Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
Between
REPUBLIC SECURITY FINANCIAL CORPORATION
and
FIRST PALM BEACH BANCORP, INC.
Dated as of May 27, 1998
TABLE OF CONTENTS
Page
ARTICLE I
THE MERGER
1.1 The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3 Effects of the Merger . . . . . . . . . . . . . . . . . . . . . 2
1.4 Conversion of Company Common Stock . . . . . . . . . . . . . . . 2
1.5 Stock Options . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.6 Parent Common Stock . . . . . . . . . . . . . . . . . . . . . . 5
1.7 Articles of Incorporation . . . . . . . . . . . . . . . . . . . 5
1.8 By-Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.9 Directors and Officers . . . . . . . . . . . . . . . . . . . . . 5
1.10 Tax Consequences; Accounting Treatment . . . . . . . . . . . . . 5
1.11 Bank Plan of Merger and Merger Agreement . . . . . . . . . . . . 5
ARTICLE II
EXCHANGE OF SHARES
2.1 Parent to Make Shares Available . . . . . . . . . . . . . . . . 6
2.2 Exchange of Shares . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE III
DISCLOSURE SCHEDULES; STANDARDS
FOR REPRESENTATIONS AND WARRANTIES
3.1 Disclosure Schedules . . . . . . . . . . . . . . . . . . . . . . 9
3.2 Standards . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
4.1 Corporate Organization . . . . . . . . . . . . . . . . . . . . . 10
4.2 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.3 Authority; No Violation . . . . . . . . . . . . . . . . . . . . 13
4.4 Consents and Approvals . . . . . . . . . . . . . . . . . . . . . 14
4.5 Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.6 Financial Statements . . . . . . . . . . . . . . . . . . . . . . 15
4.7 Broker's Fees . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.8 Absence of Certain Changes or Events . . . . . . . . . . . . . . 16
4.9 Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . 16
4.10 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.11 Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.12 SEC Reports. . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.13 Company Information. . . . . . . . . . . . . . . . . . . . . . . 19
4.14 Compliance with Applicable Law . . . . . . . . . . . . . . . . . 19
4.15 Certain Contracts. . . . . . . . . . . . . . . . . . . . . . . . 19
4.16 Agreements with Regulatory Agencies . . . . . . . . . . . . . . 20
4.17 Environmental Matters . . . . . . . . . . . . . . . . . . . . . 21
4.18 Opinion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.19 Approvals. . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.20 Loan Portfolio. . . . . . . . . . . . . . . . . . . . . . . . . 22
4.21 Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.22 Accounting for the Merger; Reorganization . . . . . . . . . . . 23
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT
5.1 Corporate Organization . . . . . . . . . . . . . . . . . . . . . 24
5.2 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . 25
5.3 Authority; No Violation . . . . . . . . . . . . . . . . . . . . 26
5.4 Consents and Approvals . . . . . . . . . . . . . . . . . . . . . 27
5.5 Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
5.6 Financial Statements . . . . . . . . . . . . . . . . . . . . . . 28
5.7 Broker's Fees . . . . . . . . . . . . . . . . . . . . . . . . . 29
5.8 Absence of Certain Changes or Events . . . . . . . . . . . . . . 29
5.9 Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . 29
5.10 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
5.11 Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
5.12 SEC Reports . . . . . . . . . . . . . . . . . . . . . . . . . . 31
5.13 Parent Information . . . . . . . . . . . . . . . . . . . . . . . 31
5.14 Compliance with Applicable Law . . . . . . . . . . . . . . . . . 31
5.15 Ownership of Company Common Stock; Affiliates and Associates . . 31
5.16 Agreements with Regulatory Agencies . . . . . . . . . . . . . . 32
5.17 Environmental Matters . . . . . . . . . . . . . . . . . . . . . 32
5.18 Opinion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
5.19 Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
5.20 Loan Portfolio. . . . . . . . . . . . . . . . . . . . . . . . . 33
5.21 Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
5.22 Accounting for the Merger; Reorganization . . . . . . . . . . . 35
ARTICLE VI
COVENANTS RELATING TO CONDUCT OF BUSINESS
6.1 Covenants of the Company . . . . . . . . . . . . . . . . . . . . 35
6.2 Covenants of Parent . . . . . . . . . . . . . . . . . . . . . . 38
6.3 Conduct of Parent's Business . . . . . . . . . . . . . . . . . . 39
ARTICLE VII
ADDITIONAL AGREEMENTS
7.1 Regulatory Matters. . . . . . . . . . . . . . . . . . . . . . . 39
7.2 Access to Information . . . . . . . . . . . . . . . . . . . . . 40
7.3 Stockholder Meetings . . . . . . . . . . . . . . . . . . . . . . 41
7.4 Legal Conditions to Merger . . . . . . . . . . . . . . . . . . . 42
7.5 Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
7.6 Stock Exchange Listing . . . . . . . . . . . . . . . . . . . . . 42
7.7 Employee Benefit Plans; Existing Agreements . . . . . . . . . . 42
7.8 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . 44
7.9 Additional Agreements . . . . . . . . . . . . . . . . . . . . . 45
7.10 Coordination of Dividends . . . . . . . . . . . . . . . . . . . 46
7.11 Assumption of Indemnification Obligations . . . . . . . . . . . 46
7.12 Parent Rights Agreement . . . . . . . . . . . . . . . . . . . . 46
7.13 Amendment of Company Option Plans . . . . . . . . . . . . . . . 46
7.14 Stock Option Agreement . . . . . . . . . . . . . . . . . . . . . 47
7.15 Directorships . . . . . . . . . . . . . . . . . . . . . . . . . 47
ARTICLE VIII
CONDITIONS PRECEDENT
8.1 Conditions to Each Party's Obligation To Effect the Merger . . . 47
8.2 Conditions to Obligations of Parent . . . . . . . . . . . . . . 48
8.3 Conditions to Obligations of the Company . . . . . . . . . . . . 50
ARTICLE IX
TERMINATION AND AMENDMENT
9.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . 51
9.2 Effect of Termination . . . . . . . . . . . . . . . . . . . . . 56
9.3 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
9.4 Extension; Waiver . . . . . . . . . . . . . . . . . . . . . . . 56
ARTICLE X
GENERAL PROVISIONS
10.1 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
10.2 Nonsurvival of Representations, Warranties and Agreements . . . 57
10.3 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
10.4 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
10.5 Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . 58
10.6 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . 58
10.7 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . 59
10.8 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . 59
10.9 Enforcement of Agreement . . . . . . . . . . . . . . . . . . . . 59
10.10 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . 59
10.11 Publicity . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
10.12 Assignment; No Third Party Beneficiaries . . . . . . . . . . . . 59
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of May 27, 1998, between
Republic Security Financial Corporation, a Florida corporation ("Parent"),
and First Palm Beach Bancorp, Inc., a Delaware corporation (the "Company").
(Parent and the Company are sometimes collectively referred to herein as
the "Constituent Corporations".)
WHEREAS, the Boards of Directors of Parent and the Company have
determined that it is in the best interests of their respective companies
and their stockholders to consummate the business combination transaction
provided for herein in which the Company will, subject to the terms and
conditions set forth herein, merge (the "Merger") with and into Parent and
the merger (the "Bank Merger") of First Bank of Florida into Republic
Security Bank; and
WHEREAS, as soon as practicable after the execution and delivery
of this Agreement, Republic Security Bank, a Florida chartered stock
commercial bank and a wholly owned subsidiary of Parent ("Parent Bank", and
sometimes referred to herein as the "Surviving Bank"), and First Bank of
Florida, a federally chartered stock savings bank and a wholly owned
subsidiary of the Company (the "Company Bank"), will enter into a
Subsidiary Agreement and Plan of Merger (the "Plan of Merger") providing
for the merger (the "Bank Merger") of the Company Bank with and into Parent
Bank, and it is intended that the Subsidiary Merger be consummated
immediately following the consummation of the Merger; and
WHEREAS, the parties desire to make certain representations,
warranties and agreements in connection with the Merger and also to
prescribe certain conditions to the Merger.
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements contained herein, and intending
to be legally bound hereby, the parties agree as follows:
ARTICLE I
THE MERGER
1.1 The Merger. Subject to the terms and conditions of this
Agreement, in accordance with the Delaware General Corporation Law (the
"DGCL") and the Florida Business Corporation Act ("FBCA"), at the Effective
Time (as defined in Section 1.2 hereof), the Company shall merge with and
into Parent. Parent shall be the surviving corporation (hereinafter
sometimes called the "Surviving Corporation") in the Merger, and shall
continue its corporate existence under the laws of the State of Florida.
The name of the Surviving Corporation shall continue to be Republic
Security Financial Corporation. Upon consummation of the Merger, the
separate corporate existence of the Company shall terminate.
1.2 Effective Time. The Merger shall become effective on
10:00 a.m. on the Closing Date as set forth in the certificate of merger
(the "Certificate of Merger") which shall be filed with the Secretary of
State of the State of Delaware (the "Delaware Secretary") and Articles of
Merger which will be filed with the Florida Secretary of State (the
"Florida Secretary") on the Closing Date (as defined in Section 10.1
hereof). The term "Effective Time" shall be the date and time when the
Merger becomes effective, as set forth in the Certificate of Merger.
1.3 Effects of the Merger. At and after the Effective Time, the
Merger shall have the effects set forth in Sections 259 and 261 of the DGCL
and as provided in the FBCA.
1.4 Conversion of Company Common Stock. (a) At the Effective
Time, subject to Section 2.2(e) and Section 9.1(g) hereof, each share of
the common stock, par value $0.01 per share, of the Company (the "Company
Common Stock") issued and outstanding immediately prior to the Effective
Time (other than (i) shares of Company Common Stock held in the Company's
treasury, (ii) shares of Company Common Stock held directly or indirectly
by Parent or the Company or any of their respective Subsidiaries (as
defined below) (except for Trust Account Shares and DPC Shares, as such
terms are defined in Section 1.4(b) hereof), and (iii) unallocated shares
of Company Common Stock held in the Company Bank's Recognition and
Retention Plan for Officers and Employees and the Company Bank's
Recognition and Retention Plan for Outside Directors (collectively, the
"Unallocated RRP Shares")), together with the rights (the "Company Rights")
attached thereto issued pursuant to the Rights Agreement, dated as of
January 23, 1995, between the Company and Mellon Bank, N.A., as Rights
Agent (the "Company Rights Agreement"), shall, by virtue of this Agreement
and without any action on the part of the holder thereof, be converted into
and exchangeable for 4.194 shares (the "Exchange Ratio") of the common
stock, par value $.01 per share, of Parent ("Parent Common Stock")
(together with the number of Parent Rights (as defined in Section 5.2
hereof) associated therewith). All of the shares of Company Common Stock
converted into Parent Common Stock pursuant to this Article I shall no
longer be outstanding and shall automatically be cancelled and shall cease
to exist, and each certificate (each a "Certificate") previously
representing any such shares of Company Common Stock shall thereafter only
represent the right to receive (i) the number of whole shares of Parent
Common Stock and (ii) the cash in lieu of fractional shares into which the
shares of Company Common Stock represented by such Certificate have been
converted pursuant to this Section 1.4(a) and Section 2.2(e) hereof.
Certificates previously representing shares of Company Common Stock shall
be exchanged for certificates representing whole shares of Parent Common
Stock and cash in lieu of fractional shares issued in consideration
therefor upon the surrender of such Certificates in accordance with Section
2.2 hereof, without any interest thereon. If, between the date of this
Agreement and the Effective Time, the shares of Parent Common Stock shall
be changed into a different number or class of shares by reason of any
reclassification, recapitalization, split-up, combination, exchange of
shares or readjustment, or a stock dividend thereon shall be declared with
a record date within said period, the Exchange Ratio shall be adjusted
accordingly.
(b) At the Effective Time, (i) all shares of Company Common
Stock that are owned by the Company as treasury stock, (ii) all shares of
Company Common Stock that are owned directly or indirectly by Parent or the
Company or any of their respective Subsidiaries (other than shares of
Company Common Stock (x) held directly or indirectly in trust accounts,
managed accounts and the like or otherwise held in a fiduciary capacity for
the benefit of third parties (any such shares, and shares of Parent Common
Stock which are similarly held, whether held directly or indirectly by
Parent or the Company, as the case may be, being referred to herein as
"Trust Account Shares") and (y) held by Parent or the Company or any of
their respective Subsidiaries in respect of a debt previously contracted
(any such shares of Company Common Stock, and shares of Parent Common Stock
which are similarly held, whether held directly or indirectly by Parent or
the Company, being referred to herein as "DPC Shares")) and (iii) all
Unallocated RRP Shares shall be cancelled and shall cease to exist and no
stock of Parent or other consideration shall be delivered in exchange
therefor. All shares of Parent Common Stock that are owned by the Company
or any of its Subsidiaries (other than Trust Account Shares and DPC Shares)
shall become treasury stock of Parent.
1.5 Stock Options. (a) At the Effective Time, each option granted
by the Company to purchase shares of Company Common Stock (each a "Company
Option") which is outstanding and unexercised immediately prior thereto
shall cease to represent a right to acquire shares of Company Common Stock
and shall be converted automatically into an option to purchase shares of
Parent Common Stock in an amount and at an exercise price determined as
provided below (and otherwise subject to the terms of the Company's 1993
Incentive Stock Option Plan and the Company's 1993 Stock Option Plan for
Outside Directors (collectively, the "Company Option Plans"), the
agreements evidencing grants thereunder and any other agreements between
the Company and an optionee regarding Company Options):
(1) the number of shares of Parent Common Stock to be subject to
the new option shall be equal to the product of the number of shares of
Company Common Stock subject to the original option and the Exchange
Ratio, provided that any fractional shares of Parent Common Stock
resulting from such multiplication shall be rounded down to the nearest
whole share; and
(2) the exercise price per share of Parent Common Stock under the
new option shall be equal to the exercise price per share of Company
Common Stock under the original option divided by the Exchange Ratio,
provided that such exercise price shall be rounded up to the nearest
cent.
The adjustment provided herein with respect to any options which are
"incentive stock options" (as defined in Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code")) shall be and is intended to
be effected in a manner which is consistent with Section 424(a) of the Code
and, to the extent it is not so consistent, such Section 424(a) shall
override anything to the contrary contained herein. The duration and other
terms of the new option shall be the same as the original option except
that all references to the Company shall be deemed to be references to
Parent.
(b) Prior to the Effective Time, Parent shall reserve for
issuance the number of shares of Parent Common Stock necessary to satisfy
Parent's obligations under this Section 1.5. Promptly after the Effective
Time (but in no event later than five business days thereafter), Parent
shall file with the Securities and Exchange Commission (the "SEC") a
registration statement on an appropriate form under the Securities Act of
1933, as amended (the "Securities Act"), with respect to the shares of
Parent Common Stock subject to options to acquire Parent Common Stock
issued pursuant to Section 1.5(a) hereof, and shall use its best efforts to
maintain the current status of the prospectus contained therein, as well as
comply with applicable state securities or "blue sky" laws, for so long as
such options remain outstanding.
1.6 Parent Common Stock. Except for shares of Parent Common Stock
owned by the Company or any of its Subsidiaries (other than Trust Account
Shares and DPC Shares), which shall be converted into treasury stock of
Parent as contemplated by Section 1.4 hereof, the shares of Parent Common
Stock issued and outstanding immediately prior to the Effective Time shall
be unaffected by the Merger and such shares shall remain issued and
outstanding.
1.7 Articles of Incorporation. At the Effective Time, the
Articles of Incorporation of Parent, as in effect at the Effective Time,
shall be the Articles of Incorporation of the Surviving Corporation.
1.8 By-Laws. At the Effective Time, the By-Laws of Parent, as in
effect immediately prior to the Effective Time, shall be the By-Laws of the
Surviving Corporation until thereafter amended in accordance with
applicable law.
1.9 Directors and Officers. Except as provided in Section 7.15
hereof, the directors and officers of Parent immediately prior to the
Effective Time shall be the directors and officers of the Surviving
Corporation, each to hold office in accordance with the Articles of
Incorporation and By-Laws of the Surviving Corporation until their
respective successors are duly elected or appointed and qualified.
1.10 Tax Consequences; Accounting Treatment. It is intended that
the Merger shall (i) constitute a reorganization within the meaning of
Section 368(a) of the Code and that this Agreement shall constitute a "plan
of reorganization" for the purposes of Section 368 of the Code , and (ii)
be accounted for as a "pooling-of-interests" under GAAP (as defined
herein).
1.11 Bank Plan of Merger and Merger Agreement. As promptly as
practicable following the execution of this Agreement, each of Parent and
the Company shall cause Parent Bank and the Company Bank, respectively, to
enter into the Plan of Merger in accordance with the requirements of
Section 658.42, Florida Statutes, and in form and substance usually
acceptable to both Parent and the Company, and to submit the Plan of Merger
to the Florida Department of Banking and Finance (the "Department") for
approval. Subject to and in accordance with the terms and conditions of
this Agreement, at the Closing, each of Parent and the Company shall cause
Parent Bank and the Company Bank to again execute the Plan of Merger, if it
differs in any respect from the counterpart thereof theretofore filed with
the Department, and to execute certified copies of the resolutions
approving the Plan of Merger by the shareholders of each bank. The Plan of
Merger and certified resolutions shall be delivered for filing with the
Department. The Plan of Merger shall provide that the Company Bank shall
be merged with and into Parent Bank (which shall be the resulting bank in
the Bank Merger) at 3:00 p.m. on the afternoon of the Effective Date. Upon
effectiveness of the Bank Merger, all of the issued and outstanding shares
of the common stock of the Company Bank shall be extinguished and
cancelled, and Parent shall be issued a number of shares of the common
stock of Parent Bank in such amount as agreed on or before such date by
Parent and Parent Bank. The shares of common stock of Parent Bank issued
and outstanding immediately prior to effectiveness of the Bank Merger shall
remain issued and outstanding and unaffected by the Bank Merger.
ARTICLE II
EXCHANGE OF SHARES
2.1 Parent to Make Shares Available. At or prior to the Effective
Time, Parent shall deposit, or shall cause to be deposited, with a bank or
trust company (which may be a Subsidiary of Parent) (the "Exchange Agent")
selected by Parent and reasonably satisfactory to the Company, for the
benefit of the holders of Certificates, for exchange in accordance with
this Article II, certificates representing the shares of Parent Common
Stock and the cash in lieu of fractional shares (such cash and certificates
for shares of Parent Common Stock, together with any dividends or
distributions with respect thereto, being hereinafter referred to as the
"Exchange Fund") to be issued pursuant to Section 1.4 and paid pursuant to
Section 2.2(a) in exchange for outstanding shares of Company Common Stock.
2.2 Exchange of Shares. (a) As soon as practicable after the
Effective Time, and in no event more than three business days thereafter,
the Exchange Agent shall mail to each holder of record of a Certificate or
Certificates a form letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the Certificates
shall pass, only upon delivery of the Certificates to the Exchange Agent)
and instructions for use in effecting the surrender of the Certificates in
exchange for certificates representing the shares of Parent Common Stock
and the cash in lieu of fractional shares into which the shares of Company
Common Stock represented by such Certificate or Certificates shall have
been converted pursuant to this Agreement. The Company shall have the
right to review both the letter of transmittal and the instructions prior
to the Effective Time and provide reasonable comments thereon. Upon
surrender of a Certificate for exchange and cancellation to the Exchange
Agent, together with such letter of transmittal, duly executed, the holder
of such Certificate shall be entitled to receive in exchange therefor (x) a
certificate representing that number of whole shares of Parent Common Stock
to which such holder of Company Common Stock shall have become entitled
pursuant to the provisions of Article I hereof and (y) a check representing
the amount of cash in lieu of fractional shares, if any, which such holder
has the right to receive in respect of the Certificate surrendered pursuant
to the provisions of this Article II, and the Certificate so surrendered
shall forthwith be cancelled. No interest will be paid or accrued on the
cash in lieu of fractional shares and unpaid dividends and distributions,
if any, payable to holders of Certificates.
(b) No dividends or other distributions declared after the
Effective Time with respect to Parent Common Stock and payable to the
holders of record thereof shall be paid to the holder of any unsurrendered
Certificate until the holder thereof shall surrender such Certificate in
accordance with this Article II. After the surrender of a Certificate in
accordance with this Article II, the record holder thereof shall be
entitled to receive any such dividends or other distributions, without any
interest thereon, which theretofore had become payable with respect to
shares of Parent Common Stock represented by such Certificate.
(c) If any certificate representing shares of Parent Common
Stock is to be issued in a name other than that in which the Certificate
surrendered in exchange therefor is registered, it shall be a condition of
the issuance thereof that the Certificate so surrendered shall be properly
endorsed (or accompanied by an appropriate instrument of transfer) and
otherwise in proper form for transfer, and that the person requesting such
exchange shall pay to the Exchange Agent in advance any transfer or other
taxes required by reason of the issuance of a certificate representing
shares of Parent Common Stock in any name other than that of the registered
holder of the Certificate surrendered, or required for any other reason, or
shall establish to the satisfaction of the Exchange Agent that such tax has
been paid or is not payable.
(d) After the Effective Time, there shall be no transfers on
the stock transfer books of the Company of the shares of Company Common
Stock which were issued and outstanding immediately prior to the Effective
Time. If, after the Effective Time, Certificates representing such shares
are presented for transfer to the Exchange Agent, they shall be cancelled
and exchanged for certificates representing shares of Parent Common Stock
as provided in this Article II.
(e) Notwithstanding anything to the contrary contained
herein, no certificates or scrip representing fractional shares of Parent
Common Stock shall be issued upon the surrender for exchange of
Certificates, no dividend or distribution with respect to Parent Common
Stock shall be payable on or with respect to any fractional share, and such
fractional share interests shall not entitle the owner thereof to vote or
to any other rights of a stockholder of Parent. In lieu of the issuance of
any such fractional share, Parent shall pay to each former stockholder of
the Company who otherwise would be entitled to receive a fractional share
of Parent Common Stock an amount in cash determined by multiplying (i) the
average of the last reported sale prices per share of Parent Common Stock
on the Nasdaq Stock Market's National Market (the "NASDAQ/NMS") as reported
by The Wall Street Journal for the ten trading days immediately preceding
the date on which the Effective Time shall occur by (ii) the fraction of a
share of Parent Common Stock which such holder would otherwise be entitled
to receive pursuant to Section 1.4 hereof.
(f) Any portion of the Exchange Fund that remains unclaimed
by the stockholders of the Company for six months after the Effective Time
shall be paid to Parent. Any stockholders of the Company who have not
theretofore complied with this Article II shall thereafter look only to
Parent for payment of their shares of Parent Common Stock, cash in lieu of
fractional shares and unpaid dividends and distributions on the Parent
Common Stock deliverable in respect of each share of Company Common Stock
such stockholder holds as determined pursuant to this Agreement, in each
case, without any interest thereon. Notwithstanding the foregoing, none of
Parent, the Company, the Exchange Agent or any other person shall be liable
to any former holder of shares of Company Common Stock for any amount
properly delivered to a public official pursuant to applicable abandoned
property, escheat or similar laws.
(g) In the event any Certificate shall have been lost, stolen
or destroyed, upon the making of an affidavit of that fact by the person
claiming such Certificate to be lost, stolen or destroyed and, if required
by Parent, the posting by such person of a bond in such amount as Parent
may direct as indemnity against any claim that may be made against it with
respect to such Certificate, the Exchange Agent will issue in exchange for
such lost, stolen or destroyed Certificate the shares of Parent Common
Stock and cash in lieu of fractional shares deliverable in respect thereof
pursuant to this Agreement.
ARTICLE III
DISCLOSURE SCHEDULES; STANDARDS
FOR REPRESENTATIONS AND WARRANTIES
3.1 Disclosure Schedules. Prior to the execution and delivery of
this Agreement, the Company has delivered to Parent, and Parent has
delivered to the Company, a schedule (in the case of the Company, the
"Company Disclosure Schedule," and in the case of Parent, the "Parent
Disclosure Schedule") setting forth, among other things, items the
disclosure of which is necessary or appropriate either in response to an
express disclosure requirement contained in a provision hereof or as an
exception to one or more of such party's representations or warranties
contained in Article IV, in the case of the Company, or Article V, in the
case of Parent, or to one or more of such party's covenants contained in
Article VI; provided, however, that notwithstanding anything in this
Agreement to the contrary (a) no such item is required to be set forth in
the Disclosure Schedule as an exception to a representation or warranty if
its absence would not result in the related representation or warranty
being deemed untrue or incorrect under the standard established by Section
3.2, and (b) the mere inclusion of an item in a Disclosure Schedule as an
exception to a representation or warranty shall not be deemed an admission
by a party that such item represents a material exception or material fact,
event or circumstance or that such item has had or would have a Material
Adverse Effect (as defined herein) with respect to either the Company or
Parent, respectively.
3.2 Standards. (a) No representation or warranty of the Company
contained in Article IV or of Parent contained in Article V shall be deemed
untrue or incorrect for any purpose under this Agreement, and no party
hereto shall be deemed to have breached a representation or warranty for
any purpose under this Agreement, in any case as a consequence of the
existence or absence of any fact, circumstance or event unless such fact,
circumstance or event, individually or when taken together with all other
facts, circumstances or events inconsistent with any representations or
warranties contained in Article IV, in the case of the Company, or Article
V, in the case of Parent, has had a Material Adverse Effect with respect to
the Company or Parent, respectively.
(b) As used in this Agreement, the term "Material Adverse
Effect" means, with respect to Parent or the Company, as the case may be, a
material adverse effect on (i) the business, results of operations or
financial condition of such party and its Subsidiaries taken as a whole,
other than any such effect attributable to or resulting from (w) any change
in banking or similar laws, rules or regulations of general applicability
or interpretations thereof by courts or governmental authorities, (x) any
change in GAAP (as defined herein) or regulatory accounting principles
applicable to banks, thrifts or their holding companies generally, (y) any
action or omission of the Company or Parent or any Subsidiary of either of
them taken with the prior written consent of the other party hereto, or (z)
any expenses incurred by such party in connection with this Agreement or
the transactions contemplated hereby or (ii) the ability of such party and
its Subsidiaries to consummate the transactions contemplated hereby.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Subject to Article III, and except as disclosed in the Company
Disclosure Schedule, the Company hereby represents and warrants to Parent
as follows:
4.1 Corporate Organization. (a) The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware. The Company has the corporate power and authority to
own or lease all of its properties and assets and to carry on its business
as it is now being conducted, and is duly licensed or qualified to do
business in each jurisdiction in which the nature of the business conducted
by it or the character or location of the properties and assets owned or
leased by it makes such licensing or qualification necessary. The Company
is duly registered as a unitary savings and loan holding company under the
Home Owners' Loan Act, as amended (the "HOLA"). The Certificate of
Incorporation and By-laws of the Company, copies of which have previously
been made available to Parent, are true and correct copies of such
documents as in effect as of the date of this Agreement. As used in this
Agreement, the word "Subsidiary" when used with respect to any party means
any corporation, partnership or other organization, whether incorporated or
unincorporated, which is consolidated with such party for financial
reporting purposes.
(b) The Company Bank is a stock savings bank duly organized,
validly existing and in good standing under the laws of the United States
of America. The deposit accounts of the Company Bank are insured by the
Federal Deposit Insurance Corporation (the "FDIC") through the Savings
Association Insurance Fund to the fullest extent permitted by law, and all
premiums and assessments required to be paid in connection therewith have
been paid when due. Each of the Company's other Subsidiaries is a
corporation duly organized, validly existing and in good standing under the
laws of its jurisdiction of incorporation or organization. Each of the
Company's Subsidiaries has the corporate power and authority to own or
lease all of its properties and assets and to carry on its business as it
is now being conducted and is duly licensed or qualified to do business in
each jurisdiction in which the nature of the business conducted by it or
the character or the location of the properties and assets owned or leased
by it makes such licensing or qualification necessary. Except as set forth
on Section 4.1(b) of the Company Disclosure Schedule, the certificate of
incorporation, by-laws and similar governing documents of each Subsidiary
of the Company, copies of which have previously been made available to
Parent, are true and correct copies of such documents as in effect as of
the date of this Agreement.
(c) The minute books of the Company and each of its
Subsidiaries contain true and correct records of all meetings and other
corporate actions held or taken since December 31, 1995 of their respective
stockholders and Boards of Directors (including committees of their
respective Boards of Directors).
4.2 Capitalization. (a) The authorized capital stock of the
Company consists of 10,000,000 shares of Company Common Stock and 1,000,000
shares of preferred stock, par value $.01 per share (the "Company Preferred
Stock"). As of May 27, 1998, there were 5,076,996 shares of Company Common
Stock outstanding and 419,379 shares of Company Common Stock held by the
Company as treasury stock. As of May 27, 1998, there were (i) no shares of
Company Common Stock reserved for issuance upon exercise of outstanding
stock options or otherwise except for (x) 435,907 shares of Company Common
Stock reserved for issuance pursuant to the Company Option Plans and
described in Section 4.2(a) of the Company Disclosure Schedule and (y)
1,010,322 shares of Company Common Stock reserved for issuance upon
exercise of the option (the "Option") to be issued to Parent pursuant to
the Stock Option Agreement to be entered into on the date hereof, between
Parent and Company (the "Stock Option Agreement") and (ii) no shares of
Company Preferred Stock issued or outstanding, held in the Company's
treasury or reserved for issuance upon exercise of outstanding stock
options or otherwise, except for 100,000 shares designated as Series A
Junior Participating Preferred Stock reserved for issuance upon exercise of
the Company Rights. All of the issued and outstanding shares of Company
Common Stock have been duly authorized and validly issued and are fully
paid, nonassessable and free of preemptive rights, with no personal
liability attaching to the ownership thereof. Except as referred to above
or reflected in Section 4.2(a) of the Company Disclosure Schedule, and
except for the Stock Option Agreement, the Company does not have and is not
bound by any outstanding subscriptions, options, warrants, calls,
commitments or agreements of any character calling for the purchase or
issuance of any shares of Company Common Stock or Company Preferred Stock
or any other equity security of the Company or any securities representing
the right to purchase or otherwise receive any shares of Company Common
Stock or any other equity security of the Company. The names of the
optionees, the date of each option to purchase Company Common Stock
granted, the number of shares subject to each such option, the expiration
date of each such option, and the price at which each such option may be
exercised under the Company Option Plans are set forth in Section 4.2(a) of
the Company Disclosure Schedule.
(b) Section 4.2(b) of the Company Disclosure Schedule sets
forth a true and correct list of all of the Subsidiaries of the Company.
Except as set forth in Section 4.2(b) of the Company Disclosure Schedule,
the Company owns, directly or indirectly, all of the issued and outstanding
shares of the capital stock of each of such Subsidiaries, free and clear of
all liens, charges, encumbrances and security interests whatsoever, and all
of such shares are duly authorized and validly issued and are fully paid,
nonassessable and free of preemptive rights, with no personal liability
attaching to the ownership thereof. No Subsidiary of the Company has or is
bound by any outstanding subscriptions, options, warrants, calls,
commitments or agreements of any character calling for the purchase or
issuance of any shares of capital stock or any other equity security of
such Subsidiary or any securities representing the right to purchase or
otherwise receive any shares of capital stock or any other equity security
of such Subsidiary. Assuming compliance by Parent with Section 1.5 hereof,
and except as provided in Section 4.2(b) of the Company Disclosure
Schedule, at the Effective Time, there will not be any outstanding
subscriptions, options, warrants, calls, commitments or agreements of any
character by which the Company or any of its Subsidiaries will be bound
calling for the purchase or issuance of any shares of the capital stock of
the Company or any of its Subsidiaries.
4.3 Authority; No Violation. (a) The Company has full corporate
power and authority to execute and deliver this Agreement and to consummate
the transactions contemplated hereby. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby have
been duly and validly approved by the Board of Directors of the Company.
The Board of Directors of the Company has directed that this Agreement and
the transactions contemplated hereby be submitted to the Company's
stockholders for approval at a meeting of such stockholders and, except for
the adoption of this Agreement by the requisite vote of the Company's
stockholders, no other corporate proceedings on the part of the Company are
necessary to approve this Agreement and to consummate the transactions
contemplated hereby. This Agreement has been duly and validly executed and
delivered by the Company and (assuming due authorization, execution and
delivery by Parent) this Agreement constitutes a valid and binding
obligation of the Company, enforceable against the Company in accordance
with its terms, except as enforcement may be limited by general principles
of equity whether applied in a court of law or a court of equity and by
bankruptcy, insolvency and similar laws affecting creditors' rights and
remedies generally.
(b) Except as set forth in Section 4.3(b) of the Company
Disclosure Schedule, neither the execution and delivery of this Agreement
by the Company, nor the consummation by the Company of the transactions
contemplated hereby, nor compliance by the Company with any of the terms or
provisions hereof, will (i) violate any provision of the Certificate of
Incorporation or By-Laws of the Company or the certificate of
incorporation, by-laws or similar governing documents of any of its
Subsidiaries, or (ii) assuming that the consents and approvals referred to
in Section 4.4 hereof are duly obtained, (x) violate any statute, code,
ordinance, rule, regulation, judgment, order, writ, decree or injunction
applicable to the Company or any of its Subsidiaries, or any of their
respective properties or assets, or (y) violate, conflict with, result in a
breach of any provision of or the loss of any benefit under, constitute a
default (or an event which, with notice or lapse of time, or both, would
constitute a default) under, result in the termination of or a right of
termination or cancellation under, accelerate the performance required by,
or result in the creation of any lien, pledge, security interest, charge or
other encumbrance upon any of the respective properties or assets of the
Company or any of its Subsidiaries under, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, deed of trust, license,
lease, agreement or other instrument or obligation to which the Company or
any of its Subsidiaries is a party, or by which they or any of their
respective properties or assets may be bound or affected.
4.4 Consents and Approvals. Except for (a) the filing of
applications and notices, as applicable, with the Board of Governors of the
Federal Reserve System (the "Federal Reserve Board") under the Bank Holding
Company Act of 1956, as amended (the "BHC Act"), the Home Owners' Loan Act
(the "HOLA") and the Bank Merger Act and approval of such applications and
notices, (b) the approval of the Department pursuant to sections 655.412,
658.41-.45 Florida Statutes (the "State Banking Approval"), (c) the filing
with the SEC of a joint proxy statement in definitive form relating to the
meetings of the Company's stockholders and Parent's stockholders to be held
in connection with this Agreement and the transactions contemplated hereby
(the "Proxy Statement") and the filing and declaration of effectiveness of
the registration statement on Form S-4 (the "S-4") in which the Proxy
Statement will be included as a prospectus, (d) the approval of this
Agreement by the requisite vote of the stockholders of the Company, (e) the
filing of the Certificate of Merger with the Delaware Secretary pursuant to
the DGCL and the filing of the Articles of Merger with the Florida
Secretary, (f) approval for quotation of the Parent Common Stock to be
issued in the Merger on the NASDAQ/NMS, and (g) such filings,
authorizations or approvals as may be set forth in Section 4.4 of the
Company Disclosure Schedule, no consents or approvals of or filings or
registrations with any court, administrative agency or commission or other
governmental authority or instrumentality (each a "Governmental Entity") or
with any third party are necessary in connection with (1) the execution and
delivery by the Company of this Agreement and (2) the consummation by the
Company of the Merger and the other transactions contemplated hereby.
4.5 Reports. The Company and each of its Subsidiaries have timely
filed all reports, registrations and statements, together with any
amendments required to be made with respect thereto, that they were
required to file since December 31, 1995 with (i) the OTS, (ii) the FDIC,
(iii) the Department (each a "State Regulator") and (iv) any other self-
regulatory organization ("SRO") (collectively with the Federal Reserve
Board, the "Regulatory Agencies"), and have paid all fees and assessments
due and payable in connection therewith. Except for normal examinations
conducted by a Regulatory Agency in the regular course of the business of
the Company and its Subsidiaries, and except as set forth in Section 4.5 of
the Company Disclosure Schedule, no Regulatory Agency has initiated any
proceeding or, to the knowledge of the Company, investigation into the
business or operations of the Company or any of its Subsidiaries since
December 31, 1995. There is no unresolved violation, criticism, or
exception by any Regulatory Agency with respect to any report or statement
relating to any examinations of the Company or any of its Subsidiaries.
4.6 Financial Statements. The Company has previously made
available to Parent copies of (a) the consolidated statements of financial
condition of the Company and its Subsidiaries as of September 30, for the
fiscal years 1996 and 1997, and the related consolidated statements of
operations, changes in stockholders' equity and cash flows for the fiscal
years 1995 through 1997, inclusive, as reported in the Company's Annual
Report on Form 10-K for the fiscal year ended September 30, 1997 filed with
the SEC under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), in each case accompanied by the audit report of Deloitte &
Touche LLP, independent public accountants with respect to the Company, and
(b) the unaudited consolidated statements of financial condition of the
Company and its Subsidiaries as of March 31, 1998 and March 31, 1997 and
the related unaudited consolidated statements of operations, cash flows and
changes in stockholders' equity for the six-month periods then ended as
reported in the Company's Quarterly Report on Form 10-Q for the period
ended March 31, 1998 filed with the SEC under the Exchange Act. The
September 30, 1997 consolidated statement of financial condition of the
Company (including the related notes, where applicable) fairly presents the
consolidated financial position of the Company and its Subsidiaries as of
the date thereof, and the other financial statements referred to in this
Section 4.6 (including the related notes, where applicable) fairly present,
and the financial statements to be filed with the SEC after the date hereof
will fairly present (subject, in the case of the unaudited statements, to
recurring audit adjustments normal in nature and amount), the results of
the consolidated operations and consolidated financial position of the
Company and its Subsidiaries for the respective fiscal periods or as of the
respective dates therein set forth; each of such statements (including the
related notes, where applicable) complies, and the financial statements to
be filed with the SEC after the date hereof will comply, with applicable
accounting requirements and with the published rules and regulations of the
SEC with respect thereto; and each of such statements (including the
related notes, where applicable) has been, and the financial statements to
be filed with the SEC after the date hereof will be, prepared in accordance
with generally accepted accounting principles ("GAAP") consistently applied
during the periods involved, except as indicated in the notes thereto or,
in the case of unaudited statements, as permitted by Form 10-Q. The books
and records of the Company and its Subsidiaries have been, and are being,
maintained in accordance with GAAP and any other applicable legal and
accounting requirements.
4.7 Broker's Fees. Neither the Company nor any Subsidiary of the
Company nor any of their respective officers or directors has employed any
broker or finder or incurred any liability for any broker's fees,
commissions or finder's fees in connection with any of the transactions
contemplated by this Agreement, except that the Company has engaged, and
will pay a fee or commission to, Keefe, Bruyette & Woods, Inc. ("KBW") in
accordance with the terms of a letter agreement between KBW and the
Company, a true and correct copy of which has been previously made
available by the Company to Parent.
4.8 Absence of Certain Changes or Events. (a) Except as may be
set forth in Section 4.8(a) of the Company Disclosure Schedule, or as
disclosed in any Company Report (as defined in Section 4.12) filed with the
SEC prior to the date of this Agreement, since September 30, 1997, there
has been no change or development or combination of changes or developments
which, individually or in the aggregate, has had a Material Adverse Effect
on the Company.
(b) Except as set forth in Section 4.8(b) of the Company
Disclosure Schedule or as disclosed in any Company Report filed with the
SEC prior to the date of this Agreement, since September 30, 1997, the
Company and its Subsidiaries have carried on their respective businesses in
the ordinary course consistent with their past practices.
(c) Except as set forth in Section 4.8(c) of the Company
Disclosure Schedule, since March 31, 1998, neither the Company nor any of
its Subsidiaries has (i) increased the wages, salaries, compensation,
pension, or other fringe benefits or perquisites payable to any executive
officer, employee, or director from the amount thereof in effect as of
March 31, 1998 (which amounts have been previously disclosed to Parent),
granted any severance or termination pay, entered into any contract to make
or grant any severance or termination pay, or paid any bonus (except for
salary increases and bonus payments made in the ordinary course of business
consistent with past practices), (ii) suffered any strike, work stoppage,
slow-down, or other labor disturbance, (iii) been a party to a collective
bargaining agreement, contract or other agreement or understanding with a
labor union or organization, or (iv) had any union organizing activities.
4.9 Legal Proceedings. (a) Except as set forth in Section 4.9(a)
of the Company Disclosure Schedule, neither the Company nor any of its
Subsidiaries is a party to any, and there are no pending or, to the
Company's knowledge, threatened, legal, administrative, arbitral or other
proceedings, claims, actions or governmental or regulatory investigations
of any nature against the Company or any of its Subsidiaries or challenging
the validity or propriety of the transactions contemplated by this
Agreement.
(b) Except as set forth in Section 4.9(b) of the Company
Disclosure Schedule, there is no injunction, order, judgment, decree, or
regulatory restriction imposed upon the Company, any of its Subsidiaries or
the assets of the Company or any of its Subsidiaries.
4.10 Taxes. (a) Except as set forth in Section 4.10(a) of the
Company Disclosure Schedule, each of the Company and its Subsidiaries has
(i) duly and timely filed (including applicable extensions granted without
penalty) all material Tax Returns (as hereinafter defined) required to be
filed at or prior to the Effective Time, and such Tax Returns are true and
correct in all material respects, and (ii) paid in full or made adequate
provision in the financial statements of the Company (in accordance with
GAAP) for all material Taxes (as hereinafter defined) shown to be due on
such Tax Returns. Except as set forth in Section 4.10(a) of the Company
Disclosure Schedule, (i) as of the date hereof neither the Company nor any
of its Subsidiaries has requested any extension of time within which to
file any Tax Returns in respect of any fiscal year which have not since
been filed and no request for waivers of the time to assess any Taxes are
pending or outstanding, and (ii) as of the date hereof, with respect to
each taxable period of the Company and its Subsidiaries, the federal and
state income Tax Returns of the Company and its Subsidiaries have been
audited by the Internal Revenue Service or appropriate state tax
authorities or the time for assessing and collecting income Tax with
respect to such taxable period has closed and such taxable period is not
subject to review.
(b) For the purposes of this Agreement, "Taxes" shall mean
all taxes, charges, fees, levies, penalties or other assessments imposed by
any United States federal, state, local or foreign taxing authority,
including, but not limited to income, excise, property, sales, transfer,
franchise, payroll, withholding, social security or other taxes, including
any interest, penalties or additions attributable thereto. For purposes of
this Agreement, "Tax Return" shall mean any return, report, information
return or other document (including any related or supporting information)
with respect to Taxes.
4.11 Employees. (a) Section 4.11(a) of the Company Disclosure
Schedule sets forth a true and correct list of each deferred compensation
plan, incentive compensation plan, equity compensation plan, "welfare"
plan, fund or program (within the meaning of section 3(1) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")); "pension"
plan, fund or program (within the meaning of section 3(2) of ERISA); each
employment, termination or severance agreement; and each other employee
benefit plan, fund, program, agreement or arrangement, in each case, that
is sponsored, maintained or contributed to or required to be contributed to
(the "Plans") by the Company, any of its Subsidiaries or by any trade or
business, whether or not incorporated (an "ERISA Affiliate"), all of which
together with the Company would be deemed a "single employer" within the
meaning of Section 4001 of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), for the benefit of any employee or former
employee of the Company, any Subsidiary or any ERISA Affiliate.
(b) The Company has heretofore made available to Parent with
respect to each of the Plans true and correct copies of each of the
following documents if applicable: (i) the Plan document; (ii) the
actuarial report for such Plan for each of the last two years, (iii) the
most recent determination letter from the Internal Revenue Service for such
Plan and (iv) the most recent summary plan description and related
summaries of material modifications.
(c) Except as set forth in Section 4.11(c) of the Company
Disclosure Schedule: each of the Plans is in compliance with the
applicable provisions of the Code and ERISA; each of the Plans intended to
be "qualified" within the meaning of section 401(a) of the Code has
received a favorable determination letter from the IRS; no Plan has an
accumulated or waived funding deficiency within the meaning of section 412
of the Code; neither the Company nor any ERISA Affiliate has incurred,
directly or indirectly, any liability to or on account of a Plan pursuant
to Title IV of ERISA (other than PBGC premiums); to the knowledge of the
Company no proceedings have been instituted to terminate any Plan that is
subject to Title IV of ERISA; no "reportable event," as such term is
defined in section 4043(c) of ERISA, has occurred with respect to any Plan
(other than a reportable event with respect to which the thirty day notice
period has been waived); and no condition exists that presents a material
risk to the Company of incurring a liability to or on account of a Plan
pursuant to Title IV of ERISA; no Plan is a multiemployer plan (within the
meaning of section 4001(a)(3) of ERISA and no Plan is a multiple employer
plan as defined in Section 413 of the Code; and there are no pending, or to
the knowledge of the Company, threatened or anticipated claims (other than
routine claims for benefits) by, on behalf of or against any of the Plans
or any trusts related thereto.
4.12 SEC Reports. The Company has previously made available to
Parent a true and correct copy of each (a) final registration statement,
prospectus, report, schedule and definitive proxy statement filed since
December 31, 1995 by the Company with the SEC pursuant to the Securities
Act or the Exchange Act (the "Company Reports") and (b) communication
mailed by the Company to its stockholders since December 31, 1995, and no
such registration statement, prospectus, report, schedule, proxy statement
or communication contained any untrue statement of a material fact or
omitted to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances in which they were made, not misleading, except that
information as of a later date shall be deemed to modify information as of
an earlier date. The Company has timely filed all Company Reports and
other documents required to be filed by it under the Securities Act and the
Exchange Act, and, as of their respective dates, all Company Reports
complied with the published rules and regulations of the SEC with respect
thereto.
4.13 Company Information. The information relating to the
Company and its Subsidiaries which is provided to Parent by the Company for
inclusion in the Proxy Statement and the S-4, or in any other document
filed with any other regulatory agency in connection herewith, will not
contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements therein, in light of the
circumstances in which they are made, not misleading.
4.14 Compliance with Applicable Law. The Company and each of its
Subsidiaries hold, and have at all times held, all licenses, franchises,
permits and authorizations necessary for the lawful conduct of their
respective businesses under and pursuant to all, and have complied with and
are not in default in any respect under any, applicable law, statute,
order, rule, regulation, policy and/or guideline of any Governmental Entity
relating to the Company or any of its Subsidiaries, and neither the Company
nor any of its Subsidiaries has received notice of any violations of any of
the above.
4.15 Certain Contracts. (a) Except as set forth in Section
4.15(a) of the Company Disclosure Schedule, neither the Company nor any of
its Subsidiaries is a party to or bound by any contract (whether written or
oral) (i) with respect to the employment of any directors or consultants,
(ii) which, upon the consummation of the transactions contemplated by this
Agreement, will (either alone or upon the occurrence of any additional acts
or events) result in any payment or benefits (whether of severance pay or
otherwise) becoming due, or the acceleration or vesting of any rights to
any payment or benefits, from Parent, the Company, the Surviving
Corporation or any of their respective Subsidiaries to any director or
consultant thereof, (iii) which is a material contract (as defined in Item
601(b)(10) of Regulation S-K of the SEC) to be performed after the date of
this Agreement that has not been filed or incorporated by reference in the
Company Reports, (iv) which is a consulting agreement (including data
processing, software programming and licensing contracts) not terminable on
90 days or less notice involving the payment of more than $250,000 per
annum, or (v) which materially restricts the conduct of any line of
business by the Company or any of its Subsidiaries. Each contract,
arrangement, commitment or understanding of the type described in this
Section 4.15(a), whether or not set forth in Section 4.15(a) of the Company
Disclosure Schedule, is referred to herein as a "Company Contract". The
Company has previously delivered or made available to Parent true and
correct copies of each Company Contract.
(b) Except as set forth in Section 4.15(b) of the Company
Disclosure Schedule, (i) each Company Contract described in clause (iii) of
Section 4.15(a) is valid and binding and in full force and effect, (ii) the
Company and each of its Subsidiaries has performed all obligations required
to be performed by it to date under each Company Contract described in
clause (iii) of Section 4.15(a), (iii) no event or condition exists which
constitutes or, after notice or lapse of time or both, would constitute, a
default on the part of the Company or any of its Subsidiaries under any
Company Contract described in clause (iii) of Section 4.15(a), and (iv) no
other party to any Company Contract described in clause (iii) of Section
4.15(a) is, to the knowledge of the Company, in default in any respect
thereunder.
4.16 Agreements with Regulatory Agencies. Except as set forth in
Section 4.16 of the Company Disclosure Schedule, neither the Company nor
any of its Subsidiaries is subject to any cease-and-desist or other order
issued by, or is a party to any written agreement, consent agreement or
memorandum of understanding with, or is a party to any commitment letter or
similar undertaking to, or is subject to any order or directive by, or is a
recipient of any extraordinary supervisory letter from, or has adopted any
board resolutions at the request of (each, whether or not set forth on
Section 4.16 of the Company Disclosure Schedule, a "Regulatory Agreement"),
any Regulatory Agency or other Governmental Entity that restricts the
conduct of its business or that in any manner relates to its capital
adequacy, its credit policies, its management or its business, nor has the
Company or any of its Subsidiaries been advised by any Regulatory Agency or
other Governmental Entity that it is considering issuing or requesting any
Regulatory Agreement.
4.17 Environmental Matters. Except as set forth in Section 4.17
of the Company Disclosure Schedule:
(a) Each of the Company and its Subsidiaries and, to the
knowledge of the Company, each of the Participation Facilities and the Loan
Properties (each as hereinafter defined), are in compliance with all
applicable federal, state and local laws, including common law, regulations
and ordinances, and with all applicable decrees, orders and contractual
obligations relating to pollution or the discharge of, or exposure to,
Hazardous Materials (as hereinafter defined) in the environment or
workplace ("Environmental Laws");
(b) There is no suit, claim, action or proceeding, pending
or, to the knowledge of the Company, threatened, before any Governmental
Entity or other forum in which the Company, any of its Subsidiaries, any
Participation Facility or any Loan Property, has been or, with respect to
threatened proceedings, may be, named as a defendant (x) for alleged
noncompliance (including by any predecessor) with any Environmental Laws,
or (y) relating to the release, threatened release or exposure to any
Hazardous Material whether or not occurring at or on a site owned, leased
or operated by the Company or any of its Subsidiaries, any Participation
Facility or any Loan Property;
(c) To the knowledge of the Company, during the period of (x)
the Company's or any of its Subsidiaries' ownership or operation of any of
their respective current or former properties, (y) the Company's or any of
its Subsidiaries' participation in the management of any Participation
Facility, or (z) the Company's or any of its Subsidiaries' interest in a
Loan Property, there has been no release of Hazardous Materials in, on,
under or affecting any such property. To the knowledge of the Company,
prior to the period of (x) the Company's or any of its Subsidiaries'
ownership or operation of any of their respective current or former
properties, (y) the Company's or any of its Subsidiaries' participation in
the management of any Participation Facility, or (z) the Company's or any
of its Subsidiaries' interest in a Loan Property, there was no release of
Hazardous Materials in, on, under or affecting any such property,
Participation Facility or Loan Property; and
(d) The following definitions apply for purposes of this
Section 4.17: (x) "Hazardous Materials" means any chemicals, pollutants,
contaminants, wastes, toxic substances, petroleum or other regulated
substances or materials, (y) "Loan Property" means any property in which
the Company or any of its Subsidiaries holds a security interest, and,
where required by the context, said term means the owner or operator of
such property; and (z) "Participation Facility" means any facility in which
the Company or any of its Subsidiaries participates in the management and,
where required by the context, said term means the owner or operator of
such property.
4.18 Opinion. Prior to the execution of this Agreement, the
Company has received an opinion from KBW to the effect that as of the date
thereof and based upon and subject to the matters set forth therein, the
Exchange Ratio is fair to the stockholders of the Company from a financial
point of view. Such opinion has not been amended or rescinded as of the
date of this Agreement.
4.19 Approvals. As of the date of this Agreement, the Company
knows of no reason why all regulatory approvals required for the
consummation of the transactions contemplated hereby (including, without
limitation, the Merger) should not be obtained.
4.20 Loan Portfolio. (a) Except as set forth in Section 4.20 of
the Company Disclosure Schedule, neither the Company nor any of its
Subsidiaries is a party to any written or oral (i) loan agreement, note or
borrowing arrangement (including, without limitation, leases, credit
enhancements, commitments, guarantees and interest-bearing assets)
(collectively, "Loans"), other than Loans the unpaid principal balance of
which does not exceed $250,000, under the terms of which the obligor was,
as of April 30, 1998, over 90 days delinquent in payment of principal or
interest or in default of any other provision, or (ii) Loan with any
director, executive officer or five percent or greater stockholder of the
Company or any of its Subsidiaries, or to the knowledge of the Company, any
person, corporation or enterprise controlling, controlled by or under
common control with any of the foregoing. Section 4.20 of the Company
Disclosure Schedule sets forth (i) all of the Loans in original principal
amount in excess of $250,000 of the Company or any of its Subsidiaries that
as of April 30, 1998, were classified by any bank examiner (whether
regulatory or internal) as "Other Loans Specially Mentioned", "Special
Mention", "Substandard", "Doubtful", "Loss", "Classified", "Criticized",
"Credit Risk Assets", "Concerned Loans", "Watch List" or words of similar
import, together with the principal amount of and accrued and unpaid
interest on each such Loan and the identity of the borrower thereunder,
(ii) by category of Loan (i.e., commercial, consumer, etc.), all of the
other Loans of the Company and its Subsidiaries that as of April 30, 1998,
were classified as such, together with the aggregate principal amount of
and accrued and unpaid interest on such Loans by category and (iii) each
asset of the Company that as of April 30, 1998, was classified as "Other
Real Estate Owned" and the book value thereof.
(b) Each Loan in original principal amount in excess of
$250,000 (i) is evidenced by notes, agreements or other evidences of
indebtedness which are true, genuine and what they purport to be, (ii) to
the extent secured, has been secured by valid liens and security interests
which have been perfected and (iii) is the legal, valid and binding
obligation of the obligor named therein, enforceable in accordance with its
terms, subject to bankruptcy, insolvency, fraudulent conveyance and other
laws of general applicability relating to or affecting creditors' rights
and to general equity principles.
4.21 Property. Each of the Company and its Subsidiaries has good
and marketable title free and clear of all liens, encumbrances, mortgages,
pledges, charges, defaults or equitable interests to all of the properties
and assets, real and personal, tangible or intangible, which are reflected
on the consolidated statement of financial condition of the Company as of
March 31, 1998 or acquired after such date, except (i) liens for taxes not
yet due and payable or contested in good faith by appropriate proceedings,
(ii) pledges to secure deposits and other liens incurred in the ordinary
course of business, (iii) such imperfections of title, easements and
encumbrances, if any, as do not interfere with the use of the respective
property as such property is used on the date of this Agreement, (iv) for
dispositions and encumbrances of, or on, such properties or assets in the
ordinary course of business or (v) mechanics', materialmen's, workmen's,
repairmen's, warehousemen's, carrier's and other similar liens and
encumbrances arising in the ordinary course of business. All leases
pursuant to which the Company or any Subsidiary of the Company, as lessee,
leases real or personal property are valid and enforceable in accordance
with their respective terms and neither the Company nor any of its
Subsidiaries nor, to the knowledge of the Company, any other party thereto,
is in default thereunder.
4.22 Accounting for the Merger; Reorganization. The Company has
no reason to believe that the Merger will fail to qualify (i) for pooling-
of-interests treatment under GAAP or (ii) as a reorganization under Section
368(a) of the Code.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT
Subject to Article III, Parent hereby represents and warrants to
the Company as follows:
5.1 Corporate Organization. (a) Parent is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Florida. Parent has the corporate power and authority to own or
lease all of its properties and assets and to carry on its business as it
is now being conducted, and is duly licensed or qualified to do business in
each jurisdiction in which the nature of the business conducted by it or
the character or location of the properties and assets owned or leased by
it makes such licensing or qualification necessary. Parent is duly
registered as a bank holding company under the BHC Act. The Articles of
Incorporation and By-laws of Parent, copies of which have previously been
made available to the Company, are true and correct copies of such
documents as in effect as of the date of this Agreement.
(b) Parent Bank is a bank duly organized, validly existing
and in good standing under the laws of the State of Florida. The deposit
accounts of the Parent Bank are insured by the FDIC through the Bank
Insurance Fund and the Savings Association Insurance Fund to the fullest
extent permitted by law, and all premiums and assessments required in
connection therewith have been paid when due. Each of Parent's other
Subsidiaries which is a "Significant Subsidiary" (each a "Significant
Subsidiary" and together the "Significant Subsidiaries") as such term is
defined in Regulation S-X promulgated by the SEC is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation. Each Significant Subsidiary of Parent has the corporate
power and authority to own or lease all of its properties and assets and to
carry on its business as it is now being conducted, and is duly licensed or
qualified to do business in each jurisdiction in which the nature of the
business conducted by it or the character or location of the properties and
assets owned or leased by it makes such licensing or qualification
necessary. The articles of incorporation and by-laws of the Parent Bank,
copies of which have previously been made available to the Company, are
true and correct copies of such documents as in effect as of the date of
this Agreement.
(c) The minute books of Parent and each of its Significant
Subsidiaries contain true and correct records of all meetings and other
corporate actions held or taken since December 31, 1995 of their respective
stockholders and Boards of Directors (including committees of their
respective Boards of Directors).
5.2 Capitalization. (a) As of the date of this Agreement, the
authorized capital stock of Parent consists of 100,000,000 shares of Parent
Common Stock and 10,000,000 shares of preferred stock, par value $0.01 per
share ("Parent Preferred Stock"). As of May 27, 1998, there were
24,288,036 shares of Parent Common Stock and no shares of Parent Preferred
Stock issued and outstanding, and no shares of Parent Common Stock held in
Parent's treasury. As of the date of this Agreement, no shares of Parent
Common Stock or Parent Preferred Stock were reserved for issuance, except
that (i) 1,190,017 shares of Parent Common Stock were reserved for issuance
upon the exercise of stock options and warrants pursuant to the stock
option plans listed in Section 5.11 of the Parent Disclosure Schedule
(collectively, the "Parent Stock Plans"), (ii) 1,000,000 shares of Parent
Series B Preferred Stock were reserved for issuance upon exercise of the
rights (the "Parent Rights") distributed to holders of Parent Common Stock
pursuant to the Rights Agreement, dated as of April 14, 1995, between
Parent and IBJ Schroder Bank and Trust Company, as Rights Agent (the
"Parent Rights Agreement") and (iii) 1,040,000 shares of Parent Common
Stock were reserved for issuance upon consummation of the transaction
contemplated by the Agreement and Plan of Merger, dated as of March 26,
1998, by and between Parent and Unifirst Federal Savings Bank (the
"Unifirst Merger Agreement"). All of the issued and outstanding shares of
Parent Common Stock and Parent Preferred Stock have been duly authorized
and validly issued and are fully paid, nonassessable and free of preemptive
rights, with no personal liability attaching to the ownership thereof. As
of the date of this Agreement, except as referred to above or reflected in
Section 5.2(a) of the Parent Disclosure Schedule, Parent does not have and
is not bound by any outstanding subscriptions, options, warrants, calls,
commitments or agreements of any character calling for the purchase or
issuance of any shares of Parent Common Stock or Parent Preferred Stock or
any other equity securities of Parent or any securities representing the
right to purchase or otherwise receive any shares of Parent Common Stock or
Parent Preferred Stock. The shares of Parent Common Stock to be issued
pursuant to the Merger will be duly authorized and validly issued and, at
the Effective Time, all such shares will be fully paid, nonassessable and
free of preemptive rights, with no personal liability attaching to the
ownership thereof.
(b) Section 5.2(b) of the Parent Disclosure Schedule sets
forth a true and correct list of all of the Parent Subsidiaries as of the
date of this Agreement. Except as set forth in Section 5.2(b) of the
Parent Disclosure Schedule, as of the date of this Agreement, Parent owns,
directly or indirectly, all of the issued and outstanding shares of capital
stock of each of the Subsidiaries of Parent, free and clear of all liens,
charges, encumbrances and security interests whatsoever, and all of such
shares are duly authorized and validly issued and are fully paid,
nonassessable and free of preemptive rights, with no personal liability
attaching to the ownership thereof. As of the date of this Agreement, no
Subsidiary of Parent has or is bound by any outstanding subscriptions,
options, warrants, calls, commitments or agreements of any character with
any party that is not a direct or indirect Subsidiary of Parent calling for
the purchase or issuance of any shares of capital stock or any other equity
security of such Subsidiary or any securities representing the right to
purchase or otherwise receive any shares of capital stock or any other
equity security of such Subsidiary.
5.3 Authority; No Violation. (a) Parent has full corporate
power and authority to execute and deliver this Agreement and to consummate
the transactions contemplated hereby. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby have
been duly and validly approved by the Board of Directors of Parent. The
Board of Directors of Parent has directed that this Agreement and the
transactions contemplated hereby be submitted to Parent's stockholders for
approval at a meeting of such stockholders and, except for the adoption of
this Agreement by the requisite vote of Parent's stockholders, no other
corporate proceedings on the part of Parent are necessary to approve this
Agreement and to consummate the transactions contemplated hereby. This
Agreement has been duly and validly executed and delivered by Parent and
(assuming due authorization, execution and delivery by the Company) this
Agreement constitutes a valid and binding obligation of Parent, enforceable
against Parent in accordance with its terms, except as enforcement may be
limited by general principles of equity whether applied in a court of law
or a court of equity and by bankruptcy, insolvency and similar laws
affecting creditors' rights and remedies generally.
(b) Except as set forth in Section 5.3(b) of the Parent
Disclosure Schedule, neither the execution and delivery of this Agreement
by Parent, nor the consummation by Parent of the transactions contemplated
hereby, nor compliance by Parent with any of the terms or provisions
hereof, will (i) violate any provision of the Articles of Incorporation or
By-Laws of Parent, or the articles of incorporation or by-laws or similar
governing documents of any of its Subsidiaries or (ii) assuming that the
consents and approvals referred to in Section 5.4 are duly obtained,
(x) violate any statute, code, ordinance, rule, regulation, judgment,
order, writ, decree or injunction applicable to Parent or any of its
Subsidiaries or any of their respective properties or assets, or (y)
violate, conflict with, result in a breach of any provision of or the loss
of any benefit under, constitute a default (or an event which, with notice
or lapse of time, or both, would constitute a default) under, result in the
termination of or a right of termination or cancellation under, accelerate
the performance required by, or result in the creation of any lien, pledge,
security interest, charge or other encumbrance upon any of the respective
properties or assets of Parent or any of its Subsidiaries under, any of the
terms, conditions or provisions of any note, bond, mortgage, indenture,
deed of trust, license, lease, agreement or other instrument or obligation
to which Parent or any of its Subsidiaries is a party, or by which they or
any of their respective properties or assets may be bound or affected.
5.4 Consents and Approvals. Except for (a) the filing of
applications and notices, as applicable, with the Federal Reserve Board
under the BHC Act, the HOLA and the Bank Merger Act, and approval of such
applications and notices, (b) the State Banking Approval, (c) the filing
with the SEC of the Proxy Statement and the filing and declaration of
effectiveness of the S-4, (d) the approval of this Agreement by the
requisite vote of the stockholders of Parent, (e) the filing of the
Certificate of Merger with the Delaware Secretary and the Articles of
Merger with the Florida Secretary, (f) such filings and approvals as are
required to be made or obtained under the securities or "Blue Sky" laws of
various states in connection with the issuance of the shares of Parent
Common Stock pursuant to this Agreement, (g) approval for quotation of the
Parent Common Stock to be issued in the Merger on the NASDAQ/NMS, and (h)
such filings, authorizations or approvals as may be set forth in Section
5.4 of the Parent Disclosure Schedule, no consents or approvals of or
filings or registrations with any Governmental Entity or with any third
party are necessary in connection with (1) the execution and delivery by
Parent of this Agreement and (2) the consummation by Parent of the Merger
and the other transactions contemplated hereby.
5.5 Reports. Parent and each of its Subsidiaries have timely
filed all reports, registrations and statements, together with any
amendments required to be made with respect thereto, that they were
required to file since December 31, 1995 with any Regulatory Agency, and
have paid all fees and assessments due and payable in connection therewith.
Except for normal examinations conducted by a Regulatory Agency in the
regular course of the business of Parent and its Subsidiaries, and except
as set forth in Section 5.5 of Parent Disclosure Schedule, no Regulatory
Agency has initiated any proceeding or, to the knowledge of Parent,
investigation into the business or operations of Parent or any of its
Subsidiaries since December 31, 1995. There is no unresolved violation,
criticism, or exception by any Regulatory Agency with respect to any report
or statement relating to any examinations of Parent or any of its
Subsidiaries.
5.6 Financial Statements. Parent has previously made available
to the Company copies of (a) the consolidated statements of financial
condition of Parent and its Subsidiaries as of December 31 for the fiscal
years 1996 and 1997 and the related consolidated statements of income,
changes in shareholders' equity and cash flows for the fiscal years 1995
through 1997, inclusive, as reported in Parent's Annual Report on Form 10-K
for the fiscal year ended December 31, 1997 filed with the SEC under the
Exchange Act, in each case accompanied by the audit report of Ernst & Young
LLP, independent public accountants with respect to Parent, and (b) the
unaudited consolidated statements of financial condition of Parent and its
Subsidiaries as of March 31, 1998 and March 31, 1997 and the related
unaudited consolidated statements of income, changes in shareholders'
equity and cash flows for the three-month periods then ended as reported in
Parent's Quarterly Report on Form 10-Q for the period ended March 31, 1998
filed with the SEC under the Exchange Act. The December 31, 1997
consolidated balance sheet of Parent (including the related notes, where
applicable) fairly presents the consolidated financial position of Parent
and its Subsidiaries as of the date thereof, and the other financial
statements referred to in this Section 5.6 (including the related notes,
where applicable) fairly present and the financial statements to be filed
with the SEC after the date hereof will fairly present (subject, in the
case of the unaudited statements, to recurring audit adjustments normal in
nature and amount), the results of the consolidated operations and changes
in stockholders' equity and consolidated financial position of Parent and
its Subsidiaries for the respective fiscal periods or as of the respective
dates therein set forth; each of such statements (including the related
notes, where applicable) complies, and the financial statements to be filed
with the SEC after the date hereof will comply, with applicable accounting
requirements and with the published rules and regulations of the SEC with
respect thereto; and each of such statements (including the related notes,
where applicable) has been, and the financial statements to be filed with
the SEC after the date hereof will be, prepared in accordance with GAAP
consistently applied during the periods involved, except as indicated in
the notes thereto or, in the case of unaudited statements, as permitted by
Form 10-Q. The books and records of Parent and its Significant
Subsidiaries have been, and are being, maintained in accordance with GAAP
and any other applicable legal and accounting requirements.
5.7 Broker's Fees. Neither Parent nor any Subsidiary of Parent,
nor any of their respective officers or directors, has employed any broker
or finder or incurred any liability for any broker's fees, commissions or
finder's fees in connection with any of the transactions contemplated by
this Agreement, except that Parent has engaged, and will pay a fee or
commission to, Sandler, O'Neill & Partners, L.P., ("Sandler O'Neill").
5.8 Absence of Certain Changes or Events. Except as may be set
forth in Section 5.8 of the Parent Disclosure Schedule, or as disclosed in
any Parent Report (as defined in Section 5.12) filed with the SEC prior to
the date of this Agreement, since December 31, 1997, there has been no
change or development or combination of changes or developments which,
individually or in the aggregate, has had a Material Adverse Effect on
Parent.
5.9 Legal Proceedings. (a) Except as set forth in Section
5.9(a) of the Parent Disclosure Schedule, neither Parent nor any of its
Subsidiaries is a party to any and there are no pending or, to Parent's
knowledge, threatened, legal, administrative, arbitral or other
proceedings, claims, actions or governmental or regulatory investigations
of any nature against Parent or any of its Subsidiaries or challenging the
validity or propriety of the transactions contemplated by this Agreement.
(b) There is no injunction, order, judgment, decree, or
regulatory restriction imposed upon Parent, any of its Subsidiaries or the
assets of Parent or any of its Subsidiaries.
5.10 Taxes. Except as set forth in Section 5.10 of the Parent
Disclosure Schedule, each of Parent and its Subsidiaries has (i) duly and
timely filed (including applicable extensions granted without penalty) all
material Tax Returns required to be filed at or prior to the Effective
Time, and such Tax Returns are true and correct in all material respects,
and (ii) paid in full or made adequate provision in the financial
statements of Parent (in accordance with GAAP) for all material Taxes shown
to be due on such Tax Returns. Except as set forth in Section 5.10 of the
Parent Disclosure Schedule, (i) as of the date hereof, neither Parent nor
any of its Subsidiaries has requested any extension of time within which to
file any Tax Returns in respect of any fiscal year which have not since
been filed and no request for waivers of the time to assess any Taxes are
pending or outstanding, and (ii) as of the date hereof, with respect to
each taxable period of Parent and its Subsidiaries, the federal and state
income Tax Returns of Parent and its Subsidiaries have been audited by the
Internal Revenue Service or appropriate state tax authorities or the time
for assessing and collecting income Tax with respect to such taxable period
has closed and such taxable period is not subject to review.
5.11 Employees. (a) Section 5.11(a) of the Parent Disclosure
Schedule sets forth a true and correct list of each deferred compensation
plan, incentive compensation plan, equity compensation plan, "welfare"
plan, fund or program (within the meaning of section 3(1) of the ERISA);
"pension" plan, fund or program (within the meaning of section 3(2) of
ERISA); each employment, termination or severance agreement; and each other
employee benefit plan, fund, program, agreement or arrangement, in each
case, that is sponsored, maintained or contributed to or required to be
contributed to as of the date of this Agreement (the "Parent Plans") by
Parent, any of its Subsidiaries or by any trade or business, whether or not
incorporated (a "Parent ERISA Affiliate"), all of which together with
Parent would be deemed a "single employer" within the meaning of Section
4001 of ERISA, for the benefit of any employee or former employee of
Parent, any Subsidiary or any Parent ERISA Affiliate.
(b) Except as set forth in Section 5.11(b) of the Parent
Disclosure Schedule: each of the Parent Plans is in compliance with the
applicable provisions of the Code and ERISA; each of the Parent Plans
intended to be "qualified" within the meaning of section 401(a) of the Code
has received a favorable determination letter from the IRS; no Parent Plan
has an accumulated or waived funding deficiency within the meaning of
section 412 of the Code; neither Parent nor any Parent ERISA Affiliate has
incurred, directly or indirectly, any liability to or on account of a
Parent Plan pursuant to Title IV of ERISA (other than PBGC premiums); to
the knowledge of Parent no proceedings have been instituted to terminate
any Parent Plan that is subject to Title IV of ERISA; no "reportable
event," as such term is defined in section 4043(c) of ERISA, has occurred
with respect to any Parent Plan (other than a reportable event with respect
to which the thirty day notice period has been waived); and no condition
exists that presents a material risk to Parent of incurring a liability to
or on account of a Parent Plan pursuant to Title IV of ERISA; no Parent
Plan is a multiemployer plan (within the meaning of section 4001(a)(3) of
ERISA and no Parent Plan is a multiple employer plan as defined in Section
413 of the Code; and there are no pending, or, to the knowledge of Parent,
threatened or anticipated claims (other than routine claims for benefits)
by, on behalf of or against any of the Parent Plans or any trusts related
thereto.
5.12 SEC Reports. Parent has previously made available to the
Company a true and correct copy of each (a) final registration statement,
prospectus, report, schedule and definitive proxy statement filed since
December 31, 1995 by Parent with the SEC pursuant to the Securities Act or
the Exchange Act (the "Parent Reports") and (b) communication mailed by
Parent to its stockholders since December 31, 1995, and no such
registration statement, prospectus, report, schedule, proxy statement or
communication contained any untrue statement of a material fact or omitted
to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances in
which they were made, not misleading, except that information as of a later
date shall be deemed to modify information as of an earlier date. Parent
has timely filed all Parent Reports and other documents required to be
filed by it under the Securities Act and the Exchange Act, and, as of their
respective dates, all Parent Reports complied with the published rules and
regulations of the SEC with respect thereto.
5.13 Parent Information. The information relating to Parent and
its Subsidiaries to be contained in the Proxy Statement and the S-4, or in
any other document filed with any other regulatory agency in connection
herewith, will not contain any untrue statement of a material fact or omit
to state a material fact necessary to make the statements therein, in light
of the circumstances in which they are made, not misleading. The Proxy
Statement (except for such portions thereof that relate only to the Company
or any of its Subsidiaries) will comply with the provisions of the Exchange
Act and the rules and regulations thereunder. The S-4 will comply with the
provisions of the Securities Act and the rules and regulations thereunder.
5.14 Compliance with Applicable Law. Parent and each of its
Subsidiaries holds, and has at all times held, all licenses, franchises,
permits and authorizations necessary for the lawful conduct of their
respective businesses under and pursuant to all, and have complied with and
are not in default in any respect under any, applicable law, statute,
order, rule, regulation, policy and/or guideline of any Governmental Entity
relating to Parent or any of its Subsidiaries and neither Parent nor any of
its Subsidiaries knows of, or has received notice of violation of, any
violations of any of the above.
5.15 Ownership of Company Common Stock; Affiliates and
Associates. (a) Neither Parent nor any of its affiliates or associates
(as such terms are defined under the Exchange Act) (i) beneficially owns,
directly or indirectly, or (ii) is a party to any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or disposing of
any shares of capital stock of the Company (other than Trust Account Shares
and DPC Shares); and
(b) Neither Parent nor any of its Subsidiaries is an
"affiliate" (as such term is defined in DGCL section203(c)(1)) or an
"associate" (as such term is defined in DGCL section203(c)(2)) of the
Company or an "Interested Stockholder" (as such term is defined in Article
Eighth of the Company's Certificate of Incorporation).
5.16 Agreements with Regulatory Agencies. Except as set forth in
Section 5.16 of the Parent Disclosure Schedule, neither Parent nor any of
its Subsidiaries is subject to any cease-and-desist or other order issued
by, or is a party to any written agreement, consent agreement or memorandum
of understanding with, or is a party to any commitment letter or similar
undertaking to, or is subject to any order or directive by, or is a
recipient of any extraordinary supervisory letter from, or has adopted any
board resolutions at the request of (each, whether or not set forth in
Section 5.16 of the Parent Disclosure Schedule, a "Parent Regulatory
Agreement"), any Regulatory Agency or other Governmental Entity that
restricts the conduct of its business or that in any manner relates to its
capital adequacy, its credit policies, its management or its business, nor
has Parent or any of its Subsidiaries been advised by any Regulatory Agency
or other Governmental Entity that it is considering issuing or requesting
any Parent Regulatory Agreement.
5.17 Environmental Matters. Except as set forth in Section 5.17
of the Parent Disclosure Schedule:
(a) Each of Parent and its Subsidiaries and, to the knowledge
of Parent, each of the Participation Facilities and the Loan Properties
(each as hereinafter defined), are in compliance with all Environmental
Laws;
(b) There is no suit, claim, action or proceeding, pending
or, to the knowledge of Parent, threatened, before any Governmental Entity
or other forum in which Parent, any of its Subsidiaries, any Participation
Facility or any Loan Property, has been or, with respect to threatened
proceedings, may be, named as a defendant (x) for alleged noncompliance
(including by any predecessor) with any Environmental Laws, or (y) relating
to the release, threatened release or exposure to any Hazardous Material
whether or not occurring at or on a site owned, leased or operated by
Parent or any of its Subsidiaries, any Participation Facility or any Loan
Property;
(c) To the knowledge of Parent during the period of (x)
Parent's or any of its Subsidiaries' ownership or operation of any of their
respective current or former properties, (y) Parent's or any of its
Subsidiaries' participation in the management of any Participation
Facility, or (z) Parent's or any of its Subsidiaries' interest in a Loan
Property, there has been no release of Hazardous Materials in, on, under or
affecting any such property. To the knowledge of Parent, prior to the
period of (x) Parent's or any of its Subsidiaries' ownership or operation
of any of their respective current or former properties, (y) Parent's or
any of its Subsidiaries' participation in the management of any
Participation Facility, or (z) Parent's or any of its Subsidiaries'
interest in a Loan Property, there was no release of Hazardous Materials
in, on, under or affecting any such property, Participation Facility or
Loan Property; and
(d) The following definitions apply for purposes of this
Section 5.17: (x) "Loan Property" means any property in which Parent or
any of its Subsidiaries holds a security interest, and, where required by
the context, said term means the owner or operator of such property; and
(y) "Participation Facility" means any facility in which Parent or any of
its Subsidiaries participates in the management and, where required by the
context, said term means the owner or operator of such property.
5.18 Opinion. Prior to the execution of this Agreement, Parent
has received an opinion from Sandler O'Neill to the effect that as of the
date thereof and based upon and subject to the matters set forth therein,
the Exchange Ratio pursuant to this Agreement is fair from a financial
point of view to Parent. Such opinion has not been amended or rescinded as
of the date of this Agreement.
5.19 Approvals. As of the date of this Agreement, Parent knows
of no reason why all regulatory approvals required for the consummation of
the transactions contemplated hereby (including, without limitation, the
Merger) should not be obtained.
5.20 Loan Portfolio. (a) Except as set forth in Section 5.20 of
Parent Disclosure Schedule, neither Parent nor any of its Subsidiaries is a
party to any written or oral (i) Loan, other than Loans the unpaid
principal balance of which does not exceed $250,000, under the terms of
which the obligor was, as of April 30, 1998, over 90 days delinquent in
payment of principal or interest or in default of any other provision, or
(ii) Loan with any director, executive officer or five percent or greater
stockholder of Parent or any of its Subsidiaries, or to the knowledge of
Parent, any person, corporation or enterprise controlling, controlled by or
under common control with any of the foregoing. Section 5.20 of Parent
Disclosure Schedule sets forth (i) all of the Loans in original principal
amount in excess of $250,000 of Parent or any of its Subsidiaries that as
of April 30, 1998, were classified by any bank examiner (whether regulatory
or internal) as "Other Loans Specially Mentioned", "Special Mention",
"Substandard", "Doubtful", "Loss", "Classified", "Criticized", "Credit Risk
Assets", "Concerned Loans", "Watch List" or words of similar import,
together with the principal amount of and accrued and unpaid interest on
each such Loan and the identity of the borrower thereunder, (ii) by
category of Loan (i.e., commercial, consumer, etc.), all of the other Loans
of Parent and its Subsidiaries that as of April 30, 1998, were classified
as such, together with the aggregate principal amount of and accrued and
unpaid interest on such Loans by category and (iii) each asset of Parent
that as of April 30, 1998, was classified as "Other Real Estate Owned" and
the book value thereof.
(b) Each Loan in original principal amount in excess of
$250,000 (i) is evidenced by notes, agreements or other evidences of
indebtedness which are true, genuine and what they purport to be, (ii) to
the extent secured, has been secured by valid liens and security interests
which have been perfected and (iii) is the legal, valid and binding
obligation of the obligor named therein, enforceable in accordance with its
terms, subject to bankruptcy, insolvency, fraudulent conveyance and other
laws of general applicability relating to or affecting creditors' rights
and to general equity principles.
5.21 Property. Each of Parent and its Subsidiaries has good and
marketable title free and clear of all liens, encumbrances, mortgages,
pledges, charges, defaults or equitable interests to all of the properties
and assets, real and personal, tangible or intangible, and which are
reflected on the consolidated statement of financial condition of Parent as
of March 31, 1998 or acquired after such date, except (i) liens for taxes
not yet due and payable or contested in good faith by appropriate
proceedings, (ii) pledges to secure deposits and other liens incurred in
the ordinary course of business, (iii) such imperfections of title,
easements and encumbrances, if any, as do not interfere with the use of the
respective property as such property is used on the date of this Agreement,
(iv) for dispositions and encumbrances of, or on, such properties or assets
in the ordinary course of business or (v) mechanics', materialmen's,
workmen's, repairmen's, warehousemen's, carrier's and other similar liens
and encumbrances arising in the ordinary course of business. All leases
pursuant to which Parent or any Subsidiary of Parent, as lessee, leases
real or personal property are valid and enforceable in accordance with
their respective terms and neither Parent nor any of its Subsidiaries nor,
to the knowledge of Parent, any other party thereto is in default
thereunder.
5.22 Accounting for the Merger; Reorganization. As of the date
of this Agreement, Parent has no reason to believe that the Merger will
fail to qualify (i) for pooling-of-interests treatment under GAAP or (ii)
as a reorganization under Section 368(a) of the Code.
ARTICLE VI
COVENANTS RELATING TO CONDUCT OF BUSINESS
6.1 Covenants of the Company. During the period from the date
of this Agreement and continuing until the Effective Time, except as
expressly contemplated or permitted by this Agreement or the Stock Option
Agreement or with the prior written consent of Parent, the Company and its
Subsidiaries shall carry on their respective businesses in the ordinary
course consistent with past practice. Without limiting the generality of
the foregoing, and except as set forth in Section 6.1 of the Company
Disclosure Schedule or as otherwise contemplated by this Agreement or the
Stock Option Agreement or consented to in writing by Parent, the Company
shall not, and shall not permit any of its Subsidiaries to:
(a) solely in the case of the Company, declare or pay any
dividends on, or make other distributions in respect of, any of its capital
stock, other than normal quarterly dividends not in excess of $0.175 per
share of Company Common Stock;
(b) (i) repurchase, redeem or otherwise acquire (except for
the acquisition of Trust Account Shares and DPC Shares, as such terms are
defined in Section 1.4(b) hereof) any shares of the capital stock of the
Company or any Subsidiary of the Company, or any securities convertible
into or exercisable for any shares of the capital stock of the Company or
any Subsidiary of the Company,(ii) split, combine or reclassify any shares
of its capital stock or issue or authorize or propose the issuance of any
other securities in respect of, in lieu of or in substitution for shares of
its capital stock, or (iii) issue, deliver or sell, or authorize or propose
the issuance, delivery or sale of, any shares of its capital stock or any
securities convertible into or exercisable for, or any rights, warrants or
options to acquire, any such shares, or enter into any agreement with
respect to any of the foregoing, except, in the case of clauses (ii) and
(iii), for the issuance of Company Common Stock upon the exercise or
fulfillment of rights or options issued or existing pursuant to the Company
Option Plans or any employee benefit plans, programs or arrangements, all
to the extent outstanding and in existence on the date of this Agreement
and in accordance with their present terms;
(c) amend its Certificate of Incorporation, By-laws or other
similar governing documents;
(d) authorize or permit any of its officers, directors,
employees or agents to directly or indirectly solicit, initiate or
encourage any inquiries relating to, or the making of any proposal which
constitutes, a "takeover proposal" (as defined below), or, subject to the
fiduciary duties of the Board of Directors of the Company, recommend or
endorse any takeover proposal, or participate in any discussions or
negotiations, or provide third parties with any nonpublic information,
relating to any such inquiry or proposal or otherwise facilitate any effort
or attempt to make or implement a takeover proposal; provided, however,
that the Company may communicate information about any such takeover
proposal to its stockholders if, in the judgment of the Company's Board of
Directors, based upon the advice of outside counsel, such communication is
required under applicable law. The Company will immediately cease and
cause to be terminated any existing activities, discussions or negotiations
previously conducted with any parties other than Parent with respect to any
of the foregoing. The Company will take all actions necessary or advisable
to inform the appropriate individuals or entities referred to in the first
sentence hereof of the obligations undertaken in this Section 6.1(d). The
Company will notify Parent immediately if any such inquiries or takeover
proposals are received by, any such information is requested from, or any
such negotiations or discussions are sought to be initiated or continued
with, the Company, and the Company will promptly inform Parent in writing
of all of the relevant details with respect to the foregoing. As used in
this Agreement, "takeover proposal" shall mean any tender or exchange
offer, proposal for a merger, consolidation or other business combination
involving the Company or any Subsidiary of the Company or any proposal or
offer to acquire in any manner a substantial equity interest in, or a
substantial portion of the assets of, the Company or any Subsidiary of the
Company other than the transactions contemplated or permitted by this
Agreement;
(e) make any capital expenditures other than those which (i)
are made in the ordinary course of business or are necessary to maintain
existing assets in good repair and (ii) in any event are in an amount of no
more than $500,000 in the aggregate;
(f) enter into any new line of business;
(g) acquire or agree to acquire, by merging or consolidating
with, or by purchasing a substantial equity interest in or a substantial
portion of the assets of, or by any other manner, any business or any
corporation, partnership, association or other business organization or
division thereof or otherwise acquire any assets, which would be material,
individually or in the aggregate, to the Company, other than in connection
with foreclosures, settlements in lieu of foreclosure or troubled loan or
debt restructurings in the ordinary course of business consistent with past
practices;
(h) take any action that is intended or may reasonably be
expected to result in any of its representations and warranties set forth
in this Agreement being or becoming untrue, or in any of the conditions to
the Merger set forth in Article VIII not being satisfied;
(i) change its methods of accounting in effect at March 31,
1998, except as required by changes in GAAP or regulatory accounting
principles as concurred to by the Company's independent auditors;
(j) (i) except as set forth in Section 7.13 hereof, as
required by applicable law or as required to maintain qualification
pursuant to the Code, adopt, amend, or terminate any employee benefit plan
(including, without limitation, any Plan) or any agreement, arrangement,
plan or policy between the Company or any Subsidiary of the Company and one
or more of its current or former directors, officers or employees or (ii)
except for normal increases in the ordinary course of business consistent
with past practice or except as required by applicable law, increase in any
manner the compensation or fringe benefits of any director, officer or
employee or pay any benefit not required by any Plan or agreement as in
effect as of the date hereof (including, without limitation, the granting
of stock options, stock appreciation rights, restricted stock, restricted
stock units or performance units or shares); provided, however, that
nothing contained herein shall prohibit the Company from (x) paying
retention bonuses as described in Section 6.1(j) of the Company Disclosure
Schedule, or (y) paying, on or immediately prior to the Closing Date,
discretionary bonuses in respect of fiscal 1998 in a manner consistent with
past practice and in an aggregate amount not to exceed $300,000;
(k) take or cause to be taken any action which would
disqualify the Merger as a "pooling-of-interests" for accounting purposes
or a reorganization under Section 368(a) of the Code;
(l) other than activities in the ordinary course of business
consistent with past practice, sell, lease, encumber, assign or otherwise
dispose of, or agree to sell, lease, encumber, assign or otherwise dispose
of, any of its material assets, properties or other rights or agreements;
(m) other than in the ordinary course of business consistent
with past practice, incur any indebtedness for borrowed money or assume,
guarantee, endorse or otherwise as an accommodation become responsible for
the obligations of any other individual, corporation or other entity;
(n) file any application to relocate or terminate the
operations of any banking office of it or any of its Subsidiaries;
(o) create, renew, amend or terminate or give notice of a
proposed renewal, amendment or termination of, any material contract,
agreement or lease for goods, services or office space to which the Company
or any of its Subsidiaries is a party or by which the Company or any of its
Subsidiaries or their respective properties is bound, other than the
renewal in the ordinary course of business of any lease the term of which
expires prior to the Closing Date; or
(p) agree to do any of the foregoing.
6.2 Covenants of Parent. Except as set forth in Section 6.2 of
the Parent Disclosure Schedule or as otherwise contemplated by this
Agreement or consented to in writing by the Company, Parent shall not, and
shall not permit any of its Subsidiaries to:
(a) solely in the case of Parent, declare or pay any
dividends on or make any other distributions in respect of any of its
capital stock other than its current quarterly dividends; provided,
however, that nothing contained herein shall prohibit Parent from
increasing the quarterly cash dividend on the Parent Common Stock in a
manner consistent with past practice;
(b) take any action that is intended or may reasonably be
expected to result in any of its representations and warranties set forth
in this Agreement being or becoming untrue, or in any of the conditions to
the Merger set forth in Article VIII not being satisfied;
(c) take any action or enter into any agreement that could
reasonably be expected to jeopardize or delay the receipt of any Requisite
Regulatory Approval (as defined in Section 8.1(c));
(d) change its methods of accounting in effect at March 31,
1998, except in accordance with changes in GAAP or regulatory accounting
principles as concurred to by Parent's independent auditors;
(e) take or cause to be taken any action which would
disqualify the Merger as a "pooling-of-interests" for accounting purposes
or a reorganization under Section 368(a) of the Code; or
(f) agree to do any of the foregoing.
6.3 Conduct of Parent's Business. Parent shall, and Parent
shall cause the Parent Banks to, conduct its business in substantially the
same manner as heretofore conducted.
ARTICLE VII
ADDITIONAL AGREEMENTS
7.1 Regulatory Matters. (a) Parent and the Company shall
promptly prepare and file with the SEC the Proxy Statement and Parent shall
promptly prepare and file with the SEC the S-4, in which the Proxy
Statement will be included as a prospectus. Each of the Company and Parent
shall use its reasonable best efforts to have the S-4 declared effective
under the Securities Act as promptly as practicable after such filing, and
each of the Company and Parent shall thereafter mail the Proxy Statement to
its respective stockholders. Parent shall also use its reasonable best
efforts to obtain all necessary state securities law or "Blue Sky" permits
and approvals required to carry out the transactions contemplated by this
Agreement.
(b) The parties hereto shall cooperate with each other and
use their reasonable best efforts to promptly prepare and file all
necessary documentation, to effect all applications, notices, petitions and
filings, and to obtain as promptly as practicable all permits, consents,
approvals and authorizations of all third parties and Governmental Entities
which are necessary or advisable to consummate the transactions
contemplated by this Agreement (including without limitation the Merger).
The Company and Parent shall have the right to review in advance, and to
the extent practicable each will consult the other on, in each case subject
to applicable laws relating to the exchange of information, all the
information relating to the Company or Parent, as the case may be, and any
of their respective Subsidiaries, which appears in any filing made with, or
written materials submitted to, any third party or any Governmental Entity
in connection with the transactions contemplated by this Agreement. In
exercising the foregoing right, each of the parties hereto shall act
reasonably and as promptly as practicable. The parties hereto agree that
they will consult with each other with respect to the obtaining of all
permits, consents, approvals and authorizations of all third parties and
Governmental Entities necessary or advisable to consummate the transactions
contemplated by this Agreement and each party will keep the other apprised
of the status of matters relating to completion of the transactions
contemplated herein.
(c) Parent and the Company shall, upon request, furnish each
other with all information concerning themselves, their Subsidiaries,
directors, officers and stockholders and such other matters as may be
reasonably necessary or advisable in connection with the Proxy Statement,
the S-4 or any other statement, filing, notice or application made by or on
behalf of Parent, the Company or any of their respective Subsidiaries to
any Governmental Entity in connection with the Merger and the other
transactions contemplated by this Agreement.
(d) Parent and the Company shall promptly furnish each other
with copies of written communications received by Parent or the Company, as
the case may be, or any of their respective Subsidiaries, Affiliates or
Associates (as such terms are defined in Rule 12b-2 under the Exchange Act
as in effect on the date of this Agreement) from, or delivered by any of
the foregoing to, any Governmental Entity in respect of the transactions
contemplated hereby.
7.2 Access to Information. (a) Upon reasonable notice and
subject to applicable laws relating to the exchange of information, each
party shall, and shall cause each of its Subsidiaries to, afford to the
officers, employees, accountants, counsel and other representatives of the
other party, access, during normal business hours during the period prior
to the Effective Time, to all its properties, books, contracts,
commitments, records, officers, employees, accountants, counsel and other
representatives and, during such period, it shall, and shall cause its
Subsidiaries to, make available to the other party all information
concerning its business, properties and personnel as the other party may
reasonably request. Neither party nor any of its Subsidiaries shall be
required to provide access to or to disclose information where such access
or disclosure would violate or prejudice the rights of its customers,
jeopardize any attorney-client privilege or contravene any law, rule,
regulation, order, judgment, decree, fiduciary duty or binding agreement
entered into prior to the date of this Agreement. The parties hereto will
make appropriate substitute disclosure arrangements under circumstances in
which the restrictions of the preceding sentence apply.
(b) All information furnished to Parent pursuant to Section
7.2(a) shall be subject to, and Parent shall hold all such information in
confidence in accordance with, the provisions of the confidentiality
agreement, (the "Confidentiality Agreement"), between Parent and the
Company. The Company shall have the same obligations to Parent under the
Confidentiality Agreement with respect to information furnished to the
Company pursuant to Section 7.2(a) as if the Company were the receiving
party under such agreement.
(c) No investigation by either of the parties or their
respective representatives shall affect the representations, warranties,
covenants or agreements of the other set forth herein.
7.3 Stockholder Meetings. The Company and Parent each shall
take all steps necessary to duly call, give notice of, convene and hold a
meeting of its stockholders to be held as soon as is reasonably practicable
after the date on which the S-4 becomes effective for the purpose of voting
upon the approval and adoption of this Agreement and the consummation of
the transactions contemplated hereby. The Company and Parent each will,
through its Board of Directors, subject, in the case of the Company, to the
fiduciary duties of such board, recommend to its stockholders approval of
this Agreement and the transactions contemplated hereby and such other
matters as may be submitted to its stockholders in connection with this
Agreement. The Company and Parent shall coordinate and cooperate with
respect to the foregoing matters, with a view towards, among other things,
holding the respective meetings of each party's stockholders on the same
day.
7.4 Legal Conditions to Merger. Each of Parent and the Company
shall, and shall cause its Subsidiaries to, use their reasonable best
efforts (a) to take, or cause to be taken, all actions necessary, proper or
advisable to comply promptly with all legal requirements which may be
imposed on such party or its Subsidiaries with respect to the Merger or the
Bank Merger and, subject to the conditions set forth in Article VIII
hereof, to consummate the transactions contemplated by this Agreement and
(b) to obtain (and to cooperate with the other party to obtain) any
consent, authorization, order or approval of, or any exemption by, any
Governmental Entity and any other third party which is required to be
obtained by the Company or Parent or any of their respective Subsidiaries
in connection with the Merger or the Bank Merger and the other transactions
contemplated by this Agreement, and to comply with the terms and conditions
of such consent, authorization, order or approval.
7.5 Affiliates. (a) Each of Parent and the Company shall use its
reasonable best efforts to cause each director, executive officer and
other person who is an "affiliate" (for purposes of Rule 145 under the
Securities Act and for purposes of qualifying the Merger for "pooling-of-
interests" accounting treatment) of such party to deliver to the other
party, as soon as practicable after the date of this Agreement, a written
agreement, in the form of Exhibit 7.5(a) hereto (in the case of affiliates
of Parent) or Exhibit 7.5(b) hereto (in the case of affiliates of the
Company).
(b) Parent shall publish, not later than 15 days after the
end of the first full calendar month following the month in which the
Effective Time occurs, financial results covering at least 30 days of post-
Merger combined operations as contemplated by SEC Accounting Series Release
No. 135.
7.6 Stock Exchange Listing. Parent shall use its reasonable best
efforts to cause the shares of Parent Common Stock to be issued in the
Merger to be approved for quotation on the NASDAQ/NMS, subject to official
notice of issuance, as of the Effective Time.
7.7 Employee Benefit Plans; Existing Agreements. (a) As of the
Effective Time, the employees of the Company and its Subsidiaries (the
"Company Employees") shall be eligible to participate in the employee
benefit plans of Parent and its Subsidiaries in which similarly situated
employees of Parent or Parent Bank participate, to the same extent as
similarly situated employees of Parent or Parent Bank (it being understood
that inclusion of Company Employees in such employee benefit plans may
occur at different times with respect to different plans).
(b) With respect to each Parent Plan, for purposes of
determining eligibility to participate, vesting, and entitlement to
benefits, including for severance benefits and vacation entitlement (but
not for accrual of pension benefits), service with the Company (or
predecessor employers to the extent the Company provides past service
credit) shall be treated as service with Parent; provided, however, that
such service shall not be recognized to the extent that such recognition
would result in a duplication of benefits. Such service also shall apply
for purposes of satisfying any waiting periods, evidence of insurability
requirements, or the application of any preexisting condition limitations.
Each Parent Plan shall waive pre-existing condition limitations to the same
extent waived under the applicable Plan. Company Employees shall be given
credit for amounts paid under a corresponding benefit plan during the same
period for purposes of applying deductibles, copayments and out-of-pocket
maximums as though such amounts had been paid in accordance with the terms
and conditions of the Parent Plan.
(c) As of the Effective Time, Parent shall assume and honor
and shall cause the appropriate Subsidiaries of Parent to assume and to
honor in accordance with their terms all employment, severance and other
compensation agreements, plans and arrangements existing prior to the
execution of this Agreement which are between the Company or any of its
Subsidiaries and any director, officer or employee thereof and which have
been disclosed in the Company Disclosure Schedule. Parent acknowledges and
agrees that (i) the Merger constitutes a "Change of Control" for all
purposes pursuant to such agreements and arrangements and (ii) in light of
Parent's plans relating to management assignments and responsibilities with
respect to the business of Parent from and after the Effective Time, each
director, officer or employee who is a party to, or is otherwise subject
to, any such agreement or arrangement will, upon consummation of the
Merger, have "Good Reason" to terminate employment thereunder. The
provisions of this Section 7.7(c) are intended to be for the benefit of,
and shall be enforceable by, each such director, officer or employee.
(d) Parent agrees that, during the three-month period
following the Effective Time, no Company Employee shall be terminated for
"cause" (as defined in the Company Option Plans) unless such Company
Employee has been given written notice of such termination at least ten
business days prior to the date of termination. This Section 7.7(d) is
intended to be for the benefit of, and shall be enforceable by, each such
Company Employee.
7.8 Indemnification. (a) In the event of any threatened or
actual claim, action, suit, proceeding or investigation, whether civil,
criminal or administrative, including, without limitation, any such claim,
action, suit, proceeding or investigation in which any person who is now,
or has been at any time prior to the date of this Agreement, or who becomes
prior to the Effective Time, a director, officer or employee of the Company
or any of its Subsidiaries (the "Indemnified Parties") is, or is threatened
to be, made a party based in whole or in part on, or arising in whole or in
part out of, or pertaining to (i) the fact that he is or was a director,
officer or employee of the Company, any of the Subsidiaries of the Company
or any of their respective predecessors or affiliates or (ii) this
Agreement or any of the transactions contemplated hereby, whether in any
case asserted or arising before or after the Effective Time, the parties
hereto agree to cooperate and use their best efforts to defend against and
respond thereto. It is understood and agreed that after the Effective
Time, Parent shall indemnify and hold harmless, as and to the extent
permitted by law, each such Indemnified Party against any losses, claims,
damages, liabilities, costs, expenses (including reasonable attorney's fees
and expenses in advance of the final disposition of any claim, suit,
proceeding or investigation to each Indemnified Party to the fullest extent
permitted by law upon receipt of any undertaking required by applicable
law), judgments, fines and amounts paid in settlement in connection with
any such threatened or actual claim, action, suit, proceeding or
investigation, and in the event of any such threatened or actual claim,
action, suit, proceeding or investigation (whether asserted or arising
before or after the Effective Time), the Indemnified Parties may retain
counsel reasonably satisfactory to them after consultation with Parent;
provided, however, that (1) Parent shall have the right to assume the
defense thereof and upon such assumption Parent shall not be liable to any
Indemnified Party for any legal expenses of other counsel or any other
expenses subsequently incurred by any Indemnified Party in connection with
the defense thereof, except that if Parent elects not to assume such
defense or counsel for the Indemnified Parties reasonably advises that
there are issues which raise conflicts of interest between Parent and the
Indemnified Parties, the Indemnified Parties may retain counsel reasonably
satisfactory to them after consultation with Parent, and Parent shall pay
the reasonable fees and expenses of such counsel for the Indemnified
Parties, (2) Parent shall in all cases be obligated pursuant to this
paragraph to pay for only one firm of counsel for all Indemnified Parties,
(3) Parent shall not be liable for any settlement effected without its
prior written consent (which consent shall not be unreasonably withheld)
and (4) Parent shall have no obligation hereunder to any Indemnified Party
when and if a court of competent jurisdiction shall ultimately determine,
and such determination shall have become final and nonappealable, that
indemnification of such Indemnified Party in the manner contemplated hereby
is prohibited by applicable law. Any Indemnified Party wishing to claim
Indemnification under this Section 7.8, upon learning of any such claim,
action, suit, proceeding or investigation, shall promptly notify Parent
thereof, provided that the failure to so notify shall not affect the
obligations of Parent under this Section 7.8 except to the extent such
failure to notify materially prejudices Parent. Parent's obligations under
this Section 7.8 shall continue in full force and effect without time limit
from and after the Effective Time.
(b) Parent shall cause the persons serving as officers and
directors of the Company immediately prior to the Effective Time to be
covered for a period of three years from the Effective Time by the
directors' and officers' liability insurance policy maintained by the
Company (provided that Parent may substitute therefor policies of at least
the same coverage and amounts containing terms and conditions which are not
less advantageous than such policy) with respect to acts or omissions
occurring prior to the Effective Time which were committed by such officers
and directors in their capacity as such; provided, however, that in no
event shall Parent be required to expend on an annual basis more than 200%
of the current amount expended by the Company (the "Insurance Amount") to
maintain or procure insurance coverage, and further provided that if Parent
is unable to maintain or obtain the insurance called for by this Section
7.8(b), Parent shall use all reasonable efforts to obtain as much
comparable insurance as is available for the Insurance Amount.
(c) In the event Parent or any of its successors or assigns
(i) consolidates with or merges into any other person and shall not be the
continuing or surviving corporation or entity of such consolidation or
merger, or (ii) transfers or conveys all or substantially all of its
properties and assets to any person, then, and in each such case, to the
extent necessary, proper provision shall be made so that the successors and
assigns of Parent assume the obligations set forth in this section.
(d) The provisions of this Section 7.8 are intended to be for
the benefit of, and shall be enforceable by, each Indemnified Party and his
or her heirs and representatives.
7.9 Additional Agreements. In case at any time after the
Effective Time any further action is necessary or desirable to carry out
the purposes of this Agreement or the Plan Merger or to vest the Surviving
Corporation or the Surviving Bank with full title to all properties,
assets, rights, approvals, immunities and franchises of any of the parties
to the Merger or the Bank Merger, the proper officers and directors of each
party to this Agreement and their respective Subsidiaries shall take all
such necessary action as may be reasonably requested by Parent.
7.10 Coordination of Dividends. After the date of this Agreement
each of Parent and the Company shall coordinate with the other the
declaration of any dividends in respect of the Parent Common Stock and the
Company Common Stock and the record dates and payments dates relating
thereto, it being the intention of the parties that the holders of Parent
Common Stock or Company Common Stock shall not receive more than one
dividend, or fail to receive one dividend, for any single calendar quarter
with respect to their shares of Parent Common Stock and/or Company Common
Stock and any shares of Parent Common Stock any holder of Company Common
Stock receives in exchange therefor in the Merger.
7.11 Assumption of Indemnification Obligations. As of the
Effective Time, Parent shall assume all of the Company's obligations under
Section 9.9 of the Agreement and Plan of Merger, dated as of May 31, 1995,
by and between the Company and PBS Financial Corp. (the "PBS Merger
Agreement"). If Parent or any of its successors or assigns consolidates
with or merges into any other person and shall not be the continuing or
surviving corporation or entity of such consolidation or merger, or
transfers all or substantially all of its assets to any person, then and in
each case, proper provision shall be made so that the successors and
assigns of Parent assume the obligations set forth in Section 9.9 of the
PBS Merger Agreement.
7.12 Parent Rights Agreement. Parent agrees that Parent Rights
shall be issued with respect to each share of Parent Common Stock issued
pursuant to the terms hereof regardless of whether there has occurred a
"Distribution Date" under the terms of the Parent Rights Agreement prior to
the Effective Time, and Parent shall take all action necessary or advisable
to enable the holder of each share of Parent Common Stock issued pursuant
to this Agreement to obtain the benefit of such Parent Rights
notwithstanding their prior distribution, including, without limitation,
amendment of the Parent Rights Agreement.
7.13 Amendment of Company Option Plans. With respect to any
Company Option which provides the holder thereof with the right to
surrender such Company Option in exchange for a cash payment under certain
circumstances following a "Change of Control" (as defined in the Company
Option Plans), the Company shall use its reasonable best efforts to obtain,
as soon as practicable following the date of this Agreement, the consent of
such option holder to an amendment of the Company Option Plan under which
such Company Option was granted providing for the replacement of such cash-
out right with a right to surrender all or part of such Company Option in
exchange for a number of shares of Company Common Stock having an aggregate
value equal to the excess of (x) the aggregate Fair Market Value (as
defined in the Company Option Plans), as of the date of surrender of such
Company Option, of the shares of Company Common Stock underlying the
portion of such Company Option being surrendered over (y) the aggregate
exercise price of such portion of the Company Option.
7.14 Stock Option Agreement. Concurrently with the execution and
delivery of this Agreement, Parent and the Company agree to execute and
deliver the Stock Option Agreement in the form attached hereto as Annex A.
7.15 Directorships. Parent shall cause its Board of Directors to
be expanded by three members and shall appoint those persons selected by
the Company from among those persons currently serving on the Company's
Board of Directors (such persons, and any substitute person as provided in
the last sentence of this paragraph, the "Nominees") to fill the vacancies
on Parent's Board of Directors created by such increase at the Effective
Time. In the event any Nominee shall be appointed or elected to a class of
directors of Parent the term of which class of directors expires prior to
December 31, 2000, Parent shall include such person on the list of nominees
for director presented by the Board of Directors of Parent and for which
said Board shall solicit proxies at the annual meeting of stockholders of
Parent following the Effective Time at which directors are elected for such
class. In the event that any Nominee is unable to serve as a director of
Parent as a result of death, illness, resignation or any other reason,
Parent shall elect another member of the Company's Board of Directors as a
substitute nominee in accordance with this Section 7.15.
ARTICLE VIII
CONDITIONS PRECEDENT
8.1 Conditions to Each Party's Obligation To Effect the Merger.
The respective obligation of each party to effect the Merger shall be
subject to the satisfaction at or prior to the Effective Time of the
following conditions:
(a) Stockholder Approvals. This Agreement shall have been
approved and adopted by the requisite votes of the holders of the
outstanding shares of Company Common Stock and Parent Common Stock under
applicable law.
(b) Listing of Shares. The shares of Parent Common Stock
which shall be issued to the stockholders of the Company upon consummation
of the Merger shall have been authorized for quotation on the NASDAQ/NMS,
subject to official notice of issuance.
(c) Other Approvals. All regulatory approvals required to
consummate the transactions contemplated hereby (including the Merger)
shall have been obtained and shall remain in full force and effect and all
statutory waiting periods in respect thereof shall have expired (all such
approvals and the expiration of all such waiting periods being referred to
herein as the "Requisite Regulatory Approvals").
(d) S-4. The S-4 shall have become effective under the
Securities Act and no stop order suspending the effectiveness of the S-4
shall have been issued and no proceedings for that purpose shall have been
initiated or threatened by the SEC.
(e) No Injunctions or Restraints; Illegality. No order,
injunction or decree issued by any court or agency of competent
jurisdiction or other legal restraint or prohibition (an "Injunction")
preventing the consummation of the Merger or the Bank Merger shall be in
effect. No statute, rule, regulation, order, injunction or decree shall
have been enacted, entered, promulgated or enforced by any Governmental
Entity which prohibits, restricts or makes illegal consummation of the
Merger or the Bank Merger.
8.2 Conditions to Obligations of Parent. The obligation of
Parent to effect the Merger is also subject to the satisfaction or waiver
by Parent at or prior to the Effective Time of the following conditions:
(a) Representations and Warranties. (i) Subject to Section
3.2, the representations and warranties of the Company set forth in this
Agreement (other than those set forth in Section 4.2 and Section 4.10)
shall be true and correct as of the date of this Agreement and (except to
the extent such representations and warranties speak as of an earlier date)
as of the Closing Date as though made on and as of the Closing Date; and
(ii) the representations and warranties of the Company set forth in Section
4.2 and Section 4.10 of this Agreement shall be true and correct in all
material respects (without giving effect to Section 3.2 of this Agreement)
as of the date of this Agreement and (except to the extent such
representations and warranties speak as of an earlier date) as of the
Closing Date as though made on and as of the Closing Date. Parent shall
have received a certificate signed on behalf of the Company by the Chief
Executive Officer and the Chief Financial Officer of the Company to the
foregoing effect.
(b) Performance of Obligations of the Company. The Company
shall have performed in all material respects all obligations required to
be performed by it under this Agreement at or prior to the Closing Date,
and Parent shall have received a certificate signed on behalf of the
Company by the Chief Executive Officer and the Chief Financial Officer of
the Company to such effect.
(c) No Pending Governmental Actions. No proceeding initiated
by any Governmental Entity seeking an Injunction shall be pending.
(d) Federal Tax Opinion. Parent shall have received an
opinion from Morgan, Lewis & Bockius LLP, counsel to Parent ("Parent's
Counsel"), in form and substance reasonably satisfactory to Parent, dated
the Effective Time, substantially to the effect that, on the basis of
facts, representations and assumptions set forth in such opinion which are
consistent with the state of facts existing at the Effective Time, the
Merger will be treated as a reorganization within the meaning of Section
368(a) of the Code and that, accordingly, for federal income tax purposes:
(i) No gain or loss will be recognized by Parent or the
Company as a result of the Merger;
(ii) No gain or loss will be recognized by the stockholders of
the Company who exchange all of their Company Common Stock solely for
Parent Common Stock pursuant to the Merger (except with respect to cash
received in lieu of a fractional share interest in Parent Common Stock);
and
(iii) The aggregate tax basis of the Parent Common Stock
received by stockholders who exchange all of their Company Common Stock
solely for Parent Common Stock pursuant to the Merger will be the same
as the aggregate tax basis of the Company Common Stock surrendered in
exchange therefor (reduced by any amount allocable to a fractional share
interest for which cash is received).
In rendering such opinion, Parent's Counsel may require and rely upon
representations and covenants, including those contained in certificates of
officers of Parent, the Company and others, reasonably satisfactory in form
and substance to such counsel.
(e) Pooling of Interests. Parent shall have received a
letter from Ernst & Young LLP addressed to Parent, to the effect that the
Merger will qualify for "pooling of interests" accounting treatment.
8.3 Conditions to Obligations of the Company. The obligation of
the Company to effect the Merger is also subject to the satisfaction or
waiver by the Company at or prior to the Effective Time of the following
conditions:
(a) Representations and Warranties. (i) Subject to Section
3.2, the representations and warranties of Parent set forth in this
Agreement (other than those set forth in Section 5.2 and Section 5.10)
shall be true and correct as of the date of this Agreement and (except to
the extent such representations and warranties speak as of an earlier date)
as of the Closing Date as though made on and as of the Closing Date; and
(ii) the representations and warranties of Parent set forth in Section 5.2
and Section 5.10 of this Agreement shall be true and correct in all
material respects (without giving effect to Section 3.2 of this Agreement)
as of the date of this Agreement and (except to the extent such
representations and warranties speak as of an earlier date) as of the
Closing Date as though made on and as of the Closing Date. The Company
shall have received a certificate signed on behalf of Parent by the Chief
Executive Officer and the Chief Financial Officer of Parent to the
foregoing effect.
(b) Performance of Obligations of Parent. Parent shall have
performed in all material respects all obligations required to be performed
by it under this Agreement at or prior to the Closing Date, and the Company
shall have received a certificate signed on behalf of Parent by the Chief
Executive Officer and the Chief Financial Officer of Parent to such effect.
(c) No Pending Governmental Actions. No proceeding initiated
by any Governmental Entity seeking an Injunction shall be pending.
(d) Federal Tax Opinion. The Company shall have received an
opinion from Skadden, Arps, Slate, Meagher & Flom LLP (the "Company's
Counsel"), in form and substance reasonably satisfactory to the Company,
dated the Effective Time, substantially to the effect that, on the basis of
facts, representations and assumptions set forth in such opinion which are
consistent with the state of facts existing at the Effective Time, the
Merger will be treated as a reorganization within the meaning of Section
368(a) of the Code and that, accordingly, for federal income tax purposes:
(i) No gain or loss will be recognized by Parent or the
Company as a result of the Merger;
(ii) No gain or loss will be recognized by the stockholders
of the Company who exchange all of their Company Common Stock solely
for Parent Common Stock pursuant to the Merger (except with respect to
cash received in lieu of a fractional share interest in Parent Common
Stock); and
(iii) The aggregate tax basis of the Parent Common Stock
received by stockholders who exchange all of their Company Common Stock
solely for Parent Common Stock pursuant to the Merger will be the same
as the aggregate tax basis of the Company Common Stock surrendered in
exchange therefor (reduced by any amount allocable to a fractional share
interest for which cash is received).
In rendering such opinion, the Company's Counsel may require and rely upon
representations and covenants, including those contained in certificates of
officers of Parent, the Company and others, reasonably satisfactory in form
and substance to such counsel.
(e) Pooling of Interests. The Company shall have received a
letter from Ernst & Young LLP addressed to Parent, to the effect that the
Merger will qualify for "pooling of interests" accounting treatment.
ARTICLE IX
TERMINATION AND AMENDMENT
9.1 Termination. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after approval of the
matters presented in connection with the Merger by the stockholders of both
the Company and Parent:
(a) by mutual consent of the Company and Parent in a written
instrument, if the Board of Directors of each so determines by a vote of a
majority of the members of its entire Board;
(b) by either Parent or the Company upon written notice to
the other party (i) 60 days after the date on which any request or
application for a Requisite Regulatory Approval shall have been denied or
withdrawn at the request or recommendation of the Governmental Entity which
must grant such Requisite Regulatory Approval, unless within the 60-day
period following such denial or withdrawal a petition for rehearing or an
amended application has been filed with the applicable Governmental Entity,
provided, however, that no party shall have the right to terminate this
Agreement pursuant to this Section 9.1(b)(i) if such denial or request or
recommendation for withdrawal shall be due to the failure of the party
seeking to terminate this Agreement to perform or observe the covenants and
agreements of such party set forth herein or (ii) if any Governmental
Entity of competent jurisdiction shall have issued a final nonappealable
order enjoining or otherwise prohibiting the Merger;
(c) by either Parent or the Company if the Merger shall not
have been consummated on or before March 31, 1999, unless the failure of
the Closing to occur by such date shall be due to the failure of the party
seeking to terminate this Agreement to perform or observe the covenants and
agreements of such party set forth herein;
(d) by either Parent or the Company (provided that the
terminating party shall not be in material breach of any of its obligations
under Section 7.3) if any approval of the stockholders of either of the
Company or Parent required for the consummation of the Merger shall not
have been obtained by reason of the failure to obtain the required vote at
a duly held meeting of such stockholders or at any adjournment or
postponement thereof;
(e) by either Parent or the Company (provided that the
terminating party is not then in material breach of any representation,
warranty, covenant or other agreement contained herein) if there shall have
been a material breach of any of the representations or warranties set
forth in this Agreement on the part of the other party, which breach is not
cured within thirty days following written notice to the party committing
such breach, or which breach, by its nature, cannot be cured prior to the
Closing; provided, however, that neither party shall have the right to
terminate this Agreement pursuant to this Section 9.1(e) unless the breach
of representation or warranty, together with all other such breaches, would
entitle the party receiving such representation not to consummate the
transactions contemplated hereby under Section 8.2(a) (in the case of a
breach of representation or warranty by the Company) or Section 8.3(a) (in
the case of a breach of representation or warranty by Parent);
(f) by either Parent or the Company (provided that the
terminating party is not then in material breach of any representation,
warranty, covenant or other agreement contained herein) if there shall have
been a material breach of any of the covenants or agreements set forth in
this Agreement on the part of the other party, which breach shall not have
been cured within thirty days following receipt by the breaching party of
written notice of such breach from the other party hereto, or which breach,
by its nature, cannot be cured prior to the Closing; or
(g) by the Company at any time during the ten-day period
commencing two days after the Determination Date (as defined below), if
either (x) both of the following conditions are satisfied:
(1) the Average Closing Price (as defined below) shall be less
than the product of 0.85 and the Starting Price; and
(2) (i) the number obtained by dividing the Average Closing Price
by the Starting Price (such number being referred to herein as the
"Parent Ratio") shall be less than (ii) the number obtained by dividing
the Index Price on the Determination Date by the Index Price on the
Starting Date and subtracting 0.15 from such quotient (such number being
referred to herein as the "Index Ratio");
or (y) the Average Closing Price shall be less than the product of 0.75 and
the Starting Price;
subject to the following four sentences. If the Company elects to exercise
its termination right pursuant to the immediately preceding sentence, it
shall give prompt written notice to Parent which notice shall specify which
of clauses (x) or (y) is applicable (or if both would be applicable, which
clause is being invoked); provided that such notice of election to
terminate may be withdrawn at any time within the aforementioned ten-day
period. During the five-day period commencing with its receipt of such
notice, Parent shall have the option, in the case of a termination invoked
under clause (x), of adjusting the Exchange Ratio to equal the lesser of
(i) a number equal to a quotient (rounded to the nearest one-ten-
thousandth), the numerator of which is the product of 0.85, the Starting
Price and the Exchange Ratio (as then in effect) and the denominator of
which is the Average Closing Price, and (ii) a number equal to a quotient
(rounded to the nearest one-ten-thousandth), the numerator of which is the
Index Ratio multiplied by the Exchange Ratio (as then in effect) and the
denominator of which is the Parent Ratio. During such five-day period,
Parent shall have the option, in the case of a termination invoked under
clause (y), to elect to increase the Exchange Ratio to equal a number equal
to a quotient (rounded to the nearest one-ten-thousandth), the numerator of
which is the product of 0.75, the Starting Price and the Exchange Ratio (as
then in effect) and the denominator of which is the Average Closing Price.
If Parent makes an election contemplated by either of the two preceding
sentences, within such five-day period it shall give prompt written notice
to the Company of such election and the revised Exchange Ratio, whereupon
no termination shall have occurred pursuant to this Section 9.1(g) and this
Agreement shall remain in effect in accordance with its terms (except as
the Exchange Ratio shall have been so modified), and any references in this
Agreement to "Exchange Ratio" shall thereafter be deemed to refer to the
Exchange Ratio as adjusted pursuant to this Section 9.1(g). For purposes
of this Section 9.1(g), the following terms shall have the meanings
indicated:
"Average Closing Price" means the average of the last reported sale
prices per share of Parent Common Stock as reported on the NASDAQ/NMS (as
reported in The Wall Street Journal or, if not reported therein, in another
mutually agreed upon authoritative source) for the 20 consecutive trading
days on the NASDAQ/NMS ending at the close of trading on the Determination
Date.
"Determination Date" means the fifth business day prior to the date on
which the last of the Requisite Regulatory Approvals shall be received,
without regard to any requisite waiting periods in respect thereof.
"Index Group" means the group of each of the 15 bank holding companies
listed below, the common stock of all of which shall be publicly traded and
as to which there shall not have been, since the Starting Date and before
the Determination Date, an announcement of a proposal for such company to
be acquired or for such company to acquire another company or companies in
transactions with a value exceeding 25% of the acquiror's market
capitalization as of the Starting Date. In the event that the common stock
of any such company ceases to be publicly traded or any such announcement
is made with respect to any such company, such company will be removed from
the Index Group, and the weights (which have been determined based on the
number of outstanding shares of common stock) redistributed proportionately
for purposes of determining the Index Price. The 15 bank holding companies
and the weights attributed to them are as follows:
BANK HOLDING COMPANY WEIGHTING
-------------------- ---------
CNB Bancshares, Inc. . . . . . . . . . . . . . . . . . . . . . . . 10.10%
BancorpSouth, Inc. . . . . . . . . . . . . . . . . . . . . . . . . 10.42%
Commerce Bancorp, Inc. . . . . . . . . . . . . . . . . . . . . . . 11.14%
Provident Bankshares Corporation . . . . . . . . . . . . . . . . . 7.94%
First Commonwealth Financial Corporation . . . . . . . . . . . . . 6.86%
Banknorth Group, Inc. . . . . . . . . . . . . . . . . . . . . . . . 5.99%
United Bankshares, Inc. . . . . . . . . . . . . . . . . . . . . . . 7.89%
Hancock Holding Company . . . . . . . . . . . . . . . . . . . . . . 7.08%
F&M National Corporation . . . . . . . . . . . . . . . . . . . . . 6.69%
Carolina Fist Corporation . . . . . . . . . . . . . . . . . . . . . 5.35%
MainStreet BankGroup Incorporated . . . . . . . . . . . . . . . . . 4.61%
BT Financial Corporation . . . . . . . . . . . . . . . . . . . . . 3.81%
Triangle Bancorp, Inc. . . . . . . . . . . . . . . . . . . . . . . 4.32%
National City Bancshares, Inc. . . . . . . . . . . . . . . . . . . 4.77%
United National Bancorp . . . . . . . . . . . . . . . . . . . . . . 3.02%
"Index Price" on a given date means the weighted average (weighted in
accordance with the factors listed above) of the closing prices of the
companies comprising the Index Group.
"Starting Date" means May 26, 1998.
"Starting Price" shall mean the last reported sale price per share of
Parent Common Stock on the Starting Date, as reported by the NASDAQ/NMS (as
reported in The Wall Street Journal or, if not reported therein, in another
mutually agreed upon authoritative source).
If any company belonging to the Index Group or Parent declares or
effects a stock dividend, reclassification, recapitalization, split-up,
combination, exchange of shares or similar transaction between the Starting
Date and the Determination Date, the prices for the common stock of such
company or Parent shall be appropriately adjusted for the purposes of
applying this Section 9.1(g).
9.2 Effect of Termination. In the event of termination of this
Agreement by either Parent or the Company as provided in Section 9.1, this
Agreement shall forthwith become void and have no effect except (i)
Sections 7.2(b), 9.2 and 10.3 shall survive any termination of this
Agreement and (ii) that notwithstanding anything to the contrary contained
in this Agreement, no party shall be relieved or released from any
liabilities or damages arising out of its willful breach of any provision
of this Agreement.
9.3 Amendment. Subject to compliance with applicable law, this
Agreement may be amended by the parties hereto, by action taken or
authorized by their respective Boards of Directors, at any time before or
after approval of the matters presented in connection with the Merger by
the stockholders of either the Company or Parent; provided, however, that
after any approval of the transactions contemplated by this Agreement by
the Company's stockholders, there may not be, without further approval of
such stockholders, any amendment of this Agreement which reduces the amount
or changes the form of the consideration to be delivered to the Company
stockholders hereunder other than as contemplated by this Agreement. This
Agreement may not be amended except by an instrument in writing signed on
behalf of each of the parties hereto.
9.4 Extension; Waiver. At any time prior to the Effective Time,
each of the parties hereto, by action taken or authorized by its Board of
Directors, may, to the extent legally allowed, (a) extend the time for the
performance of any of the obligations or other acts of the other party
hereto, (b) waive any inaccuracies in the representations and warranties of
the other party contained herein or in any document delivered pursuant
hereto and (c) waive compliance with any of the agreements or conditions of
the other party contained herein. Any agreement on the part of a party
hereto to any such extension or waiver shall be valid only if set forth in
a written instrument signed on behalf of such party, but such extension or
waiver or failure to insist on strict compliance with an obligation,
covenant, agreement or condition shall not operate as a waiver of, or
estoppel with respect to, any subsequent or other failure.
ARTICLE X
GENERAL PROVISIONS
10.1 Closing. Subject to the terms and conditions of this
Agreement, the closing of the Merger (the "Closing") will take place at
10:00 a.m. on the first day which is (a) the last business day of month and
(b) at least two business days after the satisfaction or waiver (subject to
applicable law) of the latest to occur of the conditions set forth in
Article VIII hereof (other than those conditions which relate to actions to
be taken at the Closing)(the "Closing Date"), at the offices of Morgan,
Lewis & Bockius LLP, Miami, Florida, unless another time, date or place is
agreed to in writing by the parties hereto.
10.2 Nonsurvival of Representations, Warranties and Agreements.
None of the representations, warranties, covenants and agreements in this
Agreement or in any instrument delivered pursuant to this Agreement shall
survive the Effective Time, except for those covenants and agreements
contained herein and therein which by their terms apply in whole or in part
after the Effective Time.
10.3 Expenses. All costs and expenses incurred in connection
with this Agreement and the transactions contemplated hereby shall be paid
by the party incurring such costs and expenses.
10.4 Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally,
telecopied (with confirmation), or delivered by an express courier (with
confirmation) to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
(a) if to Parent, to:
Republic Security Financial Corporation
4400 Congress Avenue
West Palm Beach, Florida 33407
facsimile: (561) 881-9225
Attention: Chief Executive Officer
with a copy to:
Morgan, Lewis & Bockius, LLP
5300 First Union Financial Center
Miami, Florida 33131
facsimile: (305) 579-0321
Attn: John S. Fletcher, Esq.
and
(b) if to the Company, to:
First Palm Beach Bancorp, Inc.
450 South Australian Avenue
West Palm Beach, Florida 33402-2326
facsimile: (561) 650-2336
Attention: Chief Executive Officer
with a copy to:
Skadden, Arps, Slate, Meagher
& Flom LLP
919 Third Avenue
New York, New York 10022
facsimile: (212) 735-2000
Attn: William S. Rubenstein, Esq.
10.5 Interpretation. When a reference is made in this Agreement to
Sections, Exhibits or Schedules, such reference shall be to a Section of or
Exhibit or Schedule to this Agreement unless otherwise indicated. The table
of contents and headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation
of this Agreement. Whenever the words "include", "includes" or "including"
are used in this Agreement, they shall be deemed to be followed by the
words "without limitation". The phrases "the date of this Agreement", "the
date hereof" and terms of similar import, unless the context otherwise
requires, shall be deemed to refer to May 27, 1998. No provision of this
Agreement shall be construed to require the Company, Parent or any of their
respective Subsidiaries or affiliates to take any action that would violate
any applicable law, rule or regulation.
10.6 Counterparts. This Agreement may be executed in
counterparts, all of which shall be considered one and the same agreement
and shall become effective when counterparts have been signed by each of
the parties and delivered to the other parties, it being understood that
all parties need not sign the same counterpart.
10.7 Entire Agreement. This Agreement (including the documents
and the instruments referred to herein), together with the Confidentiality
Agreement, the Bank Merger Agreement and the Stock Option Agreement
constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to
the subject matter hereof.
10.8 Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the State of Florida, without
regard to any applicable conflicts of law.
10.9 Enforcement of Agreement. The parties hereto agree that
irreparable damage would occur in the event that the provisions contained
in 7.2(b) of this Agreement were not performed in accordance with its
specific terms or was otherwise breached. It is accordingly agreed that
the parties shall be entitled to an injunction or injunctions to prevent
breaches of Section 7.2(b) of this Agreement and to enforce specifically
the terms and provisions thereof in any court of the United States or any
state having jurisdiction, this being in addition to any other remedy to
which they are entitled at law or in equity.
10.10 Severability. Any term or provision of this Agreement which
is invalid or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining
terms and provisions of this Agreement or affecting the validity or
enforceability of any of the terms or provisions of this Agreement in any
other jurisdiction. If any provision of this Agreement is so broad as to
be unenforceable, the provision shall be interpreted to be only so broad as
is enforceable.
10.11 Publicity. Except as otherwise required by law or the rules
of the NASDAQ/NMS, so long as this Agreement is in effect, neither Parent
nor the Company shall, or shall permit any of its Subsidiaries to, issue or
cause the publication of any press release or other public announcement
with respect to, or otherwise make any public statement concerning, the
transactions contemplated by this Agreement without the consent of the
other party, which consent shall not be unreasonably withheld.
10.12 Assignment; No Third Party Beneficiaries. Neither this
Agreement nor any of the rights, interests or obligations hereunder shall
be assigned by any of the parties hereto (whether by operation of law or
otherwise) without the prior written consent of the other parties. Subject
to the preceding sentence, this Agreement will be binding upon, inure to
the benefit of and be enforceable by the parties and their respective
successors and assigns. Except as otherwise expressly provided herein,
this Agreement (including the documents and instruments referred to herein)
is not intended to confer upon any person other than the parties hereto any
rights or remedies hereunder.
IN WITNESS WHEREOF, Parent and the Company have caused this
Agreement to be executed by their respective officers thereunto duly
authorized as of the date first above written.
REPUBLIC SECURITY FINANCIAL
CORPORATION
By: /s/ Rudy E. Schupp
-------------------------------
Name: Rudy E. Schupp
Title: Chairman and CEO
FIRST PALM BEACH BANCORP, INC.
By: /s/ Louis O. Davis, Jr.
-----------------------------
Name: Louis O. Davis, Jr.
Title: President and CEO