1
Exhibit A
AGREEMENT AND PLAN OF MERGER
by and among
ABN AMRO NORTH AMERICA, INC.,
a Delaware corporation,
HEITRITZ CORP.,
a Delaware corporation
and
STANDARD FEDERAL BANCORPORATION, INC.,
a Michigan corporation
November 21, 1996
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TABLE OF CONTENTS
Page
ARTICLE I
MERGER; CLOSING; EFFECTIVE TIME; DEFINITIONS
1.1 The Merger........................................................... 1
1.2 Closing; Effective Time.............................................. 2
1.3 Articles of Incorporation; Bylaws.................................... 2
1.4 Directors and Officers............................................... 2
1.5 Definitions.......................................................... 2
ARTICLE II
CONVERSION OF SHARES IN THE MERGER
2.1 Terms of Merger...................................................... 8
2.2 Payment for Shares................................................... 8
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
3.1 Organization, Standing and Power.................................... 9
3.2 Capitalization...................................................... 10
3.3 Subsidiaries........................................................ 11
3.4 Company Financial Statements; Absence of Liabilities................ 11
3.5 Authority of the Company; No Violation.............................. 12
3.6 Insurance........................................................... 13
3.7 Books and Records................................................... 13
3.8 Title to Assets..................................................... 13
3.9 Real Properties..................................................... 13
3.10 Litigation.......................................................... 14
3.11 Taxes............................................................... 14
3.12 Compliance with Applicable Laws; Company Permits.................... 16
3.13 Performance of Obligations.......................................... 16
3.14 Employees........................................................... 17
3.15 Material Contracts.................................................. 17
3.16 Absence of Certain Changes.......................................... 18
3.17 Loans and Investments............................................... 19
3.18 Intellectual Properties............................................. 19
3.19 Company Benefit Plans............................................... 20
3.20 Regulatory Approvals................................................ 24
3.21 Company Regulatory Reports.......................................... 24
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3.22 Company Facilities................................................. 24
3.23 Environmental Conditions........................................... 25
3.24 Proxy Statement.................................................... 25
3.25 Insider Interests.................................................. 26
3.26 Fairness Opinion................................................... 26
3.27 Brokers and Finders................................................ 26
3.28 Bylaws; State Takeover Statutes.................................... 26
3.29 Rights Agreement................................................... 26
3.30 Accuracy of Information Furnished.................................. 27
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
4.1 Organization, Standing and Power .................................. 27
4.2 Authority; No Violation............................................ 27
4.3 Regulatory Approvals............................................... 28
4.4 Litigation......................................................... 28
4.5 Adequate Funds .................................................... 28
4.6 Proxy Statement.................................................... 28
4.7 Accuracy of Information Furnished ................................. 28
4.8 Share Ownership.................................................... 28
ARTICLE V
ADDITIONAL COVENANTS AND AGREEMENTS
5.1 Conduct of Business by the Company................................. 28
5.2 Filings and Approvals.............................................. 31
5.3 Securities Reports................................................. 32
5.4 Acquisition Transaction............................................ 32
5.5 Notification of Certain Matters.................................... 33
5.6 Access to Information; Confidentiality............................. 33
5.7 Shareholder Approval............................................... 35
5.8 Employee Benefits.................................................. 36
5.9 Company Incentive Plans............................................ 37
5.10 Indemnification.................................................... 37
5.11 Bank Director Matters.............................................. 38
5.12 Rights Agreement................................................... 38
5.13 Further Assurances; Form of Transaction............................ 38
5.14 WARN Act........................................................... 38
5.15 Action by MergerSub................................................ 39
5.16 Dividend During Closing Quarter.................................... 39
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ARTICLE VI
CONDITIONS
6.1 Conditions to Obligations of Each Party........................... 39
6.2 Additional Conditions to Obligations of Company................... 39
6.3 Additional Conditions to Obligations of Purchaser and MergerSub... 40
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
7.1 Termination....................................................... 41
7.2 Effect of Termination............................................. 42
ARTICLE VIII
GENERAL PROVISIONS
8.1 Publicity......................................................... 44
8.2 Expenses.......................................................... 44
8.3 Survival.......................................................... 44
8.4 Notices........................................................... 44
8.5 Amendment......................................................... 46
8.6 Waiver............................................................ 46
8.7 Interpretation.................................................... 46
8.8 Severability...................................................... 46
8.9 Miscellaneous..................................................... 46
8.10 Counterparts...................................................... 46
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AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER ("Agreement") is entered into on
November 21, 1996, by and among ABN AMRO NORTH AMERICA, INC., a Delaware
corporation ("Purchaser"), HEITRITZ CORP., a Delaware corporation and
wholly-owned subsidiary of Purchaser ("MergerSub"), and STANDARD FEDERAL
BANCORPORATION, INC., a Michigan corporation (the "Company").
Purchaser and the Company desire to have MergerSub merge with and into the
Company (the "Merger"), as the result of which the Company will be the
surviving corporate entity, with the Merger to be upon the terms and subject to
the conditions set forth herein.
As an inducement to the willingness of Purchaser to enter into this
Agreement, the Company will, immediately after the execution and delivery of
this Agreement by the parties hereto, enter into an Option Agreement in an
amount up to 19.9% of the outstanding shares of Company Common Stock upon the
terms and conditions set forth therein.
The Boards of Directors of Purchaser, MergerSub and the Company have each
duly approved this Agreement.
In consideration of the premises and the mutual covenants,
representations, warranties and agreements contained herein, Purchaser and the
Company agree as follows:
ARTICLE I
MERGER; CLOSING; EFFECTIVE TIME; DEFINITIONS
1.1 The Merger.
(a) Subject to the terms and conditions of this Agreement, including
the receipt of all requisite regulatory and shareholder approvals, the
Company and MergerSub shall consummate the Merger, pursuant to which (i)
MergerSub shall be merged with and into the Company and the separate corporate
existence of MergerSub shall thereupon cease, (ii) the Company shall be the
surviving corporation in the Merger (the "Surviving Corporation") and shall
become a wholly-owned subsidiary of Purchaser, (iii) the Company shall continue
to be governed by the laws of the State of Michigan with all its rights,
privileges, powers and franchises unaffected by the Merger, and (iv) the
Surviving Corporation shall possess all assets and property of every
description, and every interest in the assets and property, contingent or
otherwise, wherever located, and the rights, privileges, immunities, powers,
franchises and authority, of a public as well as a private nature, of each of
the Company and MergerSub, including, without limitation, any possible
recoveries due to the Bank under existing goodwill litigation, and all
obligations belonging or due to each of the Company or MergerSub, all of which
shall vest in the Surviving Corporation without further act or deed.
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(b) The Company will cooperate in the preparation by Purchaser and
MergerSub of such applications to the Applicable Governmental Authorities and
any other regulatory authorities as may be necessary in connection with all
governmental approvals requisite to the consummation of the transactions
contemplated hereby. Purchaser and the Company will each cooperate in the
preparation of such applications, statements or materials as may be required to
be furnished to the shareholders of the Company or filed or submitted to
appropriate governmental agencies in connection with the Merger and with
solicitation of the approval by shareholders of the Company in respect thereof.
1.2 Closing; Effective Time. The Closing of the Merger shall take place
on a date which (i) shall be no later than the first business day of the
calendar month following twenty (20) calendar days after the last of the
conditions set forth in Sections 6.1(a), 6.1(b) and 6.2(e) has been fulfilled
or waived, or (ii) is mutually agreed upon by the parties at the offices of
Vedder, Price, ▇▇▇▇▇▇▇ & Kammholz, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, at a time to be mutually agreed upon by the parties. The
Merger shall become effective upon the filing, on the day of Closing or as soon
thereafter as is practicable, of a certificate of merger as provided in the
DGCL and MBCA, or at such time thereafter as Purchaser and the Company may
agree upon in writing to provide in such certificate of merger.
1.3 Articles of Incorporation; Bylaws. At the Effective Time, the Charter
and the Bylaws of MergerSub, as in effect immediately prior to the Effective
Time, shall become the Articles of Incorporation and Bylaws, respectively, of
the Surviving Corporation.
1.4 Directors and Officers. The directors and officers of MergerSub at
the Effective Time shall, from and after the Effective Time, be the directors
and officers, respectively, of the Surviving Corporation until their successors
have been duly elected or appointed in accordance with the Bylaws of the
Surviving Corporation.
1.5 Definitions. In addition to capitalized terms otherwise defined
herein, as used in this Agreement the following capitalized terms shall have
the meanings provided in this Section 1.5:
"Acquisition Transaction" means (i) a bona fide tender or exchange offer
for at least 10% of the then outstanding shares of any class of capital stock
of the Company by any Person other than Purchaser or an Affiliate of Purchaser,
(ii) a merger, consolidation or other business combination with the Company or
the Bank involving any Person other than Purchaser or an Affiliate of
Purchaser, (iii) any sale, lease, exchange, mortgage, pledge, transfer or other
disposition (whether in one transaction or a series of related transactions)
involving a substantial part of the Company's consolidated assets, including
stock of any of the Company's subsidiaries, to any Person other than Purchaser
or an Affiliate of Purchaser, (iv) the acquisition by any Person (other than
Purchaser or an Affiliate of Purchaser or any of the Company's subsidiaries in
a fiduciary capacity for third parties) of beneficial ownership (within the
meaning of Rule 13d-3 under the 1934 Act, but including any shares that may be
acquired pursuant to the exercise of any right, option, warrant or other
agreement regardless of when such exercise may
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occur) of 10% or more of the then outstanding shares of any class of
capital stock of the Company, including shares of capital stock currently owned
by such Person, (v) any reclassification of securities or recapitalization of
the Company or other similar transaction that has the effect, directly or
indirectly, of increasing the proportionate share of any class of equity
security, including securities convertible into equity securities, of the
Company which is owned by any Person other than Purchaser or an Affiliate of
Purchaser, (vi) a public proxy or consent solicitation made to shareholders of
the Company seeking proxies or consents in opposition to any proposal relating
to any of the transactions contemplated by this Agreement that has been
recommended by the Board of Directors of the Company, (vii) the filing of an
application or notice with the Applicable Governmental Authorities or any other
federal or state regulatory authority seeking approval to engage in one or more
of the transactions described in clauses (i) through (vi) above, or (viii) the
making of a bona fide proposal to the Company or its shareholders by public
announcement or written communication, that is or becomes the subject of public
disclosure, to engage in one or more of the transactions described in clauses
(i) through (vi) above;
"Affiliate" of, or a person "Affiliated" with, a specific person is a
person that directly or indirectly, through one or more intermediaries,
controls, or is controlled by, or is under common control with, the person
specified;
"Applicable Governmental Authorities" means the Federal Reserve, OTS,
FDIC, CFIUS, U.S. Department of Justice, DCB, Michigan Banking Commissioner,
and any other federal or state governmental authority having jurisdiction over
the Merger and/or the transactions contemplated herein;
"Bank" means Standard Federal Bank, a federally-chartered stock savings
bank that is wholly-owned by the Company, with its principal office at ▇▇▇▇
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇;
"Bank Common Stock" shall have the meaning given such term in Section
3.1(a) hereof;
"Benefits Letter" means the letter agreement of even date herewith between
Purchaser and the Company which is referred to in Section 5.8 hereof;
"Cancellation Agreements" shall have the meaning given such term in
Section 5.9 hereof;
"CFIUS" means the Committee on Foreign Investment in the United States;
"Closing" means the performance by the parties of all of the conditions
set forth in Article VI, which shall take place as provided in Section 1.2
hereof;
"Code" means the Internal Revenue Code of 1986, as amended;
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"Company Benefit Plans" means the plans, programs, arrangements and
agreements described in Section 3.19(a) hereof;
"Company Certificate" means a stock certificate evidencing ownership of
shares of Company Common Stock;
"Company Common Stock" means the common stock, no par value, of the
Company;
"Company Disclosure Schedule" shall have the meaning given such term in
Section 3.3 hereof;
"Company Financial Statements" means the audited consolidated financial
statements of the Company contained, or incorporated by reference, in the
Company's Annual Report on Form 10-K for the year most recently ended, as filed
with the SEC, and as updated by the unaudited consolidated financial statements
of the Company included as a part of the Company's Quarterly Reports on Form
10-Q filed with the SEC subsequent thereto;
"Company Incentive Plans" means the Standard Federal Bancorporation, Inc.
First Amended Employee Stock Option and Appreciation Rights Plan and Standard
Federal Bancorporation, Inc. 1995 Stock Option and Shareholder Value Plan;
"Company Pension Plans" shall have the meaning given to such term in
Section 3.19(a) hereof;
"Company Permits" shall have the meaning given such term in Section 3.12;
"Company Qualified Plans" shall have the meaning given to such term in
Section 3.19(b) hereof;
"Company Regulatory Reports" shall have the meaning given to such term in
Section 3.21 hereof;
"Company Report" shall have the meaning given to such term in Section
5.6(b) hereof;
"Company Subsidiary" shall mean each of the Bank and any of the Non-Bank
Subsidiaries individually or collectively, the "Company Subsidiaries";
"Confidentiality Agreement" means that agreement dated August 13, 1996
between Purchaser and ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., as agent for the Company;
"DCB" means the Dutch Central Bank;
"DGCL" means the Delaware General Corporation Law, as amended;
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"Disclosure Schedule Updates" shall have the meaning given such term in
Section 5.5(b) thereof;
"Effective Time" means the time at which the certificate of merger
relating to the Merger to be filed pursuant to Section 1.2 hereof shall become
effective in accordance with the DGCL and MBCA;
"Environmental Laws" means any law, regulation, rules, ordinance or
similar requirement which governs or protects the environment, enacted by the
United States, any state, or any county, city or agency or subdivision of the
United States or any state;
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended;
"Exchange Agent" means LaSalle National Bank, as agent for the purpose of
effectuating the exchange of Company Certificates for the Merger Consideration
in accordance with Article II hereof;
"FDIC" means the Federal Deposit Insurance Corporation;
"FHLBI" means the Federal Home Loan Bank of Indianapolis;
"FHLBC" means the Federal Home Loan Bank of Chicago;
"Federal Reserve" means the Board of Governors of the Federal Reserve
System;
"GAAP" means generally accepted accounting principles consistently
applied;
"Hazardous Materials" means any material or substance: (1) which is a
"hazardous substance," "pollutant," or "contaminant" pursuant to the
Comprehensive Environmental Response Compensation and Liability Act
("CERCLA")(42 U.S.C. 9601 et seq.), as amended, and the regulations promulgated
thereunder; (2) containing gasoline, oil, diesel fuel or other petroleum
products; (3) which is "hazardous waste" pursuant to the Federal Resource
Conservation and Recovery Act ("RCRA")(42 U.S.C. 6901 et seq.), as amended, and
the regulations promulgated thereunder; (4) containing asbestos; (5) which is
radioactive; (6) the presence of which requires investigation or remediation
under any Environmental Law; or (7) which is defined or identified as a
"hazardous waste," "hazardous substance," "pollutant," "contaminant," or
"biologically hazardous material" under any Environmental Law;
"HOLA" means the federal Home Owners' Loan Act, as amended;
"Immediate Family" means a person's spouse, parents, in-laws, children and
siblings;
"IRS" means the Internal Revenue Service;
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"Knowledge" or "to the knowledge of" means to the knowledge of ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇;
"MBCA" means the Michigan Business Corporation Act, as amended;
"Material Adverse Effect" means, with respect to an entity, any condition,
event, change or occurrence that has or may reasonably be expected to have a
material adverse change on the business, operations, prospects, results of
operations or financial condition of such entity on a consolidated basis but
shall not include (i) an adverse change with respect to, or effect on such
entity resulting from any change in law, rule or regulation generally
applicable to financial institutions, GAAP or regulatory accounting principles,
as such would apply to the financial statements of such entity; or (ii) an
adverse change with respect to, or effect on, such entity resulting from the
fee paid to ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co. as contemplated by Section 3.27 and the
reasonable expenses incurred in connection with this Agreement or the
transactions contemplated hereby;
"Merger" means the merger of MergerSub with and into the Company pursuant
to Section 1.1(a) hereof;
"Merger Consideration" means the right to receive $59.00 in cash per share
of Company Common Stock, into which shares of Company Common Stock shall be
converted in the Merger pursuant to Section 2.1 hereof;
"Mortgaged Premises" shall mean each (1) real property interest (including
without limitation any fee or leasehold interest) which is encumbered or
affected by any mortgage, deed of trust, deed to secure debt or other similar
document or instrument granting to the Bank a lien on or security interest in
such real property interest and (2) any other real property interest upon which
is situated assets or other property affected or encumbered by any document or
instrument granting to the Bank a lien thereon or security interest therein;
"Non-Bank Subsidiary" means each corporation of which the Company or the
Bank owns, directly or indirectly, at least fifty percent (50%) of the issued
and outstanding voting stock, including without limitation, each of Standard
Financial Corporation, ▇▇▇▇▇▇▇▇▇ Development Company, Standard Brokerage
Services, Inc., Eureka Service Corporation, Standard Service Corporation,
Standard Insurance Agency, Inc., a Michigan corporation, Tower Service
Corporation, Bankers Home Loan Insurance Agency, Inc., Central Mortgage
Corporation, Central Venture Corporation, Mackinac Agency, Inc., Mackinac
Realty, Inc., Standard Insurance Agency, Inc., an Indiana corporation, Fidelity
Corporation, Standard-▇▇▇▇▇ Insurance Agency, Inc. and ▇▇▇▇ Savings Service
Corporation;
"Option Agreement" means that certain Option Agreement of even date
herewith pursuant to which the Company has granted Purchaser the right to
purchase from the Company shares of Company Common Stock, subject to certain
conditions precedent, and has granted to Purchaser certain other rights;
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"OTS" means the Office of Thrift Supervision;
"PBGC" means the Pension Benefit Guaranty Corporation;
"Person" means any individual, corporation, association, partnership,
joint venture, other entity, government or governmental department or agency;
"Properties" means (1) the real estate owned or leased by the Company and
its subsidiaries and used as a banking or mortgage-related facility; (2) other
real estate owned ("REO") by the Bank or any Non-Bank Subsidiary as defined by
any federal or state financial institution regulatory agency with regulatory
authority for the Bank; (3) real estate that is in the process of pending
foreclosure or forfeiture proceedings conducted by the Bank or any Non-Bank
Subsidiary; (4) real estate that is held in trust for others by the Bank; (5)
real estate owned or leased by the Company, the Bank or any Non-Bank Subsidiary
or owned or leased by a partnership or joint venture in which the Company, the
Bank or any Non-Bank Subsidiary has an ownership interest; and (6) the
Mortgaged Premises;
"Proxy Statement" means the proxy statement to be used by the Company in
connection with the solicitation by its Board of Directors of proxies for use
at the meeting of its shareholders to be convened for the purpose of voting on
the Merger, pursuant to Section 5.7 hereof;
"Regulatory Approvals" means the approval of the Merger and transactions
contemplated herein of the Applicable Governmental Authorities;
"Rights Agreement" means that Rights Agreement by and between the Company
and Registrar and Transfer Company dated February 16, 1995;
"SAIF" means the Savings Association Insurance Fund administered by the
FDIC;
"SEC" means the Securities and Exchange Commission;
"SVU" shall have the meaning given such term in Section 5.9 hereof;
"Surviving Corporation" shall have the meaning given such term in Section
1.1(a) hereof;
"1933 Act" means the Securities Act of 1933, as amended;
"1934 Act" means the Securities Exchange Act of 1934, as amended; and
"Voting Debt" shall have the meaning given such term in Section 3.2(a)
hereof.
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ARTICLE II
CONVERSION OF SHARES IN THE MERGER
2.1 Terms of Merger. Upon the Merger becoming effective:
(a) At the Effective Time, each share of Company Common Stock issued
and outstanding immediately prior to the Effective Time of the Merger, other
than Company Common Stock owned by Purchaser or any Affiliate of Purchaser,
shall, ipso facto and without any action on the part of the holder thereof,
become and be converted into the right to receive the Merger Consideration.
The certificates representing outstanding Company Common Stock shall, after the
Effective Time of the Merger, represent only the right to receive the Merger
Consideration from Purchaser. Each holder of Company Common Stock, upon
surrender to the Exchange Agent, in proper form for cancellation, of the stock
certificate or certificates representing such Company Common Stock, shall be
entitled to receive a check from the Exchange Agent in an appropriate amount of
Merger Consideration for such shares. Until so presented and surrendered in
exchange for the Merger Consideration, each certificate which represented
issued and outstanding Company Common Stock shall be deemed for all purposes to
evidence ownership of the Merger Consideration. After the Effective Time,
there shall be no transfer on the stock transfer books of the Company of
Company Common Stock. No interest shall accrue or be payable with respect to
the Merger Consideration.
(b) Each share of Company Common Stock issued and owned of record by
Purchaser or any Affiliate of Purchaser on the Effective Time of the Merger
shall be cancelled and retired, and no securities shall be issuable and no cash
paid with respect thereto.
(c) Each share of common stock of MergerSub issued and outstanding on
the Effective Time of the Merger shall, ipso facto and without any action on
the part of the holder thereof, continue as one share of the common stock of
the Surviving Corporation and all of such shares of common stock of the
Surviving Corporation shall be owned by Purchaser. Outstanding certificates
representing shares of common stock of MergerSub shall be deemed to represent
an identical number of shares of common stock of the Surviving Corporation.
(d) Each option granted under the Company Incentive Plans issued and
outstanding immediately prior to the Effective Time shall ipso facto and
without any action on the part of holders thereof, become and be converted into
the right to receive the difference between the Merger Consideration and the
applicable option exercise price.
2.2 Payment for Shares. At and from time to time after the Effective
Time, Purchaser shall make available or cause to be made available to the
Exchange Agent amounts sufficient in the aggregate to provide all funds
necessary for the Exchange Agent to make payments of the Merger Consideration
hereof to holders of the Company Common Stock issued and outstanding
immediately prior to the Effective Time. As soon as practicable after the
Effective Time, Purchaser shall cause to be mailed to each person (or otherwise
to be delivered
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to each person, at such person's expense, who requests delivery) who
was, at the Effective Time, a holder of record of issued and outstanding Company
Common Stock, a letter of transmittal and instructions for use in effecting the
surrender of the Company Certificate(s) which, immediately prior to the
Effective Time, represented such shares. Upon surrender to the Exchange Agent
of such certificates (or such documentation as is acceptable to and required by
the Exchange Agent with respect to lost certificates), together with such letter
of transmittal, duly executed and completed in accordance with the instructions
thereto, the Exchange Agent shall promptly cause to be paid to the Persons
entitled thereto a check in the amount to which such Persons are entitled, after
giving effect to any required tax withholdings. If payment is to be made to a
Person other than the registered holder of the Company Certificate(s)
surrendered, it shall be a condition of such payment that the Company
Certificate(s) so surrendered shall be properly endorsed or otherwise in proper
form for transfer and that the person requesting such payment shall pay any
transfer or other taxes required by reason of the payment to a person other than
the registered holder of the Company Certificate(s) surrendered or established
to the satisfaction of Purchaser or the Exchange Agent that such tax has been
paid or is not applicable. One Hundred Eighty (180) days following the Effective
Time, Purchaser shall be entitled to cause the Exchange Agent to deliver to it
any funds (including any interest received with respect thereto) made available
to the Exchange Agent which have not been disbursed to holders of certificates
formerly representing Company Common Stock outstanding at the Effective Time,
and thereafter such holders shall be entitled to look to Purchaser only as
general creditors thereof with respect to the cash payable upon due surrender of
their Company Certificates. Notwithstanding anything in this Section 2 or
elsewhere in this Agreement to the contrary, neither the Exchange Agent nor any
party hereto shall be liable to a former holder of Company Common Stock for any
cash delivered to a public official pursuant to applicable escheat or abandoned
property laws. The Exchange Agent shall also deliver to Purchaser a certified
list of the names and addresses of all former registered holders of Company
Common Stock who have not then surrendered their Company Certificates to receive
the Merger Consideration to which they are entitled. Except as otherwise
provided herein or in the Letter of Transmittal, Purchaser shall pay all charges
and expenses, including those of the Exchange Agent, in connection with the
payment of the Merger Consideration in exchange for Company Common Stock.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Purchaser that each of the
following statements is true and correct on the date hereof:
3.1 Organization, Standing and Power.
(a) The Company is duly organized and existing as a corporation under
the laws of the State of Michigan and is registered with the OTS as a savings
and loan holding company. The Company has all requisite corporate power and
authority to own, lease and
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operate its properties and assets and to carry on its business as
presently conducted. Neither the scope of the business of the Company nor the
location of any of its properties requires that it be licensed to do business
in any jurisdiction other than the State of Michigan and where the failure to
be so licensed or qualified will not have a Material Adverse Effect on the
Company. True and correct copies of the Company's Articles of Incorporation and
Bylaws, both as amended to the date hereof, have been delivered to Purchaser
prior to the date hereof.
(b) The Bank is duly organized and existing as a federally-chartered
stock savings bank under HOLA and is authorized by the OTS to conduct a savings
bank business. The Bank is a member of the FHLBI, and its deposits are insured
by the SAIF in the manner and to the extent provided by law. The Bank has all
requisite corporate power and authority to own, lease and operate its
properties and assets and to carry on its business as presently conducted. True
and correct copies of the Bank's Charter and Bylaws, both as amended to the
date hereof, have been delivered to Purchaser prior to the date hereof.
(c) Each Non-Bank Subsidiary is duly organized and existing as a
corporation under the laws of the state of its incorporation and is duly
qualified or licensed as a foreign corporation in each other state or
jurisdiction in which the ownership of property or the conduct of business
requires such licensing or qualification, except where the failure to be so
qualified or licensed would not have a Material Adverse Effect on the Company.
Each Non-Bank Subsidiary has all requisite corporate power and authority to
own, lease and operate its properties and assets and to carry on its business
as presently conducted. True and correct copies of the Certificate of
Incorporation or Articles of Incorporation, as the case may be, and Bylaws of
each Non-Bank Subsidiary have been delivered to Purchaser prior to the
execution of this Agreement.
3.2 Capitalization.
(a) The authorized capital stock of the Company consists of (i)
200,000,000 shares of Company Common Stock, no par value, of which 31,205,498
shares were issued and outstanding as of October 31, 1996; and (ii) 50,000,000
shares of preferred stock, of which 350,000 shares are designated Series A
Preferred, no par value, none of which are outstanding. All of the outstanding
shares of Company Common Stock are validly issued, fully paid and
nonassessable. Except for the option granted to Purchaser pursuant to the
Option Agreement and except for stock options covering 1,377,175 shares of
Common Stock granted pursuant to the Company Incentive Plans and outstanding on
October 31, 1996 and the Company's obligations under the Rights Agreement,
there are no outstanding options, warrants or other rights in or with respect
to the unissued shares of Company Common Stock nor any securities convertible
into such stock; and the Company is not obligated to issue any additional
shares of Company Common Stock or any additional options, warrants or other
rights in or with respect to the unissued shares of Company Common Stock or any
other securities convertible into Company Common Stock. The Company does not
have outstanding any indebtedness which entitles the holder or holders thereof
to exercise voting rights in connection with the election of its directors
("Voting Debt"), nor does the Company have outstanding any options, warrants,
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calls, rights, commitments or agreements of any kind obligating the Company or
any of its subsidiaries to issue or sell any Voting Debt. There are no
outstanding contractual obligations of the Company or any of its subsidiaries
to repurchase, redeem or otherwise acquire any shares of its capital stock.
(b) The authorized capital stock of the Bank consists of (i)
50,000,000 shares of common stock, par value $1.00 per share ("Bank
Common Stock"), 10,000,000 of which are issued and outstanding; and (ii)
10,000,000 shares of serial preferred stock of which 350,000 shares are
designated Series A Preferred, par value $1.00 per share, none of which are
outstanding. All of the outstanding shares of the Bank Common Stock are
validly issued, fully paid and nonassessable and are owned by the Company, free
and clear of all liens and encumbrances. There are no outstanding options,
warrants or other rights in or with respect to the unissued shares of the Bank
common stock nor any securities convertible into such stock and the Bank is not
obligated to issue any additional shares of its common stock or any additional
options, warrants or other rights in or with respect to the unissued shares of
the Bank Common Stock or any other securities convertible into such common
stock.
(c) All of the outstanding shares of common stock of each Non-Bank
Subsidiary are validly issued, fully paid and nonassessable and are owned by
the Company or the Bank, free and clear of all liens and encumbrances. There
are no outstanding options, warrants or other rights in or with respect to the
unissued shares of each Non-Bank Subsidiary's common stock nor any securities
convertible into such stock and no Non-Bank Subsidiary is obligated to issue
any additional shares of its common stock or any additional options, warrants
or other rights in or with respect to the unissued shares of its common stock
or any other securities convertible into such common stock.
3.3 Subsidiaries. Except for the Bank and the Non-Bank Subsidiaries,
and except as set forth on Schedule 3.3 to the Company's disclosure schedule
attached hereto and made a part hereof (together with all the other schedules,
the "Company Disclosure Schedule"), neither the Company nor the Bank owns or
holds, directly or indirectly, any equity interest in any Person that is not
readily marketable on a nationally recognized exchange or securities market.
3.4 Company Financial Statements; Absence of Liabilities.
(a) There have been delivered by the Company to Purchaser copies
of the Company Financial Statements. The Company Financial Statements:
(i) fairly present the consolidated financial condition of the Company and its
subsidiaries as of the respective dates indicated and its consolidated results
of operations and the consolidated changes in its shareholders' equity and cash
flows for the respective periods indicated, except for the unaudited
consolidated financial statements of the Company and its subsidiaries, which
are subject to normal year-end adjustments; (ii) have been prepared in
accordance with GAAP; (iii) are based on the books and records of the Company
and its subsidiaries; and (iv) contain and reflect reserves for all material
accrued liabilities as of the date thereof and for all reasonably
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anticipated losses as of the date thereof, including, (but not limited
to) adequate reserves for reasonably anticipated loan and other losses.
(b) The Company has no liabilities or obligations, either accrued or
contingent, which are material to it and which have not been reflected or
disclosed in the Company Financial Statements other than liabilities and
obligations incurred subsequent to December 31, 1995 in the ordinary course of
business or as set forth on any Schedule hereto. The Company does not know of
any basis for the assertion against it of any liability, obligation or claim
(including, without limitation, that of any regulatory authority) that might
result in or cause a material adverse change in the financial condition of the
Company which is not fairly reflected in the Company Financial Statements or in
the Company Regulatory Reports (including the accompanying financial statements
thereto) filed with the SEC subsequent to the filing of the Company's most
recent Annual Report on Form 10-K.
3.5 Authority of the Company; No Violation.
(a) The Company has all requisite corporate power and authority to
enter into this Agreement, and, subject to approval by the requisite majority
of its shareholders, to consummate the Merger and the transactions contemplated
hereby. The execution and delivery by the Company of this Agreement and the
consummation of the transactions contemplated hereby have been duly and validly
authorized by all necessary corporate action on the part of the Company (other
than as described in the immediately preceding sentence), and this Agreement
has been duly executed and delivered by the Company and is a valid and binding
obligation of the Company, enforceable in accordance with its terms except as
such enforceability may be limited by (i) bankruptcy, insolvency, moratorium,
and other similar laws affecting creditors' rights generally, and (ii) general
principles of equity regardless of whether asserted in a proceeding in equity
or at law. All of the conditions specified in the Company's Articles and
Bylaws and the MBCA have been met, and approval of this Agreement and the
Merger by the shareholders of the Company requires only the affirmative vote of
a majority of the outstanding shares of Company Common Stock entitled to vote
at the meeting of shareholders to be held pursuant to Section 5.7 hereof.
(b) Except as set forth on Schedule 3.5 to the Company Disclosure
Schedule, neither the execution and delivery by the Company of this Agreement,
the consummation of the transactions contemplated herein, nor compliance by the
Company with any of the provisions hereof, will: (i) conflict with or result in
a breach of any provision of its Articles of Incorporation or Bylaws; (ii)
constitute a breach of or result in a default, or give rise to any rights of
termination, cancellation or acceleration, or any right to acquire any
securities, including without limitation, under the Rights Agreement (other
than the options currently outstanding under the Company Incentive Plans), or
assets, under any of the terms, conditions or provisions of any note, bond,
mortgage, indenture, franchise, license, permit, lease agreement or other
instrument or obligation to which the Company or any Company Subsidiary is a
party, by which the Company or any Company Subsidiary or any of their
respective properties or assets is bound, if in any such circumstances such
event could have a Material Adverse Effect
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on the Company or materially impair the Company's ability to perform its
obligations hereunder; or (iii) violate any order, writ, injunction, decree,
statute, rule or regulation applicable to the Company or any Company Subsidiary
or any of their respective properties or assets, the result of which could have
a Material Adverse Effect on the Company or materially impair the Company's
ability to perform its obligations hereunder. Except as set forth on Schedule
3.5 to the Company Disclosure Schedule, no consent of, approval of, notice to or
filing with any governmental authority having jurisdiction over any aspect of
the business or assets of the Company, and no consent of, approval of or notice
to or filing with any other Person is required in connection with the execution
and delivery by the Company of this Agreement or the consummation by the Company
of the transactions contemplated hereby, except (A) the approval of this
Agreement and the transactions contemplated hereby by the shareholders of the
Company, and (B) such approvals of the Applicable Governmental Authorities and
any other governmental authorities having jurisdiction that are required by law
or regulation to consummate the transactions contemplated by this Agreement.
3.6 Insurance. The Company and each Company Subsidiary have in full force
and effect policies of insurance (including, without limitation, a blanket
bond, fire, third-party liability, use and occupancy), with respect to their
assets and business, against such casualties and contingencies and in such
amounts, types and forms as are appropriate for their business, operations,
properties and assets and usual and customary in the industry of which they are
a part.
3.7 Books and Records. The minute books of the Company and the Bank
contain true and accurate records of all meetings and actions taken by their
Boards of Directors, any committee thereof and their shareholders, and the
books and records of the Company and the Bank truly and accurately reflect
their respective businesses and affairs.
3.8 Title to Assets. The Company and each Company Subsidiary have good
and marketable title to all properties and assets, other than real property,
owned or stated to be owned by them, free and clear of all mortgages, liens,
encumbrances, pledges or charges of any kind or nature except for: (a)
encumbrances reflected in the Company Financial Statements or described in the
notes thereto; (b) liens for current taxes not yet due; (c) liens incurred in
the ordinary course of business; or (d) encumbrances, if any, which are not
substantial in character, amount or extent or which do not materially detract
from the value, or interfere with present use of the property subject thereto
or affected thereby, or otherwise materially impair the conduct of business of
the Company or the Company Subsidiaries.
3.9 Real Properties. Schedule 3.9 to the Company Disclosure Schedule
contains a list of real properties owned or leased by the Company or any
Company Subsidiary and contains, among other things, an accurate summary of all
material commitments which the Company or any Company Subsidiary have to
improve real estate owned by them. True, correct and complete copies of all
leases in which the Company or any Company Subsidiary is either a lessor or a
lessee and which are listed or referred to in Schedule 3.9 have been delivered
to Purchaser prior to the date hereof. The Company and each Company Subsidiary
have good and
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marketable title to all the real properties, and valid leasehold
interests in the leaseholds, described in Schedule 3.9 to the Company
Disclosure Schedule, free and clear of all mortgages, covenants, conditions,
restrictions, easements, liens, security interests, charges, claims,
assessments and encumbrances, except for: (a) rights of lessors, co-lessees or
sublessees in such matters which are reflected in the lease; (b) current taxes
not yet due and payable; (c) such imperfections of title and encumbrances, if
any, as do not materially detract from the value of or materially interfere
with the present use of such property; and (d) except as described in Schedule
3.9 to the Company Disclosure Schedule.
3.10 Litigation. Except as set forth on Schedule 3.10 to the Company
Disclosure Schedule, there is no private or governmental suit, claim, action or
proceeding (arbitral or otherwise) pending or, to the knowledge of the Company,
threatened against the Company or any Company Subsidiary which, if adversely
determined, may, in the reasonable belief of the Company, involve a payment by
the Company or any Company Subsidiary of more than $250,000 in excess of
available insurance coverage, or which involve a demand for equitable relief,
or against any of their respective directors or officers relating to the
performance of their duties in such capacities that may have a Material Adverse
Effect on the Company or on the transactions contemplated hereby. Except as
set forth on Schedule 3.10 to the Company Disclosure Schedule, there are no
material judgments, decrees, stipulations or orders against the Company or any
Company Subsidiary enjoining them or any of their directors or officers in
respect of, or the effect of which is to prohibit, any business practice or the
acquisition of any property or the conduct of business in any area. The
Company has delivered to Purchaser summary reports of its attorneys, dated on
or after January 1, 1996, on all pending litigation to which the Company, any
Company Subsidiary or any of their directors or officers is a party and which
names the Company, any Company Subsidiary or any of their directors or officers
as a defendant or cross-defendant and prays for damages or such other remedy or
remedies that, if sustained, could have a Material Adverse Effect on the
Company or which could impair the ability of the Company to perform its
obligations hereunder.
3.11 Taxes. (a) The Company and each Company Subsidiary has filed all
federal and all material state and local tax returns required to be filed by it
(all such returns being accurate and complete in all material respects)
including, but not limited to, returns relating to income tax, franchise tax,
Michigan Single Business Tax, real and personal property tax, sales and use
tax, premium tax, excise tax and other tax returns of every character required
to be filed by it and has paid all taxes, together with any interest and
penalties owing in connection therewith, shown on such returns to be due in
respect of the periods covered by such returns, other than taxes which are
being contested in good faith and for which adequate reserves have been
established and reflected on the books and records of the Company and the
Company Subsidiaries. Without limiting the foregoing, the Company and each
Company Subsidiary has filed all required payroll tax returns, has fulfilled
all tax withholding obligations and has paid over to the appropriate
governmental authorities the proper amounts with respect to the foregoing to
the extent such amounts are due. The tax and audit positions taken by the
Company and each Company Subsidiary in connection with the tax returns
described in the preceding sentences were reasonable and asserted in good
faith. Adequate provision has been made in the books and
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records of the Company and each Company Subsidiary and, to the extent
required by GAAP, reflected in the Company Financial Statements, for all tax
liabilities, including interest or penalties, whether or not due and payable and
whether or not disputed, with respect to any and all federal, foreign, state,
local and other taxes of any kind or nature for the periods covered by the
Company Financial Statements and for all prior periods. The IRS has examined,
or the statute of limitations has expired with respect to, the federal tax
returns of the Company and each Company Subsidiary (to the extent not filed as
part of a consolidated return of the Company) for all taxable years ending prior
to and including December 31, 1989. Schedule 3.11 to the Company Disclosure
Schedule sets forth (a) the date or dates through which any federal, foreign,
state, local or other taxing authority has examined any other tax returns of the
Company; (b) a complete list of each year for which any federal, state or local
tax authority has obtained or has requested an extension of the statute of
limitations from the Company and lists each tax case of the Company currently
pending in audit, at the administrative appeals level or in litigation; and (c)
the date and issuing authority of each statutory notice of deficiency, notice of
proposed assessment and revenue agent's report issued to the Company within the
last 12 months. Schedule 3.11 to the Company Disclosure Schedule also identifies
any examination by taxing authorities of the federal, state or local tax returns
of the Company or its subsidiaries which have taken place since January 1, 1993,
and which have not been closed and completed without unresolved matters. To the
knowledge of the Company, neither the IRS nor any foreign, state, local or other
taxing authority is now asserting or threatening to assert any deficiency or
claim for additional taxes (or interest thereon or penalties in connection
therewith) except as set forth in Schedule 3.11 to the Company Disclosure
Schedule. All taxes which the Company or any Company Subsidiary has been
required to collect or withhold (other than backup withholdings pursuant to
Section 3406 of the Code) have been duly withheld or collected and, to the
extent required, have been paid to the proper taxing authority. With respect to
backup withholdings, the Company and each Company Subsidiary have exercised the
degree of care required under Section 6724 of the Code to avoid the imposition
of any penalties for failure to obtain certified and correct taxpayer
identification numbers from payees or for failure to make backup withholdings.
(b) Set forth on Schedule 3.11 to the Company Disclosure Schedule is a
complete list of all material tax elections made by the Company or any Company
Subsidiary on any income tax return filed during the past five years which have
the effect of deferring the realization of an item of income to a period after
the period for which such item of income was reported on the financial
statements of the Company or any Company Subsidiary, or accelerating an item of
deduction to a period prior to the period for which the corresponding item of
loss or expense was reported on the financial statements. Neither the Company
nor any Company Subsidiary is a party to, has any liability under or is bound
by, any tax indemnity, tax sharing or tax allocation agreement other than as
described in Schedule 3.11 to the Company Disclosure Schedule. There are no
liens for taxes (other than for current taxes not yet due and payable) upon the
assets of the Company or any Company Subsidiary. The Company has never been a
member of an affiliated group of corporations, within the meaning of Section
1504 of the Code ("Affiliated Group"), other than as a common parent
corporation, and, except for those Non-Bank Subsidiaries, that have been
acquired by the Company, no Company Subsidiary has ever
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been a member of an Affiliated Group except where the Company was the
common parent of the Affiliated Group. To the knowledge of the Company, neither
the Company nor any Company Subsidiary has any liability for the taxes of any
person, corporation, association, partnership, limited liability company, or
other entity (other than the Company and the Company Subsidiaries) under
Treasury Regulation Section 1.1502-6 (or any similar provision of state, local,
or foreign law) as a transferee or successor, by contract or otherwise.
(c) Neither the Company nor any Company Subsidiary has agreed to, or
to the best knowledge of the Company is required to, make any
adjustments under Section 481(a) of the Code by reason of a change in
accounting method or otherwise. Neither the Company nor any Company Subsidiary
is a "United States Real Property Holding Corporation" as defined in Section
897 of the Code. Neither the Company nor any Company Subsidiary has filed a
consent under Section 341(f) of the Code.
3.12 Compliance with Applicable Laws; Company Permits. The Company and
each Company Subsidiary holds all permits, licenses, variances, exemptions,
orders and approvals of all governmental entities which are necessary for the
operation of the businesses of the Company and each Company Subsidiary (the
"Company Permits"), except for Company Permits the failure of which to hold
would not, individually or in the aggregate, have a Material Adverse Effect on
the Company. All of the material Company Permits are listed on Schedule 3.12
to the Company Disclosure Schedule. The Bank is an approved seller-servicer
for the Federal Home Loan Mortgage Corporation ("FHLMC"), the Government
National Mortgage Association ("GNMA") and the Federal National Mortgage
Association ("FNMA") and as such holds all necessary permits, authorizations or
approvals of FHLMC and FNMA necessary to carry on a mortgage banking business
with such governmental agencies. The Bank is qualified to originate loans
insured by the Federal Housing Administration, the Department of Housing and
Urban Development and the Veteran's Administration. The Company and the
Company Subsidiaries are in compliance in all material respects with the terms
of the Company Permits and all applicable laws and regulations, except for
possible violations which, individually or in the aggregate, would not have a
Material Adverse Effect on the Company. No investigation by any governmental
entity with respect to the Company or any of the Company Subsidiaries is
pending or, to the knowledge of the Company, threatened, other than, in each
case, those the outcome of which will not have a Material Adverse Effect on the
Company.
3.13 Performance of Obligations. The Company and the Bank have performed
in all respects all material obligations required to be performed by them to
date and are not in default under or in breach of any term or provision of any
covenant, contract, lease, loan servicing agreement or arrangement, indenture
or any other covenant to which they are a party, are subject or are otherwise
bound, and no event has occurred which, with the giving of notice or the
passage of time or both, would constitute such default or breach, where such
default or breach would have a Material Adverse Effect on Company. Except for
loans and leases made by the Company or the Bank in the ordinary course of
business, to the knowledge of the Company, no party with whom the Company or
the Bank has an agreement which is of material importance to the business of
the Company or the Bank is in default thereunder.
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3.14 Employees. There are no controversies pending or threatened between,
or related to, the Company, the Bank or any Non-Bank Subsidiary and any of
their employees which could have consequences that may reasonably be expected
to have a Material Adverse Effect on the Company or impair the ability of the
Company to perform its obligations hereunder. Except as disclosed in the
Company Financial Statements, all material sums due for employee compensation
and benefits have been duly and adequately paid or accrued on its books in
accordance with GAAP. Neither the Company nor any Company Subsidiary is a
party to any collective bargaining agreement with respect to any of its
employees or any labor organization to which its employees or any of them
belong.
3.15 Material Contracts. (a) Except as disclosed in the Company
Regulatory Reports or described on Schedule 3.15 to the Company Disclosure
Schedule, neither the Company nor any Company Subsidiary is a party to any
agreement or understanding described below:
(i) any agreement, arrangement or commitment not made
in the ordinary course of business consistent with past practices that
is material to the Company on a consolidated basis, or any contract, agreement
or understanding relating to the sale or disposition by the Company or any
Company Subsidiary or any significant assets or businesses of the Company
or any Company Subsidiary;
(ii) any material agreement, indenture, credit
agreement or other instrument relating to the borrowing of money by the
Company or any Company Subsidiary (other than certificates of deposit and
customary deposit instruments) or the guarantee by the Company or any such
Company Subsidiary of any such obligation;
(iii) any contract containing covenants which limit
the ability of the Company or any Company Subsidiary to compete in any
line of business or with any person or which involve any restriction in the
geographical area in which, or method by which, the Company and the Company
Subsidiaries may carry on their respective businesses (other than as may be
required by law or applicable regulatory authority);
(iv) any other contract or agreement that would be
required to be disclosed as an exhibit to the Company's Annual Report
on Form 10-K and which has not been so disclosed;
(v) any agreement or understanding which obligates
the Company or any Company Subsidiary for a period in excess of one
year, which has a value in excess of $500,000, to purchase, sell or provide
services, materials, supplies, merchandise, facilities or equipment and which
is not terminable without penalty on not more than thirty (30) days notice;
(vi) any agreement or understanding of any kind,
except for deposit relationships or loans made prior to January 1,
1996, with any current director or executive officer of the Company, the Bank
or any Non-Bank Subsidiary or with any Affiliate thereof or any member of the
Immediate Family of any such director or executive officer; or
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(vii) any material agreement or understanding which
would be terminable by any other party other than the Company, the Bank
or any Non-Bank Subsidiary as a result of the consummation of the transactions
contemplated by this Agreement.
(b) True and correct copies of all documents identified in Schedule
3.15 to the Company Disclosure Schedule have been delivered to
Purchaser prior to the date hereof.
3.16 Absence of Certain Changes. Except as set forth in Schedule 3.16
to the Company Disclosure Schedule or the Company Regulatory Reports, since
December 31, 1995, the business of the Company and the Bank (inclusive of the
activities and operations of the Non-Bank Subsidiaries) has been conducted
diligently and only in the ordinary course, in the same manner as theretofore
conducted, and there has not been:
(a) any change in the financial condition, results of operations,
prospects or business of the Company and the Bank, taken as a whole, which has
had a Material Adverse Effect on the Company;
(b) any damage, destruction or loss (whether or not covered by
insurance) individually or in the aggregate which has had a Material Adverse
Effect on the Company;
(c) any material contract, agreement, license or understanding which
the Company or any Company Subsidiary has entered into or to which the
Company or any Company Subsidiary is a party which has been terminated or
amended other than in the ordinary course of business, which termination or
amendment would have a Material Adverse Effect on the Company;
(d) except for supplies or equipment purchased in the ordinary
course of business, any capital expenditure exceeding individually or in the
aggregate $500,000;
(e) any labor trouble, dispute or problem of any character involving
employees having a Material Adverse Effect on the Company;
(f) any change in accounting methods or practices by the Company or
any Company Subsidiary, except as required by the rules of the American
Institute of Certified Public Accountants ("AICPA"), the Financial Accounting
Standards Board ("FASB"), applicable governmental authorities or GAAP;
(g) any write-down in excess of $500,000 by the Bank of any of its
loans or other real estate owned which is not reflected in the
Company's statement of financial condition as of September 30, 1996;
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(h) any increase in the salary schedule, compensation, rate,
fee or commission of the Company or Bank employees, officers or
directors, or the declaration, commitment or obligation of any kind for the
payment by the Company or any Company Subsidiary of a bonus or other additional
salary, compensation, fee or commission to any Person, except increases made in
the ordinary course of business and consistent with past practices and
increases required under or specifically contemplated by employment agreements
disclosed on Schedule 3.15 to the Company Disclosure Schedule;
(i) any sale, assignment or transfer of any assets in excess of
$500,000 other than in the ordinary course of business or pursuant to a
contract or agreement disclosed on Schedule 3.15 to the Company Disclosure
Schedule;
(j) any mortgage, pledge or encumbrance of any asset of the Company
other than liens for taxes not yet due, except in the ordinary course
of business and except as set forth in Sections 3.8 and 3.9 hereof;
(k) any waiver or release of any material right or claim of the
Company or the Bank except in the ordinary course of business; and
(l) except for the declaration or payment of regular quarterly cash
dividends not in excess of $.20 per share of Company Common Stock, any
declaration, setting aside or payment of any dividend or distribution with
respect to the Company Common Stock or the issuance of any shares of Company
Common Stock or any other securities of the Company, except for stock options
granted pursuant to the Company Incentive Plans and shares issued upon exercise
thereof.
3.17 Loans and Investments. To the knowledge of the Company, all loans
and investments of the Company and each Company Subsidiary are legal and
enforceable in accordance with the terms thereof, except as may be limited by
any bankruptcy, insolvency, moratorium or other laws affecting creditors'
rights generally or by the exercise of judicial discretion. Except as set
forth in Schedule 3.17 to the Company Disclosure Schedule, no loans or
investments held by the Company or the Bank with outstanding principal balances
in excess of $500,000 are as of October 31, 1996 (a) more than 90 days past due
with respect to any scheduled payment of principal or interest, (b) classified
as "loss," "doubtful," "substandard" or "special mention" by any federal
regulators or by the Company's or the Bank's internal credit review system, (c)
on a non-accrual status in accordance with the Company's or the Bank's loan
review procedures or (d) "renegotiated loans," as that term is defined in
Financial Accounting Standards No. 15.
3.18 Intellectual Properties. Schedule 3.18 to the Company Disclosure
Schedule sets forth a complete and correct list of all United States material
trademarks, trade names, service marks and copyrights owned by or licensed to
the Company or any Company Subsidiary for use in their respective businesses,
and all licenses and other agreements relating thereto and all agreements
relating to third party Intellectual Property that the Company or any Company
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Subsidiary is licensed or authorized to use in their businesses,
including without limitation, any software licenses (collectively, the
"Intellectual Property"). With respect to each item of Intellectual Property
owned by the Company or any Company Subsidiary, the Company, or such Company
Subsidiary possesses all right, title and interest in and to the item, free and
clear of any lien, claim, royalty interest or encumbrance. With respect to
each item of Intellectual Property that the Company or such Company Subsidiary
is licensed or authorized to use, the license, sublicense, agreement or
permission covering such item is legal, valid, binding, enforceable and in full
force and effect and, to the knowledge of the Company, has not been breached by
any party thereto. Neither the Company nor any Company Subsidiary has ever
received (or to the knowledge of the Company, is threatened) any charge,
complaint, claim, demand or notice alleging any interference, infringement,
misappropriation or violation with or of any intellectual property rights of a
third party (including any claims that the Company or any Company Subsidiary
must license or refrain from using any intellectual property rights of a third
party). To the knowledge of the Company, none of the Company or any Company
Subsidiary has interfered with, infringed upon, misappropriated or otherwise
come into conflict with any intellectual property rights of third parties and
no third party has interfered with, infringed upon, misappropriated or
otherwise come into conflict with any intellectual property rights of the
Company or any Company Subsidiary.
3.19 Company Benefit Plans. (a) Schedule 3.19(a)(1) to the Company
Disclosure Schedule contains a list of each compensation, consulting,
employment, termination or collective bargaining agreement, and each stock
option, stock purchase, stock appreciation right, recognition and retention,
life, health, accident or other insurance, bonus, deferred or incentive
compensation, severance or separation plan or any agreement providing any
payment or benefit resulting from a change in control, profit sharing,
retirement, or other employee benefit plan, practice, policy or arrangement of
any kind, oral or written, covering employees, former employees, directors or
former directors of the Company or any Company Subsidiary or their respective
beneficiaries, including, but not limited to, any employee benefit plans within
the meaning of Section 3(3) of ERISA, which the Company or any Company
Subsidiary maintains, to which the Company or any Company Subsidiary
contributes, or under which any employee, former employee, director or former
director of the Company or any Company Subsidiary is covered or has benefit
rights and pursuant to which any liability of the Company or any Company
Subsidiary exists or is reasonably likely to occur (the "Company Benefit
Plans"). Except as set forth on Schedule 3.19(a)(2) to the Company Disclosure
Schedule, neither the Company nor any Company Subsidiary maintains or has
entered into any Company Benefit Plan or other document, plan or agreement
which contains any change in control provisions which would cause an increase
or acceleration of benefits or benefit entitlements to employees or former
employees of the Company or any Company Subsidiary or their respective
beneficiaries, or other provisions which would cause an increase in the
liability to the Company or any Company Subsidiary or to Purchaser as a result
of the transactions contemplated by this Agreement or any related action
thereafter including, but not limited to, termination of employment or
directorship (a "Change in Control Benefit"). Neither the execution of this
Agreement or the Option Agreement constitutes a "change in control" for
purposes of any Company Benefit Plan or any Change in Control Benefits. The
term "Company Benefit Plans"
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as used herein refers to all plans contemplated under the preceding
sentences of this Section 3.19, provided that the term "Plan" or "Plans" is used
in this Agreement for convenience only and does not constitute an acknowledgment
that a particular arrangement is an employee benefit plan within the meaning of
Section 3(3) of ERISA. Except as disclosed in Schedule 3.19(a)(3) to the
Company Disclosure Schedule, no Company Benefit Plan is a multiemployer plan
within the meaning of Section 3(37) of ERISA and neither the Company nor any
Company has since December 31, 1990 maintained, sponsored or had an obligation
to contribute to any such multiemployer plan. Except as disclosed on Schedule
3.19(a)(4) to the Company Disclosure Schedule, neither the Company nor any
Company Subsidiary has been notified by any Applicable Governmental Authority
that any payments or other compensation paid or payable by the Company or any
Company Subsidiary under this Agreement, any Company Benefit Plan or otherwise,
to or for the benefit of any employee or director of the Company or any Company
Subsidiary, is not in compliance with all applicable rules, regulations and
bulletins promulgated by the Applicable Governmental Authorities and, to the
best knowledge of the Company or any Company Subsidiary, all such payments are
in compliance with all applicable rules, regulations and bulletins promulgated
by the Applicable Governmental Authorities.
(b) Except as disclosed on Schedule 3.19(b) to the Company Disclosure
Schedule, each of the Company Benefit Plans that is intended to be a pension,
profit sharing, stock bonus, thrift, savings or employee stock ownership plan
that is qualified under Section 401(a) of the Code (the "Company Qualified
Plans") has been determined by the IRS to qualify under Section 401(a) of the
Code, or an application for determination of such qualification has been timely
made to the IRS prior to the end of the applicable remedial amendment period
under Section 401(b) of the Code (a copy of each such determination letter or
pending application has been provided to Purchaser by the Company), and, to the
knowledge of the Company, there exist no circumstances that may adversely
affect the qualified status of any such Company Qualified Plan. All such
Company Qualified Plans established or maintained by Company or the Company
Subsidiaries or to which Company or the Company Subsidiaries contribute are in
compliance in all material respects with all applicable requirements of ERISA,
and are in compliance in all material respects with all applicable requirements
(including qualification and nondiscrimination requirements in effect as of the
Effective Time) of the Code for obtaining the tax benefits the Code thereupon
permits with respect to such Company Qualified Plans. All accrued
contributions and other payments required to be made by the Company or any
Company Subsidiary to any Company Benefit Plan through September 30, 1996, have
been made or reserves adequate for such purposes as of September 30, 1996,
have been set aside therefor and reflected in the Company Financial Statements
dated as of September 30, 1996. Neither the Company nor any Company Subsidiary
is in material default in performing any of its respective contractual
obligations under any of the Company Benefit Plans or any related trust
agreement or insurance contract, and there are no material outstanding
liabilities of any such Plan other than liabilities for benefits to be paid to
participants in such plan and their beneficiaries in accordance with the terms
of such Plan.
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(c) There is no pending or, to the Company's knowledge, threatened
litigation or pending claim (other than benefit claims made in the ordinary
course) by or on behalf of or against any of the Company Benefit Plans (or with
respect to the administration of any of such Plans) now or heretofore
maintained by Company or any Company Subsidiary which alleges violations of
applicable state or federal law which are reasonably likely to result in a
liability on the part of the Company or any Company Subsidiary or any such
Plan, and to the Company's knowledge there is no basis for any such claim.
(d) The Company and the Company Subsidiaries and all other persons
having fiduciary or other responsibilities or duties with respect to any
Company Benefit Plan are, and since the inception of each such plan have been,
in substantial compliance with, and each such plan is and has been operated in
substantial accordance with, its provisions and in substantial compliance with
the applicable laws, rules and regulations governing such plan, including,
without limitation, the rules and regulations promulgated by the United States
Department of Labor, the PBGC and the IRS under ERISA, the Code or any other
applicable law. No "reportable event" (as defined in Section 4043(b) of ERISA)
has occurred with respect to any Company Benefit Plan. No Company Benefit Plan
has engaged in or been a party to a "prohibited transaction" (as defined in
Section 406 of ERISA or Section 4975(c) of the Code) without an exemption
thereto under Section 408 of ERISA or 4975(d) of the Code. All Company Benefit
Plans that are group health plans have been operated in compliance with the
group health plan continuation requirements of Section 4980B of the Code and
Section 601 of ERISA.
(e) Neither the Company nor any Company Subsidiary has incurred, nor to
the Company's knowledge is the Company or any Company Subsidiary reasonably
likely to incur, any liability to the PBGC (except for payment of premiums)
under Title IV of ERISA in connection with any plan subject to the provisions
of Title IV of ERISA now or heretofore maintained or contributed to by the
Company, by any Company Subsidiary or by any other entity which is considered
one employer with the Company under ERISA or the Code (the "Company Pension
Plans"). No Company Pension Plan had an "accumulated funding deficiency" (as
defined in Section 302 of ERISA (whether or not waived)) as of the last day of
the most recently completed plan year. Except as set forth on Schedule 3.19(e)
to the Company Disclosure Schedule, the fair market value of the assets of each
Company Pension Plan exceeds the present value of the "benefit liabilities" (as
defined in Section 4001(a)(16) of ERISA) under such Company Pension Plan as of
the end of the most recently completed plan year, calculated on the basis of
the actuarial assumptions used in the most recent valuation for such Company
Pension Plan prior to the date hereof, and there has been no material change in
the financial condition of any such Company Pension Plan since the last day of
the most recently completed plan year. Neither the Company nor any Company
Subsidiary has provided or is required to provide security to any Company
Pension Plan pursuant to Section 401(a)(29) of the Code.
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(f) Except as disclosed on Schedule 3.19(f) to the Company Disclosure
Schedule, neither the Company nor any Company Subsidiary has made any payments,
or is a party to any agreement or any Company Benefit Plan that under any
circumstances could obligate it, any Company Subsidiary, or any successor of
either of them, to make any payment for which the deductibility for federal
income tax purposes by the Company, any Company Subsidiary or any successor to
the Company or any Company Subsidiary is or will be limited because of Section
162(m) or Section 280G of the Code.
(g) The Company has delivered to Purchaser copies of (i) each Company
Benefit Plan (or a description with respect to any oral employee benefit plan,
practice, policy or arrangement) and all amendments thereto, (ii) current
summary plan descriptions of each Company Benefit Plan, (iii) each trust
agreement, insurance policy or other instrument relating to funding of any
Company Benefit Plan, (iv) the three most recent Annual Reports (Form 5500
series) and accompanying schedules filed with the IRS or the United States
Department of Labor with respect to each Company Benefit Plan, (v) the most
recent determination letter issued by the IRS with respect to each Company
Qualified Plan, (vi) the most recent available financial statements for each
Company Benefit Plan that has assets, (vii) the most recent actuarial report
for any Company Pension Plan and any other Company Benefit Plan that is a
defined benefit pension plan (including, but not limited to, any nonqualified
or supplemental plan), and if any such plan has been amended or been party to a
plan merger subsequent to the date of such report, information substantially
describing the financial effects of such amendment or plan merger, (viii) the
most recent audited financial statements for each Company Benefit Plan for
which audited financial statements are required by ERISA, (ix) listing of
installment amounts payable from the FIRF Retirement Fund to any Company
Qualified Plan, (x) a listing of stock options awarded under the Company
Incentive Plans, showing with respect to each holder thereof, the number of
shares, the exercise price per share and a copy of the form of option
agreements relating thereto, (xi) a listing of the shareholder value units
awarded under the Company Incentive Plans, showing the number of outstanding
shareholder value units credited to each participant, the measurement dates
applicable thereto, and the estimated payout value thereof as of the most
recent practicable date, and (xii) each officer or director for whom a deferred
compensation or supplemental retirement benefit is maintained, showing the
amounts due thereunder and the payment schedule thereof, and the respective
amounts accrued in the Company Financial Statements dated December 31, 1995 and
September 30, 1996.
(h) Schedule 3.19(h) to the Company Disclosure Schedule describes any
obligation that the Company or any Company Subsidiary has to provide health or
welfare benefits to retirees or other former employees, directors or their
dependents (other than rights under Section 4980B of the Code or Section 601 of
ERISA), including information as to the number of retirees, other former
employees or directors and dependents entitled to such coverages and their
ages.
(i) Schedules 3.19(i)(1) and (2) to the Company Disclosure Schedule
list: (1) each officer of the Company and any Company Subsidiary and each
director of Company and any Company Subsidiary who is eligible to receive a
Change in Control Benefit, showing
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the estimated amount of each such Change in Control Benefit and the
basis of the calculation thereof, estimated compensation for 1996 based upon
compensation received to the date of this Agreement, the individual's rate of
compensation in effect on the date of this Agreement, the individual's
participation in any Company Benefit Plan (including the Company Incentive
Plans) and such individual's compensation from Company or any Company Subsidiary
for each of the calendar years 1992 through 1995 as reported, and for calendar
year 1996 as estimated to be reported, by the Company or an Company Subsidiary
on Form W-2 or Form 1099; and (2) each other employee of Company or the Company
Subsidiaries who may be eligible for a Change in Control Benefit, showing an
estimated amount of each such Change in Control Benefit and the basis of the
calculation thereof.
(j) The Company and the Company Subsidiaries have filed or caused to
be filed, and will continue to file or cause to be filed, in a timely manner all
filings pertaining to each Company Benefit Plan with the IRS, the PBGC and the
United States Department of Labor, as prescribed by the Code or ERISA, or
regulations issued thereunder. All such filings, as amended, were and will be
complete and accurate in all material respects as of the dates of such filings.
3.20 Regulatory Approvals. To the knowledge of the Company, no fact
or condition exists which the Company has reason to believe will prevent
Purchaser from obtaining approval of the Applicable Governmental Authorities
or any other applicable state or federal regulatory authority to consummate
the Merger and the transactions contemplated herein.
3.21 Company Regulatory Reports. The Company has filed on a timely
basis all proxy statements, reports and other documents required to be filed
by it under the 1934 Act or HOLA after December 31, 1992 (collectively, the
"Company Regulatory Reports"), and the Company has furnished Purchaser copies
of its Annual Report on Form 10-K for the fiscal year ended December 31, 1995,
and all quarterly and periodic reports and proxy statements filed under the
1934 Act by the Company after such date, each as filed with the SEC. Each
Company Regulatory Report was in compliance in all material respects with the
requirements of its respective report form and did not on the date of filing
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 light of the circumstances under which they were made, not misleading.
3.22 Company Facilities. To the knowledge of the Company, all
"alterations" (as such term is defined in the Americans with Disabilities Act
and the regulations issued thereunder (collectively, the "ADA")) to the
respective business of the Company, the Bank and each Non-Bank Subsidiary,
including, without limitation, automated teller machines (collectively, the
"Company Facilities") undertaken after January 26, 1992, are in compliance in
all material respects with the ADA and the ATBCB Accessibility Guidelines for
Buildings and Facilities ("ADAAG"). To the knowledge of the Company, there are
no investigations, proceedings or complaints, formal or informal, pending or
overtly threatened against the Company, the Bank
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or any Non-Bank Subsidiary in connection with the Company Facilities
under ADA, ADAAG, or any other local, state or federal law concerning
accessibility for individuals with disabilities.
3.23 Environmental Conditions.
(a) Except as disclosed in Schedule 3.23 to the Company Disclosure
Schedule, to the knowledge of the Company, there are no present or past
conditions on the Properties, involving or resulting from a past or present
storage, spill, discharge, leak, emission, injection, escape, dumping or
release of any kind whatsoever of any Hazardous Materials or from any
generation, transportation, treatment, storage, disposal, use or handling of
any Hazardous Materials, that may reasonably be expected to result in a
Material Adverse Effect on the Company.
(b) The Company and the Company Subsidiaries are in compliance in all
material respects with all applicable Environmental Laws. Neither the Company
nor any Company Subsidiary has received notice of, nor to the best of their
knowledge after such inquiry and investigation as the Company deems
appropriate, are there outstanding or pending, any public or private claims,
lawsuits, citations, penalties, unsatisfied abatement obligations or notices or
orders of non-compliance relating to the environmental condition of the
Properties, which have or may have a Material Adverse Effect on the Company.
(c) To the knowledge of the Company, no Properties are currently
undergoing remediation or cleanup of Hazardous Materials or other environmental
conditions, the actual or estimated cost of which may have a Material Adverse
Effect on the Company.
(d) To the knowledge of the Company, the Company and the Company
Subsidiaries have all material governmental permits, licenses, certificates of
inspection and other authorizations governing or protecting the environment
necessary under the Environmental Laws to conduct their present business, and
such permits, licenses, certificates of inspection and other authorizations are
fully transferable, to the extent permitted by law, to Purchaser.
3.24 Proxy Statement. None of the information to be supplied by the
Company for inclusion or incorporation by reference in the Company's Proxy
Statement as of the time of its mailing and as of the time of the meeting of
the Company's shareholders in connection therewith, and as amended or
supplemented by the Company, will contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements contained therein not misleading; in
no event, however, shall the Company be liable for any untrue statement of a
material fact or omission to state a material fact in the Company's Proxy
Statement made in reliance upon, and in conformity with, written information
concerning Purchaser or MergerSub furnished by Purchaser specifically for use
in the Proxy Statement. The Proxy Statement will comply as to form in all
material respects with the requirements of the 1934 Act and the rules and
regulations thereunder.
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3.25 Insider Interests. No officer or director of the Company or the
Bank or any "affiliate" (as defined in Section 23A of the Federal Reserve Act
(12 U.S.C. Section 371c)) of the Company, has any loan, credit or other
contractual arrangement outstanding with the Company or the Bank which does
not conform to applicable rules and regulations of the OTS and the Federal
Reserve. No officer or director of the Company or any Affiliate of the Company
has any material interest in any property, real or personal, tangible or
intangible, used in or pertaining to the business of the Company or any
Company Subsidiary.
3.26 Fairness Opinion. The Board of Directors of the Company has
received the written opinion of ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., to the effect that, as of
the date of this Agreement, the Merger Consideration to be received by
shareholders of the Company in the Merger is fair to such shareholders from a
financial point of view.
3.27 Brokers and Finders. Except for the Company's agreement with
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., a copy of which has been furnished to Purchaser prior to
the execution hereof, the Company is not a party to any agreement with any
broker, finder or investment banker relating to the transactions contemplated
hereby, and neither the execution of this Agreement nor the consummation of the
transactions provided for herein will result in any liability to any broker or
finder. Except for the fee payable to ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., the Company agrees
to indemnify and hold Purchaser, MergerSub and their Affiliates harmless with
respect to any broker, finder or investment banker fee which any Person may
claim or assert arising from any express or implied agreement or engagement by
the Company or the Bank.
3.28 Bylaws; State Takeover Statutes. The Board of Directors of the
Company has approved the Merger, this Agreement and the Option Agreement and/or
has taken such other action, and such approval and/or other action is
sufficient to render inapplicable to the Merger, this Agreement, the Option
Agreement and the transactions contemplated by this Agreement and the Option
Agreement, the provisions of the Company's Bylaws and the provisions of
Chapters 7A and 7B of the MBCA. Other than as described above, no other state
takeover statute or similar statute or regulation applies or purports to apply
to the Merger, this Agreement, the Option Agreement and the transactions
contemplated by this Agreement and the Option Agreement.
3.29 Rights Agreement. The Company and the Board of Directors have
taken all necessary action to (i) render the Rights Agreement inapplicable with
respect to the Merger and the other transactions contemplated by this Agreement
and the Option Agreement and (ii) ensure that neither Purchaser nor MergerSub
nor any of their Affiliates will be deemed to be a "Acquiring Person" or an
"Adverse Person" (as such terms are defined in the Rights Agreement) and no
"Shares Acquisition Date" or "Distribution Date" (as such terms are defined in
the Rights Agreement) occurs by reason of announcement, approval, execution or
delivery of this Agreement or the Option Agreement or the consummation of the
transactions contemplated hereby and thereby.
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3.30 Accuracy of Information Furnished. The representations and
warranties made by the Company in this Agreement and in any Schedules hereto
furnished by the Company do not contain any untrue statement of a material fact
or omit to state any material fact which is necessary under the circumstances
in order to make the statements contained herein or therein not misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to the Company that each of the
following statements is true and correct on the date hereof:
4.1 Organization, Standing and Power. Each of Purchaser and MergerSub
is duly organized and existing as a corporation under the laws of the State of
Delaware. Purchaser is registered with the Federal Reserve as a bank holding
company. Each of Purchaser and MergerSub has all requisite corporate power and
authority to own, lease and operate its properties and assets and to carry on
its business as presently conducted. MergerSub was formed for the purpose of
engaging in the Merger and has not engaged in any activities other than those
necessary to effectuate the terms of this Agreement.
4.2 Authority; No Violation.
(a) Each of Purchaser and MergerSub has all requisite corporate power
and authority to enter into this Agreement and to consummate the Merger and the
transactions contemplated hereby. The execution and delivery by Purchaser and
MergerSub of this Agreement and the consummation of the transactions
contemplated hereby have been duly and validly authorized by all necessary
corporate action on the part of Purchaser and MergerSub, and this Agreement has
been duly executed and delivered by Purchaser and MergerSub and constitutes the
valid and binding obligations of Purchaser and MergerSub, enforceable against
each of Purchaser and MergerSub in accordance with its terms except as such
enforceability may be limited by (i) bankruptcy, insolvency, moratorium, and
other similar laws affecting creditors' rights generally, and (ii) general
principles of equity regardless of whether asserted in a proceeding in equity
or at law.
(b) Neither the execution and delivery by Purchaser or MergerSub of
this Agreement, the consummation of the transactions contemplated hereby, nor
compliance by Purchaser or MergerSub with any of the provisions hereof, will:
(i) conflict with or result in a breach of any provision of its Certificate of
Incorporation or Bylaws; (ii) constitute a breach of or result in a default, or
give rise to any rights of termination, cancellation or acceleration under any
of the terms, conditions or provisions of any note, bond, mortgage, indenture,
franchise, license, permit, agreement or other instrument or obligation to
which Purchaser or MergerSub is a party, or by which Purchaser or MergerSub or
any of their respective properties or assets is bound, if in any such
circumstances such event could have a Material Adverse Effect on
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Purchaser; or (iii) violate any order, writ, injunction, decree,
statute, rule or regulation applicable to Purchaser or MergerSub or any of their
respective properties or assets, the result of which could have a Material
Adverse Effect on Purchaser. No consent of, approval of, notice to or filing
with any governmental authority having jurisdiction over any aspect of the
business or assets of Purchaser, and no consent of, approval of or notice to or
filing with any other Person is required in connection with the execution and
delivery by Purchaser or MergerSub of this Agreement or the consummation by
Purchaser or MergerSub of the transactions contemplated hereby, except for the
Regulatory Approvals.
4.3 Regulatory Approvals. To the knowledge of Purchaser, no fact or
condition exists which Purchaser has reason to believe will prevent it or the
Company from obtaining any of the Regulatory Approvals.
4.4 Litigation. There is no private or governmental suit, claim,
action or proceeding pending or threatened, or which reasonably should be
expected to be commenced, against Purchaser, its subsidiaries or against any of
their directors or officers that would impair the ability of Purchaser to
perform its obligations hereunder.
4.5 Adequate Funds. At the Effective Time, Purchaser will have
sufficient funds and capital to carry out its obligations under this Agreement.
4.6 Proxy Statement. None of the information to be supplied by
Purchaser for inclusion in the Proxy Statement as of the time of its mailing
and as of the time of the meeting of the Company's shareholders in connection
therewith, and as amended or supplemented by Purchaser, will contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements contained therein
not misleading.
4.7 Accuracy of Information Furnished. The representations and
warranties made by Purchaser in this Agreement do not contain any untrue
statement of a material fact or omit to state a material fact which is
necessary in order to make the statements contained herein not misleading.
4.8 Share Ownership. As of the date hereof, Purchaser owns less than
ten percent (10%) of the Company Common Stock.
ARTICLE V
ADDITIONAL COVENANTS AND AGREEMENTS
5.1 Conduct of Business by the Company. From the date of this
Agreement to the Effective Time, the Company will operate its business and
cause each Company Subsidiary to operate its business in the ordinary course
and consistent with past practices. The Company will use all reasonable
efforts to preserve intact the present business organizations of the Company,
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the Bank and each Non-Bank Subsidiary and maintain in effect all
material licenses, permits and approvals of governmental authorities and
agencies necessary for the conduct of its present business. Except as otherwise
contemplated by this Agreement or as otherwise consented to or approved by
Purchaser in writing, none of the Company, the Bank or any Non-Bank Subsidiary
shall:
(a) issue, sell, purchase or redeem or commit or agree to issue, sell,
purchase or redeem any shares of its capital stock other than shares issued
pursuant to the exercise of stock options outstanding on the date hereof, or
any Voting Debt; or issue or create or grant any options, warrants or rights to
purchase shares of its common stock; or issue, sell or authorize the issuance
or sale of securities of any kind convertible into or exchangeable for shares
of its capital stock or any Voting Debt; or declare, set aside or pay any
dividend or make any distribution in respect of its capital stock other than
regular quarterly cash dividends payable by the Company on dates consistent
with dividend payment practices during 1995 not to exceed $.20 per share of
Company Common Stock per quarter, except that the Bank and the Non-Bank
Subsidiary may pay dividends to the Company in amounts sufficient to enable the
Company to pay its ordinary operating expenses and its accrued liabilities,
including (but not limited to) litigation expenses and accounting, legal,
printing, investment banking, environmental testing and regulatory application
fees, expenses and costs relating to the transactions contemplated hereby,
provided, however, that no dividend shall be paid by the Bank or any Non-Bank
Subsidiary if it is necessary for such entity to borrow funds to pay the
dividend;
(b) amend its Certificate or Articles of Incorporation (in the case of
the Company or any Company Subsidiary), Charter (in the case of the Bank) or
Bylaws or issue or agree to issue any additional shares of its capital stock or
issue or create any warrants, obligations, subscriptions, options, convertible
security, or other commitments under which additional shares of its capital
stock of any class might be directly or indirectly authorized or issued except
in connection with options previously granted under the Company Incentive
Plans;
(c) make any general or unusual increase in compensation or rate of
compensation payable or to become payable to hourly, salaried or commissioned
employees or officers, except for those which are normal, reasonable and
consistent with past practices or as required by or specifically provided for
by contracts in existence as of the date hereof, nor enter into any written or
oral employment agreement which by its terms cannot be terminated on thirty
(30) days' notice or less without penalty;
(d) accrue, set aside, or pay to any officer or employee any bonus,
profit-sharing, severance, retirement, insurance, death, fringe benefit, or
other extraordinary compensation (except pursuant to pension, profit-sharing,
bonus and other fringe benefit plans, agreements and arrangements presently in
effect and in accordance with past practices) or adopt or amend any employee
benefit plan;
(e) commit to purchase, purchase or otherwise acquire any derivative or
synthetic mortgage product or enter into any interest rate swap transaction;
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(f) except for loans secured by one-to-four family residences in
amounts less than $1 million, make any loan, loan commitment or renewal or
extension thereof to any Person which would, when aggregated with all
outstanding loans, commitments for loans or renewals or extensions thereof made
by the Bank to such Person and such Person's Immediate Family and Affiliates,
exceed $500,000; provided, however, that Purchaser shall be deemed to have
consented to any such loan or commitment if it has not objected thereto within
five (5) business days after receiving written notice thereof;
(g) acquire any business entity or assets thereof, except as it relates
to a foreclosure or other exercise of creditor's rights in the usual and
ordinary course of its business;
(h) enter into any contract or agreement to buy, sell, exchange or
otherwise deal in any assets or series of assets in a single transaction in
excess of $500,000 in aggregate value (including, but not limited to, options
or commodities or any tangible real or personal properties of the Company or
any Company Subsidiary), except for the origination, purchase and sale of
mortgage loans and loan participations and the purchase and sale of readily
marketable investment securities in the ordinary course of business and
consistent with past practices, and sales of real estate owned and other
repossessed properties or acceptance of a deed in lieu of foreclosure;
(i) make any one capital expenditure or any series of related capital
expenditures (other than emergency repairs and replacements), the amount or
aggregate amount of which (as the case may be) is in excess of $500,000;
(j) file, withdraw, or fail to renew any applications for additional
branches or to relocate operations from existing locations;
(k) create or incur any liabilities in excess of $500,000, other than
the taking of deposits and other liabilities incurred in the ordinary course of
business and consistent with past practices or as contemplated or permitted by
or in connection with this Agreement and the consummation of the Merger;
(l) create or incur or suffer to exist any mortgage, lien, pledge,
security interest, charge, encumbrance or restriction of any kind against or in
respect of any property or right of the Company or any Company Subsidiary
securing any obligation in excess of $500,000, except for pledges or security
interests given in connection with the acceptance of repurchase agreements or
government deposits or Federal Home Loan Bank borrowings;
(m) make or become a party to any contract or commitment in excess of
$500,000, or renew, extend, amend or modify any contract or commitment in
excess of $500,000, except in the usual and ordinary course of business or as
otherwise contemplated or permitted by this Agreement;
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(n) discharge or satisfy any mortgage, lien, charge or encumbrance
other than as a result of the payment of liabilities in accordance with the
terms thereof, or except in the ordinary course of business, if the cost to the
Company or any Company Subsidiary to discharge or satisfy any such mortgage,
lien, charge or encumbrance is in excess of $500,000, unless such discharge or
satisfaction is covered by general or specific reserves;
(o) pay any obligation or liability, absolute or contingent, in
excess of $500,000 except liabilities shown on the Company Financial
Statements or except in the usual and ordinary course of business or in
connection with the transactions contemplated hereby;
(p) institute, settle or agree to settle any claim, action or
proceeding, whether or not initiated in a court of law, involving an
expenditure in excess of $500,000;
(q) invest in any real estate, except for investments in real estate
owned as a result of foreclosure or deed in lieu of foreclosure;
(r) enter into or amend any continuing contract or series of related
contracts in excess of $500,000 for the purchase of materials, supplies,
equipment or services which cannot be terminated without cause with less than
thirty (30) days' notice and without payment of any amount as a penalty, bonus,
premium or other compensation for such termination except as contemplated or
permitted by this Agreement;
(s) enter into or amend any contract, agreement or other
transaction, other than pursuant to the Bank's employee loan program, with any
officer, director or principal shareholder of the Company or any Affiliate of
such person on terms that are less favorable than could be obtained from an
unrelated third party on an arms' length basis;
(t) change any basic policies and practices with respect to
liquidity management and cash flow planning, marketing, deposit origination,
lending, budgeting, profit and tax planning, personnel practices, accounting or
any other material aspect of its business or operations, except for such
changes as may be required in the opinion of management of the Company to
respond to then current market or economic conditions or as may be required by
the rules of the AICPA, the FASB or by applicable governmental authorities; or
(u) default under the terms of any agreement or understanding to
which the Company or any Company Subsidiary is a party, and which, individually
or together with other agreements or understandings with respect to which a
default exists, would have a Material Adverse Effect on the Company.
5.2 Filings and Approvals. Each party will use all reasonable efforts
and will cooperate with the other parties in the preparation and filing, as
soon as practicable, of all applications or other documents required to obtain
the Regulatory Approvals and approval and/or consents from any other applicable
governmental or regulatory authorities for approval of the Merger contemplated
by this Agreement, and provide copies of such applications, filings and
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related correspondence to the other parties. Prior to filing each
application, registration statement or other document with the applicable
regulatory authority, each party will provide the other parties with a
reasonable opportunity to review and comment on the non-confidential portions of
each such application, registration statement or other document. Each party
will use all reasonable efforts and will cooperate with the other party in
taking any other actions necessary to obtain such regulatory or other approvals
and consents at the earliest practicable time, including participating in any
required hearings or proceedings. Subject to the terms and conditions herein
provided, each party will use all reasonable efforts to take, or cause to be
taken, all actions and to do, or cause to be done, all things necessary, proper
or advisable to consummate and make effective as promptly as practicable the
transactions contemplated by this Agreement. In addition, the parties will use
all reasonable efforts and cooperate with each other to obtain any consents or
waivers from third parties that Purchaser reasonably deems to be necessary under
any contract or agreement to which the Company or any Company Subsidiary is a
party in order to prevent any breach or default from arising thereunder;
provided, however, that the failure to obtain any such consent or waiver shall
not constitute a breach of a covenant hereunder or a failure to satisfy any
condition precedent to either party's obligation to consummate the transactions
contemplated hereby.
5.3 Securities Reports. As soon as reasonably available, the Company
shall deliver to Purchaser complete copies of its Annual Report on Form 10-K,
if any, for the year ending December 31, 1996, all Quarterly Reports on Form
10-Q, all Current Reports on Form 8-K or any proxy materials filed hereafter
with the SEC pursuant to the 1934 Act. The financial statements contained in
such reports will be prepared in accordance with GAAP (except for changes
required by applicable governmental authorities or by GAAP) and will present
fairly the consolidated financial condition of the Company and the Bank as of
the dates indicated and for the periods then ended.
5.4 Acquisition Transaction. The Company will not, and will cause the
Company Subsidiaries and its and the Company Subsidiaries' respective officers,
directors, employees, agents and Affiliates not to, directly or indirectly,
solicit, authorize, initiate or encourage submission of, any proposal, offer,
tender offer or exchange offer from any Person relating to any Acquisition
Transaction, or participate in any negotiations in connection with or in
furtherance of any Acquisition Transaction or permit any person other than
Purchaser and its representatives to have any access to the facilities of, or
furnish to any person other than Purchaser and its representatives any
non-public information with respect to, the Company or any of the Company
Subsidiaries in connection with or in furtherance of any of the foregoing. The
Company shall immediately cease and cause to be terminated any existing
activities, discussions, or negotiations with any parties (other than the
Purchaser) conducted heretofore with respect to any of the foregoing. The
Company shall immediately provide to Purchaser telephone notice of any such
proposal or offer and shall promptly provide Purchaser with the name of the
party seeking to engage in such discussions or negotiations, or requesting such
information, and, after receipt of a written offer or proposal from such party,
copies of any written offers, proposals, agreements or other documents with
respect to such offer or proposal. Notwithstanding anything contained herein to
the contrary, nothing herein shall prohibit the
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Company, its directors and officers from taking any action otherwise
prohibited by this Section 5.4 if the Board of Directors of the Company
determines, upon receipt of a written opinion of its outside counsel, that it is
necessary to take such action in order to fulfill their fiduciary duties to
shareholders of the Company under the MBCA.
5.5 Notification of Certain Matters.
(a) Each party shall give prompt notice to the other parties of (i) the
occurrence or failure to occur of any event or the discovery of any
information, which occurrence, failure or discovery would be likely to cause
any representation or warranty on its part contained in this Agreement to be
untrue, inaccurate or incomplete after the date hereof or, in case of any
representation or warranty given as of a specific date, would be likely to
cause any such representation on its part contained in this Agreement to be
untrue, inaccurate or incomplete in any material respect as of such specific
date and (ii) any material failure of such party to comply with or satisfy any
covenant or agreement to be complied with or satisfied by it hereunder.
(b) From and after the date hereof to the Effective Time and at and
as of the Effective Time, the Company shall supplement or amend any of
its representations and warranties which apply to the period after the date
hereof by delivering monthly updates to the Company Disclosure Schedule
("Disclosure Schedule Updates") to Purchaser with respect to any matter
hereafter arising which, in the good faith judgment of the Company, would
render any such representation or warranty after the date of this Agreement
materially inaccurate or incomplete as a result of such matter arising. The
Disclosure Schedule Updates shall be provided to Purchaser on or before the
25th day of each calendar month. Within twenty (20) days after receipt of any
Disclosure Schedule Update (or if cure is promptly commenced by the Company,
but is not effected within thirty (30) days after receipt of any Disclosure
Schedule Update (the "Cure Period")), Purchaser may exercise its right to
terminate this Agreement pursuant to Section 7.1(f) hereof, if the information
in such Disclosure Schedule Update together with the information in any or all
of the Disclosure Schedule Updates previously provided by the Company indicates
that the Company, in the good faith judgment of the Purchaser, has suffered or
is reasonably likely to suffer a Material Adverse Effect (i) which either has
not or cannot be cured within the Cure Period, or (ii) which does not result
primarily from changes in the general level of interest rates.
5.6 Access to Information; Confidentiality.
(a) Between the date hereof and the Effective Time, the Company will
afford, and will cause the Bank and each Non-Bank Subsidiary to afford, to the
officers, accountants, attorneys and authorized representatives of Purchaser
reasonable access during normal business hours to the banking offices,
personnel, advisors, consultants, properties, examination reports (subject to
regulatory approval), contracts, commitments, books and records of the Company,
the Bank and each Non-Bank Subsidiary, whether such documents are located on
the premises of the Company or elsewhere. The Company shall furnish Purchaser
with all such statements
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(financial and otherwise), records, examination reports (to the extent
permitted or authorized by the OTS) and documents or copies thereof, and other
information concerning the business and affairs of the Company, the Bank and
each Non-Bank Subsidiary as Purchaser shall from time to time reasonably
request. The Company further agrees to cause its accountants, attorneys and
such other persons as the parties shall mutually agree upon to fully cooperate
with Purchaser and its representatives in connection with the right of access
granted herein.
(b) The Company will promptly furnish to Purchaser (i) a copy of each
material report filed by it with any governmental authority, including without
limitation, any federal, state or local taxing authority and any federal or
state bank regulatory or securities authority (each a "Company Report") during
the period after the date hereof and prior to the Effective Time, and (ii) all
other information concerning its business, properties and personnel as
Purchaser may reasonably request. Each financial statement set forth in a
Company Report so filed and each financial statement provided by the Company to
Purchaser pursuant to the next following sentence, together with any notes or
schedules thereto, will present fairly in all material respects the information
purported to be set forth therein for the period specified therein (subject, in
the case of unaudited statements, to normal year-end adjustments and any other
adjustments described therein or the applicable principles with respect
thereto), in each case in accordance with GAAP during the periods involved or
applicable regulatory principles, as the case may be, in each case except as
otherwise provided herein, stated therein or in the notes thereto. Throughout
the period after the date hereof and prior to the Effective Time, the Company
will provide to Purchaser, on or before the 25th day of each calendar month,
(i) the reports of management of the Company and Bank to the Board of Directors
of the Company and the Bank, respectively, for the most recently available
month, including to the extent available, delinquency schedules, addition to
loan loss reserves, and payroll reports, (ii) monthly financial statements
prepared by the Company for the preceding month, and (iii) a description of any
material changes with respect to the representations and warranties of the
Company or in any of the lists provided therewith. Throughout the period after
the date hereof and prior to the Effective Time, the Company will cause one or
more of its designated representatives to confer on a regular and frequent
basis with representatives of Purchaser and to report the general status of the
ongoing operations of the Company and each Company Subsidiary. During such
period, the Company promptly will notify Purchaser of any change in the
ordinary course of business or in the operation of the properties of the
Company or any Company Subsidiary or any breach by the Company of any
representation, warranty, covenant or agreement set forth in this Agreement,
and will keep Purchaser promptly and fully informed of such events. During
such period, the Company will consult with Purchaser before taking any steps to
comply with suggestions made by any bank regulatory authority which could
reasonably be considered to be material to the Company. The Company shall
allow a representative of Purchaser to attend as an observer the Board of
Directors', and committees thereof, meetings of the Company and the Bank. The
Company shall give reasonable notice to Purchaser of any such meeting and, if
known, the agenda for or business to be discussed at such meeting. The Company
shall also provide to Purchaser all written agendas and meeting or written
consent materials (other than in connection with the matters subject to Section
5.4 hereof) provided to the directors of the Company and each Company
Subsidiary in connection with Board and committee meetings. All
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information obtained by Purchaser at these meetings shall be treated in
confidence as provided in this Section 5.6.
(c) All information and documents to which Purchaser is given access
pursuant hereto shall be subject to the Confidentiality Agreement. All
information furnished by the Company or any Company Subsidiary to Purchaser
pursuant hereto shall be treated as the sole property of the Company until
consummation of the Merger contemplated hereby and, if such Merger shall not
occur, Purchaser shall at the request of the Company, (i) return to the Company
or any Company Subsidiary or (ii) provide written confirmation of the
destruction of, all documents or other materials containing, reflecting or
referring to such information (and all copies thereof), shall use its best
efforts to keep confidential all such information, and shall not directly or
indirectly use such information for any competitive or other commercial
purpose. The obligation to keep such information confidential shall continue
for two (2) years from the date the proposed Merger is abandoned, but shall not
apply to (i) any information which was already in the possession of Purchaser
prior to disclosure thereof by the Company or any Company Subsidiary, (ii)
information which was then generally known to the public, information which
became known to the public through no fault of Purchaser or its agents, or
(iii) information disclosed in accordance with an order of any applicable
governmental authority or a court of competent jurisdiction.
5.7 Shareholder Approval. The Company will take all steps necessary to
duly call, give notice of, convene and hold a meeting of its shareholders, as
soon as practicable, but in no event later than forty-five (45) days after the
date the SEC clears the Proxy Statement, for the purpose of obtaining
shareholder approval of this Agreement and the Merger; provided, however, that
the Proxy Statement shall not be mailed to the holders of Company Common Stock
until ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co. has delivered to the Board of Directors of the
Company for inclusion in the Proxy Statement an opinion, dated the mailing
date, to the effect that the Merger Consideration is fair to the shareholders
of the Company from a financial point of view in standard industry form with
respect to transactions of this nature. The Company will take all reasonable
steps necessary to submit the Proxy Statement to the SEC within thirty (30)
days after the date of this Agreement. The Proxy Statement will satisfy all
requirements of the 1934 Act and the rules and regulations promulgated
thereunder and will include a unanimous recommendation by the Board of
Directors of the Company that the shareholders of the Company approve this
Agreement and the Merger. Purchaser shall furnish such information concerning
Purchaser as is necessary in order to cause the Proxy Statement, insofar as it
relates to Purchaser, to be prepared in accordance with all applicable
requirements of the 1934 Act and the rules and regulations promulgated
thereunder. Purchaser agrees promptly to advise the Company if at any time
prior to such Company shareholder meeting any information provided by Purchaser
in the Proxy Statement becomes incorrect or incomplete in any material respect,
and to provide to the Company the information needed to correct such inaccuracy
or omission.
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5.8 Employee Benefits. The Company and Purchaser shall cooperate in
effecting the following treatment of the Company Benefit Plans, except as
mutually agreed upon by Purchaser and the Company prior to the Effective Time:
(a) At the Effective Time, Purchaser or any subsidiary of Purchaser
shall, to the extent required by Purchaser, be substituted for the Company or
any Company Subsidiary as the sponsoring employer under those Company Benefit
Plans with respect to which Company or any Company Subsidiary is a sponsoring
employer immediately prior to the Effective Time, and shall assume and be
vested with all of the powers, rights, duties, obligations and liabilities
previously vested in Company or Company Subsidiary with respect to each such
plan. Except as otherwise provided herein, each such plan and any Company
Benefit Plan sponsored by the Company or any Company Subsidiary shall be
continued in effect by Purchaser or any applicable subsidiary of Purchaser
after the Effective Time without a termination or discontinuance thereof as a
result of the Merger, subject to the power reserved to Purchaser or any
applicable subsidiary of Purchaser under each such plan to subsequently amend
or terminate the plan, which amendments or terminations shall be limited by and
otherwise comply with the terms of such plan and applicable law. The Company,
each Company Subsidiary and Purchaser will use all reasonable efforts (i) to
effect said substitutions and assumptions, and such other actions contemplated
under this Agreement, and (ii) to amend such plans as to the extent necessary
to provide for said substitutions and assumptions, and such other actions
contemplated under this Agreement or the Benefits Letter.
(b) After the Effective Time, at such times and to the extent set forth
in the Benefits Letter, Purchaser shall provide, or cause any applicable
subsidiary of Purchaser to provide, to each employee of Company and any Company
Subsidiary as of the Effective Time ("Company Employees") (i) the opportunity
to participate in each employee benefit plan and program maintained by
Purchaser for similarly situated employees of Purchaser and its subsidiaries
(the "Purchaser Benefit Plans"), (ii) credit for service with the Company, the
Bank or the Non-Bank Subsidiaries under the Purchaser Benefit Plans with
respect to the participation of such employees in such Purchaser Benefit Plans,
and (iii) waiver of waiting periods and preexisting condition exclusions under
the Purchaser Benefit Plans. Nothing in the preceding sentence shall obligate
Purchaser to provide or cause to be provided any benefits duplicative to those
provided under any Company Benefit Plan continued pursuant to subparagraph (a)
above. Except as otherwise provided in this Agreement, the power of Purchaser
or Company or subsidiary of Purchaser to amend or terminate any benefit plan or
program, including any Company Benefit Plan, shall not be altered or affected,
but shall remain subject to any limitations provided in such plans or under
applicable law.
(c) Purchaser agrees to honor or to cause an applicable Purchaser
subsidiary to honor certain other Company Benefit Plans, and to provide
severance benefits to eligible employees, as set forth in the Benefits Letter.
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(d) Nothing in this Section 5.8 or the Benefits Letter is intended,
nor shall it be construed, to confer any express or implied third party
beneficiary rights in any person including present or former employees of the
Company or any Company Subsidiary and any beneficiaries or dependents thereof.
5.9 Company Incentive Plans. The Company shall terminate the Company
Incentive Plans and cancel and terminate each outstanding option and
shareholder value unit ("SVU") thereunder, effective prior to the Effective
Time. The Company shall use its best efforts to receive prior to the Effective
Time a cancellation agreement from each option holder and each SVU holder in
form and substance satisfactory to Purchaser ("Cancellation Agreements"),
acknowledging such cancellation and termination of options and SVUs. The
Cancellation Agreements shall provide that in consideration for the
cancellation of such options and SVUs, the Company shall pay to such holders,
not more than two (2) days prior to the Effective Time, an amount (less any
applicable withholding and employment taxes) equal (i) in the case of options,
to the amount by which the Merger Consideration exceeds the exercise price per
share of Company Common Stock under the outstanding options held by such
holder, multiplied by the number of shares of Company Common Stock covered by
such options, and (ii) in the case of SVUs, to the amount determined in
accordance with Section 6.02 of the Company's 1995 Stock Option and Shareholder
Value Plan. All options held by a person who does not deliver a Cancellation
Agreement to the Company prior to the Effective Time shall be converted as
provided in Section 2.1(d) hereof, and all SVUs held by a person who does not
deliver a Cancellation Agreement prior to the Effective Time shall be converted
into the right to receive cash in accordance with said Section 6.02, and
Purchaser shall pay to such holders, not more than two (2) days after the
receipt of a Cancellation Agreement, an amount (less any applicable withholding
and employment taxes) equal (x) in the case of options, to the amount by which
the Merger Consideration exceeds the exercise price per share of Company Common
Stock under the outstanding options held by such holder, multiplied by the
number of shares of Company Common Stock covered by such options and (y) in the
case of SVUs, to the amount determined in accordance with Section 6.02 of the
Company's 1995 Stock Option and Shareholder Value Plan.
5.10 Indemnification.
(a) Purchaser and MergerSub hereby agree that for six (6) years
after the Effective Time, Purchaser and the Surviving Corporation shall
cause to be maintained in effect the Company's current policy of officers' and
directors' liability insurance with respect to actions and omissions occurring
on or prior to the Closing; provided, however, that the Surviving Corporation
may substitute therefor policies of at least the same coverage containing terms
and conditions which are no less advantageous to the covered persons and
provided that such substitution shall not result in any gaps or lapses in
coverage with respect to matters occurring on or prior to the Effective Time;
provided, further, that the Surviving Corporation shall not be required to pay
an annual premium in excess of 125% of the last annual premium paid by the
Company prior to the date hereof (which premium is disclosed in the Schedule
3.6 to the Company Disclosure Schedule) and if the Surviving Corporation is
unable to obtain the
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insurance required by this Section 5.10, it shall obtain as much
comparable insurance as possible for an annual premium equal to such maximum
amount.
(b) Purchaser acknowledges the exculpation, indemnification,
advancement of expenses and like obligations of the Company and the Bank
contained in their Articles of Incorporation and Charter, respectively, and
ByLaws with respect to current and former directors, officers, employees and
agents ("Indemnified Persons") and hereby agrees, for six (6) years from and
after the Effective Time, to honor in accordance with their terms in effect on
the date hereof all such obligations.
(c) The provisions of this Section 5.10 are intended to be for the
benefit of, and shall be enforceable by, each Indemnified Person and
his or her heirs, beneficiaries and representatives.
5.11 Bank Director Matters. At the Effective Time, Purchaser agrees
to elect ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ as Chairman of the Board of the Bank as
described in the Benefits Letter.
5.12 Rights Agreement. The Company shall take all necessary steps to
terminate the Rights Agreement effective upon the Effective Time.
5.13 Further Assurances; Form of Transaction.
(a) Subject to the terms and conditions herein provided, each of the
parties hereto agrees to use its best efforts to take, or cause to be taken,
all action and to do, or cause to be done, all things necessary, proper or
advisable under applicable laws and regulations to consummate and make
effective the transactions contemplated by this Agreement. In case at any time
after the Effective Time any further action is necessary or desirable to carry
out the purposes of this Agreement, the proper officers and directors of each
party to this Agreement shall take all such necessary action.
(b) If necessary to expedite the Closing of the Merger and any other
transactions contemplated by this Agreement, the parties agree that each will
take or perform any additional reasonably necessary or advisable steps to
restructure the transactions contemplated hereby; provided, however, that any
such restructuring will not result in any change in the Merger Consideration.
5.14 WARN Act. The Company agrees that, if requested by Purchaser, it
shall, on behalf of Purchaser or any subsidiary of Purchaser, issue such
notices as are required under the Worker Adjustment and Retraining Notification
Act of 1988 (the "WARN Act") or any similarly applicable state or local law.
Such request by Purchaser shall be given in time to permit the Company to issue
notices sufficiently in advance of any time of closing of such offices so that
Purchaser or any subsidiary of Purchaser shall not be liable under the WARN Act
for any penalty or payment in lieu of notice to any employee or governmental
entity. Purchaser and the
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Company shall cooperate in the preparation and giving of such notices,
and no such notices shall be given without the approval of Purchaser.
5.15 Action by MergerSub. As the sole shareholder of MergerSub,
Purchaser has approved this Agreement and the Merger and will provide all
funding necessary for the acquisition by it of all of the issued and
outstanding Company Common Stock.
5.16 Dividend During Closing Quarter. Notwithstanding anything
contained herein to the contrary, the Company shall be entitled to declare and
pay a final cash dividend in respect of the Company Common Stock, in an amount
not to exceed $.20 per share of Company Common Stock, if a regular dividend
declaration date shall be scheduled to occur during the twenty (20) day period
prior to Closing referred to in Section 1.2 hereof.
ARTICLE VI
CONDITIONS
6.1 Conditions to Obligations of Each Party. The respective
obligations of each party to effect the transactions contemplated hereby shall
be subject to the fulfillment at or prior to the Effective Time of the
following conditions:
(a) Regulatory Approvals. The Regulatory Approvals necessary for
the consummation of the transactions contemplated hereby shall have
been obtained, and none of such approvals shall contain or be subject to any
terms or conditions that are materially different from terms and conditions
customarily contained in similar approvals or notices issued prior to the date
hereof, and all applicable statutory or regulatory waiting periods shall have
lapsed.
(b) No Adverse Proceedings. There shall not be threatened,
instituted or pending any action or proceeding before any court or
governmental authority or agency, domestic or foreign, challenging or seeking
to make illegal or to delay or otherwise directly or indirectly to restrain or
prohibit, the consummation of the transactions contemplated hereby or seeking
to obtain material damages in connection with the transactions contemplated
hereby. No injunction or other order entered by a state or federal court of
competent jurisdiction shall have been issued and remain in effect which would
prohibit or make illegal the consummation of the transactions contemplated
hereby.
6.2 Additional Conditions to Obligations of Company. The obligation of
the Company to consummate the transactions contemplated hereby in accordance
with the terms of this Agreement is also subject to the following conditions:
(a) Representations; Performance. The representations and
warranties of Purchaser set forth in Article IV shall have been true
and correct as of the date hereof and shall be true and correct as of the
Effective Time, except where the failure to be true and correct would not have,
or would not reasonably be expected to have, a Material Adverse Effect on
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Purchaser. Purchaser shall in all material respects have performed each
obligation and agreement and complied with each covenant to be performed and
complied with by it hereunder at or prior to the Effective Time.
(b) Officers' Certificate. Purchaser shall have furnished to the
Company a certificate of an Executive Officer and the Chief Financial Officer
of Purchaser dated as of the Effective Time, in which such officers shall
certify to their best knowledge that they have no reason to believe that the
conditions set forth in Section 6.2(a) above have not been fulfilled.
(c) Secretary's Certificate. Purchaser shall have furnished to the
Company (i) copies of the text of the resolutions by which the corporate action
on the part of Purchaser necessary to approve this Agreement and the
transactions contemplated hereby were taken, (ii) certificates dated as of the
Effective Time executed on behalf of Purchaser and MergerSub by their
respective corporate secretaries or one of their respective assistant corporate
secretaries certifying to the Company that such copies are true, correct and
complete copies of such resolutions and that such resolutions were duly adopted
and have not been amended or rescinded, and (iii) an incumbency certificate
dated as of the Effective Time executed on behalf of each of Purchaser and
MergerSub by their respective corporate secretary or one of its assistant
corporate secretaries certifying the signature and office of each officer of
Purchaser and of MergerSub executing this Agreement or any other agreement,
certificate or other instrument executed pursuant hereto by Purchaser or
MergerSub, as the case may be.
(d) Opinion of Counsel. The Company shall have received an opinion
letter dated as of the Effective Time addressed to the Company from Vedder,
Price, ▇▇▇▇▇▇▇ & Kammholz, counsel to Purchaser, substantially in the form
previously delivered and agreed upon.
(e) Shareholder Approval. This Agreement and the Merger shall have
been approved by the affirmative vote of the holders of the percentage of the
Company's capital stock required for such approval under the provisions of the
Company's Articles of Incorporation and applicable law.
6.3 Additional Conditions to Obligations of Purchaser and MergerSub.
The obligation of Purchaser and MergerSub to consummate the transactions
contemplated hereby in accordance with the terms of this Agreement is also
subject to the following conditions:
(a) Representations; Performance. The representations and warranties of
the Company in this Agreement shall have been true and correct as of the date
hereof and shall be true and correct as of the Effective Time, as updated
pursuant to Section 5.5 hereof, except where the failure to be true and correct
would not have, or would not reasonably be expected to have, a Material Adverse
Effect on the Company, and the Company shall in all material respects have
performed each obligation and agreement and complied with each covenant to be
performed and complied with by it hereunder at or prior to the Effective Time.
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(b) Officers' Certificate. The Company shall have furnished to
Purchaser a certificate of the Chief Executive Officer and the Chief Financial
Officer of the Company, dated as of the Effective Time, in which such officers
shall certify to their best knowledge that they have no reason to believe that
the conditions set forth in Section 6.3(a) above have not been fulfilled.
(c) Secretary's Certificate. The Company shall have furnished to
Purchaser (i) copies of the text of the resolutions by which the corporate
action on the part of the Company necessary to approve this Agreement and the
transactions contemplated hereby were taken, (ii) a certificate dated as of the
Effective Time executed on behalf of the Company by its corporate secretary or
an assistant corporate secretary certifying to Purchaser that such copies are
true, correct and complete copies of such resolutions and that such resolutions
were duly adopted and have not been amended or rescinded and (iii) an
incumbency certificate dated as of the Effective Time executed on behalf of the
Company by its corporate secretary or an assistant corporate secretary
certifying the signature and office of each officer of the Company executing
this Agreement or any other agreement, certificate or other instrument executed
pursuant hereto by the Company.
(d) Opinion of Counsel. Purchaser shall have received an opinion
letter dated as of the Effective Time addressed to Purchaser from ▇▇▇▇▇▇
▇▇▇▇▇▇▇, PLLC, counsel to the Company, substantially in the form previously
delivered and agreed upon.
(e) No Material Adverse Effect. Since the date of this Agreement, the
Company shall not have suffered or experienced a Material Adverse Effect;
provided, however, that this Section 6.3(e) shall not apply to (i) matters
properly disclosed to Purchaser by the Company in a Disclosure Schedule Update
and cured by the Company within the applicable Cure Period for which Purchaser
has a specific right of termination under Section 7.1(f) hereof or (ii) a
Material Adverse Effect resulting primarily from changes in the general level
of interest rates.
(f) Accountant's Letter. The firm of Deloitte & Touche LLP,
independent certified public accountants for the Company, shall have delivered
to Purchaser a letter, dated as of the Closing Date, with a review stated to
have been done as of a date which is not more than five (5) business days prior
to the date of Closing, in standard industry form with respect to transactions
of this nature.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
7.1 Termination. This Agreement may be terminated prior to the
Effective Time:
(a) by mutual consent of the Boards of Directors of Purchaser and the
Company; or
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(b) by either Purchaser or the Company, if any of the conditions to
such party's obligation to consummate the transactions contemplated in this
Agreement shall have become impossible to satisfy if, but only if, such party
has used its best efforts and acted in good faith in attempting to satisfy all
such conditions and if such party is not then in breach or default in any
material respect of this Agreement; or
(c) by the Board of Directors of Purchaser if (i) there has been a
material breach or default by the Company of any representation or warranty or
in the observance of its covenants and agreements contained in this Agreement
of which notice has been given in writing by Purchaser and which has not been
cured within thirty (30) business days of receipt of such notice; or (ii) the
Effective Time has not occurred prior to December 31, 1997 without fault on the
part of Purchaser; or (iii) a public announcement with respect to a proposal,
plan or intention to effect an Acquisition Transaction shall have been made by
any Person other than Purchaser or an Affiliate of Purchaser and the Board of
Directors of the Company shall have (A) failed to publicly reject or oppose
such proposed Acquisition Transaction within ten (10) days of the public
announcement of such proposal, plan or intention or (B) shall have modified,
amended or withdrawn its recommended approval of this Agreement and the Merger
to the Company's shareholders; or
(d) by the Board of Directors of the Company if (i) there has been a
material breach or default by Purchaser of any representation or warranty or in
the observance of its covenants and agreements contained in this Agreement of
which notice has been given in writing by the Company and which has not been
cured within thirty (30) business days of receipt of such notice; or (ii) the
Effective Time has not occurred prior to December 31, 1997 without fault on the
part of the Company; or
(e) by the Board of Directors of either Purchaser or the Company at any
time after the date that (i) the shareholders of the Company fail to approve
this Agreement and the Merger by an affirmative vote of at least a majority of
the outstanding shares of the Company Common Stock at a meeting held for such
purpose; or (ii) if any one of the Applicable Governmental Authorities has
denied approval for the Merger and, if such denial is appealable, neither
Purchaser nor the Company has filed a petition seeking review of such order of
denial or taken other similar action under applicable law, within thirty (30)
days after the issuance or entry by the governmental agency of such order of
denial; or
(f) by Purchaser pursuant to Section 5.5(b).
7.2 Effect of Termination.
(a) In the event of the termination of this Agreement as provided in
Section 7.1(a) or 7.1(b), written notice thereof shall forthwith be given to
the other party or parties specifying the provision hereof pursuant to which
such termination is made, and this Agreement shall forthwith become null and
void, and there shall be no liability on the part of
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Purchaser or the Company except (i) for fraud or willful and material
breach of this Agreement and (ii) as set forth in this Section 7.2 and Section
8.2.
(b) If this Agreement is terminated by the Board of Directors of
Purchaser pursuant to Section 7.1(c)(iii), or Section 7.1(e)(i) and within
twenty-four (24) months of any such termination an Acquisition Transaction
shall occur or if this Agreement is terminated by the Board of Directors of
Purchaser pursuant to Section 7.1(c)(i), then in such case the Company shall
pay to Purchaser in immediately available funds not later than two business
days after demand therefor an amount equal to Ten Million Dollars ($10,000,000)
as reasonable reimbursement to Purchaser for all costs, fees and expenses
incurred or to be incurred by Purchaser in connection with this Agreement and
the transactions contemplated hereby. Notwithstanding the foregoing, the amount
of the expense reimbursement payment hereunder, when aggregated with all
amounts actually received by Purchaser for the Option Shares or the Option (as
defined in the Option Agreement) prior to the making of a demand by Purchaser
for payment pursuant to this Section 7.2(b), including, without limitation, any
Repurchase Consideration paid under the Option Agreement from any Person,
including the Company in a single transaction or a series of transactions, less
any Purchase Price (as defined in the Option Agreement) actually paid for the
Option Shares by Purchaser under the Option Agreement (such amount being
referred to as the "Stock Option Consideration"), shall not exceed the Limit
(as defined in the Option Agreement), it being the intention of the parties
that if Purchaser has previously received Stock Option Consideration pursuant
to the Option Agreement equal to the Limit, then no further expense
reimbursement payment shall be due from the Company under this Agreement.
(c) If this Agreement is terminated by the Board of Directors of the
Company pursuant to Section 7.1(d)(i), Purchaser shall pay to the Company not
later than two business days after demand therefor an amount equal to Five
Million Dollars ($5,000,000) as reasonable reimbursement to the Company for all
costs, fees and expenses actually incurred or to be incurred by the Company in
connection with this Agreement and the transactions contemplated hereby.
(d) In the event of termination of this Agreement by Purchaser or the
Company, as the case may be, pursuant to Section 7.1(c)(i), Section 7.1
(c)(iii), Section 7.1(d)(i) or Section 7.1(e)(i) hereof, there shall be no
liability or obligation on the part of either Purchaser or the Company to the
other or on the part of any of their officers or directors, except pursuant to
Section 5.6, Section 7.2(b), Section 7.2(c) and Section 8.2 hereof and except
to the extent such termination results from the willful breach by a party
hereto of any of its representations, warranties, covenants or agreements
contained herein, or a wrongful termination hereof by Purchaser or the Company,
as the case may be.
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ARTICLE VIII
GENERAL PROVISIONS
8.1 Publicity. Neither the Company nor Purchaser shall make any public
announcement or statement with respect to the Merger, this Agreement or any
related transactions without the approval of the other parties; provided,
however, that either Purchaser or the Company may, upon reasonable notice to
the other party, make any public announcement or statement that it believes is
required by federal securities law. To the extent practicable, each of the
Company and Purchaser will consult with the other with respect to any such
public announcement or statement.
8.2 Expenses. Except as otherwise provided in Section 7.2, the costs
and expenses of Purchaser and the Company shall be allocated as follows:
(a) Purchaser shall bear all fees and expenses of its counsel,
accountants and investment bankers and all other costs and expenses incurred by
it in the preparation of this Agreement, the investigation of the Company, the
preparation and prosecution of its application for regulatory approval, and all
costs and expenses of any appeals therefrom.
(b) The Company or the Bank shall bear all fees and expenses of its
counsel, accountants and investment bankers, all filing fees to be paid to the
SEC in connection with the Proxy Statement, the costs of printing and mailing
the Proxy Statement for use at the meeting of Company shareholders to consider
the Merger, and all other costs and expenses incurred by such persons or firms
in the preparation of this Agreement, the calling, noticing and holding of a
meeting of shareholders to consider and act upon the Merger and the furnishing
of information or other cooperation to Purchaser in connection with the
preparation of regulatory applications.
8.3 Survival. The representations and warranties of the parties hereto
shall expire at the Effective Time and shall not survive the consummation of
the Merger. All covenants and agreements contemplated to be performed prior to
the Effective Time shall expire at the Effective Time and shall not survive the
consummation of the Merger, and all covenants and agreements of Purchaser
contemplated to be performed, partially or in full, after the Effective Time,
shall survive the Effective Time and the consummation of the transactions
contemplated hereby.
8.4 Notices. All notices and other communications hereunder shall be
in writing and shall be sufficiently given if made by hand delivery, by fax, by
telecopies, by overnight delivery service, or by registered or certified mail
(postage prepaid and return receipt requested) to the parties at the following
addresses (or at such other address for a party as shall be specified by it by
like notice):
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If to Purchaser or to MergerSub:
ABN AMRO North America, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ - ▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Chief Financial Officer
with a copy to:
ABN AMRO North America, Inc.
Legal
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ - ▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Group Senior Vice President,
General Counsel and Secretary
with a copy to:
Vedder, Price, ▇▇▇▇▇▇▇ & Kammholz
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
If to the Company, addressed to:
Standard Federal Bancorporation, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Chairman and President
with a copy to:
Standard Federal Bancorporation, Inc.
Legal
▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Senior Vice President,
and General Counsel
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with a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇, PLLC
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Esq.
All such notices and other communications shall be deemed to have been
duly given as follows: when delivered by hand, if personally delivered; when
received, if delivered by registered or certified mail (postage prepaid and
return receipt requested); when receipt acknowledged, if faxed or telecopied;
and the next day delivery after being timely delivered to a recognized
overnight delivery service.
8.5 Amendment. This Agreement may not be amended except by an instrument
in writing approved by the parties to this Agreement and signed on behalf of
each of the parties hereto.
8.6 Waiver. At any time prior to the Effective Time, any party hereto may
extend the time for the performance of any of the obligations or other acts of
the other party hereto or waive compliance with any of the agreements of the
other party or with any conditions to its own obligations, in each case only to
the extent such obligations, agreements and conditions are intended for its
benefit.
8.7 Interpretation. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. References to Sections and Articles refer to
Sections and Articles of this Agreement unless otherwise stated. Words such as
"herein," "hereinafter," "hereof," "hereto," "hereby" and "hereunder," and
words of like import, unless the context requires otherwise, refer to this
Agreement (including the Company Disclosure Schedule hereto). As used in this
Agreement, the masculine, feminine and neuter genders shall be deemed to
include the others if the context requires.
8.8 Severability. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated, and the parties shall negotiate
in good faith to modify this Agreement and to preserve each party's anticipated
benefits under this Agreement.
8.9 Miscellaneous. This Agreement and all other documents and instruments
referred to herein: (i) constitute the entire agreement, and supersede all
other prior agreements and undertakings, both written and oral, among the
parties, with respect to the subject matter hereof; (ii) shall be governed in
all respects, including validity, interpretation and effect, by the laws of the
State of Delaware, without giving effect to the principles of conflict of laws
thereof, and by the laws of the United States where applicable; and (c) shall
not be assigned by operation of law or otherwise.
8.10 Counterparts. This Agreement may be executed in any number of
counterparts, and each such counterpart shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
agreement.
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IN WITNESS WHEREOF, the Company, Purchaser and MergerSub have caused this
Agreement to be executed on the date first written above by their respective
officers.
ABN AMRO NORTH AMERICA, INC.
By:
-----------------------------------
Its:
-----------------------------------
By:
-----------------------------------
Its:
-----------------------------------
HEITRITZ CORP.
By:
-----------------------------------
Its:
-----------------------------------
By:
-----------------------------------
Its:
-----------------------------------
STANDARD FEDERAL BANCORPORATION, INC.
By:
-----------------------------------
Its:
-----------------------------------
52
DISCLOSURE SCHEDULE
OF
STANDARD FEDERAL BANCORPORATION, INC.
TO THE
AGREEMENT AND PLAN OF MERGER
by and among
ABN AMRO NORTH AMERICA, INC.,
HEITRITZ CORP.
and
STANDARD FEDERAL BANCORPORATION, INC.
November 21, 1996
53
LIST OF SCHEDULES
Schedule 3.3 Subsidiaries
Schedule 3.6 Indemnification
Schedule 3.9 Real Properties
Schedule 3.10 Litigation
Schedule 3.11 Taxes
Schedule 3.12 Company Permits
Schedule 3.15 Material Contracts
Schedule 3.16 Absence of Certain Changes
Schedule 3.17 Loans and Investments
Schedule 3.18 Intellectual Properties
Schedule 3.19 Company Benefit Plans
(a)(1) Company Benefit Plans
(a)(2) Change in Control Benefits
(a)(3) Multiemployer Plans
(a)(4) Notice of Noncompliance
(b) Company Qualified Plans
(f) Nondeductible Payments under Code Sections 162(m) or 280G
(h) Retiree Benefits
(i)(1) Change in Control Payments to Officers and Directors
(i)(2) Other Change in Control Payments
(i)(3) Stock Options
(i)(4) SVUs
(1)(5) Deferred Compensation and Supplemental Retirement Benefits
Schedule 3.23 Environmental Conditions