EXHIBIT 10.47
AGREEMENT AND PLAN OF COMBINATION
dated as of June 22, 1997
by and among
NORTH AMERICAN MORTGAGE COMPANY
DIME BANCORP, INC.
THE DIME SAVINGS BANK OF NEW YORK, FSB
and
47TH ST. PROPERTY CORPORATION
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AMENDED AND RESTATED
as of
July 31, 1997
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TABLE OF CONTENTS
Page
RECITALS.....................................................................1
ARTICLE I
Certain Definitions; Interpretation..........................................1
1.01 Certain Definitions............................................1
1.02 Interpretation.................................................10
ARTICLE II
The Merger...................................................................10
2.01 The Merger.....................................................10
2.02 Reservation of Right to Revise Structure.......................11
2.03 Effective Time.................................................11
ARTICLE III
Consideration................................................................11
3.01 Consideration..................................................11
3.02 Rights as Stockholders; Stock Transfers........................12
3.03 Fractional Shares..............................................12
3.04 Exchange Procedures............................................12
3.05 Anti-Dilution Provisions.......................................14
3.06 Options........................................................14
ARTICLE IV
Actions Pending the Merger...................................................16
4.01 Forbearances of the Company....................................16
4.02 Forbearances of the Acquiror...................................19
4.03. Coordination of Dividends......................................20
ARTICLE V
Representations and Warranties...............................................20
5.01 Disclosure Schedules...........................................20
5.02 Standard.......................................................20
5.03 Representations and Warranties of the Company..................20
5.04 Representations and Warranties of the Acquiror.................37
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ARTICLE VI
Covenants....................................................................43
6.01 Reasonable Best Efforts........................................43
6.02 Stockholder Approvals..........................................43
6.03 Registration Statement.........................................43
6.04 Press Releases.................................................44
6.05 Access; Information............................................44
6.06 Acquisition Proposals..........................................45
6.07 Affiliate Agreements...........................................46
6.08 Takeover Laws..................................................46
6.09 No Rights Triggered............................................46
6.10 Rights Agreement...............................................46
6.11 NYSE Listing...................................................47
6.12 Regulatory Applications........................................47
6.13 Indemnification................................................47
6.14 Benefit Plans..................................................49
6.15 Accountants' Letters...........................................50
6.16 Notification of Certain Matters................................50
6.17 Certain Policies of the Company................................50
6.18 Employee Benefits..............................................51
6.19 Certain Payments at Effective Time.............................51
6.20 Certain Employee Agreements....................................52
ARTICLE VII
Conditions to Consummation of the Merger.....................................52
7.01 Conditions to Each Party's Obligation to Effect the ...........52
7.02 Conditions to Obligation of the Company........................53
7.03 Conditions to Obligation of the Acquiror.......................54
ARTICLE VIII
Termination..................................................................55
8.01 Termination....................................................55
8.02 Effect of Termination and Abandonment..........................57
8.03 Termination Fee................................................57
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ARTICLE IX
Miscellaneous................................................................59
9.01 Survival.......................................................59
9.02 Waiver; Amendment..............................................60
9.03 Counterparts...................................................60
9.04 Governing Law..................................................60
9.05 Expenses.......................................................60
9.06 Notices........................................................60
9.07 Entire Understanding; No Third Party Beneficiaries.............61
EXHIBIT A Form of Amendment to Company Rights Agreement
EXHIBIT B Form of Company Affiliate Letter
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AGREEMENT AND PLAN OF COMBINATION, dated as of June 22, 1997 and
amended and restated as of July 31, 1997 (this "Agreement"), by and among North
American Mortgage Company (the "Company"), Dime Bancorp, Inc. (the "Acquiror"),
The Dime Savings Bank of New York, FSB (the "Bank"), and 47th St. Property
Corporation ("Merger Sub").
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. Merger Sub. Merger Sub is a Delaware corporation and a wholly owned
subsidiary of the Bank. Merger Sub has engaged in no business other than as an
incident to the transactions contemplated by this Agreement.
E. Intentions of the Parties. It is the intention of the parties to
this Agreement that the business combination contemplated hereby be treated as a
"reorganization" under Section 368 of the Internal Revenue Code of 1986, as
amended (the "Code").
F. 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.
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"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 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.
"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.
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"Bank" has the meaning set forth in the preamble to this Agreement.
"Code" has the meaning set forth in Recital D.
"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).
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"Consideration" has the meaning set forth in Section 3.01.
"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 Merger.
"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 Merger becomes
effective.
"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).
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations thereunder.
"Exchange Agent" has the meaning set forth in Section 3.04.
"Exchange Fund" has the meaning set forth in Section 3.04.
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"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.
"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)
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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
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
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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.
"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 Merger 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 2.01.
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"Multiemployer Plan" means, with respect to any person, a
multiemployer plan within the meaning of Section 3(37) of ERISA.
"New Certificates" has the meaning set forth in Section 3.04.
"NYSE" means the New York Stock Exchange, Inc.
"Old Certificates" has the meaning set forth in Section 3.04.
"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.
"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.
"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.
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"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 2.01.
"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).
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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 Merger
2.01 The Merger. (a) Subject to and upon the terms and conditions of
this Agreement, at the Effective Time, Merger Sub shall merge with and into the
Company (the "Merger"), the separate corporate existence of Merger Sub shall
cease and the Company shall survive and continue to exist as a Delaware
corporation (the Company, as the surviving corporation in the Merger, sometimes
being referred to herein as the "Surviving Corporation").
(b) Effectiveness and Effects of the Merger. Subject to the
satisfaction or waiver of the conditions set forth in Article VII, 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 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. The certificate of
incorporation and by-laws of the Surviving Corporation shall be, respectively,
the certificate of incorporation of the Company, as in effect immediately prior
to the Effective Time, and the by-laws of the Company, 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.
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2.02 Reservation of Right to Revise Structure. At the Bank's election,
the Merger 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 (other than Merger Sub) 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.
2.03 Effective Time. Subject to the satisfaction or waiver of the
conditions set forth in Article VII, the parties shall cause the Merger 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, 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 right to receive
1.37 shares of Acquiror Common Stock (together with the related
Acquiror Rights) (subject to possible adjustment as set forth in
Sections 3.05 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").
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(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.
3.02 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 the right 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 III. 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.
3.03 Fractional Shares. Notwithstanding any other provision in this
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
(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.
3.04 Exchange Procedures. (a) At or prior to the Effective Time, the
Acquiror shall deposit, or shall cause to be deposited, with an exchange agent
appointed prior to the Effective Time by the Acquiror (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 III, 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 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
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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. No interest will be paid on any 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 III. After becoming so entitled in accordance with this Article III, 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.
3.05 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 a stock
split, stock dividend, recapitalization or
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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.
3.06 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 3.06(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 3.06(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
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notwithstanding the action of the Company referred to in the first sentence
of this Section 3.06(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 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 3.06. 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 Merger
4.01 Forbearances 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
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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.
(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
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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) short-term
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.
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(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 Merger 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
Merger 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'
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).
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(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 Forbearances 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 Merger 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
Merger 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 receive one dividend, for any single calendar
quarter with respect to their shares of Company Common Stock and/or any shares
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of Acquiror Common Stock that any such holder receives in exchange therefor
pursuant to the Merger.
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 Merger 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, the Bank and Merger 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.
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(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 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
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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 Merger 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 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 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
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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
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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;
(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
-24-
$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
-25-
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).
(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
-26-
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 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.
-27-
(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.
-28-
(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, 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
-29-
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, 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
-30-
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
-31-
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 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
-32-
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 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,
-33-
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
-34-
respects whenever made or reaffirmed by any of them and the
Company and each of its 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
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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 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,
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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, the Bank and Merger 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, the
Bank and Merger 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.
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(ii) The shares of Acquiror Common Stock to be issued as
Consideration, when issued in accordance with the terms of this
Agreement, will be duly authorized, validly issued, fully paid and
nonassessable.
(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 Merger Sub 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. This Agreement and the transactions
contemplated hereby have been authorized by all requisite corporate action on
the part of Acquiror, the Bank and Merger Sub. This Agreement is a valid and
legally binding agreement of each of the Acquiror, the Bank and Merger 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, the Bank or Merger Sub of this Agreement 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
Merger (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; 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 Merger.
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).
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(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 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.
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(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.
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(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; (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
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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 Merger 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 ByLaws, 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 Merger (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 Merger (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
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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 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.
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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 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
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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 B.
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 Merger and the other
transactions contemplated by this Agreement and (ii) to ensure that neither the
Acquiror, the Bank nor Merger 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 Merger, 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 Merger.
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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
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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 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
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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 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
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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 Merger 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 Merger,
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shareholder approval of the Merger, 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
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 6.19of 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
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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 Merger
7.01 Conditions to Each Party's Obligation to Effect the Merger. The
respective obligation of each of the Acquiror and the Company to consummate the
Merger 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 Merger 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) or on the Surviving Corporation.
(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 Merger 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.
(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
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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 Merger 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 Merger 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 Merger 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
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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 Merger 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 Merger 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 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 Merger 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.
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ARTICLE VIII
Termination
8.01 Termination. This Agreement may be terminated, and the Merger 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 Merger is not
consummated by December 31, 1997, except to the extent that the failure of the
Merger 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 Merger 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
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accordance with Section 6.02 or otherwise) or (ii) the 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 Merger; 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
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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 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 Merger 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 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
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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 Merger.
(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 Merger 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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(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 Merger 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.
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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: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇.
If to the Acquiror, to:
▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Dime Bancorp, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
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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.
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