EXHIBIT 2.1
AGREEMENT AND PLAN OF REORGANIZATION
BY AND BETWEEN
MAF BANCORP, INC.
AND
WESTCO BANCORP, INC.
DATED AS OF AUGUST 17, 1998
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TABLE OF CONTENTS
INDEX OF DEFINED TERMS.....................................................v
I. THE MERGER...........................................................1
1.1 Effects of the Merger........................................1
1.2 Effect of Merger on Capital Stock............................2
1.3 Stock Option Plans...........................................3
1.4 Consummation of the Merger; Effective Time...................4
1.5 Exchange of Bancorp Common Stock.............................5
II. REPRESENTATIONS AND WARRANTIES OF MAF................................7
2.1 Organization.................................................7
2.2 Authorization................................................8
2.3 Conflicts....................................................8
2.4 Capitalization...............................................9
2.5 MAF Financial Statements; Material Changes..................10
2.6 MAF Subsidiaries............................................10
2.7 MAF Filings.................................................11
2.8 MAF Reports.................................................11
2.9 Compliance With Laws........................................11
2.10 Disclosure..................................................12
2.11 Litigation..................................................12
2.12 Licenses....................................................12
2.13 Insurance...................................................12
2.14 Defaults....................................................13
2.15 Undisclosed Liabilities.....................................13
2.16 Assets......................................................13
2.17 Tax.........................................................14
2.18 Advice of Changes...........................................14
2.19 Fairness Opinion............................................14
2.20 Environmental Matters.......................................14
2.21 Millennium Compliance.......................................15
2.22 Consents....................................................16
2.23 Taxes.......................................................16
2.24 Employee Benefit Plans......................................17
2.25 Fees........................................................17
III. REPRESENTATIONS AND WARRANTIES OF BANCORP...........................18
3.1 Organization................................................18
3.2 Authorization...............................................19
3.3 Conflicts...................................................19
3.4 Antitakeover Provisions Inapplicable........................19
3.5 Capitalization and Stockholders.............................20
3.6 Bancorp Financial Statements; Material Changes..............21
3.7 Bancorp Subsidiaries........................................21
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3.8 Bancorp Filings.............................................23
3.9 Bancorp Reports.............................................23
3.10 Compliance With Laws........................................23
3.11 Disclosure..................................................24
3.12 Litigation..................................................24
3.13 Licenses....................................................25
3.14 Taxes.......................................................25
3.15 Insurance...................................................26
3.16 Loans; Investments..........................................26
3.17 Interest Rate Risk Management Arrangements..................28
3.18 Allowance for Possible Loan Losses..........................28
3.19 Bancorp Benefit Plans.......................................28
3.20 Environmental Matters.......................................32
3.21 Disclosure Schedule of Bancorp..............................32
3.22 Defaults....................................................36
3.23 Operations Since December 31, 1997..........................36
3.24 Corporate Records...........................................38
3.25 Undisclosed Liabilities.....................................38
3.26 Assets......................................................38
3.27 Indemnification.............................................39
3.28 Insider Interests...........................................39
3.29 Pooling and Tax.............................................39
3.30 Opinion.....................................................39
3.31 Advice of Changes...........................................39
3.32 Millennium Compliance.......................................40
3.33 Consents and Approvals......................................40
IV. COVENANTS...........................................................40
4.1 Conduct of Business by Bancorp Until the Effective Time.....40
4.2 Conduct of Business by MAF Until the Effective Time.........45
4.3 Environmental Investigation.................................46
4.4 Execution of the Stock Option Agreement.....................46
4.5 Capital Stock...............................................47
4.6 Certain Actions.............................................47
4.7 Title to Real Estate........................................48
V. ADDITIONAL AGREEMENTS...............................................48
5.1 Inspection of Records; Confidentiality......................48
5.2 Meetings of Bancorp.........................................49
5.3 Merger of Subsidiary Banks..................................49
5.4 Recommendation of Merger to Stockholders....................49
5.5 Registration Statement; Stockholder Approval................49
5.6 Director and Officer Liability Insurance....................50
5.7 Indemnification.............................................50
5.8 Affiliate Letters...........................................50
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5.9 Brokers.....................................................50
5.10 Cooperation.................................................50
5.11 Regulatory Applications.....................................51
5.12 Financial Statements and Reports............................51
5.13 Notice......................................................51
5.14 Press Releases..............................................52
5.15 Delivery of Supplements to Disclosure Schedules.............52
5.16 Litigation Matters..........................................52
5.17 Tax Opinion.................................................52
5.18 Resolution of Bancorp Benefit Plans.........................53
5.19 Accounting and Tax Treatment................................55
5.20 Appointment to MAF Board of Directors.......................55
5.21 Advisory Board..............................................55
5.22 Publication of Financial Statements. ......................56
VI. CONDITIONS..........................................................56
6.1 Conditions to the Obligations of MAF........................56
6.2 Conditions to the Obligations of Bancorp....................58
6.3 Conditions to the Obligations of the Parties................58
6.4 Listing on The Nasdaq Stock Market..........................59
VII. TERMINATION; AMENDMENT; WAIVER......................................59
7.1 Termination.................................................59
7.2 Termination Fee.............................................60
7.3 Expenses....................................................61
7.4 Survival of Agreements......................................61
7.5 Amendment...................................................61
7.6 Waiver......................................................61
VIII. GENERAL PROVISIONS..................................................62
8.1 Survival....................................................62
8.2 Notice......................................................62
8.3 Specific Enforceability.....................................63
8.4 Applicable Law..............................................63
8.5 Headings, Etc...............................................63
8.6 Severability................................................63
8.7 Entire Agreement; Binding Effect; Nonassignment;
Counterparts............................................64
8.8 Standards...................................................64
EXHIBITS..................................................................65
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INDEX OF DEFINED TERMS
----------------------
TERM SECTION
---- -------
Acquisition Transaction..................................................4.6(b)
Advisory Board.............................................................5.21
Agreement..............................................................Preamble
Applicable Governmental Authorities.........................................2.3
ARP Plans................................................................3.5(b)
Bancorp................................................................Preamble
Bancorp Benefit Plans...................................................3.19(a)
Bancorp Common Stock.....................................................1.2(b)
Bancorp Disclosure Schedule..............................................3.5(c)
Bancorp Employees.......................................................5.18(b)
Bancorp Financial Statements................................................3.6
Bancorp Permitted Lien..................................................3.23(c)
Bancorp Properties......................................................3.20(a)
Bancorp REO.............................................................3.20(a)
Bancorp Qualified Plans.................................................3.19(b)
Bancorp Stock Option Plans...............................................3.5(b)
Bancorp Subsidiaries.....................................................3.7(c)
Bank Merger............................................................Preamble
Bank Merger Agreement.......................................................5.3
BMA........................................................................2.22
CERCLA..............................................................2.20(a)(ii)
Certificate..............................................................1.5(a)
Certificate of Merger.......................................................1.4
Change in Control Benefit...............................................3.19(a)
Closing Date................................................................1.4
Code...................................................................Preamble
DGCL...................................................................Preamble
DPC Shares...............................................................1.2(g)
Effective Time..............................................................1.4
Environmental Law(s).................................................2.20(a)(i)
ESOP....................................................................3.19(h)
ESOP Participants.......................................................5.18(e)
Exchange Agent...........................................................1.5(a)
Exchange Ratio...........................................................1.2(b)
FDI Act.....................................................................2.9
FDIC.....................................................................2.1(b)
Final Determination Letter..............................................5.18(e)
First Federal..........................................................Preamble
Hazardous Material(s)...............................................2.20(a)(ii)
HOLA...................................................................Preamble
HSR Act....................................................................2.22
Intellectual Property...................................................3.21(o)
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IRS.....................................................................5.18(e)
Letter of Understanding.................................................5.18(c)
Liabilities................................................................2.15
MAF....................................................................Preamble
MAF Bank...............................................................Preamble
MAF Base Price Per Share..............................................1.2(c)(i)
MAF Benefit Plans.......................................................5.18(b)
MAF Closing Stock Price..................................................1.5(e)
MAF Common Stock.........................................................1.2(a)
MAF Common Stock Price Per Share.........................................1.2(d)
MAF Corporate Subsidiaries...............................................2.1(c)
MAF Employee Plans.........................................................2.24
MAF Financial Statements....................................................2.5
MAF Pension Plan...........................................................2.24
MAF Properties.....................................................2.20(a)(iii)
MAF REO............................................................2.20(a)(iii)
MAF Stock Option Plans...................................................2.4(b)
MAF Subsidiaries.........................................................2.1(d)
MAF Subsidiary...........................................................2.1(d)
Mailing Date................................................................5.5
Merger.................................................................Preamble
Merger Consideration.....................................................1.2(b)
Millennium Compliant.......................................................2.21
Option(s)................................................................1.3(a)
OTS.........................................................................2.3
Phase I..................................................................4.3(a)
Plan.....................................................................1.3(a)
Pricing Period.......................................................1.2(c)(ii)
Proxy Statement.............................................................2.3
RCRA................................................................2.20(a)(ii)
Registration Statement......................................................2.3
Reorganization.........................................................Preamble
SAIF.....................................................................2.1(b)
SEC.........................................................................2.3
Securities Act..............................................................2.7
Securities Exchange Act.....................................................2.7
Significant Subsidiary...................................................4.6(b)
Stockholders' Meeting.......................................................5.5
Stock Option Agreement......................................................4.4
Surviving Bank..............................................................5.3
Surviving Corporation....................................................1.1(a)
Systems....................................................................2.21
Tax Opinion................................................................5.17
Termination Fee..........................................................7.2(a)
Trust Account Shares.....................................................1.2(g)
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AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganization ("Agreement") is made and
entered into as of the 17th day of August, 1998, by and among MAF Bancorp, Inc.,
a Delaware corporation ("MAF"), and Westco Bancorp, Inc., a Delaware corporation
("Bancorp").
W I T N E S S E T H :
WHEREAS, MAF is a registered savings and loan holding company under
the Home Owners' Loan Act ("HOLA");
WHEREAS, Bancorp is a registered savings and loan holding company
under HOLA;
WHEREAS, the Boards of Directors of MAF and Bancorp deem it
advisable that Bancorp be merged with and into MAF in accordance with the
Delaware General Corporation Law ("DGCL") and this Agreement;
WHEREAS, immediately upon the Merger of Bancorp with and into MAF
(the "Merger"), MAF and Bancorp intend that First Federal Savings and Loan
Association of Westchester, a wholly-owned subsidiary of Bancorp ("First
Federal"), shall merge (the "Bank Merger", and such transaction together with
the Merger is hereafter referred to as the "Reorganization") with and into Mid
America Bank, fsb, a wholly-owned subsidiary of MAF ("MAF Bank"); and
WHEREAS, MAF and Bancorp intend the Merger to qualify as a "pooling
of interests" for accounting purposes and as a tax-free reorganization under
Section 368(a) of the Internal Revenue Code of 1986, as amended ("Code").
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements herein contained, the parties hereto agree as follows:
I.
THE MERGER
1.1 EFFECTS OF THE MERGER.
(a) Surviving Corporation. Subject to the terms and conditions
of this Agreement, the separate existence of Bancorp shall cease and
shall be merged with and into, and under the Certificate of
Incorporation of, MAF at the Effective Time (as defined below) in
accordance with the DGCL, with MAF being the continuing and surviving
corporation (sometimes referred to hereinafter as the "Surviving
Corporation"). At and after the Effective Time, the Merger shall have
the further effects as set forth in Sections 254, 260 and 261 of the
DGCL.
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(b) Certificate of Incorporation. The Certificate of
Incorporation of MAF shall be the Certificate of Incorporation of the
Surviving Corporation until amended in accordance with the provisions
thereof and the DGCL.
(c) By-laws. The By-laws of MAF in effect immediately prior to
the Effective Time shall be the By-laws of the Surviving Corporation
until altered, amended or repealed as provided therein, or in
accordance with the Certificate of Incorporation of the Surviving
Corporation and the DGCL.
(d) Directors and Officers. The directors of the Surviving
Corporation shall be the persons who were directors of MAF immediately
prior to the Effective Time. The officers of the Surviving Corporation
shall be the persons who were officers of MAF immediately prior to the
Effective Time in addition to the officer who becomes an officer of MAF
following the Effective Time as set forth in Section 5.20 below.
1.2 EFFECT OF MERGER ON CAPITAL STOCK. At the Effective Time, by virtue
of the Merger and without any action on the part of MAF, Bancorp or the holders
of MAF Common Stock (defined below) or Bancorp Common Stock (defined below), the
following shall occur:
(a) MAF Common Stock. Each share of the common stock, par
value $0.01 per share, of MAF ("MAF Common Stock") issued and
outstanding immediately prior to the Effective Time shall remain
outstanding and shall be unchanged after the Merger.
(b) Bancorp Common Stock. Each share of the common stock, par
value $0.01 per share, of Bancorp ("Bancorp Common Stock") issued and
outstanding immediately prior to the Effective Time, other than any
shares held by Bancorp or any of its wholly-owned subsidiaries, or by
MAF or any of its wholly-owned subsidiaries, (but in each case other
than Trust Account Shares, or DPC Shares (each as defined below)),
which shall be cancelled), shall be converted into the right to receive
1.395 (the "Exchange Ratio") fully paid and nonassessable shares of MAF
Common Stock (the value of which is referred to herein as the "Merger
Consideration"). If subsequent to the date of this Agreement but prior
to the Effective Time, MAF should split or combine shares of MAF Common
Stock, or pay a dividend or other distribution in MAF Common Stock,
then the Exchange Ratio shall be appropriately further adjusted to
reflect such split, combination, dividend or distribution. If
subsequent to the date of this Agreement, but prior to the Effective
Time, Bancorp should split or combine shares of Bancorp Common Stock,
or pay a dividend or other distribution in Bancorp Common Stock, then
the Exchange Ratio shall be appropriately further adjusted to reflect
such split, combination, dividend or distribution.
(c) Bancorp shall not be obligated to consummate the Merger if
the MAF Common Stock Price Per Share (as defined below) is less than
$18.886 (the "MAF Base Price Per Share") for each of the ten (10)
business days immediately preceding the fifth business day prior to the
Closing Date (the "Pricing Period"). The "MAF Common Stock Price Per
Share" as of any particular date shall be the dollar amount equal to
the volume
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weighted average price of all transactions for MAF Common Stock on that
date reported on The Nasdaq Stock Market for the Pricing Period.
(d) If the condition set forth in Section 1.2(c) exists,
Bancorp may, at its sole option: (i) terminate this Agreement; (ii)
renegotiate with MAF over the payment terms described herein; or (iii)
proceed with the Merger pursuant to the terms of this Agreement. If
Bancorp elects to exercise this termination right, it will give prompt
written notice to MAF as of the close of business on the second
business day after the end of the Pricing Period.
(e) Stock Held by Bancorp or MAF. All shares of Bancorp Common
Stock that are owned by Bancorp as treasury stock and all shares of
Bancorp Common Stock that are owned directly or indirectly by MAF or
Bancorp or any of their respective wholly-owned subsidiaries, other
than (i) shares of Bancorp Common Stock held directly or indirectly in
trust accounts, managed accounts and the like or otherwise held in a
fiduciary capacity that are beneficially owned by third parties (any
such shares, and shares of MAF Common Stock which are similarly held,
whether held directly or indirectly by MAF or Bancorp or any of their
respective wholly-owned subsidiaries, as the case may be, being
referred to herein as "Trust Account Shares"), and (ii) any shares of
Bancorp Common Stock held by MAF or Bancorp or any of their respective
wholly-owned subsidiaries in respect of a debt previously contracted
(any such shares of Bancorp Common Stock, and shares of MAF Common
Stock which are similarly held, whether held directly or indirectly by
MAF or Bancorp or any of their respective wholly-owned subsidiaries,
being referred to herein as "DPC Shares"), shall be cancelled and shall
constitute authorized but unissued MAF Common Stock and no stock of MAF
or other consideration shall be delivered in exchange therefor. All
shares of MAF Common Stock that are owned by Bancorp or any of its
wholly-owned subsidiaries (other than Trust Account Shares and DPC
Shares) shall become treasury stock of MAF.
1.3 STOCK OPTION PLANS.
(a) At the Effective Time, each option granted by Bancorp to
purchase shares of Bancorp Common Stock (each an "Option," and
collectively, "Options"), which is outstanding and unexercised
immediately prior to the Effective Time, shall be converted into an
option to purchase shares of MAF Common Stock in such number and at
such exercise price as provided below and otherwise having the same
terms and conditions as in effect immediately prior to the Effective
Time (except to the extent that such terms, conditions and
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restrictions may be altered in accordance with their terms as a result
of the Merger contemplated hereby):
(i) the number of shares of MAF Common Stock to be
subject to the converted Option shall be equal to the product
of (x) the number of shares of Bancorp Common Stock subject to
the original Option and (y) the Exchange Ratio;
(ii) the exercise price per share of MAF Common Stock
under the converted Option shall be equal to (x) the exercise
price per share of Bancorp Common Stock under the original
Option divided by (y) the Exchange Ratio; and
(iii) upon each exercise of Options by a holder
thereof, the aggregate number of shares of MAF Common Stock
deliverable upon such exercise shall be rounded down, if
necessary, to the nearest whole share and the aggregate
exercise price shall be rounded up, if necessary, to the
nearest cent.
The adjustments provided herein with respect to any Options which are
"incentive stock options" (as defined in Section 422 of the Code) shall
be effected in a manner consistent with the requirements of Section
424(a) of the Code.
(b) Each limited right related to an Option which is
outstanding and unexercised immediately prior to the Effective Time
shall be converted along with the assumption and conversion of the
Option pursuant to Section 1.3(a) above, and shall otherwise have the
same terms and conditions as in effect immediately prior to the
Effective Time (except to the extent that such terms, conditions and
restrictions may be altered in accordance with their terms as a result
of the Merger contemplated hereby); provided, however, that the benefit
payable upon the exercise of a limited right shall not be paid in cash,
and in lieu thereof, such benefit shall be paid in MAF Common Stock
having a fair market value equal to the cash that would otherwise have
been payable thereunder.
(c) Prior to the Effective Time, the Board of Directors of
Bancorp and the committee or committees established under the Plans
shall take such actions or make such determinations as may be required
under such Plans, subject to the approval of MAF, to effect the
provisions of this Agreement.
1.4 CONSUMMATION OF THE MERGER; EFFECTIVE TIME. The delivery of the
closing schedules, certificates and opinions called for by this Agreement shall
take place at the offices of Vedder, Price, ▇▇▇▇▇▇▇ & Kammholz, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, or such other location and such time as shall
be fixed by mutual agreement of MAF and Bancorp as promptly as practicable, but
not later than 15 days (unless otherwise agreed to by both parties, such
agreement not to be unreasonably withheld), following the latest of: (i)
approval of the transactions required to effect the transactions contemplated by
this Agreement by all the Applicable Governmental Authorities (defined below)
and the approval, consent or other action of such other governmental authorities
having jurisdiction over the transactions governed by this Agreement as may be
required
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(provided that any such approval, consent or other action shall have been
granted without the imposition of any condition which would have a material
adverse effect on MAF); (ii) the expiration of any waiting period imposed by
law; (iii) the date of the Bancorp stockholder meeting at which such
stockholders approved the Merger, the execution of this Agreement, and the other
transactions contemplated hereby; and (iv) satisfaction or waiver of all
conditions precedent to the consummation of the transactions contemplated by
this Agreement. The parties hereto shall cause the Merger to become effective on
the date of the closing (the "Closing Date") by executing, acknowledging and
filing on that date, in accordance with Sections 103 and 251 of the DGCL, a
Certificate of Merger substantially in the form of Exhibit A attached hereto and
made a part hereof (the "Certificate of Merger"). The date and time on which the
Merger becomes effective shall be referred to herein as the "Effective Time."
1.5 EXCHANGE OF BANCORP COMMON STOCK.
(a) Surrender of Certificates. As soon as practicable after
the Effective Time but in no event later than three (3) business days
following the Effective Time, the Exchange Agent (defined below) shall
deliver to each holder of record of a certificate or certificates which
as of the Effective Time represented outstanding shares of Bancorp
Common Stock (each, a "Certificate"): (i) 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 (or a lost certificate affidavit and bond in a form
reasonably acceptable to the Exchange Agent) to the Exchange Agent; and
(ii) instructions for use in effecting the surrender of the
Certificates in exchange for the Merger Consideration. Upon surrender
of a Certificate for cancellation to the Exchange Agent (or a lost
certificate affidavit and bond in a form reasonably acceptable 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, MAF Common Stock representing the number of
shares of MAF Common Stock into which the shares of Bancorp Common
Stock, theretofore represented by the Certificate so surrendered, shall
have been converted pursuant to the provisions of Section 1.2, and the
Certificate so surrendered shall be cancelled. MAF shall direct the
Exchange Agent to make such payments within five business days of the
receipt of all required documentation. If any payment for shares of
Bancorp Common Stock is to be made in a name other than that in which
the Certificate for Bancorp Common Stock surrendered for exchange is
registered, it shall be a condition to the payment that the certificate
so surrendered shall be properly endorsed or otherwise in proper form
for transfer, that all signatures shall be guaranteed by a member firm
of any national securities exchange in the United States or the
National Association of Securities Dealers, Inc., or by a commercial
bank or trust company or other financial institution acceptable to MAF
having an office in the United States, and that the person requesting
the payment shall either (a) pay to the Exchange Agent any transfer or
other taxes required by reason of the payment to a person other than
the registered holder of the certificate surrendered, or (b) establish
to the satisfaction of the Exchange Agent that such taxes have been
paid or are not payable. From and after the Effective Time, there shall
be no transfers on the stock transfer books of Bancorp of any shares of
Bancorp Common Stock outstanding immediately prior to the
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Effective Time and any such shares of Bancorp Common Stock presented to
the Exchange Agent shall be cancelled in exchange for the aggregate
Merger Consideration payable with respect thereto as provided in
Section 1.2 above. As used herein, "Exchange Agent" means ▇▇▇▇▇▇ Trust
and Savings Bank, or such other bank or trust company selected by MAF
and reasonably acceptable to Bancorp to effect the exchange of
Certificates.
(b) Escheat. Notwithstanding anything in this Agreement to the
contrary, neither the Exchange Agent nor any party hereto shall be
liable to a former holder of Bancorp Common Stock for any consideration
delivered to a public official pursuant to applicable escheat or
abandoned property laws.
(c) Failure to Exchange Bancorp Common Stock. No dividends or
other distributions declared after the Effective Time with respect to
MAF Common Stock payable to the holders of record thereof after the
Effective Time shall be paid to the holder of any unsurrendered
Certificate with respect to MAF Common Stock represented thereby and no
cash payment in lieu of fractional shares shall be paid to any holder
until the holder of record shall surrender such Certificate. Subject to
the effect, if any, of applicable law, after the subsequent surrender
and exchange of a Certificate, the holder thereof shall be entitled to
receive any such dividends or distributions, without interest thereon,
which theretofore became payable with respect to the MAF Common Stock
represented by such Certificate. All dividends or other distributions
declared on or after the Effective Time with respect to the MAF Common
Stock and payable to the holders of record thereof on or after the
Effective Time which are payable to the holder of a Certificate not
theretofore surrendered and exchanged for MAF Common Stock pursuant to
this Section 1.5(c) shall be paid or delivered by MAF to the Exchange
Agent, in trust, for the benefit of such holders. All such dividends
and distributions held by the Exchange Agent for payment or delivery to
the holders of unsurrendered Certificates unclaimed at the end of one
(1) year from the Effective Time shall be repaid or redelivered by the
Exchange Agent to MAF after which time any holder of Certificates who
has not theretofore surrendered such Certificates to the Exchange
Agent, subject to applicable law, shall look as a general creditor only
to MAF for payment or delivery of such dividends or distributions, as
the case may be. Any shares of MAF Common Stock or other amounts
delivered or made available to the Exchange Agent pursuant to this
Section 1.5(c) and not exchanged for Certificates within one (1) year
after the Effective Time pursuant to this Section 1.5(c) shall be
returned by the Exchange Agent to MAF which shall thereafter act as
Exchange Agent subject to the rights of holders of unsurrendered
Certificates hereunder.
(d) Full Payment. The Merger Consideration paid pursuant to
this Article I, including all shares of MAF Common Stock issued upon
the surrender for exchange of Bancorp Common Stock in accordance with
the terms hereof, shall be delivered and paid in full satisfaction of
all rights pertaining to such shares of Bancorp Common Stock.
(e) Fractional Shares. No certificates or scrip representing
fractional shares of MAF Common Stock shall be issued upon the
surrender for exchange of Certificates, no
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dividend or distribution of MAF shall relate to any fractional share,
and such fractional share interests will not entitle the owner thereof
to vote or assert any rights of a stockholder of MAF. In lieu of any
fractional share, the Exchange Agent or MAF as the case may be, shall
pay to each holder of shares of Bancorp Common Stock who otherwise
would be entitled to receive a fractional share of MAF Common Stock an
amount of cash (without interest) equal to the product achieved when
such fraction is multiplied by the product of (i) the Exchange Ratio
multiplied by (ii) the mean of the reported closing bid and asked
quotations of one share of MAF Common Stock as reported by The Nasdaq
Stock Market (or in the absence thereof, from such other source upon
which MAF and Bancorp shall mutually agree) for the last Business Day
preceding the Closing Date ("MAF Closing Stock Price").
(f) List of Bancorp Stockholders. Prior to the Effective Time,
but within three (3) business days thereof, Bancorp shall deliver a
certified copy of a list of its stockholders to the Exchange Agent,
after which there shall be no further registrations or transfers on the
stock transfer books of Bancorp of the shares of Bancorp Common Stock
that were outstanding immediately prior thereto. If, after the
Effective Time, Certificates representing such shares are presented to
Bancorp, they shall be cancelled and exchanged as provided in this
Article I.
II.
REPRESENTATIONS AND WARRANTIES OF MAF
MAF represents and warrants to Bancorp that:
2.1 ORGANIZATION.
(a) MAF is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware and has all
requisite power and authority, corporate and otherwise, to own, operate
and lease its assets, properties and businesses and to carry on its
businesses substantially as they have been and are now being conducted.
MAF is duly qualified to do business and is in good standing in each
jurisdiction where the character of the properties owned or leased by
it or the nature of the business transacted by it requires that it be
so qualified, except where the failure to so qualify would not have a
material adverse effect on MAF and the MAF Subsidiaries (defined
below), taken as a whole, or its ability to consummate the transactions
contemplated herein or in the Certificate of Merger. MAF has all
requisite corporate power and authority to enter into this Agreement,
the Certificate of Merger and the Stock Option Agreement (as defined
below) and, upon the approval of all requisite state and federal
regulatory agencies as hereinafter provided, to consummate the
transactions contemplated hereby and thereby. MAF is duly registered as
a unitary savings and loan holding company under HOLA.
(b) MAF Bank is a federally-chartered stock savings bank duly
organized and in existence under the laws of the United States, the
deposits of which are insured by the
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Federal Deposit Insurance Corporation ("FDIC") through the Savings
Association Insurance Fund ("SAIF") to the full extent permitted under
applicable laws. MAF Bank is a "qualified thrift lender" (as that term
is used in Section 10(m) of HOLA). MAF Bank has all requisite corporate
power and authority to enter into the Bank Merger Agreement (defined
below) and, upon the approval of all requisite state and federal
regulatory agencies and the majority of the stockholders of MAF Bank,
to consummate the transactions contemplated thereby.
(c) MAF has no direct or indirect subsidiaries other than MAF
Developments, Inc., Mid America Development Services, Inc., Mid America
Finance Corporation, Mid America Insurance Agency, Inc., Mid America
Mortgage Securities, Inc., N.W. Financial Corporation, Northwestern
Acceptance Corporation, Ambria Development Corporation, Reigate ▇▇▇▇▇
Development Corporation, ▇▇▇▇▇▇▇ Road Development Corporation, Centre
Point Title Corporation (the "MAF Corporate Subsidiaries") and MAF
Bank. Each of the MAF Corporate Subsidiaries is either wholly-owned by
MAF, MAF Bank or by wholly-owned subsidiaries of MAF Bank, and is a
duly organized and validly existing corporation in good standing under
the laws of the State of Illinois or Delaware, with corporate power and
authority to own, operate and lease its assets and properties, and
carry on its business substantially as it has been and is now being
conducted.
(d) MAF and each of its direct and indirect subsidiaries (each
an "MAF Subsidiary" and collectively the "MAF Subsidiaries") hold all
licenses, certificates, permits, franchises and rights from all
appropriate federal, state or other public authorities necessary for
the conduct of its and their respective businesses, except where the
failure to so hold would not have a material adverse effect on MAF and
the MAF Subsidiaries, taken as a whole.
2.2 AUTHORIZATION. The execution, delivery and performance of this
Agreement, the Certificate of Merger, and the Stock Option Agreement and the
consummation of the transactions contemplated hereby and thereby have been duly
and unanimously approved and authorized by MAF's Board of Directors, and all
necessary corporate action on the part of MAF has been taken. This Agreement has
been, and the Stock Option Agreement and the Certificate of Merger will be, duly
executed and delivered by MAF and, subject to the approval of all requisite
state and federal regulatory agencies and, will constitute the valid and binding
obligations of MAF, except to the extent that enforceability thereof may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws or equitable principles and doctrines. Neither the Certificate of
Incorporation nor the By-laws of MAF will need to be amended to effectuate the
transactions contemplated by this Agreement, and MAF's Board of Directors has
the authority to increase the number of directors of MAF without any such
amendment.
2.3 CONFLICTS. The execution and delivery of this Agreement, the
Certificate of Merger and the Stock Option Agreement do not, and the
consummation of the transactions contemplated hereby and thereby will not,
conflict with or result in any violation of the Certificate of Incorporation or
By-laws of MAF or similar documents of any MAF Subsidiary. The execution and
delivery of this Agreement, the Certificate of Merger and the Stock Option
Agreement do not, and
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the consummation of the transactions contemplated hereby and thereby will not,
conflict with or result in any violation, breach or termination of, or default
or loss of a material benefit under, or permit the acceleration of, any
obligation or result in the creation of any material lien, charge or encumbrance
on any of the property or assets under any provision of any mortgage, indenture,
lease, agreement or other instrument, permit, concession, grant, franchise,
license, judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to MAF or any MAF Subsidiary or their respective properties, other
than any such conflicts, violations or defaults which (i) individually or in the
aggregate do not have a material adverse effect on MAF, or (ii) will be cured or
waived prior to the Effective Time. No consent, approval, order or authorization
of, or registration, declaration or filing with, any Federal or state
governmental authority is required by or with respect to MAF in connection with
the execution and delivery of this Agreement, the Certificate of Merger or the
Stock Option Agreement or the consummation by MAF of the transactions
contemplated hereby or thereby, the absence of which would have a material
adverse effect upon MAF, except for: the filings by MAF of any application or
notice with the Office of Thrift Supervision ("OTS"), the FDIC, and any other
federal or state regulatory authorities having jurisdiction over the
transactions contemplated hereby (collectively, the "Applicable Governmental
Authorities"); the filing by MAF of the Registration Statement relating to the
MAF Common Stock to be issued pursuant to this Agreement (the "Registration
Statement") with the Securities and Exchange Commission (the "SEC") and various
blue sky authorities, which Registration Statement shall include the proxy
statement for use in connection with the meeting of the stockholders of Bancorp
(the "Proxy Statement") to be called pursuant to Section 5.5 hereof; the filing
of the Certificate of Merger with respect to the Merger with the Secretary of
State of the State of Delaware; any filings, approvals or no-action letters with
or from state securities authorities; and (e) any antitrust filings, consents,
waivers or approvals.
2.4 CAPITALIZATION.
(a) As of the date hereof, the authorized capital stock of MAF
consists of the following:
CLASS OF PAR
STOCK VALUE AUTHORIZED ISSUED OUTSTANDING TREASURY
----- ----- ---------- ------ ----------- --------
Common $0.01 40,000,000 25,420,678 22,608,471 2,812,207
Preferred $0.01 5,000,000 0 0 0
All of the issued and outstanding shares of MAF Common Stock have been,
and all of the shares of MAF to be issued in the Merger will be, at the
Effective Time, duly and validly authorized and issued, and are, or
upon issuance in the Merger will be, as the case may be, fully paid and
non-assessable. None of the outstanding shares of MAF Common Stock has
been issued in violation of any preemptive rights and none of the
outstanding shares of MAF Common Stock is or will be entitled to any
preemptive rights in respect of the Merger or any of the other
transactions contemplated by this Agreement. MAF will, at the Effective
Time,
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have a number of authorized but unissued shares of MAF Common Stock
sufficient to pay the Merger Consideration in accordance with Section
1.2(b) above. The shares of MAF Common Stock to be issued pursuant to
this Agreement are duly authorized and will be, when issued in
accordance with the terms hereof, validly issued, fully paid and
nonassessable and subject to no preemptive rights.
(b) As of the date hereof, MAF had reserved 2,533,531 shares
of MAF Common Stock for issuance under stock option plans for the
benefit of employees of MAF, pursuant to which options covering
1,766,181 shares of MAF Common Stock were outstanding as of the date
hereof (the "MAF Stock Option Plans"). Except as contemplated herein or
as provided for in the MAF Bancorp, Inc. 1990 Incentive Stock Option
Plan, the N.S. Bancorp Inc. 1990 Incentive Stock Option Plan, the MAF
Bancorp, Inc. Amended and Restated 1993 Premium Price Stock Option
Plan, the Mid America Federal Savings Bank Directors' Deferred
Compensation Plan and the Mid America Federal Savings Bank Executive
Deferred Compensation Plan, there are no shares of capital stock of MAF
subject to options, warrants, scrip, rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities or
rights convertible into or exchangeable for, shares of the capital
stock of MAF, or contracts, commitments, understandings, or
arrangements by which MAF is or may be bound to issue additional shares
of its capital stock or options, warrants, or rights to purchase or
acquire any additional shares of its capital stock.
2.5 MAF FINANCIAL STATEMENTS; MATERIAL CHANGES. MAF has heretofore
delivered to Bancorp its audited consolidated financial statements for the years
ended December 31, 1997, June 30, 1996, and June 30, 1995, the six months ended
December 31, 1996, and the unaudited consolidated financial statements for the
three months ended March 31, 1998 (the "MAF Financial Statements"). The MAF
Financial Statements (x) are true and correct in all material respects; (y) have
been prepared in accordance with generally accepted accounting principles
applied on a consistent basis during the periods involved (except as may be
indicated in the notes thereto and, in the case of the unaudited consolidated
financial statements, except for the absence of footnotes and for normal and
recurring year-end adjustments which are not material); and (z) fairly present
the consolidated statement of financial condition of MAF as of the dates thereof
and the related consolidated statement of operations, changes in stockholders'
equity and cash flows for the periods then ended. Since December 31, 1997 to the
date hereof, MAF and the MAF Subsidiaries, taken as a whole, have not undergone
or suffered any changes in their condition (financial or otherwise), properties,
assets, liabilities, business or operations which have been, in any case or in
the aggregate, materially adverse to MAF on a consolidated basis except as
contemplated herein. Since January 1, 1998, MAF and the MAF Subsidiaries have
conducted their respective businesses only in the ordinary course consistent
with past practices. No facts or circumstances have been discovered from which
it reasonably appears that there is a significant risk and reasonable
probability that MAF will suffer or experience a material adverse effect.
2.6 MAF SUBSIDIARIES. MAF owns directly or indirectly all of the issued
and outstanding shares of capital stock of the MAF Subsidiaries. No capital
stock of any of the MAF Subsidiaries is or may become required to be issued
(other than to MAF) by reason of any options,
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warrants, scrip, rights to subscribe to, calls, or commitments of any character
whatsoever relating to, or securities or rights convertible into or exchangeable
for, shares of the capital stock of any MAF Subsidiary. There are no contracts,
commitments, understandings or arrangements relating to the rights of MAF to
vote or to dispose of shares of the capital stock of any MAF Subsidiary. All of
the shares of capital stock of each MAF Subsidiary held by MAF are fully paid
and non-assessable and are owned by MAF free and clear of any claim, lien or
encumbrance.
2.7 MAF FILINGS. MAF has previously made available to Bancorp true and
complete copies of its (i) proxy statements relating to all meetings of its
stockholders (whether special or annual) held or currently scheduled to be held
during the calendar years 1995, 1996, 1997 and 1998 and (ii) all other reports
or filings, as may have been amended, filed under the Securities Exchange Act of
1934, as amended (the "Securities Exchange Act"), by MAF with the SEC and OTS
since January 1, 1995, including without limitation reports on Forms 10-K, 10-Q
and 8-K, and filings with the SEC under the Securities Act of 1933, as amended,
and the rules and regulations thereunder (collectively, the "Securities Act").
2.8 MAF REPORTS. Since January 1, 1995, each of MAF and the MAF
Subsidiaries has timely filed all reports and statements, together with any
amendment required to be made with respect thereto, that was required to be
filed with (i) the SEC, including, but not limited to Forms 10- K, 10-Q and 8-K,
and proxy statements, (ii) the OTS, (iii) the FDIC, (iv) any applicable state
banking, insurance, securities, or other regulatory authorities (except filings
which are not material), and (v) the National Association of Securities Dealers.
As of their respective dates (and without giving effect to any amendments or
modifications filed after the date of this Agreement with respect to reports and
documents filed before the date of this Agreement), each of such reports and
documents, including the financial statements, exhibits, and schedules thereto,
complied in all material respects with all of the statutes, rules, and
regulations enforced or promulgated by the authority with which they were filed
and did not contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements made therein, in light
of the circumstances under which they were made, not misleading. Except for
normal examinations conducted by the Internal Revenue Service, Department of
Labor, state, and local taxing authorities or the OTS or the FDIC in the regular
course of the business of MAF or the MAF Subsidiaries, no federal, state or
local governmental agency, commission or other entity has initiated any
proceeding or, to the best knowledge of MAF, investigation into the business or
operations of MAF or the MAF Subsidiaries within the past three (3) years. There
is no unresolved violation, criticism or exception by the SEC, the OTS or other
agency, commission or entity with respect to any report or statement referred to
herein that has had or is expected to have a material adverse effect on the
financial condition, earnings or business of MAF and the MAF Subsidiaries, taken
as a whole.
2.9 COMPLIANCE WITH LAWS. MAF and the MAF Subsidiaries are each in
compliance with all applicable federal and state laws and regulations that
regulate or are concerned in any way with the business of a savings bank,
including, without limitation, HOLA and the Federal Deposit Insurance Act ("FDI
Act"), and MAF and each of the MAF Subsidiaries are in compliance with all other
applicable laws and regulations, except in each case where the failure to comply
would not
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have a material adverse effect on the financial condition, earnings or business
of MAF and the MAF Subsidiaries, taken as a whole.
2.10 DISCLOSURE. None of the information supplied by MAF for inclusion
in the Proxy Statement or the information relating to MAF and the MAF
Subsidiaries in the Registration Statement will, in the case of the Proxy
Statement or any amendments thereof or supplements thereto, at the time of the
meeting of Bancorp's stockholders to be held in connection with the Merger
contain any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading or, in the case of the
Registration Statement, at the time it becomes effective contain any untrue
statement of a material fact or omit to state any material fact necessary to
make the statements therein not misleading. The Registration Statement (except
for such portions thereof that relate only to Bancorp or any of its
subsidiaries) will comply as to form in all material respects with the
provisions of the Securities Act.
2.11 LITIGATION. Except as disclosed on MAF's Form 10-Q for the period
ending June 30, 1998, there is no suit, action, investigation or proceeding,
legal, quasi-judicial, administrative or otherwise, pending or, to the best
knowledge of MAF, threatened against or affecting MAF or any MAF Subsidiary, or
any of their respective officers, directors, employees or agents, in their
capacities as such, which, if adversely determined, would have a material
adverse effect on MAF or which would materially affect the ability of MAF to
consummate the transactions contemplated herein or which is seeking to enjoin
consummation of the transactions provided for herein or to obtain other relief
in connection with this Agreement or the transactions contemplated hereby or
thereby, nor is there any judgment, decree, injunction, rule or order of any
court, governmental department, commission, agency, instrumentality or
arbitrator outstanding against MAF or any MAF Subsidiary or any of their
respective officers, directors, employees or agents, in their capacities as
such, having, or which could reasonably be foreseen to have in the future, any
such effect.
2.12 LICENSES. MAF and the MAF Subsidiaries hold all licenses,
certificates, permits, franchises and all patents, trademarks, service marks,
trade names, copyrights or rights thereto, and adequate authorizations,
approvals, consents, licenses, clearances and orders or registrations with all
appropriate federal, state or other authorities that are material to the conduct
of their respective businesses as now conducted and as presently proposed to be
conducted.
2.13 INSURANCE. MAF and the MAF Subsidiaries maintain insurance with an
insurer, which in the best judgment of management of MAF is sound and reputable,
on their respective assets, and upon their respective businesses and operations,
against loss or damage, risks, hazards and liabilities of the kinds customarily
insured against by prudent corporations engaged in the same or similar
businesses. MAF and the MAF Subsidiaries maintain in effect all insurance
required to be carried by law or by any agreement by which they are bound. All
material claims under all policies of insurance maintained by MAF and the MAF
Subsidiaries have been filed in due and timely fashion.
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2.14 DEFAULTS. There has not been any default, or the occurrence of an
event which with notice or lapse of time or both would constitute a default, in
any obligation to be performed by MAF or any MAF Subsidiary under any contract
or commitment, and neither MAF nor any MAF Subsidiary has waived any right under
any contract or commitment, except in each case where any such default or
waiver, singly or in the aggregate with any other such defaults or waivers,
would not have a material adverse effect on MAF and the MAF Subsidiaries taken
as a whole. To the best knowledge of MAF, no other party to any material
contract or commitment is in default in any material obligation to be performed
by such party.
2.15 UNDISCLOSED LIABILITIES. All of the obligations or liabilities
(whether accrued, absolute, contingent, unliquidated or otherwise, whether due
or becoming due, and regardless of when asserted) arising out of transactions or
events heretofore entered into, or any action or inaction, including taxes with
respect to or based upon transactions or events heretofore occurring, that are
required to be reflected, disclosed or reserved against in the audited
consolidated financial statements in accordance with generally accepted
accounting principles ("Liabilities") have, in the case of MAF and the MAF
Subsidiaries, been so reflected, disclosed or reserved against in the audited
consolidated financial statements of MAF as of December 31, 1997 or in the notes
thereto, and MAF and the MAF Subsidiaries have no other material liabilities
except Liabilities incurred since December 31, 1997, in the ordinary course of
business and except for the transactions contemplated herein.
2.16 ASSETS.
(a) MAF and the MAF Subsidiaries have good, sufficient and
marketable title to their real properties, including leaseholds, and
their other assets and properties, all as reflected as owned by MAF or
any MAF Subsidiary in the MAF financial statement dated as of December
31, 1997 except for (i) assets and properties disposed of since such
date in the ordinary course of business and (ii) liens, none of which,
in the aggregate, are material to the assets of MAF on a consolidated
basis. MAF and the MAF Subsidiaries have title or other rights to its
assets sufficient in all material respects or the conduct of their
respective businesses as presently conducted, and are free, clear and
discharged of and from any and all liens, charges, encumbrances,
security interests and/or equities which are material to MAF and its
subsidiaries, taken as a whole.
(b) All leases pursuant to which MAF or any MAF Subsidiary, as
lessee, leases real or personal property which are material to the
business of MAF on a consolidated basis are, to the best of the
knowledge of MAF, valid, effective, and enforceable against the lessor
in accordance with their respective terms. There is not under any of
such leases any existing default, or any event which with notice or
lapse of time or both would constitute a default, by either MAF or any
MAF Subsidiary, or to the best knowledge of MAF, the other party,
except for any defaults the consequences of which would not have a
material adverse effect on MAF and the MAF Subsidiaries, taken as a
whole.
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2.17 TAX. To the best of the knowledge of MAF, neither it nor any MAF
Subsidiary has engaged in any act that would preclude or adversely affect the
Merger from qualifying as a tax-free reorganization under Section 368(a) of the
Code.
2.18 ADVICE OF CHANGES. Between the date hereof and the Effective Time,
MAF shall promptly advise Bancorp in writing of any fact or occurrence (other
than as contemplated herein) which, if existing or known as of the date hereof,
would have been required to be set forth or disclosed pursuant to this Agreement
or of any fact which, if existing or known as of the date hereof, would have
made any of the representations contained herein materially untrue.
2.19 FAIRNESS OPINION. MAF has received an opinion, dated the date of
this Agreement, from ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & Company, Incorporated, that, subject to
the terms, conditions and qualifications set forth therein, the Merger is fair
to MAF's stockholders from a financial point of view.
2.20 ENVIRONMENTAL MATTERS.
(a) For purposes of Sections 2.20 and 3.20, the following
terms shall have the following respective meanings:
(i) "Environmental Law(s)" means any law, regulation,
rule, ordinance or similar requirement which governs or
protects the environment enacted by the United States, any
state, or any county, city or agency or subdivision of the
United States or any state.
(ii) "Hazardous Material(s)" means any material or
substance: (1) which is a "hazardous substance," "pollutant"
or "contaminant," pursuant to the Comprehensive Environmental
Response Compensation and Liability Act ("CERCLA") (42 U.S.C.
9601 et seq.) as amended, and regulations promulgated
thereunder; (2) containing gasoline, oil, diesel fuel or other
petroleum products; (3) which is "hazardous waste" pursuant to
the Federal Resource Conservation and Recovery Act ("RCRA")
(42 U.S.C. Section 6901 et seq.) as amended, and regulations
promulgated thereunder; (4) containing polychlorinated
biphenyls (PCBs); (5) containing asbestos; (6) which is
radioactive; (7) the presence of which requires investigation
or remediation under any Environmental Law (defined above); or
(8) which is defined or identified as a "hazardous waste,"
"hazardous substance," "pollutant," "contaminant," or
"biologically Hazardous Material" under any Environmental Law.
(iii) "MAF Properties" means (1) the real estate
owned or leased by MAF and the MAF Subsidiaries and used as a
banking related facility; (2) other real estate owned ("MAF
REO") by MAF or the MAF Subsidiaries as defined by any other
federal or state financial institution regulatory agency with
regulatory authority for MAF or the MAF Subsidiaries; (3) real
estate that is in the process of pending
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foreclosure or forfeiture proceedings conducted by MAF or the
MAF Subsidiaries; (4) real estate that is held in trust for
others by the MAF Subsidiaries; and (5) real estate owned or
leased by a partnership or joint venture in which MAF or an
MAF Subsidiary has an ownership interest.
(b) To the best knowledge of MAF after such inquiry and
investigation as MAF deems appropriate, there are no present or past
conditions on the MAF Properties, involving or resulting from a past or
present storage, spill, discharge, leak, emission, injection, escape,
dumping or release of any kind whatsoever of any Hazardous Materials or
from any generation, transportation, treatment, storage, disposal, use
or handling of any Hazardous Materials, that may reasonably be expected
to result in a material adverse effect on MAF's consolidated business,
financial condition or prospects.
(c) MAF and the MAF Subsidiaries are in compliance in all
material respects with all applicable Environmental Laws, and neither
MAF nor the MAF Subsidiaries have received notice of, nor to the best
of their knowledge are there outstanding or pending, any public or
private claims, lawsuits, citations, penalties, unsatisfied abatement
obligations or notices or orders of non-compliance relating to the
environmental condition of the MAF Properties, which have or may
reasonably be expected to result in a material adverse effect on MAF's
consolidated business, financial condition or prospects.
(d) To the best knowledge of MAF after such inquiry and
investigation as MAF deems appropriate, no MAF Properties are currently
undergoing remediation or cleanup of Hazardous Materials or other
environmental conditions, the actual or estimated cost of which may
have a material adverse effect on MAF's consolidated business,
financial condition or prospects.
(e) To the best knowledge of MAF after such inquiry and
investigation as MAF deems appropriate, MAF and the MAF Subsidiaries
have all governmental permits, licenses, certificates of inspection and
other authorizations governing or protecting the environment necessary
to conduct its present business.
2.21 MILLENNIUM COMPLIANCE. MAF represents and warrants to Bancorp
that: (a) MAF's computer hardware and software systems used for the storage and
processing of data (as used in this Section 2.21, "Systems") are, or will be by
March 31, 1999, Millennium Compliant; (b) to the best of MAF's knowledge, none
of MAF's or any MAF Subsidiary's Systems, operations or business functions will
be materially adversely affected by any third party's failure to be Millennium
Compliant; (c) to the best of MAF's knowledge, all of its suppliers, customers
and third party providers will be Millennium Compliant; and (d) MAF is taking,
or has taken, all necessary and appropriate action to address and remedy any
deficiencies in MAF's Systems from becoming Millennium Compliant. As used in
this Section 2.21, "Millennium Compliant" shall mean the ability of Systems to
provide the following functions, without human intervention, individually and in
combination with other products or systems: (i) consistently handle date
information before, during and after January 1, 2000, including but not limited
to accepting date input, providing date
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output and performing calculations on dates or portions of dates, (ii) function
accurately and without interruption before, during and after January 1, 2000
(including leap year computations), without any change in operations associated
with the advent of a new century in a disclosed, defined and predetermined
manner; and (iv) store and provide output of date information in ways that are
unambiguous as to century.
2.22 CONSENTS. Except as referred to herein or in connection, or in
compliance with the provisions of the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements
Act of ▇▇▇▇ (▇▇▇ "▇▇▇ ▇▇▇"), the Securities Act, the Securities Exchange Act,
the HOLA, the Bank Merger Act, as amended (the "BMA"), the FDI Act, the rules
and regulations of the OTS, and the environmental, corporation, securities or
blue sky laws or regulations of the various states, no filing or registration
with, or authorization, consent or approval of, any other party is necessary for
the consummation by MAF or MAF Bank of the Merger or the other transactions
contemplated by this Agreement. As of the date hereof, MAF knows of no reason
why the approvals, consents and waivers of governmental authorities referred to
in this Section 2.22 that are required to be obtained should not be obtained
without the imposition of any material condition or restriction.
2.23 TAXES.
(a) MAF and each MAF Subsidiary have each timely filed all tax
and information returns, including but not limited to all required
Forms 1099, 1098 and 5498, required to be filed (all such returns being
correct and complete in all material respects) and have paid (or MAF
has paid on behalf of each MAF Subsidiary), or have accrued on their
respective books and set up an adequate reserve for the payment of, all
taxes required to be paid in respect of the periods covered by such
returns and have accrued on their respective books and set up an
adequate reserve for the payment of all income and other taxes
anticipated to be payable in respect of periods through the end of the
calendar month next preceding the date hereof. Neither MAF nor any MAF
Subsidiary is delinquent in the payment of any tax, assessment or
governmental charge. Except as set forth on Schedule 2.23(a) (i) to the
MAF Disclosure Schedule, no deficiencies for any taxes have been
proposed, asserted or assessed against MAF or any MAF Subsidiary that
have not been resolved or settled and no requests for waivers of the
time to assess any such tax are pending or have been agreed to. Except
as set forth on Schedule 2.23(a) (ii) to the MAF Disclosure Schedule,
the income tax returns of MAF and each MAF Subsidiary have not been
audited by either the Internal Revenue Service, the Illinois Department
of Revenue, the Delaware Department of Revenue, or any other state or
local taxing authorities, for any of the last ten (10) years. Neither
MAF nor any MAF Subsidiary is a party to any action or proceeding by
any governmental authority for the assessment or the collection of
taxes. Deferred taxes of MAF have been accounted for in accordance with
generally accepted accounting principles. To the extent requested, MAF
and each MAF Subsidiary have made available to Bancorp correct and
complete copies of all federal and state income tax returns and
supporting schedules for all tax years since December 31, 1992.
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(b) MAF has not filed any consolidated federal income tax
return with an "affiliated group" (within the meaning of Section 1504
of the Code) where MAF was not the common parent of the group. Neither
MAF nor any MAF Subsidiary is, or has been, a party to any tax
allocation agreement or arrangement pursuant to which it has any
contingent or outstanding liability to anyone other than MAF or any MAF
Subsidiary.
(c) MAF and each MAF Subsidiary have each withheld amounts
from its employees or holders of deposit accounts in compliance with
the tax withholding provisions of applicable federal, state and local
laws, has filed all federal, state and local returns and reports for
all years for which any such return or report would be due with respect
to employee income tax withholding, social security, unemployment
taxes, income and other taxes and all payments or deposits with respect
to such taxes have been timely made.
2.24 EMPLOYEE BENEFIT PLANS. All retirement, stock option, stock
purchase, stock ownership, savings, stock appreciation right, profit sharing,
deferred compensation, consulting, bonus, group insurance, severance and other
benefit plans, contracts, agreements, arrangements, including, but not limited
to, "employee benefit plans," as defined in Section 3(3) of ERISA, incentive and
welfare policies, contracts, plans and arrangements and all trust agreements
related thereto with respect to any present or former directors, officers, or
other employees of MAF or any of the MAF Subsidiaries are hereinafter referred
to collectively as the "MAF Employee Plans." All of the MAF Employee Plans
comply in all material respects with all applicable requirements of ERISA, the
Code and other applicable laws; there has occurred no "prohibited transaction"
(as defined in Section 406 of ERISA or Section 4975 of the Code) which is likely
to result in the imposition of any penalties or taxes under Section 502(i) of
ERISA or Section 4975 of the Code upon MAF or any of its subsidiaries. Neither
MAF, the MAF Subsidiaries, nor any entity which is considered one employer with
MAF under Section 4001(b)(1) of ERISA or Section 414 of the Code has contributed
to any "multi-employer plan," as defined in Section 3(37) of ERISA, on or after
September 26, 1980. Neither MAF nor the MAF Subsidiaries currently maintain a
"single-employer plan" (as defined in Section 4001(a) of ERISA). Each MAF
Employee Plan which is intended to be qualified under Section 401(a) of the Code
has received a favorable determination letter from the IRS and MAF and the MAF
Subsidiaries are not aware of any circumstances likely to result in revocation
of any such favorable determination letter. There is no pending or, to the
knowledge of MAF, threatened litigation, administrative action or proceeding
relating to any MAF Employee Plan.
2.25 FEES. Other than the financial advisory services performed for MAF
by ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & Company Incorporated, neither MAF, MAF Bank nor any of the
MAF Subsidiaries, nor any of their respective officers, directors, employees or
agents, has employed a broker or finder or incurred any liability for any
financial advisory fees, brokerage fees, commissions, or finder's fees, and no
broker or finder has acted directly or indirectly for the purchase of any MAF
Subsidiary in connection with this Agreement or the transactions contemplated
hereby.
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III.
REPRESENTATIONS AND WARRANTIES OF BANCORP
Bancorp represents and warrants to MAF that:
3.1 ORGANIZATION.
(a) Bancorp is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware and has
all requisite power and authority, corporate and otherwise, to own,
operate and lease its assets, properties and businesses and to carry on
its businesses substantially as they have been and are now being
conducted. Bancorp is duly qualified to do business and is in good
standing in each jurisdiction where the character of the properties
owned or leased by it or the nature of the business transacted by it
requires that it be so qualified, except where the failure to so
qualify would not have a material adverse effect on Bancorp or its
ability to consummate the transactions contemplated herein, in the
Certificate of Merger or in the Stock Option Agreement. Bancorp has all
requisite corporate power and authority to enter into this Agreement,
the Certificate of Merger and the Stock Option Agreement and, upon the
approval of all requisite state and federal regulatory agencies and in
the case of this Agreement, the majority of the stockholders of Bancorp
as hereinafter provided, to consummate the transactions contemplated
hereby and thereby. Bancorp is duly registered as a unitary savings and
loan holding company under HOLA.
(b) First Federal is a federally-chartered stock savings bank
duly organized and in existence under the laws of the United States,
the deposits of which are insured by FDIC through SAIF to the full
extent permitted under applicable laws. First Federal has all requisite
corporate power and authority to enter into the Bank Merger Agreement
and, upon the approval of all requisite state and federal regulatory
agencies and the majority of the stockholders of First Federal, to
consummate the transactions contemplated thereby. First Federal is a
"qualified thrift lender" (as that term is used in Section 10(m) of
HOLA).
(c) Westco, Inc. is a corporation duly organized, validly
existing and in good standing under the laws of the State of Illinois
and has all requisite power and authority, corporate and otherwise, to
own, operate and lease its assets, properties and businesses and to
carry on its businesses substantially as they have been and are now
being conducted. Westco, Inc. is duly qualified to do business and is
in good standing in each jurisdiction where the character of the
properties owned or leased by it or the nature of the business
transacted by it requires that it be so qualified, except where the
failure to so qualify would not have a material adverse effect on
Westco, Inc. Bancorp has no direct or indirect subsidiaries other than
Westco, Inc. and First Federal.
(d) Bancorp, First Federal and Westco, Inc. hold all licenses,
certificates, permits, franchises and rights from all appropriate
federal, state or other public authorities necessary
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for the conduct of its and their respective business, except where the
failure to so hold would not have a material adverse effect on Bancorp,
First Federal and Westco Inc. taken as a whole.
3.2 AUTHORIZATION. The execution, delivery and performance of this
Agreement, the Certificate of Merger and the Stock Option Agreement and the
consummation of the transactions contemplated hereby and thereby have been duly
and unanimously approved and authorized by Bancorp's Board of Directors, and all
necessary corporate action on the part of Bancorp has been taken, subject to the
approval of this Agreement by the stockholders of Bancorp. This Agreement has
been, and the Certificate of Merger and the Stock Option Agreement will be, duly
executed and delivered by Bancorp and, subject to the approval of all requisite
state and federal regulatory agencies, and, in the case of this Agreement, the
approval by the stockholders of Bancorp, constitutes the valid and binding
obligation of Bancorp (except to the extent that enforceability thereof may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws or equitable principles or doctrines). Neither the Certificate of
Incorporation nor the by-laws of Bancorp will need to be amended to effectuate
the transactions contemplated by this Agreement.
3.3 CONFLICTS. The execution and delivery of this Agreement, the
Certificate of Merger and the Stock Option Agreement do not, and the
consummation of the transactions contemplated hereby and thereby will not,
conflict with or result in any violation of the Certificate of Incorporation or
By-laws of Bancorp or similar documents of any Bancorp Subsidiary (as defined
below). The execution and delivery of this Agreement, the Certificate of Merger
and the Stock Option Agreement do not, and the consummation of the transactions
contemplated hereby and thereby will not, conflict with or result in any
violation, breach or termination of, or default or loss of a material benefit
under, or permit the acceleration of, any obligation or result in the creation
of any material lien, charge or encumbrance on any property or assets under any
provision of any mortgage, indenture, lease, agreement or other instrument,
permit, concession, grant, franchise, license, judgment, order, decree, statute,
law, ordinance, rule or regulation applicable to Bancorp or any Bancorp
Subsidiary or their respective properties other than any such conflicts,
violations or defaults which (i) individually or in the aggregate do not have a
material adverse effect on Bancorp or any Bancorp Subsidiary, or (ii) will be
cured or waived prior to the Effective Time. No consent, approval, order or
authorization of, or registration, declaration or filing with, any federal or
state governmental authority is required by or with respect to Bancorp in
connection with the execution and delivery of this Agreement or the Stock Option
Agreement or the consummation by Bancorp of the transactions contemplated hereby
or thereby, the absence of which would have a material adverse effect upon
Bancorp except for: the filings by MAF of applications or notices with the
Applicable Government Authorities; the filing by MAF of the Registration
Statement with the SEC; the filing of the Certificate of Merger with the
Secretary of State of the State of Delaware; (d) any required filings with,
approvals from or notices to applicable state securities authorities; and (e)
any necessary antitrust filings, consents, waivers or approvals.
3.4 ANTITAKEOVER PROVISIONS INAPPLICABLE. Except for Article FOURTH,
Section C of Bancorp's Certificate of Incorporation, no "business combination,"
"moratorium," "control share" or other state antitakeover statute or regulation,
nor any provision in Bancorp's Certificate of
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Incorporation or By-laws, (i) prohibits or restricts Bancorp's ability to
perform its obligations under this Agreement, the Certificate of Merger or the
Stock Option Agreement, or its ability to consummate the transactions
contemplated hereby and thereby, (ii) would have the effect of invalidating or
voiding this Agreement, the Certificate of Merger or the Stock Option Agreement,
or any provision hereof or thereof, or (iii) would subject MAF to any material
impediment or condition in connection with the exercise of any of its rights
under this Agreement, the Certificate of Merger or the Stock Option Agreement.
3.5 CAPITALIZATION AND STOCKHOLDERS.
(a) As of the date hereof, the authorized capital stock of
Bancorp consists of the following:
CLASS OF PAR
STOCK VALUE AUTHORIZED ISSUED OUTSTANDING TREASURY
----- ----- ---------- ------ ----------- --------
Common $0.01 5,000,000 3,525,070 2,486,263 1,038,807
Preferred $0.01 1,000,000 0 0 0
All of the issued and outstanding shares of Bancorp Common Stock have
been duly and validly authorized and issued, and are fully paid and
non-assessable. None of the outstanding shares of Bancorp Common Stock
are subject to any preemptive rights of the current or past
stockholders of Bancorp. All of the issued and outstanding shares of
Bancorp Common Stock will be entitled to vote to approve the Agreement.
(b) As of the date hereof, Bancorp has 245,479 shares of
Bancorp Common Stock reserved for issuance under the stock option plans
for the benefit of employees and directors of Bancorp or Bancorp
Subsidiaries ("Bancorp Stock Option Plans") pursuant to which Bancorp
Stock Options covering an aggregate of 245,479 shares of Bancorp Common
Stock are outstanding as of the date hereof. As of the date hereof, all
of the shares of Bancorp Common Stock authorized to be issued under
Bancorp's Recognition and Retention Plans ("ARP Plans") are awarded and
vested. Except as set forth in this Section 3.5 and except for the
transactions herein and as provided under the Stock Option Agreement,
there are no shares of capital stock or other equity securities of
Bancorp outstanding and no outstanding options, warrants, scrip, rights
to subscribe to, calls or commitments of any character whatsoever
relating to, or securities or rights convertible into or exchangeable
for, shares of the capital stock of Bancorp, or contracts, commitments,
understandings, or arrangements by which Bancorp is or may be bound to
issue additional shares of its capital stock or options, warrants, or
rights to purchase or acquire any additional shares of its capital
stock. Each Bancorp Stock Option is exercisable or will be exercisable
as of the date set forth in Schedule 3.5(b) to the Bancorp Disclosure
Schedule and has an exercise price in the amount set forth in Schedule
3.5(b) to the Bancorp Disclosure Schedule.
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(c) Schedule 3.5(c) to the Bancorp Disclosure Schedule (as
defined below) accurately identifies the names and addresses of all of
the stockholders who, to Bancorp's knowledge, beneficially own more
than 5% of the shares of Bancorp Common Stock and the number of shares
of common stock of Bancorp held by each such stockholder and by each
director and senior officer of Bancorp. From the date hereof until the
Effective Time, Bancorp shall, upon request, provide MAF with a
complete list of all of its stockholders of record, including the
names, addresses and number of shares of Bancorp Common Stock held by
each stockholder. Without the advance written consent of Bancorp, MAF
will not disclose or make use of the information provided by Bancorp
pursuant hereto except as may be required in connection with regulatory
or other filings permitted by this Agreement, the mailing of the Proxy
Statement or as is otherwise specifically permitted by this Agreement.
The "Bancorp Disclosure Schedule" shall consist of the agreements,
lists, instruments and other documentation described or referred to in
this Agreement. The Bancorp Disclosure Schedule was delivered to MAF in
final and complete form prior to Bancorp's execution of this Agreement.
3.6 BANCORP FINANCIAL STATEMENTS; MATERIAL CHANGES. Bancorp has
heretofore delivered to MAF its audited consolidated financial statements for
the years ended December 31, 1997, December 31, 1996, and December 31, 1995, and
the unaudited consolidated financial statements for the six months ended June
30, 1998 (the "Bancorp Financial Statements"). The Bancorp Financial Statements
(x) are true and correct in all material respects; (y) have been prepared in
accordance with generally accepted accounting principles applied on a consistent
basis during the periods involved (except as may be indicated in the notes
thereto and, except in the case of the unaudited consolidated financial
statements for the absence of footnotes and for normal and recurring year-end
adjustments which are not material); and (z) fairly present the consolidated
statement of financial condition of Bancorp as of the dates thereof and the
related consolidated statement of operations, changes in stockholders' equity
and cash flows for the periods then ended. Since December 31, 1997, Bancorp and
the Bancorp Subsidiaries, taken as a whole, have not undergone or suffered any
changes in their respective condition (financial or otherwise), properties,
assets, liabilities, business or operations which have been, in any case or in
the aggregate, materially adverse to Bancorp on a consolidated basis. Since
January 1, 1998, Bancorp and the Bancorp Subsidiaries have conducted their
respective businesses only in the ordinary course consistent with past
practices. No facts or circumstances have been discovered from which it
reasonably appears that there is a significant risk and reasonable probability
that Bancorp will suffer or experience a material adverse effect.
3.7 BANCORP SUBSIDIARIES.
(a) All of the Bancorp Subsidiaries as of the date of this
Agreement are listed on Schedule 3.7(a) to the Bancorp Disclosure
Schedule. Bancorp owns directly or indirectly all of the issued and
outstanding shares of capital stock of the Bancorp Subsidiaries.
Schedule 3.7(a) of the Bancorp Disclosure Schedule accurately
identifies the number of shares of authorized and outstanding capital
stock of the Bancorp Subsidiaries, and a description of the business of
each Bancorp Subsidiary. Except as set forth in
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Schedule 3.7(a) to the Bancorp Disclosure Schedule, neither Bancorp nor
the Bancorp Subsidiaries own directly or indirectly any debt or equity
securities, or other proprietary interest in any other corporation,
joint venture, partnership, entity, association or other business. No
capital stock of any of the Bancorp Subsidiaries is or may become
required to be issued (other than to Bancorp) by reason of any options,
warrants, scrip, rights to subscribe to, calls, or commitments of any
character whatsoever relating to, or securities or rights convertible
into or exchangeable for, shares of the capital stock of the Bancorp
Subsidiaries. There are no contracts, commitments, understandings or
arrangements relating to the rights of Bancorp to vote or to dispose of
shares of the capital stock of a Bancorp Subsidiary. All of the shares
of capital stock of each Bancorp Subsidiary held by Bancorp or a
Bancorp Subsidiary are fully paid and non-assessable and are owned by
Bancorp or such Bancorp Subsidiary free and clear of any claim, lien or
encumbrance.
(b) Each Bancorp Subsidiary is either a stock savings bank or
a corporation as indicated on Schedule 3.7(b) to the Bancorp Disclosure
Schedule and is duly organized, validly existing and in good standing
under the laws of the jurisdiction in which it is incorporated or
organized, and is duly qualified to do business and in good standing in
each jurisdiction where the character of the properties owned or leased
by it or the nature of the business transacted by it requires it to be
so qualified, except where the failure to so qualify, either
individually or in the aggregate, would not have a material adverse
effect on Bancorp and the Bancorp Subsidiaries taken as a whole or its
ability to consummate the transactions contemplated herein or in the
Stock Option Agreement. Each Bancorp Subsidiary has the corporate power
and authority necessary for it to own, operate or lease its assets,
properties and business and to carry on its business substantially as
they have been and are now being conducted.
(c) For purposes of this Agreement, "Bancorp Subsidiaries"
shall mean corporations, savings banks and other entities of which
Bancorp owns or controls 5% or more of the outstanding equity
securities either directly or through an unbroken chain of entities as
to each of which 5% or more of the outstanding equity securities is
owned directly or indirectly by its parent and any joint ventures in
which Bancorp has an equity interest including, without limitation,
First Federal and Westco, Inc.; provided, however, there shall not be
included any such entity acquired in good faith through foreclosure, or
any such entity to the extent that the equity securities of such entity
are owned or controlled in a bona fide fiduciary capacity, through a
small business investment corporation, or otherwise as an investment by
an entity that invests in unaffiliated companies in the ordinary course
of business. The term "Bancorp Subsidiary" shall mean any single
subsidiary constituting one of the several Bancorp Subsidiaries.
(d) First Federal is a member of the Federal Home Loan Bank of
Chicago. The liquidation account established by First Federal in
connection with the conversion was established and has been maintained
since its establishment in accordance with applicable laws and the
records with respect to said account are complete and accurate in all
material respects. None of the transactions contemplated by this
Agreement would constitute a
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complete liquidation of First Federal so as to require the distribution
of such liquidation account of First Federal to any existing or former
savings or demand account holders of First Federal.
3.8 BANCORP FILINGS. Bancorp has previously made available to MAF true
and complete copies of its (i) proxy statements relating to all meetings of its
stockholders (whether special or annual) (of Bancorp or any Bancorp Subsidiary)
held or currently scheduled to be held during the calendar years 1995, 1996,
1997 and 1998, and (ii) all other reports or filings, in each case as may have
been amended, required to be filed under the Securities Exchange Act by Bancorp
or any Bancorp Subsidiary with the SEC or the OTS since January 1, 1995,
including without limitation reports on Forms 10-K, 10-Q and 8-K.
3.9 BANCORP REPORTS. Since January 1, 1995, each of Bancorp and the
Bancorp Subsidiaries has timely filed all reports and statements, together with
any amendment required to be made with respect thereto, that it was required to
file with (i) the SEC, including, but not limited to Forms 10-K, 10-Q and 8-K,
and proxy statements, (ii) the OTS, (iii) the FDIC, (iv) any other applicable
federal or state banking, insurance, securities, or other regulatory authorities
(except filings which are not material), and (v) the NASD. As of their
respective dates (and without giving effect to any amendments or modifications
filed after the date of this Agreement with respect to reports and documents
filed before the date of this Agreement), each of such reports and documents,
including the financial statements, exhibits and schedules thereto, complied in
all material respects with all of the statutes, rules, and regulations enforced
or promulgated by the authority with which they were filed and did not contain
any untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements made therein, in light of the
circumstances under which they were made not misleading. Except for normal
examinations conducted by the Internal Revenue Service, Department of Labor,
state and local taxing authorities, the FDIC or the OTS in the regular course of
the business of Bancorp or any Bancorp Subsidiary, no federal, state or local
governmental agency, commission or other entity has initiated any proceeding or,
to the best knowledge of Bancorp, investigation into the business or operations
of Bancorp or any Bancorp Subsidiary within the past three years except as set
forth on Schedule 3.9 to the Bancorp Disclosure Schedule. There is no unresolved
violation, criticism or exception by the SEC, the OTS, the FDIC or other agency,
commission or entity with respect to any report or statement referred to herein
that has or is expected to have a material adverse effect on Bancorp or any
Bancorp Subsidiary.
3.10 COMPLIANCE WITH LAWS.
(a) The businesses of Bancorp and each Bancorp Subsidiary are
not being conducted in violation of any law, ordinance or regulation of
any governmental entity, including, without limitation, HOLA, the FDI
Act, any laws affecting financial institutions (including those
pertaining to the Bank Secrecy Act, the investment of funds, the
lending of money, the collection of interest and the extension of
credit), federal and state securities laws, laws and regulations
relating to financial statements and reports, truth-in-lending,
truth-in-savings, fair debt collection practices, usury, fair credit
reporting, consumer protection, occupational safety, fair employment
practices, fair labor standards and laws and
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regulations relating to employee benefits, and any statutes or
ordinances relating to the properties occupied or used by Bancorp or
any Bancorp Subsidiary, except for possible violations which either
singly or in the aggregate do not and, insofar as reasonably can be
foreseen in the future, will not have a material adverse effect on
Bancorp or any Bancorp Subsidiary.
(b) The policies, programs and practices of Bancorp and each
Bancorp Subsidiary relating to wages, hours of work, and other terms
and conditions of employment are in compliance in all material respects
with applicable laws, orders, regulations, public policies and
ordinances governing employment and terms and conditions of employment.
There are no disputes, claims, or charges, pending or, to Bancorp's
knowledge, threatened, against Bancorp or any Bancorp Subsidiary
alleging breach of any express or implied employment contract or
commitment, or material breach of any applicable law, order,
regulation, public policy or ordinance relating to employment or terms
and conditions of employment, and, to the best of the knowledge of
Bancorp, there is no basis for any valid claim or charge with regard to
such matters.
(c) No investigation or review by any governmental entity with
respect to Bancorp or any Bancorp Subsidiary is pending or, to the best
of the knowledge of Bancorp, threatened, nor has any governmental
entity indicated to Bancorp an intention to conduct the same, other
than normal bank regulatory examinations and those the outcome of which
will not have a materially adverse effect on Bancorp or any Bancorp
Subsidiary.
(d) Schedule 3.10(d) to the Bancorp Disclosure Schedule sets
forth Westco Saving's rating under the Community Reinvestment Act of
1977 and the regulations promulgated thereunder.
3.11 DISCLOSURE. None of the information to be supplied by Bancorp for
inclusion or to be incorporated by reference in the Proxy Statement or the
information relating to Bancorp and the Bancorp Subsidiaries in the Registration
Statement, will, in the case of the Proxy Statement or any amendments thereof or
supplements thereto, at the time of the meeting of Bancorp's stockholders to be
held for purposes of approving the Merger, contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading or, in the case of the Registration Statement, at the time it
becomes effective and at the Effective Time contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements therein not misleading. The portions of the Proxy Statement relating
to Bancorp which are incorporated by reference to Forms 10-K, 10-Q and 8-K filed
by Bancorp under the Securities Exchange Act comply and will comply as to form
in all material respects with the provisions of the Securities Exchange Act.
3.12 LITIGATION. There is no suit, action, investigation or proceeding,
legal, quasi-judicial, administrative or otherwise, pending or, to the best of
the knowledge of Bancorp, threatened against or affecting Bancorp or any Bancorp
Subsidiary, or any of their respective officers, directors,
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employees or agents, in their capacities as such, which is seeking damages
against Bancorp, any Bancorp Subsidiary, or any of their respective officers,
directors, employees or agents, in their capacities as such, in excess of
$50,000, or which would materially affect the ability of Bancorp to consummate
the transactions contemplated herein or in the Stock Option Agreement or which
is seeking to enjoin consummation of the transactions provided for herein or in
the Stock Option Agreement or to obtain other relief in connection with this
Agreement or the Stock Option Agreement or the transactions contemplated hereby
or thereby, and judgment, decree, injunction, rule or order of any court,
governmental department, commission, agency, instrumentality or arbitrator
outstanding against Bancorp or any Bancorp Subsidiary or any of their respective
officers, directors, employees or agents, in their capacities as such, having,
or which could reasonably be foreseen to have in the future, any such effect.
3.13 LICENSES. Bancorp and each Bancorp Subsidiary hold all licenses,
certificates, permits, franchises and all patents, trademarks, service marks,
trade names, copyrights or rights thereto, and adequate authorizations,
approvals, consents, licenses, clearances and orders or registrations with all
appropriate federal, state or other authorities that are material to the conduct
of their respective businesses as now conducted and as presently proposed to be
conducted.
3.14 TAXES.
(a) Bancorp and each Bancorp Subsidiary have each timely filed
all tax and information returns, including but not limited to all
required Forms 1099, 1098 and 5498, required to be filed (all such
returns being correct and complete in all material respects) and have
paid (or Bancorp has paid on behalf of each Bancorp Subsidiary), or
have accrued on their respective books and set up an adequate reserve
for the payment of, all taxes required to be paid in respect of the
periods covered by such returns and have accrued on their respective
books and set up an adequate reserve for the payment of all income and
other taxes anticipated to be payable in respect of periods through the
end of the calendar month next preceding the date hereof. Neither
Bancorp nor any Bancorp Subsidiary is delinquent in the payment of any
tax, assessment or governmental charge. No deficiencies for any taxes
have been proposed, asserted or assessed against Bancorp or any Bancorp
Subsidiary that have not been resolved or settled and no requests for
waivers of the time to assess any such tax are pending or have been
agreed to. Except as set forth on Schedule 3.14(a) to the Bancorp
Disclosure Schedule, the income tax returns of Bancorp and each Bancorp
Subsidiary have not been audited by either the Internal Revenue
Service, the Illinois Department of Revenue, the Delaware Department of
Revenue, or any other state or local taxing authorities, for any of the
last ten years. Neither Bancorp nor any Bancorp Subsidiary is a party
to any action or proceeding by any governmental authority for the
assessment or the collection of taxes. Deferred taxes of Bancorp have
been accounted for in accordance with generally accepted accounting
principles. Bancorp and each Bancorp Subsidiary have delivered to MAF
correct and complete copies of all federal and state income tax returns
and supporting schedules for all tax years since December 31, 1992.
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(b) Bancorp has not filed any consolidated federal income tax
return with an "affiliated group" (within the meaning of Section 1504
of the Code) where Bancorp was not the common parent of the group.
Neither Bancorp nor any Bancorp Subsidiary is, or has been, a party to
any tax allocation agreement or arrangement pursuant to which it has
any contingent or outstanding liability to anyone other than Bancorp or
any Bancorp Subsidiary.
(c) Bancorp and each Bancorp Subsidiary have each withheld
amounts from its employees, stockholders or holders of deposit accounts
in compliance with the tax withholding provisions of applicable
federal, state and local laws, has filed all federal, state and local
returns and reports for all years for which any such return or report
would be due with respect to employee income tax withholding, social
security, unemployment taxes, income and other taxes and all payments
or deposits with respect to such taxes have been timely made and,
except as set forth in Schedule 3.14(c) to the Bancorp Disclosure
Schedule, has notified all employees, stockholders and holders of
public deposit accounts of their obligations to file all forms,
statements or reports with it in accordance with applicable federal,
state and local tax laws and has taken reasonable steps to insure that
such employees, stockholders and holders of public deposit accounts
have filed all such forms, statements and reports with it.
3.15 INSURANCE. Bancorp and each Bancorp Subsidiary maintain insurance
with an insurer which in the best judgment of management of Bancorp is sound and
reputable, on their respective assets, and upon their respective businesses and
operations, against loss or damage, risks, hazards and liabilities of the kinds
customarily insured against by prudent corporations engaged in the same or
similar businesses. Bancorp and each Bancorp Subsidiary maintain in effect all
insurance required to be carried by law or by any agreement by which they are
bound. All material claims under all policies of insurance maintained by Bancorp
and First Federal have been filed in due and timely fashion. Neither Bancorp nor
any Bancorp Subsidiary has had an insurance policy cancelled by the issuer of
the policy within the past five (5) years.
3.16 LOANS; INVESTMENTS.
(a) Except as otherwise disclosed in Schedule 3.16 to the
Bancorp Disclosure Schedule, each loan reflected as an asset on the
Bancorp Financial Statements is evidenced by appropriate and sufficient
documentation in all material respects and constitutes, to the best of
the knowledge of Bancorp, the legal, valid and binding obligation of
the obligor named therein, enforceable in accordance with its terms
except to the extent that the enforceability thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws
relating to or affecting the enforcement of creditors rights generally
or equitable principles or doctrines; to the best of the knowledge of
Bancorp, no obligor named therein is seeking to avoid the
enforceability of the terms of any loan under any such laws or
equitable principles or doctrines and no loan is subject to any
defense, offset or counterclaim. All such loans originated by Bancorp
or any Bancorp Subsidiary and all such loans purchased by Bancorp or
any Bancorp Subsidiary, were made or purchased in accordance with
customary lending standards of Bancorp and any Bancorp Subsidiary and
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in the ordinary course of business of Bancorp and each Bancorp
Subsidiary. Except as set forth in Schedule 3.16(a) to the Bancorp
Disclosure Schedule, all such loans are, and at the Effective Time will
be, free and clear of any security interest, lien, encumbrance or other
charge, and Bancorp and each Bancorp Subsidiary have complied, and at
the Effective Time will have complied, in all material respects, with
all laws and regulations relating to such loans. Set forth on Schedule
3.16(a) to the Bancorp Disclosure Schedule is a complete list of
Bancorp's and First Federal REO as of March 31, 1998.
(b) All guarantees of indebtedness owed to Bancorp or any
Bancorp Subsidiary, including but not limited to those of the Federal
Housing Administration, the Small Business Administration, and other
state and federal agencies, are, to the best of the knowledge of
Bancorp, valid and enforceable, except to the extent enforceability
thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or affecting the
enforcement of creditors rights generally or equitable principles or
doctrines and except as would not be material to Bancorp on a
consolidated basis.
(c) In originating, underwriting, servicing, and discharging
loans, mortgages, land contracts, and contractual obligations relating
thereto, either for their own account or for the account of others,
Bancorp and each Bancorp Subsidiary have complied with all applicable
terms and conditions of such obligations and with all applicable laws,
regulations, rules, contractual requirements, and procedures with
respect to such servicing, except where the failure to comply would not
have a material adverse effect on Bancorp.
(d) Except as set forth in Schedule 3.16(d) to the Bancorp
Disclosure Schedule and except for pledges to secure public and trust
deposits, none of the investments reflected in the Bancorp Financial
Statements under the heading "Investment Securities," and none of the
investments made by Bancorp since December 31, 1997, is subject to any
restriction, whether contractual or statutory, which materially impairs
the ability of Bancorp freely to dispose of such investment at any
time. With respect to all material repurchase agreements to which
Bancorp or any Bancorp Subsidiary is a party, Bancorp or such Bancorp
Subsidiary has a valid, perfected first lien or security interest in
the government securities or other collateral securing each such
repurchase agreement, and the value of the collateral securing each
such repurchase agreement equals or exceeds the amount of the debt
secured by such collateral under such agreement. Except as set forth in
Schedule 3.16(d) to the Bancorp Disclosure Schedule, and except for
transactions involving repurchase agreements in the investment
portfolio effected in the ordinary course of business, neither Bancorp
nor any Bancorp Subsidiary has sold or otherwise disposed of any assets
in a transaction in which the acquiror of such assets or other person
has the right, either conditionally or absolutely, to require Bancorp
or any Bancorp Subsidiary to repurchase or otherwise reacquire any such
assets. Set forth on Schedule 3.16(d) to the Bancorp Disclosure
Schedule is a complete and accurate list of each investment and debt
security, mortgage-backed and related securities, marketable equity
securities and securities purchased under agreements to resell owned by
Bancorp or any Bancorp Subsidiary, showing as of July 31, 1998, the
carrying values and estimated fair values of investment and debt
securities, the gross carrying value and
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estimated fair value of the mortgage-backed and related securities and
the estimated cost and estimated fair value of the marketable equity
securities.
(e) All United States Treasury securities, obligations of
other United States Government agencies and corporations, obligations
of States of the United States and their political subdivisions, and
other investment securities classified as "held to maturity,"
"available for sale" and "trading" held by Bancorp or any Bancorp
Subsidiary, as reflected in the Bancorp Financial Statements were
classified and accounted for in accordance with F.A.S.B. 115 and the
intentions of management.
3.17 INTEREST RATE RISK MANAGEMENT ARRANGEMENTS. Except as set forth in
Schedule 3.17 to the Bancorp Disclosure Schedule, neither Bancorp nor any
Bancorp Subsidiary is a party to any, nor has any property bound by, any
interest rate swaps, caps, floors and option agreements or other interest rate
risk management arrangements.
3.18 ALLOWANCE FOR POSSIBLE LOAN LOSSES. The allowance for possible
loan losses shown on the Bancorp Financial Statements (and as shown on any
financial statements to be delivered by Bancorp to MAF pursuant to Section 5.12
hereof), as of such date was (and will be as of such subsequent financial
statement dates) in the reasonable judgment of Bancorp, adequate in all respects
to provide for possible or specific losses, net of recoveries relating to loans
previously charged off, on loans outstanding, and contained an additional amount
of unallocated reserves for unanticipated future losses at a level considered
adequate under the standards applied by applicable federal and/or state
regulatory authorities and based upon generally accepted practices applicable to
financial institutions. The aggregate principal amount of loans contained in the
loan portfolio of Bancorp and each Bancorp Subsidiary as of June 30, 1998, in
excess of such reserve, was fully collectible.
3.19 BANCORP BENEFIT PLANS.
(a) Schedule 3.19(a)(i) to the Bancorp Disclosure Schedule
contains a list and a true and correct copy (or, a description with
respect to any oral employee benefit plan, practice, policy or
arrangement), including all amendments thereto, of each compensation,
consulting, employment, termination or collective bargaining agreement,
and each stock option, stock purchase, stock appreciation right,
recognition and retention, life, health, accident or other insurance,
bonus, deferred or incentive compensation, severance or separation
agreement or any agreement providing any payment or benefit resulting
from a change in control, profit sharing, retirement, or other employee
benefit plan, practice, policy or arrangement of any kind, oral or
written, covering employees, former employees, directors or former
directors of Bancorp or each Bancorp Subsidiary or their respective
beneficiaries, including, but not limited to, any employee benefit
plans within the meaning of Section 3(3) of ERISA, which Bancorp or any
Bancorp Subsidiary maintains, to which Bancorp or any Bancorp
Subsidiary contributes, or under which any employee, former employee,
director or former director of Bancorp or any Bancorp Subsidiary is
covered or has benefit rights and pursuant to which any liability of
Bancorp or any Bancorp Subsidiary exists or is reasonably
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likely to occur (the "Bancorp Benefit Plans"), and current summary plan
descriptions, trust agreements, and insurance contracts and Internal
Revenue Service Form 5500 or 5500-C (for the three most recently
completed plan years) with respect thereto. Except as set forth on
Schedule 3.19(a)(ii) of the Bancorp Disclosure Schedule, Bancorp
neither maintains nor has entered into any Bancorp Benefit Plan or
other document, plan or agreement which contains any change in control
provisions which would cause an increase or acceleration of benefits or
benefit entitlements to employees or former employees of Bancorp or any
Bancorp Subsidiary or their respective beneficiaries, or other
provisions, which would cause an increase in the liability of Bancorp
or any Bancorp Subsidiary or to MAF as a result of the transactions
contemplated by this Agreement or any related action thereafter (as
used in this Section 3.19, a "Change in Control Benefit"). The term
"Bancorp Benefit Plans" as used herein refers to all plans contemplated
under the preceding sentences of this Section 3.19, provided that the
term "Plan" or "Plans" is used in this Agreement for convenience only
and does not constitute an acknowledgment that a particular arrangement
is an employee benefit plan within the meaning of Section 3(3) of
ERISA. No Bancorp Benefit Plan is a multiemployer plan within the
meaning of Section 3(37) of ERISA. Neither Bancorp nor any Bancorp
Subsidiary has been notified by any Applicable Governmental Authority
to amend any payments or other compensation paid or payable by Bancorp
or any Bancorp Subsidiary under this Agreement, any Bancorp Benefit
Plan or otherwise, to or for the benefit of any employee or director of
Bancorp or any Bancorp Subsidiary and to the best knowledge of Bancorp
or all Bancorp Subsidiaries, all such payments are in compliance with
all applicable rules, regulations and bulletins promulgated by the
Applicable Governmental Authorities.
(b) Each of the Bancorp Benefit Plans that is intended to be a
pension, profit sharing, stock bonus, thrift, savings or employee stock
ownership plan that is qualified under Section 401(a) of the Code
("Bancorp Qualified Plans") has been determined by the Internal Revenue
Service to qualify under Section 401(a) of the Code, or an application
for determination of such qualification will be timely made to the
Internal Revenue Service prior to the end of the applicable remedial
amendment period under Section 401(b) of the Code (a copy of each such
determination letter or pending application is included in Schedule
3.19(b) of the Bancorp Disclosure Schedule), and, to the best of
Bancorp's knowledge, there exist no circumstances likely to materially
adversely affect the qualified status of any such Bancorp Qualified
Plan. All such Bancorp Qualified Plans established or maintained by
Bancorp or each Bancorp Subsidiary or to which Bancorp or any Bancorp
Subsidiary contribute are in compliance in all material respects with
all applicable requirements of ERISA, and are in compliance in all
material respects with all applicable requirements (including
qualification and non-discrimination requirements in effect as of the
Effective Time) of the Code for obtaining the tax benefits the Code
thereupon permits with respect to such Bancorp Qualified Plans. Except
as set forth on Schedule 3.19(b), no Bancorp Qualified Plan is a
defined benefit pension plan which is subject to Title IV of ERISA. All
accrued contributions and other payments required to be made by Bancorp
or each Bancorp Subsidiary to any Bancorp Benefit Plan through the date
hereof, have been made or reserves adequate for such purposes as of the
date hereof, have been set aside therefor and reflected
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in the Bancorp Financial Statements. Neither Bancorp nor any Bancorp
Subsidiary has accumulated any funding deficiency under Section 412 of
the Code. For each Bancorp Qualified Plan that is a defined benefit
pension plan, the net fair market value of assets under the Plan
exceeds the actuarial present value of the accumulated Plan benefits,
both vested and non-vested, as determined on the basis of the actuarial
methods and assumptions used for purposes of the most recent actuarial
report for the Plan filed with the Internal Revenue Service. Neither
Bancorp nor any Bancorp Subsidiary is in material default in performing
any of its respective contractual obligations under any of the Bancorp
Benefit Plans or any related trust agreement or insurance contract, and
there are no material outstanding liabilities of any such Plan other
than liabilities for benefits to be paid to participants in such Plan
and their beneficiaries in accordance with the terms of such Plan.
(c) There is no pending or, to the best knowledge of Bancorp,
threatened litigation or pending claim (other than benefit claims made
in the ordinary course) by or on behalf of or against any of the
Bancorp Benefit Plans (or with respect to the administration of any of
such Plans) now or heretofore maintained by Bancorp or any Bancorp
Subsidiary which allege violations of applicable state or federal law
or the terms of the Plan which are reasonably likely to result in a
liability on the part of Bancorp or any Bancorp Subsidiary or any such
Plan.
(d) Bancorp and each Bancorp Subsidiary and all other persons
having fiduciary or other responsibilities or duties with respect to
any Bancorp Benefit Plan are, and since the inception of each such Plan
have been, in substantial compliance with, and each such Plan is and
has been operated in substantial accordance with, its provisions and in
substantial compliance with the applicable laws, rules and regulations
governing such Plan, including, without limitation, the rules and
regulations promulgated by the Department of Labor, the PBGC and the
Internal Revenue Service under ERISA, the Code or any other applicable
law. No "reportable event" (as defined in Section 4043(b) of ERISA) has
occurred with respect to any Bancorp Benefit Plan. No Bancorp Benefit
Plan has engaged in or been a party to a "prohibited transaction" (as
defined in Section 406 of ERISA or Section 4975(c) of the Code) without
an exemption thereto under Section 408 of ERISA or 4975(d) of the Code.
All Bancorp Benefit Plans that are group health plans have been
operated in compliance with the group health plan continuation
requirements of Section 4980B of the Code and Section 601 of ERISA and
with the certification of prior coverage and other requirements of
Section 701 of ERISA.
(e) Neither Bancorp nor any Bancorp Subsidiary has incurred,
nor to the best knowledge of Bancorp or such Bancorp Subsidiary is
reasonably likely to incur, any liability under Title IV of ERISA in
connection with any Plan subject to the provisions of Title IV of ERISA
now or heretofore maintained or contributed to by it or by First
Federal.
(f) Except as set forth on Schedule 3.19(f) to the Bancorp
Disclosure Schedule, neither Bancorp nor any Bancorp Subsidiary has
made any payments, or is or has been a party to any agreement or any
Bancorp Benefit Plan, that under any circumstances could
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obligate it, First Federal, or any successor of either of them, to make
any payment that is not or will not be deductible in full because of
Section 162(m) or 280G of the Code.
(g) Schedule 3.19(g) to the Bancorp Disclosure Schedule
describes any obligation that Bancorp or any Bancorp Subsidiary has to
provide health or welfare benefits to retirees or other former
employees, directors or their dependents (other than rights under
Section 4980B of the Code or Section 601 of ERISA), including
information as to the number of retirees, other former employees or
directors and dependents entitled to such coverages and their ages.
(h) Schedule 3.19(h) to the Bancorp Disclosure Schedule lists:
(i) each officer and director of Bancorp and each Bancorp Subsidiary
who is eligible to receive a Change in Control Benefit, showing the
amount of each such Change in Control Benefit and the basis of the
calculation thereof, estimated compensation for 1998 based upon
compensation received to the date of this Agreement, and the
individual's rate of salary in effect on the date of this Agreement,
the individual's participation in any bonus or other employee benefit
plan, and such individual's compensation from Bancorp or any Bancorp
Subsidiary for each of the calendar years 1993 through 1997 as reported
by Bancorp or each Bancorp Subsidiary on Form W-2 or Form 1099; (ii)
each other employee of Bancorp or any Bancorp Subsidiary who may be
eligible for a Change in Control Benefit, showing the number of years
of service of each such employee together with his or her estimated
salary for 1998; (iii) a listing of each Option, showing the holder
thereof, the number of shares, the exercise price per share and a copy
of the option agreements relating thereto; (iv) a listing of the
participants in the First Federal Employee Stock Ownership Plan
("ESOP"), showing the number of outstanding shares of Bancorp Common
Stock credited to each participant, the vesting dates thereof, and the
unpaid balance of any loans owing by the ESOP to Bancorp or any party
as of the date hereof (the "ESOP Loan"), the number of unallocated
shares of Bancorp Common Stock held by such trusts; and (v) each
officer or director for whom a supplemental executive retirement,
salary continuation or deferred compensation plan or agreement is
maintained, showing the calculations of the amounts due under each such
plan or agreement and the payment schedule thereof, and the amounts
accrued in the Bancorp Financial Statements with respect thereto.
(i) Bancorp and each Bancorp Subsidiary have filed or caused
to be filed, and will continue to file or cause to be filed, in a
timely manner all filings pertaining to each Bancorp Benefit Plan with
the Internal Revenue Service, the PBGC, the Department of Labor, as
prescribed by the Code or ERISA, or regulations issued thereunder. All
such filings, as amended, were complete and accurate in all material
respects as of the dates of such filings, and there were no
misstatements or omissions in any such filing which would be material
to the financial condition of Bancorp on a consolidated basis.
(j) Neither Bancorp nor any Bancorp Subsidiary is a party to
or bound by any collective bargaining agreement and, to the best of
Bancorp's knowledge, no labor union claims to or is seeking to
represent any employees of Bancorp or any Bancorp Subsidiary.
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3.20 ENVIRONMENTAL MATTERS.
(a) For purposes of this Section 3.20, "Bancorp Properties"
means (i) the real estate owned or leased by Bancorp or First Federal
and used as a banking related facility; (ii) other real estate owned,
if any ("Bancorp REO"), by Bancorp or any Bancorp Subsidiary as defined
by any other federal or state financial institution regulatory agency
with regulatory authority for Bancorp or any Bancorp Subsidiary; (iii)
real estate that is in the process of pending foreclosure or forfeiture
proceedings conducted by Bancorp or any Bancorp Subsidiary; (iv) real
estate that is held in trust for others by First Federal; and (5) real
estate owned or leased by a partnership or joint venture in which
Bancorp or a Bancorp Subsidiary has an ownership interest.
(b) To the best knowledge of Bancorp after such inquiry and
investigation as Bancorp deems appropriate, there are no present or
past conditions on the Bancorp Properties, involving or resulting from
a past or present storage, spill, discharge, leak, emission, injection,
escape, dumping or release of any kind whatsoever of any Hazardous
Materials or from any generation, transportation, treatment, storage,
disposal, use or handling of any Hazardous Materials, that may
reasonably be expected to result in a Material Adverse Effect on
Bancorp's consolidated business, financial condition or prospects.
(c) Bancorp and each Bancorp Subsidiary are in compliance in
all material respects with all applicable Environmental Laws. Neither
Bancorp nor any Bancorp Subsidiary have received notice of, nor to the
best of their knowledge are there outstanding or pending, any public or
private claims, lawsuits, citations, penalties, unsatisfied abatement
obligations or notices or orders of non-compliance relating to the
environmental condition of the Bancorp Properties, which have or may
have a material adverse effect on Bancorp's consolidated business,
financial condition or prospects.
(d) To the best knowledge of Bancorp after such inquiry and
investigation as Bancorp deems appropriate, no Bancorp Properties are
currently undergoing remediation or cleanup of Hazardous Materials or
other environmental conditions, the actual or estimated cost of which
may have a material adverse effect on Bancorp's consolidated business,
financial condition or prospects.
(e) To the best knowledge of Bancorp after such inquiry and
investigation as Bancorp deems appropriate, Bancorp and each Bancorp
Subsidiary have all governmental permits, licenses, certificates of
inspection and other authorizations governing or protecting the
environment necessary to conduct its present business. Further, Bancorp
warrants and represents that these permits, licenses, certificates of
inspection and other authorizations are fully transferrable, to the
extent permitted by law, to MAF.
3.21 DISCLOSURE SCHEDULE OF BANCORP. Schedule 3.21 to the Bancorp
Disclosure Schedule contains, and shall be supplemented by Bancorp as required
by Section 5.15 hereof, so as
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to contain at the Closing Date the following information and copies of the
following documents, certified by an officer of Bancorp to be true and correct
copies of such documents on the dates of such certificates, if and to the extent
any of the following are not specifically included in other Schedules to the
Bancorp Disclosure Schedule:
(a) A list and description of each outstanding loan agreement,
mortgage, pledge agreement or other similar document or commitments to
extend credit to any senior officer or director of Bancorp or any
Bancorp Subsidiary, as well as a listing of all deposits or deposit
surrogates, including the amount, type and interest being paid thereon,
to which Bancorp or each Bancorp Subsidiary is a party under which it
may (contingently or otherwise) have any liability involving any
officer or director of Bancorp or any Bancorp Subsidiary.
(b) A list and description of each outstanding letter of
credit and each commitment to issue a letter of credit in excess of
$25,000 to which Bancorp or any Bancorp Subsidiary is a party and/or
under which it may (contingently or otherwise) have any liability.
(c) A list and description of each material contract or
agreement (not otherwise included in the Bancorp Disclosure Schedule or
specifically excluded therefrom in accordance with the terms of this
Agreement) involving goods, services or occupancy and which (i) has a
term of more than six months; (ii) cannot be terminated on thirty days,
(or less) written notice without penalty; and (iii) involves an annual
expenditure by Bancorp or any Bancorp Subsidiary in excess of $25,000.
(d) A list and description of each contract or commitment
(other than Bancorp Permitted Liens as defined below) hereof affecting
ownership of, title to, use of, or any interest in real estate which is
currently owned by Bancorp or any Bancorp Subsidiary, and a list and
description of all real estate owned, leased or licensed by Bancorp or
any Bancorp Subsidiary.
(e) A list and description of each material commitment made by
Bancorp or any Bancorp Subsidiary to or with any director, officer or
employee of Bancorp or any Bancorp Subsidiary extending for a period of
more than three months from the date hereof or providing for earlier
termination only upon the payment of a penalty or equivalent thereto.
(f) Complete and correct copies of the Certificate of
Incorporation, Charter and By-laws and specimen certificates of each
type of security issued by Bancorp and any Bancorp Subsidiary.
(g) A list and description of each other contract or
commitment providing for commissions, payments or any other
remuneration based in any manner upon outstanding loans or profits of
Bancorp or any Bancorp Subsidiary, including, without limitation, joint
venture arrangements.
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(h) A list and description of all powers of attorney granted
by Bancorp or any Bancorp Subsidiary which are currently in force.
(i) A list and description of all policies of insurance
currently maintained by Bancorp or any Bancorp Subsidiary and a list
and description of all unsettled or outstanding claims of Bancorp or
any Bancorp Subsidiary which have been, or to the best knowledge of
Bancorp, will be, filed with the companies providing insurance coverage
for Bancorp or any Bancorp Subsidiary (except for routine claims for
health benefits).
(j) A list and description of all policies of insurance
maintained by Bancorp or any Bancorp Subsidiary during the past five
years.
(k) A copy of any collective bargaining agreement to which
Bancorp or any Bancorp Subsidiary is a party and all affirmative action
plans or programs covering employees of Bancorp or any Bancorp
Subsidiary, as well as all employee handbooks, policy manuals, rules
and standards of employment promulgated by Bancorp or any Bancorp
Subsidiary.
(l) Each lease or material license with respect to real or
personal property, whether as lessor, lessee, licensor or licensee, to
which Bancorp or any Bancorp Subsidiary is a party, and all employment,
consulting and professional services contracts to which Bancorp or any
Bancorp Subsidiary is a party.
(m) All judgments, orders, injunctions, court decrees or
settlement agreements arising out of or relating to the labor and
employment practices or decisions of Bancorp or each Bancorp Subsidiary
which, by their terms, continue to bind or affect Bancorp or such
Bancorp Subsidiary.
(n) All orders, decrees, memoranda, agreements or
understandings with regulatory agencies binding upon or affecting the
current operations of Bancorp or any Bancorp Subsidiary or any of their
directors or officers in their capacities as such.
(o) All trademarks, trade names, service marks, patents, or
copyrights, whether registered or the subject of an application for
registration, which are owned by Bancorp or any Bancorp Subsidiary or
licensed from a third party (excluding computer software programs,
source codes and related materials) (collectively, the "Intellectual
Property"). With respect to each item of Intellectual Property owned by
Bancorp or any Bancorp Subsidiary, Bancorp or such Bancorp Subsidiary
possesses all right, title and interest in and to the item, free and
clear of any lien, claim, royalty interest or encumbrance. With respect
to each item of Intellectual Property that Bancorp or any Bancorp
Subsidiary is licensed or authorized to use, the license, sublicense,
agreement or permission covering such item is legal, valid, binding,
enforceable and in full force and effect and has not been breached by
any party thereto. Neither Bancorp nor any Bancorp Subsidiary has ever
received any
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charge, complaint, claim, demand or notice alleging any interference,
infringement, misappropriation or violation with or of any intellectual
property rights of a third party (including any claims that Bancorp or
such Bancorp Subsidiary must license or refrain from using any
intellectual property rights of a third party). To the knowledge of
Bancorp, neither Bancorp nor any Bancorp Subsidiary has interfered
with, infringed upon, misappropriated or otherwise come into conflict
with any intellectual property rights of third parties and no third
party has interfered with, infringed upon, misappropriated or otherwise
come into conflict with any intellectual property rights of Bancorp or
any Bancorp Subsidiary.
(p) All policies formally adopted by the Board of Directors of
Bancorp or any Bancorp Subsidiary as currently in effect and, with
respect to environmental matters, copies of all policies that have been
in effect during the last five years regarding the performance of
environmental investigations of properties accepted as collateral for
loans, including the effective dates of all such policies.
(q) All agreements which require or will require the consent
or approval of, or notice to, any other party as a result of, in
connection with or in order to consummate the Merger or the Bank
Merger.
(r) All other agreements to which Bancorp or any Bancorp
Subsidiary is a party (which do not expire within six months from the
date hereof and cannot be terminated upon thirty days, (or less)
written notice without penalty) which individually during its term
could commit Bancorp or any Bancorp Subsidiary to an expenditure
(either individually or through a series of installments) in excess of
$25,000 or which create a material right or benefit to receive
payments, goods or services not referred to elsewhere in this Section
3.21 including without limitation:
(i) all agreements of guaranty or indemnification
running to any person;
(ii) all agreements containing any covenant limiting
the right of Bancorp or any Bancorp Subsidiary to engage in
any line of business or to compete with any person;
(iii) all agreements with respect to licenses,
permits and similar matters that are necessary to the
operations of Bancorp or any Bancorp Subsidiary;
(iv) all contracts or agreements, including but not
limited to contracts or agreements pursuant to which Bancorp
or any Bancorp Subsidiary has sold, transferred, assigned or
agreed to service any loan, which provide for any recourse or
indemnification obligation on the part of Bancorp or any
Bancorp Subsidiary; the name and address of each person who
might or could be entitled to recourse against or
indemnification from Bancorp or any Bancorp Subsidiary; and
the monetary amount of each actual or potential recourse or
indemnification obligation under each such contract or
agreement.
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(s) All agreements relating to the servicing of loans and all
mortgage forward commitments and similar agreements pursuant to which
Bancorp or any Bancorp Subsidiary sells mortgages which it originates
to others or purchases mortgages from others.
3.22 DEFAULTS. There has not been any default, or the occurrence of an
event which with notice or lapse of time or both would constitute a default, in
any obligation to be performed by Bancorp or any Bancorp Subsidiary under any
contract or commitment, and neither Bancorp nor any Bancorp Subsidiary has
waived any right under any contract or commitment, except in each case where any
such default or waiver, singly or in the aggregate, with any other such defaults
or waivers, would not have a material adverse effect on Bancorp. To the best of
the knowledge of Bancorp, no other party to any contract or commitment is in
material default in any material obligation to be performed by such party.
3.23 OPERATIONS SINCE DECEMBER 31, 1997. Between December 31, 1997, and
the date hereof, there has not been, except as set forth on Schedule 3.23 to the
Bancorp Disclosure Schedule:
(a) any increase in the compensation payable or to become
payable by Bancorp or any Bancorp Subsidiary to any executive officer
or director;
(b) any payment of dividends by Bancorp or any Bancorp
Subsidiary or any distribution by any of them, whether directly or
indirectly, of any assets of any kind whatsoever, on or in redemption
or as the purchase price of, any of their respective capital stocks, or
any prepayment of any indebtedness to any stockholder, except that
Bancorp has paid a quarterly dividend of $0.17 per share, as reflected
on Schedule 3.23(b) to the Bancorp Disclosure Schedule;
(c) any mortgage, pledge or subjection to lien, charge or
encumbrance of any kind of or on any asset, tangible or intangible, of
Bancorp or any Bancorp Subsidiary, except the following (each of which,
whether arising before or after the date hereof, is herein referred to
as a "Bancorp Permitted Lien"): (i) liens arising out of judgments or
awards in respect of which Bancorp or any Bancorp Subsidiary is in good
faith prosecuting an appeal or proceedings for review and in respect of
which it has secured a subsisting stay of execution pending such appeal
or proceedings; (ii) liens for taxes, assessments, and other
governmental charges or levies the payment of which is not past due, or
as to which Bancorp or any Bancorp Subsidiary is diligently contesting
in good faith and by appropriate proceedings either the amount thereof
or the liability therefor or both; (iii) deposits, liens or pledges to
secure payments of worker's compensation, unemployment insurance,
pensions, or other social security obligations, or the performance of
bids, tenders, leases, contracts (other than contracts for the payment
of money), public or statutory obligations, surety, stay or appeal
bonds, or similar obligations arising in the ordinary course of
business; (iv) zoning restrictions, easements, licenses and other
restrictions on the use of real property or any interest therein, or
minor irregularities in title thereto, which do not materially impair
the use of such property in the operation of the business of Bancorp or
any Bancorp Subsidiary or
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the merchantability or the value of such property or interest therein
for the purpose of such business; (v) purchase money mortgages or other
purchase money or vendor's liens or security interests (including,
without limitation, finance leases), provided that no such mortgage,
lien or security interest shall extend to or cover any other property
of Bancorp or any Bancorp Subsidiary other than that so purchased; and
(vi) pledges and liens given to secure deposits and other liabilities
of Bancorp or any Bancorp Subsidiary arising in the ordinary course of
banking business;
(d) any creation or assumption of indebtedness (including the
extension or renewal of any existing indebtedness, or the increase
thereof), by Bancorp or any Bancorp Subsidiary for borrowed money, or
otherwise, other than in the ordinary course of business, none of which
(except those which are being disputed in good faith) is in default;
(e) the establishment of any new, or increase in the formula
for or rate of contributions to or benefits under any existing,
retirement, pension, profit sharing, stock bonus, employee stock
ownership, savings or thrift plan, or any similar plan of deferred
compensation, whether funded or unfunded and whether qualified or
unqualified (within the meaning of the Code) by Bancorp or any Bancorp
Subsidiary;
(f) any action by Bancorp or any Bancorp Subsidiary seeking
any cancellation of, or decrease in the insured limit under, or
increase in the deductible amount or the insured's retention (whether
pursuant to coinsurance or otherwise) of or under, any policy of
insurance maintained directly or indirectly by Bancorp or any Bancorp
Subsidiary on any of their respective assets or businesses, including
but not by way of limitation, fire and other hazard insurance on its
assets, automobile liability insurance, general public liability
insurance, and directors and officers liability insurance; and if an
insurer takes any such action, Bancorp shall promptly notify MAF.
(g) any change in independent auditors, historic methods or
practices of accounting of Bancorp or any Bancorp Subsidiary (other
than as required by generally accepted accounting principles or
regulatory accounting principles), or in its system for maintaining its
equipment and real estate;
(h) any purchase, whether for cash or secured or unsecured
obligations (including finance leases), by Bancorp or any Bancorp
Subsidiary of any fixed asset which either (i) has a purchase price
individually or in the aggregate in excess of $25,000 or (ii) is
outside of the ordinary course of business;
(i) any sale or transfer of any asset in excess of $25,000 of
Bancorp or any Bancorp Subsidiary or outside of the ordinary course of
business with the exception of loans and marketable securities sold in
the ordinary course of business at market prices;
(j) any cancellation or compromise of any debt to, claim by or
right of, Bancorp or any Bancorp Subsidiary except in the ordinary
course of business;
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(k) any amendment or termination of any material contract or
commitment to which Bancorp or any Bancorp Subsidiary is a party, other
than in the ordinary course of business;
(l) there has not been any agreement, contract or commitment
entered into, or agreed to be entered into, except for those in the
ordinary course of business; or
(m) any event, occurrence or condition of any character (other
than changes in legal, economic or other conditions which are not
specifically or uniquely applicable to Bancorp or any Bancorp
Subsidiary) having, or which may reasonably be expected to have, a
material adverse effect on the business, operations or financial
condition of Bancorp and any Bancorp Subsidiary taken as a whole.
3.24 CORPORATE RECORDS. The corporate record books, transfer books and
stock ledgers of Bancorp and each Bancorp Subsidiary are complete and accurate
in all material respects and reflect all meetings, consents and other material
actions of the organizers, incorporators, stockholders, Boards of Directors and
committees of the Boards of Directors of Bancorp and each Bancorp Subsidiary,
and all transactions in their respective capital stocks, since their respective
inceptions.
3.25 UNDISCLOSED LIABILITIES. All of Liabilities have, in the case of
First Federal, been reflected, disclosed or reserved against in the consolidated
financial statements of Bancorp as at December 31, 1997 or in the notes thereto,
and Bancorp and each Bancorp Subsidiary have no other Liabilities except (a)
Liabilities incurred since December 31, 1997 in the ordinary course of business,
or (b) as disclosed in Schedule 3.25 to the Bancorp Disclosure Schedule.
3.26 ASSETS.
(a) Bancorp and each Bancorp Subsidiary have good, sufficient
and marketable title to their real properties, including any leaseholds
and ground leases, and their other assets and properties, all as
reflected as owned by Bancorp or each Bancorp Subsidiary in the Bancorp
Financial Statements dated as of December 31, 1997 except for (i)
assets and properties disposed of since such date in the ordinary
course of business and (ii) Bancorp Permitted Liens, none of which, in
the aggregate, or except as set forth in Schedule 3.26(a) to the
Bancorp Disclosure Schedule, are material to the assets of Bancorp on a
consolidated basis. All buildings, structures, fixtures and
appurtenances comprising part of the real properties of Bancorp or any
Bancorp Subsidiary (whether owned or leased by Bancorp or any Bancorp
Subsidiary) are in good operating condition and have been well
maintained, reasonable wear and tear excepted. Title to all real
property listed as being owned by Bancorp or any Bancorp Subsidiary on
the Bancorp Disclosure Schedule is held in fee simple. Bancorp and each
Bancorp Subsidiary have title or other rights to its assets sufficient
in all material respects for the conduct of their respective businesses
as presently conducted, and such assets are free, clear and discharged
of, and from any and all liens,
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charges, encumbrances, security interests and/or equities which are
material to Bancorp on a consolidated basis.
(b) All leases pursuant to which Bancorp or any Bancorp
Subsidiary, as lessee, leases real or personal property which are
material to the business of Bancorp on a consolidated basis are, to the
best of the knowledge of Bancorp, valid, effective, and enforceable
against the lessor in accordance with their respective terms. There is
not under any of such leases any existing default, or any event which
with notice or lapse of time or both would constitute a default, with
respect to either Bancorp or any Bancorp Subsidiary, or to the best
knowledge of Bancorp, the other party. None of such leases contains a
prohibition against assignment by Bancorp or any Bancorp Subsidiary, by
operation of law or otherwise, or any other provision which would
preclude Bancorp or any Bancorp Subsidiary from possessing and using
the leased premises for the same purposes and upon the same rental and
other terms upon the consummation of the Merger as are applicable to
the possession and use by Bancorp or any Bancorp Subsidiary as of the
date of this Agreement. Neither Bancorp nor any Bancorp Subsidiary has
made a prior assignment for collateral purposes of any such lease.
3.27 INDEMNIFICATION. To the best of the knowledge of Bancorp, no
action or failure to take action by any director, officer, employee or agent of
Bancorp or each Bancorp Subsidiary has occurred which would give rise to a claim
or a potential claim by any such person for indemnification from Bancorp or any
Bancorp Subsidiary under the corporate indemnification provisions of Bancorp or
any Bancorp Subsidiary in effect on the date of this Agreement.
3.28 INSIDER INTERESTS. All outstanding loans and other contractual
arrangements (including deposit relationships) between Bancorp or any Bancorp
Subsidiary and any officer, director or employee of Bancorp or any Bancorp
Subsidiary conform to the applicable rules and regulations and requirements of
all applicable regulatory agencies which were in effect when such loans and
other contractual arrangements were entered into. No officer, director or
employee of Bancorp or any Bancorp Subsidiary has any material interest in any
property, real or personal, tangible or intangible, used in or pertaining to the
business of Bancorp or any Bancorp Subsidiary.
3.29 POOLING AND TAX. Neither Bancorp nor any Bancorp Subsidiary has
engaged in any act that would preclude or adversely affect the Merger from
qualifying for pooling of interests accounting treatment or as a tax-free
reorganization under Section 368(a) of the Code.
3.30 OPINION. Bancorp has received an opinion, dated the date of this
Agreement, from ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, Inc. to the effect that, subject to the
terms, conditions and qualifications set forth therein, as of the date thereof
the Merger Consideration to be received by the shareholders of Bancorp pursuant
to the Merger is fair to such stockholders from a financial point of view.
3.31 ADVICE OF CHANGES. Between the date hereof and the Effective Time,
Bancorp shall promptly advise MAF in writing of any fact which, if existing or
known as of the date hereof, would have been required to be set forth or
disclosed in or pursuant to this Agreement or of any fact which,
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if existing or known as of the date hereof, would have made any of the
representations contained herein untrue.
3.32 MILLENNIUM COMPLIANCE. Bancorp represents and warrants to MAF
that: (a) Bancorp's and the Bancorp Subsidiaries' computer hardware and software
systems used for the storage and processing of data (as used in this Section
3.32, "Systems") are Millennium Compliant; (b) to the best of Bancorp's
knowledge, none of the Systems, operations or business functions of Bancorp or
any Bancorp Subsidiaries will be materially adversely affected by any third
party's failure to be Millennium Compliant; (c) to the best of Bancorp's
knowledge after due inquiry, all of its suppliers, customers and third party
providers will be Millennium Compliant; and (d) Bancorp is taking, or has taken,
all necessary and appropriate action to address and remedy any deficiencies in
Bancorp's Systems from becoming Millennium Compliant. As used in this Section
3.32, "Millennium Compliant" shall mean the ability of Systems to provide the
following functions, without human intervention, individually and in combination
with other products or systems: (i) consistently handle date information before,
during and after January 1, 2000, including but not limited to accepting date
input, providing date output and performing calculations on dates or portions of
dates; (ii) function accurately and without interruption before, during and
after January 1, 2000 (including leap year computations), without any change in
operations associated with the advent of a new century; (iii) respond to
two-digit date input in a way that resolves any ambiguity as to century in a
disclosed, defined and predetermined manner; and (iv) store and provide output
of date information in ways that are unambiguous as to century.
3.33 CONSENTS AND APPROVALS. Except as referred to herein or in
connection, or in compliance, with the provisions of the HSR Act, the Securities
Act, the Exchange Act, the BMA, the FDI Act, the rules and regulations of the
OTS, and the environmental, corporation, securities or "blue sky" laws or
regulations of the various states, no filing or registration with, or
authorization, consent or approval of, any other party is necessary for the
consummation by Bancorp of the Merger or the other transactions contemplated by
this Agreement. As of the date hereof, Bancorp knows of no reason why the
approvals, consents and waivers of governmental authorities referred to in this
Section that are required to be obtained should not be obtained without the
imposition of any condition or restriction.
IV.
COVENANTS
4.1 CONDUCT OF BUSINESS BY BANCORP UNTIL THE EFFECTIVE TIME. During the
period commencing on the date hereof and continuing until the Effective Time,
Bancorp agrees (except as expressly contemplated by this Agreement or to the
extent that MAF shall otherwise consent in writing which consent shall not be
unreasonably withheld) that:
(a) Except as contemplated by this Agreement, Bancorp and each
Bancorp Subsidiary will carry on their respective businesses in, and
only in, the usual, regular and ordinary course in substantially the
same manner as heretofore conducted, maintain their
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respective books in accordance with generally accepted accounting
principles, conduct their respective businesses and operations only in
accordance with safe and sound banking and business practices, and, to
the extent consistent with such businesses, use all reasonable efforts
to preserve intact their present business organizations, to generally
keep available the services of their present officers and employees and
to preserve their relationships with customers, suppliers and others
having business dealings with them to the end that their respective
goodwill and going businesses shall be unimpaired at the Effective
Time.
(b) Bancorp will, and will cause each Bancorp Subsidiary to,
use their best efforts to comply promptly with all requirements which
federal or state law may impose on any of them with respect to the
Merger and will promptly cooperate with and furnish information to MAF
in connection with any such requirements imposed upon any of them in
connection with the Merger.
(c) Bancorp will, and will cause each Bancorp Subsidiary to,
use their best efforts to obtain (and to cooperate with MAF in
obtaining) any consent, authorization or approval of, or any exemption
by, any governmental authority or agency, or other third party,
required to be obtained or made by any of them in connection with the
Merger or the taking of any action contemplated hereby. Bancorp will
not, nor will it permit any of the Bancorp Subsidiaries to, knowingly
or willfully take any action that would adversely affect the ability of
such party to perform its obligations under this Agreement or the Stock
Option Agreement.
(d) Bancorp (i) will not declare or pay any dividends on or
make other distributions with respect to capital stock, except that
Bancorp will be permitted to declare and pay a regular quarterly
dividend per share not exceeding $0.17, and (ii) except as provided
below, will not declare or pay any dividends or make any distributions
on Bancorp Common Stock in the calendar quarter in which the Effective
Time shall occur and in which the holders of Bancorp Common Stock are
entitled to receive regular quarterly dividends on the shares of MAF
Common Stock into which the shares of Bancorp Common Stock have been
converted. It is the intent of clause (ii) of this Subsection to
provide that the holders of Bancorp Common Stock will receive either
payment of dividends on their shares of Bancorp Common Stock as
permitted under (i) of this Subsection or the payment of cash dividends
as the holders of shares of MAF Common Stock received in exchange for
the shares of Bancorp Common Stock for the calendar quarter during
which the Effective Time shall occur, but will not receive and will not
become entitled to receive for the same calendar quarter both the
payment of a permitted dividend as shareholders of Bancorp and the
payment of a cash dividend as the holders of the shares of MAF Common
Stock received in exchange for the shares of Bancorp Common Stock. In
the event that Bancorp does not declare and pay permitted dividends on
Bancorp Common Stock in a particular calendar quarter because of
Bancorp's expectation that the Effective Time would occur in said
calendar quarter wherein the holders of Bancorp Common Stock would have
become entitled to receive cash dividends for such calendar quarter of
the shares of MAF Common Stock to have been exchanged for the shares of
Bancorp Common Stock, and the Effective Time does
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not in fact occur in said calendar quarter, then, as a result thereof,
Bancorp shall be entitled to declare and pay a permitted dividend
(within the limitations of this Section) on said shares of Bancorp
Common Stock for said calendar quarter as soon as reasonably
practicable. Bancorp shall not make any changes in its normal practice
of establishing dividend record or dividend payment dates. Bancorp
shall not pay a dividend during the quarter that the Merger is to be
consummated if Bancorp's stockholders would be entitled to receive a
dividend from MAF during that quarter.
(e) Bancorp will not, and will not permit any Bancorp
Subsidiary to, sell, lease or otherwise dispose of any assets, except
in the ordinary course of business, which are material, individually or
in the aggregate, to the business or financial condition of Bancorp on
a consolidated basis.
(f) Bancorp will not, and will not permit any Bancorp
Subsidiary to, acquire by merging or consolidating with, purchasing
substantially all of the assets of or otherwise, any business or any
corporation, partnership, association or other business organization or
division thereof.
(g) Bancorp will not, and will not permit any Bancorp
Subsidiary to, issue, sell, authorize or propose the issuance or sale
of, or purchase or propose the purchase of, permit the conversion of or
otherwise acquire or transfer for any consideration any shares of their
respective capital stocks of any class or securities convertible into,
or rights, warrants or options to acquire, any such shares or other
convertible securities, or to increase or decrease the number of shares
of capital stock by split-up, reclassification, reverse split, stock
dividend or change in par or stated value, except as contemplated
herein, in the Stock Option Agreement or pursuant to outstanding
Options.
(h) Bancorp will not, and will not permit any Bancorp
Subsidiary to, incur any indebtedness for money borrowed or issue or
sell any debt securities other than in the ordinary course of business
or consistent with past practices as to inter-company borrowings or
permit or suffer the imposition on any shares of stock held by it or by
any Bancorp Subsidiary of any material lien, charge or encumbrance.
(i) Bancorp will not, and will not permit any Bancorp
Subsidiary to, grant to any director, officer or employee any increase
in compensation (except in accordance with past practices for those
employees who are not executive or senior management), make
contributions to any Bancorp Benefit Plan (except in accordance with
past practices or the terms of such plans or agreements as currently in
effect as of the date of this Agreement or as contemplated to be
amended in this Agreement, provided that no contributions shall be made
to any Bancorp Qualified Plan that is a defined benefit plan) or pay
any bonus (except in accordance with past practices or plans or
agreements with respect to employees other than executive or senior
management) or increase in any severance or termination pay, or enter
into or amend any employment, special termination, retention, covenant
not to compete or severance agreement with any such person except as
contemplated in this Agreement;
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provided, however, that Bancorp and the Bancorp Subsidiaries may
continue to accrue for bonuses at the current rate as reflected in
Schedule 4(i) to the Bancorp Disclosure Schedule and may pay such
bonuses prior to Closing.
(j) Except as disclosed in Schedule 4.1(j) to the Bancorp
Disclosure Schedule, neither Bancorp, nor any Bancorp Subsidiary, will
enter into any material lease or license with respect to any property,
whether real or personal, or any other contract, agreement or
commitment for goods or services which has a term of six months after
the date hereof and involves the payment by Bancorp or any Bancorp
Subsidiary of more than $35,000 in the aggregate.
(k) Bancorp will not, and will not permit any Bancorp
Subsidiary to, adopt or amend in any material respect any collective
bargaining, employee pension, profit-sharing, retirement, employee
stock ownership, insurance, incentive compensation, severance,
vacation, stock option, or other plan, agreement, trust, fund or
arrangement for the benefit of employees, except as contemplated
herein.
(l) Bancorp will, and will cause each Bancorp Subsidiary to,
use their best efforts to maintain their respective properties and
assets in their present states of repair, order and condition,
reasonable wear and tear excepted, and to maintain and keep in full
force and effect all policies of insurance presently in effect,
including the insurance of accounts with the FDIC. Bancorp will, and
will cause each Bancorp Subsidiary to, take all requisite action
(including without limitation the making of claims and the giving of
notices) pursuant to their directors' and officers' liability insurance
policies in order to preserve all rights thereunder with respect to all
matters known by Bancorp which could reasonably give rise to a claim
prior to the Effective Time.
(m) Bancorp will not, and will not permit any Bancorp
Subsidiary to, amend their respective Certificates of Incorporation,
Charters, or by-laws, except as contemplated by this Agreement.
(n) Bancorp will not, and will not permit any Bancorp
Subsidiary to, enter into, renew or increase any loan or credit
commitment (including letters of credit) to, or invest or agree to
invest in, any person or entity or modify any of the material
provisions or renew or otherwise extend the maturity date of any
existing loan or credit commitment: (i) to any person or entity in an
amount in excess of $200,000, or in any amount which, when aggregated
with any and all loans or credit commitments of Bancorp and First
Federal to such person or entity, would be in excess of $500,000; (ii)
to any person other than in accordance with its lending policies as in
effect on the date hereof; or (iii) to any person or entity any of the
loans or other extensions of credit to which, or investments in which,
are on a "watch list" or similar internal report of Bancorp or First
Federal; provided, however, that nothing in this subsection shall
prohibit Bancorp or First Federal from honoring any contractual
obligation in existence on the date of this Agreement.
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(o) Bancorp will not, and will not permit any Bancorp
Subsidiary to, take any action which would, or fail to take any action
contemplated by this Agreement if such failure would, disqualify the
Merger as a "pooling of interests" for accounting purposes or as a
tax-free reorganization under Section 368(a) of the Code.
(p) Bancorp will not, and will not permit any Bancorp
Subsidiary to, materially restructure or change its investment
securities portfolio, through purchases, sales or otherwise, or the
manner in which the portfolio is classified or reported (in accordance
with FAS 115 or otherwise), or execute individual investment
transactions.
(q) Bancorp will not, and will not permit any Bancorp
Subsidiary to, enter into any new, or modify, amend or extend the terms
of any existing, contracts relating to the purchase or sale of
financial or other futures, or any put or call option relating to cash,
securities or commodities or any interest rate swap agreements or other
agreements relating to the hedging of interest rate risks.
(r) Bancorp will not, and will not permit any Bancorp
Subsidiary to, enter into, increase or renew any loan or credit
commitment (including letters of credit) to any executive officer or
director of Bancorp or any Bancorp Subsidiary, any five percent
stockholder of Bancorp, or any entity controlled, directly or
indirectly, by any of the foregoing or engage in any transaction with
any of the foregoing which is of the type of nature sought to be
regulated in 12 U.S.C. 371c and 12 U.S.C. 371c-1. For purposes of this
Subsection, "control" shall have the meaning associated with that term
under 12 U.S.C. 371c.
(s) Bancorp will promptly advise MAF orally and in writing of
any event or series of events which has resulted in a material adverse
effect or which may have a materially adverse effect on Bancorp or any
Bancorp Subsidiary or which may adversely affect the satisfaction of
any condition to the consummation of the Merger or the ability of
Bancorp to perform its obligations under this Agreement or the Stock
Option Agreement.
(t) Notwithstanding any of the foregoing, at or immediately
prior to the Effective Time, if and as so requested by MAF, First
Federal (i) shall cause to be repaid to Bancorp any outstanding
inter-company debt, and (ii) cause dividends to be paid to Bancorp in
such amounts as specified by MAF, which payments or dividends may be
paid in kind.
(u) Bancorp covenants and agrees with MAF that it will
execute, acknowledge where appropriate and deliver, or cause to be
executed, acknowledged where appropriate and delivered, from time to
time, at the request of MAF, all such instruments or documents relating
to Millennium Compliance as in the opinion of MAF are reasonably
necessary or advisable to carry out the intent or purpose of this
Agreement or the documents delivered pursuant hereto or as part of the
transaction contemplated hereby. Bancorp further covenants and agrees
with MAF that MAF may from time to time request a statement of
Bancorp's Chief Financial Officer to the effect that Bancorp and the
Bancorp Subsidiaries are in
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compliance with their Year 2000 compliance strategy. Bancorp further
covenants and agrees with MAF that it will permit MAF, at all
reasonable times upon notice, to perform such inspections and audits as
MAF may deem necessary to establish compliance with the foregoing
covenants.
4.2 CONDUCT OF BUSINESS BY MAF UNTIL THE EFFECTIVE TIME. During the
period commencing on the date hereof and continuing until the Effective Time,
MAF agrees (except as expressly contemplated by this Agreement or to the extent
that Bancorp shall otherwise consent in writing, which consent shall not be
unreasonably withheld) that:
(a) Except as contemplated by this Agreement, MAF and the MAF
Subsidiaries will carry on their respective businesses in, and only in,
the usual, regular and ordinary course in substantially the same manner
as heretofore conducted, maintain their respective books in accordance
with generally accepted accounting principles, conduct their respective
businesses and operations only in accordance with safe and sound
banking and business practices, and, to the extent consistent with such
businesses, use all reasonable efforts to preserve intact their present
business organizations, to generally keep available the services of
their present officers and employees and to preserve their
relationships with customers, suppliers and others having business
dealings with them to the end that their respective goodwill and going
businesses shall be unimpaired at the Effective Time.
(b) MAF will, and will cause the MAF Subsidiaries to, use
their best efforts to comply promptly with all requirements which
federal or state law may impose on any of them with respect to the
Merger and will promptly cooperate with and furnish information to
Bancorp in connection with any such requirements imposed upon any of
them in connection with the Merger.
(c) MAF will, and will cause the MAF Subsidiaries to, use
their best efforts to obtain (and to cooperate with Bancorp in
obtaining) any consent, authorization or approval of, or any exemption
by, any governmental authority or agency, or other third party,
required to be obtained or made by any of them in connection with the
Merger or the taking of any action contemplated hereby. MAF will not,
nor will it permit any of the MAF Subsidiaries to, knowingly or
willfully take any action that would adversely affect their ability to
perform their obligations under this Agreement or the Stock Option
Agreement.
(d) MAF will not, and will not permit any MAF Subsidiary to,
take any action which would, or fail to take any action contemplated by
this Agreement if such failure would, disqualify the Merger as a
"pooling of interests" for accounting purposes or as a tax-free
reorganization under Section 368(a) of the Code.
(e) MAF shall cooperate with Bancorp to coordinate the record
and payment dates of their cash dividends for the quarter the Merger is
consummated as provided in Section 4.1(d) hereof.
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4.3 ENVIRONMENTAL INVESTIGATION.
(a) MAF shall engage a mutually acceptable environmental
consultant to conduct a preliminary ("Phase I") environmental
assessment of each of the parcels of real estate used in the operation
of the businesses of Bancorp and First Federal and any other real
estate owned by Bancorp. The fees and expenses of the consultant with
respect to the Phase I assessments shall be paid by MAF. The consultant
shall complete and deliver the Phase I assessments not later than sixty
(60) days after the date of this Agreement. If any environmental
conditions are found or suspected or would tend to be indicated by the
report of the consultant which may be contrary to the representations
and warranties of Bancorp set forth herein without regard to any
exceptions that may be contained in the Bancorp Disclosure Schedule,
then the parties shall obtain from one or more mutually acceptable
consultants or contractors, as appropriate, an estimate of the cost of
any further environmental investigation, sampling, analysis,
remediation, or other follow-up work that may be necessary to address
those conditions in accordance with applicable laws and regulations.
(b) Upon receipt of the estimate of the costs of all follow-up
work to the Phase I assessments or any subsequent investigation phases
that may be conducted, the parties shall attempt to agree upon a course
of action for further investigation and remediation of any
environmental condition suspected, found to exist, or that would tend
to be indicated by the report of the consultant. All post-Phase I
investigations or assessments (the cost of which shall be paid by MAF),
all work plans for any post-Phase I assessments or remediation and any
removal or remediation actions that may be performed shall be mutually
satisfactory to MAF and Bancorp. If the work plans or removal or
remediation actions would cost more than $100,000 (individually or in
the aggregate) to complete, MAF and Bancorp shall discuss a mutually
acceptable modification of this Agreement. MAF and Bancorp shall
cooperate in the review, approval and implementation of all work plans.
(c) If the parties are unable to agree upon a course of action
for further investigation and remediation of an environmental condition
or issue raised by an environmental assessment and/or a mutually
acceptable modification to this Agreement, and the condition or issue
is not one for which it can be determined to a reasonable degree of
certainty that the risk and expense to which the Surviving Corporation
and its subsidiaries would be subject as owner of the property involved
can be quantified, in good faith, and limited to an amount less than
$500,000 then MAF may abandon this Agreement as soon as possible but in
no event more than 120 days after the receipt of the Phase I
assessments.
4.4 EXECUTION OF THE STOCK OPTION AGREEMENT. Simultaneously with the
execution of this Agreement and as a condition thereto, MAF and Bancorp have
approved the execution and delivery of a stock option agreement (the "Stock
Option Agreement"), which grants to MAF an option to acquire up to 19.9% of the
issued and outstanding shares of Bancorp Common Stock upon the occurrence of
certain circumstances, substantially in the form attached hereto as Exhibit B.
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4.5 CAPITAL STOCK. Except for or as otherwise permitted in or
contemplated by this Agreement or the Stock Option Agreement, without the prior
written consent of MAF, from the date of this Agreement to the earlier of the
Effective Time or the termination of this Agreement, Bancorp shall not, and
shall not enter into any agreement to, issue, sell or otherwise permit to become
outstanding any additional shares of Bancorp Common Stock, preferred stock or
any other capital stock of Bancorp, or any stock appreciation rights, or any
option, warrant, conversion or other right to acquire any such stock, or any
security convertible into any such stock. No additional shares of Bancorp Common
Stock shall become subject to new grants of employee stock options, stock
appreciation rights or similar stock-based employee compensation rights,
including, but not limited to, grants under the ARP Plans.
4.6 CERTAIN ACTIONS.
(a) None of Bancorp or any Bancorp Subsidiary or their
directors, officers or employees (i) shall solicit, initiate,
participate in discussions of, or encourage or take any other action to
facilitate (including by way of the disclosing or furnishing of any
information that it is not legally obligated to disclose or furnish)
any inquiry or the making of any proposal relating to an Acquisition
Transaction (as defined below) or a potential Acquisition Transaction
with respect to itself or any Bancorp Subsidiary, or (ii) shall enter
into any agreement, arrangement, or understanding (whether written or
oral), regarding any proposal or transaction providing for or requiring
it to abandon, terminate or fail to consummate this Agreement, or
compensating it or any Bancorp Subsidiary under any of the instances
described in this clause. Bancorp shall immediately instruct and
otherwise use its best efforts to cause its agents, advisors
(including, without limitation, any investment banker, attorney or
accountant retained by it or any Bancorp Subsidiary), consultants and
other representatives to comply with such prohibitions. Bancorp shall
immediately cease and cause to be terminated any existing activities,
discussions or negotiations with any parties conducted heretofore with
respect to such activities. Notwithstanding the foregoing, Bancorp may
provide information at the request of or enter into negotiations with a
third party with respect to an Acquisition Transaction if the Board of
Directors of Bancorp determines, in good faith, that the exercise of
its fiduciary duties to Bancorp's stockholders under applicable law, as
advised by ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, requires it to take such action,
and, provided further, that Bancorp may not, in any event, provide to
such third party any information which it has not provided to MAF.
Bancorp shall promptly notify MAF orally and in writing in the event it
receives any such inquiry or proposal and shall provide reasonable
detail of all relevant facts relating to such inquiries, along with a
summary of the advice provided by ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇.
(b) "Acquisition Transaction" shall, with respect to Bancorp,
mean any of the following: (i) a merger or consolidation, or any
similar transaction (other than the Merger) of any company with either
Bancorp or any significant subsidiary (as defined in Rule 1.2 of
Regulation S-X of the SEC) (a "Significant Subsidiary") of Bancorp;
(ii) a purchase, lease or other acquisition of all or substantially all
the assets of either Bancorp or any Significant Subsidiary of Bancorp;
(iii) a purchase or other acquisition of "beneficial ownership" by any
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"person" or "group" (as such terms are defined in Section 13(d)(3) of
the Securities Exchange Act) (including by way of merger,
consolidation, share exchange or otherwise) which would cause such
person or group to become the beneficial owner of securities
representing 10% or more of the voting power of either Bancorp or any
Significant Subsidiary of Bancorp; (iv) a tender or exchange offer to
acquire securities representing 10% or more of the voting power of
Bancorp; (v) a public proxy or consent solicitation made to
stockholders of Bancorp seeking proxies in opposition to any proposal
relating to any of the transactions contemplated by this Agreement that
has been recommended by the Board of Directors of Bancorp; (vi) the
filing of an application or notice with the OTS or any other federal or
state regulatory authority (which application has been accepted for
processing) seeking approval to engage in one or more of the
transactions referenced in clauses (i) through (iv) above; or (vii) the
making of a bona fide proposal to Bancorp or its stockholders, by
public announcement or written communication, that is or becomes the
subject of public disclosure, to engage in one or more of the
transactions referenced in clauses (i) through (v) above.
4.7 TITLE TO REAL ESTATE. As soon as practical after the date hereof,
but in any event no later than thirty (30) days after the date hereof, Bancorp,
at its own expense, shall obtain and deliver to MAF, with respect to all real
estate owned or held pursuant to a ground lease by Bancorp and any Bancorp
Subsidiary, an owner's preliminary report of title covering a date subsequent to
the date hereof, issued by Chicago Title and Trust or such other title insurance
company as is reasonably acceptable to MAF, showing fee simple title in Bancorp
or such Bancorp Subsidiary in such real estate or the appropriate leasehold
interest of Bancorp or such Bancorp Subsidiary subject only to (i) the standard
exceptions to title customarily contained in a policy on ALTA 1970 Owner's Form
B; (ii) liens of current state and local property taxes which are not delinquent
or subject to penalty; and (iii) other liens, encumbrances, restrictions and
conditions of record that do not materially adversely affect the value or use of
such real estate.
V.
ADDITIONAL AGREEMENTS
5.1 INSPECTION OF RECORDS; CONFIDENTIALITY.
(a) Bancorp shall afford to MAF and MAF's accountants, counsel
and other representatives full access during normal business hours
during the period prior to the Effective Time to all of its properties,
books, contracts, commitments and records, including all attorneys'
responses to auditors' requests for information and accountants' work
papers, developed by Bancorp or any Bancorp Subsidiary or their
accountants or attorneys, and will permit Bancorp's representatives to
discuss such information directly with MAF's officers, directors,
employees, attorneys and accountants and (b) in the event that this
Agreement is terminated, each party shall return all nonpublic
documents furnished to it hereunder, shall destroy all documents or
portions thereof that contain nonpublic information furnished by the
other party pursuant hereto and, in any event, shall hold all nonpublic
information
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received pursuant hereto in the same degree of confidence with which it
maintains its own like information unless or until such information is
or becomes a matter of public knowledge or is or becomes known to the
party receiving the information through persons other than the party
providing such information.
5.2 MEETINGS OF BANCORP. Bancorp shall provide to MAF the agenda for or
a summary of the business proposed to be discussed at: (i) all meetings of the
Boards of Directors of Bancorp and each Bancorp Subsidiary, and (ii) all
meetings of the committees of each such Board, including without limitation the
audit and executive committees thereof. Bancorp shall provide to MAF all
information provided to the directors on all such Boards and committees in
connection with all such meetings of directors, when the same are provided to
such directors, including minutes of prior meetings with any discussion relating
to this Agreement or the merits of an Acquisition Proposal, financial reports
and any other analyses prepared by senior management of Bancorp. All such
information provided to MAF shall be treated in confidence as provided in
Section 5.1 hereof.
5.3 MERGER OF SUBSIDIARY BANKS. Bancorp and MAF intend to take all
action necessary and appropriate to cause to be entered into a plan and
agreement of merger (the "Bank Merger Agreement"), substantially on the terms
and in the form attached hereto as Exhibit C pursuant to which MAF Bank and
First Federal shall merge simultaneously with or, if such Bank Merger cannot be
effected simultaneously, immediately after the consummation of the Merger, with
MAF Bank being the surviving bank thereof (the "Surviving Bank") pursuant to the
provisions of applicable law. At the effective time of the Bank Merger, the
charter and by-laws of the Surviving Bank shall be the articles of association
and by-laws of MAF Bank in effect immediately prior to the effective time of the
Bank Merger. At the effective date of the Bank Merger, the directors and
officers of the Surviving Bank shall be the directors and officers of MAF Bank
immediately prior to the effective date of the Bank Merger and MAF Bank will add
▇▇▇▇▇ ▇. ▇▇▇▇▇ to its board of directors.
5.4 RECOMMENDATION OF MERGER TO STOCKHOLDERS. Subject to its fiduciary
duties, the Board of Directors of Bancorp will unanimously recommend to its
stockholders in the Proxy Statement approval of the Merger and all transactions
related thereto and such other matters as may be submitted in connection with
this Agreement to all stockholders of Bancorp entitled to vote thereon.
5.5 REGISTRATION STATEMENT; STOCKHOLDER APPROVAL. As soon as
practicable after the date hereof, MAF shall prepare and file with the SEC a
Registration Statement on Form S-4 covering the MAF Common Stock to be issued to
holders of Bancorp Common Stock in the Merger, and Bancorp and MAF shall use
their best efforts to cause the Registration Statement to become effective under
the Securities Act. MAF will take any action required to be taken under the
applicable blue sky or securities laws in connection with the issuance of the
shares of MAF Common Stock in the Merger. Each party shall furnish all
information concerning it and the holders of its capital stock as the other
party may reasonably request in connection with such action. Bancorp shall call
a stockholders' meeting to be held as soon as reasonably practicable after the
date of this Agreement for the purpose of voting upon this Agreement and the
Merger (the "Stockholders' Meeting"). In connection with the Stockholders'
Meeting, (i) Bancorp shall prepare and mail the
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Proxy Statement to its stockholders, on a date mutually acceptable to the
parties hereto (the "Mailing Date"); (ii) subject to its fiduciary duties, the
Board of Directors of Bancorp shall unanimously recommend to its stockholders
the approval of this Agreement and the Merger; and (iii) the Board of Directors
of Bancorp shall otherwise use its best efforts to the extent consistent with
its fiduciary duties to obtain such stockholders' approval.
5.6 DIRECTOR AND OFFICER LIABILITY INSURANCE. MAF agrees that, prior to
or at the Effective Time, it will provide under its directors' and officers'
liability insurance prior errors and omissions coverage for current and former
directors and officers of Bancorp for three (3) years.
5.7 INDEMNIFICATION. Except as may be limited by applicable law, MAF
shall maintain all rights of indemnification and advancement of expenses
currently provided by Bancorp and the Bancorp Subsidiaries in favor of their
current and former employees, directors, officers and agents on terms no less
favorable than those provided in the certificate of incorporation or by-laws of
Bancorp or otherwise in effect on the date of this Agreement for three (3) years
from the Effective Time with respect to matters occurring prior to the Effective
Time.
5.8 AFFILIATE LETTERS. Bancorp shall obtain and deliver to MAF on the
date hereof a signed representation letter as to certain restrictions on resale
substantially in the form of Exhibit D hereto from each executive officer and
director of Bancorp and each stockholder of Bancorp who may reasonably be deemed
an "affiliate" of Bancorp within the meaning of such term as used in Rule 145
under the Securities Act, and shall obtain and deliver to MAF a signed
representation letter substantially in the form of Exhibit D from any person who
becomes an executive officer or director of Bancorp or any stockholder who
becomes such an "affiliate" after the date hereof as promptly as practicable
after (and shall use its reasonable best efforts to obtain and deliver within
five (5) business days after) such person achieves such status.
5.9 BROKERS. Bancorp represents, as to itself and each subsidiary, that
no agent, broker, investment banker or other firm or person or officer or
director of either is or will be entitled to any broker's or finder's fee or any
other commission, bonus or similar fee in connection with any of the
transactions contemplated by this Agreement, except that Bancorp may pay fees to
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, Inc., as set forth in the letter dated August 1, 1998
and delivered to MAF.
5.10 COOPERATION. Each of MAF and Bancorp covenants that, unless this
Agreement is terminated as provided herein, it will use its best efforts to
bring about the transactions contemplated by this Agreement as soon as
practicable, and that it will not willfully or intentionally breach this
Agreement. Subject to the terms and conditions herein provided, each of MAF and
Bancorp agrees to use all reasonable efforts to take, or cause to be taken, all
action, and to do, or cause to be done, all things necessary, proper or
advisable under applicable laws and regulations to consummate and make effective
the transactions contemplated by this Agreement, including but not limited to
any action for the transaction to comply with "pooling of interests" accounting.
In case at any time any further action is necessary or desirable to carry out
the purposes of this Agreement, the proper officers and/or directors of MAF or
Bancorp, as the case may be, shall take all such necessary action. If necessary
to expedite the Closing of the Merger and any other transactions contemplated
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by this Agreement, the parties agree that each will take or perform any
additional reasonably necessary or advisable steps to restructure the
transactions contemplated hereby, provided that any such restructuring will not
result in any change in the Merger Consideration. Each party shall use its
reasonable best efforts to preserve for itself and each other party each
available legal privilege with respect to confidentiality of their negotiations
and related communications including the attorney-client privilege.
5.11 REGULATORY APPLICATIONS. MAF shall, as soon as practicable, file
applications or notices with the Applicable Regulatory Agencies, and shall use
its best efforts to respond as promptly as practicable to all inquiries received
concerning said applications; provided, however, that MAF shall have no
obligation to accept nonstandard conditions or restrictions with respect to the
aforesaid approvals of governmental authorities if it shall reasonably determine
that such conditions or restrictions would have a material adverse effect on MAF
or the Surviving Corporation. In the event of an adverse or unfavorable
determination by any regulatory authority, or in the event the Merger is
challenged or opposed by any administrative or legal proceeding, whether by the
United States Department of Justice or otherwise, the determination of whether
and to what extent to seek appeal or review, administrative or otherwise, or
other appropriate remedies shall be made by MAF after consultation with Bancorp.
MAF shall deliver a draft of the nonconfidential portions of all regulatory
applications to Bancorp prior to filing them and copies of the nonconfidential
portions of all responses from or written communications from regulatory
authorities relating to the Merger or this Agreement (to the extent permitted by
law), and MAF shall deliver a final copy of the nonconfidential portions of all
regulatory applications to Bancorp promptly after they are filed with the
appropriate regulatory authority.
5.12 FINANCIAL STATEMENTS AND REPORTS. From the date of this Agreement
and prior to the Effective Time: (a) each party will deliver to the other, not
later than ninety days after the end of any fiscal year, its Annual Report on
Form 10-K (and all schedules and exhibits thereto) for the fiscal period then
ended as filed with the SEC, which shall be prepared in conformity with
generally accepted accounting principles and the rules and regulations of the
SEC; (b) Bancorp will deliver to MAF not later than thirty days after the end of
any fiscal quarter, the quarterly Reports filed with the OTS by First Federal
which shall be prepared in accordance with the rules and regulations of the OTS;
(c) each party will deliver to the other not later than forty-five days after
the end of each quarter, its Report on Form 10-Q for such quarter as filed with
the SEC which shall be prepared in conformity with generally accepted accounting
principles and the rules and regulations of the SEC; (d) Bancorp will deliver to
MAF any and all other material reports filed with the SEC, the FDIC, the OTS or
any other regulatory agency within five (5) business days of the filing of any
such report; and (e) Bancorp will deliver to MAF monthly financial statements
which shall include a summary of the investment securities acquired in the
ordinary course of business.
5.13 NOTICE. At all times prior to the Effective Time, each party shall
give prompt notice to the other of the occurrence or its knowledge of any event
or condition that would cause any of its representations or warranties set forth
in this Agreement not to be true and correct in all material respects as of the
date of this Agreement or as of the Effective Time or any of its obligations set
forth in this Agreement required to be performed at or prior to the Effective
Time not to be
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performed in all material respects at or prior to the Effective Time, including
without limitation, any event, condition, change or occurrence which
individually, or in the aggregate with any other events, conditions or changes
that have occurred after the date hereof, has resulted or which, so far as
reasonably can be foreseen at the time of its occurrence, is reasonably likely
to result in a material adverse effect on it. After receipt of any such notice
disclosing a material breach, the nondisclosing party may, within two business
days thereof, notify the disclosing party of its intent to terminate this
Agreement pursuant to Section 7.1(d); provided, however, that the disclosing
party shall have the right to cure such breach within 30 days thereof but no
later than the Effective Time. In the event the nondisclosing party fails to
notify the disclosing party of its intent to terminate within two business days
after receipt of any notice hereunder, the nondisclosing party shall be deemed
to have waived its right of termination as to any such breach arising out of or
with respect to the events, conditions, change or occurrence described in such
notice; provided, however, that any particular breach that is deemed to have
been waived by the nondisclosing party may thereafter be considered by the
nondisclosing party in determining the aggregate contribution of all events,
conditions, changes and occurrences described by the disclosing party pursuant
to this Section 5.13 toward the occurrence of a material breach by the closing
party.
5.14 PRESS RELEASES. MAF and Bancorp shall coordinate all publicity
relating to the transactions contemplated by this Agreement and, except as
otherwise required by law, or with respect to employee meetings, neither party
shall issue any press release, publicity statement or other public notice
relating to this Agreement or any of the transactions contemplated hereby
without obtaining the prior consent of the other, which consent shall not be
unreasonably withheld. Bancorp shall obtain the prior consent of MAF to the
content of any communication to its stockholders.
5.15 DELIVERY OF SUPPLEMENTS TO DISCLOSURE SCHEDULES. Five (5) business
days prior to the Effective Time, Bancorp will supplement or amend the Bancorp
Disclosure Schedule with respect to any matter hereafter arising which, if
existing or occurring at or prior to the date of this Agreement, would have been
required to be set forth or described in such Disclosure Schedule or which is
necessary to correct any information in the Bancorp Disclosure Schedule or in
any representation and warranty made by the disclosing party which has been
rendered inaccurate thereby. For purposes of determining the accuracy of the
representations and warranties of Bancorp contained in Article III hereof and in
order to determine the fulfillment of the conditions set forth in Article VI
hereof as of the Effective Time, the Bancorp Disclosure Schedule shall be deemed
to include only the information contained therein on the date hereof and any
information previously disclosed by Bancorp pursuant to Section 5.13 as to which
MAF is deemed to have waived its right of termination; provided, however, that
delivery of such supplements containing information which causes any
representation or warranty of Bancorp to be false or materially misleading will
not cure any breach hereunder of such representations or warranties.
5.16 LITIGATION MATTERS. Bancorp will consult with MAF about any
proposed settlement, or any disposition of any litigation involving amounts in
excess of $25,000.
5.17 TAX OPINION. MAF and Bancorp shall obtain a written opinion ("Tax
Opinion") of Vedder, Price, ▇▇▇▇▇▇▇ & Kammholz addressed to MAF and Bancorp,
dated the Closing Date,
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subject to the customary representations and assumptions referred to therein,
and substantially to the effect that (a) the Merger will constitute a tax-free
reorganization within the meaning of Section 368(a) of the Code, and MAF and
Bancorp will each be a party to such reorganization; (b) the exchange in the
Merger of MAF Common Stock for Bancorp Common Stock will not give rise to the
recognition of any income, gain or loss to MAF Bancorp, or the stockholders of
Bancorp with respect to such exchange except, with respect to the stockholders
of Bancorp, to the extent of cash received for fractional shares; (c) the
adjusted tax basis of the MAF Common Stock received by Bancorp stockholders in
the Merger will equal the adjusted tax basis of the Bancorp Common Stock
exchanged therefor decreased by the amount of money received in the exchange and
increased by the amount of gain recognized in the exchange; (d) the holding
period of the MAF Common Stock received in the Merger will include the period
during which the shares of Bancorp Common Stock surrendered in exchange therefor
were held, provided such shares of Bancorp Common Stock were held as a capital
asset at the Effective Time; (e) the adjusted tax basis of the assets of Bancorp
in the hands of MAF will be the same as the adjusted tax basis of such assets in
the hands of Bancorp immediately prior to the exchange; and (f) the holding
period of the assets of Bancorp transferred to MAF will include the period
during which such assets were held by Bancorp prior to the exchange.
5.18 RESOLUTION OF BANCORP BENEFIT PLANS. Bancorp and MAF shall
cooperate in effecting the following treatment of the Bancorp Benefit Plans,
except as mutually agreed upon by MAF and Bancorp prior to the Effective Time:
(a) At the Effective Time, MAF (or an MAF Subsidiary) shall be
substituted for Bancorp as the sponsoring employer under those Bancorp
Benefit Plans with respect to which Bancorp or First Federal is a
sponsoring employer immediately prior to the Effective Time, and shall
assume and be vested with all of the powers, rights, duties,
obligations and liabilities previously vested in Bancorp or First
Federal with respect to each such plan. Except as otherwise provided
herein, each such plan and any Bancorp Benefit Plan sponsored by
Bancorp or First Federal shall be continued in effect by MAF or any
applicable MAF Subsidiary after the Effective Time without a
termination or discontinuance thereof as a result of the Merger,
subject to the power reserved to MAF or any applicable MAF Subsidiary
under each such plan to subsequently amend or terminate the plan, which
amendments or terminations shall comply with applicable law. Bancorp,
First Federal and MAF will use all reasonable efforts (i) to effect
said substitutions and assumptions, and take such other actions
contemplated under this Agreement, and (ii) to amend such plans as to
the extent necessary to provide for said substitutions and assumptions,
and such other actions contemplated under this Agreement.
(b) At or as promptly as practicable after the Effective Time
as MAF shall reasonably determine, MAF shall provide, or cause any MAF
Subsidiary to provide, to each employee of Bancorp and First Federal as
of the Effective Time ("Bancorp Employees") the opportunity to
participate in each employee benefit plan and program maintained by MAF
or the MAF Subsidiaries for similarly situated employees (the "MAF
Benefit Plans"); provided, however, that with respect to such MAF
Benefit Plans, Bancorp Employees shall
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be given credit for service with Bancorp or First Federal in
determining eligibility for and vesting in benefits thereunder, but not
for purposes of benefit accrual; provided further that Bancorp
Employees shall not be subject to any waiting periods or pre-existing
condition exclusions under the MAF Benefit Plans to the extent that
such periods are longer or restrictions impose a greater limitation
than the periods or limitations imposed under the Bancorp Benefit
Plans; provided further, that to the extent that the initial period of
coverage for Bancorp Employees under any MAF Benefit Plan that is an
"employee welfare benefit plan" as defined in Section 3(1) of ERISA is
not a full 12-month period of coverage, Bancorp Employees shall be
given credit under the applicable MAF Benefit Plans for any deductibles
and co-insurance payments made by such Bancorp Employees under the
Bancorp Benefit Plans during the balance of such 12-month period of
coverage. Nothing in the preceding sentence shall obligate MAF to
provide or cause to be provided any benefits duplicative of those
provided under any Bancorp Benefit Plan continued pursuant to
subparagraph (a) above, including, but not limited to, extending
participation in any MAF Benefit Plan which is an "employee pension
benefit plan" under ERISA with respect to any year during which
benefits are accrued by Bancorp Employees under the Bancorp defined
benefit plan or allocations are made to Bancorp Employees under the
ESOP. Except as otherwise provided in this Agreement, the power of MAF
or any First Federal or MAF Subsidiary to amend or terminate any
benefit plan or program, including any Bancorp Benefit Plan, shall not
be altered or affected. Moreover, this Agreement shall not confer upon
any Bancorp Employee any rights or remedies hereunder and shall not
constitute a contract of employment or create the rights, to be
retained or otherwise, in employment with MAF, First Federal or any MAF
Subsidiary.
(c) Concurrently with or immediately after the execution of
this Agreement, Bancorp shall use its best efforts to obtain from each
officer of Bancorp who is a party to an employment agreement or special
termination agreement with Bancorp or First Federal a Letter of
Understanding with MAF substantially in the form of Exhibit E attached
hereto (the "Letter of Understanding"), relating to such executive's
employment after the Effective Date and to certain matters pertaining
to such executive's employment agreement or special termination
agreement and benefits payable thereunder.
(d) Notwithstanding anything in this Agreement to the
contrary, all retention, severance, covenant not to compete,
termination payments, acceleration of benefit vesting, and other
compensation paid by Bancorp or First Federal, or as provided for in
this Agreement, any Letter of Understanding, any Bancorp Benefit Plan
or otherwise, including, but not limited to, any Change in Control
Benefit, shall not violate any prohibitions which are imposed by the
Applicable Governmental Authorities, or which the Applicable
Governmental Authorities otherwise deem to constitute unsafe and
unsound banking practices or unreasonable compensation giving effect to
any obligations of MAF or the MAF Subsidiary as provided herein or in
any Letter of Understanding.
(e) From and after the date of this Agreement through the
Effective Time, Bancorp and/or First Federal may make such
contributions to the ESOP as shall reasonably
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be determined to repay the ESOP Loan in full prior to the Effective
Time; provided, however, that all such contributions shall be
deductible by Bancorp or First Federal under Section 404 of the Code,
and in compliance with Section 415 of the Code and shall be in
compliance with the letter agreement referred to in paragraph (f)
below. Upon the earlier of the repayment of the ESOP Loan or the
Effective Time, the ESOP shall be amended to provide that all accounts
thereunder shall be fully vested and nonforfeitable and that the MAF
Common Stock issued upon the conversion of the Bancorp Common Stock in
the Merger shall become the qualifying employee security for purposes
of the ESOP. From and after the Effective Time, MAF shall make, or
shall cause a MAF Subsidiary to make such maximum annual contributions
to the ESOP, as permitted by Sections 404 and 415 of the Code, so as to
repay the ESOP Loan as promptly as practicable and to maintain the ESOP
as a separate plan for the benefit of the Bancorp Employees, it being
the intention of the parties that in no event will benefits under the
ESOP be allocated to persons other than those persons employed by
Bancorp or First Federal prior to the Effective Time. As soon as is
reasonably practicable after payment in full of the ESOP Loan, MAF
shall cause the ESOP to be merged into the MAF ESOP in compliance with
Section 414(l) of the Code.
(f) MAF and Bancorp agree to take certain other actions with
respect to the Bancorp Benefit Plans as set forth in the letter
agreement of even date herewith between MAF and Bancorp.
5.19 ACCOUNTING AND TAX TREATMENT. Neither Bancorp or First Federal nor
MAF or any of the MAF Subsidiaries, nor any of their affiliates, shall
voluntarily take any action which would cause the Merger to fail to qualify as a
"pooling of interests" for accounting purposes and as a tax-free reorganization
under Section 368(a) of the Code. The exercise by MAF of its rights under the
Stock Option Agreement shall not be deemed a violation of this Section. In
addition, MAF and Bancorp agree to take any and all necessary or advisable steps
to restructure or modify the terms of the transaction contemplated hereby, if
such steps are necessary or advisable to qualify the transaction contemplated
hereby as a tax-free reorganization under Section 368(a) of the Code; provided,
however, nothing contained in this Section 5.19 shall be deemed to require MAF
to take any steps which will increase the Merger Consideration provided for in
Section 1.2 above.
5.20 APPOINTMENT TO MAF BOARD OF DIRECTORS. MAF shall, as soon as
practicable after the Merger, cause ▇▇▇▇▇ ▇. ▇▇▇▇▇ to become a director of MAF
and MAF Bank and elect ▇▇. ▇▇▇▇▇ as an Executive Vice President of MAF, and in
connection therewith, shall extend to ▇▇. ▇▇▇▇▇ an Employment Agreement in form
and substance acceptable to the parties thereto.
5.21 ADVISORY BOARD. MAF shall cause MAF Bank to create an advisory
board (the "Advisory Board") to (a) assist in and advise with respect to
integration of the operations of First Federal into those of the MAF Bank, and
(b) advise with respect to the operations of MAF Bank. Other than ▇▇▇▇▇ ▇.
▇▇▇▇▇, the Advisory Board shall consist of all current members of the Board of
Directors of First Federal who are members of such Board as of the Effective
Time, each of whom shall be entitled to receive per meeting fees (without
reimbursement for travel expenses) equal to those currently in effect at Bancorp
provided that the Advisory Board shall meet (or for purposes
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hereof shall be deemed to have met) at least quarterly, and may meet more
frequently at the request of MAF. The Board of Directors of MAF shall review the
Advisory Board function annually to consider its continuation.
5.22 PUBLICATION OF FINANCIAL STATEMENTS. MAF shall publish financial
results covering at least 30 days of combined operations of MAF and Bancorp as
soon after the Closing as reasonably practicable.
VI.
CONDITIONS
6.1 CONDITIONS TO THE OBLIGATIONS OF MAF. Notwithstanding any other
provision of this Agreement, the obligations of MAF to consummate the Merger are
subject to the following conditions precedent:
(a) All of the representations and warranties made by Bancorp
in this Agreement and in any documents or certificates provided by
Bancorp shall have been true and correct in all material respects as of
the date of this Agreement and as of the Effective Time as though made
at and as of the Effective Time.
(b) Bancorp shall have performed in all material respects all
obligations and shall have complied in all material respects with all
agreements and covenants required by this Agreement to be performed or
complied with by it prior to or at the Effective Time.
(c) Except as specifically contemplated herein, there shall
not have been any action taken, or any statute, rule, regulation or
order enacted, promulgated or issued or deemed applicable to the Merger
by any federal or state government or governmental agency or
instrumentality or court, which would prohibit MAF's ownership or
operation of all or a material portion of Bancorp's business or assets,
whether immediately at the Effective Time or as of some future date,
whether specified or to be specified, or would compel MAF to dispose of
or hold separate all or a material portion of Bancorp's business or
assets, whether immediately at the Effective Time or as of some future
date, whether specified or to be specified as a result of this
Agreement, or which would render MAF or Bancorp unable to consummate
the transactions contemplated by this Agreement.
(d) To the extent any material lease, license, loan or
financing agreement or other contract or agreement to which Bancorp or
any Bancorp Subsidiary, as the case may be, is a party requires the
consent of or waiver from the other party thereto as a result of the
transactions contemplated by this Agreement, such consent or waiver
shall have been obtained, unless the failure to obtain such consent or
waiver would not have a material adverse effect on Bancorp.
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(e) As of the Closing Date, there shall have been no material
adverse change in the operations or financial condition of Bancorp or
any Bancorp Subsidiary from that which was represented and warranted on
the date of this Agreement pursuant to this Agreement and the Bancorp
Disclosure Schedules provided on the date of this Agreement, it being
understood that any updates provided pursuant to Section 5.15 hereof do
not constitute a waiver or other consent to any such material adverse
change in Bancorp, except in accordance with Section 5.13.
(f) MAF shall have received a certificate signed by the
President and Chief Executive Officer of Bancorp, dated as of the
Effective Time, certifying that based upon his knowledge, the
conditions set forth in Sections 6.1(a) and 6.1(b) hereto have been
satisfied.
(g) Neither Bancorp nor any Bancorp Subsidiary shall be made a
party to, or to the knowledge of Bancorp, threatened by, any actions,
suits, proceedings, litigation or legal proceedings which, in the
reasonable opinion of MAF, have or are likely to have a material
adverse effect on the consolidated assets, properties, business,
operations or condition, financial or otherwise, of Bancorp or the
assets, properties, business, operations or condition, financial or
otherwise, of any Bancorp Subsidiary, nor shall any director or officer
or former director or officer of Bancorp or any Bancorp Subsidiary be
made a party to, or threatened by, any actions, suits, proceedings,
litigation or legal proceedings relating to their performance or
nonperformance of their legal or fiduciary duties as directors and
officers of Bancorp or any Bancorp Subsidiary which in the reasonable
opinion of the Board of Directors of MAF is likely to have a material
adverse effect on Bancorp or any Bancorp Subsidiary. No action, suit,
proceeding or claim shall have been instituted, made or threatened by
any person relating to the Merger or the validity or propriety of the
transactions contemplated by this Agreement or the Bank Merger
Agreement which would make consummation of the Reorganization
inadvisable in the reasonable opinion of MAF.
(h) The Bank Merger Agreement shall have been duly authorized
and approved by Bancorp and First Federal and the other terms and
conditions of the Bank Merger Agreement shall have been satisfied so as
to permit the Bank Merger to be consummated as contemplated thereby.
(i) Bancorp shall have caused to be delivered to MAF letters
from Bancorp's independent public accountants, Cobitz, ▇▇▇▇▇▇▇▇▇▇ and
▇▇▇▇▇▇▇▇, dated the date on which the Registration Statement shall
become effective, and dated the Effective Time, and addressed to MAF
and Bancorp, with respect to Bancorp's consolidated financial position
and results of operations, and which describes procedures which shall
be consistent with applicable professional standards for "comfort"
letters delivered by independent accountants in connection with
comparable transactions.
(j) MAF shall have received an opinion of ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇, counsel for Bancorp, substantially in the form of Exhibit F
hereto.
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(k) MAF shall have received an opinion from each of (i) KPMG
Peat Marwick LLP, as independent public accountants of MAF, in form and
content acceptable to MAF, and (ii) Cobitz, ▇▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇
("Cobitz"), as independent public accountants of Bancorp, in form and
content acceptable to KPMG Peat Marwick LLP, in each case to the effect
that the Merger qualifies for "pooling of interests" accounting
treatment if consummated in accordance herewith.
6.2 CONDITIONS TO THE OBLIGATIONS OF BANCORP. Notwithstanding any other
provision of this Agreement, the obligations of Bancorp to consummate the Merger
are subject to the following conditions precedent:
(a) All of the representations and warranties made by MAF in
this Agreement and in any documents or certificates provided by MAF
shall have been true and correct in all material respects as of the
date of this Agreement and as of the Effective Time as though made on
and as of the Effective Time.
(b) MAF shall have performed in all material respects all
obligations and shall have complied in all material respects with all
agreements and covenants required by this Agreement to be performed or
complied with by it prior to or at the Effective Time.
(c) Bancorp shall have received a certificate signed by the
Chief Executive Officer of MAF, dated as of the Effective Time, that
based upon such Chief Executive Officer's best knowledge, the
conditions set forth in Sections 6.2(a) and (b) have been satisfied.
(d) Bancorp shall have received an opinion of Vedder, Price,
▇▇▇▇▇▇▇ & Kammholz, special counsel for MAF, substantially in the form
of Exhibit G hereto.
(e) The Bank Merger Agreement shall have been duly authorized
and approved by MAF and MAF Bank and the other terms and conditions of
the Bank Merger Agreement shall have been satisfied so as to permit the
Bank Merger to be consummated as contemplated thereby.
(f) Bancorp shall have received an opinion from Cobitz to the
effect that the Merger qualifies for "pooling of interests" accounting
treatment if consummated in accordance herewith.
6.3 CONDITIONS TO THE OBLIGATIONS OF THE PARTIES. Notwithstanding any
other provision of this Agreement, the obligations of MAF on the one hand, and
Bancorp on the other hand, to consummate the Merger are subject to the following
conditions precedent:
(a) No preliminary or permanent injunction or other order by
any federal or state court which prevents the consummation of the
Merger shall have been issued and shall remain in effect.
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(b) This Agreement and the Merger shall have been duly
approved by the requisite vote of the stockholders of Bancorp at a
meeting duly called and held for such purpose.
(c) MAF shall have received approvals of the Applicable
Governmental Authorities as set forth in Section 1.4(i) to acquire
Bancorp and to consummate the transactions contemplated hereby and all
required waiting periods relating thereto shall have expired.
(d) The Registration Statement shall have been declared
effective under the Securities Act and no stop orders shall be in
effect and no proceedings for such purpose shall be pending or
threatened by the SEC.
(e) Each party shall have received the Tax Opinion (as
contemplated in Section 5.17 above).
6.4 LISTING ON THE NASDAQ STOCK MARKET. The shares of MAF Common Stock
which shall be issued to the stockholders of Bancorp upon consummation of the
Merger shall have been authorized for listing on The Nasdaq Stock Market,
subject to official notice of issuance.
VII.
TERMINATION; AMENDMENT; WAIVER
7.1 TERMINATION. This Agreement may be terminated at any time prior to
the Effective Time:
(a) By mutual written consent of the Board of Directors of MAF
and the Board of Directors of Bancorp;
(b) At any time prior to the Effective Time, by MAF or Bancorp
if there shall have been a final judicial or regulatory determination
(as to which all periods for appeal shall have expired and no appeal
shall be pending) that any material provision of this Agreement is
illegal, invalid or unenforceable (unless the enforcement thereof is
waived by the affected party) or denying any regulatory application,
the approval of which is a condition precedent to either party's
obligations hereunder;
(c) By either party at any time after the stockholders of
Bancorp fail to approve this Agreement and the Merger in a vote taken
at a meeting duly convened for that purpose;
(d) By MAF or Bancorp in the event of the material breach by
the other party of any representation, warranty, covenant or agreement
contained herein or in any schedule or document delivered pursuant
hereto, which breach would result in the failure to satisfy the
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closing conditions set forth in Section 6.1 hereof, in the case of MAF,
or Section 6.2 hereof, the case of Bancorp, except in each case, for
any such breach which has been disclosed pursuant to Section 5.13 and
waived by the non-disclosing party pursuant to Section 5.13 or cured by
the disclosing party prior to the Effective Time and within the time
period specified in Section 5.13;
(e) By either party on or after June 30, 1999, in the event
the Merger has not been consummated by such date (provided that the
terminating party is not then in material breach of any representation,
warranty, covenant or other agreement contained herein);
(f) by Bancorp in accordance with Section 1.2(d) upon notice
to MAF; or
(g) by MAF pursuant to the provisions of Section 4.3 hereof
relating to the parties' being unable to agree on a course of action
regarding certain environmental matters.
7.2 TERMINATION FEE.
(a) In consideration of the expenses and forgone opportunities
of MAF, as a condition and inducement to MAF's willingness to enter
into and perform this Agreement, provided that Bancorp has not validly
terminated this Agreement pursuant to Section 7.1(d), Bancorp shall pay
to MAF immediately upon demand a fee of Two Million Five Hundred
Thousand dollars ($2,500,000) (the "Termination Fee") upon the earliest
to occur of the following:
(i) (A) the Board of Directors of Bancorp (1) shall
have withdrawn, modified or amended in any respect its
approval or recommendation of this Agreement or the
transactions contemplated hereby, (2) shall not at the
appropriate time have unanimously recommended or shall have
withdrawn, modified or amended in any respect its
recommendation that its stockholders vote in favor of this
Agreement, or (3) shall not have included such recommendation
in the Proxy Statement, or (B) the Board of Directors of
Bancorp shall have resolved to do any of the foregoing;
(ii) (A) Bancorp enters into an agreement or
understanding with a party other than MAF providing for (1)
the acquisition by any person, other than MAF or any MAF
Subsidiaries, alone or together with such person's affiliates
and associates or any group, of beneficial ownership of 10% or
more of Bancorp Common Stock (for purposes of this Section
7.2(a)(2), the terms "group" and "beneficial ownership" shall
be as defined in Section 13(d) of the Exchange Act and
regulations promulgated thereunder and as interpreted
thereunder); (2) a merger, consolidation, liquidation or
dissolution, share exchange, business combination or any other
similar transaction involving Bancorp or any Bancorp
Subsidiary; (3) any sale, lease, exchange, mortgage, pledge,
transfer or other disposition of 25% or more of the assets of
Bancorp or any Bancorp Subsidiary, in a single transaction or
series of transactions,
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or (B) the public announcement of negotiations relating to or
the occurrence of any of the above; or
(iii) the announcement of a tender or exchange offer
with the intent to accomplish any of the foregoing, which
offer the Bancorp Board of Directors does not reject.
(b) In the event this Agreement is terminated prior to the
Effective Time for any reason other than mutual agreement of the
parties pursuant to Section 7.1(a) above, a valid termination by
Bancorp pursuant to Section 7.1(d), or a valid termination by MAF
pursuant to Section 7.1(g), the Termination Fee shall continue to be
payable by Bancorp to MAF for a period of two years from the date
hereof upon the occurrence of any of the events set forth in Section
7.2(a) above.
7.3 EXPENSES. Except as provided elsewhere herein, MAF and Bancorp
shall each bear and pay all costs and expenses incurred by it or on its behalf
in connection with the transactions contemplated hereunder, including fees and
expenses of its own financial or other consultants, investment bankers,
accountants and counsel. In the event one of the parties hereto files suit to
enforce this Section or a suit seeking to recover costs and expenses or damages
for breach of this Agreement, the costs, fees, charges and expenses (including
attorneys' fees and expenses) of the prevailing party in such litigation (and
any related litigation) shall be borne by the losing party.
7.4 SURVIVAL OF AGREEMENTS. In the event of termination of this
Agreement by either MAF or Bancorp as provided in Section 7.1, this Agreement
shall forthwith become void and have no effect except that (i) the agreements
contained in Sections 5.1, 5.10, 7.2 and 7.3 hereof shall survive the
termination hereof; (ii) the Stock Option Agreement shall be governed by its own
termination provisions; and (iii) a termination pursuant to Section 7.1(d)
hereof shall not relieve a breaching party from any liability for any breach
giving rise to such termination.
7.5 AMENDMENT. This Agreement may be amended by the parties hereto by
action taken by their respective Boards of Directors at any time before or after
approval hereof by the stockholders of Bancorp but, after such approval, no
amendment shall be made which changes the form of consideration or adversely
affects or decreases the value of the consideration to be received by the
stockholders of Bancorp without the further approval of such stockholders or
which in any other way adversely affects the rights of stockholders of either
Bancorp or MAF without the further required approval of the stockholders so
affected. This Agreement may not be amended except by an instrument in writing
signed on behalf of each of the parties hereto. MAF and Bancorp may, without
approval of their respective Boards of Directors, make such technical changes to
this Agreement, not inconsistent with the purposes hereof and thereof, as may be
required to effect or facilitate any governmental approval or acceptance of the
Merger or of this Agreement or to effect or facilitate any filing or recording
required for the consummation of any of the transactions contemplated hereby.
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7.6 WAIVER. Any term, provision or condition of this Agreement (other
than requirements for stockholders' approval and required approvals of the
Applicable Governmental Authorities) may be waived in writing at any time by the
party which is, or the stockholders of which are, entitled to the benefits
hereof. Each and every right granted to any party hereunder, or under any other
document delivered in connection herewith or therewith, and each and every right
allowed it by law or equity, shall be cumulative and may be exercised from time
to time. The failure of either party at any time or times to require performance
of any provision hereof shall in no manner affect such party's right at a later
time to enforce the same except as provided in Section 5.13. No waiver by any
party of a condition or of the breach of any term, covenant, representation or
warranty contained in this Agreement, whether by conduct or otherwise, in any
one or more instances shall be deemed to be or construed as a further or
continuing waiver of any such condition or breach or a waiver of any other
condition or of the breach of any other term, covenant, representation or
warranty of this Agreement. No investigation, review or audit by MAF of Bancorp
or Bancorp of MAF prior to or after the date hereof shall estop or prevent
either party from exercising any right hereunder or be deemed to be a waiver of
any such right.
VIII.
GENERAL PROVISIONS
8.1 SURVIVAL. All representations, warranties, covenants and agreements
of the parties in this Agreement or in any instrument delivered by the parties
pursuant to this Agreement (other than the agreements, covenants and obligations
set forth herein which are contemplated to be performed after the Effective
Time) shall not survive the Effective Time except as provided for in Section
7.4.
8.2 NOTICE. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally, by facsimile
transmission or by registered or certified mail to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice) and shall be deemed to be delivered on the date so delivered:
(a) if to MAF: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Chairman and Chief Executive Officer
MAF Bancorp, Inc.
▇▇▇▇ & ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone Number: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
copy to: Vedder, Price, ▇▇▇▇▇▇▇ & Kammholz
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
or ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇, Esq.
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Telephone Number: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
(b) if to Bancorp: ▇▇▇▇▇ ▇. ▇▇▇▇▇
President
Westco Bancorp, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone Number: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
copy to: ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
Telephone Number: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
8.3 SPECIFIC ENFORCEABILITY. The parties recognize and hereby
acknowledge that it may be impossible to measure in money the damages that would
result to a party by reason of the failure of either of the parties to perform
any of the obligations imposed on it by this Agreement and that in any event
damages would be an inadequate remedy in this instance. Accordingly, if any
party should institute an action or proceeding seeking specific enforcement of
the provisions hereof, the party against which such action or proceeding is
brought hereby waives the claim or defense that the party instituting such
action or proceeding has an adequate remedy at law and hereby agrees not to
assert in any such action or proceeding the claim or defense that such a remedy
at law exists and shall waive or not assert any requirement to post bond in
connection with seeking specific performance. The parties hereto agree that this
provision is without prejudice to any other rights that the parties hereto may
have for any failure to perform this Agreement.
8.4 APPLICABLE LAW. This Agreement shall be construed and interpreted
in all respects, including validity, interpretation and effect, by the laws of
the State of Delaware with respect to matters of corporate laws and, with
respect to all other matters, by the laws of the State of Illinois, except to
the extent that the federal laws of the United States apply.
8.5 HEADINGS, ETC. The article headings and section headings contained
in this Agreement are inserted for convenience only and shall not affect in any
way the meaning or interpretation of this Agreement.
8.6 SEVERABILITY. If any term, provision, covenant or restriction
contained in this Agreement is held by a final and unappealable order of a court
of competent jurisdiction to be invalid, void, or unenforceable, then the
remainder of the terms, provisions, covenants and restrictions contained in this
Agreement shall remain in full force and effect, and shall in no way be
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affected, impaired or invalidated unless the effect would be to cause this
Agreement to not achieve its essential purposes.
8.7 ENTIRE AGREEMENT; BINDING EFFECT; NONASSIGNMENT; COUNTERPARTS.
Except as otherwise expressly provided herein, this Agreement (including the
documents and instruments referred to herein) (a) constitutes the entire
agreement between the parties hereto and supersedes all other prior agreements
and undertakings, both written and oral, between the parties, with respect to
the subject matter hereof; and (b) is not intended to confer upon any other
person any rights or remedies hereunder except as specifically provided herein.
This Agreement shall be binding upon and inure to the benefit of the parties
named herein and their respective successors. Neither this Agreement nor any of
the rights, interests or obligations hereunder shall be assigned by either party
hereto without the prior written consent of the other party hereto. This
Agreement may be executed in two or more counterparts which together shall
constitute a single agreement.
8.8 STANDARDS.
(a) Either party's representations, warranties and covenants
contained in this Agreement shall not be deemed to be untrue or
breached as a result of effects arising solely from actions taken in
compliance with a written request by the other party or as directed
under this Agreement; (b) as used in this Agreement, the term "material
adverse effect" means an effect which is material and adverse to the
business, financial condition or results of operations of Bancorp or
MAF, as the context may dictate, and its subsidiaries taken as a whole;
provided, however, that any such effects resulting from any changes in
law, rule or regulation or generally accepted accounting principles or
interpretations thereof that apply to both MAF and MAF Bank or Bancorp
and First Federal, as the case may be, shall not be considered in
determining if a material adverse effect has occurred; and (c) for
purposes of this Agreement, "knowledge" shall mean, with respect to a
party hereto, actual knowledge of any of the members of the Board of
Directors of that party, its counsel or any officer of that party with
the title ranking not less than senior vice president.
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
executed as of the day and year first above written.
MAF Bancorp, Inc.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------
Its: Chairman and Chief Executive Officer
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------------
Secretary
Westco Bancorp, Inc.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------------
Its: President
/s/ ▇▇▇▇ ▇. SUFFI
----------------------------------
Secretary
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EXHIBITS
DESCRIPTION SECTION REFERENCE
----------- -----------------
Exhibit A Certificate of Merger 1.4
Exhibit B Option Agreement 4.4
Exhibit C Bank Merger Agreement 5.3
Exhibit D Affiliate Letters 5.8
Exhibit E Letters of Understanding 5.18(c)
Exhibit F Opinion Letter - Bancorp 6.1(j)
Exhibit G Opinion Letter - MAF 6.2(d)
[OMITTED HEREFROM]
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