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EXHIBIT INDEX
Exhibit Number Description
2 Agreement and Plan of Combination, dated as of June 22,
1997, by and among North American Mortgage Company,
Dime Bancorp, Inc. and The Dime Savings Bank of New
York, FSB, including all exhibits but excluding
schedules. The omitted schedules will be furnished
supplementally upon request to the Securities and
Exchange Commission.
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AGREEMENT AND PLAN OF COMBINATION
DATED AS OF JUNE 22, 1997
BY AND AMONG
NORTH AMERICAN MORTGAGE COMPANY
DIME BANCORP, INC.
AND
THE DIME SAVINGS BANK OF NEW YORK, FSB
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TABLE OF CONTENTS
PAGE
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RECITALS.............................................................................. 1
ARTICLE I
Certain Definitions; Interpretation................................................... 1
1.01 Certain Definitions........................................................... 1
1.02 Interpretation................................................................ 6
ARTICLE II
The Business Combination.............................................................. 6
2.01 The Combination............................................................... 6
2.02 Right to Direct Company Assets and Company Liabilities........................ 7
2.03 Reservation of Right to Revise Structure...................................... 7
2.04 Effective Time................................................................ 7
ARTICLE III
Consideration......................................................................... 7
3.01 Consideration................................................................. 7
3.02 Anti-Dilution Provisions...................................................... 7
3.03 Liquidation of the Company.................................................... 8
3.04 Options....................................................................... 8
ARTICLE IV
Actions Pending the Combination....................................................... 9
4.01 Forebearances of the Company.................................................. 9
4.02 Forebearances of the Acquiror................................................. 11
4.03 Coordination of Dividends..................................................... 11
ARTICLE V
Representations and Warranties........................................................ 12
5.01 Disclosure Schedules.......................................................... 12
5.02 Standard...................................................................... 12
5.03 Representations and Warranties of the Company................................. 12
5.04 Representations and Warranties of the Acquiror................................ 23
ARTICLE VI
Covenants............................................................................. 27
6.01 Reasonable Best Efforts....................................................... 27
6.02 Stockholder Approvals......................................................... 27
6.03 Registration Statement........................................................ 27
6.04 Press Releases................................................................ 28
6.05 Access; Information........................................................... 28
6.06 Acquisition Proposals......................................................... 28
6.07 Affiliate Agreements.......................................................... 29
6.08 Takeover Laws................................................................. 29
6.09 No Rights Triggered........................................................... 29
6.10 Rights Agreement.............................................................. 29
6.11 NYSE Listing.................................................................. 29
6.12 Regulatory Applications....................................................... 30
6.13 Indemnification............................................................... 30
6.14 Benefit Plans................................................................. 31
6.15 Accountants' Letters.......................................................... 32
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PAGE
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6.16 Notification of Certain Matters............................................... 32
6.17 Certain Policies of the Company............................................... 32
6.18 Employee Benefits............................................................. 32
6.19 Certain Payments at Effective Time............................................ 33
6.20 Certain Employee Agreements................................................... 33
ARTICLE VII
Conditions to Consummation of the Combination......................................... 33
7.01 Conditions to Each Party's Obligation to Effect the Combination............... 33
7.02 Conditions to Obligation of the Company....................................... 34
7.03 Conditions to Obligation of the Acquiror...................................... 34
ARTICLE VIII
Termination........................................................................... 35
8.01 Termination................................................................... 35
8.02 Effect of Termination and Abandonment......................................... 36
8.03 Termination Fee............................................................... 36
ARTICLE IX
Miscellaneous......................................................................... 38
9.01 Survival...................................................................... 38
9.02 Waiver; Amendment............................................................. 38
9.03 Counterparts.................................................................. 38
9.04 Governing Law................................................................. 38
9.05 Expenses...................................................................... 38
9.06 Notices....................................................................... 38
9.07 Entire Understanding; No Third Party Beneficiaries............................ 39
EXHIBIT A Form of Plan of Merger
EXHIBIT B Form of Amendment to Company Rights Agreement
EXHIBIT C Form of Company Affiliate Letter
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AGREEMENT AND PLAN OF COMBINATION, dated as of June 22, 1997 (this
"Agreement"), by and among North American Mortgage Company (the "Company"), Dime
Bancorp, Inc., (the "Acquiror"), and The Dime Savings Bank of New York, FSB (the
"Bank").
RECITALS
A. The Company. The Company is a Delaware corporation, having its
principal place of business in Santa Rosa, California.
B. The Acquiror. The Acquiror is a Delaware corporation, having its
principal place of business in New York, New York.
C. The Bank. The Bank is a federal savings bank and a wholly owned
subsidiary of the Acquiror, having its principal place of business in New York,
New York.
D. Intentions of the Parties. It is the intention of the parties to this
Agreement that the business combination contemplated hereby (i) be treated as a
"reorganization" under Section 368 of the Internal Revenue Code of 1986, as
amended (the "Code"), and (ii) include the right of the Bank to acquire the
assets and assume the liabilities of the Company and to assign such right to any
corporation that the Bank controls.
E. Board Action. The respective Boards of Directors of each of Acquiror,
the Bank and the Company have determined that it is in the best interests of
their respective companies and their stockholders to consummate the business
combination transaction provided for in this Agreement.
NOW, THEREFORE, in consideration of the premises, and of the mutual
covenants, representations, warranties and agreements contained herein, the
parties agree as follows:
ARTICLE I
CERTAIN DEFINITIONS; INTERPRETATION
1.01 Certain Definitions. The following terms are used in this Agreement
with the meanings set forth below:
"Acquiror" has the meaning set forth in the preamble to this
Agreement.
"Acquiror Certificate" means the Amended and Restated Certificate of
Incorporation of the Acquiror.
"Acquiror Common Stock" means the common stock, par value $0.01 per
share, of the Acquiror.
"Acquiror Person" has the meaning set forth in Section 8.03(b).
"Acquiror Preferred Stock" means the preferred stock, par value $1.00
per share, of the Acquiror.
"Acquiror Rights" means the rights to purchase Acquiror Stock
outstanding from time to time pursuant to the Acquiror Rights Agreement.
"Acquiror Rights Agreement" means the Stockholders Protection Rights
Agreement, dated as of October 20, 1995, between the Acquiror and the First
National Bank of Boston, as Rights Agent.
"Acquiror Stock" means, collectively, the Acquiror Common Stock and
the Acquiror Preferred Stock.
"Acquiror's SEC Documents" has the meaning set forth in Section
5.04(g).
"Acquisition Transaction" means (i) a merger or consolidation, or any
similar transaction, involving the Company or any subsidiary of it (other
than mergers, consolidations or similar transactions involving solely the
Company and/or one or more wholly-owned subsidiaries of the Company;
provided that any such transaction is not entered into in violation of the
terms of this Agreement), (ii) a purchase, lease or other acquisition of
all or any substantial part of the assets or deposits of the Company or any
subsidiary
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of it, or (iii) a purchase or other acquisition (including by way of
merger, consolidation, share exchange or otherwise) of securities
representing 15% or more of the voting power of the Company or any
subsidiary of it.
"Agency" means the HUD, FHA, VA, FNMA, FHLMC, GNMA or a State Agency,
as applicable.
"Agreement" means this Agreement, as amended or modified from time to
time in accordance with Section 9.02. As contemplated by Section 2.02, if
the Plan of Merger is entered into, all references to this Agreement shall
include the Plan of Merger.
"Average Closing Price" means the average of the daily last sale
prices of Acquiror Common Stock as reported on the NYSE Composite
Transactions Reporting System (as reported in The Wall Street Journal or,
if not reported therein, in another authoritative source) for the ten
consecutive NYSE full trading days (in which such shares are traded on the
NYSE) ending at the close of trading on the Determination Date.
"Assigned Sub" has the meaning set forth in Section 2.02.
"Bank" has the meaning set forth in the preamble to this Agreement.
"Code" has the meaning set forth in Recital D.
"Combination" has the meaning set forth in Section 2.01.
"Company" has the meaning set forth in the preamble to this Agreement.
"Company Affiliate" has the meaning set forth in Section 6.07.
"Company Board" means the Board of Directors of the Company.
"Company By-Laws" means the Amended and Restated By-laws of the
Company.
"Company Certificate" means the Amended and Restated Certificate of
Incorporation of the Company.
"Company Common Stock" means the common stock, par value $0.01 per
share, of the Company.
"Company Convertible Preferred Stock" means the $0.20 Series A
Convertible Preferred Stock of the Company.
"Company Meeting" has the meaning set forth in Section 6.02.
"Company Preferred Stock" means the preferred stock, par value $0.01
per share, of the Company.
"Company Rights" means the rights to purchase Company Stock
outstanding from time to time pursuant to the Company Rights Agreement.
"Company Rights Agreement" means the Shareholder Rights Agreement,
dated as of October 19, 1992, between the Company and The Bank of New York,
as Rights Agent.
"Company Stock" means, collectively, the Company Common Stock and the
Company Preferred Stock.
"Company Stock Option" means each outstanding option to purchase
shares of Company Common Stock.
"Company's SEC Documents" has the meaning set forth in Section
5.03(g).
"Compensation and Benefit Plans" has, with respect to any person, the
meaning set forth in Section 5.03(l).
"Consideration" has the meaning set forth in Section 3.01.
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"Contract" means, with respect to any person, any agreement,
indenture, undertaking, debt instrument, contract, lease or other
commitment to which such person or any of its Subsidiaries is a party or by
which any of them is bound or to which any of their properties is subject.
"Costs" has the meaning set forth in Section 6.13(a).
"Determination Date" means the date of receipt of all OTS approvals
necessary to consummate the Combination.
"DGCL" means the General Corporation Law of the State of Delaware.
"Disclosure Schedule" has the meaning set forth in Section 5.01.
"DOL" means the United States Department of Labor.
"Effective Date" means the date on which the Effective Time occurs.
"Effective Time" means the date and time at which the Combination
becomes effective or, if the Plan of Merger is entered into, the effective
time of the Merger, as set forth in the Plan of Merger.
"Environmental Laws" means any federal, state or local law,
regulation, order, decree, permit, authorization, common law or agency
requirement with force of law relating to: (a) the protection or
restoration of the environment, health or safety (in each case as relating
to the environment) or natural resources; or (b) the handling, use,
presence, disposal, release or threatened release of any Hazardous
Substance.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" has, with respect to any person, the meaning set
forth in Section 5.03(l).
"ERISA Affiliate Plan" has the meaning set forth in Section 5.03(l).
"ERISA Affiliate Plan" has the meaning set forth in Section 5.03(l).
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations thereunder.
"FDIC" means the Federal Deposit Insurance Corporation.
"Fee" has the meaning set forth in Section 8.03(a).
"Fee Termination Event" has the meaning set forth in Section 8.03(a).
"Fee Trigger Event" has the meaning set forth in Section 8.03(c).
"FHA" means the Federal Housing Administration.
"FHLMC" means the Federal Home Loan Mortgage Corporation.
"FHMA" means the Farmers' Home Mortgage Administration.
"FNMA" means the Federal National Mortgage Association.
"GNMA" means the Government National Mortgage Association.
"Governmental Authority" means any court, administrative agency or
commission or other federal, state or local governmental authority or
instrumentality.
"Hazardous Substance" means any substance in any concentration that
is: (a) listed, classified or regulated pursuant to any Environmental Law;
(b) any petroleum product or by-product, asbestos-containing material,
lead-containing paint or plumbing, polychlorinated biphenyls, radioactive
materials or radon; or (c) any other substance which is or may be the
subject of regulatory action by any Governmental Authority pursuant to any
Environmental Law.
"HSR Act" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of
1976.
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"HUD" means the United States Department of Housing and Urban
Development.
"Indemnified Party" has the meaning set forth in Section 6.13(a).
"Index Group" means the group of the eighteen (18) companies listed
below, the common stock of all of which shall be publicly traded and as to
which there shall not have been, since the Starting Date and before the
Determination Date, an announcement of a proposal for the acquisition or
sale of such company. In the event that the common stock of any such
company ceases to be publicly traded or any such announcement is made with
respect to any such company, such company will be removed from the Index
Group, and the weights (which have been determined based on market
capitalization) redistributed proportionately for purposes of determining
the Index Price. The eighteen (18) companies and the weights attributed to
them are as follows:
COMPANY WEIGHTING TICKER
-------------------------------------------------------- --------- ------
Ahmanson & Company (H.F.)............................... 14.0 AHM
Astoria Financial Corporation........................... 2.8 ASFC
Bank United Corp........................................ 3.5 BNKU
Commercial Federal Corporation.......................... 2.4 CFB
Charter One Financial................................... 7.1 COFI
Coast Savings Financial................................. 2.7 CSA
Downey Financial Corp................................... 1.8 DSL
Golden West Financial................................... 12.5 GDW
Glendale Federal Bank FSB............................... 4.2 GLN
GreenPoint Financial Corp............................... 9.2 GPT
Long Island Bancorp Inc................................. 2.6 LISB
New York Bancorp Inc.................................... 2.7 NYB
Peoples Heritage Finl Group............................. 3.0 PHBK
▇▇▇▇▇▇ Bancorp Inc...................................... 2.5 RSLN
St. ▇▇▇▇ Bancorp Inc.................................... 2.3 SPBC
Sovereign Bancorp Inc................................... 3.0 SVRN
Washington Mutual Inc................................... 21.0 WAMU
Washington Federal Inc.................................. 3.9 WFSL
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100.0%
"Index Price" means, on a given date, the weighted average (weighted
in accordance with the factors listed in the definition of "Index Group")
of the closing prices on such date of the common stocks of the companies
composing the Index Group.
"Insurance Amount" has the meaning set forth in Section 6.13(b).
"Insurer" means a person who insures or guarantees all or any portion
of the risk of loss upon borrower default on any of the Loans, including,
without limitation, the FHA, the VA and any private mortgage insurer, and
providers of life, hazard, flood, disability, title or other insurance with
respect to any of the Loans or the collateral therefor.
"Investor" means (i) the FHLMC, the FNMA, the GNMA, or any other
person, as the case may be, that owns any of the Loans or any portion of a
Pool of Loans or holds beneficial title to the Loans or any portion of a
Pool of Loans, but shall not mean the holder of mortgage-backed securities
or mortgage pass-through securities except to the extent that the consent
of such holder may be required in order for the Company or any of its
Subsidiaries to continue to have servicing rights with respect to the Loans
related thereto and (ii) any person who owns servicing rights for loans
serviced or master serviced by the Company or any of its Subsidiaries
pursuant to a Loan Servicing Agreement.
"Investor Commitment" means any commitment of a person to purchase
Loans from the Company or any of its Subsidiaries.
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"IRS" means the United States Internal Revenue Service.
"Liens" means any charge, mortgage, pledge, security interest,
restriction, claim, lien, or encumbrance.
"Listed Termination" means a termination of this Agreement (i) by the
Acquiror pursuant to Section 8.01(b) because of a knowing, intentional or
grossly negligent breach by the Company, (ii) by the Acquiror pursuant to
Section 8.01(e) or (iii) by the Company pursuant to Section 8.01(f), in
each case, unless at the time of such termination (A) the Company is
entitled to terminate this Agreement pursuant to Section 8.01(b) because of
a knowing, intentional or grossly negligent breach by the Acquiror and (B)
the Company shall have notified the Acquiror in writing of such breach.
"Loan" has the meaning set forth in Section 5.03(t).
"Loan Servicing Agreement" has the meaning set forth in Section
5.03(t).
"Material Adverse Effect" means, with respect to the Acquiror or the
Company, any effect that (i) is material and adverse to the financial
position, results of operations or business of the Acquiror and its
Subsidiaries taken as a whole, or the Company and its Subsidiaries taken as
a whole, respectively, or (ii) would materially impair the ability of
either the Acquiror or the Company to perform its obligations under this
Agreement or otherwise materially threaten or materially impede the
consummation of the Combination and the other transactions contemplated by
this Agreement; provided, however, that Material Adverse Effect shall not
be deemed to include the impact of (a) changes in banking and similar laws
of general applicability or interpretations thereof by courts or
governmental authorities, (b) changes in generally accepted accounting
principles or regulatory accounting requirements applicable to savings
associations and their holding companies generally and (c) events or
conditions generally adversely affecting the mortgage banking industry,
including general changes in interest rates and other changes in general
business or economic conditions.
"Merger" has the meaning set forth in Section 2.02.
"Multiemployer Plan" means, with respect to any person, a
multiemployer plan within the meaning of Section 3(37) of ERISA.
"NYSE" means the New York Stock Exchange, Inc.
"OTS" means the Office of Thrift Supervision.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Pension Plan" has, with respect to any person, the meaning set forth
in Section 5.03(l).
"person" means any individual, bank, corporation, partnership,
association, joint-stock company, business trust or unincorporated
organization.
"Plan of Merger" has the meaning set forth in Section 2.02.
"Pool" means a pool of Loans originated, acquired or serviced by the
Company or any of its Subsidiaries.
"Preliminary Fee Trigger Event" has the meaning set forth in Section
8.03(b).
"Previously Disclosed" means, with respect to the Company or the
Acquiror, information set forth in such party's Disclosure Schedule.
"Proxy Statement" has the meaning set forth in Section 6.03.
"Registration Statement" has the meaning set forth in Section 6.03.
"Representatives" means, with respect to any person, such person's
directors, officers, employees, legal or financial advisors or any
representatives of such legal or financial advisors.
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"Rights" means, with respect to any person, securities or obligations
convertible into or exercisable or exchangeable for, or giving any person
any right to subscribe for or acquire, or any options, calls or commitments
relating to, or any stock appreciation right or other instrument the value
of which is determined in whole or in part by reference to the market price
or value of, shares of capital stock of such person.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations thereunder.
"Securitization Instruments" has the meaning set forth in Section 5.03(t).
"Securitization Servicer" has the meaning set forth in Section 5.03(t).
"Securitization Transaction" has the meaning set forth in Section 5.03(t).
"Serviced Loans" has the meaning set forth in Section 5.03(t).
"Starting Date" means June 20, 1997.
"Starting Price" shall mean $19.00.
"State Agency" means any state agency with authority to regulate the
business of the Company, determine the investment or servicing requirements with
regard to loans originated, purchased or serviced by the Company, or otherwise
participate in or promote mortgage lending.
"Subsidiary" and "Significant Subsidiary" have the meanings ascribed to
them in Rule 1-02 of Regulation S-X of the SEC.
"Surviving Corporation" has the meaning set forth in Section 2.02.
"Takeover Laws" has the meaning set forth in Section 5.03(n).
"Taxes" means all taxes, charges, fees, levies or other assessments,
however denominated, including, without limitation, all net income, gross
income, gross receipts, sales, use, ad valorem, goods and services, capital,
transfer, franchise, profits, license, withholding, payroll, employment,
employer health, excise, estimated, severance, stamp, occupation, property or
other taxes, custom duties, fees, assessments or charges of any kind whatsoever,
together with any interest and any penalties, additions to tax or additional
amounts imposed by any taxing authority whether arising before, on or after the
Effective Date.
"Tax Returns" has the meaning set forth in Section 5.03(q).
"Treasury Stock" has the meaning set forth in Section 5.03(b).
"Warehouse Loans" has the meaning set forth in Section 5.03(t).
1.02 Interpretation. When a reference is made in this Agreement to
Sections, Exhibits or Schedules, such reference shall be to a Section of, or
Exhibit or Schedule to, this Agreement unless otherwise indicated. The table of
contents and headings contained in this Agreement are for reference purposes
only and are not part of this Agreement. Whenever the words "include,"
"includes" or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation." No provision of this Agreement shall
be construed to require the Company, the Acquiror or any of their respective
Subsidiaries or affiliates to take any action which would violate applicable law
(whether statutory or common law), rule or regulation.
ARTICLE II
THE BUSINESS COMBINATION
2.01 The Combination. Subject to and upon the terms and conditions of
this Agreement, at the Effective Time, the Company shall sell, transfer, convey,
assign and deliver to the Bank all of the assets of the Company (the "Company
Assets") and the Bank shall purchase, acquire and accept the Company Assets from
the Company, and the Bank shall assume all the liabilities (the "Company
Liabilities") of the Company.
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Collectively, the purchase and assumption contemplated in the previous sentence
is referred to as the "Combination."
2.02 Right to Direct Company Assets and Company Liabilities. As
contemplated in Recital D, the Bank may direct that the Company Assets be
transferred to, and that the Company Liabilities (but not the obligation to pay
the Consideration or any portion thereof or any liability for any breach of any
representations and warranties or covenants arising under this Agreement) be
assumed by, a corporation wholly owned and controlled by the Bank by directing
that such corporation acquire the Company Assets and assume the Company
Liabilities (any corporation that is the subject of such direction, "Assigned
Sub"). The transactions contemplated hereby may, to the extent permitted by
applicable law, be accomplished by way of the merger of the Company with and
into Assigned Sub at the Effective Time (the "Merger"), with Assigned Sub the
corporation surviving the Merger (sometimes referred to herein as the "Surviving
Corporation"). Any such Merger shall be accomplished pursuant to a plan of
merger in substantially the form of Exhibit A (the "Plan of Merger"). At and
after the time Assigned Sub, the Acquiror and the Company enter into the Plan of
Merger, all references herein to this "Agreement" shall include a reference to
such Plan of Merger, and all references in this Agreement to the "Combination"
shall be to the Combination as effected through the Merger.
2.03 Reservation of Right to Revise Structure. At the Bank's election,
the Combination may alternatively be structured so that (i) the Company is
merged with and into Acquiror, the Bank, or any other direct or indirect wholly
owned subsidiary of Acquiror (provided, that in such event the Company makes no
representation as to whether any consents are required, or any agreements are
adversely affected, thereby) or (ii) any direct or indirect wholly owned
subsidiary of Acquiror is merged with and into the Company; provided, however,
that no such change shall (a) alter or change the amount or kind of the
Consideration or the treatment of the holders of Company Stock Options, (b)
adversely affect the tax treatment of the Company's stockholders as a result of
receiving the Consideration or prevent the parties from obtaining the opinions
of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ or ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ referred to in Section
7.02(d) and 7.03(c), respectively, or (c) materially impede or delay
consummation of the transactions contemplated by this Agreement. In the event of
such an election, the parties agree to execute an appropriate amendment to this
Agreement in order to reflect such election.
2.04 Effective Time. Subject to the satisfaction or waiver of the
conditions set forth in Article VII, the parties shall cause the Combination to
become effective on the date that is (i) the fifth business day (the "Initial
Closing Date") to occur after the last of the conditions set forth in Sections
7.01, 7.02 or 7.03 shall have been satisfied or waived in accordance with the
terms of this Agreement (or, at the election of the Acquiror, on the last
business day of the month in which such day occurs; provided that, if the
Acquiror shall make such election, it shall waive the condition set forth in
Section 7.03(a) as to other than an intentional, knowing or grossly negligent
breach (so long as such condition is satisfied on the Initial Closing Date)).
ARTICLE III
CONSIDERATION
3.01 Consideration. Subject to the terms and conditions of this
Agreement, at the Effective Time, as consideration for the Company Assets, in
addition to the assumption of the Company Liabilities, the Acquiror shall pay to
the Company the number of shares of Acquiror Common Stock, together with the
related Acquiror Rights, equal to the product of 1.37 (subject to possible
adjustment as set forth in Sections 3.02 and 8.01(g), the "Exchange Ratio") and
the number of shares of Company Common Stock, excluding Treasury Shares, issued
and outstanding immediately prior to the Effective Time (the "Consideration");
provided that, if the Combination shall be effected by way of the Merger, the
Consideration shall consist of the consideration provided for in, and shall be
paid (to the holders of record of shares of Company Common Stock immediately
prior to the Effective Time ) in the manner specified by, the Plan of Merger.
3.02 Anti-Dilution Provisions. Should the Acquiror change (or establish a
record date for changing) the number of shares of Acquiror Common Stock issued
and outstanding prior to the Effective Date by way of
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a stock split, stock dividend, recapitalization or similar transaction with
respect to the outstanding Acquiror Common Stock and the record date therefor
shall be prior to the Effective Date, the Exchange Ratio shall be
proportionately adjusted.
3.03 Liquidation of the Company. Following the acquisition of the Company
Assets, unless the Combination shall be effected by way of the merger of the
Company and a wholly owned, direct or indirect, subsidiary of the Acquiror, the
Company shall promptly liquidate and dissolve, distributing to its stockholders
the shares of Acquiror Common Stock received by it in the Combination.
3.04 Options. (a) At the Effective Time, each Company Stock Option shall
cease to represent a right to acquire shares of Company Common Stock and shall
be converted automatically into an option to purchase shares of Acquiror Common
Stock, and Acquiror shall assume each such Company Stock Option subject to the
terms thereof; provided, however, that from and after the Effective Time, (i)
the number of shares of Acquiror Common Stock purchasable upon exercise of such
Company Stock Option shall be equal to the number of shares of Company Common
Stock that were purchasable under such Company Stock Option immediately prior to
the Effective Time multiplied by the Exchange Ratio, and rounding to the nearest
whole share, and (ii) the per share exercise price under each such Company Stock
Option shall be adjusted by dividing the per share exercise price of each such
Company Stock Option by the Exchange Ratio, and rounding down to the nearest
cent. The terms of each Company Stock Option shall, in accordance with its
terms, be subject to further adjustment as appropriate to reflect any stock
split, stock dividend, recapitalization or other similar transaction with
respect to Acquiror Common Stock on or subsequent to the Effective Date.
Notwithstanding the foregoing, each Company Stock Option which is intended to be
an "incentive stock option" (as defined in Section 422 of the Code) shall be
adjusted in accordance with the requirements of Section 424 of the Code.
Accordingly, with respect to any incentive stock options, fractional shares
shall be rounded down to the nearest whole number of shares and where necessary
the per share exercise price shall be rounded down to the nearest cent.
(b) In order to effectuate the adjustment of the Company Stock Options
provided for in the proviso to Section 3.04(a), the Company represents and
warrants to, and agrees with, the Acquiror that the Company (or as appropriate,
the Company Board) shall take all action required to be taken such that (i)
holders of Stock Options issued under the Company's Incentive Stock Option Plan
will not receive the cash payment for such Stock Options as provided in the
second sentence of Section 10 of such Plan (which shall be effected) either by
resolving that this Agreement and the transactions contemplated hereby
(including the Company Meeting and any Merger) do not constitute a "Change of
Control" for purposes of such Section or by taking such other action with the
prior consent of Acquiror, provided that such other action is taken prior to the
date on which a "Change of Control" would otherwise occur in the absence of the
Company Board resolution to the contrary) and (ii) under Section 11 of the
Company's Incentive Stock Option Plan, at the Effective Time, all Company Stock
Options shall be adjusted as provided in Section 3.04(a) (and shall not be
canceled in exchange for payment as contemplated by clause (ii) of the first
sentence of that Section). Notwithstanding any other provision in this
Agreement, the Company shall be permitted to take such action or to cause such
action to be taken as may be required for each Company Stock Option (x) to fully
vest and become immediately exercisable at the Effective Time and (y) to remain
exercisable after the Effective Time for the remaining term of such Company
Stock Option, in both cases notwithstanding the action of the Company referred
to in the first sentence of this Section 3.04(b).
(c) At or prior to the Effective Time, the Company shall take all action
necessary with respect to the Company's Incentive Stock Option Plan to permit
the assumption of the then outstanding Company Stock Options by Acquiror
pursuant to this Section. The Company shall take all action necessary, including
obtaining any required consents from optionees, to provide that following the
Effective Time no participant in the Company's Incentive Stock Option Plan or
other plans, programs or arrangements of the Company or any of its Subsidiaries
shall have any right thereunder to acquire equity securities of the Company, the
Surviving Corporation or any subsidiary thereof and to permit Acquiror to assume
the Company's Incentive Stock Option Plan. The Company shall further take all
action necessary to amend the Company's Incentive Stock Option Plan to eliminate
automatic grants or awards thereunder, if any, following the Effective Time. At
the Effective Time, Acquiror shall assume the Company's Incentive Stock Option
Plan; provided, that such
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assumption shall be only in respect of the assumed Company Stock Options and
that Acquiror shall have no obligation with respect to any awards under the
Company's Incentive Stock Option Plan other than the assumed Company Stock
Options or to make any additional grants or awards under such assumed plan.
(d) The Acquiror shall take all corporate action necessary to reserve for
issuance a sufficient number of shares of Acquiror Common Stock for delivery
pursuant to the terms set forth in this Section 3.04. Subject to any applicable
limitations under the Securities Act, Acquiror shall either (i) file a
registration statement on Form S-8 (or any successor form), effective as of the
Effective Time, with respect to the shares of Acquiror Common Stock issuable
upon exercise of the Stock Options, or (ii) file any necessary amendments to the
Company's previously filed registration statement(s) on Form S-8 in order that
the Acquiror will be deemed a "successor registrant" thereunder, and, in either
event the Acquiror shall use its reasonable best efforts to maintain the
effectiveness of such registration statement(s) (and maintain the current status
of the prospectus or prospectuses relating thereto) for so long as such options
shall remain outstanding.
ARTICLE IV
ACTIONS PENDING THE COMBINATION
4.01 Forebearances of the Company. From the date hereof until the earlier
of the termination of this Agreement or the Effective Time, except as expressly
contemplated by this Agreement or the Disclosure Schedule, without the prior
written consent of the Acquiror, the Company will not, and will cause each of
its Subsidiaries not to:
(a) Ordinary Course. Conduct the business of the Company and its
Subsidiaries other than in the ordinary and usual course or, to the extent
consistent therewith, fail to use reasonable efforts to preserve intact
their business organizations and assets and maintain their rights,
franchises and existing relations with customers, suppliers, employees and
business associates.
(b) Capital Stock. Other than pursuant to Rights Previously Disclosed
and outstanding on the date hereof, (i) issue, sell or otherwise permit to
become outstanding, or authorize the creation of, any additional shares of
Company Stock or any Rights, (ii) enter into any agreement with respect to
the foregoing, or (iii) permit any additional shares of Company Stock to
become subject to new grants of employee or director stock options, other
Rights or similar stock-based employee rights. Without limiting the
foregoing, the Company will not issue or agree to issue any shares of
Company Stock or Rights under the Company's 1997 Amended Incentive Stock
Option Plan or the Company's 1997 Amended Employee Stock Purchase Plan
other than pursuant to Rights Previously Disclosed and outstanding on the
date hereof.
(c) Dividends, Etc. (i) Make, declare, pay or set aside for payment
any dividend, other than (A) subject to Section 4.03 hereof, regular
quarterly cash dividends on Company Common Stock in an amount not to exceed
$0.06 per share paid with record and payment dates consistent with past
practice and (B) dividends from wholly owned Subsidiaries to the Company or
another wholly owned Subsidiary of the Company, as applicable (in each case
having record and payment dates consistent with past practice), on or in
respect of, or declare or make any distribution on any shares of its
capital stock or (ii) directly or indirectly adjust, split, combine,
redeem, reclassify, purchase or otherwise acquire, any shares of its
capital stock.
(d) Compensation; Employment Agreements; Etc. Enter into, amend,
modify or renew any written employment, consulting, severance or similar
agreements or arrangements with any directors, officers, employees of, or
independent contractors with respect to, the Company or its Subsidiaries,
or grant any salary, wage or other increase or increase any employee
benefit (including incentive or bonus payments), except (i) for normal
individual increases in compensation to employees in the ordinary course of
business consistent with past practice, (ii) for other changes that are
required by applicable law, or (iii) to satisfy Previously Disclosed
obligations.
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(e) Benefit Plans. Enter into, establish, adopt, amend or modify any
pension, retirement, stock option, stock purchase, savings, profit sharing,
deferred compensation, consulting, bonus, group insurance or other employee
benefit, incentive or welfare contract, plan or arrangement, or any trust
agreement (or similar arrangement) related thereto, in respect of any
directors, officers, employees of, or independent contractors with respect
to, the Company or its Subsidiaries, including taking any action that
accelerates the vesting or exercisability of stock options, restricted
stock or other compensation or benefits payable thereunder, except, in each
such case, (i) as may be required by applicable law or (ii) to satisfy
Previously Disclosed obligations.
(f) Dispositions. Except (i) pursuant to Previously Disclosed
Investor Commitments existing on the date hereof or (ii) as otherwise
Previously Disclosed, (A) sell, transfer, mortgage, lease, encumber or
otherwise dispose of or discontinue any material portion of its assets,
business or properties; (B) sell, assign or otherwise transfer any rights
to service loans, other than servicing rights in respect of first mortgage
loans held by the Company or one of its Subsidiaries in its warehouse of
first mortgage loans originated by the Company or one of its Subsidiaries
(x) on a retail basis or (y) on a wholesale basis where such wholesale
loans are jumbo loans, adjustable rate mortgage loans, or other wholesale
mortgage loans registered with private investors, in each case where such
sales are in a manner consistent with past practice; or (C) except in the
ordinary course of business and in a manner consistent with past practice,
sell, transfer, lease or encumber any Loans.
(g) Acquisitions. Except (i) (A) pursuant to Previously Disclosed
contractual obligations existing on the date hereof, (B) the purchase or
repurchase of mortgage loans and/or loan servicing rights, (C) shortterm
investments for cash management purposes (including transactions that the
Company may enter into to utilize escrow balances), (D) pursuant to bona
fide hedging transactions, or (E) by way of foreclosures or otherwise in
satisfaction of debts previously contracted in good faith, in each case in
the ordinary and usual course of business consistent with past practice, or
(ii) as Previously Disclosed, neither the Company nor any of its
Subsidiaries will: (x) acquire any assets in any one transaction or a
series of related transactions for consideration in excess of $250,000 or
enter into any contract, agreement, commitment or arrangement with respect
thereto; or (y) acquire any servicing right in a "bulk" transaction.
(h) Governing Documents. Amend the Company Certificate, the Company
By-laws or the certificate of incorporation or by-laws (or similar
governing documents) of any of the Company's Subsidiaries.
(i) Accounting Methods. Implement or adopt any change in its
accounting principles, practices or methods, other than as may be required
by generally accepted accounting principles.
(j) Contracts. Except in the ordinary course of business consistent
with past practice, enter into or terminate any material Contract or amend
or modify in any material respect any of its existing material Contracts.
(k) Claims. Settle any claim, action or proceeding, except for any
claim, action or proceeding involving solely money damages in an amount,
individually or in the aggregate, that is not material to the Company and
its Subsidiaries, taken as a whole.
(l) Adverse Actions. (i) Take any action reasonably likely to prevent
or impede the Combination from qualifying as a reorganization within the
meaning of Section 368 of the Code; or (ii) knowingly take any action that
is intended or is reasonably likely to result in (A) any of its
representations and warranties set forth in this Agreement being or
becoming untrue in any material respect at any time at or prior to the
Effective Time, (B) any of the conditions to the Combination set forth in
Article VII not being satisfied or (C) a material breach of any provision
of this Agreement; except, in each case, as may be required by applicable
law.
(m) Risk Management; Loan Policies. Except as required by applicable
law or regulation, to comply with modifications of rules, regulations or
requirements imposed by any Agency and except (after prior consultation
with Acquiror) for changes required by the Company's or any of its
subsidiaries'
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traditional conduits for the sale of non-conventional loans: (i) implement
or adopt any material change in its interest rate risk management and
hedging (which term includes buying futures and forward commitments from
financial institutions) policies, procedures or practices; (ii) fail to
follow its existing policies or practices with respect to managing its
exposure to interest rate risk; (iii) fail to use commercially reasonable
means to avoid any material increase in its aggregate exposure to interest
rate risk against loans held in the Company's pipeline; or (iv) materially
alter its methods or policies of underwriting, pricing, originating,
warehousing, selling and servicing, or buying or selling rights to service
loans.
(n) Indebtedness. Incur any indebtedness for borrowed money other
than: (i) indebtedness used to fund or purchase mortgage Loans in the
ordinary course of business consistent with past practice; (ii) pursuant to
its "Warehouse Line of Credit Facility" (i.e., the Second Amended and
Restated Revolving Credit Agreement, dated as of January 23, 1996, with a
group of banks headed by The First National Bank of Chicago); and (iii)
indebtedness arising from repurchase agreements with FNMA, FHLMC and
investment banks and other financial institutions in the ordinary course of
business and consistent with past practice.
(o) Offices. Open any new branch offices, or close any existing
branch office for the retail origination of mortgage loans, except for
closures where (i) the term of such lease expires in 1997 and the Company
or its Subsidiary has not renewed such lease, (ii) the Company or its
Subsidiary had previously planned to close such branch office or (iii) such
closure is in the ordinary course of business and in a manner consistent
with past practice (in the case of (i) and (ii), as Previously Disclosed).
(p) Commitments. Agree or commit to do anything that would be
precluded by clauses (a) through (o) without first obtaining the Acquiror's
consent.
4.02 Forebearances of the Acquiror. From the date hereof until the
Effective Time, except as expressly contemplated by this Agreement, without the
prior written consent of the Company, the Acquiror will not, and will cause each
of its Subsidiaries not to:
(a) Ordinary Course. Conduct the business of the Acquiror and its
Subsidiaries other than in the ordinary and usual course; provided that
this Section 4.02(a) shall in no way affect the ability of the Acquiror or
its Subsidiaries to engage in any business, asset or deposit acquisition or
disposition, or merger, consolidation or other business combination
transaction.
(b) Adverse Actions. (i) Take any action reasonably likely to prevent
or impede the Combination from qualifying as a reorganization within the
meaning of Section 368 of the Code; or (ii) knowingly take any action that
is intended or is reasonably likely to result in (A) any of its
representations and warranties set forth in this Agreement being or
becoming untrue in any material respect at any time at or prior to the
Effective Time, (B) any of the conditions to the Combination set forth in
Article VII not being satisfied or (C) a material breach of any provision
of this Agreement; except, in each case, as may be required by applicable
law.
(c) Dividends, Etc. Make, declare, pay or set aside for payment any
dividend (other than, subject to Section 4.03 hereof, regular quarterly
cash dividends on Acquiror Common Stock and dividends from Subsidiaries to
the Acquiror or another Subsidiary of the Acquiror), on or in respect of,
or declare or make any distribution on any shares of its capital stock.
(d) Governing Documents. Amend the Acquiror Certificate or the
by-laws of Acquiror in a manner that would be materially adverse to the
holders of Acquiror Common Stock.
(e) Commitments. Agree or commit to do anything that would be
precluded by clauses (a) through (d) without first obtaining the Company's
consent.
4.03. Coordination of Dividends. Each of the Company and Acquiror shall
coordinate with the other regarding the declaration and payment of any dividends
in respect of the Company Common Stock and Acquiror Common Stock and the record
dates and the payment dates relating thereto, it being the intention of the
Company and Acquiror that holders of Company Common Stock shall not receive two
dividends, or fail to
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receive one dividend, for any single calendar quarter with respect to their
shares of Company Common Stock and/or any shares of Acquiror Common Stock that
any such holder receives in exchange therefor pursuant to the Combination.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.01 Disclosure Schedules. On or prior to the date hereof, the Company
has delivered to the Acquiror and the Acquiror (on behalf of itself, the Bank
and, in the event the Combination is effected by way of the Merger, Assigned
Sub) has delivered to the Company a schedule (respectively, its "Disclosure
Schedule") setting forth, among other things, items the disclosure of which is
necessary or appropriate either in response to an express disclosure requirement
contained in a provision hereof or as an exception to one or more
representations or warranties contained in Section 5.03 or 5.04, respectively,
or to one or more of its covenants contained in Article IV; provided, that (a)
no such item is required to be set forth in a Disclosure Schedule as an
exception to a representation or warranty if its absence would not result in the
related representation or warranty being deemed untrue or incorrect under the
standard established by Section 5.02, and (b) the mere inclusion of an item in a
Disclosure Schedule as an exception to a representation or warranty shall not be
deemed an admission by a party that such item (or any non-disclosed item or
information of comparable or greater significance) represents a material
exception or fact, event or circumstance or that such item is reasonably likely
to result in a Material Adverse Effect with respect to the Company or the
Acquiror, respectively.
5.02 Standard. No representation or warranty of the Company or the
Acquiror contained in Section 5.03 or 5.04 shall be deemed untrue or incorrect,
and no party hereto shall be deemed to have breached a representation or
warranty, as a consequence of the existence of any fact, event or circumstance
unless such fact, event or circumstance, individually or taken together with all
other facts, events or circumstances inconsistent with any representation or
warranty contained in Section 5.03 or 5.04 has had or is reasonably likely to
have a Material Adverse Effect with respect to the Company or the Acquiror,
respectively.
5.03 Representations and Warranties of the Company. Subject to Sections
5.01 and 5.02 and except as Previously Disclosed in a paragraph of its
Disclosure Schedule corresponding to the relevant paragraph below, the Company
hereby represents and warrants to the Acquiror and the Bank (and if the Plan of
Merger is entered into, from and after such date, to Assigned Sub):
(a) Organization, Standing and Authority. The Company is a
corporation, duly 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 the jurisdictions where its ownership or leasing
of property or assets or the conduct of its business requires it to be so
qualified.
(b) Company Stock. As of the date hereof, the authorized capital
stock of the Company consists solely of (i) 50,000,000 shares of Company
Common Stock, of which 13,986,899 shares are outstanding as of the date
hereof and (ii) 20,000,000 shares of Company Preferred Stock, of which
748,179 shares are outstanding (in the form of Company Convertible
Preferred Stock) as of the date hereof. As of the date hereof, 2,433,016
shares of Company Common Stock are held in treasury by the Company and
748,179 shares of Company Convertible Preferred Stock are otherwise owned
by the Company or its Subsidiaries (collectively, "Treasury Stock"). The
outstanding shares of Company Stock have been duly authorized and are
validly issued and outstanding, fully paid and nonassessable, and subject
to no preemptive rights (and were not issued in violation of any preemptive
rights). As of the date hereof, other than the Company Rights and except as
Previously Disclosed in its Disclosure Schedule, there are no shares of
Company Stock authorized and reserved for issuance, the Company does not
have any Rights issued or outstanding with respect to Company Stock, and
the Company does not have any commitment to authorize, issue or sell any
Company Stock or Rights, except pursuant to this Agreement. Since May 29,
1997, the Company has issued no shares of Company Stock or Rights or
reserved any shares for such purposes except pursuant to Previously
Disclosed plans or commitments. The number of shares of
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Company Stock which are issuable and reserved for issuance upon exercise of
Company Stock Options as of the date hereof are Previously Disclosed in the
Company's Disclosure Schedule.
(c) Subsidiaries. (i)(A) The Company has Previously Disclosed a list
of all its Subsidiaries together with the jurisdiction of organization of
each such Subsidiary, (B) the Company owns, directly or indirectly, all the
issued and outstanding equity securities of each of its Subsidiaries, (C)
no equity securities of any of its Subsidiaries are or may become required
to be issued (other than to it or its Subsidiaries) by reason of any
Rights, (D) there are no contracts, commitments, understandings or
arrangements by which any of such Subsidiaries is or may be bound to sell
or otherwise transfer any equity securities of any such Subsidiaries (other
than to it or its Subsidiaries), (E) there are no contracts, commitments,
understandings, or arrangements relating to its rights to vote or to
dispose of such securities (other than to it or its Subsidiaries), and (F)
all the equity securities of each such Subsidiary held by the Company or
its Subsidiaries are fully paid and nonassessable and are owned by the
Company or its Subsidiaries free and clear of any Liens.
(ii) The Company does not own beneficially, directly or indirectly,
any equity securities or similar interests of any person, or any
interest in a partnership or joint venture of any kind, other than its
Subsidiaries.
(iii) Each of the Company's Subsidiaries has been duly organized
and is validly existing and in good standing under the laws of the
jurisdiction of its organization, and is duly qualified to do business
and in good standing in all the jurisdictions where its ownership or
leasing of property or assets or the conduct of its business requires it
to be so qualified.
(d) Corporate Power. The Company and each of its Subsidiaries has
the corporate power and authority to carry on its business as it is now
being conducted and to own all its properties and assets; and the Company
has the corporate power and authority to execute, deliver and perform its
obligations under this Agreement and to consummate the transactions
contemplated hereby.
(e) Corporate Authority. Subject in the case of this Agreement to
adoption of the agreement of merger set forth in this Agreement by the
holders of at least a majority of the outstanding shares of Company Common
Stock entitled to vote thereon, this Agreement and the transactions
contemplated hereby have been authorized by all requisite corporate action
on the part of the Company. This Agreement is a valid and legally binding
obligation of the Company, enforceable in accordance with its terms (except
as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and similar laws of general
applicability relating to or affecting creditors' rights or by general
equity principles).
(f) Regulatory Filings; No Defaults. (i) No consents or approvals
of, or filings or registrations with, any Governmental Authority or with
any third party are required to be made or obtained by the Company or any
of its Subsidiaries in connection with the execution, delivery or
performance by the Company of this Agreement, or to consummate the
Combination except for (A) the filing of a notice under the HSR Act, (B)
filings of applications or notices with Previously Disclosed mortgage
banking licensing or supervisory authorities, (C) the filing with the SEC
of the Proxy Statement in definitive form, and (D) the filing of a
certificate of merger with the Secretary of State of the State of Delaware
pursuant to the DGCL (as contemplated by the Plan of Merger). As of the
date hereof, the Company is not aware of any reason why the approvals of
all Governmental Authorities necessary to permit consummation of the
transactions contemplated by this Agreement will not be received without
the imposition of a condition or requirement described in Section 7.01(b).
(ii) Subject to receipt of the regulatory approvals, and expiration
of the waiting periods, referred to in the preceding paragraph and the
making of required filings under federal and state securities laws, the
execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby and thereby do not
and will not (A) constitute a breach or violation of, or a default
under, or give rise to any Lien, any acceleration of remedies or any
right of termination under, any law, rule or regulation or any judgment,
decree, order, governmental permit
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or license, or Contract of the Company or of any of its Subsidiaries or
to which the Company or any of its Subsidiaries or properties is subject
or bound, (B) constitute a breach or violation of, or a default under,
the Company Certificate or the Company By-laws, or (C) require any
consent or approval under any such law, rule, regulation, judgment,
decree, order, governmental permit or license or Contract.
(g) SEC Documents; Financial Statements. (i) The Company's Annual
Reports on Form 10-K for the fiscal years ended December 31, 1994, 1995 and
1996, and all other reports, registration statements, definitive proxy
statements or information statements filed or to be filed by the Company or
any of its Subsidiaries subsequent to December 31, 1994 under the
Securities Act, or under Sections 13(a), 13(c), 14 or 15(d) of the Exchange
Act, in the form filed or to be filed (collectively, the "Company's SEC
Documents") with the SEC, as of the date filed, (A) complied or will comply
in all material respects as to form with the applicable requirements under
the Securities Act or the Exchange Act, as the case may be, and (B) did not
(or if amended or superseded by a filing prior to the date of this
Agreement, then as of the date of such filing) and will not contain any
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not
misleading; and each of the balance sheets contained in or incorporated by
reference into any such SEC Document (including the related notes and
schedules thereto) fairly presents, or will fairly present, the financial
position of the Company and its Subsidiaries as of its date, and each of
the statements of income and changes in stockholders' equity and cash flows
or equivalent statements in such SEC Documents (including any related notes
and schedules thereto) fairly presents, or will fairly present, the results
of operations, changes in stockholders' equity and changes in cash flows,
as the case may be, of the Company and its Subsidiaries for the periods to
which they relate, in each case in accordance with generally accepted
accounting principles consistently applied during the periods involved,
except in each case as may be noted therein, subject to normal year-end
audit adjustments in the case of unaudited statements.
(ii) Since December 31, 1996, on a consolidated basis the Company
and its Subsidiaries have not incurred any liability other than in the
ordinary course of business consistent with past practice.
(iii) Since December 31, 1996, (A) the Company and its Subsidiaries
have conducted their respective businesses in the ordinary and usual
course consistent with past practice (excluding the incurrence of
expenses related to this Agreement and the transactions contemplated
hereby) and (B) no event has occurred or circumstance arisen that,
individually or taken together with all other facts, events and
circumstances (described in any paragraph of Section 5.03 or otherwise),
is reasonably likely to have a Material Adverse Effect with respect to
the Company.
(iv) The Company has Previously Disclosed a list of all write-downs
of assets of the Company and its Subsidiaries since December 31, 1996,
including write-downs of interest participations, interest-only strips,
residual interest strips or originated loan servicing rights. To the
Company's knowledge, there are no other write-downs that the Company and
its Subsidiaries would be required to make to ensure that financial
statements prepared as of the end of the month in which the Effective
Date occurs fairly present the financial condition of the Company and
its Subsidiaries as of such date.
(h) Litigation. No litigation, claim or other proceeding before any
court or governmental agency is pending against the Company or any of its
Subsidiaries and, to the Company's knowledge, no such litigation, claim or
other proceeding has been threatened.
(i) Compliance with Laws. The Company and each of its Subsidiaries:
(i) in the conduct of its business, is in compliance with all
applicable federal, state, local and foreign statutes, laws,
regulations, ordinances, rules, judgments, orders or decrees applicable
thereto or to the employees conducting such businesses, including,
without limitation, the Equal Credit Opportunity Act, the Fair Housing
Act, the Home Mortgage Disclosure Act and all other applicable fair
lending laws and other laws relating to discriminatory business
practices;
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(ii) has all permits, licenses, authorizations, orders and
approvals of, and has made all filings, applications and registrations
with, all Governmental Authorities that are required in order to permit
them to own or lease their properties and to conduct their businesses as
presently conducted; all such permits, licenses, certificates of
authority, orders and approvals are in full force and effect and, to the
Company's knowledge, no suspension or cancellation of any of them is
threatened; and
(iii) has received, since December 31, 1995, no notification or
communication from any Governmental Authority (A) asserting that the
Company or any of its Subsidiaries is not in compliance with any of the
statutes, regulations, or ordinances that such Governmental Authority
enforces or (B) threatening to revoke any license, franchise, permit, or
governmental authorization (nor, to the Company's knowledge, do any
grounds for any of the foregoing exist).
(j) Material Contracts; Defaults. The Company has Previously
Disclosed a complete and accurate list of all material Contracts to which
the Company or any of its Subsidiaries is a party, including the following
categories:
(i) any Contract that (A) is not terminable at will both without
cost or other liability to the Company or any of its Subsidiaries and
upon notice of ninety (90) days or less and (B) which provides for fees
or other payments in excess of $150,000 per annum or in excess of
$300,000 for the remaining term of the Contract;
(ii) any Contract with a term beyond the Effective Time under which
the Company or any of its Subsidiaries created, incurred, assumed, or
guaranteed (or may create, incur, assume, or guarantee) indebtedness for
borrowed money (including capitalized lease obligations);
(iii) any Contract restricting the conduct of business by the
Company or any of its Subsidiaries;
(iv) any Contract to which the Company or any of its Subsidiaries
is a party, on the one hand, and under which any affiliate, officer,
director, employee or equity holder of any of the Company or any of its
Subsidiaries, on the other hand, is a party or beneficiary;
(v) any Contract between the Company or any of its Subsidiaries and
any insurance company which has authorized the Company or any of its
Subsidiaries to act as such insurance company's representative in the
sale, placement, writing or administration of insurance;
(vi) any Contract with respect to the employment of, or payment to,
any present or former directors, officers, employees or consultants;
(vii) any Contract involving the purchase or sale of assets with a
book value greater than $300,000 entered into since December 31, 1996;
and
(viii) any Contract with respect to a warehouse line of credit, any
Loan Servicing Agreement and any Investor Commitment.
Neither the Company nor any of its Subsidiaries nor, to the Company's knowledge,
any other party thereto is in default under any such Contract and there has not
occurred any event that, with the lapse of time or the giving of notice or both,
would constitute such a default.
(k) Properties. Except as reserved against in the financial
statements filed in its SEC Documents on or before the date hereof, the
Company and its Subsidiaries have good and marketable title, free and clear
of all Liens (other than Liens for current taxes not yet delinquent) to all
of the material properties and assets, tangible or intangible, reflected in
such financial statements as being owned by the Company and its
Subsidiaries as of the dates thereof. To the Company's knowledge, all
buildings and all fixtures, equipment, and other property and assets which
are material to its business on a consolidated basis and are held under
leases or subleases by any of the Company and its Subsidiaries are held
under valid leases or subleases enforceable in accordance with their
respective terms (except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other laws affecting
creditors' rights generally and to general equity principles).
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(l) Employee Benefit Plans. (i) The Company's Disclosure Schedule
contains a complete list of all bonus, vacation, deferred compensation,
pension, retirement, profit-sharing, thrift, savings, employee stock
ownership, stock bonus, stock purchase, restricted stock, stock
appreciation and stock option plans, all employment or severance contracts,
all medical, dental, disability, severance, health and life plans, all
other employee benefit and fringe benefit plans, contracts or arrangements
and any "change of control" or similar provisions in any plan, contract or
arrangement maintained or contributed to by the Company or any of its
Subsidiaries for the benefit of officers, former officers, employees,
former employees, directors, former directors, independent contractors or
the beneficiaries of any of the foregoing (collectively, the Company's
"Compensation and Benefit Plans"). Neither the Company Board nor any
executive officers of the Company or any of its Subsidiaries has taken or
initiated any formal action to create any additional material Compensation
and Benefit Plan or to modify or change any existing Compensation and
Benefit Plan in any material respect.
(ii) With respect to each Compensation and Benefit Plan, if
applicable, the Company has provided, made available, or will make
available upon request, to Acquiror, true and complete copies of
existing: (A) Compensation and Benefit Plan documents and amendments
thereto; (B) trust instruments and insurance contracts; (C) two most
recent Forms 5500 filed with the IRS; (D) the most recent actuarial
report and financial statement; (E) the most recent summary plan
description; (F) forms filed with the PBGC (other than for premium
payments); (G) the most recent determination letter issued by the IRS;
(H) any Form 5310 or Form 5330 filed with the IRS; and (I) the most
recent nondiscrimination tests performed under ERISA and the Code
(including 401(k) and 401(m) tests).
(iii) Each of the Company's Compensation and Benefit Plans has been
administered in accordance with the terms thereof and with applicable
law, including ERISA and the Code. Each of the Company's Compensation
and Benefit Plans which is an "employee pension benefit plan" within the
meaning of Section 3(2) of ERISA ("Pension Plan") and which is intended
to be qualified under Section 401(a) of the Code has received a
favorable determination letter from the IRS, and, except as Previously
Disclosed, the Company is not aware of any circumstances reasonably
likely to result in the revocation or denial of any such favorable
determination letter. Neither the Company nor any of its Subsidiaries
has engaged in a transaction, or omitted to take any action, with
respect to any Compensation and Benefit Plan that would reasonably be
expected to subject the Company or any of its Subsidiaries to a tax or
penalty imposed by either Section 4975 of the Code or Section 502 of
ERISA in an amount which would be material, assuming for purposes of
Section 4975 of the Code that the taxable period of any such transaction
expired as of the date hereof. There is no pending or, to the Company's
knowledge, threatened litigation or governmental audit, examination or
investigation relating to the Company's Compensation and Benefit Plans.
(iv) No liability under Title IV of ERISA (other than contributions
and premiums required in connection therewith) has been or is reasonably
expected to be incurred by the Company or any of its Subsidiaries with
respect to any "single-employer plan" (within the meaning of Section
4001 (a)(15) of ERISA) or Multiemployer Plan currently or formerly
maintained by any of them, or the single-employer plan or Multiemployer
Plan of any entity (an "ERISA Affiliate") which currently is or formerly
was considered one employer with the Company under Section 4001(a)(14)
of ERISA or Section 414(b) or (c) of the Code (an "ERISA Affiliate
Plan").
(v) Except as Previously Disclosed, all contributions, premiums and
payments required to have been made under the terms of any of the
Company's Compensation and Benefit Plans or applicable law have been
timely made or reflected in the Company's SEC Documents. Neither any of
the Company's Pension Plans nor ERISA Affiliate Plan has an "accumulated
funding deficiency" (whether or not waived) within the meaning of
Section 412 of the Code or Section 302 of ERISA. None of the Company,
any of its Subsidiaries or any ERISA Affiliate has provided, or is
required to provide, security to, nor are there any circumstances
requiring imposition of any lien on the assets of the Company or any of
its Subsidiaries with respect to, any Pension Plan or any ERISA
Affiliate
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Plan pursuant to ERISA or the Code. The Company's Disclosure Schedule
contains a list of all of the Company's ERISA Affiliate Plans.
(vi) Under each of the Company's Pension Plans and ERISA Affiliate
Plans, to the Company's knowledge, there has been no material adverse
change in the financial condition of any Pension Plan or ERISA Affiliate
Plan (with respect to either assets or benefits) since the last day of
the most recent plan year.
(vii) Except as Previously Disclosed, neither the Company nor any
of its Subsidiaries has any obligations under any Compensation and
Benefit Plan to provide benefits, including death or medical benefits,
with respect to any of their employees (or their spouses, beneficiaries,
or dependents) beyond the retirement or other termination of service of
any such employee other than (A) coverage mandated by Part 6 of Title I
of ERISA or Section 4980B of the Code, (B) retirement or death benefits
under any employee pension benefit plan (as defined under Section 3(2)
of ERISA), (C) disability benefits under any employee welfare plan that
have been fully provided for by insurance or otherwise, or (D) benefits
in the nature of severance pay.
(viii) Except as set forth in the Company's SEC Documents or as
Previously Disclosed, neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby
including, without limitation, as a result of any termination of
employment prior to or following the Effective Time, will (A) result in
any increase in compensation or any payment (including, without
limitation, severance, unemployment compensation, golden parachute or
otherwise) becoming due to any current or former director, officer or
employee of the Company or any of its Subsidiaries under any
Compensation and Benefit Plan or otherwise from the Company or any of
its Subsidiaries, (B) increase any benefits otherwise payable under any
Compensation and Benefit Plan, or (C) result in any acceleration of the
time of payment or vesting of any such benefit.
(ix) The Company and its Subsidiaries do not maintain any
Compensation and Benefit Plans covering foreign Employees who are not
residents of the United States.
(m) Labor Matters. Neither the Company nor any of its Subsidiaries
is a party to or is bound by any collective bargaining Contract or
understanding with a labor union or labor organization, nor is the Company
or any of its Subsidiaries the subject of a proceeding asserting that it or
any such Subsidiary has committed an unfair labor practice (within the
meaning of the National Labor Relations Act) or seeking to compel the
Company or any such Subsidiary to bargain with any labor organization as to
wages or conditions of employment, nor is there any strike or other labor
dispute involving it or any of its Subsidiaries pending or, to the
Company's knowledge, threatened, nor is the Company aware of any activity
involving it or any of its Subsidiaries' employees seeking to certify a
collective bargaining unit or engaging in other organizational activity.
(n) Takeover Laws. The Company has taken all action required to be
taken by it in order to exempt this Agreement and the transactions
contemplated hereby from, and this Agreement and the transactions
contemplated hereby are exempt from, the requirements of any "moratorium,"
"control share," "fair price" or other antitakeover laws and regulations of
any state (collectively, "Takeover Laws"), including, without limitation
the State of Delaware, including Section 203 of the DGCL, assuming the
accuracy of the representations contained in Section 5.04(l) (without
giving effect to the knowledge qualification thereof).
(o) Company Rights Agreement. There has occurred no "Distribution
Date" or "Stock Acquisition Date" (as defined in the Company Rights
Agreement). The Company and the Rights Agent will have, no later than the
first business day after the date hereof, duly and validly amended the
Company Rights Agreement, by executing and delivering an amendment in
substantially the form of Exhibit B.
(p) Environmental Matters. (i) The Company and each of its
Subsidiaries has complied at all times with applicable Environmental Laws;
(ii) no property (including buildings and any other structures) currently
or formerly owned or operated by the Company or any of its Subsidiaries or
in which the Company or any of its Subsidiaries has a Lien, has been
contaminated with, or has had any release of,
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any Hazardous Substance except as Previously Disclosed; (iii) neither the
Company nor any of its Subsidiaries would reasonably be expected to be
ruled to be the owner or operator under any Environmental Law of any
property in which it has currently or formerly held a Lien; (iv) neither
the Company nor any of its Subsidiaries is subject to liability for any
Hazardous Substance disposal or contamination on any other third-party
property; (v) neither the Company nor any of its Subsidiaries has received
any notice, demand letter, claim or request for information alleging any
violation of, or liability under, any Environmental Law; (vi) neither the
Company nor any of its Subsidiaries is subject to any order, decree,
injunction or other agreement with any Governmental Authority or any third
party relating to any Environmental Law; (vii) the Company, which does not
perform an environmental review of the mortgaged property at the time of
Loan Origination, is not aware of any circumstances or conditions involving
the Company or any of its Subsidiaries, any currently or formerly owned or
operated property, or any Lien held by the Company or any of its
Subsidiaries (including the presence of asbestos, underground storage
tanks, lead products, polychlorinated biphenyls or gas station sites) that
would reasonably be expected to result in any claims, liability or
investigations or result in any restrictions on the ownership, use, or
transfer of any property pursuant to any Environmental Law; and (viii) the
Company has delivered to the Acquiror copies of all environmental reports,
studies, sampling data, correspondence, filings and other environmental
information in its possession or reasonably available to it relating to the
Company, any of its Subsidiaries, any currently or formerly owned or
operated property or any property in which the Company or any of its
Subsidiaries has held a Lien.
(q) Tax Matters. (i) All returns, declarations, reports, estimates,
information returns and statements required to be filed on or before the
Effective Date under federal, state, local or any foreign tax laws ("Tax
Returns") with respect to the Company or any of its Subsidiaries, have been
or will be timely filed, or requests for extensions have been timely filed
and have not expired; (ii) all Tax Returns filed by the Company are
complete and accurate; (iii) all Taxes shown to be due and payable (without
regard to whether such Taxes have been assessed) on such Tax Returns have
been paid or adequate reserves have been established for the payment of
such Taxes; and (iv) no audit or examination or refund litigation with
respect to any Tax Return is pending or, to the Company's knowledge, has
been threatened.
(r) Risk Management. All swaps, caps, floors, option agreements,
futures and forward contracts and other similar risk management
arrangements, whether entered into for the Company's own account, or for
the account of one or more of the Company's Subsidiaries or their
customers, were entered into (i) in accordance with prudent business
practices and all applicable laws, rules, regulations and regulatory
policies and (ii) with counterparties believed to be financially
responsible at the time; and each of them constitutes the valid and legally
binding obligation of the Company or one of its Subsidiaries, enforceable
in accordance with its terms (except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer and similar laws of general applicability relating to or affecting
creditors' rights or by general equity principles), and are in full force
and effect. Neither the Company nor its Subsidiaries, nor to the Company's
knowledge any other party thereto, is in breach of any of its obligations
under any such agreement or arrangement.
(s) Names and Trademarks. The Company (or one of its Subsidiaries)
has the right to use the names, service-marks and trademarks Previously
Disclosed in Section 5.03(s) of its Disclosure Letter in each state of the
United States, free and clear of any Liens, and no other person has the
right to use such name in any such state.
(t) Mortgage Banking Business. (i) Licenses and Qualifications. The
Company (or any Subsidiary of it that services or originates Loans, as the
case may be) (A) is an approved (1) HUD mortgagee and servicer for
FHA-insured loans, (2) lender and servicer for VA-insured loans, (3)
seller/servicer of one-to-four-family first and second mortgages for FNMA
and FHLMC and (4) GNMA issuer and servicer of GNMA-guaranteed
mortgage-backed securities, (B) has all other certifications,
authorizations, licenses, permits and other approvals necessary to conduct
its current business, (C) is in good standing under all applicable federal,
state and local laws and regulations thereunder as a lender and servicer
and (D) is in good standing with all authorities and servicers for the
state bond programs in which it participates. As of the date hereof, there
is no pending or, to the Company's knowledge,
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threatened cancellation or reduction of any Investor Commitment or other
loan sale Contract to which the Company or any of its Subsidiaries is a
party, and the obligations of the Company and each of its Subsidiaries
under each such Contract are being performed by the Company or such
Subsidiary, as the case may be, in accordance with its terms. The Company
has no reason to believe that the underwriting waivers from FNMA and FHLMC,
under current agreements with the Company, will be restricted or rescinded,
or that the guarantee fees payable to FNMA and FHLMC will be increased as a
result of the Company's or its Subsidiaries' credit performance, or that
the Company or its Subsidiaries will suffer a forced reduction of the
master commitment amount relating to FNMA or FHLMC purchases or swaps of
loans, nor has any such restriction, rescission, increase or reduction
occurred at any time since December 31, 1995.
(ii) Title to Loans. All loans held for the Company's account,
whether or not for future sale or delivery to an investor (the
"Warehouse Loans"), are owned by the Company free and clear of any Lien,
other than Liens in favor of the Company's lender banks pursuant to
warehouse lines of credit and forward sale commitments or similar
agreements to sell any such loans to investors in the ordinary course,
and all Warehouse Loans meet all requirements for sale to the intended
investors. Each mortgage or deed of trust securing a Warehouse Loan has
been duly recorded or submitted for recordation in due course in the
appropriate filing office in the name of the Company or one of its
Subsidiaries as mortgagee. Neither the Company nor any of its
Subsidiaries has released any security for any Warehouse Loan, except
upon receipt of reasonable consideration for such release (as documented
in the applicable Loan file), or accepted prepayment of any such
Warehouse Loan which has not been promptly applied to such Warehouse
Loan.
(iii) Compliance. Each Warehouse Loan and each loan which is
being serviced by the Company or one of its Subsidiaries for the account
of others (the "Serviced Loans", and together with the Warehouse Loans,
the "Loans") was underwritten and originated, and the loan documents and
loan files maintained by the Company or its Subsidiaries with respect
thereto are being maintained by the Company or such Subsidiaries, in
compliance with all applicable laws and regulations and, if applicable,
the requirements of the Investor acquiring such Loan (or, if there is no
such Investor, in accordance with the Company's underwriting standards
then in effect) and the requirements of each Insurer of such Loan (if
any) in effect and applicable at the time such insurance was obtained.
The Company and its Subsidiaries have not done or failed to do, or
caused to be done or omitted to be done, any act, the effect of which
would operate to invalidate or materially impair (i) any approvals of
any Agency or the FHA to insure, (ii) any VA guarantee or commitment of
the VA to guarantee, (iii) any private mortgage insurance or commitment
of any private mortgage insurer to insure, (iv) any title insurance
policy, (v) any hazard insurance policy, (vi) any flood insurance
policy, (vii) any fidelity bond, direct surety bond, errors and
omissions or other insurance policy required by any Agency, Investor or
Insurer, (viii) any surety or guaranty agreement, (ix) any guaranty
issued by GNMA, FNMA or FHLMC to the Company or any of its Subsidiaries
respecting mortgage backed securities issued by the Company or any of
its Subsidiaries and other like guarantees or (x) the rights of the
Company or any of its Subsidiaries under any Loan Servicing Agreement or
Investor Commitment. No Agency, Investor or Insurer has (i) claimed that
the Company or any of its Subsidiaries have violated or have not
complied on a recurring basis with the applicable underwriting standards
with respect to Loans sold by the Company or any of its Subsidiaries to
an Investor or (ii) imposed restrictions on the activities (including
commitment authority) of the Company or any of its Subsidiaries.
(iv) Loan Files. The loan documents relating to a Loan maintained
in the loan files of the Company and its Subsidiaries were in compliance
with all applicable laws and regulations at the time of the origination,
assumption or modification of such Loan, as the case may be. The loan
files maintained by the Company and its Subsidiaries contain originals
(or, where necessitated by the terms of the applicable mortgage
servicing agreements, contain true, correct and complete copies) of the
documents relating to each Loan and the information contained in such
loan files with respect to each such Loan is true, complete and accurate
and in compliance with all applicable laws and
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regulations. Except as set forth in the loan documents relating to a
Loan maintained in the loan files of the Company or its Subsidiaries,
the terms of the note, bond, deed of trust and mortgage for each such
Loan have not been impaired, waived, altered or modified in any respect
from the date of their origination except by a written instrument which
written instrument has been recorded, or submitted for recordation in
due course, if recordation is necessary to protect the interests of the
owner thereof. The substance of any such waiver, alteration or
modification has been communicated to and approved by (A) the relevant
Investor and Insurer (if any), to the extent required by the relevant
Investor and Insurer requirements, and (B) the title Insurer, to the
extent required by the relevant policies, and the terms of any such
waiver, alteration or modification are reflected in the loan documents.
Except as set forth in the loan documents maintained in the loan files
by the Company or its Subsidiaries, no mortgagor has been released from
such mortgagor's obligations with respect to the applicable Loan.
(v) Loan Servicing Agreements. All of the Contracts pursuant to
which the Company or any of its Subsidiaries has the right and/or
obligation to service loans (each, a "Loan Servicing Agreement") are (A)
valid and binding obligations of the Company or such Subsidiary, and to
the knowledge of the Company, of all the other parties thereto, (B) in
full force and effect, (C) enforceable in accordance with their terms
(except where enforcement thereof may be limited by bankruptcy,
insolvency or other similar laws affecting the enforcement of creditors'
rights generally and by general equity principles) and (D) owned by the
Company or such Subsidiary free and clear of any Lien, except pursuant
to the loan and security agreements Previously Disclosed in the
Company's Disclosure Schedule. There is no default by the Company or any
of its Subsidiaries or claim of default against the Company or any of
its Subsidiaries by any party under any such Loan Servicing Agreement,
and, except for the consummation of the transactions contemplated by
this Agreement, no event has occurred which with the passage of time or
the giving of notice or both would constitute a default by any party
under any such Loan Servicing Agreement or would result in any such
mortgage servicing agreement being terminable by any party thereto.
There is no pending or, to the knowledge of the Company, threatened
cancellation of any Loan Servicing Agreement and the obligations of the
Company or any of its Subsidiaries under each Loan Servicing Agreement
are being performed by the Company or such Subsidiary in accordance with
the terms of such Agreement and applicable rules or regulations. The
Company and its Subsidiaries are not subservicers with respect to any of
the Serviced Loans.
(vi) No Recourse. None of the Company's or any of its
Subsidiaries' servicing rights are subject to recourse against the
servicer, and none of the Company or any of its Subsidiaries is subject
to recourse in connection with any Loans sold by it, in each case for
losses on liquidation of a loan, borrower defaults or repurchase
obligations upon the occurrence of non-payment or other events, other
than events entitling Investors to request a repurchase of a loan
because of alleged breaches of customary representations and warranties
relating to the origination or servicing thereof.
(vii) Escrow Account. Unless otherwise prohibited by law or an
executed escrow waiver, the Company or its Subsidiaries collect all
escrows related to the Loans, and all escrow accounts have been
maintained by the Company, its Subsidiaries and, to the Company's
knowledge, all prior servicers in accordance with the related loan
documents, all applicable laws, rules, regulations, and requirements of
Investors, Insurers and Governmental Authorities, and in accordance with
the applicable Loan Servicing Agreements. The Company has credited to
the account of borrowers all interest required to be paid on any escrow
account in accordance with applicable law and the terms of such
agreements and loan documents. All escrow, custodial, and suspense
accounts related to the Loans are held in the Company's (or
Subsidiary's) name or the investor's name by the Company.
(viii) Advances. There are no servicing or other Contracts to
which the Company or any of its Subsidiaries is a party which obligates
any of them to make servicing advances for principal and interest
payments with respect to defaulted or delinquent Loans other than in a
manner as provided in standard and customary agreements with FNMA, FHLMC
or GNMA. To the extent made, any
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such advances are valid and subsisting amounts owing to the Company or
its Subsidiary, as the case may be, subject to the terms of the
applicable Loan Servicing Agreement.
(ix) Single Family Loans. All of the Loans are secured by single
family (i.e., one to four family) residential real property or, to the
extent that a Loan is secured by property other than a single family
residential property, such Loan is not a Warehouse Loan and has not been
sold to any person where either the Company or any of its Subsidiaries
has any recourse obligation.
(x) ARM Adjustments. With respect to each Loan for which the
interest rate is not fixed for the entire term of the loan, the Company
or its Subsidiaries, as the case may be, has, since the date it
commenced servicing such loan and, to the Company's knowledge, all prior
servicers have (A) properly and accurately entered into its system all
data required to service the loan in accordance with the related loan
documents and all regulations, (B) properly and accurately adjusted the
monthly payment on each payment adjustment date, (C) properly and
accurately calculated the amortization of principal and interest on each
payment adjustment date, in each case in compliance with all applicable
laws, rules and regulations and the related loan documents, and (D)
executed and delivered any and all necessary notices required under, and
in a form that complies with, all applicable laws, rules and regulations
and the terms of the related loan documents regarding the interest rate
and payment adjustments.
(xi) Pools. Each Loan included in a Pool meets all eligibility
requirements (including, without limitation, all applicable requirements
for obtaining mortgage insurance certificates and loan guaranty
certificates) for inclusion in such Pool. All of such Pools have been
finally certified or, if required, recertified in accordance with all
applicable laws, rules and regulations, except where the time for
certification or recertification has not expired. No Pools have been
improperly certified. The loan file for each Loan included in a Pool
contains all documents and instruments necessary for the final
certification or recertification of such Pool. No Loan has been bought
out of a Pool without all required prior written approvals of the
applicable Investors. Neither the execution, delivery or performance of
this Agreement by the Company nor the consummation by the Company of the
transactions contemplated hereby will require any Pool to be
recertified. The aggregate unpaid principal balance outstanding of the
Loans in each Pool equals or exceeds the amount owing to the applicable
Investors.
(xii) Securitization Transactions.
(A) The Company and each of its Subsidiaries, as servicer under
the applicable Loan Servicing Agreement, (the "Securitization
Servicer") of each outstanding transaction under which the Company or
any of its Subsidiaries have sold or pledged Loans in a
securitization, whether sold under the Securities Act or otherwise (a
"Securitization Transaction"), has complied in all material respects
with all Contracts, including the Loan Servicing Agreements, and all
conditions to be performed or satisfied by it with respect to all
agreements and arrangements pursuant to which such person is bound
under such Securitization Transaction (collectively, "Securitization
Instruments").
(B) No Securitization Servicer or, to the Company's knowledge,
no trustee or issuer with respect to any Securitization has taken any
action which would reasonably be expected to adversely affect the
characterization or tax treatment for federal, state or local income
or franchise tax purposes of the issuer or any securities issued in a
Securitization Transaction, and all required federal, state and local
tax and information returns relating to any Securitization
Transaction have been properly filed.
(C) Each representation and warranty made by the Company or any
of its Subsidiaries in each "Purchase Agreement," "Pooling and
Servicing Agreement," "Placement Agency Agreement," "Servicer's
Indemnification Agreement" and any other Securitization Instrument to
which any of them was a party in any Securitization Transaction was
true and correct in all material respects whenever made or reaffirmed
by any of them and the Company and each of its
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Subsidiaries have each fully performed and carried out each covenant
and agreement made by any of them in any such Securitization
Instrument.
(D) No rating agency has downgraded, or given the Company or any
of its Subsidiaries any indication that it is considering a
downgrading of any securities issued in any Securitization
Transaction, or of its rating of any Securitization Servicer.
(xiii) Mortgage Insurance. Each Loan which is indicated in the
related loan documents to have FHA insurance is insured under the
National Housing Act or qualifies for such insurance. Each Loan which is
indicated in the related loan documents to be guaranteed by the VA is
guaranteed under the provisions of Chapter 37 of Title 38 of the United
States Code to the extent required by the applicable Investor or
qualifies for such guarantee. As to each FHA insurance certificate, each
VA guarantee certificate, and each Loan which is indicated in the
related loan file to be insured by private mortgage insurance, the
Company has complied with applicable provisions of the insurance or
guarantee contract and applicable laws and regulations, the insurance or
guarantee is in full force and effect with respect to each such Loan,
and to the knowledge of the Company, there does not exist any event or
condition which, but for the passage of time or the giving of notice or
both, can result in a revocation of any such insurance or guarantee or
constitute adequate grounds for the applicable Insurer to refuse to
provide insurance or guarantee payments thereunder.
(xiv) Taxes and Insurance. Each Loan has been covered by a policy
of hazard insurance and flood insurance, to the extent required by the
Loan Servicing Agreements relating thereto or any laws, rules,
regulations or Investor or Insurer requirements applicable to such Loan,
all in a form usual and customary in the industry and which is in full
force and effect, and all amounts due and payable under each policy have
been, or will be, paid prior to the date such payments are due; and all
taxes, assessments, ground rents or other applicable charges or fees due
and payable as to each Loan have been, or will be, paid prior to the
date such payments are due. Any and all claims under such insurance
policies have been submitted and processed in accordance with the
applicable Investor's and Insurer's requirements. Such insurance
policies name the Company (or a Subsidiary of it) and its successors and
assigns as mortgagee.
(xv) Title Insurance. To the extent required by the applicable
Investor, each Loan is covered by an ALTA lender's title insurance
policy or other generally acceptable form of policy of insurance
acceptable to the relevant Investor, and each such title insurance
policy is issued by an Insurer acceptable to the applicable Investor and
qualified to do business in the jurisdiction where the collateral
securing such Loan is located, and insures the originator and its
successors and assigns as to the first priority lien of the mortgage in
the original principal amount of the Loan (or, in the case of a second
mortgage, the second priority lien). The applicable Investor, as
assignee of the originator's rights, is an insured of such lender's
title insurance policy, and such lender's policy is in full force and
effect. Neither the Company nor, to the Company's knowledge, any prior
servicer has performed any act or omission which would impair the
coverage of such lender's policy.
(xvi) Condemnation. The Company has no notice of and has no
knowledge of any proceeding pending or threatened for the partial or
total condemnation of any of the collateral securing any of the Loans,
and the Company has no notice or knowledge that all or any part of such
collateral has been or will be condemned.
(xvii) Tape. The Company has previously delivered to the Acquiror
a tape (magnetic media) on which certain information regarding the
servicing portfolio of the Company and its Subsidiaries as of May 31,
1997 is recorded. Such tape completely and accurately contains the list
of serviced loans as of such date. The loan characteristics recorded on
such tape have been Previously Disclosed, and the information contained
on such tape is complete and accurate.
(u) Books and Records. The books and records of the Company and its
Subsidiaries have been fully, properly and accurately maintained in all
material respects, and there are no material inaccuracies or discrepancies
of any kind contained or reflected therein, and they fairly present the
financial position of
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the Company and its Subsidiaries. None of the records, systems, controls,
data or information of the Company and its Subsidiaries are recorded,
stored, maintained, operated or otherwise wholly or partly dependent on or
held by any means (including any electronic, mechanical or photographic
process, whether computerized or not) which (including all means of access
thereto and therefrom) are not under the exclusive ownership and direct
control of the Company or its Subsidiaries or accountants retained by the
Company or its Subsidiaries.
(v) Insurance. The Company's Disclosure Schedule sets forth all of
the insurance policies, binders, or bonds maintained by the Company or its
Subsidiaries ("Insurance Policies"). The Company and its Subsidiaries are
insured with reputable insurers against such risks and in such amounts as
the management of the Company reasonably has determined to be prudent in
accordance with industry practices. All of the Insurance Policies are in
full force and effect; the Company and its Subsidiaries are not in material
default thereunder; and all claims thereunder have been filed in due and
timely fashion.
(w) No Brokers. No action has been taken by the Company that would
give rise to any valid claim against any party hereto for a brokerage
commission, finder's fee or other like payment with respect to the
transactions contemplated by this Agreement, excluding a fee to be paid by
the Company to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated in an amount and on terms
Previously Disclosed.
(x) Ownership of Acquiror Common Stock. As of the date hereof,
neither the Company nor, to its knowledge, any of its affiliates or
associates (as such terms are defined under the Exchange Act) (i)
beneficially owns, directly or indirectly, or (ii) is party to any
agreement, arrangement or understanding for the purpose of acquiring,
holding, voting or disposing of, in each case, any outstanding shares of
Acquiror Common Stock (other than shares held in a bona fide fiduciary
capacity or in satisfaction of a debt previously contracted in good faith).
(y) Disclosure. The representations and warranties contained in this
Section 5.03 do not contain any untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements
contained in this Section 5.03, in the light of the circumstances in which
they are being made, not misleading. The copies of all documents furnished
to the Acquiror and the Bank (and, if the Plan of Merger is entered into,
to Assigned Sub) hereunder are true and complete copies of the originals
thereof.
5.04 Representations and Warranties of the Acquiror. Subject to Sections
5.01 and 5.02 and except as Previously Disclosed in a paragraph of its
Disclosure Schedule corresponding to the relevant paragraph below, the Acquiror
hereby represents and warrants to the Company as follows:
(a) Organization, Standing and Authority. Each of the Acquiror and
the Bank (and, if the Plan of Merger is entered into, from and after the
date thereof, Assigned Sub) is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization, and each
is duly qualified to do business and is in good standing in the
jurisdictions where its ownership or leasing of property or assets or the
conduct of its business requires it to be so qualified.
(b) Acquiror Stock. (i) As of the date hereof, the authorized
capital stock of the Acquiror consists solely of 200,000,000 shares of
Acquiror Common Stock, of which 103,726,095 shares were outstanding as of
May 31, 1997, and 40,000,000 shares of Acquiror Preferred Stock, of which
no shares are outstanding as of the date hereof. As of the date hereof,
other than the Acquiror Rights and except as set forth in its Disclosure
Schedule, there are no shares of Acquiror Stock authorized and reserved for
issuance, the Acquiror does not have any Rights issued or outstanding with
respect to Acquiror Stock, and the Acquiror does not have any commitment to
authorize, issue or sell any Acquiror Stock or Rights, except pursuant to
this Agreement. The number of shares of Acquiror Common Stock which are
issuable and reserved for issuance upon exercise of any employee or
director stock options to purchase shares of Acquiror Common Stock, and the
number and terms of any Rights, as of the date hereof, are Previously
Disclosed in the Acquiror's Disclosure Schedule.
(ii) The shares of Acquiror Common Stock to be issued as Merger
Consideration, when issued in accordance with the terms of this Agreement,
will be duly authorized, validly issued, fully paid and nonassessable.
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(c) Subsidiaries. Each of the Acquiror's Significant Subsidiaries
has been duly organized and is validly existing and in good standing under
the laws of the jurisdiction of its organization, and is duly qualified to
do business and in good standing in the jurisdictions where its ownership
or leasing of property or the conduct of its business requires it to be so
qualified.
(d) Corporate Power. The Acquiror and each of its Significant
Subsidiaries has the corporate power and authority to carry on its business
as it is now being conducted and to own all its properties and assets; each
of the Acquiror and the Bank has the corporate power and authority to
execute, deliver and perform its obligations under this Agreement and to
consummate the transactions contemplated hereby; and, if the Plan of Merger
is entered into, from and after the date thereof, the Assigned Sub will
have the corporate power and authority to execute, deliver and perform its
obligations under the Plan of Merger and to consummate the transactions
contemplated hereby.
(e) Corporate Authority. This Agreement and the transactions
contemplated hereby have been authorized by all requisite corporate action
on the part of Acquiror and the Bank, and, if the Plan of Merger is entered
into, from and after the date thereof, the Plan of Merger and the
transactions contemplated thereby will have been authorized by all
requisite corporate action on the part of Assigned Sub. This Agreement is a
valid and legally binding agreement of each of the Acquiror and the Bank,
and, if the Plan of Merger is entered into, from and after the date
thereof, the Plan of Merger will be a valid and legally binding agreement
of Assigned Sub, in each case enforceable in accordance with its terms
(except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer and similar
laws of general applicability relating to or affecting creditors' rights or
by general equity principles).
(f) Regulatory Approvals; No Defaults. (i) No consents or approvals
of, or filings or registrations with, any Governmental Authority or with
any third party are required to be made or obtained by the Acquiror or any
of its Subsidiaries in connection with the execution, delivery or
performance by the Acquiror or the Bank of this Agreement or to consummate
the Combination (and, if the Plan of Merger is entered into, by Assigned
Sub of the Plan of Merger or to consummate the Merger) except for (A) the
filing of a notice under the HSR Act, (B) the filing of applications and
notices, as applicable, with the OTS and the FDIC; (C) approval of the
listing on the NYSE of the Acquiror Common Stock to be issued in the
Combination (and related Acquiror Rights); (D) the filing and declaration
of effectiveness of the Registration Statement; (E) the filing of a
certificate of merger with the Secretary of State of the State of Delaware
pursuant to the DGCL (as provided in the Plan of Merger); and (F) such
filings as are required to be made or approvals as are required to be
obtained under the securities or "Blue Sky" laws of various states in
connection with the issuance of Acquiror Common Stock in the Combination.
As of the date hereof, the Acquiror is not aware of any reason why the
approvals of all Governmental Authorities necessary to permit consummation
of the transactions contemplated hereby will not be received without the
imposition of a condition or requirement described in Section 7.01(b).
(ii) Subject to receipt of the regulatory approvals, and expiration of
the waiting periods, referred to in the preceding paragraph and the making
of all required filings under federal and state securities laws, the
execution, delivery and performance of this Agreement and the consummation
of the transactions contemplated hereby do not and will not (A) constitute
a breach or violation of, or a default under, or give rise to any Lien, any
acceleration of remedies or any right of termination under, any law, rule
or regulation or any judgment, decree, order, governmental permit or
license, or Contract of the Acquiror or of any of its Subsidiaries or to
which the Acquiror or any of its Subsidiaries or properties is subject or
bound, (B) constitute a breach or violation of, or a default under, the
certificate of incorporation or by-laws (or similar governing documents) of
the Acquiror or any of its Subsidiaries, or (C) require any consent or
approval under any such law, rule, regulation, judgment, decree, order,
governmental permit or license, agreement, indenture or instrument.
(g) SEC Documents; Financial Statements. (i) The Acquiror's Annual
Reports on Form 10-K for the fiscal years ended December 31, 1994, 1995 and
1996, and all other reports, registration statements, definitive proxy
statements or information statements filed or to be filed by the Acquiror
or
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any of its Subsidiaries subsequent to December 31, 1994 under the
Securities Act, or under Sections 13(a), 13(c), 14 or 15(d) of the Exchange
Act, in the form filed or to be filed (collectively, the "Acquiror's SEC
Documents") with the SEC, as of the date filed, (A) complied or will comply
in all material respects as to form with the applicable requirements under
the Securities Act or the Exchange Act, as the case may be, and (B) did not
(or if amended or superseded by a filing prior to the date of this
Agreement, then as of the date of such filing) and will not contain any
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not
misleading; and each of the balance sheets contained in or incorporated by
reference into any such SEC Document (including the related notes and
schedules thereto) fairly presents, or will fairly present, the financial
position of the Acquiror and its Subsidiaries as of its date, and each of
the statements of income and changes in stockholders' equity and cash flows
or equivalent statements in such SEC Documents (including any related notes
and schedules thereto) fairly presents, or will fairly present, the results
of operations, changes in stockholders' equity and changes in cash flows,
as the case may be, of the Acquiror and its Subsidiaries for the periods to
which they relate, in each case in accordance with generally accepted
accounting principles consistently applied during the periods involved,
except in each case as may be noted therein, subject to normal year-end
audit adjustments in the case of unaudited statements.
(ii) Since December 31, 1996, on a consolidated basis the Acquiror and
its Subsidiaries have not incurred any liability other than in the ordinary
course of business consistent with past practice.
(iii) Since December 31, 1996, no event has occurred or circumstance
arisen that, individually or taken together with all other facts,
circumstances and events (described in any paragraph of Section 5.04 or
otherwise), is reasonably likely to have a Material Adverse Effect with
respect to the Acquiror.
(h) Litigation; Regulatory Action. (i) Other than as set forth in
its SEC Documents filed on or before the date hereof, no litigation, claim
or other proceeding before any Governmental Authority is pending against
the Acquiror or any of its Subsidiaries and, to the Acquiror's knowledge,
no such litigation, claim or other proceeding has been threatened.
(ii) Neither the Acquiror nor any of its Subsidiaries or properties is
a party to or is subject to any order, decree, agreement, memorandum of
understanding or similar arrangement with, or a commitment letter or
similar submission to, or extraordinary supervisory letter from the FDIC or
the OTS, nor has the Acquiror or any of its Subsidiaries been advised by
the FDIC or the OTS that such agency is contemplating issuing or requesting
(or is considering the appropriateness of issuing or requesting) any such
order, decree, agreement, memorandum of understanding, commitment letter,
supervisory letter or similar submission.
(i) Compliance with Laws. The Acquiror and each of its Subsidiaries:
(i) in the conduct of its business, is in compliance with all
applicable federal, state, local and foreign statutes, laws,
regulations, ordinances, rules, judgments, orders or decrees applicable
thereto or to the employees conducting such businesses, including,
without limitation, the Equal Credit Opportunity Act, the Fair Housing
Act, the Community Reinvestment Act, the Home Mortgage Disclosure Act
and all other applicable fair lending laws and other laws relating to
discriminatory business practices;
(ii) has all permits, licenses, authorizations, orders and
approvals of, and has made all filings, applications and registrations
with, all Governmental Authorities that are required in order to permit
them to conduct their businesses substantially as presently conducted;
all such permits, licenses, certificates of authority, orders and
approvals are in full force and effect and, to the best of its
knowledge, no suspension or cancellation of any of them is threatened;
and
(iii) has received, since December 31, 1995, no notification or
communication from any Governmental Authority (A) asserting that the
Acquiror or any of its Subsidiaries is not in compliance with any of the
statutes, regulations or ordinances that such Governmental Authority
enforces; (B) threatening to revoke any license, franchise, permit or
governmental authorization or
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(C) threatening or contemplating revocation or limitation of, or which
would have the effect of revoking or limiting, the FDIC deposit
insurance of the Bank (nor, to the Acquiror's knowledge, do any grounds
for any of the foregoing exist).
(j) No Brokers. No action has been taken by the Acquiror that would
give rise to any valid claim against any party hereto for a brokerage
commission, finder's fee or other like payment with respect to the
transactions contemplated by this Agreement, excluding a fee to be paid by
the Acquiror to Salomon Brothers Inc.
(k) Employee Benefit Plans. (i) Each of the Acquiror's Compensation
and Benefit Plans has been administered in accordance with the terms
thereof and with applicable law, including ERISA and the Code. Each of the
Acquiror's Pension Plans which is intended to be qualified under Section
401(a) of the Code has received a favorable determination letter from the
IRS, and, except as Previously Disclosed, the Acquiror is not aware of any
circumstances reasonably likely to result in the revocation or denial of
any such favorable determination letter. There is no pending or, to the
Acquiror's knowledge, threatened litigation or governmental audit,
examination or investigation relating to the Acquiror's Compensation and
Benefit Plans.
(ii) No liability under Title IV of ERISA (other than contributions
and premiums required in connection therewith) has been or is reasonably
expected to be incurred by the Acquiror or any of its Subsidiaries with
respect to any "single-employer plan" (within the meaning of Section 4001
(a)(15) of ERISA) or Multiemployer Plan currently or formerly maintained by
any of them, or the single-employer plan or Multiemployer Plan of any ERISA
Affiliate.
(iii) Except as Previously Disclosed, all contributions, premiums and
payments required to have been made under the terms of any of the
Acquiror's Compensation and Benefit Plans or applicable law have been
timely made or reflected in the Acquiror's SEC Documents. Neither any of
the Acquiror's Pension Plans nor any ERISA Affiliate Plan of the Acquiror
or any of its Subsidiaries has an "accumulated funding deficiency" (whether
or not waived) within the meaning of Section 412 of the Code or Section 302
of ERISA. None of the Acquiror, any of its Subsidiaries or any ERISA
Affiliate has provided, or is required to provide, security to, nor are
there any circumstances requiring the imposition of a lien on the assets of
the Company or any of its Subsidiaries with respect to, any Pension Plan or
to any ERISA Affiliate Plan pursuant to ERISA or the Code.
(iv) Under each of the Acquiror's Pension Plans and ERISA Affiliate
Plans, to the Acquiror's knowledge, there has been no material adverse
change in the financial condition of any Pension Plan or ERISA Affiliate
Plan (with respect to either assets or benefits) since the last day of the
most recent plan year.
(v) Except as Previously Disclosed, neither the Acquiror nor any of
its Subsidiaries has any obligations under any Acquiror Compensation and
Benefit Plan to provide benefits, including death or medical benefits, with
respect to employees (or their spouses, beneficiaries or dependents) of it
or its Subsidiaries beyond the retirement or other termination of service
of any such employee other than (A) coverage mandated by Part 6 of Title I
of ERISA or Section 4980B of the Code, (B) retirement or death benefits
under any employee pension benefit plan (as defined under Section 3(2) of
ERISA), (C) disability benefits under any employee welfare plan that have
been fully provided for by insurance or otherwise, or (D) benefits in the
nature of severance pay.
(l) Ownership of Company Common Stock. As of the date hereof,
neither the Acquiror nor, to its knowledge, any of its affiliates or
associates (as such terms are defined under the Exchange Act) (i)
beneficially owns directly or indirectly, or (ii) is party to any
agreement, arrangement or understanding for the purpose of acquiring,
holding, voting or disposing of, in each case, any outstanding shares of
Company Common Stock (other than shares held in a bona fide fiduciary
capacity or in satisfaction of a debt previously contracted in good faith).
(m) Tax Matters. (i) All Tax Returns with respect to the Acquiror or
any of its Subsidiaries, have been or will be timely filed, or requests for
extensions have been timely filed and have not expired;
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(ii) all Tax Returns filed by the Acquiror are complete and accurate; (iii)
all Taxes shown to be due and payable (without regard to whether such Taxes
have been assessed) on such Tax Returns have been paid or adequate reserves
have been established for the payment of such Taxes; and (iv) no audit or
examination or refund litigation with respect to any Tax Return is pending
or, to the Acquiror's knowledge, has been threatened.
(n) Disclosure. The representations and warranties contained in this
Section 5.04 do not contain any untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements
contained in this Section 5.04, in the light of the circumstances in which
they are being made, not misleading. The copies of all documents furnished
to the Company hereunder are true and complete copies of the original
thereof.
ARTICLE VI
COVENANTS
6.01 Reasonable Best Efforts. Subject to the terms and conditions of this
Agreement, each of the Company and the Acquiror agrees to use its reasonable
best efforts in good faith to take, or cause to be taken (including causing any
of its Subsidiaries to take), all actions, and to do, or cause to be done, all
things necessary, proper or desirable, or advisable under applicable laws, so as
to permit consummation of the Combination as promptly as practicable and
otherwise to enable consummation of the transactions contemplated hereby and
shall cooperate fully with the other party hereto to that end.
6.02 Stockholder Approvals. The Company agrees to take, in accordance
with applicable law, applicable stock exchange rules, the Company Certificate
and the Company By-Laws, all action necessary to convene an appropriate meeting
of stockholders of the Company to consider and vote upon the approval and
adoption of this Agreement and any other matters required to be approved by the
Company's stockholders for consummation of the Combination (including any
adjournment or postponement, the "Company Meeting") as promptly as practicable
after the Registration Statement is declared effective. Unless the Company
Board, after having consulted with and considered the written advice of outside
counsel, has determined in good faith that it is otherwise required in order to
discharge properly the directors' fiduciary duties in accordance with Delaware
law, the Company Board shall recommend such approval, and the Company shall take
all reasonable, lawful action to solicit such approval by its stockholders.
6.03 Registration Statement. (a) The Acquiror agrees to prepare a
registration statement on Form S-4 (the "Registration Statement"), to be filed
by the Acquiror with the SEC in connection with the issuance of Acquiror Common
Stock (and related Acquiror Rights) in the Combination (including the proxy
statement and prospectus and other proxy solicitation materials of the Company
constituting a part thereof (the "Proxy Statement") and all related documents).
The Company agrees to cooperate, and to cause its Subsidiaries to cooperate,
with the Acquiror, its counsel and its accountants, in preparation of the
Registration Statement and the Proxy Statement; and, provided that the Company
and its Subsidiaries have cooperated as required above, the Acquiror agrees to
file the Proxy Statement in preliminary form with the SEC as promptly as
reasonably practicable, and to file the Registration Statement with the SEC as
soon as reasonably practicable after any SEC comments with respect to the
preliminary Proxy Statement are resolved. Each of the Company and the Acquiror
agrees to use all reasonable best efforts to cause the Registration Statement to
be declared effective under the Securities Act as promptly as reasonably
practicable after filing thereof. The Acquiror also agrees to use all reasonable
best efforts to obtain all necessary state securities law or "Blue Sky" permits
and approvals required to carry out the transactions contemplated by this
Agreement. The Company agrees to furnish to the Acquiror all information
concerning the Company, its Subsidiaries, officers, directors and stockholders
as may be reasonably requested in connection with the foregoing.
(b) Each of the Company and the Acquiror agrees, as to itself and its
Subsidiaries, that none of the information supplied or to be supplied by it for
inclusion or incorporation by reference in (i) the Registration Statement will,
at the time the Registration Statement and each amendment or supplement thereto,
if any, becomes effective under the Securities Act, contain any untrue statement
of a material fact or omit to state
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any material fact required to be stated therein or necessary to make the
statements therein not misleading, and (ii) the Proxy Statement and any
amendment or supplement thereto will, at the date of mailing to stockholders and
at the time of the Company Meeting, contain any untrue statement which, at the
time and in the light of the circumstances under which such statement is made,
will be false or misleading with respect to any material fact, or which will
omit to state any material fact necessary in order to make the statements
therein not false or misleading or necessary to correct any statement in any
earlier statement in the Proxy Statement or any amendment or supplement thereto.
Each of the Company and the Acquiror further agrees that if it shall become
aware prior to the Effective Date of any information furnished by it that would
cause any of the statements in the Proxy Statement to be false or misleading
with respect to any material fact, or to omit to state any material fact
necessary to make the statements therein not false or misleading, to promptly
inform the other party thereof and to take the necessary steps to correct the
Proxy Statement.
(c) The Acquiror agrees to advise the Company, promptly after the Acquiror
receives notice thereof, of the time when the Registration Statement has become
effective or any supplement or amendment has been filed, of the issuance of any
stop order or the suspension of the qualification of the Acquiror Stock for
offering or sale in any jurisdiction, of the initiation or threat of any
proceeding for any such purpose, or of any request by the SEC for the amendment
or supplement of the Registration Statement or for additional information.
6.04 Press Releases. Each of the Company and the Acquiror agrees that it
will not, without the prior approval of the other party, issue any press release
or written statement for general circulation relating to the transactions
contemplated hereby, except as otherwise required by applicable law or
regulation or NYSE rules.
6.05 Access; Information. (a) Each of the Company and the Acquiror agrees
that upon reasonable notice and subject to applicable laws relating to the
exchange of information, it shall afford the other party and the other party's
officers, employees, counsel, accountants and other authorized representatives,
such access during normal business hours throughout the period prior to the
Effective Time to the books, records (including, without limitation, tax returns
and work papers of independent auditors), properties, personnel and to such
other information as any party may reasonably request and, during such period,
it shall furnish promptly to such other party (i) a copy of each material
report, schedule and other document filed by it pursuant to the requirements of
federal or state securities or banking laws, and (ii) all other information
concerning the business, properties and personnel of it as the other may
reasonably request.
(b) Each of the Company and the Acquiror agrees that it will not, and will
cause its representatives not to, use any information obtained pursuant to this
Section 5.05 for any purpose unrelated to the consummation of the transactions
contemplated by this Agreement. Subject to the requirements of law, each party
will keep confidential, and will cause its representatives to keep confidential,
all information and documents obtained pursuant to this Section 6.05 unless such
information (i) was already known to such party, (ii) becomes available to such
party from other sources not known by such party to be bound by a
confidentiality obligation, (iii) is disclosed with the prior written approval
of the party to which such information pertains or (iv) is or becomes readily
ascertainable from published information or trade sources. In the event that
this Agreement is terminated or the transactions contemplated by this Agreement
shall otherwise fail to be consummated, each party shall promptly cause all
copies of documents or extracts thereof containing information and data as to
another party hereto to be returned to the party which furnished the same. No
investigation by either party of the business and affairs of the other shall
affect or be deemed to modify or waive any representation, warranty, covenant or
agreement in this Agreement, or the conditions to either party's obligation to
consummate the transactions contemplated by this Agreement.
6.06 Acquisition Proposals. The Company agrees that it shall not, and
shall cause its Subsidiaries and its and its Subsidiaries' officers, directors,
agents, advisors and affiliates not to, solicit or encourage inquiries or
proposals with respect to, or engage in any negotiations concerning, or provide
any confidential information to, or have any discussions with, any person
relating to, any tender or exchange offer, proposal for a merger, consolidation
or other business combination involving the Company or any of its Subsidiaries
or any proposal or offer to acquire in any manner a substantial equity interest
in, or a substantial portion of the assets or deposits of, the Company or any of
its Subsidiaries, other than the transactions contemplated by this
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Agreement (any of the foregoing, an "Acquisition Proposal"); provided, that, if
the Company is not otherwise in violation of this Section 6.06, the Company
Board may provide information to, and may engage in such negotiations or
discussions with, a person, directly or through representatives, if (a) the
Company Board, after having consulted with and considered the written advice of
counsel, has determined in good faith that the provision of such information or
the engaging in such negotiations or discussion is required in order to
discharge properly the directors' fiduciary duties in accordance with Delaware
law and (b) the Company has received from such person a confidentiality
agreement in substantially customary form. The Company also agrees immediately
to cease and cause to be terminated any activities, discussions or negotiations
conducted prior to the date of this Agreement with any parties other than the
Acquiror or the Bank, with respect to any of the foregoing. The Company shall
promptly (within 24 hours) advise the Acquiror following the receipt by it of
any Acquisition Proposal and the substance thereof (including the identity of
the person making such Acquisition Proposal), and advise the Acquiror of any
developments with respect to such Acquisition Proposal immediately upon the
occurrence thereof.
6.07 Affiliate Agreements. Not later than the 15th day prior to the
mailing of the Proxy Statement, the Company shall deliver to the Acquiror a
schedule of each person that, to the Company's knowledge, is or is reasonably
likely to be, as of the date of the Company Meeting, deemed to be an "affiliate"
of it (each, a "Company Affiliate") as that term is used in Rule 145 under the
Securities Act or SEC Accounting Series Releases 130 and 135. The Company agrees
to use its reasonable best efforts to cause each person who may be deemed to be
a Company Affiliate to execute and deliver to the Company and the Acquiror on or
before the date of mailing of the Proxy Statement an agreement in the form
attached hereto as Exhibit C.
6.08 Takeover Laws. No party shall take any action that would cause the
transactions contemplated by this Agreement to be subject to requirements
imposed by any Takeover Law and each of them shall take all necessary steps
within its control to exempt (or ensure the continued exemption of) the
transactions contemplated by this Agreement from, or if necessary challenge the
validity or applicability of, any applicable Takeover Law, as now or hereafter
in effect.
6.09 No Rights Triggered. The Company shall take all reasonable steps
necessary to ensure that the entering into of this Agreement and the
consummation of the transactions contemplated hereby and any other action or
combination of actions, or any other transactions contemplated hereby, do not
and will not result in the grant of any rights to any person (a) under the
Company Certificate or the Company By-Laws or (b) under any material agreement
to which it or any of its Subsidiaries is a party (except as expressly
contemplated by the mandatory provisions under its stock option plans, as
applicable).
6.10 Rights Agreement. The Company shall take all necessary action (i) to
render the Company Rights Agreement inapplicable to the Combination and the
other transactions contemplated by this Agreement and (ii) to ensure that
neither the Acquiror nor the Bank (nor, if the Plan of the Merger is entered
into, Assigned Sub) will become an "Acquiring Person" and that no "Stock
Acquisition Date" or a "Distribution Date" (as such terms are defined in the
Rights Agreement) will occur and that the exercisability of the Company Rights
Agreement will not be triggered, in each case as a result of the execution or
delivery of this Agreement or any amendment hereto or thereto or the
consummation of the Combination, or the consummation of the other transactions
contemplated by this Agreement. Except (a) as provided in Section 5.03(o) or in
the immediately preceding sentence or (b) if the Company Board, after having
consulted with and considered the written advice of outside counsel, has
determined in good faith that it is otherwise required in order to discharge
properly the directors' fiduciary duties in accordance with Delaware law, the
Company Board shall not (i) amend the Company Rights Agreement or (ii) take any
action with respect to, or make any determination under, the Company Rights
Agreement, including the determination that the Acquiror or any of its
Subsidiaries is an "Adverse Person," a redemption of the Company Rights or any
action to facilitate an Acquisition Transaction.
6.11 NYSE Listing. The Acquiror agrees to use its reasonable best efforts
to list, prior to the Effective Date, on the NYSE, subject to official notice of
issuance, the shares of Acquiror Common Stock to be issued to the holders of
Company Common Stock in the Combination.
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6.12 Regulatory Applications. (a) The Acquiror and the Company and their
respective Subsidiaries shall cooperate and use their respective reasonable best
efforts to prepare all documentation, to effect all filings and to obtain all
permits, consents, approvals and authorizations of all third parties and
Governmental Authorities necessary to consummate the transactions contemplated
by this Agreement. Each of the Acquiror and the Company shall have the right to
review in advance, and to the extent practicable each will consult with the
other, in each case subject to applicable laws relating to the exchange of
information, with respect to, all material written information submitted to any
third party or any Governmental Authority in connection with the transactions
contemplated by this Agreement. In exercising the foregoing right, each of the
Acquiror and the Company agrees to act reasonably and as promptly as
practicable. Each of the Acquiror and the Company agrees that it will consult
with the other party hereto with respect to the obtaining of all material
permits, consents, approvals and authorizations of all third parties and
Governmental Authorities necessary or advisable to consummate the transactions
contemplated by this Agreement and each party will keep the other party
appraised of the status of material matters relating to completion of the
transactions contemplated hereby.
(b) Each of the Acquiror and the Company agrees, upon request, to furnish
the other party with all information concerning itself, its Subsidiaries,
directors, officers and stockholders and such other matters as may be reasonably
necessary or advisable in connection with any filing, notice or application made
by or on behalf of such other party or any of its Subsidiaries to any third
party or Governmental Authority.
6.13 Indemnification. (a) The by-laws of the Surviving Corporation shall
contain provisions no less favorable with respect to indemnification than are
set forth in Article VII of the Company By-Laws, which provisions shall not be
amended, repealed or otherwise modified, for a period of six years from the
Effective Time, in any manner that would adversely affect the rights thereunder
of individuals who at the Effective Time were directors, officers, employees or
agents of the Company with respect to any action, suit or proceeding arising out
of, or relating to, any actions, transactions or facts occurring prior to the
Effective Time. Following the Effective Date and for a period of six years
thereafter, the Acquiror shall indemnify, defend and hold harmless the present
and former directors and officers of the Company and its Subsidiaries (each, an
"Indemnified Party") against all costs or expenses (including reasonable
attorneys' fees), judgments, fines, losses, claims, damages or liabilities
(collectively, "Costs") incurred in connection with any claim, action, suit,
proceeding or investigation, whether civil, criminal, administrative or
investigative, arising out of actions or omissions occurring at or prior to the
Effective Time (including, without limitation, the transactions contemplated by
this Agreement), whether asserted or claimed prior to, at or after the Effective
Time, to the fullest extent that the Company is permitted to indemnify its
directors and officers under the laws of the State of Delaware, the Company
Certificate and the Company By-Laws as in effect on the date hereof (and
Acquiror shall, or shall cause the Surviving Corporation to, also advance
expenses as incurred to the fullest extent permitted under applicable law
provided the person to whom expenses are advanced provides an undertaking to
repay such advances if it is ultimately determined that such person is not
entitled to indemnification); provided that any determination required to be
made with respect to whether an officer's or director's conduct complies with
the standards set forth under Delaware law, the Company Certificate and the
Company By-Laws shall be made by independent counsel (which shall not be counsel
that provides material services to the Acquiror) selected by the Acquiror and
reasonably acceptable to such officer or director; and provided, further, that
in the absence of applicable Delaware judicial precedent to the contrary, such
counsel, in making such determination, shall presume such officer's or
director's conduct complied with such standard and the Acquiror shall have the
burden to demonstrate that such officer's or director's conduct failed to comply
with such standard.
(b) For a period of six years from the Effective Time, the Acquiror shall
use its best efforts to provide that portion of director's and officer's
liability insurance that serves to reimburse the present and former officers and
directors of the Company or any of its Subsidiaries (determined as of the
Effective Time) with respect to claims against such directors and officers
arising from facts or events which occurred before the Effective Time, which
insurance shall contain at least the same coverage and amounts, and contain
terms and conditions no less advantageous, as that coverage currently provided
by the Company; provided, however, that in no event shall the Acquiror be
required to expend more than 200 percent of the current amount expended
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by the Company (the "Insurance Amount") to maintain or procure such directors
and officers insurance coverage; provided, further, that if the Acquiror is
unable to maintain or obtain the insurance called for by this Section 6.13(b),
the Acquiror shall use its reasonable best efforts to obtain as much comparable
insurance as is available for the Insurance Amount; provided, further, that
officers and directors of the Company or any Subsidiary may be required to make
application and provide customary representations and warranties to the
Acquirer's insurance carrier for the purpose of obtaining such insurance.
(c) Any Indemnified Party wishing to claim indemnification under Section
6.13(a), upon learning of any claim, action, suit, proceeding or investigation
described above, shall promptly notify the Acquiror thereof; provided that the
failure so to notify shall not affect the obligations of the Acquiror under
Section 6.13(a) unless and to the extent that the Acquiror is actually
prejudiced as a result of such failure. In the event of any such claim, action,
suit, proceeding or investigation (whether arising before or after the Effective
Time), (i) the Acquiror or the Surviving Corporation shall have the right to
assume the defense thereof and the Acquiror shall not be liable to such
Indemnified Parties for any legal expenses of other counsel or any other
expenses subsequently incurred by such Indemnified Parties in connection with
the defense thereof, except that if the Acquiror or the Surviving Corporation
elects not to assume such defense or counsel for the Indemnified Parties advises
that there are issues that raise conflicts of interest between the Acquiror or
the Surviving Corporation and the Indemnified Parties, the Indemnified Parties
may retain counsel satisfactory to them, and the Acquiror or the Surviving
Corporation shall pay all reasonable fees and expenses of such counsel for the
Indemnified Parties promptly as statements therefor are received; provided,
however, that the Acquiror shall be obligated pursuant to this paragraph (c) to
pay for only one firm of counsel for all Indemnified Parties in any jurisdiction
unless the use of one counsel for such Indemnified Parties would present such
counsel with a conflict of interest, (ii) the Indemnified Parties will cooperate
in the defense of any such matter and (iii) the Acquiror shall not be liable for
any settlement effected without its prior written consent, which consent shall
not be unreasonably withheld; and provided, further, that the Acquiror shall not
have any obligation hereunder to any Indemnified Party when and if a court of
competent jurisdiction shall ultimately determine, and such determination shall
have become final and non-appealable, that the indemnification of such
Indemnified Party in the manner contemplated hereby is prohibited by applicable
law.
(d) If the Acquiror or any of its successors or assigns shall consolidate
with or merge into any other entity and shall not be the continuing or surviving
entity of such consolidation or merger or shall transfer all or substantially
all of its assets to any entity, then and in each case, proper provision shall
be made so that the successors and assigns of the Acquiror shall assume the
obligations set forth in this Section 6.13.
6.14 Benefit Plans. From the Effective Time until December 31, 1998,
Acquiror shall cause the Surviving Corporation and its Subsidiaries to maintain
for employees of the Company and its Subsidiaries who as of the Effective Time
become employed by the Surviving Corporation or the Acquiror or any of their
Subsidiaries (the "Covered Employees"), (a) salary and bonus opportunities (but
explicitly excluding commissions and equity grant opportunities), (b) employee
pension benefits in respect of plans intended to be qualified under Section
401(a) of the Code, (c) employee welfare benefits and (d) broad-based severance
plans (the items covered in (a) through (d) hereinafter referred to as
"Designated Benefits"), that are no less favorable, in the aggregate, than the
Designated Benefits enjoyed by such Covered Employees immediately prior to the
Effective Time. For purposes of all employee benefit plans, programs and
arrangements maintained or contributed to by the Acquiror and its Subsidiaries
(including without limitation, the Surviving Corporation), the Acquiror shall,
or shall cause its Subsidiaries to, cause each such plan, program or arrangement
to treat the prior service with the Company and its Subsidiaries of each Covered
Employee (to the same extent such service is recognized under analogous plans,
programs or arrangements of the Company or its Subsidiaries immediately prior to
the Effective Time) as service rendered to the Acquiror or its Subsidiaries, as
the case may be, solely for purposes of eligibility to participate and for
vesting thereunder. Following the Effective Time, the Acquiror shall cause the
Surviving Corporation to cause any and all pre-existing condition limitations
(to the extent such limitations did not apply to a pre-existing condition under
the Compensation and Benefit Plans) and eligibility waiting periods under any
health plans to be waived with respect to Covered Employees who, immediately
prior to the Effective Time, participated in a health plan and their eligible
dependents. All discretionary awards and benefits under any employee benefit
plans of the
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Acquiror shall be subject to the discretion of the persons or committee
administering such plans. The Acquiror shall honor, pursuant to the terms of the
Company Compensation and Benefit Plans Previously Disclosed, and to the extent
consistent with applicable law, all employee benefit obligations to current and
former employees of the Company under such plans.
6.15 Accountants' Letters. Each of the Company and the Acquiror shall use
its reasonable best efforts to cause to be delivered to the other party, and
such other party's directors and officers who sign the Registration Statement, a
letter of ▇▇▇▇▇▇ & ▇▇▇▇▇ LLP and KPMG Peat Marwick LLP, respectively,
independent auditors, dated (i) the date on which the Registration Statement
shall become effective and (ii) a date shortly prior to the Effective Date, and
addressed to such other party, and such directors and officers, in form and
substance customary for "comfort" letters delivered by independent accountants
in accordance with Statement of Accounting Standards No. 72.
6.16 Notification of Certain Matters. Each of the Company and the
Acquiror shall give prompt notice to the other of any fact, event or
circumstance known to it that (i) is reasonably likely, individually or taken
together with all other facts, events and circumstances known to it, to result
in any Material Adverse Effect with respect to it or (ii) would cause or
constitute a material breach of any of its representations, warranties,
covenants or agreements contained herein.
6.17 Certain Policies of the Company. Upon the request of the Acquiror,
the Company shall, consistent with generally accepted accounting principles and
regulatory accounting principles, use its reasonable best efforts to record
certain accounting adjustments intended to conform the loan, litigation and
other accrual and reserve policies (including loan classifications and levels of
reserves) of the Company and its Subsidiaries so as to reflect the policies of
the Acquiror; provided, however, that the Company shall not be obligated to
record any such accounting adjustments pursuant to this Section 6.17 (a) unless
and until the Company shall be satisfied that the conditions to the obligation
of the parties to consummate the Combination will be satisfied or waived on or
before the Effective Time, and (b) in no event until the day prior to the
Effective Date. The Company's representations, warranties and covenants
contained in this Agreement shall not be deemed to be untrue or breached in any
respect for any purpose as a consequence of any modifications or changes
undertaken solely on account of this Section 6.17.
6.18 Employee Benefits. The Company shall, with the prior approval of the
Acquiror, take any necessary or appropriate action to effect a correction of any
errors made in connection with contributions made to the Company's Savings Plan
or Retirement Plan (including, to the extent appropriate, making any necessary
corrective contributions in order to satisfy the nondiscrimination requirements
under Sections 401(k)(3) and 401(m)(2) of the Code). With respect to any options
granted under the Company's Incentive Stock Option Plan, the Company Board shall
refrain from canceling any such options and causing cash to be paid in
consideration therefor. The Company Board (or such members of the Company Board
authorized to so act), in accordance with the Company's Incentive Stock Option
Plan, shall take timely action to adopt a resolution providing and declaring
that the consummation of the Combination, shareholder approval of the
Combination, as well as all transactions or events contemplated thereby or
related thereto, shall not constitute a "Change of Control" for purposes of such
Incentive Stock Option Plan or, with the prior consent of the Acquiror, take
such other action as shall prevent any holder of a Stock Option from having a
right to receive, pursuant to Section 10 of such Plan, a cash payment as a
result of this Agreement and the transactions contemplated hereby; provided that
such other action be taken prior to the date on which a "Change of Control"
would otherwise occur in the absence of the Company Board resolution to the
contrary. The Company shall take such action as is reasonably necessary to
provide that, after the date of this Agreement, no employee of the Company or
any of its Subsidiaries who is otherwise eligible to participate in the
Company's Senior Executive Severance Pay Plan shall be eligible to participate
in, or receive a benefit under, the Company's Severance Pay Plan, so as to
prevent any employee of the Company or any of its subsidiaries from receiving a
severance benefit under both such plans. With respect to the Company Annual
Executive Bonus Plan (the "AEBP"), the aggregate Target Pool (as such term is
defined in the AEBP) for the 1997 calendar year Valuation Period shall not
exceed $2,000,000. To the extent a change of control (as defined in the AEBP)
occurs prior to the end of such Valuation Period, however, such Target Pool
shall be pro-rated in the same ratio as the number of months in the Valuation
Period completed as of the date of such change of
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control bears to 12 (provided, however, that such pro-rated amount shall be
reduced by $273,750) and the Committee thereunder shall determine the amounts to
be paid under the AEBP and the Company shall make such payments, if any, at the
Effective Time. Notwithstanding the foregoing or any provision of this
Agreement, the Company shall take such action as may be required for each
Company Stock Option to fully vest and become immediately exercisable at the
Effective Time and to remain exercisable for the remaining term of such Company
Stock Option.
6.19 Certain Payments at Effective Time. In lieu of and in satisfaction
for the amount of any cash payment which might otherwise be paid or payable upon
a termination of employment under any Termination Agreement previously entered
into by the Company or any applicable severance plan, the Company shall pay to
the individuals listed on Schedule 6.19 of the Company's Disclosure Schedule in
a cash lump sum at the Effective Time the amounts set forth in such Schedule
6.19, less the amount of any applicable withholding. In addition, at the
Effective Time payment shall also be made in respect of Previously Disclosed
obligations in respect of stock options that were never granted to the
individual included on Schedule 6.19 of the Company's Disclosure Schedule, less
the amount of any applicable withholding.
6.20 Certain Employee Agreements. The Company shall not terminate the
employment of Messrs. ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇ and
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ (each, an "Identified Employee") without the prior written
consent of the Acquiror (such consent not to be unreasonably withheld) and,
subject to the terms and conditions of this Agreement, shall use its reasonable
best efforts (a) to maintain the continued employment of each Identified
Employee with the Company until the Effective Date and (b) not in any way to
encourage (or permit the encouragement of) any Identified Employee to breach or
violate any employment agreement or other arrangement such Identified Employee
may have with the Acquiror or any Subsidiary of it.
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE COMBINATION
7.01 Conditions to Each Party's Obligation to Effect the Combination. The
respective obligation of each of the Acquiror and the Company to consummate the
Combination is subject to the fulfillment or written waiver by the Acquiror and
the Company prior to the Effective Time of each of the following conditions:
(a) Stockholder Approval. This Agreement shall have been duly
adopted by the affirmative vote of the holders of at least a majority of
the outstanding shares of Company Common Stock entitled to vote thereon in
accordance with Section 251 of the DGCL, other applicable law and the
Company Certificate and the Company By-Laws.
(b) Governmental and Regulatory Consents. All approvals and
authorizations of, filings and registrations with, and notifications to,
all Governmental Authorities (except to the extent that such Governmental
Authorities are acting in the capacity of Insurer or Investor) required for
the consummation of the Combination and for the prevention of any
termination of any material right, privilege, license or agreement of
either the Acquiror or the Company or their respective Subsidiaries shall
have been obtained or made and shall be in full force and effect and all
waiting periods required by law shall have expired; provided, however, that
none of the preceding shall be deemed obtained or made if it shall be
subject to any condition or restriction the effect of which would have a
Material Adverse Effect on the Acquiror (including the Company as a
Subsidiary after the Merger), on the Company (if the Combination is not
effected by way of the Merger) or on the Surviving Corporation (if the
Combination is effected by way of the Merger).
(c) Third Party Consents. All consents or approvals of all persons,
other than Governmental Authorities (except to the extent that such
Governmental Authorities are acting in the capacity of Insurer or
Investor), required for or in connection with the execution, delivery and
performance of this Agreement and the consummation of the Combination shall
have been obtained and shall be in full force and effect, unless the
failure to obtain any such consent or approval is not reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on the
Surviving Corporation.
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(d) No Injunction. No Governmental Authority of competent
jurisdiction shall have enacted, issued, promulgated, enforced or entered
any statute, rule, regulation, judgment, decree, injunction or other order
(whether temporary, preliminary or permanent) which is in effect and
prohibits consummation of the transactions contemplated by this Agreement.
(e) Registration Statement. The Registration Statement shall have
become effective under the Securities Act and no stop order suspending the
effectiveness of the Registration Statement shall have been issued and no
proceedings for that purpose shall have been initiated or threatened by the
SEC.
(f) Blue Sky Approvals. All permits and other authorizations under
the federal and state securities laws (other than that referred to in
Section 7.01(e)) and other authorizations necessary to consummate the
transactions contemplated hereby and to issue the shares of Acquiror Common
Stock (and related Acquiror Rights) to be issued in the Merger shall have
been received and be in full force and effect.
(g) Listing. The shares of Acquiror Common Stock (and related
Acquiror Rights) to be issued in the Combination shall have been approved
for listing on the NYSE, subject to official notice of issuance.
7.02 Conditions to Obligation of the Company. The obligation of the
Company to consummate the Combination is also subject to the fulfillment or
written waiver by the Company prior to the Effective Time of each of the
following conditions:
(a) Representations and Warranties. The representations and
warranties of the Acquiror set forth in this Agreement shall be true and
correct (after giving effect to the standard set forth in Section 5.02 of
this Agreement) as of the date of this Agreement and as of the Effective
Date as though made on and as of the Effective Date (except that
representations and warranties that by their terms speak as of the date of
this Agreement or some other date shall be true and correct only as of such
date), and the Company shall have received a certificate, dated the
Effective Date, signed on behalf of the Acquiror by the Chief Executive
Officer and the Treasurer of the Acquiror to such effect.
(b) Performance of Obligations of the Acquiror. The Acquiror, the
Bank and, if the Plan of Merger is entered into, Assigned Sub shall have
performed in all material respects all obligations required to be performed
by them under this Agreement at or prior to the Effective Time, and the
Company shall have received a certificate, dated the Effective Date, signed
on behalf of the Acquiror by the Chief Executive Officer and the Treasurer
of the Acquiror to such effect.
(c) Opinion of Counsel. The Company shall have received an opinion,
dated the Effective Date, of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, special counsel to the
Acquiror, to the effect that the shares of Acquiror Common Stock to be
issued as Consideration, when issued in accordance with the terms hereof,
will be duly authorized, validly issued, fully paid and nonassessable.
(d) Tax Opinion of Company's Counsel. The Company shall have
received an opinion of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, special counsel to the
Company, to the effect that (i) the Combination constitutes a
"reorganization" within the meaning of Section 368 of the Code and (ii) no
gain or loss will be recognized by stockholders of the Company who receive
shares of Acquiror Common Stock as Consideration in exchange for shares of
Company Common Stock, except that gain or loss may be recognized as to cash
received in lieu of fractional share interests.
(e) Accountants' Letters. The Company shall have received the
letters referred to in Section 6.15 from KPMG Peat Marwick LLP, the
Acquiror's independent auditors.
7.03 Conditions to Obligation of the Acquiror. The obligation of the
Acquiror to consummate the Combination is also subject to the fulfillment or
written waiver by the Acquiror prior to the Effective Time of each of the
following conditions:
(a) Representations and Warranties. The representations and
warranties of the Company set forth in this Agreement shall be true and
correct (after giving effect to the standard set forth in Section
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5.02 of this Agreement) as of the date of this Agreement and as of the
Effective Date as though made on and as of the Effective Date (except that
representations and warranties that by their terms speak as of the date of
this Agreement or some other date shall be true and correct only as of such
date) and the Acquiror shall have received a certificate, dated the
Effective Date, signed on behalf of the Company by the Chief Executive
Officer and the Treasurer of the Company to such effect.
(b) Performance of Obligations of the Company. The Company shall
have performed in all material respects all obligations required to be
performed by it under this Agreement at or prior to the Effective Time, and
the Acquiror shall have received a certificate, dated the Effective Date,
signed on behalf of the Company by the Chief Executive Officer and the
Chief Financial Officer of the Company to such effect.
(c) Tax Opinion of Acquiror's Counsel. The Acquiror shall have
received an opinion of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, special counsel to the
Acquiror, dated the Effective Date, to the effect that the Combination
constitutes a "reorganization" within the meaning of Section 368 of the
Code.
(d) Accountants' Letters. The Acquiror and its directors and
officers who sign the Registration Statement shall have received the
letters referred to in Section 6.15 from Ernst & Young LLP, the Company's
independent auditors.
ARTICLE VIII
TERMINATION
8.01 Termination. This Agreement may be terminated, and the Combination
may be abandoned:
(a) Mutual Consent. At any time prior to the Effective Time, by the
mutual consent of the Acquiror and the Company, if the Board of Directors
of each so determines by vote of a majority of the members of its entire
Board.
(b) Breach. At any time prior to the Effective Time, by the Acquiror
or the Company, in each case if its Board of Directors so determines by
vote of a majority of the members of its entire Board, in the event of
either: (i) a breach by the other party of any representation or warranty
contained herein (subject to the standard set forth in Section 5.02), which
breach cannot be or has not been cured within 30 days after the giving of
written notice to the breaching party of such breach; or (ii) a breach by
the other party of any of the covenants or agreements contained herein,
which breach cannot be or has not been cured within 30 days after the
giving of written notice to the breaching party of such breach and which
breach would be reasonably likely, individually or in the aggregate, to
have a Material Adverse Effect on the breaching party.
(c) Delay. At any time prior to the Effective Time, by the Acquiror
or the Company, in each case if its Board of Directors so determines by
vote of a majority of the members of its entire Board, in the event that
the Combination is not consummated by December 31, 1997, except to the
extent that the failure of the Combination then to be consummated arises
out of or results from the knowing action or inaction of the party seeking
to terminate pursuant to this Section 8.01(c).
(d) No Approval. By the Company or the Acquiror, in each case if its
Board of Directors so determines by a vote of a majority of the members of
its entire Board, in the event (i) the approval of any Governmental
Authority required for consummation of the Combination and the other
transactions contemplated by this Agreement shall have been denied by final
nonappealable action of such Governmental Authority or (ii) any stockholder
approval required by Section 6.02 herein is not obtained at the Company
Meeting.
(e) Failure to Recommend, Etc. By the Acquiror, if (i) at any time
prior to the Company Meeting the Company Board shall have failed to make
its recommendation referred to in Section 6.02, withdrawn such
recommendation or modified or changed such recommendation in a manner
adverse to the interests of the Acquiror (whether in accordance with
Section 6.02 or otherwise) or (ii) the
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Company Board participates in (or authorizes participation in) negotiations
regarding the substantive terms of a bona fide formal Acquisition
Proposal).
(f) Acceptance of an Acquisition Proposal. By the Company, if,
without breaching Section 6.06, the Company shall contemporaneously enter
into a definitive agreement with a third party providing for an Acquisition
Transaction on terms determined in good faith by the Company Board, after
consulting with and considering the written advice of the Company's outside
counsel and financial advisors, to be more favorable to the stockholders of
the Company than the Combination; provided, that the right to terminate
this Agreement under this Section 8.01(f) shall not be available to the
Company unless it delivers to the Acquiror simultaneously with such
termination the fee referred to in Section 8.03.
(g) Possible Adjustment. By the Company, if the Company Board so
determines by a vote of a majority of the members of the entire Company
Board, at any time during the five-day period commencing with the
Determination Date, if both of the following conditions are satisfied:
(i) The Average Closing Price on the Determination Date of shares
of Acquiror Common Stock shall be less than the product of 0.80 and the
Starting Price; and
(ii) (A) The number obtained by dividing the Average Closing Price
on the Determination Date by the Starting Price (such number, the
"Acquiror Ratio") shall be less than (B) the number obtained by dividing
the Index Price on the Determination Date by the Index Price on the
Starting Date and subtracting 0.20 from the quotient in this Section
8(g)(ii)(B) (such number, the "Index Ratio");
subject, however, to the following four sentences. If the Company elects to
exercise its termination right pursuant to this Section 8.01(g), it shall
give prompt written notice to the Acquiror; provided that such notice of
election may be withdrawn at any time within the aforementioned five-day
period. During the five-day period commencing with its receipt of such
notice, the Acquiror shall have the option of adjusting the Exchange Ratio
to the lesser of (i) a number equal to a quotient (rounded to the nearest
one-thousandth), the numerator of which is the product of 0.80, the
Starting Price and the Exchange Ratio (as then in effect) and the
denominator of which is the Average Closing Price, and (ii) a number equal
to a quotient (rounded to the nearest one-thousandth), the numerator of
which is the Index Ratio multiplied by the Exchange Ratio (as then in
effect) and the denominator of which is the Acquiror Ratio. If the Acquiror
determines so to increase the Exchange Ratio within such five-day period,
it shall give prompt written notice to the Company of its determination and
the revised Exchange Ratio, whereupon no termination shall occur pursuant
to this Section 8.01(g) and this Agreement shall remain in effect in
accordance with its terms (except as the Exchange Ratio shall have been so
modified), and any references in this Agreement (including the Plan of
Merger) to the "Exchange Ratio" shall thereafter be deemed to refer to the
Exchange Ratio as adjusted pursuant to this Section 8.01(g). If the
Acquiror or any company belonging to the Index Group declares or effects a
stock dividend, reclassification, recapitalization, split-up, combination,
exchange of shares or similar transaction between the Starting Date and the
Determination Date, the prices for the common stock of the Acquiror or such
company shall be appropriately adjusted for the purposes of applying this
Section 8.01(g).
8.02 Effect of Termination and Abandonment. In the event of termination of
this Agreement and the abandonment of the Combination pursuant to this Article
VIII, no party to this Agreement shall have any liability or further obligation
to any other party hereunder except (a) as set forth in Sections 8.03 and 9.01
and (b) that termination will not relieve a breaching party from liability for
any willful breach of this Agreement giving rise to such termination.
8.03 Termination Fee. (a) The Company hereby agrees to pay to the
Acquiror, and the Acquiror shall be entitled to payment of, a cash fee (the
"Fee") of $15,000,000 following the occurrence of a Fee Trigger
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Event; provided, that the Acquiror's right to receive the Fee shall be
discontinued if any of the following (each, a "Fee Termination Event") occurs
prior to a Fee Trigger Event:
(i) The Effective Time;
(ii) Termination of this Agreement in accordance with the provisions
hereof, if such termination occurs prior to the occurrence of a Preliminary
Fee Trigger Event, other than a Listed Termination; or
(iii) Fifteen months after termination of this Agreement, if such
termination (A) follows, or occurs at the same time as, a Preliminary Fee
Trigger Event (other than, termination by the Company pursuant to (x)
Section 8.01(b) because of a knowing, intentional or grossly negligent
breach by the Acquiror or (y) Section 8.01(g), in which case the right to
receive the Fee shall terminate at termination of this Agreement) or (B) is
a Listed Termination.
(b) The term "Preliminary Fee Trigger Event" shall mean any of the
following events or transactions occurring on or after the date hereof:
(i) The Company or any subsidiary of the Company, without having
received the Acquiror's prior written consent, shall have entered into an
agreement to engage in an Acquisition Transaction with any person (the term
"person" for purposes of this Section 8.03 having the meaning assigned
thereto in Sections 3(a)(9) and 13(d)(3) of the Exchange Act) other than
the Acquiror or any of its Subsidiaries (each an "Acquiror Person") or the
Company Board shall have recommended that the stockholders of the Company
approve or accept any Acquisition Transaction other than the Combination.
(ii) Any person, other than an Acquiror Person, shall have acquired
beneficial ownership or the right to acquire beneficial ownership of 15% or
more of the outstanding shares of Company Common Stock (the term
"beneficial ownership" for purposes of this Section 8.03 having the meaning
assigned thereto in Section 13(d) of the Exchange Act);
(iii) The stockholders of the Company shall have voted and failed to
adopt this Agreement and the Combination at a meeting which has been held
for that purpose or any adjournment or postponement thereof, or such
meeting shall not have been held in violation of this Agreement or shall
have been canceled prior to termination of this Agreement, in each case,
if, prior to such meeting (or if such meeting shall not have been held or
shall have been canceled, prior to such termination), it shall have been
publicly announced that any person (other than an Acquiror Person) shall
have made, or disclosed an intention to make, a bona fide proposal to
engage in an Acquisition Transaction;
(iv) The Company Board shall have withdrawn or modified (or disclosed
its intention to withdraw or modify) in a manner adverse in any respect to
the Acquiror its recommendation referred to in Section 6.02, or the Company
or any Subsidiary of it shall have authorized, recommended, proposed (or
publicly announced its intention to authorize, recommend or propose) an
agreement to engage in an Acquisition Transaction with any person other
than an Acquiror Person;
(v) Any person, other than an Acquiror Person, shall have made a bona
fide proposal to the Company or its stockholders, by public announcement or
written communication that is or becomes the subject of public disclosure,
to engage in an Acquisition Transaction;
(vi) Any person, other than an Acquiror Person, shall have filed with
the SEC a registration statement or tender offer materials with respect to
a potential exchange or tender offer that would constitute an Acquisition
Transaction (or filed a preliminary proxy statement with the SEC with
respect to a potential vote by its stockholders to approve the issuance of
shares to be offered in such an exchange offer); or
(vii) The Company shall have willfully breached any covenant or
obligation contained in this Agreement in anticipation of engaging in an
Acquisition Transaction, and following such breach the Acquiror would be
entitled to terminate this Agreement (whether immediately or after the
giving of notice or passage of time or both).
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42
(c) The term "Fee Trigger Event" shall mean any of the following events or
transactions occurring after the date hereof:
(i) The acquisition by any person (other than an Acquiror Person) of
beneficial ownership of 25% or more of the then outstanding Company Common
Stock; or
(ii) The occurrence of the Preliminary Fee Trigger Event described in
Section 8.03(b)(i), except that the percentage referred to in clause (iii)
of the definition of "Acquisition Transaction" shall be deemed 25%.
(d) The Company shall notify the Acquiror promptly in writing of its
knowledge of the occurrence of a Preliminary Fee Trigger Event or Fee Trigger
Event; provided, however, that the giving of such notice shall not be a
condition to the right of the Acquiror to the Fee.
(e) The Fee shall be payable, without setoff, by wire transfer in
immediately available funds, to an account specified by the Acquiror, not later
than three New York City business days following the first occurrence of a Fee
Trigger Event.
ARTICLE IX
MISCELLANEOUS
9.01 Survival. No representations, warranties, agreements and covenants
contained in this Agreement (other than in this Article IX) shall survive the
Effective Time or termination of this Agreement if this Agreement is terminated
prior to the Effective Time; provided, however, that if this Agreement is
terminated prior to the Effective Time, the agreements of the parties contained
in Sections 6.05(b), 8.02, 8.03 and Article IX shall survive such termination.
9.02 Waiver; Amendment. Prior to the Effective Time, any provision of
this Agreement may be (a) waived by the party benefitted by the provision, or
(b) amended or modified at any time, by an agreement in writing between the
parties hereto approved by their respective Boards of Directors and executed in
the same manner as this Agreement, except that, after approval of the
Combination by the stockholders of the Company, no amendment may be made which
under applicable law requires further approval of such stockholders without
obtaining such required further approval.
9.03 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to constitute an original.
9.04 Governing Law. This Agreement shall be governed by, and interpreted
in accordance with, the laws of the State of New York applicable to contracts
made and to be performed entirely within such State.
9.05 Expenses. Subject to Section 8.03, each party hereto will bear all
expenses incurred by it in connection with this Agreement and the transactions
contemplated hereby, except that printing expenses and SEC registration fees
shall be shared equally between the Company and the Acquiror.
9.06 Notices. All notices, requests and other communications hereunder to
a party shall be in writing and shall be deemed given (a) on the date of
delivery, if personally delivered or telecopied (with confirmation), (b) on the
first business day following the date of dispatch, if delivered by a recognized
next-day courier service, or (c) on the third business day following the date of
mailing, if mailed by registered or certified mail (return receipt requested),
in each case to such party at its address or telecopy number set forth below or
such other address or numbers as such party may specify by notice to the parties
hereto.
If to the Company, to:
President
North American Mortgage Company
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
38
43
With a copy to:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇.
If to the Acquiror, to:
▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Dime Bancorp, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇.
9.07 Entire Understanding; No Third Party Beneficiaries. This Agreement
(together with the Disclosure Schedules) represents the entire understanding of
the parties hereto with reference to the transactions contemplated hereby and
this Agreement supersedes any and all other oral or written agreements
heretofore made. Except for Section 6.13, insofar as such Section expressly
provides certain rights to the Indemnified Parties named therein, nothing in
this Agreement, expressed or implied, is intended to confer upon any person,
other than the parties hereto or their respective successors and permitted
assigns, any rights, remedies, obligations or liabilities under or by reason of
this Agreement.
* * *
39
44
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in counterparts by their duly authorized officers, all as of the day
and year first above written.
NORTH AMERICAN MORTGAGE
COMPANY
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
--------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
Title: Chairman and Chief Executive
Officer
DIME BANCORP, INC.
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Chief Executive Officer,
President and Chief Operating
Officer
THE DIME SAVINGS BANK OF
NEW YORK, FSB
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Chief Executive Officer,
President and Chief Operating
Officer
40
45
EXHIBIT A
PLAN OF MERGER, dated as of June 22, 1997 (this "Plan"), by and among North
American Mortgage Company, a Delaware corporation (the "Company"), Dime Bancorp,
Inc., a Delaware corporation (the "Acquiror"), The Dime Savings Bank New York,
FSB, a federal savings bank (the "Bank"), and 47th St. Property Corporation, a
Delaware corporation ("Merger Sub").
RECITALS
A. Agreement and Plan of Combination. The Company, the Acquiror and the
Bank have entered into an Agreement and Plan of Combination, dated as of the
date hereof (the "Combination Agreement"), providing for (i) the acquisition by
the Bank of the assets, and the assumption by the Bank of the liabilities, of
the Company and (ii) the ability of the Bank to assign the right to acquire such
assets and assume such liabilities to a corporation wholly owned and controlled
by the Bank (the "Combination").
B. Merger Sub. Merger Sub is a wholly owned subsidiary of the Bank.
Merger Sub has engaged in no business other than as an incident to the
transaction contemplated by this Plan.
C. Direction. The Bank has directed that the Combination be accomplished,
in part, by way of the merger of the Company with and into Merger Sub (the
"Merger") pursuant to the terms and conditions of this Plan.
D. Defined Terms. Capitalized terms used without definition in this Plan
have been defined in the Combination Agreement.
NOW, THEREFORE, in consideration of the premises, and of the mutual
covenants, representations, warranties and agreements contained in this Plan and
in the Combination Agreement, the parties hereto adopt and make this Plan and
prescribe the terms and conditions thereof and the manner and basis of carrying
it into effect, which shall be as follows:
ARTICLE I
THE MERGER
1.01 The Merger. (a) The Surviving Corporation. At the direction of the
Bank, at the Effective Time (as defined in Section 1.02) the Company shall merge
with and into Merger Sub (the "Merger"), the separate corporate existence of the
Company shall cease and Merger Sub shall survive and continue to exist as a
Delaware corporation (Merger Sub, as the surviving corporation in the Merger,
sometimes being referred to herein as the "Surviving Corporation"). At the
Bank's election, the Merger may alternatively be structured so that (i) the
Company is merged with and into Acquiror, the Bank, Merger Sub or any other
direct or indirect wholly owned subsidiary of Acquiror (provided, that in such
event the Company makes no representation as to whether any consents are
required, or any agreements are adversely affected, thereby) or (ii) any direct
or indirect wholly owned subsidiary of Acquiror is merged with and into the
Company; provided, however, that no such change shall (i) alter or change the
amount or kind of the consideration to be issued to holders of Company Stock as
provided for in Article II of this Plan (the "Merger Consideration"), (ii)
adversely affect the tax treatment of the Company's stockholders as a result of
receiving the Merger Consideration or prevent the parties from obtaining the
opinions of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ or ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ referred to in
Section 7.02(d) and Section 7.03(c), respectively, of the Combination Agreement
or (iii) materially impede or delay consummation of the transactions
contemplated by the Combination Agreement. In the event of such an election, the
parties agree to execute an appropriate amendment to this Plan (including to
this Article I) in order to reflect such election.
(b) Effectiveness and Effects of the Merger. Subject to the satisfaction
or waiver of the conditions set forth in Article VII of the Combination
Agreement and in Article III hereof, the Merger shall become effective upon the
filing in the office of the Secretary of State of the State of Delaware of a
certificate of merger in accordance with Section 251 of the Delaware General
Corporation Law (the "DGCL"), or at such
A-1
46
later date and time as may be set forth in such articles and certificate. The
Merger shall have the effects prescribed in the DGCL.
(c) Certificate of Incorporation and By-Laws. Subject to Section 1.03,
the certificate of incorporation and by-laws of the Surviving Corporation shall
be, respectively, the certificate of incorporation of Merger Sub, as in effect
immediately prior to the Effective Time, and the by-laws of Merger Sub, as in
effect immediately prior to the Effective Time.
(d) Directors. At the Effective Time, the directors of the Surviving
Corporation shall be the directors of Merger Sub immediately prior to the
Effective Time, and such directors, together with any additional directors as
may thereafter be elected, shall hold such office until such time as their
successors shall be duly elected and qualified.
(e) Officers. At the Effective Time, the officers of the Surviving
Corporation shall be the officers of Merger Sub immediately prior to the
Effective Time, together with any additional officers as may be agreed upon
prior thereto by the Acquiror and the Company or as may be appointed thereafter.
1.02 Effective Date and Effective Time. Subject to the satisfaction or
waiver of the conditions set forth in Article VII of the Combination Agreement,
the parties shall cause the Merger to become effective in accordance with
Section 2.04 of the Combination Agreement. The time and date when the Merger
shall become effective is referred to as the "Effective Time."
1.03 Amendment of the Merger Sub Certificate. At the Effective Time,
Article First of the certificate of incorporation of Merger Sub shall be amended
to read in its entirety as follows: "The name of the corporation is North
American Mortgage Company."
ARTICLE II
CONSIDERATION; EXCHANGE PROCEDURES
2.01 Merger Consideration. Subject to the provisions of this Plan, at the
Effective Time, automatically by virtue of the Merger and without any action on
the part of any stockholder:
(a) Outstanding Company Common Stock. Each share, excluding Treasury
Stock, of Company Common Stock, issued and outstanding immediately prior to
the Effective Time, together with the related Company Rights, shall become
and be converted into the number of shares of the Acquiror Common Stock,
(together with the related Acquiror Rights) equal to the Exchange Ratio (as
adjusted as set forth in the Combination Agreement).
(b) Outstanding Merger Sub Common Stock. Each share of common stock,
par value $0.01 per share, of Merger Sub issued and outstanding immediately
prior to the Effective Time shall be unchanged and shall remain issued and
outstanding as one share of common stock of the Surviving Corporation.
(c) Treasury Shares. Each share of Company Stock held as Treasury
Stock (which includes all shares of Company Convertible Preferred Stock)
immediately prior to the Effective Time shall be canceled and retired at
the Effective Time and no consideration shall be issued in exchange
therefor.
2.02 Rights as Stockholders; Stock Transfers. At the Effective Time,
holders of Company Stock shall cease to be, and shall have no rights as,
stockholders of the Company, other than to receive (a) any dividend or other
distribution with respect to such Company Stock with a record date occurring
prior to the Effective Time and (b) the consideration provided under this
Article II. After the Effective Time, there shall be no transfers on the stock
transfer books of the Company or the Surviving Corporation of shares of Company
Stock.
2.03 Fractional Shares. Notwithstanding any other provision in this Plan
or the Combination Agreement, no fractional shares of Acquiror Common Stock and
no certificates or scrip therefor, or other evidence of ownership thereof, will
be issued in the Merger; instead, the Acquiror shall pay to each holder of
Company Common Stock who otherwise would be entitled to a fractional share of
Acquiror Common Stock
A-2
47
(after taking into account all Old Certificates delivered by such holder) an
amount in cash (without interest) determined by multiplying such fraction by the
average of the last sale prices of Acquiror Common Stock, as reported by the
NYSE Composite Transactions Reporting System (as reported in The Wall Street
Journal or, if not reported therein, in another authoritative source), for the
five consecutive NYSE full trading days immediately preceding the Effective
Date.
2.04 Exchange Procedures. (a) At or prior to the Effective Time, the
Acquiror shall deposit, or shall cause to be deposited, with the Bank (in such
capacity, the "Exchange Agent"), as agent for the benefit of the holders of
certificates formerly representing shares of Company Common Stock ("Old
Certificates"), for exchange in accordance with this Article II, certificates
representing the shares of Acquiror Common Stock ("New Certificates") and an
estimated amount of cash (such cash and New Certificates, together with any
dividends or distributions with a record date occurring after the Effective Date
with respect thereto (without any interest on any such cash, dividends or
distributions), being hereinafter referred to as the "Exchange Fund") to be
issued as Merger Consideration.
(b) As promptly as practicable after the Effective Date, the Surviving
Corporation shall send or cause to be sent to each former holder of record of
shares (other than Treasury Stock) of Company Common Stock immediately prior to
the Effective Time transmittal materials for use in exchanging such
stockholder's Old Certificates for Merger Consideration. The Surviving
Corporation shall cause the New Certificates into which shares of a
stockholder's Company Common Stock are converted on the Effective Date and/or
any check in respect of any fractional share interests or dividends or
distributions which such person shall be entitled to receive to be delivered to
such stockholder upon delivery to the Exchange Agent of Old Certificates
representing such shares of Company Common Stock (or indemnity satisfactory to
the Surviving Corporation and the Exchange Agent, if any of such certificates
are lost, stolen or destroyed) owned by such stockholder; provided that New
Certificates and/or any such check shall not be issued to any Company Affiliate
unless and until such Company Affiliate has delivered an agreement pursuant to
Section 6.07 of the Combination Agreement. No interest will be paid on any
Merger Consideration, including cash to be paid in lieu of fractional share
interests, or in respect of dividends or distributions which any such person
shall be entitled to receive pursuant to this Article II upon such delivery.
(c) Notwithstanding the foregoing, neither the Exchange Agent nor any party
hereto shall be liable to any former holder of Company Stock for any amount
properly delivered to a public official pursuant to applicable abandoned
property, escheat or similar laws.
(d) No dividends or other distributions on Acquiror Common Stock with a
record date occurring after the Effective Time shall be paid to the holder of
any unsurrendered Old Certificate representing shares of Company Common Stock
converted in the Merger into the right to receive shares of such Acquiror Common
Stock until the holder thereof shall be entitled to receive New Certificates in
exchange therefor in accordance with this Article III, and no such shares of
Company Common Stock shall be eligible to vote until the holder of Old
Certificates is entitled to receive New Certificates in accordance with this
Article II. After becoming so entitled in accordance with this Article II, the
record holder thereof also shall be entitled to receive any such dividends or
other distributions, without any interest thereon, which theretofore had become
payable with respect to shares of Acquiror Common Stock such holder had the
right to receive upon surrender of the Old Certificate.
(e) Any portion of the Exchange Fund that remains unclaimed by the
stockholders of the Company for six months after the Effective Time shall be
returned to the Acquiror. Any stockholders of the Company who have not
theretofore complied with this Article III shall thereafter look only to the
Acquiror for payment of the shares of Acquiror Common Stock, cash in lieu of any
fractional shares and unpaid dividends and distributions on the Acquiror Common
Stock deliverable in respect of each share of Company Common Stock such
stockholder holds as determined pursuant to this Agreement, in each case,
without any interest thereon.
A-3
48
ARTICLE III
CONDITIONS; TERMINATION
3.01 Conditions. The obligations of each party hereto to effect the
Merger are conditioned upon occurrence of the Effective Time in accordance with
the Combination Agreement and are subject to the conditions set forth in Article
VII thereof.
3.02 Termination. (a) This Plan shall terminate upon, and be of no
further force or effect following, any termination of the Combination Agreement
in accordance with its terms.
(b) This Plan may be terminated by an agreement in writing executed by all
parties hereto.
ARTICLE IV
MISCELLANEOUS
4.01 Survival. No representations, warranties, agreements and covenants
contained in this Plan (other than in this Article IV) shall survive the
Effective Time or termination of this Plan if this Plan is terminated prior to
the Effective Time; provided, however, that if this Agreement is terminated
prior to the Effective Time, the agreements of the parties contained in this
Article IV shall survive such termination.
4.02 Waiver; Amendment. Prior to the Effective Time, any provision of
this Plan may be (a) waived by the party benefitted by the provision, or (b)
amended or modified at any time, by an agreement in writing between the parties
hereto approved by their respective Boards of Directors and executed in the same
manner as this Plan, except that, after approval of the Combination by the
stockholders of the Company, no amendment may be made which under applicable law
requires further approval of such stockholders without obtaining such required
further approval.
4.03 Counterparts. This Plan may be executed in one or more counterparts,
each of which shall be deemed to constitute an original.
4.04 Governing Law. This Plan shall be governed by, and interpreted in
accordance with, the laws of the State of New York applicable to contracts made
and to be performed entirely within such State.
4.05 Notices. All notices, requests and other communications hereunder to
a party shall be in writing and shall be deemed given, (a) on the date
delivered, if personally delivered or telecopied (with confirmation), (b) on the
first business day following the date of dispatch, if delivered by a recognized
next-day courier services, or (c) on the third business day following the date
of mailing, if mailed by registered or certified mail (return receipt
requested), in each case to such party at its address or telecopy number set
forth below or such other address or number as such party may specify by notice
to the parties hereto.
If to the Company, to:
President
North American Mortgage Company
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
A-4
49
If to the Acquiror, to:
▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Dime Bancorp, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇.
4.06 Entire Understanding; No Third Party Beneficiaries. This Plan and
the Combination Agreement (together with Disclosure Schedules) represent the
entire understanding of the parties hereto with reference to the transactions
contemplated hereby and thereby and this Agreement supersedes any and all other
oral or written agreements heretofore made. Nothing in this Plan, expressed or
implied, is intended to confer upon any person, other than the parties hereto or
their respective successors, any rights, remedies, obligations or liabilities
under or by reason of this Plan.
4.07 Interpretation. When a reference is made in this Plan to Sections,
Exhibits or Schedules, such reference shall be to a Section of, or Exhibit or
Schedule to, this Plan unless otherwise indicated. The headings contained in
this Plan are for reference purposes only and are not part of this Plan.
Whenever the words "include," "includes" or "including" are used in this Plan,
they shall be deemed to be followed by the words "without limitation." No
provision of this Plan shall be construed to require the Company, the Acquiror
or any of their respective Subsidiaries or affiliates to take any action which
would violate applicable law (whether statutory or common law), rule or
regulation.
A-5
50
* * *
IN WITNESS WHEREOF, the parties hereto have caused this Plan to be executed
in counterparts by their duly authorized officers, all as of the day and year
first above written.
NORTH AMERICAN MORTGAGE COMPANY
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
Title: Chairman and Chief Executive
Officer
DIME BANCORP. INC.
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Chief Executive Officer,
President and
Chief Operating Officer
THE DIME SAVINGS BANK OF NEW YORK, FSB
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Chief Executive Officer,
President and
Chief Operating Officer
47TH ST. PROPERTY CORPORATION
By: /s/ D. ▇▇▇▇▇ ▇▇▇▇▇
------------------------------------
Name: D. ▇▇▇▇▇ ▇▇▇▇▇
Title: Senior Vice President
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51
EXHIBIT B
FORM OF AMENDMENT TO COMPANY RIGHTS AGREEMENT
AMENDMENT, dated as of June 22, 1997 (the "Amendment"), to the Stockholder
Rights Agreement, dated as of October 19, 1992 (as amended, the "Rights
Agreement"), between North American Mortgage Company, a Delaware corporation
(the "Company"), and The Bank of New York, a New York banking corporation, as
Rights Agent (the "Rights Agent").
WITNESSETH
WHEREAS, on October 19, 1992, the Board of Directors of the Company
authorized and declared a dividend distribution of one Right for each share of
Common Stock outstanding at the close of business on the Record Date, each Right
representing the right to purchase one one-hundredth of a share of Preferred
Stock upon the terms and conditions set forth in the Rights Agreement;
WHEREAS, the Rights remain issued and outstanding and the Rights Agreement
remains in effect with respect thereto;
WHEREAS, no Distribution Date has occurred;
WHEREAS, the Company, Dime Bancorp, Inc., a Delaware corporation ("Dime"),
and The Dime Savings Bank of New York, FSB, a federal savings bank (the "Bank"),
have entered into an Agreement and Plan of Combination (the "Combination
Agreement"), pursuant to which the Bank would acquire the assets and assume the
liabilities of the Company (or assign the right to acquire such assets and
assume such liabilities to a corporation wholly owned and controlled by the
Bank); and
WHEREAS, in connection with the approval, execution, and delivery of the
Combination Agreement, the Board of Directors of the Company has approved, in
accordance with Section 27 of the Rights Agreement, this Amendment and has
directed the appropriate officers of the Company to take all appropriate steps
to execute and deliver this Amendment.
NOW, THEREFORE, in consideration of the premises and mutual agreements
herein set forth, the parties hereby agree as follows:
(1) Amendment to Section 1(a)
The first paragraph of Section 1(a) of the Rights Agreement is hereby
amended to read in its entirety as follows:
"(a) 'Acquiring Person' shall mean any Person who or which, together
with all Affiliates (as hereinafter defined) and Associates (as hereinafter
defined) of such Person, shall be the Beneficial Owner (as hereinafter
defined) of 15% or more of the shares of Common Stock, but shall not
include (i) the Company, (ii) any Subsidiary (as such term is hereinafter
defined) of the Company, (iii) any employee benefit plan or compensation
arrangement of the Company or any Subsidiary of the Company, (iv) any
Person holding shares of Common Stock organized, appointed or established
by the Company or any Subsidiary of the Company for or pursuant to the
terms of any such employee benefit plan or compensation arrangement, or (v)
until the termination of the Combination Agreement in accordance with its
terms, Dime or any Affiliate or Associate of Dime, as a result of their
acquisition of Beneficial Ownership of shares of Common Stock by reason of
the approval, execution, or delivery of the Combination Agreement, or by
reason of the consummation of any transaction contemplated by the
Combination Agreement, so long as Dime and any Affiliate or Associate of
Dime is not the Beneficial Owner of any shares of Common Stock other than
(w) shares of Common Stock of which Dime or any Affiliate or Associate of
Dime is or becomes the Beneficial Owner by reason of the approval,
execution, or delivery of the Combination Agreement, or by reason of the
consummation of any transaction contemplated by the Combination Agreement,
(x) shares of Common Stock Beneficially Owned by Dime or any Affiliate or
Associate of Dime on the date hereof, (y) shares of Common Stock of which
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Dime or any Affiliate or Associate of Dime inadvertently becomes the
Beneficial Owner after the date hereof, provided that the number of such
shares of Common Stock does not exceed 1/2 of 1% of the shares of Common
Stock outstanding on the date hereof and that Dime or any such Affiliate or
Associate, as the case may be, divests such shares of Common Stock as soon
as practicable after it becomes aware of such acquisition of Beneficial
Ownership, and (z) shares of Common Stock Beneficially Owned or otherwise
held by Dime or any Affiliate or Associate of Dime in fiduciary capacity or
in satisfaction of debts previously contracted in good faith (the Persons
described in clauses (i) through (v) above are referred to herein as
'Exempt Persons')."
(2) Amendment to Section 1(b)
Section 1(b) of the Rights Agreement is hereby amended to read in its
entirety as follows:
"(b) 'Adverse Person' shall mean any Person declared to be an Adverse
Person by the Board of Directors upon a determination of the Board of
Directors that the criteria set forth in Section 11(a)(ii)(B) apply to such
Person, provided, however, that the Board of Directors shall not declare
Dime or any Affiliate or Associate of Dime to be an Adverse Person (i) as a
result of the Combination Agreement, their acquisition of Beneficial
Ownership of shares of Common Stock by reason of the Combination Agreement,
or by reason of the consummation of any transaction contemplated by the
Combination Agreement or (ii) unless the Combination Agreement has been
terminated in accordance with its terms."
(3) Addition of Section 1(z).
A new Section 1(z) of the Rights Agreement is inserted, to read in its
entirety as follows:
"(z) 'Dime' shall mean Dime Bancorp, Inc., a Delaware corporation, and
its successors."
(4) Addition of Section 1(aa).
A new Section 1(aa) of the Rights Agreement is inserted, to read in its
entirety as follows:
"(aa) 'Combination Agreement' shall mean the Agreement and Plan of
Combination, dated as of June 22, 1997, by and among the Company, Dime, and
The Dime Savings Bank of New York, FSB, a federal savings bank, as the same
may be amended from time to time."
(5) Amendment of Section 7(a). The first sentence of Section 7(a) of the
Rights Agreement is hereby amended to read in its entirety as follows:
"(a) Subject to Section 7(e) hereof, the registered holder of any
Right Certificate may exercise the Rights evidenced thereby (except as
otherwise provided herein) in whole or in part at any time after the
Distribution Date upon surrender of the Right Certificate, with the form of
election to purchase and the certificate on the reverse side thereof duly
executed, along with a signature guarantee and such other and further
documentation as the Rights Agent may reasonably request, to the Rights
Agent at the office or offices of the Rights Agent designated for such
purpose, together with payment of the aggregate Exercise Price of the total
number of one one-hundredth of a share of Preferred Stock (or other
securities, cash or other assets, as the case may be) as to which such
surrendered Rights are then exercised, at or prior to the earlier of (i)
the close of business on December 31, 2002 (the 'Final Expiration date'),
(ii) the time at which the Rights are redeemed as provided in Section 23
hereof, (iii) the time at which such Rights are exchanged as provided in
Section 24 hereof or (iv) the effective time of the business combination
provided for in the Combination Agreement (the earlier if (i), (ii), (iii)
or (iv) being herein referred to as the 'Expiration Date')."
(6) Effectiveness. This Amendment shall be deemed to be in force and
effective immediately prior to the execution and delivery of the Combination
Agreement. Except as amended hereby, the Rights Agreement shall remain in full
force and effect and shall be otherwise unaffected hereby.
(7) Defined Terms. Unless otherwise defined herein, all capitalized terms
used but not otherwise defined herein shall have the meanings assigned them in
the Rights Agreement.
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(8) Governing Law. This Amendment shall be deemed to be a contract made
under the laws of the State of New York and for all purposes shall be governed
by and construed in accordance with the laws of such State applicable to
contracts made and to be performed entirely within New York.
(9) Counterparts. This Amendment may be executed in any number of
counterparts, each of which shall for all purposes be deemed an original and all
of which shall together constitute but one and the same instrument.
* * *
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed as of the day and year first above written.
NORTH AMERICAN MORTGAGE COMPANY
By:
--------------------------------------
Name:
Title:
THE BANK OF NEW YORK, as Rights Agent
By:
--------------------------------------
Name:
Title:
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EXHIBIT C
FORM OF COMPANY AFFILIATE LETTER
, 1997
North American Mortgage Company
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Dime Bancorp, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
I have been advised that I may be deemed to be an "affiliate" of North
American Mortgage Company, a Delaware corporation (the "Company"), as that term
is defined in Rule 145 promulgated by the Securities and Exchange Commission
(the "SEC") under the Securities Act of 1933, as amended (the "Securities Act").
I understand that pursuant to the terms of the Agreement and Plan of
Combination, dated as of June 22, 1997 (as amended from time to time and
including the exhibits thereto, the "Agreement"), by and among the Company, Dime
Bancorp, Inc., a Delaware corporation (the "Acquiror"), and The Dime Savings
Bank of New York, FSB, a federal savings bank (the "Bank"), the Bank plans to
acquire the assets and assume the liabilities of the Company or assign the right
to acquire such assets and assume such liabilities to a corporation controlled
by the Bank (the "Combination").
I further understand that as a result of the Combination, I may receive
shares of common stock, par value $0.01 per share, of the Acquiror ("Acquiror
Common Stock") (i) in exchange for shares of common stock, par value $0.01 per
share, of the Company ("Company Common Stock") or (ii) as a result of the
exercise of Rights (as defined in the Agreement).
I have carefully read this letter and reviewed the Agreement and discussed
their requirements and other applicable limitations upon my ability to sell,
transfer, or otherwise dispose of Acquiror Common Stock and Company Common
Stock, to the extent I felt necessary, with my counsel or counsel for the
Company.
I represent, warrant and covenant with and to the Acquiror that in the
event I receive any Acquiror Common Stock as a result of the Combination.
1. I shall not make any sale, transfer, or other disposition of such
Acquiror Stock unless (i) such sale, transfer or other disposition has been
registered under the Securities Act, (ii) such sale, transfer or other
disposition is made in conformity with the provisions of Rule 145 under the
Securities Act (as such rule may be amended from time to time), or (iii) in
the opinion of counsel in form and substance reasonably satisfactory to the
Acquiror, or under a "no-action" letter obtained by me from the staff of
the SEC, such sale, transfer or other disposition will not violate or is
otherwise exempt from registration under the Securities Act.
2. I understand that the Acquiror is under no obligation to register
the sale, transfer or other disposition of shares of Acquiror Common Stock
by me or on my behalf under the Securities Act or to take any other action
necessary in order to make compliance with an exemption from such
registration available.
3. I understand that stop transfer instructions will be given to the
Acquiror's transfer agent with respect to the shares of Acquiror Common
Stock issued to me as a result of the Combination and that there will be
placed on the certificates for such shares, or any substitutions therefor,
a legend stating in substance:
"The shares represented by this certificate were issued in a transaction
to which Rule 145 promulgated under the Securities Act of 1933 applies.
The shares represented by this certificate may be transferred only in
accordance with the terms of a letter agreement between the registered
holder
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hereof and Dime Bancorp, Inc., a copy of which agreement is on file at
the principal offices of Dime Bancorp, Inc."
4. I understand that, unless transfer by me of the Acquiror Common
Stock issued to me as a result of the Combination has been registered under
the Securities Act or such transfer is made in conformity with the
provisions of Rule 145(d) under the Securities Act, the Acquiror reserves
the right, in its sole discretion, to place the following legend on the
certificates issued to my transferee:
"The shares represented by this certificate have not been registered
under the Securities Act of 1933 and were acquired from a person who
received such shares in a transaction to which Rule 145 under the
Securities Act of 1933 applies. The shares have been acquired by the
holder not with a view to, or for resale in connection with, any
distribution thereof within the meaning of the Securities Act of 1933
and may not be offered, sold, pledged or otherwise transferred except in
accordance with an exemption from the registration requirements of the
Securities Act of 1933."
It is understood and agreed that the legends set forth in paragraphs (3)
and (4) above shall be removed by delivery of substitute certificates without
such legend if I shall have delivered to the Acquiror (i) a copy of a "no
action" letter from the staff of the SEC, or an opinion of counsel in form and
substance reasonably satisfactory to the Acquiror, to the effect that such
legend is not required for purposes of the Securities Act, or (ii) evidence or
representations satisfactory to the Acquiror that the Acquiror Common Stock
represented by such certificates is being or has been sold in conformity with
the provisions of Rule 145(d).
I further understand and agree that this letter agreement shall apply to
all shares of Company Common Stock and Acquiror Common Stock that I am deemed to
beneficially own pursuant to applicable federal securities laws and I further
represent, warrant and covenant with and to the Acquiror that I will have, and
will cause each of the other parties whose shares are deemed to be beneficially
owned by me to have, all shares of Company Common Stock or Acquiror Common Stock
owned by me or such parties registered in my name or the name of such parties,
as applicable, prior to the effective date of the Combination and not in the
name of any bank, broker or dealer, nominee or clearing house.
Very truly yours,
--------------------------------------
Name:
Accepted this day of
, 1997.
NORTH AMERICAN MORTGAGE COMPANY
By
------------------------------------------------------
Name:
Title:
DIME BANCORP, INC.
By
------------------------------------------------------
Name:
Title:
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