AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of July 18, 1998, between
Dime Community Bancshares, Inc., a Delaware corporation ("Parent"), and
Financial Bancorp, Inc., a Delaware corporation (the "Company"). (Parent
and the Company are sometimes collectively referred to herein as the
"Constituent Corporations".)
WHEREAS, the Boards of Directors of Parent and the Company have
determined that it is in the best interests of their respective companies
and their stockholders to consummate the business combination transaction
provided for herein in which the Company will, subject to the terms and
conditions set forth herein, merge (the "Merger") with and into Parent;
WHEREAS, concurrently with the execution and delivery of this
Agreement, and as a condition and inducement to Parent's willingness to
enter into this Agreement, Parent and the Company have entered into a Stock
Option Agreement (the "Stock Option Agreement"), pursuant to which the
Company has granted to Parent an option to purchase shares of the Company's
common stock, par value $0.01 per share (the "Company Common Stock"), upon
the terms and conditions therein contained; 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 herein, and intending
to be legally bound hereby, the parties agree as follows:
ARTICLE I
THE MERGER
1.1 The Merger. Subject to the terms and conditions of this
Agreement, in accordance with the Delaware General Corporation Law (the
"DGCL"), at the Effective Time (as defined in Section 1.2 hereof), the
Company shall merge with and into Parent. Parent shall be the surviving
corporation (hereinafter sometimes called the "Surviving Corporation") in
the Merger, and shall continue its corporate existence under the laws of
the State of Delaware. The name of the Surviving Corporation shall
continue to be Dime Community Bancshares, Inc. Upon consummation of the
Merger, the separate corporate existence of the Company shall terminate.
1.2 Effective Time. The Merger shall become effective as set
forth in the certificate of merger (the "Certificate of Merger") which
shall be filed with the Secretary of State of the State of Delaware (the
"Secretary") on the Closing Date (as defined in Section 10.1 hereof). The
term "Effective Time" shall be the date and time when the Merger becomes
effective, as set forth in the Certificate of Merger.
1.3 Effects of the Merger. At and after the Effective Time, the
Merger shall have the effects set forth in Sections 259 and 261 of the
DGCL.
1.4 Conversion of Company Common Stock. (a) At the Effective
Time, subject to Section 1.8, Section 2.2(e) and Section 9.1(g) hereof,
each share of Company Common Stock issued and outstanding immediately prior
to the Effective Time (other than (i) shares of Company Common Stock held
in the Company's treasury, (ii) unallocated shares of Company Common Stock
held in the Company's Recognition and Retention Plans and related trusts,
and (iii) shares of Company Common Stock held directly or indirectly by
Parent or the Company or any of their respective Subsidiaries (as defined
below) (except for Trust Account Shares and DPC Shares, as such terms are
defined in Section 1.4(b) hereof), shall by virtue of this Agreement and
without any action on the part of the Company, Parent or the holder
thereof, cease to be outstanding and shall be converted into and become the
right to receive, at the election of the holder thereof as provided in
Section 1.5, either:
(i) a number of shares of common stock, par value $0.01 per
share, of Parent ("Parent Common Stock") (together with the number of
Parent Rights (as defined in Section 5.2 hereof) associated therewith)
equal to the Final Exchange Ratio, or
(ii) cash in an amount equal to the Per Share Consideration.
(b) At the Effective Time, (i) all shares of Company
Common Stock that are owned by the Company as treasury stock, (ii) all
unallocated shares of Company Common Stock held in the Company's
Recognition and Retention Plans and related trusts, and (iii) all shares of
Company Common Stock that are owned directly or indirectly by Parent or the
Company or any of their respective Subsidiaries (other than shares of
Company Common Stock (x) held directly or indirectly in trust accounts,
managed accounts and the like or otherwise held in a fiduciary capacity for
the benefit of third parties (any such shares, and shares of Parent Common
Stock which are similarly held, whether held directly or indirectly by
Parent or the Company, as the case may be, being referred to herein as
"Trust Account Shares") and (y) held by Parent or the Company or any of
their respective Subsidiaries in respect of a debt previously contracted
(any such shares of Company Common Stock, and shares of Parent Common Stock
which are similarly held, being referred to herein as "DPC Shares"), shall
be cancelled and shall cease to exist and no stock of Parent or other
consideration shall be delivered in exchange therefor. All shares of
Parent Common Stock that are owned by the Company or any of its
Subsidiaries (other than Trust Account Shares and DPC Shares) shall become
treasury stock of Parent,
(c) On and after the Effective Time, holders of
certificates which immediately prior to the Effective Time represented
outstanding shares of Company Common Stock (the "Certificates") shall cease
to have any rights as stockholders of the Company, except the right to
receive the consideration set forth in this Article I (the "Merger
Consideration") for each such share held by them.
(d) If, between the date of this Agreement and the
Effective Time, the shares of Parent Common Stock shall be changed into a
different number or class of shares by reason of any reclassification,
recapitalization, split-up, combination, exchange of shares or
readjustment, or a stock dividend thereon shall be declared with a record
date within said period, appropriate adjustments shall be made to the
Preliminary Stock Ratio, the Minimum Stock Ratio, the Maximum Stock Ratio
and the Final Exchange Ratio.
(e) For purposes of this Agreement the following terms
shall (subject to Section 9.1(g)) have the meanings indicated:
"Aggregate Cash Consideration" shall mean the product obtained by
multiplying (x) the Outstanding Shares Number by (y) $20.25.
"Aggregate Merger Consideration" shall mean the sum of (x) the
Aggregate Cash Consideration and (y) the Aggregate Stock
Consideration.
"Aggregate Stock Consideration" shall mean (w) 0.5 multiplied by
(x) the Outstanding Shares Number multiplied by (y) the Average
Closing Price multiplied by (z) the Preliminary Stock Ratio.
"Average Closing Price" shall mean the average of the closing
sale prices per share for Parent Common Stock as reported on the
National Association of Securities Dealers Automated
Quotation/National Market System ("NASDAQ/ NMS") (as reported by The
Wall Street Journal, or, if not reported thereby, another
authoritative source, during the ten (10) consecutive trading-day
period during which the shares of Parent Common Stock are traded on
the Nasdaq Stock Market National Market System ("Nasdaq") ending on
the tenth business day immediately prior to the anticipated Effective
Time.
"Final Exchange Ratio" shall mean the quotient, rounded to the
nearest ten-thousandth, obtained by dividing the Per Share
Consideration by the Average Closing Price.
"Outstanding Shares Number" shall mean shares of Company Common
Stock issued and outstanding immediately prior to the Effective Time.
"Per Share Consideration" shall mean the quotient obtained by
dividing the Aggregate Merger Consideration by the Outstanding Shares
Number.
"Preliminary Stock Ratio" shall mean the quotient, rounded to the
nearest ten-thousandth obtained by dividing $40.50 by the Average
Closing Price provided, that (i) if the Average Closing Price is equal
to or greater than $31.05, the Preliminary Stock Ratio shall be 1.3043
(the "Minimum Stock Ratio"), and (ii) if the Average Closing Price is
equal to or less than $22.95, the Preliminary Stock Ratio shall be
1.7647 (the "Maximum Stock Ratio").
1.5 Election Procedures. (a) An election form and other
appropriate and customary transmittal materials (which shall specify that
delivery shall be effected, and risk of loss and title to Certificates
shall pass, only upon proper delivery of such Certificates to a bank or
trust company designated by Parent and reasonably satisfactory to the
Company (the "Exchange Agent")) in such form as the Company and Parent
shall mutually agree (the "Election Form"), shall be mailed 30 days prior
to the anticipated Effective Time or on such earlier date as Parent and the
Company shall mutually agree (the "Mailing Date") to each holder of record
of Company Common Stock as of five business days prior to the Mailing Date
("Election Form Record Date"); provided, however, that the Mailing Date
shall not occur prior to the receipt of the shareholder approval
contemplated by Section 8.1(a) hereof.
Each Election Form shall permit a holder (or the beneficial owner
through appropriate and customary documentation and instructions) of
outstanding Company Common Stock to elect, subject to provisions of this
Section 1.5, to receive, on a per share basis, with respect to such
holder's Company Common Stock (i) cash (shares as to which such election is
made, the "Cash Election Shares") or (ii) Parent Common Stock (shares as to
which such election is made, the "Stock Election Shares"). Notwithstanding
the foregoing, no holder of Company Common Stock may elect to receive
Parent Common Stock pursuant to the election procedures provided herein
with respect to fewer than 50 shares of Company Common Stock. To be
effective, a properly completed Election Form shall be submitted to the
Exchange Agent on or before 5:00 p.m., New York City time, on the 20th day
following the Mailing Date (or such other time and date as Parent and the
Company may mutually agree) (the "Election Deadline") ; provided, however,
that the Election Deadline may not occur on or after the Closing Date (as
defined in Section 10.1 hereof).
Parent shall make available up to two separate Election Forms, or
such additional Election Forms as Parent may permit, to all persons who
become holders (or beneficial owners) of Company Common Stock between the
Election Form Record Date and close of business on the business day prior
to the Election Deadline. The Company shall provide to the Exchange Agent
all information reasonably necessary for it to perform as specified herein.
An election shall have been properly made only if the Exchange Agent shall
have actually received a properly completed Election Form by the Election
Deadline. An Election Form shall be deemed properly completed only if
accompanied by one or more Certificates (or customary affidavits and
indemnification regarding the loss or destruction of such Certificates or
the guaranteed delivery of such Certificates) representing all shares of
Company Common Stock covered by such Election Form, together with duly
executed transmittal materials included with the Election Form. If a
stockholder either (i) does not submit a properly completed Election Form
in a timely fashion, or (ii) revokes its Election Form prior to the
Election Deadline, the shares of Company Common Stock held by such
stockholder shall be designated "No Election Shares." Parent shall cause
the Certificates described in clause (ii) of the preceding sentence to be
promptly returned without charge to the person submitting the Election Form
upon written request to that effect from the person who submitted the
Election Form. Subject to the terms of this Agreement and of the Election
Form, the Exchange Agent shall have reasonable discretion to determine
whether any election, revocation or change has been properly or timely made
and to disregard immaterial defects in any Election Form, and any good
faith decisions of the Exchange Agent regarding such matters shall be
binding and conclusive. Neither Parent nor the Exchange Agent shall be
under any obligation to notify any person of any defect in an Election
Form.
(b) The "Cash Election Amount" shall be equal to the Per
Share Consideration multiplied by the total number of Cash Election Shares.
Within five business days after the Election Deadline, unless the Effective
Time has not yet occurred, in which case as soon thereafter as practicable,
Parent shall cause the Exchange Agent to effect the allocation among the
holders of Company Common Stock of rights to receive Parent Common Stock or
cash in the Merger in accordance with the Election Forms as follows:
(i) If the Aggregate Cash Consideration is greater
than the Cash Election Amount, then
(A) all Cash Election Shares shall be
converted into the right to receive an amount of cash equal
to the Per Share Consideration,
(B) the Exchange Agent will select, on a pro
rata basis, first from among the holders of No Election
Shares and then, if necessary, from among the holders of
Stock Election Shares, a sufficient number of such shares
("Cash Designee Shares") such that the sum of Cash Designee
Shares and Cash Election Shares multiplied by the Per Share
Consideration equals as closely as practicable the Aggregate
Cash Consideration (the Cash Designee Shares shall be
converted into the right to receive an amount of cash equal
to the Per Share Consideration), and
(C) any Stock Election Shares and any No
Election Shares, in each case, not so selected as Cash
Designee Shares shall be converted into the right to receive
Parent Common Stock at the Final Exchange Ratio.
(ii) If the Aggregate Cash Consideration is less than
the Cash Election Amount, then
(A) all Stock Election Shares and all No
Election Shares shall be converted into the right to receive
Parent Common Stock at the Final Exchange Ratio,
(B) the Exchange Agent will select, on a pro
rata basis from among the holders of Cash Election Shares, a
sufficient number of such shares ("Stock Designee Shares")
such that the number of Stock Designee Shares multiplied by
the Per Share Consideration equals as closely as practicable
the difference between the Cash Election Amount and the
Aggregate Cash Consideration (the Stock Designee Shares
shall be converted into the right to receive Parent Common
Stock at the Final Exchange Ratio), and
(C) any Cash Election Shares not so selected
as Stock Designee Shares shall be converted into the right
to receive an amount of cash equal to the Per Share
Consideration.
The pro rata selection process to be used by the Exchange Agent
shall consist of such equitable pro ration processes as shall be mutually
determined by the Company and Parent.
1.6 Stock Options. (a) At the Effective Time, each option
granted by the Company to purchase shares of Company Common Stock (each a
"Company Option"), which is outstanding and unexercised immediately prior
thereto, whether or not then vested or exercisable, shall be cancelled and
all rights thereunder shall be extinguished. As consideration for such
cancellation, the Company shall make payment immediately prior to the
Effective Time to each holder of a Company Option of an amount determined
by multiplying (x) the number of shares of Company Common Stock underlying
such Company Option by (y) an amount equal to the excess (if any) of (i)
the Per Share Consideration, over (ii) the exercise price per share of such
Company Option, provided, however, that no such payment shall be made to a
holder unless and until such holder has executed and delivered to the
Company an instrument in such form prescribed by the Parent and reasonably
satisfactory to the Company accepting such payment in full settlement of
his rights relative to the Company Option. Prior to the Effective Time,
the Company shall take or cause to be taken all actions required under the
Company Option Plans to provide for the foregoing.
(b) Notwithstanding the provisions of Section 1.6(a) above,
at the Effective Time, each Company Option held by the individuals
previously designated by Parent and set forth on Schedule 1.6(b) hereto
("Continuing Option Holders") which is outstanding and unexercised
immediately prior thereto shall at the election of the holder thereof be
converted automatically into an option to purchase shares of Parent Common
Stock in an amount and at an exercise price determined as provided below
(and otherwise subject to the terms of the Company's 1995 Incentive Stock
Option Plan and the Company's 1995 Stock Option Plan for Outside Directors,
as the case may be (collectively, the "Company Option Plans"), the
agreements evidencing grants thereunder and any other agreements between
the Company and an optionee regarding Company Options which have been
delivered to Parent prior to the date of this Agreement, other than stock
appreciation rights or limited stock appreciation rights or other rights to
receive cash payments under the Company Option Plans):
(1) the number of shares to be subject to the new option
shall be equal to the product of the number of shares of Company
Common Stock subject to the original option and the Final Exchange
Ratio, provided that any fractional shares of Parent Common Stock
resulting from such multiplication shall be rounded down to the
nearest whole share; and
(2) the exercise price per share of Parent Common Stock
under the new option shall be equal to the exercise price per share of
Company Common Stock under the original option divided by the Final
Exchange Ratio, provided that such exercise price shall be rounded up
to the nearest cent.
The adjustment provided herein with respect to any options which are
"incentive stock options" (as defined in Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code")) shall be and is intended to
be effected in a manner which is consistent with Section 424(a) of the Code
and, to the extent it is not so consistent, such Section 424(a) shall
override anything to the contrary contained herein. The duration and other
terms of the new option shall be the same as the original option except
that all references to the Company shall be deemed to be references to
Parent. In order for any Continuing Option Holder to have his or her
Company Options converted into an option to purchase Parent Common Stock as
set forth in this Section 1.6(b), such Continuing Option Holder shall have
executed a written election with respect to such conversion no later than
five (5) business days prior to the Closing Date, which written election
shall be in such form as shall be prescribed by Parent and reasonably
satisfactory to the Company.
(c) Prior to the Effective Time, Parent shall reserve for
issuance the number of shares of Parent Common Stock necessary to satisfy
Parent's obligations under Section 1.6(b) hereof. Promptly after the
Effective Time (but in no event later than three business days thereafter),
Parent shall file with the Securities and Exchange Commission (the "SEC") a
registration statement on an appropriate form under the Securities Act of
1933, as amended (the "Securities Act"), with respect to the shares of
Parent Common Stock subject to options to acquire Parent Common Stock
issued pursuant to Section 1.6(b) hereof, and shall use its best efforts to
maintain the current status of the prospectus contained therein, as well as
comply with applicable state securities or "blue sky" laws, for so long as
such options remain outstanding.
1.7 Parent Common Stock. Except for shares of Parent Common
Stock owned by the Company or any of its Subsidiaries (other than Trust
Account Shares and DPC Shares), which shall be converted into treasury
stock of Parent as contemplated by Section 1.4 hereof, the shares of Parent
Common Stock issued and outstanding immediately prior to the Effective Time
shall be unaffected by the Merger and such shares shall remain issued and
outstanding.
1.8 Shares of Dissenting Stockholders. Notwithstanding anything
in this Agreement to the contrary, any shares of Company Common Stock that
are issued and outstanding as of the Effective Time and that are held by a
stockholder who has properly exercised his appraisal rights (the
"Dissenting Shares") under the DGCL shall not be converted into the right
to receive the Merger Consideration unless and until the holder shall have
failed to perfect, or shall have effectively withdrawn or lost, his 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
holder shall have failed to perfect or shall have effectively withdrawn or
lost such right, each share of such holder's Company Common Stock shall
thereupon be deemed to have been converted into and to have become, as of
the Effective Time, the right to receive, without any interest thereon, the
Merger Consideration as provided in Section 1.4 and as allocated pursuant
to Section 1.5 upon surrender of the Certificate or Certificates
representing such Dissenting Shares. The Company shall give Parent (i)
prompt notice of any notice or demands for appraisal or payment for shares
of Company Common Stock received by the Company and (ii) the opportunity to
participate in and direct all negotiations and proceedings with respect to
any such demands or notices. The Company shall not, without the prior
written consent of Parent, make any payment with respect to, or settle,
offer to settle or otherwise negotiate, any such demands. Dissenting
Shares shall be deemed to be No Election Shares for purposes of Section 1.5
hereof.
1.9 Tax Opinion Adjustment. If either (i) the tax opinion
referred to in Section 8.2(d) cannot be rendered (as reasonably determined
by ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇) or (ii) the tax opinion referred to in Section
8.3(d) cannot be rendered (as reasonably determined by Skadden, Arps,
Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP), in either case as a result of the Merger
potentially failing to qualify as a reorganization under Section 368(a) of
the Code, then Parent shall reduce the Aggregate Cash Consideration to the
minimum extent necessary to enable the relevant tax opinion or opinions, as
the case may be, to be rendered, and correspondingly increase the Aggregate
Stock Consideration.
1.10 Certificate of Incorporation. At the Effective Time, the
Certificate of Incorporation of Parent, as in effect at the Effective Time,
shall be the Certificate of Incorporation of the Surviving Corporation.
1.11 By-Laws. At the Effective Time, the By-Laws of Parent, as
in effect immediately prior to the Effective Time, shall be the By-Laws of
the Surviving Corporation until thereafter amended in accordance with
applicable law.
1.12 Directors and Officers. The directors and officers of
Parent immediately prior to the Effective Time shall be the directors and
officers of the Surviving Corporation, each to hold office in accordance
with the Certificate of Incorporation and By-Laws of the Surviving
Corporation until their respective successors are duly elected or appointed
and qualified.
1.13 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 Section 368 of the Code.
1.14 Bank Merger. Promptly following the execution of the
Agreement, the Parent Bank (as defined below) and the Company Bank (as
defined below) shall enter into the Plan of Bank Merger (the "Bank Merger")
in the form annexed hereto as Exhibit A (which shall qualify as a
reorganization under Section 368(a) of the Code) pursuant to which the Bank
Merger will be effected pursuant to and with the effect set forth in the
rules and regulations of the Office of Thrift Supervision ("OTS"). The
parties hereto intend that the Bank Merger shall become effective on the
Effective Date following the Effective Time of the Merger. The
documentation relating to the Bank Merger shall provide that the directors
of the Parent Bank as the surviving entity of the Bank Merger shall be all
of the respective directors of the Parent Bank immediately prior to such
merger.
ARTICLE II
EXCHANGE OF SHARES
2.1 Parent to Make Shares Available. At or prior to the
Effective Time, Parent shall deposit, or shall cause to be deposited, with
the Exchange Agent, for the benefit of the holders of Certificates, for
exchange in accordance with this Article II, certificates representing the
shares of Parent Common Stock, the cash in lieu of fractional shares and an
amount of cash sufficient to pay the Aggregate Cash Consideration (such
cash and certificates for shares of Parent Common Stock, together with any
dividends or distributions with respect thereto, being hereinafter referred
to as the "Exchange Fund") to be issued pursuant to Section 1.4 and paid
pursuant to Section 2.2(a) in exchange for outstanding shares of Company
Common Stock.
2.2 Exchange of Shares. (a) As soon as practicable after the
Effective Time, and in no event more than five business days thereafter,
the Exchange Agent shall mail to each holder of record of a Certificate or
Certificates who has not previously surrendered such Certificate or
Certificates with a Form of Election a form letter of transmittal (which
shall specify that delivery shall be effected, and risk of loss and title
to the Certificates shall pass, only upon delivery of the Certificates to
the Exchange Agent) and instructions for use in effecting the surrender of
the Certificates in exchange for the Merger Consideration into which the
shares of Company Common Stock represented by such Certificate or
Certificates shall have been converted pursuant to this Agreement. The
Company shall have the right to review both the letter of transmittal and
the instructions prior to the Effective Time and provide reasonable
comments thereon. Upon surrender of a Certificate for exchange and
cancellation to the Exchange Agent, together with such letter of
transmittal, duly executed, the holder of such Certificate shall be
entitled to receive in exchange therefor the Merger Consideration to which
such holder of Company Common Stock shall have become entitled pursuant to
the provisions of Article I hereof, and the Certificate so surrendered
shall forthwith be cancelled. No interest will be paid or accrued on any
cash constituting Merger Consideration (including the cash in lieu of
fractional shares) and any unpaid dividends and distributions, if any,
payable to holders of Certificates.
(b) No dividends or other distributions declared after the
Effective Time with respect to Parent Common Stock and payable to the
holders of record thereof shall be paid to the holder of any unsurrendered
Certificate until the holder thereof shall surrender such Certificate in
accordance with this Article II. After the surrender of a Certificate in
accordance with this Article II, the record holder thereof shall be
entitled to receive any such dividends or other distributions, without any
interest thereon, which theretofore had become payable with respect to
shares of Parent Common Stock, if any, represented by such Certificate.
(c) If any certificate representing shares of Parent Common
Stock is to be issued in a name other than that in which the Certificate
surrendered in exchange therefor is registered, it shall be a condition of
the issuance thereof that the Certificate so surrendered shall be properly
endorsed (or accompanied by an appropriate instrument of transfer) and
otherwise in proper form for transfer, and that the person requesting such
exchange shall pay to the Exchange Agent in advance any transfer or other
taxes required by reason of the issuance of a certificate representing
shares of Parent Common Stock in any name other than that of the registered
holder of the Certificate surrendered, or required for any other reason, or
shall establish to the satisfaction of the Exchange Agent that such tax has
been paid or is not payable.
(d) After the Effective Time, there shall be no transfers
on the stock transfer books of the Company of the shares of Company Common
Stock which were issued and outstanding immediately 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 Merger Consideration as determined in accordance with
Article I and this Article II.
(e) Notwithstanding anything to the contrary contained
herein, no certificates or scrip representing fractional shares of Parent
Common Stock shall be issued upon the surrender for exchange of
Certificates, no dividend or distribution with respect to Parent 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 Parent. In lieu of the issuance of
any such fractional share, Parent shall pay to each former stockholder of
the Company who otherwise would be entitled to receive a fractional share
of Parent Common Stock an amount in cash determined by multiplying (i) the
Average Closing Price by (ii) the fraction of a share of Parent Common
Stock which such holder would otherwise be entitled to receive pursuant to
Section 1.4 hereof.
(f) Any portion of the Exchange Fund that remains unclaimed
by the stockholders of the Company for twelve months after the Effective
Time shall be paid to Parent. Any stockholders of the Company who have not
theretofore complied with this Article II shall thereafter look only to
Parent for payment of the cash, shares of Parent Common Stock, cash in lieu
of fractional shares and unpaid dividends and distributions on the Parent
Common Stock deliverable in respect of each share of Company Common Stock
such stockholder holds as determined pursuant to this Agreement, in each
case, without any interest thereon. If outstanding Certificates are not
surrendered or the payment for them is not claimed prior to the date on
which such payments would otherwise escheat to or become the property of
any governmental unit or agency, the unclaimed items shall, to the extent
permitted by abandoned property and any other applicable law, become the
property of Parent (and to the extent not in its possession shall be paid
over to it), free and clear of all claims or interest of any person
previously entitled to such claims. Notwithstanding the foregoing, none of
Parent, the Company, the Exchange Agent or any other person shall be liable
to any former holder of shares of Company Common Stock for any amount
properly delivered to a public official pursuant to applicable abandoned
property, escheat or similar laws.
(g) 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
required by Parent, the posting by such person of a bond in such amount as
Parent may direct as indemnity against any claim that may be made against
it with respect to such Certificate, the Exchange Agent will issue in
exchange for such lost, stolen or destroyed Certificate the cash and/or
shares of Parent Common Stock and cash in lieu of fractional shares
deliverable in respect thereof pursuant to this Agreement.
ARTICLE III
DISCLOSURE SCHEDULES; STANDARDS
FOR REPRESENTATIONS AND WARRANTIES
3.1 Disclosure Schedules. Prior to the execution and delivery
of this Agreement, the Company has delivered to Parent, and Parent has
delivered to the Company, a schedule (in the case of the Company, the
"Company Disclosure Schedule," and in the case of Parent, the "Parent
Disclosure Schedule") setting forth, among other things, items the
disclosure of which is necessary or appropriate either in response to an
express disclosure requirement contained in a provision hereof or as an
exception to one or more of such party's representations or warranties
contained in Article IV, in the case of the Company, or Article V, in the
case of Parent, or to one or more of such party's covenants contained in
Article VI; provided, however, that notwithstanding anything in this
Agreement to the contrary (a) no such item is required to be set forth in
the Disclosure Schedule as an exception to a representation or warranty if
its absence would not result in the related representation or warranty
being deemed untrue or incorrect under the standard established by Section
3.2, and (b) the mere inclusion of an item in a Disclosure Schedule as an
exception to a representation or warranty shall not be deemed an admission
by a party that such item represents a material exception or material fact,
event or circumstance or that such item has had or would have a Material
Adverse Effect (as defined herein) with respect to either the Company or
Parent, respectively.
3.2 Standards. (a) No representation or warranty of the
Company contained in Article IV (other than the representations set forth
in the first and third sentences of Section 4.1(a), the second sentence of
Section 4.1(b) and Sections 4.2, 4.6, 4.8(a), 4.10 and 4.18) or of Parent
contained in Article V (other than the representations set forth in the
first and third sentences of Section 5.1(a), the second sentence of Section
5.1(b) and Sections 5.2, 5.6, 5.8(a), 5.10 and 5.18) 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 IV, in the case of the Company, or Article
V, in the case of Parent, has had a Material Adverse Effect with respect to
the Company or Parent, respectively.
(b) As used in this Agreement, the term "Material Adverse
Effect" means, with respect to Parent or the Company, 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,
other than any such effect attributable to or resulting from (x) any change
in banking or similar laws, rules or regulations of general applicability
or interpretations thereof by courts or governmental authorities, (y) any
change in GAAP (as defined herein) or regulatory accounting principles
applicable to banks, thrifts or their holding companies generally, or (z)
any action or omission of the Company or Parent or any Subsidiary of either
of them taken with the prior written consent of the other party hereto or
(ii) the ability of such party and its Subsidiaries to consummate the
transactions contemplated hereby. As used in this Agreement, the word
"Subsidiary" when used with respect to any party means any corporation,
partnership or other organization, whether incorporated or unincorporated,
which is consolidated with such party for financial reporting purposes.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Subject to Article III, the Company hereby represents and
warrants to Parent as follows:
4.1 Corporate Organization. (a) The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware. The Company 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. The Company
is duly registered as a unitary savings and loan holding company under the
Home Owners' Loan Act, as amended (the "HOLA"). The Certificate of
Incorporation and By-laws of the Company, copies of which have previously
been made available to Parent, are true and correct copies of such
documents as in effect as of the date of this Agreement.
(b) Financial Federal Savings Bank (the "Company Bank") is
a stock savings bank duly organized, validly existing and in good standing
under the laws of the United States of America. The deposit accounts of
the Company Bank are insured by the Federal Deposit Insurance Corporation
(the "FDIC") through the Savings Association 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. Each of the
Company's other Subsidiaries is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation or organization. Each of the Company's Subsidiaries 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 the location of
the properties and assets owned or leased by it makes such licensing or
qualification necessary. The certificate of incorporation, by-laws and
similar governing documents of each Subsidiary of the Company, copies of
which have previously been made available to Parent, are true and correct
copies of such documents as in effect as of the date of this Agreement.
(c) The minute books of the Company and each of its
Subsidiaries contain true and correct records of all meetings and other
corporate actions held or taken since December 31, 1995 of their respective
stockholders and Boards of Directors (including committees of their
respective Boards of Directors).
4.2 Capitalization. (a) The authorized capital stock of the
Company consists of 6,000,000 shares of Company Common Stock and 2,500,000
shares of preferred stock, par value $.01 per share (the "Company Preferred
Stock"). As of July 15, 1998, there were 1,706,666 shares of Company
Common Stock outstanding and 478,334 shares of Company Common Stock held by
the Company as treasury stock. As of July 15, 1998, there were (i) no
shares of Company Common Stock reserved for issuance upon exercise of
outstanding stock options or otherwise except for (x) 171,766 shares of
Company Common Stock reserved for issuance pursuant to the Company Option
Plans and described in Section 4.2(a) of the Company Disclosure Schedule
and (y) 339,627 shares of Company Common Stock reserved for issuance upon
exercise of the option to be issued to Parent pursuant to the Stock Option
Agreement and (ii) no shares of Company Preferred Stock issued or
outstanding, held in the Company's treasury or reserved for issuance upon
exercise of outstanding stock options or otherwise. All of the issued and
outstanding shares of Company 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.
Except as referred to above or reflected in Section 4.2(a) of the Company
Disclosure Schedule, and except for the Stock Option Agreement, the Company
does not have and is not bound by any outstanding subscriptions, options,
warrants, calls, commitments or agreements of any character calling for the
purchase or issuance of any shares of Company Common Stock or Company
Preferred Stock or any other equity security of the Company or any
securities representing the right to purchase or otherwise receive any
shares of Company Common Stock or any other equity security of the Company.
The names of the optionees, the date of each option to purchase Company
Common Stock granted, the number of shares subject to each such option, the
expiration date of each such option, and the price at which each such
option may be exercised under the Company Option Plans are set forth in
Section 4.2(a) of the Company Disclosure Schedule.
(b) Section 4.2(b) of the Company Disclosure Schedule sets
forth a true and correct list of all of the Subsidiaries of the Company.
Except as set forth in Section 4.2(b) of the Company Disclosure Schedule,
the Company owns, directly or indirectly, all of the issued and outstanding
shares of the capital stock of each of such Subsidiaries, free and clear of
all liens, charges, encumbrances and security interests whatsoever, and all
of such shares are duly authorized and validly issued and are fully paid,
nonassessable and free of preemptive rights, with no personal liability
attaching to the ownership thereof. No Subsidiary of the Company 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. Assuming compliance by Parent with Section 1.5 hereof,
at the Effective Time, there will not be any outstanding subscriptions,
options, warrants, calls, commitments or agreements of any character by
which the Company or any of its Subsidiaries will be bound calling for the
purchase or issuance of any shares of the capital stock of the Company or
any of its Subsidiaries.
4.3 Authority; No Violation. (a) The Company has full
corporate power and authority to execute and deliver this Agreement and the
Option Agreement and to consummate the transactions contemplated hereby and
thereby. The execution and delivery of this Agreement and the Option
Agreement and the consummation of the transactions contemplated hereby and
thereby have been duly and validly approved by the Board of Directors of
the Company. The Board of Directors of the Company has directed that this
Agreement and the transactions contemplated hereby be submitted to the
Company's stockholders for approval at a meeting of such stockholders and,
except for the adoption of this Agreement by the requisite vote of the
Company's stockholders, no other corporate proceedings on the part of the
Company are necessary to approve this Agreement and to consummate the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by the Company and (assuming due authorization,
execution and delivery by Parent) this Agreement constitutes a valid and
binding obligation of the Company, enforceable against the Company in
accordance with its terms, except as enforcement may be limited by general
principles of equity whether applied in a court of law or a court of equity
and by bankruptcy, insolvency and similar laws affecting creditors' rights
and remedies generally.
(b) Except as set forth in Section 4.3(b) of the Company
Disclosure Schedule, neither the execution and delivery of this Agreement
by the Company, nor the consummation by the Company of the transactions
contemplated hereby, nor compliance by the Company with any of the terms or
provisions hereof, will (i) violate any provision of the Certificate of
Incorporation or By-Laws of the Company or the certificate of
incorporation, by-laws or similar governing documents of any of its
Subsidiaries, or (ii) assuming that the consents and approvals referred to
in Section 4.4 hereof are duly obtained, (x) violate any statute, code,
ordinance, rule, regulation, judgment, order, writ, decree or injunction
applicable to the Company or any of its Subsidiaries, or any of their
respective properties or assets, or (y) 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, pledge, security interest, charge or
other encumbrance upon any of the respective properties or assets of the
Company 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 the Company or
any of its Subsidiaries is a party, or by which they or any of their
respective properties or assets may be bound or affected.
4.4 Consents and Approvals. Except for (a) the filing of
applications and notices, as applicable, with the OTS under the HOLA, Bank
Merger Act, Federal Deposit Insurance Act and the rules and regulations of
the OTS and approval of such applications and notices, (b) the filing of
such applications, filings, authorizations, orders and approvals as may be
required under applicable state law (the "State Banking Approvals"), (c)
the filing with the SEC of a proxy statement in definitive form relating to
the meeting of the Company's stockholders to be held in connection with
this Agreement and the transactions contemplated hereby (the "Proxy
Statement") and the filing and declaration of effectiveness of the
registration statement on Form S-4 (the "S-4") in which the Proxy Statement
will be included as a prospectus, (d) the approval of this Agreement by the
requisite vote of the stockholders of the Company, (e) the filing of the
Certificate of Merger with the Secretary pursuant to the DGCL, (f) approval
of the listing of the Parent Common Stock to be issued in the Merger on the
NASDAQ/NMS, and (g) such filings, authorizations or approvals as may be set
forth in Section 4.4 of the Company Disclosure Schedule, 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") or with any third party are necessary in
connection with (1) the execution and delivery by the Company of this
Agreement and (2) the consummation by the Company of the Merger and the
other transactions contemplated hereby.
4.5 Reports. The Company and each of its Subsidiaries have
timely filed all reports, registrations and statements, together with any
amendments required to be made with respect thereto, that they were
required to file since December 31, 1995 with (i) the OTS, (ii) the FDIC,
(iii) any state banking commissions or any other state regulatory authority
(each a "State Regulator") and (iv) any other self-regulatory organization
("SRO") (collectively with the Federal Reserve Board, the "Regulatory
Agencies"), and have paid all fees and assessments due and payable in
connection therewith. Except for normal examinations conducted by a
Regulatory Agency in the regular course of the business of the Company and
its Subsidiaries, and except as set forth in Section 4.5 of the Company
Disclosure Schedule, no Regulatory Agency has initiated any proceeding or,
to the knowledge of the Company, investigation into the business or
operations of the Company or any of its Subsidiaries since December 31,
1995. There is no unresolved violation, criticism, or exception by any
Regulatory Agency with respect to any report or statement relating to any
examinations of the Company or any of its Subsidiaries.
4.6 Financial Statements. The Company has previously made
available to Parent copies of (a) the consolidated statements of financial
condition of the Company and its Subsidiaries as of September 30, for the
fiscal years 1996 and 1997, and the related consolidated statements of
income, changes in stockholders' equity and cash flows for the fiscal years
1995 through 1997, inclusive, as reported in the Company's Annual Report on
Form 10-K for the fiscal year ended September 30, 1997 filed with the SEC
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
in each case accompanied by the audit report of Radics & Co., LLC,
independent public accountants with respect to the Company, and (b) the
unaudited consolidated statements of financial condition of the Company and
its Subsidiaries as of March 31, 1998 and March 31, 1997 and the related
unaudited consolidated statements of income, cash flows and changes in
stockholders' equity for the six-month periods then ended as reported in
the Company's Quarterly Report on Form 10-Q for the period ended March 31,
1998 filed with the SEC under the Exchange Act. The September 30, 1997
consolidated statement of financial condition of the Company (including the
related notes, where applicable) fairly presents the consolidated financial
position of the Company and its Subsidiaries as of the date thereof, and
the other financial statements referred to in this Section 4.6 (including
the related notes, where applicable) fairly present, and the financial
statements to be filed with the SEC after the date hereof will fairly
present (subject, in the case of the unaudited statements, to recurring
audit adjustments normal in nature and amount), the results of the
consolidated operations and consolidated financial position of the Company
and its Subsidiaries for the respective fiscal periods or as of the
respective dates therein set forth; each of such statements (including the
related notes, where applicable) complies, and the financial statements to
be filed with the SEC after the date hereof will comply, with applicable
accounting requirements and with the published rules and regulations of the
SEC with respect thereto; and each of such statements (including the
related notes, where applicable) has been, and the financial statements to
be filed with the SEC after the date hereof will be, prepared in accordance
with generally accepted accounting principles ("GAAP") consistently applied
during the periods involved, except as indicated in the notes thereto or,
in the case of unaudited statements, as permitted by Form 10-Q. The books
and records of the Company and its Subsidiaries have been, and are being,
maintained in accordance with GAAP and any other applicable legal and
accounting requirements.
4.7 Broker's Fees. Neither the Company nor any Subsidiary of
the Company 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 any of the transactions
contemplated by this Agreement, except that the Company has engaged, and
will pay a fee or commission to, Sandler ▇'▇▇▇▇▇ & Partners, L.P. ("Sandler
▇'▇▇▇▇▇") in accordance with the terms of a letter agreement between
Sandler ▇'▇▇▇▇▇ and the Company, a true and correct copy of which has been
previously made available by the Company to Parent.
4.8 Absence of Certain Changes or Events. (a) Except as
disclosed in any Company Report (as defined in Section 4.12) filed with the
SEC prior to the date of this Agreement, since September 30, 1997, there
has been no change or development or combination of changes or developments
which, individually or in the aggregate, has had a Material Adverse Effect
on the Company.
(b) Except as disclosed in any Company Report filed with
the SEC prior to the date of this Agreement, since September 30, 1997, the
Company and its Subsidiaries have carried on their respective businesses in
the ordinary course consistent with their past practices.
(c) Except as set forth in Section 4.8(c) of the Company
Disclosure Schedule, since March 31, 1998, neither the Company nor any of
its Subsidiaries has (i) 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
March 31, 1998 (which amounts have been previously disclosed to Parent),
granted any severance or termination pay, entered into any contract to make
or grant any severance or termination pay, or paid any bonus (except (x)
for salary increases and bonus payments made in the ordinary course of
business consistent with past practices following the date hereof and (y)
the Company may adopt the severance plan described in Section 6.1(j) of the
Company Disclosure Schedule), (ii) suffered any strike, work stoppage,
slow-down, or other labor disturbance, (iii) been a party to a collective
bargaining agreement, contract or other agreement or understanding with a
labor union or organization, or (iv) had any union organizing activities.
4.9 Legal Proceedings. (a) Except as set forth in Section
4.9(a) of the Company Disclosure Schedule, neither the Company nor any of
its Subsidiaries is a party to any, and there are no pending or, to the
Company's knowledge, threatened, legal, administrative, arbitral or other
proceedings, claims, actions or governmental or regulatory investigations
of any nature against the Company or any of its Subsidiaries or challenging
the validity or propriety of the transactions contemplated by this
Agreement.
(b) Except as set forth in Section 4.9(b) of the Company
Disclosure Schedule, there is no injunction, order, judgment, decree, or
regulatory restriction imposed upon the Company, any of its Subsidiaries or
the assets of the Company or any of its Subsidiaries.
4.10 Taxes. (a) Except as set forth in Section 4.10(a) of the
Company Disclosure Schedule, each of the Company and its Subsidiaries has
(i) duly and timely filed (including applicable extensions granted without
penalty) all material Tax Returns (as hereinafter defined) required to be
filed at or prior to the Effective Time, and such Tax Returns are true and
correct in all material respects, and (ii) paid in full or made adequate
provision in the financial statements of the Company (in accordance with
GAAP) for all material Taxes (as hereinafter defined) shown to be due on
such Tax Returns. Except as set forth in Section 4.10(a) of the Company
Disclosure Schedule, (i) as of the date hereof neither the Company nor any
of its Subsidiaries has requested any extension of time within which to
file any Tax Returns in respect of any fiscal year which have not since
been filed and no request for waivers of the time to assess any Taxes are
pending or outstanding, and (ii) as of the date hereof, with respect to
each taxable period of the Company and its Subsidiaries, the federal and
state income Tax Returns of the Company and its Subsidiaries have been
audited by the Internal Revenue Service or appropriate state tax
authorities or the time for assessing and collecting income Tax with
respect to such taxable period has closed and such taxable period is not
subject to review. Except as set forth in Section 4.10(a) of the Company
Disclosure Schedule, neither the Company nor any of its Subsidiaries (i)
has made an election under Section 341(f) of the Code, (ii) has made any
payment, is obligated to make any payment, or is a party to any agreement
that could obligate it to make any payment that would not be deductible
under Section 280G of the Code, (iii) has issued or assumed any obligation
under Section 279 of the Code, any high yield discount obligation as
described in Section 163(i) of the Code or any registration-required
obligation within the meaning of Section 163(f)(2) of the Code that is not
in registered form, or (iv) is or has been a United States real property
holding corporation within the meaning of Section 897(c)(2) of the Code.
(b) For the purposes of this Agreement, "Taxes" shall mean
all taxes, charges, fees, levies, penalties or other assessments imposed by
any United States federal, state, local or foreign taxing authority,
including, but not limited to income, excise, property, sales, transfer,
franchise, payroll, withholding, social security or other taxes, including
any interest, penalties or additions attributable thereto. For purposes of
this Agreement, "Tax Return" shall mean any return, report, information
return or other document (including any related or supporting information)
with respect to Taxes.
4.11 Employees. (a) Section 4.11(a) of the Company Disclosure
Schedule sets forth a true and correct list of each deferred compensation
plan, incentive compensation plan, equity compensation plan, "welfare"
plan, fund or program (within the meaning of section 3(1) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")); "pension"
plan, fund or program (within the meaning of section 3(2) of ERISA); each
"stay in place" bonus, retention, employment, consulting, independent
contractor, termination or severance agreement; and each other employee
benefit plan, fund, program, agreement or arrangement, in each case, that
is sponsored, maintained or contributed to or required to be contributed to
by, or with respect to which an obligation or liability exists of, (the
"Plans"), the Company, any of its Subsidiaries or by any trade or business,
whether or not incorporated (an "ERISA Affiliate"), all of which together
with the Company would be deemed a "single employer" within the meaning of
Section 4001 of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), for the benefit of any employee or director or former
employee or former director of the Company, any Subsidiary or any ERISA
Affiliate or any person who is an independent contractor or consultant to
the Company, any of its Subsidiaries or any ERISA Affiliate.
(b) The Company has heretofore made available to Parent
with respect to each of the Plans true and correct copies of each of the
following documents if applicable: (i) the Plan document and trust
agreement or other funding arrangement; (ii) the actuarial report for such
Plan for each of the last two years and any subsequent changes to actuarial
assumptions; (iii) the most recent determination letter from the Internal
Revenue Service for such Plan; (iv) the most recent Form 5500, summary plan
description and related summaries of material modifications and (v) with
respect to any employee stock ownership plan, all loan documents and
repayment schedules.
(c) Except as set forth in Section 4.11(c) of the Company
Disclosure Schedule: each of the Plans is in compliance with applicable
law, including but not limited to, the Code and ERISA; each of the Plans
intended to be "qualified" within the meaning of section 401(a) of the Code
has received a favorable determination letter from the IRS; no Plan has an
accumulated or waived funding deficiency within the meaning of section 412
of the Code; neither the Company nor any ERISA Affiliate has incurred,
directly or indirectly, any liability to or on account of a Plan pursuant
to Title IV of ERISA (other than PBGC premiums); to the knowledge of the
Company no proceedings have been instituted to terminate any Plan that is
subject to Title IV of ERISA; no "reportable event," as such term is
defined in section 4043(c) of ERISA, has occurred with respect to any Plan
(other than a reportable event with respect to which the thirty day notice
period has been waived); and no condition exists that presents a material
risk to the Company of incurring a liability to or on account of a Plan
pursuant to Title IV of ERISA; no Plan is a multiemployer plan (within the
meaning of section 4001(a)(3) of ERISA and no Plan is a multiple employer
plan as defined in Section 413 of the Code; there are no pending, or to the
knowledge of the Company, threatened or anticipated claims (other than
routine claims for benefits) by, on behalf of or against any of the Plans
or any trusts related thereto; the fair market value of the assets of each
Plan subject to Title IV of ERISA exceeds the present value of the benefit
liabilities (as defined in Section 4001(a)(16) of ERISA) under such Plan as
of the most recent plan year end prior to the date hereof, calculated using
the actuarial assumptions used in the most recent actuarial valuation of
such Plan as of the date hereof; with respect to each qualified plan which
is an employee stock ownership plan (as defined in Section 4975(e)(7) of
the Code), any assets of any such plan that are not allocated to
participants' individual accounts are pledged as security for, and may be
applied to satisfy, any securities acquisition indebtedness; and there is
not currently any legally binding commitment by the Company or any ERISA
Affiliate to create an additional Plan or amend any Plan (except amendments
to comply with law which do not materially increase the cost of such Plan)
and the Company and its Subsidiaries do not have any obligations for post-
retirement or post employment welfare benefits that cannot be amended or
terminated upon sixty days' notice or less without incurring any liability
thereunder, except for coverage required by Part 6 of Title 1 of ERISA of
Section 4980B of the Code, the premium cost of which is borne (to the
extent permitted by law) by the insured individuals.
4.12 SEC Reports. The Company has previously made available to
Parent a true and correct copy of each (a) final registration statement,
prospectus, report, schedule and definitive proxy statement filed since
December 31, 1995 by the Company with the SEC pursuant to the Securities
Act or the Exchange Act (the "Company Reports") and (b) communication
mailed by the Company to its stockholders since December 31, 1995, and no
such registration statement, prospectus, report, schedule, proxy statement
or communication 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 therein, in light of the
circumstances in which they were made, not misleading, except that
information as of a later date shall be deemed to modify information as of
an earlier date. The Company has timely filed all Company Reports and
other documents required to be filed by it under the Securities Act and the
Exchange Act, and, as of their respective dates, all Company Reports
complied with the published rules and regulations of the SEC with respect
thereto.
4.13 Company Information. The information relating to the
Company and its Subsidiaries which is provided to Parent by the Company for
inclusion in the Proxy Statement and the S-4, or in any other document
filed with any other regulatory agency in connection herewith, 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 Proxy Statement
(except for such portions thereof that relate only to the Parent or any of
its Subsidiaries) will comply with the provisions of the Exchange Act and
the rules and regulations thereunder.
4.14 Compliance with Applicable Law. The Company and each of its
Subsidiaries hold, and have at all times held, all licenses, franchises,
permits and authorizations necessary for the lawful conduct of their
respective businesses under and pursuant to all, and have complied with and
are not in default in any respect under any, applicable law, statute,
order, rule, regulation, policy and/or guideline of any Governmental Entity
relating to the Company or any of its Subsidiaries, and neither the Company
nor any of its Subsidiaries has received notice of any violations of any of
the above.
4.15 Certain Contracts. (a) Except as set forth in Section
4.15(a) of the Company Disclosure Schedule, neither the Company nor any of
its Subsidiaries is a party to or bound by any contract (whether written or
oral) (i) with respect to the employment of any directors or consultants,
(ii) which, upon the consummation 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, or the acceleration or vesting of any rights to
any payment or benefits, from Parent, the Company, the Surviving
Corporation or any of their respective Subsidiaries to any director or
consultant thereof, (iii) which is a material contract (as 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
Company Reports, (iv) which is a consulting agreement (including data
processing, software programming and licensing contracts) not terminable on
30 days or less notice involving the payment of more than $25,000 per
annum, or (v) which materially restricts the conduct of any line of
business by the Company or any of its Subsidiaries. Each contract,
arrangement, commitment or understanding of the type described in this
Section 4.15(a), whether or not set forth in Section 4.15(a) of the Company
Disclosure Schedule, is referred to herein as a "Company Contract". The
Company has previously delivered or made available to Parent true and
correct copies of each Company Contract.
(b) Except as set forth in Section 4.15(b) of the Company
Disclosure Schedule, (i) each Company Contract described in clause (iii) of
Section 4.15(a) is valid and binding and in full force and effect, (ii) the
Company and each of its Subsidiaries has performed all obligations required
to be performed by it to date under each Company Contract described in
clause (iii) of Section 4.15(a), (iii) no event or condition exists which
constitutes or, after notice or lapse of time or both, would constitute, a
default on the part of the Company or any of its Subsidiaries under any
Company Contract described in clause (iii) of Section 4.15(a), and (iv) no
other party to any Company Contract described in clause (iii) of Section
4.15(a) is, to the knowledge of the Company, in default in any respect
thereunder.
(c) Section 4.15 of the Company Disclosure Schedule
contains a schedule showing the good faith estimated present value as of
December 31, 1998 of the monetary amounts payable (including any tax
indemnification payments in respect of income and/or excise taxes) and
identifying the in-kind benefits due under any Plan other than a tax-
qualified plan for each director of the Company and each officer of the
Company with the position of vice president or higher, specifying the
assumptions in such schedule.
4.16 Agreements with Regulatory Agencies. Neither the Company
nor any of its Subsidiaries is subject to any cease-and-desist or other
order 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
is a recipient of any extraordinary supervisory letter from, or has adopted
any board resolutions at the request of (each, whether or not set forth on
Section 4.16 of the Company Disclosure Schedule, a "Regulatory Agreement"),
any Governmental Entity that restricts the conduct of its business or that
in any manner relates to its capital adequacy, its credit policies, its
management or its business, nor has the Company or any of its Subsidiaries
been advised by any Governmental Entity that it is considering issuing or
requesting any Regulatory Agreement.
4.17 Environmental Matters. Except as set forth in Section 4.17
of the Company Disclosure Schedule:
(a) Each of the Company and its Subsidiaries, each of the
Participation Facilities and, to the knowledge of the Company, the Loan
Properties (each as hereinafter defined), are in compliance with all
applicable federal, state and local laws, including common law, regulations
and ordinances, and with all applicable decrees, orders and contractual
obligations relating to pollution or the discharge of, or exposure to,
Hazardous Materials (as hereinafter defined) in the environment or
workplace ("Environmental Laws");
(b) There is no suit, claim, action or proceeding, pending
or, to the knowledge of the Company, threatened, before any Governmental
Entity or other forum in which the Company, any of its Subsidiaries, any
Participation Facility or any Loan Property, has been or, with respect to
threatened proceedings, may be, named as a defendant (x) for alleged
noncompliance (including by any predecessor) with any Environmental Laws,
or (y) relating to the release, threatened release or exposure to any
Hazardous Material whether or not occurring at or on a site owned, leased
or operated by the Company or any of its Subsidiaries, any Participation
Facility or any Loan Property;
(c) To the knowledge of the Company, during the period of
(x) the Company's or any of its Subsidiaries' ownership or operation of any
of their respective current or former properties, (y) the Company's or any
of its Subsidiaries' participation in the management of any Participation
Facility, or (z) the Company's or any of its Subsidiaries' interest in a
Loan Property, there has been no release of Hazardous Materials in, on,
under or affecting any such property. To the knowledge of the Company,
prior to the period of (x) the Company's or any of its Subsidiaries'
ownership or operation of any of their respective current or former
properties, (y) the Company's or any of its Subsidiaries' participation in
the management of any Participation Facility, or (z) the Company's or any
of its Subsidiaries' interest in a Loan Property, there was no release of
Hazardous Materials in, on, under or affecting any such property,
Participation Facility or Loan Property; and
(d) The following definitions apply for purposes of this
Section 4.17: (x) "Hazardous Materials" means any chemicals, pollutants,
contaminants, wastes, toxic substances, petroleum or other regulated
substances or materials, (y) "Loan Property" means any property in which
the Company or any of its Subsidiaries holds a security interest, and,
where required by the context, said term means the owner or operator of
such property; and (z) "Participation Facility" means any facility in which
the Company or any of its Subsidiaries participates in the management and,
where required by the context, said term means the owner or operator of
such property.
4.18 Opinion. Prior to the execution of this Agreement, the
Company has received an opinion from Sandler ▇'▇▇▇▇▇ 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 the stockholders of the
Company from a financial point of view. Such opinion has not been amended
or rescinded as of the date of this Agreement.
4.19 Approvals. As of the date of this Agreement, the Company
knows of no reason why all regulatory approvals required for the
consummation of the transactions contemplated hereby (including, without
limitation, the Merger) should not be obtained.
4.20 Loan Portfolio. (a) With respect to each loan owned by the
Company or its Subsidiaries in whole or in part (each, a "Loan"), to the
best knowledge of the Company:
(i) the note and the related security documents are
each legal, valid and binding obligations of the maker of obligor
thereof, enforceable against such maker or obligor in accordance with
their terms;
(ii) neither the Company nor any of its Subsidiaries
nor any prior holder of a Loan has modified the note or any of the
related security documents in any material respect or satisfied,
canceled or subordinated the note or any of the related security
documents except as otherwise disclosed by documents in the applicable
Loan file;
(iii) the Company or a Subsidiary is the sole
holder of legal and beneficial title to each Loan (or the Company's
applicable participation interest, as applicable), except as otherwise
referenced on the books and records of the Company;
(iv) the note and the related security documents,
copies of which are included in the Loan files, are true and correct
copies of the documents they purport to be and have not been
suspended, amended, modified, canceled or otherwise changed except as
otherwise disclosed by documents in the applicable Loan file;
(v) there is no pending or threatened condemnation
proceeding or similar proceeding affecting the property which serves
as security for a Loan, except as otherwise referenced on the books
and records of the Company;
(vi) there is no pending or threatened litigation or
proceeding relating to the property which serves as security for a
Loan; and
(vii) with respect to a Loan held in the form of a
participation, the participation documentation is legal, valid,
binding and enforceable.
(b) Except as set forth in Section 4.20 of the Company
Disclosure Schedule, neither the Company nor any of its Subsidiaries is a
party to any written or oral (i) loan agreement, note or borrowing
arrangement (including, without limitation, leases, credit enhancements,
commitments, guarantees and interest-bearing assets) (collectively,
"Loans"), under the terms of which the obligor was, as of June 30, 1998,
over 90 days delinquent in payment of principal or interest or in default
of any other provision, or (ii) Loan with any director, executive officer
or five percent or greater stockholder of the Company or any of its
Subsidiaries, or to the knowledge of the Company, any person, corporation
or enterprise controlling, controlled by or under common control with any
of the foregoing. Section 4.20 of the Company Disclosure Schedule sets
forth (i) all of the Loans of the Company or any of its Subsidiaries that
as of June 30, 1998, were classified by any bank examiner (whether
regulatory or internal) as "Other Loans Specially Mentioned", "Special
Mention", "Substandard", "Doubtful", "Loss", "Classified", "Criticized",
"Credit Risk Assets", "Concerned Loans", "Watch List" or words of similar
import, together with the principal amount of and accrued and unpaid
interest on each such Loan and the identity of the borrower thereunder,
(ii) by category of Loan (i.e., commercial, consumer, etc.), all of the
other Loans of the Company and its Subsidiaries that as of June 30, 1998,
were classified as such, together with the aggregate principal amount of
and accrued and unpaid interest on such Loans by category and (iii) each
asset of the Company that as of June 30, 1998, was classified as "Other
Real Estate Owned" and the book value thereof.
4.21 Property. Each of the Company and its Subsidiaries has good
and marketable title free and clear of all liens, encumbrances, mortgages,
pledges, charges, defaults or equitable interests to all of the properties
and assets, real and personal, tangible or intangible, which are reflected
on the consolidated statement of financial condition of the Company as of
March 31, 1998 or acquired after such date, except (i) liens for taxes not
yet due and payable or contested in good faith by appropriate proceedings,
(ii) pledges to secure deposits and other liens incurred in the ordinary
course of business, (iii) such imperfections of title, easements and
encumbrances, if any, as do not interfere with the use of the respective
property as such property is used on the date of this Agreement, (iv) for
dispositions and encumbrances of, or on, such properties or assets in the
ordinary course of business and (v) mechanics', materialmen's, workmen's,
repairmen's, warehousemen's, carrier's and other similar liens and
encumbrances arising in the ordinary course of business. All leases
pursuant to which the Company or any Subsidiary of the Company, as lessee,
leases real or personal property are valid and enforceable in accordance
with their respective terms and neither the Company nor any of its
Subsidiaries nor, to the knowledge of the Company, any other party thereto,
is in default thereunder. All material tangible properties of the Company
and each of its Subsidiaries are in good state of maintenance and repair,
conform with all applicable ordinances, regulations and zoning laws and are
considered by the Company to be adequate for the current business of the
Company and its Subsidiaries.
4.22 Reorganization. The Company has no reason to believe that
the Merger will fail to qualify as a reorganization under Section 368(a) of
the Code.
4.23 Antitakeover Provisions Inapplicable. The Board of
Directors of the Company has approved the transactions contemplated by this
Agreement, the Bank Merger and the Option Agreement such that the
provisions of Section 203 of the DGCL and Article Eighth of the Company's
Certificate of Incorporation will not, assuming the accuracy of the
representations contained in Section 5.15 hereof, apply to this Agreement,
the Bank Merger, the Option Agreement or any of the transactions
contemplated hereby or thereby.
4.24 Insurance. The Company and its Subsidiaries are presently
insured, and since December 31, 1994, have been insured, for reasonable
amounts with financially sound and reputable insurance companies, against
such risks as companies engaged in a similar business would, in accordance
with good business practice, customarily be insured. All of the insurance
policies and bonds maintained by the Company and its Subsidiaries are in
full force and effect, the Company and its Subsidiaries are not in default
thereunder and all material claims thereunder have been filed in due and
timely fashion.
4.25 Investment Securities; Borrowings; Deposits. (a) Except
for investments in Federal Home Loan Bank Stock and pledges to secure
Federal Home Loan Bank borrowings and reverse repurchase agreements entered
into in arms-length transactions pursuant to normal commercial terms and
conditions and entered into the ordinary course of business and
restrictions that exist for securities to be classified as "held to
maturity," none of the investments reflected in the consolidated balance
sheet of the Company included in the Company's Report on Form 10-Q for the
quarter ended March 31, 1998 and none of the investment securities held by
it or any of its Subsidiaries since March 31, 1998 is subject to any
restriction (contractual or statutory) that would materially impair the
ability of the entity holding such investment freely to dispose of such
investment at any time.
(b) Neither the Company nor any Subsidiary is a party to or
has agreed to enter into an exchange-traded or over the-counter equity,
interest rate, foreign exchange or other swap, forward, future, option,
cap, floor or collar or any other contract that is not included on the
consolidated statements of condition and is a derivative contract
(including various combinations thereof) (each, a "Derivatives Contract")
or owns securities that (A) are referred to generically as "structured
notes," "high risk mortgage derivatives," "capped floating rate notes" or
"capped floating rate mortgage derivatives" or (B) are likely to have
changes in value as a result of interest or exchange rate changes that
significantly exceed normal changes in value attributable to interest or
exchange rate changes, except for those Derivatives Contracts and other
instruments legally purchased or entered into in the ordinary course of
business, consistent with regulatory requirements and listed (as of the
date hereof) in the Company Disclosure Schedule or disclosed in any Company
Reports filed on or prior to the date hereof.
(c) Set forth in the Company Disclosure Schedule is a true
and correct list of the Company's borrowed funds (excluding deposit
accounts) as of the date hereof.
(d) None of the deposits of the Company or any of its
Subsidiaries is a "brokered" deposit.
4.26 Indemnification. Except as provided in the Company
Contracts or the Certificate of Incorporation or by-laws of the Company,
neither the Company nor any Company Subsidiary is a party to any
indemnification agreement with any of its present or future directors,
officers, employees, agents or other persons who serve or served in any
other capacity with any other enterprise at the request of the Company (a
"Covered Person"), and, to the best knowledge of the Company, there are no
claims for which any Covered Person would be entitled to indemnification
under the organization certificate or bylaws of the Company or any
Subsidiary of the Company, applicable law or regulation or any
indemnification agreement.
4.27 Liquidation Account. Neither the Merger nor the Bank Merger
will result in any payment or distribution payable out of the Liquidation
Account of the Company Bank.
4.28 Year 2000 Matters. Section 4.28 of the Company Disclosure
Schedule contains a true and correct copy of the Company's plan for
addressing year 2000 computer issues (the "Year 2000 Plan"). The Company
is in material compliance with the Company's Year 2000 Plan. The Company
has been examined by the OTS with respect to being "Year 2000 Compliant"
and the Company's Year 2000 Plan has been reviewed by the OTS and the
Company has received a "satisfactory" rating in connection therewith, and
neither the Company nor the Company Bank has received any written
communication from the OTS commenting adversely with respect to the ability
of the Company to become Year 2000 compliant.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT
Subject to Article III, Parent hereby represents and warrants to
the Company as follows:
5.1 Corporate Organization. (a) Parent is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Delaware. Parent 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. Parent is duly
registered as a savings and loan holding company under the HOLA. The
Certificate of Incorporation and By-laws of Parent, copies of which have
previously been made available to the Company, are true and correct copies
of such documents as in effect as of the date of this Agreement.
(b) Each Subsidiary of Parent that is a bank or savings
institution (each a "Parent Bank" and collectively, the "Parent Banks") is
a bank or savings institution, as the case may be, duly organized, validly
existing and in good standing under the laws of its jurisdiction of
organization. The deposit accounts of the Parent Banks are insured by the
FDIC through the Savings Association Insurance Fund to the fullest extent
permitted by law, and all premiums and assessments required in connection
therewith have been paid when due. Each of Parent's other Subsidiaries
which is a "Significant Subsidiary" (each a "Significant Subsidiary" and
together the "Significant Subsidiaries") as such term is defined in
Regulation S-X promulgated by the SEC is duly organized, validly existing
and in good standing under the laws of the jurisdiction of its
incorporation. Each Significant Subsidiary of Parent 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. The articles of incorporation, by-laws and other similar
governing documents of the Parent Banks, copies of which have previously
been made available to the Company, are true and correct copies of such
documents as in effect as of the date of this Agreement.
(c) The minute books of Parent and each of its Significant
Subsidiaries contain true and correct records of all meetings and other
corporate actions held or taken since December 31, 1995 of their respective
stockholders and Boards of Directors (including committees of their
respective Boards of Directors).
5.2 Capitalization. (a) As of the date of this Agreement, the
authorized capital stock of Parent consists of 45,000,000 shares of Parent
Common Stock and 9,000,000 shares of preferred stock, par value $0.01 per
share ("Parent Preferred Stock"). As of June 30, 1998, there were
12,176,513 shares of Parent Common Stock and no shares of Parent Preferred
Stock issued and outstanding, and 2,374,587 shares of Parent Common Stock
held in Parent's treasury. As of the date of this Agreement, no shares of
Parent Common Stock or Parent Preferred Stock were reserved for issuance,
except that (i)1,451,150 shares of Parent Common Stock were reserved for
issuance upon the exercise of stock options pursuant to the Dime Community
Bancorp, Inc. 1996 Stock Option Plan for Outside Directors, Officers and
Employees (the "Parent Stock Plan"), and (ii) 450,000 shares of Parent
Series A Junior Participating Preferred Stock were reserved for issuance
upon exercise of the rights (the "Parent Rights") distributed to holders of
Parent Common Stock pursuant to the Shareholder Rights Agreement, dated as
of April 19, 1998, between Parent and ChaseMellon Shareholder Services,
L.L.C., as Rights Agent (the "Parent Rights Agreement"). All of the issued
and outstanding shares of Parent 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, except as referred to above or reflected in
Section 5.2(a) of the Parent Disclosure Schedule and the Parent Rights
Agreement, Parent does not have and is not bound by any outstanding
subscriptions, options, warrants, calls, commitments or agreements of any
character calling for the purchase or issuance of any shares of Parent
Common Stock or Parent Preferred Stock or any other equity securities of
Parent or any securities representing the right to purchase or otherwise
receive any shares of Parent Common Stock or Parent Preferred Stock. The
shares of Parent 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) Section 5.2(b) of the Parent Disclosure Schedule sets
forth a true and correct list of all of the Parent Subsidiaries as of the
date of this Agreement. Except as set forth in Section 5.2(b) of the
Parent Disclosure Schedule, as of the date of this Agreement, Parent owns,
directly or indirectly, all of the issued and outstanding shares of capital
stock of each of the Subsidiaries of Parent, free and clear of all liens,
charges, encumbrances and security interests whatsoever, and all of such
shares are 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
Subsidiary of Parent has or is bound by any outstanding subscriptions,
options, warrants, calls, commitments or agreements of any character with
any party that is not a direct or indirect Subsidiary of Parent 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.
5.3 Authority; No Violation. (a) Parent has full corporate
power and authority to execute and deliver this Agreement and the Option
Agreement and to consummate the transactions contemplated hereby and
thereby. The execution and delivery of this Agreement and the Option
Agreement and the consummation of the transactions contemplated hereby and
thereby have been duly and validly approved by the Board of Directors of
Parent, and no other corporate proceedings on the part of Parent are
necessary to approve this Agreement and to consummate the transactions
contemplated hereby. This Agreement has been duly and validly executed and
delivered by Parent and (assuming due authorization, execution and delivery
by the Company) this Agreement constitutes a valid and binding obligation
of Parent, enforceable against Parent in accordance with its terms, except
as enforcement may be limited by general principles of equity whether
applied in a court of law or a court of equity and by bankruptcy,
insolvency and similar laws affecting creditors' rights and remedies
generally.
(b) Except as set forth in Section 5.3(b) of the Parent
Disclosure Schedule, neither the execution and delivery of this Agreement
by Parent, nor the consummation by Parent of the transactions contemplated
hereby, nor compliance by Parent with any of the terms or provisions
hereof, will (i) violate any provision of the Certificate of Incorporation
or By-Laws of Parent, or the articles of incorporation or by-laws or
similar governing documents of any of its Subsidiaries or (ii) assuming
that the consents and approvals referred to in Section 5.4 are duly
obtained, (x) violate any statute, code, ordinance, rule, regulation,
judgment, order, writ, decree or injunction applicable to Parent or any of
its Subsidiaries or any of their respective properties or assets, or (y)
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, pledge,
security interest, charge or other encumbrance upon any of the respective
properties or assets of Parent 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 Parent or any of its Subsidiaries is a party, or by which they or
any of their respective properties or assets may be bound or affected.
5.4 Consents and Approvals. Except for (a) the filing of
applications and notices, as applicable, with the OTS under the HOLA, Bank
Merger Act, Federal Deposit Insurance Act and the rules and regulations of
the OTS, and approval of such applications and notices, (b) the State
Banking Approvals, (c) the filing with the SEC of the Proxy Statement and
the filing and declaration of effectiveness of the S-4, (d) the filing of
the Certificate of Merger with the Secretary pursuant to the DGCL, (e) 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 Parent Common Stock pursuant to this Agreement,
(f) approval of the listing for quotation of the Parent Common Stock to be
issued in the Merger on the NASDAQ/NMS, and (g) such filings,
authorizations or approvals as may be set forth in Section 5.4 of the
Parent Disclosure Schedule, no consents or approvals of or filings or
registrations with any Governmental Entity or with any third party are
necessary in connection with (1) the execution and delivery by Parent of
this Agreement and (2) the consummation by Parent of the Merger and the
other transactions contemplated hereby.
5.5 Reports. Parent and each of its Subsidiaries have timely
filed all reports, registrations and statements, together with any
amendments required to be made with respect thereto, that they were
required to file since December 31, 1995 with any Regulatory Agency, and
have paid all fees and assessments due and payable in connection therewith.
Except for normal examinations conducted by a Regulatory Agency in the
regular course of the business of Parent and its Subsidiaries, and except
as set forth in Section 5.5 of Parent Disclosure Schedule, no Regulatory
Agency has initiated any proceeding or, to the knowledge of Parent,
investigation into the business or operations of Parent or any of its
Subsidiaries since December 31, 1995. There is no unresolved violation,
criticism, or exception by any Regulatory Agency with respect to any report
or statement relating to any examinations of Parent or any of its
Subsidiaries.
5.6 Financial Statements. Parent has previously made available
to the Company copies of (a) the consolidated balance sheets of Parent and
its Subsidiaries as of June 30 for the fiscal years 1996 and 1997 and the
related consolidated statements of income, changes in stockholders' equity
and cash flows for the fiscal years 1995 through 1997, inclusive, as
reported in Parent's Annual Report on Form 10-K for the fiscal year ended
June 30, 1997 filed with the SEC under the Exchange Act, in each case
accompanied by the audit report of Deloitte & Touche LLP independent public
accountants with respect to Parent, and (b) the unaudited consolidated
balance sheet of Parent and its Subsidiaries as of March 31, 1998 and March
31, 1997 and the related unaudited consolidated statements of income,
changes in stockholders' equity and cash flows for the nine-month periods
then ended as reported in Parent's Quarterly Report on Form 10-Q for the
period ended March 31, 1998 filed with the SEC under the Exchange Act. The
June 30, 1997 consolidated balance sheet of Parent (including the related
notes, where applicable) fairly presents the consolidated financial
position of Parent and its Subsidiaries as of the date thereof, and the
other financial statements referred to in this Section 5.6 (including the
related notes, where applicable) fairly present and the financial
statements to be filed with the SEC after the date hereof will fairly
present (subject, in the case of the unaudited statements, to recurring
audit adjustments normal in nature and amount), the results of the
consolidated operations and changes in stockholders' equity and
consolidated financial position of Parent and its Subsidiaries for the
respective fiscal periods or as of the respective dates therein set forth;
each of such statements (including the related notes, where applicable)
complies, and the financial statements to be filed with the SEC after the
date hereof will comply, with applicable accounting requirements and with
the published rules and regulations of the SEC with respect thereto; and
each of such statements (including the related notes, where applicable) has
been, and the financial statements to be filed with the SEC after the date
hereof will be, prepared in accordance with GAAP consistently applied
during the periods involved, except as indicated in the notes thereto or,
in the case of unaudited statements, as permitted by Form 10-Q. The books
and records of Parent and its Significant Subsidiaries have been, and are
being, maintained in accordance with GAAP and any other applicable legal
and accounting requirements.
5.7 Broker's Fees. Neither Parent nor any Subsidiary of Parent,
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 any of the transactions contemplated by
this Agreement, except that Parent has engaged, and will pay a fee or
commission to, ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co. ("▇▇▇▇▇▇▇ ▇▇▇▇▇").
5.8 Absence of Certain Changes or Events. Except as may be set
forth in Section 5.8 of the Parent Disclosure Schedule, or as disclosed in
any Parent Report (as defined in Section 5.12) filed with the SEC prior to
the date of this Agreement, since June 30, 1997, there has been no change
or development or combination of changes or developments which,
individually or in the aggregate, has had a Material Adverse Effect on
Parent.
5.9 Legal Proceedings. (a) Except as set forth in Section
5.9(a) of the Parent Disclosure Schedule, neither Parent nor any of its
Subsidiaries is a party to any and there are no pending or, to Parent's
knowledge, threatened, legal, administrative, arbitral or other
proceedings, claims, actions or governmental or regulatory investigations
of any nature against Parent or any of its Subsidiaries or challenging the
validity or propriety of the transactions contemplated by this Agreement.
(b) There is no injunction, order, judgment, decree, or
regulatory restriction imposed upon Parent, any of its Subsidiaries or the
assets of Parent or any of its Subsidiaries.
5.10 Taxes. Except as set forth in Section 5.10 of the Parent
Disclosure Schedule, each of Parent and its Subsidiaries has (i) duly and
timely filed (including applicable extensions granted without penalty) all
material Tax Returns required to be filed at or prior to the Effective
Time, and such Tax Returns are true and correct in all material respects,
and (ii) paid in full or made adequate provision in the financial
statements of Parent (in accordance with GAAP) for all material Taxes shown
to be due on such Tax Returns. Except as set forth in Section 5.10 of the
Parent Disclosure Schedule, (i) as of the date hereof, neither Parent nor
any of its Subsidiaries has requested any extension of time within which to
file any Tax Returns in respect of any fiscal year which have not since
been filed and no request for waivers of the time to assess any Taxes are
pending or outstanding, and (ii) as of the date hereof, with respect to
each taxable period of Parent and its Subsidiaries, the federal and state
income Tax Returns of Parent and its Subsidiaries have been audited by the
Internal Revenue Service or appropriate state tax authorities or the time
for assessing and collecting income Tax with respect to such taxable period
has closed and such taxable period is not subject to review. Except as set
forth in Section 5.10 of the Parent Disclosure Schedule, neither the Parent
nor any of its Subsidiaries (i) has made an election under Section 341(f)
of the Code, (ii) has made any payment, is obligated to make any payment,
or is party to any agreement that could obligate it to make any payment
that would not be deductible under Section 280G of the Code, (iii) has
issued or assumed any obligation under Section 279 of the Code, any high
yield discount obligation as described in Section 163f(i) of the Code or
any registration-required obligation within the meaning of Section 163f(2)
of the Code that is not in registered form, or (iv) is or has been a United
States real property holding corporation within the meaning of Section
897(c)(2) of the Code.
5.11 Employees. (a) Section 5.11(a) of the Parent Disclosure
Schedule sets forth a true and correct list of each deferred compensation
plan, incentive compensation plan, equity compensation plan, "welfare"
plan, fund or program (within the meaning of section 3(1) of the ERISA);
"pension" plan, fund or program (within the meaning of section 3(2) of
ERISA) that is sponsored, maintained or contributed to or required to be
contributed to as of the date of this Agreement by, or with respect to
which an obligation or liability exists of (the "Parent Plans"), Parent,
any of its Subsidiaries or any trade or business, whether or not
incorporated (a "Parent ERISA Affiliate"), all of which together with
Parent would be deemed a "single employer" within the meaning of Section
4001 of ERISA, for the benefit of any employee or former employee of
Parent, any Subsidiary or any Parent ERISA Affiliate and includes a true
and correct copy of the plan document for the Severance Pay Plan of the
Parent currently in effect.
(b) Except as set forth in Section 5.11(b) of the Parent
Disclosure Schedule: each of the Parent Plans is in compliance with
applicable law, including but not limited to, the Code and ERISA; each of
the Parent Plans intended to be "qualified" within the meaning of section
401(a) of the Code has received a favorable determination letter from the
IRS; no Parent Plan has an accumulated or waived funding deficiency within
the meaning of section 412 of the Code; neither Parent nor any Parent ERISA
Affiliate has incurred, directly or indirectly, any liability to or on
account of a Parent Plan pursuant to Title IV of ERISA (other than PBGC
premiums); to the knowledge of Parent no proceedings have been instituted
to terminate any Parent Plan that is subject to Title IV of ERISA; no
"reportable event," as such term is defined in section 4043(c) of ERISA,
has occurred with respect to any Parent Plan (other than a reportable event
with respect to which the thirty day notice period has been waived); and no
condition exists that presents a material risk to Parent of incurring a
liability to or on account of a Parent Plan pursuant to Title IV of ERISA;
no Parent Plan is a multiemployer plan (within the meaning of section
4001(a)(3) of ERISA and no Parent Plan is a multiple employer plan as
defined in Section 413 of the Code; there are no pending, or, to the
knowledge of Parent, threatened or anticipated claims (other than routine
claims for benefits) by, on behalf of or against any of the Parent Plans or
any trusts related thereto; the fair market value of the assets of each
Plan subject to Title IV of ERISA exceeds the present value of the benefit
liabilities (as defined in Section 4001(a)(16) of ERISA) under such Plan as
of the most recent plan year end prior to the date hereof, calculated using
the actuarial assumptions used in the most recent actuarial valuation of
such Plan as of the date hereof; with respect to each qualified plan which
is an employee stock ownership plan (as defined in Section 4975(e)(7) of
the Code), any assets of any such plan that are not allocated to
participants' individual accounts are pledged as security for, and may be
applied to satisfy, any securities acquisition indebtedness; and there is
not currently any legally binding commitment by the Parent or any ERISA
Affiliate to create an additional Plan or amend any Plan (except amendments
to comply with law which do not materially increase the cost of such Plan)
and the Parent and its subsidiaries do not have any obligations for post-
retirement or post-employment welfare benefits that cannot be amended or
terminated upon sixty days' notice or less without incurring any liability
thereunder, except for coverage required by Part 6 of Title 1 of ERISA or
Section 4980B of the Code, the premium cost of which is borne (to the
extent permitted by law) by the insured individuals.
5.12 SEC Reports. Parent has previously made available to the
Company a true and correct copy of each (a) final registration statement,
prospectus, report, schedule and definitive proxy statement filed since
December 31, 1995 by Parent with the SEC pursuant to the Securities Act or
the Exchange Act (the "Parent Reports") and (b) communication mailed by
Parent to its stockholders since December 31, 1995, and no such
registration statement, prospectus, report, schedule, proxy statement or
communication 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 therein, in light of the circumstances in
which they were made, not misleading, except that information as of a later
date shall be deemed to modify information as of an earlier date. Parent
has timely filed all Parent Reports and other documents required to be
filed by it under the Securities Act and the Exchange Act, and, as of their
respective dates, all Parent Reports complied with the published rules and
regulations of the SEC with respect thereto.
5.13 Parent Information. The information relating to Parent and
its Subsidiaries to be contained in the Proxy Statement and the S-4, or in
any other document filed with any other regulatory agency in connection
herewith, 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 Proxy
Statement (except for such portions thereof that relate only to the Company
or any of its Subsidiaries) will comply with the provisions of the Exchange
Act and the rules and regulations thereunder. The S-4 will comply with the
provisions of the Securities Act and the rules and regulations thereunder.
5.14 Compliance with Applicable Law. Parent and each of its
Subsidiaries holds, and has at all times held, all licenses, franchises,
permits and authorizations necessary for the lawful conduct of their
respective businesses under and pursuant to all, and have complied with and
are not in default in any respect under any, applicable law, statute,
order, rule, regulation, policy and/or guideline of any Governmental Entity
relating to Parent or any of its Subsidiaries and neither Parent nor any of
its Subsidiaries knows of, or has received notice of violation of, any
violations of any of the above.
5.15 Ownership of Company Common Stock; Affiliates and
Associates. (a) Neither Parent nor any of its affiliates or associates
(as such terms are defined under the Exchange Act) beneficially owns,
directly or indirectly, or is a party to any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or disposing
of, any shares of capital stock of the Company (other than Trust Account
Shares and DPC Shares); and
(b) Neither Parent nor any of its Subsidiaries is an
"affiliate" (as such term is defined in DGCL section203(c)(1)) or an
"associate" (as such term is defined in DGCL section203(c)(2)) of the
Company or an "Interested Stockholder" (as such term is defined in Article
Eighth of the Company's Certificate of Incorporation).
5.16 Agreements with Regulatory Agencies. Neither Parent nor any
of its Subsidiaries is subject to any cease-and-desist or other order
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 is a
recipient of any extraordinary supervisory letter from, or has adopted any
board resolutions at the request of (each, whether or not set forth in
Section 5.16 of the Parent Disclosure Schedule, a "Parent Regulatory
Agreement"), any Governmental Entity that restricts the conduct of its
business or that in any manner relates to its capital adequacy, its credit
policies, its management or its business, nor has Parent or any of its
Subsidiaries been advised by any Governmental Entity that it is considering
issuing or requesting any Parent Regulatory Agreement.
5.17 Environmental Matters. Except as set forth in Section 5.17
of the Parent Disclosure Schedule:
(a) Each of Parent and its Subsidiaries, each of the
Participation Facilities and, to the knowledge of Parent, the Loan
Properties (each as hereinafter defined), are in compliance with all
Environmental Laws;
(b) There is no suit, claim, action or proceeding, pending
or, to the knowledge of Parent, threatened, before any Governmental Entity
or other forum in which Parent, any of its Subsidiaries, any Participation
Facility or any Loan Property, has been or, with respect to threatened
proceedings, may be, named as a defendant (x) for alleged noncompliance
(including by any predecessor) with any Environmental Laws, or (y) relating
to the release, threatened release or exposure to any Hazardous Material
whether or not occurring at or on a site owned, leased or operated by
Parent or any of its Subsidiaries, any Participation Facility or any Loan
Property;
(c) To the knowledge of Parent during the period of (x)
Parent's or any of its Subsidiaries' ownership or operation of any of their
respective current or former properties, (y) Parent's or any of its
Subsidiaries' participation in the management of any Participation
Facility, or (z) Parent's or any of its Subsidiaries' interest in a Loan
Property, there has been no release of Hazardous Materials in, on, under or
affecting any such property. To the knowledge of Parent, prior to the
period of (x) Parent's or any of its Subsidiaries' ownership or operation
of any of their respective current or former properties, (y) Parent's or
any of its Subsidiaries' participation in the management of any
Participation Facility, or (z) Parent's or any of its Subsidiaries'
interest in a Loan Property, there was no release of Hazardous Materials
in, on, under or affecting any such property, Participation Facility or
Loan Property; and
(d) The following definitions apply for purposes of this
Section 5.17: (x) "Loan Property" means any property in which Parent or
any of its Subsidiaries holds a security interest, and, where required by
the context, said term means the owner or operator of such property; and
(y) "Participation Facility" means any facility in which Parent or any of
its Subsidiaries participates in the management and, where required by the
context, said term means the owner or operator of such property.
5.18 Opinion. Prior to the execution of this Agreement, Parent
has received an opinion from ▇▇▇▇▇▇▇ ▇▇▇▇▇ to the effect that as of the
date thereof and based upon and subject to the matters set forth therein,
the Merger Consideration pursuant to this Agreement is fair from a
financial point of view to Parent. Such opinion has not been amended or
rescinded as of the date of this Agreement.
5.19 Approvals. As of the date of this Agreement, Parent knows
of no reason why all regulatory approvals required for the consummation of
the transactions contemplated hereby (including, without limitation, the
Merger) should not be obtained.
5.20 Loan Portfolio. Except as set forth in Section 5.20 of
Parent Disclosure Schedule, neither Parent nor any of its Subsidiaries is a
party to any written or oral (i) Loan, other than Loans the unpaid
principal balance of which does not exceed $250,000, under the terms of
which the obligor was, as of June 30, 1998, over 90 days delinquent in
payment of principal or interest or in default of any other provision, or
(ii) Loan with any director, executive officer or five percent or greater
stockholder of Parent or any of its Subsidiaries, or to the knowledge of
Parent, any person, corporation or enterprise controlling, controlled by or
under common control with any of the foregoing. Section 5.20 of Parent
Disclosure Schedule sets forth (i) all of the Loans in original principal
amount in excess of $250,000 of Parent or any of its Subsidiaries that as
of June 30, 1998, were classified by any bank examiner (whether regulatory
or internal) as "Other Loans Specially Mentioned", "Special Mention",
"Substandard", "Doubtful", "Loss", "Classified", "Criticized", "Credit Risk
Assets", "Concerned Loans", "Watch List" or words of similar import,
together with the principal amount of and accrued and unpaid interest on
each such Loan and the identity of the borrower thereunder, (ii) by
category of Loan (i.e., commercial, consumer, etc.), all of the other Loans
of Parent and its Subsidiaries that as of June 20, 1998, were classified as
such, together with the aggregate principal amount of and accrued and
unpaid interest on such Loans by category and (iii) each asset of Parent
that as of June 30, 1998, was classified as "Other Real Estate Owned" and
the book value thereof.
5.21 Property. Each of Parent and its Subsidiaries has good and
marketable title free and clear of all liens, encumbrances, mortgages,
pledges, charges, defaults or equitable interests to all of the properties
and assets, real and personal, tangible or intangible, and which are
reflected on the consolidated statement of financial condition of Parent as
of March 31, 1998 or acquired after such date, except (i) liens for taxes
not yet due and payable or contested in good faith by appropriate
proceedings, (ii) pledges to secure deposits and other liens incurred in
the ordinary course of business, (iii) such imperfections of title,
easements and encumbrances, if any, as do not interfere with the use of the
respective property as such property is used on the date of this Agreement,
(iv) for dispositions and encumbrances of, or on, such properties or assets
in the ordinary course of business or (v) mechanics', materialmen's,
workmen's, repairmen's, warehousemen's, carrier's and other similar liens
and encumbrances arising in the ordinary course of business. All leases
pursuant to which Parent or any Subsidiary of Parent, as lessee, leases
real or personal property are valid and enforceable in accordance with
their respective terms and neither Parent nor any of its Subsidiaries nor,
to the knowledge of Parent, any other party thereto is in default
thereunder. All material tangible properties of the Parent and each of its
Subsidiaries are in good state of maintenance and repair, conform with all
applicable ordinances, regulations and zoning laws and are considered by
the Parent to be adequate for the current business of the Parent and its
Subsidiaries.
5.22 Reorganization. Parent has no reason to believe that the
Merger will fail to qualify as a reorganization under Section 368(a) of the
Code.
ARTICLE VI
COVENANTS RELATING TO CONDUCT OF BUSINESS
6.1 Covenants of the Company. Except as expressly provided in
this Agreement or the Stock Option Agreement, during the period from the
date of this Agreement to the Effective Time, the Company shall use
commercially reasonable efforts to, and shall cause its Subsidiaries to use
commercially reasonable efforts to, (i) conduct its business in the
ordinary and usual course consistent with past practices and prudent
banking practice; (ii) maintain and preserve intact its business
organization, properties, leases, employees and advantageous business
relationships and retain the services of its officers and key employees,
(iii) take no action which would adversely affect or delay the ability of
Company, the Company Bank, the Parent or the Parent Bank to perform its
covenants and agreements on a timely basis under this Agreement, and (iv)
take no action which would adversely affect or delay the ability of the
Company, the Company Bank, the Parent or the Parent Bank to obtain any
necessary approvals, consents or waivers of any governmental authority
required for the transactions contemplated hereby or which would reasonably
be expected to result in any such approvals, consents or waivers containing
any material condition or restriction. Without limiting the generality of
the foregoing, and except as set forth in Section 6.1 of the Company
Disclosure Schedule or as otherwise specifically provided by this
Agreement, the Stock Option Agreement or consented to in writing by Parent,
the Company shall not, and shall not permit any of its Subsidiaries to:
(a) solely in the case of the Company, declare or pay any
dividends on, or make other distributions in respect of, any of its
capital stock, other than normal quarterly dividends not in excess of
$0.125 per share of Company Common Stock; provided, however, that if the
joint venture known as AFT Associates, of which the Company's indirect
wholly owned subsidiary, FinFed Development Corp., is a joint venture
partner, sells 100% of its interest in the property described in Section
6.1(a) of the Company Disclosure Letter or if FinFed Development Corp.
sells 100% of its interest in AFT Associates (in either case without
recourse to the Company or any of its Subsidiaries and without the Company
or any of its Subsidiaries providing any financing therefor) prior to the
Closing, then the Company may pay a special one-time dividend (the
"Special Dividend") prior to the Closing in the following amount: (i) if
the cash proceeds (received in the form of a certified check or
immediately available funds) of such sale (net of transaction expenses and
transfer taxes, if any) are greater than or equal to the book value of
such assets on the Company's books and records, net of any specific
reserves established by either FinFed Development Corp. or the Company
Bank as of March 31, 1998, as set forth in Section 6.1(a) of the Company
Disclosure Letter ("Book Value"), the Special Dividend may be paid in the
aggregate amount of the product of the Outstanding Shares Number and
$1.00, or (ii) if the cash proceeds (received in the form of a certified
check or immediately available funds) of such sale are less than the Book
Value, then the Special Dividend may be paid in an aggregate amount equal
to the amount by which (A) the product of the Outstanding Shares Number
and $1.00 exceeds (B) the difference between the Book Value and the cash
proceeds of such sale; provided, further that such sale may not occur
without the prior written consent of the Parent if such sale would result
in the amount set forth in (B) exceeding the amount set forth in (A).
(b) (i) repurchase, redeem or otherwise acquire (except
for the acquisition of Trust Account Shares and DPC Shares, as such terms
are defined in Section 1.4(b) hereof) any shares of the capital stock of
the Company or any Subsidiary of the Company, or any securities convertible
into or exercisable for any shares of the capital stock of the Company or
any Subsidiary of the Company, (ii) split, combine or reclassify any shares
of its capital stock or issue or authorize or propose the issuance of any
other securities in respect of, in lieu of or in substitution for shares of
its capital stock, or (iii) issue, deliver or sell, or authorize or propose
the issuance, delivery or sale of, any shares of its capital stock or any
securities convertible into or exercisable for, or any rights, warrants or
options to acquire, any such shares, or enter into any agreement with
respect to any of the foregoing, except, in the case of clauses (ii) and
(iii), for the issuance of Company Common Stock upon the exercise or
fulfillment of rights or options issued or existing pursuant to the Option
Agreement, the Company Option Plans or any employee benefit plans, programs
or arrangements, all to the extent outstanding and in existence on the date
of this Agreement and in accordance with their present terms;
(c) amend its Certificate of Incorporation, By-laws or
other similar governing documents;
(d) (i) initiate, solicit or encourage, directly or
indirectly, any inquiries or the making of any proposal or offer
(including, without limitation, any proposal or offer to stockholders of
the Company) with respect to a merger, consolidation or similar transaction
involving, or any purchase of, all or more than 10% of the assets or any
equity securities of the Company of any of its material Subsidiaries (any
such proposal or offer being hereinafter referred to as an "Acquisition
Proposal") or, (ii) engage in any negotiations concerning, or provide any
confidential information or data to, or have any discussions with, any
person relating to an Acquisition Proposal; provided, however, that nothing
contained in this Agreement shall prevent the Company or its Board of
Directors from (i) complying with Rule 14e-2 promulgated under the Exchange
Act with regard to an Acquisition Proposal or (ii)(A) providing information
in response to a request therefor by a person who has made an unsolicited
bona fide written Acquisition Proposal if the Board of Directors receives
from the person so requesting such information an executed confidentiality
agreement on terms substantially equivalent to those contained in the
confidentiality agreement between Parent and the Company, dated as of June
17, 1998; or (B) engaging in any negotiations or discussions with any
person who has made an unsolicited bona fide written Acquisition Proposal,
if and only to the extent that, in each such case referred to in clause (A)
or (B) above, (i) the Board of Directors of the Company, after consultation
with outside legal counsel, in good ▇▇▇▇▇ ▇▇▇▇▇ such action to be legally
necessary for the proper discharge of its fiduciary duties under applicable
law and (ii) the Board of Directors of the Company determines in good faith
(after consultation with its financial advisor) that such Acquisition
Proposal, if accepted, is reasonably likely to be consummated, taking into
account all legal, financial and regulatory aspects of the proposal and the
person making the proposal and would, if consummated, result in a more
favorable transaction than the transaction contemplated by this Agreement;
provided further, however, that the Company may communicate information
about any such Acquisition Proposal to its stockholders if, in the judgment
of the Company's Board of Directors, based upon the advice of outside
counsel, such communication is required under applicable law. The Company
will notify Parent immediately orally (within one day) and in writing
(within 3 days) if any such inquiries, proposals or offers are received by,
any such information is requested from, or any such negotiations or
discussions are sought to be initiated or continued with the Company after
the date hereof, and the identity of the person making such inquiry,
proposal or offer and the substance thereof and will keep Parent informed
of any developments with respect thereto immediately upon occurrence
thereof. Subject to the foregoing, the Company will immediately cease and
cause to be terminated any existing activities, discussions or negotiations
with any parties conducted heretofore with respect to any of the foregoing.
The Company and its Subsidiaries will take the necessary steps to inform
their respective officers, directors, agents, and representatives
(including, without limitation, any investment banker, attorney or
accountant retained by it) of the obligations undertaken in this Section
6.1(d). The Company will promptly request each person (other than Parent)
that has executed a confidentiality agreement prior to the date hereof in
connection with its consideration of a business combination with the
Company or any of its Subsidiaries to return or destroy all confidential
information previously furnished to such person by or on behalf of the
Company or any of its Subsidiaries. The Company shall take all steps
necessary to enforce all such confidentiality agreements.
(e) make any capital expenditures other than those which
(i) are made in the ordinary course of business or are necessary to
maintain existing assets in good repair and (ii) in any event are in an
amount of no more than $50,000 in the aggregate;
(f) enter into any new line of business;
(g) acquire or agree to acquire, by merging or
consolidating with, or by purchasing a substantial equity interest in or a
substantial portion of the assets of, or by any other manner, any business
or any corporation, partnership, association or other business organization
or division thereof or otherwise acquire any assets, which would be
material, individually or in the aggregate, to the Company, other than in
connection with foreclosures, settlements in lieu of foreclosure or
troubled loan or debt restructurings in the ordinary course of business
consistent with past practices;
(h) 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 VIII not being satisfied;
(i) change its methods of accounting in effect at March 31,
1998, except as required by changes in GAAP or regulatory accounting
principles as concurred in writing by the Company's independent auditors;
(j) (i) except as set forth in Section 7.12 hereof, as
required by applicable law or as required to maintain qualification
pursuant to the Code, adopt, amend, or terminate any employee benefit plan
(including, without limitation, any Plan) or any agreement, arrangement,
plan, trust, other funding arrangement or policy between the Company or any
Subsidiary of the Company and one or more of its current or former
directors, officers, employees or independent contractors except as
required pursuant to irrevocable commitments existing on the date of this
Agreement, change any trustee or custodian of the assets of any plan or
transfer plan assets among trustees or custodians except that the Company
may adopt the severance policy and pay retention bonuses, in each case as
described in Section 6.1(j) of the Company Disclosure Schedule, (ii) except
for normal salary increases in the ordinary course of business consistent
with past practice, which increases do not exceed 5% of annual rate of base
salary in effect on the date of this Agreement in any individual case or
except as required by applicable law, increase or accelerate payment of in
any manner the compensation or fringe benefits of any director, officer or
employee or pay any benefit not required by any Plan or agreement as in
effect as of the date hereof; provided, however, that nothing contained
herein shall prohibit the Company from (x) committing to pay retention
bonuses as described in Section 6.1(j) of the Company Disclosure Schedule,
or (y) paying, on or immediately prior to the Closing Date, discretionary
bonuses in respect of fiscal 1998 such that the aggregate amount of all
such bonuses in respect of fiscal 1998 does not exceed $291,000 and in
individual amounts to be mutually agreed upon by Parent and the Board of
Directors of the Company, provided, however, that Parent's agreement shall
not be unreasonably withheld or (ii) grant or award any stock options,
stock appreciation rights, restricted stock, restricted stock units or
performance units or shares;
(k) other than activities in the ordinary course of
business consistent with past practice, sell, lease, encumber, assign or
otherwise dispose of, or agree to sell, lease, encumber, assign or
otherwise dispose of, any of its material assets, properties or other
rights or agreements except as otherwise specifically contemplated by this
Agreement;
(l) other than in the ordinary course of business
consistent with past practice, incur any indebtedness for borrowed money or
assume, guarantee, endorse or otherwise as an accommodation become
responsible for the obligations of any other individual, corporation or
other entity;
(m) file any application to relocate or terminate the
operations of any banking office of it or any of its Subsidiaries;
(n) create, renew, amend or terminate or give notice of a
proposed renewal, amendment or termination of, any material contract,
agreement or lease for goods, services or office space to which the Company
or any of its Subsidiaries is a party or by which the Company or any of its
Subsidiaries or their respective properties is bound, other than the
renewal in the ordinary course of business of any lease the term of which
expires prior to the Closing Date;
(o) other than in the ordinary course of business
consistent with past practice, in individual amounts not to exceed $25,000,
and other than investments for the Company's portfolio made in accordance
with Section 6.1(p), make any 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;
(p) make any investment in any debt security, including
mortgage-backed and mortgage related securities, other than US government
and US government agency securities with final maturities not greater than
five years or mortgage-backed or mortgage related securities which would
not be considered "high risk" securities pursuant to Thrift Bulletin Number
52 issued by the OTS, that are purchased in the ordinary course of business
with past practice;
(q) other than as set forth on Schedule 6.1(j), enter into
or terminate any contract or agreement, or make any change in any of its
leases or contracts, other than with respect to those involving aggregate
payments of less than, or the provision of goods or services with a market
value of less than, $50,000 per annum and other than contracts or
agreements covered by Section 6.1(t);
(r) settle any claim, action or proceeding involving any
liability of the Company or any of its Subsidiaries for money damages in
excess of $50,000 or involving any material restrictions upon the
operations of the Company or any of its Subsidiaries;
(s) except in the ordinary course of business and in
amounts less than $100,000, waive or release any material right or
collateral or cancel or compromise any extension of credit or other debt or
claim;
(t) make, renegotiate, renew, increase, extend, modify or
purchase any (i) loan, lease (credit equivalent), advance, credit
enhancement or other extension of credit, or make any commitment in respect
of any of the foregoing, except (A) with respect to one- to four-family
owner-occupied residential mortgage loans, originations or refinancings of
adjustable rate loans with maturities not to exceed 30 years and fixed-rate
loans with maturities not to exceed 15 years, in each case made in strict
compliance with underwriting guidelines established by either the Federal
National Mortgage Association or the Federal Home Loan Mortgage
Corporation; (B) with respect to multi-family loans, originations or
refinancing in amounts up to $400,000 in accordance with the following
lending policies: (I) collateral consisting of multi-family buildings only
within the 5 boroughs of New York City and Nassau County, (II) debt service
ratios not less than 1.2 based upon actual cash flows at the time of
underwriting (accounting for normal vacancy and attributing no increase for
potential future increases), (III) loan-to-value ratios not greater than
75% based upon appraisals performed by licensed real estate appraisers
carrying the "MAI" designation, and based upon cash flows as described
above regarding computation of debt service ratios, (IV) personal
guarantees of the borrower and (V) verification of rents with the NYC
Department of Housing and Community Renewal where apartment rents are
subject to statutory control; (C) with respect to construction loans, only
the continuation of disbursements of proceeds in connection with existing
loans in process, but only subsequent to adequate due diligence regarding
the stage of project completion; (D) with respect to loans secured by
mixed-use properties or by commercial income-producing properties,
originations or refinancings in amounts up to $250,000 with valuations and
debt service coverage ratios that are based upon actual rent rolls made in
strict compliance with the loan-to-value ratios and debt service ratios set
forth in the Company's current Board-approved loan policy manual; (E) with
respect to consumer loans, originations or refinancings in the ordinary
course of business upon terms and in aggregate monthly volumes that do not
differ materially from past practice; or (F) loans or advances as to which
the Company has a legally binding obligation to make as of the date hereof
and a description of which has been provided by the Company in writing to
Parent prior to the execution of this Agreement; provided, that all new
loan commitments made by the Company between the date hereof and the
Closing, as permitted by clauses (A) through (D) above, shall not aggregate
more than $8 million in any single month, and no more than $25 million in
the aggregate; and provided further, however, that the Company may not
make, renegotiate, renew, increase, extend, modify or purchase any loan
that is underwritten based on either no or limited verification of income
or otherwise without full documentation customary for such a loan; (ii)
unsecured commercial loans; or (iii) loans, advances or commitments to
employees, directors, officer or other affiliated parties of the Company or
any of its Subsidiaries;
(u) incur any additional borrowings beyond those set forth
in the Company Disclosure Letter other than short-term (with a final
maturity of two years or less) Federal Home Loan Bank borrowings and
reverse repurchase agreements consistent with past practice, or pledge any
of its assets to secure any borrowings other than as required pursuant to
the terms of borrowings of the Company or any Subsidiary in effect at the
date hereof or in connection with borrowings or reverse repurchase
agreements permitted hereunder. Deposits shall not be deemed to be
borrowings within the meaning of this paragraph;
(v) except for advances in the ordinary course to fund the
carrying costs of the properties held in AFT Associates up to $50,000 in
the aggregate, make any investment or commitment to invest in real estate
or in any real estate development project, other than real estate acquired
in satisfaction of defaulted mortgage loans and investments or commitments
approved by the Board of Directors of the Company prior to the date of this
Agreement and disclosed in writing to Parent;
(w) except pursuant to commitments existing at the date
hereof which have previously been disclosed in writing to the Parent, make
any real estate loans secured by undeveloped land or real estate located
outside the State of New York or make any construction loan;
(x) establish or make any commitment relating to the
establishment of any new branch or other office facilities other than those
for which all regulatory approvals have been obtained; with respect to any
such new branch or other office facility for which regulatory approval has
been received, make any capital expenditures that in the aggregate would
exceed $50,000;
(y) except for advances in the ordinary course to fund the
carrying costs of the properties held in AFT Associates up to $50,000 in
the aggregate, organize, capitalize, lend to or otherwise invest in any
Subsidiary, or invest in or acquire a 10% or greater equity or voting
interest in any firm, corporation or business enterprise;
(z) elect to the Board of Directors of the Company any
person who is not a member of the Board of Directors of the Company as the
last Company Report; or
(aa) agree to do any of the foregoing.
6.2 Covenants of Parent. Except as expressly provided in this
Agreement, during the period from the date of this Agreement to the
Effective Time, the Parent shall use commercially reasonably efforts to,
and shall cause its Subsidiaries to use commercially reasonable efforts to,
(i) conduct its business in the ordinary and usual course consistent with
past practices and prudent banking practice, (ii) maintain and preserve
intact its business organization, properties, leases, employees and
advantageous business relationships and retain the services of its officers
and key employees, (iii) take no action which would adversely affect or
delay the ability of the Company or the Parent to perform it covenants and
agreements on a timely basis under this Agreement, and (iv) take no action
which would adversely affect or delay the ability of the Company, the
Parent, the Company Bank or the Parent Bank to obtain any necessary
approvals, consents or waivers of any governmental authority required for
the transactions contemplated hereby or which would reasonably be expected
to result in any such approvals, consents or waivers containing any
material condition or restriction. Without limiting the generality of the
foregoing, and except as set forth in Section 6.2 of the Parent Disclosure
Schedule or as otherwise specifically provided by the Agreement or
consented to in writing by the Company, Parent shall not, and shall not
permit any of its Subsidiaries to:
(a) solely in the case of Parent, declare or pay any
dividends on or make any other distributions in respect of any of its
capital stock other than its current quarterly dividends; provided,
however, that nothing contained herein shall prohibit Parent from
increasing the quarterly cash dividend on the Parent Common Stock up
to $0.15 per share;
(b) 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 VIII not being satisfied;
(c) change its methods of accounting in effect at March 31,
1998, except in accordance with changes in GAAP or regulatory
accounting principles as concurred to by Parent's independent
auditors; or
(d) agree to do any of the foregoing.
ARTICLE VII
ADDITIONAL AGREEMENTS
7.1 Regulatory Matters. (a) Parent and the Company shall
promptly prepare and file with the SEC the Proxy Statement and Parent shall
promptly prepare and file with the SEC the S-4, in which the Proxy
Statement will be included as a prospectus. Each of the Company and Parent
shall use its reasonable best efforts to have the S-4 declared effective
under the Securities Act as promptly as practicable after such filing, and
the Company shall thereafter mail the Proxy Statement to its stockholders.
Parent 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.
(b) The parties hereto shall cooperate with each other and
use their reasonable best efforts to promptly prepare and file all
necessary documentation, to effect all applications, notices, petitions and
filings, and to obtain as promptly as practicable all permits, consents,
approvals and authorizations of all third parties and Governmental Entities
which are necessary or advisable to consummate the transactions
contemplated by this Agreement (including without limitation the Merger).
The Company and Parent shall have the right to review in advance, and to
the extent practicable each will consult the other on, in each case subject
to applicable laws relating to the exchange of information, all the
information relating to the Company or Parent, as the case may be, and any
of their respective Subsidiaries, which appears 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 hereto shall act
reasonably and as promptly as practicable. The parties hereto agree that
they will consult with each other with respect to the obtaining of all
permits, consents, approvals and authorizations of all third parties and
Governmental Entities necessary or advisable to consummate the transactions
contemplated by this Agreement and each party will keep the other apprised
of the status of matters relating to completion of the transactions
contemplated herein.
(c) Parent and the Company shall, upon request, furnish
each other with all information concerning themselves, their Subsidiaries,
directors, officers and stockholders and such other matters as may be
reasonably necessary or advisable in connection with the Proxy Statement,
the S-4 or any other statement, filing, notice or application made by or on
behalf of Parent, the Company or any of their respective Subsidiaries to
any Governmental Entity in connection with the Merger and the other
transactions contemplated by this Agreement.
(d) Parent and the Company shall promptly furnish each
other with copies of written communications received by Parent or the
Company, as the case may be, or any of their respective Subsidiaries,
Affiliates or Associates (as such terms are defined in Rule 12b-2 under the
Exchange Act as in effect on the date of this Agreement) from, or delivered
by any of the foregoing to, any Governmental Entity in respect of the
transactions contemplated hereby.
7.2 Access to Information. (a) Upon reasonable notice and
subject to applicable laws relating to the exchange of information, each
party shall, and shall cause each of its Subsidiaries to, afford to the
officers, employees, accountants, counsel and other representatives of the
other party, access, during normal business hours during the period prior
to the Effective Time, to all its properties, books, contracts,
commitments, records, officers, employees, accountants, counsel and other
representatives and, during such period, it shall, and shall cause its
Subsidiaries to, make available to the other party all information
concerning its business, properties and personnel as the other party may
reasonably request.
Neither party nor any of its Subsidiaries shall be required to
provide access to or to disclose information where such access or
disclosure would violate or prejudice the rights of its customers,
jeopardize any attorney-client privilege 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 hereto will
make appropriate substitute disclosure arrangements under circumstances in
which the restrictions of the preceding sentence apply.
(b) All information furnished pursuant to Section 7.2(a)
shall be subject to, and each of the Company and Parent shall hold all such
information in confidence in accordance with, the provisions of the
confidentiality agreement, dated June 17, 1998 (the "Confidentiality
Agreement"), between Parent and the Company.
(c) No investigation by either of the parties or their
respective representatives shall affect the representations, warranties,
covenants or agreements of the other set forth herein.
7.3 Stockholder Meeting. The Company shall take all steps
necessary to duly call, give notice of, convene and hold a meeting of its
stockholders to be held as soon as is reasonably practicable after the date
on which the S-4 becomes effective for the purpose of voting upon the
approval and adoption of this Agreement and the consummation of the
transactions contemplated hereby. The Company will, through its Board of
Directors, except to the extent legally required for the discharge by the
Board of Directors of its fiduciary duties as advised by such Board's legal
counsel subject to the fiduciary duties of such board, recommend to its
stockholders approval of this Agreement and the transactions contemplated
hereby and such other matters as may be submitted to its stockholders in
connection with this Agreement.
7.4 Legal Conditions to Merger. Each of Parent and the Company
shall, and shall cause its Subsidiaries to, use their reasonable best
efforts (a) to take, or cause to be taken, all actions necessary, proper or
advisable to comply promptly with all legal requirements which may be
imposed on such party or its Subsidiaries with respect to the Merger and,
subject to the conditions set forth in Article VIII hereof, to consummate
the transactions contemplated by this Agreement and (b) to obtain (and to
cooperate with the other party to obtain) any consent, authorization, order
or approval of, or any exemption by, any Governmental Entity and any other
third party which is required to be obtained by the Company or Parent or
any of their respective Subsidiaries in connection with the Merger and the
other transactions contemplated by this Agreement, and to comply with the
terms and conditions of such consent, authorization, order or approval.
7.5 Affiliates. Promptly, but in any event within two weeks
after the execution and delivery of this Agreement, the Company shall
deliver to the Parent a letter identifying all persons who, to the
knowledge of the Company, may be deemed to be "affiliates" of the Company
under Rule 145 of the Securities Act, including, without limitation , all
directors and executive officers of the Company, together with executed
letter agreements, each substantially in the form of Exhibit B hereto,
executed by each such person so identified as an affiliate of the Company
agreeing (i) to comply with Rule 145 and (ii) to be present in person or by
proxy and vote in favor of the Merger at the Company's stockholders
meeting.
7.6 Stock Exchange Listing. Parent shall use its reasonable
best efforts to cause the shares of Parent Common Stock to be issued in the
Merger to be approved for listing for quotation on the NASDAQ/NMS, subject
to official notice of issuance, as of the Effective Time.
7.7 Employee Benefit Plans; Existing Agreements. (a) As of or
as soon as practicable following the Effective Time, the employees of the
Company and its Subsidiaries (the "Company Employees") shall be eligible to
participate in the employee benefit plans of Parent and its Subsidiaries in
which similarly situated employees of Parent or Parent Bank participate, to
the same extent as similarly situated employees of Parent or Parent Bank
(it being understood that inclusion of Company Employees in such employee
benefit plans may occur at different times with respect to different plans
and that participation of Company employees in an analogous Company Plan
shall be continued until such time). The Company agrees to take any
necessary actions to cease benefit accruals under any Plan that is a tax-
qualified defined benefit plan as of the Effective Date.
(b) With respect to each Parent Plan, for purposes of
determining eligibility to participate, vesting, and entitlement to
benefits, including for severance benefits and vacation entitlement (but
not for accrual of pension benefits), service with the Company (or
predecessor employers to the extent the Company provides past service
credit) shall be treated as service with Parent; provided, however, that
such service shall not be recognized to the extent that such recognition
would result in a duplication of benefits. Such service also shall apply
for purposes of satisfying any waiting periods, evidence of insurability
requirements, or the application of any preexisting condition limitations.
Each Parent Plan shall waive pre-existing condition limitations to the same
extent waived under the applicable Plan. Company Employees shall be given
credit for amounts paid under a corresponding benefit plan during the same
period for purposes of applying deductibles, copayments and out-of-pocket
maximums as though such amounts had been paid in accordance with the terms
and conditions of the Parent Plan.
(c) As of the Effective Time, Parent shall assume and honor
and shall cause the appropriate Subsidiaries of Parent to assume and to
honor in accordance with their terms all employment, severance and other
compensation agreements, plans and arrangements existing prior to the
execution of this Agreement which are between the Company or any of its
Subsidiaries and any director, officer or employee thereof and which have
been disclosed in the Company Disclosure Schedule. Parent acknowledges and
agrees that (i) the Merger constitutes a "Change of Control" for all
purposes pursuant to such agreements and arrangements and (ii) in light of
Parent's plans relating to management assignments and responsibilities with
respect to the business of Parent from and after the Effective Time, each
director, officer or employee who is a party to, or is otherwise subject
to, any such agreement or arrangement will, upon consummation of the
Merger, be entitled to terminate employment thereunder and receive the
severance or other similar benefits that are provided thereunder in the
event of a termination of employment for "Good Reason", constructive
discharge, (including, but not limited to, demotion or reduction in
compensation) or other similar events. Any director, officer or employee
of the Company who is a party to an agreement set forth in Section 7.7(c)
of the Company Disclosure Schedule who intends to terminate employment as
of the Effective Time, or who otherwise becomes entitled to benefits
thereunder, shall be entitled to receive the cash benefits payable under
such agreement on the Closing Date by wire transfer of immediately
available funds to an account designated by such employee in writing and
delivered to Parent not less than five (5) business days prior to the
Closing Date; provided, however, that (i) the amounts payable by such wire
transfer shall not exceed, individually or in the aggregate, the amounts
reflected in Section 7.7(c) of the Company Disclosure Schedule and (ii) the
employee executes and delivers to the Company an instrument in form and
substance satisfactory to the Parent releasing the Parent and its
affiliates from any further liability for monetary payments under such
agreement. The provisions of this Section 7.7(c) are intended to be for
the benefit of, and shall be enforceable by, each such director, officer or
employee.
(d) Prior to the Effective Time, the Parent shall cause the
Parent Bank to amend its Severance Pay Plan in the form included in Section
5.11(a) of the Parent Disclosure Schedule to designate the Company and the
Company Bank as "Acquired Companies."
(e) With respect to the Financial Federal Savings and Loan
Association Employee Stock Ownership Plan (the "ESOP"), the Company shall:
(i) take any actions necessary to cause the ESOP to be
terminated and for the balances in all Accounts (as defined in the
ESOP) to become fully vested and nonforfeitable as of the Closing
Date;
(ii) use its best efforts to cause the Trustee of the
ESOP to make such elections under Sections 1.4 and 1.5 of this
Agreement with respect to unallocated Company Common Stock as are
necessary to obtain cash at least equal to the remaining ESOP
indebtedness;
(iii) cause the Trustee to use such cash to repay
in full all such outstanding ESOP indebtedness;
(iv) cause the shares of Company Common Stock and/or
any cash remaining in the suspense account maintained under the ESOP,
after giving effect to the repayment of ESOP indebtedness referred to
in subparagraph (iii) above, to be allocated (as of the Closing Date)
to the accounts of all ESOP participants who have account balances as
of the Closing Date, as investment experience in accordance with
Section 8.3 of the ESOP;
(v) cause the account balances of all ESOP
participants to be distributed in a lump sum (or transferred in
accordance with Section 401(a)(31) of the Code) as soon as practicable
following the later of (A) the Closing Date or (B) the date of receipt
of a favorable determination letter from the Internal Revenue Service
(the "Service") regarding the qualified status of the ESOP upon its
termination; and
(vi) adopt an amendment to the ESOP, in form and
substance reasonably satisfactory to Parent, which includes and
provides for the actions described in subparagraphs (i), (ii), (iii),
(iv) and (v) above.
(f) As soon as practicable after the date hereof, the
Company shall file a request for a determination letter from the Service
regarding the continued qualified status of the ESOP upon its termination.
Prior to the Effective Time, the Company and, following the Effective Time,
Parent shall use their respective best efforts to obtain such favorable
determination letter (including, but not limited to, making such changes to
the ESOP and the proposed allocations described herein as may be requested
by the Service as a condition to its issuance of a favorable determination
letter). Neither the Company nor Parent shall implement any of the actions
described in Section 7.7(e) (iv) and (v) above until receipt of such
favorable determination letter.
7.8 Indemnification. (a) It is understood and agreed that after
the Effective Time, Parent shall indemnify and hold harmless, to the
fullest extent that the Company is permitted to indemnify (including
advancement of expenses) its directors and officers under Delaware law or
OTS regulations, as applicable and the Certificate of Incorporation and
Bylaws of the Company as in effect at the Effective Time, any person 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 the
Company or any of its Subsidiaries (the "Indemnified Parties") against any
losses, claims, damages, liabilities, costs, expenses (including reasonable
attorney's fees and expenses in advance of the final disposition of any
claim, suit, proceeding or investigation to each Indemnified Party)
judgments, fines and amounts paid in settlement in connection with any such
threatened or actual claim, action, suit, proceeding or investigation, and
in the event of any such threatened or actual claim, action, suit,
proceeding or investigation (whether asserted or arising before or after
the Effective Time), the Indemnified Parties may retain counsel reasonably
satisfactory to them after consultation with Parent; provided, however,
that (1) Parent shall have the right to assume the defense thereof and upon
such assumption Parent shall not be liable to any Indemnified Party for any
legal expenses of other counsel or any other expenses subsequently incurred
by any Indemnified Party in connection with the defense thereof, except
that if Parent elects not to assume such defense or counsel for the
Indemnified Parties reasonably advises that there are issues which raise
conflicts of interest between Parent and the Indemnified Parties, the
Indemnified Parties may retain counsel reasonably satisfactory to them
after consultation with Parent, and Parent shall pay the reasonable fees
and expenses of such counsel for the Indemnified Parties, (2) Parent shall
in all cases be obligated pursuant to this paragraph to pay for only one
firm of counsel for all Indemnified Parties, (3) Parent shall not be liable
for any settlement effected without its prior written consent (which
consent shall not be unreasonably withheld) and (4) Parent shall have no
obligation hereunder to any Indemnified Party when and if a court of
competent jurisdiction shall ultimately determine, and such determination
shall have become final and nonappealable, that indemnification of such
Indemnified Party in the manner contemplated hereby is prohibited by
applicable law. Any Indemnified Party wishing to claim Indemnification
under this Section 7.8, upon learning of any such claim, action, suit,
proceeding or investigation, shall promptly notify Parent thereof, provided
that the failure to so notify shall not affect the obligations of Parent
under this Section 7.8 except to the extent such failure to notify
materially prejudices Parent. Parent's obligations under this Section 7.8
shall continue in full force and effect for a period of six years from and
after the Effective Time; provided, however, that all rights to
indemnification in respect of any claim asserted or made within such period
shall continue until the final disposition of such claim.
(b) Parent shall cause the persons serving as officers and
directors of the Company immediately prior to the Effective Time to be
covered for a period of three years from the Effective Time by the
directors' and officers' liability insurance policy maintained by the
Company (provided that Parent may substitute therefor policies of at least
the same coverage and amounts containing terms and conditions which are not
less advantageous than such policy or single premium tail coverage with
policy limits equal to the Company's existing annual coverage limits) with
respect to acts or omissions occurring prior to the Effective Time which
were committed by such officers and directors in their capacity as such;
provided, however, that in no event shall Parent be required to expend an
aggregate premium in excess of 200% of the current annual premiums expended
by the Company (the "Insurance Amount") to maintain or procure insurance
coverage, and further provided that if Parent is unable to maintain or
obtain the insurance called for by this Section 7.8(b), Parent shall use
all reasonable efforts to obtain as much comparable insurance as is
available for the Insurance Amount.
(c) In the event Parent or any of its successors or assigns
(i) consolidates with or merges into any other person and shall not be the
continuing or surviving corporation or entity of such consolidation or
merger, or (ii) transfers or conveys all or substantially all of its
properties and assets to any person, then, and in each such case, to the
extent necessary, proper provision shall be made so that the successors and
assigns of Parent assume the obligations set forth in this section.
(d) The provisions of this Section 7.8 are intended to be
for the benefit of, and shall be enforceable by, each Indemnified Party and
his or her heirs and representatives.
7.9 Additional Agreements. In case at any time after the
Effective Time any further action is necessary or desirable to carry out
the purposes of this Agreement or to vest the Surviving Corporation with
full title to all properties, assets, rights, approvals, immunities and
franchises of any of the parties to the Merger, the proper officers and
directors of each party to this Agreement and their respective Subsidiaries
shall take all such necessary action as may be reasonably requested by
Parent.
7.10 Coordination of Dividends. Subject to the proviso of
Section 6.1(a), after the date of this Agreement the Company shall
coordinate the declaration of any dividends in respect of the Company
Common Stock and the record dates and payments dates relating thereto with
that of the Parent Common Stock, it being the intention of the parties that
the holders of Parent Common Stock or Company Common Stock shall not
receive more than one dividend, or fail to receive one dividend, for any
single calendar quarter with respect to their shares of Parent Common Stock
and/or Company Common Stock and any shares of Parent Common Stock any
holder of Company Common Stock receives in exchange therefor in the Merger.
7.11 Parent Rights Agreement. Parent agrees that Parent Rights
shall be issued with respect to each share of Parent Common Stock issued
pursuant to the terms hereof regardless of whether there has occurred a
"Distribution Date" under the terms of the Parent Rights Agreement prior to
the Effective Time, and Parent shall take all action necessary or advisable
to enable the holder of each share of Parent Common Stock issued pursuant
to this Agreement to obtain the benefit of such Parent Rights
notwithstanding their prior distribution, including, without limitation,
amendment of the Parent Rights Agreement.
7.12 Notification of Certain Matters. Each party shall give
prompt notice to the others of (a) any event or notice of, or other
communication relating to, a default or event that, with notice or lapse of
time or both, would become a default, received by it or any of its
Subsidiaries subsequent to the date of this Agreement and prior to the
Effective Time, under any contract material to the financial condition,
properties, businesses or results or operations of the Company and its
Subsidiaries taken as a whole to which the Company or any Subsidiary is a
party or is subject ; and (b) any event, condition, change or occurrence
which individually or in the aggregate has, or which, so far as reasonably
can be foreseen at the time of its occurrence, is reasonably likely to
result in a Material Adverse Event. Each of the Company and the Parent
shall give prompt notice to the other party of any notice or other
communication from any third party alleging that the consent of such third
party is or may be required in connection with the transactions
contemplated by this Agreement.
7.13 Certain Matters, Certain Revaluations, Changes and
Adjustments. At or before the Effective Time, upon the request of Parent,
the Company shall, consistent with GAAP, modify and change its loan,
litigation and real estate valuation policies and practices (including loan
classifications and levels of reserves) so as to be applied consistently on
a mutually satisfactory basis with those of Parent and establish such
accruals and reserves as shall be necessary to reflect Merger-related
expenses and costs incurred by the Company, provided, however, that the
Company shall not be required to take such action (A) more than five days
prior to the Effective Time; and (B) unless Parent agrees in writing that
all conditions to closing set forth in Article VIII have been satisfied or
waived (other than those conditions relating to delivery of documents on
the Closing Date); and provided further, however, that no accrual or
reserve made by the Company or any Company Subsidiary pursuant to this
Section 7.13 or any litigation or regulatory proceeding arising out of any
such accrual or reserve, shall constitute or be deemed to be a breach,
violation of or failure to satisfy any representation, warranty, covenant,
condition or other provision of this Agreement or otherwise be considered
in determining whether any such breach, violation or failure to satisfy
shall have occurred.
7.14 Advisory Board. Parent shall, effective as of the Effective
Time, cause ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇ and
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, if such persons are willing to so serve, to be elected
or appointed as members of an advisory board ("Advisory Board") established
by Parent, the function of which shall be to advise Parent with respect to
deposit and lending activities in the Company's former market area and to
maintain and develop customer relationships. The members of the Advisory
Board who are willing to so serve initially shall be elected or appointed
for a term of one year. Parent agrees annually to re-elect or re-appoint
each of the initial members of the Advisory Board to two successive one-
year terms following the initial one-year term; provided, however, that
Parent shall have no obligation to re-elect or re-appoint any member if
Parent reasonably determines that such member has a conflict of interest
that compromises such member's ability to serve effectively as a member of
the advisory board of any cause exists that otherwise would allow for
removal of such person as a director of Parent if such person were a member
of Parent's Board of Directors. Each member of the Advisory Board shall
receive a retainer fee for such service at an annual rate of $25,000, which
shall be payable in quarterly installments or in one lump sum at any time
in advance at the option of Parent.
ARTICLE VIII
CONDITIONS PRECEDENT
8.1 Conditions to Each Party's Obligation To Effect the Merger.
The respective obligation of each party to effect the Merger shall be
subject to the satisfaction at or prior to the Effective Time of the
following conditions:
(a) Stockholder Approval. This Agreement shall have been
approved and adopted by the requisite vote of the holders of the
outstanding shares of Company Common Stock under applicable law.
(b) Listing of Shares. The shares of Parent Common Stock
which shall be issued to the stockholders of the Company upon consummation
of the Merger shall have been authorized for listing for quotation on the
NASDAQ/NMS, subject to official notice of issuance.
(c) Other Approvals. All necessary regulatory or
governmental approvals, consents or waivers required to consummate the
transactions contemplated hereby shall have been obtained and shall remain
in full force and effect and all statutory waiting periods in respect
thereof shall have expired; and all other consents, waivers and approvals
of any third parties which are necessary to permit the consummation of the
Merger and the other transactions contemplated hereby shall have been
obtained or made except for those the failure to obtain would not have a
Material Adverse Effect (i) on the Company and its subsidiaries taken as a
whole or (ii) on the Parent and its Subsidiaries taken as a whole. None of
the approvals or waivers referred to herein shall contain any term or
condition which would have a Material Adverse Effect on the Surviving
Corporation and its Subsidiaries, taken as a whole, after giving effect to
the Merger.
(d) S-4. The S-4 shall have become effective under the
Securities Act and no stop order suspending the effectiveness of the S-4
shall have been issued and no proceedings for that purpose shall have been
initiated or threatened by the SEC.
(e) 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 shall be in effect. No statute,
rule, regulation, order, injunction or decree shall have been enacted,
entered, promulgated or enforced by any Governmental Entity which
prohibits, restricts or makes illegal consummation of the Merger.
(f) Affiliate Letters. Parent shall have received the
letter agreements referred to in Section 7.5.
8.2 Conditions to Obligations of Parent. The obligation of
Parent to effect the Merger is also subject to the satisfaction or waiver
by Parent at or prior to the Effective Time of the following conditions:
(a) Representations and Warranties. (i) Subject to
Section 3.2, the representations and warranties of the Company set forth in
this Agreement (other than those set forth in the first and third sentences
of Section 4.1(a), the second sentence of Section 4.1(b) and Sections 4.2,
4.6, 4.8(a), 4.10 and 4.18) shall be true and correct as of the date of
this Agreement and (except to the extent such representations and
warranties speak as of an earlier date) as of the Closing Date as though
made on and as of the Closing Date; and (ii) the representations and
warranties of the Company set forth in the first and third sentences of
Section 4.1(a), the second sentence of Section 4.1(b) and Sections 4.2,
4.6, 4.8(a), 4.10 and 4.18 of this Agreement shall be true and correct in
all material respects (without giving effect to Section 3.2 of this
Agreement) as of the date of this Agreement and (except to the extent such
representations and warranties speak as of an earlier date) as of the
Closing Date as though made on and as of the Closing Date. Parent shall
have received a certificate signed on behalf of the Company by the Chief
Executive Officer and the Chief Financial Officer of the Company to the
foregoing effect.
(b) Performance of Obligations of the Company. The Company
shall have performed in all material respects all obligations required to
be performed by it under this Agreement at or prior to the Closing Date,
and Parent shall have received a certificate signed on behalf of the
Company by the Chief Executive Officer and the Chief Financial Officer of
the Company to such effect.
(c) Federal Tax Opinion. Parent shall have received an
opinion from ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & Wood, counsel to Parent ("Parent's
Counsel"), in form and substance reasonably satisfactory to Parent, dated
the Effective Time, substantially to the effect that, on the basis of
facts, representations and assumptions set forth in such opinion which 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 and that, accordingly, for federal income tax purposes:
(i) No gain or loss will be recognized by Parent or the
Company as a result of the Merger;
(ii) No gain or loss will be recognized by the stockholders
of the Company who exchange all of their Company Common Stock solely
for Parent Common Stock pursuant to the Merger (except with respect to
cash received in lieu of a fractional share interest in Parent Common
Stock); and
(iii) The aggregate tax basis of the Parent Common Stock
received by stockholders who exchange all of their Company Common
Stock solely for Parent Common Stock pursuant to the Merger will be
the same as the aggregate tax basis of the Company Common Stock
surrendered in exchange therefor (reduced by any amount allocable to a
fractional share interest for which cash is received).
In rendering such opinion, Parent's Counsel may require and rely upon
representations and covenants, including those contained in certificates of
officers of Parent, the Company and others, reasonably satisfactory in form
and substance to such counsel.
(d) Accountant's Letter. The Company shall have caused to
be delivered to the Parent "cold comfort" letters or letters of procedures
from the Company's independent certified public accountants, dated (i) the
date of the mailing of the Proxy Statement to the Company's stockholders
and (ii) a date not earlier than five business days preceding the date of
the Closing and addressed to the Parent, concerning such matters as are
customarily covered in transactions of the type contemplated hereby;
8.3 Conditions to Obligations of the Company. The obligation of
the Company to effect the Merger is also subject to the satisfaction or
waiver by the Company at or prior to the Effective Time of the following
conditions:
(a) Representations and Warranties. (i) Subject to Section
3.2, the representations and warranties of Parent set forth in this
Agreement (other than those set forth in the first and third sentences of
Section 5.1(a), the second sentence of Section 5.1(b) and Sections 5.2,
5.6, 5.8(a), 5.10 and 5.18) shall be true and correct as of the date of
this Agreement and (except to the extent such representations and
warranties speak as of an earlier date) as of the Closing Date as though
made on and as of the Closing Date; and (ii) the representations and
warranties of Parent set forth in the first and third sentences of Section
5.1(a), the second sentence of Section 5.1(b) and Sections 5.2, 5.6,
5.8(a), 5.10 and 5.18 of this Agreement shall be true and correct in all
material respects (without giving effect to Section 3.2 of this Agreement)
as of the date of this Agreement and (except to the extent such
representations and warranties speak as of an earlier date) as of the
Closing Date as though made on and as of the Closing Date. The Company
shall have received a certificate signed on behalf of Parent by the Chief
Executive Officer and the Chief Financial Officer of Parent to the
foregoing effect.
(b) Performance of Obligations of Parent. Parent shall
have performed in all material respects all obligations required to be
performed by it under this Agreement at or prior to the Closing Date, and
the Company shall have received a certificate signed on behalf of Parent by
the Chief Executive Officer and the Chief Financial Officer of Parent to
such effect.
(c) Federal Tax Opinion. The Company shall have received
an opinion from Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP (the "Company's
Counsel"), in form and substance reasonably satisfactory to the Company,
dated the Effective Time, substantially to the effect that, on the basis of
facts, representations and assumptions set forth in such opinion which 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 and that, accordingly, for federal income tax purposes:
(i) No gain or loss will be recognized by Parent or
the Company as a result of the Merger;
(ii) No gain or loss will be recognized by the
stockholders of the Company who exchange all of their Company
Common Stock solely for Parent Common Stock pursuant to the
Merger (except with respect to cash received in lieu of a
fractional share interest in Parent Common Stock); and
(iii) The aggregate tax basis of the Parent Common Stock
received by stockholders who exchange all of their Company Common
Stock solely for Parent Common Stock pursuant to the Merger will be
the same as the aggregate tax basis of the Company Common Stock
surrendered in exchange therefor (reduced by any amount allocable to a
fractional share interest for which cash is received).
In rendering such opinion, the Company's Counsel may require and rely upon
representations and covenants, including those contained in certificates of
officers of Parent, the Company and others, reasonably satisfactory in form
and substance to such counsel.
(d) Accountant's Letter. Parent shall have executed to be
delivered to the Company "cold comfort" letters or letters of procedures
from the Parent's independent certified public accountants, dated (i) the
date of the mailing of the Proxy Statement to the Company's stockholders
and (ii) a date not earlier than five business days preceding the date of
the Closing and addressed to the Company, concerning such matters as are
customarily covered in transactions of the type contemplated hereby.
ARTICLE IX
TERMINATION AND AMENDMENT
9.1 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 the
Company:
(a) by mutual consent of the Company and Parent in a
written instrument, if the Board of Directors of each so determines by a
vote of a majority of the members of its entire Board;
(b) by either Parent or the Company upon written notice to
the other party (i) 60 days after the date on which any request or
application for a Requisite Regulatory Approval shall have been denied or
withdrawn at the request or recommendation of the Governmental Entity which
must grant such Requisite Regulatory Approval, unless within the 60-day
period following such denial or withdrawal a petition for rehearing or an
amended application has been filed with the applicable Governmental Entity,
provided, however, that no party shall have the right to terminate this
Agreement pursuant to this Section 9.1(b)(i) if such denial or request or
recommendation for withdrawal 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 herein or (ii) if any Governmental
Entity of competent jurisdiction shall have issued a final nonappealable
order enjoining or otherwise prohibiting the Merger;
(c) by either Parent or the Company, if its Board of
Directors so determines by a vote of a majority of the members of its
entire Board, if the Merger shall not have been consummated on or before
March 31, 1999, 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 herein;
(d) by either Parent or the Company if its Board of
Directors so determines by a vote of a majority of the members of its
entire Board (provided that if the Company is the terminating party, it
shall not be in material breach of any of its obligations under Section
7.3) if any approval of the stockholders of the Company required for the
consummation of the Merger shall not have been obtained by reason of the
failure to obtain the required vote at a duly held meeting of such
stockholders or at any adjournment or postponement thereof;
(e) by either Parent or the Company, if its Board of
Directors so determines by a vote of a majority of the members of its
entire Board, (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 material breach of any of the
representations or warranties set forth in this Agreement on the part of
the other party, which breach is not cured within thirty days following
written notice to the party committing such breach, or which breach, by its
nature, cannot be cured prior to the Closing; provided, however, that
neither party shall have the right to terminate this Agreement pursuant to
this Section 9.1(e) unless the breach of representation or warranty,
together with all other such breaches, would entitle the party receiving
such representation not to consummate the transactions contemplated hereby
under Section 8.2(a) (in the case of a breach of representation or warranty
by the Company) or Section 8.3(a) (in the case of a breach of
representation or warranty by Parent);
(f) by either Parent or the Company , if its Board of
Directors so determines by a vote of a majority of the members of its
entire Board (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 material breach of any of the
covenants or agreements set forth in this Agreement on the part of the
other party, which breach shall not have been cured within thirty days
following receipt by the breaching party of written notice of such breach
from the other party hereto, or which breach, by its nature, cannot be
cured prior to the Closing; or
(g) by the Company, if its Board of Directors so determines
by a vote of a majority of the members of its entire Board, if the Average
Closing Price is less than or equal to $20.25, subject, however, to the
following three sentences. If the Company makes an election to terminate
this Agreement under this Section 9.1(g), it shall give ten (10) days prior
written notice thereof to Parent (provided that such notice of election may
be withdrawn at any time within the aforementioned ten-day period). During
the seven-day period commencing with its receipt of such notice, Parent
shall have the option to increase the value of the cash, the Parent Common
Stock or a combination thereof being offered to stockholders of the Company
(through an increase in the Aggregate Cash Consideration and/or Preliminary
Stock Ratio) such that the Per Share Consideration is at least $38.12 per
share (provided that Parent shall be limited in its ability to elect to
increase the Aggregate Cash Consideration to the extent necessary to allow
the Merger to qualify as a reorganization within the meaning of Section 368
of the Code). If Parent so elects within such seven-day period, it shall
give prompt written notice to the Company of such election and the increase
in the Merger Consideration whereupon no termination shall have occurred
and this Agreement shall remain in effect in accordance with its terms
(except as the Aggregate Cash Consideration and/or the Preliminary Stock
Ratio, and all amounts set forth in Article I derived therefrom, shall have
been so modified).
9.2 Effect of Termination. In the event of termination of this
Agreement by either Parent or the Company as provided in Section 9.1, this
Agreement shall forthwith become void and have no effect except (i)
Sections 7.2(b), 9.2 and 10.3 shall survive any termination of this
Agreement and (ii) that notwithstanding anything to the contrary contained
in this Agreement, no party shall be relieved or released from any
liabilities or damages arising out of its willful breach of any provision
of this Agreement.
9.3 Amendment. Subject to compliance with applicable law, this
Agreement may be amended by the parties hereto, 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 the Merger by
the stockholders of the Company; provided, however, that after any approval
of the transactions contemplated by this Agreement by the Company's
stockholders, there may not be, without further approval of such
stockholders, any amendment of this Agreement which reduces the amount or
changes the form of the consideration to be delivered to the Company
stockholders hereunder other than as contemplated by this Agreement. This
Agreement may not be amended except by an instrument in writing signed on
behalf of each of the parties hereto.
9.4 Extension; Waiver. At any time prior to the Effective Time,
each of the parties hereto, by action taken or authorized by its 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
hereto, (b) waive any inaccuracies in the representations and warranties of
the other party contained herein or in any document delivered pursuant
hereto and (c) waive compliance with any of the agreements or conditions of
the other party contained herein. Any agreement on the part of a party
hereto 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.
9.5 Termination Fee. In the event that at any time after the
date of this Agreement (i) any person (as defined in Sections 3(a)(9) and
13(d)(3) of the Exchange Act, and the rules and regulations thereunder),
other than Parent or any Subsidiary of Parent, shall have acquired
beneficial ownership of 10% or more of the outstanding shares of Common
Stock (the term "beneficial ownership" for purposes of this Agreement
having the meaning assigned thereto in Section 13(d) of the Exchange Act,
and the rules and regulations thereunder) provided that such acquisition
shall have required prior regulatory approval (including waiver of such
approval), (ii) (A) the holders of Company Common Stock shall not have
approved this Agreement and the transactions contemplated hereby at the
meeting of such stockholders held for the purpose of voting on this
Agreement, (B) such meeting shall not have been held or shall have been
cancelled, (C) the Board of Directors of the Company shall have publicly
withdrawn or modified, or publicly announced its intent to withdraw or
modify, in any manner adverse to Parent, its recommendation that the
stockholders of the Company approve the transactions contemplated by this
Agreement, or (D) the Company shall have breached any covenant or
obligation contained in this Agreement and such breach would entitle Parent
to terminate this Agreement, in each case after it shall have been publicly
announced that any person other than Parent or any Subsidiary of Parent
shall have made a bona fide proposal by public announcement or written
communication that becomes the subject of public disclosure to engage in a
merger, consolidation or similar transaction with, or a purchase or other
acquisition of all or substantially all of the assets or 10% or more of the
outstanding shares of Common Stock of, the Company, or (iii) a Purchase
Event (as defined in the Stock Option Agreement) shall have occurred prior
to the occurrence of an Exchange Termination Event (as defined in the Stock
Option Agreement), then in any such case the Company shall pay to Parent a
termination fee of $1.0 million.
ARTICLE X
GENERAL PROVISIONS
10.1 Closing. Subject to the terms and conditions of this
Agreement, the closing of the Merger (the "Closing") will take place at
10:00 a.m. on the first day which is at least two and not more than five
business days after the satisfaction or waiver (subject to applicable law)
of the latest to occur of the conditions set forth in Article VIII hereof
(other than those conditions which relate to actions to be taken at the
Closing) (the "Closing Date"), at the offices of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇,
unless another time, date or place is agreed to in writing by the parties
hereto; provided, however, that the Closing shall occur no earlier than
January 5, 1999, and shall not occur until after the Election Deadline.
10.2 Nonsurvival of Representations, Warranties and Agreements.
None of the representations, warranties, covenants and agreements in this
Agreement or in any instrument delivered pursuant to this Agreement shall
survive the Effective Time, except for those covenants and agreements
contained herein and therein which by their terms apply in whole or in part
after the Effective Time.
10.3 Expenses. All costs and expenses incurred in connection
with this Agreement and the transactions contemplated hereby shall be paid
by the party incurring such costs and expenses.
10.4 Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally,
telecopied (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):
(a) if to Parent, to:
The Dime Savings Bank of Williamsburgh
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Chief Executive Officer
with a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & Wood
▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, 39th Fl.
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
and
(b) if to the Company, to:
Financial Federal Savings Bank
▇▇-▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Chief Executive Officer
with a copy to:
Skadden, Arps, Slate, ▇▇▇▇▇▇▇
& ▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Esq.
10.5 Interpretation. When a reference is made in this Agreement
to Sections, Exhibits or Schedules, such reference shall be to a Section of
or Exhibit or Schedule to this Agreement unless otherwise indicated. The
table of contents and headings contained in this Agreement are for
reference purposes only and 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". The phrases "the date of this
Agreement", "the date hereof" and terms of similar import, unless the
context otherwise requires, shall be deemed to refer to July 18, 1998. No
provision of this Agreement shall be construed to require the Company,
Parent or any of their respective Subsidiaries or affiliates to take any
action that would violate any applicable law, rule or regulation.
10.6 Counterparts. This Agreement may be executed in
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 parties, it being understood that
all parties need not sign the same counterpart.
10.7 Entire Agreement. This Agreement (including the documents
and the instruments referred to herein), together with the Option Agreement
and the Confidentiality Agreement, constitutes the entire agreement and
supersedes all prior agreements and understandings, both written and oral,
among the parties with respect to the subject matter hereof.
10.8 Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the State of New York, without
regard to any applicable conflicts of law.
10.9 Severability. Any term or provision of this Agreement which
is invalid or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining
terms and provisions of this Agreement or affecting the validity or
enforceability of any of the terms or provisions of this Agreement in any
other jurisdiction. If any provision of this Agreement is so broad as to
be unenforceable, the provision shall be interpreted to be only so broad as
is enforceable.
10.10 Publicity. Except as otherwise required by law or the
rules of the NASDAQ/NMS, so long as this Agreement is in effect, neither
Parent nor the Company shall, or 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
consent of the other party, which consent shall not be unreasonably
withheld.
10.11 Assignment; No Third Party Beneficiaries. Neither this
Agreement nor any of the rights, interests or obligations hereunder shall
be assigned by any of the parties hereto (whether by operation of law or
otherwise) without the prior written consent of the other parties. Subject
to the preceding sentence, this Agreement will be binding upon, inure to
the benefit of and be enforceable by the parties and their respective
successors and assigns. Except as otherwise expressly provided herein,
this Agreement (including the documents and instruments referred to herein)
is not intended to confer upon any person other than the parties hereto any
rights or remedies hereunder.
IN WITNESS WHEREOF, Parent and the Company have caused this
Agreement to be executed by their respective officers thereunto duly
authorized as of the date first above written.
Dime Community Bancshares, Inc.
By /s/ ▇▇▇▇▇▇▇ ▇. Palagaino
-----------------------------
Name: ▇▇▇▇▇▇▇ ▇. Palagaino
Title: Chairman & C.E.O.
Financial Bancorp, Inc.
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: President & C.E.O.
AGREEMENT AND PLAN OF MERGER
Between
DIME COMMUNITY BANCSHARES, INC.
and
FINANCIAL BANCORP, INC.
Dated as of July 18, 1998
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 Company Common Stock . . . . . . . . . . . . . . . 2
1.5 Election Procedures . . . . . . . . . . . . . . . . . . . . . . . 4
1.6 Stock Options . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.7 Parent Common Stock . . . . . . . . . . . . . . . . . . . . . . . 9
1.8 Shares of Dissenting Stockholders . . . . . . . . . . . . . . . . 9
1.9 Tax Opinion Adjustment . . . . . . . . . . . . . . . . . . . . 10
1.10 Certificate of Incorporation . . . . . . . . . . . . . . . . . 10
1.11 By-Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
1.12 Directors and Officers . . . . . . . . . . . . . . . . . . . . 10
1.13 Tax Consequences . . . . . . . . . . . . . . . . . . . . . . . 10
1.14 Bank Merger . . . . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE II
EXCHANGE OF SHARES
2.1 Parent to Make Shares Available . . . . . . . . . . . . . . . . 11
2.2 Exchange of Shares . . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE III
DISCLOSURE SCHEDULES; STANDARDS
FOR REPRESENTATIONS AND WARRANTIES
3.1 Disclosure Schedules . . . . . . . . . . . . . . . . . . . . . 14
3.2 Standards . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
4.1 Corporate Organization . . . . . . . . . . . . . . . . . . . . 15
4.2 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . 16
4.3 Authority; No Violation . . . . . . . . . . . . . . . . . . . . 17
4.4 Consents and Approvals . . . . . . . . . . . . . . . . . . . . 18
4.5 Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.6 Financial Statements . . . . . . . . . . . . . . . . . . . . . 19
4.7 Broker's Fees . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.8 Absence of Certain Changes or Events . . . . . . . . . . . . . 21
4.9 Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . 21
4.10 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.11 Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.12 SEC Reports. . . . . . . . . . . . . . . . . . . . . . . . . . 24
4.13 Company Information. . . . . . . . . . . . . . . . . . . . . . 25
4.14 Compliance with Applicable Law . . . . . . . . . . . . . . . . 25
4.15 Certain Contracts. . . . . . . . . . . . . . . . . . . . . . . 25
4.16 Agreements with Regulatory Agencies . . . . . . . . . . . . . . 26
4.17 Environmental Matters . . . . . . . . . . . . . . . . . . . . . 27
4.18 Opinion. . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
4.19 Approvals. . . . . . . . . . . . . . . . . . . . . . . . . . . 28
4.20 Loan Portfolio. . . . . . . . . . . . . . . . . . . . . . . . . 28
4.21 Property . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
4.22 Reorganization . . . . . . . . . . . . . . . . . . . . . . . . 30
4.23 Antitakeover Provisions Inapplicable . . . . . . . . . . . . . 30
4.24 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
4.25 Investment Securities; Borrowings; Deposits . . . . . . . . . . 31
4.26 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . 32
4.27 Liquidation Account . . . . . . . . . . . . . . . . . . . . . . 32
4.28 Year 2000 Matters . . . . . . . . . . . . . . . . . . . . . . . 32
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT
5.1 Corporate Organization . . . . . . . . . . . . . . . . . . . . 32
5.2 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . 33
5.3 Authority; No Violation . . . . . . . . . . . . . . . . . . . . 35
5.4 Consents and Approvals . . . . . . . . . . . . . . . . . . . . 35
5.5 Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
5.6 Financial Statements . . . . . . . . . . . . . . . . . . . . . 36
5.7 Broker's Fees . . . . . . . . . . . . . . . . . . . . . . . . . 37
5.8 Absence of Certain Changes or Events . . . . . . . . . . . . . 37
5.9 Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . 37
5.10 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
5.11 Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
5.12 SEC Reports . . . . . . . . . . . . . . . . . . . . . . . . . . 40
5.13 Parent Information . . . . . . . . . . . . . . . . . . . . . . 40
5.14 Compliance with Applicable Law . . . . . . . . . . . . . . . . 40
5.15 Ownership of Company Common Stock; Affiliates and
Associates . . . . . . . . . . . . . . . . . . . . . . . . . . 41
5.16 Agreements with Regulatory Agencies . . . . . . . . . . . . . . 41
5.17 Environmental Matters . . . . . . . . . . . . . . . . . . . . . 41
5.18 Opinion. . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
5.19 Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
5.20 Loan Portfolio. . . . . . . . . . . . . . . . . . . . . . . . . 43
5.21 Property . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
5.22 Reorganization . . . . . . . . . . . . . . . . . . . . . . . . 44
ARTICLE VI
COVENANTS RELATING TO CONDUCT OF BUSINESS
6.1 Covenants of the Company . . . . . . . . . . . . . . . . . . . 44
6.2 Covenants of Parent . . . . . . . . . . . . . . . . . . . . . . 52
ARTICLE VII
ADDITIONAL AGREEMENTS
7.1 Regulatory Matters. . . . . . . . . . . . . . . . . . . . . . . 53
7.2 Access to Information . . . . . . . . . . . . . . . . . . . . . 54
7.3 Stockholder Meeting . . . . . . . . . . . . . . . . . . . . . . 55
7.4 Legal Conditions to Merger . . . . . . . . . . . . . . . . . . 55
7.5 Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . 55
7.6 Stock Exchange Listing . . . . . . . . . . . . . . . . . . . . 56
7.7 Employee Benefit Plans; Existing Agreements . . . . . . . . . . 56
7.8 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . 59
7.9 Additional Agreements . . . . . . . . . . . . . . . . . . . . . 60
7.10 Coordination of Dividends . . . . . . . . . . . . . . . . . . . 61
7.11 Parent Rights Agreement . . . . . . . . . . . . . . . . . . . . 61
7.12 Notification of Certain Matters . . . . . . . . . . . . . . . . 61
7.13 Certain Matters, Certain Revaluations, Changes
and Adjustments . . . . . . . . . . . . . . . . . . . . . . . . 61
7.14 Advisory Board . . . . . . . . . . . . . . . . . . . . . . . . 62
ARTICLE VIII
CONDITIONS PRECEDENT
8.1 Conditions to Each Party's Obligation To Effect the Merger . . 63
8.2 Conditions to Obligations of Parent . . . . . . . . . . . . . . 64
8.3 Conditions to Obligations of the Company . . . . . . . . . . . 65
ARTICLE IX
TERMINATION AND AMENDMENT
9.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . 67
9.2 Effect of Termination . . . . . . . . . . . . . . . . . . . . . 69
9.3 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
9.4 Extension; Waiver . . . . . . . . . . . . . . . . . . . . . . . 70
9.5 Termination Fee . . . . . . . . . . . . . . . . . . . . . . . . 70
ARTICLE X
GENERAL PROVISIONS
10.1 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
10.2 Nonsurvival of Representations, Warranties and Agreements . . . 71
10.3 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
10.4 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
10.5 Interpretation . . . . . . . . . . . . . . . . . . . . . . . . 72
10.6 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . 73
10.7 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . 73
10.8 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . 73
10.9 Severability . . . . . . . . . . . . . . . . . . . . . . . . . 73
10.10 Publicity . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
10.11 Assignment; No Third Party Beneficiaries . . . . . . . . . . . 74