Exhibit 2.1
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
by and between
NORTH FORK BANCORPORATION, INC.
and
CAPITAL ONE FINANCIAL CORPORATION
---------------------
DATED AS OF MARCH 12, 2006
TABLE OF CONTENTS
PAGE
ARTICLE I
THE MERGER
1.1 The Merger...........................................................1
1.2 Effective Time.......................................................2
1.3 Effects of the Merger................................................2
1.4 Conversion of North Fork Common Stock................................2
1.5 Proration............................................................4
1.6 Stock Options and Other Stock-Based Awards...........................5
1.7 Certificate of Incorporation of Capital One..........................7
1.8 Bylaws of Capital One................................................7
1.9 Tax Consequences.....................................................7
ARTICLE II
DELIVERY OF MERGER CONSIDERATION
2.1 Election Procedures..................................................7
2.2 Deposit of Merger Consideration......................................9
2.3 Delivery of Merger Consideration.....................................9
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF NORTH FORK
3.1 Corporate Organization..............................................12
3.2 Capitalization......................................................13
3.3 Authority; No Violation.............................................14
3.4 Consents and Approvals..............................................15
3.5 Reports; Regulatory Matters.........................................15
3.6 Financial Statements................................................17
3.7 Broker's Fees.......................................................18
3.8 Absence of Certain Changes or Events................................18
3.9 Legal Proceedings...................................................19
3.10 Taxes and Tax Returns...............................................20
3.11 Employee Matters....................................................21
3.12 Compliance with Applicable Law......................................23
3.13 Certain Contracts...................................................23
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TABLE OF CONTENTS
(continued)
PAGE
3.14 Risk Management Instruments.........................................24
3.15 Investment Securities and Commodities...............................24
3.16 Loan Portfolio......................................................25
3.17 Property............................................................26
3.18 Intellectual Property...............................................27
3.19 Environmental Liability.............................................27
3.20 Investment Adviser Subsidiaries; Funds; Clients.....................28
3.21 Broker-Dealer Subsidiaries..........................................29
3.22 State Takeover Laws.................................................30
3.23 Reorganization; Approvals...........................................30
3.24 Opinions............................................................30
3.25 North Fork Information..............................................30
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF CAPITAL ONE
4.1 Corporate Organization..............................................31
4.2 Capitalization......................................................31
4.3 Authority; No Violation.............................................32
4.4 Consents and Approvals..............................................33
4.5 Reports; Regulatory Matters.........................................33
4.6 Financial Statements................................................35
4.7 Broker's Fees.......................................................36
4.8 Absence of Certain Changes or Events................................36
4.9 Legal Proceedings...................................................36
4.10 Taxes and Tax Returns...............................................37
4.11 Compliance with Applicable Law......................................37
4.12 Intellectual Property...............................................37
4.13 Certain Contracts...................................................38
4.14 Risk Management Instruments.........................................38
4.15 Investment Securities and Commodities...............................39
4.16 Property............................................................39
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TABLE OF CONTENTS
(continued)
PAGE
4.17 Environmental Liability.............................................39
4.18 Reorganization; Approvals...........................................40
4.19 Opinion.............................................................40
4.20 Capital One Information.............................................40
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
5.1 Conduct of Businesses Prior to the Effective Time...................40
5.2 North Fork Forbearances.............................................40
5.3 Capital One Forbearances............................................43
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 Regulatory Matters..................................................43
6.2 Access to Information...............................................44
6.3 Stockholder Approvals...............................................45
6.4 Affiliates..........................................................45
6.5 NYSE Listing........................................................45
6.6 Employee Matters....................................................45
6.7 Indemnification; Directors' and Officers' Insurance.................46
6.8 Additional Agreements...............................................48
6.9 Advice of Changes...................................................48
6.10 Exemption from Liability Under Section 16(b)........................48
6.11 No Solicitation.....................................................48
6.12 Directorships.......................................................50
6.13 Restructuring Efforts...............................................50
ARTICLE VII
CONDITIONS PRECEDENT
7.1 Conditions to Each Party's Obligation To Effect the Merger..........50
7.2 Conditions to Obligations of Capital One............................51
7.3 Conditions to Obligations of North Fork.............................52
ARTICLE VIII
TERMINATION AND AMENDMENT
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TABLE OF CONTENTS
(continued)
PAGE
8.1 Termination.........................................................52
8.2 Effect of Termination...............................................54
8.3 Fees and Expenses...................................................54
8.4 Amendment...........................................................54
8.5 Extension; Waiver...................................................54
ARTICLE IX
GENERAL PROVISIONS
9.1 Closing.............................................................54
9.2 Standard............................................................55
9.3 Nonsurvival of Representations, Warranties and Agreements...........55
9.4 Notices.............................................................55
9.5 Interpretation......................................................56
9.6 Counterparts........................................................56
9.7 Entire Agreement....................................................56
9.8 Governing Law; Jurisdiction.........................................57
9.9 Publicity...........................................................57
9.10 Assignment; Third Party Beneficiaries...............................57
Exhibit A - North Fork Option Agreement
Exhibit B - Capital One Option Agreement
Exhibit C - Form of Affiliate Letter
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INDEX OF DEFINED TERMS
SECTION
2005 10-K...................................................... 3.5(c)
Adjusted Option................................................ 1.6(a)
Agency (Agencies).............................................. 3.16(d)
Agreement...................................................... Preamble
BHC Act........................................................ 3.1(b)
Broker-Dealer Subsidiary....................................... 3.21(a)
Capital One.................................................... Preamble
Capital One By-laws............................................ 4.1(a)
Capital One Capitalization Date................................ 4.2(a)
Capital One Certificate........................................ 4.1(a)
Capital One Closing Price...................................... 1.4(c)
Capital One Common Stock....................................... 1.4(a)
Capital One Contract........................................... 4.13(a)
Capital One Disclosure Schedule................................ Art. IV
Capital One Leased Properties.................................. 4.16
Capital One Option Agreement................................... Recitals
Capital One Owned Properties................................... 4.16
Capital One Preferred Stock.................................... 4.2(a)
Capital One Real Property...................................... 4.16
Capital One Regulatory Agreement............................... 4.5(b)
Capital One Requisite Regulatory Approvals..................... 7.2(d)
Capital One Restricted Share Right............................. 1.6(b)
Capital One SEC Reports........................................ 4.5(c)
Capital One Share Unit......................................... 1.6(c)
Capital One Stock Plans........................................ 4.2(a)
Capital One Subsidiary......................................... 3.1(c)
Cash Component................................................. 1.4(c)
Cash Consideration............................................. 1.4(c)(i)
Cash Conversion Number......................................... 1.5(a)
Cash Election.................................................. 1.4(c)(i)
Cash Election Number........................................... 1.5(b)(i)
Cash Election Shares........................................... 1.4(c)(i)
Certificate.................................................... 1.4(d)
Certificate of Merger.......................................... 1.2
Claim.......................................................... 6.7(a)
Closing........................................................ 9.1
Closing Date................................................... 9.1
Code........................................................... Recitals
Confidentiality Agreement...................................... 6.2(b)
Covered Employees.............................................. 6.6(a)
Derivative Transactions........................................ 3.14(a)
DGCL........................................................... 1.1(a)
Dissenting Shares.............................................. 1.4(f)
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DPC Common Shares.............................................. 1.4(b)
Draft 10-K..................................................... 3.5(c)
Effective Time................................................. 1.2
Election....................................................... 2.1(a)
Election Deadline.............................................. 2.1(d)
ERISA.......................................................... 3.11(a)
Exchange Act................................................... 3.5(c)
Exchange Agent................................................. 2.1(d)
Exchange Agent Agreement....................................... 2.1(d)
Exchange Fund.................................................. 2.2
Exchange Ratio................................................. 1.4(c)
FDIC........................................................... 3.1(d)
Federal Reserve Board.......................................... 3.4
Form ADV....................................................... 3.20(f)
Form BD........................................................ 3.21(b)
Form of Election............................................... 2.1(b)
Form S-4....................................................... 3.4
GAAP........................................................... 3.1(c)
Governmental Entity............................................ 3.4
Holder......................................................... 2.1
HSR Act........................................................ 3.4
Indemnified Parties............................................ 6.7(a)
Injunction..................................................... 7.1(d)
Insurance Amount............................................... 6.7(c)
Intellectual Property.......................................... 3.18
Investment Advisers Act........................................ 3.20(a)
Investment Company Act......................................... 3.20(a)
IRS............................................................ 3.10(a)
Joint Proxy Statement.......................................... 3.4
Letter of Transmittal.......................................... 2.3(a)
Liens.......................................................... 3.2(b)
Loans.......................................................... 3.16(a)
Material Adverse Effect........................................ 3.8(a)
Materially Burdensome Regulatory Condition..................... 6.1(b)
Merger......................................................... Recitals
Merger Consideration........................................... 1.4(c)
Non-Election Shares............................................ 1.4(c)(iii)
North Fork..................................................... Preamble
North Fork Advisory Client..................................... 3.20(a)
North Fork Advisory Contract................................... 3.20(a)
North Fork Advisory Entity..................................... 3.20(a)
North Fork Alternative Proposal................................ 6.11(a)
North Fork Alternative Transaction............................. 6.11(a)
North Fork Benefit Plans....................................... 3.11(a)
North Fork By-laws............................................. 3.1(b)
North Fork Capitalization Date................................. 3.2(a)
North Fork Certificate......................................... 3.1(b)
vi
North Fork Common Stock........................................ 1.4(b)
North Fork Contract............................................ 3.13(a)
North Fork Criticized Assets................................... 3.14(c)
North Fork Deferred Shares..................................... 1.6(c)
North Fork Disclosure Schedule................................. Art. III
North Fork Fund Client......................................... 3.20(a)
North Fork Leased Properties................................... 3.17
North Fork Option Agreement.................................... Recitals
North Fork Options............................................. 1.6(a)
North Fork Owned Properties.................................... 3.17
North Fork Preferred Stock..................................... 3.2(a)
North Fork Real Property....................................... 3.17
North Fork Regulatory Agreement................................ 3.5(b)
North Fork Requisite Regulatory Approvals...................... 7.3(d)
North Fork Restricted Shares................................... 1.6(b)
North Fork SEC Reports......................................... 3.5(c)
North Fork Stock Plans......................................... 1.6(a)
North Fork Subsidiary.......................................... 3.1(c)
NYSBD.......................................................... 3.4
NYSE........................................................... 1.4(c)
Option Agreements.............................................. Recitals
Other Regulatory Approvals..................................... 3.4
Performance Plan............................................... 3.11(h)
Permitted Encumbrances......................................... 3.17
Per Share Amount............................................... 1.4(c)
Policies, Practices and Procedures............................. 3.15(b)
Pool........................................................... 3.16(g)
Regulatory Agencies............................................ 3.5(a)
▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act............................................. 3.5(c)
SBA............................................................ 3.4
SEC............................................................ 3.4
Securities Act................................................. 3.2(a)
Shortfall Number............................................... 1.5(b)(ii)
Sponsored...................................................... 3.20(a)
SRO............................................................ 3.4
Stock Consideration............................................ 1.4(c)(ii)
Stock Election................................................. 1.4(c)(ii)
Stock Election Shares.......................................... 1.4(c)(ii)
Subsidiary..................................................... 3.1(c)
Surviving Corporation.......................................... Recitals
Takeover Statutes.............................................. 3.22
Tax(es)........................................................ 3.10(b)
Tax Return..................................................... 3.10(c)
Trust Account Common Shares.................................... 1.4(b)
Voting Debt.................................................... 3.2(a)
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of March 12, 2006 (this
"AGREEMENT"), by and between NORTH FORK BANCORPORATION, INC., a Delaware
corporation ("NORTH FORK"), and CAPITAL ONE FINANCIAL CORPORATION, a Delaware
corporation ("CAPITAL ONE").
W I T N E S S E T H:
WHEREAS, the Boards of Directors of North Fork and Capital One have
determined that it is in the best interests of their respective companies and
their stockholders to consummate the strategic business combination transaction
provided for in this Agreement in which North Fork will, on the terms and
subject to the conditions set forth in this Agreement, merge with and into
Capital One (the "MERGER"), so that Capital One is the surviving corporation in
the Merger (sometimes referred to in such capacity as the "SURVIVING
CORPORATION"); and
WHEREAS, for federal income Tax purposes, it is intended that the
Merger shall qualify as a reorganization under the provisions of Section 368(a)
of the Internal Revenue Code of 1986, as amended (the "CODE"), and this
Agreement is intended to be and is adopted as a "plan of reorganization" for
purposes of Sections 354 and 361 of the Code; and
WHEREAS, as an inducement and condition to the entrance of Capital
One into this Agreement, North Fork is granting to Capital One an option
pursuant to a stock option agreement in the form set forth in Exhibit A (the
"NORTH FORK OPTION AGREEMENT"); and
WHEREAS, as an inducement and condition to the entrance of North Fork
into this Agreement, Capital One is granting to North Fork an option pursuant to
a stock option agreement in the form set forth in Exhibit B (the "CAPITAL ONE
OPTION AGREEMENT" and, together with the North Fork Option Agreement, the
"OPTION AGREEMENTS"); and
WHEREAS, the parties desire to make certain representations,
warranties and agreements in connection with the Merger and also to prescribe
certain conditions to the Merger.
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements contained in this Agreement, and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, and intending to be legally bound hereby, the parties agree
as follows:
ARTICLE I
THE MERGER
1.1 THE MERGER. (a) Subject to the terms and conditions of this Agreement, in
accordance with the Delaware General Corporation Law (the "DGCL"), at the
Effective Time, North Fork shall merge with and into Capital One. Capital One
shall be the Surviving Corporation in the Merger, and shall continue its
corporate existence under the laws of the State of Delaware. As of the Effective
Time, the separate corporate existence of North Fork shall cease.
1
(b) Capital One may at any time change the method of effecting the
combination (including by providing for the merger of North Fork and a wholly
owned subsidiary of Capital One) if and to the extent requested by Capital One
and consented to by North Fork (such consent not to be unreasonably withheld);
PROVIDED, HOWEVER, that no such change shall (i) alter or change the amount or
kind of the Merger Consideration provided for in this Agreement, (ii) adversely
affect the Tax treatment of the Merger with respect to North Fork's stockholders
or (iii) materially impede or delay consummation of the transactions
contemplated by this Agreement.
1.2 EFFECTIVE TIME. The Merger shall become effective as set forth in the
certificate of merger (the "CERTIFICATE OF MERGER") that shall be filed with the
Secretary of State of the State of Delaware on the Closing Date. The term
"EFFECTIVE TIME" shall be the date and time when the Merger becomes effective as
set forth in the Certificate of Merger, which, if the Closing Date is September
29, 2006 or October 31, 2006, shall be 12:01 a.m. on the first day of the month
immediately following the Closing Date.
1.3 EFFECTS OF THE MERGER. At and after the Effective Time, the Merger shall
have the effects set forth in Section 259 of the DGCL.
1.4 CONVERSION OF NORTH FORK COMMON STOCK. At the Effective Time, by virtue of
the Merger and without any action on the part of Capital One, North Fork or the
holder of any of the following securities:
(a) Each share of common stock, par value $0.01 per share, of Capital
One (the "CAPITAL ONE COMMON STOCK") issued and outstanding immediately prior to
the Effective Time shall remain issued and outstanding and shall not be affected
by the Merger.
(b) All shares of common stock, par value $0.01 per share, of North
Fork issued and outstanding immediately prior to the Effective Time (the "NORTH
FORK COMMON STOCK") that are owned by North Fork or Capital One (other than
shares of North Fork Common Stock held in trust accounts, managed accounts and
the like, or otherwise held in a fiduciary or agency capacity, that are
beneficially owned by third parties (any such shares, "TRUST ACCOUNT COMMON
SHARES") and other than shares of North Fork Common Stock held, directly or
indirectly, by North Fork or Capital One in respect of a debt previously
contracted (any such shares, "DPC COMMON SHARES")) shall be cancelled and shall
cease to exist and no stock of Capital One or other consideration shall be
delivered in exchange therefor.
(c) Subject to Sections 1.4(e) and 1.5, each share of North Fork
Common Stock, except for shares of North Fork Common Stock owned by North Fork
or Capital One (other than Trust Account Common Shares and DPC Common Shares),
shall be converted, at the election of the holder thereof, in accordance with
the procedures set forth in Section 2.1, into the right to receive the
following, without interest:
(i) for each share of North Fork Common Stock with respect to which an
election to receive cash has been effectively made and not revoked or deemed
revoked pursuant to Article II (a "CASH ELECTION"), the right to receive in cash
from Capital One an amount (the "CASH CONSIDERATION") equal to the Per Share
Amount (collectively, the "CASH ELECTION SHARES");
2
(ii) for each share of North Fork Common Stock with respect to which
an election to receive Capital One Common Stock has been effectively made and
not revoked or deemed revoked pursuant to Article II (a "STOCK ELECTION"), the
right to receive from Capital One the fraction of a share of Capital One Common
Stock (the "STOCK CONSIDERATION") as is equal to the Exchange Ratio
(collectively, the "STOCK ELECTION SHARES"); and
(iii) for each share of North Fork Common Stock other than shares as
to which a Cash Election or a Stock Election has been effectively made and not
revoked or deemed revoked pursuant to Article II (collectively, the
"NON-ELECTION SHARES"), the right to receive from Capital One such Stock
Consideration and/or Cash Consideration as is determined in accordance with
Section 1.5(b).
"EXCHANGE RATIO" shall mean the quotient, rounded to the nearest one
ten thousandth, of (A) the Per Share Amount divided by (B) the Capital One
Closing Price.
"PER SHARE AMOUNT" shall mean the sum, rounded to the nearest
one-tenth of a cent, of (A) $11.25 plus (B) the product, rounded to the nearest
one tenth of a cent, of 0.2216 (the "SHARE RATIO") times the Capital One Closing
Price.
"CAPITAL ONE CLOSING PRICE" shall mean the average, rounded to the
nearest one tenth of a cent, of the closing sale prices of Capital One Common
Stock on the New York Stock Exchange (the "NYSE") as reported by The Wall Street
Journal for the five trading days immediately preceding the date of the
Effective Time.
"CASH COMPONENT" shall mean $5.2 billion.
The Cash Consideration and the Stock Consideration are sometimes
referred to herein collectively as the "MERGER CONSIDERATION."
(d) All of the shares of North Fork Common Stock converted into the
right to receive the Merger Consideration pursuant to this Article I shall no
longer be outstanding and shall automatically be cancelled and shall cease to
exist as of the Effective Time, and each certificate previously representing any
such shares of North Fork Common Stock (each, a "CERTIFICATE") shall thereafter
represent only the right to receive the Merger Consideration and/or cash in lieu
of fractional shares, into which the shares of North Fork Common Stock
represented by such Certificate have been converted pursuant to this Section 1.4
and Section 2.3(f), as well as any dividends to which holders of North Fork
Common Stock become entitled in accordance with Section 2.3(c).
(e) If, between the date of this Agreement and the Effective Time, the
outstanding shares of Capital One Common Stock shall have been increased,
decreased, changed into or exchanged for a different number or kind of shares or
securities as a result of a reorganization, recapitalization, reclassification,
stock dividend, stock split, reverse stock split, or other similar change in
capitalization, an appropriate and proportionate adjustment shall be made to the
Share Ratio.
(f) Notwithstanding any other provision contained in this Agreement,
no shares of North Fork Common Stock that are issued and outstanding as of the
Effective Time and that are held by a stockholder who has properly exercised
such stockholder's appraisal rights
3
(any such shares being referred to herein as "DISSENTING SHARES") under Section
262 of the DGCL shall be converted into the right to receive the Merger
Consideration as provided in Section 1.4(c) and instead shall be entitled to
such rights (but only such rights) as are granted by Section 262 of the DGCL
(unless and until such stockholder shall have failed to perfect, or shall have
effectively withdrawn or lost, such stockholder's right to dissent from the
Merger under the DGCL) and to receive such consideration as may be determined to
be due with respect to such Dissenting Shares pursuant to and subject to the
requirements of the DGCL. If any such stockholder shall have failed to perfect
or shall have effectively withdrawn or lost such right prior to the Election
Deadline, each of such holder's shares of North Fork Common Stock shall
thereupon be deemed to be Non-Election Shares for all purposes of this
Agreement, unless such stockholder shall thereafter otherwise make a timely
Election under this Agreement. If any holder of Dissenting Shares shall have so
failed to perfect or has effectively withdrawn or lost such stockholder's right
to dissent from the Merger after the Election Deadline, each of such holder's
shares of North Fork Common Stock shall thereupon be deemed to have been
converted into and to have become, as of the Effective Time, the right to
receive the Stock Consideration or the Cash Consideration, or a combination
thereof, as determined by Capital One in its sole discretion. North Fork shall
give Capital One (i) prompt notice of any notice or demand for appraisal or
payment for shares of North Fork Common Stock received by North Fork and (ii)
the opportunity to participate in and direct all negotiations and proceedings
with respect to any such demand or notices. North Fork shall not, without the
prior written consent of Capital One, make any payment with respect to, or
settle, offer for settle or otherwise negotiate any such demands.
1.5 PRORATION.
(a) Notwithstanding any other provision contained in this Agreement,
the total number of shares of North Fork Common Stock (including North Fork
Restricted Shares) to be converted into Cash Consideration pursuant to Section
1.4 (which, for this purpose, shall be deemed to include the Dissenting Shares
determined as of the Effective Time) (the "CASH CONVERSION NUMBER") shall be
equal to the quotient obtained by dividing (x) the Cash Component by (y) the Per
Share Amount. All other shares of North Fork Common Stock shall be converted
into Stock Consideration (other than shares of North Fork Common Stock to be
cancelled as provided in Section 1.4(b)).
(b) Within five business days after the Effective Time, Capital One
shall cause the Exchange Agent (as defined below) to effect the allocation among
holders of North Fork Common Stock of rights to receive the Cash Consideration
and the Stock Consideration as follows:
(i) If the aggregate number of shares of North Fork Common Stock with
respect to which Cash Elections shall have been made (which, for this purpose,
shall be deemed to include the Dissenting Shares determined as of the Effective
Time) (the "CASH ELECTION NUMBER") exceeds the Cash Conversion Number, then all
Stock Election Shares and all Non-Election Shares shall be converted into the
right to receive the Stock Consideration, and Cash Election Shares of each
holder thereof will be converted into the right to receive the Cash
Consideration in respect of that number of Cash Election Shares equal to the
product obtained by multiplying (x) the number of Cash Election Shares held by
such holder by (y) a fraction, the numerator of which is the Cash Conversion
Number and the denominator of which is the Cash
4
Election Number (with the Exchange Agent to determine, consistent with Section
1.5(a), whether fractions of Cash Election Shares shall be rounded up or down),
with the remaining number of such holder's Cash Election Shares being converted
into the right to receive the Stock Consideration; and
(ii) If the Cash Election Number is less than the Cash Conversion
Number (the amount by which the Cash Conversion Number exceeds the Cash Election
Number being referred to herein as the "SHORTFALL NUMBER"), then all Cash
Election Shares shall be converted into the right to receive the Cash
Consideration and the Non-Election Shares and Stock Election Shares shall be
treated in the following manner:
(A) If the Shortfall Number is less than or equal to the number
of Non-Election Shares, then all Stock Election Shares shall be
converted into the right to receive the Stock Consideration, and the
Non-Election Shares of each holder thereof shall convert into the
right to receive the Cash Consideration in respect of that number of
Non-Election Shares equal to the product obtained by multiplying (x)
the number of Non-Election Shares held by such holder by (y) a
fraction, the numerator of which is the Shortfall Number and the
denominator of which is the total number of Non-Election Shares (with
the Exchange Agent to determine, consistent with Section 1.5(a),
whether fractions of Non-Election Shares shall be rounded up or down),
with the remaining number of such holder's Non-Election Shares being
converted into the right to receive the Stock Consideration; or
(B) If the Shortfall Number exceeds the number of Non-Election
Shares, then all Non-Election Shares shall be converted into the right
to receive the Cash Consideration, and Stock Election Shares of each
holder thereof shall convert into the right to receive the Cash
Consideration in respect of that number of Stock Election Shares equal
to the product obtained by multiplying (x) the number of Stock
Election Shares held by such holder by (y) a fraction, the numerator
of which is the amount by which (1) the Shortfall Number exceeds (2)
the total number of Non-Election Shares, and the denominator of which
is the total number of Stock Election Shares (with the Exchange Agent
to determine, consistent with Section 1.5(a), whether fractions of
Stock Election Shares shall be rounded up or down), with the remaining
number of such holder's Stock Election Shares being converted into the
right to receive the Stock Consideration.
1.6 STOCK OPTIONS AND OTHER STOCK-BASED AWARDS.
(a) As of the Effective Time, by virtue of the Merger and without any
action on the part of the holders thereof, each option to purchase shares of
North Fork Common Stock granted to employees or directors of North Fork or any
of its Subsidiaries under any of the North Fork Bancorporation, Inc. 1989
Executive Management Compensation Plan, North Fork Bancorporation, Inc. ▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇ Bancorporation, Inc. 1999 Stock Compensation
Plan, North Fork Bancorporation, Inc. 1998 Stock Compensation Plan, North Fork
Bancorporation, Inc. 1997 Non-Officer Stock Plan, North Fork Bancorporation,
Inc. 2003 Stock Compensation Plan, JSB Financial, Inc. 1996 Stock Option Plan,
Reliance Bancorp, Inc. 1994 Incentive Stock Option Plan, Reliance Bancorp, Inc.
Amended and Restated Incentive Stock Option Plan, GreenPoint Financial Corp.
1999 Stock Incentive Plan, Headlands Mortgage
5
Company 1997 Executive and Non-Employee Director Stock Plan, GreenPoint
Financial Corp. Amended and Restated 1994 Stock Incentive Plan, GreenPoint
Financial Corp. ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇ Bancorporation, Inc. New Employee
Stock Compensation Plan, North Fork Bancorporation, Inc. 2004 Outside Directors
Stock in Lieu of Fees Plan and GreenPoint Bank 1993 Director's Deferred Fee
Stock Unit Plan, all as amended and the award agreements thereunder
(collectively, the "NORTH FORK STOCK PLANS") that is outstanding immediately
prior to the Effective Time (collectively, the "NORTH FORK Options") shall be
converted into an option (an "ADJUSTED OPTION") to purchase, on the same terms
and conditions as applied to each such North Fork Option immediately prior to
the Effective Time (taking into account any accelerated vesting of such North
Fork Options in accordance with the terms thereof), the number of whole shares
of Capital One Common Stock that is equal to the number of shares of North Fork
Common Stock subject to such North Fork Option immediately prior to the
Effective Time multiplied by the Exchange Ratio (rounded down to the nearest
whole share), at an exercise price per share of Capital One Common Stock
(rounded up to the nearest whole cent) equal to the exercise price for each such
share of North Fork Common Stock subject to such North Fork Option immediately
prior to the Effective Time divided by the Exchange Ratio.
(b) As of the Effective Time, each restricted share of North Fork
Common Stock granted to any employee or director of North Fork or any of its
Subsidiaries under a North Fork Stock Plan that is outstanding immediately prior
to the Effective Time (collectively, the "NORTH FORK RESTRICTED Shares") shall,
by virtue of the Merger and without any action on the part of the holder
thereof, be cancelled and converted into the right to receive (the "CAPITAL ONE
RESTRICTED SHARE RIGHT"), on the same terms and conditions as applied to each
such North Fork Restricted Share immediately prior to the Effective Time
(including the same transfer restrictions taking into account any accelerated
vesting of such North Fork Restricted Shares), the Merger Consideration
determined in accordance with Sections 1.4 and 1.5 of this Agreement based on
the holder's election in accordance with Section 2.1 of this Agreement, and
treating such North Fork Restricted Shares in the same manner as all other
shares of North Fork Common Stock for such purposes; PROVIDED, HOWEVER, that,
upon the lapsing of restrictions with respect to each such Capital One
Restricted Share Right in accordance with the terms applicable to the
corresponding North Fork Restricted Share immediately prior to the Effective
Time, Capital One shall be entitled to deduct and withhold such amounts as may
be required to be deducted and withheld under the Code and any applicable state
or local tax law with respect to the lapsing of such restrictions.
(c) As of the Effective Time, each deferred share with respect to
shares of North Fork Common Stock granted to any employee or director of North
Fork or any of its Subsidiaries under a North Fork Stock Plan that is
outstanding immediately prior to the Effective Time (collectively, the "NORTH
FORK DEFERRED SHARES") shall, by virtue of the Merger and without any action on
the part of the holder thereof, be converted into a deferred share unit, on the
same terms and conditions as applied to each such North Fork Deferred Shares
immediately prior to the Effective Time (taking into account any accelerated
vesting of such North Fork Deferred Shares in accordance with the terms
thereof), with respect to the number of shares of Capital One Common Stock that
is equal to the number of shares of North Fork Common Stock subject to the North
Fork Deferred Shares immediately prior to the Effective Time multiplied by the
Exchange Ratio (rounded down to the nearest whole share) (a "CAPITAL ONE SHARE
UNIT").
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(d) As of the Effective Time, Capital One shall assume the obligations
and succeed to the rights of North Fork under the North Fork Stock Plans with
respect to the Adjusted Options, the Capital One Restricted Share Rights and the
Capital One Share Units. North Fork and Capital One agree that prior to the
Effective Time each of the North Fork Stock Plans shall be amended, to the
extent possible without requiring stockholder approval of such amendments, (i)
if and to the extent necessary and practicable, to reflect the transactions
contemplated by this Agreement, including, but not limited to, the conversion of
North Fork Options, North Fork Restricted Shares, North Fork Deferred Shares and
each restricted share unit with respect to shares of North Fork Common Stock
granted to any employee or director of North Fork or any of its Subsidiaries
under a North Fork Stock Plan that is outstanding immediately prior to the
Effective Time pursuant to paragraphs (a), (b) and (c) above and the
substitution of Capital One for North Fork thereunder to the extent appropriate
to effectuate the assumption of such North Fork Stock Plans by Capital One and
(ii) to preclude any automatic or formulaic grant of options, restricted shares
or other awards thereunder on or after the date hereof. From and after the
Effective Time, all references to North Fork (other than any references relating
to a "change in control" of North Fork) in each North Fork Stock Plan and in
each agreement evidencing any award of North Fork Options or North Fork
Restricted Shares shall be deemed to refer to Capital One, unless Capital One
determines otherwise.
(e) Capital One shall take all action reasonably necessary or
appropriate to have available for issuance or transfer a sufficient number of
shares of Capital One Common Stock for delivery upon exercise of the Adjusted
Options or settlement of the Capital One Share Units. Promptly after the
Effective Time, Capital One shall prepare and file with the SEC a registration
statement on Form S-8 (or other appropriate form) registering a number of shares
of Capital One Common Stock necessary to fulfill Capital One's obligations under
this paragraph (e).
1.7 CERTIFICATE OF INCORPORATION OF CAPITAL ONE. At the Effective Time, the
Capital One Certificate (as defined in Section 4.1) shall be the certificate of
incorporation of the Surviving Corporation until thereafter amended in
accordance with applicable law.
1.8 BYLAWS OF CAPITAL ONE. At the Effective Time, the Capital One By-laws (as
defined in Section 4.1) shall be the By-laws of the Surviving Corporation until
thereafter amended in accordance with applicable law.
1.9 TAX CONSEQUENCES. It is intended that the Merger shall constitute a
"reorganization" within the meaning of Section 368(a) of the Code, and that this
Agreement shall constitute a "plan of reorganization" for purposes of Sections
354 and 361 of the Code.
ARTICLE II
DELIVERY OF MERGER CONSIDERATION
2.1 ELECTION PROCEDURES. Each holder of record of shares of North Fork Common
Stock ("HOLDER") shall have the right, subject to the limitations set forth in
this Article II, to submit an election in accordance with the following
procedures:
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(a) Each Holder may specify in a request made in accordance with the
provisions of this Section 2.1 (herein called an "ELECTION") (i) the number of
shares of North Fork Common Stock owned by such Holder with respect to which
such Holder desires to make a Stock Election and (ii) the number of shares of
North Fork Common Stock owned by such Holder with respect to which such Holder
desires to make a Cash Election.
(b) Capital One shall prepare a form reasonably acceptable to North
Fork (the "FORM OF ELECTION") which shall be mailed to record holders of North
Fork Common Stock so as to permit those holders to exercise their right to make
an Election prior to the Election Deadline.
(c) Capital One shall make the Form of Election initially available
not less than twenty (20) business days prior to the anticipated Election
Deadline and shall use all reasonable efforts to make available as promptly as
possible a Form of Election to any stockholder of North Fork who requests such
Form of Election following the initial mailing of the Forms of Election and
prior to the Election Deadline.
(d) Any Election shall have been made properly only if the person
authorized to receive Elections and to act as exchange agent under this
Agreement, which person shall be a bank or trust company selected by Capital One
and reasonably acceptable to North Fork (the "EXCHANGE AGENT"), pursuant to an
agreement (the "EXCHANGE AGENT AGREEMENT") entered into prior to the mailing of
the Form of Election to North Fork stockholders, shall have received, by the
Election Deadline, a Form of Election properly completed and signed and
accompanied by Certificates to which such Form of Election relates or by an
appropriate customary guarantee of delivery of such certificates, as set forth
in such Form of Election, from a member of any registered national securities
exchange or a commercial bank or trust company in the United States; provided,
that such Certificates are in fact delivered to the Exchange Agent by the time
required in such guarantee of delivery. Failure to deliver shares of North Fork
Common Stock covered by such a guarantee of delivery within the time set forth
on such guarantee shall be deemed to invalidate any otherwise properly made
Election, unless otherwise determined by Capital One, in its sole discretion. As
used herein, unless otherwise agreed in advance by the parties, "ELECTION
DEADLINE" means 5:00 p.m. local time (in the city in which the principal office
of the Exchange Agent is located) on the later of (1) the date of the meeting of
North Fork stockholders pursuant to Section 6.3 and (2) the earlier of (i) the
date that Capital One and North Fork shall agree is as near as practicable to
five (5) business days prior to the expected Closing Date taking into account
Capital One's intention to minimize the impact of limitations under applicable
law that might apply during the period from the initial mailing of the Forms of
Election until the Election Deadline and (ii) September 1, 2006; PROVIDED that
if it appears that the Closing Date will not take place on or prior to October
13, 2006, the parties shall in good faith discuss whether such September 1, 2006
date should be deferred to an appropriate later date. North Fork and Capital One
shall cooperate to issue a press release reasonably satisfactory to each of them
announcing the date of the Election Deadline not more than fifteen (15) business
days before, and at least five (5) business days prior to, the Election
Deadline.
(e) Any North Fork stockholder may, at any time prior to the Election
Deadline, change or revoke his or her Election by written notice received by the
Exchange Agent prior to the Election Deadline accompanied by a properly
completed and signed revised Form of Election. Subject to the terms of the
Exchange Agent Agreement, if Capital One shall determine in its reasonable
discretion that any Election is not properly made with respect to any shares of
8
North Fork Common Stock (neither Capital One nor North Fork nor the Exchange
Agent being under any duty to notify any stockholder of any such defect), such
Election shall be deemed to be not in effect, and the shares of North Fork
Common Stock covered by such Election shall, for purposes hereof, be deemed to
be Non-Election Shares, unless a proper Election is thereafter timely made.
(f) Any North Fork stockholder may, at any time prior to the Election
Deadline, revoke his or her Election by written notice received by the Exchange
Agent prior to the Election Deadline or by withdrawal prior to the Election
Deadline of his or her Certificates, or of the guarantee of delivery of such
Certificates, previously deposited with the Exchange Agent. All Elections shall
be automatically deemed revoked upon receipt by the Exchange Agent of written
notification from Capital One or North Fork that this Agreement has been
terminated in accordance with Article VIII.
(g) Subject to the terms of the Exchange Agent Agreement, Capital One,
in the exercise of its reasonable discretion, shall have the right to make all
determinations, not inconsistent with the terms of this Agreement, governing (i)
the validity of the Forms of Election and compliance by any North Fork
stockholder with the Election procedures set forth herein, (ii) the manner and
extent to which Elections are to be taken into account in making the
determinations prescribed by Section 1.5, (iii) the issuance and delivery of
certificates representing the whole number of shares of Capital One Common Stock
into which shares of North Fork Common Stock are converted in the Merger and
(iv) the method of payment of cash for shares of North Fork Common Stock
converted into the right to receive the Cash Consideration and cash in lieu of
fractional shares of Capital One Common Stock.
2.2 DEPOSIT OF MERGER CONSIDERATION. At or prior to the Effective Time, Capital
One shall deposit, or shall cause to be deposited, with the Exchange Agent, (i)
certificates representing the number of shares of Capital One Common Stock
sufficient to deliver, and Capital One shall instruct the Exchange Agent to
timely deliver, the aggregate Stock Consideration, and (ii) immediately
available funds equal to the aggregate Cash Consideration (together with, to the
extent then determinable, any cash payable in lieu of fractional shares pursuant
to Section 2.3(f)) (collectively, the "EXCHANGE FUND") and Capital One shall
instruct the Exchange Agent to timely pay the Cash Consideration, and such cash
in lieu of fractional shares, in accordance with this Agreement.
2.3 DELIVERY OF MERGER CONSIDERATION.
(a) As soon as reasonably practicable after the Effective Time, the
Exchange Agent shall mail to each holder of record of Certificate(s) which
immediately prior to the Effective Time represented outstanding shares of North
Fork Common Stock whose shares were converted into the right to receive the
Merger Consideration pursuant to Section 1.4 and any cash in lieu of fractional
shares of Capital One Common Stock to be issued or paid in consideration
therefor who did not properly complete and submit an Election Form, (i) a letter
of transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to Certificate(s) shall pass, only upon delivery of
Certificate(s) (or affidavits of loss in lieu of such Certificate(s))) (the
"LETTER OF TRANSMITTAL") to the Exchange Agent and shall be substantially in
such form and have such other provisions as shall be prescribed by the Exchange
Agent Agreement and (ii) instructions for use in surrendering Certificate(s) in
exchange for the Merger Consideration and
9
any cash in lieu of fractional shares of Capital One Common Stock to be issued
or paid in consideration therefor in accordance with Section 2.3(f) upon
surrender of such Certificate and any dividends or distributions to which such
holder is entitled pursuant to Section 2.3(c).
(b) Upon surrender to the Exchange Agent of its Certificate(s),
accompanied by a properly completed Form of Election or a properly completed
Letter of Transmittal, a holder of North Fork Common Stock will be entitled to
receive, promptly after the Effective Time, the Merger Consideration (elected or
deemed elected by it, subject to, and in accordance with Sections 1.4 and 1.5)
and any cash in lieu of fractional shares of Capital One Common Stock to be
issued or paid in consideration therefor in respect of the shares of North Fork
Common Stock represented by its Certificate(s). Until so surrendered, each such
Certificate shall represent after the Effective Time, for all purposes, only the
right to receive, without interest, the Merger Consideration and any cash in
lieu of fractional shares of Capital One Common Stock to be issued or paid in
consideration therefor upon surrender of such Certificate in accordance with,
and any dividends or distributions to which such holder is entitled pursuant to,
this Article II.
(c) No dividends or other distributions with respect to Capital One
Common Stock shall be paid to the holder of any unsurrendered Certificate with
respect to the shares of Capital One Common Stock represented thereby, in each
case unless and until the surrender of such Certificate in accordance with this
Article II. Subject to the effect of applicable abandoned property, escheat or
similar laws, following surrender of any such Certificate in accordance with
this Article II the record holder thereof shall be entitled to receive, without
interest, (i) the amount of dividends or other distributions with a record date
after the Effective Time theretofore payable with respect to the whole shares of
Capital One Common Stock represented by such Certificate and not paid and/or
(ii) at the appropriate payment date, the amount of dividends or other
distributions payable with respect to shares of Capital One Common Stock
represented by such Certificate with a record date after the Effective Time (but
before such surrender date) and with a payment date subsequent to the issuance
of the Capital One Common Stock issuable with respect to such Certificate.
(d) In the event of a transfer of ownership of a Certificate
representing North Fork Common Stock that is not registered in the stock
transfer records of North Fork, the proper amount of cash and/or shares of
Capital One Common Stock shall be paid or issued in exchange therefor to a
person other than the person in whose name the Certificate so surrendered is
registered if the Certificate formerly representing such North Fork Common Stock
shall be properly endorsed or otherwise be in proper form for transfer and the
person requesting such payment or issuance shall pay any transfer or other
similar Taxes required by reason of the payment or issuance to a person other
than the registered holder of the Certificate or establish to the satisfaction
of Capital One that the Tax has been paid or is not applicable. The Exchange
Agent (or, subsequent to the first anniversary of the Effective Time, Capital
One) shall be entitled to deduct and withhold from any cash portion of the
Merger Consideration, any cash in lieu of fractional shares of Capital One
Common Stock, cash dividends or distributions payable pursuant to Section 2.3(c)
hereof and any other cash amounts otherwise payable pursuant to this Agreement
to any holder of North Fork Common Stock such amounts as the Exchange Agent or
Capital One, as the case may be, is required to deduct and withhold under the
Code, or any provision of state, local or foreign Tax law, with respect to the
making of such payment. To the extent the amounts are so withheld by the
Exchange Agent or Capital One, as the case may be, such withheld amounts shall
be treated for all purposes of this Agreement as having been paid to
10
the holder of shares of North Fork Common Stock in respect of whom such
deduction and withholding was made by the Exchange Agent or Capital One, as the
case may be.
(e) After the Effective Time, there shall be no transfers on the stock
transfer books of North Fork of any shares of North Fork Common Stock that were
issued and outstanding immediately prior to the Effective Time other than to
settle transfers of North Fork Common Stock that occurred prior to the Effective
Time. If, after the Effective Time, Certificates representing such shares are
presented for transfer to the Exchange Agent, they shall be cancelled and
exchanged for the Merger Consideration and any cash in lieu of fractional shares
of Capital One Common Stock to be issued or paid in consideration therefor in
accordance with Section 1.5 and the procedures set forth in this Article II.
(f) Notwithstanding anything to the contrary contained in this
Agreement, no certificates or scrip representing fractional shares of Capital
One Common Stock shall be issued upon the surrender of Certificates for
exchange, no dividend or distribution with respect to Capital One Common Stock
shall be payable on or with respect to any fractional share, and such fractional
share interests shall not entitle the owner thereof to vote or to any other
rights of a stockholder of Capital One. In lieu of the issuance of any such
fractional share, Capital One shall pay to each former stockholder of North Fork
who otherwise would be entitled to receive such fractional share, an amount in
cash (rounded to the nearest whole cent) determined by multiplying (i) the
Capital One Closing Price by (ii) the fraction of a share (after taking into
account all shares of North Fork Common Stock held by such holder at the
Effective Time and rounded to the nearest one thousandth when expressed in
decimal form) of Capital One Common Stock to which such holder would otherwise
be entitled to receive pursuant to Section 1.4.
(g) Any portion of the Exchange Fund that remains unclaimed by the
stockholders of North Fork as of the first anniversary of the Effective Time
shall be paid to Capital One. Any former stockholders of North Fork who have not
theretofore complied with this Article II shall thereafter look only to Capital
One with respect to the Merger Consideration, any cash in lieu of any fractional
shares and any unpaid dividends and distributions on the Capital One Common
Stock deliverable in respect of each share of North Fork Common Stock such
stockholder holds as determined pursuant to this Agreement, in each case,
without any interest thereon. Notwithstanding the foregoing, none of Capital
One, North Fork, the Exchange Agent or any other person shall be liable to any
former holder of shares of North Fork Common Stock for any amount delivered in
good faith to a public official pursuant to applicable abandoned property,
escheat or similar laws.
(h) In the event any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
such Certificate to be lost, stolen or destroyed and, if reasonably required by
Capital One or the Exchange Agent, the posting by such person of a bond in such
amount as Capital One may determine is reasonably necessary as indemnity against
any claim that may be made against it with respect to such Certificate, the
Exchange Agent will issue in exchange for such lost, stolen or destroyed
Certificate the Merger Consideration deliverable in respect thereof pursuant to
this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF NORTH FORK
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Subject to Section 9.2 and except as disclosed in the disclosure
schedule (the "NORTH FORK DISCLOSURE SCHEDULE") delivered by North Fork to
Capital One prior to the execution of this Agreement (which schedule sets forth,
among other things, items, the disclosure of which is necessary or appropriate,
either in response to an express disclosure requirement contained in a provision
hereof or as an exception to one or more representations or warranties contained
in this Article III, or to one or more of North Fork's covenants, provided,
however, that disclosure in any section of such North Fork Disclosure Schedule
shall apply only to the indicated Section of this Agreement except to the extent
that it is reasonably apparent that such disclosure is relevant to another
section of this Agreement, and provided further that notwithstanding anything in
this Agreement to the contrary, no item is required to be set forth in such
schedule as an exception to a representation or warranty if its absence would
not result in the related representation or warranty being deemed untrue or
incorrect under the standard established by Section 9.2), North Fork hereby
represents and warrants to Capital One as follows:
3.1 CORPORATE ORGANIZATION.
(a) North Fork is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Delaware. North Fork has the
corporate power and authority to own or lease all of its properties and assets
and to carry on its business as it is now being conducted, and is duly licensed
or qualified to do business, in each jurisdiction in which the nature of the
business conducted by it or the character or location of the properties and
assets owned or leased by it makes such licensing or qualification necessary.
(b) North Fork is duly registered as a bank holding company under the
Bank Holding Company Act of 1956, as amended (the "BHC ACT"). True, complete and
correct copies of the Certificate of Incorporation of North Fork, as amended
(the "NORTH FORK CERTIFICATE"), and the By-laws of North Fork (the "NORTH FORK
BY-LAWS"), as in effect as of the date of this Agreement, have previously been
made available to Capital One.
(c) Each North Fork Subsidiary (i) is duly incorporated or duly
formed, as applicable to each such Subsidiary, and validly existing under the
laws of its jurisdiction of organization, (ii) is duly licensed or qualified to
do business and in good standing in all jurisdictions (whether federal, state,
local or foreign) where its ownership or leasing of property or the conduct of
its business requires it to be so licensed or qualified and (iii) has all
requisite corporate power or other power and authority to own or lease its
properties and assets and to carry on its business as now conducted. As used in
this Agreement, the word "SUBSIDIARY" when used with respect to either party,
means any bank, corporation, partnership, limited liability company or other
organization, whether incorporated or unincorporated, that is consolidated with
such party for financial reporting purposes under U.S. generally accepted
accounting principles ("GAAP"), and the terms "NORTH FORK SUBSIDIARY" and
"CAPITAL ONE SUBSIDIARY" shall mean any direct or indirect Subsidiary of North
Fork or Capital One, respectively.
(d) The deposit accounts of North Fork Bank and Superior Savings of
New England, N.A. are insured by the Federal Deposit Insurance Corporation (the
"FDIC") through the Bank Insurance Fund to the fullest extent permitted by law,
and all premiums and assessments required to be paid in connection therewith
have been paid when due.
12
(e) The minute books of North Fork and each of its Subsidiaries
previously made available to Capital One contain true, complete and correct
records of all meetings and other corporate actions held or taken since December
31, 2002 of their respective stockholders and Boards of Directors (including
committees of their respective Boards of Directors).
3.2 CAPITALIZATION. (a) The authorized capital stock of North Fork consists of
1,000,000,000 shares of North Fork Common Stock, of which, as of March 3, 2006
(the "NORTH FORK CAPITALIZATION DATE"), 462,106,577 shares were issued and
outstanding, which includes all North Fork Restricted Shares outstanding as of
the North Fork Capitalization Date, and 10,000,000 shares of preferred stock,
par value $1.00 ("NORTH FORK PREFERRED STOCK"), of which, as of the North Fork
Capitalization Date, no shares were issued and outstanding. As of the North Fork
Capitalization Date, no more than 18,575,541 shares of North Fork Common Stock
were held in North Fork's treasury. As of the date hereof, no shares of North
Fork Common Stock or North Fork Preferred Stock were reserved for issuance
except for (i) 13,515,759 shares of North Fork Common Stock reserved for
issuance upon the exercise of North Fork Stock Options pursuant to North Fork
Stock Plans, (ii) shares of North Fork Common Stock reserved for issuance
pursuant to the North Fork Option Agreement, (iii) 588,848 shares of North Fork
Common Stock were reserved for issuance upon settlement of the North Fork
Deferred Shares, and (iv) 2,271,435 shares of North Fork Common Stock reserved
for issuance pursuant to its Dividend Reinvestment and Stock Purchase Plan. All
of the issued and outstanding shares of North Fork Common Stock have been duly
authorized and validly issued and are fully paid, nonassessable and free of
preemptive rights, with no personal liability attaching to the ownership
thereof. As of the date of this Agreement, no bonds, debentures, notes or other
indebtedness having the right to vote on any matters on which shareholders may
vote ("VOTING DEBT") of North Fork are issued or outstanding. As of the date of
this Agreement, except pursuant to this Agreement, the North Fork Option
Agreement and North Fork Stock Plans, North Fork does not have and is not bound
by any outstanding subscriptions, options, warrants, calls, rights, commitments
or agreements of any character calling for the purchase or issuance of, or the
payment of any amount based on, any shares of North Fork Common Stock, Voting
Debt or any other equity securities of North Fork or any securities representing
the right to purchase or otherwise receive any shares of North Fork Common
Stock, Voting Debt or any other equity securities of North Fork or any North
Fork Subsidiary. As of the date of this Agreement, there are no contractual
obligations of North Fork or any North Fork Subsidiary (x) to repurchase, redeem
or otherwise acquire any shares of capital stock of North Fork or any equity
security of North Fork or any North Fork Subsidiary or any securities
representing the right to purchase or otherwise receive any shares of capital
stock or any other equity security of North Fork or any North Fork Subsidiary or
(y) pursuant to which North Fork or any North Fork Subsidiary is or could be
required to register shares of North Fork capital stock or other securities
under the Securities Act of 1933, as amended (the "SECURITIES ACT"). North Fork
has provided Capital One with a true, complete and correct list of the aggregate
number of shares of North Fork Common Stock issuable upon the exercise of each
stock option outstanding under North Fork Stock Plans as of the North Fork
Capitalization Date and the exercise prices for such North Fork Stock Options.
Since the North Fork Capitalization Date through the date hereof, North Fork has
not (A) issued or repurchased any shares of North Fork Common Stock, North Fork
Preferred Stock, Voting Debt or other equity securities of North Fork other than
the issuance of shares of North Fork Common Stock in connection with the
exercise of stock options to purchase North Fork Common Stock granted under
North Fork Stock Plans that were outstanding on the North Fork Capitalization
Date or (B) issued or
13
awarded any options, restricted shares or any other equity based awards under
any of North Fork Stock Plans.
(b) Except for any director qualifying shares, all of the issued and
outstanding shares of capital stock or other equity ownership interests of each
North Fork Subsidiary are owned by North Fork, directly or indirectly, free and
clear of any material liens, pledges, charges and security interests and similar
encumbrances ("LIENS"), and all of such shares or equity ownership interests are
duly authorized and validly issued and are fully paid, nonassessable (subject to
12 U.S.C. ss. 55) and free of preemptive rights. No such North Fork Subsidiary
has or is bound by any outstanding subscriptions, options, warrants, calls,
commitments or agreements of any character calling for the purchase or issuance
of any shares of capital stock or any other equity security of such Subsidiary
or any securities representing the right to purchase or otherwise receive any
shares of capital stock or any other equity security of such Subsidiary.
3.3 AUTHORITY; NO VIOLATION. (a) North Fork has full corporate power and
authority to execute and deliver this Agreement and the Option Agreements and to
consummate the transactions contemplated hereby and thereby. The execution and
delivery of this Agreement and the Option Agreements and the consummation of the
transactions contemplated hereby and thereby have been duly, validly and
unanimously approved by the Board of Directors of North Fork. The Board of
Directors of North Fork has determined that this Agreement and the Option
Agreements and the transactions contemplated hereby and thereby are advisable
and in the best interests of North Fork and its stockholders and has directed
that this Agreement be submitted to North Fork's stockholders for approval and
adoption at a duly held meeting of such stockholders and has adopted a
resolution to the foregoing effect. Except for the approval and adoption of this
Agreement by the affirmative vote of the holders of a majority of the
outstanding shares of North Fork Common Stock entitled to vote at such meeting,
no other corporate proceedings on the part of North Fork are necessary to
approve this Agreement or the Option Agreements or to consummate the
transactions contemplated hereby or thereby. This Agreement and the Option
Agreements have been duly and validly executed and delivered by North Fork and
(assuming due authorization, execution and delivery by Capital One) constitute
the valid and binding obligations of North Fork, enforceable against North Fork
in accordance with their terms (except as may be limited by bankruptcy,
insolvency, moratorium, reorganization or similar laws affecting the rights of
creditors generally and subject to general principles of equity).
(b) Neither the execution and delivery of this Agreement or the Option
Agreements by North Fork nor the consummation by North Fork of the transactions
contemplated hereby or thereby, nor compliance by North Fork with any of the
terms or provisions of this Agreement or the Option Agreements, will (i) violate
any provision of North Fork Certificate or North Fork By-laws or (ii) assuming
that the consents, approvals and filings referred to in Section 3.4 are duly
obtained and/or made, (A) violate any statute, code, ordinance, rule,
regulation, judgment, order, writ, decree or Injunction applicable to North
Fork, any of its Subsidiaries or any of their respective properties or assets or
(B) violate, conflict with, result in a breach of any provision of or the loss
of any benefit under, constitute a default (or an event which, with notice or
lapse of time, or both, would constitute a default) under, result in the
termination of or a right of termination or cancellation under, accelerate the
performance required by, or result in the creation of any Lien upon any of the
respective properties or assets of North Fork or any of its Subsidiaries under,
any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, deed of trust, license, lease, agreement or other instrument or
14
obligation to which North Fork or any of its Subsidiaries is a party or by which
any of them or any of their respective properties or assets is bound.
3.4 CONSENTS AND APPROVALS. Except for (i) the filing of applications and
notices, as applicable, with the Board of Governors of the Federal Reserve
System (the "FEDERAL RESERVE BOARD") under the BHC Act and approval of such
applications and notices, (ii) the filing of applications and notices, as
applicable, with the New York State Banking Department (the "NYSBD") and
approval of such applications and notices, (iii) the filing of any required
applications, filings or notices with any foreign, federal or state banking,
insurance or other regulatory authorities and approval of such applications,
filings and notices including in respect of North Fork's mortgage business (the
"OTHER REGULATORY APPROVALS"), (iv) the filing with the Securities and Exchange
Commission (the "SEC") of a Joint Proxy Statement in definitive form relating to
the meetings of North Fork's and Capital One's respective stockholders to be
held in connection with this Agreement and the transactions contemplated by this
Agreement (the "JOINT PROXY STATEMENT") and of a registration statement on Form
S-4 (the "FORM S-4") in which the Joint Proxy Statement will be included as a
prospectus, and declaration of effectiveness of the Form S-4 and the filing and
effectiveness of the registration statement contemplated by Section 1.6(e), (v)
the filing of the Certificate of Merger with the Secretary of State of the State
of Delaware pursuant to the DGCL, (vi) any notices to or filings with the Small
Business Administration (the "SBA"), (vii) any consents, authorizations,
approvals, filings or exemptions in connection with compliance with the
applicable provisions of federal and state securities laws relating to the
regulation of broker-dealers, investment companies, investment advisers or
transfer agents and federal commodities laws relating to the regulation of
futures commission merchants, commodity trading advisers, commodity pool
operators or introducing brokers and the rules and regulations thereunder and of
any securities or futures exchange or other applicable industry self-regulatory
organization ("SRO"), or that are required under consumer finance, mortgage
banking and other similar laws, (viii) any notices or filings under the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), and (ix) such filings and approvals as are required to be made or
obtained under the securities or "Blue Sky" laws of various states in connection
with the issuance of the shares of Capital One Common Stock pursuant to this
Agreement and approval of listing of such Capital One Common Stock on the NYSE,
no consents or approvals of or filings or registrations with any court,
administrative agency or commission or other governmental authority or
instrumentality (each a "GOVERNMENTAL ENTITY") are necessary in connection with
the consummation by North Fork of the Merger and the other transactions
contemplated by this Agreement or the Option Agreements. No consents or
approvals of or filings or registrations with any Governmental Entity are
necessary in connection with the execution and delivery by North Fork of this
Agreement or the Option Agreements.
3.5 REPORTS; REGULATORY MATTERS.
(a) North Fork and each North Fork Subsidiary has timely filed all
reports, registrations and statements, together with any amendments required to
be made with respect thereto, that it was required to file since January 1, 2003
with (i) the Federal Reserve Board, (ii) the FDIC, (iii) the Office of the
Comptroller of the Currency, (iv) the NASD, (v) any state insurance commission
or other state regulatory authority, including the NYSBD, (vi) the SEC, (vii)
any foreign regulatory authority and (viii) any SRO (collectively, "REGULATORY
AGENCIES") and with each other applicable Governmental Entity, and all other
reports and statements
15
required to be filed by them since January 1, 2003, including any report or
statement required to be filed pursuant to the laws, rules or regulations of the
United States, any state, any foreign entity, or any Regulatory Agency or
Governmental Entity, and have paid all fees and assessments due and payable in
connection therewith. Except for normal examinations conducted by a Regulatory
Agency or Governmental Entity in the ordinary course of the business of North
Fork and its Subsidiaries, no Regulatory Agency or Governmental Entity has
initiated since January 1, 2003 or has pending any proceeding, enforcement
action or, to the knowledge of North Fork, investigation into the business,
disclosures or operations of North Fork or any North Fork Subsidiary. Since
January 1, 2003, no Regulatory Agency or Governmental Entity has resolved any
proceeding, enforcement action or, to the knowledge of North Fork, investigation
into the business, disclosures or operations of North Fork or any North Fork
Subsidiary. There is no unresolved violation, criticism or exception by any
Regulatory Agency or Governmental Entity with respect to any report or statement
relating to any examinations or inspections of North Fork or any North Fork
Subsidiary. Since January 1, 2003, there has been no formal or informal
inquiries by, or disagreements or disputes with, any Regulatory Agency or
Governmental Entity with respect to the business, operations, policies or
procedures of North Fork or any North Fork Subsidiary.
(b) Neither North Fork nor any North Fork Subsidiary is subject to any
cease-and-desist or other order or enforcement action issued by, or is a party
to any written agreement, consent agreement or memorandum of understanding with,
or is a party to any commitment letter or similar undertaking to, or is subject
to any order or directive by, or has been since January 1, 2003, a recipient of
any supervisory letter from, or has been ordered to pay any civil money penalty
by, or since January 1, 2003, has adopted any policies, procedures or board
resolutions at the request or suggestion of any, Regulatory Agency or other
Governmental Entity that currently restricts in any material respect the conduct
of its business or that in any material manner relates to its capital adequacy,
its ability to pay dividends, its credit, risk management or compliance
policies, its internal controls, its management or its business, other than
those of general application that apply to similarly situated bank holding
companies or their Subsidiaries (each, a "NORTH FORK REGULATORY AGREEMENT"), nor
has North Fork or any of its Subsidiaries been advised since January 1, 2003 by
any Regulatory Agency or other Governmental Entity that it is considering
issuing, initiating, ordering, or requesting any such North Fork Regulatory
Agreement. To the knowledge of North Fork, as of the date hereof, there has not
been any event or occurrence since January 1, 2004 that would result in a
determination that either North Fork Bank or Superior Savings of New England,
N.A. is not "well capitalized" and "well managed" as a matter of U.S. federal
banking law.
(c) North Fork has previously made available to Capital One an
accurate and complete copy of (i) each final registration statement, prospectus,
report, schedule and definitive proxy statement filed with or furnished to the
SEC by North Fork since January 1, 2003 pursuant to the Securities Act or the
Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"), and prior to
the date of this Agreement (the "NORTH FORK SEC REPORTS"), (ii) each
communication mailed by North Fork to its stockholders, in each case since
January 1, 2003 and prior to the date of this Agreement, and (iii) a draft,
dated March 7, 2006, of North Fork's Annual Report on Form 10-K for the period
ended December 31, 2005 (the "DRAFT 10-K"). North Fork will timely file with the
SEC its Annual Report on Form 10-K for the period ended December 31, 2005 (the
"2005 10-K") and the 2005 10-K will not vary in any material respect from the
Draft 10-K provided to Capital One by North Fork, except to the extent necessary
to reflect this Agreement
16
and the Option Agreements and the transactions contemplated hereby and thereby.
Neither any North Fork SEC Report or communication, at the time filed, furnished
or communicated (in the case of registration statements and proxy statements, on
the dates of effectiveness and the dates of the relevant meetings,
respectively), contained, nor will the 2005 10-K when filed contain, any untrue
statement of a material fact or omitted to state any material fact required to
be stated therein or necessary in order to make the statements made therein, in
light of the circumstances in which they were made, not misleading, except that
information as of a later date (but before the date of this Agreement) shall be
deemed to modify information as of an earlier date. As of their respective
dates, all North Fork SEC Reports complied (and the 2005 10-K, when filed, will
comply) as to form in all material respects with the published rules and
regulations of the SEC with respect thereto. No executive officer of North Fork
has failed in any respect to make the certifications required of him or her
under Section 302 or 906 of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 (the "▇▇▇▇▇▇▇▇-▇▇▇▇▇
ACT") and all required certifications under such sections will be made with
respect to the 2005 10-K.
3.6 FINANCIAL STATEMENTS.
(a) The financial statements of North Fork and its Subsidiaries
included (or incorporated by reference) in North Fork SEC Reports (including the
related notes, where applicable, and including any preliminary financial results
furnished to the SEC on Form 8-K) (and the 2005 10-K, when filed will) (i) have
been prepared from, and are (in the case of the 2005 10-K, will be) in
accordance with, the books and records of North Fork and its Subsidiaries, (ii)
fairly present in all material respects the consolidated results of operations,
cash flows, changes in stockholders' equity and consolidated financial position
of North Fork and its Subsidiaries for the respective fiscal periods or as of
the respective dates therein set forth (subject in the case of unaudited
statements to recurring year-end audit adjustments normal in nature and amount),
(iii) complied (in the case of the 2005 10-K, will comply) as to form, as of
their respective dates of filing with the SEC, in all material respects with
applicable accounting requirements and with the published rules and regulations
of the SEC with respect thereto, and (iv) have been prepared in accordance with
GAAP consistently applied during the periods involved, except, in each case, as
indicated in such statements or in the notes thereto. The financial statements
contained in the 2005 10-K will not vary in any material respect from the
financial statements included in the Draft 10-K, except for the inclusion of a
subsequent events footnote with respect to this Agreement, the Option Agreements
and the transactions contemplated hereby and thereby. The books and records of
North Fork and its Subsidiaries have been, and are being, maintained in all
material respects in accordance with GAAP and any other applicable legal and
accounting requirements and reflect only actual transactions. KPMG LLP has not
resigned or been dismissed as independent public accountants of North Fork as a
result of or in connection with any disagreements with North Fork on a matter of
accounting principles or practices, financial statement disclosure or auditing
scope or procedure.
(b) Neither North Fork nor any North Fork Subsidiary has any material
liability of any nature whatsoever (whether absolute, accrued, contingent or
otherwise and whether due or to become due), except for those liabilities that
are reflected or reserved against on the consolidated balance sheet of North
Fork included in its Quarterly Report on Form 10-Q for the period ended
September 30, 2005 (including any notes thereto) and for liabilities incurred in
the ordinary course of business consistent with past practice since September
30, 2005 or in connection with this Agreement and the transactions contemplated
hereby.
17
(c) The records, systems, controls, data and information of North Fork
and its Subsidiaries are recorded, stored, maintained and operated under means
(including any electronic, mechanical or photographic process, whether
computerized or not) that are under the exclusive ownership and direct control
of North Fork or its Subsidiaries or accountants (including all means of access
thereto and therefrom), except for any non-exclusive ownership and non-direct
control that would not reasonably be expected to have a material adverse effect
on the system of internal accounting controls described below in this Section
3.6(c). North Fork (x) has implemented and maintains disclosure controls and
procedures (as defined in Rule 13a-15(e) of the Exchange Act) to ensure that
material information relating to North Fork, including its consolidated
Subsidiaries, is made known to the chief executive officer and the chief
financial officer of North Fork by others within those entities, and (y) has
disclosed, based on its most recent evaluation prior to the date hereof, to
North Fork's outside auditors and the audit committee of North Fork's Board of
Directors (i) any significant deficiencies and material weaknesses in the design
or operation of internal controls over financial reporting (as defined in Rule
13a-15(f) of the Exchange Act) which are reasonably likely to adversely affect
North Fork's ability to record, process, summarize and report financial
information and (ii) any fraud, whether or not material, that involves
management or other employees who have a significant role in North Fork's
internal controls over financial reporting. These disclosures were made in
writing by management to North Fork's auditors and audit committee and a copy
has previously been made available to Capital One. As of the date hereof, there
is no reason to believe that its outside auditors and its chief executive
officer and chief financial officer will not be able to give the certifications
and attestations required pursuant to the rules and regulations adopted pursuant
to Section 404 of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act, without qualification, when next due.
(d) Since December 31, 2004, (i) through the date hereof, neither
North Fork nor any of its Subsidiaries nor, to the knowledge of the officers of
North Fork, any director, officer, employee, auditor, accountant or
representative of North Fork or any of its Subsidiaries has received or
otherwise had or obtained knowledge of any material complaint, allegation,
assertion or claim, whether written or oral, regarding the accounting or
auditing practices, procedures, methodologies or methods of North Fork or any of
its Subsidiaries or their respective internal accounting controls, including any
material complaint, allegation, assertion or claim that North Fork or any of its
Subsidiaries has engaged in questionable accounting or auditing practices, and
(ii) no attorney representing North Fork or any of its Subsidiaries, whether or
not employed by North Fork or any of its Subsidiaries, has reported evidence of
a material violation of securities laws, breach of fiduciary duty or similar
violation by North Fork or any of its officers, directors, employees or agents
to the Board of Directors of North Fork or any committee thereof or to any
director or officer of North Fork.
3.7 BROKER'S FEES. Neither North Fork nor any North Fork Subsidiary nor any of
their respective officers or directors has employed any broker or finder or
incurred any liability for any broker's fees, commissions or finder's fees in
connection with the Merger or related transactions contemplated by this
Agreement, other than Sandler ▇'▇▇▇▇▇ & Partners, L.P. and ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ &
▇▇▇▇▇, Inc. pursuant to the letter agreements between North Fork and Sandler
▇'▇▇▇▇▇ & Partners, L.P. and North Fork and ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, Inc, true,
complete and correct copies of which have been previously delivered to Capital
One.
3.8 ABSENCE OF CERTAIN CHANGES OR EVENTS. (a) Since December 31, 2005, except as
publicly disclosed by North Fork in the North Fork SEC Reports filed or
furnished prior to the date hereof
18
or as disclosed in the Draft 10-K, no event or events have occurred that have
had or are reasonably likely to have, either individually or in the aggregate, a
Material Adverse Effect on North Fork. As used in this Agreement, the term
"MATERIAL ADVERSE EFFECT" means, with respect to Capital One, North Fork or the
Surviving Corporation, as the case may be, a material adverse effect on (i) the
business, results of operations or financial condition of such party and its
Subsidiaries taken as a whole (provided, however, that, with respect to this
clause (i), Material Adverse Effect shall not be deemed to include effects to
the extent resulting from (A) changes, after the date hereof, in generally
accepted accounting principles or regulatory accounting requirements applicable
to banks or savings associations and their holding companies generally, (B)
changes, after the date hereof, in laws, rules or regulations of general
applicability or interpretations thereof by courts or Governmental Entities, (C)
changes, after the date hereof, in global or national political conditions
(including the outbreak of war or acts of terrorism) or in general economic or
market conditions affecting banks or their holding companies generally except to
the extent that any such changes have a materially disproportionate adverse
effect on such party or (D) public disclosure of the transactions contemplated
hereby), or (ii) the ability of such party to timely consummate the transactions
contemplated by this Agreement.
(b) Since December 31, 2004, through and including the date of this
Agreement, except as publicly disclosed by North Fork in the North Fork SEC
Reports filed or furnished prior to the date hereof or as disclosed in the Draft
10-K, North Fork and its Subsidiaries have carried on their respective
businesses in all material respects in the ordinary course of business
consistent with their past practice.
(c) Since December 31, 2004, neither North Fork nor any North Fork
Subsidiary has (i) except for (A) normal increases for employees (other than
officers subject to the reporting requirements of Section 16(a) of the Exchange
Act) made in the ordinary course of business consistent with past practice, (B)
as publicly disclosed by North Fork in North Fork SEC Reports filed or furnished
prior to the date hereof or (C) as required by applicable law, increased the
wages, salaries, compensation, pension, or other fringe benefits or perquisites
payable to any executive officer, employee, or director from the amount thereof
in effect as of December 31, 2004 (which amounts have been previously made
available to Capital One), granted any severance or termination pay, entered
into any contract to make or grant any severance or termination pay (except as
required under the terms of agreements or severance plans listed on Section 3.11
of the North Fork Disclosure Schedule, as in effect as of the date hereof ), or
paid any bonus other than the customary year-end bonuses in amounts consistent
with past practice, (ii) granted any options to purchase shares of North Fork
Common Stock, any restricted shares of North Fork Common Stock or any right to
acquire any shares of its capital stock to any executive officer, director or
employee other than grants to employees (other than officers subject to the
reporting requirements of Section 16(a) of the Exchange Act) made in the
ordinary course of business consistent with past practice under North Fork Stock
Plans, (iii) changed any accounting methods, principles or practices of North
Fork or its Subsidiaries affecting, its assets, liabilities or businesses,
including any reserving, renewal or residual method, practice or policy or (iv)
suffered any strike, work stoppage, slow-down, or other labor disturbance.
3.9 LEGAL PROCEEDINGS. (a) Neither North Fork nor any North Fork Subsidiary is
a party to any, and there are no pending or, to the best of North Fork's
knowledge, threatened, material
19
legal, administrative, arbitral or other material proceedings, claims, actions
or governmental or regulatory investigations of any nature against North Fork or
any of its Subsidiaries.
(b) There is no Injunction, judgment, or regulatory restriction (other
than those of general application that apply to similarly situated bank holding
companies or their Subsidiaries) imposed upon North Fork, any of its
Subsidiaries or the assets of North Fork or any of its Subsidiaries.
3.10 TAXES AND TAX RETURNS. (a) Each of North Fork and its Subsidiaries has duly
and timely filed (including all applicable extensions) all material Tax Returns
required to be filed by it on or prior to the date of this Agreement (all such
returns being accurate and complete in all material respects), has paid all
Taxes shown thereon as arising and has duly paid or made provision for the
payment of all material Taxes that have been incurred or are due or claimed to
be due from it by federal, state, foreign or local taxing authorities other than
Taxes that are not yet delinquent or are being contested in good faith, have not
been finally determined and have been adequately reserved against. The federal,
state and local income Tax returns of North Fork and its Subsidiaries have been
examined by the Internal Revenue Service (the "IRS") and any applicable state
and local tax authorities for all years to and including 2000 and any liability
with respect thereto has been satisfied or any liability with respect to
deficiencies asserted as a result of such examination is covered by reserves
that are adequate under GAAP. There are no material disputes pending, or claims
asserted, for Taxes or assessments upon North Fork or any of its Subsidiaries
for which North Fork does not have reserves that are adequate under GAAP.
Neither North Fork nor any of its Subsidiaries is a party to or is bound by any
Tax sharing, allocation or indemnification agreement or arrangement (other than
such an agreement or arrangement exclusively between or among North Fork and its
Subsidiaries). Within the past five years, neither North Fork nor any of its
Subsidiaries has been a "distributing corporation" or a "controlled corporation"
in a distribution intended to qualify under Section 355(a) of the Code. Neither
North Fork nor any of its Subsidiaries is required to include in income any
adjustment pursuant to Section 481(a) of the Code, no such adjustment has been
proposed by the IRS and no pending request for permission to change any
accounting method has been submitted by North Fork or any of its Subsidiaries.
Section 3.10(a) of the North Fork Disclosure Schedule sets forth the aggregate
balance of the reserve for bad debts described in Section 593(g)(A)(ii) of the
Code and any similar provision under state or local laws and regulations of
North Fork and its Subsidiaries as of December 31, 2005. Neither North Fork nor
any of its Subsidiaries has participated in a "reportable transaction" within
the meaning of Treasury Regulation section 1.6011-4(b)(1).
(b) As used in this Agreement, the term "TAX" or "TAXES" means (i) all
federal, state, local, and foreign income, excise, gross receipts, gross income,
ad valorem, profits, gains, property, capital, sales, transfer, use, payroll,
employment, severance, withholding, duties, intangibles, franchise, backup
withholding, and other taxes, charges, levies or like assessments together with
all penalties and additions to tax and interest thereon and (ii) any liability
for Taxes described in clause (i) above under Treasury Regulation Section
1.1502-6 (or any similar provision of state, local or foreign law).
(c) As used in this Agreement, the term "TAX RETURN" means a report,
return or other information (including any amendments) required to be supplied
to a governmental
20
entity with respect to Taxes including, where permitted or required, combined or
consolidated returns for any group of entities that includes North Fork or any
of its Subsidiaries.
3.11 EMPLOYEE MATTERS.
(a) Section 3.11 of the North Fork Disclosure Schedule sets forth a
true, complete and correct list of each "employee benefit plan" as defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), whether or not subject to ERISA, and each employment, consulting,
bonus, incentive or deferred compensation, vacation, stock option or other
equity-based, severance, termination, retention, change of control,
profit-sharing, fringe benefit or other similar plan, program, agreement or
commitment for the benefit of any employee, former employee, director or former
director of North Fork or any North Fork Subsidiary entered into, maintained or
contributed to by North Fork or any North Fork Subsidiary or to which North Fork
or any North Fork Subsidiary may have any liability with respect to current or
former employees or directors of North Fork or any North Fork Subsidiary (such
plans, programs, agreements and commitments, herein referred to as the "NORTH
FORK BENEFIT PLANS").
(b) With respect to each North Fork Benefit Plan, North Fork has made
available to Capital One true, complete and correct copies of the following (as
applicable): (i) the written document evidencing such North Fork Benefit Plan
or, with respect to any such plan that is not in writing, a written description
thereof, (ii) the summary plan description; (iii) the most recent annual report,
financial statement and/or actuarial report; (iv) the most recent determination
letter from the IRS; (v) the most recent Form 5500 required to have been filed
with the IRS, including all schedules thereto; (vi) any related trust
agreements, insurance contracts or documents of any other funding arrangements,
(vii) any written communications to or from the IRS or any office or
representative of the Department of Labor relating to any compliance issues in
respect of any such North Fork Benefit Plan and (viii) all amendments,
modifications or supplements to any such document.
(c) North Fork and each North Fork Subsidiary has operated and
administered each North Fork Benefit Plan in compliance with all applicable laws
and the terms of each such plan. The terms of each North Fork Benefit Plan are
in compliance with all applicable laws. Each North Fork Benefit Plan that is
intended to be "qualified" under Section 401 and/or 409 of the Code has received
a favorable determination letter from the IRS to such effect and, to the
knowledge of North Fork, no fact, circumstance or event has occurred or exists
since the date of such determination letter that would reasonably be expected to
adversely affect the qualified status of any such North Fork Benefit Plan. There
are no pending or, to the knowledge of North Fork, threatened or anticipated
claims by, on behalf of or against any of the North Fork Benefit Plans or any
assets thereof (other than routine claims for benefits). All contributions,
premiums and other payments required to be made with respect to any North Fork
Benefit Plan have been made on or before their due dates under applicable law
and the terms of such North Fork Benefit Plan, and with respect to any such
contributions, premiums or other payments required to be made with respect to
any North Fork Benefit Plan that are not yet due, to the extent required by
GAAP, adequate reserves are reflected on the consolidated balance sheet of North
Fork included in the Quarterly Report on Form 10-Q for the quarter ended
September 30, 2005 (including any notes thereto) or liability therefor was
incurred in the ordinary course of business consistent with past practice since
September 30, 2005.
21
(d) With respect to the North Fork Benefits Plans, neither North Fork
nor any North Fork Subsidiary has incurred or reasonably expects to incur,
either directly or indirectly (including as a result of an indemnification or
joint and several liability obligation), any liability under Title I or IV of
ERISA or the penalty, excise tax or joint and several liability provisions of
the Code or any foreign law or regulation relating to employee benefit plans,
and, to the knowledge of North Fork, no event, transaction or condition has
occurred, exists or is reasonably expected to occur which could reasonably be
expected to result in any such liability to North Fork, any North Fork
Subsidiary or, after the Closing, to Capital One. With respect to each North
Fork Benefit Plan which is an "employee pension benefit plan" (within the
meaning of Section 3(2) of ERISA): (i) no such plan is a "multiemployer plan"
(within the meaning of Section 3(37) of ERISA) or a "multiple employer plan"
(within the meaning of Section 413(c) of the Code), and (ii) no "reportable
event" (as defined in Section 4043 of ERISA) has occurred with respect to any
such plan within the past 12 months.
(e) Neither the execution or delivery of this Agreement nor the
consummation of the transactions contemplated by this Agreement will, either
alone or in conjunction with any other event, (i) result in any payment or
benefit becoming due or payable, or required to be provided, to any director,
employee or independent contractor of North Fork or any of its Subsidiaries,
(ii) increase the amount or value of any benefit or compensation otherwise
payable or required to be provided to any such director, employee or independent
contractor, (iii) result in the acceleration of the time of payment, vesting or
funding of any such benefit or compensation or (iv) result in any amount failing
to be deductible by reason of Section 280G of the Code.
(f) No payment made or to be made in respect of any employee or former
employee of North Fork or any of its Subsidiaries is or will be nondeductible by
reason of Section 162(m) of the Code.
(g) Neither North Fork nor any of its Subsidiaries is a party to or
bound by any labor or collective bargaining agreement and there are no
organizational campaigns, petitions or other unionization activities seeking
recognition of a collective bargaining unit with respect to, or otherwise
attempting to represent, any of the employees of North Fork or any of its
Subsidiaries. There are no labor related controversies, strikes, slowdowns,
walkouts or other work stoppages pending or, to the knowledge of North Fork,
threatened and neither North Fork nor any of its Subsidiaries has experienced
any such labor related controversy, strike, slowdown, walkout or other work
stoppage within the past three years. Neither North Fork nor any of its
Subsidiaries is a party to, or otherwise bound by, any consent decree with, or
citation by, any Governmental Entity relating to employees or employment
practices. Each of North Fork and its Subsidiaries are in compliance with all
applicable laws, statutes, orders, rules, regulations, policies or guidelines of
any Governmental Entity relating to labor, employment, termination of employment
or similar matters and have not engaged in any unfair labor practices or similar
prohibited practices.
(h) On or prior to the date hereof, North Fork has taken all necessary
steps to ensure that (a) the maximum amount payable under or with respect to the
North Fork Performance Plan (the "PERFORMANCE PLAN") (inclusive of all tax
gross-ups) is $50,000,000, and (b) none of ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇ or ▇▇▇▇▇▇
▇▇▇▇▇ will receive any payments or awards under or in connection with the
Performance Plan.
22
3.12 COMPLIANCE WITH APPLICABLE LAW. (a) North Fork and each North Fork
Subsidiary holds all material licenses, franchises, permits and authorizations
necessary for the lawful conduct of their respective businesses under and
pursuant to each, and have complied in all respects with and are not in default
in any material respect under any, applicable law, statute, order, rule,
regulation, policy or guideline of any Governmental Entity relating to North
Fork or any of its Subsidiaries.
(b) North Fork and each North Fork Subsidiary has properly
administered all accounts for which it acts as a fiduciary, including accounts
for which it serves as a trustee, agent, custodian, personal representative,
guardian, conservator or investment advisor, in accordance with the terms of the
governing documents, applicable state and federal law and regulation and common
law. None of North Fork, any North Fork Subsidiary, or any director, officer or
employee of North Fork or of any North Fork Subsidiary has committed any breach
of trust or fiduciary duty with respect to any such fiduciary account and the
accountings for each such fiduciary account are true and correct and accurately
reflect the assets of such fiduciary account.
(c) Since the enactment of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act, North Fork has been
and is in compliance in all material respects with (i) the applicable provisions
of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act and (ii) the applicable listing and corporate
governance rules and regulations of the NYSE. Section 3.12(c) of North Fork
Disclosure Schedule sets forth, as of December 30, 2005, a schedule of all
officers and directors of North Fork who have outstanding loans from North Fork,
and there has been no default on, or forgiveness or waiver of, in whole or in
part, any such loan during the two years immediately preceding the date hereof.
3.13 CERTAIN CONTRACTS. (a) Neither North Fork nor any North Fork Subsidiary is
a party to or bound by any contract, arrangement, commitment or understanding
(whether written or oral) (i) with respect to the employment of any directors,
officers, employees or consultants, other than in the ordinary course of
business consistent with past practice, (ii) which, upon execution of this
Agreement or consummation or stockholder approval of the transactions
contemplated by this Agreement will (either alone or upon the occurrence of any
additional acts or events) result in any payment or benefits (whether of
severance pay or otherwise) becoming due from Capital One, North Fork, the
Surviving Corporation, or any of their respective Subsidiaries to any officer or
employee of North Fork or any Subsidiary thereof, (iii) that is a "material
contract" (as such term is defined in Item 601(b)(10) of Regulation S-K of the
SEC) to be performed after the date of this Agreement that has not been filed or
incorporated by reference in North Fork SEC Reports filed prior to the date
hereof or (iv) that materially restricts the conduct of any line of business by
North Fork or, to the knowledge of North Fork, upon consummation of the Merger
will materially restrict the ability of the Surviving Corporation to engage in
any line of business in which a bank holding company may lawfully engage. Each
contract, arrangement, commitment or understanding of the type described in this
Section 3.13, whether or not set forth in North Fork Disclosure Schedule, is
referred to as a "NORTH FORK CONTRACT," and neither North Fork nor any of its
Subsidiaries knows of, or has received notice of, any violation of any North
Fork Contract by any of the other parties thereto.
(b) (i) Each North Fork Contract is valid and binding on North Fork or
its applicable Subsidiary and is in full force and effect, (ii) North Fork and
each North Fork Subsidiary has in all material respects performed all
obligations required to be performed by it to
23
date under each North Fork Contract, and (iii) no event or condition exists that
constitutes or, after notice or lapse of time or both, will constitute, a
material default on the part of North Fork or any of its Subsidiaries under any
such North Fork Contract.
3.14 RISK MANAGEMENT INSTRUMENTS. (a) "DERIVATIVE TRANSACTIONS" means any swap
transaction, option, warrant, forward purchase or sale transaction, futures
transaction, cap transaction, floor transaction or collar transaction relating
to one or more currencies, commodities, bonds, equity securities, loans,
interest rates, events or conditions (credit-related or otherwise) or any
indexes, or any other similar transaction or combination of any of these
transactions, and any collateralized debt obligations or other similar
instruments or any debt or equity instruments evidencing or embedding any such
types of transactions, and any related credit support, collateral or other
similar arrangements related to such transactions; provided that, for the
avoidance of doubt, the term "Derivative Transactions" shall not include any
North Fork Stock Option.
(b) All Derivative Transactions, whether entered into for the account
of North Fork or any North Fork Subsidiary or for the account of a customer of
North Fork or any North Fork Subsidiary, were duly authorized by North Fork and
entered into in the ordinary course of business consistent with past practice
and in accordance with prudent banking practice and applicable laws, rules,
regulations and policies of any Regulatory Authority and in accordance with the
investment, securities, commodities, risk management and other policies,
practices and procedures employed by North Fork and its Subsidiaries, and with
counterparties believed at the time to be financially responsible and able to
understand (either alone or in consultation with their advisers) and to bear the
risks of such Derivative Transactions. All of such Derivative Transactions are
legal, valid and binding obligations of North Fork or a North Fork Subsidiary
enforceable against it in accordance with their terms (except as may be limited
by bankruptcy, insolvency, moratorium, reorganization or similar laws affecting
the rights of creditors generally and subject to general principles of equity),
and are in full force and effect. North Fork and each applicable North Fork
Subsidiary have duly performed their obligations under the Derivative
Transactions to the extent that such obligations to perform have accrued and, to
North Fork's knowledge, there are no breaches, violations or defaults or
allegations or assertions of such by any party thereunder.
(c) Except as set forth in Section 3.14(c) of the North Fork
Disclosure Schedule, as of January 1, 2003, no Derivative Transaction, were it
to be a Loan held by North Fork or any North Fork Subsidiary, would be
classified as "Other Loans Specially Mentioned", "Special Mention",
"Substandard", "Doubtful", "Loss", or words of similar import ("NORTH FORK
CRITICIZED ASSETS"). The financial position of North Fork and its Subsidiaries
on a consolidated basis under or with respect to such Derivative Transaction has
been reflected in the books and records of North Fork and such North Fork
Subsidiary in accordance with GAAP consistently applied, and as of the date
hereof, no open exposure of North Fork and of any North Fork Subsidiary with
respect to any such instrument (or with respect to multiple instruments with
respect to any single counterparty) exceeds $500,000.
3.15 INVESTMENT SECURITIES AND COMMODITIES. (a) Each of North Fork and each
North Fork Subsidiary has good title to all securities and commodities owned by
it (except those sold under repurchase agreements or held in any fiduciary or
agency capacity), free and clear of any Lien, except to the extent such
securities or commodities are pledged in the ordinary course of
24
business to secure obligations of North Fork or its Subsidiaries. Such
securities and commodities are valued on the books of North Fork in accordance
with GAAP in all material respects.
(b) North Fork and its Subsidiaries and their respective businesses
employ investment, securities, commodities, risk management and other policies,
practices and procedures (the "POLICIES, PRACTICES AND PROCEDURES") which North
Fork believes are prudent and reasonable in the context of such businesses.
Prior to the date hereof, North Fork has made available to Capital One in
writing the material Policies, Practices and Procedures.
3.16 LOAN PORTFOLIO. (a) Section 3.16(a) of the North Fork Disclosure Schedule
sets forth (i) the aggregate outstanding principal amount, as of December 31,
2005, of all written or oral loan agreements, notes or borrowing arrangements
(including leases, credit enhancements, commitments, guarantees and
interest-bearing assets) payable to North Fork or its Subsidiaries
(collectively, "LOANS"), other than "non-accrual" Loans, and (ii) the aggregate
outstanding principal amount, as of December 31, 2005, of all "non-accrual"
Loans. As of December 31, 2005, North Fork and its Subsidiaries, taken as a
whole, did not have outstanding Loans and assets classified as "Other Real
Estate Owned" with an aggregate then outstanding, fully committed principal
amount in excess of that amount set forth on Section 3.16(a) of the North Fork
Disclosure Schedule, net of specific reserves with respect to such Loans and
assets, that were designated as of such date by North Fork as North Fork
Criticized Assets. Section 3.16(a) of the North Fork Disclosure Schedule sets
forth (A) a summary of North Fork Criticized Assets as of December 31, 2005, by
category of Loan (e.g., commercial, consumer, etc.), together with the aggregate
principal amount of such Loans by category and the amount of specific reserves
with respect to each such category of Loan and the amount of reserves with
respect to each such category of Loans and (B) each asset of North Fork or any
of its Subsidiaries that, as of December 31, 2005, is classified as "Other Real
Estate Owned" and the book value thereof.
(b) Each Loan (i) is evidenced by notes, agreements or other evidences
of indebtedness which are true, genuine and what they purport to be, (ii) to the
extent secured, has been secured by valid liens and security interests which
have been perfected and (iii) is the legal, valid and binding obligation of the
obligor named therein, enforceable in accordance with its terms (except as may
be limited by bankruptcy, insolvency, moratorium, reorganization or similar laws
affecting the rights of creditors generally and subject to general principles of
equity). All Loans originated by North Fork or its Subsidiaries, and all such
Loans purchased, administered or serviced by North Fork or its Subsidiaries
(including Loans held for resale to investors), were made or purchased and are
administered or serviced, as applicable, in accordance with customary lending
standards of North Fork or its Subsidiaries, as applicable (and in the case of
Loans held for resale to investors, the lending standards, if any, of such
investors) and in accordance with applicable federal, state and local laws,
regulations and rules. All such Loans (and any related guarantees) and payments
due thereunder are, and on the Closing Date will be, free and clear of any Lien,
and North Fork or its Subsidiaries has complied in all material respects, and on
the Closing Date will have complied in all material respects, with all laws and
regulations relating to such Loans.
(c) None of the agreements pursuant to which North Fork or any of its
Subsidiaries has sold Loans or pools of Loans or participations in Loans or
pools of Loans
25
contains any obligation to repurchase such Loans or interests therein solely on
account of a payment default by the obligor on any such Loan.
(d) Each of North Fork and each North Fork Subsidiary, as applicable,
is approved by and is in good standing (i) as a supervised mortgagee by the
Department of Housing and Urban Development to originate and service Title I FHA
mortgage loans; (ii) as a GNMA I and II Issuer by the Government National
Mortgage Association; (iii) by the Department of Veteran's Affairs to originate
and service VA loans; and (iv) as a seller/servicer by the Federal National
Mortgage Association and the Federal Home Loan Mortgage Corporation to originate
and service conventional residential mortgage Loans (each such entity being
referred to herein as an "AGENCY" and, collectively, the "AGENCIES").
(e) None of North Fork or any of its Subsidiaries is now nor has it
ever been since December 31, 2003 subject to any fine, suspension, settlement or
other agreement or other administrative agreement or sanction by, or any
reduction in any loan purchase commitment from any Agency or any federal or
state agency relating to the origination, sale or servicing of mortgage or
consumer Loans. Neither North Fork nor any of its Subsidiaries has received any
notice, nor does it have any reason to believe, that any Agency proposes to
limit or terminate the underwriting authority of North Fork or any of its
Subsidiaries or to increase the guarantee fees payable to any such Agency.
(f) Each of North Fork and its Subsidiaries is in compliance in all
material respects with all applicable federal, state and local laws, rules and
regulations, including the Truth-In-Lending Act and Regulation Z, the Equal
Credit Opportunity Act and Regulation B, the Real Estate Settlement Procedures
Act and Regulation X, the Fair Credit Reporting Act, the Fair Debt Collection
Practices Act and all Agency and other investor and mortgage insurance company
requirements relating to the origination, sale and servicing of mortgage and
consumer Loans.
(g) To the knowledge of North Fork, each Loan included in a pool of
Loans originated, acquired or serviced by North Fork or any of its Subsidiaries
(a "POOL") meets all eligibility requirements (including all applicable
requirements for obtaining mortgage insurance certificates and loan guaranty
certificates) for inclusion in such Pool. All such Pools have been finally
certified or, if required, recertified in accordance with all applicable laws,
rules and regulations, except where the time for certification or
recertification has not yet expired. To the knowledge of North Fork, no Pools
have been improperly certified, and no Loan has been bought out of a Pool
without all required approvals of the applicable investors.
3.17 PROPERTY. North Fork or a North Fork Subsidiary (a) has good and marketable
title to all the properties and assets reflected in the latest audited balance
sheet included in North Fork SEC Reports as being owned by North Fork or a North
Fork Subsidiary or acquired after the date thereof (except properties sold or
otherwise disposed of since the date thereof in the ordinary course of business)
(the "NORTH FORK OWNED PROPERTIES"), free and clear of all Liens of any nature
whatsoever, except (i) statutory Liens securing payments not yet due, (ii) Liens
for real property Taxes not yet due and payable, (iii) easements, rights of way,
and other similar encumbrances that do not materially affect the use of the
properties or assets subject thereto or affected thereby or otherwise materially
impair business operations at such properties and (iv) such imperfections or
irregularities of title or Liens as do not materially affect the use of the
26
properties or assets subject thereto or affected thereby or otherwise materially
impair business operations at such properties (collectively, "PERMITTED
ENCUMBRANCES"), and (b) is the lessee of all leasehold estates reflected in the
latest audited financial statements included in such North Fork SEC Reports or
acquired after the date thereof (except for leases that have expired by their
terms since the date thereof) (the "NORTH FORK LEASED PROPERTIES" and,
collectively with the North Fork Owned Properties, the "NORTH FORK REAL
PROPERTY"), free and clear of all Liens of any nature whatsoever, except for
Permitted Encumbrances, and is in possession of the properties purported to be
leased thereunder, and each such lease is valid without default thereunder by
the lessee or, to North Fork's knowledge, the lessor. The North Fork Real
Property is in material compliance with all applicable zoning laws and building
codes, and the buildings and improvements located on the North Fork Real
Property are in good operating condition and in a state of good working order,
ordinary wear and tear excepted. There are no pending or, to the knowledge of
North Fork, threatened condemnation proceedings against the North Fork Real
Property. North Fork and its Subsidiaries are in compliance with all applicable
health and safety related requirements for the North Fork Real Property,
including those under the Americans with Disabilities Act of 1990 and the
Occupational Health and Safety Act of 1970.
3.18 INTELLECTUAL PROPERTY. North Fork and each of its Subsidiaries owns, or is
licensed to use (in each case, free and clear of any Liens), all Intellectual
Property used in or necessary for the conduct of its business as currently
conducted. The use of any Intellectual Property by North Fork and its
Subsidiaries does not, to the knowledge of North Fork, infringe on or otherwise
violate the rights of any person and is in accordance with any applicable
license pursuant to which North Fork or any North Fork Subsidiary acquired the
right to use any Intellectual Property. No person is challenging, infringing on
or otherwise violating any right of North Fork or any of its Subsidiaries with
respect to any Intellectual Property owned by and/or licensed to North Fork or
its Subsidiaries. Neither North Fork nor any North Fork Subsidiary has received
any written notice of any pending claim with respect to any Intellectual
Property used by North Fork or any North Fork Subsidiary and no Intellectual
Property owned and/or licensed by North Fork or any North Fork Subsidiary is
being used or enforced in a manner that would be expected to result in the
abandonment, cancellation or unenforceability of such Intellectual Property. For
purposes of this Agreement, "INTELLECTUAL PROPERTY" means trademarks, service
marks, brand names, certification marks, trade dress and other indications of
origin, the goodwill associated with the foregoing and registrations in any
jurisdiction of, and applications in any jurisdiction to register, the
foregoing, including any extension, modification or renewal of any such
registration or application; inventions, discoveries and ideas, whether
patentable or not, in any jurisdiction; patents, applications for patents
(including divisions, continuations, continuations in part and renewal
applications), and any renewals, extensions or reissues thereof, in any
jurisdiction; nonpublic information, trade secrets and confidential information
and rights in any jurisdiction to limit the use or disclosure thereof by any
person; writings and other works, whether copyrightable or not, in any
jurisdiction; and registrations or applications for registration of copyrights
in any jurisdiction, and any renewals or extensions thereof; and any similar
intellectual property or proprietary rights.
3.19 ENVIRONMENTAL LIABILITY. There are no legal, administrative, arbitral or
other proceedings, claims, actions, causes of action or notices with respect to
any environmental, health or safety matters or any private or governmental
environmental, health or safety investigations or remediation activities of any
nature seeking to impose, or that are reasonably likely to result in, any
liability or obligation of North Fork or any of its Subsidiaries arising under
common law or
27
under any local, state or federal environmental, health or safety statute,
regulation or ordinance, including the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, pending or threatened
against North Fork or any of its Subsidiaries. To the knowledge of North Fork,
there is no reasonable basis for, or circumstances that are reasonably likely to
give rise to, any such proceeding, claim, action, investigation or remediation
by any Governmental Entity or any third party that would give rise to any
liability or obligation on the part of North Fork or any of its Subsidiaries.
Neither North Fork nor any of its Subsidiaries is subject to any agreement,
order, judgment, decree, letter or memorandum by or with any Governmental Entity
or third party imposing any liability or obligation with respect to any of the
foregoing.
3.20 INVESTMENT ADVISER SUBSIDIARIES; FUNDS; CLIENTS.
(a) For purposes of this Agreement, a "NORTH FORK ADVISORY ENTITY"
means, if applicable, North Fork and any of its Subsidiaries that provides
investment management, investment advisory or sub-advisory services to any
person (including management and advice provided to separate accounts and
participation in wrap fee programs); "NORTH FORK ADVISORY CONTRACT" means each
contract for such services provided by a North Fork Advisory Entity; "NORTH FORK
ADVISORY CLIENT" means each party to a North Fork Advisory Contract other than
the applicable North Fork Advisory Entity or any other advisory client of North
Fork for purposes of the Investment Advisers Act of 1940, as amended, and the
rules and regulations promulgated thereunder (the "INVESTMENT ADVISERS ACT");
"NORTH FORK FUND CLIENT" means each North Fork Advisory Client that is required
to be registered as an investment company under the Investment Company Act of
1940, as amended, and the rules and regulations promulgated thereunder (the
"INVESTMENT COMPANY ACT"); and "SPONSORED" means, when used with respect to any
North Fork Fund Client, any such North Fork Fund Client a majority of the
officers of which are employees of North Fork or any North Fork Subsidiary or of
which North Fork or any North Fork Subsidiary holds itself out as the sponsor.
(b) Each Sponsored North Fork Fund Client and North Fork Advisory
Entity (i) has since January 1, 2003 operated and is currently operating in
compliance with all laws, regulations, rules, judgments, orders or rulings of
any Governmental Entity applicable to it or its business and (ii) has all
registrations, permits, licenses, exemptions, orders and approvals required for
the operation of its business or ownership of its properties and assets as
presently conducted. There is no action, suit, proceeding or investigation
pending or, to the knowledge of North Fork, threatened that would reasonably be
expected to lead to the revocation, amendment, failure to renew, limitation,
suspension or restriction of any such registrations, permits, licenses,
exemptions, orders and approvals.
(c) Each North Fork Advisory Entity has been and is in compliance with
each North Fork Advisory Contract to which it is a party.
(d) The accounts of each North Fork Advisory Client subject to ERISA
have been managed by the applicable North Fork Advisory Entity in compliance
with the applicable requirements of ERISA.
(e) Neither North Fork nor any North Fork Advisory Entity nor any
"affiliated person" (as defined in the Investment Company Act) of any of them is
ineligible pursuant to
28
Section 9(a) or (b) of the Investment Company Act to serve as an investment
adviser (or in any other capacity contemplated by the Investment Company Act) to
a registered investment company; none of North Fork, any North Fork Advisory
Entity or any "person associated with an investment advisor" (as defined in the
Investment Advisers Act) of any of them is ineligible pursuant to Section 203 of
the Investment Advisers Act to serve as an investment advisor or as a person
associated with a registered investment advisor; and none of North Fork, any
North Fork Advisory Entity or any "associated person" (as defined in the
Exchange Act) of any of them is ineligible pursuant to Section 15(b) of the
Exchange Act to serve as a broker-dealer or as an associated person to a
registered broker-dealer.
(f) North Fork has made available to Capital One true, correct and
complete copies of each Uniform Application for Investment Adviser Registration
on Form ADV filed since January 1, 2004 by each North Fork Advisory Entity that
is required to be registered as an investment adviser under the Investment
Advisers Act, reflecting all amendments thereto to the date hereof (each, a
"FORM ADV"). The Forms ADV are in material compliance with the applicable
requirements of the Investment Advisers Act and do 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. Since January 1, 2003,
each North Fork Advisory Entity has made available to each North Fork Advisory
Client its Form ADV to the extent required by the Investment Advisers Act.
(g) North Fork has made available to Capital One true, correct and
complete copies of all deficiency letters and inspection reports or similar
documents furnished to North Fork by the SEC since January 1, 2003 and North
Fork's responses thereto, if any.
3.21 BROKER-DEALER SUBSIDIARIES.
(a) Each North Fork Subsidiary that is a broker-dealer (a
"BROKER-DEALER SUBSIDIARY") is duly registered under the Exchange Act as a
broker-dealer with the SEC, and is in compliance in all material respects with
the applicable provisions of the Exchange Act, including the net capital
requirements and customer protection requirements thereof. Each Broker-Dealer
Subsidiary is a member in good standing with all required SROs and in compliance
in all material respects with all applicable rules and regulations of such SROs.
Each Broker-Dealer Subsidiary and registered representative is duly registered,
licensed or qualified as a broker-dealer or registered representative under, and
in compliance in all material respects with, the applicable laws and regulations
of all jurisdictions in which it is required to be so registered and each such
registration, license or qualification is in full force and effect and in good
standing. There is no action, suit, proceeding or investigation pending or, to
the knowledge of North Fork, threatened that would reasonably be expected to
lead to the revocation, amendment, failure to renew, limitation, suspension or
restriction of any such registrations, licenses and qualifications.
(b) North Fork has made available to Capital One true, correct and
complete copies of each Broker-Dealer Subsidiary's Uniform Application for
Broker-Dealer Registration on Form BD filed since January 1, 2003, reflecting
all amendments thereto to the date hereof (each, a "FORM BD"). The Forms BD of
the Broker-Dealer Subsidiaries are in compliance in all material respects with
the applicable requirements of the Exchange Act and do not contain any untrue
statement of a material fact or omit to state a material fact required to be
29
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(c) None of the Broker-Dealer Subsidiaries nor any "associated person"
thereof (i) is subject to a "statutory disqualification" as such terms are
defined in the Exchange Act, or (ii) is subject to a disqualification that would
be a basis for censure, limitations on the activities, functions or operations
of, or suspension or revocation of the registration of any Broker-Dealer
Subsidiary as broker-dealer, municipal securities dealer, government securities
broker or government securities dealer under Section 15, Section 15B or Section
15C of the Exchange Act.
(d) Subject to the foregoing, neither North Fork nor its Subsidiaries
is required to be registered as a commodity trading advisor, commodity pool
operator, futures commission merchant or introducing broker under any laws or
regulations.
3.22 STATE TAKEOVER LAWS. The Board of Directors of North Fork has unanimously
approved this Agreement and the North Fork Option Agreement and the transactions
contemplated hereby and thereby as required to render inapplicable to this
Agreement and the North Fork Option Agreement and the transactions contemplated
hereby and thereby, the restrictions on "business combinations" set forth in
Section 203 of the DGCL and, to the knowledge of North Fork, similar
"moratorium," "control share," "fair price," "takeover" or "interested
stockholder" law (any such laws, "TAKEOVER STATUTES").
3.23 REORGANIZATION; APPROVALS. As of the date of this Agreement, North Fork (a)
is not aware of any fact or circumstance that could reasonably be expected to
prevent the Merger from qualifying as a "reorganization" within the meaning of
Section 368(a) of the Code, and (b) knows of no reason why all regulatory
approvals from any Governmental Entity required for the consummation of the
transactions contemplated by this Agreement should not be obtained on a timely
basis.
3.24 OPINIONS. Prior to the execution of this Agreement, North Fork has received
opinions from each of Sandler ▇'▇▇▇▇▇ & Partners, L.P. and ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ &
▇▇▇▇▇, Inc. to the effect that as of the date of each opinion and based upon and
subject to the matters set forth in each such opinion, the Merger Consideration
is fair to the stockholders of North Fork from a financial point of view. Such
opinions have not been amended or rescinded as of the date of this Agreement.
North Fork has provided Capital One with true, correct and complete copies of
such opinions for informational purposes.
3.25 NORTH FORK INFORMATION. The information relating to North Fork and its
Subsidiaries that is provided by North Fork or its representatives for inclusion
in the Joint Proxy Statement and the Form S-4, or in any other document filed
with any other Regulatory Agency or Governmental Entity in connection with the
transactions contemplated by this Agreement, will not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements therein, in light of the circumstances in which they are made,
not misleading. The portions of the Joint Proxy Statement relating to North Fork
and other portions within the reasonable control of North Fork will comply in
all material respects with the provisions of the Exchange Act and the rules and
regulations thereunder.
30
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF CAPITAL ONE
Subject to Section 9.2 and except as disclosed in the disclosure
schedule (the "CAPITAL ONE DISCLOSURE SCHEDULE") delivered by Capital One to
North Fork prior to the execution of this Agreement (which schedule sets forth,
among other things, items, the disclosure of which is necessary or appropriate,
either in response to an express disclosure requirement contained in a provision
hereof or as an exception to one or more representations or warranties contained
in this Article IV, or to one or more of Capital One's covenants, provided,
however, that disclosure in any section of such Capital One Disclosure Schedule
shall apply only to the indicated Section of this Agreement except to the extent
that it is reasonably apparent that such disclosure is relevant to another
section of this Agreement, and provided further that notwithstanding anything in
this Agreement to the contrary, (i) no item is required to be set forth in such
schedule as an exception to a representation or warranty if its absence would
not result in the related representation or warranty being deemed untrue or
incorrect under the standard established by Section 9.2), Capital One hereby
represents and warrants to North Fork as follows:
4.1 CORPORATE ORGANIZATION. (a) Capital One is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of Delaware.
Capital One has the corporate power and authority to own or lease all of its
properties and assets and to carry on its business as it is now being conducted,
and is duly licensed or qualified to do business in each jurisdiction in which
the nature of the business conducted by it or the character or location of the
properties and assets owned or leased by it makes such licensing or
qualification necessary. Capital One is duly registered as a bank holding
company under the BHC Act and is a financial holding company pursuant to Section
4(l) of the BHC Act and meets the applicable requirements for qualification as
such. True, complete and correct copies of the Amended Restated Certificate of
Incorporation, as amended (the "CAPITAL ONE CERTIFICATE"), and Amended Restated
Bylaws of Capital One, as amended (the "CAPITAL ONE BY-LAWS"), as in effect as
of the date of this Agreement, have previously been made available to North
Fork.
(b) Each Capital One Subsidiary (i) is duly incorporated or duly
formed, as applicable to each such Subsidiary, and validly existing under the
laws of its jurisdiction of organization, (ii) is duly licensed or qualified to
do business and in good standing in all jurisdictions (whether federal, state,
local or foreign) where its ownership or leasing of property or the conduct of
its business requires it to be so qualified, and (iii) has all requisite
corporate power or other power and authority to own or lease its properties and
assets and to carry on its business as now conducted.
4.2 CAPITALIZATION. (a) The authorized capital stock of Capital One consists of
1,000,000,000 shares of Capital One Common Stock, of which, as of February 28,
2006 (the "CAPITAL ONE CAPITALIZATION DATE"), 303,855,515 shares were issued and
outstanding, and 50,000,000 shares of preferred stock, $0.01 par value (the
"CAPITAL ONE PREFERRED STOCK"), of which, as of the Capital One Capitalization
Date, no shares were issued and outstanding. As of the Capital One
Capitalization Date, no more than 2,027,885 shares of Capital One Common Stock
were held in Capital One's treasury. As of the Capital One Capitalization Date,
no shares of Capital One Common Stock or Capital One Preferred Stock were
reserved for issuance, except for (i)
31
4,558,820 shares of Capital One Common Stock reserved for issuance upon exercise
of options issued pursuant to employee and director stock plans of Capital One
in effect as of the date of this Agreement (the "CAPITAL ONE STOCK PLANS"), (ii)
shares of Capital One Common Stock reserved for issuance pursuant to the Capital
One Option Agreement, (iii) 1,196,240 shares of Capital One Common Stock
reserved for issuance pursuant to Capital One Financial Corporation 2002
Associate Stock Purchase Plan and (iv) 11,087,688 shares of Capital One Common
Stock reserved for issuance pursuant to the 1997 Dividend Reinvestment and Stock
Purchase Plan and 2002 Dividend Reinvestment and Stock Purchase Plan. All of the
issued and outstanding shares of Capital One Common Stock have been duly
authorized and validly issued and are fully paid, nonassessable and free of
preemptive rights, with no personal liability attaching to the ownership
thereof. As of the date of this Agreement, no Voting Debt of Capital One is
issued or outstanding. As of the Capital One Capitalization Date, except
pursuant to this Agreement, the Capital One Option Agreement, the Capital One
Stock Plans, and stock repurchase plans entered into by Capital One from time to
time, Capital One does not have and is not bound by any outstanding
subscriptions, options, warrants, calls, rights, commitments or agreements of
any character calling for the purchase or issuance of any shares of Capital One
Common Stock, Voting Debt or any other equity securities of Capital One or any
securities representing the right to purchase or otherwise receive any shares of
Capital One Common Stock, Voting Debt or other equity securities of Capital One.
The shares of Capital One Common Stock to be issued pursuant to the Merger will
be duly authorized and validly issued and, at the Effective Time, all such
shares will be fully paid, nonassessable and free of preemptive rights, with no
personal liability attaching to the ownership thereof.
(b) Except for director qualifying shares, all of the issued and
outstanding shares of capital stock or other equity ownership interests of each
Capital One Subsidiary are owned by Capital One, directly or indirectly, free
and clear of any Liens, and all of such shares or equity ownership interests are
duly authorized and validly issued and are fully paid, nonassessable (subject to
12 U.S.C. ss. 55) and free of preemptive rights. No such Capital One Subsidiary
has or is bound by any outstanding subscriptions, options, warrants, calls,
commitments or agreements of any character calling for the purchase or issuance
of any shares of capital stock or any other equity security of such Subsidiary
or any securities representing the right to purchase or otherwise receive any
shares of capital stock or any other equity security of such Subsidiary.
4.3 AUTHORITY; NO VIOLATION. (a) Capital One has full corporate power and
authority to execute and deliver this Agreement and the Option Agreements and to
consummate the transactions contemplated hereby and thereby. The execution and
delivery of this Agreement and the Option Agreements and the consummation of the
transactions contemplated hereby and thereby have been duly, validly and
unanimously approved by the Board of Directors of Capital One. The Board of
Directors of Capital One has determined that this Agreement and the Option
Agreements and the transactions contemplated hereby and thereby are advisable
and in the best interests of Capital One and its stockholders and has directed
that this Agreement be submitted to Capital One's stockholders for approval and
adoption at a duly held meeting of such stockholders and has adopted a
resolution to the foregoing effect. Except for the approval and adoption of this
Agreement by the affirmative vote of the holders of a majority of the
outstanding shares of Capital One Common Stock entitled to vote at such meeting,
no other corporate proceedings on the part of Capital One are necessary to
approve this Agreement or the Option Agreements or to consummate the
transactions contemplated hereby or thereby. This Agreement
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and the Option Agreements have been duly and validly executed and delivered by
Capital One and (assuming due authorization, execution and delivery by North
Fork) constitute the valid and binding obligations of Capital One, enforceable
against Capital One in accordance with their terms (except as may be limited by
bankruptcy, insolvency, moratorium, reorganization or similar laws affecting the
rights of creditors generally and subject to general principles of equity).
(b) Neither the execution and delivery of this Agreement or the Option
Agreements by Capital One, nor the consummation by Capital One of the
transactions contemplated hereby or thereby, nor compliance by Capital One with
any of the terms or provisions of this Agreement or the Option Agreements, will
(i) violate any provision of the Capital One Certificate or the Capital One
By-laws, or (ii) assuming that the consents, approvals and filings referred to
in Section 4.4 are duly obtained and/or made, (A) violate any statute, code,
ordinance, rule, regulation, judgment, order, writ, decree or Injunction
applicable to Capital One, any Capital One Subsidiary or any of their respective
properties or assets or (B) violate, conflict with, result in a breach of any
provision of or the loss of any benefit under, constitute a default (or an event
which, with notice or lapse of time, or both, would constitute a default) under,
result in the termination of or a right of termination or cancellation under,
accelerate the performance required by, or result in the creation of any Lien
upon any of the respective properties or assets of Capital One or any of its
Subsidiaries under, any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, deed of trust, license, lease, agreement or other
instrument or obligation to which Capital One or any of its Subsidiaries is a
party or by which any of them or any of their respective properties or assets is
bound.
4.4 CONSENTS AND APPROVALS. Except for (i) the filing of applications and
notices, as applicable, with the Federal Reserve Board under the BHC Act and
approval of such applications and notices, (ii) the filing of applications and
notices, as applicable, with the NYSBD and approval of such applications and
notices, (iii) the Other Regulatory Approvals, (iv) the filing with the SEC of
the Joint Proxy Statement and the filing and declaration of effectiveness of the
Form S-4 and the filing and effectiveness of the registration statement
contemplated by Section 1.6(e), (v) the filing of the Certificate of Merger with
the Secretary of State of the State of Delaware pursuant to the DGCL, (vi) any
notices to or filings with the SBA, (vii) any consents, authorizations,
approvals, filings or exemptions in connection with compliance with the rules
and regulations of any applicable SRO, and the rules of the NYSE, or that are
required under consumer finance, mortgage banking and other similar laws, (viii)
such filings and approvals as are required to be made or obtained under the
securities or "Blue Sky" laws of various states in connection with the issuance
of the shares of Capital One Common Stock pursuant to this Agreement and
approval of listing of such Capital One Common Stock on the NYSE, and (ix) any
notices or filings under the HSR Act, no consents or approvals of or filings or
registrations with any Governmental Entity are necessary in connection with the
consummation by Capital One of the Merger and the other transactions
contemplated by this Agreement or the Option Agreements. No consents or
approvals of or filings or registrations with any Governmental Entity are
necessary in connection with the execution and delivery by Capital One of this
Agreement or the Option Agreements.
4.5 REPORTS; REGULATORY MATTERS.
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(a) Capital One and each Capital One Subsidiary has timely filed all
reports, registrations and statements, together with any amendments required to
be made with respect thereto, that it was required to file since January 1, 2003
with the Regulatory Agencies or any Governmental Entity, and all other reports
and statements required to be filed by them since January 1, 2003, including any
report or statement required to be filed pursuant to the laws, rules or
regulations of the United States, any state, any foreign entity, or any
Regulatory Agency or Governmental Entity, and have paid all fees and assessments
due and payable in connection therewith. Except for normal examinations
conducted by a Regulatory Agency or Governmental Entity in the ordinary course
of the business of Capital One and its Subsidiaries, no Regulatory Agency or
Governmental Entity has initiated since January 1, 2003 or has pending any
proceeding, enforcement action or, to the knowledge of Capital One,
investigation into the business, disclosures or operations of Capital One or any
of its Subsidiaries. Since January 1, 2003, no Regulatory Agency or Governmental
Entity has resolved any proceeding, enforcement action or, to the knowledge of
Capital One, investigation into the business, disclosures or operations of
Capital One or any of its Subsidiaries. There is no unresolved violation,
criticism, or exception by any Regulatory Agency or Governmental Entity with
respect to any report or statement relating to any examinations or inspections
of Capital One or any of its Subsidiaries. Since January 1, 2003 there has been
no formal or informal inquiries by, or disagreements or disputes with, any
Regulatory Agency with respect to the business, operations, policies or
procedures of Capital One or any of its Subsidiaries.
(b) Neither Capital One nor any Capital One Subsidiary is subject to
any cease-and-desist or other order or enforcement action issued by, or is a
party to any written agreement, consent agreement or memorandum of understanding
with, or is a party to any commitment letter or similar undertaking to, or is
subject to any order or directive by, or has been since January 1, 2003, a
recipient of any supervisory letter from, or has been ordered to pay any civil
money penalty by, or since January 1, 2003, has adopted any policies, procedures
or board resolutions at the request or suggestion of, any Regulatory Agency or
other Governmental Entity that currently restricts in any material respect the
conduct of its business or that in any material manner relates to its capital
adequacy, its ability to pay dividends, its credit, risk management or
compliance policies, its internal controls, its management or its business,
other than those of general application that apply to similarly situated bank
holding companies or their Subsidiaries (each, a "CAPITAL ONE REGULATORY
AGREEMENT"), nor has Capital One or any of its Subsidiaries been advised since
January 1, 2003, by any Regulatory Agency or other Governmental Entity that it
is considering issuing, initiating, ordering or requesting any such Capital One
Regulatory Agreement.
(c) Capital One has previously made available to North Fork an
accurate and complete copy of each (i) final registration statement, prospectus,
report, schedule and definitive proxy statement filed with or furnished to the
SEC by Capital One pursuant to the Securities Act or the Exchange Act and prior
to the date of this Agreement (the "CAPITAL ONE SEC REPORTS") and (ii)
communication mailed by Capital One to its stockholders, in each case since
January 1, 2003 and prior to the date of this Agreement. No such Capital One SEC
Report or communication, at the time filed, furnished or communicated (and, in
the case of registration statements and proxy statements, on the dates of
effectiveness and the dates of the relevant meetings, respectively), contained
any untrue statement of a material fact or omitted to state any material fact
required to be stated therein or necessary in order to make the statements made
therein, in light of the circumstances in which they were made, not misleading,
except that
34
information as of a later date (but before the date of this Agreement) shall be
deemed to modify information as of an earlier date. As of their respective
dates, all Capital One SEC Reports complied as to form in all material respects
with the published rules and regulations of the SEC with respect thereto. No
executive officer of Capital One has failed in any respect to make the
certifications required of him or her under Section 302 or 906 of the
▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act.
4.6 FINANCIAL STATEMENTS.
(a) The financial statements of Capital One and its Subsidiaries
included (or incorporated by reference) in the Capital One SEC Reports
(including the related notes, where applicable, and including any preliminary
financial results furnished to the SEC on Form 8-K) (i) have been prepared from,
and are in accordance with, the books and records of Capital One and its
Subsidiaries; (ii) fairly present in all material respects the consolidated
results of operations, cash flows, changes in stockholders' equity and
consolidated financial position of Capital One and its Subsidiaries for the
respective fiscal periods or as of the respective dates therein set forth
(subject in the case of unaudited statements to recurring year-end audit
adjustments normal in nature and amount); (iii) complied as to form, as of their
respective dates of filing with the SEC, in all material respects with
applicable accounting requirements and with the published rules and regulations
of the SEC with respect thereto; and (iv) have been prepared in accordance with
GAAP consistently applied during the periods involved, except, in each case, as
indicated in such statements or in the notes thereto. The books and records of
Capital One and its Subsidiaries have been, and are being, maintained in all
material respects in accordance with GAAP and any other applicable legal and
accounting requirements and reflect only actual transactions. Ernst & Young LLP
has not resigned or been dismissed as independent public accountants of Capital
One as a result of or in connection with any disagreements with Capital One on a
matter of accounting principles or practices, financial statement disclosure or
auditing scope or procedure.
(b) Neither Capital One nor any Capital One Subsidiary has any
material liability of any nature whatsoever (whether absolute, accrued,
contingent or otherwise and whether due or to become due), except for those
liabilities that are reflected or reserved against on the consolidated balance
sheet of Capital One included in its Annual Report on Form 10-K for the period
ended December 31, 2005 (including any notes thereto) and for liabilities
incurred in the ordinary course of business consistent with past practice since
December 31, 2005 or in connection with this Agreement and the transactions
contemplated hereby.
(c) The records, systems, controls, data and information of Capital
One and its Subsidiaries are recorded, stored, maintained and operated under
means (including any electronic, mechanical or photographic process, whether
computerized or not) that are under the exclusive ownership and direct control
of Capital One or its Subsidiaries or accountants (including all means of access
thereto and therefrom), except for any non-exclusive ownership and non-direct
control that would not reasonably be expected to have a material adverse effect
on the system of internal accounting controls described below in this Section
4.6(c). Capital One (x) has implemented and maintains disclosure controls and
procedures (as defined in Rule 13a-15(e) of the Exchange Act) to ensure that
material information relating to Capital One, including its consolidated
Subsidiaries, is made known to the chief executive officer and the chief
financial officer of Capital One by others within those entities, and (y) has
disclosed, based on its most recent evaluation prior to the date hereof, to
Capital One's outside auditors and the audit
35
committee of Capital One's Board of Directors (i) any significant deficiencies
and material weaknesses in the design or operation of internal controls over
financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) which are
reasonably likely to adversely affect Capital One's ability to record, process,
summarize and report financial information and (ii) any fraud, whether or not
material, that involves management or other employees who have a significant
role in Capital One's internal controls over financial reporting. These
disclosures were made in writing by management to Capital One's auditors and
audit committee and a copy has previously been made available to North Fork. As
of the date hereof, there is no reason to believe that its outside auditors and
its chief executive officer and chief financial officer will not be able to give
the certifications and attestations required pursuant to the rules and
regulations adopted pursuant to Section 404 of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act, without
qualification, when next due.
(d) Since December 31, 2005, (x) through the date hereof, neither
Capital One nor any of its Subsidiaries nor, to the knowledge of the officers of
Capital One, any director, officer, employee, auditor, accountant or
representative of Capital One or any of its Subsidiaries has received or
otherwise had or obtained knowledge of any material complaint, allegation,
assertion or claim, whether written or oral, regarding the accounting or
auditing practices, procedures, methodologies or methods of Capital One or any
of its Subsidiaries or their respective internal accounting controls, including
any material complaint, allegation, assertion or claim that Capital One or any
of its Subsidiaries has engaged in questionable accounting or auditing
practices, and (y) no attorney representing Capital One or any of its
Subsidiaries, whether or not employed by Capital One or any of its Subsidiaries,
has reported evidence of a material violation of securities laws, breach of
fiduciary duty or similar violation by Capital One or any of its officers,
directors, employees or agents to the Board of Directors of Capital One or any
committee thereof or to any director or officer of Capital One.
4.7 BROKER'S FEES. Neither Capital One nor any Capital One Subsidiary nor any
of their respective officers or directors has employed any broker or finder or
incurred any liability for any broker's fees, commissions or finder's fees in
connection with the Merger or related transactions contemplated by this
Agreement, other than ▇.▇. ▇▇▇▇▇▇ Securities Inc. and Citigroup Global Markets
Inc.
4.8 ABSENCE OF CERTAIN CHANGES OR EVENTS. (a) Since December 31, 2005, except as
publicly disclosed by Capital One in the Capital One SEC Reports filed or
furnished prior to the date hereof, no event or events have occurred that have
had or are reasonably likely to have a Material Adverse Effect on Capital One.
(b) Since December 31, 2005 through and including the date of this
Agreement, except as publicly disclosed by Capital One in the Capital One SEC
Reports filed or furnished prior to the date hereof, Capital One and its
Subsidiaries have carried on their respective businesses in all material
respects in the ordinary course of business consistent with their past practice.
4.9 LEGAL PROCEEDINGS. (a) Neither Capital One nor any Capital One Subsidiary is
a party to any, and there are no pending or, to the best of Capital One's
knowledge, threatened, material legal, administrative, arbitral or other
material proceedings, claims, actions or governmental or regulatory
investigations of any nature against Capital One or any of its Subsidiaries.
36
(b) There is no Injunction, judgment, or regulatory restriction (other
than those of general application that apply to similarly situated bank holding
companies or their Subsidiaries) imposed upon Capital One, any of its
Subsidiaries or the assets of Capital One or any of its Subsidiaries.
4.10 TAXES AND TAX RETURNS. Each of Capital One and its Subsidiaries has duly
and timely filed (including all applicable extensions) all material Tax Returns
required to be filed by it on or prior to the date of this Agreement (all such
returns being accurate and complete in all material respects), has paid all
Taxes shown thereon as arising and has duly paid or made provision for the
payment of all material Taxes that have been incurred or are due or claimed to
be due from it by federal, state, foreign or local taxing authorities other than
Taxes that are not yet delinquent or are being contested in good faith, have not
been finally determined and have been adequately reserved against. There are no
material disputes pending, or claims asserted, for Taxes or assessments upon
Capital One or any of its Subsidiaries for which Capital One does not have
reserves that are adequate under GAAP.
4.11 COMPLIANCE WITH APPLICABLE LAW. (a) Capital One and each Capital One
Subsidiary hold all material licenses, franchises, permits and authorizations
necessary for the lawful conduct of their respective businesses under and
pursuant to each, and have complied in all respects with and are not in default
in any material respect under any, applicable law, statute, order, rule,
regulation, policy or guideline of any Governmental Entity relating to Capital
One or any of its Subsidiaries.
(b) Capital One and each Capital One Subsidiary has properly
administered all accounts for which it acts as a fiduciary, including accounts
for which it serves as a trustee, agent, custodian, personal representative,
guardian, conservator or investment advisor, in accordance with the terms of the
governing documents, applicable state and federal law and regulation and common
law. None of Capital One, any Capital One Subsidiary, or any director, officer
or employee of Capital One or of any Capital One Subsidiary has committed any
breach of trust or fiduciary duty with respect to any such fiduciary account and
the accountings for each such fiduciary account are true and correct and
accurately reflect the assets of such fiduciary account.
(c) Since the enactment of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act, Capital One has
been and is in compliance in all material respects with (i) the applicable
provisions of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act and (ii) the applicable listing and
corporate governance rules and regulations of the NYSE. Section 4.11(c) of the
Capital One Disclosure Schedule sets forth, as of the date hereof, a schedule of
all officers and directors of Capital One who have outstanding loans from
Capital One, and there has been no default on, or forgiveness or waiver of, in
whole or in part, any such loan during the two years immediately preceding the
date hereof.
4.12 INTELLECTUAL PROPERTY. Capital One and each of Capital One Subsidiary owns,
or is licensed to use (in each case, free and clear of any Liens), all
Intellectual Property used in or necessary for the conduct of its business as
currently conducted. The use of any Intellectual Property by Capital One and
each Capital One Subsidiary does not, to the knowledge of Capital One, infringe
on or otherwise violate the rights of any person and is in accordance with any
applicable license pursuant to which Capital One or any Capital One Subsidiary
acquired the right to use any Intellectual Property. No person is challenging,
infringing on or otherwise
37
violating any right of Capital One or any Capital One Subsidiary with respect to
any Intellectual Property owned by and/or licensed to Capital One or its
Subsidiaries. Neither Capital One nor any Capital One Subsidiary has received
any written notice of any pending claim with respect to any Intellectual
Property used by Capital One or any Capital One Subsidiary and no Intellectual
Property owned and/or licensed by Capital One or any Capital One Subsidiary is
being used or enforced in a manner that would be expected to result in the
abandonment, cancellation or unenforceability of such Intellectual Property.
4.13 CERTAIN CONTRACTS. (a) Neither Capital One nor any Capital One Subsidiary
is a party to or bound by any contract, arrangement, commitment or understanding
(whether written or oral) (i) that is a "material contract" (as such term is
defined in Item 601(b)(10) of Regulation S-K of the SEC) to be performed after
the date of this Agreement that has not been filed or incorporated by reference
in the Capital One SEC Reports filed prior to the date hereof or (ii) that
materially restricts the conduct of any line of business by Capital One or, to
the knowledge of Capital One, upon consummation of the Merger will materially
restrict the ability of the Surviving Corporation to engage in any line of
business in which a bank holding company may lawfully engage. Each contract,
arrangement, commitment or understanding of the type described in this Section
4.13(a), whether or not set forth in the Capital One Disclosure Schedule, is
referred to as a "CAPITAL ONE CONTRACT," and neither Capital One nor any of its
Subsidiaries knows of, or has received notice of, any violation of any Capital
One Contract by any of the other parties thereto.
(b) (i) Each Capital One Contract is valid and binding on Capital One
or its applicable Subsidiary and is in full force and effect, (ii) Capital One
and each Capital One Subsidiary has in all material respects performed all
obligations required to be performed by it to date under each the Capital One
Contract, and (iii) no event or condition exists that constitutes or, after
notice or lapse of time or both, will constitute, a material default on the part
of Capital One or any of its Subsidiaries under any such Capital One Contract.
4.14 RISK MANAGEMENT INSTRUMENTS. All Derivative Transactions (which for the
avoidance of doubt shall not include any Capital One Stock Option), whether
entered into for the account of Capital One or any Capital One Subsidiary or for
the account of a customer of Capital One or any Capital One Subsidiary, were
duly authorized and entered into in the ordinary course of business consistent
with past practice and in accordance with prudent banking practice and
applicable laws, rules, regulations and policies of any Regulatory Authority and
in accordance with the investment, securities, commodities, risk management and
other policies, practices and procedures employed by Capital One and its
Subsidiaries, and with counterparties believed at the time to be financially
responsible and able to understand (either alone or in consultation with their
advisers) and to bear the risks of such Derivative Transactions. All of such
Derivative Transactions are legal, valid and binding obligations of Capital One
or a Capital One Subsidiary enforceable against it in accordance with their
terms (except as may be limited by bankruptcy, insolvency, moratorium,
reorganization or similar laws affecting the rights of creditors generally and
subject to general principles of equity), and are in full force and effect.
Capital One and each applicable Capital One Subsidiary have duly performed their
obligations under the Derivative Transactions to the extent that such
obligations to perform have accrued and, to Capital One's knowledge, there are
no breaches, violations or defaults or allegations or assertions of such by any
party thereunder.
38
4.15 INVESTMENT SECURITIES AND COMMODITIES. (a) Each of Capital One and each
Capital One Subsidiary has good title to all securities and commodities owned by
it (except those sold under repurchase agreements or held in any fiduciary or
agency capacity), free and clear of any Lien, except to the extent such
securities or commodities are pledged in the ordinary course of business to
secure obligations of Capital One or its Subsidiaries. Such securities and
commodities are valued on the books of Capital One in accordance with GAAP in
all material respects.
(b) Capital One and its Subsidiaries and their respective businesses
employ Policies, Practices and Procedures which Capital One believes are prudent
and reasonable in the context of such businesses. Prior to the date hereof,
Capital One has made available to North Fork in writing the material Policies,
Practices and Procedures.
4.16 PROPERTY. Capital One or a Capital One Subsidiary (a) has good and
marketable title to all the properties and assets reflected in the latest
audited balance sheet included in the Capital One SEC Reports as being owned by
Capital One or a Capital One Subsidiary or acquired after the date thereof
(except properties sold or otherwise disposed of since the date thereof in the
ordinary course of business) (the "CAPITAL ONE OWNED PROPERTIES"), free and
clear of all Liens of any nature whatsoever, except Permitted Encumbrances, and
(b) is the lessee of all leasehold estates reflected in the latest audited
financial statements included in such Capital One SEC Reports or acquired after
the date thereof (except for leases that have expired by their terms since the
date thereof) (the "CAPITAL ONE LEASED PROPERTIES" and, collectively with the
Capital One Owned Properties, the "CAPITAL ONE REAL PROPERTY"), free and clear
of all Liens of any nature whatsoever, except for Permitted Encumbrances, and is
in possession of the properties purported to be leased thereunder, and each such
lease is valid without default thereunder by the lessee or, to the Capital One
knowledge, the lessor. The Capital One Real Property is in material compliance
with all applicable zoning laws and building codes, and the buildings and
improvements located on the Capital One Real Property are in good operating
condition and in a state of good working order, ordinary wear and tear excepted.
There are no pending or, to the knowledge of North Fork, threatened condemnation
proceedings against the Capital One Real Property. Capital One and its
Subsidiaries are in compliance with all applicable health and safety related
requirements for the Capital One Real Property, including those under the
Americans with Disabilities Act of 1990 and the Occupational Health and Safety
Act of 1970.
4.17 ENVIRONMENTAL LIABILITY. There are no legal, administrative, arbitral or
other proceedings, claims, actions, causes of action or notices with respect to
any environmental, health or safety matters or any private or governmental
environmental, health or safety investigations or remediation activities of any
nature seeking to impose, or that are reasonably likely to result in, any
liability or obligation of Capital One or any of its Subsidiaries arising under
common law or under any local, state or federal environmental, health or safety
statute, regulation or ordinance, including the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended, pending or
threatened against Capital One or any of its Subsidiaries. To the knowledge of
Capital One, there is no reasonable basis for, or circumstances that are
reasonably likely to give rise to, any such proceeding, claim, action,
investigation or remediation by any Governmental Entity or any third party that
would give rise to any liability or obligation on the part of Capital One or any
of its Subsidiaries. Neither Capital One nor any of its Subsidiaries is subject
to any agreement, order, judgment, decree, letter or memorandum by or with any
39
Governmental Entity or third party imposing any liability or obligation with
respect to any of the foregoing.
4.18 REORGANIZATION; APPROVALS. As of the date of this Agreement, Capital One
(a) is not aware of any fact or circumstance that could reasonably be expected
to prevent the Merger from qualifying as a "reorganization" within the meaning
of Section 368(a) of the Code, and (b) knows of no reason why all regulatory
approvals from any Governmental Entity required for the consummation of the
transactions contemplated by this Agreement should not be obtained on a timely
basis.
4.19 OPINION. Prior to the execution of this Agreement, Capital One has received
an opinion from ▇.▇. ▇▇▇▇▇▇ Securities Inc. to the effect that as of the date
thereof and based upon and subject to the matters set forth therein, the Merger
Consideration is fair to Capital One from a financial point of view. Such
opinion has not been amended or rescinded as of the date of this Agreement.
4.20 CAPITAL ONE INFORMATION. The information relating to Capital One and its
Subsidiaries that is provided by Capital One or its representatives for
inclusion in the Joint Proxy Statement and the Form S-4, or in any other
document filed with any other Regulatory Agency in connection with the
transactions contemplated by this Agreement, will not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements therein, in light of the circumstances in which they are made,
not misleading. The portions of the Joint Proxy Statement relating to Capital
One and other portions within the reasonable control of Capital One will comply
in all material respects with the provisions of the Exchange Act and the rules
and regulations thereunder. The Form S-4 will comply in all material respects
with the provisions of the Securities Act and the rules and regulations
thereunder.
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
5.1 CONDUCT OF BUSINESSES PRIOR TO THE EFFECTIVE TIME. Except as expressly
contemplated by or permitted by this Agreement or with the prior written consent
of the other party, during the period from the date of this Agreement to the
Effective Time, each of North Fork and Capital One shall, and shall cause each
of its respective Subsidiaries to, (a) conduct its business in the ordinary
course in all material respects, (b) use reasonable best efforts to maintain and
preserve intact its business organization and advantageous business
relationships and retain the services of its key officers and key employees and
(c) take no action that is intended to or would reasonably be expected to
adversely affect or materially delay the ability of either North Fork or Capital
One to obtain any necessary approvals of any Regulatory Agency or other
Governmental Entity required for the transactions contemplated hereby or to
perform its covenants and agreements under this Agreement or to consummate the
transactions contemplated hereby or thereby.
5.2 NORTH FORK FORBEARANCES. During the period from the date of this Agreement
to the Effective Time, except as set forth in the North Fork Disclosure Schedule
and except as expressly contemplated or permitted by this Agreement, North Fork
shall not, and shall not permit any of its Subsidiaries to, without the prior
written consent of Capital One:
40
(a) other than in the ordinary course of business consistent with past
practice, incur any indebtedness for borrowed money, assume, guarantee, endorse
or otherwise as an accommodation become responsible for the obligations of any
other individual, corporation or other entity, or make any loan or advance or
capital contribution to, or investment in, any person (it being understood and
agreed that incurrence of indebtedness in the ordinary course of business
consistent with past practice shall include the creation of deposit liabilities,
purchases of Federal funds, securitizations, sales of certificates of deposit
and entering into repurchase agreements);
(b) (i) adjust, split, combine or reclassify any of its capital stock;
(ii) make, declare or pay any dividend, or make any other distribution
on, or directly or indirectly redeem, purchase or otherwise acquire, any shares
of its capital stock or any securities or obligations convertible (whether
currently convertible or convertible only after the passage of time or the
occurrence of certain events) into or exchangeable for any shares of its capital
stock (except (A) for regular quarterly cash dividends at a rate not in excess
of $0.25 per share of North Fork Common Stock with record dates and payment
dates consistent with the prior year (provided that if the Closing is scheduled
to occur on September 29, 2006 or after December 15, 2006 (but prior to the
normal record date for North Fork's dividend normally payable in January), North
Fork may accelerate the record date (but not the payment date, which shall be
consistent with past practice) for the dividend normally payable in October (in
the case of a Closing on September 29, 2006) and January (in the case of a
Closing after December 15, 2006) to the trading day immediately prior to the
Closing Date), (B) dividends paid by any of the Subsidiaries of North Fork to
North Fork or to any of its wholly owned Subsidiaries, and (C) the acceptance of
shares of North Fork Common Stock in payment of the exercise price or
withholding taxes incurred by any employee or director in connection with the
exercise of North Fork Options or the vesting of North Fork Restricted Shares or
North Fork Deferred Shares granted under a North Fork Stock Plan, in each case
in accordance with past practice and the terms of the applicable North Fork
Stock Plan and related award agreements);
(iii) grant any stock options, restricted shares or other equity-based
award with respect to shares of North Fork Common Stock under any of North Fork
Stock Plans or otherwise (whether such awards are settled in cash, North Fork
Common Stock or otherwise), or grant any individual, corporation or other entity
any right to acquire any shares of its capital stock, other than grants of stock
options to newly hired employees of North Fork in the ordinary course of
business consistent with past practice under the North Fork Stock Plans subject
to the terms set forth on Section 5.2(b) of the North Fork Disclosure Schedule;
or
(iv) issue any additional shares of capital stock or other securities
except pursuant to the exercise of stock options or settlement of North Fork
Deferred Shares granted under a North Fork Stock Plan that are outstanding as of
the date of this Agreement, pursuant to the North Fork Option Agreement or
issued thereafter in compliance with this Agreement;
(c) except as required by applicable law or the terms of any North
Fork Benefit Plan as in effect on the date of this Agreement and, solely with
respect to employees that are not executive officers or directors of North Fork,
except for normal increases made in the ordinary course of business consistent
with past practice, (i) increase the wages, salaries, benefits or incentive
compensation or incentive compensation opportunities of any employee of North
41
Fork or any of its Subsidiaries, or, except for payments in the ordinary course
of business consistent with past practice, pay or provide, or increase or
accelerate the accrual rate, vesting or timing of payment or funding of, any
compensation, benefits or other rights of any employee of North Fork or any of
its Subsidiaries or (ii) establish, adopt, or become a party to any new employee
benefit or compensation plan, program, commitment, agreement or arrangement or
amend any existing North Fork Benefit Plan;
(d) sell, transfer, mortgage, encumber or otherwise dispose of any
material amount of its properties or assets to any individual, corporation or
other entity other than a Subsidiary or cancel, release or assign any material
amount of indebtedness to any such person or any claims held by any such person,
in each case other than in the ordinary course of business consistent with past
practice or pursuant to contracts in force at the date of this Agreement;
(e) enter into any new line of business or change in any material
respect its lending, investment, underwriting, risk and asset liability
management and other banking and operating, securitization and servicing
policies, except as required by applicable law, regulation or policies imposed
by any Governmental Entity;
(f) except for transactions in the ordinary course of business
consistent with past practice, make any material investment either by purchase
of stock or securities, contributions to capital, property transfers, or
purchase of any property or assets of any other individual, corporation or other
entity;
(g) take any action, or knowingly fail to take any action, which
action or failure to act is reasonably likely to prevent the Merger from
qualifying as a reorganization within the meaning of Section 368(a) of the Code;
(h) amend its certificate of incorporation or bylaws, or otherwise
take any action to exempt any person or entity (other than Capital One or its
Subsidiaries) or any action taken by any person or entity from any Takeover
Statute or similarly restrictive provisions of its organizational documents or
terminate, amend or waive any provisions of any confidentiality or standstill
agreements in place with any third parties;
(i) other than in prior consultation with Capital One, restructure or
materially change its investment securities portfolio or its gap position,
through purchases, sales or otherwise, or the manner in which the portfolio is
classified or reported;
(j) commence or settle any material claim, action or proceeding,
except in the ordinary course of business consistent with past practice;
(k) take any action or fail to take any action that is intended or may
reasonably be expected to result in any of the conditions to the Merger set
forth in Article VII not being satisfied;
(l) implement or adopt any change in its tax accounting or financial
accounting principles, practices or methods, other than as may be required by
applicable law, GAAP or regulatory guidelines;
42
(m) file any application to establish, or to relocate or terminate the
operations of, any banking office of North Fork or any North Fork Subsidiary;
(n) file or amend any Tax Return other than in the ordinary course of
business, make or change any material Tax election, or settle or compromise any
material Tax liability; or
(o) agree to take, make any commitment to take, or adopt any
resolutions of its board of directors in support of, any of the actions
prohibited by this Section 5.2.
5.3 CAPITAL ONE FORBEARANCES. Except as expressly permitted by this Agreement or
with the prior written consent of North Fork, during the period from the date of
this Agreement to the Effective Time, Capital One shall not, and shall not
permit any Capital One Subsidiary to, (a) amend, repeal or otherwise modify any
provision of the Capital One Certificate or the Capital One By-laws in a manner
that would adversely affect North Fork, the stockholders of North Fork or the
transactions contemplated by this Agreement, (b) take any action, or knowingly
fail to take any action, which action or failure to act is reasonably likely to
prevent the Merger from qualifying as a reorganization within the meaning of
Section 368(a) of the Code, (c) take any action that is intended or may
reasonably be expected to result in any of the conditions to the Merger set
forth in Article VII not being satisfied, (d) enter into any new line of
business or materially change its lending, investment, underwriting, risk and
asset liability management and other banking and operating policies, except as
required by applicable law, regulation or policies imposed by any Governmental
Entity, or, except for transactions in the ordinary course of business
consistent with past practice, make any material investment either by purchase
of stock or securities, contributions to capital, property transfers or purchase
of any property or assets of any other individual, corporation or other entity,
in any case to the extent such action would be reasonably expected to prevent,
materially impede or materially delay the consummation of the transactions
contemplated by this Agreement; or (f) agree to take, make any commitment to
take, or adopt any resolutions of its board of directors in support of, any of
the actions prohibited by this Section 5.3.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 REGULATORY MATTERS. (a) Capital One and North Fork shall promptly prepare
and file with the SEC the Form S-4, in which the Joint Proxy Statement will be
included as a prospectus. Each of Capital One and North Fork shall use its
reasonable best efforts to have the Form S-4 declared effective under the
Securities Act as promptly as practicable after such filing, and Capital One and
North Fork shall thereafter mail or deliver the Joint Proxy Statement to its
respective stockholders. Capital One shall file the opinion described in Section
7.3(c) on a post-effective amendment to the Form S-4. Capital One shall also use
its reasonable best efforts to obtain all necessary state securities law or
"Blue Sky" permits and approvals required to carry out the transactions
contemplated by this Agreement, and North Fork shall furnish all information
concerning North Fork and the holders of North Fork Common Stock as may be
reasonably requested in connection with any such action.
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(b) The parties shall cooperate with each other and use their
respective reasonable best efforts to promptly prepare and file all necessary
documentation, to effect all applications, notices, petitions and filings, to
obtain as promptly as practicable all permits, consents, approvals and
authorizations of all third parties and Governmental Entities that are necessary
or advisable to consummate the transactions contemplated by this Agreement
(including the Merger), and to comply with the terms and conditions of all such
permits, consents, approvals and authorizations of all such third parties,
Regulatory Agencies or Governmental Entities. North Fork and Capital One shall
have the right to review in advance, and, to the extent practicable, each will
consult the other on, in each case subject to applicable laws relating to the
confidentiality of information, all the information relating to North Fork or
Capital One, as the case may be, and any of their respective Subsidiaries, which
appear in any filing made with, or written materials submitted to, any third
party or any Governmental Entity in connection with the transactions
contemplated by this Agreement. In exercising the foregoing right, each of the
parties shall act reasonably and as promptly as practicable. The parties shall
consult with each other with respect to the obtaining of all permits, consents,
approvals and authorizations of all third parties and Governmental Entities
necessary or advisable to consummate the transactions contemplated by this
Agreement and each party will keep the other apprised of the status of matters
relating to completion of the transactions contemplated by this Agreement.
Notwithstanding the foregoing, nothing contained herein shall be deemed to
require Capital One to take any action, or commit to take any action, or agree
to any condition or restriction, in connection with obtaining the foregoing
permits, consents, approvals and authorizations of Governmental Entities, that
would reasonably be expected to have a material adverse effect (measured on a
scale relative to North Fork) on either Capital One or North Fork (a "MATERIALLY
BURDENSOME REGULATORY CONDITION").
(c) Each of Capital One and North Fork shall, upon request, furnish to
the other all information concerning itself, its Subsidiaries, directors,
officers and stockholders and such other matters as may be reasonably necessary
or advisable in connection with the Joint Proxy Statement, the Form S-4 or any
other statement, filing, notice or application made by or on behalf of Capital
One, North Fork or any of their respective Subsidiaries to any Governmental
Entity in connection with the Merger and the other transactions contemplated by
this Agreement.
(d) Each of Capital One and North Fork shall promptly advise the other
upon receiving any communication from any Regulatory Agency or Governmental
Entity consent or approval of which is required for consummation of the
transactions contemplated by this Agreement that causes such party to believe
that there is a reasonable likelihood that any Capital One Requisite Regulatory
Approval or North Fork Requisite Regulatory Approval, respectively, will not be
obtained or that the receipt of any such approval may be materially delayed.
(e) North Fork shall cooperate with such reasonable requests as may be
made by Capital One with respect to any post-Closing reorganization of Capital
One's and North Fork's Subsidiaries, including filing prior to the Closing such
applications with Regulatory Agencies or Governmental Entities as may be
necessary or desirable in connection with any such reorganization.
6.2 ACCESS TO INFORMATION. (a) Upon reasonable notice and subject to
applicable laws relating to the confidentiality of information, each of North
Fork and Capital One shall, and shall cause each of its Subsidiaries to, afford
to the officers, employees, accountants, counsel,
44
advisors, agents and other representatives of the other party, reasonable
access, during normal business hours during the period prior to the Effective
Time, to all its properties, books, contracts, commitments and records, and,
during such period, such party shall, and shall cause its Subsidiaries to, make
available to the other party (i) a copy of each report, schedule, registration
statement and other document filed or received by it during such period pursuant
to the requirements of federal securities laws or federal or state banking or
insurance laws (other than reports or documents that such party is not permitted
to disclose under applicable law) and (ii) all other information concerning its
business, properties and personnel as the other party may reasonably request (in
the case of a request by North Fork, information concerning Capital One that is
reasonably related to the prospective value of Capital One Common Stock or to
Capital One's ability to consummate the transactions contemplated hereby).
Neither North Fork nor Capital One, nor any of its Subsidiaries, shall be
required to provide access to or to disclose information where such access or
disclosure would jeopardize the attorney-client privilege of such party or its
Subsidiaries or contravene any law, rule, regulation, order, judgment, decree,
fiduciary duty or binding agreement entered into prior to the date of this
Agreement. The parties shall make appropriate substitute disclosure arrangements
under circumstances in which the restrictions of the preceding sentence apply.
(b) All information and materials provided pursuant to this Agreement
shall be subject to the provisions of the Confidentiality Agreement entered into
between the parties as of March 7, 2006 (the "CONFIDENTIALITY AGREEMENT").
(c) No investigation by a party hereto or its representatives shall
affect the representations and warranties of the other party set forth in this
Agreement.
6.3 STOCKHOLDER APPROVALS. Each of North Fork and Capital One shall call a
meeting of its stockholders to be held as soon as reasonably practicable for the
purpose of obtaining the requisite stockholder approvals required in connection
with this Agreement and the Merger, and each shall use its reasonable best
efforts to cause such meetings to occur as soon as reasonably practicable and on
the same date. The Board of Directors of each of North Fork and Capital One
shall use its reasonable best efforts to obtain from its respective stockholders
the stockholder vote in favor of the approval and adoption of this Agreement
required to consummate the transactions contemplated by this Agreement. Each of
North Fork and Capital One agree that they have an unqualified obligation to
submit this Agreement to their respective stockholders at their respective
stockholder meetings.
6.4 AFFILIATES. North Fork shall use its reasonable best efforts to cause each
director, executive officer and other person who is an "affiliate" (for purposes
of Rule 145 under the Securities Act) of North Fork to deliver to Capital One,
as soon as practicable after the date of this Agreement, and prior to the date
of the meeting of North Fork stockholders to be held pursuant to Section 6.3, a
written agreement, in the form of Exhibit A.
6.5 NYSE LISTING. Capital One shall cause the shares of Capital One Common Stock
to be issued in the Merger to be approved for listing on the NYSE, subject to
official notice of issuance, prior to the Effective Time.
6.6 EMPLOYEE MATTERS. (a) For the one-year period following the Effective
Time, Capital One shall, or shall cause its applicable Subsidiaries to, provide
to those individuals actively
45
employed by North Fork or one of its Subsidiaries as of the Effective Time
(collectively, the "COVERED EMPLOYEES") with employee benefits, rates of base
salary or hourly wage and annual bonus opportunities that are substantially
similar, in the aggregate, to the aggregate rates of base salary or hourly wage
provided to such Covered Employees and the aggregate employee benefits and
annual bonus opportunities provided to such Covered Employees under the North
Fork Benefit Plans as in effect immediately prior to the Effective Time;
PROVIDED that nothing herein shall limit the right of Capital One or any of its
Subsidiaries to terminate the employment of any Covered Employee at any time or
require Capital One or any of its Subsidiaries to provide any such employee
benefits, rates of base salary or hourly wage or annual bonus opportunities for
any period following any such termination.
(b) To the extent that a Covered Employee becomes eligible to
participate in an employee benefit plan maintained by Capital One or any of its
Subsidiaries, other than North Fork or its Subsidiaries, Capital One shall cause
such employee benefit plan to (i) recognize the service of such Covered Employee
with North Fork or its Subsidiaries for purposes of eligibility and vesting and,
except under defined benefit pension plans, benefit accrual under such employee
benefit plan of Capital One or any of its Subsidiaries to the same extent such
service was recognized immediately prior to the Effective Time under a
comparable North Fork Benefit Plan in which such Covered Employee was a
participant immediately prior to the Effective Time or, if there is no such
comparable benefit plan, to the same extent such service was recognized under
the North Fork 401(k) plan immediately prior to the Effective Time, PROVIDED
that such recognition of service shall not operate to duplicate any benefits
payable to the Covered Employee with respect to the same period of service, and
(ii) with respect to any health, dental or vision plan of Capital One or any of
its Subsidiaries (other than North Fork and its Subsidiaries) in which any
Covered Employee is eligible to participate in the plan year that includes the
year in which such Covered Employee is eligible to participate, (x) cause any
pre-existing condition limitations under such Capital One or Subsidiary plan to
be waived with respect to such Covered Employee to the extent such limitation
would have been waived or satisfied under the North Fork Benefit Plan in which
such Covered Employee participated immediately prior to the Effective Time, and
(y) recognize any medical or other health expenses incurred by such Covered
Employee in the year that includes the Closing Date for purposes of any
applicable deductible and annual out-of-pocket expense requirements under any
such health, dental or vision plan of Capital One or any of its Subsidiaries.
(c) From and after the Effective Time, Capital One shall, or shall
cause its Subsidiaries to, honor, in accordance with the terms thereof as in
effect as of the date hereof or as may be amended after the date hereof as
permitted under Section 5.2, each employment agreement and change in control
agreement listed on Section 3.11 of the North Fork Disclosure Schedule and the
obligations of North Fork and its Subsidiaries as of the Effective Time under
the Performance Plan and each deferred compensation plan or agreement listed on
Section 3.11 of the North Fork Disclosure Schedule; provided, that, nothing
herein will prevent Capital One from amending any such agreement or plan in
accordance with its terms, including such amendments as may be necessary to
avoid the imposition of a Tax under Section 409A of the Code. Capital One agrees
to take all action necessary to effectuate and satisfy the obligations set forth
in Section 6.6(c) of the North Fork Disclosure Schedule.
6.7 INDEMNIFICATION; DIRECTORS' AND OFFICERS' INSURANCE.
46
(a) In the event of any threatened or actual claim, action, suit,
proceeding or investigation, whether civil, criminal or administrative (a
"CLAIM"), including any such Claim in which any individual who is now, or has
been at any time prior to the date of this Agreement, or who becomes prior to
the Effective Time, a director, officer or employee of North Fork or any North
Fork Subsidiary or who is or was serving at the request of North Fork or any
North Fork Subsidiary as a director, officer or employee of another person (the
"INDEMNIFIED PARTIES"), is, or is threatened to be, made a party based in whole
or in part on, or arising in whole or in part out of, or pertaining to (i) the
fact that he is or was a director, officer or employee of North Fork or any of
its Subsidiaries prior to the Effective Time or (ii) this Agreement or any of
the transactions contemplated by this Agreement, whether asserted or arising
before or after the Effective Time, the parties shall cooperate and use their
best efforts to defend against and respond thereto. All rights to
indemnification and exculpation from liabilities for acts or omissions occurring
at or prior to the Effective Time now existing in favor of any Indemnified Party
as provided in their respective certificates or articles of incorporation or
by-laws (or comparable organizational documents), and any existing
indemnification agreements set forth in Section 6.7 of North Fork Disclosure
Schedule, shall survive the Merger and shall continue in full force and effect
in accordance with their terms, and shall not be amended, repealed or otherwise
modified after the Effective Time in any manner that would adversely affect the
rights thereunder of such individuals for acts or omissions occurring at or
prior to the Effective Time or taken at the request of Capital One pursuant to
Section 6.8 hereof, it being understood that nothing in this sentence shall
require any amendment to the certificate of incorporation or by-laws of the
Surviving Corporation.
(b) From and after the Effective Time, the Surviving Corporation
shall, to the fullest extent permitted by applicable law, indemnify, defend and
hold harmless, and provide advancement of expenses to, each Indemnified Party
against all losses, claims, damages, costs, expenses, liabilities or judgments
or amounts that are paid in settlement of or in connection with any Claim based
in whole or in part on or arising in whole or in part out of the fact that such
person is or was a director, officer or employee of North Fork or any Subsidiary
of North Fork, and pertaining to any matter existing or occurring, or any acts
or omissions occurring, at or prior to the Effective Time, whether asserted or
claimed prior to, or at or after, the Effective Time (including matters, acts or
omissions occurring in connection with the approval of this Agreement and the
consummation of the transactions contemplated hereby) or taken at the request of
Capital One pursuant to Section 6.8 hereof.
(c) Capital One shall cause the individuals serving as officers and
directors of North Fork or any of its Subsidiaries immediately prior to the
Effective Time to be covered for a period of six years from the Effective Time
by the directors' and officers' liability insurance policy maintained by North
Fork (PROVIDED that Capital One may substitute therefor policies of at least the
same coverage and amounts containing terms and conditions that are not less
advantageous than such policy) with respect to acts or omissions occurring prior
to the Effective Time that were committed by such officers and directors in
their capacity as such; PROVIDED that in no event shall Capital One be required
to expend annually in the aggregate an amount in excess of 250% of the annual
premiums currently paid by North Fork (which current amount is set forth in
Section 6.7 of the North Fork Disclosure Schedule) for such insurance (the
"INSURANCE AMOUNT"), and provided further that if Capital One is unable to
maintain such policy (or such substitute policy) as a result of the preceding
proviso, Capital One shall obtain as much comparable insurance as is available
for the Insurance Amount.
47
(d) The provisions of this Section 6.7 shall survive the Effective
Time and are intended to be for the benefit of, and shall be enforceable by,
each Indemnified Party and his or her heirs and representatives.
6.8 ADDITIONAL AGREEMENTS. (a) Subject to the terms and conditions of this
Agreement, each of North Fork and Capital One agree to cooperate fully with each
other and to use reasonable best efforts to take, or cause to be taken, all
actions, and to do, or cause to be done, all things necessary, proper or
advisable to consummate and make effective, at the time and in the manner
contemplated by this Agreement, the Merger. Without limiting the generality of
the foregoing, North Fork shall use reasonable best efforts to comply with any
reasonable request made by Capital One from time to time in connection with
Capital One's financing of the Cash Component.
(b) In case at any time after the Effective Time any further action is
necessary or desirable to carry out the purposes of this Agreement (including
any merger between a Subsidiary of Capital One, on the one hand, and a
Subsidiary of North Fork, on the other) or to vest the Surviving Corporation
with full title to all properties, assets, rights, approvals, immunities and
franchises of either party to the Merger, the proper officers and directors of
each party and their respective Subsidiaries shall, at Capital One's sole
expense, take all such necessary action as may be reasonably requested by
Capital One.
6.9 ADVICE OF CHANGES. Each of Capital One and North Fork shall promptly advise
the other of any change or event (i) having or reasonably likely to have a
Material Adverse Effect on it or (ii) that it believes would or would be
reasonably likely to cause or constitute a material breach of any of its
representations, warranties or covenants contained in this Agreement; PROVIDED,
HOWEVER, that no such notification shall affect the representations, warranties,
covenants or agreements of the parties (or remedies with respect thereto) or the
conditions to the obligations of the parties under this Agreement; PROVIDED
FURTHER that a failure to comply with this Section 6.9 shall not constitute a
breach of this Agreement or the failure of any condition set forth in Article
VII to be satisfied unless the underlying Material Adverse Effect or material
breach would independently result in the failure of a condition set forth in
Article VII to be satisfied.
6.10 EXEMPTION FROM LIABILITY UNDER SECTION 16(B). Prior to the Effective Time,
Capital One and North Fork shall each take all such steps as may be necessary or
appropriate to cause any disposition of shares of North Fork Common Stock or
conversion of any derivative securities in respect of such shares of North Fork
Common Stock in connection with the consummation of the transactions
contemplated by this Agreement to be exempt under Rule 16b-3 promulgated under
the Exchange Act, including any such actions specified in the No-Action Letter
dated January 12, 1999, issued by the SEC to Skadden, Arps, Slate, ▇▇▇▇▇▇▇ &
▇▇▇▇, LLP.
6.11 NO SOLICITATION.
(a) None of North Fork, its Subsidiaries or any officer, director,
employee, agent or representative (including any investment banker, financial
advisor, attorney, accountant or other retained representative) of North Fork or
any of its Subsidiaries shall directly or indirectly (i) solicit, initiate,
encourage, facilitate (including by way of furnishing information) or take any
other action designed to facilitate any inquiries or proposals regarding any
merger, share exchange, consolidation, sale of assets, sale of shares of capital
stock (including, without
48
limitation, by way of a tender offer) or similar transactions involving North
Fork or any of its Subsidiaries that, if consummated, would constitute a North
Fork Alternative Transaction (any of the foregoing inquiries or proposals,
including the indication of any intention to propose any of the foregoing, being
referred to herein as a "NORTH FORK ALTERNATIVE PROPOSAL"), (ii) participate in
any discussions or negotiations regarding a North Fork Alternative Transaction
or (iii) enter into any agreement regarding any North Fork Alternative
Transaction. Notwithstanding the foregoing, the Board of Directors of North Fork
shall be permitted, prior to the meeting of North Fork stockholders to be held
pursuant to Section 6.3, and subject to compliance with the other terms of this
Section 6.11 and to first entering into an agreement with the person proposing
such North Fork Alternative Proposal on terms substantially similar to, and no
less favorable to North Fork than, those contained in the Confidentiality
Agreement, to consider and participate in discussions with respect to a bona
fide North Fork Alternative Proposal received by North Fork, if and only to the
extent that the Board of Directors of North Fork reasonably determines in good
faith after consultation with outside legal counsel that failure to do so would
cause it to violate its fiduciary duties.
As used in this Agreement, "NORTH FORK ALTERNATIVE TRANSACTION" means
any of (i) a transaction pursuant to which any person (or group of persons)
(other than Capital One or its affiliates) directly or indirectly, acquires or
would acquire more than 25% of the outstanding shares of North Fork or any of
its Subsidiaries or outstanding voting power or of any new series or new class
of preferred stock that would be entitled to a class or series vote with respect
to a merger of North Fork or any of its Subsidiaries whether from North Fork or
any of its Subsidiaries or pursuant to a tender offer or exchange offer or
otherwise, (ii) a merger, share exchange, consolidation or other business
combination involving North Fork or any of its Subsidiaries (other than the
Merger), (iii) any transaction pursuant to which any person (or group of
persons) (other than Capital One or its affiliates) acquires or would acquire
control of assets (including for this purpose the outstanding equity securities
of subsidiaries of North Fork and securities of the entity surviving any merger
or business combination including any of North Fork's Subsidiaries) of North
Fork, or any of its Subsidiaries representing more than 25% of the fair market
value of all the assets, net revenues or net income of North Fork and its
Subsidiaries, taken as a whole, immediately prior to such transaction, or (iv)
any other consolidation, business combination, recapitalization or similar
transaction involving North Fork or any of its Subsidiaries, other than the
transactions contemplated by this Agreement.
(b) North Fork shall notify Capital One promptly (but in no event
later than 24 hours) after receipt of any North Fork Alternative Proposal, or
any material modification of or material amendment to any North Fork Alternative
Proposal, or any request for nonpublic information relating to North Fork or any
of its Subsidiaries or for access to the properties, books or records of North
Fork or any Subsidiary by any Person or entity that informs the Board of
Directors of North Fork or any Subsidiary that it is considering making, or has
made, a North Fork Alternative Proposal. Such notice to Capital One shall be
made orally and in writing, and shall indicate the identity of the Person making
the North Fork Alternative Proposal or intending to make or considering making a
North Fork Alternative Proposal or requesting non-public information or access
to the books and records of North Fork or any Subsidiary, and the material terms
of any such North Fork Alternative Proposal or modification or amendment to a
North Fork Alternative Proposal. North Fork shall keep Capital One fully
informed, on a current basis,
49
of any material changes in the status and any material changes or modifications
in the terms of any such North Fork Alternative Proposal, indication or request.
North Fork shall also promptly, and in any event within 24 hours, notify Capital
One, orally and in writing, if it enters into discussions or negotiations
concerning any North Fork Alternative Proposal in accordance with Section
6.11(a).
(c) North Fork and its Subsidiaries shall immediately cease and cause
to be terminated any existing discussions or negotiations with any Persons
(other than each other) conducted heretofore with respect to any of the
foregoing, and shall use reasonable best efforts to cause all Persons other than
the other party hereto who have been furnished confidential information
regarding itself in connection with the solicitation of or discussions regarding
a North Fork Alternative Proposal, as the case may be, within the 12 months
prior to the date hereof promptly to return or destroy such information. North
Fork agrees not to, and to cause its Subsidiaries not to, release any third
party from the confidentiality and standstill provisions of any agreement to
which North Fork or any of its Subsidiaries is or may become a party, and shall
immediately take all steps necessary to terminate any approval that may have
been heretofore given under any such provisions authorizing any person to make a
North Fork Alternative Proposal.
(d) Nothing contained in this Section 6.11 shall prohibit North Fork
or its Subsidiaries from taking and disclosing to its stockholders a position
required by Rule 14e-2(a) or Rule 14d-9 promulgated under the Exchange Act.
6.12 DIRECTORSHIPS. Capital One shall take such actions as may be reasonably
required to appoint, effective as of the Effective Time, the President and Chief
Executive Officer of North Fork to the Board of Directors of the Surviving
Corporation, appointed to the class of directors with its term expiring at the
2009 Annual Meeting of Capital One stockholders, and, to the extent so required,
shall increase the size of the Capital One Board of Directors to permit the
appointment of such individual.
6.13 RESTRUCTURING EFFORTS. If either North Fork or Capital One shall have
failed to obtain the requisite vote or votes of its stockholders for the
consummation of the transactions contemplated by this Agreement at a duly held
meeting of its stockholders or at any adjournment or postponement thereof, then,
unless this Agreement shall have been terminated pursuant to its terms, each of
the parties shall in good faith use its reasonable best efforts to negotiate a
restructuring of the transaction provided for herein (it being understood that
neither party shall have any obligation to alter or change the amount or kind of
the Merger Consideration, or the Tax treatment of the Merger, in a manner
adverse to such party or its stockholders) and to resubmit the transaction to
their respective stockholders for approval.
ARTICLE VII
CONDITIONS PRECEDENT
7.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The respective
obligations of the parties to effect the Merger shall be subject to the
satisfaction at or prior to the Effective Time of the following conditions:
50
(a) STOCKHOLDER APPROVAL. This Agreement shall have been approved and
adopted by the requisite affirmative vote of the holders of North Fork Common
Stock entitled to vote thereon and by the requisite affirmative vote of the
holders of Capital One Common Stock entitled to vote thereon.
(b) NYSE LISTING. The shares of Capital One Common Stock to be issued
to the holders of North Fork Common Stock upon consummation of the Merger shall
have been authorized for listing on the NYSE, subject to official notice of
issuance.
(c) FORM S-4. The Form S-4 shall have become effective under the
Securities Act and no stop order suspending the effectiveness of the Form S-4
shall have been issued and no proceedings for that purpose shall have been
initiated or threatened by the SEC.
(d) NO INJUNCTIONS OR RESTRAINTS; ILLEGALITY. No order, injunction or
decree issued by any court or agency of competent jurisdiction or other legal
restraint or prohibition (an "INJUNCTION") preventing the consummation of the
Merger or any of the other transactions contemplated by this Agreement shall be
in effect. No statute, rule, regulation, order, Injunction or decree shall have
been enacted, entered, promulgated or enforced by any Governmental Entity that
prohibits or makes illegal consummation of the Merger.
7.2 CONDITIONS TO OBLIGATIONS OF CAPITAL ONE. The obligation of Capital One to
effect the Merger is also subject to the satisfaction, or waiver by Capital One,
at or prior to the Effective Time, of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. Subject to the standard set forth
in Section 9.2, the representations and warranties of North Fork set forth in
this Agreement shall be true and correct as of the date of this Agreement and as
of the Effective Time as though made on and as of the Effective Time (except
that representations and warranties that by their terms speak specifically as of
the date of this Agreement or another date shall be true and correct as of such
date); and Capital One shall have received a certificate signed on behalf of
North Fork by the Chief Executive Officer or the Chief Financial Officer of
North Fork to the foregoing effect.
(b) PERFORMANCE OF OBLIGATIONS OF NORTH FORK. North Fork shall have
performed in all material respects all obligations required to be performed by
it under this Agreement at or prior to the Effective Time; and Capital One shall
have received a certificate signed on behalf of North Fork by the Chief
Executive Officer or the Chief Financial Officer of North Fork to such effect.
(c) FEDERAL TAX OPINION. Capital One shall have received the opinion
of its counsel, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, in form and substance
reasonably satisfactory to Capital One, dated the Closing Date, substantially to
the effect that, on the basis of facts, representations and assumptions set
forth in such opinion that are consistent with the state of facts existing at
the Effective Time, the Merger will be treated as a reorganization within the
meaning of Section 368(a) of the Code. In rendering such opinion, counsel may
require and rely upon customary representations contained in certificates of
officers of North Fork and Capital One.
51
(d) REGULATORY APPROVALS. All regulatory approvals set forth in
Section 4.4 required to consummate the transactions contemplated by this
Agreement, including the Merger, shall have been obtained and shall remain in
full force and effect and all statutory waiting periods in respect thereof shall
have expired (all such approvals and the expiration of all such waiting periods
being referred as the "CAPITAL ONE REQUISITE REGULATORY APPROVALS"), and no such
regulatory approval shall have resulted in the imposition of any Materially
Burdensome Regulatory Condition.
7.3 CONDITIONS TO OBLIGATIONS OF NORTH FORK. The obligation of North Fork to
effect the Merger is also subject to the satisfaction or waiver by North Fork at
or prior to the Effective Time of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. Subject to the standard set forth
in Section 9.2, the representations and warranties of Capital One set forth in
this Agreement shall be true and correct as of the date of this Agreement and as
of the Effective Time as though made on and as of the Effective Time (except
that representations and warranties that by their terms speak specifically as of
the date of this Agreement or another date shall be true and correct as of such
date); and North Fork shall have received a certificate signed on behalf of
Capital One by the Chief Executive Officer or the Chief Financial Officer of
Capital One to the foregoing effect.
(b) PERFORMANCE OF OBLIGATIONS OF CAPITAL ONE. Capital One shall have
performed in all material respects all obligations required to be performed by
it under this Agreement at or prior to the Effective Time, and North Fork shall
have received a certificate signed on behalf of Capital One by the Chief
Executive Officer or the Chief Financial Officer of Capital One to such effect.
(c) FEDERAL TAX OPINION. North Fork shall have received the opinion of
its counsel, Wachtell, Lipton, ▇▇▇▇▇ & ▇▇▇▇, in form and substance reasonably
satisfactory to North Fork, dated the Closing Date, substantially to the effect
that, on the basis of facts, representations and assumptions set forth in such
opinion that are consistent with the state of facts existing at the Effective
Time, the Merger will be treated as a reorganization within the meaning of
Section 368(a) of the Code. In rendering such opinion, counsel may require and
rely upon customary representations contained in certificates of officers of
North Fork and Capital One.
(d) REGULATORY APPROVALS. All regulatory approvals set forth in
Section 3.4 required to consummate the transactions contemplated by this
Agreement, including the Merger, shall have been obtained and shall remain in
full force and effect and all statutory waiting periods in respect thereof shall
have expired (all such approvals and the expiration of all such waiting periods
being referred as the "NORTH FORK REQUISITE REGULATORY APPROVALS").
ARTICLE VIII
TERMINATION AND AMENDMENT
8.1 TERMINATION. This Agreement may be terminated at any time prior to the
Effective Time, whether before or after approval of the matters presented in
connection with the Merger by the stockholders of North Fork or Capital One:
52
(a) by mutual consent of North Fork and Capital One in a written
instrument authorized by the boards of directors of North Fork and Capital One,
as determined by a vote of a majority of the members of each respective entire
board of directors;
(b) by either North Fork or Capital One, if any Governmental Entity
that must grant a Capital One Requisite Regulatory Approval or a North Fork
Requisite Regulatory Approval has denied approval of the Merger and such denial
has become final and nonappealable or any Governmental Entity of competent
jurisdiction shall have issued a final and nonappealable order permanently
enjoining or otherwise prohibiting the consummation of the transactions
contemplated by this Agreement;
(c) by either North Fork or Capital One, if the Merger shall not have
been consummated on or before the first anniversary of the date of this
Agreement unless the failure of the Closing to occur by such date shall be due
to the failure of the party seeking to terminate this Agreement to perform or
observe the covenants and agreements of such party set forth in this Agreement;
(d) by either Capital One or North Fork (PROVIDED that the terminating
party is not then in material breach of any representation, warranty, covenant
or other agreement contained herein), if there shall have been a breach of any
of the covenants or agreements or any of the representations or warranties set
forth in this Agreement on the part of North Fork, in the case of a termination
by Capital One, or Capital One, in the case of a termination by North Fork,
which breach, either individually or in the aggregate, would result in, if
occurring or continuing on the Closing Date, the failure of the conditions set
forth in Section 7.2 or 7.3, as the case may be, and which is not cured within
45 days following written notice to the party committing such breach or by its
nature or timing cannot be cured within such time period;
(e) by Capital One, if (i) North Fork shall have materially breached
its obligations under Section 6.3 or Section 6.11, or (ii) the Board of
Directors of North Fork shall have (A) failed to recommend in the Joint Proxy
Statement the adoption of the agreement of merger set forth in this Agreement,
(B) publicly withdrawn or modified, or publicly announced its intention to
withdraw or modify, in any manner adverse to Capital One, its recommendation
that its stockholders approve or adopt this Agreement or (C) recommended any
North Fork Alternative Proposal (or, in the case of clause (ii), resolved to
take any such action), whether or not permitted by the terms hereof;
(f) by North Fork, if Capital One shall have materially breached its
obligations under Section 6.3; or
(g) by either Capital One or North Fork, if its Board of Directors
determines in good faith by a majority vote that the other party has
substantially engaged in bad faith in breach of its obligations under Section
6.13 of this Agreement.
The party desiring to terminate this Agreement pursuant to any clause
of this Section 8.1 (other than clause (a)) shall give written notice of such
termination to the other party in accordance with Section 9.4, specifying the
provision or provisions hereof pursuant to which such termination is effected.
53
8.2 EFFECT OF TERMINATION. In the event of termination of this Agreement by
either North Fork or Capital One as provided in Section 8.1, this Agreement
shall forthwith become void and have no effect, and none of North Fork, Capital
One, any of their respective Subsidiaries or any of the officers or directors of
any of them shall have any liability of any nature whatsoever under this
Agreement, or in connection with the transactions contemplated by this
Agreement, except that (i) Sections 6.2(b), 8.2, 8.3, 9.3, 9.4, 9.5, 9.7, 9.8,
9.9 and 9.10 shall survive any termination of this Agreement, and (ii) neither
North Fork nor Capital One shall be relieved or released from any liabilities or
damages arising out of its willful breach of any provision of this Agreement.
Notwithstanding the foregoing, in the event of any termination of this
Agreement, each of the Option Agreements shall remain in full force and effect
to the extent provided therein.
8.3 FEES AND EXPENSES. Except with respect to costs and expenses of printing and
mailing the Joint Proxy Statement and all filing and other fees paid to the SEC
in connection with the Merger, which shall be borne equally by North Fork and
Capital One, all fees and expenses incurred in connection with the Merger, this
Agreement, and the transactions contemplated by this Agreement shall be paid by
the party incurring such fees or expenses, whether or not the Merger is
consummated.
8.4 AMENDMENT. This Agreement may be amended by the parties, by action taken or
authorized by their respective Boards of Directors, at any time before or after
approval of the matters presented in connection with Merger by the stockholders
of North Fork and Capital One; PROVIDED, HOWEVER, that after any approval of the
transactions contemplated by this Agreement by the stockholders of North Fork or
Capital One, as the case may be, there may not be, without further approval of
such stockholders, any amendment of this Agreement that requires such further
approval under applicable law. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties.
8.5 EXTENSION; WAIVER. At any time prior to the Effective Time, the parties, by
action taken or authorized by their respective Board of Directors, may, to the
extent legally allowed, (a) extend the time for the performance of any of the
obligations or other acts of the other party, (b) waive any inaccuracies in the
representations and warranties contained in this Agreement or (c) waive
compliance with any of the agreements or conditions contained in this Agreement.
Any agreement on the part of a party to any such extension or waiver shall be
valid only if set forth in a written instrument signed on behalf of such party,
but such extension or waiver or failure to insist on strict compliance with an
obligation, covenant, agreement or condition shall not operate as a waiver of,
or estoppel with respect to, any subsequent or other failure.
ARTICLE IX
GENERAL PROVISIONS
9.1 CLOSING. On the terms and subject to the conditions set forth in this
Agreement, a closing (the "CLOSING") shall take place at 10:00 a.m. on September
29, 2006 at a place to be specified by the parties, PROVIDED that if on such
date the conditions set forth in Article VII have not been satisfied or waived
(subject to applicable law) (other than those conditions that by their nature
are to be satisfied or waived at the Closing, but in all cases subject to
satisfaction thereof), the Closing shall take place at 10:00 a.m. on October 31,
2006 if such conditions are satisfied or waived (in accordance with applicable
law) on such date or, if such conditions are not so
54
satisfied or waived on such date, the second business day immediately thereafter
following the date on which such conditions have been so satisfied or waived.
The date on which the Closing actually occurs is referred to herein as the
"CLOSING DATE". The Effective Time of the Merger shall be determined in
accordance with Section 1.2. If the Effective Time of the Merger would otherwise
be during the two weeks immediately prior to the end of a fiscal quarter of
Capital One, then Capital One may postpone the Closing Date until the first full
week after the end of that fiscal quarter.
9.2 STANDARD. No representation or warranty of North Fork contained in Article
III or of Capital One contained in Article IV shall be deemed untrue or
incorrect for any purpose under this Agreement, and no party hereto shall be
deemed to have breached a representation or warranty for any purpose under this
Agreement, in any case as a consequence of the existence or absence of any fact,
circumstance or event unless such fact, circumstance or event, individually or
when taken together with all other facts, circumstances or events inconsistent
with any representations or warranties contained in Article III, in the case of
North Fork, or Article IV, in the case of Capital One, has had or would be
reasonably likely to have a Material Adverse Effect with respect to North Fork
or Capital One, respectively (disregarding for purposes of this Section 9.2 any
materiality or Material Adverse Effect qualification contained in any
representations or warranties). Notwithstanding the immediately preceding
sentence, the representations and warranties contained in (x) Section 3.2(a)
shall be deemed untrue and incorrect if not true and correct except to an
immaterial (relative to Section 3.2(a) taken as a whole) extent, (y) Sections
3.2(b), 3.3(a), 3.3(b)(i), 3.7 and 3.24, in the case of North Fork, and Sections
4.2, 4.3(a), 4.3(b)(i), 4.7 and 4.19, in the case of Capital One, shall be
deemed untrue and incorrect if not true and correct in all material respects and
(z) Section 3.8(a), in the case of North Fork, and 4.8(a), in the case of
Capital One, shall be deemed untrue and incorrect if not true and correct in all
respects.
9.3 NONSURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS. None of the
representations, warranties, covenants and agreements set forth in this
Agreement or in any instrument delivered pursuant to this Agreement shall
survive the Effective Time, except for Section 6.8 and for those other covenants
and agreements contained in this Agreement that by their terms apply or are to
be performed in whole or in part after the Effective Time.
9.4 NOTICES. All notices and other communications in connection with this
Agreement shall be in writing and shall be deemed given if delivered personally,
sent via facsimile (with confirmation), mailed by registered or certified mail
(return receipt requested) or delivered by an express courier (with
confirmation) to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
if to North Fork, to:
North Fork Bancorporation, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇,
Executive Vice President and Chief Financial Officer
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
55
with a copy to:
Wachtell, Lipton, ▇▇▇▇▇ & ▇▇▇▇
▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
and
if to Capital One, to:
Capital One Financial Corporation
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.,
Executive Vice President and General Counsel
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq. and
▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
9.5 INTERPRETATION. When a reference is made in this Agreement to Articles,
Sections, Exhibits or Schedules, such reference shall be to an Article or
Section of or Exhibit or Schedule to this Agreement unless otherwise indicated.
The table of contents and headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement. Whenever the words "include," "includes" or "including" are used
in this Agreement, they shall be deemed to be followed by the words "without
limitation." North Fork Disclosure Schedule and the Capital One Disclosure
Schedule, as well as all other schedules and all exhibits hereto, shall be
deemed part of this Agreement and included in any reference to this Agreement.
This Agreement shall not be interpreted or construed to require any person to
take any action, or fail to take any action, if to do so would violate any
applicable law.
9.6 COUNTERPARTS. This Agreement may be executed in two or more counterparts,
all of which shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each of the parties and
delivered to the other party, it being understood that each party need not sign
the same counterpart.
9.7 ENTIRE AGREEMENT. This Agreement (including the documents and the
instruments referred to in this Agreement), together with the Confidentiality
Agreement and the Option Agreements, constitutes the entire agreement and
supersedes all prior agreements and understandings, both written and oral,
between the parties with respect to the subject matter of this Agreement, other
than the Confidentiality Agreement and the Option Agreements.
56
9.8 GOVERNING LAW; JURISDICTION. This Agreement shall be governed and construed
in accordance with the internal laws of the State of New York applicable to
contracts made and wholly-performed within such state, without regard to any
applicable conflicts of law principles, except to the extent that the DGCL
applies. The parties hereto agree that any suit, action or proceeding brought by
either party to enforce any provision of, or based on any matter arising out of
or in connection with, this Agreement or the transactions contemplated hereby
shall be brought in any federal or state court located in New York County, New
York. Each of the parties hereto submits to the jurisdiction of any such court
in any suit, action or proceeding seeking to enforce any provision of, or based
on any matter arising out of, or in connection with, this Agreement or the
transactions contemplated hereby and hereby irrevocably waives the benefit of
jurisdiction derived from present or future domicile or otherwise in such action
or proceeding. Each party hereto irrevocably waives, to the fullest extent
permitted by law, any objection that it may now or hereafter have to the laying
of the venue of any such suit, action or proceeding in any such court or that
any such suit, action or proceeding brought in any such court has been brought
in an inconvenient forum.
9.9 PUBLICITY. Neither North Fork nor Capital One shall, and neither North Fork
nor Capital One shall permit any of its Subsidiaries to, issue or cause the
publication of any press release or other public announcement with respect to,
or otherwise make any public statement concerning, the transactions contemplated
by this Agreement without the prior consent (which consent shall not be
unreasonably withheld) of Capital One, in the case of a proposed announcement or
statement by North Fork, or North Fork, in the case of a proposed announcement
or statement by Capital One; PROVIDED, HOWEVER, that either party may, without
the prior consent of the other party (but after prior consultation with the
other party to the extent practicable under the circumstances) issue or cause
the publication of any press release or other public announcement to the extent
required by law or by the rules and regulations of the NYSE.
9.10 ASSIGNMENT; THIRD PARTY BENEFICIARIES. Neither this Agreement nor any of
the rights, interests or obligations under this Agreement shall be assigned by
either of the parties (whether by operation of law or otherwise) without the
prior written consent of the other party. Subject to the preceding sentence,
this Agreement shall be binding upon, inure to the benefit of and be enforceable
by each of the parties and their respective successors and assigns. Except as
otherwise specifically provided in Section 6.7, this Agreement (including the
documents and instruments referred to in this Agreement) is not intended to and
does not confer upon any person other than the parties hereto any rights or
remedies under this Agreement.
REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
57
IN WITNESS WHEREOF, North Fork and Capital One have caused this
Agreement to be executed by their respective officers thereunto duly authorized
as of the date first above written.
NORTH FORK BANCORPORATION, INC.
By: /S/ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
---------------------------------------------
Name: ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Title: Chairman of the Board, President and
Chief Executive Officer
CAPITAL ONE FINANCIAL CORPORATION
By: /S/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Chairman, Chief Executive Officer and
President
SIGNATURE PAGE TO AGREEMENT AND PLAN OF MERGER
Exhibit A
[Stock Option Agreement, between North Fork as Issuer
and Capital One as Grantee]
Exhibit B
[Stock Option Agreement, between Capital One as Issuer
and North Fork as Grantee]
Exhibit C
Form of Affiliate Letter
Capital One Financial Corporation
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
I have been advised that as of the date hereof I may be deemed to be
an "affiliate" of North Fork Bancorporation, Inc., a Delaware corporation
("NORTH FORK"), as the term "affiliate" is defined for purposes of paragraphs
(c) and (d) of Rule 145 of the Rules and Regulations (the "RULES AND
REGULATIONS") of the Securities and Exchange Commission (the "COMMISSION") under
the Securities Act of 1933, as amended (the "Act"). I have been further advised
that pursuant to the terms of the Agreement and Plan of Merger dated as of March
12, 2006 (the "MERGER AGREEMENT"), by and between Capital One Financial
Corporation, a Delaware corporation ("CAPITAL ONE"), and North Fork, North Fork
shall be merged with and into Capital One (the "MERGER"). All terms used in this
letter but not defined herein shall have the meanings ascribed thereto in the
Merger Agreement.
I represent, warrant and covenant to Capital One that in the event I
receive any Capital One Common Stock as a result of the Merger:
I shall not make any sale, transfer or other disposition of Capital
One Common Stock in violation of the Act or the Rules and Regulations.
I have carefully read this letter and the Merger Agreement and
discussed its requirements and other applicable limitations upon my ability to
sell, transfer or otherwise dispose of Capital One Common Stock to the extent I
believed necessary with my counsel or counsel for North Fork.
I have been advised that the issuance of Capital One Common Stock to
me pursuant to the Merger will be registered with the Commission under the Act
on a Registration Statement on Form S-4. However, I have also been advised that,
since at the time the Merger will be submitted for a vote of the stockholders of
North Fork I may be deemed to have been an affiliate of North Fork and the
distribution by me of Capital One Common Stock has not been registered under the
Act, I may not sell, transfer or otherwise dispose of Capital One Common Stock
issued to me in the Merger unless (i) such sale, transfer or other disposition
has been registered under the Act, (ii) such sale, transfer or other disposition
is made in conformity with the volume and other limitations of Rule 145
promulgated by the Commission under the Act, or (iii) in the opinion of counsel
reasonably acceptable to Capital One, such sale, transfer or other disposition
is otherwise exempt from registration under the Act.
I understand that Capital One is under no obligation to register the
sale, transfer or other disposition of Capital One Common Stock by me or on my
behalf under the Act or to take any other action necessary in order to make
compliance with an exemption from such registration available.
I also understand that stop transfer instructions will be given to
Capital One's transfer agents with respect to Capital One Common Stock and that
there will be placed on the certificates for Capital One Common Stock issued to
me, or any substitutions therefor, a legend stating in substance:
"The securities represented by this certificate have been issued in a
transaction to which Rule 145 promulgated under the Securities Act of
1933 applies and may only be sold or otherwise transferred in
compliance with the requirements of Rule 145 or pursuant to a
registration statement under said act or an exemption from such
registration."
I also understand that unless the transfer by me of my Capital One
Common Stock has been registered under the Act or is a sale made in conformity
with the provisions of Rule 145, Capital One reserves the right to put the
following legend on the certificates issued to my transferee:
"The shares represented by this certificate have not been registered
under the Securities Act of 1933 and were acquired from a person who
received such shares in a transaction to which Rule 145 promulgated
under the Securities Act of 1933 applies. The shares have been
acquired by the holder not with a view to, or for resale in
connection with, any distribution thereof within the meaning of the
Securities Act of 1933 and may not be sold, pledged or otherwise
transferred except in accordance with an exemption from the
registration requirements of the Securities Act of 1933."
It is understood and agreed that the legends set forth above shall be
removed by delivery of substitute certificates without such legend, and/or the
issuance of a letter to Capital One's transfer agent removing such stop transfer
instructions, and the above restrictions on sale will cease to apply, if (A) one
year (or such other period as may be required by Rule 145(d)(2) under the
Securities Act or any successor thereto) shall have elapsed from the Closing
Date and the provisions of such Rule are then available to me; or (B) if two
years (or such other period as may be required by Rule 145(d)(3) under the
Securities Act or any successor thereto) shall have elapsed from the Effective
Date and the provisions of such Rule are then available to me; or (C) I shall
have delivered to Capital One (i) a copy of a letter from the staff of the
Commission, or an opinion of counsel in form and substance reasonably
satisfactory to Capital One, or other evidence reasonably satisfactory to
Capital One, to the effect that such legend and/or stop transfer instructions
are not required for purposes of the Securities Act or (ii) reasonably
satisfactory evidence or representations that the securities represented by such
certificates are being or have been transferred in a transaction made in
conformity with the provisions of Rule 145 under the Securities Act or pursuant
to an effective registration under the Securities Act.
I recognize and agree that the foregoing provisions also apply to (i)
my spouse, (ii) any relative of mine or my spouse occupying my home, (iii) any
trust or estate in which I, my spouse or any such relative owns at least 10%
beneficial interest or of which any of us serves as trustee, executor or in any
similar capacity and (iv) any corporate or other organization in which
I, my spouse or any such relative owns at least 10% of any class of equity
securities or of the equity interest.
It is understood and agreed that this Letter Agreement shall
terminate and be of no further force and effect if the Merger Agreement is
terminated in accordance with its terms.
Execution of this letter should not be construed as an admission on
my part that I am an "affiliate" of North Fork as described in the first
paragraph of this letter or as a waiver of any rights I may have to object to
any claim that I am such an affiliate on or after the date of this letter.
Very truly yours,
By:__________________________________
Name:
Accepted this [___] day of
[__________], 2006
Capital One Financial Corporation
By:______________________________
Name:
Title: