EXHIBIT 2
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AGREEMENT AND PLAN OF MERGER
by and among
BAY VIEW CAPITAL CORPORATION,
AMERICA FIRST EUREKA HOLDINGS, INC.,
AMERICA FIRST FINANCIAL FUND 1987-A
LIMITED PARTNERSHIP
and
AMERICA FIRST CAPITAL ASSOCIATES LIMITED
PARTNERSHIP FIVE
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Dated May 8, 1997
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TABLE OF CONTENTS
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Page
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ARTICLE I
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THE MERGER
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1.01. The Merger.................................................. 2
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1.02. Closing..................................................... 2
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1.03. Effective Time.............................................. 2
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1.04. Additional Actions.......................................... 3
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1.05. Certificate of Incorporation and Bylaws of Surviving
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Corporation................................................. 3
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1.06. Board of Directors and Officers of the Surviving
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Corporation................................................. 3
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1.07. Conversion of Securities.................................... 3
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1.08. Exchange of Certificates.................................... 4
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1.09. No Fractional Shares........................................ 5
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1.10. Anti-Dilution Adjustments................................... 5
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1.11. Reservation of Right to Revise Transaction.................. 5
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ARTICLE II
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REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLER, SELLING STOCKHOLDER
AND GENERAL PARTNER
2.01. Organization and Authority.................................. 6
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2.02. Subsidiaries................................................ 6
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2.03. Capitalization.............................................. 7
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2.04. Authorization............................................... 7
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2.05. Seller Financial Statements................................. 8
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2.06. Seller Reports.............................................. 9
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2.07. Properties and Leases....................................... 9
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2.08. Taxes....................................................... 10
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2.09. Material Adverse Effect..................................... 10
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2.10. Commitments and Contracts................................... 11
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2.11. Litigation and Other Proceedings............................ 12
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2.12. Insurance................................................... 12
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2.13. Compliance with Laws........................................ 12
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2.14. Labor....................................................... 14
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2.15. Material Interests of Certain Persons....................... 14
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2.16. Allowance for Loan and Lease Losses; Non-performing Assets.. 15
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2.17. Employee Benefit Plans...................................... 15
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2.18. Conduct of Seller to Date................................... 17
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2.19. Proxy Statement, etc........................................ 18
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2.20. Registration Obligations.................................... 19
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2.21. State Takeover Statutes..................................... 19
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2.22. Accounting, Tax and Regulatory Matters...................... 19
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2.23. Brokers and Finders......................................... 19
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2.24. Interest Rate Risk Management Instruments................... 19
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2.25. Accuracy of Information..................................... 20
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2.26. Authorization............................................... 20
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2.27. Beneficial Ownership of Seller Equity Securities............ 20
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2.28. Rights to Acquire Equity Securities......................... 20
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2.29. Title to Seller Common Stock................................ 20
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2.30. Authorization............................................... 21
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ARTICLE III
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REPRESENTATIONS, WARRANTIES AND COVENANTS OF BUYER
3.01. Organization and Authority.................................. 21
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3.02. Subsidiaries................................................ 21
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3.03. Capitalization of Buyer..................................... 22
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3.04. Authorization............................................... 22
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3.05. Buyer Financial Statements.................................. 23
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3.06. Buyer Reports............................................... 24
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3.07. Properties and Leases....................................... 24
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3.08. Taxes....................................................... 24
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3.09. Material Adverse Effect..................................... 25
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3.10. Commitments and Contracts................................... 25
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3.11. Litigation and Other Proceedings............................ 26
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3.12. Insurance................................................... 27
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3.13. Compliance with Laws........................................ 27
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3.14. Labor....................................................... 29
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3.15. Material Interests of Certain Persons....................... 29
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3.16. Allowance for Loan Losses; Non-performing Assets............ 29
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3.17. Employee Benefit Plans...................................... 30
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3.18. Conduct of Buyer to Date.................................... 31
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3.19. Proxy Statement, etc........................................ 32
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3.20. State Takeover Statutes..................................... 32
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3.21. Accounting, Tax and Regulatory Matters...................... 33
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3.22. Brokers and Finders......................................... 33
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3.23. Interest Rate Risk Management Instruments................... 33
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3.24. Accuracy of Information..................................... 33
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ARTICLE IV
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CONDUCT OF BUSINESSES PRIOR TO THE EFFECTIVE TIME
4.01. Conduct of Businesses Prior to the Effective Time........... 34
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4.02. Forbearances of Seller...................................... 34
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4.03 Forbearances of Selling Stockholder......................... 37
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4.04. Forbearances of Buyer....................................... 37
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ARTICLE V
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ADDITIONAL AGREEMENTS
5.01. Access and Information...................................... 38
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5.02. Registration Statement Regulatory Matters................... 39
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5.03. Approval of Merger and Distribution......................... 40
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5.04. Current Information......................................... 40
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5.05. Agreements of Affiliates.................................... 40
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5.06. Expenses.................................................... 41
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5.07. Miscellaneous Agreements and Consents....................... 41
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5.08. Employee Benefits........................................... 42
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5.09. Equity Appreciation Plan and Long Term Incentive
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Compensation Plan........................................... 42
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5.10. Press Releases.............................................. 42
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5.11. State Takeover Statutes..................................... 43
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5.12. D&O Indemnification......................................... 43
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5.13. Best Efforts................................................ 43
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5.14. Insurance................................................... 43
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5.15. Conforming Entries.......................................... 43
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5.16. Environmental Reports....................................... 45
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5.17. Seller Bank Securities...................................... 45
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5.18. Agreement with FDIC......................................... 45
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5.19. Directors of Buyer.......................................... 45
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5.20. Indemnification of Buyer.................................... 45
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5.21. Selling Stockholder and General Partner Approval............ 46
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5.22. Distribution................................................ 46
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5.23. EAP and LTIP Distributions.................................. 46
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ARTICLE VI
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CONDITIONS
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6.01. Conditions to Each Party's Obligation To Effect the
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Merger...................................................... 46
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6.02. Conditions to Obligations of Seller To Effect the Merger.... 47
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6.03. Conditions to Obligations of Buyer To Effect the Merger..... 48
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ARTICLE VII
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TERMINATION, AMENDMENT AND WAIVER
7.01. Termination................................................. 48
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7.02. Effect of Termination....................................... 49
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7.03. Amendment................................................... 50
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7.04. Severability................................................ 50
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7.05. Waiver...................................................... 50
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ARTICLE VIII
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GENERAL PROVISIONS
8.01. Non-Survival of Representations, Warranties and Agreements.. 50
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8.02. Notices..................................................... 51
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8.03. Miscellaneous............................................... 52
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AGREEMENT AND PLAN OF MERGER
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This AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and entered
into on May 8, 1997 by and among BAY VIEW CAPITAL CORPORATION, a Delaware
corporation ("Buyer"), AMERICA FIRST EUREKA HOLDINGS, INC., a Delaware
corporation ("Seller"), AMERICA FIRST FINANCIAL FUND 1987-A LIMITED PARTNERSHIP,
the sole stockholder of Seller and a Delaware limited partnership ("Selling
Stockholder") and AMERICA FIRST CAPITAL ASSOCIATES LIMITED PARTNERSHIP FIVE, the
General Partner of Selling Stockholder and a Delaware limited partnership.
W I T N E S S E T H:
- - - - - - - - -
WHEREAS, Buyer is a registered unitary savings and loan holding company
under the Home Owners' Loan Act, as amended ("HOLA"); and
WHEREAS, Seller is a registered unitary savings and loan holding company
under HOLA; and
WHEREAS, the Boards of Directors of Buyer, and Seller have approved the
merger (the "Merger") of Seller with and into Buyer, pursuant to the terms and
subject to the conditions of this Agreement to be followed immediately by the
merger of EurekaBank, A Federal Savings Bank, a wholly owned subsidiary of
Seller and a federal savings bank ("Seller Bank") with and into Bay View Bank, a
wholly owned subsidiary of Buyer and a federal savings bank ("Buyer Bank"),
pursuant to the Subsidiary Agreement and Plan of Merger in the form attached
hereto as Exhibit A (the "Subsidiary Merger Agreement"); and
WHEREAS, for federal income tax purposes, it is intended that the Merger
shall qualify as a reorganization within the meaning of Section 368(a)(1)(A) of
the Internal Revenue Code of 1986, as amended (the "IRC"), and this Agreement
shall constitute a plan of reorganization pursuant to Section 368 of the IRC;
and
WHEREAS, as a condition to, and promptly after the execution of this
Agreement, (i) Buyer and each director of Seller and certain other persons
designated by Seller will enter into Support Agreements (the "Buyer Support
Agreements") in the form attached hereto as Exhibit B and (ii) Seller and each
director of Buyer will enter into Support Agreements (the "Seller Support
Agreements") in the form attached hereto as Exhibit C; and
WHEREAS, as a condition to, and immediately prior to execution of this
Agreement, Buyer and Selling Stockholder will enter into an option agreement
(the "Buyer Option Agreement") in the form attached hereto as Exhibit D; and
WHEREAS, as a condition to, and immediately prior to execution of this
Agreement, Buyer and Seller will enter into an option
agreement (the "Seller Option Agreement") in the form attached hereto as
Exhibit E; and
WHEREAS, the parties desire to provide for certain undertakings,
conditions, representations, warranties and covenants in connection with the
transactions contemplated by this Agreement.
NOW THEREFORE, in consideration of the premises and the representations,
warranties and agreements herein contained, the parties agree as follows:
ARTICLE I
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THE MERGER
1.01. The Merger. Subject to the terms and conditions of this
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Agreement, and pursuant to the provisions of the Delaware General Corporation
Law (the "DGCL"), at the Effective Time (as hereinafter defined), Seller shall
be merged with and into Buyer pursuant to the terms and conditions set forth
herein. Upon consummation of the Merger, the separate corporate existence of
Seller shall cease and Buyer shall continue as the surviving corporation
(sometimes referred to herein as the "Surviving Corporation") under the DGCL,
and all rights, properties and assets and every other interest of or belonging
to or due to the Seller will be deemed to be transferred to and vested in Buyer.
1.02. Closing. The closing (the "Closing") of the Merger shall take
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place at 10:00 a.m. local time, on the date that the Effective Time (as defined
in Section 1.03) occurs, or at such other time, and at such place, as Buyer and
Seller shall agree (the "Closing Date"). The Closing is anticipated to occur on
December 31, 1997. In no event will the Closing Date occur until after the
record date for the quarterly dividend of Seller with respect to the fourth
calendar quarter of 1997.
1.03. Effective Time. The Merger shall become effective on the date
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and at the time (the "Effective Time") on which appropriate documents in respect
of the Merger are filed with the Secretary of State of the State of Delaware in
such form as required by and in accordance with, the relevant provisions of the
DGCL. Subject to the terms and conditions of this Agreement, the Effective Time
shall occur on any such date as Buyer shall notify Seller in writing (such
notice to be at least five business days in advance of the Effective Time) but
not earlier than the satisfaction of all conditions set forth in Section 6.01(a)
and 6.01(b). As soon as practicable following the Effective Time, Buyer and
Seller shall cause a certificate or plan of merger reflecting the terms of this
Agreement to be delivered for filing and recordation with other state or local
officials in the State of Delaware in accordance with the DGCL.
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1.04. Additional Actions. If, at any time after the Effective Time,
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Buyer or Buyer Bank shall consider or be advised that any further deeds,
assignments or assurances or any other acts are necessary or desirable to
(a) vest, perfect or confirm, of record or otherwise, in Buyer or Buyer Bank its
right, title or interest in, to or under any of the rights, properties or assets
of Seller or Seller Bank, as the case may be, or (b) otherwise carry out the
purposes of this Agreement, Seller shall be deemed to have granted to Buyer and
Buyer Bank, jointly and severally, an irrevocable power of attorney to execute
and deliver all such deeds, assignments or assurances and to do all acts
necessary or desirable to vest, perfect or confirm title and possession to such
rights, properties or assets in Buyer or Buyer Bank, as the case may be, and
otherwise to carry out the purposes of this Agreement, and the officers and
directors of Buyer are authorized in the name of Seller and the General Partner
or otherwise to take any and all such action.
1.05. Certificate of Incorporation and Bylaws of Surviving
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Corporation. The Certificate of Incorporation and Bylaws of Buyer in effect
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immediately prior to the Effective Time shall, without any change, be the
Certificate of Incorporation and Bylaws of the Surviving Corporation following
the Merger until otherwise amended or repealed in accordance with applicable
law.
1.06. Board of Directors and Officers of the Surviving Corporation.
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At the Effective Time, the directors of Buyer immediately prior to the Effective
Time, and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and another person selected by Seller acceptable to
Buyer, shall be the directors of the Surviving Corporation. At the Effective
Time, the officers of Buyer immediately prior to the Effective Time shall be the
officers of the Surviving Corporation. Such directors and officers shall hold
office in accordance with the Surviving Corporation's Certificate of
Incorporation and Bylaws.
1.07. Conversion of Securities. (a) At the Effective Time, by virtue
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of the Merger and without any action on the part of Buyer, Seller or the holder
of any of the following securities:
(i) Each share of the common stock, par value $.01 per share, of
Buyer ("Buyer Common Stock") (and the associated Rights under the
Stockholder Protection Rights Agreement dated as of July 31, 1990, as
amended (the "Buyer Rights Agreement") between Buyer and Manufacturers
Hanover Trust Company of California, as Rights Agent) issued and
outstanding or held in treasury immediately prior to the Effective Time
shall remain issued and outstanding or held in treasury and shall be
unchanged after the Merger; and
(ii) Each share of common stock, par value $1.00 per share, of Seller
("Seller Common Stock") issued and outstanding immediately prior to the
Effective Time ("Exchange Shares")
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shall cease to be outstanding and shall be converted into and become the
right to receive:
(1) that number of shares of Buyer Common Stock (and the
associated Rights under the Buyer Rights Agreement) equal to (i) 70%
of Purchase Price, divided by (ii) the number of Exchange Shares,
divided by (iii) the Buyer Stock Price (such number of shares being
the "Per Share Stock Consideration"). The "Buyer Stock Price" means
(a) the average (rounded to four decimal points) of the average
closing sale price of one share of Buyer Common Stock on the Nasdaq
National Market ("Nasdaq") for the 20 consecutive full trading days
ending on the fifth business day immediately prior to the Closing Date
("Average Price"), (b) if the Average Price is in excess of $52.00 per
share, then $52.00, or (c) if the Average Price is less than $42.00
per share and Buyer has not made an Adjustment Election (as defined in
Section 7.01(f)), then $42.00. "Purchase Price" shall mean $300
million; and
(2) an amount of cash equal to (i) 30% of Purchase Price,
divided by (ii) the number of Exchange Shares (such amount of cash
being the "Per Share Cash Consideration").
1.08. Exchange of Certificates. (a) At the Closing, the Selling
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Stockholder shall deliver to Buyer certificates evidencing all of the Exchange
Shares ("Certificates"), duly endorsed in blank or accompanied by stock powers
duly executed in blank. Buyer shall issue Buyer Common Stock (and the
associated Rights) to the Selling Stockholder in exchange for Certificates in an
amount equal to the Per Share Stock Consideration multiplied by the number of
Exchange Shares evidenced by such Certificates.
(b) Buyer shall cooperate with the Selling Stockholder in distributing
the Buyer Common Stock issued pursuant to Section 1.08(a) to the holders of
Beneficial Unit Certificates of Selling Stockholder ("BUC Holders"), Limited
Partners of Selling Stockholder (the "Limited Partners") and the General Partner
in accordance with a plan of dissolution of the Selling Stockholder (the
"Distribution") which plan shall be approved by the Limited Partners and BUC
Holders pursuant to Section 5.03 of this Agreement. In consummating the
Distribution, Buyer and the Selling Stockholder agree to use their best efforts
to cause the Buyer Common Stock distributed in the Distribution to be registered
pursuant to the Securities Act of 1933, as amended (the "Securities Act").
(c) All shares of Seller Common Stock exchanged pursuant to this
Section 1.08 shall no longer be outstanding and shall automatically be canceled
and retired and shall cease to exist, and
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each Certificate previously evidencing any such shares shall thereafter
represent the right to receive the consideration described in this Agreement.
The holders of Certificates shall cease to have any rights with respect to
shares of Seller Common Stock except as otherwise provided herein or by law.
1.09. No Fractional Shares. Notwithstanding any other provision of
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this Agreement, neither certificates nor scrip for fractional shares of Buyer
Common Stock shall be issued in the Merger. The Selling Stockholder shall
receive in lieu thereof cash (without interest) in an amount determined by
multiplying the fractional share interest to which such holder would otherwise
be entitled by the Closing Price on the last business day preceding the
Effective Time. With respect to a share of stock, "Closing Price" shall mean:
the closing sale price of one share of Buyer Common Stock on the Nasdaq. The
Selling Stockholder shall not be entitled to dividends, voting rights or any
other rights in respect of any fractional share.
1.10. Anti-Dilution Adjustments. If prior to the Effective Time
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Buyer shall declare a stock dividend or make distributions upon or subdivide,
split up, reclassify or combine or make other similar change to Buyer Common
Stock, exchange Buyer Common Stock for a different number or kind of shares or
securities or declare a dividend or make a distribution on Buyer Common Stock or
on any security convertible into Buyer Common Stock, or is involved in any
transaction resulting in any of the foregoing (including any exchange of Buyer
Common Stock for a different number or kind of shares or securities)
appropriate adjustment or adjustments will be made to the Buyer Stock Price,
Average Price and the per share prices set forth in Section 1.07.
1.11. Reservation of Right to Revise Transaction. Buyer may at any
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time change the method of effecting the acquisition of Seller by Buyer (in a
manner reasonably acceptable to Seller counsel) and Seller shall cooperate in
such efforts (including without limitation the provisions of this Article I)
(any such additional transactions together with the Merger being referred to
herein as the "Transactions")), if and to the extent Buyer has been advised in
writing by Buyer's independent accountants that the method of effecting the
acquisition contemplated hereby will not result in the best utilization of net
operating loss carry-forwards of Seller and the Seller Subsidiaries, provided,
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however, that no such change shall (A) alter or change the amount or kind of
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consideration to be issued to Selling Stockholder as provided for in this
Agreement (the "Merger Consideration"), (B) adversely affect the tax treatment
to Selling Stockholder as a result of receiving the Merger Consideration or (C)
materially delay receipt of any approval referred to in Section 6.01(b) or the
consummation of the transactions contemplated by this Agreement. Buyer may
exercise this right of revision by giving written notice thereof in the manner
provided in Section 8.02 of this Agreement.
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ARTICLE II
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REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLER,
SELLING STOCKHOLDER AND GENERAL PARTNER
Seller represents and warrants to and covenant with Buyer as follows:
2.01. Organization and Authority. Seller is a corporation duly
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organized, validly existing and in good standing under the laws of the State of
Delaware and is duly qualified to do business and is in good standing in all
jurisdictions where its ownership or leasing of property or the conduct of its
business requires it to be so qualified, except as set forth on Schedule 2.01
and except where the failure to be so qualified would not have a material
adverse effect on the financial condition or results of operations ("Material
Adverse Effect") of Seller and its Subsidiaries, taken as a whole, and has
corporate power and authority to own its properties and assets and to carry on
its business as it is now being conducted. Seller is registered as a unitary
savings and loan holding company with the Office of Thrift Supervision (the
"OTS") under HOLA. True and complete copies of the Certificate of Incorporation
and Bylaws of Seller and of the charter and bylaws of the Seller Subsidiaries
(as that term is defined in Section 2.02), each as in effect on the date of this
Agreement, have been provided to Buyer. As used in this Agreement, the word
"Subsidiary" when used with respect to any party means any corporation,
partnership or other organization, whether incorporated or unincorporated, which
is consolidated with such party for financial reporting purposes.
2.02. Subsidiaries. Schedule 2.02 sets forth, among other things, a
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complete and correct list of all of Seller's Subsidiaries (each a "Seller
Subsidiary" and collectively the "Seller Subsidiaries"), all outstanding Equity
Securities of each of which, except as set forth on Schedule 2.02, are owned
directly or indirectly by Seller. "Equity Securities" of an issuer means
capital stock or other equity securities of such issuer, options, limited
partnership units, warrants, scrip, rights to subscribe to, calls or commitments
of any character whatsoever relating to, or securities or rights convertible
into, shares of any capital stock or other Equity Securities of such issuer, or
contracts, commitments, understandings or arrangements by which such issuer is
or may become bound to issue additional shares of its capital stock or other
Equity Securities of such issuer, or options, warrants, scrip or rights to
purchase, acquire, subscribe to, calls on or commitments for any shares of its
capital stock or other Equity Securities. Except as set forth on Schedule 2.02,
all of the outstanding shares of capital stock of the Seller Subsidiaries are
validly issued, fully paid and nonassessable, and those shares owned by Seller
are owned free and clear of any lien, claim, charge, option, encumbrance,
agreement, mortgage, pledge, security
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interest or restriction (a "Lien") with respect thereto. Each of the Seller
Subsidiaries is a corporation or savings bank duly incorporated or organized,
validly existing, and in good standing under the laws of its jurisdiction of
incorporation or organization, and has corporate power and authority to own or
lease its properties and assets and to carry on its business as it is now being
conducted. Each of the Seller Subsidiaries is duly qualified to do business in
each jurisdiction where its ownership or leasing of property or the conduct of
its business requires it so to be qualified, except where the failure to so
qualify would not have a Material Adverse Effect on Seller and its Subsidiaries,
taken as a whole. Except as set forth on Schedule 2.02, Seller does not own
beneficially, directly or indirectly, any shares of any class of Equity
Securities or similar interests of any corporation, bank, business trust,
association or similar organization. Seller Bank is chartered by the OTS. The
deposits of Seller Bank are insured by the Savings Association Insurance Fund
("SAIF") or the Bank Insurance Fund ("BIF"). Except as set forth on
Schedule 2.02, neither Seller nor any Seller Subsidiary holds any interest in a
partnership, limited liability company, joint venture or any other kind of
business enterprise.
2.03. Capitalization. The authorized capital stock of Seller consists
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of 100 shares of Seller Common Stock of which 100 are issued and outstanding,
all of which shares are beneficially owned by Selling Stockholder. There are no
other Equity Securities of Seller outstanding. All of the issued and outstanding
shares of Seller Common Stock are validly issued, fully paid, and nonassessable,
and have not been issued in violation of any preemptive right. The authorized
capital stock of Seller Bank consists of (i) 10,000,000 shares of common stock,
par value $1.00 per share ("Seller Bank Common Stock"), of which 5,000,000
shares are issued and outstanding and (ii) 1,000,000 shares of preferred stock,
par value $100.00 per share("Seller Bank Preferred Stock"), issuable in series,
of which 200,000 shares are issued and outstanding. There are no other Equity
Securities of Seller Bank outstanding. All of the issued and outstanding shares
of Seller Bank Common Stock and Seller Bank Preferred Stock are validly issued,
fully paid and nonassessable, and have not been issued in violation of any
preemptive right.
2.04. Authorization. (a) Seller has the corporate power and authority
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to enter into this Agreement and, subject to the approval of this Agreement by
the Selling Stockholder, to carry out its obligations hereunder. The only vote
required for Selling Stockholder to approve this Agreement is the affirmative
vote of a Majority in Interest of the Limited Partners as provided in Section
10.03 of the Limited Partnership Agreement of the Selling Stockholder (the
"Limited Partnership Agreement") at a meeting called for such purpose. The
execution, delivery and performance of this Agreement by Seller and the
consummation by Seller of the transactions contemplated hereby have been duly
authorized by all
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requisite corporate action on the part of Seller. Subject to approval by the
Selling Stockholder and the execution and delivery hereof by the parties hereto,
this Agreement is a valid and binding obligation of Seller enforceable against
Seller in accordance with its terms.
(b) Except as set forth on Schedule 2.04B, neither the execution nor
delivery nor performance by Seller of this Agreement, nor the consummation by
Seller and Seller Bank of the transactions contemplated hereby, nor compliance
by Seller with any of the provisions hereof, or compliance by Seller Bank with
any of the provisions of the Subsidiary Merger Agreement will (i) violate,
conflict with, or result in a breach of any provisions of, or constitute a
default (or an event which, with notice or lapse of time or both, would
constitute a default) under, or result in the termination of, or accelerate the
performance required by, or result in a right of termination or acceleration of,
or result in the creation of, any Lien upon any of the material properties or
assets of Seller or any Seller Subsidiary under any of the terms, conditions or
provisions of (x) its articles or certificate of incorporation, charter or
bylaws or (y) any material note, bond, mortgage, indenture, deed of trust,
license, lease, agreement or other instrument or obligation to which Seller or
any Seller Subsidiary is a party or by which it may be bound, or to which Seller
or any Seller Subsidiary or any of the material properties or assets of Seller
or any Seller Subsidiary may be subject, or (ii) subject to compliance with the
statutes and regulations referred to in paragraph (c) of this Section 2.04, to
the best of knowledge of Seller violate any judgment, ruling, order, writ,
injunction, decree, statute, rule or regulation applicable to Seller or any
Seller Subsidiary or any of their respective material properties or assets.
(c) Other than in connection or in compliance with the provisions of the
DGCL, the Securities Act, the Securities Exchange Act of 1934, as amended, and
the rules and regulations thereunder (the "Exchange Act"), the securities or
blue sky laws of the various states or filings, consents, reviews,
authorizations, approvals or exemptions required by the FDIC or under HOLA or
the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of ▇▇▇▇ (▇▇▇ "▇▇▇ ▇▇▇"), or any
required approvals or filings pursuant to any state statutes or regulations
applicable to Seller, Buyer or their respective Subsidiaries with respect to the
transactions contemplated by this Agreement, no notice to, filing with,
exemption or review by or authorization, consent or approval of, any public body
or authority is necessary for the consummation by Seller and Seller Bank of the
transactions contemplated by this Agreement.
2.05. Seller Financial Statements. The consolidated balance sheets
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of Seller and its Subsidiary as of December 31, 1996, 1995 and 1994 and related
consolidated statements of income,
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cash flows and partners' capital for each of the three years in the three-year
period ended December 31, 1996, together with the notes thereto, audited by KPMG
Peat Marwick LLP and included in an annual report on Form 10-K of Selling
Stockholder (including amendments thereto) as filed with the Securities and
Exchange Commission (the "SEC") (the "Seller Financial Statements"), except as
set forth on Schedule 2.05, have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis ("GAAP"), present
fairly the consolidated financial position of Selling Stockholder, Seller and
its Subsidiary at the dates and the consolidated results of operations, cash
flows and partners' capital of Selling Stockholder, Seller and its Subsidiary
for the periods stated therein and are derived from the books and records of
Selling Stockholder, Seller and its Subsidiary, which are complete and accurate
in all material respects and have been maintained in all material respects in
accordance with applicable laws and regulations. Except as set forth on
Schedule 2.05, neither Seller nor its Subsidiary has any material contingent
liabilities that are not reflected in the Seller Reports (defined below) or
disclosed in the financial statements described above.
2.06. Seller Reports. Except as set forth on Schedule 2.06, since
--------------
January 1, 1994, each of Seller and the Seller Subsidiaries has filed all
material reports, registrations and statements, together with any required
material amendments thereto, that it was required to file with (i)the OTS,
(ii) the FDIC, and (iii) any other federal, state, municipal, local or foreign
government, securities, banking, savings and loan, insurance and other
governmental or regulatory authority and the agencies and staffs thereof (the
entities in the foregoing clauses (i) through (iii) being referred to herein
collectively as the "Regulatory Authorities" and individually as a "Regulatory
Authority"). All such reports and statements filed with any such Regulatory
Authority are collectively referred to herein as the "Seller Reports." As of
its respective date, each Seller Report complied in all material respects with
all the rules and regulations promulgated by the applicable Regulatory Authority
and did not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
2.07. Properties and Leases. Except as set forth on Schedule 2.07 or
---------------------
as may be reflected in the Seller Financial Statements, except for any Lien for
current taxes not yet delinquent and except with respect to assets classified
as real estate owned, Seller and its Subsidiaries have good title free and clear
of any material Lien to all the real and personal property reflected in Seller's
consolidated balance sheet as of December 31, 1996 included in the most recent
Selling Stockholder Form 10-K and, in each case, all real and personal property
acquired since such
9
date, except such real and personal property as has been disposed of in the
ordinary course of business. All leases material to Seller or any Seller
Subsidiary pursuant to which Seller or any Seller Subsidiary, as lessee, leases
real or personal property, are valid and effective in accordance with their
respective terms, and there is not, under any of such leases, any material
existing default by Seller or any Seller Subsidiary or any event which, with
notice or lapse of time or both, would constitute such a material default.
Substantially all of Seller's and Seller Subsidiaries' buildings, structures and
equipment in regular use have been well maintained in all material respects and
are in good and serviceable condition, normal wear and tear excepted.
2.08. Taxes. Except as set forth on Schedule 2.08, Seller and each
-----
Seller Subsidiary have timely filed or will timely (including extensions) file
all tax returns required to be filed at or prior to the Closing Date ("Seller
Returns"). Each of Seller and its Subsidiaries has paid, or set up adequate
reserves on the Seller Financial Statements for the payment of, all taxes
required to be paid in respect of the periods covered by such returns and has
set up adequate reserves on the most recent financial statements Selling
Stockholder has filed under the Exchange Act for the payment of all taxes
anticipated to be payable in respect of all periods up to and including the
latest period covered by such financial statements. Neither Seller nor any
Seller Subsidiary will have any liability material to the financial condition or
results of operations (the "Condition") of Seller and the Seller Subsidiaries,
taken as a whole, for any such taxes in excess of the amounts so paid or
reserves so established and no material deficiencies for any tax, assessment or
governmental charge have been proposed, asserted or assessed (tentatively or
definitely) against any of Seller or any Seller Subsidiary which would not be
covered by existing reserves. Neither Seller nor any Seller Subsidiary is
delinquent in the payment of any material tax, assessment or governmental
charge, nor, except as previously disclosed, has it requested any extension of
time within which to file any tax returns in respect of any fiscal year which
have not since been filed and no requests for waivers of the time to assess any
tax are pending. The federal and state income tax returns of Seller and the
Seller Subsidiaries have been audited and settled by the Internal Revenue
Service (the "IRS") or appropriate state tax authorities for all periods ended
through December 31, 1985 or the period for assessment of taxes in respect of
such periods has expired. There is no deficiency or refund litigation or matter
in controversy with respect to Seller Returns. Neither Seller nor any Seller
Subsidiary has extended or waived any statute of limitations on the assessment
of any tax due that is currently in effect.
2.09. Material Adverse Effect. Since December 31, 1996, there has
-----------------------
been no Material Adverse Effect on Seller and its Subsidiaries, taken as a
whole, except as may have resulted or may result from changes to laws and
regulations or changes in economic
10
conditions applicable to thrift institutions generally or in general levels of
interest rates affecting thrift institutions generally.
2.10. Commitments and Contracts. (a) Except as set forth on
-------------------------
Schedule 2.10A, neither Seller nor any Seller Subsidiary is a party or subject
to any of the following (whether written or oral, express or implied):
(i) any material agreement, arrangement or commitment (A) not made in
the ordinary course of business or (B) pursuant to which Seller or any of
its Subsidiaries is or may become obligated to invest in or contribute
capital to any Seller Subsidiary;
(ii) any agreement, indenture or other instrument not disclosed in the
Seller Financial Statements relating to the borrowing of money by Seller or
any Seller Subsidiary or the guarantee by Seller or any Seller Subsidiary
of any such obligation (other than trade payables or instruments related to
transactions entered into in the ordinary course of business by any Seller
Subsidiary, such as deposits and Fed Funds borrowings);
(iii) any contract, agreement or understanding with any labor union or
collective bargaining organization;
(iv) any contract containing covenants which limit the ability of
Seller or any Seller Subsidiary to compete in any line of business or with
any person or which involve any restriction of the geographical area in
which, or method by which, Seller or any Seller Subsidiary may carry on its
business (other than as may be required by law or any applicable Regulatory
Authority);
(v) any other contract or agreement which is a material contract
within the meaning of Item 601(b)(10) of Regulation S-K promulgated by the
SEC;
(vi) any lease with annual rental payments aggregating $250,000 or
more; or
(vii) any agreement, commitment or arrangement to make any distribution
or other payments to the Selling Stockholder.
(b) Neither Seller nor any Seller Subsidiary is in violation of its
certificate or articles of incorporation or bylaws or charter documents or
bylaws or in default under any material agreement, commitment, arrangement,
lease, insurance policy or other instrument, whether entered into in the
ordinary course of business or otherwise and whether written or oral, and there
has
11
not occurred any event that, with the lapse of time or giving of notice or both,
would constitute such a default, except, in all cases, where such default would
not have a Material Adverse Effect on Seller and its Subsidiaries, taken as a
whole.
2.11. Litigation and Other Proceedings. Except as set forth on
--------------------------------
Schedule 2.11, neither Seller nor any Seller Subsidiary is a party to any
pending or, to the best knowledge of Seller, threatened claim, action, suit,
investigation or proceeding, or is subject to any order, judgment or decree,
except for matters which, in the aggregate, will not have, or reasonably could
not be expected to have, a Material Adverse Effect on Seller and its
Subsidiaries, taken as a whole, or which purports or seeks to enjoin or restrain
the transactions contemplated by this Agreement. Without limiting the generality
of the foregoing, as of the date of this Agreement, there are no actions, suits,
or proceedings pending or, to the best knowledge of Seller, threatened against
Seller or any Seller Subsidiary or any of their respective officers or directors
by any stockholder (or any former stockholder), or involving claims under the
DGCL, the Securities Act, the Exchange Act, the Community Reinvestment Act of
1977 as amended (the "CRA"), or the fair lending laws.
2.12. Insurance. Each of Seller and its Subsidiaries has taken all
---------
requisite action (including without limitation the making of claims and the
giving of notices) pursuant to its directors' and officers' liability insurance
policy or policies in order to preserve all rights thereunder with respect to
all matters (other than matters arising in connection with this Agreement and
the transactions contemplated hereby) occurring prior to the Effective Time that
are known to Seller, except for such matters which, individually or in the
aggregate, will not have and reasonably could not be expected to have a Material
Adverse Effect on Seller and its Subsidiaries, taken as a whole. Set forth on
Schedule 2.12 is a list of all insurance policies maintained by or for the
benefit of Seller or its Subsidiaries or their directors, officers, employees or
agents.
2.13. Compliance with Laws. (a) Except as set forth on Schedule
--------------------
2.13A, Seller and each of its Subsidiaries have all permits, licenses,
authorizations, orders and approvals of, and have made all filings, applications
and registrations with, all Regulatory Authorities that are required in order to
permit them to own or lease their properties and assets and to carry on their
business as presently conducted and that are material to the business of Seller
and its Subsidiaries; all such permits, licenses, certificates of authority,
orders and approvals are in full force and effect and, to the best knowledge of
Seller, no suspension or cancellation of any of them is threatened; and all such
filings, applications and registrations are current.
12
(b) Except as set forth on Schedule 2.13B and except for failures to
comply or defaults which individually or in the aggregate would not have a
Material Adverse Effect on Seller and its Subsidiaries, taken as a whole, (i)
each of Seller and its Subsidiaries has complied with all laws, regulations and
orders (including without limitation zoning ordinances, building codes, the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and
securities, tax, environmental, civil rights, and occupational health and safety
laws and regulations and including without limitation in the case of any Seller
Subsidiary that is a bank or savings association, banking organization, banking
corporation or trust company, all statutes, rules, regulations and policy
statements pertaining to the conduct of a banking, deposit-taking, lending or
related business, or to the exercise of trust powers) and governing instruments
applicable to them and to the conduct of their business, and (ii) neither Seller
nor any Seller Subsidiary is in default under, and no event has occurred which,
with the lapse of time or notice or both, could result in the de fault under,
the terms of any judgment, order, writ, decree, permit, or license of any
Regulatory Authority or court, whether federal, state, municipal, or local and
whether at law or in equity. Except as set forth on Schedule 2.13B, as of the
date of this Agreement, neither Seller nor any Seller Subsidiary is subject to
or reasonably likely to incur a liability as a result of its ownership,
operation, or use of any Property (as defined below) of Seller (whether directly
or to the best knowledge of Seller, as a consequence of such Property being part
of the investment portfolio of Seller or any Seller Subsidiary) (A) that is
contaminated by or contains any hazardous waste, toxic substance, or related
materials, including, without limitation, asbestos, PCBs, pesticides,
herbicides, and any other substance or waste that is hazardous to human health
or the environment (collectively, a "Toxic Substance") or (B) on which any Toxic
Substance has been stored, disposed of, placed or used in the construction
thereof. "Property" of a person shall include all property (real or personal,
tangible or intangible) owned or controlled by such person, including, without
limitation, property under foreclosure, property held by such person or any
Subsidiary of such person in its capacity as a trustee and property in which any
venture capital or similar unit of such person or any Subsidiary of such person
has an interest. Except as set forth on Schedule 2.13B, no claim, action, suit,
or proceeding is pending against Seller or any Seller Subsidiary relating to
Property of Seller or any Seller Subsidiary before any court or other Regulatory
Authority or arbitration tribunal relating to hazardous substances, pollution,
or the environment, and there is no outstanding judgment, order, writ,
injunction, decree, or award against or affecting Seller or any Seller
Subsidiary with respect to the same. Except for statutory or regulatory
restrictions of general application, no Regulatory Authority has placed any
restriction on the business of Seller or any Seller Subsidiary which reasonably
could be expected to have a
13
Material Adverse Effect on Seller and its Subsidiaries, taken as a whole.
(c) From and after January 1, 1994, neither Seller nor any Seller
Subsidiary has received any notification or communication which has not been
resolved from any Regulatory Authority (i) asserting that any Seller or any
Subsidiary of Seller, is not in substantial compliance with any of the statutes,
regulations or ordinances that such Regulatory Authority enforces, except with
respect to matters which (A) are set forth on Schedule 2.13C or in any writing
previously furnished to Buyer and (B) reasonably could not be expected to have a
Material Adverse Effect on Seller and its Subsidiaries, taken as a whole, (ii)
threatening to revoke any license, franchise, permit or governmental
authorization that is material to the Condition of Seller and its Subsidiaries,
taken as a whole, including without limitation such company's status as an
insured depositary institution under the Federal Deposit Insurance Act (the
"FDIA"), or (iii) requiring or threatening to require Seller or any of its
Subsidiaries, or indicating that Seller or any of its Subsidiaries may be
required to enter into a cease and desist order, agreement or memorandum of
understanding or any other agreement restricting or limiting or purporting to
direct, restrict or limit in any manner the operations of Seller or any of its
Subsidiaries, including, without limitation, any restriction on the making of
distributions or payment of dividends. No such cease and desist order,
agreement or memorandum of understanding or other agreement is currently in
effect.
(d) Except as set forth on Schedule 2.13D, neither Seller nor any
Seller Subsidiary is required by Section 32 of the FDIA to give prior notice to
any federal banking agency of the proposed addition of an individual to its
board of directors or the employment of an individual as a senior executive
officer.
2.14. Labor. No work stoppage involving Seller or any Seller
-----
Subsidiary is pending or, to the best knowledge of Seller, threatened, which
reasonably could be expected to have a Material Adverse Effect on Seller and its
Subsidiaries, taken as a whole. Except as set forth on Schedule 2.14, neither
Seller nor any Seller Subsidiary is involved in or, to the best knowledge of
Seller, threatened with or affected by any labor dispute, arbitration, lawsuit
or administrative proceeding. Employees of neither Seller nor any Seller
Subsidiary are represented by any labor union or any collective bargaining
organization.
2.15. Material Interests of Certain Persons. (a) Except as set forth
-------------------------------------
in Selling Stockholder's Form 10-K for the fiscal year ended December 31, 1996,
to the best knowledge of Seller no officer or director of Seller or any
Subsidiary of Seller or any "associate" (as such term is defined in Rule 14a-1
under the Exchange Act) of any such officer or director has any material
interest in any material contract or property (real or personal,
14
tangible or intangible), used in, or pertaining to the business of, Seller or
any Subsidiary of Seller, which would be required to be so disclosed if Seller
or any such Subsidiary were required to disclose such information pursuant to
Item 404 of Regulation S-K promulgated by the SEC.
(b) Except as set forth on Schedule 2.15B, there are no loans from
Seller or any Seller Subsidiary to any present officer, director, employee or
any associate or related interest of any such person which was or would be
required under any rule or regulation to be approved by or reported to Seller's
or Seller Bank's Board of Directors ("Seller Insider Loans"). All outstanding
Seller Insider Loans from Seller or Seller Bank were approved by or reported to
the appropriate partner or board of directors in accordance with applicable law
and regulations.
2.16. Allowance for Loan and Lease Losses; Non-performing Assets.
----------------------------------------------------------
(a) The allowances for loan and lease losses contained in the Seller Financial
Statements were established in accordance with the past practices and
experiences of Seller and its Subsidiaries, and the allowance for loan losses
shown on the consolidated condensed balance sheet of Selling Stockholder and its
Subsidiaries contained in the most recent Selling Stockholder Form 10-K is
adequate in all material respects under the requirements of GAAP to provide for
possible losses on loans (including without limitation accrued interest
receivable) and credit commitments (including without limitation stand-by
letters of credit) outstanding as of the date of such balance sheet.
(b) As of December 31, 1996, the aggregate amount of all Seller
Nonperforming Assets (as defined below) on the books of Seller and its
Subsidiaries does not exceed $11,700,000. "Seller Non-performing Assets" shall
mean (i) all loans and leases (A) that are contractually past due 90 days or
more in the payment of principal and/or interest, (B) that are on nonaccrual
status, (C) where a reasonable doubt exists, in the reasonable judgment of
Seller, as to the timely future collectibility of principal and/or interest,
whether or not interest is still accruing or the loan is less than 90 days past
due, (D) where the interest rate terms have been reduced and/or the maturity
dates have been extended subsequent to the agreement under which the loan was
originally created due to concerns regarding the borrower's ability to pay in
accordance with such initial terms, (E) where a specific reserve allocation
exists in connection therewith, or (F) that have been classified "doubtful",
"loss" or the equivalent thereof by any Regulatory Authority and (ii) all
assets classified as real estate acquired through foreclosure or repossession
and other assets acquired through foreclosure or repossession.
2.17. Employee Benefit Plans. (a) Except as set forth on Schedule
----------------------
2.17A, neither Seller nor any Seller Subsidiary is a party to any existing
employment, management, consulting, deferred
15
compensation, change-in-control or other similar contract. Schedule 2.17A lists
all pension, retirement, supplemental retirement, savings, profit sharing, stock
option, stock purchase, stock ownership, stock appreciation right, deferred
compensation, consulting, bonus, medical, disability, workers' compensation,
vacation, group insurance, severance and other material employee benefit,
incentive and welfare policies, contracts, plans and arrangements, and all trust
agreements related thereto, maintained (currently or at any time in the last
five years) by or contributed to by Seller or any Seller Subsidiary in respect
of any of the present or former directors, officers, or other employees of
and/or consultants to Seller or any Seller Subsidiary (collectively "Seller
Employee Plans"). The aggregate number of Rights (as defined in the Equity
Appreciation Plan (the "EAP")) granted under the EAP is 320,000. Seller has
furnished Buyer with the following documents with respect to each Seller
Employee Plan: (i) a true and complete copy of all written documents comprising
such Seller Employee Plan (including amendments and individual agreements
relating thereto) or, if there is no such written document, an accurate and
complete description of the Seller Employee Plan; (ii) the most recent Form 5500
or Form 5500-C (including all schedules thereto) if applicable; (iii) the most
recent financial statements and actuarial reports, if any; (iv) the summary plan
description currently in effect and all material modifications thereof, if any;
and (v) the most recent IRS determination letter, if any.
(b) All Seller Employee Plans have been maintained and operated
materially in accordance with their terms and with the material requirements of
all applicable statutes, orders, rules and final regulations, including without
limitation ERISA and the IRC. All contributions required to be made to Seller
Employee Plans have been made.
(c) With respect to each of the Seller Employee Plans which is a
pension plan (as defined in Section 3(2) of ERISA)(the "Seller Pension Plans"):
(i) each Seller Pension Plan which is intended to be "qualified" within the
meaning of Section 401(a) of the IRC has been determined to be so qualified by
the IRS and, to the knowledge of Seller such determination letter may still be
relied upon, and each related trust is exempt from taxation under Section 501(a)
of the IRC; (ii) the actuarial present value of all benefits under each Seller
Pension Plan which is subject to Title IV of ERISA, valued using the assumptions
in the most recent actuarial report, did not, in each case, as of the last
applicable annual valuation date (as indicated on Schedule 2.17A), exceed the
value of the assets of the Seller Pension Plan allocable to such vested or
accrued benefits; (iii) to the best knowledge of Seller there has been no
"prohibited transaction," as such term is defined in Section 4975 of the IRC or
Section 406 of ERISA, which could subject any Seller Pension Plan or associated
trust, or the Seller or any Seller Subsidiary to any material tax or penalty;
(iv) except as set forth on Schedule 2.17C, no Seller Pension Plan
16
subject to Title IV of ERISA or any trust created thereunder has been
terminated, nor have there been any "reportable events" with respect to any
Seller Pension Plan, as that term is defined in Section 4043 of ERISA for which
the 30-day notice requirement has not been waived on or after January 1, 1985;
and (v) no Seller Pension Plan or any trust created thereunder has incurred any
"accumulated funding deficiency," as such term is defined in Section 302 of
ERISA (whether or not waived). Except as set forth on Schedule 2.17C, no Seller
Pension Plan is a "multiemployer plan" as that term is defined in Section 3(37)
of ERISA. With respect to each Seller Pension Plan that is described in Section
4063 (a) of ERISA (a "Multiple Employer Pension Plan"): (i) neither Seller nor
any Seller Subsidiary would have any liability or obligation to post a bond
under Section 4063 of ERISA if Seller and all Seller Subsidiaries were to
withdraw from such Multiple Employer Pension Plan; and (ii) neither Seller nor
any Seller Subsidiary would have any liability under Section 4064 of ERISA if
such Multiple Employer Pension Plan were to terminate.
(d) Except as set forth on Schedule 2.17D, neither Seller nor any
Seller Subsidiary has any liability for any post-retirement health, medical or
similar benefit of any kind whatsoever, except as required by statute or
regulation.
(e) Except as set forth on Schedule 2.17E, neither Seller nor any
Seller Subsidiary has any material liability under ERISA or the IRC as a result
of its being a member of a group described in Sections 414(b), (c), (m) or (o)
of the IRC.
(f) Except as set forth on Schedule 2.17F neither the execution nor
delivery of this Agreement, nor the consummation of any of the transactions
contemplated hereby, will (i) result in any material payment to any director or
employee of Seller or any Seller Subsidiary from any of such entities, (ii)
materially increase any benefit otherwise payable under any of the Seller
Employee Plans or (iii) result in the acceleration of the time of payment of any
such benefit.
(g) Except as set forth on Schedule 2.17G, there are no arrangements
or agreements of Seller or any Seller Subsidiary that could possibly result in
"parachute payments" (as defined in 280G of the IRC). Set forth on Schedule
2.17G are the names of the persons who could be "disqualified individuals" for
purposes of Section 280G of the IRC.
2.18. Conduct of Seller to Date. From and after January 1, 1997
-------------------------
through the date of this Agreement, except as set forth on Schedule 2.18 or in
Seller Financial Statements or Seller Reports: (i) Seller and the Seller
Subsidiaries have conducted their respective businesses in all material respects
in the ordinary and usual course consistent with past practices; (ii) neither
Seller nor any Seller Subsidiary has incurred any material obligation or
17
liability (absolute or contingent), except normal trade or business obligations
or liabilities incurred in the ordinary course of business, or subjected to Lien
any of its assets or properties other than in the ordinary course of business
consistent with past practice; (iii) neither Seller nor any Seller Subsidiary
has discharged or satisfied any material Lien or paid any material obligation or
liability (absolute or contingent), other than in the ordinary course of
business; (iv) neither Seller nor any Seller Subsidiary has sold, assigned,
transferred, leased, exchanged, or otherwise disposed of any of its material
properties or assets other than for a fair consideration in the ordinary course
of business; (v) except as required by contract or law or in the ordinary course
of business, neither Seller nor any Seller Subsidiary has (A) increased the rate
of compensation of, or paid any bonus to, any of its directors, officers, or
other employees, except merit, promotion or annual increases and bonuses in
accordance with existing policy, (B) entered into any new, or amended or
supplemented any existing employment, management, consulting, deferred
compensation, severance, or other similar contract, (C) entered into,
terminated, or substantially modified any of the Seller Employee Plans or (D)
agreed to do any of the foregoing; (vi) neither Seller nor any Seller Subsidiary
has suffered any material damage, destruction, or loss, whether as the result of
fire, explosion, earthquake, accident, casualty, labor trouble, requisition, or
taking of property by any Regulatory Authority, flood, windstorm, embargo, riot,
act of God or the enemy, or other casualty or event, and whether or not covered
by insurance; and (vii) neither Seller nor any Seller Subsidiary has canceled or
compromised any debt, except for debts charged off or compromised in accordance
with the past practice of Seller and its Subsidiaries.
2.19. Proxy Statement, etc. None of the information regarding Seller
--------------------
or any Seller Subsidiary supplied or to be supplied by Seller for inclusion or
included in (i) the registration statement on Form S-4 to be filed with the SEC
by Buyer for the purpose of registering the shares of Buyer Common Stock to be
issued pursuant to the provisions of this Agreement (the "Registration
Statement"), (ii) the proxy or information statement (the "Proxy Statement") to
be mailed to Limited Partners and BUC Holders of Selling Stockholder in
connection with the transactions contemplated by this Agreement or (iii) any
other documents to be filed with any Regulatory Authority in connection with the
transactions contemplated hereby will, at the respective times such documents
are filed with any Regulatory Authority and, in the case of the Registration
Statement, when it becomes effective and, in the case of the Proxy Statement,
when mailed, be false or misleading with respect to any material fact, or omit
to state any material fact necessary in order to make the statements therein not
misleading or, in the case of the Proxy Statement or any amendment thereof or
supplement thereto, at the time of the meeting of Limited Partners referred to
in Section 5.03 (the
18
"Selling Stockholder Meeting") (or, if no Selling Stockholder Meeting is held,
at the time the Proxy Statement is first furnished to Limited Partners) and at
the time of the meeting of Buyer's stockholders referred to in Section 5.03 (the
"Buyer Meeting"), be false or misleading with respect to any material fact, or
omit to state any material fact necessary to correct any statement in any
earlier communication with respect to the solicitation of any proxy for the
Selling Stockholder Meeting. All documents which Seller or any Seller
Subsidiary is responsible for filing with any Regulatory Authority in connection
with the Merger will comply as to form in all material respects with the
provisions of applicable law.
2.20. Registration Obligations. Except as set forth on Schedule
------------------------
2.20, neither Seller nor any Seller Subsidiary is under any obligation,
contingent or otherwise to register any of its securities under the Securities
Act.
2.21. State Takeover Statutes. Except as set forth on Schedule 2.21,
-----------------------
the transactions contemplated by this Agreement are not subject to any
applicable state takeover law.
2.22. Accounting, Tax and Regulatory Matters. Neither Seller nor any
--------------------------------------
Seller Subsidiary has taken or agreed to take any action or has any knowledge of
any fact or circumstance that would (i) prevent the transactions contemplated
hereby from qualifying as a reorganization within the meaning of Section 368 of
the IRC or (ii) materially impede or delay receipt of any approval referred to
in Section 6.01(b) or the consummation of the transactions contemplated by this
Agreement.
2.23. Brokers and Finders. Except for ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., neither
-------------------
Seller nor any Seller Subsidiary nor any of their respective officers, directors
or employees has employed any 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 Seller or any Seller
Subsidiary in connection with this Agreement or the transactions contemplated
hereby. Schedule 2.23 discloses bona fide estimates of the amounts of all fees
and expenses expected to be paid by Seller to all third parties in connection
with the Merger ("Merger Fees").
2.24. Interest Rate Risk Management Instruments. (a) Set forth on
-----------------------------------------
Schedule 2.24A is a list, as of the date hereof, of all interest rate swaps,
caps, floors, and option agreements and other interest rate risk management
arrangements to which Seller or any of its Subsidiaries is a party or by which
any of their properties or assets may be bound.
(b) All interest rate swaps, caps, floors and option agreements and
other interest rate risk management arrangements to which Seller or any of its
Subsidiaries is a party or by which any
19
of their properties or assets may be bound were entered into in the ordinary
course of business and, to the best knowledge of Seller, in accordance with
prudent banking practice and applicable rules, regulations and policies of
Regulatory Authorities and with counterparties believed to be financially
responsible at the time and are legal, valid and binding obligations and are in
full force and effect. Seller and each of its Subsidiaries has duly performed
in all material respects all of its obligations thereunder to the extent that
such obligations to perform have accrued, and there are no material breaches,
violations or defaults or allegations or assertions of such by any party
thereunder.
2.25. Accuracy of Information. To the best knowledge of Seller, the
-----------------------
statements of Seller contained in this Agreement, the Schedules and any other
written document executed and delivered by or on behalf of Seller pursuant to
the terms of this Agreement are true and correct in all material respects, and
such statements and documents do not omit any material fact necessary to make
the statements contained therein not misleading.
Selling Stockholder represents and warrants to and covenants with Buyer
as follows:
2.26. Authorization. Selling Stockholder has the partnership power
-------------
and authority to enter into this Agreement and, subject to the approval of this
Agreement by a Majority in Interest of the Limited Partners, to carry out its
obligations hereunder. The execution, delivery and performance of this Agreement
by Selling Stockholder and the consummation by Selling Stockholder of the
transactions contemplated hereby have been duly authorized by all requisite
partnership action on the part of Selling Stockholder. Subject to approval by a
Majority in Interest of the Limited Partners, and the execution and delivery
hereof by the parties hereto, this Agreement is a valid and binding obligation
of Selling Stockholder enforceable against Selling Stockholder in accordance
with its terms.
2.27. Beneficial Ownership of Seller Equity Securities. Selling
------------------------------------------------
Stockholder beneficially owns all of the issued and outstanding shares of Seller
Common Stock. Selling Stockholder does not own, directly or indirectly, any
other Equity Securities of Seller.
2.28. Rights to Acquire Equity Securities. There is no subscription,
-----------------------------------
option, warrant, call, right, contract, agreement, commitment, understanding or
arrangement relating to the sale, delivery or transfer by Selling Stockholder of
any shares of Seller Common Stock, including any right of conversion or exchange
under any outstanding security or other instrument.
2.29 Title to Seller Common Stock. Selling Stockholder has good
----------------------------
and marketable title to all of the issued and outstanding
20
shares of Seller Common Stock, free and clear of all pledges, security
interests, liens, charges, encumbrances, equities, claims and options of
whatever nature.
General Partner represents and warrants to and covenants with Buyer as
follows:
2.30. Authorization. General Partner has the partnership power and
-------------
authority to enter into this Agreement and, subject to the approval of this
Agreement by a Majority in Interest of the Limited Partners, to carry out its
obligations hereunder. The execution, delivery and performance of this
Agreement by General Partner and the consummation by General Partner of the
transactions contemplated hereby have been duly authorized by all requisite
partnership action on the part of General Partner. Subject to approval by a
Majority in Interest of the Limited Partners and the execution and delivery
hereof by the parties hereto, this Agreement is a valid and binding obligation
of General Partner enforceable against General Partner in accordance with its
terms.
ARTICLE III
-----------
REPRESENTATIONS, WARRANTIES AND COVENANTS OF BUYER
Buyer represents and warrants to and covenants with Seller as follows:
3.01. Organization and Authority. Buyer and each of its
--------------------------
Subsidiaries is a corporation, savings bank, trust company or other entity duly
organized, validly existing and in good standing under the laws of the
jurisdiction of organization, is duly qualified to do business and is in good
standing in all jurisdictions where its ownership or leasing of property or the
conduct of its business requires it to be so qualified except as set forth on
Schedule 3.01 and, except where the failure to be so qualified would not have a
Material Adverse Effect on Buyer and its Subsidiaries, taken as a whole, has
corporate power and authority to own its properties and assets and to carry on
its business as it is now being conducted, except, in the case of the Buyer
Subsidiaries, where the failure to be so qualified would not have a Material
Adverse Effect on Buyer and its Subsidiaries, taken as a whole. Buyer is
registered as a unitary savings and loan holding company under HOLA. True and
complete copies of the Certificate of Incorporation and Bylaws of Buyer and of
the Charter and Bylaws of Buyer Bank, each as in effect on the date of this
Agreement, have been provided to Seller.
3.02. Subsidiaries. Schedule 3.02 sets forth, among other things, a
------------
complete and correct list of all of Buyer's Subsidiaries (each a "Buyer
Subsidiary" and collectively the "Buyer Subsidiaries"), all outstanding Equity
Securities of each of which, except as set forth on Schedule 3.02, are owned
directly or
21
indirectly by Buyer. Except as set forth on Schedule 3.02, all of the
outstanding shares of capital stock of the Buyer Subsidiaries are validly
issued, fully paid and nonassessable, and those shares owned by Buyer are owned
free and clear of any Lien with respect thereto. Each of the Buyer Subsidiaries
is a corporation or savings bank duly incorporated or organized, validly
existing, and in good standing under the laws of its jurisdiction of
incorporation or organization, and has corporate power and authority to own or
lease its properties and assets and to carry on its business as it is now being
conducted. Each of the Buyer Subsidiaries is duly qualified to do business in
each jurisdiction where its ownership or leasing of property or the conduct of
its business requires it so to be qualified, except where the failure to so
qualify would not have a Material Adverse Effect on Buyer and its Subsidiaries,
taken as a whole. Except as set forth on Schedule 3.02, Buyer does not own
beneficially, directly or indirectly, any shares of any class of Equity
Securities or similar interests of any corporation, bank, business trust,
association or similar organization. Buyer Bank is chartered by the OTS. The
deposits of Buyer Bank are insured by the SAIF or the BIF. Except as set forth
on Schedule 3.02, neither Buyer nor any Buyer Subsid iary holds any interest in
a partnership, limited liability company, joint venture or any other kind of
business enterprise.
3.03. Capitalization of Buyer. The authorized capital stock of
-----------------------
Buyer consists of (i) 20,000,000 shares of Buyer Common Stock, of which, as of
May 8, 1997, 6,485,080 shares were issued and outstanding and (ii) 7,000,000
shares of preferred stock, par value $.01 per share ("Buyer Preferred Stock"),
issuable in series, none of which, as of May 8, 1997, is issued or outstanding.
As of May 8, 1997 Buyer had reserved (i) 1,654,715 shares of Buyer Common Stock
for issuance under various employee stock option and incentive plans ("Buyer
Stock Options") a list of which is set forth on Schedule 3.03. From May 8, 1997
through the date of this Agreement, no shares of Buyer Common Stock or other
Equity Securities of Buyer have been issued excluding any such shares which may
have been issued pursuant to stock-based employee benefit or incentive plans and
programs or pursuant to the foregoing agreements. Except as set forth above and
except pursuant to the Buyer Rights Agreement, there are no other Equity
Securities of Buyer outstanding as of May 8, 1997. All of the issued and
outstanding shares of Buyer Common Stock are validly issued, fully paid, and
nonassessable, and have not been issued in violation of any preemptive right of
any stockholder of Buyer. At the Effective Time, the Buyer Common Stock to be
issued in the Merger will be duly authorized, validly issued, fully paid and
non-assessable, and will not be issued in violation of any preemptive right.
3.04. Authorization. (a) Buyer has the corporate power and
-------------
authority to enter into this Agreement and, subject to the approval of this
Agreement by the stockholders of Buyer, to carry out its obligations hereunder.
The execution, delivery and
22
performance of this Agreement by Buyer and the consummation by Buyer of the
transactions contemplated hereby have been duly authorized by the Board of
Directors of Buyer. Subject to approval by the stockholders of Buyer and the
execution and delivery hereof by the parties hereto, this Agreement is a valid
and binding obligation of Buyer enforceable against Buyer in accordance with its
terms.
(b) Except as set forth on Schedule 3.04B neither the execution,
delivery and performance by Buyer of this Agreement, nor the consummation by
Buyer and Buyer Bank of the transactions contemplated hereby, nor compliance by
Buyer with any of the provisions hereof, or compliance by Buyer Bank with any of
the provisions of the Subsidiary Merger Agreement will (i) violate, conflict
with or result in a breach of any provisions of, or constitute a default (or an
event which, with notice or lapse of time or both, would constitute a default)
or result in the termination of, or accelerate the performance required by, or
result in a right of termination or acceleration of, or result in the creation
of, any Lien upon any of the material properties or assets of Buyer or any Buyer
Subsidiary under any of the terms, conditions or provisions of (x) its articles
or certificate of incorporation, charter or bylaws, or (y) any material note,
bond, mortgage, indenture, deed of trust, license, lease, agreement or other
instrument or obligation to which Buyer or any of the material properties or
assets of Buyer or any Buyer Subsidiary is a party or by which it may be bound,
or to which Buyer may be subject, or (ii) subject to compliance with the
statutes and regulations referred to in paragraph (c) of this Section 3.04, to
the best knowledge of Buyer, violate any judgment, ruling, order, writ,
injunction, decree, statute, rule or regulation applicable to Buyer or any of
its Subsidiaries or any of their respective material properties or assets.
(c) Other than in connection with or in compliance with the provisions
of the DGCL, the Securities Act, the Exchange Act, the securities or blue sky
laws of the various states or filings, consents, reviews, authorizations,
approvals or exemptions required by the FDIC or under the HOLA or the HSR Act,
or any required approvals of, or notice to, any other Regulatory Authority, no
notice to, filing with, exemption or review by, or authorization, consent or
approval of, any public body or authority is necessary for the consummation by
Buyer or Buyer Bank of the transactions contemplated by this Agreement.
3.05. Buyer Financial Statements. The consolidated balance sheets of
--------------------------
Buyer and its Subsidiaries as of December 31, 1996, 1995 and 1994 and related
consolidated statements of income, cash flows and changes in stockholders'
equity for each of the three years in the three-year period ended December 31,
1996, together with the notes thereto, audited by Deloitte & Touche LLP ("Buyer
Auditors") and included in an annual report on Form 10-K as
23
filed with the SEC (the "Buyer Financial Statements"), except as set forth on
Schedule 3.05 have been prepared in accordance with GAAP, present fairly the
consolidated financial position of Buyer and its Subsidiaries at the dates and
the consolidated results of operations, changes in stockholders' equity and cash
flows of Buyer and its Subsidiaries for the periods stated therein and are
derived from the books and records of Buyer and its Subsidiaries, which are
complete and accurate in all material respects and have been maintained in all
material respects in accordance with applicable laws and regulations. Except as
set forth on Schedule 3.05 neither Buyer nor any of its Subsidiaries has any
material contingent li abilities that are not reflected in the Buyer Reports
(defined below) or disclosed in the financial statements described above.
3.06. Buyer Reports. Except as set forth on Schedule 3.06, since
-------------
January 1, 1994, each of Buyer and the Buyer Subsidiaries has filed all material
reports, registrations and statements, together with any required material
amendments thereto, that it was required to file with any Regulatory Authority.
All such reports and statements filed with any such Regulatory Authority are
collectively referred to herein as the "Buyer Reports." As of its respective
date, each Buyer Report complied in all material respects with all the rules and
regulations promulgated by the applicable Regulatory Authority and did not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
3.07. Properties and Leases. Except as set forth on Schedule 3.07 or
---------------------
as may be reflected in the Buyer Financial Statements, except for any Lien for
current taxes not yet de linquent and except with respect to assets classified
as real estate owned, Buyer and its Subsidiaries have good title free and clear
of any material Lien to all the real and personal property reflected in Buyer's
consolidated balance sheet as of December 31, 1996 included in the most recent
Buyer Form 10-K and, in each case, all real and personal property acquired since
such date, except such real and personal property as has been disposed of in the
ordinary course of business. All leases material to Buyer or any Buyer
Subsidiary pursuant to which Buyer or any Buyer Subsidiary, as lessee, leases
real or personal property, are valid and effective in accordance with their
respective terms, and there is not, under any of such leases, any material
existing default by Buyer or any Buyer Subsidiary or any event which, with
notice or lapse of time or both, would constitute such a material default.
Substantially all of Buyer's and Buyer Subsidiaries' buildings, structures and
equipment in regular use have been well maintained in all material respects and
are in good and serviceable condition, normal wear and tear excepted.
3.08. Taxes. Except as set forth on Schedule 3.08, Buyer
-----
24
and each Buyer Subsidiary have timely filed or will timely (including
extensions) file all tax returns required to be filed at or prior to the Closing
Date ("Buyer Returns"). Each of Buyer and its Subsidiaries has paid, or set up
adequate reserves on the Buyer Financial Statements for the payment of, all
taxes required to be paid in respect of the periods covered by such returns and
has set up adequate reserves on the most recent financial statements Buyer has
filed under the Exchange Act for the payment of all taxes anticipated to be
payable in respect of all periods up to and including the latest period covered
by such financial statements. Neither Buyer nor any Buyer Subsidiary will have
any liability material to the Condition of Buyer and the Buyer Subsidiaries,
taken as a whole, for any such taxes in excess of the amounts so paid or
reserves so established and no material deficiencies for any tax, assessment or
governmental charge have been proposed, asserted or assessed (tentatively or
definitely) against any of Buyer or any Buyer Subsidiary which would not be
covered by existing reserves. Neither Buyer nor any Buyer Subsidiary is
delinquent in the payment of any material tax, assessment or governmental
charge, nor, except as previously disclosed, has it requested any extension of
time within which to file any tax re turns in respect of any fiscal year which
have not since been filed and no requests for waivers of the time to assess any
tax are pending. The federal and state income tax returns of Buyer and the
Buyer Subsidiaries have been audited and settled by the IRS or ap propriate
state tax authorities for all periods ended through December 31, 1989 or the
period for assessment of taxes in respect of such periods has expired. There is
no deficiency or refund litigation or matter in controversy with respect to
Buyer Returns. Neither Buyer nor any Buyer Subsidiary has extended or waived any
statute of limitations on the assessment of any tax due that is currently in
effect.
3.09. Material Adverse Effect. Since December 31, 1996, there has
-----------------------
been no Material Adverse Effect on Buyer and its Subsidiaries, taken as a whole,
except as may have resulted or may result from changes to laws and regulations
or changes in economic conditions applicable to thrift institutions generally or
in general levels of interest rates affecting thrift institutions generally.
3.10. Commitments and Contracts. (a) Except as set forth on
-------------------------
Schedule 3.10A, neither Buyer nor any Buyer Subsidiary is a party or subject to
any of the following (whether written or oral, express or implied):
(i) any material agreement, arrangement or commitment (A) not made
in the ordinary course of business or (B) pursuant to which Buyer or any of its
Subsidiaries is or may become obligated to invest in or contribute capital to
any Buyer Subsidiary;
25
(ii) any agreement, indenture or other instrument not disclosed in
the Buyer Financial Statements relating to the borrowing of money by Buyer
or any Buyer Subsidiary or the guarantee by Buyer or any Buyer Subsidiary
of any such obligation (other than trade payables or instruments related to
transactions entered into in the ordinary course of business by any Buyer
Subsidiary, such as deposits and Fed Funds borrowings);
(iii) any contract, agreement or understanding with any labor union
or collective bargaining organization;
(iv) any contract containing covenants which limit the ability of
Buyer or any Buyer Subsidiary to compete in any line of business or with
any person or which involve any restriction of the geographical area in
which, or method by which, Buyer or any Buyer Subsidiary may carry on its
business (other than as may be required by law or any applicable Regulatory
Authority);
(v) any other contract or agreement which is a material contract
within the meaning of Item 601(b)(10) of Regulation S-K promulgated by the
SEC; or
(vi) any lease with annual rental payments aggregating $250,000 or
more.
(b) Neither Buyer nor any Buyer Subsidiary is in violation of its
certificate or articles of incorporation or charter documents or bylaws or in
default under any material agreement, commitment, arrangement, lease, insurance
policy or other instrument, whether entered into in the ordinary course of
business or otherwise and whether written or oral, and there has not occurred
any event that, with the lapse of time or giving of notice or both, would
constitute such a default, except, in all cases, where such default would not
have a Material Adverse Effect on Buyer and its Subsidiaries, taken as a whole.
3.11. Litigation and Other Proceedings. Except as set forth on Schedule
--------------------------------
3.11, neither Buyer nor any Buyer Subsidiary is a party to any pending or, to
the best knowledge of Buyer, threatened claim, action, suit, investigation or
proceeding, or is subject to any order, judgment or decree, except for matters
which, in the aggregate, will not have, or reasonably could not be expected to
have, a Material Adverse Effect on Buyer and its Subsidiaries, taken as a whole,
or which purports or seeks to enjoin or restrain the transactions contemplated
by this Agreement. Without limiting the generality of the foregoing, as of the
date of this Agreement, there are no actions, suits, or proceedings pending or,
to the best knowledge of Buyer, threatened against Buyer or any Buyer Subsidiary
or any of their respective officers or directors
26
by any holder of Buyer Common Stock (or any former holder of Buyer Common Stock)
or involving claims under the DGCL, the Securities Act, the Exchange Act, the
CRA, or the fair lending laws.
3.12. Insurance. Each of Buyer and its Subsidiaries has taken all requisite
---------
action (including without limitation the making of claims and the giving of
notices) pursuant to its directors' and officers' liability insurance policy or
policies in order to preserve all rights thereunder with respect to all matters
(other than matters arising in connection with this Agreement and the
transactions contemplated hereby) occurring prior to the Effective Time that are
known to Buyer, except for such matters which, individually or in the aggregate,
will not have and reasonably could not be expected to have a Material Adverse
Effect on Buyer and its Subsidiaries, taken as a whole. Set forth on Schedule
3.12 is a list of all insurance policies maintained by or for the benefit of
Buyer or its Subsidiaries or their directors, officers, employees or agents.
3.13. Compliance with Laws. (a) Except as set forth on Schedule 3.13A,
--------------------
Buyer and each of its Subsidiaries have all permits, licenses, authorizations,
orders and approvals of, and have made all filings, applications and
registrations with, all Regulatory Authorities that are required in order to
permit them to own or lease their properties and assets and to carry on their
business as presently conducted and that are material to the business of Buyer
and its Subsidiaries; all such permits, licenses, certificates of authority,
orders and approvals are in full force and effect and, to the best knowledge of
Buyer no suspension or cancellation of any of them is threatened; and all such
filings, applications and registrations are current.
(b) Except as set forth on Schedule 3.13B and except for failures to comply
or defaults which individually or in the aggregate would not have a Material
Adverse Effect on Buyer and its Subsidiaries, taken as a whole, (i) each of
Buyer and its Subsidiaries has complied with all laws, regulations and orders
(including without limitation zoning ordinances, building codes, ERISA), and
securities, tax, environmental, civil rights, and occupational health and safety
laws and regulations and including without limitation in the case of any Buyer
Subsidiary that is a bank or savings association, banking organization, banking
corporation or trust company, all statutes, rules, regulations and policy
statements pertaining to the conduct of a banking, deposit-taking, lending or
related business, or to the exercise of trust powers) and governing instruments
applicable to them and to the conduct of their business, and (ii) neither Buyer
nor any Buyer Subsidiary is in default under, and no event has occurred which,
with the lapse of time or notice or both, could result in the de fault under,
the terms of any judgment, order, writ, decree, permit, or license of any
Regulatory Authority or court, whether federal, state, municipal, or local and
whether at law or in
27
equity. Except as set forth on Schedule 3.13B, as of the date of this
Agreement, neither Buyer nor any Buyer Subsidiary is subject to or reasonably
likely to incur a liability as a result of its ownership, operation, or use of
any Property of Buyer (whether directly or to the best knowledge of Buyer, as a
consequence of such Property being part of the investment portfolio of Buyer or
any Buyer Subsidiary) (A) that is contaminated by or contains any Toxic
Substance or (B) on which any Toxic Substance has been stored, disposed of,
placed or used in the construction thereof. Except as set forth on Schedule
3.13B, no claim, action, suit, or proceeding is pending against Buyer or any
Buyer Subsidiary relating to Property of Buyer before any court or other
Regulatory Authority or arbitration tribunal relating to hazardous substances,
pollution, or the environment, and there is no outstanding judgment, order,
writ, injunction, decree, or award against or affecting Buyer or any Buyer
Subsidiary with respect to the same. Except for statutory or regulatory
restrictions of general application, no Regulatory Authority has placed any
restriction on the business of Buyer or any Buyer Subsidiary which reasonably
could be expected to have a Material Adverse Effect on Buyer and its
Subsidiaries, taken as a whole.
(c) From and after January 1, 1994, neither Buyer nor any Buyer Subsidiary
has received any notification or communication which has not been resolved from
any Regulatory Authority (i) asserting that any Buyer or any Subsidiary of
Buyer, is not in substantial compliance with any of the statutes, regulations or
ordinances that such Regulatory Authority enforces, except with respect to
matters which (A) are set forth on Schedule 3.13C or in any writing previously
furnished to Seller and (B) reasonably could not be expected to have a Material
Adverse Effect on Buyer and its Subsidiaries, taken as a whole, (ii) threatening
to revoke any license, franchise, permit or governmental authorization that is
material to the Condition of Buyer and its Subsidiaries, taken as a whole,
including without limitation such company's status as an insured depositary
institution under the FDIA, or (iii) requiring or threatening to require Buyer
or any of its Subsidiaries, or indicating that Buyer or any of its Subsidiaries
may be required to enter into a cease and desist order, agreement or memorandum
of un derstanding or any other agreement restricting or limiting or purporting
to direct, restrict or limit in any manner the op erations of Buyer or any of
its Subsidiaries, including, without limitation, any restriction on the making
of distributions or payment of dividends. No such cease and desist order,
agreement or memorandum of understanding or other agreement is currently in
effect.
(d) Except as set forth on Schedule 3.13D, neither Buyer nor any Buyer
Subsidiary is required by Section 32 of the FDIA to give prior notice to any
federal banking agency of the proposed addition of an individual to its board of
directors or the employment of an individual as a senior executive officer.
28
3.14. Labor. No work stoppage involving Buyer or any Buyer Subsidiary is
-----
pending or, to the best knowledge of Buyer, threatened, which reasonably could
be expected to have a Material Adverse Effect on Buyer and its Subsidiaries,
taken as a whole. Neither Buyer nor any Buyer Subsidiary is involved in or, to
the best knowledge of Buyer, threatened with or affected by any labor dispute,
arbitration, lawsuit or administrative proceeding. Employees of neither Buyer
nor any Buyer Subsidiary are represented by any labor union or any collective
bargaining organization.
3.15. Material Interests of Certain Persons. (a) Except as set forth on
-------------------------------------
Schedule 3.15A, to the best knowledge of Buyer no officer or director of Buyer
or any Subsidiary of Buyer or any "associate" (as such term is defined in Rule
14a-1 under the Exchange Act) of any such officer or director has any material
interest in any material contract or property (real or personal, tangible or
intangible), used in, or pertaining to the business of, Buyer or any Subsidiary
of Buyer, which would be required to be disclosed pursuant to Item 404 of
Regulation S-K promulgated by the SEC.
(b) Except as set forth on Schedule 3.15B, there are no loans from Buyer or
any Buyer Subsidiary to any present officer, director, employee or any associate
or related interest of any such person which was or would be required under any
rule or regulation to be approved by or reported to Buyer's or Buyer Bank's
Board of Directors ("Buyer Insider Loans"). All outstanding Buyer Insider Loans
from Buyer or Buyer Bank were approved by or reported to the appropriate board
of directors in accordance with applicable law and regulations.
3.16. Allowance for Loan Losses; Non-performing Assets.
------------------------------------------------
(a) The allowances for loan losses contained in the Buyer Financial
Statements were established in accordance with the past practices and
experiences of Buyer and its Subsidiaries, and the allowance for loan losses
shown on the consolidated condensed balance sheet of Buyer and its Subsidiaries
contained in the most recent Buyer Form 10-K is adequate in all material
respects under the requirements of GAAP to provide for possible losses on loans
(including without limitation accrued interest receivable) and credit
commitments (including without limitation stand-by letters of credit)
outstanding as of the date of such balance sheet.
(b) As of December 31, 1996, the aggregate amount of all Buyer
Nonperforming Assets (as defined below) on the books of Buyer and its
Subsidiaries does not exceed $24,310,000. "Buyer Non-performing Assets" shall
mean (i) all loans and leases(A) that are contractually past due 90 days or more
in the payment of principal and/or interest, (B) that are on nonaccrual status,
(C) where a reasonable doubt exists, in the reasonable judgment of Buyer, as to
the timely future collectibility of principal and/or interest,
29
whether or not interest is still accruing or the loan is less than 90 days past
due, (D) where the interest rate terms have been reduced and/or the maturity
dates have been extended subsequent to the agreement under which the loan was
originally created due to concerns regarding the borrower's ability to pay in
accordance with such initial terms, (E) where a specific reserve allocation
exists in connection therewith, or (F) that have been classified "doubtful",
"loss" or the equivalent thereof by any Regulatory Authority and (ii) all assets
classified as real estate acquired through foreclosure or repossession and other
assets acquired through foreclosure or repossession.
3.17. Employee Benefit Plans. (a) Except as set forth on Schedule 3.17A,
----------------------
neither Buyer nor any Buyer Subsidiary is a party to any existing employment,
management, consulting, deferred compensation, change-in-control or other
similar contract. Schedule 3.17A lists all pension, retirement, supplemental
retirement, savings, profit sharing, stock option, stock purchase, stock
ownership, stock appreciation right, deferred compensation, consulting, bonus,
medical, disability, workers' compensation, vacation, group insurance, severance
and other material employee benefit, incentive and welfare policies, contracts,
plans and arrangements, and all trust agreements related thereto, maintained
(currently or at any time in the last five years) by or contributed to by Buyer
or any Buyer Subsidiary in respect of any of the present or former directors,
officers, or other employees of and/or consultants to Buyer or any Buyer
Subsidiary (collectively "Buyer Employee Plans").
(b) All Buyer Employee Plans have been maintained and operated materially
in accordance with their terms and with the material requirements of all
applicable statutes, orders, rules and final regulations, including without
limitation ERISA and the IRC. All contributions required to be made to Buyer
Employee Plans have been made.
(c) With respect to each of the Buyer Employee Plans which is a pension
plan (as defined in Section 3(2) of ERISA) (the "Buyer Pension Plans"): (i) each
Buyer Pension Plan which is intended to be "qualified" within the meaning of
Section 401(a) of the IRC has been determined to be so qualified by the IRS and,
to the knowledge of Buyer such determination letter may still be relied upon,
and each related trust is exempt from taxation under Section 501(a) of the IRC;
(ii) the actuarial present value of all benefits under each Buyer Pension Plan
which is subject to Title IV of ERISA, valued using the assumptions in the most
recent actuarial report, did not, in each case, as of the last applicable annual
valuation date (as indicated on Schedule 3.17A), exceed the value of the assets
of the Buyer Pension Plan allocable to such vested or accrued benefits; (iii) to
the best knowledge of Buyer there has been no "prohibited transaction," as such
term is defined in Section 4975 of the IRC or Section 406 of ERISA, which could
30
subject any Buyer Pension Plan or associated trust, or the Buyer or any Buyer
Subsidiary to any material tax or penalty; (iv) except as set forth on Schedule
3.17C, no Buyer Pension Plan subject to Title IV of ERISA or any trust created
thereunder has been terminated, nor have there been any "reportable events" with
respect to any Buyer Pension Plan, as that term is defined in Section 4043 of
ERISA for which the 30-day notice requirement has not been waived on or after
January 1, 1985; and (v) no Buyer Pension Plan or any trust created thereunder
has incurred any "accumulated funding deficiency," as such term is defined in
Section 302 of ERISA (whether or not waived). Except as set forth on Schedule
3.17C, no Buyer Pension Plan is a "multiemployer plan" as that term is defined
in Section 3(37) of ERISA. With respect to each Buyer Pension Plan that is
described in Section 4063 (a) of ERISA (a "Multiple Employer Pension Plan"):
(i) neither Buyer nor any Buyer Subsidiary would have any liability or
obligation to post a bond under Section 4063 of ERISA if Buyer and all Buyer
Subsidiaries were to withdraw from such Multiple Employer Pension Plan; and (ii)
neither Buyer nor any Buyer Subsidiary would have any liability under Section
4064 of ERISA if such Multiple Employer Pension Plan were to terminate.
(d) Except as set forth on Schedule 3.17D, neither Buyer nor any Buyer
Subsidiary has any liability for any post-retirement health, medical or similar
benefit of any kind whatsoever, except as required by statute or regulation.
(e) Except as set forth on Schedule 3.17E, neither Buyer nor any Buyer
Subsidiary has any material liability under ERISA or the IRC as a result of its
being a member of a group described in Sections 414(b), (c), (m) or (o) of the
IRC.
(f) Except as set forth on Schedule 3.17F neither the execution nor
delivery of this Agreement, nor the consummation of any of the transactions
contemplated hereby, will (i) result in any material payment becoming due to any
director or employee of Buyer or any Buyer Subsidiary from any of such entities,
(ii) materially increase any benefit otherwise payable under any of the Buyer
Employee Plans or (iii) result in the acceleration of the time of payment of any
such benefit.
3.18. Conduct of Buyer to Date. From and after January 1, 1997 through the
------------------------
date of this Agreement, except as set forth on Schedule 3.18 or in Buyer
Financial Statements or Buyer Reports: (i) Buyer and the Buyer Subsidiaries have
conducted their respective businesses in all material respects in the ordinary
and usual course consistent with past practices; (ii) neither Buyer nor any
Buyer Subsidiary has incurred any material obligation or liability (absolute or
contingent), except normal trade or business obligations or liabilities incurred
in the ordinary course of business, or subjected to Lien any of its assets or
properties other than in the ordinary course of business consistent with past
31
practice; (iii) neither Buyer nor any Buyer Subsidiary has discharged or
satisfied any material Lien or paid any material obligation or liability
(absolute or contingent), other than in the ordinary course of business; (iv)
neither Buyer nor any Buyer Subsidiary has sold, assigned, transferred, leased,
exchanged, or otherwise disposed of any of its material properties or assets
other than for a fair consideration in the ordinary course of business; (v)
except as required by contract or law or in the ordinary course of business,
neither Buyer nor any Buyer Subsidiary has (A) increased the rate of
compensation of, or paid any bonus to, any of its directors, officers, or other
employees, except merit, promotion or annual increases and bonuses in accordance
with existing policy, (B) entered into any new, or amended or supplemented any
existing employment, management, consulting, deferred compensation, severance,
or other similar contract, (C) entered into, terminated, or substantially
modified any of the Buyer Employee Plans or (D) agreed to do any of the
foregoing; (vi) neither Buyer nor any Buyer Subsidiary has suffered any material
damage, destruction, or loss, whether as the result of fire, explosion,
earthquake, accident, casualty, labor trouble, requisition, or taking of
property by any Regulatory Authority, flood, windstorm, embargo, riot, act of
God or the enemy, or other casualty or event, and whether or not covered by
insurance; and (vii) neither Buyer nor any Buyer Subsidiary has canceled or
compromised any debt, except for debts charged off or compromised in accordance
with the past practice of Buyer and its Subsidiaries.
3.19. Proxy Statement, etc. None of the information regarding Buyer or any
--------------------
Buyer Subsidiary supplied or to be supplied by Buyer for inclusion or included
in (i) the Registration Statement, (ii) the Proxy Statement or (iii) any other
documents to be filed with any Regulatory Authority in connection with the
transactions contemplated hereby will, at the respective times such documents
are filed with any Regulatory Authority and, in the case of the Registration
Statement, when it becomes effective and,, with respect to the Proxy Statement,
when mailed, be false or misleading with respect to any material fact, or omit
to state any material fact necessary in order to make the statements therein not
misleading or, in the case of the Proxy Statement or any amendment thereof or
supplement thereto, at the time of the Buyer Meeting and the Selling Stockholder
Meeting, be false or misleading with respect to any material fact, or omit to
state any material fact necessary to correct any statement in any earlier
communication with respect to the solicitation of any proxy for the Buyer
Meeting. All documents which Buyer or any Buyer Subsidiary is responsible for
filing with any Regulatory Authority in connection with the Merger will comply
as to form in all material respects with the provisions of applicable law.
3.20. State Takeover Statutes. Except as set forth on Schedule 3.20, the
-----------------------
transactions contemplated by this Agreement are not subject to any applicable
state takeover law.
32
3.21. Accounting, Tax and Regulatory Matters. Neither Buyer nor any Buyer
--------------------------------------
Subsidiary has taken or agreed to take any action or has any knowledge of any
fact or circumstance that would (i) prevent the transactions contemplated hereby
from qualifying as a reorganization within the meaning of Section 368 of the IRC
or (ii) materially impede or delay receipt of any approval referred to in
Section 6.01(b) or the consummation of the transactions contemplated by this
Agreement.
3.22. Brokers and Finders. Except for ▇▇▇▇▇ Financial, Inc., neither Buyer
-------------------
nor any Buyer Subsidiary nor any of their respective directors, officers or
employees has employed any 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 Buyer or any Buyer
Subsidiary in connection with this Agreement or the transactions contemplated
hereby. Schedule 3.22 discloses bona fide estimates of the amounts of all fees
and expenses expected to be paid by Buyer to all third parties in connection
with the Merger.
3.23. Interest Rate Risk Management Instruments. (a) Set forth on Schedule
-----------------------------------------
3.23A is a list, as of the date hereof, of all interest rate swaps, caps,
floors, and option agreements and other interest rate risk management
arrangements to which Buyer or any of its Subsidiaries is a party or by which
any of their properties or assets may be bound.
(b) All interest rate swaps, caps, floors and option agreements and other
interest rate risk management arrangements to which Buyer or any of its
Subsidiaries is a party or by which any of their properties or assets may be
bound were entered into in the ordinary course of business and, to the best
knowledge of Buyer, in accordance with prudent banking practice and applicable
rules, regulations and policies of Regulatory Authorities and with
counterparties believed to be financially responsible at the time and are legal,
valid and binding obligations and are in full force and effect. Buyer and each
of its Subsidiaries has duly performed in all material respects all of its
obligations thereunder to the extent that such obligations to perform have
accrued, and there are no material breaches, violations or defaults or
allegations or assertions of such by any party thereunder.
3.24. Accuracy of Information. To the best knowledge of Buyer, the
-----------------------
statements of Buyer contained in this Agreement, the Schedules and any other
written document executed and delivered by or on behalf of Buyer pursuant to the
terms of this Agreement are true and correct in all material respects, and such
statements and documents do not omit any material fact necessary to make the
statements contained therein not misleading.
ARTICLE IV
----------
33
CONDUCT OF BUSINESSES PRIOR TO THE EFFECTIVE TIME
4.01. Conduct of Businesses Prior to the Effective Time. Except as
-------------------------------------------------
otherwise contemplated by this Agreement, during the period from the date of
this Agreement to the Effective Time, each of Buyer and Seller shall, and shall
cause each of their respective Subsidiaries to, conduct its business according
to the ordinary and usual course consistent with past practices and shall cause
each such Subsidiary to use, consistent with the provisions of Sections 4.02 and
4.04, its best efforts to maintain and preserve its business organization,
employees and advantageous business relationships and retain the services of its
officers and key employees.
4.02. Forbearances of Seller. Except as set forth on Schedule 4.02 or as
----------------------
otherwise contemplated by this Agreement, during the period from the date of
this Agreement to the Effective Time, Seller shall not and shall not permit any
of the Seller Subsidiaries to, without the prior written consent of Buyer:
(a) declare, set aside or pay any dividends or other distributions,
directly or indirectly, in respect of its capital stock (other than
dividends from a Subsidiary of Seller to Seller or another Subsidiary of
Seller), except that Seller may (i) declare and pay cash dividends on the
Seller Common Stock in the aggregate of not more than $2.4 million per
calendar quarterly period and (ii) distribute management fees in the
aggregate of not more than $250,000 per calendar quarterly period;
(b) enter into or amend any employment, severance or similar
agreement or arrangement with any, director, officer or employee, or modify
any of the Seller Employee Plans or grant any salary or wage increase
including incentive or bonus payments), except normal individual increases
in compensation to rank and file employees consistent with past practice,
or as required by law or contract; provided, that Seller may (i) pay
management performance bonuses at times and in amounts consistent with past
practice, which shall be in amounts in the aggregate equal to bonuses
granted with respect to services in 1996 and (ii) make severance and
retention payments pursuant to all employment, severance or similar
agreements or arrangements in effect as of the date hereof or subsequent to
the date hereof (including, without limitation, all employment contracts)
in an aggregate amount not to exceed $5.5 million, subject to cut-back in
individual payments, if necessary, except as set forth on Schedule 4.02B to
assure that no payment to any person will be, when aggregated with all
other payments and benefits to be received by such person, an excess
parachute payment under Section 280G of the IRC;
34
(c) authorize, recommend, propose or announce an intention to
authorize, so recommend or propose, or enter into an agreement in principle
with respect to, any merger, consolidation or business combination (other
than the Merger), any acquisition of a material amount of assets or
securities, any disposition of a material amount of assets or securities or
any release or relinquishment of any material contract rights; or
(d) propose or adopt any amendments to its Certificate of
Incorporation or other charter document or Bylaws; or
(e) issue, sell, grant, confer or award any of its Equity Securities
or effect any split or adjust, combine, reclassify or otherwise change its
capitalization as it existed on the date of this Agreement; or
(f) purchase, redeem, retire, repurchase, or exchange, or otherwise
acquire or dispose of, directly or indirectly, any of its Equity
Securities, whether pursuant to the terms of such Equity Securities or
otherwise; or
(g) (i) without first consulting with Buyer, enter into, renew or
increase any loan or credit commitment (including stand-by 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 (collectively, "Lend to") in
an amount in excess of (A) $1,000,000 in respect of commercial
transactions, including commercial real estate transactions ("Commercial
Transactions") and (B) $1,000,000 in respect of residential real estate
transactions, or in an amount which, or when aggregated with any and all
loans or credit commitments to such person or entity, would be in excess of
(A) $1,000,000 in respect of commercial transactions, including Commercial
Transactions and (B) $1,000,000 in respect of residential real estate
transactions; (ii) without first obtaining the written consent of Buyer,
lend to any person or entity in an amount in excess of $1,000,000 in
respect of Commercial Transactions or in an amount which, when aggregated
with any and all loans or credit commitments to such person or entity,
would be in excess of $1,000,000 in respect of Commercial Transactions;
(iii) Lend to any person other than in accordance with lending policies as
in effect on the date hereof; provided that in the case of clauses (ii) and
--------
(iii) Seller or any Seller Subsidiary may make any such loan in the event
(A) Seller or any Seller Subsidiary has delivered to Buyer or its
designated representative a notice of its intention to make such loan and
such information as Buyer or its designated representative may reasonably
require in respect thereof and (B) Buyer or its designated representative
shall not have reasonably objected
35
to such loan by giving written or facsimile notice of such objection within
two business days following the delivery to Buyer of the notice of
intention and information as aforesaid; or (iv) Lend 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
Seller or any Seller Subsidiary (except those denoted "pass" thereon), in
an amount in excess of $500,000; provided, however, that nothing in this
-------- -------
paragraph shall prohibit Seller or any Seller Subsidiary from honoring any
contractual obligation in existence on the date of this Agreement.
Notwithstanding the provisions of clauses (i) and (ii) of this Section
4.02(g), Seller shall be authorized without first consulting with Buyer or
obtaining Buyer's prior written consent, to increase the aggregate amount
of any credit facilities theretofore established in favor of any person or
entity (each a "Pre-Existing Facility"), provided that the aggregate amount
of any and all such increases with respect to any Pre-Existing Facility
shall not without Buyer's prior written consent, which consent shall not be
unreasonably withheld or delayed, be in excess of the lesser of 5% of such
Pre-Existing Facility or $25,000; or;
(h) directly or indirectly (including through its officers,
directors, employees, other representatives or the partners of the Selling
Stockholder (including any general or limited partner of the General
Partner of the Selling Stockholder)) initiate, solicit or encourage any
discussions, inquiries or proposals with any third party relating to the
disposition of any significant portion of the business or assets of Seller
or any Seller Subsidiary or the acquisition of Equity Securities of Seller
or any Seller Subsidiary or the merger of Seller or any Seller Subsidiary
with any person (other than Buyer, Seller or another Seller Subsidiary) or
any similar transaction (each such transaction being referred to herein as
an "Acquisition Transaction"), or provide any such person with information
or assistance or negotiate with any such person with respect to an
Acquisition Transaction, and Seller shall promptly notify Buyer orally of
all the relevant details relating to all inquiries, indications of interest
and proposals which it may receive with respect to any Acquisition
Transaction and promptly confirm the same to Buyer in writing; or
(i) take any action that would (A) materially impede or delay the
consummation of the transactions contemplated by this Agreement or the
ability of Buyer or Seller to obtain any approval of any Regulatory
Authority required for the transactions contemplated by this Agreement or
to perform its covenants and agreements under this Agreement or (B) prevent
the transactions contemplated hereby from qualifying as a
36
reorganization within the meaning of Section 368 of the IRC; or
(j) other than in the ordinary course of business consistent with
past practice, incur any indebtedness for borrowed money, assume,
guarantee, endorse or otherwise as an accommodation become responsible or
liable for the obligations of any other individual, partnership,
corporation or other entity or pay without prior approval of Buyer, which
shall not be unreasonably withheld, any Merger Fees in excess of the amount
set forth on Schedule 2.23; or
(k) materially restructure or materially change its investment
securities portfolio, without prior written consent of Buyer, which consent
shall not be unreasonably withheld or delayed, through purchases, sales or
otherwise, or the manner in which the portfolio is classified or reported,
or execute any individual investment transaction for its own account (i) in
securities backed by the full faith and credit of the United States or an
agency thereof in excess of $1,000,000 and (ii) in any other investment
securities in excess of $500,000; or
(l) make any awards or agree to make any awards under Seller Employee
Plans which have not been previously disclosed to Buyer in Section 2.17A;
or
(m) agree in writing or otherwise to take any of the foregoing
actions or engage in any activity, enter into any transaction or take or
omit to take any other act which would make any of the representations and
warranties in Article II of this Agreement untrue or incorrect in any
material respect if made anew after engaging in such activity, entering
into such transaction, or taking or omitting such other act.
4.03 Forbearances of Selling Stockholder. During the period from the
-----------------------------------
date of this Agreement to the Effective Time, Selling Stockholder shall not,
without the prior written consent of Buyer authorize, recommend, propose or
announce an intention to authorize, so recommend or propose, or enter into an
agreement in principle with respect to any sale, pledge or other transfer of any
part of the capital stock of Seller.
4.04. Forbearances of Buyer. Except as set forth on Schedule 4.04 or as
---------------------
otherwise contemplated by this Agreement, during the period from the date of
this Agreement to the Effective Time, Buyer shall not and shall not permit any
of the Buyer Subsidiaries to, without the prior written consent of Seller:
(a) declare, set aside or pay any dividends or other distributions,
directly or indirectly, in respect of its capital stock (other than
dividends from any of the Buyer
37
Subsidiaries to Buyer or to another of the Buyer Subsidiaries), except
that Buyer may pay its regular quarterly dividends in amounts as it shall
determine from time to time and may effect any stock split in the form of a
stock dividend as discussed in the Proxy Statement of Buyer for the 1997
annual meeting of shareholders of Buyer, or such additional stock split in
the form of a stock dividend after consultation with Seller;
(b) acquire or agree to acquire, by merging or consolidating with, or
by purchasing a substantial equity interest in or a substantial portion of
the assets of, or in any other manner, any business or any corporation,
partnership, association or other business organization or division thereof
except for an acquisition which involves the payment of consideration by
Buyer in an amount equal to less than 25% of the Market Value of the issued
and outstanding shares of Buyer Common Stock as of the date the definitive
agreement relating to such acquisition is executed by all applicable
parties (the "Execution Date"). "Market Value" shall mean the Closing Price
on the last business day preceding the Execution Date multiplied by the
number of issued and outstanding shares of Buyer Common Stock on the
Execution Date;
(c) take any action that would (A) materially impede or delay the
consummation of the transactions contemplated by this Agreement or the
ability of Seller or Buyer to obtain any approval of any Regulatory
Authority required for the transactions contemplated by this Agreement or
to perform its covenants and agreements under this Agreement or (B) prevent
the transactions contemplated hereby from qualifying as a reorganization
within the meaning of Section 368 of the Code; or
(d) agree in writing or otherwise to take any of the foregoing
actions or engage in any activity, enter into any transaction or
intentionally take or omit to take any other action which would make any of
the representations and warranties in Article III of this Agreement untrue
or incorrect in any material respect if made anew after engaging in such
activity, entering into such transaction, or taking or omitting such other
action.
ARTICLE V
---------
ADDITIONAL AGREEMENTS
5.01. Access and Information. Buyer and its Subsidiaries, on the one hand,
----------------------
and Seller and its Subsidiaries, on the other hand, shall each afford to each
other, and to the other's accountants, counsel and other representatives,
reasonable access
38
during normal business hours, during the period prior to the Effective Time, to
all their respective properties, books, contracts, commitments and records and,
during such period, each shall furnish promptly to the other (i) a copy of each
report, schedule and other document filed or received by it during such period
pursuant to the requirements of federal and state securities laws and (ii) all
other information concerning its business, properties and personnel as such
other party may reasonably request. Each party hereto shall, and shall cause
its advisors and representatives to, (A) hold confidential all information
obtained in connection with any transaction contemplated hereby with respect to
the other party which is not otherwise public knowledge, (B) return all
documents (including copies thereof) obtained hereunder from the other party to
such other party and (C) use its best efforts to cause all information obtained
pursuant to this Agreement or in connection with the negotiation of this
Agreement to be treated as confidential and not use, or knowingly permit others
to use, any such information unless such information becomes generally available
to the public.
5.02. Registration Statement Regulatory Matters. (a) Buyer shall prepare
-----------------------------------------
and, subject to the review and consent of Seller with respect to matters
relating to Seller, file with the SEC as soon as is reasonably practicable the
Registration Statement (or the equivalent in the form of preliminary proxy
material) with respect to the shares of Buyer Common Stock to be issued in the
Merger after the Effective Time and distributed pursuant to the Distribution.
Buyer shall use all reasonable efforts to cause the Registration Statement to
become effective. Buyer shall also take any action required to be taken under
any applicable state blue sky or securities laws in connection with the issuance
of such shares, and Seller and its Subsidiaries shall furnish Buyer all
information concerning Seller and its Subsidiaries and the Selling Stockholder
thereof as Buyer may reasonably request in connection with any such action.
Buyer shall use its best efforts to cause the shares of Buyer Common Stock to be
issued in the Merger to be approved for listing on the Nasdaq subject to
official notice of issuance, prior to the Effective Time.
(b) Seller and Buyer shall cooperate and use their respective best efforts
to prepare all documentation, to effect all filings and to obtain all permits,
consents, approvals and authorizations of all third parties and Regulatory
Authorities necessary to consummate the transactions contemplated by this
Agreement and, as and if directed by Buyer, to consummate such other mergers,
consolidations or asset transfers or other transactions by and among Buyer's
Subsidiaries and Seller's Subsidiaries concurrently with or following the
Effective Time, provided, however, that the foregoing shall not (A) alter or
-------- -------
change the Merger Consideration, (B) adversely affect the tax treatment to
Selling Stockholder as a result of receiving the Merger Consideration or (C)
materially impede or delay receipt of any approval referred to in Section
39
6.01(b) or the consummation of the transactions contemplated by this Agreement.
5.03. Approval of Merger and Distribution. Buyer shall call the Buyer
-----------------------------------
Meeting and Selling Stockholder and the General Partner shall call the Seller
Stockholder Meeting, in each case to be held as soon as practicable after the
Registration Statement becomes effective for the purpose of voting upon this
Agreement and the Merger and, in the case of the Selling Stockholder Meeting,
the Distribution. In connection therewith, Buyer shall prepare the Proxy
Statement and, with the approval of each of Buyer and Seller, the Proxy
Statement shall be filed with the SEC and mailed to the stockholders of Buyer
and the Limited Partners and BUC Holders. The Board of Directors of Buyer shall
submit for approval of Buyer's stockholders the matters to be voted upon in
order to authorize the Merger. The General Partner shall submit for approval of
the Limited Partners and BUC Holders the matters to be voted upon in order to
authorize the Merger and the Distribution. The Board of Directors of Buyer
hereby does and will recommend this Agreement and the transactions contemplated
hereby to stockholders of Buyer and will use its best efforts to obtain any vote
of Buyer's stockholders that is necessary for the approval and adoption of this
Agreement and consummation of the transactions contemplated hereby. The General
Partner of Selling Stockholder hereby does and will recommend the Distribution
and this Agreement and the transactions contemplated hereby to the Limited
Partners and BUC Holders and will use its best efforts to obtain any vote of the
Limited Partners and BUC Holders that is necessary for the approval and adoption
of the Distribution and this Agreement and consummation of the transactions
contemplated hereby.
5.04. Current Information. During the period from the date of this
-------------------
Agreement to the Effective Time, each party shall promptly furnish the other
with copies of all monthly and other interim financial statements produced in
the ordinary course of business as the same become available and shall cause one
or more of its designated representatives to confer on a regular and frequent
basis with representatives of the other party. Further, Seller shall furnish to
Buyer within five business days of the end of each month a description of all
loans (including, without limitation, the name of the borrower, the loan amount
and a description of the collateral) originated by Seller Bank during such
month. Each party shall promptly notify the other party of any material change
in its business or operations and of any governmental complaints, investigations
or hearings (or communications indicating that the same may be contemplated), or
the institution or the threat of material litigation involving such party or the
transactions contemplated hereby and shall keep the other party fully informed
of such events.
5.05. Agreements of Affiliates. As soon as practicable after the date of
------------------------
this Agreement, Seller shall deliver to Buyer a
40
letter identifying all persons and entities whom Seller believes to be, at the
time this Agreement is submitted to a vote of the Limited Partners, "affiliates"
of Seller for purposes of Rule 145 under the Securities Act. Seller shall use
its best efforts to cause each person or entity who is so identified as an
"affiliate" to deliver to Buyer as soon as practicable thereafter and in any
event no later than ten calendar days after the date hereof, a written agreement
providing that from the date of such agreement each such person will agree not
to sell, pledge, transfer or otherwise dispose of any BUCs held by such person
or any shares of Buyer Common Stock to be received by such person in the
Distribution except in compliance with the applicable provisions of the
Securities Act. Prior to the Effective Time, Seller shall amend and supplement
such letter and use its best efforts to cause each additional person or entity
who is identified as an "affiliate" to execute a written agreement as set forth
in this Section 5.05.
5.06. Expenses. Each party hereto shall bear its own expenses incident to
--------
preparing, entering into and carrying out this Agreement and to consummating the
Merger.
5.07. Miscellaneous Agreements and Consents. (a) Subject to the terms and
-------------------------------------
conditions herein provided, each of the parties hereto agrees to use its
respective best 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 as expeditiously as possible, including without
limitation using its respective best efforts to lift or rescind any injunction
or restraining order or other order adversely affecting the ability of the
parties to consummate the transactions contemplated hereby. Each party shall,
and shall cause each of its respective subsidiaries to, use its best efforts to
obtain consents of all third parties and Regulatory Authorities necessary, or in
the opinion of Buyer desirable, for the consummation of the transactions
contemplated by this Agreement.
(b) Subject to applicable laws, regulations and requirements of Regulatory
Authorities, Seller, immediately prior to the Effective Time, shall (i) consult
and cooperate with Buyer regarding the implementation of those policies and
procedures established by Buyer for its governance and that of its Subsidiaries
and not otherwise referenced in Section 5.15 hereof, including, without
limitation, policies and procedures pertaining to the accounting,
asset/liability management, audit, credit, human resources, treasury and legal
functions, and (ii) at the request of Buyer, conform Seller's existing policies
and procedures in respect of such matters to Buyer's policies and procedures or
in the absence of any existing Seller policy or procedure regarding any such
function, introduce Buyer's policies or procedures in respect thereof, unless to
do so would cause Seller or any of the Seller
41
Subsidiaries to be in violation of any law, rule or regulation of any Regulatory
Authority having jurisdiction over Seller and/or the Seller Subsidiary affected
thereby; provided, however, that prior to the date that it shall be a
--------- -------
requirement hereunder for such policies and procedures to be established, Buyer
shall certify to Seller that Buyer's representations and warranties are true and
correct as of such date, that the approval conditions to its obligations
contemplated by Section 6.01(b) have been satisfied or waived (except to the
extent that any waiting period associated therewith may then have commenced but
not expired) and that Buyer is otherwise in compliance with this Agreement; and
provided, further that Seller shall not be required to take any such action
that is not consistent with GAAP and regulatory accounting principles.
5.08. Employee Benefits. The Seller Employee Plans shall not be terminated
-----------------
by reason of the Merger but shall continue thereafter as plans of the Surviving
Bank until such time as the employees of Seller and the Seller Subsidiaries are
integrated into Buyer's employee benefit plans that are available to other
employees of Buyer and Buyer Subsidiaries, subject to the terms and conditions
specified in such plans and to such changes therein as may be necessary to
reflect the consummation of the Merger. Buyer shall take such steps as are
necessary or required to integrate the employees of Seller and the Seller
Subsidiaries in Buyer's employee benefit plans available to other employees of
Buyer and Buyer Subsidiaries as soon as practicable after the Effective Time,
(i) with full credit for prior service with Seller or any of the Seller
Subsidiaries for all purposes other than determining the amount of benefit
accruals under any defined benefit plan, (ii) without any waiting periods,
evidence of insurability, or application of any pre-existing condition
limitations, and (iii) with full credit for claims arising prior to the
Effective Time for purposes of deductibles, out-of-pocket maximums, benefit
maximums, and all other similar limitations for the applicable plan year during
which the Merger is consummated. Except as otherwise disclosed, each of Buyer
and Seller shall use all reasonable efforts to insure that no amounts paid or
payable by Seller, Seller Subsidiaries, Buyer or Buyer Subsidiaries to or with
respect to any director, former director, employee or former employee of Seller
or any Seller Subsidiary will fail to be deductible for federal income tax
purposes by reason of Section 162(m), 280G or any other Section of the IRC.
5.09. Equity Appreciation Plan and Long Term Incentive Compensation Plan.
------------------------------------------------------------------
Seller shall take all necessary action to insure that the EAP and the Long Term
Incentive Compensation Plan (the "LTIP") shall be paid on or before the
Effective Time and terminate as of the Effective Time.
5.10. Press Releases. Except as may be required by law, Seller and Buyer
--------------
shall consult and agree with each other as to the
42
form and substance of any proposed press release relating to this Agreement or
any of the transactions contemplated hereby.
5.11. State Takeover Statutes. Seller and Buyer will each take all steps
-----------------------
necessary to exempt the transactions contemplated by this Agreement and any
agreement contemplated hereby from, and if necessary challenge the validity of,
any applicable state takeover law.
5.12. D&O Indemnification. From and after the Effective Time, Buyer agrees
-------------------
to indemnify and hold harmless the past and present employees, agents, directors
or officers of Seller or the Seller Subsidiaries for all acts or omissions
occurring at or prior to the Effective Time to the same extent such persons are
indemnified and held harmless (A) under their respective Certificate of
Incorporation, Charter or Bylaws in the form in effect at the date of this
Agreement, (B) by operation of law, or (C) by virtue of any contract, resolution
or other agreement or document existing at the date of this Agreement, and such
duties and obligations shall continue in full force and effect for so long as
they would (but for the Merger) otherwise survive and continue in full force and
effect. Buyer will provide, or cause to be provided, for a period of not less
than six years from the Effective Time, to the extent available at a cost not
in excess of 200% of the current annual premium cost, single premium tail
coverage, on behalf of the officers and directors of Seller and Seller
Subsidiaries immediately prior to the Effective Time, with policy limits equal
to Seller's existing annual coverage limits.
5.13. Best Efforts. Each of Buyer and Seller undertakes and agrees to use
------------
its best efforts to cause the Merger to qualify as a reorganization within the
meaning of Section 368 of the IRC (including, if necessary, to take reasonable
steps to restructure the transactions contemplated by this Agreement to so
qualify). Each of Buyer and Seller agrees to not take any action that would
materially impede or delay the consummation of the transactions contemplated by
this Agreement or the ability of Buyer or Seller to obtain any approval of any
Regulatory Authority required for the transactions contemplated by this
Agreement or to perform its covenants and agreements under this Agreement.
5.14. Insurance. Each of Buyer and Seller shall cause each of its
---------
respective Subsidiaries to, use its best efforts to maintain its existing
insurance.
5.15. Conforming Entries. (a) Notwithstanding that Seller believes that
------------------
Seller and the Seller Subsidiaries have established all reserves and taken all
provisions for possible loan losses required by GAAP and applicable laws, rules
and regulations, Seller recognizes that Buyer may have adopted different loan,
accrual and reserve policies (including loan classifications and levels of
reserves for possible loan losses). Subject to
43
applicable laws, regulations and the requirements of Regulatory Authorities,
from and after the date of this Agreement to the Effective Time, Seller and
Buyer shall consult and cooperate with each other with respect to conforming the
loan accrual and reserve policies of Seller and the Seller Subsidiaries to those
policies of Buyer, as specified in each case in writing to Seller, based upon
such consultation and as herein after provided.
(b) Subject to applicable laws, regulations and the requirements of Regulatory
Authorities, in addition, from and after the date of this Agreement to the
Effective Time, Seller and Buyer shall consult and cooperate with each other
with respect to determining appropriate Seller accruals, reserves and charges to
establish and take in respect of excess equipment write-off or write-down of
various assets and other appropriate charges and accounting adjustments taking
into account the parties' business plans following the Merger, as specified in
each case in writing to Seller based upon such consultation and as hereinafter
provided.
(c) Subject to applicable laws, regulations and the requirements of Regulatory
Authorities, Seller and Buyer shall consult and cooperate with each other with
respect to determining, as specified in a written notice from Buyer to Seller,
based upon such consultation and as hereinafter provided, the amount and the
timing for recognizing for financial accounting purposes Seller's expenses of
the Merger and the restructuring charges relating to or to be incurred in
connection with the Merger.
(d) Subject to applicable laws, regulations and the requirements of Regulatory
Authorities, Seller shall (i) establish and take such reserves and accruals at
such time as Buyer shall reasonably request to conform Seller's loan, accrual
and reserve policies to Buyer's policies, and (ii) establish and take such
accruals, reserves and charges in order to implement such policies in respect of
excess facilities and equipment capacity, severance costs, litigation matters,
write-off or write-down of various assets and other appropriate accounting
adjustments, and to recognize for financial accounting purposes such expenses of
the Merger and restructuring charges related to or to be incurred in connection
with the Merger, in each case at such times as are reasonably requested by
Buyer; provided, however, that such reserves, accruals and charges are not be
-------- -------
taken until immediately prior to the Effective Time and that on the date such
reserves, accruals and charges are to be taken, Buyer shall certify to Seller
that Buyer's representations and warranties are true and correct as of such
date, that the approval conditions to its obligations contemplated by Section
6.01(b) have been satisfied or waived and that Buyer is otherwise in compliance
with this Agreement; and provided, further that Seller shall not be required to
take any such action that is not consistent with GAAP and regulatory accounting
principles.
44
(e) No reserves, accruals or charges taken in accordance with Section 5.15(d)
above may be a basis to assert a violation of a breach of a representation,
warranty or covenant of Seller herein.
5.16. Environmental Reports. Seller shall cooperate with Buyer so that
---------------------
Buyer may as soon as reasonably practicable obtain, at Buyer's expense, a report
of a phase one environmental investigation on all real property owned, leased or
operated by Seller or any of the Seller Subsidiaries as of the date hereof and
within ten days after the acquisition or lease of any real property acquired or
leased by Seller or any of the Seller Subsidiaries after the date hereof. If
advisable in light of the phase one report with respect to any parcel of real
property referred to above, in the reasonable opinion of Buyer, Seller shall
also cooperate with Buyer so that Buyer may obtain, at Buyer's expense, a phase
two investigation report to such designated parcels.
5.17. Seller Bank Securities. Seller Bank shall call for redemption at the
----------------------
earliest practicable date permitted pursuant to the related certificate of
designation all issued and outstanding shares of Seller Bank Preferred Stock.
5.18. Agreement with FDIC. Seller shall use its best efforts to obtain the
-------------------
termination on or prior to the Effective Time of all agreements, instruments or
other obligations to which Seller or any Seller Subsidiary and the FDIC is a
party. Seller shall use its best efforts to have received a letter from the
FDIC on or before the Effective Time to the effect that upon the Merger the FDIC
has no claim or rights against any Seller Subsidiary, the Surviving Corporation
or any Surviving Corporation Subsidiary and neither the Seller, any Seller
Subsidiary, the Surviving Corporation nor any Surviving Corporation Subsidiary
has any obligations to the FDIC pursuant to the Assistance Agreement, Limited
Partnership Agreement, this Agreement, the Merger, or otherwise, except for
payment for unredeemed shares of Series A Preferred Stock of Seller Bank in an
amount not to exceed $100 per share.
5.19. Directors of Buyer. The Board of Directors of Buyer shall take all
------------------
requisite corporate action so that at the Effective Time the directors of Buyer
shall include ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and another person selected by Seller acceptable
to Buyer.
5.20. Indemnification of Buyer. From and after the Effective Time, Selling
------------------------
Stockholder and the General Partner, jointly and severally, agree to indemnify
and hold harmless Buyer and each Buyer Subsidiary and their past and present
employees, agents, directors or officers against any loss, liability, claim,
damage and expense whatsoever, as incurred, for all acts or omissions by Selling
Stockholder or the General Partner arising out of the Distribution and for all
claims of the FDIC arising out of the Assistance Agreement or other rights or
entitlements of the
45
FDIC as successor to the Federal Savings and Loan Insurance Corporation (the
"FSLIC") in connection with the acquisition of Seller Bank from the FSLIC
(except for payment for unredeemed shares of Series A Preferred Stock of Seller
Bank in an amount not to exceed $100 per share).
5.21. Selling Stockholder and General Partner Approval. Selling Stockholder,
------------------------------------------------
as sole stockholder of Seller, and General Partner as general partner of Selling
Stockholder, shall approve this Agreement, the Merger and the Distribution in
accordance with applicable law.
5.22. Distribution. The Distribution will be conducted by Selling
------------
Stockholder pursuant to the terms of the Limited Partnership Agreement, the
Delaware Revised Uniform Limited Partnership Act and otherwise in accordance
with applicable law, and will occur immediately after the Effective Time.
Selling Stockholder will not vote any shares of Buyer Common Stock prior to the
Distribution.
5.23 EAP and LTIP Distributions. In the event that the approval conditions
--------------------------
to Buyer's obligations contemplated by Section 6.01(b) have been satisfied or
waived and Buyer shall notify Seller pursuant to Section 1.03 hereof at least
five business days prior to December 31, 1997 that the Effective Time shall
occur on a date after December 31, 1997, then at the written request of Buyer,
Seller shall cause Seller Bank to make all distributions pursuant to the EAP and
the LTIP on or prior to December 31, 1997.
ARTICLE VI
----------
CONDITIONS
6.01. Conditions to Each Party's Obligation To Effect the Merger. The
----------------------------------------------------------
respective obligations of each party to effect the Merger shall be subject to
the fulfillment or waiver at or prior to the Effective Time of the following
conditions:
(a) This Agreement, including the Merger (and in the case of the Selling
Stockholder, the Distribution) shall have received the requisite approval of
stockholders of Buyer in accordance with the applicable provisions of the Bylaws
of Buyer and the DGCL and the requisite approval of the Limited Partners and BUC
Holders of Selling Stockholder in accordance with the applicable provisions of
the Limited Partnership Agreement and the Delaware Revised Uniform Limited
Partnership Act.
(b) All requisite approvals of this Agreement and the transactions
contemplated hereby shall have been received from the Regulatory Authorities
without the imposition of any
46
condition which differs from conditions customarily imposed by such Regulatory
Authorities in orders approving acquisitions of the type contemplated hereby and
in the good faith opinion of Buyer, compliance with which would materially
adversely affect the reasonably anticipated benefits to Buyer.
(c) The Registration Statement shall have been declared effective and
shall not be subject to a stop order or any threatened stop order.
(d) Neither Seller nor Buyer shall be subject to any order, decree or
injunction, and there shall be no pending or threatened order decree or
injunction, of a court or agency of competent jurisdiction which enjoins or
prohibits the consummation of any of the Transactions.
(e) There shall be no legislative, statutory or regulatory action (whether
federal or state) pending which prohibits or threatens to prohibit consummation
of the Transactions or which otherwise materially adversely affects the
Transactions.
(f) Each of Buyer and Seller shall have received, from counsel reasonably
satisfactory to it, an opinion reasonably satisfactory in form and substance to
it to the effect that the Merger will constitute a reorganization within the
meaning of Section 368 of the IRC and that no gain or loss will be recognized by
Selling Stockholder to the extent it receives Buyer Common Stock solely in
exchange for Seller Common Stock.
6.02. Conditions to Obligations of Seller To Effect the Merger. The
--------------------------------------------------------
obligations of Seller to effect the Merger shall be subject to the fulfillment
or waiver at or prior to the Effective Time of the following additional
conditions:
(a) Representations and Warranties. The representations and warranties of
------------------------------
Buyer set forth in Article III of this Agreement shall be 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 except (i) to the extent
such representations and warranties are by their express provisions made as of a
specified date or period which shall, subject to clause (iii), be true and
correct as of such date or period, and (ii) for the effect of transactions
contemplated by this Agreement) and (iii) where the failure or failures of such
representations and warranties to be so true and correct, individually or in the
aggregate, does not result or would not reasonably be expected to result in a
Material Adverse Effect. Seller shall have received a certificate of the
chairman or vice chairman of Buyer to that effect.
47
(b) Performance of Obligations. Buyer shall have performed in all material
--------------------------
respects all obligations required to be performed by it under this Agreement
prior to the Effective Time, and Seller shall have received a certificate of the
chairman or vice chairman of Buyer to that effect.
6.03. Conditions to Obligations of Buyer To Effect the Merger. The
-------------------------------------------------------
obligations of Buyer to effect the Merger shall be subject to the fulfillment or
waiver at or prior to the Effective Time of the following additional conditions:
(a) Representations and Warranties. The representations and warranties of
------------------------------
Seller, Selling Stockholder and General Partner set forth in Article II of this
Agreement shall be 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 except (i) to the extent such representations and warranties are
by their express provisions made as of a specific date or period which shall,
subject to clause (iii), be true and correct as of such date or period, and (ii)
for the effect of transactions contemplated by this Agreement) and (iii) where
the failure or failures of such representations and warranties to be so true and
correct, individually or in the aggregate, does not result or would not
reasonably be expected to result in a Material Adverse Effect. Buyer shall have
received a certificate of the President of Seller, the General Partner and the
general partner of the General Partner, as appropriate, to that effect.
(b) Performance of Obligations. Seller, General Partner and Selling
--------------------------
Stockholder shall have performed in all material respects all obligations
required to be performed by them under this Agreement prior to the Effective
Time, and Buyer shall have received a certificate of the President of Seller,
the General Partner and the general partner of the General Partner, as
appropriate, to that effect.
ARTICLE VII
-----------
TERMINATION, AMENDMENT AND WAIVER
7.01. Termination. This Agreement may be terminated at any time prior to
-----------
the Effective Time, whether before or after any requisite approval by
stockholders of Buyer or the Limited Partners and BUC Holders:
(a) by mutual consent by the Board of Directors of Buyer and the Board of
Directors of Seller;
(b) by the Board of Directors of Buyer or the Board of Directors of Seller
at any time after the date that is 12
48
months after the date of this Agreement or such later date as mutually agreed
upon by the parties if the Merger shall not theretofore have been consummated
(provided that the terminating party is not then in material breach of any
representation, warranty, covenant or other agreement contained herein);
(c) by the Board of Directors of Buyer or the Board of Directors of Seller
if (i) the OTS has denied approval of the Merger and such denial has become
final and nonappealable, (ii) stockholders of Buyer shall not have approved this
Agreement at the Buyer Meeting following a favorable recommendation of Buyer's
Board of Directors or (iii) the Limited Partners or the BUC Holders shall not
have approved this Agreement at the Selling Stockholder Meeting following a
favorable recommendation of the General Partner;
(d) by the Board of Directors of Buyer in the event of a material breach
by Seller or Selling Stockholder of any representation, warranty covenant or
other agreement contained in this Agreement, which breach is not cured within 30
days after written notice thereof to Seller by Buyer;
(e) by the Board of Directors of Seller in the event of a material breach
by Buyer of any representation, warranty, covenant or other agreement contained
in this Agreement, which breach is not cured within 30 days after written notice
thereof is given to Buyer by Seller;
(f) by the Board of Directors of Seller, no earlier than the fifth trading
day or later than the third full trading day immediately preceding the Closing
Date, if the Average Price is less than $42.00 (subject to adjustment pursuant
to Section 1.10), provided that the Board of Directors of Seller will have no
right to terminate pursuant to this paragraph (f) unless Seller shall have
given, during the three trading day period referred to above, one full trading
day's prior written notice of its intention to terminate pursuant to this
Section 7.01(f) and (y) Buyer during such one full trading day notice period
shall not have given written notice (an "Adjustment Election") to Seller that
the Buyer Stock Price shall be calculated pursuant to clause (a) of the second
sentence of Section 1.07(ii)(1).
7.02. Effect of Termination. In the event of termination of this Agreement
---------------------
as provided in Sections 7.01(a) through 7.01(c) and Section 7.01(f) above, this
Agreement shall forthwith become void and there shall be no liability or
obligation on the part of Buyer or Seller or their respective officers or
directors except as set forth in the second sentence of Section 5.0l and in
Section 5.06. In the event that this Agreement is terminated by a party (the
"Aggrieved Party") solely by reason of the material breach by
49
the other party ("Breaching Party") of any of its representations, warranties,
covenants or agreements contained herein then the Aggrieved Party shall be
entitled to such remedies and relief against the Breaching Party as are
available at law or in equity. Moreover, the Aggrieved Party without terminating
this Agreement shall be entitled to a decree of specific performance against the
Breaching Party provided that the Aggrieved Party is not in material breach
hereunder.
7.03. Amendment. This Agreement and the Schedules hereto may be amended by
---------
the parties hereto, by action taken by or on behalf of their respective Boards
of Directors or at any time before or after approval of this Agreement by the
stockholders of Buyer and the Limited Partners and BUC Holders; provided,
---------
however, that after any such approval no such modification shall alter or change
-------
the amount or the composition of the Merger Consideration. This Agreement may
not be amended except by an instrument in writing signed on behalf of each of
Buyer and Seller.
7.04. Severability. Any term, provision, covenant or restriction contained
------------
in this Agreement held by a court or a Regulatory Authority of competent
jurisdiction or the Board to be invalid, void or unenforceable, shall be
ineffective to the extent of such invalidity, voidness or unenforceability, but
neither the remaining terms, provisions, covenants or restrictions contained in
this Agreement nor the validity or enforceability thereof in any other
jurisdiction shall be affected or impaired thereby. Any term, provision,
covenant or restriction contained in this Agreement that is so found to be so
broad as to be unenforceable shall be interpreted to be as broad as is
enforceable.
7.05. Waiver. Any term, condition or provision of this Agreement may be
------
waived in writing at any time by the party which is, or whose securityholders
are, entitled to the benefits thereof.
ARTICLE VIII
------------
GENERAL PROVISIONS
8.01. Non-Survival of Representations, Warranties and Agreements. No
----------------------------------------------------------
investigation by the parties hereto made heretofore or hereafter shall affect
the representations and warranties of the parties which are contained herein and
each such representation and warranty shall survive such investigation. Except
as set forth below in this Section 8.01, all representations, warranties and
agreements in this Agreement of Buyer and Seller or in any instrument delivered
by Buyer or Seller pursuant to or in connection with this Agreement shall expire
at the Effective Time or upon termination of this Agreement in accordance with
its terms or, in the case of any other such instrument, in accordance with the
terms of such instrument. In the event of consummation of the
50
Merger, the agreements contained in or referred to in Sections 5.02(b), 5.07,
5.08, 5.09, 5.12, 5.20 and 5.22 shall survive the Effective Time. In the event
of termination of this Agreement in accordance with its terms, the agreements
contained in or referred to in the second sentence of Section 5.01, Section 5.06
and Section 7.02 shall survive such termination.
8.02. Notices. All notices and other communications hereunder shall be in
-------
writing and shall be deemed to be duly received (i) on the date given if
delivered personally or (ii) upon confirmation of receipt, if by facsimile
transmission or (iii) on the date received if mailed by registered or certified
mail (return receipt requested), or (iv) on the business date after being
delivered to a reputable overnight delivery service, if by such service, to the
parties at the following addresses (or at such other address for a party as
shall be specified by like notice):
(i) if to Buyer:
Bay View Capital Corporation
▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇,
Executive Vice President
Copies to:
Silver, ▇▇▇▇▇▇▇▇ & Taff, L.L.P.
▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇, P.C.
▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, P C.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
(ii) if to Seller:
AMERICA FIRST EUREKA HOLDINGS, INC.
C/O AMERICA FIRST FINANCIAL CORP.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
Copies to:
Wachtell, Lipton, ▇▇▇▇▇ & ▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
51
8.03. Miscellaneous. This Agreement (including the Schedules and other
-------------
written documents referred to herein or provided hereunder) (i) constitutes the
entire agreement and supersedes all other prior agreements and understandings,
both written and oral, among the parties, or any of them, with respect to the
subject matter hereof, including any confidentiality agreement between the
parties hereto, (ii) except for the provisions of Section 5.08, 5.09, 5.12 and
5.20, is not intended to confer upon any person not a party hereto any rights or
remedies hereunder, (iii) shall not be assigned by operation of law or otherwise
and (iv) shall be governed in all respects by the laws of the State of Delaware.
Nothing in this Agreement shall be construed to require any party (or any
subsidiary or affiliate of any party) to take any action or fail to take any
action in violation of applicable law, rule or regulation. This Agreement may be
executed in counterparts which together shall constitute a single agreement.
52
IN WITNESS WHEREOF, Buyer, Seller, General Partner and Selling Stockholder
have caused this Agreement to be signed and, by such signature, acknowledged by
their respective partners or officers thereunto duly authorized, and such
signatures to be duly attested to, all as of the date first written above.
Attest: BAY VIEW CAPITAL CORPORATION
-------
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------- -----------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇ Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Secretary Title: President and Chief
Executive Officer
Attest: AMERICA FIRST EUREKA HOLDINGS,
------- INC.
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------- -----------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Chairman of the Board Title: Chief Executive
Officer and President
Attest: AMERICA FIRST FINANCIAL FUND
------- 1987-A LIMITED PARTNERSHIP
By: American First Capital
Associates Limited Partnership
Five, a general partner
By: AFCA-5 Management
Corporation, a general
partner
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------- -----------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chairman of the Board
and Secretary
53
Attest:
------- AMERICA FIRST CAPITAL ASSOCIATES
LIMITED PARTNERSHIP FIVE
By: AFCA-5 Management
Corporation, a general
partner
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------- -----------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chairman of the Board
and Secretary
54