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
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
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
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
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.
(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, Kaufman & Kammholz, 222 North LaSalle Street,
Suite 2600, Chicago, Illinois, 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 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 2600 West Big Beaver Road, Troy, Michigan, 48084;
"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;
"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 Merrill Lynch & Co., as agent for the Company;
"DCB" means the Dutch Central Bank;
"DGCL" means the Delaware General Corporation Law, as amended;
"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;
"Knowledge" or "to the knowledge of" means to the knowledge of
Thomas R. Ricketts, Garry C. Carley, Ronald J. Palmer, Joseph E. Krul,
Michael R. Maher and Margaret Makela;
"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 Merrill Lynch & 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, Kercheval 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-Curti Insurance Agency, Inc. and
Bell 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;
"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.
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.
(c) 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 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 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, 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 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
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 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 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 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.
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
(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;
(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 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" 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.
(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.
(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 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 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.
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 Merrill Lynch & 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 Merrill Lynch & 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 Merrill
Lynch & 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.
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 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, 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;
(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;
(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 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 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 (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 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 Merrill Lynch & 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.
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.
(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 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 Mr. Thomas R. Ricketts 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
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
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 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, Kaufman & 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.
(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
Dykema Gossett, 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
(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 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.
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 Section7.2, 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):
If to Purchaser or to MergerSub:
ABN AMRO North America, Inc.
135 South LaSalle Street - Room 340
Chicago, Illinois 60603
Telecopy: (312) 904-2346
Attention: Thomas C. Heagy
Chief Financial Officer
with a copy to:
ABN AMRO North America, Inc.
Legal
135 South LaSalle Street - Room 325
Chicago, Illinois 60603
Telecopy: (312) 904-2010
Attention: Robert K. Quinn, Esq.
Group Senior Vice President,
General Counsel and Secretary
with a copy to:
Vedder, Price, Kaufman & Kammholz
222 North LaSalle Street
Suite 2600
Chicago, Illinois 60601-1003
Telecopy: (312) 609-5005
Attention: Robert J. Stucker, Esq.
If to the Company, addressed to:
Standard Federal Bancorporation, Inc.
2600 West Big Beaver Road
Troy, Michigan 48084
Telecopy: (810) 637-0329
Attention: Thomas R. Ricketts
Chairman and President
with a copy to:
Standard Federal Bancorporation, Inc.
Legal
2600 West Big Beaver Road
Troy, Michigan 48084
Telecopy: (810) 816-4899
Attention: Ronald J. Palmer
Senior Vice President,
and General Counsel
with a copy to:
Dykema Gossett, PLLC
400 Renaissance Center
Detroit, Michigan 48243
Telecopy: (313) 568-6915
Attention: Paul R. Rentenbach, 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.
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: /S/ HARRISON F. TEMPEST
Its: Chairman and Chief Executive Officer
By: /S/ ROBERT K. QUINN
Its: Group Senior Vice President,
General Counsel and Secretary
HEITRITZ CORP.
By: /S/ SCOTT HEITMANN
Its: President
By: /S/ DAVID R. PAPRITZ
Its: Vice President
STANDARD FEDERAL BANCORPORATION, INC.
By: /S/ THOMAS R. RICKETTS
Its: Chairman and President