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EXHIBIT 2
AGREEMENT AND PLAN OF REORGANIZATION
by and among
STANDARD FEDERAL BANCORPORATION, INC.,
a Michigan corporation,
BSB ACQUISITION CORP.,
a Delaware corporation,
and
BELL BANCORP, INC.,
a Delaware corporation,
December 14, 1995
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TABLE OF CONTENTS
Page
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ARTICLE I. MERGER; CLOSING; EFFECTIVE TIME; DEFINITIONS
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1.1 The Merger......................................... 1
1.2 Closing; Effective Time............................ 2
1.3 Certificate 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................................. 9
ARTICLE III. REPRESENTATIONS AND
WARRANTIES OF THE COMPANY
-------------------------
3.1 Organization, Standing and Power................... 10
3.2 Capitalization..................................... 11
3.3 Subsidiaries....................................... 12
3.4 Company Financial Statements; Absence of
Liabilities..................................... 12
3.5 Authority of the Company; No Violation............. 13
3.6 Insurance.......................................... 14
3.7 Books and Records.................................. 14
3.8 Title to Assets.................................... 14
3.9 Real Properties.................................... 15
3.10 Litigation......................................... 15
3.11 Taxes.............................................. 15
3.12 Compliance with Applicable Laws; Company Permits... 17
3.13 Performance of Obligations......................... 18
3.14 Employees.......................................... 18
3.15 Material Contracts................................. 18
3.16 Absence of Certain Changes......................... 20
3.17 Loans and Investments.............................. 21
3.18 Intellectual Properties............................ 22
3.19 Company Benefit Plans.............................. 22
3.20 Regulatory Approvals............................... 24
3.21 Company SEC Reports................................ 24
3.22 Environmental Conditions........................... 25
3.23 Proxy Statement.................................... 25
3.24 Insider Interests.................................. 26
3.25 Fairness Opinion................................... 26
3.26 Brokers and Finders................................ 26
3.27 Accuracy of Information Furnished.................. 26
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ARTICLE IV. REPRESENTATIONS AND
WARRANTIES OF STANDARD
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4.1 Organization, Standing and Power................... 27
4.2 Authority of Standard; No Violation................ 27
4.3 Regulatory Approvals............................... 28
4.4 Compliance with Applicable Law..................... 28
4.5 Litigation......................................... 28
4.6 Necessary Capital.................................. 28
4.7 Proxy Statement.................................... 29
4.8 Accuracy of Information Furnished.................. 29
ARTICLE V. ADDITIONAL COVENANTS AND AGREEMENTS
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5.1 Conduct of Business by the Company................. 30
5.2 Filings and Approvals.............................. 34
5.3 Securities Reports................................. 34
5.4 Acquisition Transactions........................... 35
5.5 Notification of Certain Matters.................... 35
5.6 Access to Information; Confidentiality............. 36
5.7 Stockholder Approval............................... 37
5.8 Resolution of Company Benefit Plans................ 38
5.9 Company Stock Options.............................. 40
5.10 Indemnification.................................... 40
5.11 Employment of Certain Persons; Director Matters.... 42
5.12 Further Assurances; Form of Transaction............ 42
5.13 Environmental Matters.............................. 43
5.14 WARN Act........................................... 44
5.15 Action by MergerSub................................ 44
5.16 Conduct of Business by Standard................... 44
5.17 Dividend During Closing Quarter.................... 45
ARTICLE VI. CONDITIONS
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6.1 Conditions to Obligations of Each Party............ 46
6.2 Additional Conditions to Obligations
of Company ........................................ 46
6.3 Additional Conditions to Obligation of Standard ... 47
ARTICLE VII. TERMINATION, AMENDMENT AND WAIVER
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7.1 Termination........................................ 49
7.2 Effect of Termination.............................. 50
ARTICLE VIII. GENERAL PROVISIONS
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8.1 Publicity.......................................... 52
8.2 Expenses........................................... 52
8.3 Survival........................................... 52
8.4 Notices............................................ 53
8.5 Amendment.......................................... 53
8.6 Waiver............................................. 53
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8.7 Interpretation..................................... 54
8.8 Severability....................................... 54
8.9 Miscellaneous...................................... 54
8.10 Counterparts....................................... 54
SIGNATURES................................................... 55
Schedule 3.6 - Insurance
Schedule 3.9 - Real Properties
Schedule 3.10 - Litigation
Schedule 3.11 - Tax Matters
Schedule 3.12 - Licenses and Permits
Schedule 3.14 - Employee Matters
Schedule 3.15 - Material Contracts
Schedule 3.16 - Certain Changes since March 31, 1995
Schedule 3.17 - Classified Loans
Schedule 3.18 - Intellectual Properties
Schedule 3.19 - Company Benefit Plans
Schedule 3.22 - Environmental Matters
Schedule 3.24 - Insider Interests
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AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is entered
into on December 14, 1995, by and among STANDARD FEDERAL BANCORPORATION, INC.,
a Michigan corporation ("Standard"), BSB ACQUISITION CORP., a Delaware
corporation that is a wholly-owned subsidiary of Standard ("MergerSub"), and
BELL BANCORP, INC., a Delaware corporation (the "Company").
Standard 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. The Boards of Directors of Standard,
MergerSub and the Company have each duly approved this Agreement. Upon
effectiveness of the Merger and immediately thereafter, the Company will carry
out its complete liquidation by merging with and into Standard (with Standard
being the surviving corporation), subject to all required governmental
approvals. Simultaneously with the execution hereof, the Company and Standard
have entered into the Option Agreement. Capitalized terms used herein shall
have the meanings given to them in Section 1.5 hereof.
In consideration of the premises and the mutual covenants,
representations, warranties and agreements contained herein, Standard 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 stockholder
approvals, the Company and MergerSub shall consummate the Merger in 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 and shall become a wholly-owned subsidiary
of Standard and (iii) the Company shall continue to be governed by the laws of
the State of Delaware with all its rights, privileges, powers and franchises
unaffected by the Merger. The Merger shall have the effects set forth in
Section 259 of the Delaware General Corporation Law ("DGCL").
(b) Immediately following the Merger, Standard shall cause the
complete liquidation of the Company by merging the Company with and into
Standard and the separate corporate existence of the Company shall thereupon
cease. As the result of such merger, Standard shall be the surviving
corporation in and shall continue to be governed by the laws of the State of
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Michigan, with all its rights, privileges, powers and franchises unaffected by
such merger. Such merger shall have the effects set forth in Section 724 of
the Michigan Business Corporation Act and Section 259 of the DGCL.
(c) The Company will cooperate in the preparation by Standard and
PFB of such applications to the OTS and any other regulatory authorities as may
be necessary in connection with all governmental approvals requisite to the
consummation of the transactions contemplated hereby. Standard and the Company
will each cooperate in the preparation of such applications, statements or
materials as may be required to be furnished to the stockholders of the Company
or filed or submitted to appropriate governmental agencies in connection with
the Merger and with solicitation of the approval by stockholders of the Company
in respect thereof.
1.2 Closing; Effective Time. The Closing of the Merger shall take
place in 1996 on a Friday selected by Standard and within 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, at the main office of Standard in Troy, Michigan, on
a date and 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 by the surviving
corporation as provided in the DGCL, or at such time thereafter as Standard and
the Company may agree upon in writing to provide in such certificate of merger.
1.3 Certificate of Incorporation; Bylaws. At the Effective Time,
the Certificate of Incorporation and Bylaws of the Company, as in effect
immediately prior to the Effective Time, shall become the Certificate 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 20% of the then outstanding shares of any class of capital
stock of the Company by any Person other than Standard or an Affiliate of
Standard, (ii) a merger, consolidation or other business combination with the
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Company or the Association involving any Person other than Standard or an
Affiliate of Standard, (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 Standard or an Affiliate of Standard, (iv) the
acquisition by any Person (other than Standard or an Affiliate of Standard 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 20% 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 Standard or an Affiliate of
Standard, (vi) a public proxy or consent solicitation made to stockholders 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 FDIC, the OTS 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 stockholders 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;
"Association" means Bell Federal Savings and Loan Association, a
federally-chartered stock savings association that is wholly-owned by the
Company, with its principal office at 79 West Monroe Street, Chicago, Illinois
60603;
"Benefits Letter" means the letter agreement of even date herewith
between Standard and the Company which is referred to in Section 5.8 hereof;
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"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;
"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);
"Company Certificate" means a stock certificate evidencing ownership
of shares of Company Common Stock;
"Company Common Stock" means the common stock, par value $0.01 per
share, of the Company;
"Company Incentive Plans" means the Bell Bancorp, Inc. 1991 Incentive
Stock Option Plan and the Bell Bancorp, Inc. 1991 Stock Option Plan for Outside
Directors, as amended;
"Company SEC Reports" shall have the meaning given to such term in
Section 3.21 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 ended March 31, 1995, 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 to March 31, 1995;
"DGCL" means the Delaware General Corporation Law, as amended;
"Director Recognition Plan" means the Bell Federal Savings and Loan
Association 1991 Recognition and Retention Plan for Outside Directors;
"Dissenting Share" means a share of Company Common Stock held by any
person who properly exercises appraisal rights, if any, under the DGCL with
respect to such share;
"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;
"Employee Recognition Plan" means the Bell Federal Savings and Loan
Association Recognition and Retention Plan for Employees, as amended and
restated November 19, 1992;
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"Environmental Laws" means any law, regulation, rule 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;
"ESOP" means the Bell Federal Savings and Loan Association Employee
Stock Ownership Plan, as amended;
"Exchange Agent" means Harris Trust and Savings Bank, as agent for the
purpose of effectuating the exchange of 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;
"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 actual knowledge of
any senior executive officer of the Company or the Association;
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"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 a change in law, rule, regulation, generally
accepted accounting principles or regulatory accounting principles, as such
would apply to the financial statements of such entity and (ii) an adverse
change with respect to, or effect on, such entity resulting from expenses
incurred in connection with this Agreement or the transactions contemplated
hereby;
"Merger" means the merger of the Company with and into Standard
pursuant to Article I hereof;
"Merger Consideration" means the right to receive $37.50 in cash, 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 Association 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 Association a lien
thereon or security interest therein.
"Non-Bank Subsidiaries" means Bell Savings Service Corporation, an
Illinois corporation, and Bell Mortgage and Financial Services Co., an Illinois
corporation;
"Option Agreement" means that certain Option Agreement of even date
herewith pursuant to which the Company has granted Standard the right to
purchase from the Company shares of Company Common Stock, subject to certain
conditions precedent, and has granted to Standard certain other rights;
"OTS" means the Office of Thrift Supervision, an Office of the United
States Department of the Treasury;
"PBGC" means the Pension Benefit Guaranty Corporation'
"Person" means any individual, corporation, association, partnership,
joint venture, other entity, government or governmental department or agency;
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"Properties" means (1) the real estate owned or leased by the Company
and its subsidiaries and used as a banking related facility; (2) other real
estate owned ("REO") by the Association as defined by any federal or state
financial institution regulatory agency with regulatory authority for the
Association; (3) real estate that is in the process of pending foreclosure or
forfeiture proceedings conducted by the Association; (4) real estate that is
held in trust for others by the Association; (5) real estate owned or leased by
the Company, the Association or any Non-Bank Subsidiary or owned or leased by a
partnership or joint venture in which the Company, the Association 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 stockholders to be convened for the purpose of voting
on the Merger, pursuant to Section 5.7 hereof;
"SAIF" means the Savings Association Insurance Fund administered by
the FDIC;
"SEC" means the Securities and Exchange Commission;
"SFB" means Standard Federal Bank, a federally chartered stock savings
bank that is wholly-owned by Standard, with its principal office at 2600 West
Big Beaver Road, Troy, Michigan.
"1933 Act" means the Securities Act of 1933, as amended; and
"1934 Act" means the Securities Exchange Act of 1934, as amended.
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ARTICLE II
CONVERSION OF SHARES IN THE MERGER
2.1 Terms of Merger. Upon the Merger becoming effective:
(a) At the Effective Time, each share of Company Common Stock
issued and outstanding immediately prior to the Effective Time of the
Merger, other than Dissenting Shares and Company Common Stock owned by
Standard, 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. Certificates representing outstanding Company Common Stock
shall, after the Effective Time of the Merger, represent only the right to
receive the Merger Consideration from Standard. 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 held by the
Company in its treasury or owned of record by Standard or any
subsidiary of Standard 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 Standard. Outstanding certificates
representing shares of common stock of MergerSub shall be deemed to represent
an identical number of shares of common stock of the surviving corporation.
(d) Each option granted under the Company Incentive Plans issued
and outstanding immediately prior to the Effective Time shall ipso
facto and without any action on the part of holders thereof, become and be
converted into the right to
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receive the difference between the Merger Consideration and the applicable
option exercise price.
(e) The holder of any Dissenting Share shall have the rights,
subject to the limitations, provided by the DGCL.
2.2 Payment for Shares. From time to time after the Effective
Time, Standard 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, Standard shall cause to be mailed to each person (or delivered
to each person who requests delivery) who was, at the Effective Time, a holder
of record of issued and outstanding Company Common Stock, other than holders of
Dissenting Shares, a form (mutually agreed to by Standard and the Company) of
letter of transmittal and instructions for use in effecting the surrender of
the certificates 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 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 certificate surrendered, it shall be a condition of such payment
that the certificate 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 certificate surrendered or establish to the
satisfaction of Standard or the Exchange Agent that such tax has been paid or
is not applicable. One Hundred Eighty (180) days following the Effective Time,
Standard 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 Standard only as
general creditors thereof with respect to the cash payable upon due surrender
of their certificates. The Exchange Agent shall also deliver to Standard a
certified list of the names and addresses of all former registered holders of
Company Common Stock who have not then surrendered their certificates to
receive the Merger Consideration to which they are entitled. Notwithstanding
the foregoing, neither the Exchange Agent nor any party hereto shall be liable
to any holder of certificates formerly representing such shares for any amount
paid to a public official pursuant to any applicable abandoned property,
escheat or similar law. Standard 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.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Standard 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 Delaware 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 Illinois
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
Certificate of Incorporation and Bylaws, both as amended to the date hereof,
have been delivered to Standard prior to the date hereof.
(b) The Association is duly organized and existing as a federally
chartered stock savings and loan association under HOLA and is authorized by
the OTS to conduct a savings and loan business. The Association is a member of
the FHLBC, and its deposits are insured by the SAIF in the manner and to the
extent provided by law. The Association 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
Association's Charter and Bylaws, both as amended to the date hereof, have been
delivered to Standard 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 and Bylaws of each Non-Bank Subsidiary have been delivered to
Standard prior to the execution of this Agreement.
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3.2 Capitalization.
(a) The authorized capital stock of the Company consists of
30,000,000 shares of Company Common Stock, par value $0.01 per share, of which
12,461,960 shares were issued, 9,153,199 shares were issued and outstanding,
and 3,308,761 shares were held as treasury stock as of November 30, 1995, and
10,000,000 shares of preferred stock, par value $0.01 per share, none of which
is outstanding. All of the outstanding shares of Company Common Stock are
validly issued, fully paid and nonassessable. Except for the option granted to
Standard pursuant to the Option Agreement and except for stock options covering
814,557 shares of Common Stock granted pursuant to the Company Incentive Plans
and outstanding on November 30, 1995, 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 Association consists of
35,000,000 shares of common stock, $1.00 par value each, all of which are
issued and outstanding, and 15,000,000 shares of serial preferred stock, none
of which is outstanding. All of the outstanding shares of the Association
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 Association common stock nor any securities convertible
into such stock and the Association 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 Association's 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 Association, free and clear of all liens and encumbrances.
There are no outstanding options, warrants or other rights in or with
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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 Association and the Non-Bank
Subsidiaries, and except for stock held in the FHLBC and equity interests
obtained upon the exercise of creditors rights in the usual course of its
business or held as collateral against extensions of credit or held in escrow
for safekeeping, neither the Company nor the Association owns or holds,
directly or indirectly, any equity interests in any Person that are not readily
marketable on a nationally recognized exchange.
3.4 Company Financial Statements; Absence of Liabilities. (a)
There have been delivered by the Company to Standard 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 stockholders' 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 generally
accepted accounting principles; (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 losses and 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 March 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 SEC 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.
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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 stockholders and an
amendment to Article Fourth, Section C, of the Company's Certificate of
Incorporation to permit the transactions contemplated hereby, 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 either paragraph 1 or paragraph 2 of Article EIGHTH,
Section B of the Company's Certificate of Incorporation have been met and
approval of this Agreement and the Merger by the stockholders 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 stockholders to be held
pursuant to Section 5.7 hereof.
(b) 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 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, or any right to
acquire any securities (other than the options currently outstanding under the
Company Incentive Plans and shares of Company Common Stock currently
outstanding but subject to restrictions under the Employee Recognition Plan and
the Director Recognition Plan) or assets, 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 the Company or the
Association is a party, or by which the Company or the Association 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 the Association or any of their respective
properties or assets, the result of which could have a Material Adverse
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Effect on the Company or materially impair the Company's ability to perform its
obligations hereunder. 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 stockholders of the Company, (B)
the amendment of Article Fourth, Section C, of the Company's Certificate of
Incorporation and (C) such approvals of the OTS 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 the Association 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. Set forth in Schedule 3.6 hereto is a list of all policies of
insurance carried and owned by the Company and the Association, showing the
name of the insurance company, the nature of the coverage, the policy limit,
the annual premiums and the expiration dates. There has been delivered or made
available to Standard prior to the date hereof a copy of each such policy of
insurance.
3.7 Books and Records. The minute books of the Company and the
Association contain true and accurate records of all meetings and actions taken
by their Boards of Directors, any committee thereof and their stockholders, and
the books and records of the Company and the Association truly and accurately
reflect in all material aspects their business and affairs.
3.8 Title to Assets. The Company and the Association have good
and marketable title to all material 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 Association.
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3.9 Real Properties. Schedule 3.9 hereto contains a list of real
properties owned or leased by the Company or the Association and contains,
among other things, an accurate summary of all material commitments which the
Company or the Association have to improve real estate owned by them. True,
correct and complete copies of all leases in which the Company or the
Association is either a lessor or a lessee and which are listed or referred to
in Schedule 3.9 have been delivered to Standard prior to the date hereof. The
Company and the Association have good and marketable title to all the real
properties, and valid leasehold interests in the leaseholds, described in
Schedule 3.9, 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.
3.10 Litigation. Except as set forth on Schedule 3.10, 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 the Association which, if adversely determined, may involve a
payment by the Company or the Association of more than $100,000 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, there are no material judgments, decrees,
stipulations or orders against the Company or the Association 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 Standard summary
reports of its attorneys, dated on or after March 31, 1995, on all pending
litigation to which the Company, the Association or any of their directors or
officers is a party and which names the Company, the Association 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. The Company has filed all federal and foreign income
tax returns, all state and local franchise and income tax, real and personal
property tax, sales and use tax, premium tax, excise tax and other tax returns
of every
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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. The Company 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 in connection with the tax returns described in the preceding sentence
were reasonable and asserted in good faith. Adequate provision has been made in
the books and records of the Company and, to the extent required by generally
accepted accounting procedures, 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 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 the Association (to the extent not filed as part of a
consolidated return of the Company) for all taxable years ending prior to and
including March 31, 1987. Schedule 3.11 hereto sets forth (a) the date or
dates through which any 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 or foreign 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 also identifies any examination by taxing authorities of the
federal or state tax returns of the Company or its subsidiaries which have
taken place since January 1, 1992, 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. All taxes which the Company or the Association 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 the Association 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.
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(b) Set forth on Schedule 3.11 is a complete list of all material
tax elections made by the Company or the Association 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 Company's or the Association's financial
statements, 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
Company's or the Association's financial statements. Neither the Company nor
the Association is a party to, or bound by, any tax indemnity, tax sharing or
tax allocation agreement other than as described in Schedule 3.11. There are
no liens for taxes (other than for current taxes not yet due and payable) upon
the assets of the Company or the Association. 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 the Association has never been a member of an Affiliated Group
except where the Company or the Association was the common parent of the
Affiliated Group. Except as set forth on Schedule 3.11, neither the Company
nor the Association is a party to any current agreement, contract, arrangement
or plan that has resulted or would result, separately or in the aggregate, in
the payment of any "excess parachute payments" within the meaning of Section
280G of the Code.
3.12 Compliance with Applicable Laws; Company Permits. The Company
and its subsidiaries hold 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 its subsidiaries (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 Company Permits are listed in Schedule 3.12 hereto. The
Association 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
Association 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 its 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 its subsidiaries is pending
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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 Association
have performed in all material 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 Association in
the ordinary course of business, to the knowledge of the Company, no party with
whom the Company or the Association has an agreement which is of material
importance to the business of the Company or the Association is in default
thereunder.
3.14 Employees. Except as set forth on Schedule 3.14, there are no
controversies pending or threatened between, or related to, the Company or the
Association 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 or as set forth on Schedule
3.14, all material sums due for employee compensation and benefits have been
duly and adequately paid or accrued on its books in accordance with generally
accepted accounting principles. Neither the Company nor the Association 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. Except as described in Schedule 3.15
hereto, neither the Company nor the Association is a party to any agreement or
understanding described below:
(a) any commitment made to the Company or the Association
permitting it to borrow money, any letter of credit, any pledge, any security
agreement, any lease (excluding leases of real property listed in Schedule 3.9
hereto), any guarantee or any subordination agreement, or other similar or
related type of understanding, involving an amount in excess of $100,000 as to
which the Company or the Association is a debtor, pledgor, lessee or obligor;
(b) any agreement or understanding dealing with
advertising, brokerage, licensing, dealership, representative or agency
relationships involving payments that may exceed $100,000 annually;
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(c) any profit-sharing, group insurance, bonus, deferred
compensation, stock option, severance pay, pension, retirement or any other
employee benefit plan or any plan, agreement, contract, authorization or
arrangement pursuant to which any Person is or will become entitled to any
benefit upon a change in control of the Company or the Association;
(d) any written correspondent banking contracts;
(e) any agreement or understanding (i) for the sale of
its assets in excess of $100,000 outside of the ordinary course of business,
(ii) for the grant of any preferential right to purchase any of its assets,
properties or rights in excess of $100,000 or (iii) which requires the consent
of any third party to the transfer and assignment of any assets, properties or
rights in excess of $100,000;
(f) any agreement or understanding which obligates the
Company or the Association for a period in excess of one year, which has a
value in excess of $100,000, to purchase, sell or provide services, materials,
supplies, merchandise, facilities or equipment and which is not terminable
without penalty on not more than 30 days notice;
(g) any agreement or understanding for any one capital
expenditure or a series of capital expenditures, the aggregate amount of which
is in excess of $100,000;
(h) any agreement or understanding entered into
subsequent to June 30, 1995, to make a loan not yet fully disbursed or funded
as of September 30, 1995, to any Person, wherein the undisbursed or unfunded
amount exceeds $250,000;
(i) any agreement or understanding of any kind, except
for deposit relationships or loans made prior to April 1, 1995, with any
current director or officer of the Company or the Association or with any
Affiliate or any member of the Immediate Family of any such director or
officer;
(j) any agreement or understanding for the employment of
any officer or employee which is not by its terms, terminable by the Company or
the Association without liability on not more than 30 days notice, including
any employee manual or policy which may be construed under applicable law to
grant employment rights or any agreement implied by law or any agreement
providing for severance benefits;
(k) any material agreement or understanding which would
be terminable by any other party other than the Company or the Association as a
result of the consummation of the transactions contemplated by this Agreement;
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(l) any loan participation agreement with any other
Person entered into subsequent to April 1, 1995, in excess of $250,000 and on
the books at September 30, 1995; and
(m) any agreement or understanding not otherwise
disclosed or excepted pursuant to this Section 3.15 with an aggregate value in
excess of $250,000 which is material to the financial condition, results of
operations, prospects, assets or business of the Company and the Association,
taken as a whole.
True and correct copies of all documents identified in Schedule 3.15 have been
delivered to Standard prior to the date hereof.
3.16 Absence of Certain Changes. Except as set forth in Schedule
3.16, since March 31, 1995, the business of the Company and the Association 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 Association, taken as
a whole, which has been materially adverse;
(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 the Association has entered into or to which
the Company or the Association 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 $100,000;
(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 the Association, 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 generally
accepted accounting principles;
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(g) any write-down in excess of $100,000 by the
Association of any of its loans or other real estate owned which are not
reflected in the Company's statement of financial condition as of September 30,
1995;
(h) any increase in the salary schedule, compensation,
rate, fee or commission of the Company or Association employees, officers or
directors, or the declaration, commitment or obligation of any kind for the
payment by the Company or the Association 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;
(i) any sale, assignment or transfer of any assets in
excess of $100,000 other than in the ordinary course of business or pursuant
to a contract or agreement disclosed on Schedule 3.15;
(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 Association except in the ordinary course of business,
including, but not limited to, loan or lease collection actions; and
(l) except for the declaration or payment of regular
quarterly cash dividends not in excess of $0.1125 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 and shares issued pursuant to the Employee
Recognition Plan.
3.17 Loans and Investments. To the knowledge of the Company, all
loans and investments of the Association 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
hereto, no loans or investments held by the Company or the Association with
outstanding principal balances in excess of $250,000 are as of September 30,
1995 (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
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regulators or by the Company's or the Association's internal credit review
system, (c) on a non-accrual status in accordance with the Company's or the
Association'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 hereto sets forth a
complete and correct list of all United States trademarks, trade names, service
marks and copyrights owned by the Company or the Association, and all licenses
and other agreements relating thereto and all agreements relating to third
party Intellectual Property that the Company or the Association is licensed or
authorized to use (collectively, the "Intellectual Property"). With respect to
each item of Intellectual Property owned by the Company or the Association, the
Company or the Association 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 the
Association 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 has not been breached by any party
thereto. Neither the Company nor the Association has ever received 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 the Association must
license or refrain from using any intellectual property rights of a third
party). To the knowledge of the Company, neither the Company nor the
Association 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 the Association.
3.19 Company Benefit Plans. (a) Schedule 3.19 hereto contains a
true and correct list of (i) every employee benefit plan within the meaning of
Section 3(3) of ERISA maintained by the Company or the Association for any
employee, or to which the Company or the Association is required to contribute
pursuant to any collective bargaining agreement to which either of them is a
party or by which either of them is bound, (ii) all written bonus, percentage
compensation, stock purchase and stock option plans, to which the Company or
the Association is a party or is subject, (iii) all group insurance programs in
effect for employees of the Company or the Association not included in (i)
above, and (iv) any other material bonus, profit-sharing, retirement,
insurance, death, or other programs or plans not disclosed pursuant to (i),
(ii) or (iii) above. The Company has furnished to Standard true and complete
copies of all benefit plans referred to in (i) to (iv) above, as well
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as any summary plan description for such benefit plans and, if applicable, the
most recent actuarial valuation for such benefit plans. All expenses
associated with such benefit plans which were incurred during the fiscal year
ended March 31, 1995, have been accrued on the books of the Company in
accordance with generally accepted accounting principles and are reflected in
the Company Financial Statements.
(b) Each employee benefit plan listed in Schedule 3.19 which is a
pension benefit plan within the meaning of Section 3(2) of ERISA has been duly
authorized and adopted by the Board of Directors of the Company and/or the
Association. With respect to all such employee pension benefit plans, the
Company and/or the Association is in compliance with the requirements
prescribed by all statutes, governmental or court orders, governmental rules or
regulations currently in effect, including but not limited to ERISA and the
Code, applicable to such plans or arrangements. Subject to extensions of time
for approval as permitted under Code Section 401(b) and applicable IRS
pronouncements, each such pension benefit plan has been determined by the
Internal Revenue Service to be a qualified plan under Section 401(a) and exempt
from tax under Section 501(a) of the Code, respectively. All government
reports and filings required by law have been properly and timely filed and all
information required to be distributed to plan participants or beneficiaries
has been distributed. Minimum funding standards have been met for each year to
which Section 302 of ERISA or Section 412 of the Code was applicable and no
waiver of minimum funding standards has been requested for any such year with
regard to any employee pension benefit plan. The present value of all accrued
benefits under each plan did not, as of the latest valuation date immediately
preceding the date of this Agreement, exceed the then current value of the
assets of such plan allocable to such accrued benefits, based upon the
actuarial assumptions used for such plan. No condition exists that could
constitute grounds for termination of any employee pension plan under Section
4042 of ERISA. No prohibited transaction (within the meaning of Section 4975
of the Code) or party-in-interest transaction (within the meaning of Section
406 of ERISA) has occurred or exists with respect to any of such plans which
could subject any of such plans to liability under Sections 409 or 502 of ERISA
or Section 4975 of the Code which would have a Material Adverse Effect on the
Company or which would adversely affect the qualified status of such plans. No
"reportable event", as defined in ERISA, has occurred with respect to any plan
which would have a Material Adverse Effect on the Company. To the extent
applicable, all costs of the plans have been provided for on the basis of
consistent methods in accordance with sound actuarial assumptions and
practices.
(c) The Company has furnished to Standard for each of the pension
benefit plans, where applicable, (i) a copy of the Form 5500 which was filed in
each of the most recent three plan
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years, including, without limitation, all schedules thereto and all financial
statements with attached opinions of independent accountants; (ii) the most
recent determination letter from the IRS; (iii) the Statement of Assets and
Liabilities as of the most recent valuation date; and (iv) the Statement of
Changes in Fund Balance and Financial Position or the Statement of Changes in
Net Assets Available for Benefits under each of said plans for the most
recently ended plan year. The documents referred to in subsections (iii) and
(iv) fairly present the financial condition of each such plan as of such dates
and the results of operations of each such plan.
(d) With respect to any "employee welfare plan" as defined in
ERISA Section 3(1), and except as disclosed on Schedule 3.19, (i) there are no
retiree benefits provided or payable, (ii) each plan that is a "group health
plan" (as defined in Code Section 5000(b)(1)) complies and in each case has
complied in all respects with the applicable requirements of ERISA Sections 601
and 602, Code Section 162(k) (through December 31, 1988) and Code Sections
4980(B) (commencing on January 1, 1989), and (iii) subject to reasonable notice
requirements that may exist within plans, each plan that covers current and
former employees may be amended or terminated at any time by the Company or its
successor on or at any time after the Effective Time.
(e) Each employee welfare plan disclosed on Schedule 3.19 (i) has
been duly adopted and maintained in all respects in accordance with its
respective provisions, and (ii) has complied and is in compliance in all
respects with the applicable provisions of law, including the requirements of
ERISA, and the Code and the regulations promulgated thereunder by the IRS and
the United States Department of Labor. With respect to each such welfare plan,
all government reports and filings required by law have been properly and
timely filed and all information required to be distributed to plan
participants and beneficiaries has been distributed, and all contributions
required thereunder have been made in a timely fashion.
3.20 Regulatory Approvals. To the knowledge of the Company, no
fact or condition exists which the Company has reason to believe will prevent
it or Standard from obtaining approval of the OTS to consummate the Merger.
3.21 Company SEC 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 after April 1, 1994 (collectively, the "Company SEC
Reports"), and the Company has furnished Standard copies of its Annual Report
on Form 10-K for the fiscal year ended March 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 SEC Report was in
substantial compliance with the
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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 Environmental Conditions. (a) Except as disclosed in
Schedule 3.22 hereto, to the best knowledge of the Company after such inquiry
and investigation as the Company in its sole discretion deems appropriate,
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, the Association and the Non-Bank Subsidiaries are
in compliance in all material respects with all applicable Environmental Laws.
Neither the Company, the Association, nor any Non-Bank 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 best knowledge of the Company after such inquiry and
investigation as the Company in its sole discretion deems appropriate, 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 best knowledge of the Company after such inquiry and
investigation as the Company in its sole discretion deems appropriate, the
Company, the Association and the Non-Bank Subsidiaries have all 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 Standard or SFB.
3.23 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 stockholders in connection therewith, and as amended or
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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 Standard or MergerSub furnished by Standard 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.
3.24 Insider Interests. No officer or director of the Company or
the Association or any affiliate of the Company, as defined in Section 23A of
the Federal Reserve Act (12 U.S.C. Section 371c), has any loan, credit or other
contractual arrangement outstanding with the Company or the Association which
does not conform to applicable rules and regulations of the OTS and the Board
of Governors of the Federal Reserve System. Except as disclosed on Schedule
3.24, no officer or director of the Company or the Association has any material
interest in any property, real or personal, tangible or intangible, used in or
pertaining to the business of the Company or the Association.
3.25 Fairness Opinion. The Board of Directors of the Company has
received the written opinion of Donaldson, Lufkin & Jenrette Securities
Corporation, to the effect that, as of the date of this Agreement, the Merger
Consideration to be received by stockholders of the Company in the Merger is
fair to such stockholders from a financial point of view.
3.26 Brokers and Finders. Except for the Company's agreement with
Donaldson, Lufkin & Jenrette Securities Corporation, a copy of which has been
furnished to Standard 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.
3.27 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.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF STANDARD
Standard 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.
(a) Standard 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. Standard 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
Standard 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.
(b) SFB is duly organized and existing as a federally chartered
stock savings and loan association under HOLA and is authorized by the OTS to
conduct a savings and loan business. SFB is a member of the FHLBI, and its
deposits are insured by the SAIF in the manner and to the extent provided by
law. SFB 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.
4.2 Authority of Standard; No Violation. (a) Standard 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 Standard 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 Standard, and this Agreement has been
duly executed and delivered by Standard and is a valid and binding obligation
of Standard, 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.
(b) Neither the execution and delivery by Standard of
this Agreement, the consummation of the transactions contemplated herein, nor
compliance by Standard 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 under any of the terms,
conditions or provisions
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of any note, bond, mortgage, indenture, franchise, license, permit, agreement
or other instrument or obligation to which Standard or SFB is a party, or by
which Standard or SFB or any of their respective properties or assets is bound,
if in any such circumstances such event could have a Material Adverse Effect to
the business or financial condition of Standard or SFB or impair Standard's
ability to perform its obligations hereunder; or (iii) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to Standard or SFB
or any of their respective properties or assets, the result of which could have
a Material Adverse Effect on Standard or impair Standard's ability to perform
its obligations hereunder. No consent of, approval of, notice to or filing
with any governmental authority having jurisdiction over any aspect of the
business or assets of Standard, 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 Standard of this Agreement or the consummation by Standard of the
transactions contemplated hereby, except such approvals of the OTS and any
other governmental authorities having jurisdiction that are required by law or
regulation to consummate the transactions contemplated by this Agreement.
4.3 Regulatory Approvals. To the knowledge of Standard, no fact
or condition exists which Standard has reason to believe will prevent it or the
Company from obtaining approval of the OTS to consummate the Merger.
4.4 Compliance with Applicable Law. Each of Standard and its
subsidiaries holds, and has at all times held, all material licenses,
franchises, permits and authorizations necessary for the lawful conduct of its
business under and pursuant to all, and has complied with and is not in default
in any respect under any applicable law, statute, order, rule, regulation,
policy and/or guideline of any federal, state or local governmental authority
relating to Standard and its subsidiaries (other than where such default or
non-compliance is not likely to result in a material limitation on the conduct
of the business of Standard or SFB or is not likely to have a Material Adverse
Effect on Standard), and Standard has not received notice of violation of, and
does not know of any violations of, any of the above.
4.5 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 Standard, its subsidiaries or against any of
their directors or officers that would impair the ability of Standard to
perform its obligations hereunder.
4.6 Necessary Capital. Standard has or will have at the Closing
the necessary capital required by the regulations of the OTS to consummate the
transactions contemplated by this
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Agreement. At the Effective Time, Standard will have sufficient funds and
capital resources to carry out its obligations under this Agreement.
4.7 Proxy Statement. None of the information to be supplied by
Standard for inclusion or incorporation by reference in the Proxy Statement as
of the time of its mailing and as of the time of the meeting of the Company's
stockholders in connection therewith, and as amended or supplemented by
Standard, 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. 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.
4.8 Accuracy of Information Furnished. The representations and
warranties made by Standard 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 or therein not
misleading.
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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 the Association 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
Association and the Non-Bank Subsidiary and maintain in effect all 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 Standard in writing,
neither the Company, the Association nor the Non-Bank Subsidiary shall:
(a) issue, sell, purchase or redeem or commit 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 and the conversion of outstanding restricted shares of
Company Common Stock for unrestricted shares pursuant to the Employee
Recognition Plan; 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 common stock; 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
$0.1125 per share of Company Common Stock per quarter, except that the
Association 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;
(b) other than the amendment of Article Fourth, Section C
of the Company's Certificate of Incorporation contemplated by Section
3.5 hereof, amend its Certificate or Articles of Incorporation (in the
case of the Company or the Non-Bank Subsidiary), Charter (in the case
of the Association) 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
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commitments under which additional shares of its capital stock of any
class might be directly or indirectly authorized, issued, or
transferred from treasury, 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) nor adopt or amend any employee benefit plan nor amend
the ESOP except as contemplated by Section 5.8(c);
(e) commit to purchase, purchase or otherwise acquire any
derivative or synthetic mortgage product or enter into any interest
rate swap transaction;
(f) make any loan, loan commitment or renewal or
extension thereof principally secured by real property located in the
State of California to any Person which would, when aggregated with
all outstanding loans, commitments for loans or renewals or extensions
thereof made by the Association to such Person and such Person's
Immediate Family and Affiliates, exceed $250,000 or make any loan,
loan commitment or renewal or extension thereof principally secured by
real property located outside of the State of California to any Person
which would, when aggregated with all outstanding loans, commitments
for loans or renewals or extensions thereof made by the Association to
such Person and such Person's Immediate Family and Affiliates, exceed
$500,000; provided, however, that this restriction shall not apply to
(i) any renewals or advances on existing lines of credit or (ii) the
renegotiation or restructuring of any problem or delinquent loan or
(iii) the making of any residential mortgage loan made with adjustable
rates of interest or any such loan with fixed rates of interest for
which the Association has a prior commitment from an unaffiliated
Person to purchase such loan; and provided,
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further, that Standard 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, 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 $250,000 in aggregate value
(including, but not limited to, options or commodities or any tangible
real or personal properties of the Company or the Association), 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 $250,000;
(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
$100,000, 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 the Association securing any obligation in excess of $100,000,
except for pledges or security interests given in connection with the
acceptance of repurchase agreements or government deposits;
(m) make or become a party to any contract or commitment
in excess of $100,000, or renew, extend, amend or modify any contract
or commitment in excess of $100,000, except in the usual and ordinary
course of
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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 the Association to discharge
or satisfy any such mortgage, lien, charge or encumbrance is in excess
of $100,000, unless such discharge or satisfaction is covered by
general or specific reserves;
(o) pay any obligation or liability, absolute or
contingent, in excess of $100,000 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, or pay the principal owing on the ESOP Debt (as defined in
Section 5.8) such that the ESOP Debt will be less than $1.9 million at
the Effective Time;
(p) institute, settle or agree to settle any claim,
action or proceeding involving an expenditure in excess of $100,000
before any court or governmental body;
(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 $100,000 for the purchase of
materials, supplies, equipment or services which cannot be terminated
without cause 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 with any officer, director or principal stockholder 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 amendments to the compensation plan for certain
employees of the Company, its subsidiaries previously disclosed to
Standard and such
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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) knowingly default in any material respect under any
agreement or understanding to which the Company or the Association 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 regulatory approvals and consents from the OTS and 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 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 Standard reasonably deems to be necessary under
any contract or agreement to which the Company or the Association 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 Standard complete copies of all Quarterly Reports on
Form 10-Q and Current Reports on Form 8-K filed hereafter with the SEC pursuant
to the 1934 Act. The financial statements contained in such reports will be
prepared in accordance with generally accepted
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accounting principles consistently applied (except for changes required by
applicable governmental authorities or by generally accepted accounting
principles) and will present fairly the consolidated financial condition of the
Company and the Association as of the dates indicated and for the periods then
ended.
5.4 Acquisition Transactions. The Company will not, and will use
its best efforts to cause its subsidiaries and its and its 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 Standard and its representatives to have any access to the
facilities of, or furnish to any person other than Standard and its
representatives any non-public information with respect to, the Company or any
of its subsidiaries in connection with or in furtherance of any of the
foregoing. The Company shall immediately provide to Standard telephone notice
of any such proposal or offer and shall promptly provide Standard 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, a copy 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 officers of the Company determines,
after consultation with outside counsel, that it is necessary to take such
action in order to fulfill their fiduciary duties to stockholders of the
Company under the DGCL.
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.
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(b) From time to time prior to the Effective Time, each party
shall promptly supplement or amend any of its representations and warranties
which apply to the period after the date hereof by delivering an updated
Schedule to the other parties pursuant hereto with respect to any matter
hereafter arising which, in the good faith judgment of the disclosing party,
would render any such representation or warranty after the date of this
Agreement materially inaccurate or incomplete as a result of such matter
arising. Such supplement or amendment to a party's representations and
warranties contained in an updated Schedule shall be deemed to have modified
the representations and warranties of the disclosing party, and no such
supplement or amendment, or the information contained in an updated Schedule,
shall constitute a breach of a representation or warranty of the disclosing
party or affect the conditions and obligations of the receiving party to
consummate the transactions contemplated hereby (except as set forth in the
next following sentence). Within 20 days after receipt of such supplement or
amendment (or if cure is promptly commenced by the disclosing party, but is not
effected within the Cure Period (as defined below)), the receiving party may
exercise its right to terminate this Agreement pursuant to Section 7.1(f)
hereof if the information in such supplement or amendment together with the
information in any or all of the supplements or amendments previously provided
by the disclosing party indicate that the disclosing party, in good faith of
the disclosing party, has suffered or is reasonably likely to suffer a Material
Adverse Effect which either has not or cannot be cured within 30 days after
disclosure to the receiving party (the "Cure Period").
5.6 Access to Information; Confidentiality. (a) Between the date
hereof and the Effective Time, the Company will afford, and will cause the
Association to afford, to the officers, accountants, attorneys and authorized
representatives of Standard and SFB 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 and the Association, whether such documents
are located on the premises of the Company or elsewhere. The Company shall
furnish Standard and SFB 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 and the Association as Standard or SFB 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 Standard and SFB and its representatives in
connection with the right of access granted herein.
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(b) All information and documents to which Standard or SFB is
given access pursuant hereto shall be subject to the Confidentiality Agreement
executed between the parties dated October 31, 1995. All information furnished
by the Company or the Association to Standard or SFB pursuant hereto shall be
treated as the sole property of the Company or the Association until
consummation of the Merger contemplated hereby and, if such Merger shall not
occur, Standard and SFB shall return to the Company or the Association 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 five years
from the date the proposed Merger is abandoned, but shall not apply to (i) any
information which was already in the possession of Standard or SFB prior to
disclosure thereof by the Company or the Association, (ii) information which
was then generally known to the public, information which became known to the
public through no fault of Standard or SFB or its agents, or (iii) information
disclosed in accordance with an order of a court of competent jurisdiction.
5.7 Stockholder Approval. The Company will take all reasonable
steps necessary to duly call, give notice of, convene and hold a meeting of its
stockholders as soon as practicable after the date of approval of this
Agreement by the Board of Directors of the Company for the purpose of obtaining
stockholder 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 Donaldson, Lufkin & Jenrette Securities Corporation has delivered to the
Board of Directors of the Company for inclusion in the Proxy Statement an
opinion to the effect that the Merger Consideration is fair to the stockholders
of the Company from a financial point of view, dated the mailing date, in
standard industry form with respect to transactions in this nature. The Proxy
Statement will satisfy all requirements of the 1934 Act and the rules and
regulations thereunder and will include a recommendation by the Board of
Directors of the Company that the stockholders of the Company approve this
Agreement and the Merger, provided such recommendation is consistent with the
proper exercise of the fiduciary duties of such directors to the stockholders
of the Company. Standard shall furnish such information concerning Standard
and SFB as is necessary in order to cause the Proxy Statement, insofar as it
relates to Standard, to be prepared in accordance with all applicable
requirements of the 1934 Act and the rules and regulations thereunder.
Standard agrees promptly to advise the Company if at any time prior to such
Company stockholder meeting any information provided by Standard in the Proxy
Statement becomes incorrect or incomplete in any material respect, and to
provide to the Company the information needed to correct such inaccuracy or
omission.
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5.8 Resolution of Company Benefit Plans. The Company and Standard
shall cooperate in effecting the following treatment of the Company Benefit
Plans, except as mutually agreed upon by Standard and the Company prior to the
Effective Time:
(a) At the Effective Time, Standard or SFB shall be substituted
for the Company or the Association as the sponsoring employer under those
Company Benefit Plans with respect to which Company or the Association 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 Association with respect to each
such plan. Except as otherwise provided herein, each such plan and any Company
Benefit Plan sponsored by the Company or the Association shall be continued in
effect by Standard or any SFB after the Effective Time without a termination or
discontinuance thereof as a result of the Merger, subject to the power reserved
to Standard or any applicable subsidiary of Standard 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, the Association, Standard and SFB 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.
(b) After the Effective Time, Standard shall provide, or cause SFB
to provide, to each employee of Company and any subsidiary of the Company as of
the Effective Time ("Company Employees") (i) the opportunity to participate in
each employee benefit plan and program maintained by Standard or SFB for
similarly-situated employees (the "Standard Benefit Plans"), (ii) credit for
service with the Company, the Association or the Non-Bank Subsidiaries
thereunder and (iii) waiver of waiting periods and pre-existing condition
exclusions under the Standard Benefit Plans, in accordance with the Benefits
Letter. Nothing in the preceding sentence shall obligate Standard to provide
or cause to be provided any benefits duplicative to those provided under any
Company Benefit Plan continued pursuant to subparagraph (a) above, including,
but not limited to, extending participation in any Standard Benefit Plan which
is a defined contribution "employee pension benefit plan" under ERISA with
respect to any year during which allocations are made to Company Employees
under the ESOP. Except as otherwise provided in this Agreement, the power of
Standard or any Company or Standard Subsidiary to amend or terminate any
benefit plan or program, including any Company
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Benefit Plan shall not be altered or affected, but shall remain subject to any
limitations provided in such plans or under applicable law.
(c) From and after the date of this Agreement through the
Effective Time, the Company and/or the Association may make such contributions
to the ESOP as the Company may reasonably determine in order to maximize
payment of the ESOP indebtedness (the "ESOP Debt") prior to the Effective Time;
provided, however, that all such contributions shall be deductible by the
Company or the Association under Section 404 of the Code; and provided,
further, that the Company may amend the ESOP to provide that those Company
Employees who are participants in the ESOP immediately prior to the Effective
Time shall be entitled to receive an allocation of amounts attributable to such
contributions made with respect to the plan year in which the Effective Time
occurs. Pursuant to the terms of the ESOP, at the Effective Time (i) the ESOP
shall terminate, (ii) all accounts under the ESOP shall be fully vested and
nonforfeitable and (iii) the Merger Consideration received by the ESOP with
respect to unallocated shares held in the suspense account thereunder shall be
applied to repay in full the remaining balances of the ESOP Debt, and the
amount of the Merger Consideration remaining in the suspense account after such
repayment shall be allocated to the accounts of those Company Employees who are
participants and beneficiaries and such other participants and beneficiaries,
if any (such individuals are referred to hereafter as "ESOP Participants"), in
accordance with the terms of the ESOP. As soon as practicable after the
receipt of a letter from the IRS as to the tax qualified status of the ESOP
upon its termination under Sections 401(a) and 4975(e) of the Code (the "Final
Determination Letter"), distributions of the benefits under the ESOP shall be
made to the ESOP Participants. From and after the date of this Agreement to
the Effective Time, in anticipation of such termination and distribution, the
Company and the Association, through a committee appointed by the Board of
Directors of the Association prior to the Effective Time, shall use their best
efforts to apply for and obtain a favorable Final Determination Letter from the
IRS. In the event that the committee reasonably determines that the ESOP
cannot obtain such a favorable Final Determination Letter, or that the amounts
held in the ESOP cannot be so applied, allocated and distributed without
causing the ESOP to lose its qualified status, the committee shall take such
action as it may determine with respect to the distribution of benefits to the
ESOP Participants while preserving such qualified status, provided that the
assets of the ESOP shall be held or paid for the benefit of the ESOP
Participants and provided further that in no event shall any portion of the
amounts held in the ESOP revert, directly or indirectly, to the Company or any
affiliate thereof, or to Standard or any affiliate thereof, or to Persons other
than the ESOP Participants.
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(d) Immediately prior to the Effective Time, the Company shall
terminate the Employee Recognition Plan and the Director Recognition Plan and
any related trusts, whereupon all allocated shares of Company Common Stock
shall be distributed to participants thereunder and all unallocated shares
shall be returned to the Company and shall become unissued shares of treasury
stock.
(e) Standard and SFB agree to honor certain other Company Benefit
Plans, and to provide severance benefits to eligible employees, as set forth in
the Benefits Letter.
5.9 Company Stock Options. The Company shall terminate the
Company Incentive Plans and cancel and terminate each outstanding option
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 in form and substance satisfactory to Standard
("Cancellation Agreements"), acknowledging such cancellation and termination of
options. The Cancellation Agreements shall provide that in consideration for
the cancellation of such options, 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 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. 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 Standard 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 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.
5.10 Indemnification. From and after the Effective Time, Standard
shall indemnify, defend and hold harmless each person who is now or who becomes
prior to the Effective Time, an officer or director of the Company or the
Association (the "Indemnified Parties") against all losses, claims, damages,
costs, expenses (including attorneys' fees), liabilities or judgments or
amounts that are paid in any settlement approved by Standard (whose approval
shall not be unreasonably withheld) of or in connection with any claim, action,
suit, proceeding or investigation (a "Claim") in which an Indemnified Party is,
or is threatened to be made a party or a witness based in whole or in part on
or arising in whole or in part out of the fact that such person is or was a
director or officer of the Company or
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the Association, if such Claim pertains to any matter or fact arising, existing
or occurring on or prior to the Effective Time (including, without limitation,
the Merger and other transactions contemplated by this Agreement), regardless
of whether such Claim is asserted or claimed prior to, at or after the
Effective Time (the "Indemnified Liabilities") to the full extent permitted
under applicable law (including, but not limited to, the DGCL and 12 C.F.R.
544.121) and the Certificate of Incorporation and Bylaws of Standard as in
existence on the date of this Agreement. Without limiting the foregoing, in
the event of a Claim against an Indemnified Party (whether arising before or
after the Effective Time), (i) the Indemnified Party or Parties may retain one
firm of legal counsel reasonably satisfactory to Standard, (ii) after the
Effective Time, Standard shall pay all reasonable fees and expenses of such
counsel for the Indemnified Parties as statements therefor are received, and
(iii) after the Effective Time, Standard will use all reasonable efforts to
assist in the vigorous defense of any such matter; provided, that Standard
shall not be liable for any settlement of any Claim made without its written
consent, which consent shall not be unreasonably withheld. Any Indemnified
Party wishing to claim indemnification under this Section 5.10, upon learning
of a Claim shall notify Standard (but the failure to so notify Standard shall
not relieve it from any liability that Standard may have under this Section
5.10 unless such failure prejudices Standard's ability to defend such Claim)
and shall deliver to Standard an undertaking to repay any payments advanced
hereunder by Standard if it is ultimately determined that such person is not
entitled to indemnification hereunder. Standard shall use its best efforts to
assure, to the extent permitted under applicable law, that all limitations of
liability existing in favor of the Indemnified Parties as provided in the
Company's Certificate of Incorporation and Bylaws, as in effect on the date
hereof, with respect to claims or liabilities arising from facts or events
existing or occurring prior to the Effective Time (including, without
limitation, the transactions contemplated by this Agreement) shall survive the
Merger. The obligations of Standard under this Section 5.10 shall continue in
full force and effect, without any amendment thereto, for a period of not less
than five (5) years from the Effective Time; provided, however, that all
rights to indemnification in respect to any Claim asserted or made within such
period shall continue until the final disposition of such Claim; and provided,
further, that nothing in this Section 5.10 shall be deemed to modify applicable
law regarding indemnification of former officers and directors. For a period
of three (3) years from and after the Effective Time, Standard will maintain,
at its expense, the Company's and the Association's current insurance policy
for directors' and officers' liability or an equivalent policy having terms and
conditions no less favorable than those in effect on the date hereof for
directors and officers of the Company, the Association and each Non-Bank
Subsidiary who are
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covered by such current insurance policy. The obligations of Standard under
this Section 5.11 are intended to benefit, and be enforceable against Standard
directly by, an Indemnified Party and his or her heirs or representatives, and
shall be binding on all respective successors of Standard.
5.11 Employment of Certain Persons; Director Matters. At the
Effective Time, Standard agrees to cause SFB to offer to employ each of Robert
G. Rowen and John C. Savio as officers of Standard and/or SFB on the terms and
subject to the conditions set forth in letters of understanding of even date
herewith. At the first meeting of the Board of Directors of Standard following
the Effective Time, the Board of Directors of Standard shall take appropriate
action to increase the number of Directors of Standard and of SFB by one and
shall thereupon appoint Mr. Rowen to fill the vacancy created by such action on
the Boards of Directors of both Standard and SFB, which appointment, in the
case of Standard, shall be for a term expiring at the 1998 Annual Meeting of
Stockholders of Standard. Standard agrees to cause SFB to establish an
advisory board comprised of all current directors of the Company except Messrs.
Rowen and Savio, for the purpose of consulting monthly with management of
Standard concerning the operations of the Association's offices, and to
maintain such advisory board for a period of at least one year following the
Effective Time of the Merger. Standard will cause SFB to compensate members of
such advisory board in the amount of $2,500 per month and to reimburse the
members of such advisory board for reasonable expenses incurred in attending
meetings, in accordance with the Company's current policy.
5.12 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 that any such
restructuring will not result in any change in the Merger Consideration.
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5.13 Environmental Matters. (a) Standard shall engage a mutually
acceptable environmental consultant to conduct a preliminary environmental
assessment ("Phase I") of each of the parcels of real estate used in the
operation of the businesses of the Company and the Association and any other
real estate owned by the Company or the Association, other than residential
real property. Standard and the Company will use reasonable efforts to agree
upon the consultant within five business days after the date hereof, and
Standard will engage such consultant as soon as practicable after such
agreement. The fees and expenses of the consultant with respect to the Phase I
assessments shall be shared equally by Standard and the Company. Such
consultant shall complete and deliver the Phase I assessments not later than 55
days after the date that the consultant is engaged. If any environmental
conditions are found, suspected, or would tend to be indicated by the report of
the consultant which, if known by the Company to be existing on the date hereof
may be contrary to the representations and warranties set forth in Section
3.22, then the parties shall obtain from one or more mutually acceptable
consultants or contractors, as appropriate, recommendations as to any further
environmental investigation, sampling, analysis, remediation, or other
follow-up work that may be necessary to address those conditions in accordance
with applicable laws and regulations, and an estimate of the costs thereof.
(b) Upon receipt of the estimate of the costs of all follow-up
work to the Phase I assessments or any subsequent investigation phases that may
be conducted, the parties shall attempt to agree upon a course of action for
further investigation and remediation of any environmental condition suspected,
found to exist, or that would tend to be indicated by the report of the
consultant. All work plans for any post-Phase I assessments or remediation,
and any removal or remediation actions that may be performed, shall be mutually
satisfactory to Standard and the Company, except that (i) Standard shall be
entitled to cause to be performed such "Phase II" assessments as Standard shall
reasonably request, in each case having a scope reasonable under the
circumstances, taking into account among other things the recommendations set
forth in the Phase I assessments and (ii) the Company shall bear the costs of
any measures taken under this Section 5.13 other than as provided in paragraph
(a) above. Standard and the Company shall thereafter cooperate in the review,
approval and implementation of all work plans. If the work plans or removal or
remediation actions with respect to all Company Properties would entail an
aggregate cost to complete that would be reasonably likely to exceed $3,000,000
in the aggregate, Standard and the Company shall discuss a mutually acceptable
modification of this Agreement under the standards of fair dealing and
objective good faith.
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(c) If (i) the parties are unable to agree upon a course of action
for further investigation and remediation of all environmental conditions
and/or issues raised by environmental assessments with respect to Company
Properties and/or a mutually acceptable modification to this Agreement within
85 days after the consultant for the Phase I assessments is selected and (ii)
the conditions and/or issues are not such that it can be determined to a
reasonable degree of certainty that the risk and expense to which Standard or
SFB would be subject as owner and/or operator of the Company Property involved
can be quantified and limited to an amount that would not be reasonably likely
to exceed $3,000,000 in the aggregate (including costs incurred by the Company
or any of its subsidiaries prior to the Effective Time), then Standard may
terminate this Agreement pursuant to Section 7.1(g) hereof.
(d) During the period prior to the Effective Time, the Company
shall cause each of its subsidiaries that proposes to acquire ownership or
possession of any real property other than residential real properties, through
foreclosure or repossession or otherwise, to conduct a Phase I environmental
assessment of such real property and any further environmental investigation,
sampling or analysis reasonably required to ensure that such subsidiary shall
not acquire ownership or possession of real property that is likely to cause
the subsidiary to be subject to or incur any liabilities, damages, penalties or
removal, remediation or other costs as a result of its ownership or control of
the property that will exceed the value of such property.
5.14 WARN Act. The Company agrees that, if requested by Standard,
it shall, on behalf of Standard and SFB, 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, in connection with
Standard's intended closing of one or more of the banking offices of the
Association on or after the Effective Time. Such request by Standard 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 SFB shall not be liable under
the WARN Act for any penalty or payment in lieu of notice to any employee or
governmental entity. Standard and the Company shall cooperate in the
preparation and giving of such notices, and no such notices shall be given
without the approval of Standard.
5.15 Action by MergerSub. As the sole stockholder of MergerSub,
Standard shall approve 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 Conduct of Business by Standard. Standard will not take any
action that, in its judgment reasonably exercised,
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could jeopardize or materially delay the receipt of any regulatory approval
required to consummate the Merger or the other transactions contemplated
hereby. Standard covenants and agrees that it will diligently pursue all
governmental and regulatory approvals necessary to consummate the Merger in
accordance with the terms and conditions of this Agreement.
5.17 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 $0.1125 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.
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ARTICLE VI
CONDITIONS
6.1 Conditions to Obligations of Each Party. The respective
obligations of each party to effect the transactions contemplated hereby shall
be subject to the fulfillment at or prior to the Effective Time of the
following conditions:
(a) Regulatory Approvals. Regulatory approvals for the
consummation of the transactions contemplated hereby shall have been obtained
from the OTS and any other governmental authority from which approval is
required 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 Standard 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 as
updated pursuant to Section 5.5, 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. Standard shall 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. Standard shall have furnished to the
Company a certificate of the Chief Executive Officer and the Chief Financial
Officer of Standard, dated as of the Effective Time, in which such officers
shall certify to
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their best knowledge that they have no reason to believe that the conditions
set forth in Section 6.2(a) have not been fulfilled.
(c) Secretary's Certificate. Standard shall have furnished to the
Company (i) copies of the text of the resolutions by which the corporate action
on the part of Standard necessary to approve this Agreement and the
transactions contemplated hereby were taken, (ii) certificates dated as of the
Effective Time executed on behalf of Standard 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 Standard and
MergerSub by their respective corporate secretary or one of its assistant
corporate secretaries certifying the signature and office of each officer of
Standard and of MergerSub executing this Agreement or any other agreement,
certificate or other instrument executed pursuant hereto by Standard 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
Dykema Gossett PLLC, counsel to Standard, based on customary reliance and
subject to customary qualifications, in form and substance satisfactory to the
Company and its counsel.
(e) Stockholder Approval. This Agreement and the Merger shall
have been approved by the affirmative vote of the holders of the percentage of
the Company capital stock required for such approval under the provisions of
the Company's Certificate of Incorporation and applicable law.
6.3 Additional Conditions to Obligation of Standard. The
obligation of Standard 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, 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 Standard, and the Company shall in all material respects have
performed each obligation and agreement and complied with each covenant to be
performed and complied with by it hereunder at or prior to the Effective Time.
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(b) Officers' Certificate. The Company shall have furnished to
Standard 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) have not been fulfilled.
(c) Secretary's Certificate. The Company shall have furnished to
Standard (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 Standard 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. Standard shall have received an opinion
letter dated as of the Effective Time addressed to Standard from Vedder, Price,
Kaufman & Kammholz, counsel to the Company, based on customary reliance and
subject to customary qualifications, in form and substance satisfactory to
Standard and its counsel.
(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 paragraph shall not apply to (i) matters properly
disclosed to Standard by the Company in a supplement or amendment delivered
pursuant to Section 5.5 for which Standard has a specific right of termination
under Section 7.1(f) hereof, and (ii) any such Material Adverse Effect
resulting primarily by reason of changes in banking laws or regulations (or
interpretations thereof), changes in the general level of interest rates or
changes in economic or financial market conditions affecting the banking
industry generally in the same regions in which the Company or Standard
operate.
(f) Accountant's Letter. The firm of KPMG Peat Marwick,
independent certified public accountants for the Company, shall have delivered
to Standard a letter, dated as of the Closing Date, with a review stated to
have been done to 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.
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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
Standard and the Company; or
(b) by either Standard 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 Standard 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 Standard 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, 1996 without fault on the part
of Standard; 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 Standard or an Affiliate of
Standard and the Board of Directors of the Company shall have failed
to undertake such actions as Standard has reasonably requested to
oppose such proposed Acquisition Transaction or withdrawn its
recommended approval of this Agreement and the Merger to the Company's
stockholders; or
(d) by the Board of Directors of the Company if (i) there
has been a material breach or default by Standard 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, 1996 without fault on the
part of the Company; or
(e) by the Board of Directors of either Standard or the
Company at any time after the date that (i) the stockholders of the
Company fail to approve this
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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 the OTS (or any other applicable
governmental authority) has denied approval for the Merger and, if
such denial is appealable, neither Standard 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 OTS of such order of denial; or
(f) by Standard or the Company pursuant to Section
5.5(b); or
(g) by Standard if (i) any environmental conditions are
found, suspected, or indicated by the environmental assessments
obtained pursuant to the investigation to be made pursuant to Section
5.13 which, if known by the Company to be existing on the date hereof,
would be contrary to the Company's representations and warranties set
forth in Section 3.22 hereof and (ii) all of the events described in
Section 5.13(c) shall have occurred, provided that Standard gives the
Company written notice of its intent to terminate this Agreement not
less than five (5) days prior to the effective date of such
termination and such notice is given within 95 days after the date on
which the consultant is selected pursuant to Section 5.13(a) hereof.
Notwithstanding the foregoing, Standard may elect in writing to terminate its
right to terminate this Agreement pursuant to paragraph (g) above as of any
date specified in such written instrument that is prior to the date such right
would otherwise expire, and Standard shall not be entitled to terminate this
Agreement pursuant to paragraph (g) above at any time later than the date which
is 95 days after the date on which the consultant is selected pursuant to
Section 5.13(a).
7.2 Effect of Termination. (a) In the event of the termination
of this Agreement as provided in Section 7.1, 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
Standard or the Company except (A) for fraud or for willful and material breach
of this Agreement or the Confidentiality Agreement and (B) as set forth in this
Section 7.2 and Section 8.2.
(b) If this Agreement is terminated by the Board of Directors of
Standard pursuant to Section 7.1(c)(iii) or Section 7.1(e)(i) and within one
(1) year of any such
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termination an Acquisition Transaction shall occur, or if this Agreement is
terminated by the Board of Directors of Standard pursuant to Section 7.1(c)(i),
then in such case the Company shall pay to Standard in immediately available
funds not later than two business days after demand therefor an amount equal to
$4.0 million as reasonable reimbursement to Standard for all costs, fees and
expenses incurred or to be incurred by Standard and SFB 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 Standard for the Option Shares
or the Option (as defined in the Option Agreement) prior to the making of a
demand by Standard 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 Standard 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 Standard 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), Standard shall pay to the Company
not later than two business days after demand therefor an amount equal to $1.0
million 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 Standard
pursuant to Section 7.1(g) hereof, there shall be no liability or obligation on
the part of either Standard or the Company to the other, or on the part of any
of their officers or directors, except pursuant to Section 5.6 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 Standard.
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ARTICLE VIII
GENERAL PROVISIONS
8.1 Publicity. Neither the Company nor Standard 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 Standard 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 Standard will consult with the other with respect to any such
public announcement of statement.
8.2 Expenses. Except as otherwise provided in Section 7.2, the
costs and expenses of Standard and the Company shall be allocated as follows:
(a) Standard 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 Association 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 stockholders 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 stockholders to consider and act upon the Merger, in
obtaining the environmental studies required hereunder and the
furnishing of information or other cooperation to Standard 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 Standard 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.
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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 Standard or to MergerSub:
Standard Federal Bancorporation, Inc.
2600 West Big Beaver Road
Troy, Michigan 48084
Attention: Thomas R. Ricketts,
Chairman and President
with a copy to:
Dykema Gossett, PLLC
400 Renaissance Center
Detroit, Michigan 48243
Attention: Paul R. Rentenbach
If to the Company, addressed to:
Bell Bancorp, Inc.
79 West Monroe Street
Chicago, Illinois 60603
Attention: Robert G. Rowen, President
with a copy to:
Vedder, Price, Kaufman & Kammholz
222 North LaSalle Street
Chicago, Illinois 60601-1003
Attention: Daniel O'Rourke or
Thomas P. Desmond
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
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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 word
of like import, unless the context requires otherwise, refer to this Agreement
(including the Annexes and Schedules 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 (together with the
Confidentiality Agreement dated October 31, 1995, and all other documents and
instruments referred to herein): (a) constitutes the entire agreement, and
supersedes all other prior agreements and undertakings, both written and oral,
among the parties, with respect to the subject matter hereof; (b) shall be
governed in all respects, including validity, interpretation and effect, by the
laws of the State of Delaware with respect to matters of corporate law, by the
laws of the United States where applicable and by the internal laws of the
State of Michigan without giving effect to the principles of conflict of laws
thereof with respect to all other matters; 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 in original
instrument, but all such counterparts together shall constitute but one
agreement.
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IN WITNESS WHEREOF, the Company, Standard and MergerSub have caused
this Agreement to be executed on the date first written above by their
respective officers.
STANDARD FEDERAL BANCORPORATION, INC.
By: /S/ THOMAS R. RICKETTS
----------------------------------------
Thomas R. Ricketts
Chairman and President
BSB ACQUISITION CORP.
By: /S/ THOMAS R. RICKETTS
----------------------------------------
Thomas R. Ricketts
President
BELL BANCORP, INC.
By: /S/ ROBERT G. ROWEN
----------------------------------------
Robert G. Rowen, President
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