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AGREEMENT AND PLAN OF COMBINATION
dated as of June 22, 1997
by and among
NORTH AMERICAN MORTGAGE COMPANY
DIME BANCORP, INC.
THE DIME SAVINGS BANK OF NEW YORK, FSB
and
47TH ST. PROPERTY CORPORATION
______________
AMENDED AND RESTATED
as of
July 31, 1997
______________
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TABLE OF CONTENTS
PAGE
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RECITALS....................................................... 1
ARTICLE I
Certain Definitions; Interpretation............................ 1
1.01 Certain Definitions.................................. 1
1.02 Interpretation....................................... 10
ARTICLE II
The Merger..................................................... 10
2.01 The Merger........................................... 10
2.02 Reservation of Right to Revise Structure............. 11
2.03 Effective Time....................................... 11
ARTICLE III
Consideration.................................................. 11
3.01 Consideration........................................ 11
3.02 Rights as Stockholders; Stock Transfers.............. 12
3.03 Fractional Shares.................................... 12
3.04 Exchange Procedures.................................. 12
3.05 Anti-Dilution Provisions............................. 14
3.06 Options.............................................. 14
ARTICLE IV
Actions Pending the Merger..................................... 16
4.01 Forbearances of the Company.......................... 16
4.02 Forbearances of the Acquiror......................... 19
4.03 Coordination of Dividends............................ 20
ARTICLE V
Representations and Warranties................................. 20
5.01 Disclosure Schedules................................. 20
5.02 Standard............................................. 20
5.03 Representations and Warranties of the Company........ 20
5.04 Representations and Warranties of the Acquiror....... 37
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ARTICLE VI
Covenants...................................................... 43
6.01 Reasonable Best Efforts.............................. 43
6.02 Stockholder Approvals................................ 43
6.03 Registration Statement............................... 43
6.04 Press Releases....................................... 44
6.05 Access; Information.................................. 44
6.06 Acquisition Proposals................................ 45
6.07 Affiliate Agreements................................. 46
6.08 Takeover Laws........................................ 46
6.09 No Rights Triggered.................................. 46
6.10 Rights Agreement..................................... 46
6.11 NYSE Listing......................................... 47
6.12 Regulatory Applications.............................. 47
6.13 Indemnification...................................... 47
6.14 Benefit Plans........................................ 49
6.15 Accountants' Letters................................. 50
6.16 Notification of Certain Matters...................... 50
6.17 Certain Policies of the Company...................... 50
6.18 Employee Benefits.................................... 51
6.19 Certain Payments at Effective Time................... 51
6.20 Certain Employee Agreements.......................... 52
ARTICLE VII
Conditions to Consummation of the Merger....................... 52
7.01 Conditions to Each Party's Obligation to Effect the.. 52
7.02 Conditions to Obligation of the Company.............. 53
7.03 Conditions to Obligation of the Acquiror............. 54
ARTICLE VIII
Termination.................................................... 55
8.01 Termination.......................................... 55
8.02 Effect of Termination and Abandonment................ 57
8.03 Termination Fee...................................... 57
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PAGE
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ARTICLE IX
Miscellaneous.................................................. 59
9.01 Survival............................................. 59
9.02 Waiver; Amendment.................................... 60
9.03 Counterparts......................................... 60
9.04 Governing Law........................................ 60
9.05 Expenses............................................. 60
9.06 Notices.............................................. 60
9.07 Entire Understanding; No Third Party Beneficiaries... 61
EXHIBIT A Form of Amendment to Company Rights Agreement
EXHIBIT B Form of Company Affiliate Letter
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AGREEMENT AND PLAN OF COMBINATION, dated as of June 22, 1997 and
amended and restated as of July 31, 1997 (this "Agreement"), by and among North
American Mortgage Company (the "Company"), Dime Bancorp, Inc. (the "Acquiror"),
The Dime Savings Bank of New York, FSB (the "Bank"), and 47th St. Property
Corporation ("Merger Sub").
RECITALS
A. The Company. The Company is a Delaware corporation, having
its principal place of business in Santa Rosa, California.
B . The Acquiror. The Acquiror is a Delaware corporation,
having its principal place of business in New York, New York.
C. The Bank. The Bank is a federal savings bank and a wholly
owned subsidiary of the Acquiror, having its principal place of business in New
York, New York.
D. Merger Sub. Merger Sub is a Delaware corporation and a
wholly owned subsidiary of the Bank. Merger Sub has engaged in no business
other than as an incident to the transactions contemplated by this Agreement.
E. Intentions of the Parties. It is the intention of the
parties to this Agreement that the business combination contemplated hereby be
treated as a "reorganization" under Section 368 of the Internal Revenue Code of
1986, as amended (the "Code").
F. Board Action. The respective Boards of Directors of each of
Acquiror, the Bank and the Company have determined that it is in the best
interests of their respective companies and their stockholders to consummate the
business combination transaction provided for in this Agreement.
NOW, THEREFORE, in consideration of the premises, and of the mutual
covenants, representations, warranties and agreements contained herein, the
parties agree as follows:
ARTICLE I
CERTAIN DEFINITIONS; INTERPRETATION
1.01 Certain Definitions. The following terms are used in this
Agreement with the meanings set forth below:
"Acquiror" has the meaning set forth in the preamble to this
Agreement.
"Acquiror Certificate" means the Amended and Restated Certificate of
Incorporation of the Acquiror.
"Acquiror Common Stock" means the common stock, par value $0.01 per
share, of the Acquiror.
"Acquiror Person" has the meaning set forth in Section 8.03(b).
"Acquiror Preferred Stock" means the preferred stock, par value $1.00
per share, of the Acquiror.
"Acquiror Rights" means the rights to purchase Acquiror Stock
outstanding from time to time pursuant to the Acquiror Rights Agreement.
"Acquiror Rights Agreement" means the Stockholders Protection Rights
Agreement, dated as of October 20, 1995, between the Acquiror and the First
National Bank of Boston, as Rights Agent.
"Acquiror Stock" means, collectively, the Acquiror Common Stock and
the Acquiror Preferred Stock.
"Acquiror's SEC Documents" has the meaning set forth in Section
5.04(g).
"Acquisition Transaction" means (i) a merger or consolidation, or any
similar transaction, involving the Company or any subsidiary of it (other
than mergers, consolidations or similar transactions involving solely the
Company and/or one or more wholly-owned subsidiaries of the Company;
provided that any such transaction is not entered into in violation of the
terms of this Agreement), (ii) a purchase, lease or other acquisition of
all or any substantial part of the assets or deposits of the Company or any
subsidiary of it, or (iii) a purchase or other acquisition (including by
way of merger, consolidation, share exchange or otherwise) of securities
representing 15% or more of the voting power of the Company or any
subsidiary of it.
"Agency" means the HUD, FHA, VA, FNMA, FHLMC, GNMA or a State Agency,
as applicable.
"Agreement" means this Agreement, as amended or modified from time to
time in accordance with Section 9.02.
"Average Closing Price" means the average of the daily last sale
prices of Acquiror Common Stock as reported on the NYSE Composite
Transactions Reporting System (as reported in The Wall Street Journal or,
if not reported therein, in another authoritative source) for the ten
consecutive NYSE full trading days (in which such shares are traded on the
NYSE) ending at the close of trading on the Determination Date.
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"Bank" has the meaning set forth in the preamble to this Agreement.
"Code" has the meaning set forth in Recital D.
"Company" has the meaning set forth in the preamble to this Agreement.
"Company Affiliate" has the meaning set forth in Section 6.07.
"Company Board" means the Board of Directors of the Company.
"Company By-Laws" means the Amended and Restated By-laws of the
Company.
"Company Certificate" means the Amended and Restated Certificate of
Incorporation of the Company.
"Company Common Stock" means the common stock, par value $0.01 per
share, of the Company.
"Company Convertible Preferred Stock" means the $0.20 Series A
Convertible Preferred Stock of the Company.
"Company Meeting" has the meaning set forth in Section 6.02.
"Company Preferred Stock" means the preferred stock, par value $0.01
per share, of the Company.
"Company Rights" means the rights to purchase Company Stock
outstanding from time to time pursuant to the Company Rights Agreement.
"Company Rights Agreement" means the Shareholder Rights Agreement,
dated as of October 19, 1992, between the Company and The Bank of New York,
as Rights Agent.
"Company Stock" means, collectively, the Company Common Stock and the
Company Preferred Stock.
"Company Stock Option" means each outstanding option to purchase
shares of Company Common Stock.
"Company's SEC Documents" has the meaning set forth in Section
5.03(g).
"Compensation and Benefit Plans" has, with respect to any person, the
meaning set forth in Section 5.03(l).
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"Consideration" has the meaning set forth in Section 3.01.
"Contract" means, with respect to any person, any agreement,
indenture, undertaking, debt instrument, contract, lease or other
commitment to which such person or any of its Subsidiaries is a party or by
which any of them is bound or to which any of their properties is subject.
"Costs" has the meaning set forth in Section 6.13(a).
"Determination Date" means the date of receipt of all OTS approvals
necessary to consummate the Merger.
"DGCL" means the General Corporation Law of the State of Delaware.
"Disclosure Schedule" has the meaning set forth in Section 5.01.
"DOL" means the United States Department of Labor.
"Effective Date" means the date on which the Effective Time occurs.
"Effective Time" means the date and time at which the Merger becomes
effective.
"Environmental Laws" means any federal, state or local law,
regulation, order, decree, permit, authorization, common law or agency
requirement with force of law relating to: (a) the protection or
restoration of the environment, health or safety (in each case as relating
to the environment) or natural resources; or (b) the handling, use,
presence, disposal, release or threatened release of any Hazardous
Substance.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" has, with respect to any person, the meaning set
forth in Section 5.03(l).
"ERISA Affiliate Plan" has the meaning set forth in Section 5.03(l).
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations thereunder.
"Exchange Agent" has the meaning set forth in Section 3.04.
"Exchange Fund" has the meaning set forth in Section 3.04.
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"FDIC" means the Federal Deposit Insurance Corporation.
"Fee" has the meaning set forth in Section 8.03(a).
"Fee Termination Event" has the meaning set forth in Section 8.03(a).
"Fee Trigger Event" has the meaning set forth in Section 8.03(c).
"FHA" means the Federal Housing Administration.
"FHLMC" means the Federal Home Loan Mortgage Corporation.
"FHMA" means the Farmers' Home Mortgage Administration.
"FNMA" means the Federal National Mortgage Association.
"GNMA" means the Government National Mortgage Association.
"Governmental Authority" means any court, administrative agency or
commission or other federal, state or local governmental authority or
instrumentality.
"Hazardous Substance" means any substance in any concentration that
is: (a) listed, classified or regulated pursuant to any Environmental Law;
(b) any petroleum product or by-product, asbestos-containing material,
lead-containing paint or plumbing, polychlorinated biphenyls, radioactive
materials or radon; or (c) any other substance which is or may be the
subject of regulatory action by any Governmental Authority pursuant to any
Environmental Law.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976.
"HUD" means the United States Department of Housing and Urban
Development.
"Indemnified Party" has the meaning set forth in Section 6.13(a).
"Index Group" means the group of the eighteen (18) companies listed
below, the common stock of all of which shall be publicly traded and as to
which there shall not have been, since the Starting Date and before the
Determination Date, an announcement of a proposal for the acquisition or
sale of such company. In the event that the common stock of any such
company ceases to be publicly traded or any such announcement is made with
respect to any such company, such company will be removed from the Index
Group, and the weights (which have been determined based on market
capitalization)
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redistributed proportionately for purposes of determining the Index Price.
The eighteen (18) companies and the weights attributed to them are as
follows:
Company Weighting Ticker
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Ahmanson & Company (H.F.) 14.0 AHM
Astoria Financial Corporation 2.8 ASFC
Bank United Corp. 3.5 BNKU
Commercial Federal Corporation 2.4 CFB
Charter One Financial 7.1 COFI
Coast Savings Financial 2.7 CSA
Downey Financial Corp. 1.8 DSL
Golden West Financial 12.5 GDW
Glendale Federal Bank FSB 4.2 GLN
GreenPoint Financial Corp. 9.2 GPT
Long Island Bancorp Inc. 2.6 LISB
New York Bancorp Inc. 2.7 NYB
Peoples Heritage Finl Group 3.0 PHBK
Xxxxxx Bancorp Inc. 2.5 RSLN
St. Xxxx Bancorp Inc. 2.3 SPBC
Sovereign Bancorp Inc. 3.0 SVRN
Washington Mutual Inc. 21.0 WAMU
Washington Federal Inc. 3.9 WFSL
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100.0%
"Index Price" means, on a given date, the weighted average (weighted
in accordance with the factors listed in the definition of "Index Group")
of the closing prices on such date of the common stocks of the companies
composing the Index Group.
"Insurance Amount" has the meaning set forth in Section 6.13(b).
"Insurer" means a person who insures or guarantees all or any portion
of the risk of loss upon borrower default on any of the Loans, including,
without limitation, the FHA, the VA and any private mortgage insurer, and
providers of life, hazard, flood, disability, title or other insurance with
respect to any of the Loans or the collateral therefor.
"Investor" means (i) the FHLMC, the FNMA, the GNMA, or any other
person, as the case may be, that owns any of the Loans or any portion of a
Pool of Loans or holds beneficial title to the Loans or any portion of a
Pool of Loans, but shall not mean the holder of mortgage-backed securities
or mortgage pass-through securities except to the extent that the consent
of such holder may be required in order for the Company or any of
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its Subsidiaries to continue to have servicing rights with respect to the
Loans related thereto and (ii) any person who owns servicing rights for
loans serviced or master serviced by the Company or any of its Subsidiaries
pursuant to a Loan Servicing Agreement.
"Investor Commitment" means any commitment of a person to purchase
Loans from the Company or any of its Subsidiaries.
"IRS" means the United States Internal Revenue Service.
"Liens" means any charge, mortgage, pledge, security interest,
restriction, claim, lien, or encumbrance.
"Listed Termination" means a termination of this Agreement (i) by the
Acquiror pursuant to Section 8.01(b) because of a knowing, intentional or
grossly negligent breach by the Company, (ii) by the Acquiror pursuant to
Section 8.01(e) or (iii) by the Company pursuant to Section 8.01(f), in
each case, unless at the time of such termination (A) the Company is
entitled to terminate this Agreement pursuant to Section 8.01(b) because of
a knowing, intentional or grossly negligent breach by the Acquiror and (B)
the Company shall have notified the Acquiror in writing of such breach.
"Loan" has the meaning set forth in Section 5.03(t).
"Loan Servicing Agreement" has the meaning set forth in Section
5.03(t).
"Material Adverse Effect" means, with respect to the Acquiror or the
Company, any effect that (i) is material and adverse to the financial
position, results of operations or business of the Acquiror and its
Subsidiaries taken as a whole, or the Company and its Subsidiaries taken as
a whole, respectively, or (ii) would materially impair the ability of
either the Acquiror or the Company to perform its obligations under this
Agreement or otherwise materially threaten or materially impede the
consummation of the Merger and the other transactions contemplated by this
Agreement; provided, however, that Material Adverse Effect shall not be
deemed to include the impact of (a) changes in banking and similar laws of
general applicability or interpretations thereof by courts or governmental
authorities, (b) changes in generally accepted accounting principles or
regulatory accounting requirements applicable to savings associations and
their holding companies generally and (c) events or conditions generally
adversely affecting the mortgage banking industry, including general
changes in interest rates and other changes in general business or economic
conditions.
"Merger" has the meaning set forth in Section 2.01.
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"Multiemployer Plan" means, with respect to any person, a
multiemployer plan within the meaning of Section 3(37) of ERISA.
"New Certificates" has the meaning set forth in Section 3.04.
"NYSE" means the New York Stock Exchange, Inc.
"Old Certificates" has the meaning set forth in Section 3.04.
"OTS" means the Office of Thrift Supervision.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Pension Plan" has, with respect to any person, the meaning set forth
in Section 5.03(l).
"person" means any individual, bank, corporation, partnership,
association, joint-stock company, business trust or unincorporated
organization.
"Pool" means a pool of Loans originated, acquired or serviced by the
Company or any of its Subsidiaries.
"Preliminary Fee Trigger Event" has the meaning set forth in Section
8.03(b).
"Previously Disclosed" means, with respect to the Company or the
Acquiror, information set forth in such party's Disclosure Schedule.
"Proxy Statement" has the meaning set forth in Section 6.03.
"Registration Statement" has the meaning set forth in Section 6.03.
"Representatives" means, with respect to any person, such person's
directors, officers, employees, legal or financial advisors or any
representatives of such legal or financial advisors.
"Rights" means, with respect to any person, securities or obligations
convertible into or exercisable or exchangeable for, or giving any person
any right to subscribe for or acquire, or any options, calls or commitments
relating to, or any stock appreciation right or other instrument the value
of which is determined in whole or in part by reference to the market price
or value of, shares of capital stock of such person.
"SEC" means the Securities and Exchange Commission.
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"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations thereunder.
"Securitization Instruments" has the meaning set forth in Section
5.03(t).
"Securitization Servicer" has the meaning set forth in Section
5.03(t).
"Securitization Transaction" has the meaning set forth in Section
5.03(t).
"Serviced Loans" has the meaning set forth in Section 5.03(t).
"Starting Date" means June 20, 1997.
"Starting Price" shall mean $19.00.
"State Agency" means any state agency with authority to regulate the
business of the Company, determine the investment or servicing requirements
with regard to loans originated, purchased or serviced by the Company, or
otherwise participate in or promote mortgage lending.
"Subsidiary" and "Significant Subsidiary" have the meanings ascribed
to them in Rule 1-02 of Regulation S-X of the SEC.
"Surviving Corporation" has the meaning set forth in Section 2.01.
"Takeover Laws" has the meaning set forth in Section 5.03(n).
"Taxes" means all taxes, charges, fees, levies or other assessments,
however denominated, including, without limitation, all net income, gross
income, gross receipts, sales, use, ad valorem, goods and services,
capital, transfer, franchise, profits, license, withholding, payroll,
employment, employer health, excise, estimated, severance, stamp,
occupation, property or other taxes, custom duties, fees, assessments or
charges of any kind whatsoever, together with any interest and any
penalties, additions to tax or additional amounts imposed by any taxing
authority whether arising before, on or after the Effective Date.
"Tax Returns" has the meaning set forth in Section 5.03(q).
"Treasury Stock" has the meaning set forth in Section 5.03(b).
"Warehouse Loans" has the meaning set forth in Section 5.03(t).
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1.02 Interpretation. When a reference is made in this Agreement to
Sections, Exhibits or Schedules, such reference shall be to a Section of, or
Exhibit or Schedule to, this Agreement unless otherwise indicated. The table of
contents and headings contained in this Agreement are for reference purposes
only and are not part of this Agreement. Whenever the words "include,"
"includes" or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation." No provision of this Agreement shall
be construed to require the Company, the Acquiror or any of their respective
Subsidiaries or affiliates to take any action which would violate applicable law
(whether statutory or common law), rule or regulation.
ARTICLE II
THE MERGER
2.01 The Merger. (a) Subject to and upon the terms and conditions of
this Agreement, at the Effective Time, Merger Sub shall merge with and into the
Company (the "Merger"), the separate corporate existence of Merger Sub shall
cease and the Company shall survive and continue to exist as a Delaware
corporation (the Company, as the surviving corporation in the Merger, sometimes
being referred to herein as the "Surviving Corporation").
(b) Effectiveness and Effects of the Merger. Subject to the
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satisfaction or waiver of the conditions set forth in Article VII, the Merger
shall become effective upon the filing in the office of the Secretary of State
of the State of Delaware of a certificate of merger in accordance with Section
251 of the Delaware General Corporation Law (the "DGCL"), or at such later date
and time as may be set forth in such articles and certificate. The Merger shall
have the effects prescribed in the DGCL.
(c) Certificate of Incorporation and By-Laws. The certificate of
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incorporation and by-laws of the Surviving Corporation shall be, respectively,
the certificate of incorporation of the Company, as in effect immediately prior
to the Effective Time, and the by-laws of the Company, as in effect immediately
prior to the Effective Time.
(d) Directors. At the Effective Time, the directors of the Surviving
---------
Corporation shall be the directors of Merger Sub immediately prior to the
Effective Time, and such directors, together with any additional directors as
may thereafter be elected, shall hold such office until such time as their
successors shall be duly elected and qualified.
(e) Officers. At the Effective Time, the officers of the Surviving
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Corporation shall be the officers of Merger Sub immediately prior to the
Effective Time, together with any additional officers as may be agreed upon
prior thereto by the Acquiror and the Company or as may be appointed thereafter.
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2.02 Reservation of Right to Revise Structure. At the Bank's
election, the Merger may alternatively be structured so that (i) the Company is
merged with and into Acquiror, the Bank, or any other direct or indirect wholly
owned subsidiary of Acquiror (provided, that in such event the Company makes no
representation as to whether any consents are required, or any agreements are
adversely affected, thereby) or (ii) any direct or indirect wholly owned
subsidiary of Acquiror (other than Merger Sub) is merged with and into the
Company; provided, however, that no such change shall (a) alter or change the
amount or kind of the Consideration or the treatment of the holders of Company
Stock Options, (b) adversely affect the tax treatment of the Company's
stockholders as a result of receiving the Consideration or prevent the parties
from obtaining the opinions of Xxxxxxx Xxxxxxx & Xxxxxxxx or Xxxxxxxx & Xxxxxxxx
referred to in Section 7.02(d) and 7.03(c), respectively, or (c) materially
impede or delay consummation of the transactions contemplated by this Agreement.
In the event of such an election, the parties agree to execute an appropriate
amendment to this Agreement in order to reflect such election.
2.03 Effective Time. Subject to the satisfaction or waiver of
the conditions set forth in Article VII, the parties shall cause the Merger to
become effective on the date that is (i) the fifth business day (the "Initial
Closing Date") to occur after the last of the conditions set forth in Sections
7.01, 7.02 or 7.03 shall have been satisfied or waived in accordance with the
terms of this Agreement (or, at the election of the Acquiror, on the last
business day of the month in which such day occurs; provided that, if the
Acquiror shall make such election, it shall waive the condition set forth in
Section 7.03(a) as to other than an intentional, knowing or grossly negligent
breach (so long as such condition is satisfied on the Initial Closing Date)).
ARTICLE III
CONSIDERATION
3.01 Consideration. Subject to the terms and conditions of this
Agreement, at the Effective Time, automatically by virtue of the Merger and
without any action on the part of any stockholder:
(a) Outstanding Company Common Stock. Each share, excluding Treasury
--------------------------------
Stock, of Company Common Stock, issued and outstanding immediately prior to
the Effective Time, together with the related Company Rights, shall become
and be converted into the right to receive 1.37 shares of Acquiror Common
Stock (together with the related Acquiror Rights) (subject to possible
adjustment as set forth in Sections 3.05 and 8.01(g), the "Exchange Ratio")
and the number of shares of Company Common Stock, excluding Treasury
Shares, issued and outstanding immediately prior to the Effective Time (the
"Consideration").
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(b) Outstanding Merger Sub Common Stock. Each share of common stock,
-----------------------------------
par value $0.01 per share, of Merger Sub issued and outstanding immediately
prior to the Effective Time shall be unchanged and shall remain issued and
outstanding as one share of common stock of the Surviving Corporation.
(c) Treasury Shares. Each share of Company Stock held as Treasury
---------------
Stock (which includes all shares of Company Convertible Preferred Stock)
immediately prior to the Effective Time shall be canceled and retired at
the Effective Time and no consideration shall be issued in exchange
therefor.
3.02 Rights as Stockholders; Stock Transfers. At the Effective
Time, holders of Company Stock shall cease to be, and shall have no rights as,
stockholders of the Company, other than the right to receive (a) any dividend or
other distribution with respect to such Company Stock with a record date
occurring prior to the Effective Time and (b) the consideration provided under
this Article III. After the Effective Time, there shall be no transfers on the
stock transfer books of the Company or the Surviving Corporation of shares of
Company Stock.
3.03 Fractional Shares. Notwithstanding any other provision in
this Agreement, no fractional shares of Acquiror Common Stock and no
certificates or scrip therefor, or other evidence of ownership thereof, will be
issued in the Merger; instead, the Acquiror shall pay to each holder of Company
Common Stock who otherwise would be entitled to a fractional share of Acquiror
Common Stock (after taking into account all Old Certificates delivered by such
holder) an amount in cash (without interest) determined by multiplying such
fraction by the average of the last sale prices of Acquiror Common Stock, as
reported by the NYSE Composite Transactions Reporting System (as reported in The
Wall Street Journal or, if not reported therein, in another authoritative
source), for the five consecutive NYSE full trading days immediately preceding
the Effective Date.
3.04 Exchange Procedures. (a) At or prior to the Effective
Time, the Acquiror shall deposit, or shall cause to be deposited, with an
exchange agent appointed prior to the Effective Time by the Acquiror (the
"Exchange Agent"), as agent for the benefit of the holders of certificates
formerly representing shares of Company Common Stock ("Old Certificates"), for
exchange in accordance with this Article III, certificates representing the
shares of Acquiror Common Stock ("New Certificates") and an estimated amount of
cash (such cash and New Certificates, together with any dividends or
distributions with a record date occurring after the Effective Date with respect
thereto (without any interest on any such cash, dividends or distributions),
being hereinafter referred to as the "Exchange Fund") to be issued as
Consideration.
(b) As promptly as practicable after the Effective Date, the Surviving
Corporation shall send or cause to be sent to each former holder of record of
shares (other than Treasury Stock) of Company Common Stock immediately prior to
the Effective Time transmittal
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materials for use in exchanging such stockholder's Old Certificates for Merger
Consideration. The Surviving Corporation shall cause the New Certificates into
which shares of a stockholder's Company Common Stock are converted on the
Effective Date and/or any check in respect of any fractional share interests or
dividends or distributions which such person shall be entitled to receive to be
delivered to such stockholder upon delivery to the Exchange Agent of Old
Certificates representing such shares of Company Common Stock (or indemnity
satisfactory to the Surviving Corporation and the Exchange Agent, if any of such
certificates are lost, stolen or destroyed) owned by such stockholder; provided
that New Certificates and/or any such check shall not be issued to any Company
Affiliate unless and until such Company Affiliate has delivered an agreement
pursuant to Section 6.07. No interest will be paid on any Consideration,
including cash to be paid in lieu of fractional share interests, or in respect
of dividends or distributions which any such person shall be entitled to receive
pursuant to this Article II upon such delivery.
(c) Notwithstanding the foregoing, neither the Exchange Agent nor any
party hereto shall be liable to any former holder of Company Stock for any
amount properly delivered to a public official pursuant to applicable abandoned
property, escheat or similar laws.
(d) No dividends or other distributions on Acquiror Common Stock with
a record date occurring after the Effective Time shall be paid to the holder of
any unsurrendered Old Certificate representing shares of Company Common Stock
converted in the Merger into the right to receive shares of such Acquiror Common
Stock until the holder thereof shall be entitled to receive New Certificates in
exchange therefor in accordance with this Article III, and no such shares of
Company Common Stock shall be eligible to vote until the holder of Old
Certificates is entitled to receive New Certificates in accordance with this
Article III. After becoming so entitled in accordance with this Article III,
the record holder thereof also shall be entitled to receive any such dividends
or other distributions, without any interest thereon, which theretofore had
become payable with respect to shares of Acquiror Common Stock such holder had
the right to receive upon surrender of the Old Certificate.
(e) Any portion of the Exchange Fund that remains unclaimed by the
stockholders of the Company for six months after the Effective Time shall be
returned to the Acquiror. Any stockholders of the Company who have not
theretofore complied with this Article III shall thereafter look only to the
Acquiror for payment of the shares of Acquiror Common Stock, cash in lieu of any
fractional shares and unpaid dividends and distributions on the Acquiror Common
Stock deliverable in respect of each share of Company Common Stock such
stockholder holds as determined pursuant to this Agreement, in each case,
without any interest thereon.
3.05 Anti-Dilution Provisions. Should the Acquiror change (or
establish a record date for changing) the number of shares of Acquiror Common
Stock issued and outstanding prior to the Effective Date by way of a stock
split, stock dividend, recapitalization or
-13-
similar transaction with respect to the outstanding Acquiror Common Stock and
the record date therefor shall be prior to the Effective Date, the Exchange
Ratio shall be proportionately adjusted.
3.06 Options. (a) At the Effective Time, each Company Stock
Option shall cease to represent a right to acquire shares of Company Common
Stock and shall be converted automatically into an option to purchase shares of
Acquiror Common Stock, and Acquiror shall assume each such Company Stock Option
subject to the terms thereof; provided, however, that from and after the
Effective Time, (i) the number of shares of Acquiror Common Stock purchasable
upon exercise of such Company Stock Option shall be equal to the number of
shares of Company Common Stock that were purchasable under such Company Stock
Option immediately prior to the Effective Time multiplied by the Exchange Ratio,
and rounding to the nearest whole share, and (ii) the per share exercise price
under each such Company Stock Option shall be adjusted by dividing the per share
exercise price of each such Company Stock Option by the Exchange Ratio, and
rounding down to the nearest cent. The terms of each Company Stock Option
shall, in accordance with its terms, be subject to further adjustment as
appropriate to reflect any stock split, stock dividend, recapitalization or
other similar transaction with respect to Acquiror Common Stock on or subsequent
to the Effective Date. Notwithstanding the foregoing, each Company Stock Option
which is intended to be an "incentive stock option" (as defined in Section 422
of the Code) shall be adjusted in accordance with the requirements of Section
424 of the Code. Accordingly, with respect to any incentive stock options,
fractional shares shall be rounded down to the nearest whole number of shares
and where necessary the per share exercise price shall be rounded down to the
nearest cent.
(b) In order to effectuate the adjustment of the Company Stock Options
provided for in the proviso to Section 3.06(a), the Company represents and
warrants to, and agrees with, the Acquiror that the Company (or as appropriate,
the Company Board) shall take all action required to be taken such that (i)
holders of Stock Options issued under the Company's Incentive Stock Option Plan
will not receive the cash payment for such Stock Options as provided in the
second sentence of Section 10 of such Plan (which shall be effected either by
resolving that this Agreement and the transactions contemplated hereby
(including the Company Meeting and any Merger) do not constitute a "Change of
Control" for purposes of such Section or by taking such other action with the
prior consent of Acquiror, provided that such other action is taken prior to the
date on which a "Change of Control" would otherwise occur in the absence of the
Company Board resolution to the contrary) and (ii) under Section 11 of the
Company's Incentive Stock Option Plan, at the Effective Time, all Company Stock
Options shall be adjusted as provided in Section 3.06(a) (and shall not be
canceled in exchange for payment as contemplated by clause (ii) of the first
sentence of that Section). Notwithstanding any other provision in this
Agreement, the Company shall be permitted to take such action or to cause such
action to be taken as may be required for each Company Stock Option (x) to fully
vest and become immediately exercisable at the Effective Time and (y) to remain
exercisable after the Effective Time for the remaining term of such Company
Stock Option, in both cases
-14-
notwithstanding the action of the Company referred to in the first sentence of
this Section 3.06(b).
(c) At or prior to the Effective Time, the Company shall take all
action necessary with respect to the Company's Incentive Stock Option Plan to
permit the assumption of the then outstanding Company Stock Options by Acquiror
pursuant to this Section. The Company shall take all action necessary,
including obtaining any required consents from optionees, to provide that
following the Effective Time no participant in the Company's Incentive Stock
Option Plan or other plans, programs or arrangements of the Company or any of
its Subsidiaries shall have any right thereunder to acquire equity securities of
the Company, the Surviving Corporation or any subsidiary thereof and to permit
Acquiror to assume the Company's Incentive Stock Option Plan. The Company shall
further take all action necessary to amend the Company's Incentive Stock Option
Plan to eliminate automatic grants or awards thereunder, if any, following the
Effective Time. At the Effective Time, Acquiror shall assume the Company's
Incentive Stock Option Plan; provided, that such assumption shall be only in
respect of the assumed Company Stock Options and that Acquiror shall have no
obligation with respect to any awards under the Company's Incentive Stock Option
Plan other than the assumed Company Stock Options or to make any additional
grants or awards under such assumed plan.
(d) The Acquiror shall take all corporate action necessary to reserve
for issuance a sufficient number of shares of Acquiror Common Stock for delivery
pursuant to the terms set forth in this Section 3.06. Subject to any applicable
limitations under the Securities Act, Acquiror shall either (i) file a
registration statement on Form S-8 (or any successor form), effective as of the
Effective Time, with respect to the shares of Acquiror Common Stock issuable
upon exercise of the Stock Options, or (ii) file any necessary amendments to the
Company's previously filed registration statement(s) on Form S-8 in order that
the Acquiror will be deemed a "successor registrant" thereunder, and, in either
event the Acquiror shall use its reasonable best efforts to maintain the
effectiveness of such registration statement(s) (and maintain the current status
of the prospectus or prospectuses relating thereto) for so long as such options
shall remain outstanding.
ARTICLE IV
ACTIONS PENDING THE MERGER
4.01 Forbearances of the Company. From the date hereof until the
earlier of the termination of this Agreement or the Effective Time, except as
expressly contemplated by this Agreement or the Disclosure Schedule, without the
prior written consent of the Acquiror, the Company will not, and will cause each
of its Subsidiaries not to:
(a) Ordinary Course. Conduct the business of the Company and its
---------------
Subsidiaries other than in the ordinary and usual course or, to the extent
consistent
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therewith, fail to use reasonable efforts to preserve intact their business
organizations and assets and maintain their rights, franchises and existing
relations with customers, suppliers, employees and business associates.
(b) Capital Stock. Other than pursuant to Rights Previously Disclosed
-------------
and outstanding on the date hereof, (i) issue, sell or otherwise permit to
become outstanding, or authorize the creation of, any additional shares of
Company Stock or any Rights, (ii) enter into any agreement with respect to
the foregoing, or (iii) permit any additional shares of Company Stock to
become subject to new grants of employee or director stock options, other
Rights or similar stock-based employee rights. Without limiting the
foregoing, the Company will not issue or agree to issue any shares of
Company Stock or Rights under the Company's 1997 Amended Incentive Stock
Option Plan or the Company's 1997 Amended Employee Stock Purchase Plan
other than pursuant to Rights Previously Disclosed and outstanding on the
date hereof.
(c) Dividends, Etc. (i) Make, declare, pay or set aside for payment
---------------
any dividend, other than (A) subject to Section 4.03 hereof, regular
quarterly cash dividends on Company Common Stock in an amount not to exceed
$0.06 per share paid with record and payment dates consistent with past
practice and (B) dividends from wholly owned Subsidiaries to the Company or
another wholly owned Subsidiary of the Company, as applicable (in each case
having record and payment dates consistent with past practice), on or in
respect of, or declare or make any distribution on any shares of its
capital stock or (ii) directly or indirectly adjust, split, combine,
redeem, reclassify, purchase or otherwise acquire, any shares of its
capital stock.
(d) Compensation; Employment Agreements; Etc. Enter into, amend,
-----------------------------------------
modify or renew any written employment, consulting, severance or similar
agreements or arrangements with any directors, officers, employees of, or
independent contractors with respect to, the Company or its Subsidiaries,
or grant any salary, wage or other increase or increase any employee
benefit (including incentive or bonus payments), except (i) for normal
individual increases in compensation to employees in the ordinary course of
business consistent with past practice, (ii) for other changes that are
required by applicable law, or (iii) to satisfy Previously Disclosed
obligations.
(e) Benefit Plans. Enter into, establish, adopt, amend or modify any
-------------
pension, retirement, stock option, stock purchase, savings, profit sharing,
deferred compensation, consulting, bonus, group insurance or other employee
benefit, incentive or welfare contract, plan or arrangement, or any trust
agreement (or similar arrangement) related thereto, in respect of any
directors, officers, employees of, or independent contractors with respect
to, the Company or its Subsidiaries, including taking any action that
accelerates the vesting or exercisability of stock options, restricted
stock or other
-16-
compensation or benefits payable thereunder, except, in each such case, (i)
as may be required by applicable law or (ii) to satisfy Previously
Disclosed obligations.
(f) Dispositions. Except (i) pursuant to Previously Disclosed
------------
Investor Commitments existing on the date hereof or (ii) as otherwise
Previously Disclosed, (A) sell, transfer, mortgage, lease, encumber or
otherwise dispose of or discontinue any material portion of its assets,
business or properties; (B) sell, assign or otherwise transfer any rights
to service loans, other than servicing rights in respect of first mortgage
loans held by the Company or one of its Subsidiaries in its warehouse of
first mortgage loans originated by the Company or one of its Subsidiaries
(x) on a retail basis or (y) on a wholesale basis where such wholesale
loans are jumbo loans, adjustable rate mortgage loans, or other wholesale
mortgage loans registered with private investors, in each case where such
sales are in a manner consistent with past practice; or (C) except in the
ordinary course of business and in a manner consistent with past practice,
sell, transfer, lease or encumber any Loans.
(g) Acquisitions. Except (i) (A) pursuant to Previously Disclosed
------------
contractual obligations existing on the date hereof, (B) the purchase or
repurchase of mortgage loans and/or loan servicing rights, (C) short-term
investments for cash management purposes (including transactions that the
Company may enter into to utilize escrow balances), (D) pursuant to bona
fide hedging transactions, or (E) by way of foreclosures or otherwise in
satisfaction of debts previously contracted in good faith, in each case in
the ordinary and usual course of business consistent with past practice, or
(ii) as Previously Disclosed, neither the Company nor any of its
Subsidiaries will: (x) acquire any assets in any one transaction or a
series of related transactions for consideration in excess of $250,000 or
enter into any contract, agreement, commitment or arrangement with respect
thereto; or (y) acquire any servicing right in a "bulk" transaction.
(h) Governing Documents. Amend the Company Certificate, the Company
-------------------
By-laws or the certificate of incorporation or by-laws (or similar
governing documents) of any of the Company's Subsidiaries.
(i) Accounting Methods. Implement or adopt any change in its
------------------
accounting principles, practices or methods, other than as may be required
by generally accepted accounting principles.
(j) Contracts. Except in the ordinary course of business consistent
---------
with past practice, enter into or terminate any material Contract or amend
or modify in any material respect any of its existing material Contracts.
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(k) Claims. Settle any claim, action or proceeding, except for any
------
claim, action or proceeding involving solely money damages in an amount,
individually or in the aggregate, that is not material to the Company and
its Subsidiaries, taken as a whole.
(l) Adverse Actions. (i) Take any action reasonably likely to
---------------
prevent or impede the Merger from qualifying as a reorganization within the
meaning of Section 368 of the Code; or (ii) knowingly take any action that
is intended or is reasonably likely to result in (A) any of its
representations and warranties set forth in this Agreement being or
becoming untrue in any material respect at any time at or prior to the
Effective Time, (B) any of the conditions to the Merger set forth in
Article VII not being satisfied or (C) a material breach of any provision
of this Agreement; except, in each case, as may be required by applicable
law.
(m) Risk Management; Loan Policies. Except as required by applicable
------------------------------
law or regulation, to comply with modifications of rules, regulations or
requirements imposed by any Agency and except (after prior consultation
with Acquiror) for changes required by the Company's or any of its
subsidiaries' traditional conduits for the sale of non-conventional loans:
(i) implement or adopt any material change in its interest rate risk
management and hedging (which term includes buying futures and forward
commitments from financial institutions) policies, procedures or practices;
(ii) fail to follow its existing policies or practices with respect to
managing its exposure to interest rate risk; (iii) fail to use commercially
reasonable means to avoid any material increase in its aggregate exposure
to interest rate risk against loans held in the Company's pipeline; or (iv)
materially alter its methods or policies of underwriting, pricing,
originating, warehousing, selling and servicing, or buying or selling
rights to service loans.
(n) Indebtedness. Incur any indebtedness for borrowed money other
------------
than: (i) indebtedness used to fund or purchase mortgage Loans in the
ordinary course of business consistent with past practice; (ii) pursuant to
its "Warehouse Line of Credit Facility" (i.e., the Second Amended and
Restated Revolving Credit Agreement, dated as of January 23, 1996, with a
group of banks headed by The First National Bank of Chicago); and (iii)
indebtedness arising from repurchase agreements with FNMA, FHLMC and
investment banks and other financial institutions in the ordinary course of
business and consistent with past practice.
(o) Offices. Open any new branch offices, or close any existing
-------
branch office for the retail origination of mortgage loans, except for
closures where (i) the term of such lease expires in 1997 and the Company
or its Subsidiary has not renewed such lease, (ii) the Company or its
Subsidiary had previously planned to close such branch office or (iii) such
closure is in the ordinary course of business and in a manner consistent
with past practice (in the case of (i) and (ii), as Previously Disclosed).
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(p) Commitments. Agree or commit to do anything that would be
-----------
precluded by clauses (a) through (o) without first obtaining the Acquiror's
consent.
4.02 Forbearances of the Acquiror. From the date hereof until
the Effective Time, except as expressly contemplated by this Agreement, without
the prior written consent of the Company, the Acquiror will not, and will cause
each of its Subsidiaries not to:
(a) Ordinary Course. Conduct the business of the Acquiror and its
---------------
Subsidiaries other than in the ordinary and usual course; provided that
this Section 4.02(a) shall in no way affect the ability of the Acquiror or
its Subsidiaries to engage in any business, asset or deposit acquisition or
disposition, or merger, consolidation or other business combination
transaction.
(b) Adverse Actions. (i) Take any action reasonably likely to prevent
---------------
or impede the Merger from qualifying as a reorganization within the meaning
of Section 368 of the Code; or (ii) knowingly take any action that is
intended or is reasonably likely to result in (A) any of its
representations and warranties set forth in this Agreement being or
becoming untrue in any material respect at any time at or prior to the
Effective Time, (B) any of the conditions to the Merger set forth in
Article VII not being satisfied or (C) a material breach of any provision
of this Agreement; except, in each case, as may be required by applicable
law.
(c) Dividends, Etc. Make, declare, pay or set aside for payment any
--------------
dividend (other than, subject to Section 4.03 hereof, regular quarterly
cash dividends on Acquiror Common Stock and dividends from Subsidiaries to
the Acquiror or another Subsidiary of the Acquiror), on or in respect of,
or declare or make any distribution on any shares of its capital stock.
(d) Governing Documents. Amend the Acquiror Certificate or the by-
-------------------
laws of Acquiror in a manner that would be materially adverse to the
holders of Acquiror Common Stock.
(e) Commitments. Agree or commit to do anything that would be
-----------
precluded by clauses (a) through (d) without first obtaining the Company's
consent.
4.03. Coordination of Dividends. Each of the Company and Acquiror
shall coordinate with the other regarding the declaration and payment of any
dividends in respect of the Company Common Stock and Acquiror Common Stock and
the record dates and the payment dates relating thereto, it being the intention
of the Company and Acquiror that holders of Company Common Stock shall not
receive two dividends, or fail to receive one dividend, for any single calendar
quarter with respect to their shares of Company Common Stock and/or any shares
-19-
of Acquiror Common Stock that any such holder receives in exchange therefor
pursuant to the Merger.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.01 Disclosure Schedules. On or prior to the date hereof, the
Company has delivered to the Acquiror and the Acquiror (on behalf of itself, the
Bank and Merger Sub) has delivered to the Company a schedule (respectively, its
"Disclosure Schedule") setting forth, among other things, items the disclosure
of which is necessary or appropriate either in response to an express disclosure
requirement contained in a provision hereof or as an exception to one or more
representations or warranties contained in Section 5.03 or 5.04, respectively,
or to one or more of its covenants contained in Article IV; provided, that (a)
no such item is required to be set forth in a Disclosure Schedule as an
exception to a representation or warranty if its absence would not result in the
related representation or warranty being deemed untrue or incorrect under the
standard established by Section 5.02, and (b) the mere inclusion of an item in a
Disclosure Schedule as an exception to a representation or warranty shall not be
deemed an admission by a party that such item (or any non-disclosed item or
information of comparable or greater significance) represents a material
exception or fact, event or circumstance or that such item is reasonably likely
to result in a Material Adverse Effect with respect to the Company or the
Acquiror, respectively.
5.02 Standard. No representation or warranty of the Company or
the Acquiror contained in Section 5.03 or 5.04 shall be deemed untrue or
incorrect, and no party hereto shall be deemed to have breached a representation
or warranty, as a consequence of the existence of any fact, event or
circumstance unless such fact, event or circumstance, individually or taken
together with all other facts, events or circumstances inconsistent with any
representation or warranty contained in Section 5.03 or 5.04 has had or is
reasonably likely to have a Material Adverse Effect with respect to the Company
or the Acquiror, respectively.
5.03 Representations and Warranties of the Company. Subject to
Sections 5.01 and 5.02 and except as Previously Disclosed in a paragraph of its
Disclosure Schedule corresponding to the relevant paragraph below, the Company
hereby represents and warrants to the Acquiror, the Bank and Merger Sub:
(a) Organization, Standing and Authority. The Company is a
------------------------------------
corporation, duly organized, validly existing and in good standing under
the laws of the State of Delaware, and is duly qualified to do business and
is in good standing in all the jurisdictions where its ownership or leasing
of property or assets or the conduct of its business requires it to be so
qualified.
-20-
(b) Company Stock. As of the date hereof, the authorized capital
-------------
stock of the Company consists solely of (i) 50,000,000 shares of Company
Common Stock, of which 13,986,899 shares are outstanding as of the date
hereof and (ii) 20,000,000 shares of Company Preferred Stock, of which
748,179 shares are outstanding (in the form of Company Convertible
Preferred Stock) as of the date hereof. As of the date hereof, 2,433,016
shares of Company Common Stock are held in treasury by the Company and
748,179 shares of Company Convertible Preferred Stock are otherwise owned
by the Company or its Subsidiaries (collectively, "Treasury Stock"). The
outstanding shares of Company Stock have been duly authorized and are
validly issued and outstanding, fully paid and nonassessable, and subject
to no preemptive rights (and were not issued in violation of any preemptive
rights). As of the date hereof, other than the Company Rights and except
as Previously Disclosed in its Disclosure Schedule, there are no shares of
Company Stock authorized and reserved for issuance, the Company does not
have any Rights issued or outstanding with respect to Company Stock, and
the Company does not have any commitment to authorize, issue or sell any
Company Stock or Rights, except pursuant to this Agreement. Since May 29,
1997, the Company has issued no shares of Company Stock or Rights or
reserved any shares for such purposes except pursuant to Previously
Disclosed plans or commitments. The number of shares of Company Stock
which are issuable and reserved for issuance upon exercise of Company Stock
Options as of the date hereof are Previously Disclosed in the Company's
Disclosure Schedule.
(c) Subsidiaries. (i)(A) The Company has Previously Disclosed a list
------------
of all its Subsidiaries together with the jurisdiction of organization of
each such Subsidiary, (B) the Company owns, directly or indirectly, all the
issued and outstanding equity securities of each of its Subsidiaries, (C)
no equity securities of any of its Subsidiaries are or may become required
to be issued (other than to it or its Subsidiaries) by reason of any
Rights, (D) there are no contracts, commitments, understandings or
arrangements by which any of such Subsidiaries is or may be bound to sell
or otherwise transfer any equity securities of any such Subsidiaries (other
than to it or its Subsidiaries), (E) there are no contracts, commitments,
understandings, or arrangements relating to its rights to vote or to
dispose of such securities (other than to it or its Subsidiaries), and (F)
all the equity securities of each such Subsidiary held by the Company or
its Subsidiaries are fully paid and nonassessable and are owned by the
Company or its Subsidiaries free and clear of any Liens.
(ii) The Company does not own beneficially, directly or indirectly,
any equity securities or similar interests of any person, or any interest
in a partnership or joint venture of any kind, other than its Subsidiaries.
(iii) Each of the Company's Subsidiaries has been duly organized and
is validly existing and in good standing under the laws of the jurisdiction
of its organization, and is duly qualified to do business and in good
standing in all the jurisdictions where its
-21-
ownership or leasing of property or assets or the conduct of its business
requires it to be so qualified.
(d) Corporate Power. The Company and each of its Subsidiaries has the
---------------
corporate power and authority to carry on its business as it is now being
conducted and to own all its properties and assets; and the Company has the
corporate power and authority to execute, deliver and perform its
obligations under this Agreement and to consummate the transactions
contemplated hereby.
(e) Corporate Authority. Subject in the case of this Agreement to
-------------------
adoption of the agreement of merger set forth in this Agreement by the
holders of at least a majority of the outstanding shares of Company Common
Stock entitled to vote thereon, this Agreement and the transactions
contemplated hereby have been authorized by all requisite corporate action
on the part of the Company. This Agreement is a valid and legally binding
obligation of the Company, enforceable in accordance with its terms (except
as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and similar laws of general
applicability relating to or affecting creditors' rights or by general
equity principles).
(f) Regulatory Filings; No Defaults. (i) No consents or approvals of,
-------------------------------
or filings or registrations with, any Governmental Authority or with any
third party are required to be made or obtained by the Company or any of
its Subsidiaries in connection with the execution, delivery or performance
by the Company of this Agreement, or to consummate the Merger except for
(A) the filing of a notice under the HSR Act, (B) filings of applications
or notices with Previously Disclosed mortgage banking licensing or
supervisory authorities, (C) the filing with the SEC of the Proxy Statement
in definitive form, and (D) the filing of a certificate of merger with the
Secretary of State of the State of Delaware pursuant to the DGCL. As of
the date hereof, the Company is not aware of any reason why the approvals
of all Governmental Authorities necessary to permit consummation of the
transactions contemplated by this Agreement will not be received without
the imposition of a condition or requirement described in Section 7.01(b).
(ii) Subject to receipt of the regulatory approvals, and expiration
of the waiting periods, referred to in the preceding paragraph and the
making of required filings under federal and state securities laws, the
execution, delivery and performance of this Agreement and the consummation
of the transactions contemplated hereby and thereby do not and will not (A)
constitute a breach or violation of, or a default under, or give rise to
any Lien, any acceleration of remedies or any right of termination under,
any law, rule or regulation or any judgment, decree, order, governmental
permit or license, or Contract of the Company or of any of its Subsidiaries
or to which the Company or any of its Subsidiaries or properties is subject
or bound, (B) constitute a breach or violation of, or a default under, the
Company Certificate or the Company By-laws, or (C) require any
-22-
consent or approval under any such law, rule, regulation, judgment, decree,
order, governmental permit or license or Contract.
(g) SEC Documents; Financial Statements. (i) The Company's Annual
-----------------------------------
Reports on Form 10-K for the fiscal years ended December 31, 1994, 1995 and
1996, and all other reports, registration statements, definitive proxy
statements or information statements filed or to be filed by the Company or
any of its Subsidiaries subsequent to December 31, 1994 under the
Securities Act, or under Sections 13(a), 13(c), 14 or 15(d) of the Exchange
Act, in the form filed or to be filed (collectively, the "Company's SEC
Documents") with the SEC, as of the date filed, (A) complied or will comply
in all material respects as to form with the applicable requirements under
the Securities Act or the Exchange Act, as the case may be, and (B) did not
(or if amended or superseded by a filing prior to the date of this
Agreement, then as of the date of such filing) and will not contain any
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not
misleading; and each of the balance sheets contained in or incorporated by
reference into any such SEC Document (including the related notes and
schedules thereto) fairly presents, or will fairly present, the financial
position of the Company and its Subsidiaries as of its date, and each of
the statements of income and changes in stockholders' equity and cash flows
or equivalent statements in such SEC Documents (including any related notes
and schedules thereto) fairly presents, or will fairly present, the results
of operations, changes in stockholders' equity and changes in cash flows,
as the case may be, of the Company and its Subsidiaries for the periods to
which they relate, in each case in accordance with generally accepted
accounting principles consistently applied during the periods involved,
except in each case as may be noted therein, subject to normal year-end
audit adjustments in the case of unaudited statements.
(ii) Since December 31, 1996, on a consolidated basis the Company and
its Subsidiaries have not incurred any liability other than in the ordinary
course of business consistent with past practice.
(iii) Since December 31, 1996, (A) the Company and its Subsidiaries
have conducted their respective businesses in the ordinary and usual course
consistent with past practice (excluding the incurrence of expenses related
to this Agreement and the transactions contemplated hereby) and (B) no
event has occurred or circumstance arisen that, individually or taken
together with all other facts, events and circumstances (described in any
paragraph of Section 5.03 or otherwise), is reasonably likely to have a
Material Adverse Effect with respect to the Company.
(iv) The Company has Previously Disclosed a list of all write-downs of
assets of the Company and its Subsidiaries since December 31, 1996,
including write-downs of
-23-
interest participations, interest-only strips, residual interest strips or
originated loan servicing rights. To the Company's knowledge, there are no
other write-downs that the Company and its Subsidiaries would be required
to make to ensure that financial statements prepared as of the end of the
month in which the Effective Date occurs fairly present the financial
condition of the Company and its Subsidiaries as of such date.
(h) Litigation. No litigation, claim or other proceeding before any
----------
court or governmental agency is pending against the Company or any of its
Subsidiaries and, to the Company's knowledge, no such litigation, claim or
other proceeding has been threatened.
(i) Compliance with Laws. The Company and each of its Subsidiaries:
--------------------
(i) in the conduct of its business, is in compliance with all
applicable federal, state, local and foreign statutes, laws,
regulations, ordinances, rules, judgments, orders or decrees
applicable thereto or to the employees conducting such businesses,
including, without limitation, the Equal Credit Opportunity Act, the
Fair Housing Act, the Home Mortgage Disclosure Act and all other
applicable fair lending laws and other laws relating to discriminatory
business practices;
(ii) has all permits, licenses, authorizations, orders and
approvals of, and has made all filings, applications and registrations
with, all Governmental Authorities that are required in order to
permit them to own or lease their properties and to conduct their
businesses as presently conducted; all such permits, licenses,
certificates of authority, orders and approvals are in full force and
effect and, to the Company's knowledge, no suspension or cancellation
of any of them is threatened; and
(iii) has received, since December 31, 1995, no notification or
communication from any Governmental Authority (A) asserting that the
Company or any of its Subsidiaries is not in compliance with any of
the statutes, regulations, or ordinances that such Governmental
Authority enforces or (B) threatening to revoke any license,
franchise, permit, or governmental authorization (nor, to the
Company's knowledge, do any grounds for any of the foregoing exist).
(j) Material Contracts; Defaults. The Company has Previously Disclosed
----------------------------
a complete and accurate list of all material Contracts to which the Company
or any of its Subsidiaries is a party, including the following categories:
(i) any Contract that (A) is not terminable at will both
without cost or other liability to the Company or any of its
Subsidiaries and upon notice of ninety (90) days or less and (B) which
provides for fees or other payments in excess of
-24-
$150,000 per annum or in excess of $300,000 for the remaining term of
the Contract;
(ii) any Contract with a term beyond the Effective Time under
which the Company or any of its Subsidiaries created, incurred,
assumed, or guaranteed (or may create, incur, assume, or guarantee)
indebtedness for borrowed money (including capitalized lease
obligations);
(iii) any Contract restricting the conduct of business by the
Company or any of its Subsidiaries;
(iv) any Contract to which the Company or any of its
Subsidiaries is a party, on the one hand, and under which any
affiliate, officer, director, employee or equity holder of any of the
Company or any of its Subsidiaries, on the other hand, is a party or
beneficiary;
(v) any Contract between the Company or any of its Subsidiaries
and any insurance company which has authorized the Company or any of
its Subsidiaries to act as such insurance company's representative in
the sale, placement, writing or administration of insurance;
(vi) any Contract with respect to the employment of, or payment
to, any present or former directors, officers, employees or
consultants;
(vii) any Contract involving the purchase or sale of assets with
a book value greater than $300,000 entered into since December 31,
1996; and
(viii) any Contract with respect to a warehouse line of credit,
any Loan Servicing Agreement and any Investor Commitment.
Neither the Company nor any of its Subsidiaries nor, to the Company's
knowledge, any other party thereto is in default under any such Contract
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.
(k) Properties. Except as reserved against in the financial
----------
statements filed in its SEC Documents on or before the date hereof, the
Company and its Subsidiaries have good and marketable title, free and clear
of all Liens (other than Liens for current taxes not yet delinquent) to all
of the material properties and assets, tangible or intangible, reflected in
such financial statements as being owned by the Company and its
Subsidiaries as of the dates thereof. To the Company's knowledge, all
buildings and all fixtures, equipment, and other property and assets which
are material to its business on a
-25-
consolidated basis and are held under leases or subleases by any of the
Company and its Subsidiaries are held under valid leases or subleases
enforceable in accordance with their respective terms (except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws affecting creditors' rights
generally and to general equity principles).
(l) Employee Benefit Plans. (i) The Company's Disclosure Schedule
----------------------
contains a complete list of all bonus, vacation, deferred compensation,
pension, retirement, profit-sharing, thrift, savings, employee stock
ownership, stock bonus, stock purchase, restricted stock, stock
appreciation and stock option plans, all employment or severance contracts,
all medical, dental, disability, severance, health and life plans, all
other employee benefit and fringe benefit plans, contracts or arrangements
and any "change of control" or similar provisions in any plan, contract or
arrangement maintained or contributed to by the Company or any of its
Subsidiaries for the benefit of officers, former officers, employees,
former employees, directors, former directors, independent contractors or
the beneficiaries of any of the foregoing (collectively, the Company's
"Compensation and Benefit Plans"). Neither the Company Board nor any
executive officers of the Company or any of its Subsidiaries has taken or
initiated any formal action to create any additional material Compensation
and Benefit Plan or to modify or change any existing Compensation and
Benefit Plan in any material respect.
(ii) With respect to each Compensation and Benefit Plan, if
applicable, the Company has provided, made available, or will make
available upon request, to Acquiror, true and complete copies of existing:
(A) Compensation and Benefit Plan documents and amendments thereto; (B)
trust instruments and insurance contracts; (C) two most recent Forms 5500
filed with the IRS; (D) the most recent actuarial report and financial
statement; (E) the most recent summary plan description; (F) forms filed
with the PBGC (other than for premium payments); (G) the most recent
determination letter issued by the IRS; (H) any Form 5310 or Form 5330
filed with the IRS; and (I) the most recent nondiscrimination tests
performed under ERISA and the Code (including 401(k) and 401(m) tests).
(iii) Each of the Company's Compensation and Benefit Plans has been
administered in accordance with the terms thereof and with applicable law,
including ERISA and the Code. Each of the Company's Compensation and
Benefit Plans which is an "employee pension benefit plan" within the
meaning of Section 3(2) of ERISA ("Pension Plan") and which is intended to
be qualified under Section 401(a) of the Code has received a favorable
determination letter from the IRS, and, except as Previously Disclosed, the
Company is not aware of any circumstances reasonably likely to result in
the revocation or denial of any such favorable determination letter.
Neither the Company nor any of its Subsidiaries has engaged in a
transaction, or omitted to take any action, with respect to any
Compensation and Benefit Plan that would reasonably be expected to
-26-
subject the Company or any of its Subsidiaries to a tax or penalty imposed
by either Section 4975 of the Code or Section 502 of ERISA in an amount
which would be material, assuming for purposes of Section 4975 of the Code
that the taxable period of any such transaction expired as of the date
hereof. There is no pending or, to the Company's knowledge, threatened
litigation or governmental audit, examination or investigation relating to
the Company's Compensation and Benefit Plans.
(iv) No liability under Title IV of ERISA (other than contributions
and premiums required in connection therewith) has been or is reasonably
expected to be incurred by the Company or any of its Subsidiaries with
respect to any "single-employer plan" (within the meaning of Section 4001
(a)(15) of ERISA) or Multiemployer Plan currently or formerly maintained by
any of them, or the single-employer plan or Multiemployer Plan of any
entity (an "ERISA Affiliate") which currently is or formerly was considered
one employer with the Company under Section 4001(a)(14) of ERISA or Section
414(b) or (c) of the Code (an "ERISA Affiliate Plan").
(v) Except as Previously Disclosed, all contributions, premiums and
payments required to have been made under the terms of any of the Company's
Compensation and Benefit Plans or applicable law have been timely made or
reflected in the Company's SEC Documents. Neither any of the Company's
Pension Plans nor ERISA Affiliate Plan has an "accumulated funding
deficiency" (whether or not waived) within the meaning of Section 412 of
the Code or Section 302 of ERISA. None of the Company, any of its
Subsidiaries or any ERISA Affiliate has provided, or is required to
provide, security to, nor are there any circumstances requiring imposition
of any lien on the assets of the Company or any of its Subsidiaries with
respect to, any Pension Plan or any ERISA Affiliate Plan pursuant to ERISA
or the Code. The Company's Disclosure Schedule contains a list of all of
the Company's ERISA Affiliate Plans.
(vi) Under each of the Company's Pension Plans and ERISA Affiliate
Plans, to the Company's knowledge, there has been no material adverse
change in the financial condition of any Pension Plan or ERISA Affiliate
Plan (with respect to either assets or benefits) since the last day of the
most recent plan year.
(vii) Except as Previously Disclosed, neither the Company nor any of
its Subsidiaries has any obligations under any Compensation and Benefit
Plan to provide benefits, including death or medical benefits, with respect
to any of their employees (or their spouses, beneficiaries, or dependents)
beyond the retirement or other termination of service of any such employee
other than (A) coverage mandated by Part 6 of Title I of ERISA or Section
4980B of the Code, (B) retirement or death benefits under any employee
pension benefit plan (as defined under Section 3(2) of ERISA), (C)
disability benefits under any employee welfare plan that have been fully
provided for by insurance or otherwise, or (D) benefits in the nature of
severance pay.
-27-
(viii) Except as set forth in the Company's SEC Documents or as
Previously Disclosed, neither the execution and delivery of this Agreement
nor the consummation of the transactions contemplated hereby including,
without limitation, as a result of any termination of employment prior to
or following the Effective Time, will (A) result in any increase in
compensation or any payment (including, without limitation, severance,
unemployment compensation, golden parachute or otherwise) becoming due to
any current or former director, officer or employee of the Company or any
of its Subsidiaries under any Compensation and Benefit Plan or otherwise
from the Company or any of its Subsidiaries, (B) increase any benefits
otherwise payable under any Compensation and Benefit Plan, or (C) result in
any acceleration of the time of payment or vesting of any such benefit.
(ix) The Company and its Subsidiaries do not maintain any
Compensation and Benefit Plans covering foreign Employees who are not
residents of the United States.
(m) Labor Matters. Neither the Company nor any of its Subsidiaries is
-------------
a party to or is bound by any collective bargaining Contract or
understanding with a labor union or labor organization, nor is the Company
or any of its Subsidiaries the subject of a proceeding asserting that it or
any such Subsidiary has committed an unfair labor practice (within the
meaning of the National Labor Relations Act) or seeking to compel the
Company or any such Subsidiary to bargain with any labor organization as to
wages or conditions of employment, nor is there any strike or other labor
dispute involving it or any of its Subsidiaries pending or, to the
Company's knowledge, threatened, nor is the Company aware of any activity
involving it or any of its Subsidiaries' employees seeking to certify a
collective bargaining unit or engaging in other organizational activity.
(n) Takeover Laws. The Company has taken all action required to be
-------------
taken by it in order to exempt this Agreement and the transactions
contemplated hereby from, and this Agreement and the transactions
contemplated hereby are exempt from, the requirements of any "moratorium,"
"control share," "fair price" or other antitakeover laws and regulations of
any state (collectively, "Takeover Laws"), including, without limitation
the State of Delaware, including Section 203 of the DGCL, assuming the
accuracy of the representations contained in Section 5.04(l) (without
giving effect to the knowledge qualification thereof).
(o) Company Rights Agreement. There has occurred no "Distribution
------------------------
Date" or "Stock Acquisition Date" (as defined in the Company Rights
Agreement). The Company and the Rights Agent will have, no later than the
first business day after the date hereof, duly and validly amended the
Company Rights Agreement, by executing and delivering an amendment in
substantially the form of Exhibit B.
-28-
(p) Environmental Matters. (i) The Company and each of its
---------------------
Subsidiaries has complied at all times with applicable Environmental Laws;
(ii) no property (including buildings and any other structures) currently
or formerly owned or operated by the Company or any of its Subsidiaries or
in which the Company or any of its Subsidiaries has a Lien, has been
contaminated with, or has had any release of, any Hazardous Substance
except as Previously Disclosed; (iii) neither the Company nor any of its
Subsidiaries would reasonably be expected to be ruled to be the owner or
operator under any Environmental Law of any property in which it has
currently or formerly held a Lien; (iv) neither the Company nor any of its
Subsidiaries is subject to liability for any Hazardous Substance disposal
or contamination on any other third-party property; (v) neither the Company
nor any of its Subsidiaries has received any notice, demand letter, claim
or request for information alleging any violation of, or liability under,
any Environmental Law; (vi) neither the Company nor any of its Subsidiaries
is subject to any order, decree, injunction or other agreement with any
Governmental Authority or any third party relating to any Environmental
Law; (vii) the Company, which does not perform an environmental review of
the mortgaged property at the time of Loan Origination, is not aware of any
circumstances or conditions involving the Company or any of its
Subsidiaries, any currently or formerly owned or operated property, or any
Lien held by the Company or any of its Subsidiaries (including the presence
of asbestos, underground storage tanks, lead products, polychlorinated
biphenyls or gas station sites) that would reasonably be expected to result
in any claims, liability or investigations or result in any restrictions on
the ownership, use, or transfer of any property pursuant to any
Environmental Law; and (viii) the Company has delivered to the Acquiror
copies of all environmental reports, studies, sampling data,
correspondence, filings and other environmental information in its
possession or reasonably available to it relating to the Company, any of
its Subsidiaries, any currently or formerly owned or operated property or
any property in which the Company or any of its Subsidiaries has held a
Lien.
(q) Tax Matters. (i) All returns, declarations, reports, estimates,
-----------
information returns and statements required to be filed on or before the
Effective Date under federal, state, local or any foreign tax laws ("Tax
Returns") with respect to the Company or any of its Subsidiaries, have been
or will be timely filed, or requests for extensions have been timely filed
and have not expired; (ii) all Tax Returns filed by the Company are
complete and accurate; (iii) all Taxes shown to be due and payable (without
regard to whether such Taxes have been assessed) on such Tax Returns have
been paid or adequate reserves have been established for the payment of
such Taxes; and (iv) no audit or examination or refund litigation with
respect to any Tax Return is pending or, to the Company's knowledge, has
been threatened.
(r) Risk Management. All swaps, caps, floors, option agreements,
---------------
futures and forward contracts and other similar risk management
arrangements, whether entered into for the Company's own account, or for
the account of one or more of the Company's
-29-
Subsidiaries or their customers, were entered into (i) in accordance with
prudent business practices and all applicable laws, rules, regulations and
regulatory policies and (ii) with counterparties believed to be financially
responsible at the time; and each of them constitutes the valid and legally
binding obligation of the Company or one of its Subsidiaries, enforceable
in accordance with its terms (except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer and similar laws of general applicability relating to or affecting
creditors' rights or by general equity principles), and are in full force
and effect. Neither the Company nor its Subsidiaries, nor to the Company's
knowledge any other party thereto, is in breach of any of its obligations
under any such agreement or arrangement.
(s) Names and Trademarks. The Company (or one of its Subsidiaries)
--------------------
has the right to use the names, service-marks and trademarks Previously
Disclosed in Section 5.03(s) of its Disclosure Letter in each state of the
United States, free and clear of any Liens, and no other person has the
right to use such name in any such state.
(t) Mortgage Banking Business. (i) Licenses and Qualifications. The
-------------------------
Company (or any Subsidiary of it that services or originates Loans, as the
case may be) (A) is an approved (1) HUD mortgagee and servicer for FHA-
insured loans, (2) lender and servicer for VA-insured loans, (3)
seller/servicer of one-to-four-family first and second mortgages for FNMA
and FHLMC and (4) GNMA issuer and servicer of GNMA-guaranteed mortgage-
backed securities, (B) has all other certifications, authorizations,
licenses, permits and other approvals necessary to conduct its current
business, (C) is in good standing under all applicable federal, state and
local laws and regulations thereunder as a lender and servicer and (D) is
in good standing with all authorities and servicers for the state bond
programs in which it participates. As of the date hereof, there is no
pending or, to the Company's knowledge, threatened cancellation or
reduction of any Investor Commitment or other loan sale Contract to which
the Company or any of its Subsidiaries is a party, and the obligations of
the Company and each of its Subsidiaries under each such Contract are being
performed by the Company or such Subsidiary, as the case may be, in
accordance with its terms. The Company has no reason to believe that the
underwriting waivers from FNMA and FHLMC, under current agreements with the
Company, will be restricted or rescinded, or that the guarantee fees
payable to FNMA and FHLMC will be increased as a result of the Company's or
its Subsidiaries' credit performance, or that the Company or its
Subsidiaries will suffer a forced reduction of the master commitment amount
relating to FNMA or FHLMC purchases or swaps of loans, nor has any such
restriction, rescission, increase or reduction occurred at any time since
December 31, 1995.
(ii) Title to Loans. All loans held for the Company's account,
whether or not for future sale or delivery to an investor (the "Warehouse
Loans"), are owned by the Company free and clear of any Lien, other than
Liens in favor of the Company's lender
-30-
banks pursuant to warehouse lines of credit and forward sale commitments or
similar agreements to sell any such loans to investors in the ordinary
course, and all Warehouse Loans meet all requirements for sale to the
intended investors. Each mortgage or deed of trust securing a Warehouse
Loan has been duly recorded or submitted for recordation in due course in
the appropriate filing office in the name of the Company or one of its
Subsidiaries as mortgagee. Neither the Company nor any of its Subsidiaries
has released any security for any Warehouse Loan, except upon receipt of
reasonable consideration for such release (as documented in the applicable
Loan file), or accepted prepayment of any such Warehouse Loan which has not
been promptly applied to such Warehouse Loan.
(iii) Compliance. Each Warehouse Loan and each loan which is being
serviced by the Company or one of its Subsidiaries for the account of
others (the "Serviced Loans", and together with the Warehouse Loans, the
"Loans") was underwritten and originated, and the loan documents and loan
files maintained by the Company or its Subsidiaries with respect thereto
are being maintained by the Company or such Subsidiaries, in compliance
with all applicable laws and regulations and, if applicable, the
requirements of the Investor acquiring such Loan (or, if there is no such
Investor, in accordance with the Company's underwriting standards then in
effect) and the requirements of each Insurer of such Loan (if any) in
effect and applicable at the time such insurance was obtained. The Company
and its Subsidiaries have not done or failed to do, or caused to be done or
omitted to be done, any act, the effect of which would operate to
invalidate or materially impair (i) any approvals of any Agency or the FHA
to insure, (ii) any VA guarantee or commitment of the VA to guarantee,
(iii) any private mortgage insurance or commitment of any private mortgage
insurer to insure, (iv) any title insurance policy, (v) any hazard
insurance policy, (vi) any flood insurance policy, (vii) any fidelity bond,
direct surety bond, errors and omissions or other insurance policy required
by any Agency, Investor or Insurer, (viii) any surety or guaranty
agreement, (ix) any guaranty issued by GNMA, FNMA or FHLMC to the Company
or any of its Subsidiaries respecting mortgage backed securities issued by
the Company or any of its Subsidiaries and other like guarantees or (x) the
rights of the Company or any of its Subsidiaries under any Loan Servicing
Agreement or Investor Commitment. No Agency, Investor or Insurer has (i)
claimed that the Company or any of its Subsidiaries have violated or have
not complied on a recurring basis with the applicable underwriting
standards with respect to Loans sold by the Company or any of its
Subsidiaries to an Investor or (ii) imposed restrictions on the activities
(including commitment authority) of the Company or any of its Subsidiaries.
(iv) Loan Files. The loan documents relating to a Loan maintained in
the loan files of the Company and its Subsidiaries were in compliance with
all applicable laws and regulations at the time of the origination,
assumption or modification of such Loan, as the case may be. The loan
files maintained by the Company and its Subsidiaries contain originals (or,
where necessitated by the terms of the applicable mortgage servicing
-31-
agreements, contain true, correct and complete copies) of the documents
relating to each Loan and the information contained in such loan files with
respect to each such Loan is true, complete and accurate and in compliance
with all applicable laws and regulations. Except as set forth in the loan
documents relating to a Loan maintained in the loan files of the Company or
its Subsidiaries, the terms of the note, bond, deed of trust and mortgage
for each such Loan have not been impaired, waived, altered or modified in
any respect from the date of their origination except by a written
instrument which written instrument has been recorded, or submitted for
recordation in due course, if recordation is necessary to protect the
interests of the owner thereof. The substance of any such waiver,
alteration or modification has been communicated to and approved by (A) the
relevant Investor and Insurer (if any), to the extent required by the
relevant Investor and Insurer requirements, and (B) the title Insurer, to
the extent required by the relevant policies, and the terms of any such
waiver, alteration or modification are reflected in the loan documents.
Except as set forth in the loan documents maintained in the loan files by
the Company or its Subsidiaries, no mortgagor has been released from such
mortgagor's obligations with respect to the applicable Loan.
(v) Loan Servicing Agreements. All of the Contracts pursuant to which
the Company or any of its Subsidiaries has the right and/or obligation to
service loans (each, a "Loan Servicing Agreement") are (A) valid and
binding obligations of the Company or such Subsidiary, and to the knowledge
of the Company, of all the other parties thereto, (B) in full force and
effect, (C) enforceable in accordance with their terms (except where
enforcement thereof may be limited by bankruptcy, insolvency or other
similar laws affecting the enforcement of creditors' rights generally and
by general equity principles) and (D) owned by the Company or such
Subsidiary free and clear of any Lien, except pursuant to the loan and
security agreements Previously Disclosed in the Company's Disclosure
Schedule. There is no default by the Company or any of its Subsidiaries or
claim of default against the Company or any of its Subsidiaries by any
party under any such Loan Servicing Agreement, and, except for the
consummation of the transactions contemplated by this Agreement, no event
has occurred which with the passage of time or the giving of notice or both
would constitute a default by any party under any such Loan Servicing
Agreement or would result in any such mortgage servicing agreement being
terminable by any party thereto. There is no pending or, to the knowledge
of the Company, threatened cancellation of any Loan Servicing Agreement and
the obligations of the Company or any of its Subsidiaries under each Loan
Servicing Agreement are being performed by the Company or such Subsidiary
in accordance with the terms of such Agreement and applicable rules or
regulations. The Company and its Subsidiaries are not subservicers with
respect to any of the Serviced Loans.
(vi) No Recourse. None of the Company's or any of its Subsidiaries'
servicing rights are subject to recourse against the servicer, and none of
the Company or any of its Subsidiaries is subject to recourse in connection
with any Loans sold by it, in each case
-32-
for losses on liquidation of a loan, borrower defaults or repurchase
obligations upon the occurrence of non-payment or other events, other than
events entitling Investors to request a repurchase of a loan because of
alleged breaches of customary representations and warranties relating to
the origination or servicing thereof.
(vii) Escrow Account. Unless otherwise prohibited by law or an
executed escrow waiver, the Company or its Subsidiaries collect all escrows
related to the Loans, and all escrow accounts have been maintained by the
Company, its Subsidiaries and, to the Company's knowledge, all prior
servicers in accordance with the related loan documents, all applicable
laws, rules, regulations, and requirements of Investors, Insurers and
Governmental Authorities, and in accordance with the applicable Loan
Servicing Agreements. The Company has credited to the account of borrowers
all interest required to be paid on any escrow account in accordance with
applicable law and the terms of such agreements and loan documents. All
escrow, custodial, and suspense accounts related to the Loans are held in
the Company's (or Subsidiary's) name or the investor's name by the Company.
(viii) Advances. There are no servicing or other Contracts to which
the Company or any of its Subsidiaries is a party which obligates any of
them to make servicing advances for principal and interest payments with
respect to defaulted or delinquent Loans other than in a manner as provided
in standard and customary agreements with FNMA, FHLMC or GNMA. To the
extent made, any such advances are valid and subsisting amounts owing to
the Company or its Subsidiary, as the case may be, subject to the terms of
the applicable Loan Servicing Agreement.
(ix) Single Family Loans. All of the Loans are secured by single
family (i.e., one to four family) residential real property or, to the
extent that a Loan is secured by property other than a single family
residential property, such Loan is not a Warehouse Loan and has not been
sold to any person where either the Company or any of its Subsidiaries has
any recourse obligation.
(x) ARM Adjustments. With respect to each Loan for which the interest
rate is not fixed for the entire term of the loan, the Company or its
Subsidiaries, as the case may be, has, since the date it commenced
servicing such loan and, to the Company's knowledge, all prior servicers
have (A) properly and accurately entered into its system all data required
to service the loan in accordance with the related loan documents and all
regulations, (B) properly and accurately adjusted the monthly payment on
each payment adjustment date, (C) properly and accurately calculated the
amortization of principal and interest on each payment adjustment date, in
each case in compliance with all applicable laws, rules and regulations and
the related loan documents, and (D) executed and delivered any and all
necessary notices required under, and in a form that complies with,
-33-
all applicable laws, rules and regulations and the terms of the related
loan documents regarding the interest rate and payment adjustments.
(xi) Pools. Each Loan included in a Pool meets all eligibility
requirements (including, without limitation, all applicable requirements
for obtaining mortgage insurance certificates and loan guaranty
certificates) for inclusion in such Pool. All of such Pools have been
finally certified or, if required, recertified in accordance with all
applicable laws, rules and regulations, except where the time for
certification or recertification has not expired. No Pools have been
improperly certified. The loan file for each Loan included in a Pool
contains all documents and instruments necessary for the final
certification or recertification of such Pool. No Loan has been bought out
of a Pool without all required prior written approvals of the applicable
Investors. Neither the execution, delivery or performance of this
Agreement by the Company nor the consummation by the Company of the
transactions contemplated hereby will require any Pool to be recertified.
The aggregate unpaid principal balance outstanding of the Loans in each
Pool equals or exceeds the amount owing to the applicable Investors.
(xii) Securitization Transactions.
(A) The Company and each of its Subsidiaries, as servicer under
the applicable Loan Servicing Agreement, (the "Securitization
Servicer") of each outstanding transaction under which the Company or
any of its Subsidiaries have sold or pledged Loans in a
securitization, whether sold under the Securities Act or otherwise (a
"Securitization Transaction"), has complied in all material respects
with all Contracts, including the Loan Servicing Agreements, and all
conditions to be performed or satisfied by it with respect to all
agreements and arrangements pursuant to which such person is bound
under such Securitization Transaction (collectively, "Securitization
Instruments").
(B) No Securitization Servicer or, to the Company's knowledge, no
trustee or issuer with respect to any Securitization has taken any
action which would reasonably be expected to adversely affect the
characterization or tax treatment for federal, state or local income
or franchise tax purposes of the issuer or any securities issued in a
Securitization Transaction, and all required federal, state and local
tax and information returns relating to any Securitization Transaction
have been properly filed.
(C) Each representation and warranty made by the Company or any
of its Subsidiaries in each "Purchase Agreement," "Pooling and
Servicing Agreement," "Placement Agency Agreement," "Servicer's
Indemnification Agreement" and any other Securitization Instrument to
which any of them was a party in any Securitization Transaction was
true and correct in all material
-34-
respects whenever made or reaffirmed by any of them and the Company
and each of its Subsidiaries have each fully performed and carried out
each covenant and agreement made by any of them in any such
Securitization Instrument.
(D) No rating agency has downgraded, or given the Company or any
of its Subsidiaries any indication that it is considering a
downgrading of any securities issued in any Securitization
Transaction, or of its rating of any Securitization Servicer.
(xiii) Mortgage Insurance. Each Loan which is indicated in the
related loan documents to have FHA insurance is insured under the National
Housing Act or qualifies for such insurance. Each Loan which is indicated
in the related loan documents to be guaranteed by the VA is guaranteed
under the provisions of Chapter 37 of Title 38 of the United States Code to
the extent required by the applicable Investor or qualifies for such
guarantee. As to each FHA insurance certificate, each VA guarantee
certificate, and each Loan which is indicated in the related loan file to
be insured by private mortgage insurance, the Company has complied with
applicable provisions of the insurance or guarantee contract and applicable
laws and regulations, the insurance or guarantee is in full force and
effect with respect to each such Loan, and to the knowledge of the Company,
there does not exist any event or condition which, but for the passage of
time or the giving of notice or both, can result in a revocation of any
such insurance or guarantee or constitute adequate grounds for the
applicable Insurer to refuse to provide insurance or guarantee payments
thereunder.
(xiv) Taxes and Insurance. Each Loan has been covered by a policy of
hazard insurance and flood insurance, to the extent required by the Loan
Servicing Agreements relating thereto or any laws, rules, regulations or
Investor or Insurer requirements applicable to such Loan, all in a form
usual and customary in the industry and which is in full force and effect,
and all amounts due and payable under each policy have been, or will be,
paid prior to the date such payments are due; and all taxes, assessments,
ground rents or other applicable charges or fees due and payable as to each
Loan have been, or will be, paid prior to the date such payments are due.
Any and all claims under such insurance policies have been submitted and
processed in accordance with the applicable Investor's and Insurer's
requirements. Such insurance policies name the Company (or a Subsidiary of
it) and its successors and assigns as mortgagee.
(xv) Title Insurance. To the extent required by the applicable
Investor, each Loan is covered by an ALTA lender's title insurance policy
or other generally acceptable form of policy of insurance acceptable to the
relevant Investor, and each such title insurance policy is issued by an
Insurer acceptable to the applicable Investor and qualified to do business
in the jurisdiction where the collateral securing such Loan is located, and
insures the originator and its successors and assigns as to the first
priority lien of the
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mortgage in the original principal amount of the Loan (or, in the case of a
second mortgage, the second priority lien). The applicable Investor, as
assignee of the originator's rights, is an insured of such lender's title
insurance policy, and such lender's policy is in full force and effect.
Neither the Company nor, to the Company's knowledge, any prior servicer has
performed any act or omission which would impair the coverage of such
lender's policy.
(xvi) Condemnation. The Company has no notice of and has no
knowledge of any proceeding pending or threatened for the partial or total
condemnation of any of the collateral securing any of the Loans, and the
Company has no notice or knowledge that all or any part of such collateral
has been or will be condemned.
(xvii) Tape. The Company has previously delivered to the Acquiror a
tape (magnetic media) on which certain information regarding the servicing
portfolio of the Company and its Subsidiaries as of May 31, 1997 is
recorded. Such tape completely and accurately contains the list of
serviced loans as of such date. The loan characteristics recorded on such
tape have been Previously Disclosed, and the information contained on such
tape is complete and accurate.
(u) Books and Records. The books and records of the Company and its
-----------------
Subsidiaries have been fully, properly and accurately maintained in all
material respects, and there are no material inaccuracies or discrepancies
of any kind contained or reflected therein, and they fairly present the
financial position of the Company and its Subsidiaries. None of the
records, systems, controls, data or information of the Company and its
Subsidiaries are recorded, stored, maintained, operated or otherwise wholly
or partly dependent on or held by any means (including any electronic,
mechanical or photographic process, whether computerized or not) which
(including all means of access thereto and therefrom) are not under the
exclusive ownership and direct control of the Company or its Subsidiaries
or accountants retained by the Company or its Subsidiaries.
(v) Insurance. The Company's Disclosure Schedule sets forth all of
---------
the insurance policies, binders, or bonds maintained by the Company or its
Subsidiaries ("Insurance Policies"). The Company and its Subsidiaries are
insured with reputable insurers against such risks and in such amounts as
the management of the Company reasonably has determined to be prudent in
accordance with industry practices. All of the Insurance Policies are in
full force and effect; the Company and its Subsidiaries are not in material
default thereunder; and all claims thereunder have been filed in due and
timely fashion.
(w) No Brokers. No action has been taken by the Company that would
----------
give rise to any valid claim against any party hereto for a brokerage
commission, finder's fee or other like payment with respect to the
transactions contemplated by this Agreement,
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excluding a fee to be paid by the Company to Xxxxxx Xxxxxxx & Co.
Incorporated in an amount and on terms Previously Disclosed.
(x) Ownership of Acquiror Common Stock. As of the date hereof,
----------------------------------
neither the Company nor, to its knowledge, any of its affiliates or
associates (as such terms are defined under the Exchange Act) (i)
beneficially owns, directly or indirectly, or (ii) is party to any
agreement, arrangement or understanding for the purpose of acquiring,
holding, voting or disposing of, in each case, any outstanding shares of
Acquiror Common Stock (other than shares held in a bona fide fiduciary
capacity or in satisfaction of a debt previously contracted in good faith).
(y) Disclosure. The representations and warranties contained in this
----------
Section 5.03 do not contain any untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements
contained in this Section 5.03, in the light of the circumstances in which
they are being made, not misleading. The copies of all documents furnished
to the Acquiror, the Bank and Merger Sub hereunder are true and complete
copies of the originals thereof.
5.04 Representations and Warranties of the Acquiror. Subject to
Sections 5.01 and 5.02 and except as Previously Disclosed in a paragraph of its
Disclosure Schedule corresponding to the relevant paragraph below, the Acquiror
hereby represents and warrants to the Company as follows:
(a) Organization, Standing and Authority. Each of the Acquiror, the
------------------------------------
Bank and Merger Sub is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization, and each
is duly qualified to do business and is in good standing in the
jurisdictions where its ownership or leasing of property or assets or the
conduct of its business requires it to be so qualified.
(b) Acquiror Stock. (i) As of the date hereof, the authorized
--------------
capital stock of the Acquiror consists solely of 200,000,000 shares of
Acquiror Common Stock, of which 103,726,095 shares were outstanding as of
May 31, 1997, and 40,000,000 shares of Acquiror Preferred Stock, of which
no shares are outstanding as of the date hereof. As of the date hereof,
other than the Acquiror Rights and except as set forth in its Disclosure
Schedule, there are no shares of Acquiror Stock authorized and reserved for
issuance, the Acquiror does not have any Rights issued or outstanding with
respect to Acquiror Stock, and the Acquiror does not have any commitment to
authorize, issue or sell any Acquiror Stock or Rights, except pursuant to
this Agreement. The number of shares of Acquiror Common Stock which are
issuable and reserved for issuance upon exercise of any employee or
director stock options to purchase shares of Acquiror Common Stock, and the
number and terms of any Rights, as of the date hereof, are Previously
Disclosed in the Acquiror's Disclosure Schedule.
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(ii) The shares of Acquiror Common Stock to be issued as
Consideration, when issued in accordance with the terms of this Agreement,
will be duly authorized, validly issued, fully paid and nonassessable.
(c) Subsidiaries. Each of the Acquiror's Significant Subsidiaries has
------------
been duly organized and is validly existing and in good standing under the
laws of the jurisdiction of its organization, and is duly qualified to do
business and in good standing in the jurisdictions where its ownership or
leasing of property or the conduct of its business requires it to be so
qualified.
(d) Corporate Power. The Acquiror and each of its Significant
---------------
Subsidiaries has the corporate power and authority to carry on its business
as it is now being conducted and to own all its properties and assets; each
of the Acquiror and the Bank has the corporate power and authority to
execute, deliver and perform its obligations under this Agreement and to
consummate the transactions contemplated hereby; and Merger Sub has the
corporate power and authority to execute, deliver and perform its
obligations under this Agreement and to consummate the transactions
contemplated hereby.
(e) Corporate Authority. This Agreement and the transactions
-------------------
contemplated hereby have been authorized by all requisite corporate action
on the part of Acquiror, the Bank and Merger Sub. This Agreement is a
valid and legally binding agreement of each of the Acquiror, the Bank and
Merger Sub, in each case enforceable in accordance with its terms (except
as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and similar laws of general
applicability relating to or affecting creditors' rights or by general
equity principles).
(f) Regulatory Approvals; No Defaults. (i) No consents or approvals
---------------------------------
of, or filings or registrations with, any Governmental Authority or with
any third party are required to be made or obtained by the Acquiror or any
of its Subsidiaries in connection with the execution, delivery or
performance by the Acquiror, the Bank or Merger Sub of this Agreement or to
consummate the Merger except for (A) the filing of a notice under the HSR
Act, (B) the filing of applications and notices, as applicable, with the
OTS and the FDIC; (C) approval of the listing on the NYSE of the Acquiror
Common Stock to be issued in the Merger (and related Acquiror Rights); (D)
the filing and declaration of effectiveness of the Registration Statement;
(E) the filing of a certificate of merger with the Secretary of State of
the State of Delaware pursuant to the DGCL; and (F) such filings as are
required to be made or approvals as are required to be obtained under the
securities or "Blue Sky" laws of various states in connection with the
issuance of Acquiror Common Stock in the Merger. As of the date hereof,
the Acquiror is not aware of any reason why the approvals of all
Governmental Authorities necessary to permit consummation of the
transactions contemplated hereby will not be received without the
imposition of a condition or requirement described in Section 7.01(b).
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(ii) Subject to receipt of the regulatory approvals, and
expiration of the waiting periods, referred to in the preceding paragraph
and the making of all required filings under federal and state securities
laws, the execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby do not and will not
(A) constitute a breach or violation of, or a default under, or give rise
to any Lien, any acceleration of remedies or any right of termination
under, any law, rule or regulation or any judgment, decree, order,
governmental permit or license, or Contract of the Acquiror or of any of
its Subsidiaries or to which the Acquiror or any of its Subsidiaries or
properties is subject or bound, (B) constitute a breach or violation of, or
a default under, the certificate of incorporation or by-laws (or similar
governing documents) of the Acquiror or any of its Subsidiaries, or (C)
require any consent or approval under any such law, rule, regulation,
judgment, decree, order, governmental permit or license, agreement,
indenture or instrument.
(g) SEC Documents; Financial Statements. (i) The Acquiror's Annual
-----------------------------------
Reports on Form 10-K for the fiscal years ended December 31, 1994, 1995 and
1996, and all other reports, registration statements, definitive proxy
statements or information statements filed or to be filed by the Acquiror
or any of its Subsidiaries subsequent to December 31, 1994 under the
Securities Act, or under Sections 13(a), 13(c), 14 or 15(d) of the Exchange
Act, in the form filed or to be filed (collectively, the "Acquiror's SEC
Documents") with the SEC, as of the date filed, (A) complied or will comply
in all material respects as to form with the applicable requirements under
the Securities Act or the Exchange Act, as the case may be, and (B) did not
(or if amended or superseded by a filing prior to the date of this
Agreement, then as of the date of such filing) and will not contain any
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not
misleading; and each of the balance sheets contained in or incorporated by
reference into any such SEC Document (including the related notes and
schedules thereto) fairly presents, or will fairly present, the financial
position of the Acquiror and its Subsidiaries as of its date, and each of
the statements of income and changes in stockholders' equity and cash flows
or equivalent statements in such SEC Documents (including any related notes
and schedules thereto) fairly presents, or will fairly present, the results
of operations, changes in stockholders' equity and changes in cash flows,
as the case may be, of the Acquiror and its Subsidiaries for the periods to
which they relate, in each case in accordance with generally accepted
accounting principles consistently applied during the periods involved,
except in each case as may be noted therein, subject to normal year-end
audit adjustments in the case of unaudited statements.
(ii) Since December 31, 1996, on a consolidated basis the Acquiror and
its Subsidiaries have not incurred any liability other than in the ordinary
course of business consistent with past practice.
-39-
(iii) Since December 31, 1996, no event has occurred or circumstance
arisen that, individually or taken together with all other facts,
circumstances and events (described in any paragraph of Section 5.04 or
otherwise), is reasonably likely to have a Material Adverse Effect with
respect to the Acquiror.
(h) Litigation; Regulatory Action. (i) Other than as set forth in
-----------------------------
its SEC Documents filed on or before the date hereof, no litigation, claim
or other proceeding before any Governmental Authority is pending against
the Acquiror or any of its Subsidiaries and, to the Acquiror's knowledge,
no such litigation, claim or other proceeding has been threatened.
(ii) Neither the Acquiror nor any of its Subsidiaries or properties
is a party to or is subject to any order, decree, agreement, memorandum of
understanding or similar arrangement with, or a commitment letter or
similar submission to, or extraordinary supervisory letter from the FDIC or
the OTS, nor has the Acquiror or any of its Subsidiaries been advised by
the FDIC or the OTS that such agency is contemplating issuing or requesting
(or is considering the appropriateness of issuing or requesting) any such
order, decree, agreement, memorandum of understanding, commitment letter,
supervisory letter or similar submission.
(i) Compliance with Laws. The Acquiror and each of its Subsidiaries:
--------------------
(i) in the conduct of its business, is in compliance with all
applicable federal, state, local and foreign statutes, laws,
regulations, ordinances, rules, judgments, orders or decrees
applicable thereto or to the employees conducting such businesses,
including, without limitation, the Equal Credit Opportunity Act, the
Fair Housing Act, the Community Reinvestment Act, the Home Mortgage
Disclosure Act and all other applicable fair lending laws and other
laws relating to discriminatory business practices;
(ii) has all permits, licenses, authorizations, orders and
approvals of, and has made all filings, applications and registrations
with, all Governmental Authorities that are required in order to
permit them to conduct their businesses substantially as presently
conducted; all such permits, licenses, certificates of authority,
orders and approvals are in full force and effect and, to the best of
its knowledge, no suspension or cancellation of any of them is
threatened; and
(iii) has received, since December 31, 1995, no notification or
communication from any Governmental Authority (A) asserting that the
Acquiror or any of its Subsidiaries is not in compliance with any of
the statutes, regulations or ordinances that such Governmental
Authority enforces; (B) threatening to revoke any license, franchise,
permit or governmental authorization or
-40-
(C) threatening or contemplating revocation or limitation of, or which
would have the effect of revoking or limiting, the FDIC deposit
insurance of the Bank (nor, to the Acquiror's knowledge, do any
grounds for any of the foregoing exist).
(j) No Brokers. No action has been taken by the Acquiror that would
----------
give rise to any valid claim against any party hereto for a brokerage
commission, finder's fee or other like payment with respect to the
transactions contemplated by this Agreement, excluding a fee to be paid by
the Acquiror to Salomon Brothers Inc.
(k) Employee Benefit Plans. (i) Each of the Acquiror's Compensation
----------------------
and Benefit Plans has been administered in accordance with the terms
thereof and with applicable law, including ERISA and the Code. Each of the
Acquiror's Pension Plans which is intended to be qualified under Section
401(a) of the Code has received a favorable determination letter from the
IRS, and, except as Previously Disclosed, the Acquiror is not aware of any
circumstances reasonably likely to result in the revocation or denial of
any such favorable determination letter. There is no pending or, to the
Acquiror's knowledge, threatened litigation or governmental audit,
examination or investigation relating to the Acquiror's Compensation and
Benefit Plans.
(ii) No liability under Title IV of ERISA (other than contributions
and premiums required in connection therewith) has been or is reasonably
expected to be incurred by the Acquiror or any of its Subsidiaries with
respect to any "single-employer plan" (within the meaning of Section 4001
(a)(15) of ERISA) or Multiemployer Plan currently or formerly maintained by
any of them, or the single-employer plan or Multiemployer Plan of any ERISA
Affiliate.
(iii) Except as Previously Disclosed, all contributions, premiums and
payments required to have been made under the terms of any of the
Acquiror's Compensation and Benefit Plans or applicable law have been
timely made or reflected in the Acquiror's SEC Documents. Neither any of
the Acquiror's Pension Plans nor any ERISA Affiliate Plan of the Acquiror
or any of its Subsidiaries has an "accumulated funding deficiency" (whether
or not waived) within the meaning of Section 412 of the Code or Section 302
of ERISA. None of the Acquiror, any of its Subsidiaries or any ERISA
Affiliate has provided, or is required to provide, security to, nor are
there any circumstances requiring the imposition of a lien on the assets of
the Company or any of its Subsidiaries with respect to, any Pension Plan or
to any ERISA Affiliate Plan pursuant to ERISA or the Code.
(iv) Under each of the Acquiror's Pension Plans and ERISA Affiliate
Plans, to the Acquiror's knowledge, there has been no material adverse
change in the financial condition of any Pension Plan or ERISA Affiliate
Plan (with respect to either assets or benefits) since the last day of the
most recent plan year.
-41-
(v) Except as Previously Disclosed, neither the Acquiror nor any of
its Subsidiaries has any obligations under any Acquiror Compensation and
Benefit Plan to provide benefits, including death or medical benefits, with
respect to employees (or their spouses, beneficiaries or dependents) of it
or its Subsidiaries beyond the retirement or other termination of service
of any such employee other than (A) coverage mandated by Part 6 of Title I
of ERISA or Section 4980B of the Code, (B) retirement or death benefits
under any employee pension benefit plan (as defined under Section 3(2) of
ERISA), (C) disability benefits under any employee welfare plan that have
been fully provided for by insurance or otherwise, or (D) benefits in the
nature of severance pay.
(l) Ownership of Company Common Stock. As of the date hereof, neither
---------------------------------
the Acquiror nor, to its knowledge, any of its affiliates or associates (as
such terms are defined under the Exchange Act) (i) beneficially owns
directly or indirectly, or (ii) is party to any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or disposing
of, in each case, any outstanding shares of Company Common Stock (other
than shares held in a bona fide fiduciary capacity or in satisfaction of a
debt previously contracted in good faith).
(m) Tax Matters. (i) All Tax Returns with respect to the Acquiror or
-----------
any of its Subsidiaries, have been or will be timely filed, or requests for
extensions have been timely filed and have not expired; (ii) all Tax
Returns filed by the Acquiror are complete and accurate; (iii) all Taxes
shown to be due and payable (without regard to whether such Taxes have been
assessed) on such Tax Returns have been paid or adequate reserves have been
established for the payment of such Taxes; and (iv) no audit or examination
or refund litigation with respect to any Tax Return is pending or, to the
Acquiror's knowledge, has been threatened.
(n) Disclosure. The representations and warranties contained in this
----------
Section 5.04 do not contain any untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements
contained in this Section 5.04, in the light of the circumstances in which
they are being made, not misleading. The copies of all documents furnished
to the Company hereunder are true and complete copies of the original
thereof.
ARTICLE VI
COVENANTS
6.01 Reasonable Best Efforts. Subject to the terms and
conditions of this Agreement, each of the Company and the Acquiror agrees to use
its reasonable best efforts in
-42-
good faith to take, or cause to be taken (including causing any of its
Subsidiaries to take), all actions, and to do, or cause to be done, all things
necessary, proper or desirable, or advisable under applicable laws, so as to
permit consummation of the Merger as promptly as practicable and otherwise to
enable consummation of the transactions contemplated hereby and shall cooperate
fully with the other party hereto to that end.
6.02 Stockholder Approvals. The Company agrees to take, in
accordance with applicable law, applicable stock exchange rules, the Company
Certificate and the Company By-Laws, all action necessary to convene an
appropriate meeting of stockholders of the Company to consider and vote upon the
approval and adoption of this Agreement and any other matters required to be
approved by the Company's stockholders for consummation of the Merger (including
any adjournment or postponement, the "Company Meeting") as promptly as
practicable after the Registration Statement is declared effective. Unless the
Company Board, after having consulted with and considered the written advice of
outside counsel, has determined in good faith that it is otherwise required in
order to discharge properly the directors' fiduciary duties in accordance with
Delaware law, the Company Board shall recommend such approval, and the Company
shall take all reasonable, lawful action to solicit such approval by its
stockholders.
6.03 Registration Statement. (a) The Acquiror agrees to prepare
a registration statement on Form S-4 (the "Registration Statement"), to be filed
by the Acquiror with the SEC in connection with the issuance of Acquiror Common
Stock (and related Acquiror Rights) in the Merger (including the proxy statement
and prospectus and other proxy solicitation materials of the Company
constituting a part thereof (the "Proxy Statement") and all related documents).
The Company agrees to cooperate, and to cause its Subsidiaries to cooperate,
with the Acquiror, its counsel and its accountants, in preparation of the
Registration Statement and the Proxy Statement; and, provided that the Company
and its Subsidiaries have cooperated as required above, the Acquiror agrees to
file the Proxy Statement in preliminary form with the SEC as promptly as
reasonably practicable, and to file the Registration Statement with the SEC as
soon as reasonably practicable after any SEC comments with respect to the
preliminary Proxy Statement are resolved. Each of the Company and the Acquiror
agrees to use all reasonable best efforts to cause the Registration Statement to
be declared effective under the Securities Act as promptly as reasonably
practicable after filing thereof. The Acquiror also agrees to use all
reasonable best efforts to obtain all necessary state securities law or "Blue
Sky" permits and approvals required to carry out the transactions contemplated
by this Agreement. The Company agrees to furnish to the Acquiror all
information concerning the Company, its Subsidiaries, officers, directors and
stockholders as may be reasonably requested in connection with the foregoing.
(b) Each of the Company and the Acquiror agrees, as to itself and its
Subsidiaries, that none of the information supplied or to be supplied by it for
inclusion or incorporation by reference in (i) the Registration Statement will,
at the time the Registration
-43-
Statement and each amendment or supplement thereto, if any, becomes effective
under the Securities Act, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements therein not misleading, and (ii) the Proxy Statement and any
amendment or supplement thereto will, at the date of mailing to stockholders and
at the time of the Company Meeting, contain any untrue statement which, at the
time and in the light of the circumstances under which such statement is made,
will be false or misleading with respect to any material fact, or which will
omit to state any material fact necessary in order to make the statements
therein not false or misleading or necessary to correct any statement in any
earlier statement in the Proxy Statement or any amendment or supplement thereto.
Each of the Company and the Acquiror further agrees that if it shall become
aware prior to the Effective Date of any information furnished by it that would
cause any of the statements in the Proxy Statement to be false or misleading
with respect to any material fact, or to omit to state any material fact
necessary to make the statements therein not false or misleading, to promptly
inform the other party thereof and to take the necessary steps to correct the
Proxy Statement.
(c) The Acquiror agrees to advise the Company, promptly after the
Acquiror receives notice thereof, of the time when the Registration Statement
has become effective or any supplement or amendment has been filed, of the
issuance of any stop order or the suspension of the qualification of the
Acquiror Stock for offering or sale in any jurisdiction, of the initiation or
threat of any proceeding for any such purpose, or of any request by the SEC for
the amendment or supplement of the Registration Statement or for additional
information.
6.04 Press Releases. Each of the Company and the Acquiror agrees
that it will not, without the prior approval of the other party, issue any press
release or written statement for general circulation relating to the
transactions contemplated hereby, except as otherwise required by applicable law
or regulation or NYSE rules.
6.05 Access; Information. (a) Each of the Company and the
Acquiror agrees that upon reasonable notice and subject to applicable laws
relating to the exchange of information, it shall afford the other party and the
other party's officers, employees, counsel, accountants and other authorized
representatives, such access during normal business hours throughout the period
prior to the Effective Time to the books, records (including, without
limitation, tax returns and work papers of independent auditors), properties,
personnel and to such other information as any party may reasonably request and,
during such period, it shall furnish promptly to such other party (i) a copy of
each material report, schedule and other document filed by it pursuant to the
requirements of federal or state securities or banking laws, and (ii) all other
information concerning the business, properties and personnel of it as the other
may reasonably request.
(b) Each of the Company and the Acquiror agrees that it will not, and
will cause its representatives not to, use any information obtained pursuant to
this Section 5.05 for any purpose unrelated to the consummation of the
transactions contemplated by this Agreement.
-44-
Subject to the requirements of law, each party will keep confidential, and will
cause its representatives to keep confidential, all information and documents
obtained pursuant to this Section 6.05 unless such information (i) was already
known to such party, (ii) becomes available to such party from other sources not
known by such party to be bound by a confidentiality obligation, (iii) is
disclosed with the prior written approval of the party to which such information
pertains or (iv) is or becomes readily ascertainable from published information
or trade sources. In the event that this Agreement is terminated or the
transactions contemplated by this Agreement shall otherwise fail to be
consummated, each party shall promptly cause all copies of documents or extracts
thereof containing information and data as to another party hereto to be
returned to the party which furnished the same. No investigation by either
party of the business and affairs of the other shall affect or be deemed to
modify or waive any representation, warranty, covenant or agreement in this
Agreement, or the conditions to either party's obligation to consummate the
transactions contemplated by this Agreement.
6.06 Acquisition Proposals. The Company agrees that it shall
not, and shall cause its Subsidiaries and its and its Subsidiaries' officers,
directors, agents, advisors and affiliates not to, solicit or encourage
inquiries or proposals with respect to, or engage in any negotiations
concerning, or provide any confidential information to, or have any discussions
with, any person relating to, any tender or exchange offer, proposal for a
merger, consolidation or other business combination involving the Company or any
of its Subsidiaries or any proposal or offer to acquire in any manner a
substantial equity interest in, or a substantial portion of the assets or
deposits of, the Company or any of its Subsidiaries, other than the transactions
contemplated by this Agreement (any of the foregoing, an "Acquisition
Proposal"); provided, that, if the Company is not otherwise in violation of this
Section 6.06, the Company Board may provide information to, and may engage in
such negotiations or discussions with, a person, directly or through
representatives, if (a) the Company Board, after having consulted with and
considered the written advice of counsel, has determined in good faith that the
provision of such information or the engaging in such negotiations or discussion
is required in order to discharge properly the directors' fiduciary duties in
accordance with Delaware law and (b) the Company has received from such person a
confidentiality agreement in substantially customary form. The Company also
agrees immediately to cease and cause to be terminated any activities,
discussions or negotiations conducted prior to the date of this Agreement with
any parties other than the Acquiror or the Bank, with respect to any of the
foregoing. The Company shall promptly (within 24 hours) advise the Acquiror
following the receipt by it of any Acquisition Proposal and the substance
thereof (including the identity of the person making such Acquisition Proposal),
and advise the Acquiror of any developments with respect to such Acquisition
Proposal immediately upon the occurrence thereof.
6.07 Affiliate Agreements. Not later than the 15th day prior to
the mailing of the Proxy Statement, the Company shall deliver to the Acquiror a
schedule of each person that, to the Company's knowledge, is or is reasonably
likely to be, as of the date of the Company Meeting, deemed to be an "affiliate"
of it (each, a "Company Affiliate") as that term is used in
-45-
Rule 145 under the Securities Act or SEC Accounting Series Releases 130 and 135.
The Company agrees to use its reasonable best efforts to cause each person who
may be deemed to be a Company Affiliate to execute and deliver to the Company
and the Acquiror on or before the date of mailing of the Proxy Statement an
agreement in the form attached hereto as Exhibit B.
6.08 Takeover Laws. No party shall take any action that would
cause the transactions contemplated by this Agreement to be subject to
requirements imposed by any Takeover Law and each of them shall take all
necessary steps within its control to exempt (or ensure the continued exemption
of) the transactions contemplated by this Agreement from, or if necessary
challenge the validity or applicability of, any applicable Takeover Law, as now
or hereafter in effect.
6.09 No Rights Triggered. The Company shall take all reasonable
steps necessary to ensure that the entering into of this Agreement and the
consummation of the transactions contemplated hereby and any other action or
combination of actions, or any other transactions contemplated hereby, do not
and will not result in the grant of any rights to any person (a) under the
Company Certificate or the Company By-Laws or (b) under any material agreement
to which it or any of its Subsidiaries is a party (except as expressly
contemplated by the mandatory provisions under its stock option plans, as
applicable).
6.10 Rights Agreement. The Company shall take all necessary
action (i) to render the Company Rights Agreement inapplicable to the Merger and
the other transactions contemplated by this Agreement and (ii) to ensure that
neither the Acquiror, the Bank nor Merger Sub will become an "Acquiring Person"
and that no "Stock Acquisition Date" or a "Distribution Date" (as such terms are
defined in the Rights Agreement) will occur and that the exercisability of the
Company Rights Agreement will not be triggered, in each case as a result of the
execution or delivery of this Agreement or any amendment hereto or thereto or
the consummation of the Merger, or the consummation of the other transactions
contemplated by this Agreement. Except (a) as provided in Section 5.03(o) or in
the immediately preceding sentence or (b) if the Company Board, after having
consulted with and considered the written advice of outside counsel, has
determined in good faith that it is otherwise required in order to discharge
properly the directors' fiduciary duties in accordance with Delaware law, the
Company Board shall not (i) amend the Company Rights Agreement or (ii) take any
action with respect to, or make any determination under, the Company Rights
Agreement, including the determination that the Acquiror or any of its
Subsidiaries is an "Adverse Person," a redemption of the Company Rights or any
action to facilitate an Acquisition Transaction.
6.11 NYSE Listing. The Acquiror agrees to use its reasonable
best efforts to list, prior to the Effective Date, on the NYSE, subject to
official notice of issuance, the shares of Acquiror Common Stock to be issued to
the holders of Company Common Stock in the Merger.
-46-
6.12 Regulatory Applications. (a) The Acquiror and the Company and
their respective Subsidiaries shall cooperate and use their respective
reasonable best efforts to prepare all documentation, to effect all filings and
to obtain all permits, consents, approvals and authorizations of all third
parties and Governmental Authorities necessary to consummate the transactions
contemplated by this Agreement. Each of the Acquiror and the Company shall have
the right to review in advance, and to the extent practicable each will consult
with the other, in each case subject to applicable laws relating to the exchange
of information, with respect to, all material written information submitted to
any third party or any Governmental Authority in connection with the
transactions contemplated by this Agreement. In exercising the foregoing right,
each of the Acquiror and the Company agrees to act reasonably and as promptly as
practicable. Each of the Acquiror and the Company agrees that it will consult
with the other party hereto with respect to the obtaining of all material
permits, consents, approvals and authorizations of all third parties and
Governmental Authorities necessary or advisable to consummate the transactions
contemplated by this Agreement and each party will keep the other party
appraised of the status of material matters relating to completion of the
transactions contemplated hereby.
(b) Each of the Acquiror and the Company agrees, upon request, to
furnish the other party with all information concerning itself, its
Subsidiaries, directors, officers and stockholders and such other matters as may
be reasonably necessary or advisable in connection with any filing, notice or
application made by or on behalf of such other party or any of its Subsidiaries
to any third party or Governmental Authority.
6.13 Indemnification. (a) The by-laws of the Surviving
Corporation shall contain provisions no less favorable with respect to
indemnification than are set forth in Article VII of the Company By-Laws, which
provisions shall not be amended, repealed or otherwise modified, for a period of
six years from the Effective Time, in any manner that would adversely affect the
rights thereunder of individuals who at the Effective Time were directors,
officers, employees or agents of the Company with respect to any action, suit or
proceeding arising out of, or relating to, any actions, transactions or facts
occurring prior to the Effective Time. Following the Effective Date and for a
period of six years thereafter, the Acquiror shall indemnify, defend and hold
harmless the present and former directors and officers of the Company and its
Subsidiaries (each, an "Indemnified Party") against all costs or expenses
(including reasonable attorneys' fees), judgments, fines, losses, claims,
damages or liabilities (collectively, "Costs") incurred in connection with any
claim, action, suit, proceeding or investigation, whether civil, criminal,
administrative or investigative, arising out of actions or omissions occurring
at or prior to the Effective Time (including, without limitation, the
transactions contemplated by this Agreement), whether asserted or claimed prior
to, at or after the Effective Time, to the fullest extent that the Company is
permitted to indemnify its directors and officers under the laws of the State of
Delaware, the Company Certificate and the Company By-Laws as in effect on the
date hereof (and Acquiror shall, or shall cause the Surviving Corporation to,
also advance expenses as incurred to the fullest extent permitted under
applicable law provided the person to whom
-47-
expenses are advanced provides an undertaking to repay such advances if it is
ultimately determined that such person is not entitled to indemnification);
provided that any determination required to be made with respect to whether an
officer's or director's conduct complies with the standards set forth under
Delaware law, the Company Certificate and the Company By-Laws shall be made by
independent counsel (which shall not be counsel that provides material services
to the Acquiror) selected by the Acquiror and reasonably acceptable to such
officer or director; and provided, further, that in the absence of applicable
Delaware judicial precedent to the contrary, such counsel, in making such
determination, shall presume such officer's or director's conduct complied with
such standard and the Acquiror shall have the burden to demonstrate that such
officer's or director's conduct failed to comply with such standard.
(b) For a period of six years from the Effective Time, the Acquiror
shall use its best efforts to provide that portion of director's and officer's
liability insurance that serves to reimburse the present and former officers and
directors of the Company or any of its Subsidiaries (determined as of the
Effective Time) with respect to claims against such directors and officers
arising from facts or events which occurred before the Effective Time, which
insurance shall contain at least the same coverage and amounts, and contain
terms and conditions no less advantageous, as that coverage currently provided
by the Company; provided, however, that in no event shall the Acquiror be
required to expend more than 200 percent of the current amount expended by the
Company (the "Insurance Amount") to maintain or procure such directors and
officers insurance coverage; provided, further, that if the Acquiror is unable
to maintain or obtain the insurance called for by this Section 6.13(b), the
Acquiror shall use its reasonable best efforts to obtain as much comparable
insurance as is available for the Insurance Amount; provided, further, that
officers and directors of the Company or any Subsidiary may be required to make
application and provide customary representations and warranties to the
Acquirer's insurance carrier for the purpose of obtaining such insurance.
(c) Any Indemnified Party wishing to claim indemnification under
Section 6.13(a), upon learning of any claim, action, suit, proceeding or
investigation described above, shall promptly notify the Acquiror thereof;
provided that the failure so to notify shall not affect the obligations of the
Acquiror under Section 6.13(a) unless and to the extent that the Acquiror is
actually prejudiced as a result of such failure. In the event of any such
claim, action, suit, proceeding or investigation (whether arising before or
after the Effective Time), (i) the Acquiror or the Surviving Corporation shall
have the right to assume the defense thereof and the Acquiror shall not be
liable to such Indemnified Parties for any legal expenses of other counsel or
any other expenses subsequently incurred by such Indemnified Parties in
connection with the defense thereof, except that if the Acquiror or the
Surviving Corporation elects not to assume such defense or counsel for the
Indemnified Parties advises that there are issues that raise conflicts of
interest between the Acquiror or the Surviving Corporation and the Indemnified
Parties, the Indemnified Parties may retain counsel satisfactory to them, and
the Acquiror or the Surviving Corporation shall pay all reasonable fees and
expenses of such counsel for the Indemnified Parties promptly as statements
therefor are received; provided, however, that the Acquiror shall
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be obligated pursuant to this paragraph (c) to pay for only one firm of counsel
for all Indemnified Parties in any jurisdiction unless the use of one counsel
for such Indemnified Parties would present such counsel with a conflict of
interest, (ii) the Indemnified Parties will cooperate in the defense of any such
matter and (iii) the Acquiror shall not be liable for any settlement effected
without its prior written consent, which consent shall not be unreasonably
withheld; and provided, further, that the Acquiror shall not have any obligation
hereunder to any Indemnified Party when and if a court of competent jurisdiction
shall ultimately determine, and such determination shall have become final and
non-appealable, that the indemnification of such Indemnified Party in the manner
contemplated hereby is prohibited by applicable law.
(d) If the Acquiror or any of its successors or assigns shall
consolidate with or merge into any other entity and shall not be the continuing
or surviving entity of such consolidation or merger or shall transfer all or
substantially all of its assets to any entity, then and in each case, proper
provision shall be made so that the successors and assigns of the Acquiror shall
assume the obligations set forth in this Section 6.13.
6.14 Benefit Plans. From the Effective Time until December 31,
1998, Acquiror shall cause the Surviving Corporation and its Subsidiaries to
maintain for employees of the Company and its Subsidiaries who as of the
Effective Time become employed by the Surviving Corporation or the Acquiror or
any of their Subsidiaries (the "Covered Employees"), (a) salary and bonus
opportunities (but explicitly excluding commissions and equity grant
opportunities), (b) employee pension benefits in respect of plans intended to be
qualified under Section 401(a) of the Code, (c) employee welfare benefits and
(d) broad-based severance plans (the items covered in (a) through (d)
hereinafter referred to as "Designated Benefits"), that are no less favorable,
in the aggregate, than the Designated Benefits enjoyed by such Covered Employees
immediately prior to the Effective Time. For purposes of all employee benefit
plans, programs and arrangements maintained or contributed to by the Acquiror
and its Subsidiaries (including without limitation, the Surviving Corporation),
the Acquiror shall, or shall cause its Subsidiaries to, cause each such plan,
program or arrangement to treat the prior service with the Company and its
Subsidiaries of each Covered Employee (to the same extent such service is
recognized under analogous plans, programs or arrangements of the Company or its
Subsidiaries immediately prior to the Effective Time) as service rendered to the
Acquiror or its Subsidiaries, as the case may be, solely for purposes of
eligibility to participate and for vesting thereunder. Following the Effective
Time, the Acquiror shall cause the Surviving Corporation to cause any and all
pre-existing condition limitations (to the extent such limitations did not apply
to a pre-existing condition under the Compensation and Benefit Plans) and
eligibility waiting periods under any health plans to be waived with respect to
Covered Employees who, immediately prior to the Effective Time, participated in
a health plan and their eligible dependents. All discretionary awards and
benefits under any employee benefit plans of the Acquiror shall be subject to
the discretion of the persons or committee administering such plans. The
Acquiror shall honor, pursuant to the terms of the Company Compensation and
Benefit Plans Previously
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Disclosed, and to the extent consistent with applicable law, all employee
benefit obligations to current and former employees of the Company under such
plans.
6.15 Accountants' Letters. Each of the Company and the Acquiror
shall use its reasonable best efforts to cause to be delivered to the other
party, and such other party's directors and officers who sign the Registration
Statement, a letter of Xxxxxx & Xxxxx LLP and KPMG Peat Marwick LLP,
respectively, independent auditors, dated (i) the date on which the Registration
Statement shall become effective and (ii) a date shortly prior to the Effective
Date, and addressed to such other party, and such directors and officers, in
form and substance customary for "comfort" letters delivered by independent
accountants in accordance with Statement of Accounting Standards No. 72.
6.16 Notification of Certain Matters. Each of the Company and
the Acquiror shall give prompt notice to the other of any fact, event or
circumstance known to it that (i) is reasonably likely, individually or taken
together with all other facts, events and circumstances known to it, to result
in any Material Adverse Effect with respect to it or (ii) would cause or
constitute a material breach of any of its representations, warranties,
covenants or agreements contained herein.
6.17 Certain Policies of the Company. Upon the request of the
Acquiror, the Company shall, consistent with generally accepted accounting
principles and regulatory accounting principles, use its reasonable best efforts
to record certain accounting adjustments intended to conform the loan,
litigation and other accrual and reserve policies (including loan
classifications and levels of reserves) of the Company and its Subsidiaries so
as to reflect the policies of the Acquiror; provided, however, that the Company
shall not be obligated to record any such accounting adjustments pursuant to
this Section 6.17 (a) unless and until the Company shall be satisfied that the
conditions to the obligation of the parties to consummate the Merger will be
satisfied or waived on or before the Effective Time, and (b) in no event until
the day prior to the Effective Date. The Company's representations, warranties
and covenants contained in this Agreement shall not be deemed to be untrue or
breached in any respect for any purpose as a consequence of any modifications or
changes undertaken solely on account of this Section 6.17.
6.18 Employee Benefits. The Company shall, with the prior
approval of the Acquiror, take any necessary or appropriate action to effect a
correction of any errors made in connection with contributions made to the
Company's Savings Plan or Retirement Plan (including, to the extent appropriate,
making any necessary corrective contributions in order to satisfy the
nondiscrimination requirements under Sections 401(k)(3) and 401(m)(2) of the
Code). With respect to any options granted under the Company's Incentive Stock
Option Plan, the Company Board shall refrain from canceling any such options and
causing cash to be paid in consideration therefor. The Company Board (or such
members of the Company Board authorized to so act), in accordance with the
Company's Incentive Stock Option Plan, shall take timely action to adopt a
resolution providing and declaring that the consummation of the Merger,
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shareholder approval of the Merger, as well as all transactions or events
contemplated thereby or related thereto, shall not constitute a "Change of
Control" for purposes of such Incentive Stock Option Plan or, with the prior
consent of the Acquiror, take such other action as shall prevent any holder of a
Stock Option from having a right to receive, pursuant to Section 10 of such
Plan, a cash payment as a result of this Agreement and the transactions
contemplated hereby; provided that such other action be taken prior to the date
on which a "Change of Control" would otherwise occur in the absence of the
Company Board resolution to the contrary. The Company shall take such action as
is reasonably necessary to provide that, after the date of this Agreement, no
employee of the Company or any of its Subsidiaries who is otherwise eligible to
participate in the Company's Senior Executive Severance Pay Plan shall be
eligible to participate in, or receive a benefit under, the Company's Severance
Pay Plan, so as to prevent any employee of the Company or any of its
subsidiaries from receiving a severance benefit under both such plans. With
respect to the Company Annual Executive Bonus Plan (the "AEBP"), the aggregate
Target Pool (as such term is defined in the AEBP) for the 1997 calendar year
Valuation Period shall not exceed $2,000,000. To the extent a change of control
(as defined in the AEBP) occurs prior to the end of such Valuation Period,
however, such Target Pool shall be pro-rated in the same ratio as the number of
months in the Valuation Period completed as of the date of such change of
control bears to 12 (provided, however, that such pro-rated amount shall be
reduced by $273,750) and the Committee thereunder shall determine the amounts to
be paid under the AEBP and the Company shall make such payments, if any, at the
Effective Time. Notwithstanding the foregoing or any provision of this
Agreement, the Company shall take such action as may be required for each
Company Stock Option to fully vest and become immediately exercisable at the
Effective Time and to remain exercisable for the remaining term of such Company
Stock Option.
6.19 Certain Payments at Effective Time. In lieu of and in
satisfaction for the amount of any cash payment which might otherwise be paid or
payable upon a termination of employment under any Termination Agreement
previously entered into by the Company or any applicable severance plan, the
Company shall pay to the individuals listed on Schedule 6.19 of the Company's
Disclosure Schedule in a cash lump sum at the Effective Time the amounts set
forth in such Schedule 6.19, less the amount of any applicable withholding. In
addition, at the Effective Time payment shall also be made in respect of
Previously Disclosed obligations in respect of stock options that were never
granted to the individual included on Schedule 6.19of the Company's Disclosure
Schedule, less the amount of any applicable withholding.
6.20 Certain Employee Agreements. The Company shall not
terminate the employment of Messrs. Xxxxxxxx X. Xxxxx, Xxxxxx X. Xxxxxxxxx, Xxxx
X. Xxxxx and Xxxxxx X. Xxxxxx (each, an "Identified Employee") without the prior
written consent of the Acquiror (such consent not to be unreasonably withheld)
and, subject to the terms and conditions of this Agreement, shall use its
reasonable best efforts (a) to maintain the continued employment of each
Identified Employee with the Company until the Effective Date and (b) not in any
way to encourage (or permit the encouragement of) any Identified Employee to
breach or violate any
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employment agreement or other arrangement such Identified Employee may have with
the Acquiror or any Subsidiary of it.
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER
7.01 Conditions to Each Party's Obligation to Effect the Merger.
The respective obligation of each of the Acquiror and the Company to consummate
the Merger is subject to the fulfillment or written waiver by the Acquiror and
the Company prior to the Effective Time of each of the following conditions:
(a) Stockholder Approval. This Agreement shall have been duly adopted
--------------------
by the affirmative vote of the holders of at least a majority of the
outstanding shares of Company Common Stock entitled to vote thereon in
accordance with Section 251 of the DGCL, other applicable law and the
Company Certificate and the Company By-Laws.
(b) Governmental and Regulatory Consents. All approvals and
------------------------------------
authorizations of, filings and registrations with, and notifications to,
all Governmental Authorities (except to the extent that such Governmental
Authorities are acting in the capacity of Insurer or Investor) required for
the consummation of the Merger and for the prevention of any termination of
any material right, privilege, license or agreement of either the Acquiror
or the Company or their respective Subsidiaries shall have been obtained or
made and shall be in full force and effect and all waiting periods required
by law shall have expired; provided, however, that none of the preceding
shall be deemed obtained or made if it shall be subject to any condition or
restriction the effect of which would have a Material Adverse Effect on the
Acquiror (including the Company as a Subsidiary after the Merger) or on the
Surviving Corporation.
(c) Third Party Consents. All consents or approvals of all persons,
--------------------
other than Governmental Authorities (except to the extent that such
Governmental Authorities are acting in the capacity of Insurer or
Investor), required for or in connection with the execution, delivery and
performance of this Agreement and the consummation of the Merger shall have
been obtained and shall be in full force and effect, unless the failure to
obtain any such consent or approval is not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on the
Surviving Corporation.
(d) No Injunction. No Governmental Authority of competent
-------------
jurisdiction shall have enacted, issued, promulgated, enforced or entered
any statute, rule, regulation, judgment, decree, injunction or other order
(whether temporary, preliminary or
-52-
permanent) which is in effect and prohibits consummation of the
transactions contemplated by this Agreement.
(e) Registration Statement. The Registration Statement shall have
----------------------
become effective under the Securities Act and no stop order suspending the
effectiveness of the Registration Statement shall have been issued and no
proceedings for that purpose shall have been initiated or threatened by the
SEC.
(f) Blue Sky Approvals. All permits and other authorizations under
------------------
the federal and state securities laws (other than that referred to in
Section 7.01(e)) and other authorizations necessary to consummate the
transactions contemplated hereby and to issue the shares of Acquiror Common
Stock (and related Acquiror Rights) to be issued in the Merger shall have
been received and be in full force and effect.
(g) Listing. The shares of Acquiror Common Stock (and related
-------
Acquiror Rights) to be issued in the Merger shall have been approved for
listing on the NYSE, subject to official notice of issuance.
7.02 Conditions to Obligation of the Company. The obligation of
the Company to consummate the Merger is also subject to the fulfillment or
written waiver by the Company prior to the Effective Time of each of the
following conditions:
(a) Representations and Warranties. The representations and
------------------------------
warranties of the Acquiror set forth in this Agreement shall be true and
correct (after giving effect to the standard set forth in Section 5.02 of
this Agreement) as of the date of this Agreement and as of the Effective
Date as though made on and as of the Effective Date (except that
representations and warranties that by their terms speak as of the date of
this Agreement or some other date shall be true and correct only as of such
date), and the Company shall have received a certificate, dated the
Effective Date, signed on behalf of the Acquiror by the Chief Executive
Officer and the Treasurer of the Acquiror to such effect.
(b) Performance of Obligations of the Acquiror. The Acquiror, the
------------------------------------------
Bank and Merger Sub shall have performed in all material respects all
obligations required to be performed by them under this Agreement at or
prior to the Effective Time, and the Company shall have received a
certificate, dated the Effective Date, signed on behalf of the Acquiror by
the Chief Executive Officer and the Treasurer of the Acquiror to such
effect.
(c) Opinion of Counsel. The Company shall have received an opinion,
------------------
dated the Effective Date, of Xxxxxxxx & Xxxxxxxx, special counsel to the
Acquiror, to the effect that the shares of Acquiror Common Stock to be
issued as Consideration, when issued in
-53-
accordance with the terms hereof, will be duly authorized, validly issued,
fully paid and nonassessable.
(d) Tax Opinion of Company's Counsel. The Company shall have received
--------------------------------
an opinion of Xxxxxxx Xxxxxxx & Xxxxxxxx, special counsel to the Company,
to the effect that (i) the Merger constitutes a "reorganization" within the
meaning of Section 368 of the Code and (ii) no gain or loss will be
recognized by stockholders of the Company who receive shares of Acquiror
Common Stock as Consideration in exchange for shares of Company Common
Stock, except that gain or loss may be recognized as to cash received in
lieu of fractional share interests.
(e) Accountants' Letters. The Company shall have received the letters
--------------------
referred to in Section 6.15 from KPMG Peat Marwick LLP, the Acquiror's
independent auditors.
7.03 Conditions to Obligation of the Acquiror. The obligation of
the Acquiror to consummate the Merger is also subject to the fulfillment or
written waiver by the Acquiror prior to the Effective Time of each of the
following conditions:
(a) Representations and Warranties. The representations and
------------------------------
warranties of the Company set forth in this Agreement shall be true and
correct (after giving effect to the standard set forth in Section 5.02 of
this Agreement) as of the date of this Agreement and as of the Effective
Date as though made on and as of the Effective Date (except that
representations and warranties that by their terms speak as of the date of
this Agreement or some other date shall be true and correct only as of such
date) and the Acquiror shall have received a certificate, dated the
Effective Date, signed on behalf of the Company by the Chief Executive
Officer and the Treasurer of the Company to such effect.
(b) Performance of Obligations of the Company. The Company shall have
-----------------------------------------
performed in all material respects all obligations required to be performed
by it under this Agreement at or prior to the Effective Time, and the
Acquiror shall have received a certificate, dated the Effective Date,
signed on behalf of the Company by the Chief Executive Officer and the
Chief Financial Officer of the Company to such effect.
(c) Tax Opinion of Acquiror's Counsel. The Acquiror shall have
---------------------------------
received an opinion of Xxxxxxxx & Xxxxxxxx, special counsel to the
Acquiror, dated the Effective Date, to the effect that the Merger
constitutes a "reorganization" within the meaning of Section 368 of the
Code.
(d) Accountants' Letters. The Acquiror and its directors and officers
--------------------
who sign the Registration Statement shall have received the letters
referred to in Section 6.15 from Ernst & Young LLP, the Company's
independent auditors.
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ARTICLE VIII
TERMINATION
8.01 Termination. This Agreement may be terminated, and the
Merger may be abandoned:
(a) Mutual Consent. At any time prior to the Effective Time, by the
--------------
mutual consent of the Acquiror and the Company, if the Board of Directors
of each so determines by vote of a majority of the members of its entire
Board.
(b) Breach. At any time prior to the Effective Time, by the Acquiror
------
or the Company, in each case if its Board of Directors so determines by
vote of a majority of the members of its entire Board, in the event of
either: (i) a breach by the other party of any representation or warranty
contained herein (subject to the standard set forth in Section 5.02), which
breach cannot be or has not been cured within 30 days after the giving of
written notice to the breaching party of such breach; or (ii) a breach by
the other party of any of the covenants or agreements contained herein,
which breach cannot be or has not been cured within 30 days after the
giving of written notice to the breaching party of such breach and which
breach would be reasonably likely, individually or in the aggregate, to
have a Material Adverse Effect on the breaching party.
(c) Delay. At any time prior to the Effective Time, by the Acquiror
-----
or the Company, in each case if its Board of Directors so determines by
vote of a majority of the members of its entire Board, in the event that
the Merger is not consummated by December 31, 1997, except to the extent
that the failure of the Merger then to be consummated arises out of or
results from the knowing action or inaction of the party seeking to
terminate pursuant to this Section 8.01(c).
(d) No Approval. By the Company or the Acquiror, in each case if its
-----------
Board of Directors so determines by a vote of a majority of the members of
its entire Board, in the event (i) the approval of any Governmental
Authority required for consummation of the Merger and the other
transactions contemplated by this Agreement shall have been denied by final
nonappealable action of such Governmental Authority or (ii) any stockholder
approval required by Section 6.02 herein is not obtained at the Company
Meeting.
(e) Failure to Recommend, Etc. By the Acquiror, if (i) at any time
--------------------------
prior to the Company Meeting the Company Board shall have failed to make
its recommendation referred to in Section 6.02, withdrawn such
recommendation or modified or changed such recommendation in a manner
adverse to the interests of the Acquiror (whether in
-55-
accordance with Section 6.02 or otherwise) or (ii) the Company Board
participates in (or authorizes participation in) negotiations regarding the
substantive terms of a bona fide formal Acquisition Proposal).
(f) Acceptance of an Acquisition Proposal. By the Company, if,
-------------------------------------
without breaching Section 6.06, the Company shall contemporaneously enter
into a definitive agreement with a third party providing for an Acquisition
Transaction on terms determined in good faith by the Company Board, after
consulting with and considering the written advice of the Company's outside
counsel and financial advisors, to be more favorable to the stockholders of
the Company than the Merger; provided, that the right to terminate this
Agreement under this Section 8.01(f) shall not be available to the Company
unless it delivers to the Acquiror simultaneously with such termination the
fee referred to in Section 8.03.
(g) Possible Adjustment. By the Company, if the Company Board so
-------------------
determines by a vote of a majority of the members of the entire Company
Board, at any time during the five-day period commencing with the
Determination Date, if both of the following conditions are satisfied:
(i) The Average Closing Price on the Determination Date of shares
of Acquiror Common Stock shall be less than the product of 0.80 and the
Starting Price; and
(ii) (A) The number obtained by dividing the Average Closing
Price on the Determination Date by the Starting Price (such number, the
"Acquiror Ratio") shall be less than (B) the number obtained by dividing
the Index Price on the Determination Date by the Index Price on the
Starting Date and subtracting 0.20 from the quotient in this Section
8(g)(ii)(B) (such number, the "Index Ratio");
subject, however, to the following four sentences. If the Company elects
to exercise its termination right pursuant to this Section 8.01(g), it
shall give prompt written notice to the Acquiror; provided that such notice
of election may be withdrawn at any time within the aforementioned five-day
period. During the five-day period commencing with its receipt of such
notice, the Acquiror shall have the option of adjusting the Exchange Ratio
to the lesser of (i) a number equal to a quotient (rounded to the nearest
one-thousandth), the numerator of which is the product of 0.80, the
Starting Price and the Exchange Ratio (as then in effect) and the
denominator of which is the Average Closing Price, and (ii) a number equal
to a quotient (rounded to the nearest one-thousandth), the numerator of
which is the Index Ratio multiplied by the Exchange Ratio (as then in
effect) and the denominator of which is the Acquiror Ratio. If the
Acquiror determines so to increase the Exchange Ratio within such five-day
period, it shall give prompt written notice to the Company of its
determination and the revised Exchange Ratio, whereupon no termination
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shall occur pursuant to this Section 8.01(g) and this Agreement shall
remain in effect in accordance with its terms (except as the Exchange Ratio
shall have been so modified), and any references in this Agreement to the
"Exchange Ratio" shall thereafter be deemed to refer to the Exchange Ratio
as adjusted pursuant to this Section 8.01(g). If the Acquiror or any
company belonging to the Index Group declares or effects a stock dividend,
reclassification, recapitalization, split-up, combination, exchange of
shares or similar transaction between the Starting Date and the
Determination Date, the prices for the common stock of the Acquiror or such
company shall be appropriately adjusted for the purposes of applying this
Section 8.01(g).
8.02 Effect of Termination and Abandonment. In the event of
termination of this Agreement and the abandonment of the Merger pursuant to this
Article VIII, no party to this Agreement shall have any liability or further
obligation to any other party hereunder except (a) as set forth in Sections 8.03
and 9.01 and (b) that termination will not relieve a breaching party from
liability for any willful breach of this Agreement giving rise to such
termination.
8.03 Termination Fee. (a) The Company hereby agrees to pay to
the Acquiror, and the Acquiror shall be entitled to payment of, a cash fee (the
"Fee") of $15,000,000 following the occurrence of a Fee Trigger Event; provided,
that the Acquiror's right to receive the Fee shall be discontinued if any of the
following (each, a "Fee Termination Event") occurs prior to a Fee Trigger Event:
(i) The Effective Time;
(ii) Termination of this Agreement in accordance with the provisions
hereof, if such termination occurs prior to the occurrence of a Preliminary
Fee Trigger Event, other than a Listed Termination; or
(iii) Fifteen months after termination of this Agreement, if such
termination (A) follows, or occurs at the same time as, a Preliminary Fee
Trigger Event (other than, termination by the Company pursuant to (x)
Section 8.01(b) because of a knowing, intentional or grossly negligent
breach by the Acquiror or (y) Section 8.01(g), in which case the right to
receive the Fee shall terminate at termination of this Agreement) or (B) is
a Listed Termination.
(b) The term "Preliminary Fee Trigger Event" shall mean any of the
following events or transactions occurring on or after the date hereof:
(i) The Company or any subsidiary of the Company, without having received
the Acquiror's prior written consent, shall have entered into an agreement
to engage in an Acquisition Transaction with any person (the term "person"
for purposes of this Section 8.03 having the meaning assigned thereto in
Sections 3(a)(9) and 13(d)(3) of the
-57-
Exchange Act) other than the Acquiror or any of its Subsidiaries (each an
"Acquiror Person") or the Company Board shall have recommended that the
stockholders of the Company approve or accept any Acquisition Transaction
other than the Merger.
(ii) Any person, other than an Acquiror Person, shall have acquired
beneficial ownership or the right to acquire beneficial ownership of 15% or
more of the outstanding shares of Company Common Stock (the term
"beneficial ownership" for purposes of this Section 8.03 having the meaning
assigned thereto in Section 13(d) of the Exchange Act);
(iii) The stockholders of the Company shall have voted and failed to
adopt this Agreement and the Merger at a meeting which has been held for
that purpose or any adjournment or postponement thereof, or such meeting
shall not have been held in violation of this Agreement or shall have been
canceled prior to termination of this Agreement, in each case, if, prior to
such meeting (or if such meeting shall not have been held or shall have
been canceled, prior to such termination), it shall have been publicly
announced that any person (other than an Acquiror Person) shall have made,
or disclosed an intention to make, a bona fide proposal to engage in an
Acquisition Transaction;
(iv) The Company Board shall have withdrawn or modified (or disclosed its
intention to withdraw or modify) in a manner adverse in any respect to the
Acquiror its recommendation referred to in Section 6.02, or the Company or
any Subsidiary of it shall have authorized, recommended, proposed (or
publicly announced its intention to authorize, recommend or propose) an
agreement to engage in an Acquisition Transaction with any person other
than an Acquiror Person;
(v) Any person, other than an Acquiror Person, shall have made a bona
fide proposal to the Company or its stockholders, by public announcement or
written communication that is or becomes the subject of public disclosure,
to engage in an Acquisition Transaction;
(vi) Any person, other than an Acquiror Person, shall have filed with the
SEC a registration statement or tender offer materials with respect to a
potential exchange or tender offer that would constitute an Acquisition
Transaction (or filed a preliminary proxy statement with the SEC with
respect to a potential vote by its stockholders to approve the issuance of
shares to be offered in such an exchange offer); or
(vii) The Company shall have willfully breached any covenant or
obligation contained in this Agreement in anticipation of engaging in an
Acquisition Transaction, and following such breach the Acquiror would be
entitled to terminate this Agreement (whether immediately or after the
giving of notice or passage of time or both).
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(c) The term "Fee Trigger Event" shall mean any of the following events or
transactions occurring after the date hereof:
(i) The acquisition by any person (other than an Acquiror Person) of
beneficial ownership of 25% or more of the then outstanding Company Common
Stock; or
(ii) The occurrence of the Preliminary Fee Trigger Event described in
Section 8.03(b)(i), except that the percentage referred to in clause (iii)
of the definition of "Acquisition Transaction" shall be deemed 25%.
(d) The Company shall notify the Acquiror promptly in writing of its
knowledge of the occurrence of a Preliminary Fee Trigger Event or Fee Trigger
Event; provided, however, that the giving of such notice shall not be a
condition to the right of the Acquiror to the Fee.
(e) The Fee shall be payable, without setoff, by wire transfer in
immediately available funds, to an account specified by the Acquiror, not later
than three New York City business days following the first occurrence of a Fee
Trigger Event.
ARTICLE IX
MISCELLANEOUS
9.01 Survival. No representations, warranties, agreements and covenants
contained in this Agreement (other than in this Article IX) shall survive the
Effective Time or termination of this Agreement if this Agreement is terminated
prior to the Effective Time; provided, however, that if this Agreement is
terminated prior to the Effective Time, the agreements of the parties contained
in Sections 6.05(b), 8.02, 8.03 and Article IX shall survive such termination.
9.02 Waiver; Amendment. Prior to the Effective Time, any provision of
this Agreement may be (a) waived by the party benefitted by the provision, or
(b) amended or modified at any time, by an agreement in writing between the
parties hereto approved by their respective Boards of Directors and executed in
the same manner as this Agreement, except that, after approval of the Merger by
the stockholders of the Company, no amendment may be made which under applicable
law requires further approval of such stockholders without obtaining such
required further approval.
9.03 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to constitute an original.
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9.04 Governing Law. This Agreement shall be governed by, and
interpreted in accordance with, the laws of the State of New York applicable to
contracts made and to be performed entirely within such State.
9.05 Expenses. Subject to Section 8.03, each party hereto will bear all
expenses incurred by it in connection with this Agreement and the transactions
contemplated hereby, except that printing expenses and SEC registration fees
shall be shared equally between the Company and the Acquiror.
9.06 Notices. All notices, requests and other communications hereunder
to a party shall be in writing and shall be deemed given (a) on the date of
delivery, if personally delivered or telecopied (with confirmation), (b) on the
first business day following the date of dispatch, if delivered by a recognized
next-day courier service, or (c) on the third business day following the date of
mailing, if mailed by registered or certified mail (return receipt requested),
in each case to such party at its address or telecopy number set forth below or
such other address or numbers as such party may specify by notice to the parties
hereto.
If to the Company, to:
President
North American Mortgage Company
0000 Xxxxxx Xxxxx
Xxxxx Xxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
With a copy to:
Xxxxx X. Xxxxxx, Esq.
Xxxxxxx Xxxxxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000.
If to the Acquiror, to:
Xxxx X. Xxxxxx, Esq.
Dime Bancorp, Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
-60-
With a copy to:
Xxxxxxxx X. Xxxxx, Esq.
Xxxxxxxx & Xxxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000.
9.07 Entire Understanding; No Third Party Beneficiaries. This Agreement
(together with the Disclosure Schedules) represents the entire understanding of
the parties hereto with reference to the transactions contemplated hereby and
this Agreement supersedes any and all other oral or written agreements
heretofore made. Except for Section 6.13, insofar as such Section expressly
provides certain rights to the Indemnified Parties named therein, nothing in
this Agreement, expressed or implied, is intended to confer upon any person,
other than the parties hereto or their respective successors and permitted
assigns, any rights, remedies, obligations or liabilities under or by reason of
this Agreement.
* * *
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EXHIBIT A
Form of Amendment to Company Rights Agreement
---------------------------------------------
AMENDMENT, dated as of June 22, 1997 (the "Amendment"), to the Stockholder
Rights Agreement, dated as of October 19, 1992 (as amended, the "Rights
Agreement"), between North American Mortgage Company, a Delaware corporation
(the "Company"), and The Bank of New York, a New York banking corporation, as
Rights Agent (the "Rights Agent").
WITNESSETH
WHEREAS, on October 19, 1992, the Board of Directors of the Company
authorized and declared a dividend distribution of one Right for each share of
Common Stock outstanding at the close of business on the Record Date, each Right
representing the right to purchase one one-hundredth of a share of Preferred
Stock upon the terms and conditions set forth in the Rights Agreement;
WHEREAS, the Rights remain issued and outstanding and the Rights Agreement
remains in effect with respect thereto;
WHEREAS, no Distribution Date has occurred;
WHEREAS, the Company, Dime Bancorp, Inc., a Delaware corporation ("Dime"),
and The Dime Savings Bank of New York, FSB, a federal savings bank (the "Bank"),
have entered into an Agreement and Plan of Combination (the "Combination
Agreement"), pursuant to which the Bank would acquire the assets and assume the
liabilities of the Company (or assign the right to acquire such assets and
assume such liabilities to a corporation wholly owned and controlled by the
Bank); and
WHEREAS, in connection with the approval, execution, and delivery of the
Combination Agreement, the Board of Directors of the Company has approved, in
accordance with Section 27 of the Rights Agreement, this Amendment and has
directed the appropriate officers of the Company to take all appropriate steps
to execute and deliver this Amendment.
NOW, THEREFORE, in consideration of the premises and mutual agreements
herein set forth, the parties hereby agree as follows:
(1) Amendment to Section 1(a)
-------------------------
The first paragraph of Section 1(a) of the Rights Agreement is hereby
amended to read in its entirety as follows:
"(a) 'Acquiring Person' shall mean any Person who or which,
----------------
together with all Affiliates (as hereinafter defined) and Associates
(as hereinafter defined) of such Person, shall be the Beneficial Owner
(as hereinafter defined) of 15% or more of the shares of Common Stock,
but shall not include (i) the Company, (ii) any Subsidiary (as such
term is hereinafter defined) of the Company, (iii) any employee
benefit plan or compensation arrangement of the Company or any
Subsidiary of the Company, (iv) any Person holding shares of Common
Stock organized, appointed or established by the Company or any
Subsidiary of the Company for or pursuant to the terms of any such
employee benefit plan or compensation arrangement, or (v) until the
termination of the Combination Agreement in accordance with its terms,
Dime or any Affiliate or Associate of Dime, as a result of their
acquisition of Beneficial Ownership of shares of Common Stock by
reason of the approval, execution, or delivery of the Combination
Agreement, or by reason of the consummation of any transaction
contemplated by the Combination Agreement, so long as Dime and any
Affiliate or Associate of Dime is not the Beneficial Owner of any
shares of Common Stock other than (w) shares of Common Stock of which
Dime or any Affiliate or Associate of Dime is or becomes the
Beneficial Owner by reason of the approval, execution, or delivery of
the Combination Agreement, or by reason of the consummation of any
transaction contemplated by the Combination Agreement, (x) shares of
Common Stock Beneficially Owned by Dime or any Affiliate or Associate
of Dime on the date hereof, (y) shares of Common Stock of which Dime
or any Affiliate or Associate of Dime inadvertently becomes the
Beneficial Owner after the date hereof, provided that the number of
such shares of Common Stock does not exceed 1/2 of 1% of the shares of
Common Stock outstanding on the date hereof and that Dime or any such
Affiliate or Associate, as the case may be, divests such shares of
Common Stock as soon as practicable after it becomes aware of such
acquisition of Beneficial Ownership, and (z) shares of Common Stock
Beneficially Owned or otherwise held by Dime or any Affiliate or
Associate of Dime in fiduciary capacity or in satisfaction of debts
previously contracted in good faith (the Persons described in clauses
(i) through (v) above are referred to herein as 'Exempt Persons')."
(2) Amendment to Section 1(b)
-------------------------
Section 1(b) of the Rights Agreement is hereby amended to read in its
entirety as follows:
"(b) 'Adverse Person' shall mean any Person declared to be an
--------------
Adverse Person by the Board of Directors upon a determination of the
Board of Directors that the criteria set forth in Section 11(a)(ii)(B)
apply to such Person, provided, however, that the Board of Directors
shall not declare Dime or any Affiliate or Associate of Dime to be an
Adverse Person (i) as a result of the Combination
A-2
Agreement, their acquisition of Beneficial Ownership of shares of
Common Stock by reason of the Combination Agreement, or by reason of
the consummation of any transaction contemplated by the Combination
Agreement or (ii) unless the Combination Agreement has been terminated
in accordance with its terms."
(3) Addition of Section 1(z).
------------------------
A new Section 1(z) of the Rights Agreement is inserted, to read in its
entirety as follows:
"(z) 'Dime' shall mean Dime Bancorp, Inc., a Delaware
----
corporation, and its successors."
(4) Addition of Section 1(aa).
-------------------------
A new Section 1(aa) of the Rights Agreement is inserted, to read in
its entirety as follows:
"(aa) 'Combination Agreement' shall mean the Agreement and Plan of
---------------------
Combination, dated as of June 22, 1997, by and among the Company, Dime, and
The Dime Savings Bank of New York, FSB, a federal savings bank, as the same
may be amended from time to time."
(5) Amendment of Section 7(a). The first sentence of Section 7(a) of
-------------------------
the Rights Agreement is hereby amended to read in its entirety as follows:
"(a) Subject to Section 7(e) hereof, the registered holder of any
Right Certificate may exercise the Rights evidenced thereby (except as
otherwise provided herein) in whole or in part at any time after the
Distribution Date upon surrender of the Right Certificate, with the
form of election to purchase and the certificate on the reverse side
thereof duly executed, along with a signature guarantee and such other
and further documentation as the Rights Agent may reasonably request,
to the Rights Agent at the office or offices of the Rights Agent
designated for such purpose, together with payment of the aggregate
Exercise Price of the total number of one one-hundredth of a share of
Preferred Stock (or other securities, cash or other assets, as the
case may be) as to which such surrendered Rights are then exercised,
at or prior to the earlier of (i) the close of business on December
31, 2002 (the 'Final Expiration date'), (ii) the time at which the
Rights are redeemed as provided in Section 23 hereof, (iii) the time
at which such Rights are exchanged as provided in Section 24 hereof or
(iv) the effective time of the business combination provided for in
the Combination Agreement (the earlier if (i), (ii), (iii) or (iv)
being herein referred to as the 'Expiration Date')."
A-3
(6) Effectiveness. This Amendment shall be deemed to be in force and
-------------
effective immediately prior to the execution and delivery of the Combination
Agreement. Except as amended hereby, the Rights Agreement shall remain in full
force and effect and shall be otherwise unaffected hereby.
(7) Defined Terms. Unless otherwise defined herein, all capitalized
-------------
terms used but not otherwise defined herein shall have the meanings assigned
them in the Rights Agreement.
(8) Governing Law. This Amendment shall be deemed to be a contract
-------------
made under the laws of the State of New York and for all purposes shall be
governed by and construed in accordance with the laws of such State applicable
to contracts made and to be performed entirely within New York.
(9) Counterparts. This Amendment may be executed in any number of
------------
counterparts, each of which shall for all purposes be deemed an original and all
of which shall together constitute but one and the same instrument.
* * *
A-4
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed as of the day and year first above written.
NORTH AMERICAN MORTGAGE COMPANY
By:_______________________________
Name:
Title:
THE BANK OF NEW YORK, as Rights Agent
By:_______________________________
Name:
Title:
A-5
EXHIBIT B
Form of Company Affiliate Letter
--------------------------------
______________, 1997
North American Mortgage Company
0000 Xxxxxx Xxxxx
Xxxxx Xxxx, Xxxxxxxxxx 00000
Dime Bancorp, Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
I have been advised that I may be deemed to be an "affiliate" of North
American Mortgage Company, a Delaware corporation (the "Company"), as that term
is defined in Rule 145 promulgated by the Securities and Exchange Commission
(the "SEC") under the Securities Act of 1933, as amended (the "Securities Act").
I understand that pursuant to the terms of the Agreement and Plan of
Combination, dated as of June 22, 1997 (as amended from time to time and
including the exhibits thereto, the "Agreement"), by and among the Company, Dime
Bancorp, Inc., a Delaware corporation (the "Acquiror"), The Dime Savings Bank of
New York, FSB, a federal savings bank (the "Bank"), and 47th St. Property
Corporation ("Merger Sub"), Merger Sub plans to merge with and into the Company
(the "Merger").
I further understand that as a result of the Merger, I may receive
shares of common stock, par value $0.01 per share, of the Acquiror ("Acquiror
Common Stock") (i) in exchange for shares of common stock, par value $0.01 per
share, of the Company ("Company Common Stock") or (ii) as a result of the
exercise of Rights (as defined in the Agreement).
I have carefully read this letter and reviewed the Agreement and
discussed their requirements and other applicable limitations upon my ability to
sell, transfer, or otherwise dispose of Acquiror Common Stock and Company Common
Stock, to the extent I felt necessary, with my counsel or counsel for the
Company.
I represent, warrant and covenant with and to the Acquiror that in the
event I receive any Acquiror Common Stock as a result of the Merger:
1. I shall not make any sale, transfer, or other disposition of such Acquiror
Stock unless (i) such sale, transfer or other disposition has been
registered under the Securities Act, (ii) such sale, transfer or other
disposition is made in conformity with the provisions of Rule
145 under the Securities Act (as such rule may be amended from time to
time), or (iii) in the opinion of counsel in form and substance reasonably
satisfactory to the Acquiror, or under a "no-action" letter obtained by me
from the staff of the SEC, such sale, transfer or other disposition will
not violate or is otherwise exempt from registration under the Securities
Act.
2. I understand that the Acquiror is under no obligation to register the sale,
transfer or other disposition of shares of Acquiror Common Stock by me or
on my behalf under the Securities Act or to take any other action necessary
in order to make compliance with an exemption from such registration
available.
3. I understand that stop transfer instructions will be given to the
Acquiror's transfer agent with respect to the shares of Acquiror Common
Stock issued to me as a result of the Merger and that there will be placed
on the certificates for such shares, or any substitutions therefor, a
legend stating in substance:
"The shares represented by this certificate were issued in a
transaction to which Rule 145 promulgated under the Securities Act of
1933 applies. The shares represented by this certificate may be
transferred only in accordance with the terms of a letter agreement
between the registered holder hereof and Dime Bancorp, Inc., a copy of
which agreement is on file at the principal offices of Dime Bancorp,
Inc."
4. I understand that, unless transfer by me of the Acquiror Common Stock
issued to me as a result of the Merger has been registered under the
Securities Act or such transfer is made in conformity with the provisions
of Rule 145(d) under the Securities Act, the Acquiror reserves the right,
in its sole discretion, to place the following legend on the certificates
issued to my transferee:
"The shares represented by this certificate have not been registered
under the Securities Act of 1933 and were acquired from a person who
received such shares in a transaction to which Rule 145 under the
Securities Act of 1933 applies. The shares have been acquired by the
holder not with a view to, or for resale in connection with, any
distribution thereof within the meaning of the Securities Act of 1933
and may not be offered, sold, pledged or otherwise transferred except
in accordance with an exemption from the registration requirements of
the Securities Act of 1933."
It is understood and agreed that the legends set forth in paragraphs (3)
and (4) above shall be removed by delivery of substitute certificates without
such legend if I shall have delivered to the Acquiror (i) a copy of a "no
action" letter from the staff of the SEC, or an opinion of counsel in form and
substance reasonably satisfactory to the Acquiror, to the effect that such
legend is not
B-2
required for purposes of the Securities Act, or (ii) evidence or representations
satisfactory to the Acquiror that the Acquiror Common Stock represented by such
certificates is being or has been sold in conformity with the provisions of Rule
145(d).
I further understand and agree that this letter agreement shall apply to
all shares of Company Common Stock and Acquiror Common Stock that I am deemed to
beneficially own pursuant to applicable federal securities laws and I further
represent, warrant and covenant with and to the Acquiror that I will have, and
will cause each of the other parties whose shares are deemed to be beneficially
owned by me to have, all shares of Company Common Stock or Acquiror Common
Stock owned by me or such parties registered in my name or the name of such
parties, as applicable, prior to the effective date of the Merger and not in the
name of any bank, broker or dealer, nominee or clearing house.
Very truly yours,
________________________________
Name:
Accepted this _____ day of
______________, 1997.
NORTH AMERICAN MORTGAGE COMPANY
By __________________________
Name:
Title:
DIME BANCORP, INC.
By __________________________
Name:
Title:
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