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EXHIBIT 2.4
AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER
DATED AS OF
MAY 16, 2000
BY AND BETWEEN
XXXXXXX FINANCIAL SERVICES CORPORATION
AND
FRANKLIN BANK, N.A.
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AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER
This Amended and Restated Agreement and Plan of Merger, dated May 16, 2000
(the "Agreement"), is entered into by and between XXXXXXX FINANCIAL SERVICES
CORPORATION, a Michigan corporation ("Xxxxxxx") and FRANKLIN BANK, N.A., a
national banking association ("Bank"). Xxxxxxx and Bank are referred to
collectively in this Agreement as the "Parties" and individually as a "Party".
RECITALS:
A. The Parties have entered into an Agreement and Plan of Merger dated
March 19, 2000, which they desire to amend and restate in its entirety in
accordance with the terms and conditions of this Agreement.
B. The Parties desire to merge Bank with and into Xxxxxxx Bank, a
federally-chartered savings association to be formed as a wholly-owned
subsidiary of Xxxxxxx ("Merger Sub"), with Merger Sub to be the surviving
entity, as a wholly-owned subsidiary of Xxxxxxx (the "Merger").
C. The respective boards of directors of each of the Parties have
determined that it is in the best interests of their respective companies and
their shareholders to consummate the Merger.
D. The Parties intend that the Merger be treated as a tax-free
"reorganization" under Section 368(a)(2)(D) of the Internal Revenue Code of
1986, as amended (the "Code").
In consideration of the premises and of the mutual covenants,
representations, warranties and agreements contained in this Agreement, the
Parties agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
The following terms are used in this Agreement with the meanings set forth
below:
"Affiliate" has the meaning ascribed to it in Rule 12(b)(2) promulgated
under the Exchange Act.
"Agreement" means this Agreement, as amended or modified from time to time.
"Attendant Documents" has the meaning set forth in Section 4.01(a).
"BAC" has the meaning set forth in Section 4.02(a).
"Bank" has the meaning set forth in the preamble to this Agreement.
"Bank Act" means the Bank Conservation Act, 12 U.S.C. sec.201 et. seq., as
amended.
"Bank Arrangements" has the meaning set forth in Section 5.12.
"Bank Board" means the board of directors of Bank.
"Bank Common Stock" means the common stock, par value $1.00 per share, of
Bank.
"Bank Employee Benefit Plan" means any Pension Plan, Welfare Plan and any
bonus, severance, deferred compensation, annuity, retirement, stock option,
stock purchase, executive compensation, incentive compensation, educational
assistance, insurance or other plan, policy or arrangement providing benefits to
employees of Bank, its Subsidiaries or any Controlled Group Member or with
respect to which Bank or any of its Subsidiaries has any liability or potential
liability, including, if Bank, its Subsidiaries or any Controlled Group Member
is organized under foreign law, any similar plan allowed by any foreign law, and
including any multi-employer plan (as defined in Section 3(37) of ERISA).
"Bank Material Adverse Effect" means, with respect to Bank, any effect that
(i) is material and adverse to the financial position, results of operations,
business, or operations of Bank and its Subsidiaries taken as a whole, or (ii)
would materially impair the ability of Bank to perform its obligations under
this
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Agreement or otherwise materially impede the consummation of the Merger;
provided, however, that Bank Material Adverse Effect shall not be deemed to
include the impact of (a) changes in thrift, banking and similar laws of general
applicability or interpretations thereof by Governmental Authorities, or other
changes affecting depository institutions generally, including changes in
general economic conditions and changes in prevailing interest and deposit
rates, (b) changes in generally accepted accounting principles or regulatory
accounting requirements applicable to thrifts, banks and their holding companies
generally, (c) any modifications or changes to valuation policies and practices
or restructuring charges, in each case taken pursuant to this Agreement by Bank
or its Subsidiaries and in such event only in accordance with generally accepted
accounting principles, (d) changes resulting from expenses (such as legal,
accounting and investment bankers' fees) incurred in connection with this
Agreement and (e) actions or omissions of Bank taken with the prior written
consent of Xxxxxxx in contemplation of the transactions contemplated hereby.
"Bank Meeting" has the meaning set forth in Section 5.04.
"Bank SEC Documents" has the meaning set forth in Section 4.01(c).
"Bank Stock" means all of the authorized capital stock of Bank.
"Bank Stock Option" has the meaning set forth in Section 3.06(a).
"Bank Stock Plans" means the [1983] Franklin Savings and Loan Association
Directors Stock Option Plan, the [1986] Franklin Savings and Loan Association
Directors Stock Option Plan, the [1994] Franklin Bank, N.A. Directors Stock
Option Plan, the [1986] Franklin Bank Key Executive Stock Option Plan and the
[1994] Franklin Bank, N.A. Key Executive Incentive Stock Option Plan.
"Ben Properties" means Ben Properties, Inc., a Michigan corporation, and a
wholly owned subsidiary of Bank.
"Xxxxxxx" has the meaning set forth in the preamble to this Agreement.
"Xxxxxxx Board" means the board of directors of Xxxxxxx.
"Xxxxxxx Common Stock" means the common stock, without par value, of
Xxxxxxx.
"Xxxxxxx Employee Benefit Plan" means any Pension Plan, Welfare Plan and
any bonus, severance, deferred compensation, annuity, retirement, stock option,
stock purchase, executive compensation, incentive compensation, educational
assistance, insurance or other plan, policy or arrangement providing benefits to
employees of Xxxxxxx, its Subsidiaries or any Controlled Group Member or with
respect to which Xxxxxxx or any of its Subsidiaries has any liability or
potential liability, including, if Xxxxxxx, its Subsidiaries or any Controlled
Group Member is organized under foreign law, any similar plan allowed by any
foreign law, and including any multiemployer plan (as defined in Section 3(37)
of ERISA).
"Xxxxxxx Material Adverse Effect" means, with respect to Xxxxxxx, any
effect that (i) is material and adverse to the financial position, results of
operations, business, or operations of Xxxxxxx and its Subsidiaries taken as a
whole, or (ii) would materially impair the ability of Xxxxxxx to perform its
obligations under this Agreement or otherwise materially impede the consummation
of the Merger; provided, however, that Xxxxxxx Material Adverse Effect shall not
be deemed to include the impact of (a) any modifications or changes to valuation
policies and practices or restructuring charges, in each case taken pursuant to
this Agreement by Xxxxxxx or its Subsidiaries, taken pursuant to the DFI
Restructuring Plan and in such event, only in accordance with generally accepted
accounting principles, (b) changes resulting from expenses (such as legal,
accounting and investment bankers' fees) incurred in connection with this
Agreement and (c) actions or omissions of Xxxxxxx taken with the prior written
consent of Bank in contemplation of the transactions contemplated hereby.
"Xxxxxxx Meeting" has the meaning set forth in Section 5.04.
"Xxxxxxx SEC Documents" has the meaning set forth in Section 4.02(c).
"Xxxxxxx Stock" means all of the authorized capital stock of Xxxxxxx.
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"Xxxxxxx Stock Plan" means the First Amended and Restated Xxxxxxx Financial
Services 1997 Stock Option Plan.
"BSC" has the meaning set forth in Section 4.02(a).
"Closing" has the meaning set forth in Section 7.01.
"COBRA" means the Consolidated Omnibus Budget Reconciliation Act of 1985,
as amended.
"Code" has the meaning set forth in the Recitals to this Agreement.
"Controlled Group" means (A) a controlled group of corporations as defined
in Section 414(b) of the Code; (B) a group of trades or businesses under common
control as defined in Section 414(c) of the Code; (C) an affiliated service
group as defined in Section 414(m) of the Code; (D) a group of businesses
referred to in Section 414(o) of the Code; (E) a group of trades or businesses
under common control as defined in Section 4001(b) of ERISA; or (F) any other
group under the law, rules or regulations of a foreign country similar to (A)
through (E).
"Controlled Group Member" means a corporation, trade or business that is a
part of the same Controlled Group as Bank or Xxxxxxx, as applicable.
"DFI" has the meaning set forth in Section 4.02(a).
"DFI Alabama" has the meaning set forth in Section 4.02(a).
"DIA" has the meaning set forth in Section 4.02(a).
"DFI Restructuring Plan" means Xxxxxxx'x plan for restructuring the
manufactured home lending businesses, the material terms of which are set forth
on Schedule 5.02(a).
"DOL" means the United States Department of Labor.
"Effective Date" has the meaning set forth in Section 7.01.
"Effective Time" has the meaning set forth in Section 7.01.
"Environmental Laws" shall mean any federal, state or local law, statute,
ordinance, rule, regulation, code, license, permit, authorization, approval,
consent, order, judgment, decree, injunction or agreement with any Governmental
Authority relating to (i) the protection, preservation or restoration of the
environment (including, without limitation, air, water vapor, surface water,
groundwater, drinking water supply, surface soil, subsurface soil, plant and
animal life or any other natural resource), and/or (ii) the use, storage,
recycling, treatment, generation, transportation, processing, handling,
labeling, production, release or disposal of Materials of Environmental Concern.
The term Environmental Law includes without limitation (i) the Comprehensive
Environmental Response, Compensation and Liability Act, as amended; the Resource
Conservation and Recovery Act, as amended; the Clean Air Act, as amended; the
Federal Water Pollution Control Act, as amended; the Toxic Substances Control
Act, as amended; the Emergency Planning and Community Right to Know Act; the
Safe Drinking Water Act; and all comparable state and local laws, and (ii) any
common law (including without limitation common law that may impose strict
liability) that may impose liability or obligations for injuries or damages due
to, or threatened as a result of, the presence of or exposure to any Materials
of Environmental Concern.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ESOP" means the Franklin Bank, N.A. Employee Stock Ownership Plan.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations thereunder.
"Exchange Agent" has the meaning set forth in Section 3.04(a).
"Exchange Fund" has the meaning set forth in Section 3.04(a).
"Exchange Ratio" has the meaning set forth in Section 3.01(a).
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"FDIC" means the Federal Deposit Insurance Corporation.
"FRB" means the Board of Governors of the Federal Reserve System.
"Franklin Finance" means Franklin Finance Corporation, a Michigan
corporation, and a wholly-owned subsidiary of Bank.
"Franklin Home" means Franklin Home Lending Group, Inc., a Michigan
corporation, and a wholly-owned subsidiary of Bank.
"Governing Documents" means, with respect to any Person other than an
individual, such Person's articles of incorporation, articles of organization,
articles of association, charter, partnership agreement, operating agreement,
bylaws, or similar governing documents, as applicable.
"Governmental Authority" means any court, administrative agency or
commission or other federal, state or local governmental authority or
instrumentality.
"Holding Company" means the holding company of the Surviving Subsidiary
after the Merger, whether or not such holding company is known as Xxxxxxx
Financial Services Corporation.
"Holding Company Board" means the board of directors of the Holding
Company.
"IRS" means the Internal Revenue Service.
"Knowledge" means the actual knowledge of any director, executive officer,
or officer of Bank and its Subsidiaries or Xxxxxxx and its Subsidiaries, as
applicable, or the existence of any facts which any of such persons reasonably
should be expected to know, had any of them conducted a reasonable investigation
into the matter.
"Lien" means any title defect, judgment, objection, security interest,
lien, charge, liability, right of redemption, option, mortgage, easement,
restriction, reservation, tenancy, agreement or other obligation or encumbrance
of any nature whatsoever other than (a) mechanic's, materialmen's, and similar
liens, (b) liens for taxes not yet due and payable, (c) purchase money liens and
liens securing rental payments under capital lease arrangements, and other liens
arising in the ordinary course of business and not incurred in connection with
borrowings of money.
"Material Contract" means any agreement or series of related agreements
entered into by a Party or any of its Subsidiaries or by which a Party or any of
its Subsidiaries is bound that (i) requires aggregate payments in any
consecutive 12 month period by or to the Party or its Subsidiary of more than
$50,000 and (ii) is not terminable by the Party or its Subsidiary upon notice of
30 days or less; provided, however, that mortgage loans made in the ordinary
course of business shall not be deemed to be Material Contracts.
"Materials of Environmental Concern" shall mean pollutants, contaminants,
wastes, toxic substances, petroleum and petroleum products and any other
materials regulated under Environmental Laws.
"Merger" has the meaning set forth in the Recitals to this Agreement.
"Merger Consideration" means the consideration to be issued to holders of
Bank Common Stock in the Merger.
"Merger Sub" has the meaning set forth in the Recitals to this Agreement.
"NASD" means the National Association of Securities Dealers, Inc.
"NASDAQ National Market" means The Nasdaq National Market System.
"NASDAQ SmallCap" means The Nasdaq SmallCap Market.
"New Certificates" has the meaning set forth in Section 3.04(a).
"1999 Financial Statements" means the internally prepared balance sheets of
the Bank and its Subsidiaries as of December 31, 1999 and the related statements
of income and expenses, retained earnings and cash flows for the 12 months then
ended heretofore delivered to Xxxxxxx and its auditors.
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"1999 Work Papers" means the work papers of Xxxxx Xxxxxxxx LLP relating to
the audit of the financial statements of the Bank and is Subsidiaries as of, and
for the year ended, December 31, 1999.
"OCC" means the Office of the Comptroller of the Currency.
"Old Certificates" has the meaning set forth in Section 3.04(a).
"ordinary course of business" and "business in the ordinary and usual
course" and like phrases shall include, with respect to Xxxxxxx and its
Subsidiaries, the sale of loans, in bulk or otherwise, and the securitization of
loans.
"OTS" means the Office of Thrift Supervision.
"OTS Charter" has the meaning set forth in Section 5.08(b).
"Pension Plan" means any employee pension benefit plan as defined in
Section 3(2) of ERISA.
"Person" means any individual, bank, corporation, partnership, limited
liability company, association, joint-stock company, trust or unincorporated
organization.
"Proxy Statement" has the meaning set forth in Section 5.05(a).
"Xxxxxxx Xxxxx" has the meaning set forth in Section 4.01(p).
"Registered Shares" has the meaning set forth in Section 3.04(b).
"Registration Statement" has the meaning set forth in Section 5.05(a).
"Regulator" means the Governmental Authority which will have regulatory
authority over the Surviving Subsidiary after the Merger, to be mutually agreed
upon by the Parties before the Effective Time.
"Regulatory Authority" has the meaning set forth in Section 4.01(e).
"Representatives" means, with respect to any Person, such Person's
guardians, conservators, agents, personal representatives, directors, officers,
employees, accountants, legal or financial advisors or any representatives of
such legal or financial advisors.
"Rights" means, with respect to any Person, securities or obligations
convertible into or exercisable or exchangeable for, or giving any person any
right to subscribe for or acquire, or any options, calls or commitments relating
to, or any stock appreciation right or other instrument the value of which is
determined in whole or in part by reference to the market price or value of,
shares of capital stock of such Person.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations thereunder.
"Severance Agreements" means those agreements set forth on Schedule
5.14(b).
"Severance Payments" means all cash payments that could become payable on
or before the Effective Date, or within three years of the Effective Date, under
the Severance Agreements.
"Shareholder Approvals" has the meaning set forth in Section 5.04.
"Subsidiary" has the meaning ascribed to it in Rule 1-02 of Regulation S-X
of the SEC.
"Surviving Subsidiary" has the meaning set forth in Section 2.01(a).
"Surviving Subsidiary Board" means the board of directors of the Surviving
Subsidiary.
"Takeover Laws" has the meaning set forth in Section 5.09.
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"Tax Returns" means any return, amended return or other report (including
elections, declarations, disclosures, schedules, estimates and information
returns) required to be filed with any Governmental Authority with respect to
any Tax.
"Tax" and "Taxes" means all federal, state, local or foreign taxes,
charges, fees, levies or other assessments, however denominated, including,
without limitation, all net income, gross income, gains, gross receipts, sales,
use, ad valorem, goods and services, capital, production, transfer, franchise,
windfall profits, license, withholding, payroll, employment, disability,
employer health, excise, estimated, severance, stamp, occupation, property,
environmental, unemployment or other taxes, custom duties, fees, assessments or
charges of any kind whatsoever, together with any interest and any penalties,
additions to tax or additional amounts, in each case imposed by any taxing or
Governmental Authority whether arising before, on or after the Effective Date.
"trading-day" means a day that securities are being traded on the NASDAQ
SmallCap.
"Treasury Stock" shall mean shares of Bank Stock held by Bank or any of its
Subsidiaries or Xxxxxxx Stock held by Xxxxxxx or any of its Subsidiaries, in
each case other than in a fiduciary capacity or as a result of debts previously
contracted in good faith.
"Walk Away Date" means December 31, 2000.
"Welfare Plan" means any employee welfare benefit plan as defined in
Section 3(1) of ERISA.
ARTICLE II
THE MERGER
Section 2.01 The Merger.
(a) Merger. Before the Effective Time, Xxxxxxx will cause Merger Sub
to be formed as a wholly-owned subsidiary of Xxxxxxx. At the Effective
Time, Bank will merge with and into Merger Sub, the separate corporate
existence of Bank will cease and Merger Sub will survive and continue to
exist as the surviving entity in the Merger. Merger Sub, as the surviving
entity in the Merger, is sometimes referred to in this Agreement as the
"Surviving Subsidiary".
(b) Conditions to Effectiveness of Merger. The Merger shall be subject
to the satisfaction or waiver of the conditions set forth in Article VI.
(c) Effects of Merger. The Merger shall have the effects set forth in
this Agreement as well as those prescribed under applicable law.
(d) Governing Documents of Surviving Subsidiary. The Governing
Documents of Merger Sub in effect immediately before the Effective Time
will be those of the Surviving Subsidiary immediately after the Effective
Time.
(e) Principal Office. The location of the principal office of the
Surviving Subsidiary in the State of Michigan will be 00000 X. 00 Xxxx
Xxxx, Xxxxxxxxxx, XX 00000.
(f) Corporate Structure. Before the Effective Time, Xxxxxxx and Bank
will mutually determine whether Xxxxxxx'x subsidiaries will be direct
subsidiaries of the Holding Company or will be direct subsidiaries of the
Surviving Subsidiary after the Merger is consummated.
(g) Regulation and Name. Xxxxxxx and Bank will mutually agree before
the Effective Time as to which Governmental Authority will be the
Regulator. The Surviving Subsidiary will be named "Franklin Bank".
Section 2.02 Right to Revise Transaction. Xxxxxxx and Bank may at any time
before the Effective Time mutually change the method of effecting the Merger or
change any of the determinations to be made or actions to be taken under
Sections 2.01(d) or 2.01(f), if and to the extent they deem that change to be
necessary, appropriate or desirable to (a) ensure that the Merger be treated as
a tax-free
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reorganization under Section 368(a)(2)(D) of the Code, or (b) obtain the
approval of the Regulator to the Merger. In the event the Regulator shall be
other than the OTS, the rights and obligations of the Bank and the Merger Sub
under this Agreement may be assigned so as to cause the rights and obligations
of the Bank and the Merger Sub under this Agreement to be placed in entities
that come under the jurisdiction of the Regulator.
ARTICLE III
CONSIDERATION; EXCHANGE PROCEDURES
Section 3.01 Merger Consideration. Subject to the provisions of this
Agreement, at the Effective Time, automatically by virtue of the Merger and
without any action on the part of any Person:
(a) Outstanding Bank Common Stock. Except for Bank Common Stock owned
of record by Xxxxxxx immediately before the Effective Time and Treasury
Stock, each share of Bank Common Stock issued and outstanding immediately
before the Effective Time shall become and be converted into the right to
receive 1.525 shares of Xxxxxxx Common Stock (the "Exchange Ratio").
(b) Outstanding Xxxxxxx Common Stock. Each share of Xxxxxxx Common
Stock issued and outstanding or held in treasury immediately before the
Effective Time shall remain issued and outstanding or held in treasury and
will be unaffected by the Merger.
(c) Cancellation of Shares. Each share of Bank Common Stock held as
Treasury Stock immediately before the Effective Time and each share of Bank
Common Stock owned of record by Xxxxxxx immediately before the Effective
Time will be canceled and retired at the Effective Time, and no
consideration will be issued in exchange for that Treasury Stock or Bank
Common Stock owned by Xxxxxxx.
Section 3.02 Rights as Shareholders; Stock Transfers. At the Effective
Time, holders of Bank Stock will cease to be, and will have no rights as,
shareholders of Bank, other than to receive the consideration provided under
this Article III. After the Effective Time, there shall be no transfers of
shares of Bank Stock on the stock transfer books of Bank or the Surviving
Subsidiary.
Section 3.03 Fractional Shares. Notwithstanding any other provision of this
Agreement, no fractional shares of Xxxxxxx Common Stock and no certificates or
scrip therefor, or other evidence of ownership thereof, will be issued in the
Merger. Instead, Xxxxxxx will pay to each holder of Bank Common Stock who would
otherwise be entitled to a fractional share of Xxxxxxx Common Stock (after
taking into account all Old Certificates delivered by such holder) an amount in
cash (without interest) determined by multiplying the fraction by the closing
per share sale price of Xxxxxxx Common Stock on NASDAQ SmallCap for the last
trading day immediately preceding the Effective Date.
Section 3.04 Exchange Procedures.
(a) Deposit of New Certificates, Etc. At or before the Effective Time,
Xxxxxxx shall deposit, or shall cause to be deposited, with an independent
exchange agent (the "Exchange Agent") to be mutually selected by Xxxxxxx
and Bank before the Effective Time, for the benefit of the holders of
certificates formerly representing shares of Bank Common Stock ("Old
Certificates"), for exchange in accordance with this Article III,
certificates representing the shares of Xxxxxxx Common Stock ("New
Certificates") and an amount of cash (that cash and New Certificates,
together with any dividends or distributions with a record date occurring
after the Effective Date with respect thereto (without any interest on any
of that cash, dividends or distributions), is referred to as the "Exchange
Fund") to be paid pursuant to this Article III in exchange for outstanding
shares of Bank Common Stock.
(b) Transmittal and Deliveries. As soon as practicable after the
Effective Date (but in no event later than 15 days following the Effective
Date), Xxxxxxx shall send or cause to be sent to each former holder of
record of shares of Bank Common Stock immediately before the Effective Time
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transmittal materials (which shall specify that risk of loss and title to
Old Certificates shall pass only upon acceptance of those Old Certificates
by Xxxxxxx or the Exchange Agent) for use in exchanging the shareholder's
Old Certificates for Merger Consideration. Xxxxxxx will cause the New
Certificates or uncertificated shares of Xxxxxxx Common Stock registered on
the stock transfer books of Xxxxxxx ("Registered Shares") into which shares
of a shareholder's Bank Common Stock are converted on the Effective Date or
any check in respect of any fractional share interest or dividends or
distributions which that person is entitled to receive to be delivered to
that shareholder upon delivery to the Exchange Agent of Old Certificates
representing the shares of Bank Common Stock (or indemnity reasonably
satisfactory to Xxxxxxx and the Exchange Agent, if any of the certificates
are lost, stolen or destroyed) owned by that shareholder. No interest will
be paid on any cash to be paid in lieu of a fractional share interest or in
respect of dividends or distributions that any person is entitled to
receive under this Article III upon delivery. Xxxxxxx and the Exchange
Agent will be entitled to rely upon the stock transfer books of Bank to
identify persons entitled to receive Merger Consideration, which books
shall be conclusive with respect to establishing the identify of those
persons. If a dispute arises with respect to ownership of stock represented
by any Old Certificate, Xxxxxxx or the Exchange Agent will be entitled to
deposit any consideration in respect of that stock in escrow with an
independent third party and thereafter be relieved with respect to any
claims to that consideration.
(c) Escheat. Notwithstanding the foregoing, neither the Exchange Agent
nor any Party will be liable to any former holder of Bank Stock for any
amount properly delivered to a public official under applicable abandoned
property, escheat or similar laws.
(d) Restrictions on the Payment of Dividends and Voting. No dividends
or other distributions with respect to Xxxxxxx Common Stock with a record
date after the Effective Time will be paid to the holder of any
unsurrendered Old Certificates converted into the right to receive shares
of Xxxxxxx Common Stock until the holder of the Old Certificates becomes
entitled to receive New Certificates or Registered Shares in exchange under
the procedures set forth in this Section 3.04. After becoming so entitled
in accordance with this Section 3.04, the record holder of the Old
Certificates will be entitled to receive any dividends or other
distributions, without any interest, that before that time had become
payable with respect to shares of Xxxxxxx Common Stock the holder had the
right to receive upon surrender of the Old Certificates. Registered holders
of unsurrendered Old Certificates will be entitled to vote after the
Effective Time at any meeting of Xxxxxxx shareholders with a record date at
or after the Effective Time the number of whole shares of Xxxxxxx Common
Stock represented by those Old Certificates, regardless of whether those
holders have exchanged their Old Certificates.
(e) Return of Exchange Fund to Xxxxxxx. Any portion of the Exchange
Fund that remains unclaimed by the shareholders of Bank for 12 months after
the Effective Time will be paid to Xxxxxxx. Any shareholder of Bank who has
not complied with this Article III after that 12-month period may look only
to Xxxxxxx for payment of Merger Consideration and unpaid dividends and
distributions on Xxxxxxx Common Stock deliverable in respect of shares of
Bank Common Stock that shareholder holds as determined under this
Agreement, in each case, without any interest.
Section 3.05 [intentionally omitted]
Section 3.06 Options.
(a) Conversion. At the Effective Time, each option outstanding on the
date of this Agreement to purchase shares of Bank Common Stock under the
Bank Stock Plans (each, a "Bank Stock Option") and remaining outstanding
immediately before the Effective Time will, at the Effective Time, be
assumed by Xxxxxxx and will continue to be outstanding. Each Bank Stock
Option will be converted into an option to purchase shares of Xxxxxxx
Common Stock in an amount and at an exercise price determined as provided
below (and otherwise subject to the terms of the applicable Bank Stock Plan
and Bank Stock Option, as they may be amended from time to time):
(i) the number of shares of Xxxxxxx Common Stock to be subject to
the continuing Bank Stock Option will be equal to the product of (A) the
number of shares of Bank Common Stock
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subject to the Bank Stock Option immediately before the Effective Time
and (B) the Exchange Ratio, provided that any fractional share of
Xxxxxxx Common Stock resulting from that multiplication will be rounded
down to the nearest whole share; and
(ii) the exercise price per share of Xxxxxxx Common Stock under the
continuing Bank Stock Option will be equal to (A) the exercise price per
share of Bank Common Stock under the Bank Stock Option immediately
before the Effective Time divided by (B) the Exchange Ratio, provided
that the exercise price will be rounded down to the nearest cent.
The conversion of Bank Stock Options will be undertaken consistent
with and in a manner that will not constitute a "modification" under
Section 424 of the Code as to any Bank Stock Option that is an "incentive
stock option". Notwithstanding the foregoing, the Parties agree that the
Bank Stock Options and Bank Stock Plans will be treated as set forth in the
attached Schedule 5.01(f); provided that such treatment shall not result in
the Holding Company or the Surviving Subsidiary having any liability as a
result of changing the tax treatment in connection with the Bank Stock
Options or the exercise thereof.
(b) Reservation of Xxxxxxx Common Stock and Securities Filings. At all
times after the Effective Time, Xxxxxxx will reserve for issuance the
number of shares of Xxxxxxx Common Stock necessary to permit the exercise
of continuing options in the manner contemplated by this Agreement and the
documents under which those options were granted. Xxxxxxx will make all
filings required under federal and state securities laws including without
limitation a filing with the SEC on Form S-8, promptly after the Effective
Time so as to permit the exercise of the continuing options and the sale of
the shares received by the optionee upon exercise of the options. Xxxxxxx
will continue to make all such filings necessary to permit the continued
exercise of continuing options.
(c) Amendment of Xxxxxxx Stock Option Plan. At the Xxxxxxx Meeting,
Xxxxxxx will present to its shareholders for approval before the Effective
Time a proposal to amend the Xxxxxxx Stock Plan to increase the number of
shares of Xxxxxxx Common Stock available under the Xxxxxxx Stock Plan to a
number sufficient to enable grants thereunder to be made to any specified
group of officers, directors and/or employees of Xxxxxxx, the Holding
Company and the Surviving Subsidiary before or after the Effective Time.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.01 Representations and Warranties of Bank. Bank hereby represents
and warrants to Xxxxxxx, both as of the date of this Agreement and as of the
Effective Date, with the knowledge and expectation that, in agreeing to enter
into this Agreement, Xxxxxxx is relying on, and in connection with the
consummation of the transactions contemplated in this Agreement, will rely on,
such representations and warranties:
(a) Good Standing and Authority. Bank is a national banking
association, duly organized, validly existing and in good standing under
the Bank Act. Franklin Finance is a corporation duly organized, validly
existing and in good standing under the laws of the State of Michigan.
Franklin Home is a corporation duly organized, validly existing and in good
standing under the laws of the State of Michigan. Ben Properties is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Michigan. Each of Bank and its Subsidiaries is duly
qualified to do business as a foreign corporation and is in good standing
in each jurisdiction in which it is required to be so qualified other than
where a failure to so qualify would not have a Bank Material Adverse
Effect. Each such jurisdiction is listed on Schedule 4.01(a). Bank has all
requisite power and authority to enter into this Agreement and any and all
documents contemplated in this Agreement (the "Attendant Documents") to
which it is a party and to consummate the transactions contemplated in this
Agreement and the Attendant Documents. This Agreement and all of the
Attendant Documents to which Bank is a party, and the consummation of the
transactions contemplated in this Agreement,
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have been or will be, on or prior to the Effective Date, duly authorized
and approved by the Bank Board and all other necessary and proper corporate
action on the part of Bank has been or will be taken on or prior to the
Effective Date. This Agreement, and all of the Attendant Documents to which
Bank is a party, when executed and delivered, will constitute legal, valid
and binding obligations of Bank enforceable against it in accordance with
their respective terms.
(b) Consents and Approvals; No Defaults.
(i) To the knowledge of Bank, except as set forth on Schedule
4.01(b), no consent, approval or authorization of, or designation,
declaration or filing with, or notice to, any Governmental Authority, or
any lenders, lessors, creditors, shareholders or others, is required on
the part of Bank or its Subsidiaries in connection with the valid
execution and delivery of this Agreement and the Attendant Documents or
the consummation of the transactions contemplated in this Agreement and
the Attendant Documents except where the failure to obtain such consent,
approval, authorization, designation, declaration or filing would not
have a Bank Material Adverse Effect. Before the Effective Time, Bank and
its Subsidiaries (in cooperation with Xxxxxxx, as applicable) shall
properly obtain, perform or give all of the consents, approvals,
authorizations, designations, declarations, filings and notices set
forth on Schedule 4.01(b), and as of the Effective Time, Bank shall have
given Xxxxxxx'x counsel copies or adequate evidence of all such
consents, approvals, authorizations, designations, declarations, filings
and notices.
(ii) Subject to the receipt or making of the consents, approvals,
authorizations, designations, declarations, filings and notices referred
to in the preceding paragraph, and expiration of related waiting
periods, and required filings under federal and state securities laws,
the execution, delivery and performance of this Agreement and the
consummation of the Merger do not and will not: (i) (A) constitute a
breach or violation of, or a default under, or give rise to any Lien,
any acceleration of remedies or any right of termination under, any law,
rule or regulation or any judgment, decree, order, governmental permit
or license, or agreement, license, indenture or instrument of Bank or of
any of its Subsidiaries or to which Bank or any of its Subsidiaries or
properties is subject or bound, (B) constitute a breach or violation of,
or a default under, Bank's Governing Documents, (C) require any consent
or approval under any such law, rule, regulation, judgment, decree,
order, governmental permit or license, agreement, license, indenture or
instrument or (D) result in any penalty payment relating to borrowed
funds, advances or financial instruments; and (ii) have a Bank Material
Adverse Effect.
(c) Financial Reports, SEC Documents, and Material Adverse Effect.
(i) Bank's Form 10-K for the period ending December 31, 1998 and
all other reports, registration statements, definitive proxy statements
or information statements filed or to be filed by it or any of its
Subsidiaries subsequent to December 31, 1998 under the Securities Act or
the Exchange Act, in the form filed or to be filed with the SEC or the
OCC (collectively, "Bank SEC Documents"), as of the date filed, (A)
complied or will comply in all material respects with the applicable
requirements under the Securities Act or the Exchange Act, as the case
may be, and (B) did not and will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; and each of
the balance sheets or statements of condition contained in or
incorporated by reference into any such SEC Document (including the
related notes and schedules thereto), and each of the statements of
income or results of operations and changes in shareholders' equity and
cash flows or equivalent statements in the Bank SEC Documents (including
any related notes and schedules thereto), have been prepared, in each
case, in accordance with generally accepted accounting principles
consistently applied during the periods involved, except in each case as
may be noted therein, subject to normal year-end audit adjustments and
the absence of footnotes in the case of unaudited statements.
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(ii) The 1999 Financial Statements have been prepared in accordance
with generally accepted accounting principals applied consistently with
the audited statements of the Bank and its Subsidiaries subject only to
normal year-end adjustments and the absence of footnotes.
(iii) Except as set forth on Schedule 4.01(c), and except for
liabilities incurred in connection with negotiation of and compliance
with this Agreement and otherwise in connection with the transactions
contemplated hereby, since December 31, 1999 to the date hereof, Bank
and its Subsidiaries have not incurred any material liability other than
in the ordinary course of business consistent with past practice which
would constitute a Bank Material Adverse Effect.
(iv) Except as set forth on Schedule 4.01(c), since December 31,
1999, (A) Bank and its Subsidiaries have to the date hereof conducted
their respective businesses in the ordinary and usual course consistent
with past practice (excluding matters related to this Agreement and the
transactions contemplated hereby) and (B) there has not occurred any
event or circumstance that, individually or taken together with all
other facts, circumstances and events, would constitute a Bank Material
Adverse Effect.
(d) Litigation. Except as set forth on Schedule 4.01(d), no material
litigation, claim or other proceeding before any Governmental Authority is
pending against Bank or any of its Subsidiaries and, to Bank's Knowledge,
no such litigation, claim or other proceeding has been threatened.
(e) Regulatory Matters.
(i) Except as set forth on Schedule 4.01(e), neither Bank nor any
of its Subsidiaries or properties is a party to or is subject to any
order, decree, agreement, memorandum of understanding or similar
arrangement with, or a commitment letter to, or extraordinary
supervisory letter from, any federal or state Governmental Authority or
authority charged with the supervision or regulation of financial
institutions and trust companies (or their holding companies) or issuers
of securities or engaged in the insurance of deposits (including,
without limitation, the FRB, the OCC, and the FDIC) or the supervision
or regulation of it or any of its Subsidiaries (collectively, the
"Regulatory Authorities").
(ii) Except as set forth on Schedule 4.01(e), neither Bank nor any
of its Subsidiaries has been advised by any Regulatory Authority that
such Regulatory Authority is contemplating issuing or requesting (or is
considering the appropriateness of issuing or requesting) any such
order, decree, agreement, memorandum of understanding, commitment
letter, or extraordinary supervisory letter.
(f) Compliance with Laws. Except as set forth on Schedule 4.01(f), and
except for violations and acts of noncompliance that would not have a Bank
Material Adverse Effect, each of Bank and its Subsidiaries:
(i) to Bank's knowledge, is in material compliance with all
applicable federal, state, local and foreign statutes, laws,
regulations, ordinances, rules, judgments, orders or decrees applicable
thereto or to the employees conducting such businesses, including,
without limitation, the Equal Credit Opportunity Act, the Fair Housing
Act, the Community Reinvestment Act of 1977, the Home Mortgage
Disclosure Act and all other applicable fair lending laws and other laws
relating to discriminatory business practices; and
(ii) has received, since December 31, 1998, no notification or
communication from any Governmental Authority (A) asserting that Bank or
any of its Subsidiaries is not in compliance in any material respect
with any of the statutes, regulations, or ordinances which such
Governmental Authority enforces or (B) threatening to revoke any
material license, franchise, permit, or governmental authorization (nor,
to Bank's Knowledge, do any grounds for any of the foregoing exist).
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(g) Loan Portfolio; Portfolio Management.
(i) Except as set forth on Schedule 4.01(g) all evidences of
indebtedness reflected as assets in Bank's financial statements at
December 31, 1999 referred to in Section 4.01(c) hereof, or originated
or acquired since such date, are (except with respect to those assets
which are no longer assets of it or any of its Subsidiaries) binding
obligations of the respective obligors named therein except as
enforcement may be limited by bankruptcy, insolvency or other similar
laws affecting the enforcement of creditors' rights generally, and
except as to the availability of equitable remedies, including specific
performance, which are subject to the discretion of the court before
which a proceeding is brought, and except where a failure of enforcement
will not have a Bank Material Adverse Effect, and the payment of no
material amount thereof (either individually or in the aggregate with
other evidences of indebtedness) is subject to any defenses or offsets
which have been threatened or asserted against Bank or any of its
Subsidiaries which would collectively constitute a Bank Material Adverse
Effect. All such indebtedness which is secured by an interest in real
property is secured by a valid and perfected mortgage lien having the
priority specified in the loan documents except in each case in which,
individually or in the aggregate, the failure to have such a mortgage
would not have a Bank Material Adverse Effect. All such indebtedness
which is secured by an interest in personal property is secured by a
valid and perfected security interest having the priority specified in
the loan documents, except in each case in which, individually or in the
aggregate, the failure to have such a security interest would not have a
Bank Material Adverse Effect. Except as set forth on Schedule 4.01(g) or
except where noncompliance would not have a Bank Material Adverse
Effect, all loans originated, directly or indirectly, or purchased by
Bank or any of its Subsidiaries were, at the time entered into and at
all times owned by Bank or its Subsidiaries, in compliance in all
material respects with all applicable laws and regulations (including,
without limitation, all consumer protection laws and regulations).
Except where noncompliance would not have a Bank Material Adverse
Effect, Bank and its Subsidiaries (as applicable), in all material
respects, administer their loan and investment portfolios (including,
but not limited to, adjustments to adjustable mortgage loans) in
accordance with all applicable laws and regulations and the terms of
applicable instruments. Except where noncompliance would not have a Bank
Material Adverse Effect, the records of Bank and any of its Subsidiaries
(as applicable) regarding all loans outstanding on its books are
accurate in all material respects. With respect to loans for which real
property is the primary collateral, the Bank and its Subsidiaries (as
applicable) maintain or require all borrowers to maintain adequate
insurance on the security property and pay or cause all borrowers, to
pay all taxes or assessments which may be entitled to a Lien with
priority over the Bank's Lien in such property. The Bank maintains
insurance against its failure or the borrower's failure to maintain
insurance and pay taxes or assessments.
(ii) Schedule 4.01(g) sets forth a list, accurate and complete in
all material respects, of the aggregate amounts of loans, extensions of
credit and other assets of Bank and its Subsidiaries that have been
adversely designated, criticized or classified by Bank, its outside
auditors or the OCC as of November 30, 1999, separated by category of
classification or criticism (the "Bank Asset Classification"); and no
amounts of loans, extensions of credit or other assets that have been
adversely designated, classified or criticized as of the date hereof, by
any representative of any governmental or regulatory authority as
"Special Mention," "Substandard," "Doubtful," "Loss" or words of similar
import are excluded from the amounts disclosed in the Bank Asset
Classification other than amounts of loans, extensions of credit or
other assets that were charged off by Bank or any of its Subsidiaries
before the date hereof.
(h) Permits and Licenses. Bank and each of its Subsidiaries has all
franchises, permits, licenses or other authorizations by all Governmental
Authorities, and has made all filings, applications and registrations with,
all Governmental Authorities that are required in order to permit them to
own or lease their properties and to conduct their businesses as presently
conducted except where the failure to obtain such franchises, permits,
licenses or other authorizations would not have a Bank Material
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Adverse Effect. Schedule 4.01(h) lists all franchises, permits, licenses or
other authorizations by all Governmental Authorities held by Bank and its
Subsidiaries ("Bank Licenses"), true and complete copies of all of which
have been delivered to Xxxxxxx. Except as set forth on Schedule 4.01(h),
all of the Bank Licenses are in full force and effect and will not be
affected in any way by, and will continue to be in full force and effect
after, the consummation of the transactions contemplated in this Agreement
and the Attendant Documents to the extent necessary to complete any
required governmental approvals of the transactions contemplated in this
Agreement and the Attendant Documents, and to permit continuous business
operations following consummation of the transactions contemplated.
(i) Labor Matters.
(i) Schedule 4.01(i) contains a complete and accurate list of the
current employees of Bank and its Subsidiaries as of a date no later
than 30 days before this representation and warranty is made (the "Bank
Employees") and, with respect to each Bank Employee, his or her salary
or hourly rate currently in effect, annual bonuses (last paid or
payable), if any, any other fringe benefits or incentive paid or payable
to him or her and the amount of all cash compensation accrued through
February 29, 2000, but as yet unpaid for each such Bank Employee. Except
as set forth on Schedule 4.01(i), all such Bank Employees are actively
at work, and no such Bank Employee is currently on leave of absence,
layoff, military leave, suspension, workers' compensation, salary
continuance or short or long term disability or otherwise not actively
performing his or her work during all normally scheduled business hours.
(ii) Except as set forth on Schedule 4.01(i), neither Bank nor any
of its Subsidiaries is a party to or is bound by any collective
bargaining agreement, contract or other agreement or understanding with
a labor union or labor organization, nor is Bank or any of its
Subsidiaries the subject of a proceeding asserting that it or any such
Subsidiary has committed an unfair labor practice (within the meaning of
the National Labor Relations Act) or seeking to compel Bank or any such
Subsidiary to bargain with any labor organization as to wages or
conditions of employment, nor is there any strike or other labor dispute
involving Bank or any of its Subsidiaries pending or, to Bank's
Knowledge, threatened, nor does Bank have any Knowledge of any activity
involving any Bank Employee seeking to certify a collective bargaining
unit or engaging in other organizational activity.
(iii) To the knowledge of Bank, except as set forth on Schedule
4.01(i), hours worked by, and payments made to, all Bank Employees and
former employees of Bank and its Subsidiaries ("Former Bank Employees")
have been in compliance with the Fair Labor Standards Act and other
applicable federal, state and local laws.
(iv) Except as set forth on Schedule 4.01(i), as of the Effective
Date, all payments determined to be due from Bank and its Subsidiaries
on account of any Bank Employee's or Former Bank Employees' work, health
or welfare insurance, under any agreement, whether oral or written, will
have been paid or properly accrued on Bank's financial statements.
(v) Except as set forth on Schedule 4.01(i), there are no vacation
monies or rights to time off which have been earned by any Bank Employee
or Former Bank Employee under any agreement, whether oral or written,
that have not been paid or properly accrued on Bank's financial
statements, nor are there any severance payments which could become
payable by Bank or its Subsidiaries under the terms of any oral or
written agreement or commitment.
(vi) Except as disclosed pursuant to Section 4.01(j), neither Bank
nor any of its Subsidiaries has any material liability with respect to
any pension, profit sharing, retirement or similar plan, or other
employee benefit plan.
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(vii) Except as set forth on Schedule 4.01(i):
(A) there is no unfair labor practice charge or complaint
concerning Bank or its Subsidiaries or any Bank Employee or Former
Bank Employee pending before any Governmental Authority in any
jurisdiction in which Bank or its Subsidiaries conduct business;
(B) there is no labor strike or slowdown, work stoppage, lockout
or other collective labor action actually pending or, to Bank's
Knowledge, threatened against or affecting the business of Bank or
its Subsidiaries, and neither Bank nor its Subsidiaries has
experienced any strike or slowdown, work stoppage, lockout or other
collective labor action in connection with their business by or with
respect to any Bank Employees or Former Bank Employees;
(C) there is no representation claim or petition concerning the
business of Bank or its Subsidiaries or any Bank Employee or Former
Bank Employee pending before any Governmental Authority in any
jurisdiction in which the business of Bank or its Subsidiaries
conduct business, and no question concerning representation exists
relating to the Bank Employees;
(D) there are no charges with respect to or relating to the
business of Bank or its Subsidiaries pending before the Equal
Employment Opportunity Commission or any Governmental Authority in
any jurisdiction in which Bank or its Subsidiaries conduct business
responsible for the prevention of unlawful employment practices;
(E) neither of Bank nor its Subsidiaries has received formal
notice from any Governmental Authority responsible for the
enforcement of labor or employment laws of an intention to conduct an
investigation of Bank or its Subsidiaries and no such investigation
is currently in progress; and
(F) to Bank's Knowledge, no key Bank Employee or group of Bank
Employees has any plans to terminate employment with Bank or its
Subsidiaries prior to or after Closing.
(j) Employee Benefits.
(i) Controlled Group: Except as disclosed in Schedule 4.01(j),
neither Bank nor any of its Subsidiaries is now, has ever been or will
be at any time prior to the Effective Time, a member of a Controlled
Group.
(ii) Bank Employee Benefit Plans and Documents: Schedule 4.01(j)
lists each and every Bank Employee Benefit Plan that Bank, its
Subsidiaries or any Controlled Group Member now, or will at any time
prior to the Effective Date, maintain, sponsor, participate in or
contribute to with respect to the Bank Employees or the Former Bank
Employees, or that Bank, its Subsidiaries or any Controlled Group Member
ever maintained, sponsored, participated in or made contributions to
with respect to the Bank Employees or the Former Bank Employees. Except
as disclosed in Schedule 4.01(j), neither Bank nor any of its
Subsidiaries or any Controlled Group Member is a party to any collective
bargaining or union contract with respect to the Bank Employees or the
Former Bank Employees. Bank has provided to Xxxxxxx true and correct
copies of all current and prior material and readily available documents
relating to the Bank Employee Benefit Plans listed in Schedule 4.01(j),
including, but not limited to: (A) plan documents, trust documents and
plan and trust amendments, in each case, which implement, relate to or
amend a Bank Employee Benefits Plan; (B) summary plan descriptions,
amendments thereto, and all other communication material provided to
employees; (C) summaries of material modifications; (D) insurance
(including reinsurance), administrative services or annuity contracts;
(E) collective bargaining agreements or contracts and all amendments
thereto; (F) the most recent financial statements; (G) with regard to
self-funded Welfare Plans, experience and enrollment data for the prior
three plan years as well as documentation and calculations demonstrating
the preset value of accrued obligations under such plans as of the
Effective Date;
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(H) if Bank or its Subsidiaries provide, or have any commitment or
obligation to provide, any Bank Employee Benefit Plan benefits to their
retirees, copies of all documentation and calculations demonstrating the
present value of such obligation or commitment as of the Effective Date;
(I) if Bank, its Subsidiaries or any Controlled Group Member maintains a
defined benefit pension plan, as defined in Section 3(35) of ERISA with
respect to the Bank Employees or the Former Bank Employees, the most
recent actuarial valuation for each such plan and copies of any funding
waivers and applications therefor, and all related correspondence and
documentation; (J) the three most recent annual reports; (K) agreements
with respect to leased or temporary employees; (L) all government
rulings and opinions, if any (and pending requests for rulings and
opinions, if any); and (M) the most recent IRS determination letters
with respect to the Bank Employee Benefit Plans listed in Schedule
4.01(j).
(iii) No Minimum Funding Obligations; No Multiemployer Plan,
Multiple Employer Plan or Post-Employment Welfare Plan Liability. No
Bank Employee Benefit Plan is a, and none of Bank, any of its
Subsidiaries or any Controlled Group Member has any material liability
or potential liability (including, with respect to clauses (B) and (C)
of this paragraph any actual or potential withdrawal liability)with
respect to any, (A) Pension Plan that is subject to the minimum funding
requirements of Section 412 of the Code or Section 302 of ERISA, (B)
multiemployer plan (as such term is defined in Section 3(37) of ERISA),
(C) plan of the type described in Sections 4063 and 4064 of ERISA or in
Section 413(c) of the Code (and regulations promulgated thereunder), or
(D) plan which provides health, life insurance, accident or other
"welfare-type" benefits to current or future retirees or current or
future former employees, their spouses or dependents, other than in
accordance with Section 4980B of the Code, Part 6 of Subtitle B of Title
I of ERISA or applicable state continuation coverage law.
(iv) Representations: Except as set forth in Schedule 4.01(j):
(A) Qualification: All the Pension Plans required to be listed
on Schedule 4.01(j), and the related trusts, if any, now meet, and
since their inception have met, and as of the Effective Date shall
meet, in all material respects, the requirements for qualification
under Section 401(a) of the Code and are now, and since their
inception have been, exempt from taxation under Section 501(a) of the
Code;
(B) Determination Letters: The IRS has issued a favorable
determination letter with respect to the qualified status of each
such Pension Plan and trust, and has not taken, nor to the Knowledge
of Bank, its Subsidiaries and Controlled Group Members, has
reasonable grounds to take any action to revoke such letter;
(C) Satisfaction of Obligations: Bank, each of its Subsidiaries
and each Controlled Group Member have performed, and through the
Effective Date shall perform, in all material respects, all
obligations required to be performed by them under the Bank Employee
Benefit Plans (including, but not limited to, the making of all
contributions), and are not in material default under, or in material
violation of, any of the Bank Employee Benefit Plans, and none of
Bank, its Subsidiaries, or any Controlled Group Member has Knowledge
of any such material default or violation of any other party to any
and all of the Bank Employee Benefit Plans;
(D) Compliance With Laws: Each Bank Employee Benefit Plan has
been, and through the Effective Date shall be, maintained, and funded
in compliance in all material respects with ERISA, the Code, the Age
Discrimination in Employment Act (to the extent applicable), COBRA,
and each other applicable federal, state or local laws, and, if
applicable, each foreign law, and each Bank Employee Benefit Plan is
valid and binding, in full force and effect, and there are no
material defaults thereunder;
(E) No Prohibited Transactions: None of the Bank Employee
Benefit Plans, nor any trust created thereunder, any trustee or
administrator thereof, nor Bank or any of its
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Subsidiaries, nor any other Party dealing with any Bank Employee
Benefit Plan has engaged in any transaction, or will prior to the
Effective Date engage in any transaction, that would trigger a tax
under Section 4975 of the Code, or violate Section 406 of ERISA, or,
if applicable, any similar provision under foreign law;
(F) No Claims Pending or Threatened: There are not presently,
nor shall there be prior to the Effective Date, any actions, suits or
claims pending (other than routine claims for benefits) or, to Bank's
Knowledge, threatened against, any Bank Employee Benefit Plan,
against the assets of any Bank Employee Benefit Plan, or against the
Bank, any of its Subsidiaries or any Controlled Group Member for
benefits arising under or pursuant to any Bank Employee Benefit Plan;
(G) Reporting and Disclosure: With regard to each Bank Employee
Benefit Plan listed in Schedule 4.01(j), Bank and its Subsidiaries
have complied with, and will through the Effective Date continue to
comply with, all reporting and disclosure requirements of ERISA and
the Code in all material respects;
(H) No Unfunded Liabilities: No Bank Employee Benefit Plan has
any material unfunded liabilities;
(I) No Further Liabilities: Except as provided in Schedule
4.01(j), Bank and its Subsidiaries do not, and shall not as of the
Effective Date, have any liability or obligation to any Bank Employee
Benefit Plan or to the Pension Benefit Guaranty Corporation, DOL,
Department of Treasury or similar agency of a foreign government, any
other plan or entity, or any employee, participant or beneficiary of
any Bank Employee Benefit Plan, arising out of or pursuant to any
Bank Employee Benefit Plan which could subject Bank or its
Subsidiaries to any material liability;
(J) Termination and Amendment: Except as disclosed in Schedule
4.01(j), each Bank Employee Benefit Plan listed in Schedule 4.01(j)
is, and as of and through the Effective Date, shall be terminable,
and/or subject to amendment by Bank or its Subsidiaries, at the
discretion of Bank or its Subsidiaries, with no liability for
benefits incurred after such termination or inconsistent with the
terms of any amendment after its effective date.
(K) Change of Control Payments: Except as set forth in Schedule
4.01(j), none of the Bank Employee Benefit Plans obligates Bank or
any of its Subsidiaries to pay separation, severance, termination or
similar-type benefits solely as a result of any transaction
contemplated by this Agreement or solely as a result of a "change in
control," as such term is contemplated by Section 280G of the Code.
(v) ESOP. None of the execution, delivery and performance of this
Agreement, or the consummation of the transactions, contemplated hereby
shall violate or conflict with any governing document of the ESOP, any
contract, agreement or other arrangement binding upon the ESOP or its
assets or any statute, regulation or other provision of law applicable
to the ESOP in any material respect. During the five years preceding the
date hereof, there has not been any action, suit, proceeding,
investigation, audit, or order against or affecting the ESOP at law or
in equity, or before or by any federal, state, municipal or other
governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign. The ESOP is not subject to or
bound by any outstanding orders, judgments or decrees of any court or
governmental entity.
(k) Tax Matters.
(i) Except as would not cause a Bank Material Adverse Effect or
except as set forth on Schedule 4.01(k):
(A) Bank, each of its Subsidiaries, each of their affiliated
groups and each of the entities identified on Schedule 4.01(k)
pursuant to Section 4.01(k)(ii)(B) (the "Bank
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Predecessors") have filed all Tax Returns which they are required to
file under applicable laws and regulations, and all such Tax Returns
are complete and correct and have been prepared in compliance with
all applicable laws and regulations;
(B) Bank, each of its Subsidiaries, each of their affiliated
groups and each of the Bank Predecessors have paid all Taxes due and
owing by them (whether or not such Taxes are required to be shown on
a Tax Return) and have withheld and paid over to the appropriate
taxing authority all Taxes which they are required to withhold from
amounts paid or owing to any employee, shareholder, creditor or other
third party;
(C) neither Bank or its Subsidiaries, nor any of their
affiliated groups or the Bank Predecessors have waived any statute of
limitations with respect to any Taxes or agreed to any extension of
time with respect to any Tax assessment or deficiency;
(D) the accrual for Taxes on Bank's most recent audited balance
sheet would be adequate to pay all Tax liabilities of Bank and its
Subsidiaries if their current tax year were treated as ending on the
date of such balance sheet (excluding any amount recorded which is
attributable solely to timing differences between book and Tax
income);
(E) since December 31, 1998, neither Bank nor any of its
Subsidiaries has incurred any liability for Taxes with respect to
their businesses other than in the ordinary course;
(F) no foreign, federal, state or local tax audits or
administrative or judicial proceedings are pending or being conducted
with respect to Bank, any of its Subsidiaries, any of their
affiliated groups or any of the Bank Predecessors;
(G) neither Bank or its Subsidiaries, nor any of their
affiliated groups or the Bank Predecessors have received from any
foreign, federal, state or local taxing authority any (1) written
notice indicating an intent to open an audit or other review, or (2)
request for information related to Tax matters; and
(H) there are no material unresolved questions or claims
concerning any Tax liability of Bank, its Subsidiaries, or any of
their affiliated groups or the Bank Predecessors.
(ii) Except as set forth on Schedule 4.01(k), neither Bank nor any
of its Subsidiaries (A) has made an election under Section 341(f) of the
Code, (B) is liable for the Taxes of another person (1) under Treasury
Regulation Section 1.1502-6 (or comparable provisions of state, local or
foreign law), (2) as a transferee or successor, (3) by contract or
indemnity or (4) otherwise, (C) is a party to any tax sharing agreement
or (D) has made any payments, are obligated to make any payments or is a
party to an agreement that could obligate it to make any payments that
would not be deductible under Section 280G of the Code.
(l) Environmental Matters. To Bank's Knowledge, neither the conduct
nor operation of Bank or its Subsidiaries nor any condition of any property
currently or previously owned or operated by any of them (including,
without limitation, in a fiduciary or agency capacity), or on which any of
them holds a Lien, results or resulted in a violation of any Environmental
Laws and to Bank's Knowledge, no condition has existed or event has
occurred with respect to any of them or any such property that, with notice
or the passage of time, or both, is reasonably likely to result in any
liability to Bank or any of its Subsidiaries under or by reason of any
Environmental Laws or Materials of Environmental Concern except where the
conduct, operation, condition or event would not have a Bank Material
Adverse Effect. To Bank's Knowledge, except for any notice for which, in
Bank's reasonable judgment, there is no reasonable basis, neither Bank nor
any of its Subsidiaries has received any notice from any person or entity
that Bank or its Subsidiaries or the operation or condition of any property
ever owned, operated, or held as collateral or in a fiduciary capacity by
any of them are or were in violation of or otherwise are alleged to have
liability under any Environmental Law or relating to Materials of
Environmental Concern, including, but not limited to, responsibility (or
potential
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responsibility) for the cleanup or other remediation of Materials of
Environmental Concern at, on, beneath, or originating from any such
property.
(m) Risk Management Instruments. Except as set forth on Schedule
4.01(m), all material interest rate swaps, caps, floors, option agreements,
futures and forward contracts and other similar risk management
arrangements, whether entered into for Bank's own account, or for the
account of one or more of Bank's Subsidiaries or their customers have been
previously disclosed to Xxxxxxx and were entered into (i) in accordance
with prudent business practices and in all material respects in compliance
with all applicable laws, rules, regulations and regulatory policies and
(ii) with parties believed to be financially responsible at the time; and
each of them constitutes the valid and legally binding obligation of Bank
or one of its Subsidiaries, enforceable in accordance with its terms
(except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer and similar
laws of general applicability relating to or affecting creditors' rights or
by general equity principles), and is in full force and effect. Neither
Bank nor its Subsidiaries, nor to Bank's Knowledge any other party thereto,
is in breach of any of its obligations under any such agreement or
arrangement in any material respect.
(n) Insurance. Except as set forth on Schedule 4.01(n), Bank and its
Subsidiaries have maintained and now maintain insurance with respect to
their assets and businesses covering property damage by fire or other
casualty, and against such liabilities, claims and risks, including,
without limitation, workers compensation, and in such amounts as is
customary or appropriate in the industry. Schedule 4.01(n) contains a true
and correct summary of all such insurance policies maintained by Bank and
its Subsidiaries, presently or at any point during the last five years,
setting forth the names of the insured and the insurer, policy numbers, the
types of coverage, premium payments or basis of payment, deductible amounts
and limits of coverage. Except as set forth on Schedule 4.01(n), to the
knowledge of Bank no such policy of insurance is subject to any deductible,
self-insured retention, retrospective rating agreement, indemnification
agreement or any other method or device by which the insured person is
subject to all or any part of the liability for any or all claims.
Concurrently with or prior to the execution of this Agreement, Bank and its
Subsidiaries have delivered to Xxxxxxx true, correct and complete copies of
all such insurance policies. Except as set forth on Schedule 4.01(n), all
such insurance policies will be in full force and effect through the
Effective Date. To the knowledge of Bank, except as set forth on Schedule
4.01(n), there is no state of facts and no event has occurred forming the
basis for any present property, casualty or fidelity claim against Bank or
its Subsidiaries that is not fully covered by insurance. Schedule 4.01(n)
contains loss runs for the last five years setting forth all property,
general and products liability and workers compensation claim activity
against the businesses of Bank and its Subsidiaries, including the date and
place of the occurrence, the claimant's name, reserves, amounts paid, a
brief description of the incident and whether the claim is open or closed.
Except as set forth on Schedule 4.01(n), Bank has no Knowledge of any
occurrence, circumstance, or event which could reasonably be expected to
result in any such claim.
(o) Governmental Reviews. Except as set forth on Schedule 4.01(o), no
investigation or review by any Governmental Authority with respect to Bank,
any Bank Subsidiary or any of their officers or directors is pending or, to
the Knowledge of Bank, threatened, nor has any Governmental Authority
indicated to Bank or any Bank Subsidiary an intention to conduct the same,
other than normal or routine regulatory examinations.
(p) Fairness Opinion. On March 19, 2000, Xxxxxxx Xxxxx & Associates,
Inc. ("Xxxxxxx Xxxxx") provided to the Bank Board a written fairness
opinion to the effect that the Exchange Ratio is fair to the shareholders
of Bank from a financial point of view.
(q) Compliance with Servicing Obligations. Except as set forth on
Schedule 4.01(q), and except for violations and acts of noncompliance that
would not have a Bank Material Adverse Effect, to the best of Bank's
Knowledge, Bank and the Bank Subsidiaries are in compliance in all material
respects with all contract, agency and investor requirements and
guidelines, and all applicable laws, rules and
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regulations of Governmental Authorities, relating to the servicing and
administration of loans by them, or any of them, including but not limited
to, properly and timely making interest rate adjustments to adjustable rate
loans.
(r) Intellectual Property. Schedule 4.01(r) sets forth all patents,
trade names, service names, trademarks, service marks, copyrights, or any
other intellectual or intangible property or applications ("Intellectual
Property") Bank and its Subsidiaries own or use in their businesses ("Bank
Intellectual Property"). Bank and its Subsidiaries are the sole owners
(except for licensed property for which valid and subsisting licenses
exist) of the Bank Intellectual Property, free of all Liens. Except as set
forth on Schedule 4.01(r), to Bank's Knowledge, there is no claim against
Bank or any of its Subsidiaries that the Bank Intellectual Property or any
of its operations, activities, products or publications infringes any
material patent, trademark, trade name, copyright or other proprietary or
intellectual property right of any third party or that any of them is
illegally using the material trade secrets or property rights of others in
any material respect. To the knowledge of Bank, neither Bank nor any of its
Subsidiaries has any disputes with or claims against, or any basis for
claims against, any third party for infringement by such third party of any
Bank Intellectual Property.
(s) Material Contracts. Schedule 4.01(s) identifies all of the
Material Contracts of Bank and its Subsidiaries, true and complete copies
of all of which have been delivered to Xxxxxxx. Except as set forth on
Schedule 4.01(s), and except for any default which would not constitute a
Bank Material Adverse Effect, (i) Bank and each of its Subsidiaries has
complied in all material respects with the provisions of, and is not in
default under, each such Material Contract to which it is a party or any
such default has been waived, and (ii) to the Knowledge of Bank, no other
party to any such Material Contract has failed to comply in any material
respect with, or is in default under, the provisions of any such Material
Contract.
(t) Real Property Owned.
(i) Other than the real property described on Schedule 4.01(t)(the
"Bank Owned Real Property") or real property of a type classified as
OREO (other real estate owned) on the Bank's financial statements (i.e.,
foreclosed property not owned for the operation of the Bank's business),
Bank and its Subsidiaries own no real property. Schedule 4.01(t)
contains a true and accurate legal description of the Bank Owned Real
Property. Bank and its Subsidiaries have good and marketable fee simple
title to the Bank Owned Real Property free and clear of all Liens other
than those identified on Schedule 4.01(t).
(ii) Except as set forth on Schedule 4.01(t), no substantial work
has been performed on or materials supplied with respect to the Bank
Owned Real Property within any applicable statutory period which could
give rise to mechanics' or materialmen's liens; all bills and claims for
substantial labor performed and materials furnished to or for the
benefit of the Bank Owned Real Property for all periods prior to the
Effective Time have been, or prior to the Effective Time, will be, paid
or properly accrued on Bank's financial statements in full, and Bank has
no Knowledge of any mechanics' or materialmen's Liens, whether or not
perfected, on or affecting any portion of the Bank Owned Real Property.
(iii) There is no pending or, to Bank's Knowledge, threatened
condemnation or eminent domain proceeding with respect to the Bank Owned
Real Property.
(iv) Except as set forth on Schedule 4.01(t), (A) there are no
taxes or special assessments other than ordinary real estate taxes
pending or payable against the Bank Owned Real Property, and to the
knowledge of Bank there are no contingencies existing under which any
assessment for real estate taxes may be retroactively filed against the
Bank Owned Real Property; (B) Bank has no Knowledge of any proposed
special assessment that may affect the Bank Owned Real Property or any
part thereof; (C) there are no penalties due with respect to real estate
taxes and/or impositions, and all real estate taxes and/or impositions
(excepting those for the current year that are not yet due and payable)
with respect to the Bank Owned Real Property have been
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paid in full; and (D) there are no taxes, permit fees or connection fees
which must be paid respecting existing curb cuts, sewer hookups,
water-main hookups or services of a like nature.
(v) Except as set forth on Schedule 4.01(t), the Bank Owned Real
Property materially complies with the requirements of all building,
zoning, subdivision, health, safety, environmental, pollution control,
waste products, sewage control and all other applicable statutes, laws,
codes, ordinances, rules, orders, regulations and decrees of any and all
government agencies. There is no uncured breach of any material
condition or requirement imposed by, or pursuant to, any permit or
license issued with respect to the Bank Owned Real Property.
(vi) Except as set forth on Schedule 4.01(t), no property insurer
or similar body has made any recommendations with respect to any parcel
of Bank Owned Real Property which have not been complied with, and all
structures on the Bank Owned Real Property meet all qualifications for
"highly protected risk" classification for fire insurance purposes.
(vii) Except as set forth on Schedule 4.01(t), and except for real
property of the type classified as OREO (other real estate owned) on the
Bank's financial statements (i.e., foreclosed property not owned for the
operation of the Bank's business), Bank and its Subsidiaries have never
owned any real property.
(u) Real Property Leased. Schedule 4.01(u) sets forth the legal
description for all real properties leased or subleased to Bank or its
Subsidiaries (the "Bank Leased Real Property"). Bank has delivered to
Xxxxxxx true, correct and complete copies of the leases and subleases
listed on Schedule 4.01(u). Except as set forth on Schedule 4.01(u),
neither Bank nor any of its Subsidiaries has leased or subleased any real
property during the past three years. Except as set forth on Schedule
4.01(u), with respect to each such lease or sublease:
(i) the lease or sublease is legal, valid, binding, enforceable and
in full force and effect in all material respects;
(ii) the lease or sublease will continue to be legal, valid,
binding, enforceable and in full force and effect in all material
respects on identical terms following the Closing;
(iii) neither Bank, its Subsidiaries, nor, to Bank's Knowledge, any
other party to the lease or sublease is in breach or default, and no
event has occurred which, with notice or lapse of time, would constitute
such a breach or default or permit termination, modification or
acceleration under the lease or sublease;
(iv) to Bank's Knowledge, no party to the lease or sublease has
repudiated any of its provisions;
(v) there are no material disputes, oral agreements or forbearance
programs in effect as to the lease or sublease;
(vi) neither Bank nor any of its Subsidiaries, as applicable, has
assigned, transferred, conveyed, mortgaged, deeded in trust or
encumbered all or any portion of their interest in the leasehold or
subleasehold;
(vii) to Bank's Knowledge, all facilities leased or subleased under
the lease or sublease have been operated and maintained in accordance
with applicable laws, rules and regulations in all material respects;
(viii) all facilities leased or subleased under the lease or
sublease are supplied with utilities and other services reasonably
necessary for the operation of such facilities;
(ix) all facilities leased or subleased under the lease or sublease
are in good operating condition, and would not, with ordinary wear and
tear, require major repair or replacement during the remainder of the
lease term; and
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(x) no property insurer or similar body has made any
recommendations with respect to any parcel of Bank Leased Real Property
which have not been complied with, and all structures on the Bank Leased
Real Property meet all qualifications for "highly protected risk"
classification for fire insurance purposes.
(v) Liens. Except as set forth on Schedule 4.01(v), Bank and its
Subsidiaries own and have good, marketable and unencumbered title to, or an
unencumbered interest in, each item comprising their assets, free and clear
of any and all Liens.
(w) Good Condition. Except as set forth on Schedule 4.01(w), all
facilities used in connection with the operation of the businesses of Bank
and its Subsidiaries and all of the material assets of Bank and its
Subsidiaries, except real property of a type classified as OREO (other real
estate owned) on the Bank's financial statements (i.e., foreclosed property
not owned for the operation of the Bank's business), are free from material
defects (normal wear and tear excepted) and have been maintained in
accordance with normal industry practice.
(x) No Undisclosed Liabilities. Except as and to the extent set forth
on Schedule 4.01(x) or reflected in the 1999 Financial Statements, and
except for current liabilities incurred by Bank or its Subsidiaries in
connection with the operation of or with respect to their businesses in the
ordinary course, since December 31, 1999, neither Bank nor its Subsidiaries
has incurred any debts, liabilities or obligations of any nature or kind
(whether absolute, accrued, contingent, unliquidated or otherwise, whether
or not known to Bank, whether due or to become due and regardless of when
asserted) arising out of transactions entered into, at or prior to the
Closing, or any action or inaction at or prior to the Closing or any state
of facts existing at or prior to the Closing and which could have a Bank
Material Adverse Effect. Except as set forth on Schedule 4.01(x), Bank has
no Knowledge of any existing, proposed or threatened change which could
have a Bank Material Adverse Effect. There are no contingent or other
liabilities of Bank or its Subsidiaries that have not been disclosed in the
Schedules to this Agreement which could have a Bank Material Adverse
Effect.
(y) Recent Conduct of Business; Interim Operations. Except as set
forth on Schedule 4.01(y), since December 31, 1999, there has not been, and
through the Effective Time, there shall not be, any Bank Material Adverse
Effect. Except as set forth on Schedule 4.01(y) or any other Schedule to
this Agreement, since December 31, 1999, Bank and its Subsidiaries have
caused their businesses to be conducted only in the ordinary course. Except
as set forth on Schedule 4.01(y) or any other Schedule to this Agreement,
since December 31, 1999, Bank and its Subsidiaries have not done any of the
actions described in Sections 5.01(a) through (g), 5.01(l) through (v) or
5.01(w) as Section 5.01(w) relates to Sections 5.01(a) through (g) and
5.01(l) through (v).
(z) Brokerage or Finder's Fee. Except for XxXxxxxxx, Xxxx & Dowens,
Inc. and Xxxxxxx Xxxxx, no broker, finder, agent or similar intermediary
has acted for or on behalf of Bank in connection with this Agreement or the
transactions contemplated hereby and, except for the fee payable to Xxxxxxx
Xxxxx by Bank, no broker, finder, agent or similar intermediary is entitled
to any broker's, finder's or similar fee or other commission in connection
therewith based on any agreement, arrangement or understanding with Bank or
any action taken by Bank.
(aa) [intentionally omitted].
(bb) Disclosure. No representation or warranty by Bank contained in
this Agreement and no statement contained in any of the Attendant Documents
or any other certificate or instrument furnished or to be furnished
pursuant to this Agreement or in connection with the transactions
contemplated in this Agreement contains or will contain any untrue
statement of a material fact, or omits or will omit to state a material
fact, necessary in order to make any of the statements not misleading.
(cc) Capitalization. Bank has two classes of capital stock, common
stock, $1.00 par value, and preferred stock, $1.00 par value. Franklin
Finance has two classes of capital stock, common stock, $300.00 par value,
and preferred stock $10.00 par value. Franklin Home has one class of
capital stock,
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common stock, $1.00 par value. Ben Properties has one class of capital
stock, common stock, no par value. Schedule 4.01(cc) sets forth the number
of authorized and the number of issued and outstanding shares of capital
stock of Bank and each of its Subsidiaries. All of the shares of Bank Stock
and all of the shares of capital stock of each of its Subsidiaries have
been duly authorized and validly issued, are fully paid and non-assessable
and were issued by Bank and its Subsidiaries without violating any
requirements of law. Except as set forth on Schedule 4.01(cc), (i) there
are no preemptive or first refusal rights to purchase or otherwise acquire
shares of Bank Stock or capital stock of any of Bank's Subsidiaries
pursuant to the Governing Documents of Bank or its Subsidiaries, by
agreement or otherwise, (ii) there are no outstanding agreements,
commitments, rights, options, warrants or claims of any nature whatsoever
for the issuance, sale, purchase or redemption of any shares of Bank Stock
or capital stock of any of Bank's Subsidiaries or any securities
convertible into or exchangeable for such shares and (iii) there are no
stock appreciation rights or phantom stock rights outstanding with respect
to Bank stock or the capital stock of any of Bank's Subsidiaries.
(dd) No Knowledge. Except as set forth in Schedule 4.01(dd), Bank has
no Knowledge whatsoever that any of the representations or warranties of
Xxxxxxx are untrue in any material respect.
(ee) Affiliate Transactions. Except as set forth on Schedule 4.01(ee),
Bank has not entered into any business transactions with any of its
Affiliates.
Section 4.02 Representations and Warranties of Xxxxxxx. Xxxxxxx hereby
represents and warrants to Bank, both as of the date of this Agreement and as of
the Effective Date, with the knowledge and expectation that, in agreeing to
enter into this Agreement, Bank is relying on, and in connection with the
consummation of the transactions contemplated in this Agreement, will rely on,
such representations and warranties:
(a) Good Standing and Authority. Xxxxxxx and each of its Subsidiaries
is a corporation duly organized, validly existing and in good standing
under the laws of the State of Michigan, except for (i) Merger Sub, which,
prior to the Effective Time, will be a federally-chartered savings
association, duly organized, validly existing and in good standing under
applicable law, (ii) Dynex Financial, Inc. ("DFI"), Dynex Financial of
Alabama, Inc. ("DFI Alabama") and Dynex Insurance Agency, Inc. ("DIA"),
which are corporations duly organized, validly existing and in good
standing under the laws of the Commonwealth of Virginia, and (iii)
Bloomfield Acceptance Company, L.L.C. ("BAC") and Bloomfield Servicing
Company, L.L.C. ("BSC"), which are limited liability companies duly
organized, validly existing and in good standing under the laws of the
State of Michigan. Xxxxxxx and each of its Subsidiaries is duly qualified
to do business as a foreign corporation and is in good standing in each
jurisdiction in which it is required to be so qualified other than where a
failure to so qualify would not have a Xxxxxxx Material Adverse Effect.
Each such jurisdiction is listed on Schedule 4.02(a). Xxxxxxx has all
requisite power and authority to enter into this Agreement and any
Attendant Documents to which it is a party and to consummate the
transactions contemplated in this Agreement and the Attendant Documents.
This Agreement and all of the Attendant Documents to which Xxxxxxx is a
party, and the consummation of the transactions contemplated in this
Agreement, have been or will be, on or prior to the Effective Date, duly
authorized and approved by the Xxxxxxx Board, and all other necessary and
proper corporate action on the part of Xxxxxxx has been or will be taken on
or prior to the Effective Date. This Agreement, and all of the Attendant
Documents to which Xxxxxxx is a party, when executed and delivered, will
constitute legal, valid and binding obligations of Xxxxxxx enforceable
against it in accordance with their respective terms.
(b) Consents and Approvals; No Defaults.
(i) To the knowledge of Xxxxxxx, except as set forth on Schedule
4.02(b) and except for filings or approvals required under state "Blue
Sky" laws, no consent, approval or authorization of, or designation,
declaration or filing with, or notice to, any Governmental Authority, or
any lenders, lessors, creditors, shareholders or others, is required on
the part of Xxxxxxx or its Subsidiaries in connection with the valid
execution and delivery of this Agreement and the
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Attendant Documents or the consummation of the transactions contemplated
in this Agreement and the Attendant Documents except where the failure
to obtain such consent, approval, authorization, designation,
declaration or filing would not have a Xxxxxxx Material Adverse Effect.
Before the Effective Time, Xxxxxxx and its Subsidiaries (in cooperation
with Bank, as applicable) shall properly obtain, perform or give all of
the consents, approvals, authorizations, designations, declarations,
filings and notices set forth on Schedule 4.02(b), and as of the
Effective Time, Xxxxxxx shall have given Bank's counsel copies or
adequate evidence of all such consents, approvals, authorizations,
designations, declarations, filings and notices.
(ii) Subject to the receipt or making of the consents, approvals,
authorizations, designations, declarations, filings and notices referred
to in the preceding paragraph, and expiration of related waiting
periods, and required filings under federal and state securities laws,
the execution, delivery and performance of this Agreement and the
consummation of the Merger do not and will not: (i)(A) constitute a
breach or violation of, or a default under, or give rise to any Lien,
any acceleration of remedies or any right of termination under, any law,
rule or regulation or any judgment, decree, order, governmental permit
or license, or agreement, license, indenture or instrument of Xxxxxxx or
of any of its Subsidiaries or to which Xxxxxxx or any of its
Subsidiaries or properties is subject or bound, (B) constitute a breach
or violation of, or a default under, Xxxxxxx'x or Merger Sub's Governing
Documents, (C) require any consent or approval under any such law, rule,
regulation, judgment, decree, order, governmental permit or license,
agreement, license, indenture or instrument or (D) result in any penalty
payment relating to borrowed funds, advances or financial instruments;
and (ii) have a Xxxxxxx Material Adverse Effect.
(c) Financial Reports, SEC Documents, and Material Adverse Effect.
(i) Xxxxxxx'x Form 10-K for the period ending September 30, 1999
and all other reports, registration statements, definitive proxy
statements or information statements filed or to be filed by it or any
of its Subsidiaries subsequent to September 30, 1999 under the
Securities Act or the Exchange Act, in the form filed or to be filed
with the SEC (collectively, "Xxxxxxx SEC Documents"), as of the date
filed, (A) complied or will comply in all material respects with the
applicable requirements under the Securities Act or the Exchange Act, as
the case may be, and (B) did not and will not contain any untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading;
and each of the balance sheets or statements of condition contained in
or incorporated by reference into any such SEC Document (including the
related notes and schedules thereto), and each of the statements of
income or results of operations and changes in shareholders' equity and
cash flows or equivalent statements in the Xxxxxxx SEC Documents
(including any related notes and schedules thereto), have been prepared,
in each case, in accordance with generally accepted accounting
principles consistently applied during the periods involved, except in
each case as may be noted therein, subject to normal year-end audit
adjustments and the absence of footnotes in the case of unaudited
statements.
(ii) Except as set forth on Schedule 4.02(c), and except for
liabilities incurred in connection with negotiation of and compliance
with this Agreement and otherwise in connection with the transactions
contemplated hereby, since September 30, 1999 to the date hereof,
Xxxxxxx and its Subsidiaries have not incurred any material liability
other than in the ordinary course of business consistent with past
practice which would constitute a Xxxxxxx Material Adverse Effect.
(iii) Except as set forth on Schedule 4.02(c), since September 30,
1999, (A) Xxxxxxx and its Subsidiaries have to the date hereof conducted
their respective businesses in the ordinary and usual course consistent
with past practice (excluding matters related to this Agreement and the
transactions contemplated hereby) and (B) there has not occurred any
event or circumstance
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that, individually or taken together with all other facts, circumstances
and events, would constitute a Xxxxxxx Material Adverse Effect.
(d) Litigation. Except as set forth on Schedule 4.02(d), no material
litigation, claim or other proceeding before any Governmental Authority is
pending against Xxxxxxx or any of its Subsidiaries and, to Xxxxxxx'x
Knowledge, no such litigation, claim or other proceeding has been
threatened.
(e) Regulatory Matters.
(i) Except as set forth on Schedule 4.02(e), neither Xxxxxxx nor
any of its Subsidiaries or properties is a party to or is subject to any
order, decree, agreement, memorandum of understanding or similar
arrangement with, or a commitment letter to, or extraordinary
supervisory letter from, any federal or state Governmental Authority or
Regulatory Authority.
(ii) Except as set forth on Schedule 4.02(e), neither Xxxxxxx nor
any of its Subsidiaries has been advised by any Regulatory Authority
that such Regulatory Authority is contemplating issuing or requesting
(or is considering the appropriateness of issuing or requesting) any
such order, decree, agreement, memorandum of understanding, commitment
letter, or extraordinary supervisory letter.
(f) Compliance with Laws. Except as set forth on Schedule 4.02(f), and
except for violations and acts of noncompliance that would not have a
Xxxxxxx Material Adverse Effect, each of Xxxxxxx and its Subsidiaries:
(i) to Xxxxxxx'x Knowledge is in material compliance with all
applicable federal, state, local and foreign statutes, laws,
regulations, ordinances, rules, judgments, orders or decrees applicable
thereto or to the employees conducting such businesses, including,
without limitation, the Equal Credit Opportunity Act, the Fair Housing
Act, the Home Mortgage Disclosure Act and all other applicable fair
lending laws and other laws relating to discriminatory business
practices; and
(ii) has received, since September 30, 1999, no notification or
communication from any Governmental Authority (A) asserting that Xxxxxxx
or any of its Subsidiaries is not in compliance in any material respect
with any of the statutes, regulations, or ordinances which such
Governmental Authority enforces or (B) threatening to revoke any
material license, franchise, permit, or governmental authorization (nor,
to Xxxxxxx'x Knowledge, do any grounds for any of the foregoing exist).
(g) Loan Portfolio; Portfolio Management.
(i) Except as set forth on Schedule 4.02(g) all evidences of
indebtedness reflected as assets in Xxxxxxx'x financial statements at
September 30, 1999 referred to in Section 4.02(c) hereof, or originated
or acquired since such date, are (except with respect to those assets
which are no longer assets of it or any of its Subsidiaries) binding
obligations of the respective obligors named therein except as
enforcement may be limited by bankruptcy, insolvency or other similar
laws affecting the enforcement of creditors' rights generally and except
as to the availability of equitable remedies, including specific
performance, which are subject to the discretion of the court before
which a proceeding is brought, and except where a failure of enforcement
will not have a Xxxxxxx Material Adverse Effect, and the payment of no
material amount thereof (either individually or in the aggregate with
other evidences of indebtedness) is subject to any defenses or offsets
which have been threatened or asserted against Xxxxxxx or any of its
Subsidiaries which would collectively constitute a Xxxxxxx Material
Adverse Effect. All such indebtedness which is secured by an interest in
real property is secured by a valid and perfected mortgage lien having
the priority specified in the loan documents except in each case in
which, individually or in the aggregate, the failure to have such a
mortgage would not have a Xxxxxxx Material Adverse Effect. All such
indebtedness which is secured by an interest in personal property is
secured by a valid and perfected security interest having the priority
specified in the loan
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documents, except in each case in which, individually or in the
aggregate, the failure to have such a security interest would not have a
Xxxxxxx Material Adverse Effect. Except as set forth on Schedule
4.02(g), or except where noncompliance would not have a Xxxxxxx Material
Adverse Effect, all loans originated, directly or indirectly, or
purchased by Xxxxxxx or any of its Subsidiaries were, at the time
entered into and at all times owned by Xxxxxxx or its Subsidiaries, in
compliance in all material respects with all applicable laws and
regulations (including, without limitation, all consumer protection laws
and regulations). Except where noncompliance would not have a Xxxxxxx
Material Adverse Effect, Xxxxxxx and its Subsidiaries (as applicable),
in all material respects, administer their loan and investment
portfolios (including, but not limited to, adjustments to adjustable
mortgage loans) in accordance with all applicable laws and regulations
and the terms of applicable instruments. Except where noncompliance
would not have a Xxxxxxx Material Adverse Effect, the records of Xxxxxxx
and any of its Subsidiaries (as applicable) regarding all loans
outstanding on its books are accurate in all material respects. With
respect to loans for which real property is the primary collateral,
Xxxxxxx and its Subsidiaries (as applicable) maintain or require all
borrowers to maintain adequate insurance on the security property and
pay or cause all borrowers, to pay all taxes or assessments which may be
entitled to a Lien with priority over the Xxxxxxx'x Xxxx in such
property. Other than in connection with commercial loans, Xxxxxxx
maintains insurance against its failure or the borrower's failure to
maintain insurance and pay taxes or assessments.
(ii) Schedule 4.02(g) sets forth a list, accurate and complete in
all material respects, of the aggregate amounts of loans, extensions of
credit and other assets of Xxxxxxx and its Subsidiaries that have been
adversely designated, criticized or classified by Xxxxxxx or its outside
auditors as of December 31, 1999, separated by category of
classification or criticism (the "Xxxxxxx Asset Classification"); and no
amounts of loans, extensions of credit or other assets that have been
adversely designated, classified or criticized as of the date hereof, by
any representative of any governmental or regulatory authority as
"Special Mention," "Substandard," "Doubtful," "Loss" or words of similar
import are excluded from the amounts disclosed in the Xxxxxxx Asset
Classification other than amounts of loans, extensions of credit or
other assets that were charged off by Xxxxxxx or any of its Subsidiaries
before the date hereof.
(h) Permits and Licenses. Xxxxxxx and each of its Subsidiaries has all
franchises, permits, licenses or other authorizations by all Governmental
Authorities, and has made all filings, applications and registrations with,
all Governmental Authorities that are required in order to permit them to
own or lease their properties and to conduct their businesses as presently
conducted except where the failure to obtain such consent, approval,
authorization, designation, declaration or filing would not have a Xxxxxxx
Material Adverse Effect. Schedule 4.02(h) lists all franchises, permits,
licenses or other authorizations by all Governmental Authorities held by
Xxxxxxx and its Subsidiaries ("Xxxxxxx Licenses"), true and complete copies
of all of which have been delivered to Bank. Except as set forth on
Schedule 4.02(h), all of the Xxxxxxx Licenses are in full force and effect
and will not be affected in any way by, and will continue to be in full
force and effect after, the consummation of the transactions contemplated
in this Agreement and the Attendant Documents to the extent necessary to
complete any required governmental approvals of the transactions
contemplated in this Agreement and the Attendant Documents, and to permit
continuous business operations following consummation of the transactions
contemplated.
(i) Labor Matters.
(i) Schedule 4.02(i) contains a complete and accurate list of the
current employees of Xxxxxxx and its Subsidiaries as of a date no later
than 30 days before this representation and warranty is made (the
"Xxxxxxx Employees") and, with respect to each Xxxxxxx Employee, his or
her salary or hourly rate currently in effect, annual bonuses (last paid
or payable), if any, any other fringe benefits or incentive paid or
payable to him or her and the amount of all cash compensation accrued
through February 29, 2000, but as yet unpaid for each such Xxxxxxx
Employee. Except as set forth on Schedule 4.02(i), all such Xxxxxxx
Employees are actively at
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work, and no such Xxxxxxx Employee is currently on leave of absence,
layoff, military leave, suspension, workers' compensation, salary
continuance or short or long term disability or otherwise not actively
performing his or her work during all normally scheduled business hours.
(ii) Except as set forth on Schedule 4.02(i), neither Xxxxxxx nor
any of its Subsidiaries is a party to or is bound by any collective
bargaining agreement, contract or other agreement or understanding with
a labor union or labor organization, nor is Xxxxxxx or any of its
Subsidiaries the subject of a proceeding asserting that it or any such
Subsidiary has committed an unfair labor practice (within the meaning of
the National Labor Relations Act) or seeking to compel Xxxxxxx or any
such Subsidiary to bargain with any labor organization as to wages or
conditions of employment, nor is there any strike or other labor dispute
involving Xxxxxxx or any of its Subsidiaries pending or, to Xxxxxxx'x
Knowledge, threatened, nor does Xxxxxxx have any Knowledge of any
activity involving any Xxxxxxx Employee seeking to certify a collective
bargaining unit or engaging in other organizational activity.
(iii) To the knowledge of Xxxxxxx, except as set forth on Schedule
4.02(i), hours worked by, and payments made to, all Xxxxxxx Employees
and former employees of Xxxxxxx and its Subsidiaries ("Former Xxxxxxx
Employees") have been in compliance with the Fair Labor Standards Act
and other applicable federal, state and local laws.
(iv) Except as set forth on Schedule 4.02(i), as of the Effective
Date, all payments determined to be due from Xxxxxxx and its
Subsidiaries on account of any Xxxxxxx Employee's or Former Xxxxxxx
Employees' work, health or welfare insurance, under any agreement,
whether oral or written, will have been paid or properly accrued on
Xxxxxxx'x financial statements.
(v) Except as set forth on Schedule 4.02(i), there are no vacation
monies or rights to time off which have been earned by any Xxxxxxx
Employee or Former Xxxxxxx Employee under any agreement, whether oral or
written, that have not been paid or properly accrued on Xxxxxxx'x
financial statements, nor, except for payments in connection with the
DFI Restructuring Plan, are there any severance payments which could
become payable by Xxxxxxx or its Subsidiaries under the terms of any
oral or written agreement or commitment.
(vi) Except as disclosed pursuant to Section 4.02(j), neither
Xxxxxxx nor any of its Subsidiaries has any material liability with
respect to any pension, profit sharing, retirement or similar plan, or
other employee benefit plan.
(vii) Except as set forth on Schedule 4.02(i):
(A) there is no unfair labor practice charge or complaint
concerning Xxxxxxx or its Subsidiaries or any Xxxxxxx Employee or
Former Xxxxxxx Employee pending before any Governmental Authority in
any jurisdiction in which Xxxxxxx or its Subsidiaries conduct
business;
(B) there is no labor strike or slowdown, work stoppage, lockout
or other collective labor action actually pending or, to Xxxxxxx'x
Knowledge, threatened against or affecting the business of Xxxxxxx or
its Subsidiaries, and neither Xxxxxxx nor its Subsidiaries has
experienced any strike or slowdown, work stoppage, lockout or other
collective labor action in connection with their business by or with
respect to any Xxxxxxx Employees or Former Xxxxxxx Employees;
(C) there is no representation claim or petition concerning the
business of Xxxxxxx or its Subsidiaries or any Xxxxxxx Employee or
Former Xxxxxxx Employee pending before any Governmental Authority in
any jurisdiction in which the business of Xxxxxxx or its Subsidiaries
conduct business, and no question concerning representation exists
relating to the Xxxxxxx Employees;
(D) there are no charges with respect to or relating to the
business of Xxxxxxx or its Subsidiaries pending before the Equal
Employment Opportunity Commission or any
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Governmental Authority in any jurisdiction in which Xxxxxxx or its
Subsidiaries conduct business responsible for the prevention of
unlawful employment practices;
(E) neither of Xxxxxxx nor its Subsidiaries has received formal
notice from any Governmental Authority responsible for the
enforcement of labor or employment laws of an intention to conduct an
investigation of Xxxxxxx or its Subsidiaries and no such
investigation is currently in progress; and
(F) to Xxxxxxx'x Knowledge, no key Xxxxxxx Employee or group of
Xxxxxxx Employees has any plans to terminate employment with Xxxxxxx
or its Subsidiaries prior to or after Closing.
(j) Employee Benefits.
(i) Controlled Group: Except as disclosed in Schedule 4.02(j),
neither Xxxxxxx nor any of its Subsidiaries is now, has ever been or
will be at any time prior to the Effective Time, a member of a
Controlled Group.
(ii) Xxxxxxx Employee Benefit Plans and Documents: Schedule 4.02(j)
lists each and every Xxxxxxx Employee Benefit Plan that Xxxxxxx, its
Subsidiaries or any Controlled Group Member now, or will at any time
prior to the Effective Date, maintain, sponsor, participate in or
contribute to with respect to the Xxxxxxx Employees or the Former
Xxxxxxx Employees, or that Xxxxxxx, its Subsidiaries or any Controlled
Group Member ever maintained, sponsored, participated in or made
contributions to with respect to the Xxxxxxx Employees or the Former
Xxxxxxx Employees. Except as disclosed in Schedule 4.02(j), neither
Xxxxxxx nor any of its Subsidiaries or any Controlled Group Member is a
party to any collective bargaining or union contract with respect to the
Xxxxxxx Employees or the Former Xxxxxxx Employees. Xxxxxxx has provided
to Bank true and correct copies of all current and prior material and
readily available documents relating to the Xxxxxxx Employee Benefit
Plans listed in Schedule 4.02(j), including, but not limited to: (A)
plan documents, trust documents and plan and trust amendments, in each
case, which implement, relate to, or amend a Xxxxxxx Employee Benefits
Plan; (B) summary plan descriptions, amendments thereto, and all other
communication material provided to employees; (C) summaries of material
modifications; (D) insurance (including reinsurance), administrative
services or annuity contracts; (E) collective bargaining agreements or
contracts and all amendments thereto; (F) the most recent financial
statements; (G) with regard to self-funded Welfare Plans, experience and
enrollment data for the prior three plan years as well as documentation
and calculations demonstrating the preset value of accrued obligations
under such plans as of the Effective Date; (H) if Xxxxxxx or its
Subsidiaries provide, or have any commitment or obligation to provide,
any Xxxxxxx Employee Benefit Plan benefits to their retirees, copies of
all documentation and calculations demonstrating the present value of
such obligation or commitment as of the Effective Date; (I) if Xxxxxxx,
its Subsidiaries or any Controlled Group Member maintains a defined
benefit pension plan, as defined in Section 3(35) of ERISA with respect
to the Xxxxxxx Employees or the Former Xxxxxxx Employees, the most
recent actuarial valuation for each such plan and copies of any funding
waivers and applications therefor, and all related correspondence and
documentation; (J) the three most recent annual reports; (K) agreements
with respect to leased or temporary employees; (L) all government
rulings and opinions, if any (and pending requests for rulings and
opinions, if any); and (M) the most recent IRS determination letters
with respect to the Xxxxxxx Employee Benefits Plans listed on Schedule
4.02(j).
(iii) No Minimum Funding Obligations; No Multiemployer Plan,
Multiple Employer Plan or Post-Employment Welfare Plan Liability. No
Xxxxxxx Employee Benefit Plan is a, and none of Xxxxxxx, any of its
Subsidiaries or any Controlled Group Member has any material liability
or potential liability (including, with respect to clauses (B) and (C)
of this paragraph any actual or potential withdrawal liability)with
respect to any, (A) Pension Plan that is subject to the minimum funding
requirements of Section 412 of the Code or Section 302 of ERISA,
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(B) multiemployer plan (as such term is defined in Section 3(37) of
ERISA), (C) plan of the type described in Sections 4063 and 4064 of
ERISA or in Section 413(c) of the Code (and regulations promulgated
thereunder), or (D) plan which provides health, life insurance, accident
or other "welfare-type" benefits to current or future retirees or
current or future former employees, their spouses or dependents, other
than in accordance with Section 4980B of the Code, Part 6 of Subtitle B
of Title I of ERISA or applicable state continuation coverage law.
(iv) Representations: Except as set forth in Schedule 4.02(j):
(A) Qualification: All the Pension Plans required to be listed
on Schedule 4.02(j), and the related trusts, if any, now meet, and
since their inception have met, and as of the Effective Date shall
meet, in all material respects, the requirements for qualification
under Section 401(a) of the Code and are now, and since their
inception have been, exempt from taxation under Section 501(a) of the
Code;
(B) Determination Letters: The IRS has issued a favorable
determination letter with respect to the qualified status of each
such Pension Plan and trust, and has not taken, nor to the Knowledge
of Xxxxxxx, its Subsidiaries and Controlled Group Members, has
reasonable grounds to take any action to revoke such letter;
(C) Satisfaction of Obligations: Xxxxxxx, each of its
Subsidiaries and each Controlled Group Member have performed, and
through the Effective Date shall perform, in all material respects,
all obligations required to be performed by them under the Xxxxxxx
Employee Benefit Plans (including, but not limited to, the making of
all contributions), and are not in material default under, or in
material violation of, any of the Xxxxxxx Employee Benefit Plans, and
none of Xxxxxxx, its Subsidiaries, or any Controlled Group Member has
Knowledge of any such material default or violation of any other
party to any and all of the Xxxxxxx Employee Benefit Plans;
(D) Compliance With Laws: Each Xxxxxxx Employee Benefit Plan has
been, and through the Effective Date shall be, maintained, and funded
in compliance in all material respects with ERISA, the Code, the Age
Discrimination in Employment Act (to the extent applicable), COBRA,
and each other applicable federal, state or local laws, and, if
applicable, each foreign law, and each Xxxxxxx Employee Benefit Plan
is valid and binding, in full force and effect, and there are no
material defaults thereunder;
(E) No Prohibited Transactions: None of the Xxxxxxx Employee
Benefit Plans, nor any trust created thereunder, any trustee or
administrator thereof, nor Xxxxxxx or any of its Subsidiaries, nor
any other Party dealing with any Xxxxxxx Employee Benefit Plan has
engaged in any transaction, or will prior to the Effective Date
engage in any transaction, that would trigger a tax under Section
4975 of the Code, or violate Section 406 of ERISA, or, if applicable,
any similar provision under foreign law;
(F) No Claims Pending or Threatened: There are not presently,
nor shall there be prior to the Effective Date, any actions, suits or
claims pending (other than routine claims for benefits) or, to
Xxxxxxx'x Knowledge, threatened against, any Xxxxxxx Employee Benefit
Plan, against the assets of any Xxxxxxx Employee Benefit Plan, or
against the Xxxxxxx, any of its Subsidiaries or any Controlled Group
Member for benefits arising under or pursuant to any Xxxxxxx Employee
Benefit Plan;
(G) Reporting and Disclosure: With regard to each Xxxxxxx
Employee Benefit Plan listed in Schedule 4.02(j), Xxxxxxx and its
Subsidiaries have complied with, and will through the Effective Date
continue to comply with, all reporting and disclosure requirements of
ERISA and the Code in all material respects;
(H) No Unfunded Liabilities: No Xxxxxxx Employee Benefit Plan
has any material unfunded liabilities;
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(I) No Further Liabilities: Except as provided in Schedule
4.02(j), Xxxxxxx and its Subsidiaries do not, and shall not as of the
Effective Date, have any liability or obligation to any Xxxxxxx
Employee Benefit Plan or to the Pension Benefit Guaranty Corporation,
DOL, Department of Treasury or similar agency of a foreign
government, any other plan or entity, or any employee, participant or
beneficiary of any Xxxxxxx Employee Benefit Plan, arising out of or
pursuant to any Xxxxxxx Employee Benefit Plan which could subject
Xxxxxxx or its Subsidiaries to any material liability;
(J) Termination and Amendment: Except as disclosed in Schedule
4.02(j), each Xxxxxxx Employee Benefit Plan listed in Schedule
4.02(j) is, and as of and through the Effective Date, shall be
terminable, and/or subject to amendment by Xxxxxxx or its
Subsidiaries, at the discretion of Xxxxxxx or its Subsidiaries, with
no liability for benefits incurred after such termination or
inconsistent with the terms of any amendment after its effective
date.
(K) Change of Control Payments: Except as set forth in Schedule
4.02(j), none of the Xxxxxxx Employee Benefit Plans obligates Xxxxxxx
or any of its Subsidiaries to pay separation, severance, termination
or similar-type benefits solely as a result of any transaction
contemplated by this Agreement or solely as a result of a "change in
control," as such term is contemplated by Section 280G of the Code.
(k) Tax Matters.
(i) Except as would not cause a Xxxxxxx Material Adverse Effect or
except as set forth on Schedule 4.02(k):
(A) Xxxxxxx, each of its Subsidiaries, each of their affiliated
groups and each of the entities identified on Schedule 4.02(k)
pursuant to Section 4.02(k)(ii)(B) (the "Xxxxxxx Predecessors") have
filed all Tax Returns which they are required to file under
applicable laws and regulations, and all such Tax Returns are
complete and correct and have been prepared in compliance with all
applicable laws and regulations;
(B) Xxxxxxx, each of its Subsidiaries, each of their affiliated
groups and each of the Xxxxxxx Predecessors have paid all Taxes due
and owing by them (whether or not such Taxes are required to be shown
on a Tax Return) and have withheld and paid over to the appropriate
taxing authority all Taxes which they are required to withhold from
amounts paid or owing to any employee, shareholder, creditor or other
third party;
(C) neither Xxxxxxx or its Subsidiaries, nor any of their
affiliated groups or the Xxxxxxx Predecessors have waived any statute
of limitations with respect to any Taxes or agreed to any extension
of time with respect to any Tax assessment or deficiency;
(D) the accrual for Taxes on Xxxxxxx'x most recent audited
balance sheet would be adequate to pay all Tax liabilities of Xxxxxxx
and its Subsidiaries if their current tax year were treated as ending
on the date of such balance sheet (excluding any amount recorded
which is attributable solely to timing differences between book and
Tax income);
(E) since September 30, 1999, neither Xxxxxxx nor any of its
Subsidiaries has incurred any liability for Taxes with respect to
their businesses other than in the ordinary course;
(F) no foreign, federal, state or local tax audits or
administrative or judicial proceedings are pending or being conducted
with respect to Xxxxxxx, any of its Subsidiaries, any of their
affiliated groups or any of the Xxxxxxx Predecessors;
(G) neither Xxxxxxx or its Subsidiaries, nor any of their
affiliated groups or the Xxxxxxx Predecessors have received from any
foreign, federal, state or local taxing authority
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31
any (1) written notice indicating an intent to open an audit or other
review, or (2) request for information related to Tax matters; and
(H) there are no material unresolved questions or claims
concerning any Tax liability of Xxxxxxx, its Subsidiaries, or any of
their affiliated groups or the Xxxxxxx Predecessors.
(ii) Except as set forth on Schedule 4.02(k), neither Xxxxxxx nor
any of its Subsidiaries (A) has made an election under Section 341(f) of
the Code, (B) is liable for the Taxes of another person (1) under
Treasury Regulation Section 1.1502-6 (or comparable provisions of state,
local or foreign law), (2) as a transferee or successor, (3) by contract
or indemnity or (4) otherwise, (C) is a party to any tax sharing
agreement or (D) has made any payments, are obligated to make any
payments or is a party to an agreement that could obligate it to make
any payments that would not be deductible under Section 280G of the
Code.
(l) Environmental Matters. To Xxxxxxx'x Knowledge, neither the conduct
nor operation of Xxxxxxx or its Subsidiaries nor any condition of any
property currently or previously owned or operated by any of them
(including, without limitation, in a fiduciary or agency capacity), or on
which any of them holds a Lien, results or resulted in a violation of any
Environmental Laws and to Xxxxxxx'x Knowledge, no condition has existed or
event has occurred with respect to any of them or any such property that,
with notice or the passage of time, or both, is reasonably likely to result
in any liability to Xxxxxxx or any of its Subsidiaries under or by reason
of any Environmental Laws or Materials of Environmental Concern except
where the conduct, operation, condition or event would not have a Xxxxxxx
Material Adverse Effect. To Xxxxxxx'x Knowledge, except for any notice for
which, in Xxxxxxx'x reasonable judgment, there is no reasonable basis,
neither Xxxxxxx nor any of its Subsidiaries has received any notice from
any person or entity that Xxxxxxx or its Subsidiaries or the operation or
condition of any property ever owned, operated, or held as collateral or in
a fiduciary capacity by any of them are or were in violation of or
otherwise are alleged to have liability under any Environmental Law or
relating to Materials of Environmental Concern, including, but not limited
to, responsibility (or potential responsibility) for the cleanup or other
remediation of Materials of Environmental Concern at, on, beneath, or
originating from any such property.
(m) Risk Management Instruments. Except as set forth on Schedule
4.02(m), all material interest rate swaps, caps, floors, option agreements,
futures and forward contracts and other similar risk management
arrangements, whether entered into for Xxxxxxx'x own account, or for the
account of one or more of Xxxxxxx'x Subsidiaries or their customers have
been previously disclosed to Bank and were entered into (i) in accordance
with prudent business practices and in all material respects in compliance
with all applicable laws, rules, regulations and regulatory policies and
(ii) with parties believed to be financially responsible at the time; and
each of them constitutes the valid and legally binding obligation of
Xxxxxxx or one of its Subsidiaries, enforceable in accordance with its
terms (except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer and similar
laws of general applicability relating to or affecting creditors' rights or
by general equity principles), and is in full force and effect. Neither
Xxxxxxx nor its Subsidiaries, nor to Xxxxxxx'x Knowledge any other party
thereto, is in breach of any of its obligations under any such agreement or
arrangement in any material respect.
(n) Insurance. Except as set forth on Schedule 4.02(n), Xxxxxxx and
its Subsidiaries have maintained and now maintain insurance with respect to
their assets and businesses covering property damage by fire or other
casualty, and against such liabilities, claims and risks, including,
without limitation, workers compensation, and in such amounts as is
customary or appropriate in the industry. Schedule 4.02(n) contains a true
and correct summary of all such insurance policies maintained by Xxxxxxx
and its Subsidiaries, presently or at any point during the last five years,
setting forth the names of the insured and the insurer, policy numbers, the
types of coverage, premium payments or basis of payment, deductible amounts
and limits of coverage. Except as set forth on Schedule 4.02(n), to the
knowledge of Xxxxxxx no such policy of insurance is subject to any
deductible, self-insured retention, retrospective rating agreement,
indemnification agreement or any other method or device by
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which the insured person is subject to all or any part of the liability for
any or all claims. Concurrently with or prior to the execution of this
Agreement, Xxxxxxx and its Subsidiaries have delivered to Bank true,
correct and complete copies of all such insurance policies. Except as set
forth on Schedule 4.02(n), all such insurance policies will be in full
force and effect through the Effective Date. To the knowledge of Xxxxxxx,
except as set forth on Schedule 4.02(n), there is no state of facts and no
event has occurred forming the basis for any present property, casualty or
fidelity claim against Xxxxxxx or its Subsidiaries that is not fully
covered by insurance. Schedule 4.02(n)contains loss runs for the last five
years setting forth all property, general and products liability and
workers compensation claim activity against the businesses of Xxxxxxx and
its Subsidiaries, including the date and place of the occurrence, the
claimant's name, reserves, amounts paid, a brief description of the
incident and whether the claim is open or closed. Except as set forth on
Schedule 4.02(n), Xxxxxxx has no Knowledge of any occurrence, circumstance,
or event which could reasonably be expected to result in any such claim.
(o) Governmental Reviews. Except as set forth on Schedule 4.02(o), no
investigation or review by any Governmental Authority with respect to
Xxxxxxx, any Xxxxxxx Subsidiary or any of their officers or directors is
pending or, to the Knowledge of Xxxxxxx, threatened, nor has any
Governmental Authority indicated to Xxxxxxx or any Xxxxxxx Subsidiary an
intention to conduct the same, other than normal or routine regulatory
examinations.
(p) Fairness Opinion. On March 19, 2000, Xxxxx Xxxxxxxx & Xxxxx, Inc.
("Xxxxx Xxxxxxxx") provided to the Xxxxxxx Board a written fairness opinion
to the effect that the consideration to be paid by Xxxxxxx in the Merger is
fair to the shareholders of Xxxxxxx from a financial point of view.
(q) Compliance with Servicing Obligations. Except as set forth on
Schedule 4.02(q) and except for violations and acts of noncompliance that
would not have a Xxxxxxx Material Adverse Effect, to the best of Xxxxxxx'x
Knowledge, Xxxxxxx and the Xxxxxxx Subsidiaries are in compliance in all
material respects with all contract, agency and investor requirements and
guidelines, and all applicable laws, rules and regulations of Governmental
Authorities, relating to the servicing and administration of loans by them,
or any of them, including but not limited to, properly and timely making
interest rate adjustments to adjustable rate loans.
(r) Intellectual Property. Schedule 4.02(r) sets forth all
Intellectual Property Xxxxxxx and its Subsidiaries own or use in their
businesses ("Xxxxxxx Intellectual Property"). Xxxxxxx and its Subsidiaries
are the sole owners (except for licensed property for which valid and
subsisting licenses exist) of the Xxxxxxx Intellectual Property, free of
all Liens. Except as set forth in Schedule 4.02(r), to Xxxxxxx'x Knowledge,
there is no claim against Xxxxxxx or any of its Subsidiaries that the
Xxxxxxx Intellectual Property or any of its operations, activities,
products or publications infringes any material patent, trademark, trade
name, copyright or other proprietary or intellectual property right of any
third party or that any of them is illegally using the material trade
secrets or property rights of others in any material respect. To the
knowledge of Xxxxxxx, neither Xxxxxxx nor any of its Subsidiaries has any
disputes with or claims against, or any basis for claims against, any third
party for infringement by such third party of any Xxxxxxx Intellectual
Property.
(s) Material Contracts. Schedule 4.02(s) identifies all of the
Material Contracts of Xxxxxxx and its Subsidiaries, true and complete
copies of all of which have been delivered to Bank. Except as set forth on
Schedule 4.02(s), and except for any default which would not constitute a
Xxxxxxx Material Adverse Effect, (i) Xxxxxxx and each of its Subsidiaries
has complied in all material respects with the provisions of, and is not in
default under, each such Material Contract to which it is a party or any
such default has been waived, and (ii) to the Knowledge of Xxxxxxx, no
other party to any such Material Contract has failed to comply in any
material respect with, or is in default under, the provisions of any such
Material Contract.
(t) Real Property Owned. Neither Xxxxxxx nor any of its Subsidiaries
own any real property and, except as set forth on Schedule 4.02(t), and
except for real property of the type classified as
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OREO (other real estate owned) on the Xxxxxxx'x financial statements (i.e.,
foreclosed property not owned for the operation of Xxxxxxx'x business),
none of them has ever owned any real property.
(u) Real Property Leased. Schedule 4.02(u) sets forth the legal
description for all real properties leased or subleased to Xxxxxxx or its
Subsidiaries (the "Xxxxxxx Leased Real Property"). Xxxxxxx has delivered to
Bank true, correct and complete copies of the leases and subleases listed
on Schedule 4.02(u). Except as set forth on Schedule 4.02(u), neither
Xxxxxxx nor any of its Subsidiaries has leased or subleased any real
property during the past three years. Except as set forth on Schedule
4.02(u), with respect to each such lease or sublease:
(i) the lease or sublease is legal, valid, binding, enforceable and
in full force and effect in all material respects;
(ii) the lease or sublease will continue to be legal, valid,
binding, enforceable and in full force and effect in all material
respects on identical terms following the Closing;
(iii) neither Xxxxxxx, its Subsidiaries, nor, to Xxxxxxx'x
Knowledge, any other party to the lease or sublease is in breach or
default, and no event has occurred which, with notice or lapse of time,
would constitute such a breach or default or permit termination,
modification or acceleration under the lease or sublease;
(iv) to Xxxxxxx'x Knowledge, no party to the lease or sublease has
repudiated any of its provisions;
(v) there are no material disputes, oral agreements or forbearance
programs in effect as to the lease or sublease;
(vi) neither Xxxxxxx nor any of its Subsidiaries, as applicable,
has assigned, transferred, conveyed, mortgaged, deeded in trust or
encumbered all or any portion of their interest in the leasehold or
subleasehold;
(vii) to Xxxxxxx'x Knowledge, all facilities leased or subleased
under the lease or sublease have been operated and maintained in
accordance with applicable laws, rules and regulations in all material
respects;
(viii) all facilities leased or subleased under the lease or
sublease are supplied with utilities and other services reasonably
necessary for the operation of such facilities;
(ix) all facilities leased or subleased under the lease or sublease
are in good operating condition, and would not, with ordinary wear and
tear, require major repair or replacement during the remainder of the
lease term; and
(x) no property insurer or similar body has made any
recommendations with respect to any parcel of Xxxxxxx Leased Real
Property which have not been complied with, and all structures on the
Xxxxxxx Leased Real Property meet all qualifications for "highly
protected risk" classification for fire insurance purposes.
(v) Liens. Except as set forth on Schedule 4.02(v), Xxxxxxx and its
Subsidiaries own and have good, marketable and unencumbered title to, or an
unencumbered interest in, each item comprising their assets, free and clear
of any and all Liens.
(w) Good Condition. Except as set forth on Schedule 4.02(w), all
facilities used in connection with the operation of the businesses of
Xxxxxxx and its Subsidiaries and all of the material assets of Xxxxxxx and
its Subsidiaries except real property of a type classified as OREO (other
real estate owned) on the Xxxxxxx'x financial statements (i.e., foreclosed
property not owned for the operation of the Xxxxxxx'x business) are free
from material defects (normal wear and tear excepted) and have been
maintained in accordance with normal industry practice.
(x) No Undisclosed Liabilities. Except as and to the extent set forth
on Schedule 4.02(x) or reflected in the Xxxxxxx SEC Documents, and except
for current liabilities incurred by Xxxxxxx or
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34
its Subsidiaries in connection with the operation of or with respect to
their businesses in the ordinary course, since September 30, 1999, neither
Xxxxxxx nor its Subsidiaries has incurred any debts, liabilities or
obligations of any nature or kind (whether absolute, accrued, contingent,
unliquidated or otherwise, whether or not known to Xxxxxxx, whether due or
to become due and regardless of when asserted) arising out of transactions
entered into, at or prior to the Closing, or any action or inaction at or
prior to the Closing or any state of facts existing at or prior to the
Closing and which could have a Xxxxxxx Material Adverse Effect. Except as
set forth on Schedule 4.02(x), Xxxxxxx has no Knowledge of any existing,
proposed or threatened change which could have a Xxxxxxx Material Adverse
Effect. There are no contingent or other liabilities of Xxxxxxx or its
Subsidiaries that have not been disclosed in the Schedules to this
Agreement which could have a Xxxxxxx Material Adverse Effect.
(y) Recent Conduct of Business; Interim Operations. Except as set
forth on Schedule 4.02(y), since September 30, 1999, there has not been,
and through the Effective Time, there shall not be, any Xxxxxxx Material
Adverse Effect. Except as set forth on Schedule 4.02(y) or any other
Schedule to this Agreement, since September 30, 0000, Xxxxxxx and its
Subsidiaries have caused their businesses to be conducted only in the
ordinary course. Except as set forth on Schedule 4.02(y) or any other
Schedule to this Agreement, since September 30, 0000, Xxxxxxx and its
Subsidiaries have not done any of the actions described in Sections 5.02
(a) through (g), 5.02 (l) through (u) or 5.02(v) as Section 5.02(v) relates
to Sections 5.02(a) through (g) and 5.02(l) through (u).
(z) Brokerage or Finder's Fee. Except for Xxxxx Xxxxxxxx, no broker,
finder, agent or similar intermediary has acted for or on behalf of Xxxxxxx
in connection with this Agreement or the transactions contemplated hereby
and, except for the fee payable to Xxxxx Xxxxxxxx by Xxxxxxx, no broker,
finder, agent or similar intermediary is entitled to any broker's, finder's
or similar fee or other commission in connection therewith based on any
agreement, arrangement or understanding with Xxxxxxx or any action taken by
Xxxxxxx.
(aa) Disclosure. No representation or warranty by Xxxxxxx contained in
this Agreement and no statement contained in any of the Attendant Documents
or any other certificate or instrument furnished or to be furnished
pursuant to this Agreement or in connection with the transactions
contemplated in this Agreement contains or will contain any untrue
statement of a material fact, or omits or will omit to state a material
fact, necessary in order to make any of the statements not misleading.
(bb) Capitalization. Xxxxxxx and each of its Subsidiaries has one
class of capital stock, common stock, without par value, except for (i) DFI
Alabama and DIA, which each have one class of capital stock, common stock,
$0.01 par value per share, (ii) Xxxxxxx & Xxxxxxx Mortgage Associates,
Inc., which has one class of capital stock, common stock, $1.00 par value
per share, and (iii) BAC and BSC, which are limited liability companies
with one class of ownership interest. Schedule 4.02(bb) sets forth the
number of authorized and the number of issued and outstanding shares of
common stock of Xxxxxxx and each of its Subsidiaries. All of the shares of
Xxxxxxx Stock and all of the shares of capital stock of each of its
Subsidiaries have been duly authorized and validly issued, are fully paid
and non-assessable and were issued by Xxxxxxx and its Subsidiaries without
violating any requirements of law. Except as set forth on Schedule
4.02(bb), (i) there are no preemptive or first refusal rights to purchase
or otherwise acquire shares of Xxxxxxx Stock or capital stock of any of
Xxxxxxx'x Subsidiaries pursuant to the Governing Documents of Xxxxxxx or
its Subsidiaries, by agreement or otherwise, (ii) there are no outstanding
agreements, commitments, rights, options, warrants or claims of any nature
whatsoever for the issuance, sale, purchase or redemption of any shares of
Xxxxxxx Stock or capital stock of any of Xxxxxxx'x Subsidiaries or any
securities convertible into or exchangeable for such shares, and (iii)
there are no stock appreciation rights or phantom stock rights outstanding
with respect to the capital stock of Xxxxxxx or any of its Subsidiaries.
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(cc) No Knowledge. Except as set forth in Schedule 4.02(cc), Xxxxxxx
has no Knowledge whatsoever that any of the representations or warranties
of Bank are untrue in any material respect.
(dd) Affiliate Transactions. Except as set forth on Schedule 4.02(dd),
Xxxxxxx has not entered into any business transactions with any of its
Affiliates.
ARTICLE V
COVENANTS
Section 5.01 Bank's Forbearances From the date of this Agreement until the
Effective Time, except as expressly contemplated by this Agreement, without the
prior written consent of Xxxxxxx, Bank will not, and will cause each of its
Subsidiaries not to:
(a) Ordinary Course. Conduct the business of Bank and its Subsidiaries
other than in the ordinary and usual course consistent with past practice
or fail to use reasonable efforts to (i) preserve intact in any material
respect their business organizations and assets, and (ii) maintain their
rights, franchises and existing relations with customers, suppliers,
employees and business associates, or take any action reasonably likely to
materially impair Bank's ability to perform any of its obligations under
this Agreement. Notwithstanding the fact that it has customarily done so in
the past, Bank shall not make, declare, pay or set aside for payment any
stock dividend on shares of Bank Stock; provided, however, that Bank may
redeem its subordinated debt in accordance with the terms of the documents
evidencing such debt.
(b) Bank Stock. Other than pursuant to Bank Stock Options outstanding
on the date of this Agreement as disclosed on Schedule 5.01(b) or Bank
Stock Options issued to officers, employees or directors in the ordinary
course of business, (i) issue, sell or otherwise permit to become
outstanding, or authorize the creation of, any additional shares of Bank
Stock or any Rights, or (ii) enter into any agreement with respect to the
foregoing, provided, however, that Bank Stock Options and Bank Stock Plans
may be amended in the ordinary course of business or as contemplated by
this Agreement.
(c) Other Securities. Issue any other capital securities, capital
stock of any Subsidiary, debentures, or subordinated notes other than in
the ordinary course of business.
(d) Dividends, Etc. (i) Except for quarterly dividends (common or
preferred) in the ordinary course of business, make, declare, pay or set
aside for payment any dividend (other than dividends from wholly-owned
Subsidiaries to Bank or another wholly-owned Subsidiary of Bank) on or in
respect of, or declare or make any distribution on any shares of Bank Stock
or (ii) directly or indirectly adjust, split, combine, redeem, reclassify,
purchase or otherwise acquire, any shares of its capital stock or Rights.
(e) Compensation; Employment Agreements, Etc. Except (i) for oral at
will employment agreements, (ii) for normal individual increase in
compensation to employees in the ordinary course of business consistent
with past practice, (iii) for other changes that are required by applicable
law, (iv) to satisfy contractual obligations existing as of the date hereof
that are disclosed on Schedule 5.01(e) in the ordinary course of business,
(v) otherwise in the ordinary course of business, or (vi) as contemplated
by this Agreement, enter into or amend or renew any employment, consulting,
severance or similar agreements or arrangements with any director, officer
or employee of Bank or its Subsidiaries, or grant any salary or wage
increase or increase any employee benefit (including incentive or bonus
payments).
(f) Benefit Plans. Except in the ordinary course of business and
consistent with past practice, to provide incentive to directors, officers
or employees, enter into, establish, adopt, renew, or amend (except as may
be required by applicable law) any pension, profit sharing, employee stock
ownership, retirement, stock option, stock appreciation, phantom stock,
stock purchase, savings, deferred compensation, consulting, bonus, group
insurance or other employee benefit, incentive or welfare contract, plan or
arrangement, or any trust agreement (or similar arrangement) related
thereto, in
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respect of any director, officer or employee of Bank or its Subsidiaries,
or take any action to accelerate the vesting or exercisability of stock
options or other compensation or benefits payable thereunder.
Notwithstanding the foregoing, Bank shall expressly be allowed to amend its
Bank Stock Options and Bank Stock Plans as set forth in the attached
Schedule 5.01(f); provided, however, such amendment shall not result in the
Holding Company or the Surviving Subsidiary having any liability as a
result of changing the tax treatment in connection with the Bank Stock
Options or the exercise thereof. Further, notwithstanding the foregoing,
the Bank shall expressly be allowed to enter into a trust agreement
establishing and funding trusts contemplated in the Severance Agreements;
provided that such trust agreement shall provide that at such time as
Severance Payments or Bank Board Severance Payments (defined below) are no
longer payable to a beneficiary of the trusts established under such trust
agreement, an amount equal to such Severance Payments or Bank Board
Severance Payment, less the amount of trust funds used to pay such
Severance Payments or Bank Board Severance Payments, shall be released from
the trusts established under such trust agreement and paid to the Surviving
Subsidiary; provided further, such trusts will be funded with funds of the
Bank and the trustee of the trusts established under such trust agreement
shall be reasonably acceptable to Xxxxxxx; and provided further, such trust
agreement shall specifically provide that the trustee shall pay over the
earnings of the trusts established thereunder to the Surviving Subsidiary
as and when earned or as otherwise acceptable to Xxxxxxx.
(g) Dispositions. Except as set forth in Schedule 4.01(y), sell,
transfer, mortgage, encumber or otherwise dispose of or discontinue any of
its material assets, deposits, business or properties except in the
ordinary course of business for fair value consistent with past practice.
(h) Acquisitions. Except in the ordinary and usual course of business
consistent with past practice, acquire all or any portion of, the assets,
business, deposits or properties of any Person or entity.
(i) Governing Documents. Except as contemplated in this Agreement,
amend the Governing Documents of Bank or any of its Subsidiaries.
(j) Accounting Methods. Implement or adopt any change in its
accounting principles, practices or methods, other than as may be required
by generally accepted accounting principles.
(k) Material Contracts. Except as permitted by Sections 5.01(e) and
5.01(f), and to renew real and personal property leases in the ordinary
course of business where the renewal option would otherwise expire, enter
into or terminate any Material Contract or amend or modify in any material
respect or renew any of its existing Material Contracts.
(l) Claims. Except in the ordinary course of business consistent with
past practice or involving an amount not in excess of $100,000, settle any
claim, action or proceeding.
(m) Foreclosure. Foreclose upon or otherwise take title to or
possession or control of any real property without first having an
environmental report thereon.
(n) Deposit Taking and Other Bank Activities. In the case of Bank (i)
voluntarily make any material changes in or to its deposit mix; (ii)
increase or decrease the rate of interest paid on time deposits or on
certificates of deposit, except in a manner consistent with prevailing
banking practice or the Bank's existing strategic plan and year 2000
budget; or (iii) incur any liability or obligation relating to retail
banking and branch merchandising, marketing and advertising activities and
initiatives materially in excess of the amounts previously disclosed to
Xxxxxxx.
(o) Facilities. Except as disclosed on Schedule 5.01(o) or as
contemplated in the Bank's existing strategic plan and year 2000 budget, or
as required for technology or facility upgrades, open any new offices or
facilities or expand, close or relocate any existing office or facility.
(p) Investments. Enter into any material securities transaction for
its own account or purchase or otherwise acquire any material amount of
investment securities for its own account except purchases and sales of
securities consistent with past practice (including the Bank's existing
strategic
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plan and year 2000 budget) in order to maintain investment portfolios at
Bank and its Subsidiaries that have risk and asset mix characteristics
substantially similar to those of the respective investment portfolios as
of the date of this Agreement.
(q) Capital Expenditures. Purchase or lease fixed assets where the
amount paid or committed is in excess of $50,000 individually or $250,000
in the aggregate.
(r) Lending. Except as required by action of any Regulatory Authority
(i) make any material changes in its policies concerning loan underwriting
or which persons may approve loans as previously provided in writing to
Xxxxxxx (except in the ordinary course of business consistent with past
practice or prevailing banking practices) or fail to materially comply with
such policies; or (ii) make or commit to make any new loan or letter of
credit, or any new or additional discretionary advance under any existing
loan or letter of credit, or restructure any existing loan or letter of
credit in a manner inconsistent with past practice or customary safe and
sound standards.
(s) Acquisition of Loans. Except in the ordinary course of business
and consistent with current policies and guidelines in effect as previously
disclosed to Xxxxxxx, purchase any loan, loan participation or other
interest in any loan.
(t) Adverse Actions. (i) Take any action or fail to take any action
while knowing that such action or inaction would, or is reasonably likely
to, prevent or impede the Merger from qualifying as a reorganization within
the meaning of Section 368(a) of the Code; or (ii) knowingly take any
action or fail to take any action that is intended or is reasonably likely
to result in (A) any of its representations and warranties set forth in
this Agreement being or becoming untrue in any material respect at any time
at or prior to the Effective Time except as expressly permitted by this
Agreement, (B) any of the conditions to the Merger set forth in Article VI
not being satisfied except as expressly permitted by this Agreement or (C)
a material violation of any provision of this Agreement except, in each
case, as may be required by applicable law or regulation.
(u) Risk Management. Except as required by applicable law or as
contemplated by the Bank's existing strategic plan and year 2000 budget,
regulation, (i) implement or adopt any material change in its interest rate
and other risk management policies, procedures or practices; (ii) fail to
follow its existing policies or practices with respect to managing its
exposure to interest rate and other risk; or (iii) fail to use commercially
reasonable means to avoid any material increase in its aggregate exposure
to interest rate risk.
(v) Indebtedness. Incur any indebtedness for borrowed money other than
in the ordinary course of business.
(w) Commitments. Agree or commit to do any of the foregoing.
Section 5.02 Xxxxxxx'x Forbearances. From the date hereof until the
Effective Time, except as expressly contemplated by this Agreement, without the
prior written consent of Bank, Xxxxxxx will not, and will cause each of its
Subsidiaries not to:
(a) Ordinary Course. Conduct the business of Xxxxxxx and its
Subsidiaries other than in the ordinary and usual course consistent with
past practice or fail to use reasonable efforts to (i) preserve intact in
any material respect their business organizations and assets, and (ii)
maintain their rights, franchises and existing relations with customers,
suppliers, employees and business associates, or take any action reasonably
likely to materially impair Xxxxxxx'x ability to perform any of its
obligations under this Agreement. Without limiting the foregoing, Xxxxxxx
may not make, declare, pay or set aside for payment any stock dividend on
shares of Xxxxxxx'x capital stock. Notwithstanding the foregoing, Xxxxxxx
may effectuate the DFI Restructuring Plan substantially on the terms set
forth on Schedule 5.02(a) and may enter into commercially reasonable whole
loan sales or loan securitizations.
(b) Xxxxxxx Stock. Other than pursuant to options to purchase shares
of Xxxxxxx Stock ("Xxxxxxx Stock Options") outstanding on the date of this
Agreement as disclosed on Schedule 5.02(b) or Xxxxxxx Stock Options and
other stock awards issued to officers, employees or
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directors in the ordinary course of business, (i) issue, sell or otherwise
permit to become outstanding, or authorize the creation of, any additional
shares of Xxxxxxx Stock or any Rights, or (ii) enter into any agreement
with respect to the foregoing, provided, however, that options to purchase
Xxxxxxx stock and Xxxxxxx'x stock option plans may be amended in the
ordinary course of business or as contemplated by this Agreement.
(c) Other Securities. Issue any other capital securities, capital
stock of any Subsidiary, debentures, or subordinated notes.
(d) Dividends, Etc. (i) Except for dividends in the ordinary course of
business, make, declare, pay or set aside for payment any dividend (other
than dividends from wholly-owned Subsidiaries to Xxxxxxx or another
wholly-owned Subsidiary of Xxxxxxx) on or in respect of, or declare or make
any distribution on any shares of Xxxxxxx Stock or (ii) directly or
indirectly adjust, split, combine, redeem, reclassify, purchase or
otherwise acquire, any shares of its capital stock or Rights.
(e) Compensation; Employment Agreements, Etc. Except (i) for oral at
will employment agreements, (ii) for normal individual increase in
compensation to employees in the ordinary course of business consistent
with past practice, (iii) for other changes that are required by applicable
law, (iv) to satisfy contractual obligations existing as of the date hereof
that are disclosed on Schedule 5.02(e) in the ordinary course of business,
(v) otherwise in the ordinary course of business, or (vi) as contemplated
by this Agreement, enter into or amend or renew any employment, consulting,
severance or similar agreements or arrangements with any director, officer
or employee of Xxxxxxx or its Subsidiaries, or grant any salary or wage
increase or increase any employee benefit (including incentive or bonus
payments).
(f) Benefit Plans. Except in the ordinary course of business and
consistent with past practice to provide incentives to directors, officers
or employees, enter into, establish, adopt, renew, or amend (except as may
be required by applicable law) any pension, profit sharing, employee stock
ownership, retirement, stock option, stock appreciation, phantom stock,
stock purchase, savings, deferred compensation, consulting, bonus, group
insurance or other employee benefit, incentive or welfare contract, plan or
arrangement, or any trust agreement (or similar arrangement) related
thereto, in respect of any director, officer or employee of Xxxxxxx or its
Subsidiaries, or take any action to accelerate the vesting or
exercisability of stock options or other compensation or benefits payable
thereunder. Notwithstanding the foregoing, Xxxxxxx shall expressly be
allowed to amend the Xxxxxxx Stock Plan in accordance with Section 3.06(c).
(g) Dispositions. Except as set forth on Schedule 4.02(y), sell,
transfer, mortgage, encumber or otherwise dispose of or discontinue any of
its material assets, deposits, business or properties except in the
ordinary course of business for fair value consistent with past practice.
(h) Acquisitions. Except as set forth in Schedule 5.02(h) acquire all
or any substantial portion of, the assets, business, deposits or properties
of any Person or entity.
(i) Governing Documents. Except as contemplated in this Agreement,
amend the Governing Documents of Xxxxxxx or any of its Subsidiaries.
(j) Accounting Methods. Implement or adopt any change in its
accounting principles, practices or methods, other than as may be required
by generally accepted accounting principles.
(k) Material Contracts. Except as permitted by Section 5.02(e), and to
renew real and personal property leases in the ordinary course of business
where the renewal option would otherwise expire, enter into or terminate
any Material Contract or amend or modify in any material respect or renew
any of its existing Material Contracts.
(l) Claims. Except: (i) in the ordinary course of business consistent
with past practice; (ii) involving an amount not in excess of $100,000; or
(iii) in connection with the DFI Restructuring Plan which, in the
aggregate, involves an amount not in excess of $5,000,000, settle any
claim, action or proceeding.
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(m) Foreclosure. Foreclose upon or otherwise take title to or
possession or control of any real property without first having an
environmental report thereon.
(n) Facilities. Except as disclosed on Schedule 5.02(n), or as
contemplated in Xxxxxxx'x year 2000 budget or as required for technology or
facility upgrades, open any new offices or facilities or expand, close or
relocate any existing office or facility.
(o) Investments. Enter into any material securities transaction for
its own account or purchase or otherwise acquire any material amount of
investment securities for its own account except purchases and sales of
securities consistent with past practice (including Xxxxxxx'x year 2000
budget) in order to maintain investment portfolios at Xxxxxxx and its
Subsidiaries that have risk and asset mix characteristics substantially
similar to those of the respective investment portfolios as of the date of
this Agreement.
(p) Capital Expenditures. Except as set forth on Schedule 5.02(p),
purchase or lease fixed assets where the amount paid or committed is in
excess of $50,000 individually or $250,000 in the aggregate.
(q) Lending. Except as required by action of any Regulatory Authority
(i) make any material changes in its policies concerning loan underwriting
or which persons may approve as previously provided in writing to Bank
(except in the ordinary course of business consistent with past practice or
prevailing lending practices) loans or fail to materially comply with such
policies; or (ii) make or commit to make any new loan or letter of credit,
or any new or additional discretionary advance under any existing loan or
letter of credit, or restructure any existing loan or letter of credit in a
manner inconsistent with past practice or customary safe and sound
standards.
(r) Acquisition of Loans. Except in the ordinary course of business
and consistent with current policies and guidelines in effect as previously
disclosed to Bank, purchase any loan, loan participation or other interest
in any loan.
(s) Adverse Actions. (i) Take any action or fail to take any action
while knowing that such action or inaction would, or is reasonably likely
to, prevent or impede the Merger from qualifying as a reorganization within
the meaning of Section 368(a) of the Code; or (ii) knowingly take any
action or fail to take any action that is intended or is reasonably likely
to result in (A) any of its representations and warranties set forth in
this Agreement being or becoming untrue in any material respect at any time
at or prior to the Effective Time except as expressly permitted by this
Agreement, (B) any of the conditions to the Merger set forth in Article VI
not being satisfied except as expressly permitted by this Agreement or (C)
a material violation of any provision of this Agreement except, in each
case, as may be required by applicable law or regulation.
(t) Risk Management. Except as required by applicable law or
regulation or as contemplated by Xxxxxxx'x year 2000 budget, (i) implement
or adopt any material change in its interest rate and other risk management
policies, procedures or practices; (ii) fail to follow its existing
policies or practices with respect to managing its exposure to interest
rate and other risk; or (iii) fail to use commercially reasonable means to
avoid any material increase in its aggregate exposure to interest rate
risk.
(u) Indebtedness. Incur any indebtedness for borrowed money other than
in the ordinary course of business.
(v) Commitments. Agree or commit to do any of the foregoing.
Section 5.03 Reasonable Efforts. Subject to the terms and conditions of
this Agreement, each Party agrees to use its reasonable efforts in good faith to
take, or cause to be taken, all actions, and to do, or cause to be done, all
things necessary, proper, desirable, or advisable to consummate the Merger and
all other transactions contemplated in this Agreement as promptly as
practicable. Each Party will cooperate fully with the other Parties to that end.
A Party's reasonable efforts will include, without limitation, (a) using
reasonable efforts to obtain all necessary consents, approvals or waivers from
Regulatory
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Authorities necessary to consummate the Merger, including without limitation
making any revisions to loan reserves required by the Regulator, and (b)
opposing vigorously any litigation or administrative proceeding or directive
relating to this Agreement or the Merger, including, if necessary, promptly
appealing any adverse court or agency order.
Section 5.04 Shareholder Approvals. Xxxxxxx and Bank agree to take, in
accordance with applicable law and NASD rules and their Governing Documents, all
action necessary to convene an appropriate meeting of their shareholders to
consider and vote upon, in the case of Bank, the adoption of this Agreement and
the approval of the Merger, and in the case of Xxxxxxx to approve (a) this
Agreement and the transactions it contemplates, including (i) the issuance of
Xxxxxxx Common Stock in the Merger, (ii) the conversion of Bank Stock Options
into Xxxxxxx stock options, (iii) the assumption of the Bank Stock Plans by
Xxxxxxx, and (iv) the amendment of the Xxxxxxx Stock Plan as contemplated in
Section 3.06 (c), and (b) a plan to reconstitute the Holding Company Board as
set forth in Section 5.14(a), and in each case any other matter required to be
approved by shareholders to consummate the Merger (including any adjournment or
postponement, the "Xxxxxxx Meeting" or "Bank Meeting", as applicable), in each
case as promptly as practicable after the Registration Statement is declared
effective (collectively, the "Shareholder Approvals"). The Xxxxxxx Board and the
Bank Board shall each recommend adoption or approval, and Xxxxxxx and Bank shall
take all reasonable, lawful action to solicit adoption or approval by its
shareholders, except to the extent that their fiduciary obligations require them
to do otherwise.
Section 5.05 Registration Statement.
(a) Xxxxxxx and Bank agree to jointly promptly prepare a registration
statement on Form S-4 (the "Registration Statement") to be filed by them
with the SEC in connection with the issuance of Xxxxxxx Common Stock in the
Merger (including the joint proxy statement and prospectus and other
necessary proxy solicitation materials of Xxxxxxx and Bank (the "Proxy
Statement") and all related documents). Subject to compliance by Xxxxxxx
and Bank with Sections 5.05(b) and (c), the Registration Statement will
comply in all material respects with applicable federal securities laws.
Xxxxxxx and Bank agree to cooperate, and to cause their Subsidiaries to
cooperate, with each other, their counsel and their accountants, in
preparing the Registration Statement and the Proxy Statement. Xxxxxxx and
Bank agree to file the Registration Statement (or the form of the Proxy
Statement) in preliminary form with the SEC as promptly as reasonably
practicable and will use reasonable efforts to cause the filing to occur
within 45 days after the Parties execute this Agreement. If the Proxy
Statement is filed in preliminary form, the Registration Statement will be
filed with the SEC as soon as reasonably practicable after any SEC comments
with respect to the preliminary Proxy Statement are resolved. Each of Bank
and Xxxxxxx agrees to use all reasonable efforts to cause the Registration
Statement to be declared effective under the Securities Act as promptly as
reasonably practicable after it is filed. Each of Bank and Xxxxxxx also
agrees to use reasonable efforts to obtain, before the effective date of
the Registration Statement, all state securities law or "Blue Sky" permits
and approvals required to consummate the Merger. Each of Bank and Xxxxxxx
agrees to give the other all information concerning it, its Subsidiaries,
officers, directors and shareholders that the other reasonably requests in
connection with the foregoing.
(b) Each of Bank and Xxxxxxx agrees, as to itself and its
Subsidiaries, that none of the information supplied or to be supplied by it
for inclusion or incorporation by reference in (i) the Registration
Statement will, at the time the Registration Statement and each amendment
or supplement to it, if any, becomes effective under the Securities Act,
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading, and (ii) the Proxy Statement and any
amendment or supplement to it will, at the date of mailing to shareholders
and at the time of the Xxxxxxx Meeting or the Bank Meeting, as the case may
be, 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 or any statement that, in the light of
the circumstances under which such statement is made, will be false or
misleading with respect to any material fact, or that will omit to state
any
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material fact necessary in order to make the statements therein not false
or misleading or necessary to correct any statement in any earlier
statement in the Proxy Statement or any amendment or supplement thereto.
Each of Bank and Xxxxxxx further agrees to promptly inform the other if it
becomes aware before the Effective Date of any information furnished by it
that would cause any of the statements in the Proxy Statement to be false
or misleading with respect to any material fact, or to omit to state any
material fact necessary to make the statements therein not false or
misleading, and to take the necessary steps to correct the Proxy Statement.
(c) Xxxxxxx agrees to advise Bank, promptly after it receives notice
thereof, if (i) any stop order has been issued or the Xxxxxxx Common Stock
for offering or sale has been suspended or qualified in any jurisdiction or
(ii) a threat of any proceeding for any such purpose has been initiated.
Section 5.06 Proxy Solicitors. Each of Xxxxxxx and Bank, in consultation
with the other, will employ professional proxy solicitors to assist it in
contacting shareholders in connection with soliciting votes on the matters to be
considered and voted upon at the Xxxxxxx Meeting and Bank Meeting. Bank and
Xxxxxxx shall share equally all costs and fees associated with the retention of
proxy solicitors.
Section 5.07 Access; Information.
(a) Each of Bank and Xxxxxxx agrees that upon reasonable notice it
shall afford the other Party and the other Party's Representatives such
access during normal business hours throughout the period prior to the
Effective Time to the books, records (including, without limitation, Tax
Returns and work papers of independent auditors), properties, personnel and
to such other information as any Party may reasonably request. During that
period, it shall furnish promptly to the other Party (i) a copy of each
material report, schedule and other document filed by it pursuant to the
requirements of federal or state securities or banking laws, and (ii) all
other information concerning the business, properties and personnel of it
and its Subsidiaries as the other Party may reasonably request.
(b) During the period from the date of this Agreement to the Effective
Time, each of Xxxxxxx and Bank agrees to promptly give to the other copies
of all monthly and other interim financial statements produced in the
ordinary course of business as they become available.
(c) Notwithstanding anything to the contrary set forth in this Section
5.07 or otherwise, except with respect to the obligation of the Bank to
provide the 1999 Work Papers to Xxxxxxx and its auditors, and Xxxxxxx and
its auditors having the opportunity to review and approve the same, and
except as set forth in a letter dated March 19, 2000 directed to the Bank
by Xxxxxxx, each of Bank and Xxxxxxx acknowledges that it has completed its
respective due diligence investigations in connection with the Merger and
is satisfied with the results thereof. Accordingly, each agrees that
neither has the right to terminate this Agreement except as provided in
Article VIII or the letter described in the preceding sentence.
Section 5.08 Exclusivity.
(a) From and after the date of this Agreement until the Effective
Time, neither Bank nor Xxxxxxx shall offer to sell its business, stock or
assets to (a "Unilateral Offer"), or carry on negotiations with respect to
the sale of its business, stock or assets with, any party other than the
other Party or the other Party's Affiliates. Notwithstanding the foregoing
sentence, either the Bank Board or the Xxxxxxx Board may consider
unsolicited bona fide third-party offers to purchase its business, stock or
assets ("Unsolicited Offers") if it determines in good faith after
consultation with legal counsel that such action is necessary for it to act
in a manner consistent with fiduciary duties under applicable law. If
either Xxxxxxx or Bank receives an Unsolicited Offer, it must within 24
hours of its receipt advise the other Party that it has received the
Unsolicited Offer, disclose its terms (including the identity of the person
making the Unsolicited Offer), and advise the other Party of any material
developments concerning the Unsolicited Offer immediately as they occur.
(b) Bank acknowledges that Xxxxxxx has filed an application with the
OTS seeking a charter (the "OTS Charter") to become a Federal Savings Bank.
Bank acknowledges that Xxxxxxx'x pursuit
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of the Merger may jeopardize attainment of the OTS Charter and that
significant incurred expenses will be lost by Xxxxxxx without benefit. In
consideration of these events, Xxxxxxx'x execution of this Agreement,
Xxxxxxx'x expenses incurred in connection with this Agreement and the
Merger, and lost opportunities incurred by Xxxxxxx as the result of
pursuing the Merger, Bank shall pay $3,000,000 to Xxxxxxx as liquidated
damages (and not as a penalty) if before the Effective Time, (i) Bank makes
a Unilateral Offer or enters into negotiations with respect to a Unilateral
Offer or an Unsolicited Offer, and (ii) the Merger is abandoned or
terminated by Bank as a result of considering that Unilateral Offer or
Unsolicited Offer. Xxxxxxx and Bank acknowledge that Xxxxxxx'x damages if
the Merger is abandoned or terminated as described in this clause would be
incapable of accurate calculation and that $3,000,000 is a reasonable
estimate of Xxxxxxx'x actual damages.
(c) In consideration of Bank's execution of this Agreement, Bank's
expenses incurred in connection with this Agreement and the Merger, and
lost opportunities incurred by Bank as the result of pursuing the Merger,
Xxxxxxx shall pay $3,000,000 to Bank as liquidated damages (and not as a
penalty) if before the Effective Time, (i) Xxxxxxx makes a Unilateral Offer
or enters into negotiations with respect to a Unilateral Offer or an
Unsolicited Offer, and (ii) the Merger is abandoned or terminated by
Xxxxxxx as a result of considering that Unilateral Offer or Unsolicited
Offer. Xxxxxxx and Bank acknowledge that Bank's damages if the Merger is
abandoned or terminated as described in this clause would be incapable of
accurate calculation and that $3,000,000 is a reasonable estimate of Bank's
actual damages.
Section 5.09 Takeover Laws. No Party may take any action that would cause
the transactions contemplated by this Agreement to be subject to requirements
imposed by any "moratorium", "control share", "fair price", "affiliate
transactions", "business combination" or other anti-takeover laws or regulations
("Takeover Laws") and each Party will take all necessary steps within its
control to exempt (or ensure the continued exemption of) the transactions
contemplated by this Agreement from, or if necessary, challenge the validity or
applicability of, any applicable Takeover Law, as now or hereafter in effect.
Section 5.10 Listing. Xxxxxxx agrees to use its reasonable efforts before
the Effective Time and subject to official notice of issuance, to list all
shares of Xxxxxxx Common Stock, including the shares to be issued in the Merger,
on the NASDAQ National Market.
Section 5.11 Regulatory Applications.
(a) Xxxxxxx and Bank and their respective Subsidiaries will cooperate
and use their reasonable efforts to (i) promptly prepare all documentation,
to effect all filings and to obtain all permits, consents, approvals and
authorizations of all third parties and Governmental Authorities necessary
to consummate the transactions contemplated by this Agreement, and (ii)
file within 45 days of the date of this Agreement, the applications
necessary to obtain the permits, consents, approvals and authorizations of
all Regulatory Authorities necessary to consummate the Merger. Each of
Xxxxxxx and Bank may review in advance, and to the extent practicable each
will consult with the other with respect to all material written
information submitted to any third party or any Governmental Authority in
connection with the transactions contemplated by this Agreement. In
exercising the foregoing right, each Party agrees to act reasonably and as
promptly as practicable. Each of Xxxxxxx and Bank agrees that it will
consult with the other with respect to the obtaining of all material
permits, consents, approvals and authorizations of all third parties and
Governmental Authorities necessary or advisable to consummate the
transactions contemplated by this Agreement. Each of Xxxxxxx and Bank will
keep the other apprised of the status of material matters relating to
completion of the transactions contemplated by this Agreement.
(b) Each of Xxxxxxx and Bank agrees, upon request, to furnish the
other with all information concerning itself, its Subsidiaries, directors,
officers and shareholders and such other matters as may be reasonably
necessary or advisable in connection with any filing, notice or application
made by or on behalf of such other party or any of its Subsidiaries to any
third party or Governmental Authority.
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Section 5.12 Benefit Plans. At the Effective Time, Xxxxxxx shall be
substituted for Bank or a Bank Subsidiary as the sponsoring employer under those
employee benefit and welfare plans with respect to which Bank or any of its
Subsidiaries is a sponsoring employer, and any other employee benefit programs,
policies, agreements and arrangements of Bank or its Subsidiaries in effect
immediately prior to the Effective Time (collectively, the "Bank Arrangements").
Xxxxxxx shall assume and be vested with all of the powers, rights, duties,
obligations and liabilities previously vested in Bank or the applicable Bank
Subsidiary with respect to each such Bank Arrangement. Except as otherwise
provided in this Agreement, and except as otherwise covered under the Bank
Arrangements, each such Bank Arrangement shall be continued in effect by Xxxxxxx
after the Effective Time without a termination or discontinuance thereof as a
result of the Merger, subject to the power reserved to Xxxxxxx under each such
Bank Arrangement to subsequently amend or terminate the Bank Arrangement, which
amendments or terminations shall comply with applicable law. Bank, each Bank
Subsidiary, and Xxxxxxx will use all reasonable efforts (i) to effect said
substitutions and assumptions, and such other actions contemplated under this
Agreement, and (ii) to amend such Bank Arrangements to the extent necessary to
provide for said substitutions and assumptions, and such other actions
contemplated under this Agreement.
Section 5.13 Notification of Certain Matters. Each of Bank and Xxxxxxx
shall give prompt notice to the other of any fact, event or circumstance known
to it that (a) is reasonably likely, individually or taken together with all
other facts, events and circumstances known to it, to result in any Bank
Material Adverse Effect or Xxxxxxx Material Adverse Effect, respectively, (b)
would cause or constitute a material breach of any of its representations,
warranties, covenants or agreements in this Agreement as of the date of this
Agreement or (c) would cause or constitute a material breach of any of its
representations, warranties, covenants or agreements in this Agreement, arising
from events or circumstances after the date of this Agreement or otherwise.
Section 5.14 Holding Company Board
(a) At the Effective Time, Xxxxxxx shall cause the Holding Company
Board to be reconstituted to consist of twelve directors, six of which will
be designated by Xxxxxxx and five of which will be designated by Bank prior
to the Effective Time. Of the five directors appointed by Bank, the term of
two will expire on the date of the first annual meeting of the Holding
Company after the Effective Date, the terms of two will expire on the date
of the second annual meeting of the Holding Company after the Effective
Date, and the term of the fifth will expire on the date of the third annual
meeting of the Holding Company after the Effective Date. The twelfth
director shall be the CEO of the Surviving Subsidiary. Before the Effective
Time, Bank and Xxxxxxx shall identify their designees for the Holding
Company Board on Schedule 5.14(a), which Schedule shall also set forth the
initial term of each director.
(b) Schedule 5.14(b) lists all the Severance Agreements, the amount of
all Severance Payments, and the amount of the Severance Payments that would
be due to each of the current non-employee directors of Bank (the "Current
Non-Employee Bank Directors") if each such Current Non-Employee Bank
Director were to be terminated on December 31, 2000 (the "Bank Board
Severance Payments"). At or before the Effective Time, any Current
Non-Employee Bank Director that is designated by Bank to serve as a
director of the Holding Company after the Effective Time pursuant to
Section 5.14(a) above, shall enter into a new severance agreement with the
Holding Company substantially in the form of Exhibit A attached hereto (the
"New Holding Company Severance Agreement") which provides, among other
things, that (i) such Current Non-Employee Bank Director's current
Severance Agreement with Bank will be terminated if he or she is elected to
the Holding Company Board at or around the Effective Date and will be
replaced with the New Holding Company Severance Agreement; (ii) the
aggregate amount of Bank Board Severance Payments payable to such Current
Non-Employee Bank Director at any time after the Effective Time will not
exceed the aggregate amount of Bank Board Severance Payments to be paid to
such person as shown on Schedule 5.14(b); (iii) subject to clause (v) of
this Section 5.14(b), such Current Non-Employee Bank Director who serves as
a Holding Company director after the Effective Date shall be entitled to
receive the Bank Board Severance Payments shown for such person on Schedule
5.14(b) if he or she
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resigns from, fails to be re-elected to or is removed from the Holding
Company Board within two years of the Effective Date, and the New Holding
Company Severance Agreement with such Current Non-Employee Bank Director
who serves as a Holding Company director after such two-year period shall
thereupon terminate and he or she shall not be entitled to any Bank Board
Severance Payments whatsoever; (iv) subject to clause (v) of this Section
5.14(b), any Current Non-Employee Bank Director who is elected to a term on
the Holding Company Board expiring more than two years after the Effective
Date but who dies before the second anniversary of the Effective Date shall
be entitled to receive the Bank Board Severance Payments shown for such
person on Schedule 5.14(b); (v) notwithstanding any provisions of clauses
(iii) or (iv) of this Section 5.14(b) to the contrary, in the event a
Current Non-Employee Bank Director who is elected to serve on the Holding
Company Board for a term expiring on the date of the first annual meeting
of the Holding Company after the Effective Date and who is also serving on
the Surviving Subsidiary Board on the Effective Date shall be elected to
serve on the Holding Company Board after the first annual meeting of the
Holding Company after the Effective Date, such Current Non-Employee Bank
Director shall no longer be entitled to any Bank Board Severance Payments
whatsoever, provided, however, that such person will not lose his
eligibility for Bank Board Severance Payments by virtue of serving a second
and/or third year on the Surviving Subsidiary Board as long as he is not
then serving on the Holding Company Board; and (vi) such Current
Non-Employee Bank Director shall not be entitled to cancel his or her Bank
Stock Options and receive payments in connection therewith by reason of the
occurrence of the Merger, or otherwise, unless Xxxxxxx elects to have such
Bank Stock Options cancelled and cause payments to be made in connection
therewith.
Section 5.15 Surviving Subsidiary Board
(a) At the Effective Time, the Surviving Subsidiary Board shall be
constituted so that four members of the Surviving Subsidiary Board will be
designated by Bank plus one shall be the CEO of the Surviving Subsidiary,
who shall be selected with the mutual consent of Xxxxxxx and Bank. The
remaining six members of the Surviving Subsidiary Board will be designated
by Xxxxxxx. In addition to designating four of the Surviving Subsidiary
directors after the Closing, Bank will be entitled to designate one
non-voting observer to the Surviving Subsidiary Board to serve at the
Surviving Subsidiary Board's discretion, who shall be entitled to receive
all materials and information provided to the Surviving Subsidiary
directors, shall be entitled to attend Surviving Subsidiary Board meetings
and shall be paid as if he were a Surviving Subsidiary director. Before the
Effective Time, Bank and Xxxxxxx shall identify their designees for the
Surviving Subsidiary Board on Schedule 5.15(a). Xxxxxxx shall use its
reasonable efforts to re-nominate the members of the Surviving Subsidiary
Board designated by the Bank for two successive one year terms following
the term commencing on, or running at the time of, the Effective Date.
(b) At or before the Effective Time, any Current Non-Employee Bank
Director that is designated by Bank to serve as a director of Bank after
the Effective Time pursuant to Section 5.15(a) above, shall enter into a
new severance agreement with Bank substantially in the form of Exhibit B
attached hereto (the "New Bank Severance Agreement") which provides, among
other things, that (i) such Current Non-Employee Bank Director's current
Severance Agreement with Bank will be terminated if he or she is elected to
the Bank Board at or around the Effective Date and will be replaced with
the New Bank Severance Agreement; (ii) the aggregate amount of Bank Board
Severance Payments payable to each such Current Non-Employee Bank Director
at any time after the Effective Time will not exceed the aggregate amount
of Bank Board Severance Payments to be paid to such person as shown on
Schedule 5.14(b); (iii) such Current Non-Employee Bank Director who serves
as a director of the Surviving Subsidiary but not as a director of the
Holding Company after the Effective Date shall be entitled to receive all
Bank Board Severance Payments shown for such person on Schedule 5.14(b) if
he or she resigns from, is removed from or fails to be re-elected to the
Surviving Subsidiary Board through a period ending three years after the
Effective Date; (iv) at the expiration of that three-year period, the New
Bank Severance Agreement with such Current Non-Employee Bank Director shall
terminate if he or she continues to serve as a director of
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Surviving Subsidiary and he or she shall not be entitled to any Bank Board
Severance Payments whatsoever; and (v) such Current Non-Employee Bank
Director shall not be entitled to cancel his or her Bank Stock Options and
receive payments in connection therewith by reason of the occurrence of the
Merger, or otherwise, unless Xxxxxxx elects to have such Bank Stock Options
cancelled and cause payments to be made in connection therewith.
Notwithstanding anything to the contrary set forth in this Section 5.15(b),
in the event that any Current Non-Employee Bank Director shall no longer be
entitled to any Bank Board Severance Payments pursuant to clause (v) of
Section 5.14(b) above, such Current Non-Employee Bank Director shall not be
entitled to any Bank Board Severance Payments by virtue of any provision of
this Section 5.15(b).
Section 5.16 Management
(a) Xxxxxxx and Bank contemplate that, after the Effective Date (i)
Xxxxxx X. Xxxxx will continue to be the President and CEO of the Holding
Company, (ii) Xxxx X. Xxxxxxxx will continue to be the Chairman of the
Board of the Holding Company and (iii) Xxxxx X. Xxxxx will be an Executive
Vice President of the Holding Company.
(b) Before the Effective Time, the person who will serve as the CEO of
the Surviving Subsidiary after the Effective Date will be appointed with
the consent of both Xxxxxxx and Bank. Xxxxxxx and Bank contemplate that
Xxxxx X. Xxxxx will serve as Chairman of the Board of the Surviving
Subsidiary after the Effective Date in accordance with the terms and
conditions of his employment agreement with Bank.
Section 5.17 Appointment of Independent ESOP Trustee; Meeting of ESOP
Participants. Bank shall appoint an independent trustee of the ESOP (the "ESOP
Trustee") to take all actions necessary in accordance with applicable law and
the terms of the ESOP to convene a meeting of the ESOP participants to consider
the approval of this Agreement and the transactions contemplated hereby
(including the Merger and issuance of Xxxxxxx Common Stock to be issued in the
Merger), before the Bank Meeting. The ESOP Trustee shall vote any and all shares
of Bank Common Stock owned by the ESOP pursuant to the terms of the ESOP and
applicable law (including, without limitation, securities laws and applicable
provisions of ERISA, the Code and regulations promulgated thereunder).
ARTICLE VI
CLOSING CONDITIONS
Section 6.01 Conditions Precedent to Each Party's Obligation. The
respective obligation of each of Xxxxxxx and Bank to consummate the transactions
contemplated in this Agreement at the Closing is subject to the satisfaction of
all of the following conditions, any of which may be waived in writing by the
Party not responsible for satisfying the condition, or by both Parties if they
are both responsible for satisfying the condition:
(a) Shareholder Approvals. The Shareholder Approvals shall have been
obtained.
(b) Regulatory Approvals. The Regulator shall have approved the Merger
in accordance with applicable law. All consents, approvals, authorizations,
designations, declarations, filings and notices set forth on Schedules
4.01(b) and 4.02(b) shall have been obtained or made and shall remain in
full force and effect and all statutory waiting periods with respect
thereto shall have expired and no such approvals shall contain (i) any
conditions, restrictions or requirements which the Xxxxxxx Board or the
Bank Board reasonably determines would either before or after the Effective
Time have a Xxxxxxx Material Adverse Effect or a Bank Material Adverse
Effect or (ii) any conditions, restrictions or requirements that are not
customary and usual for approvals of such type and which the Xxxxxxx Board
or the Bank Board reasonably determines would either before or after the
Effective Time be unduly burdensome.
(c) No Injunction. No Governmental Authority of competent jurisdiction
shall have enacted, issued, promulgated, enforced or entered any statute,
rule, regulation, judgment, decree, injunction or
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other order (whether temporary, preliminary or permanent) which is in
effect and prohibits consummation of the Merger.
(d) Registration Statement. The Registration Statement shall have
become effective under the Securities Act and no stop order suspending the
effectiveness of the Registration Statement shall have been issued and no
proceedings for that purpose shall have been initiated or threatened by the
SEC.
(e) Blue Sky Approvals. All permits and other authorizations under
state securities laws necessary to consummate the transactions contemplated
hereby and to issue the shares of Xxxxxxx Common Stock to be issued in the
Merger shall have been received and be in full force and effect.
(f) Listing. The shares of Xxxxxxx Common Stock to be issued in the
Merger shall have been approved for listing on the NASDAQ National Market,
subject to official notice of issuance.
(g) Litigation. There shall not be any litigation, action, suit,
claim, proceeding, order, investigation or inquiry pending or threatened
before any court or quasi-judicial or administrative agency to, or pursuant
to which a judgment, order, decree, stipulation, injunction or charge could
be entered, which could enjoin or prevent the consummation of the Merger or
cause any of the transactions contemplated in this Agreement or the
Attendant Documents to be rescinded following consummation thereof.
(h) Surviving Subsidiary CEO. The Xxxxxxx Board and the Bank Board
shall have each approved the selection of, and compensation arrangement
for, the Surviving Subsidiary's CEO.
(i) No Change to Business Plan. There shall have been no material
change to the business plan of the Surviving Subsidiary previously approved
by the Xxxxxxx Board and the Bank Board, unless the Xxxxxxx Board and the
Bank Board approve such change before the Effective Time.
(j) The Holding Company Board and the Surviving Subsidiary Board shall
have been reconstituted as provided in Sections 5.14(a) and 5.15(a),
respectively. The persons identified on Schedules 5.14(a) and 5.15(a) and
Sections 5.16(a) and 5.16(b) shall have been appointed to the Holding
Company Board and the Surviving Subsidiary Board or to serve as an officer
of the Holding Company or the Surviving Subsidiary, as applicable, to serve
until their respective successors are duly elected and have qualified.
Section 6.02 Conditions Precedent to Bank's Obligation. The obligation of
Bank to consummate the transactions contemplated in this Agreement at the
Closing is subject to the satisfaction of all of the following conditions, any
of which may be waived in writing by Bank:
(a) Representations and Warranties. All representations and warranties
made by Xxxxxxx in this Agreement shall have been true and correct in all
material respects on the date of this Agreement and shall be true and
correct in all material respects as of the Effective Date with the same
force and effect as if they had been made on and as of such date.
(b) Performance of Obligations of Xxxxxxx. Xxxxxxx and its
Subsidiaries shall have performed in all material respects all obligations
required to be performed by them under this Agreement at or prior to the
Effective Time.
(c) Approvals. Xxxxxxx shall have obtained, performed or given all of
the consents, approvals, authorizations, designations, declarations,
filings and notices set forth on Schedule 4.02(b), in accordance with the
terms and conditions of this Agreement.
(d) Updating of Disclosure Schedules. From the date of this Agreement
until the Effective Time, Xxxxxxx shall have updated all of the Schedules
to this Agreement and shall have promptly notified Bank of any changes or
additions or events which may cause any material change or addition to any
such Schedules or in any representation or warranty made pursuant to
Section 4.02. Subject to the other provisions of this Section 6.02(d),
neither the immediately preceding sentence nor any notice by Xxxxxxx
pursuant to this Section 6.02(d) shall be deemed in any way to constitute a
waiver by Bank of the condition set forth in Section 6.02(a).
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(e) Termination. This Agreement shall not have been terminated
pursuant to Article VIII.
(f) Delivery of Closing Documents. Xxxxxxx shall have executed and
delivered, or caused to be executed and delivered, all of the documents
described in Section 7.03. All documents relating to the transactions
contemplated in this Agreement shall be reasonably satisfactory in form and
content to Bank and its legal counsel.
(g) Operation of Business and Material Adverse Effect. Xxxxxxx and its
Subsidiaries shall have continued to operate their businesses in the
ordinary course through the Effective Time. Since the date of this
Agreement, no change shall have occurred which could have a Xxxxxxx
Material Adverse Effect.
Section 6.03 Conditions to Xxxxxxx'x Obligation. The obligation of Xxxxxxx
to consummate the transactions contemplated in this Agreement at the Closing is
subject to the satisfaction of all of the following conditions, any of which may
be waived in writing by Xxxxxxx:
(a) Representations and Warranties. All representations and warranties
made by Bank in this Agreement shall have been true and correct in all
material respects on the date of this Agreement and shall be true and
correct in all material respects as of the Effective Date with the same
force and effect as if they had been made on and as of such date.
(b) Performance of Obligations of Bank. Bank shall have performed in
all material respects all obligations required to be performed by it under
this Agreement at or prior to the Effective Time.
(c) Approvals. Bank shall have obtained, performed or given all of the
consents, approvals, authorizations, designations, declarations, filings
and notices set forth on Schedule 4.01(b), in accordance with the terms and
conditions of this Agreement.
(d) Updating of Disclosure Schedules. From the date of this Agreement
until the Effective Time, Bank shall have updated all of the Schedules to
this Agreement and shall have promptly notified Xxxxxxx of any changes or
additions or events which may cause any material change or addition to any
such Schedules or in any representation or warranty made pursuant to
Section 4.01. Subject to the other provisions of this Section 6.03(d),
neither the immediately preceding sentence nor any notice by Bank pursuant
to this Section 6.03(d) shall be deemed in any way to constitute a waiver
by Xxxxxxx of the condition set forth in Section 6.03(a).
(e) Termination. This Agreement shall not have been terminated
pursuant to Article VIII.
(f) Delivery of Closing Documents. Bank shall have executed and
delivered, or caused to be executed and delivered, all of the documents
described in Section 7.02. All documents relating to the transactions
contemplated in this Agreement shall be reasonably satisfactory in form and
content to Xxxxxxx and its legal counsel.
(g) Operation of Business and Material Adverse Change. Bank and its
Subsidiaries shall have continued to operate their businesses in the
ordinary course through the Effective Time. Since the date of this
Agreement, no change shall have occurred which could have a Bank Material
Adverse Effect.
(h) Compensation Amendments. The New Holding Company Severance
Agreements and the New Bank Severance Agreements as contemplated by
Sections 5.14(b) and 5.15(b) shall have been executed and delivered by the
applicable Current Non-Employee Bank Directors.
(i) ESOP Compliance. The ESOP Trustee shall have complied with all
provisions of the Governing Documents of the ESOP and all provisions of
applicable law necessary for the consummation of the transactions
contemplated by this Agreement.
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ARTICLE VII
CLOSING
Section 7.01 Closing. The closing (the "Closing") of the transactions
contemplated in this Agreement shall take place as soon as reasonably possible
following execution of the Agreement and the satisfaction of each of the
conditions precedent set forth in Article VI; provided, however, that in no
event shall the Closing take place after the Walk Away Date. The Parties shall
mutually agree on the date of the Closing consistent with the immediately
preceding sentence. As used in this Agreement, the "Effective Date" means the
date on which the Closing actually occurs and "Effective Time" means the time on
the Effective Date when the Merger becomes effective. The Closing shall take
place at the offices of Xxxxxxx'x counsel, Jaffe, Raitt, Heuer & Xxxxx,
Professional Corporation, Xxx Xxxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxxx, or
at such other location and in such other manner as the Parties may mutually
agree.
Section 7.02 Deliveries at Closing by Bank. At the Closing, Bank shall
properly execute (if necessary) and deliver to Xxxxxxx, or cause to be executed
and delivered to Xxxxxxx, the following:
(a) An opinion of Xxxxxx, Xxxxxxx & Xxxxxxx LLP, counsel to Bank,
addressed to Xxxxxxx, in form and substance reasonably satisfactory to
Xxxxxxx and its counsel to the effect that, among other things: (i) the
Merger will qualify as a tax-free "reorganization" under Section 368(a) of
the Internal Revenue Code, (ii) no gain or loss will be recognized by Bank
or Xxxxxxx by reason of the Merger, (iii) no gain or loss will be
recognized by any shareholder of Bank upon the exchange of Bank Common
Stock solely for Xxxxxxx Common Stock in the Merger, (iv) the basis of the
Xxxxxxx Common Stock received by each Bank shareholder who exchanges Bank
Common Stock for Xxxxxxx Common Stock in the Merger will be the same as the
shareholder's basis in the Bank Common Stock surrendered in exchange
therefor (subject to any adjustments required as the results of receipt of
cash in lieu of a fractional share of Xxxxxxx Common Stock), (v) the
holding period of the Xxxxxxx Common Stock received by each Bank
shareholder in the Merger will include the holding period of the Bank
Common Stock surrendered in exchange therefor, provided that such shares of
Bank Common Stock were held as a capital asset by such shareholder at the
Effective Time, (vi) cash received by each Bank shareholder in lieu of a
fractional share interest of Xxxxxxx Common Stock as part of the Merger
will be treated as having been received as a distribution in full payment
in exchange for the fractional share interest of Xxxxxxx Common Stock which
such shareholder would otherwise be entitled to receive and will qualify as
capital gain or loss (assuming the Bank Common Stock was a capital asset in
such shareholder's hands at the Effective Time), and (vii) Franklin Finance
qualifies as a real estate investment trust under the Code.
(b) A copy of each of Bank's Governing Documents, certified when
applicable by the OCC, and a Certificate of Good Standing (or analogous
document) for Bank issued by every state in which it is authorized to do
business. All such documents shall be dated not earlier than 30 days prior
to the Effective Date.
(c) The resignations of each officer and director of Bank and its
Subsidiaries other than those who, with Xxxxxxx'x and Bank's consent,
desire to remain as officers or directors of the Surviving Subsidiary and
its Subsidiaries.
(d) Bank's Certificates.
(i) A "Closing Certificate", executed by an officer of Bank, to the
effect that (A) all of the representations and warranties made by Bank
in this Agreement are true and correct in all material respects on the
Effective Date with the same force and effect as though made on and as
of the Effective Date, (B) Bank has performed and complied in all
material respects with all of its obligations under this Agreement which
are to have been performed or complied with on or before the Effective
Date, (C) since the date of this Agreement, Bank and its Subsidiaries
have operated their businesses only in the ordinary course, and (D)
there has been no Bank Material Adverse Effect from the date of this
Agreement to the Effective Date.
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(ii) A "Secretary's Certificate", executed by the Secretary or
Assistant Secretary of Bank, attaching a copy of Bank's Governing
Documents and copies of the resolutions of the Bank Board and the Bank's
shareholders approving the transactions contemplated in this Agreement.
The officer executing such certificate shall certify that, as of the
Effective Date, such Governing Documents and resolutions are true,
complete and correct, have not been altered or repealed and are in full
force and effect.
(e) Such other documents and instruments as are contemplated in this
Agreement (or as the Parties have contemplated in connection with this
Agreement) or as Xxxxxxx or its counsel may reasonably request in order to
evidence or consummate the transactions contemplated in this Agreement or
to effectuate the purpose or intent of this Agreement.
Section 7.03 Deliveries at Closing by Xxxxxxx. At the Closing, Xxxxxxx
shall properly execute (if necessary) and deliver to Bank, or cause to be
executed and delivered to Bank, the following:
(a) An opinion of Jaffe, Raitt, Heuer & Xxxxx, Professional
Corporation, counsel to Xxxxxxx and Merger Sub, addressed to Bank, in form
and substance reasonably satisfactory to Bank and its counsel to the effect
that, among other things: (i) the Merger will qualify as a tax-free
"reorganization" under Section 368(a) of the Internal Revenue Code, (ii) no
gain or loss will be recognized by Bank or Xxxxxxx by reason of the Merger,
(iii) no gain or loss will be recognized by any shareholder of Bank upon
the exchange of Bank Common Stock solely for Xxxxxxx Common Stock in the
Merger, (iv) the basis of the Xxxxxxx Common Stock received by each Bank
shareholder who exchanges Bank Common Stock for Xxxxxxx Common Stock in the
Merger will be the same as the shareholder's basis in the Bank Common Stock
surrendered in exchange therefor (subject to any adjustments required as
the results of receipt of cash in lieu of a fractional share of Xxxxxxx
Common Stock), (v) the holding period of the Xxxxxxx Common Stock received
by each Bank shareholder in the Merger will include the holding period of
the Bank Common Stock surrendered in exchange therefor, provided that such
shares of Bank Common Stock were held as a capital asset by such
shareholder at the Effective Time, and (vi) cash received by each Bank
shareholder in lieu of a fractional share interest of Xxxxxxx Common Stock
as part of the Merger will be treated as having been received as a
distribution in full payment in exchange for the fractional share interest
of Xxxxxxx Common Stock which such shareholder would otherwise be entitled
to receive and will qualify as capital gain or loss (assuming the Bank
Common Stock was a capital asset in such shareholder's hands at the
Effective Time) and (vii) Franklin Finance qualifies as a real estate
investment trust under the Code.
(b) The Merger Consideration to the Exchange Agent.
(c) A copy of Xxxxxxx'x articles of incorporation, certified by the
Michigan Department of Consumer and Industry Services, a copy of Merger
Sub's Governing Documents, certified, when applicable, by the appropriate
Governmental Authority and a Certificate of Good Standing (or analogous
document) for Xxxxxxx and Merger Sub issued by every state in which each is
authorized to do business. All such documents shall be dated not earlier
than 30 days prior to the Effective Date.
(d) Xxxxxxx'x Certificates.
(i) A "Closing Certificate", executed by an officer of Xxxxxxx, to
the effect that (A) all of the representations and warranties made by
Xxxxxxx in this Agreement are true and correct in all material respects
on the Effective Date with the same force and effect as though made on
and as of the Effective Date, (B) Xxxxxxx has performed and complied in
all material respects with all of its obligations under this Agreement
which are to have been performed or complied with on or before the
Effective Date, (C) since the date of this Agreement, Xxxxxxx and its
Subsidiaries have operated their businesses only in the ordinary course,
and (D) there has been no Xxxxxxx Material Adverse Effect from the date
of this Agreement to the Effective Date.
(ii) "Secretary's Certificates", executed by the Secretary or
Assistant Secretary of each of Xxxxxxx and Merger Sub, attaching a copy
of the Governing Documents of such company and,
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in the case of Xxxxxxx, a copy of the resolutions of the Xxxxxxx Board
approving the transactions contemplated in this Agreement and a copy of
the resolutions of Xxxxxxx'x shareholders approving the issuance of
Xxxxxxx Common Stock to be issued in the Merger, and, in the case of
Merger Sub, a copy of the resolutions of its board of directors and
shareholders approving the transactions contemplated in this Agreement.
The officer executing each such certificate shall certify that, as of
the Effective Date, such Governing Documents and resolutions are true,
complete and correct, have not be altered or repealed and are in full
force and effect.
(e) Such other documents and instruments as are contemplated in this
Agreement (or as the Parties have contemplated in connection with this
Agreement) or as Bank or its counsel may reasonably request in order to
evidence or consummate the transactions contemplated in this Agreement or
to effectuate the purpose or intent of this Agreement.
ARTICLE VIII
TERMINATION
Section 8.01 Termination. This Agreement may be terminated:
(a) at any time before the Effective Time by the mutual consent of the
Parties;
(b) at any time before the Effective Time by Bank (i) if any of the
conditions set forth in Sections 6.01 or 6.02 have not been fulfilled,
satisfied or waived by the Walk Away Date, or (ii) if Xxxxxxx materially
breaches any representation, warranty, covenant or agreement set forth in
this Agreement;
(c) at any time before the Effective Time by Xxxxxxx (i) if any of the
conditions set forth in Sections 6.01 or 6.03 have not been fulfilled,
satisfied or waived by the Walk Away Date, or (ii) if Bank materially
breaches any representation, warranty, covenant or agreement set forth in
this Agreement;
(d) by Bank or by Xxxxxxx, if such Party's board of directors so
determines by a vote of a majority of the members of its entire board, in
the event (i) the approval of any Governmental Authority required for
consummation of the Merger shall have been denied by final nonappealable
action of such Governmental Authority or (ii) any shareholder approval
required by Section 5.04 is not obtained at the Bank Meeting or the Xxxxxxx
Meeting;
(e) at any time prior to the Bank Meeting, by Xxxxxxx if the Bank
Board shall have failed to recommend adoption of this Agreement to the Bank
shareholders, withdrawn such recommendation or modified or changed such
recommendation in a manner adverse in any respect to the interests of
Xxxxxxx;
(f) at any time prior to the Xxxxxxx Meeting, by Bank, if the Xxxxxxx
Board shall have failed to recommend to the Xxxxxxx shareholders approval
of the issuance of Xxxxxxx Common Stock to be issued pursuant to the
Merger, withdrawn such recommendation or modified or changed such
recommendation in a manner adverse in any respect to the interests of Bank;
(g) by Bank, if, for any 20-consecutive-trading-day period between the
date of this Agreement and the date the Shareholders of the Bank approve
the Merger, the price of Xxxxxxx'x stock does not trade or close at or
above $8.00 per share; or
(h) no later than the close of business seven days after the 1999 Work
Papers are delivered or made available (with such availability being
confirmed by written notice to Xxxxxx X. Xxxxx) to Xxxxxxx and its
auditors, by Xxxxxxx, if Xxxxxxx reasonably determines that the 1999 Work
Papers do not support any information set forth in the 1999 Financial
Statements; provided, however, such determination cannot be based on
methodology, if such methodology was used in the preparation of prior
audited statements of the Bank.
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Section 8.02 Effect of Termination. If terminated in accordance with
Section 8.01, this Agreement shall be null and void and have no further force or
effect, except as provided in Section 9.13.
ARTICLE IX
MISCELLANEOUS
Section 9.01 Expenses. Except as provided in Section 5.08 and this Section
9.01, and the next sentence, regardless of whether the closing actually occurs,
each Party will bear the expenses incurred by it in connection with the
preparation and negotiation of this Agreement and the Attendant Documents and
the consummation of the transactions contemplated in this Agreement and the
Attendant Documents. Notwithstanding the foregoing, Bank and Xxxxxxx shall share
equally (a) all printing expenses and filing fees related to the Proxy Statement
and the Registration Statement, (b) all filing fees payable to Regulatory
Authorities in connection with the Merger, and (c) all Xxxx-Xxxxx-Xxxxxx fees
incurred by the Parties in connection with the Merger, (d) all costs, expenses
and fees of proxy solicitors incurred under Section 5.06, and (e) all other
costs and expenses incurred by any Party in connection with a collaborative
effort among the Parties (other than fees of legal counsel and accountants), the
purpose of which is to effectuate the Merger. Further, while Xxxxxxx shall be
responsible for paying the compensation of the Surviving Subsidiary's CEO during
the time from his or her retention to the Effective Date, if for any reason,
this Agreement is terminated and the Merger shall not be consummated, the Bank
shall reimburse Xxxxxxx for one-half of all compensation paid to such CEO.
Section 9.02 Dispute Resolution. Any and all disputes between the Parties
arising out of any provision of this Agreement shall be resolved in accordance
with the procedure set forth in this Section 9.02; provided, however, that a
Party may seek a preliminary injunction or other provisional judicial relief if,
in its judgment, such action is necessary to avoid irreparable damage or to
preserve the status quo. Despite any such action, the Parties will continue to
participate in good faith in the procedures set forth in this Section 9.02. The
Parties shall submit all disputes under this Agreement or any of the Attendant
Documents to arbitration. Such arbitration shall be conducted in accordance with
the rules of the American Arbitration Association by one arbitrator. Xxxxxxx
shall appoint one arbitrator and Bank shall appoint one arbitrator, who shall
mutually select a third arbitrator to conduct the arbitration. The arbitration
shall be governed by the United States Arbitration Act, 9 U.S.C., Sections
1 -- 16, and judgment on the award rendered by the arbitrators may be entered by
any court having jurisdiction thereof. The place of the arbitration shall be the
metropolitan Detroit area. The arbitrators shall make written findings of fact
and conclusions of law, and the decision of the arbitrators shall be final. Each
Party shall pay its own expenses of arbitration and the expense of the
arbitrators shall be equally shared; provided, however, that if in the opinion
of the arbitrators any claim under this Agreement or any defense in objection
thereto was unreasonable, the arbitrators may assess, as part of their award,
all or any part of the arbitration expenses (including reasonable attorney's
fees) of the other Party and of the arbitrators against the Party raising such
unreasonable claim, defense or objection. The Parties agree that discovery shall
be permitted as authorized in the Michigan Court Rules of 1985, as amended.
Section 9.03 Notices. All notices, requests and other communications under
this Agreement to a Party shall be in writing and shall be deemed given if
personally delivered, telecopied (with confirmation) or mailed by registered or
certified mail (return receipt requested) to the Party at its address set forth
below or such other address as it may specify by notice to the other Parties.
If to Bank, to: With a required copy to:
Franklin Bank, X.X. Xxxxxx, Xxxxxxx & Xxxxxxx LLP
00000 X. 00 Xxxx Xx. 34th Floor, 000 Xxxxxxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000 Xxxxxxx, XX 00000
Attention: Xxxxx Xxxxx Attention: Xxxxxxxx X. Xxxxxx
Fax: 000-000-0000 Fax: 000-000-0000
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If to Xxxxxxx, to: With required copies to:
Xxxxxxx Financial Services Jaffe, Raitt, Heuer & Xxxxx,
Corporation Professional Corporation
000 X. Xxxxx Xxxxxx, Xxxxx 000 Xxx Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxx, Xxxxxxxx 00000 Xxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxx Attn: Xxxxx Sugar
Fax: 000-000-0000 Fax: 000-000-0000
Section 9.04 Construction. This Agreement shall be construed and enforced
in accordance with the laws of the State of Michigan without regard to its
conflicts of law principles. 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. The headings contained in this Agreement are
for reference purposes only and are not part of this Agreement. References in
this Agreement to Sections, Exhibits or Schedules shall be to a Section of, or
Exhibit or Schedule to, this Agreement unless otherwise indicated. Whenever the
words "include", "includes" or "including" are used in this Agreement, they
shall be deemed to be followed by the words "without limitation".
Section 9.05 No Assignment; Benefit. No Party may assign its rights and
obligations under this Agreement without the prior written consent of the other
Parties. This Agreement shall be binding on and inure to the benefit of the
Parties and their respective successors and permitted assigns.
Section 9.06 Entire Agreement. This Agreement, including the Exhibits and
the Schedules attached or to be attached to it, is and shall be deemed to be the
complete and final expression of the agreement between the Parties as to the
matters contained in and related to this Agreement and supersedes any previous
agreements between the Parties pertaining to such matters.
Section 9.07 Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original and all of which together shall be
considered one and the same agreement. Photostatic or facsimile reproductions of
this Agreement may be made and relied upon to the same extent as originals.
Section 9.08 Waiver. Before the Effective Time, any provision of this
Agreement may be (i) waived in writing by the Party benefited by the provision.
The waiver by any Party of any breach of any provision of this Agreement shall
not operate or be construed as a waiver of any subsequent or similar breach.
Section 9.09 Amendment. This Agreement may only be amended by written
agreement executed by all of the Parties, except that after the Bank Meeting,
the consideration to be received by the Bank shareholders for each share of Bank
Common Stock shall not thereby be decreased.
Section 9.10 Brokerage or Finder's Fee. Any and all brokerage fees due and
payable to any broker, finder, agent or similar intermediary in connection with
this Agreement or the transactions contemplated hereby, including but not
limited to the fee payable to Xxxxxxx Xxxxx by Bank as described in Section
4.01(z) and the fee payable to Xxxxx Xxxxxxxx by Xxxxxxx as described in Section
4.02(z), shall be borne by the Party responsible for retaining, or claimed to be
responsible for retaining, such broker, finder, agent or similar intermediary.
Section 9.11 Confidentiality. The Parties agree to keep in strict
confidence the fact of and the content of the negotiations and the agreements
concerning the transactions contemplated in this Agreement until such time as
the Parties agree on a joint public announcement or consent, in writing, to the
other Party's proposed public announcement, which consent shall not be
unreasonably withheld, conditioned or delayed. Each of the Parties agrees that
it will not, and will cause its Representatives not to, use any information
obtained pursuant to this Agreement (as well as any other information obtained
before the date of this Agreement in connection with the entering into of this
Agreement) for any purpose unrelated to the consummation of the transactions
contemplated by this Agreement. Each Party will keep confidential, and will
cause its Representatives to keep confidential, all information and documents
obtained pursuant to this Agreement (as well as any other information obtained
before the date of this Agreement in connection with the entering into of this
Agreement) unless such information (i) was
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already known to such Party, (ii) becomes available to such Party from other
sources not known by such Party to be bound by a confidentiality obligation,
(iii) is disclosed with the prior written approval of the Party to which such
information pertains, (iv) is or becomes readily ascertainable from published
information or trade sources or (v) is required to be disclosed by law or
regulation, as determined in good faith by the Party making the disclosure,
provided the disclosing Party advises the other Parties in writing prior to
making the disclosure. If this Agreement is terminated or the transactions
contemplated by this Agreement are otherwise not consummated, each Party shall
promptly cause all copies of documents, extracts thereof or notes, analyses,
compilations, studies or other documents containing information and data as to
another Party to be returned to the Party that furnished the same.
Section 9.12 No Third Party Beneficiaries. Except for Sections 5.12, 5.14,
5.15, 5.16, and 9.14, the rights and obligations of the Parties under this
Agreement are for the benefit of the Parties only, and neither any creditor of
any of the Parties nor any other person or entity (other than a successor in
interest to any of the Parties), shall have the right to rely on or enforce the
provisions of this Agreement as a third-party beneficiary or otherwise.
Section 9.13 Survival. No representations, warranties, agreements and
covenants contained in this Agreement shall survive beyond the Effective Time
(other than the agreements and covenants contained in Sections 3.03, 3.04(b),
3.04(c), 3.04(d), 3.04(e), 3.06(b), 5.05, 5.14, 5.15 and 5.16 and this Article
IX) or the termination of this Agreement if this Agreement is terminated prior
to the Effective Time (other than Sections 5.08(b) and (c), and this Article
IX).
Section 9.14 Indemnification.
(a) For a period of six years from and after the Effective Time, the
Surviving Subsidiary will take no action which would diminish the right of
any officer or director of the Bank or any of its Subsidiaries who shall
have served in such capacity prior to the Effective Time from being
indemnified in accordance with the provisions of the Bank's or the Bank's
Subsidiaries Governing Documents in effect prior to the Effective Time from
and against any losses, claims, damages, costs, expenses (including
reasonable attorney fees), liabilities or judgments arising, in whole or in
part, out of the fact that such person was a director or officer of the
Bank or a Subsidiary of the Bank prior to the Effective Time, and
pertaining to any matter or fact arising, existing or occurring before the
Effective Time.
(b) For a period of six years from and after the Effective Date, the
Surviving Subsidiary, to the extent commercially available and reasonable,
shall maintain directors and officers liability insurance comparable to
that which is maintained by the Bank immediately prior to the Effective
Date covering the liability described in Section 9.14(a) above. Directors
and officers liability insurance shall be deemed to be available on a
commercially reasonable basis at any time, if, at such time, such insurance
is obtainable at rates comparable to the rates then being paid for
directors and officers liability insurance then covering either the
directors of the Holding Company or the Surviving Subsidiary.
(c) Xxxxxxx agrees that after the Merger those persons designated by
the Bank to serve on the Holding Company Board or the Surviving Subsidiary
Board will be afforded the same protection against claims and liability
arising from such service, through indemnification agreements, insurance or
otherwise, as is afforded to those persons designated by Xxxxxxx to serve
on the Holding Company Board or the Surviving Subsidiary Board,
respectively.
(d) The obligations of the Surviving Subsidiary under this Section
9.14 are intended to be enforceable against the Surviving Subsidiary and
shall be binding on all respective successors and permitted assigns of the
Surviving Subsidiary.
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The Parties have executed this Agreement and Plan of Merger as of the day
and year first written above.
Xxxxxxx Financial Services Corporation
By: /s/ XXXXXX X. XXXXX
------------------------------------
Its: Chief Executive Officer
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Franklin Bank, N.A.
By: /s/ XXXXX X. XXXXX
------------------------------------
Its: Chairman
------------------------------------
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