AGREEMENT AND PLAN OF MERGER
between
XXXXXX RIVER BANK & TRUST COMPANY
and
AMBANC HOLDING CO., INC.
dated as of September 4, 2001
AGREEMENT AND PLAN OF MERGER
TABLE OF CONTENTS
Page
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ARTICLE I
DEFINITIONS...............................................................1
ARTICLE II
THE TRANSACTIONS
2.1 The Corporate Merger.......................................................................7
2.2 Effective Time; Closing....................................................................8
2.3 Treatment of Capital Stock.................................................................8
2.4 Shareholder Rights; Stock Transfers........................................................8
2.5 Cancellation of Seller Options and Seller Restricted Stock.................................8
2.6 Exchange Procedures........................................................................9
2.7 Dissenting Shares.........................................................................10
2.8 Liquidation and Bank Merger...............................................................11
2.9 Additional Actions........................................................................11
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
3.1 Capital Structure.........................................................................11
3.2 Organization, Standing and Authority of Seller............................................11
3.3 Ownership of Seller Subsidiaries..........................................................12
3.4 Organization, Standing and Authority of Seller Subsidiaries...............................12
3.5 Authorized and Effective Agreement........................................................12
3.6 Securities Documents and Regulatory Reports...............................................13
3.7 Financial Statements......................................................................14
3.8 Material Adverse Change...................................................................14
3.9 Environmental Matters.....................................................................14
3.10 Tax Matters...............................................................................15
3.11 Legal Proceedings. ......................................................................16
3.12 Compliance with Laws......................................................................16
3.13 Certain Information.......................................................................16
3.14 Employee Benefit Plans....................................................................17
3.15 Certain Contracts.........................................................................18
3.16 Brokers and Finders.......................................................................19
3.17 Insurance.................................................................................19
3.18 Properties................................................................................19
3.19 Labor.....................................................................................19
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3.20 Allowance for Loan Losses.................................................................19
3.21 Material Interests of Certain Persons.....................................................20
3.22 Fairness Opinion..........................................................................20
3.23 No Undisclosed Liabilities................................................................20
3.24 Loan Portfolio............................................................................20
3.25 Investment Portfolio......................................................................21
3.26 Interest Rate Risk Management Instruments.................................................21
3.27 Interim Events............................................................................21
3.28 Indemnification...........................................................................21
3.29 Disclosures...............................................................................21
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
4.1 Organization, Standing and Authority of Buyer.............................................21
4.2 Authorized and Effective Agreement........................................................22
4.3 Securities Documents and Regulatory Reports...............................................23
4.4 Financial Statements......................................................................23
4.5 Material Adverse Change...................................................................23
4.6 Legal Proceedings.........................................................................23
4.7 Certain Information.......................................................................23
4.8 Brokers and Finders.......................................................................24
4.9 Financial Resources.......................................................................24
4.10 Disclosures...............................................................................24
ARTICLE V
COVENANTS
5.1 Reasonable Best Efforts...................................................................24
5.2 Shareholders Meeting......................................................................24
5.3 Regulatory Matters........................................................................24
5.4 Investigation and Confidentiality.........................................................25
5.5 Press Releases............................................................................26
5.6 Business of the Parties...................................................................26
5.7 Certain Actions...........................................................................29
5.8 Current Information.......................................................................30
5.9 Indemnification; Insurance................................................................30
5.10 Early Completion of Bank Merger...........................................................31
5.11 Employees and Employee Benefit Plans......................................................31
5.12 Organization of Merger Sub................................................................33
5.13 Conforming Entries. .....................................................................33
5.14 Integration of Policies...................................................................34
5.15 Disclosure Supplements....................................................................34
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5.16 Failure to Fulfill Conditions.............................................................34
5.17 Environmental Reports.....................................................................34
5.18 Litigation Matters .......................................................................35
5.19 Liquidated Damages .......................................................................35
5.20 Sale of Loans by Seller Bank .............................................................36
ARTICLE VI
CONDITIONS PRECEDENT
6.1 Conditions Precedent - The Parties........................................................36
6.2 Conditions Precedent - Seller.............................................................37
6.3 Conditions Precedent - Buyer..............................................................37
ARTICLE VII
TERMINATION, WAIVER AND AMENDMENT
7.1 Termination...............................................................................38
7.2 Effect of Termination.....................................................................39
7.3 Survival of Representations, Warranties and Covenants.....................................39
7.4 Waiver 39
7.5 Amendment or Supplement...................................................................40
7.6 Specific Performance
ARTICLE VIII
MISCELLANEOUS
8.1 Expenses. ...............................................................................40
8.2 Entire Agreement..........................................................................40
8.3 No Assignment.............................................................................40
8.4 Notices 40
8.5 Alternative Structure.....................................................................41
8.6 Interpretation............................................................................41
8.7 Counterparts..............................................................................41
8.8 Governing Law.............................................................................41
8.9 Severability..............................................................................41
Exhibit A Form of Voting Agreement
Exhibit B Form of Standstill Agreement
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AGREEMENT AND PLAN OF MERGER
WHEREAS, the Boards of Directors of the Parties (as such term is
defined in Article I hereof) have determined to consummate certain business
combination transactions subject to the terms and conditions set forth herein;
and
WHEREAS, as a material inducement for Buyer to enter into this
Agreement, each of the executive officers and directors of Seller and each of
their respective affiliates have entered into a Voting Agreement (as such term
is defined in Article I hereof) pursuant to which each such person has agreed to
vote all of the shares of Seller Common Stock owned, controlled or for which
such person has voting power in favor of the Corporate Merger (as such term is
defined in Article I herein) and the adoption of this Agreement; and
WHEREAS, as a material inducement for Buyer to enter into this
Agreement Xxxxxxx Xxxxxxxx and Xxxxxxxx Xxxxxxx and their affiliates have
entered into the Standstill Agreements (as such term is defined in Article I
hereof) with Buyer; and
NOW, THEREFORE, in consideration of the foregoing and of the
representations, warranties, covenants and agreements of the Parties contained
herein, the Parties hereby agree as follows:
ARTICLE I
DEFINITIONS
The following terms shall have the meanings ascribed to them for all
purposes of this Agreement.
"Acquisition Proposal" means a proposal to engage in, or a public
announcement to engage in, or a filing with the SEC or any other Governmental
Entity with respect to, any of the following: (a) a merger, consolidation or any
similar transaction involving Seller or Seller Bank (other than the
Transactions), (b) a purchase, lease or other acquisition of all or a
substantial portion of the assets of Seller or Seller Bank, (c) a purchase or
other acquisition of "beneficial ownership" by any "person" or "group" (as such
terms are defined in Section 13(d)(3) of the Exchange Act) (including by way of
merger, consolidation, share exchange, or otherwise) which would cause such
person or group to become the beneficial owner of securities representing more
than 19.9% of the voting power of Seller, (d) a tender or exchange offer to
acquire securities representing more than 19.9% of the voting power of Seller or
(e) a public proxy or consent solicitation made to the shareholders of Seller
seeking proxies in opposition to this Agreement or the Corporate Merger.
"Agreement" means this Agreement and Plan of Merger, as the same may be
modified or amended in accordance with the terms hereof.
"Bank Merger" means the merger of Seller Bank into Buyer.
"Buyer" means Xxxxxx River Bank & Trust Company, a New York chartered
savings institution and wholly owned subsidiary of Parent.
"Buyer's Proposal" has the meaning set forth in Section Section 5.7(b).
"Cause" means termination because of the employee's personal
dishonesty, incompetence, willful misconduct, breach of fiduciary duty involving
personal profit, intentional failure to perform stated duties or willful
violation of any law, rule or regulation (other than traffic violations or
similar offenses).
"Certificate" means any certificate which prior to the Effective Time
represented shares of Seller Common Stock other than certificates for
Seller-Owned Shares and certificates for Seller Restricted Stock.
"Certificate of Merger" means the certificate of merger to be filed
with the Delaware Secretary of State with respect to the Corporate Merger.
"Closing" means the closing of the Corporate Merger at a time and place
reasonably selected by Buyer following the satisfaction or waiver of all
conditions to the Corporate Merger.
"Closing Date" means the date on which the Closing occurs.
"Code" means the Internal Revenue Code of 1986, as amended.
"Corporate Merger" means the merger of Merger Sub into Seller, with
Seller as the surviving corporation.
"CRA" means the Community Reinvestment Act.
"Department" means the New York State Department of Banking.
"DGCL" means the Delaware General Corporation Law, as amended.
"Dissenting Shares" means any shares of Seller Common Stock whose
holder becomes entitled to fair value under the DGCL.
"DOJ" means the United States Department of Justice.
"Effective Time" means the time of the filing of the Certificate of
Merger, or such later time as may be specified in the Certificate of Merger.
"Environmental Claim" means any written notice from any Governmental
Entity or third party alleging potential liability (including potential
liability for investigatory costs, cleanup costs,
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governmental response costs, natural resources damages, property damages,
personal injuries or penalties) arising out of, based on, or resulting from the
presence, or release into the environment, of any Materials of Environmental
Concern.
"Environmental Laws" shall mean any federal, state or local law,
statute, ordinance, rule, regulation, code, license, permit, authorization,
approval, consent, order, judgment, decree, injunction or agreement with any
Governmental Entity relating to (a) the protection, preservation or restoration
of the environment (including air, water vapor, surface water, groundwater,
drinking water supply, surface soil, subsurface soil, plant and animal life or
any other natural resource), and/or (b) the use, storage, recycling, treatment,
generation, transportation, processing, handling, labeling, production, release
or disposal of Materials of Environment Concern. The term Environmental Law
includes (i) the Comprehensive Environmental Response, Compensation and
Liability Act, as amended, 42 U.S.C. ss.9601, et seq; the Resource Conservation
and Recovery Act, as amended, 42 U.S.C. ss.6901, et seq; the Clean Air Act, as
amended, 42 U.S.C. ss.7401, et seq; the Federal Water Pollution Control Act, as
amended, 33 U.S.C. ss.1251, et seq; the Toxic Substances Control Act, as
amended, 15 U.S.C. ss.9601, et seq; the Emergency Planning and Community Right
to Know Act, 42 U.S.C. ss.1101, et seq; the Safe Drinking Water Act, 42 U.S.C.
ss.300f, et seq; and all comparable state and local laws, and (ii) any common
law (including common law that may impose strict liability) that may impose
liability or obligations for injuries or damages due to, or threatened as a
result of, the presence of or exposure to any Materials of Environmental
Concern.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Agent" means Registrar & Transfer Company.
"FDIA" means the Federal Deposit Insurance Act, as amended.
"FDIC" means the Federal Deposit Insurance Corporation or any successor
thereto.
"Federal Reserve Board" means the Board of Governors of the Federal
Reserve System.
"FHLB" shall mean the Federal Home Loan Bank of New York.
"GAAP" means generally accepted accounting principles.
"Governmental Entity" means any federal or state court, administrative
agency or commission or other governmental authority or instrumentality.
"HOLA" means the Home Owners' Loan Act, as amended.
"include" means "include without limitation."
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"Indemnified Parties" has the meaning set forth in Section 5.9(a).
"Insider Loans" means loans from Seller or any Seller Subsidiary to any
officer, director or employee of Seller, any Seller Subsidiary or any associate
or related interest of any such person.
"IRS" means the Internal Revenue Service or any successor thereto.
"Liquidation" means the liquidation and dissolution of Seller pursuant
to which all of the assets and liabilities of Seller shall be transferred to
Buyer.
"MAE Qualification" shall mean except for any failures,
non-compliances, facts, events or circumstances, which when aggregated with all
other failures, non-compliances, facts, events or circumstances would not have a
Material Adverse Effect.
"Material Adverse Effect" means, (a) in the case of Seller, any effect
that is material and adverse to the condition (financial or otherwise), results
of operations or business of Seller and its Subsidiaries, taken as a whole, or
that materially impairs the ability of Seller or Seller Bank to consummate any
of the Transactions, provided, however, that a Material Adverse Effect shall not
be deemed to include the impact of (i) changes in laws and regulations or
interpretations thereof that are generally applicable to the banking or savings
institution industries, (ii) changes in GAAP that are generally applicable to
the banking or savings institution industries, (iii) expenses incurred in
connection with this Agreement and the Transactions, including payments to be
made pursuant to Previously Disclosed employment and severance agreements and
the financial reporting expense associated with the retirement of the Seller
ESOP loan, (iv) actions or omissions of Seller or Seller Bank taken with the
prior informed written consent of Buyer in contemplation of the Transactions or
(v) changes attributable to or resulting from changes in general economic
conditions generally affecting financial institutions, including changes in the
prevailing level of interest rates; and (b) in the case of Buyer, any effect
that materially impairs the ability of Buyer to make payment at the Effective
Time of the aggregate Merger Consideration or otherwise materially impairs the
ability of Buyer to consummate any of the Transactions.
"Materials of Environmental Concern" means pollutants, contaminants,
wastes, toxic substances, petroleum and petroleum products and any other
materials regulated under Environmental Laws.
"Merger Consideration" shall mean $21.50 in cash without interest for
each share of Seller Common Stock outstanding immediately prior to the Effective
Time (but excluding Dissenting Shares and Seller-Owned Shares).
"Merger Sub" means a Delaware corporation to be organized as a first
tier, transitory Subsidiary of Buyer.
"Merger Sub Common Stock" means the common stock of Merger Sub.
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"NASD" means the National Association of Securities Dealers, Inc.
"New Merger Consideration" has the meaning set forth in Section 5.7(b).
"NYBL" means the New York Banking Law.
"OTS" means the Office of Thrift Supervision of the U.S. Department of
the Treasury or any successor thereto.
"Parent" means Xxxxxx River Bancorp, Inc., a Delaware corporation.
"Parent Financial Statements" means the consolidated balance sheets
(including related notes and schedules, if any) of Parent as of June 30, 2001
and 2000 and the consolidated income statements and statements of changes in
equity and cash flows (including related notes and schedules, if any) of Parent
for each of the three years ended June 30, 2001, 2000 and 1999, as filed by
Parent in its Securities Documents.
"Parties" means Buyer and Seller.
"Party" means either Buyer or Seller.
"PBGC" means the Pension Benefit Guaranty Corporation, or any successor
thereto.
"Plan of Bank Merger" means the plan of merger to be entered into by
Seller Bank and Buyer to effectuate the Bank Merger.
"Previously Disclosed" means disclosed in a disclosure schedule
delivered prior to the date hereof by the disclosing Party to the other Party
specifically referring to the appropriate section of this Agreement and
describing in reasonable detail the matters contained therein.
"Proxy Statement" means the proxy statement to be delivered to
shareholders of Seller in connection with the solicitation of their adoption of
this Agreement.
"Rights" means warrants, options, rights, convertible securities and
other arrangements or commitments which obligate an entity to issue or dispose
of any of its capital stock or other ownership interests.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Documents" means all reports, offering circulars, proxy
statements, registration statements and all similar documents filed, or required
to be filed, pursuant to the Securities Laws.
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"Securities Laws" means the Securities Act; the Exchange Act; the
Investment Company Act of 1940, as amended; the Investment Advisers Act of 1940,
as amended; the Trust Indenture Act of 1939, as amended, and the rules and
regulations of the SEC promulgated thereunder.
"Seller" means Ambanc Holding Co., Inc., a Delaware corporation.
"Seller Bank" means Mohawk Community Bank , a federally chartered
savings bank and wholly owned subsidiary of Seller.
"Seller Common Stock" means the common stock, par value $0.01 per
share, of Seller.
"Seller Defined Benefit Plan" means any Seller Employee Plan
constituting a "defined benefit plan" within the meaning of Section 3(35) of
ERISA.
"Seller Employee Plans" means all stock option, employee stock purchase
and stock bonus plans, qualified pension, stock ownership or profit-sharing
plans, any deferred compensation, consultant, bonus or group insurance contract
or any other incentive, health and welfare or employee benefit plan or agreement
maintained for the benefit of employees or former employees of Seller or any
Seller Subsidiary, whether written or oral.
"Seller ESOP" means the employee stock ownership plan of Seller, as in
effect as of the date hereof.
"Seller Financial Statements" means (a) the consolidated balance sheets
(including related notes and schedules, if any) of Seller as of December 31,
2000 and 1999 and the consolidated statements of income, changes in
stockholders' equity and cash flows (including related notes and schedules, if
any) of Seller for each of the three years ended December 31, 2000, 1999 and
1998 as filed by Seller in its Securities Documents, and (b) the consolidated
balance sheets of Seller (including related notes and schedules, if any) and the
consolidated statements of income, changes in stockholders' equity and cash
flows (including related notes and schedules, if any) of Seller included in the
Securities Documents filed by Seller with respect to the periods ended
subsequent to December 31, 2000.
"Seller Options" means options to purchase shares of Seller Common
Stock issued pursuant to Seller's 1997 Stock Option and Incentive Plan or
pursuant to any other stock option plan of an entity previously acquired by
Seller.
"Seller-Owned Shares" means any shares of Seller Common Stock which are
owned beneficially or of record by any Party or any Subsidiary of a Party
immediately prior to the Effective Time, other than shares held in a fiduciary
capacity for the benefit of third parties (including under the Seller ESOP and
other Seller Employee Plans) or as a result of debts previously contracted.
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"Seller Preferred Stock" means the shares of preferred stock, par value
$0.01 per share, of Seller.
"Seller Restricted Stock" means outstanding shares of Seller Common
Stock subject to restrictions pursuant to any restricted stock plan.
"Standstill Agreements" are the agreements, substantially in the form
of Exhibit B, to be entered into by Xxxxxxx Xxxxxxxx and Xxxxxxxx Xxxxxxx and
their respective affiliates with Buyer providing for, among other things, that
none of Xxxxxxx Xxxxxxxx, Xxxxxxxx Xxxxxxx or any of their respective affiliates
shall directly or indirectly for a stated period of time acquire any voting
securities (or securities which are convertible to voting securities) of Parent
in excess of a specified aggregate limitation and all voting securities of
Parent owned or controlled by them or any of them shall be voted with management
of Parent.
"Superior Offer" means any bona fide proposal, including a tender
offer, made by a third party to acquire, directly or indirectly, for
consideration consisting of cash and/or securities, more than 50% of the
outstanding Seller Common Stock or all or substantially all the assets of Seller
and provides consideration to Seller's shareholders which the Board of Directors
of Seller determines in its good faith judgment (based on the advice of its
financial advisor) to be more favorable than the Merger Consideration and for
which third-party financing, to the extent required, is then firmly committed.
"Superintendent" means the Superintendent of the Department.
"Subsidiary" and "Significant Subsidiary" have the meanings set forth
in Rule 1-02 of Regulation S-X of the SEC.
"Surviving Corporation" means Seller after the Corporate Merger.
"Surviving Corporation Common Stock" means the shares of common stock
of the Surviving Corporation.
"Transactions" means the Corporate Merger, Liquidation and Bank Merger.
"Voting Agreement" means that certain agreement entered into between
Buyer and each of the executive officers and directors of Seller and each of
their respective affiliates on the date hereof in the form of Exhibit A hereto.
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ARTICLE II
THE TRANSACTIONS
2.1 The Corporate Merger.
(a) Subject to the terms and conditions of this Agreement, at
the Effective Time, Merger Sub shall be merged into Seller in accordance with
the provisions of Section 251 of the DGCL, and the separate corporate existence
of Merger Sub shall cease. Seller shall be the Surviving Corporation of the
Corporate Merger, and shall continue its corporate existence under the laws of
the State of Delaware. The name of the Surviving Corporation shall be as stated
in the Certificate of Incorporation of Seller immediately prior to the Effective
Time.
(b) The Certificate of Incorporation and Bylaws of Seller as
in effect immediately prior to the Effective Time shall be the Certificate of
Incorporation and Bylaws of the Surviving Corporation.
(c) The directors and officers of Merger Sub immediately prior
to the Effective Time shall be the directors and officers of the Surviving
Corporation.
2.2 Effective Time; Closing. The Corporate Merger shall become
effective at the Effective Time. The Certificate of Merger shall be properly
executed and filed with the Secretary of State of Delaware on the Closing Date.
2.3 Treatment of Capital Stock. At the Effective Time, automatically by
virtue of the Corporate Merger and without any action on the part of any Party
or any shareholder:
(a) each outstanding share of Merger Sub Common Stock shall
become an outstanding share of Surviving Corporation Common Stock;
(b) each outstanding or treasury share of Buyer capital stock
shall be unchanged and shall continue as an outstanding or treasury share of
Buyer capital stock;
(c) each share of Seller Common Stock issued and outstanding
immediately prior to the Effective Time (other than Dissenting Shares and
Seller-Owned Shares) shall be converted into the right to receive the Merger
Consideration; and
(d) all Seller-Owned Shares shall be cancelled and retired
without consideration or conversion.
2.4 Shareholder Rights; Stock Transfers. At the Effective Time, holders
of Seller Common Stock shall cease to be and shall have no rights as
shareholders of Seller, other than such rights as they may have under the DGCL.
After the Effective Time, there shall be no transfers on the stock transfer
books of Seller or the Surviving Corporation of shares of Seller Common Stock
and
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if Certificates are presented for transfer after the Effective Time, they shall
be delivered to Buyer or the Exchange Agent for cancellation against delivery of
the Merger Consideration. No interest shall be paid on the Merger Consideration.
2.5 Cancellation of Seller Options and Seller Restricted Stock.
(a) Each Seller Option outstanding on the date hereof and
remaining outstanding immediately prior to the Effective Time, whether or not
the option is then exercisable, shall be converted into the right to receive a
cancellation payment in an amount equal to the product of (i) the number of
shares of Seller Common Stock subject to such option immediately prior to the
Effective Time and (ii) the excess, if any, of the Merger Consideration over the
exercise price per share of such option, net of any cash which must be withheld
under federal and state income and employment tax requirements. Such cash
payments shall be made by Seller not later than the Effective Time in
consideration for, and shall result in, the settlement and cancellation of all
such Seller Options. As a condition to the receipt of a cash payment in
cancellation of options, each option holder shall execute and deliver a
cancellation agreement to Seller in form and substance reasonably satisfactory
to Buyer.
(b) Each share of Seller Restricted Stock outstanding
immediately prior to the Effective Time shall be canceled and exchanged for a
payment to made to the recipient or holder thereof by the Seller Bank not later
than the Effective Time in an amount equal to the Merger Consideration, less any
cash which must be withheld under federal and state income and employment tax
requirements; provided that such recipient or holder shall deliver to the Seller
Bank a cancellation agreement in form and substance reasonably satisfactory to
the Buyer prior to receipt of such payment.
2.6 Exchange Procedures.
(a) No later than five business days following the Effective
Time, Buyer shall cause the Exchange Agent to mail or make available to each
holder of record of any Certificate a notice and letter of transmittal
disclosing the effectiveness of the Corporate Merger and the procedure for
exchanging Certificates for the Merger Consideration. Such letter of transmittal
shall specify that delivery shall be effected and risk of loss and title shall
pass only upon proper delivery of Certificates to the Exchange Agent.
(b) At or prior to the Effective Time, or at such other time
or times as the Exchange Agent may otherwise request, Buyer shall deliver to the
Exchange Agent for the benefit of the holders of Certificates (other than the
holders of Dissenting Shares) an amount of cash for timely payment of the
aggregate Merger Consideration to such holders of Certificates.
(c) Each holder of a Certificate (other than holders of
Dissenting Shares) who surrenders such Certificate to the Exchange Agent will,
upon acceptance thereof by the Exchange Agent, be entitled to the Merger
Consideration to be paid within seven business days of acceptance
9
by the Exchange Agent. The Exchange Agent shall accept Certificates upon
compliance with such reasonable terms and conditions as the Exchange Agent may
impose to effect an orderly exchange in accordance with normal exchange
practices. Each Certificate which is not surrendered to the Exchange Agent
shall, except as otherwise herein provided, evidence ownership of only the right
to receive the Merger Consideration without interest.
(d) The Exchange Agent shall not be obligated to deliver the
Merger Consideration until the holder surrenders a Certificate as provided in
this Section 2.6, or, in default thereof, an appropriate affidavit of loss and
indemnity agreement and/or a bond as may be required in each case by the
Exchange Agent. If any check is to be issued in a name other than that in which
the Certificate is registered, it shall be a condition of the issuance thereof
that the Certificate so surrendered shall be properly endorsed or accompanied by
an executed form of assignment separate from the Certificate and otherwise in
proper form for transfer and that the person requesting such exchange pay to the
Exchange Agent any transfer or other tax required by reason of the issuance of a
check in any name other than that of the registered holder of the Certificate
surrendered or otherwise establish to the satisfaction of the Exchange Agent
that such tax has been paid or is not payable.
(e) Any portion of the cash delivered to the Exchange Agent by
Buyer pursuant to Section 2.6(b) that remains unclaimed by the shareholders of
Seller for six months after the Closing Date shall be delivered by the Exchange
Agent to Buyer. Any shareholders of Seller who have not theretofore complied
with Section 2.6(c) shall thereafter look only to Buyer for the Merger
Consideration. If Certificates are not surrendered or the payment for them is
not claimed prior to the date on which such payment would otherwise escheat to
or become the property of any Governmental Entity, the unclaimed items shall, to
the extent permitted by abandoned property and any other applicable law, become
the property of Buyer (and to the extent not in its possession shall be
delivered to it), free and clear of all claims or interest of any person
previously entitled to such property. Neither the Exchange Agent nor any Party
shall be liable to any holder of Seller Common Stock represented by any
Certificate for any consideration paid to a public official pursuant to
applicable abandoned property, escheat or similar laws. Buyer and the Exchange
Agent shall be entitled to rely upon the stock transfer books of Seller to
establish the identity of those persons entitled to receive the Merger
Consideration, which books shall be conclusive with respect thereto. In the
event of a dispute with respect to ownership of Seller Common Stock represented
by any Certificate, Buyer and the Exchange Agent shall be entitled to deposit
any Merger Consideration represented thereby in escrow with an independent third
party and thereafter be relieved with respect to any claims thereto.
(f) The Exchange Agent or Buyer shall be entitled to deduct
and withhold from consideration otherwise payable pursuant to this Agreement to
any holder of Certificates, such amounts as it is required to deduct and
withhold with respect to the making of such payment under the Code, or any
provision of state, local or foreign tax law. To the extent that amounts are so
withheld by the Exchange Agent or Buyer, such withheld amounts shall be treated
for all purposes
10
of this Agreement as having been paid to the holder of the Certificates in
respect of which such deduction and withholding was made.
2.7 Dissenting Shares.
(a) Any holders of Dissenting Shares shall be entitled to
payment for such shares only to the extent permitted by and in accordance with
the provisions of the DGCL; provided, however, that if, in accordance with the
DGCL, any holder of Dissenting Shares shall forfeit such right to payment of the
fair value of such shares, such shares shall thereupon be deemed to have been
converted into and to have become exchangeable for, as of the Effective Time,
the right to receive the Merger Consideration without interest from Buyer.
Dissenting Shares shall not, after the Effective Time, be entitled to vote for
any purpose or receive any dividends or other distributions and shall be
entitled only to such rights as are afforded in respect of Dissenting Shares
pursuant to the DGCL.
(b) Seller shall give Buyer (i) prompt notice of any written
objections to the Corporate Merger and any written demands for the payment of
the fair value of any shares, withdrawals of such demands, and any other
instruments served pursuant to the DGCL received by Seller and (ii) the
opportunity to participate in all negotiations and proceedings with respect to
such demands under the DGCL. Seller shall not voluntarily make any payment with
respect to any demands for payment of fair value and shall not, except with the
prior written consent of Buyer, settle or offer to settle any such demands.
2.8 Liquidation and Bank Merger. Immediately after the Effective Time
the Board of Directors of Buyer shall approve the Liquidation and shall take all
necessary action to consummate the Liquidation. Immediately after consummation
of the Liquidation, Buyer shall cause its Board of Directors and the Boards of
Directors of Seller Bank to approve the Plan of Bank Merger and to take all
necessary action to cause the Bank Merger to become effective.
2.9 Additional Actions. If, at any time after the Effective Time, Buyer
shall consider that any further assignments or assurances in law or any other
acts are necessary or desirable to (i) vest, perfect or confirm, of record or
otherwise, in Buyer its right, title or interest in, to or under any of the
rights, properties or assets of Seller or Seller Bank acquired or to be acquired
by Buyer as a result of, or in connection with, the Transactions, or (ii)
otherwise carry out the purposes of this Agreement, Seller, Seller Bank and
their proper officers and directors shall be deemed to have granted to Buyer an
irrevocable power of attorney to execute and deliver all such proper deeds,
assignments and assurances in law and to do all acts necessary or proper to
vest, perfect or confirm title to and possession of such rights, properties or
assets in Buyer and otherwise to carry out the purposes of this Agreement; and
the proper officers and directors of Buyer are fully authorized in the name of
Seller, Seller Bank or otherwise to take any and all such action.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer as follows, except as
Previously Disclosed:
3.1 Capital Structure. The authorized capital stock of Seller consists
of fifteen million shares of Seller Common Stock and five million shares of
Seller Preferred Stock. As of the date hereof, 4,436,178 shares of Seller Common
Stock are outstanding including shares of Seller Restricted Stock, 996,067
shares of Seller Common Stock are held in treasury, and no shares of Seller
Preferred Stock have been issued. All outstanding shares of Seller Common Stock
have been duly authorized and validly issued and are fully paid and
nonassessable, and none of the outstanding shares of Seller Common Stock has
been issued in violation of the preemptive rights of any person, firm or entity.
Except for (a) Seller Options to acquire not more than 608,348 shares of Seller
Common Stock, a schedule of which has been Previously Disclosed that includes
the name of each optionee, the number of Seller Options held by each optionee,
the vesting date of each Seller Option and the exercise price thereof, and (b)
6,975 shares of Seller Restricted Stock a schedule of which has been Previously
Disclosed, there are no Rights authorized, issued or outstanding with respect to
the capital stock of Seller.
3.2 Organization, Standing and Authority of Seller. Seller is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware, with full corporate power and authority to own and
lease all of its properties and assets and to carry on its business as now
conducted, and Seller is duly licensed or qualified to do business and is in
good standing in each jurisdiction in which its ownership or leasing of property
or the conduct of its business requires such licensing or qualification. Seller
is a unitary savings and loan holding company under the HOLA and the regulations
of the OTS thereunder. Seller has heretofore delivered to Buyer true and
complete copies of the Certificate of Incorporation and Bylaws of Seller as in
effect as of the date hereof.
3.3 Ownership of Seller Subsidiaries. Seller has Previously Disclosed
the name, jurisdiction of incorporation and percentage ownership of each direct
or indirect Seller Subsidiary and has identified Seller Bank as its only
Significant Subsidiary. Except for (a) capital stock of Seller Subsidiaries, (b)
securities and other interests held in a fiduciary capacity and beneficially
owned by third parties or taken in consideration of debts previously contracted
and (c) securities and other interests which are Previously Disclosed, neither
Seller nor any Seller Subsidiary owns or has the right to acquire, directly or
indirectly, any outstanding capital stock or other voting securities or
ownership interests of any corporation, bank, savings association, partnership,
joint venture or other organization, other than investment securities
representing not more than 5% of any entity. The outstanding shares of capital
stock or other ownership interests of each Seller Subsidiary have been duly
authorized and validly issued, are fully paid and nonassessable, and are
directly owned by Seller free and clear of all liens, claims, encumbrances,
charges, pledges, restrictions or rights of third parties of any kind
whatsoever. No rights are authorized, issued or outstanding with respect to the
capital stock or other ownership interests of Seller Subsidiaries and there are
no agreements,
12
understandings or commitments relating to the right of Seller or any Seller
Subsidiary to vote or to dispose of such capital stock or other ownership
interests.
3.4 Organization, Standing and Authority of Seller Subsidiaries. Each
of the Seller Subsidiaries is a savings bank, corporation or partnership duly
organized, validly existing and in good standing under the laws of the
jurisdiction in which it is organized with full power and authority to own and
lease all of its properties and assets and to carry on its business as now
conducted, and each of the Seller Subsidiaries is duly licensed or qualified to
do business and is in good standing in each jurisdiction in which its ownership
or leasing of property or the conduct of its business requires such licensing or
qualification. The deposit accounts of Seller Bank are insured by the FDIC to
the maximum extent permitted by the FDIA and Seller Bank has paid all deposit
insurance premiums and assessments required by the FDIA and the regulations
thereunder. Seller has heretofore delivered to Buyer true and complete copies of
the Charter and Bylaws of Seller Bank as in effect as of the date hereof.
3.5 Authorized and Effective Agreement.
(a) Seller has all requisite power and authority to enter into
this Agreement and (subject to receipt of all necessary approvals of
Governmental Entities and the adoption of this Agreement by Seller's
shareholders) to perform all of its respective obligations hereunder. The
execution and delivery of this Agreement and the completion of the transactions
contemplated hereby have been duly authorized and approved by all necessary
corporate action in respect thereof on the part of Seller, except for the
adoption of this Agreement by Seller's shareholders. This Agreement has been
duly and validly executed and delivered by Seller and, assuming due
authorization, execution and delivery by Buyer, constitutes a legal, valid and
binding obligation of Seller, enforceable against Seller in accordance with its
terms, subject, as to enforceability, to bankruptcy, insolvency and other laws
of general applicability relating to or affecting creditors' rights and to
general equity principles.
(b) Neither the execution and delivery of this Agreement nor
completion of the Transactions or compliance by Seller with any of the
provisions hereof does or will (i) conflict with or result in a breach of any
provisions of the Certificate of Incorporation or Bylaws of Seller or the
equivalent documents of any Seller Subsidiary, (ii) violate, conflict with or
result in a breach of any term, condition or provision of, or constitute a
default (or an event which, with notice or lapse of time, or both, would
constitute a default) under, or give rise to any right of termination,
cancellation or acceleration with respect to, or result in the creation of any
lien, charge or encumbrance upon any property or asset of Seller or any Seller
Subsidiary pursuant to, any material note, bond, mortgage, indenture, deed of
trust, license, lease, agreement or other material instrument or obligation to
which Seller or any Seller Subsidiary is a party, or by which any of their
respective properties or assets may be bound or affected, or (iii) subject to
receipt of all required approvals from Governmental Entities and the
shareholders of Seller, violate any order, writ, injunction, decree, statute,
rule or regulation applicable to Seller or any Seller Subsidiary.
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(c) To the best knowledge of Seller, except for (i) the filing
of applications and notices with and the approvals of the OTS and the FDIC, (ii)
the filing of applications with the Department and the approvals of the
Superintendent, (iii) the filing and clearance of the Proxy Statement relating
to the meeting of shareholders of Seller to be held pursuant to Section 5.2
hereof with the SEC, (iv) the adoption of this Agreement by the requisite vote
of the shareholders of Seller, (v) the filing of the Certificate of Merger with
the Secretary of State of Delaware in connection with the Corporate Merger and
(vi) review of the Transactions by the DOJ under federal antitrust laws, no
consents or approvals of or filings or registrations with any Governmental
Entity or with any third party are necessary on the part of Seller or Seller
Bank in connection with the execution and delivery by Seller of this Agreement
and the completion of the Transactions.
(d) As of the date hereof, Seller is not aware of any reasons
relating to Seller or Seller Bank (including CRA compliance) why all consents
and approvals shall not be procured from all Governmental Entities having
jurisdiction over the Transactions as shall be necessary for the completion of
the Transactions and the continuation by Buyer after the Effective Time of the
business of each of Seller and Seller Bank, respectively, as such business is
carried on immediately prior to the Effective Time, free of any conditions or
requirements which could impair the value of Seller or Seller Bank to Buyer.
3.6 Securities Documents and Regulatory Reports.
(a) Since January 1, 1998, Seller has timely filed with the
SEC and the NASD all Securities Documents required by the Securities Laws and
such Securities Documents complied in all material respects with the Securities
Laws and did not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading.
(b) Since January 1, 1998, each of Seller and Seller Bank has
duly filed with the OTS and any other applicable federal or state banking
authority, as the case may be, the reports required to be filed under applicable
laws and regulations and such reports were in all material respects complete and
accurate and in compliance with the requirements of applicable laws and
regulations. In connection with the most recent examinations of Seller and
Seller Bank by the OTS, neither Seller nor Seller Bank was required to correct
or change any action, procedure or proceeding which Seller or Seller Bank
believes has not been corrected or changed as required.
3.7 Financial Statements.
(a) Seller has previously delivered or made available to Buyer
accurate and complete copies of the Seller Financial Statements, which are
accompanied by the audit reports of KPMG, LLP, independent certified public
accountants with respect to Seller. The Seller Financial Statements, as well as
the Seller Financial Statements to be delivered pursuant to Section 5.8 hereof,
fairly present or will fairly present, as the case may be, the consolidated
financial condition of Seller
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as of the respective dates set forth therein, and the consolidated income,
changes in stockholders' equity and cash flows of Seller for the respective
periods or as of the respective dates set forth therein.
(b) Each of the Seller Financial Statements referred to in
Section 3.7(a) has been or will be, as the case may be, prepared in accordance
with GAAP consistently applied during the periods involved, except as stated
therein. The audits of Seller have been conducted in all material respects in
accordance with generally accepted auditing standards. The books and records of
Seller and the Seller Subsidiaries are being maintained in compliance with
applicable legal and accounting requirements, and such books and records
accurately reflect all dealings and transactions in respect of the business,
assets, liabilities and affairs of Seller and its Subsidiaries.
3.8 Material Adverse Change. Since December 31, 2000, (i) Seller and
its Subsidiaries have conducted their respective businesses in the ordinary and
usual course (excluding the incurrence of expenses in connection with this
Agreement and the Transactions) and (ii) no event has occurred or circumstance
arisen that, in the aggregate, has had or is reasonably likely to have a
Material Adverse Effect on Seller.
3.9 Environmental Matters.
(a) Seller and its Subsidiaries are in compliance with all
Environmental Laws in all material respects. Neither Seller nor any Seller
Subsidiary has received any communication alleging that Seller or any Seller
Subsidiary is not in such compliance and, to the best knowledge of Seller, there
are no present circumstances that would prevent or interfere with the
continuation of such compliance.
(b) To the best of Seller's knowledge, none of the properties
owned, leased or operated by Seller or a Seller Subsidiary has been or is in
violation of or liable under any Environmental Law.
(c) To the best of Seller's knowledge, there are no past or
present actions, activities, circumstances, conditions, events or incidents that
could reasonably form the basis of any Environmental Claim or other claim or
action or governmental investigation that could result in the imposition of any
liability arising under any Environmental Law against Seller or a Seller
Subsidiary or against any person or entity whose liability for any Environmental
Claim Seller or a Seller Subsidiary has or may have retained or assumed either
contractually or by operation of law.
(d) Seller has not conducted any environmental studies during
the past five years with respect to any properties owned or leased by it or any
Seller Subsidiary.
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3.10 Tax Matters.
(a) Seller and its Subsidiaries have timely filed all federal,
state and local (and, if applicable, foreign) income, franchise, bank, excise,
real property, personal property and other tax returns required by applicable
law to be filed by them (including estimated tax returns, income tax returns,
information returns and withholding and employment tax returns) and have paid,
or where payment is not required to have been made, have set up an adequate
reserve or accrual for the payment of, all taxes required to be paid in respect
of the periods covered by such returns and, as of the Effective Time, will have
paid, or where payment is not required to have been made, will have set up an
adequate reserve or accrual for the payment of, all material taxes for any
subsequent periods ending on or prior to the Effective Time. Neither Seller nor
any Seller Subsidiary will have any material liability for any such taxes in
excess of the amounts so paid or reserves or accruals so established.
(b) All federal, state and local (and, if applicable, foreign)
income, franchise, bank, excise, real property, personal property and other tax
returns filed by Seller and its Subsidiaries are complete and accurate in all
material respects. Neither Seller nor any Seller Subsidiary is delinquent in the
payment of any tax, assessment or governmental charge or has requested any
extension of time within which to file any tax returns in respect of any fiscal
year or portion thereof. The federal, state and local income tax returns of
Seller and its Subsidiaries have not been audited by any tax authorities during
the past six years and no deficiencies for any tax, assessment or governmental
charge have been proposed, asserted or assessed (tentatively or otherwise)
against Seller or any Seller Subsidiary which have not been settled and paid.
There are currently no agreements in effect with respect to Seller or any Seller
Subsidiary to extend the period of limitations for the assessment or collection
of any tax. As of the date hereof, no audit, examination or deficiency or refund
litigation with respect to any such return is pending or, to the best of
Seller's knowledge, threatened.
(c) Neither Seller nor any Seller Subsidiary (i) is a party to
any agreement providing for the allocation or sharing of taxes, (ii) is required
to include in income any adjustment pursuant to Section 481(a) of the Code or by
reason of a voluntary change in accounting method initiated by Seller or any
Subsidiary (nor does Seller have any knowledge that the IRS has proposed any
such adjustment or change of accounting method) or (iii) has filed a consent
pursuant to Section 341(f) of the Code or agreed to have Section 341(f)(2) of
the Code apply.
(d) Seller and its Subsidiaries have withheld amounts from
their employees, stockholders, or holders of public deposit accounts in
compliance with the tax withholding provisions of applicable federal, state and
local laws, have filed all federal, state and local returns and reports for all
periods for which such returns or reports would be due with respect to income
tax withholding, social security, unemployment taxes, income and other taxes and
all payments or deposits with respect to such taxes have been timely made.
3.11 Legal Proceedings. There are no actions, suits, claims,
governmental investigations or proceedings instituted, pending or, to the best
knowledge of Seller, that are unasserted or threatened against Seller or
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any of its Subsidiaries or against any asset, interest or right of Seller or any
of its Subsidiaries, or against any officer, director or employee of any of
them. Neither Seller nor any Seller Subsidiary is a party to any order, judgment
or decree.
3.12 Compliance with Laws.
(a) Each of Seller and the Seller Subsidiaries has all
permits, licenses, certificates of authority, orders and approvals of, and has
made all filings, applications and registrations with, all Governmental Entities
that are required in order to permit it to carry on its business as it is
presently being conducted; all such permits, licenses, certificates of
authority, orders and approvals are in full force and effect and will not be
adversely affected by virtue of the completion of the Transactions; and to the
best knowledge of Seller, no suspension or cancellation of any of the same is
threatened.
(b) Neither Seller nor any Seller Subsidiary is in violation
of its respective Certificate of Incorporation, Charter or Bylaws, or of any
applicable federal, state or local law or ordinance or any order, rule or
regulation of any Governmental Entity (including all banking (including all
regulatory capital requirements), truth-in-lending, usury, fair credit
reporting, consumer protection, securities, municipal securities, safety,
health, environmental, zoning, anti-discrimination, antitrust, and wage and hour
laws, ordinances, orders, rules and regulations), or in default with respect to
any order, writ, injunction or decree of any court, or in default under any
order, license, regulation or demand of any Governmental Entity; and neither
Seller nor any Seller Subsidiary has received any notice or communication from
any Governmental Entity asserting that Seller or any Seller Subsidiary is in
violation of any of the foregoing. Neither Seller nor any Seller Subsidiary is
subject to any regulatory or supervisory cease and desist order, agreement,
written directive, memorandum of understanding or written commitment (other than
those of general applicability to savings banks or holding companies thereof
issued by Governmental Entities), and neither of them has received any written
communication requesting that it enter into any of the foregoing.
3.13 Certain Information. None of the information relating to Seller
and its Subsidiaries supplied or to be supplied by them for inclusion in the
Proxy Statement, as of the date such Proxy Statement is mailed to shareholders
of Seller and up to and including the date of the meeting of shareholders to
which such Proxy Statement relates, will contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, provided that information as of a later date shall be deemed to
modify information as of an earlier date.
3.14 Employee Benefit Plans.
(a) Seller has Previously Disclosed all Seller Employee Plans
and has heretofore delivered to Buyer accurate and complete copies of each
(including amendments and agreements relating thereto) together with, in the
case of qualified plans, (i) the most recent actuarial and financial reports
prepared with respect thereto, (ii) the most recent annual reports filed with
any
17
Governmental Entity with respect thereto, and (iii) all rulings and
determination letters and any open requests for rulings or letters that pertain
thereto.
(b) None of Seller, any Seller Subsidiary, any qualified
Seller Employee Plan or, to the best of Seller's knowledge, any fiduciary of a
qualified Seller Employee Plan, has incurred any material liability to the PBGC
or the IRS with respect to any qualified Seller Employee Plan. To the best of
Seller's knowledge, no reportable event under Section 4043(b) of ERISA has
occurred with respect to any qualified Seller Employee Plan.
(c) Neither Seller nor any Seller Subsidiary participates in
or has incurred any liability under Section 4201 of ERISA for a complete or
partial withdrawal from a multi-employer plan (as such term is defined in
ERISA).
(d) A favorable determination letter has been issued by the
IRS with respect to each Seller Employee Plan which is intended to qualify under
Section 401 of the Code to the effect that such Seller Employee Plan is
qualified under Section 401 of the Code, and the trust associated with such
Seller Employee Plan is tax exempt under Section 501 of the Code. No such letter
has been revoked or, to the best of Seller's knowledge, is threatened to be
revoked, and Seller does not know of any ground on which such revocation may be
based. Neither Seller nor any Seller Subsidiary has any liability under any such
Seller Employee Plan that is not reflected in the Seller Financial Statements,
other than liabilities incurred in the ordinary course of business in connection
therewith subsequent to the date thereof.
(e) To the best of Seller's knowledge, no transaction
prohibited by Section 406 of ERISA (and not exempt under Section 408 of ERISA or
Section 4975 of the Code) has occurred with respect to any Seller Employee Plan
which would result in the imposition, directly or indirectly, of an excise tax
under Section 4975 of the Code.
(f) Full payment has been made (or proper accruals have been
established) of all contributions which are required for periods prior to the
date hereof, and full payment will be so made (or proper accruals will be so
established) of all contributions which are required for periods after the date
hereof and prior to the Effective Time, under the terms of each Seller Employee
Plan or ERISA.
(g) Any Seller Defined Benefit Plan has been heretofore
terminated and neither Seller nor any Seller Subsidiary has any current, future
or contingent obligation or liability to any Seller Defined Benefit Plan or any
participant or beneficiary thereof or the PPGC with respect thereto.
(h) To the best of Seller's knowledge, the Seller Employee
Plans have been operated in compliance in all material respects with the
applicable provisions of ERISA, the Code, all regulations, rulings and
announcements promulgated or issued thereunder and all other applicable
governmental laws and regulations.
18
(i) There are no pending or, to the best knowledge of Seller,
threatened claims (other than routine claims for benefits) by, on behalf of or
against any of Seller Employee Plans or any trust related thereto or any
fiduciary thereof.
(j) Neither Seller nor any Seller Subsidiary has made any
payments, or is or has been a party to any agreement or any Seller Employee
Plan, that could obligate it or its successor to make payments or deemed
payments, that are not or will not be deductible because of Sections 162(m) or
280G of the Code.
3.15 Certain Contracts.
(a) Neither Seller nor any Seller Subsidiary is a party to, is
bound or affected by, receives, or is obligated to pay, benefits under (i) any
agreement, arrangement or commitment, including any agreement, indenture or
other instrument, relating to the borrowing of money by Seller or a Seller
Subsidiary (other than in the case of Seller Bank deposits, FHLB advances,
federal funds purchased and securities sold under agreements to repurchase in
the ordinary course of business) or the guarantee by Seller or a Seller
Subsidiary of any obligation, other than by Seller Bank in the ordinary course
of its banking business, (ii) any agreement, arrangement or commitment relating
to the employment of a consultant or the employment, election or retention in
office of any present or former director, officer or employee of Seller or a
Seller Subsidiary, (iii) any agreement, arrangement or understanding pursuant to
which any payment (whether of severance pay or otherwise) became or may become
due to any director, officer or employee of Seller or a Seller Subsidiary upon
execution of this Agreement or upon or following completion of any of the
Transactions (either alone or in connection with the occurrence of any
additional acts or events); (iv) any agreement, arrangement or understanding
pursuant to which Seller or a Seller Subsidiary is obligated to indemnify any
director, officer, employee or agent of Seller or a Seller Subsidiary; (v) any
agreement, arrangement or understanding to which Seller or a Seller Subsidiary
is a party or by which any of the same is bound which limits the freedom of
Seller or a Seller Subsidiary to compete in any line of business or with any
person; (vi) any assistance agreement, supervisory agreement, memorandum of
understanding, consent order, cease and desist order or condition of any
regulatory order or decree with or by the OTS, the FDIC or any other
Governmental Entity; (vii) any agreement, arrangement or understanding which
would be required to be filed as an exhibit pursuant to Item 601(b)(10) of
Regulation S-K to Seller's Annual Report on Form 10-K under the Exchange Act and
which has not been so filed; or (viii) any agreement pursuant to which loans
have been sold by Seller or a Seller Subsidiary which impose any potential
recourse (by representation, warranty, covenant or other contractual terms) upon
Seller or any Seller Subsidiary.
(b) Neither Seller nor any Seller Subsidiary is in default or
in non-compliance under any contract, agreement, commitment, arrangement, lease,
insurance policy or other instrument to which it is a party or by which its
assets, business or operations may be bound or affected, whether entered into in
the ordinary course of business or otherwise and whether written or oral, and
there has not occurred any event that with the lapse of time or the giving of
notice, or both, would constitute such a default or non-compliance.
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3.16 Brokers and Finders. Except for Previously Disclosed agreements
with FinPro, Inc., neither Seller nor any Seller Subsidiary nor any of their
respective directors, officers or employees, has employed any broker or finder
or incurred any liability for any broker or finder fees or commissions in
connection with the transactions contemplated hereby.
3.17 Insurance. Each of Seller and its Subsidiaries is insured for
reasonable amounts with financially sound and reputable insurance companies
against such risks as companies engaged in a similar business would, in
accordance with good business practice, customarily be insured and has
maintained all insurance required by contract or applicable laws and
regulations.
3.18 Properties. All real and personal property owned by Seller or its
Subsidiaries or presently used by any of them in its respective business is in
good condition (ordinary wear and tear excepted) and is sufficient to carry on
the business of Seller and its Subsidiaries in the ordinary course of business
consistent with their past practices. Each of Seller and its Subsidiaries has
good and marketable title free and clear of all liens, encumbrances, charges,
defaults or equities (other than equities of redemption under applicable
foreclosure laws) to all of its properties and assets, real and personal, except
(a) liens for current taxes not yet due or payable, (b) pledges to secure
deposits and other liens incurred in the ordinary course of its banking
business, (c) such imperfections of title, easements and encumbrances, if any,
as are de minimis in character amount or extent and (d) as reflected in the
Seller Financial Statements. All real and personal property which is material to
Seller's business on a consolidated basis and leased or licensed by Seller or a
Seller Subsidiary is held pursuant to leases or licenses which are valid and
enforceable in accordance with their respective terms and such leases and
licenses will not terminate or lapse prior to the Effective Time or thereafter
by reason of completion of any of the Transactions. All improved real property
owned by Seller or its Subsidiaries is in compliance with all applicable zoning
laws in all material respects.
3.19 Labor. No work stoppage involving Seller or a Seller Subsidiary is
pending or, to the best knowledge of Seller, threatened. Neither Seller nor any
of its Subsidiaries is involved in or, to the best knowledge of Seller,
threatened with or affected by, any labor dispute, arbitration, lawsuit or
administrative proceeding involving the employees of Seller or any Seller
Subsidiary. Employees of Seller and Seller Subsidiaries are not represented by
any labor union nor are any collective bargaining agreements otherwise in effect
with respect to such employees, and to the best of Seller's knowledge, there
have been no efforts to unionize or organize any employees of Seller or any
Seller Subsidiaries during the past five years.
3.20 Allowance for Loan Losses. The allowance for loan losses reflected
on Seller's consolidated balance sheet included in the Seller Financial
Statements is, and will be in the case of subsequently delivered Seller
Financial Statements, in the opinion of Seller's management, adequate as of
their respective dates under the requirements of GAAP to provide for reasonably
anticipated losses on outstanding loans, net of recoveries. The real estate
owned reflected in the Seller Financial Statements is, and will be in the case
of subsequently delivered Seller Financial Statements, carried at the lower of
cost or fair value, less estimated costs to sell, as required by GAAP.
20
3.21 Material Interests of Certain Persons.
(a) Except as set forth in Seller's Proxy Statement for its
2001 Annual Meeting of Stockholders, no officer, director or employee of Seller,
any Seller Subsidiary or any "associate" (as such term is defined in Rule 14a-1
under the Exchange Act) or related interest of any such person has any material
interest in any material contract or property (real or personal, tangible or
intangible), used in, or pertaining to, the business of Seller or any Seller
Subsidiary.
(b) Except as set forth in Seller's Proxy Statement for its
2001 Annual Meeting of Stockholders there are no Insider Loans. All outstanding
Insider Loans were made in the ordinary course of business and on substantially
the same terms as those prevailing at the time for comparable transactions with
third parties and were, with respect to executive officers and directors,
approved by the appropriate board of directors in accordance with applicable law
and regulations.
3.22 Fairness Opinion. Seller has received an opinion from FinPro, Inc.
to the effect that, as of the date hereof, the consideration to be received by
the shareholders of Seller pursuant to this Agreement is fair, from a financial
point of view, to such shareholders.
3.23 No Undisclosed Liabilities. Seller and its Subsidiaries do not
have any liability whether asserted or unasserted, whether absolute or
contingent, whether accrued or unaccrued, whether liquidated or unliquidated,
and whether due or to become due, including any liability for taxes (and there
is no past or present fact, situation, circumstance, condition or other basis
for any present or future action, suit or proceeding, hearing, charge,
complaint, claim or demand against Seller or its Subsidiaries giving rise to any
such liability) required in accordance with GAAP to be reflected in an audited
consolidated balance sheet of Seller, except (a) for liabilities set forth or
reserved against in the most recent Seller Financial Statement prior to the date
hereof and (b) liabilities occurring in the ordinary course of business since
the most recent Seller Financial Statements prior to the date hereof.
3.24 Loan Portfolio. (a) All loans and discounts shown on the Seller
Financial Statements or which were entered into after the date of the most
recent balance sheet included in the Seller Financial Statements were and shall
be made for good, valuable and adequate consideration in the ordinary course of
the business of Seller and its Subsidiaries, in accordance with sound banking
practices, and are not subject to any known defenses, set-offs or
counter-claims, including any such as are afforded by usury or truth in lending
laws, except as may be provided by bankruptcy, solvency or similar laws or by
general principles of equity, (b) the notes or other evidence of indebtedness
evidencing such loans and all forms of pledges, mortgages and other collateral
documents and security agreements are and shall be in full force and effect,
valid, true and genuine and what they purport to be, and (c) Seller and its
Subsidiaries have complied in all material respects and shall prior to the
Effective Time comply in all material respects with all laws and regulations
relating to such loans.
21
3.25 Investment Portfolio. All investment securities held by Seller or
its Subsidiaries, as reflected in the consolidated balance sheets of Seller
included in the Seller Financial Statements, are carried in accordance with
GAAP, specifically including but not limited to, FAS 115.
3.26 Interest Rate Risk Management Instruments. Seller has Previously
Disclosed all interest rate swaps, caps, floors, option agreements or other
interest rate risk management arrangements or agreements, whether entered into
for the account of Seller or its Subsidiaries or for the account of a customer
of Seller or one of its Subsidiaries. All such arrangements and agreements were
entered into in the ordinary course of business and in accordance with prudent
banking practice and applicable rules, regulations and policies and with counter
parties believed to be financially responsible at the time and are legal, valid
and binding obligations of Seller or one of its Subsidiaries in accordance with
their terms (subject to the provisions of bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium or similar laws effecting the
enforceability of creditors rights generally from time to time and effect, and
equitable principles relating to the granting of specific performance and other
equitable remedies as a matter of judicial discretion), and are in full force
and effect. Seller and its Subsidiaries have duly performed all of their
obligations thereunder to the extent that such obligations to perform have
accrued; and, to Seller's knowledge, there are no breaches, violations or
defaults or allegations or assertions of such by any party thereunder.
3.27 Interim Events. Since June 30, 2001, neither Seller nor any of its
Subsidiaries has paid or declared any dividend or made any other distribution to
shareholders or taken any action which if taken after the date hereof would
require the prior written consent of Buyer pursuant to Section 5.6 hereof.
3.28 Indemnification. To the best knowledge of Seller, no action or
failure to take action by any present or former director, advisory director,
officer, employee or agent of Seller or any Seller Subsidiary has occurred which
would as of the date hereof give rise to a claim or a potential claim by any
such person for indemnification from Seller or any Seller Subsidiary.
3.29 Disclosures. None of the representations and warranties of Seller
or any of the written information or documents furnished or to be furnished by
Seller to Buyer in connection with or pursuant to this Agreement or in
connection with the completion of the Transactions, when considered as a whole,
contains or will contain any untrue statement of a material fact, or omits or
will omit to state any material fact required to be stated or necessary to make
any such information or document, in light of the circumstances, not misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows, except as
Previously Disclosed:
4.1 Organization, Standing and Authority of Buyer. Buyer is a
corporation duly organized, validly existing and in good standing under the laws
of the State of New York, with full
22
corporate power and authority to own and lease all of its properties and assets
and to carry on its business as now conducted, and Buyer is duly licensed or
qualified to do business and is in good standing in each jurisdiction in which
its ownership or leasing of property or the conduct of its business requires
such licensing or qualification.
4.2 Authorized and Effective Agreement.
(a) Buyer has all requisite power and authority to enter into
this Agreement and (subject to receipt of all necessary approvals for
Governmental Entities) to perform all of its obligations hereunder. The
execution and delivery of this Agreement and the completion of the Transactions
have been duly authorized and approved by the Board of Directors of Buyer and no
other corporate action is required on the part of Buyer. This Agreement has been
duly and validly executed and delivered by Buyer and, assuming due
authorization, execution and delivery by Seller, constitutes the legal, valid
and binding obligation of Buyer, enforceable against Buyer in accordance with
its terms, subject, as to enforceability, to bankruptcy, insolvency and other
laws of general applicability relating to or affecting creditors' rights and to
general equity principles.
(b) Neither the execution and delivery of this Agreement nor
completion of the Transactions, or compliance by Buyer with any of the
provisions hereof, does or will (i) conflict with or result in a breach of any
provisions of the Charter or Bylaws of Buyer or the equivalent documents of any
Buyer Subsidiary, (ii) violate, conflict with or result in a breach of any term,
condition or provision of, or constitute a default (or an event which, with
notice or lapse of time, or both, would constitute a default) under, or give
rise to any right of termination, cancellation or acceleration with respect to,
or result in the creation of any lien, charge or encumbrance upon any property
or asset of Buyer or any Buyer Subsidiary pursuant to, any material note, bond,
mortgage, indenture, deed of trust, license, lease, agreement or other material
instrument or obligation to which Buyer or any Buyer Subsidiary is a party, or
by which any of their respective properties or assets may be bound or affected,
or (iii) subject to receipt of all required approvals from Governmental
Entities, violate any order, writ, injunction, decree, statute, rule or
regulation applicable to Buyer or any Buyer Subsidiary.
(c) To the best knowledge of Buyer, except for the consents,
approvals, filings or registrations to be made as set forth in Section 3.5(c),
no consents or approvals of or filings or registrations with any Governmental
Entity or with any third party are necessary on the part of Buyer or Merger Sub
in connection with the execution and delivery by Buyer of this Agreement and the
completion of the Transactions.
(d) As of the date hereof, Buyer is not aware of any reasons
relating to it (including CRA compliance) why all consents and approvals shall
not be procured from all Governmental Entities having jurisdiction over the
Transactions as shall be necessary for completion of the Transactions and
continuation by Buyer after the Effective Time of the business of each of Seller
and Seller Bank, respectively, as such business is carried on immediately prior
to the Effective
23
Time, free of any conditions or requirements which could impair the value of
Seller or Seller Bank to Buyer.
4.3 Securities Documents and Regulatory Reports.
(a) Since April 1, 1998, Parent has timely filed with the SEC
and the NASD all Securities Documents required by the Securities Laws and such
Securities Documents complied in all material respects with the Securities Laws
and did not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
(b) Buyer has since April 1, 1998 duly filed with the
Department and any other applicable federal or state banking authority the
reports required to be filed by it under applicable laws and regulations and
such reports were in all material respects complete and accurate and in
compliance with the requirements of applicable laws and regulations. In
connection with the most recent examination of Buyer by its primary regulator,
Buyer was not required to correct or change any action, procedure or proceeding
which Buyer or Buyer Bank believes has not been corrected or changed as
required.
4.4 Financial Statements.
(a) The Parent Financial Statements fairly present the
consolidated financial condition of Parent as of the respective dates set forth
therein, and the consolidated income, changes in equity and cash flows of Parent
for the respective periods or as of the respective dates set forth therein.
(b) Each of the Parent Financial Statements has been prepared
in accordance with GAAP consistently applied during the periods involved, except
as stated therein. The audits of Parent have been conducted in accordance with
generally accepted auditing standards. The books and records of Parent, Buyer
and the Buyer Subsidiaries are being maintained in compliance with applicable
legal and accounting requirements, and all such books and records accurately
reflect all dealings and transactions in respect of the business, assets,
liabilities and affairs of Parent, Buyer and the Buyer Subsidiaries.
4.5 Material Adverse Change. Since December 31, 2000, no event has
occurred or circumstance arisen that, in the aggregate, has had or is reasonably
likely to have a Material Adverse Effect on Buyer.
4.6 Legal Proceedings. There are no actions, suits, claims,
governmental investigations or proceedings instituted, pending or, to the best
knowledge of Buyer, that are unasserted or threatened against Parent, Buyer or
any of their Subsidiaries or against any asset, interest or right of Parent,
Buyer or any of their Subsidiaries, or against any officer, director or employee
of any of them, which individually or in the aggregate could adversely affect
the ability of Buyer to consummate any of the Transactions.
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4.7 Certain Information. None of the information relating to Parent,
Buyer or their affiliates supplied or to be supplied by Buyer for inclusion in
the Proxy Statement, as of the date such Proxy Statement is mailed to
shareholders of Seller and up to and including the date of the meeting of
shareholders to which such Proxy Statement relates, will contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading, provided that information as of a later date shall be
deemed to modify information as of an earlier date.
4.8 Brokers and Finders. Except for Sandler O'Neil & Partners, L.P.,
neither Buyer nor any of its directors, officers or employees, has employed any
broker or finder or incurred any liability for any broker or finder fees or
commissions in connection with the transactions contemplated hereby.
4.9 Financial Resources. Buyer has the financial wherewithal and has,
or will have prior to the Effective Time, sufficient funds to perform its
obligations under this Agreement.
4.10 Disclosures. None of the representations and warranties of Buyer
or any of the written information or documents furnished or to be furnished by
Buyer to Seller in connection with or pursuant to this Agreement or in
connection with the completion of the Transactions, when considered as a whole,
contains or will contain any untrue statement of a material fact, or omits or
will omit to state any material fact required to be stated or necessary to make
any such information or document, in light of the circumstances, not misleading.
ARTICLE V
COVENANTS
5.1 Reasonable Best Efforts. Subject to the terms and conditions of
this Agreement, each of Seller and Buyer (a) shall use its reasonable best
efforts in good faith to take, or cause to be taken, all actions, and to do, or
cause to be done, all things necessary or advisable under applicable laws and
regulations so as to permit and otherwise enable completion of the Corporate
Merger not later than March 31, 2002, and (b) shall cooperate fully with each
other to that end.
5.2 Shareholders Meeting. Seller shall take all action necessary to
properly call and convene a meeting of its shareholders as soon as practicable
after the date hereof to consider and vote upon the adoption of this Agreement.
Subject to the receipt of an updated fairness opinion from its financial advisor
as set forth in Section 6.2(e), the Board of Directors of Seller will recommend
that the shareholders of Seller adopt this Agreement; provided that the Board of
Directors of Seller may fail to make such recommendation, or withdraw, modify or
change any such recommendation, if such Board of Directors, after having
consulted with and considered the advice of outside counsel, has determined that
the making of such recommendation, or the failure to withdraw, modify or change
such recommendation, would constitute a breach of the fiduciary duties of such
directors under applicable Delaware law.
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5.3 Regulatory Matters.
(a) Seller, with the cooperation of Buyer, shall promptly
prepare and file the Proxy Statement relating to the meeting of shareholders of
Seller and thereafter Seller shall promptly mail to its shareholders the Proxy
Statement.
(b) The Parties shall cooperate with each other and use their
reasonable best efforts to promptly prepare and file within 60 days after the
date hereof or as soon thereafter as is reasonably practicable, all necessary
documentation, to effect all applications, notices, petitions and filings, and
to obtain as promptly as practicable all permits, consents, approvals and
authorizations of all Governmental Entities and third parties which are
necessary or advisable to consummate the Transactions. Each Party shall have the
right to review in advance, and to the extent practicable each will consult with
the other on, in each case subject to applicable laws relating to the exchange
of information, all the information which appears in any filing made by the
other Party with, or written materials submitted by the other Party, to any
third party or any Governmental Entity in connection with the Transactions. In
exercising the foregoing right, each Party shall act reasonably and as promptly
as practicable. The Parties agree that they will consult with each other with
respect to the obtaining of all permits, consents, approvals and authorizations
of all third parties and Governmental Entities necessary or advisable to
consummate the Transactions and each Party will keep the other apprised of the
status of matters relating to completion of the Transactions. The Parties agree
that they will use their reasonable best efforts to cause the Closing Date to
occur not later than March 31, 2002.
(c) Each Party shall, upon request, furnish the other Party
with all information concerning itself, its Subsidiaries, directors and
officers, the shareholders of Seller and such other matters as may be reasonably
necessary or advisable in connection with any statement, filing, notice or
application made by or on behalf of any Party or its Subsidiaries to any
Governmental Entity in connection with the Transactions.
(d) Each Party shall promptly furnish the other Party with
copies of written communications received by it or any of its Subsidiaries from,
or delivered by any of the foregoing to, any Governmental Entity in respect of
the Transactions.
5.4 Investigation and Confidentiality.
(a) Seller shall permit Buyer and its representatives
reasonable access to its and its Subsidiaries properties and personnel, and
shall disclose and make available to Buyer and its representatives, all books,
papers and records relating to the assets, stock ownership, properties,
operations, obligations and liabilities of it and its Subsidiaries, including
all books of account (including the general ledger), tax records, minute books
of meetings of boards of directors (and any committees thereof) and
shareholders, organizational documents, bylaws, material contracts and
agreements, filings with any regulatory authority, accountants' work papers,
litigation files, loan files, plans affecting employees, and any other business
activities or prospects in which Buyer may have
26
a reasonable interest, provided that such access and any such request for
information shall be reasonably related to the Transactions and, in the
reasonable opinion of Seller, not unduly interfere with normal operations.
Seller may exclude Buyer from access to information relating to Seller's
consideration of Acquisition Proposals whether or not involving a Superior
Offer. Seller and its Subsidiaries shall make their respective directors,
officers, employees and agents and authorized representatives (including counsel
and independent public accountants) reasonably available to confer with Buyer
and its representatives.
(b) All information furnished previously in connection with
the Transactions contemplated by this Agreement or pursuant hereto shall be
treated as the sole property of the Party furnishing the information until
completion of the Corporate Merger and, if the Corporate Merger shall not occur,
the Party receiving the information shall either destroy or return to the Party
which furnished such information all documents or other materials containing,
reflecting or referring to such information, shall use its best efforts to keep
confidential all such information, and shall not directly or indirectly use such
information for any competitive or other commercial purposes. The obligation to
keep such information confidential shall continue for two years after the
termination of this Agreement but shall not apply to (i) any information which
(x) the Party receiving the information can establish was already in its
possession prior to the disclosure thereof by the Party furnishing the
information, (y) was then generally known to the public, or (z) became known to
the public through no fault of the Party receiving the information; or (ii)
disclosures pursuant to a legal requirement or in accordance with an order of a
court of competent jurisdiction, provided that the Party which is the subject of
any such legal requirement or order shall use its best efforts to give the other
Party at least ten business days prior notice thereof.
5.5 Press Releases. The Parties shall agree as to the form, substance
and timing of any press release related to this Agreement or the Transactions,
and consult with each other as to the form, substance and timing of other public
disclosures which may relate to the Transactions, provided, however, that
nothing contained herein shall prohibit either Party, following notification to
the other Party, from making any disclosure which is required by law or
regulation.
5.6 Business of the Parties.
(a) During the period from the date of this Agreement and
continuing until the Effective Time, except as expressly contemplated or
permitted by this Agreement or with the prior written consent of Buyer, Seller
and its Subsidiaries shall carry on their respective businesses in the ordinary
course consistent with past practice. During such period, Seller will, and will
cause each of its Subsidiaries to, use all reasonable efforts to (x) preserve
its business organization intact, (y) keep available the present services of its
employees and (z) preserve the goodwill of its customers and others with whom it
has business relationships. Without limiting the generality of the foregoing,
except with the prior written consent of Buyer (which consent under subparts
(vi), (ix) and (xiv) shall not be unreasonably withheld or delayed) or as
expressly contemplated hereby, between the date hereof and the Effective Time,
Seller shall not, and shall cause each Seller Subsidiary not to:
27
(i) declare, set aside, make or pay any dividend
or other distribution (whether in cash, stock or property or any combination
thereof) in respect of Seller Common Stock, except for regular quarterly cash
dividends at a rate per share of Seller Common Stock not in excess of $0.17 per
share (with record and payment dates to be consistent with past practices), but
only to the extent that such dividends may be funded out of current earnings,
without regard to severance costs paid by Seller or Seller Bank pursuant to
Previously Disclosed employment or change in control severance agreements or the
financial reporting expense relating to the retirement of the Seller ESOP loan
pursuant to Section 5.11(e);
(ii) issue any shares of its capital stock, other
than (i) upon exercise of Seller Options referred to in Section 3.1(a) hereof,
or issue, grant, modify or authorize any Rights; purchase any shares of Seller
Common Stock; or effect any recapitalization, reclassification, stock dividend,
stock split or like change in capitalization;
(iii) amend its Certificate of Incorporation, Bylaws
or similar organizational documents; impose, or suffer the imposition, on any
share of stock or other ownership interest held by Seller in a Subsidiary of any
lien, charge or encumbrance or permit any such lien, charge or encumbrance to
exist; or waive or release any material right or cancel or compromise any
material debt or claim;
(iv) increase the rate of compensation of any of its
directors, officers or employees, or pay or agree to pay any bonus, severance,
or change in control benefit to, or provide any other new employee benefit or
incentive to, any of its directors, officers or employees, except (i) as may be
required pursuant to Previously Disclosed commitments existing on the date
hereof, (ii) as may be required by law, or (iii) regular pay increases to
non-officer employees in the ordinary course of business consistent with past
practices;
(v) enter into or, except as may be required by law,
modify any Seller Employee Plan or other employee benefit, incentive or welfare
contract, plan or arrangement, or any trust agreement related thereto, in
respect of any of its directors, officers or employees; or make any
contributions to any qualified Seller Employee Plan including the Seller ESOP
(other than as required by law or regulation or in a manner and amount
consistent with past practices);
(vi) except for any loans pursuant to legally binding
commitments in effect on the date of this Agreement that have been Previously
Disclosed, originate or purchase any loan other than (A) a brokered loan
pursuant to a commitment Previously Disclosed and existing on the date hereof,
(B) an unsecured loan not in excess of $50,000, (C) a loan secured by a first
trust or mortgage on a one- to four-family residential property not in excess of
$350,000 or (D) a loan secured by a first trust or mortgage on commercial real
property not in excess of $400,000;
(vii) enter into (A) any transaction, agreement,
arrangement or commitment not made in the ordinary course of business, (B) any
agreement, indenture or other instrument relating to the borrowing of money by
Seller or a Subsidiary or guarantee by Seller or any Seller
28
Subsidiary of any such obligation, except in the case of Seller Bank for
deposits, FHLB advances, federal funds purchased and securities sold under
agreements to repurchase in the ordinary course of business consistent with past
practice, (C) any agreement, arrangement or commitment relating to the
employment of an employee or consultant, or amend any such existing agreement,
arrangement or commitment; or (D) any contract, agreement or understanding with
a labor union;
(viii) change any of its methods of accounting,
except as required by changes in laws or regulations or GAAP, or change any of
its methods of reporting income and deductions for federal income tax purposes
from those employed in the preparation of its last federal income tax return,
except as required by changes in laws or regulations;
(ix) make any expenditures in excess of $30,000
individually or $50,000 in the aggregate, other than pursuant to binding
commitments existing on the date hereof and expenditures necessary to maintain
existing assets in good repair; or enter into any new agreement or renew any
existing agreement that involves an annual expenditure in excess of $15,000,
unless such agreement may be terminated at any time by Seller or a Seller
Subsidiary without penalty or premium upon not more than 60 days' advance
written notice;
(x) file any applications or make any contract with
respect to branching or site location or relocation;
(xi) acquire in any manner whatsoever (other than to
realize upon collateral for a defaulted loan) control over or any equity
interest in any business or entity, except for investments in readily marketable
equity securities in the ordinary course of business and not exceeding 5% of the
outstanding shares of any class;
(xii) enter or agree to enter into any agreement or
arrangement granting any preferential right to purchase any of its assets or
rights or requiring the consent of any party to the transfer and assignment of
any such assets or rights;
(xiii) except as necessitated in the reasonable
opinion of Seller due to changes in interest rates, and in accordance with safe
and sound banking practices, change or modify in any material respect any of its
lending or investment policies, except to the extent required by law or an
applicable regulatory authority;
(xiv) enter into any futures contract, option
contract, interest rate caps, interest rate floors, interest rate exchange
agreement or other agreement for purposes of hedging the exposure of its
interest-earning assets and interest-bearing liabilities to changes in market
rates of interest;
(xv) knowingly take any action that would result in
any of the representations and warranties of Seller contained in this Agreement
not to be true and correct in any
29
material respect at the Effective Time or that would cause any of the conditions
of Sections 6.1 or 6.3 hereof not to be satisfied;
(xvi) knowingly take any action that would materially
impede or delay the completion of the Transactions or the ability of any Party
to perform its covenants and agreements under this Agreement;
(xvii) materially increase or decrease the rate of
interest paid on time deposits, or on certificates of deposit, except in a
manner and pursuant to policies consistent with past practices; or
(xviii) agree to do any of the foregoing.
(b) Seller shall promptly notify Buyer in writing of the
occurrence of any matter or event known to and directly involving Seller or any
of its Subsidiaries that has had or is reasonably likely to have, either
individually or in the aggregate, a Material Adverse Effect on Seller.
(c) Except with the prior written consent of Seller or as
expressly contemplated hereby, between the date hereof and the Effective Time,
Buyer shall not, and shall cause each Buyer Subsidiary not to:
(i) knowingly take any action that would result
in any of the representations and warranties of Buyer contained in this
Agreement not to be true and correct in any material respect at the Effective
Time or that would cause any of the conditions of Sections 6.1 or 6.2 hereof not
to be satisfied;
(ii) knowingly take any action that would materially
impede or delay the receipt of any necessary regulatory approvals or the
completion of the Transactions contemplated by this Agreement or the ability of
either Party to perform its covenants and agreements under this Agreement; or
(iii) agree to do any of the foregoing.
(d) Notwithstanding the foregoing, Seller shall cause Seller
Bank to close its New Jersey loan production office at the earliest practicable
time.
5.7 Certain Actions.
(a) Seller shall not, and shall cause each Seller Subsidiary
not to, solicit or encourage inquiries or proposals with respect to, furnish any
information relating to, or participate in any negotiations or discussions
concerning, any acquisition, purchase of all or a substantial portion of the
assets of, or any equity interest in, Seller or a Subsidiary (other than with
Buyer or an affiliate thereof), provided, however, that the Board of Directors
of Seller may furnish such information or
30
participate in such negotiations or discussions if such Board of Directors,
after having consulted with and considered the advice of outside counsel, has
determined that the failure to do the same would constitute a breach of
fiduciary duties of such directors under applicable Delaware law. Seller will
promptly inform Buyer orally and in writing of any such request for information
or of any such negotiations or discussions, as well as instruct its and its
Subsidiaries' directors, officers, representatives and agents to refrain from
taking any action prohibited by this Section 5.7(a).
(b) In the event that the Board of Directors of Seller
believes in good faith, after consultation with its financial advisor and
outside counsel, that it has received a Superior Offer, it shall notify Buyer in
writing of its intent to terminate this Agreement. Such notice shall specify all
of the terms and conditions of such Superior Offer and identify the person
making such Superior Offer. Buyer shall have two business days to evaluate and
respond to the Seller notice. If Buyer does not agree in writing prior to the
expiration of the two business day period provided above to increase the Merger
Consideration to an amount at least equal to that of such Superior Offer (the
"New Merger Consideration"), then Seller shall be permitted to terminate this
Agreement pursuant to Section 7.1(g). In the event that Buyer does provide
written notice to Seller to increase the Merger Consideration to the New Merger
Consideration, such written notice shall constitute a contractual offer by Buyer
("Buyer's Proposal") which shall be deemed accepted by Seller unless rejected by
Seller as set forth in Section 5.7(d) below. Seller shall have two business days
to evaluate Buyer's Proposal.
(c) In the event the Superior Offer involves consideration to
Seller's shareholders consisting of securities, in whole or in part, the New
Merger Consideration shall be deemed to be at least equal to the Superior Offer,
if Buyer's Proposal offers cash consideration that equals or exceeds the
consideration being offered to Seller's shareholders in the Superior Offer
valuing any securities forming a part of the Superior Offer at its cash
equivalent based upon (i) the average trading price of such securities for the
20 trading days immediately preceding the date of Buyer's Proposal or (ii) the
written valuation of such securities by a nationally recognized investment
banking firm selected by Buyer if such securities are not traded on a nationally
recognized exchange or will be newly issued securities that are not of a class
then trading on a nationally recognized exchange. Any written valuation shall be
attached as an Exhibit to Buyer's Proposal.
(d) In the event that the Board of Directors of Seller
believes in good faith, after consultation with its financial advisor, that the
New Merger Consideration is not at least equal to the Superior Offer, then
Seller can terminate this Agreement pursuant to Section 7.1(g).
5.8 Current Information. During the period from the date hereof to the
Effective Time, Seller shall, upon the request of Buyer, cause one or more of
its designated representatives to confer on a monthly or more frequent basis
with representatives of Buyer regarding Seller's consolidated financial
condition, operations and business and matters relating to the completion of the
Transactions. As soon as reasonably available, but in no event more than two
business days after filing, Seller will deliver to Buyer all reports filed by it
under the Exchange Act subsequent to the date hereof. Seller also will deliver
to Buyer each call report or similar report filed by it or Seller
31
Bank with the FDIC or the OTS concurrently with the filing of such call report.
Within 25 days after the end of each month, Seller will deliver to Buyer an
unaudited consolidated balance sheet and an unaudited consolidated statement of
income, without related notes, for such month prepared in accordance with GAAP.
5.9 Indemnification; Insurance.
(a) From and after the Effective Time, the past and present
directors and officers of Seller and its Subsidiaries (the "Indemnified
Parties") shall be entitled to indemnification from Parent or Buyer as set forth
below. If the Indemnified Party is a past or present director or officer of
Seller, such Indemnified Party shall be indemnified by Parent for his or her
past acts or omissions occurring prior to the Effective Time to the same extent
that he or she is indemnified under the Certificate of Incorporation or Bylaws
of Seller as in effect on the date of this Agreement. If the Indemnified Party
is a past or present director or officer of a Seller Subsidiary including Seller
Bank, such Indemnified Party shall be indemnified by Buyer for his or her past
acts or omissions occurring prior to the Effective Time to the maximum extent
permitted by Buyer's Charter and Bylaws subject to any restrictions imposed by
applicable law or regulation. The foregoing indemnification shall remain in
effect for a period of six years following the Effective Time. Buyer or Parent
will provide, or cause to be provided, for a period of not less than three years
from the Effective Time, an insurance and indemnification policy that provides
to those officers and directors of Seller and its Subsidiaries immediately prior
to the Effective Time coverage no less favorable than as currently provided by
Seller to such officers and directors, to the extent such insurance may be
purchased or kept in full force without any material increase in the cost of the
premium currently paid by Buyer for its directors' and officers' liability
insurance (provided, Buyer or Parent may substitute or cause Seller to
substitute therefor to the extent available at a cost not in excess of 150% of
the current annual premium cost of Seller's existing directors and officers'
insurance, single premium tail coverage with policy limits equal to Seller's
existing annual coverage limits). At the request of Buyer, Seller shall use
reasonable efforts to procure the insurance coverage referred to in the
preceding sentence prior to the Effective Time.
(b) To induce Seller to enter into this Agreement, Parent has
agreed to execute this Agreement as an accommodation party for the sole purpose
of agreeing to be bound by the terms of this Section 5.9.
(c) In the event that Parent or Buyer or any of its respective
successors or assigns (i) consolidates with or merges into any other person and
shall not be the continuing or surviving corporation or entity of such
consolidation or merger or (ii) transfers all or substantially all of its
properties and assets to any person, then, and in each such case the successors
and assigns of such entity shall assume the obligations set forth in this
Section 5.9, which obligations are expressly intended to be for the irrevocable
benefit of, and shall be enforceable by, each director and officer covered
hereby.
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5.10 Early Completion of Bank Merger. If the Bank Merger shall be
completed prior to March 17, 2002, then at or immediately prior to consummation
of the Bank Merger Xxxxxxxx Xxxxxxx shall be elected as a director of Buyer for
a term ending as of the close of business on March 17, 2002.
5.11 Employees and Employee Benefit Plans.
(a) Except as otherwise provided herein, full time employees
of Seller and Seller Bank who remain employed by Buyer after the Effective Time
will be eligible to participate in benefit plans of Buyer that are generally
available to its full-time employees on a uniform and non-discriminatory basis
in accordance with and subject to the terms and provisions of such benefit
plans, with credit for years of service with Seller or Seller Bank for the
purpose of determining eligibility for participation, vesting and entitlement to
vacation time and sick pay (but not for the purpose of accrual or restoration of
benefits under any existing or future benefit plan of Buyer where benefits are
calculated on an actuarial basis, including any qualified or non-qualified
defined benefit plan or restoration plan). Contributions to (and accrual of
benefits, to the extent applicable, if any, under) benefit plans of Buyer on
behalf of continuing full-time employees of Seller and Seller Bank shall only
relate to qualifying compensation earned by such employees after the Effective
Time subject to the terms and provisions of such benefit plans. Notwithstanding
anything contained above, continuing full time employees of Seller and Seller
Bank (i) shall not be entitled to any past service credit for their prior
employment for any purposes whatsoever with respect to any post-termination or
post-retirement welfare benefits of Buyer; and (ii) shall not be eligible to
participate in the Buyer benefit restoration plan or any qualified plan of Buyer
or any of its Subsidiaries (other than the 401(k) plan of Buyer into which the
Seller Bank 401(k) plan has been merged) until the entry date occurring on April
1, 2003. Buyer shall use its best efforts to cause any and all pre-existing
condition limitations (to the extent such limitations did not apply to a
pre-existing condition under the corresponding Seller group health plan) and
eligibility waiting periods under its group health plans to be waived with
respect to such participants and their eligible dependents.
(b) To the extent that Buyer terminates the employment of any
full time employee of Seller or Seller Bank other than for Cause within six
months following the Effective Time, Buyer shall, provide severance benefits in
a cash amount equal to such employee's regular salary for a one-week period (as
in effect immediately prior to the Effective Time) multiplied by the total
number of whole years of such employee's employment (up to a maximum of eight
years) at Seller or Seller Bank; provided, however that in no event shall Buyer
have any obligation to provide severance benefits to any Seller or Seller Bank
employee whose termination of employment occurs due to resignation or discharge
for Cause or who is entitled to severance benefits or the equivalent thereof
under the terms of any other compensation plan or individual contract with
Seller or Seller Bank.
(c) Buyer agrees to honor the payout terms of all Previously
Disclosed employment, change in control severance, deferred compensation and
supplemental executive retirement agreements. Buyer agrees to expressly assume
every such agreement which by its terms requires express assumption by a
successor to Buyer. Such express assumption shall occur without
33
further action by Buyer upon the completion of the Corporate Merger. On or
before the Effective Time, Seller or Seller Bank shall payout to each director
of the Seller or Seller Bank any amounts deferred under the Seller's directors'
deferred compensation agreements.
(d) Payments made by Seller in full and complete satisfaction
of obligations of Seller or Seller Bank under any Seller Employee Plan or under
any agreement referred to in Section 5.11(b) or (c) shall be subject to the
recipient's delivery to Seller or Buyer of (i) a written acknowledgment signed
by such recipient that the payment or payments and benefits to be made to him or
her is in full and complete satisfaction of all liabilities and obligations
thereunder of Seller, Seller Bank and/or Buyer, and each of their respective
affiliates, directors, officers, employees and agents, and (ii) a release by
such recipient of all such parties from further liability in connection with the
particular Seller Employee Plan or agreement, as applicable.
(e) As of the Effective Time, the Seller ESOP shall be
terminated in accordance with its terms. Prior to the Effective Time, the Seller
shall be permitted to make such changes to the Seller ESOP as it deems
appropriate to carry out the provisions of this subsection and shall file a
request for determination with the IRS with respect to the termination of the
Seller ESOP. Any cash received by the Seller ESOP trustee in connection with the
Corporate Merger with respect to the unallocated shares of Seller Common Stock
shall be first applied by the Seller ESOP trustee to the full repayment of the
Seller ESOP loan. The balance of the cash (if any) received by the Seller ESOP
trustee in connection with the Corporate Merger with respect to the unallocated
shares of Seller Common Stock shall be allocated to the accounts of all
participants in the Seller ESOP who have accounts remaining under the Seller
ESOP (whether or not such participants are then actively employed) and
beneficiaries in proportion to the account balances of such participants and
beneficiaries as they exist as of the Effective Time as earnings, unless
otherwise required to be allocated as annual additions subject to the
limitations of Section 415 of the Code. As soon as practicable after receipt of
a favorable determination letter from the IRS with respect to termination, the
assets of the Seller ESOP shall be distributed to participants and beneficiaries
or transferred to an eligible individual retirement account as a participant or
beneficiary may direct. Neither Seller nor any Seller Subsidiary shall be
entitled to make any contributions to the Seller ESOP or payments on the Seller
ESOP loan, except required contributions and payments for calendar year 2001. At
no time shall Seller or any Seller Subsidiary make any prepayments on the Seller
ESOP loan.
(f) At the Effective Time, the Seller Bank 401(k) plan shall
be continued in effect, provided that Buyer may elect to terminate the Seller
Bank 401(k) plan or merge it with a tax-qualified plan maintained by Buyer; and
provided further, that at the request of Buyer, Seller shall cause the Seller
Bank 401(k) plan to be terminated at or immediately prior to the Effective Time
in accordance with applicable law and in a manner that will not result in the
imposition of any liability or responsibility upon Buyer or any of its
Subsidiaries.
5.12 Organization of Merger Sub. Buyer shall cause Merger Sub to be
organized under the DGCL as soon as practicable hereafter. Following the
organization, the Board of Directors of Merger Sub shall approve this Agreement
and the Corporate Merger, whereupon Merger Sub shall
34
become a party to, and be bound by, this Agreement, and Buyer shall approve this
Agreement in its capacity as the sole stockholder of Merger Sub.
5.13 Conforming Entries.
(a) The Parties recognize that Buyer and Seller Bank may have
adopted different loan, accrual and reserve policies (including loan
classifications and levels of reserves for possible loan losses). Subject to
applicable laws, from and after the date of this Agreement to the Effective
Time, the Parties shall consult and cooperate with each other with respect to
conforming the loan, accrual and reserve policies of Seller Bank to those
policies of Buyer, as specified in each case in writing to Seller, based upon
such consultation and subject to the conditions in Section 5.13(c) below.
(b) Subject to applicable laws and regulations, the Parties
shall consult and cooperate with each other with respect to determining, as
specified in a written notice from Buyer to Seller, based upon such consultation
and subject to the conditions in Section 5.13(c) below, the amount and the
timing for recognizing for financial accounting purposes Seller's expenses of
the Transactions and the restructuring charges relating to or to be incurred in
connection with the Transactions.
(c) Subject to applicable laws and regulations, Seller shall
(i) establish and take such reserves and accruals at such time as Buyer shall
reasonably request to conform Seller Bank's loan, accrual and reserve policies
to Buyer's policies, and (ii) establish and take such accruals, reserves and
charges in order to implement such policies and to recognize for financial
accounting purposes such expenses of the Transactions and restructuring charges
related to or to be incurred in connection with the Transactions, in each case
at such times as are reasonably requested by Buyer; provided, however, that on
the date such reserves, accruals and charges are to be taken, Buyer shall
certify to Seller that all conditions to Buyer's obligation to consummate the
Corporate Merger set forth in Sections 6.1 and 6.3 hereof (other than the
delivery of certificates, opinions and other instruments and documents to be
delivered at the Closing or otherwise to be dated at the Effective Time, the
delivery of which shall continue to be conditions to Buyer's obligation to
consummate the Corporate Merger) have been satisfied or waived; and provided,
further, that Seller shall not be required to take any such action that is not
consistent with GAAP and regulatory accounting principles.
(d) No reserves, accruals or charges taken in accordance with
this Section 5.13 may be a basis to assert a violation of a breach of a
representation, warranty or covenant of Seller herein.
5.14 Integration of Policies. During the period from the date hereof to
the Effective Time, Seller shall cause its and Seller Bank's directors, officers
and employees to, and shall make all reasonable efforts to cause Seller Bank's
data processing service providers to, cooperate and assist Buyer in connection
with an electronic and systematic conversion of all applicable data regarding
35
Seller Bank to Buyer's system of electronic data processing. In furtherance of
the foregoing, Seller shall cause Seller Bank to make reasonable arrangements
during normal business hours to permit representatives of Buyer to train Seller
Bank employees in Buyer's system of electronic data processing.
5.15 Disclosure Supplements. From time to time prior to the Effective
Time, each Party shall promptly supplement or amend any materials Previously
Disclosed and delivered to the other Party pursuant hereto with respect to any
matter hereafter arising which, if existing, occurring or known at the date of
this Agreement, would have been required to be set forth or described in
materials Previously Disclosed to the other Party or which is necessary to
correct any information in such materials which has been rendered materially
inaccurate thereby. No such supplement or amendment to such materials shall be
deemed to have modified the representations, warranties and covenants of the
parties for the purpose of determining whether the conditions set forth in
Article VI hereof have been satisfied.
5.16 Failure to Fulfill Conditions. If a Party determines that a
condition to its obligations to consummate the Transactions may not be
fulfilled, it will promptly notify the other Party. Each Party will promptly
inform the other Party of any facts applicable to it that would be likely to
prevent or materially delay approval of any of the Transactions by any
Governmental Entity or third party or which would otherwise prevent or
materially delay completion of any of the Transactions.
5.17 Environmental Reports. Unless Buyer provides Seller with a reduced
list of real properties within ten days after the date of this Agreement, Seller
shall provide to Buyer, as soon as reasonably practical, but not later than 30
days after the date hereof (or within ten days after the acquisition of lease of
any real property acquired or leased after the date hereof), a report of a phase
one environmental investigation on real property owned or leased by Seller or
its Subsidiaries (but excluding space in office or retail and similar
establishments leased by Seller or its subsidiaries for automatic teller
machines or bank branch facilities or other office uses where the space leased
comprises less than 20% of the total space leased to all tenants of such
property). If required by the phase one investigation in Buyer's reasonable
opinion, Seller shall provide to Buyer, within 60 days of the receipt by Seller
of the request of Buyer therefor, a report of a phase two investigation on
properties requiring such additional study. Buyer shall have seven business days
from receipt of any phase one investigation report to request Seller to obtain a
phase two investigation report with respect to such real property. Buyer shall
have seven business days from the receipt of any such phase two investigation
report to notify Seller of any dissatisfaction with the contents of such report.
Should the cost of taking all remedial or other corrective actions and measures
(i) required by applicable law or reasonably likely to be required by applicable
law, or (ii) recommended or suggested by such report or reports or prudent in
light of serious life, health or safety concerns, in the aggregate, exceed the
sum of $500,000 as reasonably estimated by an environmental expert retained for
such purpose by Buyer and reasonably acceptable to Seller, or if the cost of
such actions and measures cannot be so reasonably estimated by such expert to be
such amount or less with any reasonable degree of certainty, then Buyer shall
have the right pursuant to Section 7.1(h) hereof, for a period of ten business
days following receipt of such estimate or indication that the cost of such
36
actions and measures can not be so reasonably estimated, to terminate this
Agreement, which shall be Buyer's sole remedy in such event. The costs of the
phase one investigations, if any, shall be borne by Seller. The costs of the
phase two investigations, if any, shall be borne by Buyer.
5.18 Litigation Matters. Seller will consult with Buyer about any
proposed settlement, or any disposition of, any litigation to which Seller or
any of its Subsidiaries is a party.
5.19 Liquidated Damages. Due to expenses, direct and indirect, incurred
by Buyer in negotiating and executing this Agreement and in taking steps to
effect the Transactions, the loss by it of other opportunities, and as material
inducement for Buyer agreeing to enter into this Agreement, Seller shall pay to
Buyer, agreed upon cash liquidated damages of three million dollars, within five
business days after written demand for payment is made by Buyer, following the
occurrence of any of the events set forth below:
(a) Buyer terminates this Agreement pursuant to Section
7.1(f);
(b) Seller terminates this Agreement pursuant to Section
7.1(g);
(c) either Party terminates this Agreement pursuant to Section
7.1(e) if prior thereto Seller's shareholders meeting has not been held to vote
on the adoption of this Agreement; or
(d) the entering into a definitive agreement by Seller or
Seller Bank relating to an Acquisition Proposal or the consummation of an
Acquisition Proposal involving Seller or Seller Bank within 18 months after the
termination of this Agreement if (i) an Acquisition Proposal occurs prior to the
applicable event described in subpart (ii) hereof and (ii) either of the
following occurs: (x) the termination of this Agreement by Buyer pursuant to
Section 7.1(b) or (y) the failure of the shareholders of Seller to adopt this
Agreement at the Seller's shareholders meeting held to vote on this Agreement.
If demand for payment of cash liquidated damages is made pursuant to
this Section 5.19 and payment is timely made, then Buyer will have any other
rights or claims against Seller under this Agreement, it being agreed that the
acceptance of cash liquidated damages under this Section 5.19 will constitute
the sole and exclusive remedy of Buyer against Seller.
5.20 Sale of Loans by Seller Bank. At any time prior to the Closing,
Seller and Seller Bank shall be permitted to sell, assign, convey, transfer or
dispose of, in the ordinary course of business those Previously Disclosed loans
(including Previously Disclosed approved loans which subsequently close) of
Seller Bank's New Jersey Loan Production Office for a cash purchase price for
each applicable loan equal to its unpaid principal balance plus accrued
interest. To the extent that any such loans have not been sold at the Effective
Time, then Xxxxxxxx Xxxxxxx shall have the right during the eighteen month
period next following the Effective Time (but excluding any period during
37
which he is a director of Buyer) to purchase any of such remaining loans for a
cash purchase price for each applicable loan equal to its unpaid principal
balance plus accrued interest.
ARTICLE VI
CONDITIONS PRECEDENT
6.1 Conditions Precedent - The Parties. The obligations of each Party
to effect the Corporate Merger shall be subject to satisfaction of the following
conditions at or prior to the Effective Time.
(a) The adoption of this Agreement by the requisite vote
of the shareholders of Seller.
(b) All approvals and consents from any Governmental
Entity the approval or consent of which is required for the completion of the
Transactions shall have been received and all statutory waiting periods in
respect thereof shall have expired; and the Parties shall have procured all
other approvals, consents and waivers of each person (other than the
Governmental Entities referred to above) whose approval, consent or waiver is
necessary to the completion of the Transactions and the failure of which to
obtain would have the effects set forth in the following proviso clause;
provided, however, that no approval or consent referred to in this Section
6.1(b) shall be deemed to have been received if it shall include any condition
or requirement that, in the aggregate, would so materially reduce the economic
or business benefits of the Transactions to Buyer that had such condition or
requirement been known, Buyer, in its reasonable judgment, would not have
entered into this Agreement.
(c) None of Buyer, Seller or Seller Bank shall be
subject to any statute, rule, regulation, injunction or other order or decree
which shall have been enacted, entered, promulgated or enforced by any
governmental or judicial authority which prohibits, restricts or makes illegal
completion of the Transactions.
(d) No proceeding initiated by any Governmental Entity
seeking an order, injunction or decree issued by any court or agency of
competent jurisdiction or other legal restraint or prohibition preventing the
completion any of the Transactions shall be pending.
6.2 Conditions Precedent - Seller. The obligations of Seller to effect
the Corporate Merger shall be subject to satisfaction of the following
conditions at or prior to the Effective Time unless waived by Seller pursuant to
Section 7.4 hereof.
(a) The representations and warranties of Buyer set forth
in Article IV hereof shall be true and correct in all material respects as of
the date of this Agreement and such representations and warranties shall,
subject to the MAE Qualification, be true and correct as of the Closing Date as
though made anew on and as of the Closing Date, unless the representation and
warranty specifically relates to an earlier date.
38
(b) Buyer shall have performed in all material respects
all obligations and complied with all covenants required to be performed and
complied with by it pursuant to this Agreement on or prior to the Effective
Time.
(c) Buyer shall have delivered to Seller a certificate,
dated the date of the Closing and signed by its President and Chief Executive
Officer and by its Chief Financial Officer, to the effect that the conditions
set forth in Sections 6.2(a) and 6.2(b) have been satisfied.
(d) Buyer shall have furnished Seller with such
certificates of its officers or others and such other documents to evidence
fulfillment of the conditions set forth in Sections 6.1 and 6.2 as such
conditions relate to Buyer as Seller may reasonably request.
(e) Seller shall have received, as of the date of the Proxy
Statement, or as of a date not more than five business days prior thereto, an
updated written opinion of its financial advisor that the consideration to be
received by the shareholders of Seller in the Corporate Merger is fair from a
financial point of view.
6.3 Conditions Precedent - Buyer. The obligations of Buyer to effect
the Corporate Merger shall be subject to satisfaction of the following
conditions at or prior to the Effective Time unless waived by Buyer pursuant to
Section 7.4 hereof.
(a) The representations and warranties of Seller set forth in
Article III hereof shall be true and correct in all material respects as of the
date of this Agreement and such representations and warranties shall, subject to
the MAE Qualification, be true and correct as of the Closing Date as though made
anew on and as of the Closing Date, unless the representation and warranty
specifically relates to an earlier date.
(b) Seller shall have performed in all material respects all
obligations and complied with all covenants required to be performed and
complied with by it pursuant to this Agreement on or prior to the Effective
Time.
(c) Seller shall have delivered to Buyer a certificate, dated
the date of the Closing and signed by its President and Chief Executive Officer
and by its Chief Financial Officer, to the effect that the conditions set forth
in Sections 6.3(a) and 6.3(b) have been satisfied.
(d) Seller shall have furnished Buyer with such certificates
of its officers or others and such other documents to evidence fulfillment of
the conditions set forth in Sections 6.1 and 6.3 as such conditions relate to
Seller as Buyer may reasonably request.
(e) No more than 10% of the outstanding shares of Seller
Common Stock shall be Dissenting Shares.
39
ARTICLE VII
TERMINATION, WAIVER AND AMENDMENT
7.1 Termination. This Agreement may be terminated by a written
instrument prior to the Effective Time:
(a) by the mutual consent of the Boards of Directors of the
Parties;
(b) by the Board of Directors of the non-breaching Party if
the other Party has breached in any material respect any of its covenants,
agreements or representations and warranties, and such breach has not been cured
within 30 days after written notice;
(c) by the Board of Directors of either Party, (i) if any
Governmental Entity of competent jurisdiction shall have issued a final
nonappealable order prohibiting the completion of the Transactions or (ii) if
application for any necessary prior approval of a Governmental Entity is denied
or withdrawn at the request or recommendation of the Governmental Entity,
provided that such denial or request or recommendation for withdrawal is not due
to the terminating Party's breach of any provision of this Agreement;
(d) by the Board of Directors of either Party if the
shareholders of Seller fail to adopt this Agreement at Seller's shareholders
meeting held to vote on this Agreement;
(e) by the Board of Directors of either Party if the Effective
Time has not occurred by the close of business on June 30, 2002, provided that
the terminating Party is not then in breach in any material respect of any of
its covenants, agreements or representations and warranties herein;
(f) by the Board of Directors of Buyer if Seller's Board of
Directors either (i) fails to recommend, or fails to continue its
recommendation, that the shareholders of Seller vote in favor of the adoption of
this Agreement, or (ii) modifies, withdraws or changes in any manner adverse to
Buyer its recommendation that the shareholders of Seller vote in favor of the
adoption of this Agreement, unless the shareholders of Seller adopt this
Agreement;
(g) by the Board of Directors of Seller within ten business
days after Seller has received a Superior Offer if either of the following shall
have occurred: (i) Buyer does not timely tender Buyer's Proposal increasing the
Merger Consideration to the New Merger Consideration or (ii) Buyer does timely
tender Buyer's Proposal but the Board of Directors of Seller determines pursuant
to Section 5.7(d) that the New Merger Consideration is not at least equal to the
Superior Offer; or
(h) by the Board of Directors of Buyer to the extent permitted
by Section 5.17.
40
Any termination of this Agreement by Buyer pursuant to Section 7.1(f)
shall be controlling over any termination by Seller pursuant to Section 7.1(d),
in which case the termination by Seller pursuant to said Section 7.1(d) shall be
disregarded.
7.2 Effect of Termination. In the event that this Agreement is
terminated pursuant to Section 7.1 hereof, this Agreement shall become void and
have no effect, except that (A) the provisions relating to confidentiality set
forth in Section 5.4(b), liquidated damages set forth in Section 5.19, expenses
set forth in Section 8.1 and this Section 7.2, shall survive any such
termination and (b) a termination pursuant to Section 7.1(b) shall not (except
as provided in Section 5.19) relieve the breaching Party from any liability or
damages arising out of its willful breach of any provision of this Agreement
giving rise to such termination.
7.3 Survival of Representations, Warranties and Covenants. All
representations, warranties, agreements and covenants in this Agreement or in
any instrument delivered pursuant hereto or thereto shall expire on, and be
terminated and extinguished at, the Effective Time other than covenants that by
their terms are to be performed after the Effective Time, provided that no such
representations, warranties or covenants shall be deemed to be terminated or
extinguished so as to deprive either Party (or any director, officer or
controlling person of either Party) of any defense at law or in equity which
otherwise would be available against the claims of any person, including any
shareholder or former shareholder of either Party.
7.4 Waiver. Each Party by written instrument approved by its Board of
Directors and signed by an executive officer of such Party, may at any time
(whether before or after adoption of this Agreement by the shareholders of
Seller) extend the time for the performance of any of the obligations or other
acts of the other Party hereto and may waive (a) any inaccuracies of the other
Party in the representations or warranties contained in this Agreement or any
document delivered pursuant hereto, (b) compliance with any of the covenants,
undertakings or agreements of the other Party, (c) to the extent permitted by
law, satisfaction of any of the conditions precedent to its obligations
contained herein or (d) the performance by the other Party of any of its
obligations set forth herein, provided that any such waiver granted, or any
amendment or supplement pursuant to Section 7.5 hereof executed after
shareholders of Seller have adopted this Agreement, shall not modify either the
amount or form of the consideration to be provided hereby to the holders of
Seller Common Stock upon completion of the Corporate Merger or otherwise
materially adversely affect such shareholders without the approval of the
shareholders who would be so affected.
7.5 Amendment or Supplement. This Agreement may be amended or
supplemented at any time by mutual agreement of the parties hereto, subject to
the proviso to Section 7.4 hereof. Any such amendment or supplement must be in
writing and authorized by or under the direction of the Board of Directors of
each of the Parties.
7.6 Specific Performance. Except as set forth at Section 5.19, the
Parties acknowledge and agree that the Transactions contemplated herein are
unique and that any remedy at law for breach is inadequate to compensate the
aggrieved Party. Accordingly, each Party shall have the right to seek
41
specific performance of this Agreement and the other Party's duties,
obligations, covenants and agreements herein in order to cause the Transactions
to be consummated. To this end, each Party, to the extent permitted by law,
irrevocably waives any defense it might have based on the adequacy of a remedy
at law which might be asserted as a bar to specific performance or any other
equitable relief.
ARTICLE VIII
MISCELLANEOUS
8.1 Expenses. Each Party shall bear and pay all costs and expenses
incurred by it in connection with the Transactions, including fees and expenses
of its own financial advisors, accountants and counsel.
8.2 Entire Agreement. This Agreement contains the entire agreement
among the Parties with respect to the Transactions and supersede all prior
arrangements or understandings with respect thereto, written or oral, other than
documents referred to herein. The terms and conditions of this Agreement shall
inure to the benefit of and be binding upon the Parties and their respective
successors. Nothing in this Agreement, expressed or implied, is intended to
confer upon any person, other than the Parties, and their respective successors,
any rights, remedies, obligations or liabilities other than as set forth in
Sections 5.9, 5.11, and 5.20 hereof.
8.3 No Assignment. No Party may assign any of its rights or obligations
under this Agreement.
8.4 Notices. All notices or other communications which are required or
permitted hereunder shall be in writing and sufficient if delivered personally,
telecopied (with confirmation) or sent by overnight mail service or by
registered or certified mail (return receipt requested), postage prepaid,
addressed as follows:
If to Buyer:
Xxxxxx River Bancorp, Inc.
Xxx Xxxxxx Xxxx Xxxxxx
Xxxxxx, Xxx Xxxx 00000
Attn: Xxxx X. Xxxxxx
Fax: (000) 000-0000
With a required copy to:
Silver, Xxxxxxxx & Xxxx, L.L.P.
0000 Xxx Xxxx Xxxxxx, X.X.
Xxxxxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxxx, P.C. or
Xxxxx X. Xxxx, P.C.
Fax: (000) 000-0000
42
If to Seller:
Ambanc Holding Co., Inc.
00 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxx 00000
Attn: Xxxx X. Xxxxxxx
Fax: (000) 000-0000
With a required copy to:
Xxxxxxx Spidi & Xxxxx, PC
0000 Xxx Xxxx Xxxxxx, X.X.
Suite 340, West Tower
Washington, D.C. 20005
Attn: Xxxx X. Spidi, Esq.
Fax: (000) 000-0000
8.5 Alternative Structure. Notwithstanding any provision of this
Agreement to the contrary, Buyer may at any time modify the structure of the
acquisition of Seller set forth herein, provided that (a) the consideration to
be paid to the holders of Seller Common Stock is not thereby changed in kind or
reduced in amount as a result of such modification and (b) such modification
will not materially delay or jeopardize receipt of any required approvals of
Governmental Entities or any other condition to the obligations of Buyer set
forth in Sections 6.1 and 6.3 hereof.
8.6 Interpretation. The captions contained in this Agreement are for
reference purposes only and are not part of this Agreement.
8.7 Counterparts. This Agreement may be executed in any number of
counterparts, and each such counterpart shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
agreement.
8.8 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware applicable to agreements made
and entirely to be performed within such jurisdiction.
8.9 Severability. Any term, provision, covenant or restriction
contained in this Agreement held to be invalid, void or unenforceable, shall be
ineffective to the extent of such invalidity, voidness or unenforceability, but
neither the remaining terms, provisions, covenants or restrictions contained in
this Agreement nor the validity or enforceability thereof in any other
jurisdiction shall be affected or impaired thereby. Any term, provision,
covenant or restriction contained in this Agreement that is so found to be so
broad as to be unenforceable shall be interpreted to be as broad as is
enforceable.
43
IN WITNESS WHEREOF, the Parties have caused this Agreement to be
executed in counterparts by their duly authorized officers and attested by their
officers thereunto duly authorized, all as of the day and year first above
written.
AMBANC HOLDING CO., INC.
Attest:
/s//Xxxxxx Xxxxx By: /s/Xxxx X. Xxxxxxx
- -------------------------- ----------------------------------------
Secretary President
XXXXXX RIVER BANK & TRUST COMPANY
Attest:
/s/Xxxxx X. Rapplayea By: /s/Xxxx X. Xxxxxx
- -------------------------- ----------------------------------------
Secretary President
To induce Ambanc Holding Co., Inc. to enter into the foregoing
agreement, the undersigned does hereby agree to be bound by the terms of Section
5.9 of the foregoing agreement as such terms are applicable to it; and the
undersigned certifies that it has taken all necessary corporate action to
approve the execution and delivery of this undertaking by it and the performance
thereof by it and that no other approvals or consents are required on its part
relative thereto.
XXXXXX RIVER BANCORP, INC.
By: /s/Xxxx X. Xxxxxx
------------------------------------------
President
Date: September 4, 2001
------------------------------------------
