AGREEMENT AND PLAN OF MERGER
By and Among
CHARTER ONE FINANCIAL, INC.
CITIZENS FINANCIAL GROUP, INC.
CARDINAL ACQUISITION CORP.
and, solely with respect to Article 11 of this Agreement,
THE ROYAL BANK OF SCOTLAND GROUP PLC
dated as of May 4, 2004
TABLE OF CONTENTS1
Page
ARTICLE 1
DEFINITIONS
Section 1.01. Definitions...................................................1
Section 1.02. Other Definitional and Interpretative Provisions..............6
ARTICLE 2
THE MERGER
Section 2.01. The Merger....................................................7
Section 2.02. Consummation..................................................7
Section 2.03. Conversion of Shares..........................................7
Section 2.04. Surrender and Payment.........................................8
Section 2.05. Company Equity Compensation Plans; Surrender of Company
Common Stock by Executive Officers and Directors.............10
Section 2.06. Dissenters' Rights...........................................11
Section 2.07. Adjustments..................................................11
Section 2.08. Withholding Rights...........................................11
Section 2.09. Lost Certificates............................................11
ARTICLE 3
THE SURVIVING CORPORATION
Section 3.01. Alternative Transaction Structures...........................12
Section 3.02. Certificate of Incorporation.................................12
Section 3.03. Bylaws.......................................................12
Section 3.04. Directors and Officers.......................................12
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 4.01. Corporate Existence and Power................................13
Section 4.02. Corporate Authorization......................................13
Section 4.03. Governmental Authorization...................................14
Section 4.04. Non-contravention............................................14
Section 4.05. Capitalization...............................................15
Section 4.06. Subsidiaries.................................................15
Section 4.07. SEC Filings; Financial Statements............................16
Section 4.08. Disclosure Documents.........................................18
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1 The Table of Contents is not a part of this Agreement.
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Section 4.09. Absence of Certain Changes...................................18
Section 4.10 . Litigation and Liabilities...................................19
Section 4.11. Compliance with Laws and Court Orders; Reporting
Requirements.................................................19
Section 4.12. Bank Capitalization..........................................21
Section 4.13. Material Contracts...........................................21
Section 4.14. Fees.........................................................21
Section 4.15. Opinion of Financial Advisor.................................21
Section 4.16. Taxes........................................................22
Section 4.17. Intellectual Property........................................23
Section 4.18. Personnel Matters............................................23
Section 4.19. Environmental Matters........................................26
Section 4.20. Property and Leases..........................................27
Section 4.21. Derivative Transactions......................................27
Section 4.22. Broker/Dealer Status.........................................28
Section 4.23. Antitakeover Statutes and Rights Agreement...................28
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF BUYER
Section 5.01. Corporate Existence and Power................................29
Section 5.02. Corporate Authorization......................................29
Section 5.03. Governmental Authorization...................................30
Section 5.04. Non-contravention............................................30
Section 5.05. SEC Reports; Financial Statements............................31
Section 5.06. Disclosure Documents.........................................32
Section 5.07. Compliance with Laws and Court Orders........................32
Section 5.08. Litigation...................................................32
Section 5.09. Finder' Fees................................................33
Section 5.10. Financing....................................................33
ARTICLE 6
COVENANTS OF THE COMPANY
Section 6.01. Conduct of the Company.......................................33
Section 6.02. Stockholder Meeting; Proxy Material..........................37
Section 6.03. Access to Information........................................37
Section 6.04. Acquisition Proposals........................................38
Section 6.05. Transition Committee.........................................40
Section 6.06. Control of Other Party's Business............................40
Section 6.07. ALCO Management..............................................41
Section 6.08. Branch Incentive Plan; Other Products........................41
Section 6.09. Charitable Contributions.....................................41
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ARTICLE 7
COVENANTS OF BUYER
Section 7.01. Obligations of Merger Subsidiary.............................42
Section 7.02. Director and Officer Liability...............................42
Section 7.03. Benefit Plans................................................43
Section 7.04. Conduct of Buyer and Merger Subsidiary.......................45
ARTICLE 8
COVENANTS OF BUYER AND THE COMPANY
Section 8.01. Reasonable Best Efforts......................................45
Section 8.02. Preparation of Company Proxy Statement.......................46
Section 8.03. Public Announcements.........................................47
Section 8.04. Further Assurances...........................................47
Section 8.05. Notices of Certain Events....................................47
ARTICLE 9
CONDITIONS TO THE MERGER
Section 9.01. Conditions to Obligations of Each Party......................48
Section 9.02. Conditions to the Obligations of Buyer
and Merger Subsidiary........................................48
Section 9.03. Conditions to the Obligations of the Company.................49
ARTICLE 10
TERMINATION
Section 10.01. Termination.................................................49
Section 10.02. Effect of Termination.......................................51
ARTICLE 11
MISCELLANEOUS
Section 11.01. Notices.....................................................51
Section 11.02. Survival of Representations and Warranties..................53
Section 11.03. Amendments and Waivers......................................53
Section 11.04. Expenses....................................................54
Section 11.05. Binding Effect; Benefit; Third Party Beneficiaries;
Assignment..................................................55
Section 11.06. Governing Law...............................................55
Section 11.07. Jurisdiction................................................55
Section 11.08. WAIVER OF JURY TRIAL........................................56
Section 11.09. Counterparts; Effectiveness.................................56
Section 11.10. Entire Agreement; Interpretation............................56
Section 11.11. Severability................................................57
Section 11.12. Specific Performance........................................57
Section 11.13. Liability for Payment of Merger Consideration...............57
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SCHEDULES
Company Disclosure Schedule
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of May 4, 2004 among Charter One
Financial, Inc., a Delaware corporation (the "COMPANY"), Citizens Financial
Group, Inc., a Delaware corporation ("BUYER"), Cardinal Acquisition Corp., a
Delaware corporation and a wholly owned Subsidiary of Buyer ("MERGER
SUBSIDIARY"), and, solely with respect to Article 11 of this Agreement, The
Royal Bank of Scotland Group PLC, a public limited liability company
incorporated under the laws of Scotland and indirect parent of Buyer
("HOLDINGS").
WHEREAS, the respective Boards of Directors of Buyer, Merger Subsidiary and
the Company have approved this Agreement and the Merger (as defined below) and
deem it advisable and in the best interests of their respective stockholders to
consummate the Merger on the terms and conditions set forth herein;
WHEREAS, Buyer, Merger Subsidiary and the Company desire to make those
representations, warranties, covenants and agreements specified herein in
connection with this Agreement;
WHEREAS, Holdings has agreed, pursuant to Section 11.13 hereof, to be
jointly and severally liable for the payment of the Merger Consideration (as
defined below) and any payment obligation arising from certain breaches of
this Agreement by Buyer and Merger Subsidiary; and
WHEREAS, prior to the execution and delivery of this Agreement, the
Board of Directors of the Company has duly amended the Amended and Restated
Stockholder Protection Rights Agreement dated as of October 20, 1999 between
the Company and BankBoston, N.A., as Rights Agent (the "RIGHTS AGREEMENT") to
provide that (i) the entry into by Buyer, Merger Subsidiary and the Company
of this Agreement and (ii) the acquisition of Company Common Stock by Buyer
or Merger Subsidiary pursuant to the Merger will not constitute or cause to
occur a "Flip-over Transaction or Event", "Flip-in Date", "Separation Time"
or "Stock Acquisition Date", or cause Buyer or Merger Subsidiary to be an
"Acquiring Person", pursuant to the Rights Agreement.
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements herein contained, the
parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
Section 1.01. DEFINITIONS. (a) The following terms, as used herein, have
the following meanings:
"AFFILIATE" means, with respect to any Person, any other Person directly
or indirectly controlling, controlled by, or under common control with such
Person.
"AGREEMENT" means this Agreement and Plan of Merger, together with the
Company Disclosure Schedule and the Buyer Disclosure Schedule.
"BANK REGULATOR" shall mean any pertinent federal or state Governmental
Authority charged with the supervision of banks, thrifts or bank or financial
holding companies or engaged in the insurance of bank deposits.
"BHC ACT" means the Bank Holding Company Act of 1956.
"BUSINESS DAY" means a day, other than Saturday, Sunday or any other day
on which commercial banks in New York, New York or London, England are
authorized or required by law to close.
"BUYER MATERIAL ADVERSE EFFECT" means a material adverse effect on the
ability of Buyer or Merger Subsidiary to timely consummate the Merger and the
transactions contemplated by this Agreement.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMPANY BALANCE SHEET" means the consolidated balance sheet of the
Company as of December 31, 2003 and the footnotes thereto set forth in the
Company 10-K.
"COMPANY BALANCE SHEET DATE" means December 31, 2003.
"COMPANY COMMON STOCK" means the common stock, $0.01 par value, of the
Company.
"COMPANY EQUITY COMPENSATION PLAN" means any equity or equity-based
compensation plan under which directors, employees, independent contractors
or other service providers to the Company and its Affiliates may purchase or
otherwise acquire shares of Company Common Stock or receive awards that are
based on or may be settled in shares of Company Common Stock.
"COMPANY INTELLECTUAL PROPERTY RIGHTS" means all material Intellectual
Property Rights owned or licensed and used or held for use by the Company or
any of its Subsidiaries.
"COMPANY MATERIAL ADVERSE EFFECT" means a material adverse effect on (i)
the business, results of operations or financial condition of the Company and
its Subsidiaries, taken as a whole (PROVIDED, HOWEVER, that, with respect to
this clause (i), Material Adverse Effect shall not be deemed to include
effects to the extent resulting from (a) changes, after the date hereof, in
generally accepted accounting principles or regulatory accounting
requirements applicable to banks or savings associations and their holding
companies generally, (b) changes, after
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the date hereof, in laws, rules or regulations of general applicability or
interpretations thereof by courts or Governmental Authorities, (c) actions or
omissions of the Company or any of its Subsidiaries taken with the prior written
consent of Buyer or expressly required hereunder, (d) changes, after the date
hereof, in general economic or market conditions affecting banks or their
holding companies generally or (e) the public disclosure of the transactions
contemplated by this Agreement), or (ii) the ability of the Company to timely
consummate the transactions contemplated by this Agreement.
"COMPANY PREFERRED STOCK" means the preferred stock, $0.01 par value, of
the Company.
"COMPANY 10-K" means the Company's annual report on Form 10-K for the
fiscal year ended December 31, 2003.
"DELAWARE LAW" means the General Corporation Law of the State of
Delaware.
"DISSENTING SHAREHOLDERS" means shareholders exercising appraisal rights
pursuant to Section 262 of the Delaware Law.
"EMPLOYEE PLAN" means any (i) "employee benefit plan", as defined in
Section 3(3) of ERISA; (ii) any employment, consultancy, severance or similar
service agreement, plan, arrangement or policy; or (iii) any other plan or
arrangement providing for compensation, bonuses, profit-sharing, equity or
equity-based compensation or other forms of incentive or deferred
compensation, vacation benefits, insurance (including any self-insured
arrangements), medical, dental, vision or prescription benefits, disability
or sick leave benefits, life insurance, employee assistance program, workers'
compensation, supplemental unemployment benefits and post-employment or
retirement benefits (including compensation, pension or insurance benefits);
in each case which is sponsored, maintained, administered, contributed to by
the Company or any Affiliate and covers any current or former employee,
director or independent contractor of the Company or any of its Subsidiaries
or with respect to which the Company or any of its Subsidiaries has any
liability to any current or former employee, director or independent
contractor of the Company or any of its Subsidiaries.
"ENVIRONMENTAL LAWS" means any federal, state, local or foreign law
(including common law), treaty, judicial decision, regulation, rule,
judgment, order, decree, injunction, permit or governmental restriction or
requirement or any agreement with any Governmental Authority or other third
party, relating to human health and safety (as affected by the environment or
natural resources), the environment, pollutants, contaminants (including mold
or other fungal contaminants), wastes or chemicals or to any toxic,
radioactive, ignitable, corrosive, reactive or otherwise hazardous
substances, wastes or materials.
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"ENVIRONMENTAL PERMITS" means all permits, licenses, franchises,
certificates, approvals and other similar authorizations of Governmental
Authorities relating to or required by Environmental Laws and affecting, or
relating in any way to, the business of the Company or any Subsidiary as
currently conducted.
"ERISA" means the Employee Retirement Income Security Act of 1974.
"ERISA AFFILIATE" with respect to the Company means any other entity
that, together with the Company, would be treated as a single employer under
Section 414 of the Code.
"FDIC" means the Federal Deposit Insurance Corporation.
"FEDERAL RESERVE BOARD" means the Board of Governors of the Federal
Reserve System.
"HOLDINGS 20-F" means Holdings' annual report on Form 20-F for the
fiscal year ended December 31, 2003.
"HSR ACT" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976.
"INTELLECTUAL PROPERTY RIGHTS" means any trademark, service xxxx, trade
name, mask work, invention, patent, trade secret, copyright, know-how
(including any registrations or applications for registration of any of the
foregoing) or any other similar type of proprietary intellectual property
right.
"JOINT VENTURE" means any Person which is not a Subsidiary of the
Company and in which (i) the Company, directly or indirectly, owns or
controls any shares of any class of the outstanding voting securities or
other equity interests, including without limitation, an equity investment,
as such term as of the date hereof is defined in the Federal Deposit
Insurance Corporation's rules and regulations at 12 C.F.R. Section 362.2(g),
of 5% or more or (ii) the Company or one of its Subsidiaries is a general
partner.
"LIEN" means, with respect to any property or asset, any mortgage, lien,
pledge, charge, security interest or other encumbrance of any kind in respect
of such property or asset. For purposes of this Agreement, a Person shall be
deemed to own subject to a Lien any property or asset that it has acquired or
holds subject to the interest of a vendor or lessor under any conditional
sale agreement, capital lease or other title retention agreement relating to
such property or asset.
"1933 ACT" means the Securities Act of 1933.
"1934 ACT" means the Securities Exchange Act of 1934.
"OCC" means the Office of the Comptroller of Currency.
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"OFFICER" of any Person means any executive officer of such Person
within the meaning of Rule 3b-7 of the 1934 Act.
"PERSON" means an individual, corporation, partnership, limited
liability company, association, trust or other entity or organization,
including a government or political subdivision or an agency or
instrumentality thereof.
"RIGHTS" has the meaning given to such term in the Rights Agreement.
"SEC" means the Securities and Exchange Commission.
"SUBSIDIARY" means, with respect to any Person, any entity of which (i)
if a corporation, securities or other ownership interests having ordinary
voting power to elect a majority of the board of directors or other persons
performing similar functions are at the time directly or indirectly owned by
such Person or (ii) if a limited liability company, partnership, association
or other business entity, a majority of the membership, partnership or other
ownership interests thereof are at the time directly or indirectly owned by
such Person.
"THIRD PARTY" means any Person other than Buyer or any of its Affiliates.
"WARN ACT" means the Worker Adjustment and Retraining Notification Act.
Any reference in this Agreement to a statute shall be to such statute,
as amended from time to time, and to the rules and regulations promulgated
thereunder.
(b) Each of the following terms is defined in the Section set forth
opposite such term:
TERM SECTION
Acquisition Proposal............. 6.04
Bankruptcy and Equity Exception.. 4.02
Benefits Transition Date......... 7.03
Branch Incentive Plan............ 6.09
Buyer Disclosure Schedule........Article 5
Certificates..................... 2.04
Closing.......................... 2.02
Company Disclosure Schedule......Article 4
Company DRIP..................... 2.05
Company Options.................. 2.05
Company Proxy Statement.......... 4.08
Company SEC Documents............ 4.07
Company Securities............... 4.05
Company Stockholder Meeting...... 6.02
Company Subsidiary Securities.... 4.06
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TERM SECTION
Company Units.................... 2.05
Confidentiality Agreement........ 6.03
Covered Employees................ 7.03
Dissenting Shares................ 2.03
Effective Time................... 2.01
End Date......................... 10.01
Exchange Agent................... 2.04
Expenses......................... 11.04
Finance Laws..................... 4.11
GAAP............................. 4.07
Governmental Authority........... 4.03
Holdings.........................Recitals
Indemnified Person............... 7.02
Material Contract................ 4.13
Merger........................... 2.01
Merger Consideration............. 2.03
Permits.......................... 4.01
Regulatory Applications.......... 4.03
Representatives.................. 6.04
Rights Agreement.................Recitals
Significant Stockholders.........Recitals
Surviving Corporation............ 2.01
Tax Return....................... 4.16
Tax.............................. 4.16
Taxing Authority................. 4.16
Termination Fee.................. 11.04
Transaction Agreements........... 11.10
Transition Committee............. 6.06
Trust Shares..................... 0.00
Xxxxxx Xxxxxx Bank............... 2.04
Section 1.02. OTHER DEFINITIONAL AND INTERPRETATIVE PROVISIONS. Unless
specified otherwise, in this Agreement the obligations of any party consisting
of more than one Person are joint and several. The words "hereof", "herein" and
"hereunder" and words of like import used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement. The
captions herein are included for convenience of reference only and shall be
ignored in the construction or interpretation hereof. References to Articles,
Sections, Exhibits and Schedules are to Articles, Sections, Exhibits and
Schedules of this Agreement unless otherwise specified. All Exhibits and
Schedules annexed hereto or referred to herein are hereby incorporated in and
made a part of this Agreement as if set forth in full herein. Any capitalized
terms used in any Exhibit or Schedule but not otherwise defined therein, shall
have the meaning as defined in this Agreement. Any singular term in this
Agreement shall be deemed to include the plural, and any plural term the
singular. Whenever the words
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"include", "includes" or "including" are used in this Agreement, they shall be
deemed to be followed by the words "without limitation", whether or not they are
in fact followed by those words or words of like import. References to any
agreement or contract are to that agreement or contract as amended, modified or
supplemented from time to time in accordance with the terms thereof. References
to any Person include the successors and permitted assigns of that Person.
References from or through any date mean, unless otherwise specified, from and
including or through and including, respectively.
ARTICLE 2
THE MERGER
Section 2.01. THE MERGER. (a) At the Effective Time, Merger Subsidiary
shall be merged (the "MERGER") with and into the Company in accordance with
Delaware Law, whereupon the separate existence of Merger Subsidiary shall cease,
and the Company shall be the surviving corporation (the "SURVIVING
CORPORATION").
(b) As soon as practicable after satisfaction or, to the extent permitted
hereunder, waiver of all conditions set forth in Article 9, the Company and
Merger Subsidiary shall file a certificate of merger with the Delaware Secretary
of State and make all other filings or recordings required by Delaware Law in
connection with the Merger. The Merger shall become effective at such time (the
"EFFECTIVE TIME") as the certificate of merger is duly filed with the Delaware
Secretary of State (or at such later time as may be specified in the certificate
of merger).
(c) From and after the Effective Time, the Surviving Corporation shall
possess all the rights, powers, privileges and franchises and be subject to all
of the obligations, liabilities, restrictions and disabilities of the Company
and Merger Subsidiary, all as provided under Delaware Law.
Section 2.02. CONSUMMATION. Unless this Agreement shall have been
terminated and the Merger shall have been abandoned pursuant to Section 10.01,
the consummation of the Merger (the "Closing") shall take place at 10:00 a.m.,
New York City time, at the offices of Xxxxx Xxxx & Xxxxxxxx, 000 Xxxxxxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx, as soon as possible, but in no event later than
three Business Days, after satisfaction or waiver (to the extent permitted
hereunder) of the conditions set forth in Article 9 (other than those conditions
that by their nature are to be satisfied at Closing, but subject to satisfaction
or waiver of those conditions), or at such other time or place as Buyer and the
Company may agree in writing.
Section 2.03. CONVERSION OF SHARES. At the Effective Time:
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(a) each share of Company Common Stock (i) held by the Company as treasury
stock or (ii) owned by Buyer or any Subsidiary of Buyer, in each case,
immediately prior to the Effective Time shall be canceled, and no payment shall
be made with respect thereto; PROVIDED that any shares of Company Common Stock
(A) held by Buyer or any of its Subsidiaries in connection with any market
making or proprietary trading activity or for the account of clients, customers
or other Persons, (B) as to which Buyer or any of its Subsidiaries is or may be
required to act as a fiduciary or in a similar capacity, (C) shares held by
Buyer or the Company or any of their respective Subsidiaries in respect of a
debt previously contracted (any such shares in clauses (A), (B) or (C), "TRUST
SHARES") or (D) the cancellation of which would violate any legal duties or
obligations of Buyer or any of its Subsidiaries, in each case, shall not be
cancelled but, instead, shall be treated as set forth in Section 2.03(c) below;
(b) each share of common stock of Merger Subsidiary outstanding immediately
prior to the Effective Time shall be converted into and become one share of
common stock of the Surviving Corporation with the same rights, powers and
privileges as the shares so converted and shall constitute the only outstanding
shares of capital stock of the Surviving Corporation; and
(c) except as otherwise provided in this Section 2.03 or as provided in
Section 2.05 with respect to shares of Company Common Stock as to which
appraisal rights have been exercised, each share of Company Common Stock
outstanding immediately prior to the Effective Time shall be converted into the
right to receive in cash from Buyer an amount equal to $44.50, without interest
(the "MERGER CONSIDERATION").
Section 2.04. SURRENDER AND PAYMENT. Prior to the Effective Time, Buyer
shall appoint an agent, reasonably satisfactory to the Company (the "EXCHANGE
AGENT") for the purpose of exchanging for the Merger Consideration certificates
representing shares of Company Common Stock (the "CERTIFICATES"). Prior to the
Effective Time, Buyer shall deposit or cause to be deposited with the Exchange
Agent in a separate fund established for the benefit of the holders of shares of
Company Common Stock, cash sufficient to pay the aggregate Merger Consideration
required to be paid for all of the Certificates at the Effective Time. Any cash
deposited with the Exchange Agent shall not be used for any purpose other than
as set forth in this Article 2 and shall be invested by the Exchange Agent as
directed by Buyer or the Surviving Corporation in: (A) direct obligations of, or
obligations the principal of and interest on which are unconditionally
guaranteed by, the United States of America with a remaining term at the time of
acquisition thereof not in excess of 90 days, (B) money market accounts or
certificates of deposit maturing within 90 days of the acquisition thereof and
issued by a bank or trust company organized under the laws of the United States
of America or a State thereof having a combined capital surplus in excess of
$500,000,000 (a "UNITED STATES BANK"), (C) commercial paper issued by a domestic
corporation and given a rating of no lower than A1 by Standard & Poor's
Corporation and P1 by Xxxxx'x Investors Service, Inc. with a remaining
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term at the time of acquisition thereof not in excess of 90 days or (D) demand
deposits with any United States Bank. The earnings and interest thereon shall be
paid to Buyer or as Buyer directs. Promptly after the Effective Time (but in no
event later than seven Business Days after the Effective Time), Buyer shall
send, or shall cause the Exchange Agent to send, to each holder of record of
shares of Company Common Stock at the Effective Time, a letter of transmittal
and instructions (which shall specify that the delivery shall be effected, and
risk of loss and title shall pass, only upon proper delivery of the Certificates
to the Exchange Agent) for use in such exchange.
(b) Each holder of shares of Company Common Stock that have been converted
into the right to receive the Merger Consideration shall be entitled to receive,
upon surrender to the Exchange Agent of a Certificate, together with a properly
completed letter of transmittal, the Merger Consideration in respect of the
Company Common Stock represented by each such Certificate. Until so surrendered
or transferred, as the case may be, each such Certificate shall represent after
the Effective Time for all purposes only the right to receive such Merger
Consideration.
(c) If any portion of the Merger Consideration is to be paid to a Person
other than the Person in whose name the surrendered Certificate is registered,
it shall be a condition to such payment that (i) either such Certificate shall
be properly endorsed or shall otherwise be in proper form for transfer and (ii)
the Person requesting such payment shall pay to the Exchange Agent any transfer
or other similar taxes required as a result of such payment to a Person other
than the registered holder of such Certificate or establish to the reasonable
satisfaction of the Exchange Agent that such tax has been paid or is not
payable.
(d) After the Effective Time, there shall be no further registration of
transfers of shares of Company Common Stock. If, after the Effective Time,
Certificates are presented to the Surviving Corporation, they shall be canceled
and exchanged for the Merger Consideration provided for, and in accordance with
the procedures set forth, in this Article 2.
(e) Any portion of the Merger Consideration made available to the Exchange
Agent pursuant to Section 2.04(a) (and any interest or other income earned
thereon) that remains unclaimed by the holders of shares of Company Common Stock
six months after the Effective Time shall be returned to Buyer, upon demand, and
any such holder who has not exchanged shares of Company Common Stock for the
Merger Consideration in accordance with this Section 2.04 prior to that time
shall thereafter look only to Buyer for payment of the Merger Consideration in
respect of such shares without any interest thereon. Notwithstanding the
foregoing, Buyer shall not be liable to any holder of shares of Company Common
Stock for any amounts paid to a public official pursuant to applicable abandoned
property, escheat or similar laws. Any amounts remaining unclaimed by holders of
shares of Company Common Stock immediately prior to such time when the amounts
would otherwise escheat to or become property of
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any Governmental Authority shall become, to the extent permitted by applicable
law, the property of Buyer free and clear of any claims or interest of any
Person previously entitled thereto.
Section 2.05. COMPANY EQUITY COMPENSATION PLANS; SURRENDER OF COMPANY
COMMON STOCK BY EXECUTIVE OFFICERS AND DIRECTORS. (a) At the Effective Time,
each outstanding option to purchase shares of Company Common Stock which the
Company is obligated to honor, whether through the issuance of shares of Company
Common Stock or otherwise, granted under a Company Equity Compensation Plan
(each, a "COMPANY OPTION"), shall be cancelled and the Company shall pay each
holder thereof at or promptly after the Effective Time (but in no event later
than seven Business Days after the Effective Time) for each such Company Option
cancelled an amount in cash (without interest) determined by multiplying (i) the
excess, if any, of the Merger Consideration over the applicable exercise price
of such Company Option by (ii) the number of shares of Company Common Stock
subject thereto immediately prior to the Effective Time. In connection
therewith, the Company shall provide written notice to each holder of a then
outstanding Company Option (whether or not such Company Option is then vested or
exercisable), that (A) such Company Option shall be, as at the date of such
notice, exercisable in full, (B) such Company Option shall terminate at the
Effective Time and (C) if such Company Option is not exercised or otherwise
terminated on or before the fifth Business Day prior to the Effective Time, such
Company Option shall be treated as set forth in the immediately preceding
sentence. Immediately prior to the Effective Time, all outstanding compensatory
Company Common Stock units granted under a Company Equity Compensation Plan
(collectively, "COMPANY UNITS"), including the 2004 Senior Executive Stock Unit
Deferred Compensation Plan and the Stock Deferred Compensation Plan, shall
become fully vested and cease to be subject to any risk of forfeiture or
restriction on transferability. At the Effective Time, each Company Unit shall
be cancelled, and the Company shall pay each holder thereof at or promptly after
the Effective Time (but in no event later than seven Business Days after the
Effective Time) for each such Company Unit cancelled an amount in cash (without
interest) determined by multiplying (i) the Merger Consideration by (ii) the
number of shares of Company Common Stock subject thereto immediately prior to
the Effective Time.
(b) The Company has taken all action as is necessary to provide that (i)
from and after the date of this Agreement, no new participants shall be
permitted to enroll in the Company's automatic dividend reinvestment plan (the
"Company DRIP") and the Company shall direct BankBoston N.A., as transfer agent
under the Company DRIP, to stop accepting Authorization Cards (as described in
the Company DRIP) and (ii) no later than three Business Days prior to the date
on which the Effective Time occurs, no further shares of Company Common Stock
will be purchased under the Company DRIP. Immediately prior to the Effective
Time and subject to the consummation of the Merger, the Company shall terminate
the Company DRIP.
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(c) Prior to the Effective Time, the Company shall adopt such resolutions
that are necessary to give effect to the transactions contemplated by this
Section 2.05.
(d) The board of directors of the Company shall adopt such resolutions
necessary to provide that the surrender of any Company Common Stock, Company
Options and Company Units by each officer and director of the Company who is
subject to Section 16 of the 1934 Act shall be an exempt transaction pursuant to
Rule 16b-3 under the 1934 Act.
Section 2.06. DISSENTERS' RIGHTS. Notwithstanding anything in this
Agreement to the contrary, if any Dissenting Shareholder shall demand to be paid
the "fair value" of such holder's shares of Company Common Stock, as provided in
Section 262 of the Delaware Law, such shares shall not be converted into or
exchangeable for the right to receive the Merger Consideration except as
provided in this Section 2.06, and the Company shall give Buyer notice thereof
and Buyer shall have the right to participate in all negotiations and
proceedings with respect to any such demands. Neither the Company nor the
Surviving Corporation shall, except with the prior written consent of Buyer,
voluntarily make any payment with respect to, or settle or offer to settle, any
such demand for payment. If any Dissenting Shareholder shall fail to perfect or
shall have effectively withdrawn or lost the right to dissent, the shares of
Company Common Stock held by such Dissenting Shareholder shall thereupon be
treated as though such shares had been converted into the Merger Consideration
pursuant to Section 2.03.
Section 2.07. ADJUSTMENTS. If, during the period between the date of this
Agreement and the Effective Time, any change in the outstanding shares of
capital stock of the Company shall occur, including by reason of any
reclassification, recapitalization, stock split (including a reverse stock
split) or combination, exchange, subdivision or readjustment of shares, or any
stock dividend thereon with a record date during such period or issuer tender or
exchange offer or other similar transaction, the Merger Consideration and any
other amounts payable pursuant to this Agreement shall be appropriately
adjusted.
Section 2.08. WITHHOLDING RIGHTS. Each of the Surviving Corporation and
Buyer shall be entitled to deduct and withhold from the consideration otherwise
payable to any Person pursuant to this Article 2 such amounts as it is required
to deduct and withhold with respect to the making of such payment under any
provision of federal, state, local or foreign tax law. If the Surviving
Corporation or Buyer, as the case may be, so withholds amounts, such amounts
shall be treated for all purposes of this Agreement as having been paid to the
holder of the shares of Company Common Stock, Company Options or Company Units
in respect of which the Surviving Corporation or Buyer, as the case may be, made
such deduction and withholding.
Section 2.09. LOST CERTIFICATES. If any Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the Person
11
claiming such Certificate to be lost, stolen or destroyed and, if required by
the Surviving Corporation, the posting by such Person of a bond, in such
reasonable amount as the Surviving Corporation may direct, as indemnity against
any claim that may be made against it with respect to such Certificate, the
Exchange Agent will issue, in exchange for such lost, stolen or destroyed
Certificate, the Merger Consideration to be paid in respect of the shares of
Company Common Stock represented by such Certificate, as contemplated by this
Article 2.
ARTICLE 3
THE SURVIVING CORPORATION
Section 3.01. ALTERNATIVE TRANSACTION STRUCTURES. Notwithstanding anything
that may be deemed to be to the contrary contained herein, at its election,
Buyer may change, and the Company shall cooperate in such efforts (including,
without limitation, by entering into an appropriate amendment to this
Agreement), the method of effecting the combination with the Company, including
to provide for a merger of the Company into Buyer or any Subsidiary of Buyer or
to substitute any of Buyer's direct or indirect wholly owned Subsidiaries of
Buyer or Merger Subsidiary organized under the laws of Delaware as a constituent
corporation in the Merger; PROVIDED, HOWEVER, that no such change shall (i)
alter or change the amount or kind of consideration to be issued to holders of
shares of Company Common Stock as provided for in this Agreement, (ii)
materially impede or delay consummation of the transactions contemplated by this
Agreement or (iii) otherwise adversely affect the stockholders of the Company.
Section 3.02. CERTIFICATE OF INCORPORATION. The certificate of
incorporation of the Company in effect at the Effective Time shall be the
certificate of incorporation of the Surviving Corporation until amended in
accordance with Delaware Law.
Section 3.03. BYLAWS. The bylaws of Merger Subsidiary in effect at the
Effective Time shall be the bylaws of the Surviving Corporation until amended in
accordance with Delaware Law.
Section 3.04. DIRECTORS AND OFFICERS. From and after the Effective Time,
until successors are duly elected or appointed and qualified in accordance with
applicable law, (i) the directors of Merger Subsidiary at the Effective Time
shall be the directors of the Surviving Corporation and (ii) the officers of the
Company at the Effective Time shall be the officers of the Surviving
Corporation.
12
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the Disclosure Schedule (subject to Section
11.10(c)) delivered by the Company to Buyer contemporaneously with the
execution and delivery of this Agreement (the "COMPANY DISCLOSURE SCHEDULE"),
the Company represents and warrants to Buyer that:
Section 4.01. CORPORATE EXISTENCE AND POWER. The Company is a corporation
duly incorporated, validly existing and in good standing under the laws of the
State of Delaware and has all corporate powers and all governmental licenses,
authorizations, permits, consents and approvals (collectively, "Permits")
required to carry on its business as now conducted, except for those Permits the
absence of which would not have, individually or in the aggregate, a Company
Material Adverse Effect. The Company is duly qualified to do business as a
foreign corporation and is in good standing in each jurisdiction where such
qualification is necessary, except for those jurisdictions where failure to be
so qualified would not have, individually or in the aggregate, a Company
Material Adverse Effect. The Company is duly registered as a financial holding
company under the BHC Act. The Company has heretofore made available to Buyer
true and complete copies of the certificate of incorporation and bylaws of the
Company as currently in effect.
Section 4.02. CORPORATE AUTHORIZATION. (a) The execution, delivery and
performance by the Company of this Agreement and the consummation by the Company
of the transactions contemplated hereby are within the Company's corporate
powers and, except for the required approval of the Company's stockholders in
connection with the consummation of the Merger, have been duly authorized by all
necessary corporate action on the part of the Company. The affirmative vote of
the holders of a majority of the outstanding shares of Company Common Stock is
the only vote of the holders of any of the Company's capital stock necessary in
connection with the consummation of the Merger. This Agreement is a valid and
binding agreement of the Company enforceable against the Company in accordance
with its terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability relating to
or affecting creditors' rights and to general equity principles (the "BANKRUPTCY
AND EQUITY EXCEPTION").
(b) At a meeting duly called and held on May 4, 2004, the Company's Board
of Directors has (i) unanimously determined that this Agreement and the
transactions contemplated hereby are fair to and in the best interests of the
Company's stockholders, (ii) unanimously approved and adopted this Agreement and
the transactions contemplated hereby, (ii) approved and adopted an amendment to
the Rights Agreement to render the Rights inapplicable to the Merger, this
Agreement and the transactions contemplated hereby, (iii) unanimously resolved
to recommend approval and adoption of this Agreement by
13
its stockholders and (iv) directed that this Agreement be submitted
to the Company's stockholders for their adoption.
Section 4.03. GOVERNMENTAL AUTHORIZATION. The execution, delivery and
performance by the Company of this Agreement and the consummation by the Company
of the transactions contemplated hereby require no action by or in respect of,
or filing with, any governmental body, agency, official, authority or
instrumentality (each, a "GOVERNMENTAL AUTHORITY"), domestic, foreign or
supranational, other than (i) the filing of a certificate of merger with respect
to the Merger with the Secretary of State of Delaware and appropriate documents
with the relevant authorities of other states in which the Company is qualified
to do business, (ii) the filing of an application by Buyer with the
Massachusetts Board of Bank Incorporation (and, in connection with such
application, an application with the Massachusetts Housing Partnership Fund), an
application by Buyer on Form FR Y-3 with the Federal Reserve Board and the other
filings and actions listed in Section 4.03 of the Company Disclosure Schedule
(together, the "REGULATORY APPLICATIONS"), (iii) compliance with any applicable
requirements of the HSR Act, (iv) compliance with any applicable requirements of
the 1934 Act, and any other applicable securities laws, whether state or
foreign, and (v) any actions or filings the absence of which would not be
reasonably expected to have, individually or in the aggregate, a Company
Material Adverse Effect. As of the date of this Agreement, the Company knows of
no reason why all regulatory approvals from any Governmental Authority required
for the consummation of the transactions contemplated by this Agreement should
not be obtained on a timely basis.
Section 4.04. NON-CONTRAVENTION. The execution, delivery and performance
by the Company of this Agreement and the consummation of the transactions
contemplated hereby do not and will not (i) contravene, conflict with, or result
in any violation or breach of any provision of the certificate of incorporation
or bylaws of the Company or the comparable governing instruments of any of its
Subsidiaries, assuming compliance with the matters referred to in Section 4.03,
contravene, conflict with or result in a violation or breach of any provision of
any applicable law, statute, ordinance, rule, regulation, judgment, injunction,
order, or decree applicable to the Company or any of its Subsidiaries, require
any consent or other action by any Person under, constitute a default, or an
event that, with or without notice or lapse of time or both, would constitute a
default, under, or cause or permit the termination, cancellation, acceleration
or other change of any right or obligation or the loss of any benefit to which
the Company or any of its Subsidiaries is entitled under any provision of any
agreement or other instrument binding upon the Company or any of its
Subsidiaries or any license, franchise, permit, certificate, approval or other
similar authorization affecting, or relating in any way to, the assets or
business of the Company and its Subsidiaries or result in the creation or
imposition of any Lien on any asset of the Company or any of its Subsidiaries,
except for such contraventions, conflicts and violations referred to in clause
(ii) and for such
14
failures to obtain any such consent or other action, defaults, terminations,
cancellations, accelerations, changes, losses or Liens referred to in clauses
(iii) and (iv) that would not be reasonably expected to have, individually or in
the aggregate, a Company Material Adverse Effect.
Section 4.05. CAPITALIZATION. (a) The authorized capital stock of the
Company consists of 360,000,000 shares of Company Common Stock and 20,000,000
shares of Company Preferred Stock. As of the close of business on May 3, 2004,
there were outstanding 223,800,732 shares of Company Common Stock, no shares of
Company Preferred Stock, compensatory stock options to purchase an aggregate of
26,617,611 shares of Company Common Stock (of which options to purchase an
aggregate of 13,785,100 shares of Company Common Stock were vested) and
compensatory units with respect to 365,013 shares of Company Common Stock (of
which, no units with respect to shares of Company Common Stock were vested). The
Company has no shares of capital stock reserved for issuance, except that, as of
May 3, 2004, there were 3,600,000 shares of Company Preferred Stock reserved for
issuance pursuant to the Rights Agreement, and 31,139,413 shares of Company
Common Stock reserved for issuance pursuant to the Company Equity Compensation
Plans. A true and complete copy of the Rights Agreement as in effect as of the
date hereof has been made available to Buyer. Section 4.05 of the Company
Disclosure Schedule contains a true and complete list as of May 3, 2004 of the
number of outstanding Company Options, the exercise price of all Company Options
and number of shares of Company Common Stock issuable at such exercise price.
All outstanding shares of capital stock of the Company have been, and all shares
that may be issued pursuant to the Company Equity Compensation Plans will be,
when issued in accordance with the respective terms thereof, duly authorized and
validly issued and are fully paid and nonassessable. No Subsidiary of the
Company owns any shares of capital stock of the Company, other than shares held
in a trust or fiduciary capacity or Trust Shares.
(b) Except as set forth in this Section 4.05 and for changes since May 3
2004 resulting from the exercise of employee stock options outstanding on such
date or the distribution of shares in satisfaction of Company Units outstanding
on such date, there are no outstanding shares of capital stock or voting
securities of the Company, securities of the Company convertible into or
exchangeable for shares of capital stock or voting securities of the Company or
options or other rights (other than the Rights) to acquire from the Company, or
other obligation of the Company to issue, any capital stock, voting securities
or securities convertible into or exchangeable for capital stock or voting
securities of the Company (the items in clauses (i), (ii) and (iii) being
referred to collectively as the "COMPANY SECURITIES"). There are no outstanding
obligations of the Company or any of its Subsidiaries to repurchase, redeem or
otherwise acquire any of the Company Securities.
Section 4.06. SUBSIDIARIES. Each Subsidiary of the Company is a
corporation, limited liability company or similar corporate entity duly
15
incorporated, validly existing and in good standing (where such concept exists)
under the laws of its jurisdiction of incorporation, has all corporate powers
and all Permits required to carry on its business as now conducted, except for
those Permits the absence of which would not have, individually or in the
aggregate, a Company Material Adverse Effect. Each such Subsidiary is duly
qualified to do business as a foreign corporation and is in good standing in
each jurisdiction where such qualification is necessary, except for those
jurisdictions where failure to be so qualified would not have, individually or
in the aggregate, a Company Material Adverse Effect. All material Subsidiaries
of the Company and their respective jurisdictions of incorporation are
identified in the Company 10-K and all Joint Ventures are identified in Schedule
4.06 of the Company Disclosure Schedule.
(b) All of the outstanding capital stock of, or other voting securities or
ownership interests in, each Subsidiary of the Company and each Joint Venture,
is owned by the Company, directly or indirectly, free and clear of any Lien and
free of any other limitation or restriction (including any restriction on the
right to vote, sell or otherwise dispose of such capital stock or other voting
securities or ownership interests). There are no outstanding securities of the
Company or any of its Subsidiaries convertible into or exchangeable for shares
of capital stock or other voting securities or ownership interests in any
Subsidiary of the Company or options or other rights to acquire from the Company
or any of its Subsidiaries, or other obligations of the Company or any of its
Subsidiaries to issue, any capital stock or other voting securities or ownership
interests in, or any securities convertible into or exchangeable for any capital
stock or other voting securities or ownership interests in, any Subsidiary of
the Company (the items in clauses (i) and (ii) being referred to collectively as
the "COMPANY SUBSIDIARY SECURITIES"). There are no outstanding obligations of
the Company or any of its Subsidiaries to repurchase, redeem or otherwise
acquire any of the Company Subsidiary Securities.
Section 4.07. SEC FILINGS; FINANCIAL STATEMENTS. (a) The Company has made
available to Buyer (i) the Company's annual reports on Form 10-K for its fiscal
years ended December 31, 2003, 2002 and 2001, (ii) its proxy or information
statements relating to meetings of, or actions taken without a meeting by, the
stockholders of the Company held since December 31, 2003, and (iii) all of its
other reports, statements, schedules and registration statements filed with the
SEC since December 31, 2003 (the documents referred to in this Section 4.07(a),
collectively, the "COMPANY SEC DOCUMENTS"). The Company has filed all reports,
schedules, forms, statements and other documents (including exhibits, material
agreements and other information incorporated therein) required to be filed by
the Company with the SEC since December 31, 2002.
(b) As of its filing date, each Company SEC Document complied, and each
such Company SEC Document filed subsequent to the date hereof will comply, as to
form in all material respects with the applicable requirements of the 1933 Act
and the 1934 Act, as the case may be.
16
(c) As of its filing date (or, if amended or superceded by a filing prior
to the date hereof, on the date of such filing), each Company SEC Document filed
pursuant to the 1934 Act did not, and each such Company SEC Document filed
subsequent to the date hereof will not, contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading.
(d) Each Company SEC Document that is a registration statement, as amended
or supplemented, if applicable, filed pursuant to the 1933 Act, as of the date
such registration statement or amendment became effective, did not 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.
(e) Each of the consolidated balance sheets included in or incorporated by
reference into the Company SEC Documents (including the related notes and
schedules) filed prior to the date of this Agreement fairly presents, and, if
filed after the date of this Agreement, will fairly present, the consolidated
financial position of the Company and its consolidated Subsidiaries, as of its
date, and each of the consolidated statements of operations, cash flows and of
changes in shareholders' equity included in or incorporated by reference into
the Company SEC Documents (including any related notes and schedules) fairly
presents, and, if filed after the date of this Agreement, will fairly present,
the results of operations, retained earnings and changes in financial position,
as the case may be, of the Company and its consolidated Subsidiaries for the
periods set forth therein (subject, in the case of unaudited statements, to
notes and normal year-end audit adjustments in amounts materially consistent
with past experience), in each case in accordance with U.S. generally accepted
accounting principles ("GAAP") consistently applied during the periods involved,
except as may be noted therein.
(f) The books and records of the Company and its Subsidiaries have been,
and are being, maintained in all material respects in accordance with GAAP and
any other applicable legal and accounting requirements and reflect only actual
transactions.
(g) The management of the Company has (x) implemented disclosure controls
and procedures (as defined in Rule 13a-15(e) of the 0000 Xxx) to ensure that
material information relating to the Company, including its consolidated
Subsidiaries, is made known to the management of the Company by others within
those entities, and (y) has disclosed, based on its most recent evaluation, to
the Company's outside auditors and the audit committee of the Board of Directors
of the Company (A) all significant deficiencies and material weaknesses in the
design or operation of internal control over financial reporting (as defined in
Rule 13a-15(f) of the 0000 Xxx) which are reasonably likely to adversely affect
the Company's ability to record, process, summarize and report financial data
and (B) any fraud, whether or not material, that involves management or other
employees who have a significant role in the Company's internal control over
financial
17
reporting. A summary of any of those disclosures made by management to the
Company's auditors and audit committee is set forth in Section 4.07(f) of the
Company Disclosure Schedule.
(h) Since July 30, 2002,(x) through the date hereof, neither the Company
nor any of its Subsidiaries nor, to the knowledge of the officers of the
Company, any director, officer, employee, auditor, accountant or representative
of the Company or any of its Subsidiaries has received or otherwise had or
obtained knowledge of any material complaint, allegation, assertion or claim,
whether written or oral, regarding the accounting or auditing practices,
procedures, methodologies or methods of the Company or any of its Subsidiaries
or their respective internal accounting controls, including any material
complaint, allegation, assertion or claim that the Company or any of its
Subsidiaries has engaged in questionable accounting or auditing practices, and
(y) no attorney representing the Company or any of its Subsidiaries, whether or
not employed by the Company or any of its Subsidiaries, has reported evidence of
a material violation of securities laws, breach of fiduciary duty or similar
violation by the Company or any of its officers, directors, employees or agents
to the Board of Directors of the Company or any committee thereof or to any
director or officer of the Company.
Section 4.08. DISCLOSURE DOCUMENTS. The proxy or information statement of
the Company to be filed with the SEC in connection with the Merger (the "COMPANY
PROXY STATEMENT") and any amendments or supplements thereto will, when filed,
comply as to form in all material respects with the applicable requirements of
the 1934 Act. At the time the Company Proxy Statement or any amendment or
supplement thereto is first mailed to stockholders of the Company, and at the
time such stockholders vote on adoption of this Agreement, the Company Proxy
Statement, as supplemented or amended, if applicable, will not contain any
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading. The representations and warranties
contained in this Section 4.08 will not apply to statements or omissions
included in the Company Proxy Statement based upon information relating to Buyer
or its Affiliates furnished to the Company in writing by Buyer or its Affiliates
specifically for use therein.
Section 4.09. ABSENCE OF CERTAIN CHANGES. Since the Company Balance Sheet
Date, the business of the Company and its Subsidiaries has been conducted in the
ordinary course consistent with past practices and there has not been:
(a) any event, occurrence, development or state of circumstances or facts
that has had or would reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect; or
(b) any action taken by the Company or any of its Subsidiaries from the
Company Balance Sheet Date through the date of this Agreement that, if taken
18
during the period from the date of this Agreement through the Effective Time,
would constitute a breach of Section 6.01.
Section 4.10. LITIGATION AND LIABILITIES. (a) There are no (i) civil,
criminal or administrative actions, suits, claims, hearings, investigations or
proceedings pending or, to the knowledge of the officers of the Company,
threatened against the Company or any of its Subsidiaries or Affiliates, or (ii)
litigations, arbitrations, investigations or other proceedings, or injunctions
or final judgments relating thereto, pending or, to the knowledge of the
officers of the Company, threatened against the Company or any of its
Subsidiaries or Affiliates before any Governmental Authority, including, without
limitation, the Federal Reserve Board, the OCC or the FDIC, except in the case
of either clause (i) or (ii), for those that would not reasonably be expected to
have, individually or in the aggregate, a Company Material Adverse Effect. None
of the Company, any of its Subsidiaries or any of its Affiliates is a party to
or subject to the provisions of any judgment, order, writ, injunction, decree or
award of any Governmental Authority which would reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect.
(b) There are no liabilities or obligations of the Company or any
Subsidiary of the Company, whether or not accrued, contingent or otherwise and
whether or not required to be disclosed, or any other facts or circumstances
that would reasonably be expected to result in any obligations or liabilities
of, the Company or any of its Subsidiaries, other than:
(i) liabilities or obligations to the extent reflected or fully
reserved against on the Company Balance Sheet or reasonably apparent in the
notes thereto;
(ii) liabilities or obligations incurred in the ordinary course of
business since the Company Balance Sheet Date; or
(iii) liabilities or obligations that, individually or in the
aggregate, would not be reasonably expected to have a Company Material
Adverse Effect.
Section 4.11. COMPLIANCE WITH LAWS AND COURT ORDERS; REPORTING
REQUIREMENTS. (a) The Company and each of its Subsidiaries (i) is and has been
in compliance with the terms of the Permits required to carry on its business as
now conducted and (ii) is and has been in compliance with, and to the knowledge
of the officers of the Company is not under investigation with respect to and
has not been threatened in writing or, to the knowledge of the officers of the
Company, otherwise been threatened, to be charged with or given written notice
of any violation of, any applicable law, statute, ordinance, rule, regulation,
judgment, injunction, order or decree (including, but not limited to, the USA
PATRIOT Act of 2001), in each case, except for failures to comply or violations
that have not had and would not reasonably be expected to have, individually or
19
in the aggregate, a Company Material Adverse Effect. Since December 31, 2000,
the Company and its Subsidiaries have timely filed all material reports required
to be filed with (i) the Federal Reserve Board, (ii) the OCC, (iii) the FDIC and
(iv) any other Bank Regulator.
(b) Except as would not reasonably be expected to have, either individually
or in the aggregate, a Company Material Adverse Effect, each of the Company and
its Subsidiaries have properly administered all accounts for which it acts as a
fiduciary, including accounts for which it serves as a trustee, agent,
custodian, personal representative, guardian, conservator or investment advisor,
in accordance with the terms of the governing documents, applicable state and
federal law and regulation and common law. None of the Company, any of its
Subsidiaries, or any director, officer or employee of the Company or any of its
Subsidiaries, has committed any breach of trust or fiduciary duty with respect
to any such fiduciary account that would reasonably be expected to have, either
individually or in the aggregate, a Company Material Adverse Effect and, except
as would not reasonably be expected to have, either individually or in the
aggregate, a Company Material Adverse Effect, the accountings for each such
fiduciary account are true and correct and accurately reflect the assets of such
fiduciary account.
(c) Except for normal periodic examinations conducted by a Bank Regulator
in the regular course of the business of the Company and its Subsidiaries, since
December 31, 2000, no Bank Regulator has initiated any proceeding or, to the
knowledge of the officers of the Company, investigation into any part of the
business or operations of the Company or any of its Subsidiaries.
(d) The business and operations of the Company and of each of the Company's
Subsidiaries through which the Company conducts its finance activities
(including mortgage banking and mortgage lending activities and consumer finance
activities, which consumer finance activities include direct and indirect
automobile lending, banking, home equity operations and consumer financial
services (together, the "COMPANY FINANCE SUBSIDIARIES")), have been conducted in
compliance with all applicable statutes and regulations regulating the business
of consumer lending, including state usury laws, the Truth in Lending Act, Real
Estate Settlement Procedures Act of 1974, the Consumer Credit Protection Act,
the Equal Credit Opportunity Act, the Fair Credit Reporting Act, the Homeowners
Ownership and Equity Protection Act, the Fair Debt Collections Act and other
federal, state, local and foreign laws regulating lending ("FINANCE LAWS"), and
have complied with all applicable collection practices in seeking payment under
any loan or credit extension of such Company Finance Subsidiaries except, in
each case, for such failures to comply as would not, individually or in the
aggregate, reasonably be expected to have a Company Material Adverse Effect. In
addition, there is no pending or, to the knowledge of the officers of the
Company, threatened charge by any
20
Governmental Authority that any of the Company Finance Subsidiaries has
violated, nor any pending or, to the knowledge of the officers of the Company,
threatened investigation by any Governmental Authority with respect to possible
violations of, any applicable Finance Laws where such violations would, either
individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect.
Section 4.12. BANK CAPITALIZATION. Each depository institution that is a
Subsidiary of the Company is "well capitalized", as such term is defined in the
rules and regulations promulgated by the OCC. Each depository institution that
is a Subsidiary of the Company has received at least a "satisfactory" rating
under the Community Reinvestment Act at its most recent examination. The
Company is "well capitalized" as such term is defined in the Federal Reserve
Board's Regulation Y.
Section 4.13. MATERIAL CONTRACTS. Each contract requiring aggregate annual
payments to be made to or by the Company in excess of $500,000 and each other
"material contract" (as defined in Item 601(b)(10) of Regulation S-K under the
1933 Act), in each case, to which the Company or one of its Subsidiaries is a
party (each such contract, a "MATERIAL CONTRACT") is a valid, binding and
enforceable obligation of the Company or its Subsidiary, as the case may be, and
is in full force and effect, except where the failure to be valid, binding and
enforceable and in full force and effect would not reasonably be expected to
have a Company Material Adverse Effect. None of the Company nor any of its
Subsidiaries is (i) in default or violation of any term, condition or provision
of any Material Contract, except for any defaults or violations that would not
reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect or (ii) party to, or bound by, any agreement or
arrangement (including any agreement with any Bank Regulator) that (x) expressly
limits or otherwise restricts the ability of the Company or such Subsidiary to
compete in, or conduct, any line of business or to compete with any Person, in
each case in any geographic area or during any period of time, in any material
respect, or (y) adversely affects, in any material respect, the conduct of the
Company's and its Subsidiaries' business, taken as a whole, as currently
conducted.
Section 4.14. FEES. Except for Xxxxxx Brothers Inc., a copy of whose
engagement agreement has been provided to Buyer (the "ENGAGEMENT LETTER"), there
is no investment banker, broker, finder or other intermediary who might be
entitled to any fee or commission from the Company or any of its Subsidiaries in
connection with the transactions contemplated by this Agreement. The Engagement
Letter has not been amended, and will not be amended, without the prior consent
of Buyer. The estimated fees and expenses of Xxxxxx Brothers Inc. and legal
counsel to the Company have been disclosed in writing to Buyer.
Section 4.15. OPINION OF FINANCIAL ADVISOR. The Company has received the
opinion of Xxxxxx Brothers Inc., financial advisor to the Company, to the effect
that, as of the date of this Agreement, the Merger Consideration is fair to the
Company's stockholders from a financial point of view.
21
Section 4.16. TAXES. (a) Except as would not reasonably be expected to
have, individually or in the aggregate, a Company Material Adverse Effect:
(i) all Tax Returns of the Company or any of its Subsidiaries required
to be filed on or before the date hereof (taking into account any
applicable extensions) have been filed when due in accordance with all
applicable laws, and all such Tax Returns are, or shall be at the time of
filing, true and complete;
(ii) the Company and each of its Subsidiaries has paid (or has had
paid on its behalf) or has withheld and remitted to the appropriate Taxing
Authority all Taxes due and payable (including applicable employee payroll
Taxes), or, where payment is not yet due or where such Taxes are being
challenged in good faith, has established (or has had established on its
behalf and for its sole benefit and recourse) in accordance with GAAP an
adequate accrual for all Taxes through the end of the last period for which
the Company and its Subsidiaries ordinarily record items on their
respective books;
(iii) the income and franchise Tax Returns of the Company and its
Subsidiaries through the Tax year ended December 31, 1999 have been
examined and closed or are Tax Returns with respect to which the applicable
period for assessment under applicable law, after giving effect to
extensions or waivers, has expired;
(iv) there is no claim, audit, action, suit, proceeding or
investigation now pending or threatened in writing against or with respect
to the Company or its Subsidiaries in respect of any Tax or Tax asset;
(v) none of the Company or any of its Subsidiaries has any liability
for Taxes of any other Person (other than the Company or any of its
Subsidiaries) under Treasury Regulation Section 1.1502-6 (or any similar
provision of state, local or foreign law), as transferee or successor, by
contract, or otherwise; and
(vi) the Company and its Subsidiaries are not bound by any Tax sharing
or Tax allocation agreement or arrangement (other than any such agreement
or arrangement solely between the Company and its Subsidiaries).
(b) During the three-year period ending on the date hereof, neither the
Company nor any of its Subsidiaries was a distributing corporation or a
controlled corporation in a transaction intended to be governed by Section 355
of the Code.
(c) Schedule 4.16(c) contains a list of all jurisdictions (whether foreign
or domestic) in which the Company or any of its Subsidiaries currently files
income or franchise Tax Returns.
22
(d) "TAX" means any tax or other like assessment or charge of any kind
whatsoever (including withholding on amounts paid to or by any Person), together
with any interest, penalty, addition to tax or additional amount imposed by any
Governmental Authority (domestic or foreign) responsible for the imposition of
any such tax (a "TAXING AUTHORITY"). "TAX RETURN" means any report, return,
document, declaration or other information or filing required to be supplied to
any Taxing Authority with respect to Taxes, including information returns, any
documents accompanying payments of estimated Taxes, or requesting or
accompanying requests for the extension of time in which to file any such
report, return, document, declaration or other information.
Section 4.17. INTELLECTUAL PROPERTY. No Company Intellectual Property
Right owned, or to the knowledge of the officers of the Company leased, by the
Company or any of its Subsidiaries is subject to any outstanding judgment,
injunction, order, decree or agreement restricting the use thereof by the
Company or any of its Subsidiaries or restricting the licensing thereof by the
Company or any of its Subsidiaries to any Person, except for any judgment,
injunction, order, decree or agreement which would not reasonably be expected to
have a Company Material Adverse Effect. Since the Company Balance Sheet Date,
neither the Company nor any of its Subsidiaries has been a defendant in any
action, suit, investigation or proceeding relating to, or otherwise has been
notified in writing of, any alleged claim of infringement of any Intellectual
Property Right of the Company or any of its Subsidiaries that, if determined or
resolved adversely in accordance with the plaintiff's demands, would reasonably
be expected to have, individually or in the aggregate, a Company Material
Adverse Effect. The Company and its Subsidiaries have no outstanding material
claim or suit for any continuing infringement by any other Person of any Company
Intellectual Property Rights.
Section 4.18. PERSONNEL MATTERS. (a) Section 4.18(a) of the Company
Disclosure Schedule contains a correct and complete list identifying each
material Employee Plan. Copies of each such Employee Plan and any amendments
thereto have been furnished or made available to Buyer, and copies of, to the
extent applicable, any related trust or funding agreements or insurance
policies, amendments thereto, prospectuses or summary plan descriptions relating
thereto and the most recent annual report (Form 5500 including, if applicable,
Schedule B thereto) and tax return (Form 990) prepared in connection therewith
have been furnished or made available to Buyer. All employees and independent
contractors of the Company and its Subsidiaries are employed or provide services
within the United States.
(b) As of December 31, 2003, the fair market value of the assets of each
Employee Plan subject to Title IV of ERISA, excluding for these purposes any
accrued but unpaid contributions, exceeded the present value of all benefits
accrued under such Title IV Plan determined on a termination basis using the
actuarial assumptions and valuations most recently used for the purpose of
funding such Employee Plan. No "accumulated funding deficiency", as defined
23
in Section 412 of the Code, has been incurred with respect to any Employee Plan
subject to such Section 412, whether or not waived. No material "reportable
event", within the meaning of Section 4043 of ERISA and no event described in
Section 4062 or 4063 of ERISA, has occurred in connection with any Employee
Plan. Neither the Company nor any of its ERISA Affiliates has (i) engaged in, or
is a successor or parent corporation to an entity that has engaged in, a
transaction described in Sections 4069 or 4212(c) of ERISA or (ii) incurred, or
reasonably expects to incur prior to the Effective Time, (A) any liability under
Title IV of ERISA arising in connection with the termination of, or a complete
or partial withdrawal from, any plan covered or previously covered by Title IV
of ERISA or (B) any liability under Section 4971 of the Code that in either case
could reasonably be expected to become a liability of the Company or any
Subsidiary or Buyer or any of its ERISA Affiliates after the Closing. No
condition exists that could constitute grounds for termination by the Pension
Benefit Guaranty Corporation of any Employee Plan that is subject to Title IV of
ERISA. The assets of the Company and all of its Subsidiaries are not now, nor
are they reasonably expected after the passage of time to be, subject to any
material Lien imposed under Section 412(n) of the Code by reason of a failure of
any of Seller, its Affiliates, the Company or any Subsidiary to make timely
installments or other payments required under Section 412 of the Code.
(c) Neither the Company nor any ERISA Affiliate nor any predecessor thereof
contributes to, or in the six years prior to the date hereof has contributed to,
any multiemployer plan, as defined in Section 3(37) of ERISA.
(d) Each Employee Plan which is intended to be qualified under Section
401(a) of the Code has either received a favorable determination letter, or has
pending or has time remaining in which to file, an application for such
determination from the Internal Revenue Service, and the Company is not aware of
any reason why any such determination would reasonably be expected to be revoked
or not be reissued. The Company has made available to Buyer copies of the most
recent Internal Revenue Service determination letters with respect to each such
Employee Plan. Each Employee Plan has been maintained in material compliance
with its terms and with the requirements prescribed by any and all statutes,
orders, rules and regulations, including ERISA and the Code, which are
applicable to such Employee Plan. No material events have occurred with respect
to any Employee Plan that would reasonably be expected to result in payment or
assessment by or against the Company of any material excise taxes under Sections
4972, 4975, 4976, 4977, 4979, 4980B, 4980D, 4980E or 5000 of the Code.
(e) No Employee Plan exists that, as a result of the transactions
contemplated by this Agreement (whether alone or in connection with other
events), could result in the payment to any current or former employee, director
or independent contractor of the Company or any of its Subsidiaries of any money
or other property or could result in the acceleration or provision of any other
rights or benefits to any current or former employee, director or independent
contractor of the Company or any of its Subsidiaries, whether or not such
payment, right or
24
benefit would constitute a "parachute payment" within the meaning of Section
280G of the Code. No Employee Plan exists that could give rise to the payment of
any amount that would not be deductible pursuant to the terms of Section 162(m)
of the Code, except as would not reasonably be expected to have, individually or
in the aggregate, a Company Material Adverse Effect.
(f) Neither the Company nor any of its Subsidiaries has any liability in
respect of post-retirement health, medical or life insurance benefits for former
or current employees of the Company or its Subsidiaries, except as required to
avoid excise tax under Section 4980B of the Code or as otherwise required by
applicable law.
(g) There has been no amendment to, or announcement (whether or not
written) by the Company or any of its Affiliates relating to, or change in
employee participation or coverage under, an Employee Plan which would increase
materially the expense of maintaining such Employee Plan above the level of the
expense incurred in respect thereof for the fiscal year ended December 31, 2003.
(h) Neither the Company nor any of its Subsidiaries is or in the six years
prior to the date hereof has been a party to or subject to, or is currently
negotiating in connection with entering into, any collective bargaining
agreement or other contract or understanding with a labor union or organization.
Furthermore, except as would not reasonably be expected to have, individually or
in the aggregate, a Company Material Adverse Effect, (i) there are no unfair
labor practice charges or complaints, or representation claims or petitions,
against the Company or any of its Subsidiaries pending before the National Labor
Relations Board and (ii) there are no labor strikes, slowdowns or stoppages
actually pending or, to the knowledge of the Company, threatened against or
affecting the Company or any of its Subsidiaries.
(i) All contributions required to be made to any Employee Plan by
applicable law or regulation or by any plan document for any period ending as of
the date hereof have been timely made or paid in full or, to the extent not
required to be made or paid on or before the date hereof, are or will be fully
accrued for and reflected as a liability on the most recent financial statements
of the Company.
(j) There is no action, suit, investigation, audit or proceeding pending
against or involving or, to the knowledge of the officers of the Company,
threatened against or involving, any Employee Plan before any court or
arbitrator or any Governmental Authority inside or outside the jurisdiction of
the United States.
(k) The Company and its Subsidiaries have complied with all applicable laws
relating to labor and employment, including those relating to wages, hours,
collective bargaining, unemployment compensation, worker's compensation,
25
equal employment opportunity, age and disability discrimination, immigration
control, employee classification, information privacy and security, and
continuation coverage with respect to group health plans, except for such
compliance the failure of which would not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect.
(l) Since December 31, 2003, neither the Company nor any of its
Subsidiaries has effectuated (i) a "plant closing" (as defined in the WARN Act)
affecting any site of employment or one or more facilities or operating units
within any site of employment or facility of the Company or any of its
Subsidiaries; (ii) a "mass layoff" (as defined in the WARN Act); or (iii) such
other transaction, layoff, reduction in force or employment terminations
sufficient in number (standing alone) to trigger application of any similar
state or local law that could reasonably be expected to result in a material
liability of the Company and its Subsidiaries.
Section 4.19. ENVIRONMENTAL MATTERS. (a) Except as would not reasonably be
expected to have, individually or in the aggregate, a Company Material Adverse
Effect:
(i) no notice, notification, demand, request for information,
citation, summons or order has been received, no complaint has been filed,
no penalty has been assessed, and no investigation, action, claim, suit,
proceeding or review (or any basis therefor) is pending or, to the
knowledge of the officers of the Company, is threatened by any Governmental
Authority or other Person relating to or arising out of any Environmental
Law;
(ii) the Company and its Subsidiaries are and have been in compliance
with all Environmental Laws (including, without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act of
1980) and all Environmental Permits; and
(iii) there are no liabilities of or relating to the Company or any of
its Subsidiaries of any kind whatsoever, whether accrued, contingent,
absolute, determined, determinable or otherwise arising under or relating
to any Environmental Law and there are no facts, conditions, situations or
set of circumstances that could reasonably be expected to result in or be
the basis for any such liability.
(b) There has been no environmental investigation, study, audit, test,
review or other analysis conducted of which any of the officers of the Company
has knowledge in relation to the current or prior business of the Company or any
of its Subsidiaries or any property or facility now or previously owned or
leased by the Company or any of its Subsidiaries that has not been delivered to
Buyer at least two days prior to the date hereof.
26
(c) For purposes of this Section 4.19, the terms "COMPANY" and
"SUBSIDIARIES" shall include any entity that is, in whole or in part, a
predecessor of the Company or any of its Subsidiaries.
Section 4.20. PROPERTY AND LEASES. Except as disclosed in the Company SEC
Documents filed prior to the date of this Agreement, the Company or one of its
Subsidiaries (a) has good and marketable title to all real property assets, and
good title to all other assets, in each case, reflected in the latest audited
balance sheet included in such Company SEC Documents as being owned by the
Company or one of its Subsidiaries or acquired after the date thereof which are
listed on Section 4.20 of the Company Disclosure Schedule (except properties
sold or otherwise disposed of since the date thereof listed on Section 4.20 of
the Company Disclosure Schedule or sold after the date hereof in the ordinary
course of business), free and clear of all Liens of any nature whatsoever,
except (i) statutory Liens securing payments not yet due, (ii) Liens on assets
of Subsidiaries of the Company which are banks incurred in the ordinary course
of their banking business and (iii) such imperfections or irregularities of
title and Liens as do not materially affect the current use of the properties or
assets subject thereto or affected thereby or otherwise materially impair
business operations at such properties as currently conducted, and (b) is the
lessee of all leasehold real estate reflected in the latest audited financial
statements included in such Company SEC Documents or acquired after the date
thereof which are listed in Section 4.20 of the Company Disclosure Schedule
(except for those leases that have expired by their terms since the date
thereof, which are listed on Section 4.20 of the Company Disclosure Schedule, or
that expire by their terms after the date hereof) and is in possession of the
properties purported to be leased thereunder, and each such lease is valid
without material default thereunder by the lessee or, to the knowledge of the
officers of the Company, the lessor.
Section 4.21. DERIVATIVE TRANSACTIONS. (a) Except as would not, either
individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect, all Derivative Transactions (as defined below) entered
into by the Company or any of its Subsidiaries were entered into in accordance
with applicable rules, regulations and policies of any Bank Regulator or other
regulatory authority with jurisdiction over the Company or any of its
Subsidiaries, and in accordance with the investment, securities, commodities,
risk management and other policies, practices and procedures employed by the
Company and its Subsidiaries, and were entered into with counterparties believed
at the time to be financially responsible and able to understand (either alone
or in consultation with their advisers) and to bear the risks of such Derivative
Transactions. The Company and each of its Subsidiaries have duly performed all
of their obligations under the Derivative Transactions to the extent that such
obligations to perform have accrued, and, to the knowledge of the officers of
the Company, there are no breaches, violations or defaults or allegations or
assertions of such by any party thereunder except for such breaches, violations
or defaults that would reasonably be expected to have, individually or in the
aggregate, a Company Material
27
Adverse Effect. The Company and its Subsidiaries have adopted policies and
procedures consistent in all material respects with the publications of
Governmental Authorities with respect to their derivatives program.
(b) For purposes of this Section 4.20, "DERIVATIVE TRANSACTIONS" means any
swap transaction, option, warrant, forward purchase or sale transaction, futures
transaction, cap transaction, floor transaction or collar transaction relating
to one or more currencies, commodities, bonds, equity securities, loans,
interest rates, credit-related events or conditions or any indexes, or any other
similar transaction or combination of any of these transactions, including
collateralized mortgage obligations or other similar instruments or any debt or
equity instruments evidencing or embedding any such types of transactions, and
any related credit support, collateral or other similar arrangements related to
such transactions; provided, that, for the avoidance of doubt, the term
"Derivative Transactions" shall not include any Company Options.
Section 4.22. BROKER/DEALER STATUS. (a) The Company's broker-dealer
Subsidiaries (the "COMPANY B/DS") are duly registered as broker-dealers under
the 1934 Act and are duly registered, licensed or qualified as broker-dealers in
all jurisdictions where such registration, licensing or qualification is
required in order to conduct its business, except where the failure to be so
registered, licensed or qualified would not, individually or in the aggregate,
reasonably be expected to have a Company Material Adverse Effect. Each such
registration, license or qualification is in full force and effect and in good
standing. Each Company B/D is in good standing with the National Association of
Securities Dealers. Each Company B/D and each of their managers, directors,
officers, employees and registered persons with respect to their service has
been, and is, in compliance, in the conduct of its business, with all applicable
federal, state, local and foreign statutes, laws, regulations, ordinances,
rules, judgments, orders or decrees applicable thereto except for such failures
to comply as would not reasonably be expected, individually or in the aggregate,
to result in a Company Material Adverse Effect.
(b) The Company and its Subsidiaries do not have any currently outstanding
or previously communicated customer complaints (whether written or oral) that
are currently subject to, or reasonably likely to result in or become subject
to, any material litigation, arbitration or other proceeding, whether civil,
governmental or otherwise.
Section 4.23. ANTITAKEOVER STATUTES AND RIGHTS AGREEMENT. (a) No "fair
price", "moratorium", "control share acquisition" or other similar anti-takeover
statute or regulation or any similar provision in the Company's certificate of
incorporation (including, without limitation, Articles Sixth, Tenth and
Thirteenth) or bylaws is, or at the Effective Time will be, applicable to the
shares of Company Common Stock or the capital stock of the Surviving
Corporation, the Merger or the other transactions contemplated by this Agreement
and neither Buyer, Merger
28
Subsidiary of any of Buyer's Affiliates will be deemed to be an "Interested
Person" or "Related Person" thereunder. The Board of Directors of the Company
has taken or caused to be taken all action so none of Buyer, Merger Subsidiary
or any of Buyer's Affiliates will be prohibited from entering into a "business
combination" with the Company or any of its Affiliates as an "interested
stockholder" (in each case as such term is used in Section 203 of the DGCL), or
will be an "Interested Person" or a "Related Person" under any provision of the
Company's certificate of incorporation, as a result of the execution of this
Agreement or the consummation of the transactions contemplated hereby.
(b) The Company has taken all action necessary to (i) render the Rights
issued pursuant to the terms of the Rights Agreement inapplicable to the Merger,
this Agreement and the transactions contemplated hereby and (ii) ensure that (A)
neither Buyer, Merger Subsidiary nor any of their Affiliates is an "Acquiring
Person" (as defined in the Rights Agreement) and (B) none of a "Flip-over
Transaction or Event", "Flip-in Date", "Separation Time" or "Stock Acquisition
Date" (each as defined in the Rights Agreement) shall occur by reason of the
approval or execution of this Agreement, the announcement or consummation of the
Merger or the consummation of any of the other transactions contemplated by this
Agreement.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to the Company that:
Section 5.01. CORPORATE EXISTENCE AND POWER. Each of Buyer and Merger
Subsidiary is a corporation duly incorporated, validly existing and in good
standing under the laws of its jurisdiction of incorporation and has all
corporate powers and all Permits required to carry on its business as now
conducted, except for those Permits the absence of which would not have,
individually or in the aggregate, a Buyer Material Adverse Effect. Each of Buyer
and Merger Subsidiary is duly qualified to do business as a foreign corporation
and is in good standing in each jurisdiction where such qualification is
necessary, except for those jurisdictions where failure to be so qualified would
not have, individually or in the aggregate, a Buyer Material Adverse Effect.
Buyer has heretofore made available to the Company true and complete copies of
the certificate of incorporation and bylaws of Buyer and Merger Subsidiary as
currently in effect. Merger Subsidiary was formed solely for the purpose of
engaging in the transactions contemplated by this Agreement. Since the date of
its incorporation, Merger Subsidiary has not engaged in any activities other
than in connection with or as contemplated by this Agreement.
Section 5.02. CORPORATE AUTHORIZATION. The execution, delivery and
performance by Buyer and Merger Subsidiary of this Agreement and the
consummation by Buyer and Merger Subsidiary of the transactions contemplated
29
hereby are within the corporate powers of Buyer and Merger Subsidiary and have
been duly authorized by all necessary corporate action on the part of Buyer,
Merger Subsidiary, Holdings and their Affiliates. This Agreement is a valid and
binding agreement of each of Buyer and Merger Subsidiary enforceable against
Buyer and Merger Subsidiary in accordance with its terms, subject to the
Bankruptcy and Equity Exception.
Section 5.03. GOVERNMENTAL AUTHORIZATION. The execution, delivery and
performance by Buyer and Merger Subsidiary of this Agreement and the
consummation by Buyer and Merger Subsidiary of the transactions contemplated
hereby require no action by or in respect of, or filing with, any Governmental
Authority, domestic, foreign or supranational, other than (i) the filing of a
certificate of merger with respect to the Merger with the Secretary of State of
Delaware and appropriate documents with the relevant authorities of other states
in which Buyer is qualified to do business, (ii) the Regulatory Applications,
(iii)compliance with any applicable requirements of the HSR Act, (iv) compliance
with any applicable requirements of the 1934 Act and any other securities laws,
whether state or foreign, and (v) any actions or filings the absence of which
would not be reasonably expected to have, individually or in the aggregate, a
Buyer Material Adverse Effect. As of the date of this Agreement, neither Buyer
nor Merger Subsidiary knows of no reason why all regulatory approvals from any
Governmental Authority required for the consummation of the transactions
contemplated by this Agreement should not be obtained on a timely basis.
Section 5.04. NON-CONTRAVENTION. The execution, delivery and performance
by Buyer and Merger Subsidiary of this Agreement and the consummation by Buyer
and Merger Subsidiary of the transactions contemplated hereby do not and will
not (i) contravene, conflict with, or result in any violation or breach of any
provision of the certificate of incorporation or bylaws of Buyer or Merger
Subsidiary or the comparable governing instruments of any of Buyer's other
Subsidiaries, assuming compliance with the matters referred to in Section 5.03,
contravene, conflict with or result in a violation or breach of any provision of
any law, rule, regulation, judgment, injunction, order or decree, require any
consent or other action by any Person under, constitute a default, or an event
that, with or without notice or lapse of time or both, could become a default,
under, or cause or permit the termination, cancellation, acceleration or other
change of any right or obligation or the loss of any benefit to which Buyer or
any of its Subsidiaries is entitled under any provision of any agreement or
other instrument binding upon Buyer or any of its Subsidiaries or any license,
franchise, permit, certificate, approval or other similar authorization
affecting, or relating in any way to, the assets or business of Buyer and its
Subsidiaries or result in the creation or imposition of any Lien on any asset of
Buyer or any of its Subsidiaries, except for such contraventions, conflicts and
violations referred to in clause (ii) and for such failures to obtain any such
consent or other action, defaults, terminations, cancellations, accelerations,
changes, losses or Liens
30
referred to in clauses (iii) and (iv) that would not be reasonably expected to
have, individually or in the aggregate, a Buyer Material Adverse Effect.
Section 5.05. SEC REPORTS; FINANCIAL STATEMENTS. (a) Buyer has made
available to the Company (i) Holdings' annual reports on Form 20-F for its
fiscal years ended December 31, 2003, 2002 and 2001, (ii) its proxy or
information statements relating to meetings of, or actions taken without a
meeting by, the stockholders of Holdings held since December 31, 2003, and (iii)
all of its other reports, statements, schedules and registration statements
filed with the SEC since December 31, 2003 (the documents referred to in this
Section 5.05, collectively, the "HOLDINGS SEC DOCUMENTS"). Holdings has filed
all reports, schedules, forms, statements and other documents (including
exhibits, material agreements and other information incorporated therein)
required to be filed by Holdings with the SEC since December 31, 2002.
(b) As of its filing date, each Holdings SEC Document complied, and each
such Holdings SEC Document filed subsequent to the date hereof will comply, as
to form in all material respects with the applicable requirements of the 1933
Act and the 1934 Act, as the case may be.
(c) As of its filing date (or, if amended or superceded by a filing prior
to the date hereof, on the date of such filing), each Holdings SEC Document
filed pursuant to the 1934 Act did not, and each such Holdings SEC Document
filed subsequent to the date hereof will not, contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading.
(d) Each Holdings SEC Document that is a registration statement, as amended
or supplemented, if applicable, filed pursuant to the 1933 Act, as of the date
such registration statement or amendment became effective, did not 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.
(e) Each of the consolidated balance sheets included in or incorporated by
reference into the Holdings SEC Documents (including the related notes and
schedules) filed prior to the date of this Agreement fairly presents, and, if
filed after the date of this Agreement, will fairly present, the consolidated
financial position of the Holdings and its consolidated Subsidiaries respective
Subsidiaries, as of its date, and each of the consolidated statements of
operations, cash flows and of changes in shareholders' equity included in or
incorporated by reference into the Holdings SEC Documents (including any related
notes and schedules) fairly presents, and, if filed after the date of this
Agreement, will fairly present, the results of operations, retained earnings and
changes in financial position, as the case may be, of Holdings and its
consolidated Subsidiaries for the periods set forth therein (subject, in the
case of unaudited statements, to notes and normal year-end audit adjustments in
amounts consistent with past experience), in each
31
case in accordance with GAAP consistently applied during the periods involved,
except as may be noted therein.
Section 5.06. DISCLOSURE DOCUMENTS. None of the information relating to
Buyer or its Affiliates provided by Buyer or its Affiliates for inclusion in the
Company Proxy Statement or any amendment or supplement thereto, at the time the
Company Proxy Statement or any amendment or supplement thereto is first mailed
to stockholders of the Company and at the time the stockholders vote on adoption
of this Agreement, will contain any untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements made
therein, in the light of the circumstances under which they were made, not
misleading.
Section 5.07. COMPLIANCE WITH LAWS AND COURT ORDERS. (a) Buyer and each of
its Subsidiaries (i) is and has been in compliance with the terms of the Permits
required to carry on its business as now conducted and (ii) is and has been in
compliance with, and to the knowledge of Buyer is not under investigation with
respect to and has not been threatened in writing or, to the knowledge of Buyer,
otherwise been threatened, to be charged with or given written notice of any
violation of, any applicable law, statute, ordinance, rule, regulation,
judgment, injunction, order or decree (including, but not limited to, the USA
PATRIOT Act of 2001), in each case, except for failures to comply or violations
that have not had and would not reasonably be expected to have, individually or
in the aggregate, a Buyer Material Adverse Effect.
(b) Except as would not reasonably be expected to have, either individually
or in the aggregate, a Buyer Material Adverse Effect, each of Buyer and its
Subsidiaries have properly administered all accounts for which it acts as a
fiduciary, including accounts for which it serves as a trustee, agent,
custodian, personal representative, guardian, conservator or investment advisor,
in accordance with the terms of the governing documents, applicable state and
federal law and regulation and common law. None of Buyer, any of its
Subsidiaries, or any director, officer or employee of Buyer or any of its
Subsidiaries, has committed any breach of trust or fiduciary duty with respect
to any such fiduciary account that would reasonably be expected to have, either
individually or in the aggregate, a Buyer Material Adverse Effect and, except as
would not reasonably be expected to have, either individually or in the
aggregate, a Buyer Material Adverse Effect, the accountings for each such
fiduciary account are true and correct and accurately reflect the assets of such
fiduciary account.
Section 5.08. LITIGATION. There are no (i) civil, criminal or
administrative actions, suits, claims, hearings, investigations or proceedings
pending or, to the knowledge of Buyer, threatened against Buyer or any of its
Subsidiaries or Affiliates, or (ii) litigations, arbitrations, investigations or
other proceedings, or injunctions or final judgments relating thereto, pending
or, to the knowledge of the officers of Buyer, threatened against Buyer or any
of its Subsidiaries or Affiliates before any Governmental Authority, including,
without limitation, the
32
Federal Reserve Board, the OCC or the FDIC, except in the case of either clause
(i) or (ii), for those that would not reasonably be expected to have,
individually or in the aggregate, a Buyer Material Adverse Effect. None of
Buyer, any of its Subsidiaries or any of its Affiliates is a party to or subject
to the provisions of any judgment, order, writ, injunction, decree or award of
any Governmental Authority which would reasonably be expected to have,
individually or in the aggregate, a Buyer Material Adverse Effect.
Section 5.09. FINDERS' FEES. Except for Xxxxxxx Xxxxx & Co., Xxxxxxx
Lynch, Pierce, Xxxxxx & Xxxxx, Incorporated and UBS Warburg whose fees will be
paid by Buyer, there is no investment banker, broker, finder or other
intermediary who might be entitled to any fee or commission from Buyer or any of
its Subsidiaries in connection with the transactions contemplated by this
Agreement.
Section 5.10. FINANCING. Buyer has, or will have prior to the Effective
Time, sufficient cash, available lines of credit or other sources of immediately
available funds to enable it to make payment of the aggregate Merger
Consideration and related fees and expenses.
ARTICLE 6
COVENANTS OF THE COMPANY
The Company agrees that:
Section 6.01. CONDUCT OF THE COMPANY. Except as set forth in the
corresponding section of the Company Disclosure Schedule or otherwise as
expressly contemplated hereby, the Company covenants and agrees as to itself and
its Subsidiaries that, from the date of this Agreement until the Effective Time
(unless Buyer shall otherwise approve in writing, which approval shall not be
unreasonably withheld or delayed), the business of it and its Subsidiaries shall
be conducted in the ordinary course and, to the extent consistent therewith, it
and its Subsidiaries shall use their respective reasonable best efforts to
preserve its business organization intact and maintain its existing relations
and goodwill with Governmental Authorities, customers, suppliers, distributors,
creditors, lessors, employees and business associates and keep available the
services of the present employees and agents of the Company and its
Subsidiaries. Without limiting the generality of the foregoing and in
furtherance thereof, from the date of this Agreement until the Effective Time,
the Company will not and will not permit its Subsidiaries to (unless Buyer shall
otherwise approve in writing, which approval shall not be unreasonably withheld
or delayed):
(a) other than in the ordinary course of business consistent with past
practice, issue any debt securities or otherwise incur, create or assume any
indebtedness for borrowed money, including Federal Home Loan Bank borrowings
(other than (i) short-term indebtedness incurred to support asset
33
growth, to support deposit flows or to refinance short-term indebtedness and
(ii) indebtedness of the Company or any of its wholly owned Subsidiaries to the
Company or any of its wholly owned Subsidiaries) or modify any of the terms of
such outstanding indebtedness, assume, guarantee, endorse or otherwise as an
accommodation become responsible for the obligations of any other Person, or
make any loans, advances or renewals thereof in excess of $250,000,000;
(b) (i) adjust, split, combine or reclassify any shares of its capital
stock, (ii) make, declare or pay any dividend or make any other distribution on,
whether payable in cash, stock, property or otherwise or (iii) directly or
indirectly redeem, purchase or otherwise acquire for consideration, any shares
of its capital stock or any securities or obligations convertible into (whether
currently convertible or only convertible after the passage of time or the
occurrence of certain events) or exchangeable for any shares of its capital
stock except the acquisition of trading account shares and Trust Shares in the
ordinary course of business and consistent with past practices. Notwithstanding
the foregoing, the Company shall be entitled to (x) declare and pay a regular
quarterly cash dividend on the Company Common Stock at a rate not in excess of
$0.29 per share per quarter with usual record and payment dates for such
dividends in accordance with the Company's past dividend practices, (y) permit
direct or indirect Subsidiaries to declare and pay dividends to the Company or
any of its direct or indirect wholly owned Subsidiaries, and (z) accept shares
of Company Common Stock as payment of the exercise price of stock options or for
withholding taxes incurred in connection with the exercise of Company Options or
the vesting or satisfaction of Company Units in accordance with past practice
and the terms of the applicable award documents or Company Equity Compensation
Plans;
(c) issue or sell any shares of capital stock or any options, warrants,
convertible securities or other rights of any kind to acquire any shares of such
capital stock, or any other ownership interest, except (x) the issuance of
capital stock upon the exercise or settlement of stock options or other equity
rights or obligations under the terms of the applicable Company Option Plan or
Company benefit plan in effect on the date hereof, (y) issuances by a wholly
owned Subsidiary of the Company of its capital stock to its parent or to another
wholly owned direct or indirect Subsidiary of the Company and (z) pursuant to
the Rights Agreement or any renewal or replacement thereof;
(d) sell, transfer, lease, assign, mortgage, encumber or otherwise dispose
of any of its properties or assets that are material to the Company and its
Subsidiaries, taken as a whole, to any Person other than a direct or indirect
wholly owned Subsidiary (so long as no resulting internal reorganization or
consolidation involving existing Subsidiaries would present a material risk to
or any material delay in the receipt of all regulatory approvals required
pursuant to Section 9.01(c)) or cancel, release or assign any indebtedness to
any such Person that is material to the Company and its Subsidiaries, taken as a
whole, or any claims held by any such Person that are material to the Company
and its Subsidiaries, taken as a whole, except in each case, contemplated by
this clause (d) in the ordinary
34
course of business consistent with past practice or pursuant to contracts or
agreements in force at the date of this Agreement;
(e) except for transactions in the ordinary course of business consistent
with past practice, make any material investment either by purchase of stock or
securities, contributions to capital, property transfers, or purchase of any
property or assets of any other Person other than a wholly owned direct or
indirect Subsidiary of the Company; PROVIDED, HOWEVER, that the terms of this
Section 6.01(e) shall not apply to the Company's investment securities portfolio
or gap position, each of which is expressly covered by Section 6.01(j);
(f) except for transactions in the ordinary course of business consistent
with past practice, enter into, terminate or renew, or make any material change
or amendment to, any Material Contract;
(g) (i) adopt, amend, renew or terminate any plan or policy or any
agreement or arrangement between the Company or any of its Subsidiaries and one
or more of its current or former employees, directors and independent
contractors (including any collective bargaining, bonus, profit-sharing, equity
or equity-based compensation, retirement, deferred compensation, severance or
other plan, policy, agreement or arrangement), (ii) enter into, modify or renew
any employment, consultancy, deferred compensation, severance, retirement or
other similar agreement or arrangement with any employee, director or
independent contractor of the Company or any of its Subsidiaries, (iii) pay any
bonus to any of its employees, (iv) increase in any manner the compensation or
fringe benefits of any employees, directors or independent contractors of the
Company or its Subsidiaries or make any retirement-related payment not required
by any existing plan, policy, agreement or arrangement to any such employees,
directors or independent contractors or become a party to, amend or commit
itself to any retirement, profit-sharing or welfare benefit plan, policy,
agreement or arrangement, (v) grant any equity or equity-based compensation or
(vi) make any commitment to take any action described in clauses (i) through (v)
above, other than (A) in the ordinary course of business, (B) as may be required
by applicable law, including as a condition of continued tax qualification or
(C) as expressly contemplated by Section 7.03 (including Section 7.03 of the
Company Disclosure Schedule referenced therein);
(h) settle or compromise any material pending or threatened claim, action
or proceeding, except in the ordinary course of business consistent with past
practice, against the Company or any of its Subsidiaries or which relates to
this Agreement, the Merger or any of the other transactions contemplated hereby;
(i) amend its Certificate of Incorporation or other governance documents,
or adopt any resolution granting dissenters' rights or permit any Subsidiary to
enter into a plan of consolidation, merger or reorganization with any Person
other than a wholly owned Subsidiary of the Company;
35
(j) other than in the ordinary course of business consistent with past
practice and after consultation with Buyer, restructure or materially change its
investment securities portfolio, its hedging strategy or its gap position,
through purchases, sales or otherwise, or the manner in which the portfolio is
classified or reported or materially increase the credit risk associated with
its market making activities;
(k) enter into any new line of business that is material to the Company and
its Subsidiaries, taken as a whole;
(l) incur or commit to any capital expenditures or any obligations or
liabilities in connection therewith, other than in the ordinary course of
business consistent with past practice;
(m) make any individual extension of credit (including pursuant to
equipment leases), other than to an executive officer or director of the
Company, in excess of $15,000,000;
(n) implement or adopt any change to its financial accounting methods,
principles or practices, other than changes required by applicable law or GAAP
or regulatory accounting as concurred in by the Company's independent
accountants where Buyer has been notified in advance of such changes;
(o) knowingly commit any act or omission which constitutes a material
breach or default by the Company or any of its Subsidiaries under any agreement
with any Governmental Authority;
(p) take any action that is intended or reasonably expected to result in
any of its representations and warranties set forth in this Agreement being or
becoming untrue in any material respect at any time prior to the Effective Time,
or in any of the conditions to the Merger set forth in Article 9 not being
satisfied or in a violation of any provision of this Agreement, except, in every
case, as may be required by applicable law;
(q) (with respect to the Company only) amend, or redeem the rights issued
under, the Rights Agreement or otherwise take any action to exempt any Person
(other than Buyer or its Affiliates) or any action taken by any Person (other
than Buyer and its Affiliates) from the Rights Agreement or any state
takeover statute or similarly restrictive provisions of its organizational
documents;
(r) take any action that would materially impede or delay the ability of
the parties to obtain any necessary approvals of any Governmental Authority
required for the transactions contemplated hereby;
(s) adopt a plan of complete or partial liquidation or resolutions
providing for or authorizing such a liquidation or a dissolution, restructuring,
recapitalization or reorganization;
36
(t) other than in the ordinary course of business consistent with past
practice: (A) make or change any material Tax election, (B) adopt or change any
material method of tax accounting, (C) file any materially amended material Tax
Return or material claim for a Tax refund, (D) enter into any material closing
agreement, or (E) settle or compromise any material Tax claim or Tax liability,
in each case, except as required by applicable law; and
(u) agree to, or make any commitment to, take or authorize, any of the
foregoing.
Section 6.02. STOCKHOLDER MEETING; PROXY MATERIAL. The Company shall cause
a meeting of its stockholders (the "COMPANY STOCKHOLDER MEETING") to be duly
called and held as soon as reasonably practicable for the purpose of voting on
the approval and adoption of this Agreement and the Merger. Subject to Section
6.04(b), the Board of Directors of the Company shall recommend approval and
adoption of this Agreement and the Merger by the Company's stockholders. In
connection with such meeting, the Company shall (i) as promptly as practicable
prepare and file with the SEC, use its reasonable best efforts to have cleared
by the SEC and thereafter mail to its stockholders as promptly as practicable
the Company Proxy Statement and all other proxy materials for such meeting, (ii)
use its reasonable best efforts to obtain the necessary approvals by its
stockholders of this Agreement and the transactions contemplated hereby and
(iii) otherwise comply with all legal requirements applicable to such meeting.
Section 6.03. ACCESS TO INFORMATION. From the date hereof until the
Effective Time and subject to applicable law and the Confidentiality Agreement
dated as of April 18, 2004, as amended, between the Company and Buyer (the
"CONFIDENTIALITY AGREEMENT"), the Company shall, and shall cause its
Subsidiaries to, (i) upon reasonable notice, give to Buyer and its
Representatives, access to the offices, properties, contracts, commitments,
books and records of the Company and its Subsidiaries, (ii) furnish to Buyer and
its Representatives such financial and operating data and other information
regarding the Company and its Subsidiaries as such Persons may reasonably
request, (iii) furnish to Buyer and its Representatives a copy of each report,
schedule, registration statement and other document filed or received by it
during such period pursuant to the requirements of federal securities laws or
federal or state banking laws (other than reports or documents which the Company
is not permitted to disclose under applicable law) and make available each
periodic report to the Company's senior management, (iv) upon reasonable notice,
make available members of the Company's senior management and other employees,
(v) instruct its Representatives and the Representatives of its Subsidiaries to
cooperate with Buyer in its investigation and (vi) provide to Buyer copies of
the materials provided to its credit committee in respect of all extensions of
credit in excess of $10 million on or about the date such materials are provided
to such committee. Neither the Company nor any of its Subsidiaries shall be
required to provide access to or to disclose information where such access or
disclosure would violate or prejudice the rights of the
37
Company's customers, jeopardize the attorney-client privilege of the institution
in possession or control of such information or contravene any law, rule,
regulation, order, judgment, decree, fiduciary duty or binding agreement entered
into prior to the date of this Agreement, PROVIDED THAT, throughout the period
prior to the Effective Time, the Company shall use its reasonable best efforts
to obtain waivers from Persons who are parties to such agreements in order for
Buyer to be provided reasonable access to such agreements. Any investigation
pursuant to this Section shall be conducted in such manner as not to interfere
unreasonably with the conduct of the business of the Company. No information or
knowledge obtained in any investigation pursuant to this Section shall affect or
be deemed to modify any representation or warranty made by the Company
hereunder.
Section 6.04. ACQUISITION PROPOSALS. (a) The Company agrees that neither it
nor any of its Subsidiaries nor any of the officers and directors of it or its
Subsidiaries shall, and that it shall cause its and its Subsidiaries' employees,
agents and representatives (including any investment banker, attorney or
accountant ("REPRESENTATIVES") retained by it or any of its Subsidiaries) not
to, directly or indirectly, initiate, solicit or knowingly encourage or
facilitate any inquiries or the making of any proposal or offer with respect to
(a) a merger, reorganization, share exchange, consolidation or similar
transaction involving the Company, (b) any purchase of an equity interest
representing an amount equal to or greater than a 20% voting or economic
interest in the Company or (c) any purchase of assets, securities or ownership
interests representing an amount equal to or greater than 20% of the
consolidated assets of the Company and its Subsidiaries taken as a whole (any
such proposal or offer being hereinafter referred to as an "ACQUISITION
PROPOSAL").
(b) The Company further agrees that neither it nor any of its Subsidiaries
nor any of the officers and directors of it or its Subsidiaries shall, and that
it shall cause its and its Subsidiaries' employees, agents and Representatives
not to, directly or indirectly, engage in any negotiations concerning, or
provide any confidential information or data to, or have any discussions with,
any Person relating to an Acquisition Proposal, or otherwise knowingly encourage
or facilitate any effort or attempt to make or implement an Acquisition
Proposal; provided, however, that nothing contained in this Agreement shall
prevent the Company or its Board of Directors from:
(i) complying with its disclosure obligations under Sections 14d-9 and
14e-2 of the 1934 Act with regard to an Acquisition Proposal; PROVIDED,
HOWEVER, that, if such disclosure has the effect of withdrawing, modifying
or qualifying the recommendation to the Company's stockholders referred to
in Section 6.02 hereof in a manner adverse to Buyer or the approval of this
Agreement by the Board of Directors of the Company, Buyer shall have the
right to terminate this Agreement to the extent set forth in Section
10.01(c)(i) of this Agreement; and
38
(ii) at any time prior to, but not after, the time this Agreement is
adopted by the stockholders of the Company, (A) providing information in
response to a request therefor by a Person who has made an unsolicited bona
fide written Acquisition Proposal, if the Board of Directors of the Company
receives from the Person so requesting such information an executed
confidentiality agreement (other than standstill provisions) on customary
terms; (B) engaging in any negotiations or discussions with any Person who
has made an unsolicited bona fide written Acquisition Proposal if the Board
of Directors of the Company receives from such Person an executed
confidentiality agreement (other than standstill provisions) on customary
terms; or (C) recommending such an unsolicited bona fide written
Acquisition Proposal to the stockholders of the Company, IF AND ONLY TO THE
EXTENT THAT, (x) in each such case referred to in clause (A), (B) or (C)
above, the Board of Directors of the Company determines in good faith after
consultation with outside legal counsel that such action is necessary in
order for its directors to comply with their respective fiduciary duties
under applicable law, (y) in each case referred to in clause (B) or (C)
above, the Board of Directors of the Company determines in good faith
(after consultation with its financial advisor and outside counsel) that
such Acquisition Proposal, if accepted, is reasonably likely to be
consummated, taking into account all legal, financial and regulatory
aspects of the proposal, the likelihood of obtaining financing, and the
Person making the proposal, and if consummated, would result in a
transaction more favorable to the Company's stockholders from a financial
point of view than the transaction contemplated by this Agreement taking
into account any change in proposal proposed by Buyer; and (z) in the case
of clause (C), Buyer shall have had written notice of the Company's
intention to take the action referred to in clause (C) at least three
business days prior to the taking of such action by the Company; provided,
that any more favorable Acquisition Proposal referred to in clause (B) or
(C) above must involve 50% rather than the 20% used in the definition of
Acquisition Proposal. The Company agrees that it will immediately cease and
cause to be terminated any existing activities, discussions or negotiations
with any Person conducted heretofore with respect to any Acquisition
Proposal.
(c) The Company agrees that it will take the necessary steps to promptly
inform the individuals or entities referred to in Section 6.04(a) of the
obligations undertaken in this Section 6.04. The Company agrees that it will
notify Buyer promptly, but in any event within 48 hours if any such inquiries,
proposals or offers are received by, any such information is requested from, or
any such discussions or negotiations are sought to be initiated or continued
with, it or any of its Representatives indicating, in connection with such
notice, the name of such Person and the material terms and conditions of any
proposals or offers and thereafter shall keep Buyer informed on a current basis,
and, in any event, within 48 hours of any changes in the status and terms of any
such proposals or offers,
39
including whether any such proposal has been withdrawn or rejected. The Company
also agrees to provide any information to Buyer that it is providing to another
Person pursuant to this Section 6.04 at substantially the same time it provides
it to such other Person and that it will promptly request each Person that has
heretofore executed a confidentiality agreement in connection with its
consideration of a transaction with the Company to return all confidential
information furnished prior to the execution of this Agreement to or for the
benefit of such Person by or on behalf of it or any of its Subsidiaries. The
Company agrees promptly, but in any event, within five days after the date of
this Agreement, to request the return or destruction of all information and
materials provided prior to the date of this Agreement by it, its Affiliates or
their respective Representatives with respect to the consideration or making of
any Acquisition Proposal.
(d) Notwithstanding anything herein that may be deemed to be to the
contrary, nothing contained in this Section 6.04 shall relieve the Company of
its obligation to call and hold the Company Stockholder Meeting, and hold a vote
of its stockholders, pursuant to Section 6.02.
Section 6.05. TRANSITION COMMITTEE. In order to facilitate the planning
for the integration of the operations of the Company and Buyer and their
Subsidiaries as promptly as possible following the Effective Time, the Company
shall, and shall cause its Subsidiaries to, consult with Buyer on all strategic
and operational matters to the extent such consultation is not in violation of
applicable laws, including laws regarding the exchange of information and other
laws regarding competition, and does not conflict with Section 6.06 of this
Agreement. Immediately upon the execution of this Agreement, the Company and
Buyer shall establish a transition committee, consisting of three
representatives designated by the Company and three representatives designated
by Buyer (the "TRANSITION COMMITTEE"). During the period from the date of this
Agreement to the Effective Time, the Transition Committee will (i) confer on a
regular and continued basis regarding the general status of the ongoing
operations of the Company and its Subsidiaries, and the status of the
development and implementation of a system conversion plan, and (ii) communicate
and consult with its members with respect to (x) the manner in which the
business of the Company and its Subsidiaries are conducted, (y) branch
alignment, and (z) audit and accounting procedures and policies including,
without limitation, conforming the Company's policies regarding loan loss
reserve calculation to those of the Buyer and compliance and remedial actions,
in each case to the extent consistent with applicable laws, including laws
regarding the exchange of information and other laws regarding competition.
Section 6.06. CONTROL OF OTHER PARTY'S BUSINESS. Nothing contained in this
Agreement shall give Buyer, directly or indirectly, the right to control or
direct the operations of the Company prior to the Effective Time. Prior to the
Effective Time, the Company shall exercise, consistent with the terms and
40
conditions of this Agreement, complete control and supervision over its
Subsidiaries' operations.
Section 6.07. ALCO MANAGEMENT. Except as otherwise required by applicable
law or regulation, the Company and its Subsidiaries agree to manage their assets
and liabilities in accordance with Company's asset and liability management
policy as in effect on the date hereof, unless otherwise reasonably agreed by
the parties. Neither the Company nor any of its Subsidiaries shall materially
amend or modify such policy or policies without express written consent of
Buyer, which consent will not be unreasonably withheld or delayed. The Company
and Buyer agree to consult on investment and funding programs and policies to be
administered by the Company's Subsidiaries.
Section 6.08. BRANCH INCENTIVE PLAN; OTHER PRODUCTS. The Company agrees
that it will consult and reasonably cooperate with Buyer in the development and
implementation of policies and programs to incent management and branch staff of
the Company and its Subsidiaries and, following the execution and delivery of
this Agreement, the Company and Buyer will adopt and implement an incentive plan
for management and branch staff of the Company and its Subsidiaries ("BRANCH
INCENTIVE PLAN") on such terms and conditions as may be mutually agreed upon by
the Company and Buyer and set forth in the Branch Incentive Plan. The Branch
Incentive Plan shall include, as may be mutually agreed upon, among other
things, other initiatives designed to incentivize management and branch staff to
increase the deposit and customer base of the Company and its Subsidiaries
through the period of the system conversion. The parties shall also consult and
reasonably cooperate regarding similar matters relating to the Company's loan
production offices. More generally, Buyer and the Company shall consult with
each other on the introduction of products and services not currently offered by
the Company which Buyer would expect to make available to customers following
the Effective Time; provided that nothing herein shall obligate the Company to
offer any such products or services prior to the Effective Time.
Section 6.09. CHARITABLE CONTRIBUTIONS. At least two days prior to the
Effective Time, the Company shall contribute to a newly-established subaccount
of Buyer's existing charitable foundation (the "BUYER'S FOUNDATION") established
for the benefit of the markets served by the Company, an amount equal to
$40,000,000 (the "CONTRIBUTION AMOUNT"); PROVIDED that, each non-executive
director of the Company (a "NON-EXECUTIVE DIRECTOR") shall be entitled to direct
a portion of the Contribution Amount equal to $180,000, such donation to be made
by the Buyer's Foundation in the name of such Non-Executive Director, to a
charitable organization or tax-exempt entity under Section 501(c)(3) of the Code
(reasonably satisfactory to the Buyer's Foundation) located in a market served
by the Company. Buyer agrees that if the Merger is not consummated for any
reason, Buyer shall reimburse the Company for such amounts previously
contributed by the Company to such charitable foundation within two Business
Days of termination.
41
ARTICLE 7
COVENANTS OF BUYER
Buyer agrees that:
Section 7.01. OBLIGATIONS OF MERGER SUBSIDIARY. Buyer shall take all
action necessary to cause Merger Subsidiary to perform its obligations under
this Agreement and to consummate the Merger on the terms and conditions set
forth in this Agreement.
Section 7.02. DIRECTOR AND OFFICER LIABILITY. Buyer shall cause the
Surviving Corporation, and the Surviving Corporation hereby agrees, to do the
following:
(a) From and after the Effective Time, the Surviving Corporation shall, any
Buyer shall cause the Surviving Corporation to, indemnify and hold harmless the
present and former officers and directors of the Company and any of its
Subsidiaries (each an "INDEMNIFIED PERSON") against all losses, claims, damages,
costs, expenses, liabilities or judgments or amounts that are paid in settlement
of or in connection with any threatened or actual claim, action, suit,
proceeding or investigation, whether civil, criminal or administrative, based in
whole or in part on or arising in whole or in part out of the fact that such
Indemnified Person is or was such a director or officer, and pertaining to any
matter existing or occurring, or any acts or omissions occurring, at or prior to
the Effective Time, whether asserted or claimed prior to, or at or after, the
Effective Time (including matters, acts or omissions occurring in connection
with the approval of this Agreement and the consummation of the transactions
contemplated hereby) to the fullest extent permitted by Delaware Law or any
other applicable laws or provided under the Company's certificate of
incorporation and bylaws in effect on the date hereof (including the advancement
of expenses); provided that such indemnification shall be subject to any
limitation imposed from time to time under applicable law.
(b) For a period of six years after the Effective Time, the Surviving
Corporation shall, and Buyer shall cause the Surviving Corporation to, provide
officers' and directors' liability insurance in respect of actual or alleged
acts or omissions occurring prior to the Effective Time covering each such
Indemnified Person currently covered by the Company's officers' and directors'
liability insurance policy on terms with respect to coverage and amount and
conditions no less favorable than those of such policy in effect on the date
hereof; provided that, in satisfying its obligation under this Section 7.02(b),
the Surviving Corporation shall not be obligated to pay annual premiums in
excess of 250% of the amount per annum the Company paid in its last full fiscal
year, which amount the Company has disclosed to Buyer prior to the date hereof
(such 250% amount, the "MAXIMUM ANNUAL PREMIUM"); PROVIDED, FURTHER, that if the
annual premiums of such insurance coverage exceed such amount, the Surviving
Corporation shall be obligated to obtain a policy with the greatest coverage
available for a cost not exceeding the Maximum Annual Premium. In addition, the
Company may (after
42
consultation with Buyer) purchase a six-year "tail" prepaid policy prior to the
Effective Time on terms and conditions no less advantageous to the Indemnified
Persons than the existing directors' and officers' liability insurance
maintained by the Company; provided, that the aggregate amount paid by the
Company shall not exceed the Maximum Annual Premium. If such "tail" prepaid
policies have been obtained by the Company prior to the Closing, the Surviving
Corporation shall, and Buyer shall cause the Surviving Corporation to, maintain
such policies in full force and effect, and continue to honor the respective
obligations thereunder, and all other obligations under this Section 7.02(b)
shall terminate.
(c) If Buyer, the Surviving Corporation or any of its successors or assigns
(i) consolidates with or merges into any other Person and shall not be the
continuing or surviving corporation or entity of such consolidation or merger,
or (ii) transfers or conveys all or substantially all of its properties and
assets to any Person, then, and in each such case, to the extent necessary,
proper provision shall be made so that the successors and assigns of Buyer or
the Surviving Corporation, as the case may be, shall assume the obligations set
forth in this Section 7.02.
(d) The rights of each Indemnified Person under this Section 7.02 shall be
in addition to any rights such Person may have under the certificate of
incorporation or bylaws of the Company or any of its Subsidiaries, or under
Delaware Law or any other applicable laws or under any agreement of any
Indemnified Person with the Company or any of its Subsidiaries. These rights
shall survive consummation of the Merger and are intended to benefit, and shall
be enforceable by, each Indemnified Person and his or her heirs and
representatives.
Section 7.03. BENEFIT PLANS. () From the Effective Time through December
31, 2004 (the "BENEFITS TRANSITION DATE"), Buyer shall, or shall cause the
Surviving Corporation to, provide the employees of the Company and its
Subsidiaries as of the Effective Time (the "COVERED EMPLOYEES") with employee
benefits and compensation plans, programs and arrangements that are
substantially similar, in the aggregate, to the employee benefits and
compensation plans, programs and arrangements (other than any Company Equity
Compensation Plans) provided by the Company or its Subsidiaries, as the case may
be, to such employees immediately prior to the Effective Time. From and after
the Benefits Transition Date, Buyer shall, or shall cause the Surviving
Corporation to, provide the Covered Employees with employee benefits and
compensation plans, programs and arrangements that are equivalent to those
provided to similarly situated employees of Buyer and its other Subsidiaries.
Notwithstanding the foregoing:
(i) from and after the Benefits Transition Date, Buyer shall be
required to cause the Surviving Corporation to provide the Covered
Employees who meet the age and service requirements under the Buyer Pension
Plan (taking into account for these purposes service with the Company or
any of its Subsidiaries (or their predecessor entities)) with
43
benefits under such plan in accordance with the benefits formula as in
effect for employees hired after December 31, 2003 only if, prior to the
Benefits Transition Date, Buyer has not announced to employees of Buyer and
its other Subsidiaries Buyer's intention to terminate or freeze such plan;
(ii) from and after the Effective Time, Buyer's obligation under the
first two sentences of this Section 7.03(a) with respect to retiree medical
care shall be satisfied by maintaining (or causing the Surviving
Corporation to maintain) a retiree medical plan for the benefit of current
and former employees of the Company and its Subsidiaries that is no less
favorable than the retiree medical plan in effect at the Company, as
described in Section 7.03 of the Company Disclosure Schedule; and
(iii) a Covered Employee who is terminated without cause (definition
to be mutually agreed to between the Company and Buyer prior to the
Effective Time) during the period commencing at the Effective Time and
ending on the first anniversary thereof shall be entitled to receive the
severance payments and benefits under the severance arrangement described
in Section 7.03 of the Company Disclosure Schedule (without amendment
during such one-year period following the Effective Time), subject to his
or her execution of a general release mutually agreed to by the Company and
Buyer and the expiration of any attorney consultation, revocation or
similar period required by applicable law.
(b) From and after the Effective Time, Buyer shall, or shall cause the
Surviving Corporation to, (i) provide all Covered Employees with service credit
for purposes of eligibility, participation, vesting and levels of benefits (but
not for benefit accruals under any defined benefit pension plan), under any
employee benefit or compensation plan, program or arrangement adopted,
maintained or contributed to by Buyer or the Surviving Corporation in which
Covered Employees are eligible to participate (subject to the last sentence of
Section 7.03(a)), for all periods of employment with the Company or any of its
Subsidiaries (or their predecessor entities) prior to the Effective Time and
with the Surviving Corporation and any of its Affiliates on and after the
Effective Time, (ii) cause any pre-existing conditions or limitations,
eligibility waiting periods or required physical examinations under any welfare
benefit plans of Buyer or the Surviving Corporation to be waived with respect to
the Covered Employees and their eligible dependents, to the extent waived under
the corresponding plan in which the applicable Covered Employee participated
immediately prior to the Effective Time or Benefits Transition Date, as
applicable, and (iii) give the Covered Employees and their eligible dependents
credit for the plan year in which the Effective Time (or commencement of
participation in a plan of Buyer or the Surviving Corporation) occurs towards
applicable deductibles and annual out-of-pocket limits for expenses incurred
prior to the Effective Time (or the date of commencement of participation in a
plan of Buyer or the Surviving Corporation).
44
(c) From and after the Effective Time, Buyer shall, or shall cause the
Surviving Corporation to, honor all accrued and vested benefit obligations to
and contractual rights of current and former employees, directors or independent
contractors of the Company and its Subsidiaries to the extent disclosed in
Section 4.18(a) of the Company Disclosure Schedule. From and after the Effective
Time, Buyer shall, or shall cause the Surviving Corporation to, take all
necessary action to effectuate the obligations set forth in Section 7.03 of the
Company Disclosure Schedule.
Section 7.04. CONDUCT OF BUYER AND MERGER SUBSIDIARY. Buyer and Merger
Subsidiary, from the date of this Agreement until the Effective Time, will not
and will not permit its Subsidiaries to (unless the Company shall otherwise
approve in writing, which approval shall not be unreasonably withheld or
delayed):
(a) take any action that is intended or reasonably expected to result in
any of its representations and warranties set forth in this Agreement being or
becoming untrue in any material respect at any time prior to the Effective Time,
or in any of the conditions to the Merger set forth in Article 9 not being
satisfied or in a violation of any provision of this Agreement, except, in every
case, as may be required by applicable law;
(b) take any action that would materially impede or delay the ability of
the parties to obtain any necessary approvals of any Governmental Authority
required for the transactions contemplated hereby; and
(c) agree to, or make any commitment to, take or authorize, any of the
foregoing.
ARTICLE 8
COVENANTS OF BUYER AND THE COMPANY
The parties hereto agree that:
Section 8.01. REASONABLE BEST EFFORTS. (a) Subject to the terms and
conditions of this Agreement, the Company and Buyer shall use their reasonable
best efforts to take, or cause to be taken, all actions and to do, or cause to
be done, all things necessary, proper or advisable under applicable laws and
regulations to consummate the transactions contemplated by this Agreement,
including (i) preparing and filing as promptly as practicable with any
Governmental Authority or other third party all documentation to effect all
necessary filings, notices, petitions, statements, registrations, submissions of
information, applications and other documents and (ii) obtaining and maintaining
all approvals, consents, registrations, permits, authorizations and other
confirmations required to be obtained from any Governmental Authority or other
third party that are necessary, proper or advisable to consummate the
transactions contemplated by this
45
Agreement. The Company and Buyer shall have the right to review in advance,
and, to the extent practicable, each will consult the other on, in each
case subject to applicable laws relating to the exchange of information,
all the information relating to the Company and Buyer, as the case may be,
and any of their respective Subsidiaries, which appear in any filing made
with, or written materials submitted to, any third party or any
Governmental Authority as contemplated by clauses (i) and (ii) of the
immediately preceding sentence in connection with the transactions
contemplated by this Agreement. In exercising the foregoing right, each of
the parties shall act reasonably and as promptly as practicable.
(b) In furtherance and not in limitation of the foregoing, (i) each of
Buyer and the Company shall make an appropriate filing of a Notification and
Report Form pursuant to the HSR Act with respect to the transactions
contemplated hereby that are not exempt from such filing pursuant to Sections
18a(c)(7) and 18a(c)(8) of the HSR Act as promptly as practicable and in any
event within 10 Business Days of the date hereof and (ii) Buyer shall use its
reasonable best efforts to make or file within 30 days of the date hereof the
Regulatory Applications and all other applications, notices, requests for
authorization or other documents with the appropriate federal or state bank
regulatory authorities necessary to consummate the Merger and the other
transactions contemplated by this Agreement and, in each case, Buyer and/or the
Company, as the case may be, shall supply as promptly as practicable any
additional information and documentary material that may be requested pursuant
to the HSR Act or in connection with any Regulatory Applications or other
applications or notices made pursuant to clause (ii) and to take all other
actions necessary to cause the expiration or termination of the applicable
waiting periods under the HSR Act or in connection with any Regulatory
Applications or other applications or notices made pursuant to clause (ii) as
soon as practicable.
Section 8.02. PREPARATION OF COMPANY PROXY STATEMENT. (a) The Company and
Buyer shall cooperate with one another (i) in connection with the preparation of
the Company Proxy Statement, (ii) in determining whether any action by or in
respect of, or filing with, any Governmental Authority is required, or any
actions, consents, approvals or waivers are required to be obtained from parties
to any material contracts, in connection with the consummation of the
transactions contemplated by this Agreement and (iii) in taking such actions or
making any such filings, furnishing information required in connection therewith
or with the Company Proxy Statement and seeking timely to obtain any such
actions, consents, approvals or waivers.
(b) Buyer and its counsel shall be given a reasonable opportunity to review
and comment on the Company Proxy Statement before such document (or any
amendment thereto) is filed with the SEC, and reasonable and good faith
consideration shall be given to any comments made by such party and its counsel.
The Company shall provide Buyer and its counsel with (i) any comments or other
communications, whether written or oral, that the Company or its counsel may
receive from time to time from the SEC or its staff with respect to the Company
46
Proxy Statement promptly after receipt of those comments or other communications
and Error! Bookmark not defined. a reasonable opportunity to participate in the
response to those comments and to provide comments on that response (to which
reasonable and good faith consideration shall be given), including by
participating in any discussions or meetings with the SEC.
Section 8.03. PUBLIC ANNOUNCEMENTS. Buyer and the Company shall consult
with each other before issuing any press release, making any other public
statement or scheduling any press conference or conference call with investors
or analysts with respect to this Agreement or the transactions contemplated
hereby and, except as may be required by applicable law, order of a court of
competent jurisdiction or any listing agreement with or rule of any national
securities exchange or association, shall not issue any such press release, make
any such other public statement or schedule any such press conference or
conference call before such consultation.
Section 8.04. FURTHER ASSURANCES. At and after the Effective Time, the
officers and directors of the Surviving Corporation shall be authorized to
execute and deliver, in the name and on behalf of the Company or Merger
Subsidiary, any deeds, bills of sale, assignments or assurances and to take and
do, in the name and on behalf of the Company or Merger Subsidiary, any other
actions and things to vest, perfect or confirm of record or otherwise in the
Surviving Corporation any and all right, title and interest in, to and under any
of the rights, properties or assets of the Company acquired or to be acquired by
the Surviving Corporation as a result of, or in connection with, the Merger.
Section 8.05. NOTICES OF CERTAIN EVENTS. Each of the Company and Buyer
shall promptly notify the other of:
(a) any notice or other communication from any Person alleging that the
consent of such Person is or may be required in connection with the transactions
contemplated by this Agreement;
(b) any material notice or other material communication from any court,
administrative agency or commission or other Governmental Authority, whether
domestic, foreign or supranational, in connection with the transactions
contemplated by this Agreement; and
(c) any actions, suits, claims, investigations or proceedings commenced or,
to its knowledge, threatened against, relating to or involving or otherwise
affecting the Company or any of its Subsidiaries that, if pending on the date of
this Agreement, would have been required to have been disclosed pursuant to
Sections 4.09, 4.10, 4.11, 4.13, 4.16, 4.17, 4.18, 4.19, 4.21, 5.07 or 5.08, as
the case may be, or that relate to the consummation of the transactions
contemplated by this Agreement;
47
PROVIDED that, any failure to comply with this Section 8.05 shall not constitute
the failure of any condition set forth in Article 9 to be satisfied unless the
underlying matter would independently result in the failure of a condition set
forth in Article 9 to be satisfied.
ARTICLE 9
CONDITIONS TO THE MERGER
Section 9.01. CONDITIONS TO OBLIGATIONS OF EACH PARTY. The obligations of
the Company, Buyer and Merger Subsidiary to consummate the Merger are subject to
the satisfaction or waiver on or prior to Closing of the following conditions:
(a) this Agreement shall have been approved and adopted by the stockholders
of the Company in accordance with Delaware Law;
(b) no provision of any applicable law or regulation and no judgment,
injunction, order or decree shall prohibit the consummation of the Merger; and
(c) (i) the Federal Reserve Board shall have approved Buyer's Section 3
application to approve the Merger and all other Regulatory Applications required
to complete the Merger shall have been made and the related consents and
approvals necessary to complete the Merger received and (ii) any applicable
waiting period under the HSR Act relating to the Merger shall have expired or
been terminated.
Section 9.02. CONDITIONS TO THE OBLIGATIONS OF BUYER AND MERGER
SUBSIDIARY. The obligations of Buyer and Merger Subsidiary to consummate the
Merger are subject to the satisfaction or waiver on or prior to Closing of the
following further conditions:
(a) (i) the Company shall have performed in all material respects all of
its obligations hereunder required to be performed by it at or prior to the
Effective Time, (ii) the representations and warranties of the Company contained
in this Agreement and in any certificate or other writing delivered by the
Company pursuant hereto shall be true at and as of the Effective Time as if made
at and as of such time except that those representations and warranties which
address matters only as of a particular date need only be true and correct as of
such date and, in each case, except for breaches with respect to all
representations and warranties that have not had or would not reasonably be
expected to have, individually or in the aggregate, a Company Material Adverse
Effect (it being agreed that, for purposes of this Section 9.02(a)(ii), the
representations and warranties of the Company contained in this Agreement shall
be deemed to have been made without any qualifications as to materiality and,
accordingly, references to "material", "Company Material Adverse Effect", "in
all material respects" and similar qualifications as to materiality shall be
deemed to be deleted
48
therefrom) and (iii) Buyer shall have received a certificate signed by the Chief
Executive Officer or Chief Financial Officer of the Company to the foregoing
effect; and
(b) there shall not have been any action taken, or any statute, rule,
regulation order or decree enacted, entered, enforced or deemed applicable to
the Merger by any government or Governmental Authority of competent
jurisdiction, domestic, foreign or supranational, making illegal or prohibiting
the consummation of the Merger, or otherwise imposing any condition or
restriction in connection with the Merger that would reasonably be expected to
have a material adverse effect on the business, results of operations or
financial condition of Buyer and its Subsidiaries, taken as a whole, after the
Effective Time.
Section 9.03. CONDITIONS TO THE OBLIGATIONS OF THE COMPANY. The
obligations of the Company to consummate the Merger are subject to the
satisfaction or waiver on or prior to Closing of the following conditions: (i)
each of Buyer and Merger Subsidiary shall have performed in all material
respects all of its obligations hereunder required to be performed by it at or
prior to the Effective Time, the representations and warranties of Buyer
contained in this Agreement and in any certificate or other writing delivered by
Buyer pursuant hereto shall be true in all material respects at and as of the
Effective Time as if made at and as of such time except that those
representations and warranties which address matters only as of a particular
date need only be true and correct as of such date and (iii) the Company shall
have received a certificate signed by an officer of Buyer to the foregoing
effect.
ARTICLE 10
TERMINATION
Section 10.01. TERMINATION. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time (notwithstanding
any approval of this Agreement by the stockholders of the Company):
(a) by mutual written agreement of the Company and Buyer; or
(b) by either the Company or Buyer, if:
(i) the Merger has not been consummated on or before May 1, 2005 (the
"END DATE"); PROVIDED that the right to terminate this Agreement pursuant
to this Section 10.01(b)(i) shall not be available to any party whose
breach of any provision of this Agreement shall have proximately
contributed to the occurrence of the failure of the Merger to be
consummated by such time;
49
(ii) (A) there shall be any United States law or regulation that makes
consummation of the Merger illegal or otherwise prohibited, (B) any
judgment, injunction, order or decree of any court or Governmental
Authority having competent jurisdiction enjoining the Company or Buyer from
consummating the Merger is entered and such judgment, injunction, decree or
order shall have become final and nonappealable or (C) any Governmental
Authority that must approve a Regulatory Application required to complete
the Merger has denied approval of the Merger and such denial has become
final and nonappealable; PROVIDED that the right to terminate this
Agreement pursuant to this Section 10.01(b)(ii) shall not be available to
any party whose breach of any provision of this Agreement shall have
proximately contributed to the entering of such judgment, injunction, order
or decree; or
(iii) this Agreement shall not have been approved and adopted in
accordance with Delaware Law by the Company's stockholders at the Company
Stockholder Meeting (or any adjournment thereof) following the vote of such
stockholders thereat; or
(c) by Buyer, if:
(i) at any time prior to the adoption and approval of this
Agreement by the Company's stockholders, the Board of Directors of the
Company shall have (A) failed to make or withdrawn, or modified in a
manner adverse to Buyer, its approval or recommendation of this
Agreement or the Merger, (B) approved, recommended or endorsed any
Acquisition Proposal or (C) materially breached its obligations to
call the Company Stockholder Meeting or hold the vote of the Company's
stockholders, in each case, in accordance with Section 6.02; or
(ii) a breach of any representation or warranty or failure to
perform any covenant or agreement on the part of the Company set forth
in this Agreement shall have occurred that would cause the condition
set forth in Section 9.02(a) not to be satisfied, and such condition
is incapable of being satisfied by the End Date; or
(d) by the Company, if a breach of any representation or warranty or
failure to perform any covenant or agreement on the part of Buyer or Merger
Subsidiary set forth in this Agreement shall have occurred that would cause the
condition set forth in Section 9.03 not to be satisfied, and such condition is
incapable of being satisfied by the End Date.
The party desiring to terminate this Agreement pursuant to this Section 10.01
(other than pursuant to Section 10.01(a)) shall give notice of such termination
to the other party.
50
Section 10.02. EFFECT OF TERMINATION. If this Agreement is terminated
pursuant to Section 10.01, this Agreement shall become void and of no effect
without liability of any party (or any stockholder, director, officer, employee,
agent, consultant or representative of such party) to the other party hereto;
PROVIDED that, if such termination shall result from the willful (i) failure of
either party to fulfill a condition to the performance of the obligations of the
other party or (ii) failure of either party to perform a covenant hereof, such
party shall be fully liable for any and all liabilities and damages incurred or
suffered by the other party as a result of such failure. The provisions of this
Section 10.02 and Sections 11.04, 11.05, 11.06, 11.07, 11.08, 11.09, 11.10 and
11.11 shall survive any termination hereof pursuant to Section 10.01.
ARTICLE 11
MISCELLANEOUS
Section 11.01. NOTICES. All notices, requests and other communications to
any party hereunder shall be in writing (including facsimile transmission) and
shall be given,
if to Buyer or Merger Subsidiary, to:
Citizens Financial Group, Inc.
Xxx Xxxxxxxx Xxxxx
Xxxxxxxxxx, Xxxxx Xxxxxx 00000-0000
Attention: Xxxxxxxx X. Xxxx,
Chairman, President and Chief Executive Officer
Facsimile No.: (000) 000-0000
with a copy to:
Citizens Financial Group, Inc.
00 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxx X. Xxxxxxxx
Senior Vice President, Secretary and General Counsel
Facsimile No.: (000) 000-0000
and a copy to:
The Royal Bank of Scotland Group PLC
00 Xx. Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx
XX0 0XX
Attention: Company Secretary
Facsimile No.: x00-(0)000-000-0000
51
and a copy to:
Xxxxx Xxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. XxXxxxxx, Xx.
Facsimile No.: (000) 000-0000
and a copy to:
Xxxxxxx Procter LLP
Exchange Place
Boston, Massachusetts 02109
Attention: Xxxxxx X. Pisa
Attention: Xxxxxxx X. Xxxxx
Facsimile No.: (000) 000-0000
if to the Company, to:
Charter One Financial, Inc.
Charter Xxx Xxxx Xxxxxxxx
0000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
Attention: Xxxxxx X. Xxxx
Chief Corporate Counsel
Facsimile No.: (000) 000-0000
with a copy to:
Wachtell, Lipton, Xxxxx & Xxxx LLP
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxx
Facsimile No.: (000) 000-0000
52
with a copy to:
Silver, Xxxxxxxx & Xxxx, L.L.P.
0000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, Xxxxxxxx xx Xxxxxxxx 00000
Attention: Xxxxx X. Xxxx
Facsimile No.: (000) 000-0000
if to Holdings, to:
The Royal Bank of Scotland Group PLC
00 Xx. Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx
XX0 0XX
Attention: Company Secretary
Facsimile No.: x00-(0)000-000-0000
and a copy to:
Xxxxx Xxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. XxXxxxxx, Xx.
Facsimile No.: (000) 000-0000
or to such other address or facsimile number as such party may hereafter
specify for the purpose by notice to the other parties hereto. All such
notices, requests and other communications shall be deemed received on the
date of receipt by the recipient thereof if received prior to 5:00 p.m. on a
Business Day in the place of receipt. Otherwise, any such notice, request or
communication shall be deemed to have been received on the next succeeding
Business Day in the place of receipt.
Section 11.02. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations, warranties and agreements contained herein and in any
certificate or other writing delivered pursuant hereto shall not survive the
Effective Time, except for the agreements set forth in Sections 7.02, 7.03, 8.04
and 11.05 through 11.11.
Section 11.03. AMENDMENTS AND WAIVERS. (a) Any provision of this Agreement
may be amended or waived prior to the Effective Time if, but only if, such
amendment or waiver is in writing and is signed, in the case of an amendment, by
each party to this Agreement or, in the case of a waiver, by each party against
whom the waiver is to be effective; PROVIDED that, after the adoption of this
Agreement by the stockholders of the Company and without their further approval,
no such amendment or waiver shall reduce the amount or change the kind of
consideration to be received in exchange for the Company Common Stock.
53
(b) No failure or delay by any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or
the exercise of any other right, power or privilege. The rights and remedies
herein provided shall be cumulative and not exclusive of any rights or
remedies provided by law.
Section 11.04. EXPENSES. (a) Except as otherwise provided herein, all costs
and expenses incurred in connection with this Agreement shall be paid by the
party incurring such cost or expense.
(b) In the event that after the date hereof, an Acquisition Proposal shall
have been publicly made or, after the date hereof, any Person shall have
publicly announced an intention (whether or not conditional) to make an
Acquisition Proposal and thereafter this Agreement is terminated by either Buyer
or the Company pursuant to Section 10.01(b)(iii) or by Buyer pursuant to Section
10.01(c)(i):
(i) then the Company shall promptly, but in no event later than two
Business Days after the date of such termination, pay to Buyer all of the
charges and expenses actually incurred by Buyer and its Affiliates in
connection with this Agreement and the transactions contemplated by this
Agreement up to a maximum amount of $40,000,000 (the "EXPENSES") payable by
wire transfer of same day funds; and
(ii) if, within 15 months after such termination (A) any Third Party
has entered into an agreement (x) to, directly or indirectly, acquire by
purchase, merger, consolidation, sale, assignment, lease, transfer or
similar business combination, in one transaction or any related series of
transactions, 50% or more of the voting power of the outstanding securities
of the Company, or ownership or control of 50% or more of the consolidated
assets of the Company or (y) with respect to any transaction or series of
related transactions after which stockholders of the Company immediately
prior to the consummation of such transaction or transactions would cease
to own directly or indirectly at least 50% of the voting power of the
outstanding securities of the Company (or of another Person that directly
or indirectly would own all or substantially all the assets of the Company)
immediately following such transaction in the same proportion as they owned
prior to the consummation of such transaction, or (B) there has been
consummated any such merger, consolidation or similar business combination
or any such sale, assignment, lease or transaction between the Company or
one of its Subsidiaries and any Third Party, then the Company shall,
promptly following such event, but in no event later than two business days
after such event, pay Buyer an aggregate termination fee of $500,000,000
(the "TERMINATION FEE") payable by wire transfer of same day funds.
54
(c) Upon the payment of the Termination Fee and the Expenses, the Company
shall have no further liabilities or obligations under Section 11.04(b). The
Company acknowledges that the agreements contained in Section 11.04(b) are an
integral part of the transactions contemplated by this Agreement, and that,
without these agreements, Buyer would not enter into this Agreement;
accordingly, if the Company fails to promptly pay the amount due pursuant to
Section 11.04(b), and, in order to obtain such payment, Buyer commences a suit
that results in a judgment against the Company for the fee set forth in Section
11.04(b) or any portion of such fee, the Company shall pay to Buyer its costs
and expenses (including attorneys' fees) in connection with such suit, together
with interest on the amount of the fee at the prime rate of Citibank, N.A. in
effect on the date such payment was required to be made from the date such
payment was required to be made through the date of payment.
Section 11.05. BINDING EFFECT; BENEFIT; THIRD PARTY BENEFICIARIES;
ASSIGNMENT. (a) The provisions of this Agreement shall be binding upon and,
except as provided in Section 7.02, shall inure to the benefit of the parties
hereto and their respective successors and assigns. Except with respect to the
Indemnified Persons as provided in Section 7.02 or as expressly provided in
Section 7.03 of the Company Disclosure Schedule, no provision of this Agreement
is intended to confer any rights, benefits, remedies, obligations or liabilities
hereunder upon any Person other than the parties hereto and their respective
successors and assigns.
(b) No party may assign, delegate or otherwise transfer any of its rights
or obligations under this Agreement without the consent of each other party
hereto, except that Buyer or Merger Subsidiary may transfer or assign, in whole
or from time to time in part, to one or more of their Affiliates, the right to
enter into the transactions contemplated by this Agreement to the extent
provided in Section 3.01, but any such transfer or assignment shall not relieve
Buyer or Merger Subsidiary of its obligations hereunder.
Section 11.06. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, without regard
to the conflicts of law rules of such state.
Section 11.07. JURISDICTION. The parties hereto agree that any suit,
action or proceeding seeking to enforce any provision of, or based on any matter
arising out of or in connection with, this Agreement or the transactions
contemplated hereby shall be brought in any federal court located in the State
of Delaware or any Delaware state court, and each of the parties hereby
irrevocably consents to the jurisdiction of such courts (and of the appropriate
appellate courts therefrom) in any such suit, action or proceeding and
irrevocably waives, to the fullest extent permitted by law, any objection that
it may now or hereafter have to the laying of the venue of any such suit, action
or proceeding in any such court or that any such suit, action or proceeding
brought in any such court has been brought in an inconvenient forum. Process in
any such suit, action or proceeding may be served
55
on any party anywhere in the world, whether within or without the jurisdiction
of any such court. Without limiting the foregoing, each party agrees that
service of process on such party as provided in Section 11.01 shall be deemed
effective service of process on such party.
Section 11.08. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.
Section 11.09. COUNTERPARTS; EFFECTIVENESS. This Agreement may be signed
in any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
This Agreement shall become effective when each party hereto shall have received
a counterpart hereof signed by all of the other parties hereto. Until and unless
each party has received a counterpart hereof signed by the other parties hereto,
this Agreement shall have no effect and no party shall have any right or
obligation hereunder (whether by virtue of any other oral or written agreement
or other communication).
Section 11.10. ENTIRE AGREEMENT; INTERPRETATION. (a) This Agreement and the
Confidentiality Agreement (the "TRANSACTION AGREEMENTS") constitute the entire
agreement between the parties with respect to the subject matter of the
Transaction Agreements and supersede all prior agreements and understandings,
both oral and written, between the parties with respect to the subject matter of
the Transaction Agreements.
(b) The parties have participated jointly in negotiating and drafting this
Agreement. In the event that an ambiguity or a question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the parties, and no presumption or burden of proof shall arise favoring or
disfavoring any party by virtue of the authorship of any provision of this
Agreement.
(c) Each party hereto has or may have set forth information in the Company
Disclosure Schedule or the Buyer Disclosure Schedule, as the case may be, in a
section thereof that corresponds to the section of this Agreement to which it
relates. A matter set forth in one section of the Company Disclosure Schedule or
the Buyer Disclosure Schedule need not be set forth in any other section of the
Company Disclosure Schedule or the Buyer Disclosure Schedule so long as its
relevance to such other section of the Company Disclosure Schedule or the Buyer
Disclosure Schedule or section of the Agreement is reasonably apparent on the
face of the information disclosed therein to the Person to which such disclosure
is being made. The fact that any item of information is disclosed in the Company
Disclosure Schedule or the Buyer Disclosure Schedule shall not be construed to
mean that such information is required to be disclosed by this Agreement. Such
information and the dollar thresholds set forth herein shall not be used as a
basis
56
for interpreting the terms "material", "Company Material Adverse Effect",
"Buyer Material Adverse Effect" or other similar terms in this Agreement.
Section 11.11. SEVERABILITY. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated
so long as the economic or legal substance of the transactions contemplated
hereby is not affected in any manner materially adverse to any party. Upon such
a determination, the parties shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner in order that the transactions contemplated
hereby be consummated as originally contemplated to the fullest extent possible.
Section 11.12. SPECIFIC PERFORMANCE. The parties hereto agree that
irreparable damage would occur if any provision of this Agreement were not
performed in accordance with the terms hereof and that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
or to enforce specifically the performance of the terms and provisions hereof in
any federal court located in the State of Delaware or any Delaware state court,
in addition to any other remedy to which they are entitled at law or in equity.
Section 11.13. LIABILITY FOR PAYMENT OF MERGER CONSIDERATION. (a) Holdings
hereby agrees to be jointly and severally liable for the payment of the Merger
Consideration on the terms and subject to the conditions specified in this
Agreement and any payment obligation arising as a result of a breach of this
Agreement prior to the Effective Time by Buyer and Merger Subsidiary.
(b) Holdings represents and warrants that (i) the execution, delivery and
performance by Holdings of this Agreement and the provisions hereof are within
the corporate powers of Holdings and have been duly authorized by all necessary
corporate action on the part of Holdings, (ii) this Agreement is the valid and
binding obligation of Holdings enforceable against Holdings in accordance with
its terms, subject to the Bankruptcy and Equity Exception, and (iii) the
execution, delivery and performance by Holdings of this Agreement and the
performance by Holdings of its obligations hereunder require no action by or in
respect of, or filing with, any Governmental Authority, domestic, foreign or
supranational, or any consent of any third party other than, with respect to the
payment of the Merger Consideration, the actions, filings and consents specified
in Sections 4.03 and 4.04.
57
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
CHARTER ONE FINANCIAL, INC.
By: /s/ Xxxxxxx X. Xxxx
--------------------------
Name: Xxxxxxx X. Xxxx
Title: Chairman, President and
Chief Executive Officer
CITIZENS FINANCIAL GROUP, INC.
By: /s/ Xxxxxxxx X. Xxxx
--------------------------
Name: Xxxxxxxx X. Xxxx
Title: Chairman, President and
Chief Executive Officer
CARDINAL ACQUISITION CORP.
By: /s/ Xxxxxxxx X. Xxxx
--------------------------
Name: Xxxxxxxx X. Xxxx
Title: President
THE ROYAL BANK OF SCOTLAND
GROUP PLC
By: /s/ Xxxxxx Xxx XxXxxx
--------------------------
Name: Xxxxxx Xxx XxXxxx
Title: Group Secretary and
General Counsel
