AGREEMENT AND PLAN
OF MERGER
BY AND AMONG
TELEBANC FINANCIAL CORPORATION
and
MET HOLDINGS CORPORATION
May 10, 1996
TABLE OF CONTENTS
Page
1. WORDS, TERMS AND PHRASES............................................1
1.1. Number and Gender...........................................1
1.2. Definitions.................................................1
2. THE MERGER..........................................................5
2.1. The Merger..................................................5
2.2. Consideration for MET Holdings Stock........................5
2.3. MET Holdings Options........................................7
2.4. Modification of Structure...................................7
3. REPRESENTATIONS AND WARRANTIES......................................8
3.1. Representations and Warranties of TeleBanc..................8
3.2. Representations and Warranties of MET Holdings..............9
4. COVENANTS...........................................................15
4.1. Regulatory Applications.....................................15
4.2. Registration Statement......................................16
4.3. Shareholder Approvals.......................................17
4.4. Blue Sky....................................................18
4.5. Other Approvals.............................................18
4.6. Conduct of the Business of MET Holdings and each MET
Holdings Subsidiary.........................................18
4.7. Employee Plans..............................................20
4.8. Access to Information.......................................20
4.9. Confidentiality.............................................21
4.10. Best Efforts...............................................21
5. CONDITIONS..........................................................22
5.1. Conditions to Obligations of the Parties....................22
5.2. Conditions to Obligations of TeleBanc.......................22
5.3. Conditions to Obligations of MET Holdings...................23
6. CLOSING.............................................................24
6.1. Time and Place of Closing...................................24
6.2. TeleBanc Deliveries.........................................24
6.3. MET Holdings Deliveries.....................................24
6.4. Fees and Closing Costs......................................24
7. TERMINATION.........................................................25
7.1. Mutual Consent..............................................25
7.2. Other Termination...........................................25
7.3. Effect of Termination.......................................26
8. MISCELLANEOUS.......................................................26
8.1. Notices.....................................................26
8.2. Entire Agreement............................................26
8.3. Amendment...................................................27
8.4. Waiver......................................................27
8.5. Severability................................................27
8.6. Captions....................................................27
8.7. Governing Law...............................................27
8.8. No Third Party Beneficiaries................................27
8.9. Assignability...............................................27
8.10. Parties Not Partners.......................................28
8.11. Counterparts...............................................28
8.12. Cumulative Remedies........................................28
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8.13. Time of Performance........................................28
8.14. Further Assurances.........................................28
8.15. Time of Essence............................................28
8.16. Survival...................................................28
8.17. Indemnification of TeleBanc................................29
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER ("this Agreement") is made
and entered into effective as of May 10, 1996, by and among TeleBanc Financial
Corporation ("TeleBanc"), a Delaware corporation, and MET Holdings Corporation
("MET Holdings"), a Delaware corporation.
RECITALS
A. TeleBanc is a corporation with common stock, par value
$0.01 per share (the "TeleBanc Stock"). TeleBank (the "Bank"), a federally
chartered savings bank, is a wholly-owned subsidiary of TeleBanc which has its
principal office located in Arlington, Virginia.
B. MET Holdings is a privately held corporation whose Class A
Common Stock, Class B Common Stock, Class A Serial Preferred Stock and Class B
Serial Preferred Stock have a par value of $0.10 per share (the "MET Holdings
Stock"). MET Holdings holds approximately 63.4% of the outstanding TeleBanc
Stock. MET Holdings also owns 80.3% of Arbor Capital Partners, Inc. ("Arbor"), a
Securities and Exchange Commission ("SEC") registered investment advisor and
National Association of Securities Dealers, Inc. ("NASD") member broker-dealer,
and holds direct and indirect investments in, among other things, Loan
Identification Number Corporation ("LIN"), AG Arbor Management, L.L.C. ("AG
Arbor"), CD Partners, L.P. ("CD Partners") and Eric Bruskin Associates, Inc.
("Bruskin").
C. It is the intention of the parties that TeleBanc and MET
Holdings be combined through a merger, which is tax free to TeleBanc, of MET
Holdings with and into TeleBanc on the terms and subject to the conditions set
forth in this Agreement.
D. The respective boards of directors of each of the parties
have duly approved this Agreement and have duly authorized its execution and
delivery.
NOW, THEREFORE, in consideration of the foregoing recitals,
the representations, warranties, covenants and agreements contained in this
Agreement and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto hereby represent, warrant,
covenant and agree as follows.
1. WORDS, TERMS AND PHRASES
1.1. Number and Gender.
When used in this Agreement, all words in the singular number
shall extend to and include the plural number, where the content so requires;
all words used in the plural number shall extend to and include the singular
number where the content so requires; and all words used in any gender, whether
male, female or neuter, shall extend to and include all genders that may be
applicable in any particular context.
1.2. Definitions.
In addition to any other definitions contained in this
Agreement, the following words, terms and phrases shall have the following
meanings when utilized in this Agreement:
"Application": Any application, notice, request,
correspondence or other filing, material or communication submitted to any
Governmental Authority in connection with any Regulatory Approval.
"Benefit Arrangement": Any form of current or deferred
compensation, bonus, stock option, stock appreciation right, severance pay,
salary continuation, retirement or incentive plan or arrangement, or any group
or individual health, disability or life insurance plan, or welfare or similar
plan or arrangement for the benefit of any one or more of the directors,
officers and employees of MET Holdings or any MET Holdings Subsidiary, whether
active or retired, other than Employee Plans and plans and agreements providing
for base salary and base wages.
"Business Day": Any day other than a Saturday, a Sunday, an
official federal or Commonwealth of Virginia holiday, a day on which banks
operating in Virginia generally are not open for business, and a day on which
the OTS and/or the FDIC are not open for business.
"Caplan/Smilow Escrow Agreement:" The escrow agreement by and
among TeleBanc, MET Holdings and the Escrow Agent, entered into on or before the
Closing Date, the terms of which will be substantially as set forth in Section
2.2.1(b) of this Agreement.
"Caplan/Smilow Escrow Shares:" This term has the meaning set
forth in Section 2.2.1(b).
"Class A Common Stock": The common stock, par value $0.10 per
share, of MET Holdings.
"Class A Serial Preferred Stock": The preferred stock, par
value $0.10 per share, of MET Holdings.
"Class B Common Stock": The common stock, par value $0.10 per
share, of MET Holdings.
"Class B Serial Preferred Stock": The preferred stock, par
value $0.10 per share, of MET Holdings.
"Closing": The consummation of the Merger and any other
transactions contemplated by this Agreement on the Closing Date.
"Closing Conditions": All conditions precedent to the
obligation of any one or more parties hereto to consummate the transactions
contemplated by this Agreement, including, without limitation, those conditions
set forth in Section 5.
"Closing Date": The date on which the Closing occurs, which
shall be the fifth Business Day after the satisfaction or waiver of all Closing
Conditions or such other earlier Business Day as the parties may mutually
determine after the satisfaction or waiver of all of the Closing Conditions.
"Common Stock Exchange Ratio:" This term has the meaning set
forth in Section 2.2.1(a).
"Default": A party shall be in Default hereunder if:
(i) any representation or warranty of said party
contained in this Agreement shall have been incorrect,
incomplete or otherwise misleading when made in any material
respect; and/or
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(ii) such party shall have failed to perform or
otherwise breached in any material respect any of its
covenants and obligations contained in this Agreement and such
failure or breach shall have remained uncured for 10 days
after notice thereof to the defaulting party by the other
party hereto.
"Dissenting Shares": The shares held by MET Holdings
shareholders that have timely and properly perfected their dissenters' rights
pursuant to Section 262 of the General Corporation Law of the State of Delaware.
"Effective Time": The time at which the Merger becomes
effective, which shall be the later of (i) the date and time set forth in the
Certificate of Merger, (ii) or the date and time at which the Certificate of
Merger is accepted for filing by the Secretary of State of the State of
Delaware.
"Employee Plan": Any "employee benefit plan" (as that term is
defined in Section 3(3) of ERISA) that is subject to any provisions of ERISA and
covers any one or more of the directors and employees of MET Holdings or any MET
Holdings Subsidiary, whether active or retired.
"ERISA": The Employee Retirement Income Security Act of 1974,
as amended.
"Escrow Account:" An escrow account established pursuant to
the Caplan/Smilow Escrow Agreement or the Stockholder Escrow Agreement, as
applicable.
"Escrow Agent:" An escrow agent, mutually selected by TeleBanc
and MET Holdings, that is identified as the "Escrow Agent" in the Caplan/Smilow
Escrow Agreement or the Stockholder Escrow Agreement, as applicable.
"Exchange Act": The Securities Exchange Act of 1934, as
amended.
"FDIC": The Federal Deposit Insurance Corporation.
"Financial Advisor": Corporate Finance of Washington, Inc., or
such other independent financial adviser as TeleBanc may consult for the
purposes specified herein.
"Governmental Authority": Any federal, state, county,
municipal or other local legislative, regulatory (including non-governmental
self-regulatory bodies such as the NASD) or judicial body or other entity with
jurisdiction over all or any portion of any one or more of TeleBanc, MET
Holdings, the Bank, or any of their respective properties, businesses and
affairs.
"IRC": The United States Internal Revenue Code of 1986, as
amended.
"Knowledge": As to any person, and as of the date of the
statement in question, such person's actual knowledge or what such person should
have known in the ordinary exercise of that person's duties in the capacity
referred to herein.
"Laws": Any and all statutes, laws, ordinances, rules,
regulations, orders, permits, judgments, injunctions, decrees, case law and
other rules of law enacted, promulgated or issued by any Governmental Authority.
"Material Adverse Change in MET Holdings": Any material
adverse change in the business, financial condition, operating results or
prospects of MET Holdings and the MET Holdings Subsidiaries taken as a whole.
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"Material Adverse Change in TeleBanc": Any material adverse
change in the business, financial condition, operating results or prospects of
TeleBanc and the TeleBanc Subsidiaries taken as a whole.
"Merger": The merger of MET Holdings with and into TeleBanc in
accordance with the terms and provisions of the Plan of Merger, upon which
merger TeleBanc shall be the surviving corporation.
"Merger Consideration": Collectively, the TeleBanc Stock and
cash to be received by the holders of MET Holdings Stock and the MET Holdings
Options in accordance with Sections 2.2 and 2.3 of this Agreement.
"MET Holdings Disclosure Schedule": All of the disclosure
schedules which may be required of MET Holdings pursuant to this Agreement,
which disclosure schedules shall be cross-referenced to the specific sections
and subsections of this Agreement.
"MET Holdings Options": Options or any other rights to
purchase or acquire shares of MET Holdings Stock, including, without limitation,
options, warrants, stock appreciation rights or similar rights to acquire MET
Holdings Stock or equity capital stock of any MET Holdings Subsidiary.
"MET Holdings Stock": The Class A Common Stock, Class B Common
Stock, Class A Serial Preferred Stock, and Class B Serial Preferred Stock, of
MET Holdings.
"MET Holdings Subsidiary": Each corporation, partnership or
other business enterprise, other than TeleBanc and the Bank, which is
consolidated with MET Holdings for financial reporting purposes or of which MET
Holdings owns, directly or indirectly, 25% or more of the outstanding capital
stock or other ownership interest.
"OTS": The Office of Thrift Supervision.
"Plan of Merger": A plan of merger to be entered into
subsequent to the date of this Agreement which is consistent with the terms of
this Agreement.
"Promissory Notes:" The four promissory notes, each dated May
10, 1993, made by MET Holdings to the order of: (1) Eric Claus, in the original
principal amount of $112,400, (2) LCF America, Inc., in the original principal
amount of $356,000, (3) Antoine Schwartz, in the original principal amount of
$362,800, and (4) Banque Dumenil Leble, in the original principal amount of
$1,663,360.
"Proxy Statement/Prospectus": The combined proxy statement and
prospectus to be used to solicit MET Holdings' and TeleBanc's respective
shareholders for the approvals required to consummate the transactions
contemplated by this Agreement, and to offer TeleBanc Stock in connection
therewith.
"Registration Statement": The registration statement filed
with the SEC by TeleBanc for the purpose of registering the TeleBanc Stock to be
issued as part of the Merger Consideration, in the form declared effective by
the SEC, together with all amendments and supplements thereto, as declared
effective by the SEC.
"Regulations": The rules and regulations of the SEC, the OTS,
the NASD and the FDIC.
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"Regulatory Approvals": Each and every consent, approval,
expiration of a waiting period and similar action or inaction by any
governmental authority (including, without limitation, the OTS, the United
States Federal Trade Commission and the United States Department of Justice) or
self-regulatory organization (including, without limitation, the NASD) that is
required in connection with the consummation of the transactions contemplated by
this Agreement.
"Securities Act": The Securities Act of 1933, as amended.
"Stockholder Escrow Agreement:" The escrow agreement by and
among TeleBanc, MET Holdings and the Escrow Agent, entered into on or before the
Closing Date, the terms of which will be substantially as set forth in Section
2.2.1(c) of this Agreement.
"Stockholder Escrow Shares:" This term has the meaning set
forth in Section 2.2.1(c).
"Supervisory Agreement": The supervisory agreement of the Bank
and the OTS dated May 24, 1993, as amended on March 18, 1994.
"Surviving Corporation": TeleBanc, as the surviving
corporation of the Merger.
"Tax Opinion": The tax opinion of Arthur Andersen LLP that
TeleBanc may require as a Closing Condition.
"Tax Returns": All federal, state and local tax returns,
reports and declarations of estimated tax with respect to income and all other
applicable taxes, and all other tax returns and reports, the filing of which is
required by applicable Laws (including returns and reports with respect to taxes
withheld from or imposed in respect of employees' wages and with respect to
deposit accounts).
"TeleBanc Stock": The common stock, par value $0.01 per share,
of TeleBanc.
"TeleBanc Subsidiary": Each corporation, partnership or other
business enterprise which is consolidated with TeleBanc for financial reporting
purposes or of which TeleBanc owns, directly or indirectly, 25% or more of the
outstanding capital stock or other ownership interest.
2. THE MERGER
2.1. The Merger.
At the Effective Time, MET Holdings shall be merged with and
into TeleBanc as permitted by and in accordance with applicable Laws and on the
terms and subject to the conditions contained in this Agreement and the Plan of
Merger. Simultaneously with the effectiveness of the Merger, (a) the separate
existence of MET Holdings shall cease, and (b) TeleBanc, as the Surviving
Corporation, shall continue to exist under and be governed by the General
Corporation Law of the State of Delaware. At the Effective Time, the certificate
of incorporation and bylaws of the Surviving Corporation shall be in the form of
the certificate of incorporation and bylaws of TeleBanc immediately preceding
the Merger. At the Effective Time, the board of directors and executive officers
of TeleBanc shall be the directors and executive officers of the Surviving
Corporation.
2.2. Consideration for MET Holdings Stock.
In order to consummate the Merger:
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2.2.1. Conversion of MET Holdings Stock.
(a) At the Effective Time, all of the shares of TeleBanc Stock
owned by MET Holdings shall be canceled and returned to the Treasury of
TeleBanc. Also at the Effective Time, each issued and outstanding share of Class
A Common Stock and Class B Common Stock (other than Dissenting Shares) shall, by
virtue of the Merger, automatically and without any action on the part of the
holder thereof, be converted into the right to receive 80.54 shares of TeleBanc
Stock (the "Common Stock Exchange Ratio"). Also at the Effective Time, each
issued and outstanding share of Class A Serial Preferred Stock and Class B
Serial Preferred Stock shall, by virtue of the Merger, automatically and without
any action on the part of the holder thereof, be converted into the right to
receive 72.46 shares of TeleBanc Stock. All other shares of MET Holdings Stock
shall be canceled.
(b) Caplan/Smilow Escrow Shares. Upon the Effective Time,
TeleBanc shall issue and deposit with the Escrow Agent of the Caplan/Smilow
Escrow Agreement 235,990 shares of TeleBanc Stock which otherwise would be
issued, pursuant to Section 2.2.1(a), either on behalf of Mitchell H. Caplan or
David A. Smilow or attributed to either of Messrs. Caplan or Smilow as a result
of the Merger (the "Caplan/Smilow Escrow Shares") to be held in an Escrow
Account. Pursuant to the terms of the Caplan/Smilow Escrow Agreement, the
Caplan/Smilow Escrow Shares shall be released periodically on a pro rata basis
to each of Messrs. Caplan and Smilow within five Business Days following each
distribution, if any, to Arbor from either of AG Spruce Fund, L.P. or AGEA
Partners, L.P. (the "Funds") in return of Arbor's capital investment in the
Funds. The Caplan/Smilow Escrow Agreement shall provide that prior to the Escrow
Termination Date (as defined below), any such Caplan/Smilow Escrow Shares that
have not been distributed to Messrs. Caplan and Smilow shall be voted by Messrs.
Caplan and Smilow, as applicable. Any dividends or other earnings on the
Caplan/Smilow Escrow Shares will be held in escrow and distributed with the
Caplan/Smilow Escrow Shares to which such dividends or earnings relate, in
accordance with the terms of the Caplan/Smilow Escrow Agreement. Any
Caplan/Smilow Escrow Shares that have not been distributed upon the final
liquidation, dissolution or termination of both of the Funds (the "Escrow
Termination Date"), pursuant to the terms of the Caplan/Smilow Escrow Agreement,
shall be canceled and returned to TeleBanc's treasury.
(c) Stockholder Escrow Shares. Upon the Effective Time, in
addition to the shares of TeleBanc Stock issued pursuant to Section 2.2.1(a),
TeleBanc shall issue and deposit with the Escrow Agent 750,000 shares of
TeleBanc Stock to be held in an Escrow Account (the "Stockholder Escrow
Shares"). Pursuant to the terms of the Statement of Earnings Requirements (which
is attached as Exhibit A to this Agreement, and which also will be attached as
Schedule B to the Stockholder Escrow Agreement), once the Initial Arbor Earnings
Goal has been achieved, Stockholder Escrow Shares will be released periodically
on a pro rata basis, in accordance with the Release Ratio (as such term is
defined in Exhibit A), to the shareholders of MET Holdings identified in
Schedule A to the Stockholder Escrow Agreement. If the Initial Arbor Earnings
Goal has not been met prior to or on the Escrow Termination Date or if any of
the Stockholder Escrow Shares remain in the Escrow Account after the Escrow
Termination Date, pursuant to the terms of the Stockholder Escrow Agreement, any
remaining Stockholder Escrow Shares in the Escrow Account shall be canceled and
returned to TeleBanc's treasury. The Stockholder Escrow Agreement shall provide
that prior to the Escrow Termination Date, any such Stockholder Escrow Shares
that remain in the Stockholder Escrow Account shall be voted by the Escrow Agent
in the same pro rata proportion as the other issued and outstanding shares of
TeleBanc Stock are voted. Any dividends or other earnings on the Stockholder
Escrow Shares will be held in escrow and distributed with the Stockholder Escrow
Shares to which such dividends or earnings relate, in accordance with the terms
of the Stockholder Escrow Agreement. As provided in Section 8.17, for so long as
any of the Stockholder Escrow Shares or any dividends or other earnings thereon
are held in the Escrow Account pursuant to the Stockholder Escrow Agreement,
such shares and any dividends or other earnings thereon shall be available to
satisfy any claims for indemnification by TeleBanc for the applicable period set
forth in Section 8.16(b).
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2.2.2. Fractional Shares. Certificates for fractions of shares
of TeleBanc Stock will not be issued. In lieu of a fraction of a share of
TeleBanc Stock, each holder of MET Holdings Stock otherwise entitled to a
fraction of a share of TeleBanc Stock shall be entitled to receive an amount of
cash equal to (i) the fraction of a share of TeleBanc Stock to which such holder
would otherwise be entitled, multiplied by (ii) the average prices for trades of
TeleBanc Stock for the 30 days proceeding the Closing Date as reported in the
over-the-counter markets. Following consummation of the Merger, no holder of MET
Holdings Stock shall be entitled to dividends or any other rights in respect of
any such fraction.
2.2.3. Cancellation of Unissued and Treasury Shares. No
payment shall be made in respect of authorized but unissued shares of MET
Holdings Stock or treasury shares of MET Holdings Stock, and such shares shall
be canceled upon the Closing.
2.2.4. Dissenting Shares. Notwithstanding anything to the
contrary herein, Dissenting Shares shall not be converted into or represent a
right to receive the consideration specified in Sections 2.2.1 and 2.2.2, but
the holder thereof (to the extent that such holder, as of the Effective Time of
the Merger, has not effectively withdrawn or lost his dissenter's rights, shall
be entitled only to such rights as are granted by applicable Law.
2.3. MET Holdings Options.
At the Effective Time, all MET Holdings Options shall
terminate. At the option of the holder, as may be determined by any holder by
providing written instructions to TeleBanc no less than 10 calendar days before
the Effective Time, TeleBanc shall either (i) in cash, pay to each holder of
outstanding unexpired and unexercised MET Holdings Options $82,302.45, or (ii)
issue to each holder of outstanding unexpired and unexercised MET Holdings
Options 9,940 shares of TeleBanc Stock which equals the Common Stock Exchange
Ratio times the number of shares of MET Holdings Stock into which such MET
Holdings Options are exercisable less the strike price of such options, or (iii)
pay to the holder part in cash and issue to the holder shares of TeleBanc Stock,
with the amount of cash and the number of shares of TeleBanc Stock to be
determined, respectively, as set forth in clauses (i) and (ii) of this
paragraph.
2.4. Modification of Structure.
Notwithstanding any provision of this Agreement to the
contrary, TeleBanc may elect to modify the structure of the transactions
contemplated hereby so long as (i) there are no material adverse federal or
state income tax consequences to MET Holdings and its shareholders as a result
of such modification; (ii) the consideration to be paid to holders of MET
Holdings Stock or MET Holdings Options under this Agreement is not thereby
changed in kind or reduced in amount to any extent that, but for such
modification, such consideration would not have been changed or reduced; (iii)
there are no material adverse changes to the benefits and other arrangements
being provided to or on behalf of MET Holdings and the MET Holdings
Subsidiaries' directors, officers and other employees; and, (iv) such
modification will not be likely to delay materially or jeopardize receipt of any
required Regulatory Approvals or of the Tax Opinion (unless the Closing
Condition regarding the Tax Opinion is waived by TeleBanc). In the event this
Agreement is terminated in accordance with Section 7.2.3, TeleBanc shall
reimburse MET Holdings for any expenses incurred by MET Holdings solely as a
result of a modification pursuant to this Section 2.4.
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3. REPRESENTATIONS AND WARRANTIES
3.1. Representations and Warranties of TeleBanc.
TeleBanc hereby makes the following representations and
warranties to MET Holdings, each of which is being relied upon by MET Holdings
as a material inducement to enter into and perform this Agreement:
3.1.1. Organization of TeleBanc. TeleBanc is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware. TeleBanc has full corporate power and authority to own or
lease all of its properties and assets and to carry on its business as now being
conducted, which business is described in TeleBanc's Annual Report on Form 10-K
for the year ended December 31, 1995. TeleBanc is duly licensed or qualified to
do business and is in good standing in each jurisdiction in which the nature of
the business conducted by it or the character or location of the employees or of
the properties or assets owned or leased by it makes such licensing or
qualification necessary.
3.1.2. TeleBanc Subsidiaries. All the shares of capital stock
or other ownership interest of a TeleBanc Subsidiary which are owned by TeleBanc
or a TeleBanc Subsidiary are owned free and clear of any liens, claims, charges
or other encumbrances. Each TeleBanc Subsidiary is duly organized, validly
existing and, to the extent applicable, in good standing under the laws of its
jurisdiction of incorporation or organization, has full corporate power and
authority to own or lease its properties and assets and to carry on its business
as now being conducted, is duly licensed or qualified to do business and is in
good standing in each jurisdiction in which the nature of the business conducted
by it or the character or location of the employees or of the properties or
assets owned or leased by it makes such licensing or qualification necessary.
3.1.3. Capitalization. The entire authorized capital stock of
TeleBanc consists of 4,000,000 shares, (i) 3,500,000 shares of common stock, par
value $0.01 per share, of which 2,049,500 shares have been issued and are
outstanding and (ii) 500,000 shares of preferred stock, par value $0.01 per
share, of which no shares have been issued and are outstanding. There also are
issued and outstanding 345,000 warrants to purchase one share each of TeleBanc
Stock (the "Warrants"). All the issued and outstanding shares of TeleBanc Stock
and the capital stock of each TeleBanc Subsidiary have been duly authorized and
validly issued.
3.1.4. Authorization. TeleBanc has all requisite corporate
power and authority to execute and deliver this Agreement and, subject to the
approval of this Agreement by the shareholders of TeleBanc entitled to vote
thereon and to the receipt of all Regulatory Approvals, to consummate the
transactions contemplated by this Agreement in accordance with the terms hereof.
This Agreement has been duly authorized by the board of directors of TeleBanc
and, except for the approval of the shareholders of TeleBanc as to this
Agreement, including the Plan of Merger, no other corporate proceedings on the
part of TeleBanc or any TeleBanc Subsidiary are necessary to consummate the
transactions so contemplated. This Agreement has been duly and validly executed
and delivered by TeleBanc and constitutes a valid and legally binding obligation
of TeleBanc enforceable against TeleBanc in accordance with its terms.
3.1.5. Non-Contravention. The execution and delivery of this
Agreement by TeleBanc does not, and the performance of this Agreement by
TeleBanc, in accordance with the terms hereof, will not (a) violate any
provision of the charter or certificate of incorporation or bylaws of TeleBanc
or any TeleBanc Subsidiary or (b) conflict with or result in a breach of, or
default under, or result in the creation of any lien, claim, charge or other
encumbrance upon any of the assets or properties of TeleBanc or any TeleBanc
Subsidiary pursuant to the provisions of any agreement, mortgage, indenture or
other document or instrument to which TeleBanc or any TeleBanc Subsidiary
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is a party or by which TeleBanc, any TeleBanc Subsidiary or any of their
respective properties or assets is bound, or (c) violate any existing Laws
applicable to TeleBanc or any TeleBanc Subsidiary or any of their respective
properties or assets, or applicable to TeleBanc's power or authority to perform
its obligations under this Agreement, or TeleBanc's ability to obtain the
Regulatory Approvals.
3.1.6. Financial Statements.
(a) TeleBanc has previously delivered or made available to MET
Holdings accurate and complete copies of the consolidated statements of
financial condition of TeleBanc as of December 31, 1994 and 1995, and the
related consolidated statements of income, shareholders' equity and cash flows
for the years ended December 31, 1994 and 1995, accompanied by the audit report
of the independent public accountants with respect to TeleBanc as of such date.
The consolidated statements of financial condition of TeleBanc referred to
herein (including the related notes, where applicable) fairly present the
consolidated financial condition of TeleBanc as of the respective dates set
forth therein, and the related consolidated statements of income, shareholders'
equity and cash flows (including the related notes, where applicable) fairly
present the consolidated results of operations, shareholders' equity and cash
flows of TeleBanc for the respective periods or as of the respective dates set
forth therein.
(b) Each of the financial statements referred to in Section
3.1.6(a) has been prepared in accordance with generally accepted accounting
principles. The audits of TeleBanc and each TeleBanc Subsidiary have been
conducted in accordance with generally accepted auditing standards. The books
and records of TeleBanc and each TeleBanc Subsidiary are being maintained in
material compliance with applicable legal and accounting requirements.
3.2. Representations and Warranties of MET Holdings.
MET Holdings hereby makes the following representations and
warranties to TeleBanc, each of which is being relied upon by TeleBanc as a
material inducement to enter into and perform this Agreement:
3.2.1. Organization of MET Holdings. MET Holdings is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware. MET Holdings has full corporate power and authority to
own or lease its properties and assets and to carry on its business as now being
conducted. MET Holdings is duly licensed or qualified to do business and is in
good standing in each jurisdiction in which the nature of the business conducted
by it or the character or location of the employees or of the properties or
assets owned or leased by it makes such licensing or qualification necessary.
3.2.2. MET Holdings Subsidiaries.
(a) Arbor, LIN, AG Arbor, CD Partners and Bruskin are the only
MET Holdings Subsidiaries. All the shares of capital stock or other ownership
interest of a MET Holdings Subsidiary which are owned by MET Holdings or a MET
Holdings Subsidiary are owned free and clear of any liens, claims, charges or
other encumbrances. Each MET Holdings Subsidiary is duly organized, validly
existing and in good standing under the laws of its state of incorporation or
organization, has full corporate, partnership or limited liability company power
and authority to own or lease its properties and assets and to carry on its
business as now being conducted, and is duly licensed or qualified to do
business and is in good standing in each jurisdiction in which the nature of the
business conducted by it or the character or location of the employees or of the
properties or assets owned or leased by it makes such licensing or qualification
necessary. Except as to the MET Holdings Options, there is no agreement to which
MET Holdings or any MET Holdings
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Subsidiary is subject with respect to the issuance, sale, or voting of issued or
unissued shares of the capital stock of any MET Holdings Subsidiary.
(b) Except as set forth in Section 3.2.2(b) of the MET
Holdings Disclosure Schedule, there is no corporation, partnership, joint
venture or other business enterprise, other than a MET Holdings Subsidiary, in
which MET Holdings owns, directly or indirectly, any equity or other ownership
interest, or has the right to share in any profit participation.
3.2.3. Capitalization. The entire authorized capital stock of
MET Holdings consists of 210,000 shares, (i) 100,000 shares of Class A Common
Stock, par value $0.10 per share, of which 11,263 shares have been issued and
are outstanding, (ii) 100,000 shares of Class B Common Stock, par value $0.10
per share, of which 6,940 shares have been issued and are outstanding, (iii)
5,000 shares of Class A Serial Preferred Stock, par value $0.10 per share, of
which no shares have been issued and are outstanding, and (iv) 5,000 shares of
Class B Serial Preferred Stock, par value $0.10 per share, of which 5,000 shares
have been issued and are outstanding. All of the issued and outstanding shares
of MET Holdings Stock and the capital stock of each MET Holdings Subsidiary have
been duly authorized and validly issued and, except as set forth in the next
sentence, are fully paid and nonassessable, free of any pre-emptive right, and
with no personal liability attaching thereto. As of the date of this Agreement,
167 shares of Class B Serial Preferred Stock are not fully paid, however MET
Holdings covenants that such shares shall be fully paid prior to the Closing
Date. Except for the MET Holdings Options and the convertibility of the Class A
Common Stock, the Class A Serial Preferred Stock, and the Class B Serial
Preferred Stock hereinabove described, there are no options, warrants, calls,
employee benefit or other plans, preemptive rights or commitments of any
character relating to the authorized but unissued capital stock or any other
equity security of MET Holdings or any MET Holdings Subsidiary or any securities
or obligations convertible into or exchangeable for or giving any person any
right to subscribe for or acquire from MET Holdings or any MET Holdings
Subsidiary any shares of such capital stock, nor are there any stock
appreciation rights, limited rights or other similar rights or obligations of
MET Holdings or any MET Holdings Subsidiary exercisable upon any circumstance,
including upon a change in control of MET Holdings or any MET Holdings
Subsidiary, other than the Promissory Notes. The only MET Holdings Options are
as set forth at Section 3.2.3 of the MET Holdings Disclosure Schedule attached
hereto. The MET Holdings Options have been validly and properly issued under all
applicable federal and state laws and true, correct and complete copies of the
related option agreements or grants have been provided to TeleBanc by MET
Holdings. There are no outstanding contractual obligations of MET Holdings or
any MET Holdings Subsidiary to repurchase, redeem or otherwise acquire any
outstanding shares of MET Holdings Stock or other ownership interest in MET
Holdings or capital stock or ownership interest in any MET Holdings Subsidiary.
There are no outstanding agreements, arrangements, commitments, or
understandings of any kind to which MET Holdings or, to the Knowledge of any of
the directors and officers of MET Holdings, any "associate" or "affiliate" of
MET Holdings (as those terms are defined in the rules and regulations
promulgated under the Securities Act), is a party affecting or relating to the
voting, issuance, purchase, redemption, repurchase, or transfer of MET Holdings
Stock or any other securities of MET Holdings, except for MET Holdings Options.
3.2.4. Authorization. MET Holdings has all requisite corporate
power and authority to execute and deliver this Agreement and, subject to the
approval of the shareholders of MET Holdings entitled to vote thereon and to the
receipt of all Regulatory Approvals, to consummate the transactions contemplated
by this Agreement hereby in accordance with the terms hereof. The execution,
delivery and performance of this Agreement has been duly authorized by the board
of directors of MET Holdings, and, except for the approval of the shareholders
of MET Holdings as to this Agreement, including the Plan of Merger, no other
corporate proceedings on the part of MET Holdings or any MET Holdings Subsidiary
are necessary to consummate the transactions so contemplated. This Agreement has
been duly executed and delivered by MET Holdings and constitutes a valid and
legally binding obligation of MET Holdings enforceable against MET Holdings in
accordance with its terms.
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3.2.5. Non-Contravention. The execution and delivery of this
Agreement by MET Holdings does not, and the performance of this Agreement, in
accordance with the terms hereof, will not (a) violate any provision of the
charter or articles of incorporation or bylaws of MET Holdings or any MET
Holdings Subsidiary, (b) conflict with or result in a breach of, or default
under, or result in the creation of any lien, claim, charge or other encumbrance
upon any of the assets or properties of MET Holdings or any MET Holdings
Subsidiary pursuant to the provisions of any agreement, mortgage, indenture or
other document or instrument to which MET Holdings or any MET Holdings
Subsidiary is a party or by which MET Holdings, any MET Holdings Subsidiary or
any of their respective properties or assets is bound, or (c) violate any
existing Laws applicable to MET Holdings or any MET Holdings Subsidiary or any
of their properties or assets, or applicable to MET Holdings' power or authority
to perform its obligations under this Agreement, or MET Holdings' ability to
obtain the Regulatory Approvals.
3.2.6. Properties and Assets. Neither MET Holdings nor any MET
Holdings Subsidiary owns any real property or is a party to any contract for the
purchase, sale, or development of real estate. MET Holdings has provided to
TeleBanc a true, correct and complete copy of each real property lease,
sublease, or similar agreement to which MET Holdings or any MET Holdings
Subsidiary is a party. Except for (a) items reflected in the audited financial
statements of MET Holdings as of December 31, 1995, (b) exceptions to title that
do not interfere materially with MET Holdings' or any MET Holdings Subsidiary's
use and enjoyment of owned or leased real property (other than real property
acquired through foreclosure or a transaction in lieu of foreclosure), (c) liens
for current real estate taxes not yet delinquent, or being contested in good
faith, properly reserved against (and reflected on the financial statements
referred to in Section 3.2.8 below) and (d) properties and assets sold or
transferred in the ordinary course of business consistent with past practice
since December 31, 1995, MET Holdings and each MET Holdings Subsidiary have good
title to all their respective properties and assets, including the properties
and assets reflected in the audited financial statements of MET Holdings as of
December 31, 1995, whether real, personal, tangible or intangible, free and
clear of all liens, claims, charges and other encumbrances. MET Holdings and
each MET Holdings Subsidiary, as lessees, have the right under valid and
subsisting leases to occupy, use and possess all property leased by them, and
there has not occurred under any such lease any breach, violation or default
except with respect to deductibles under insurance policies that comply with the
requirements of Section 3.2.12, and neither MET Holdings nor any MET Holdings
Subsidiary has experienced any uninsured damage or destruction with respect to
such properties since December 31, 1995. MET Holdings and each MET Holdings
Subsidiary enjoy peaceful and undisturbed possession under all leases for the
use of real or tangible personal property under which they are the lessees, and
all leases to which MET Holdings and any MET Holdings Subsidiary is a party are
valid and enforceable in all material respects in accordance with the terms
thereof except as may be limited by bankruptcy, insolvency, moratorium or other
similar laws affecting creditors' rights and except as may be limited by the
exercise of judicial discretion in applying principles of equity. Neither MET
Holdings nor any MET Holdings Subsidiary is in default with respect to any such
lease.
3.2.7. Certificate of Incorporation and Bylaws. True and
complete copies of the certificate of incorporation and bylaws of MET Holdings
and each MET Holdings Subsidiary, as in effect on the date hereof, have been
delivered to TeleBanc.
3.2.8. Financial Statements.
(a) MET Holdings has previously delivered or made available to
TeleBanc accurate and complete copies of the consolidated statements of
financial condition of MET Holdings as of December 31, 1993, 1994 and 1995, and
the related consolidated statements of income, shareholders' equity and cash
flows for the years ended December 31, 1993, 1994 and 1995, in each case
accompanied by the audit report of the independent public accountants with
respect to MET Holdings. The consolidated statements of financial condition of
MET Holdings referred to herein
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(including the related notes, where applicable), fairly present the consolidated
financial condition of MET Holdings as of the respective dates set forth
therein, and the related consolidated statements of income, shareholders' equity
and cash flows (including the related notes, where applicable) fairly present
the consolidated results of operations, shareholders' equity and cash flows of
MET Holdings for the respective periods or as of the respective dates set forth
therein.
(b) Each of the financial statements referred to in Section
3.2.8(a) has been prepared in accordance with generally accepted accounting
principles consistently applied during the periods involved. The audits of MET
Holdings and each MET Holdings Subsidiary have been conducted in accordance with
generally accepted auditing standards. The books and records of MET Holdings and
each MET Holdings Subsidiary are being maintained in material compliance with
applicable legal and accounting requirements.
(c) Except and to the extent (i) reflected, disclosed or
provided for in the financial statements as of December 31, 1995 referred to
above and (ii) of liabilities incurred since December 31, 1995 in the ordinary
course of business and consistent with past practice, neither MET Holdings nor
any MET Holdings Subsidiary has any liabilities, whether absolute, accrued,
contingent or otherwise.
3.2.9. Absence of Changes. Since December 31, 1995, the
business of MET Holdings has been conducted only in the ordinary course
consistent with past practice and there has not been any Material Adverse Change
in MET Holdings, nor has there been any material change in any policy or
practice followed by MET Holdings or any MET Holdings Subsidiary in the ordinary
course of business.
3.2.10. Legal Proceedings. There are no legal, administrative
or other claims, actions, suits or other proceedings pending, or to the
Knowledge of any of MET Holdings' officers and directors or those of any MET
Holdings Subsidiary, threatened, of which MET Holdings or any MET Holdings
Subsidiary is a party before any court or arbitration tribunal or before or by
any Governmental Authority. Neither MET Holdings nor any MET Holdings Subsidiary
is a party to any pending or, to the Knowledge of any of MET Holdings' officers
and directors, threatened legal, administrative or other claim, action, suit,
investigation, arbitration or proceeding challenging the validity or propriety
of any of the transactions contemplated by this Agreement. Neither MET Holdings
nor any MET Holdings Subsidiary is subject to any judgment, order, writ,
injunction, decree or arbitration award.
3.2.11. Certain Contracts. Except as contemplated by this
Agreement, neither MET Holdings nor any MET Holdings Subsidiary is a party to or
is bound or affected by, or receives benefits under (i) any material agreement,
arrangement or understanding not made in the ordinary course of business; (ii)
any agreement, indenture or other instrument relating to the borrowing of money
by MET Holdings or any MET Holdings Subsidiary or the guarantee by MET Holdings
or any MET Holdings Subsidiary of any obligation; (iii) any agreement,
arrangement or understanding relating to the employment, election, retention in
office or severance of any present or former director, officer or employee of
MET Holdings or any MET Holdings Subsidiary; (iv) any agreement, arrangement or
understanding pursuant to which any payment (whether of severance pay or
otherwise) became or may become due to any director, officer or employee of MET
Holdings or any MET Holdings Subsidiary upon execution of this Agreement or upon
or following consummation of the transactions contemplated by this Agreement
(either alone or in connection with the occurrence of any additional acts or
events); (v) any assistance agreement, supervisory agreement, memorandum of
understanding, consent order, cease and desist order or condition of any
regulatory order or decree with or by the OTS, the SEC, the NASD or any other
regulatory agency; or (vi) any other agreement, arrangement or understanding,
which requires aggregate payments to or from MET Holdings and/or any MET
Holdings Subsidiary of $25,000 or more per year.
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3.2.12. Insurance. All insurance policies and bonds maintained
by MET Holdings and any MET Holdings Subsidiary, have, from time to time, in
respect of the nature of the risks insured against and amount of coverage
provided, been substantially similar in kind and amount to that customarily
carried by parties similarly situated who engage in businesses substantially
similar to that of MET Holdings and any MET Holdings Subsidiary), and are in
full force and effect and have been in full force and effect at all times during
which MET Holdings or any MET Holdings Subsidiary had any insurable interest in
the subject of such insurance policies and bonds. As of the date hereof, neither
MET Holdings nor any MET Holdings Subsidiary has received any notice of
cancellation or amendment of any such policy or bond or is in default under any
such policy or bond, no coverage thereunder is being disputed and all material
claims thereunder have been filed in a timely fashion. The existing insurance
carried by MET Holdings and any MET Holdings Subsidiary is and will continue to
be, in respect of the nature of the risks insured against and the amount of
coverage provided, substantially similar in kind and amount to that customarily
carried by parties similarly situated who engage in businesses substantially
similar to that of MET Holdings and any MET Holdings Subsidiary, and is
sufficient for compliance by MET Holdings and any MET Holdings Subsidiary with
all material requirements of law and regulations and agreements to which MET
Holdings or any MET Holdings Subsidiary is subject or is a party. True and
complete copies of all such policies and bonds as in effect on the date hereof,
have been delivered to TeleBanc.
3.2.13. Employee Benefit Plans.
(a) True, correct and complete copies of each Employee Plan of
MET Holdings, including amendments and trust agreements relating thereto, have
been delivered to TeleBanc, together with (i) a complete and correct copy of the
five most recent annual reports (Form 5500 including, if applicable, Schedule B
thereto) prepared in connection with any such Employee Plan, (ii) a true,
correct and complete copy of the five most recent actuarial valuation reports,
if any, prepared in connection with any such Employee Plan, and (iii) a true,
correct and complete copy of the most recent summary plan description (including
any summaries of material modifications) of each such Employee Plan. None of
such Employee Plans is a "multiemployer plan," as defined in Section 3(37) of
ERISA, and neither MET Holdings nor any MET Holdings Subsidiary has been
obligated to make a contribution to any such multiemployer plan within the past
five years. Since its inception, each Employee Plan which is intended to be
qualified under Section 401(a) of the IRC has been operated and administered in
all material respects in accordance with the requirements for a qualified plan
under Section 401(a) of the IRC and each trust maintained in connection with
each such Employee Plan has been operated and administered in all material
respects in accordance with the requirements for a tax exempt trust under
Section 501 of the IRC and applicable state laws. MET Holdings has received from
the Internal Revenue Service a determination letter with respect to the
qualification of each such Employee Plan and has delivered to TeleBanc a true
and complete copy of the most recent determination letter for each such Employee
Plan, as well as all correspondence relating to the application therefor. The
representations made as a part of the application for each such determination
letter were true and complete when made and continue to be true and complete.
Nothing has occurred since the date of the most recent applicable determination
letter that would adversely affect the qualified status of any such Employee
Plan.
(b) True and complete copies of all Benefit Arrangements that
MET Holdings or any MET Holdings Subsidiary maintains have been delivered to
TeleBanc.
(c) Each of the Employee Plans and Benefit Arrangements of MET
Holdings and any MET Holdings Subsidiary is in compliance with the requirements
prescribed by any and all applicable laws and regulations, including, but not
limited to, ERISA and the IRC. No Employee Plan is subject to Title IV of ERISA.
Neither MET Holdings nor any MET Holdings Subsidiary nor any Employee Plan has
engaged in a "prohibited transaction," as defined in Section 406 of ERISA and
Section 4975 of the IRC, which could subject any of them or MET Holdings to
material liability under Section 409 or 502(i) of ERISA or Section 4975 of the
IRC. No Employee Plan is subject to
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Part III of Subtitle B of Title I of ERISA or Section 412 of the IRC, or both.
Neither MET Holdings nor any MET Holdings Subsidiary failed to make any
contribution or pay any amount due and owing as required by the terms of any
Employee Plan or Benefit Arrangement. Each funded Employee Plan is fully funded
such that the fair market value of the net assets of the Employee Plan equals or
exceeds the present value of all accrued benefits and other liabilities under
such Employee Plan. No events have occurred or are expected to occur with
respect to any Employee Plan that would cause a material change in the value of
the assets or the amount or present value of accrued benefits and other
liabilities of such Employee Plan.
(d) No Employee Plan or Benefit Arrangement, individually or
collectively, provides for any payment by MET Holdings or any MET Holdings
Subsidiary to any employee or independent contractor, in connection with or as a
result of the transactions contemplated by this Agreement, that is not
deductible under either Section 162(a)(1), 162(m), 280G or 404 of the IRC.
3.2.14. Compliance with Applicable Laws. Each of MET Holdings
and any MET Holdings Subsidiary has complied with all Laws applicable to it or
to the operation of its business and none of them has received any notice of any
alleged claim or threatened claim, violation of or liability or potential
responsibility under such Laws that has not heretofore been cured and for which
there is no remaining liability.
3.2.15. Regulatory Filings and Reports. Since December 31,
1991, MET Holdings and each MET Holdings Subsidiary has filed all documents
required to be filed by it under federal securities laws and Laws applicable to
savings and loan holding companies, broker-dealers and investment advisors, and
applicable Regulations thereunder, and all such documents, as finally amended,
were complete and accurate, complied in all material respects as to form and
substance with all applicable requirements of law and regulation and did not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading.
3.2.16. Tax Matters.
(a) MET Holdings has timely filed on behalf of itself and any
MET Holdings Subsidiary, with the appropriate Governmental Authorities, the Tax
Returns. All of the Tax Returns are accurate and complete in all material
respects.
(b) MET Holdings and each MET Holdings Subsidiary have
collected and withheld all taxes which they are or have been required to collect
or withhold and have timely submitted all such collected and withheld amounts to
the appropriate authorities. MET Holdings and each MET Holdings Subsidiary are
in compliance with the back-up withholding and information reporting
requirements under the IRC, and the rules and regulations of the Internal
Revenue Service thereunder.
(c) All federal, state and local taxes, due and payable by MET
Holdings or any MET Holdings Subsidiary pursuant to the Tax Returns, or pursuant
to any assessment with respect to taxes, penalties or interest in any of such
jurisdictions, have been accrued or paid.
(d) The reserves for taxes contained in the financial
statements (including the notes thereto) described in Section 3.2.8 of this
Agreement are adequate to cover the tax liabilities, including penalties and
interest, of MET Holdings and any MET Holdings Subsidiary for all periods up to
and including December 31, 1995.
(e) Neither MET Holdings nor any MET Holdings Subsidiary has
received any notice of deficiency or assessment or proposed deficiency or
assessment by the Internal Revenue Service or any other taxing authority in
connection with the Tax Returns that has not been brought
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to the attention of TeleBanc management. There is no action, suit, proceeding,
audit, examination, investigation, or claim pending, or to the Knowledge of any
of MET Holdings' officers and directors, or those of any MET Holdings
Subsidiary, threatened, in respect of any taxes for which MET Holdings or any
MET Holdings Subsidiary is or may become liable if such action, suit,
proceeding, audit, examination, investigation, or claim were to be resolved, in
whole or in part, adversely to MET Holdings or any MET Holdings Subsidiary that
has not been brought to the attention of TeleBanc management. To the Knowledge
of any of MET Holdings' officers and directors, or those of any MET Holdings
Subsidiary, no fact exists which constitutes grounds for the assessment of
material additional taxes with respect to MET Holdings or any MET Holdings
Subsidiary that has not been brought to the attention of TeleBanc management.
MET Holdings has provided to TeleBanc a true, correct and complete copy of the
agreement for the allocation or sharing of taxes among MET Holdings and any MET
Holdings Subsidiary.
(f) Neither MET Holdings nor any MET Holdings Subsidiary has
waived any Law fixing, or consented to the extension of, any period of time for
assessment of any tax.
(g) Neither MET Holdings nor any MET Holdings Subsidiary has
made an election under Section 341(f) of the IRC.
(h) MET Holdings has provided to TeleBanc complete and correct
copies of the Tax Returns and all material correspondence and documents, if any,
relating directly or indirectly to taxes for each taxable year of MET Holdings
and each MET Holdings Subsidiary as to which the applicable statute of
limitations has not run on the date hereof. For this purpose, "correspondence
and documents" include, without limitation, amended tax returns, claims for
refunds, notices from taxing authorities of proposed changes or adjustments to
taxes or tax returns, consents to assessment or collection of taxes, acceptances
of proposed adjustments, closing agreements, rulings and determination letters
and requests therefor, and all other written communications to or from taxing
authorities relating to any material tax liability of MET Holdings or any MET
Holdings Subsidiary.
3.2.17. Broker's Fees. No agent, finder, broker, investment
banker, person or firm acting on behalf or under authority of MET Holdings is or
will be entitled to any fee as compensation for services as broker or finder or
any other commission or similar fee directly or indirectly in connection with
this Agreement or any of the transactions contemplated hereby.
3.2.18. No Misrepresentation. None of the representations and
warranties of MET Holding set forth in this Agreement nor any matter disclosed
in any of the schedules, lists, certificates, exhibits or other documents
delivered to TeleBanc hereunder or in connection with the transactions
contemplated hereby contains any untrue statement of a material fact or omits to
state a material fact necessary to make the statements contained herein or
therein, in light of the circumstances in which they were made, not misleading.
4. COVENANTS
4.1. Regulatory Applications.
Upon the execution and delivery of this Agreement, the parties
hereto shall thereupon cause to be prepared and filed, as soon as is reasonably
practical, all required Applications and any other filings with Governmental
Authorities which are necessary or contemplated for the consummation of the
Merger. Such filing deadline is subject to receipt by the filing party from each
other party hereto of all information required in connection with the filing of
such Applications and other filings. The parties hereto will use their best
efforts to supply, on a timely basis, each other
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party all information required in connection with the preparation and filing of
such Applications and other filings. Such Applications and filings shall be in
such forms as may be prescribed by the respective Governmental Authorities and
shall contain such information as they may require. The parties hereto will
cooperate with each other, including their respective attorneys, advisers and
other representatives, and will use their best efforts to prepare and execute
all necessary documentation, to effect all necessary or contemplated filings and
to obtain all necessary or contemplated permits, consents, Regulatory Approvals,
and authorizations of Governmental Authorities and third parties which are
necessary or contemplated to consummate the transactions contemplated by this
Agreement; provided, however, that TeleBanc shall not be obligated to amend any
Application or other filing, or take any action in connection with such
application or other filing, which TeleBanc reasonably determines would result
in a Material Adverse Change in MET Holdings or a Material Adverse Change in
TeleBanc. TeleBanc shall deliver to MET Holdings, and MET Holdings shall deliver
to TeleBanc, reasonably in advance of the time it intends to file any such
Application or other filing, a draft of the proposed Application or other
filing, and each shall cooperate with the other in responding to and considering
any reasonable questions or comments regarding such draft before it is finalized
and filed, provided that such questions or comments are received on a timely
basis so as to permit response or incorporation.
4.2. Registration Statement.
(a) Upon the execution and delivery of this Agreement,
TeleBanc shall thereupon cause to be prepared and filed with the SEC, as soon as
reasonably practical (provided that MET Holdings has given to TeleBanc all
information concerning MET Holdings which is required for inclusion in the
Registration Statement, including the Proxy Statement/Prospectus), a
Registration Statement, including the Proxy Statement/Prospectus, complying in
form and substance in all material respects with the requirements of applicable
Laws for the purpose of registering the TeleBanc Stock to be issued in exchange
for MET Holdings Stock and will use its best efforts to have the Registration
Statement declared effective by the SEC upon receipt of the Regulatory
Approvals, or as soon thereafter as possible, and remain effective through the
Closing Date.
(b) TeleBanc shall deliver to MET Holdings, reasonably in
advance of the time it intends to file the Registration Statement with the SEC,
a draft Registration Statement for review and comment upon all information
relating to MET Holdings and any MET Holdings Subsidiary that appears in the
Registration Statement. TeleBanc shall cooperate with MET Holdings in responding
to and considering any reasonable questions or comments regarding such draft
Registration Statement before it is finalized and filed, provided that such
questions or comments are received on a timely basis so as to permit response or
incorporation.
(c) If at any time after the Registration Statement is first
filed with the SEC, and prior to the Closing Date, any event relating to MET
Holdings or any MET Holdings Subsidiary should be discovered which should be set
forth in an amendment of, or a supplement to, the Registration Statement,
including the Proxy Statement/Prospectus, MET Holdings shall promptly so inform
TeleBanc, and will furnish all necessary information to TeleBanc relating to
such event. TeleBanc shall thereupon cause an amendment to the Registration
Statement to be filed with the SEC, and upon the effectiveness of such
amendment, if appropriate, MET Holdings will take any necessary action as
promptly as practicable to permit an appropriate amendment or supplement to be
transmitted to the holders of MET Holdings Stock entitled to vote at the MET
Holdings Shareholders Meeting (as defined in Section 4.3(a) hereof), and will
transmit such amendment or supplement as promptly as practical.
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4.3. Shareholder Approvals.
(a) At such time as TeleBanc and MET Holdings may reasonably
agree, and no later than five Business Days following the later to occur of
receipt of the Regulatory Approvals or the day the Registration Statement
(including any amendments necessitated by Regulatory Approvals) is declared
effective by the SEC, each of MET Holdings and TeleBanc will (i) duly and
properly call, and give notice of, and thereafter cause to be convened and held
no later than 30 days after such notice, a meeting of its shareholders
(including any adjournment of such meeting which may be necessary), for the
purpose of approving this Agreement (including the Plan of Merger) and for such
other purposes as may be necessary to effect the transactions contemplated
hereby (respectively, the "MET Holdings Shareholders Meeting" and the "TeleBanc
Shareholders Meeting"), and (ii) subject to the fiduciary duty of its directors,
recommend to its shareholders the approval of this Agreement (including the Plan
of Merger) and use its best efforts to obtain, as promptly as reasonably
practical, such shareholder approval as may be necessary to effect the Merger.
(b) At the earlier of the time that the Proxy
Statement/Prospectus is mailed to the shareholders of MET Holdings or TeleBanc
for the solicitation of proxies for the approvals referred to above in
connection with the MET Holdings Shareholders Meeting or the TeleBanc
Shareholders Meeting and at all times subsequent to such mailing up to and
including the Closing Date, TeleBanc shall cause all information set forth in
the Proxy Statement/Prospectus (including any supplements thereto) relating to
TeleBanc and any TeleBanc Subsidiary, this Agreement, the Plan of Merger, the
Merger, and all other transactions contemplated hereby and thereby, and any
other documents or notices delivered to shareholders in connection therewith:
(i) to comply in all material respects with
applicable provisions of the Exchange Act and rules and
regulations of the SEC thereunder and all other applicable
Laws; and
(ii) to not contain any statement which, at the time
and in light of the circumstances under which it is made, is
false or misleading with respect to any material fact or omit
to state any material fact required to be stated therein or
necessary in order to make the statements therein not false or
misleading, or necessary to correct any statement in an
earlier communication with respect to the solicitation of a
proxy for the same meeting or subject matter which has become
false or misleading.
TeleBanc's obligations hereunder are subject to MET Holdings promptly furnishing
TeleBanc with the information relating to MET Holdings and each MET Holdings
Subsidiary which is required under applicable Laws for inclusion in the Proxy
Statement/Prospectus, which information MET Holdings represents and warrants to
TeleBanc shall not contain any statement which, at the time and in light of the
circumstances under which it is furnished, is false or misleading with respect
to any material fact or omits to state any material fact required to be stated
therein or necessary in order to make the information furnished therein not
false or misleading. MET Holdings further represents and warrants to TeleBanc
that it will amend, supplement or revise any information so furnished as
necessary to make the foregoing sentence correct and true in all material
respects at and as of all times from the date of the mailing of the Proxy
Statement/Prospectus to and including the Closing Date.
(c) At the earlier of the time that the Proxy
Statement/Prospectus is mailed to the shareholders of MET Holdings or TeleBanc
for the solicitation of proxies for the approvals referred to above in
connection with the MET Holdings Shareholders Meeting or the TeleBanc
Shareholders Meeting and at all times subsequent to such mailing up to and
including the Closing Date, MET Holdings shall cause all information set forth
in the Proxy Statement/Prospectus (including any supplements thereto) relating
to MET Holdings and any MET Holdings Subsidiary,
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this Agreement, the Plan of Merger, the Merger, and all other transactions
contemplated hereby and thereby, and any other documents or notices delivered to
shareholders in connection therewith:
(i) to comply in all material respects with
applicable provisions of the Exchange Act and rules and
regulations of the SEC thereunder and all other applicable
Laws; and
(ii) to not contain any statement which, at the time
and in light of the circumstances under which it is made, is
false or misleading with respect to any material fact or omit
to state any material fact required to be stated therein or
necessary in order to make the statements therein not false or
misleading, or necessary to correct any statement in an
earlier communication with respect to the solicitation of a
proxy for the same meeting or subject matter which has become
false or misleading.
MET Holdings' obligations hereunder are subject to TeleBanc promptly furnishing
MET Holdings with the information relating to TeleBanc and each TeleBanc
Subsidiary which is required under applicable Laws for inclusion in the Proxy
Statement/Prospectus, which information TeleBanc represents and warrants to MET
Holdings shall not contain any statement which, at the time and in light of the
circumstances under which it is furnished, is false or misleading with respect
to any material fact or omits to state any material fact required to be stated
therein or necessary in order to make the information furnished therein not
false or misleading. TeleBanc further represents and warrants to MET Holdings
that it will amend, supplement or revise any information so furnished as
necessary to make the foregoing sentence correct and true in all material
respects at and as of all times from the date of the mailing of the Proxy
Statement/Prospectus to and including the Closing Date.
4.4. Blue Sky.
(a) TeleBanc shall take all actions necessary to have the
shares of TeleBanc Stock to be delivered in exchange for the MET Holdings Stock
qualified or registered for offering and sale, or to identify and perfect an
exemption therefrom, under the securities or "Blue Sky" laws of each
jurisdiction within the United States in which shareholders of MET Holdings
reside.
(b) TeleBanc shall provide all such notices and make such all
filings as may be required in connection with the transactions contemplated
hereby.
4.5. Other Approvals.
The parties shall cooperate and use their best efforts to
obtain all written consents and approvals of other persons in connection with
any lease or other agreement the benefits of which cannot be retained upon
consummation of the transactions contemplated hereby without such written
consent or approval.
4.6. Conduct of the Business of MET Holdings and each MET
Holdings Subsidiary.
4.6.1. Negative Covenants. From and after the date of this
Agreement up to and including the Closing Date, none of MET Holdings or any MET
Holdings Subsidiary shall, except with the prior written consent of TeleBanc,
which consent shall not be unreasonably withheld, do any one or more of the
following:
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(a) Except for the MET Holdings Stock issuable upon exercise
of existing MET Holdings Options, issue any shares of MET Holdings Stock or
securities exercisable for or convertible into any such shares (including the
grant of additional options or other rights under the MET Holdings Option Plans
or any similar plan of MET Holdings);
(b) Except as otherwise provided by this Agreement, (i) amend
or enter into any agreement with any employee establishing the terms of
employment or severance or termination benefits; (ii) adopt or establish any
Employee Plan or Benefit Arrangement or amend, supplement or otherwise modify
any existing Employee Plan or Benefit Arrangement; or (iii) make additional
grants or contributions under any existing Employee Plans or Benefit
Arrangements except in accordance with past practices;
(c) Increase the compensation payable to any director, officer
or employee, or pay any bonuses to any officer or employee;
(d) Incur any material indebtedness;
(e) Sell, purchase or lease, or commit to sell, purchase or
lease, any material assets, except for transactions pursuant to legally binding
agreements or commitments entered into or approved before the date hereof and
transactions otherwise permitted by this Agreement;
(f) Pay any dividend, acquire any of its capital stock (by
repurchase, tender, redemption or otherwise) or make any other capital
distribution;
(g) Engage in any securities or other trading activity, except
in the ordinary course of business and consistent with past practice;
(h) Make any capital expenditure in excess of $5,000, except
in accordance with budget terms supplied to TeleBanc by MET Holdings hereafter
and specifically approved by TeleBanc;
(i) Make any change in its capital stock by split, reverse
split, reclassification, combination, subdivision, or otherwise;
(j) Amend its certificate of incorporation or by-laws;
(k) Merge, combine, or consolidate with or into, or permit the
merger into it of, any other corporation, association, trust, or entity or
change in any manner the character of its business;
(l) Invest in a MET Holdings Subsidiary or enter into any
joint venture, management agreement, partnership (general or limited) agreement,
or other business enterprise;
(m) Make any investment that does not conform to its existing
investment policies;
(n) Settle or otherwise agree to cease proceedings with
respect to any claims, actions, suits, or other proceedings, where such
settlement or other agreement would require any charge against the income or
assets of MET Holdings or any MET Holdings Subsidiary;
(o) Change or modify in any way any current accounting policy
or practice with respect to the MET Holdings' financial statements prepared in
accordance with generally accepted accounting principles;
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(p) Change or modify in any way business or operating
policies, practices or procedures, as in effect on the date hereof;
(q) Engage in any other transaction that is not consistent
with past practices and in the ordinary course of the business of MET Holdings
or such MET Holdings Subsidiary, as the case may be;
(r) Make any payment to any director, officer, employee or
independent contractor, in connection with or as a result of the transactions
contemplated by this Agreement, or otherwise, that is not deductible under
either Section 162(a)(1) 162(m), 280G or 404 of the IRC; or
(s) Not take any affirmative action which would cause to not
be true as of the Closing Date any of the representations and warranties of MET
Holdings or any MET Holdings Subsidiary.
4.6.2. Affirmative Covenants. To the extent not otherwise
restricted or limited by the terms of this Agreement, MET Holdings and each MET
Holdings Subsidiary shall:
(a) carry on its business in all material respects in
substantially the same manner as heretofore conducted;
(b) use its best efforts to preserve intact the business of
MET Holdings and each MET Holdings Subsidiary, to keep available their present
officers and key employees, to preserve the goodwill of customers and others
having business relationships with MET Holdings and each MET Holdings
Subsidiary, and to comply in all material respects with applicable Laws; and
(c) promptly notify TeleBanc in writing of the existence or
happening of any Material Adverse Change in MET Holdings, Default, or any event
or matter that, with notice or passage of time, would constitute a Default.
4.7. Employee Plans.
From the date of this Agreement to the Closing, MET Holdings
shall not terminate any of its Employee Plans and MET Holdings will use its best
efforts to arrange for the assignment and assumption by TeleBanc, pursuant to
the Merger, of each of the Employee Plans of Met Holdings.
4.8. Access to Information.
(a) From the date hereof until the Closing, MET Holdings shall
furnish to TeleBanc and its authorized representatives, and TeleBanc shall
furnish to MET Holdings and its authorized representatives, upon reasonable
notice and during ordinary business hours, full access to all of its respective
books, records, properties, operations and activities, including, but not
limited to, all contracts, commitments, and all loan, investment, accounting,
tax and property records and files (and those of its subsidiaries).
(b) Until the Closing Date, TeleBanc and MET Holdings shall
provide to the other financial statements and other information and reports at
the same time such reports are provided to their respective board of directors
for the preceding calendar month period. Each of TeleBanc and MET Holdings
hereby covenants that the consolidated statements of financial condition
included in the financial statements (including the related notes, where
applicable) to be delivered pursuant to this Section 4.8(b) will fairly present,
the consolidated financial condition of TeleBanc or MET Holdings, as the case
may be, as of the respective dates set forth therein, and the
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related consolidated statements of income, shareholders' equity and cash flows
(including the related notes, where applicable) will fairly present the
consolidated results of operations, shareholders' equity and cash flows of
TeleBanc or MET Holdings, as the case may be, for the respective periods or as
of the respective dates set forth therein, and that each of such financial
statements will be prepared in accordance with generally accepted accounting
principles consistently applied during the periods involved.
(c) MET Holdings and TeleBanc shall provide to each other
complete and correct copies of all reports presented to either of them or any of
their respective subsidiaries by their independent accountants after the date
hereof and for any preceding fiscal years with respect to internal accounting
controls. Each of MET Holdings and TeleBanc represents and warrants to the other
that all recommendations made in such prior reports have been implemented.
4.9. Confidentiality.
Any and all commercial, financial, technical, or other
information regarding MET Holdings, TeleBanc or their respective subsidiaries or
their respective businesses, properties, and personnel, or that of their
respective officers, directors, control persons, or affiliates, including such
information obtained in accordance with Section 4.8 above (the "Confidential
Information"), which is derived or results from access by such party (or their
authorized agents and representatives) to the properties, books, contracts,
commitments, and records of the other party or its subsidiaries pursuant to the
provisions of this Agreement, whether obtained before or after the execution of
this Agreement, shall be held in strict confidence; and the party in possession
of the Confidential Information shall exercise the same degree of care with
respect thereto that it uses to preserve and safeguard its own confidential
proprietary information. Such Confidential Information shall not directly or
indirectly be divulged, disclosed or communicated to any other person or entity
or used for any purposes other than those expressly contemplated by this
Agreement, except as otherwise required by judicial or regulatory authorities
having jurisdiction in respect thereof. Each party shall cause its authorized
agents and representatives to maintain the confidentiality of Confidential
Information. In the event the transactions contemplated by this Agreement are
not consummated for any reason, the confidentiality of such Confidential
Information shall be maintained by such party and its authorized agents and
representatives (except to the extent that such Confidential Information can be
shown to be previously known to such party or later acquired by it from
legitimate sources or otherwise available to the public). MET Holdings and
TeleBanc acknowledge and agree that any prior agreements regarding the
confidentiality of Confidential Information shall not merge into and shall
survive the execution and delivery of this Agreement, except that to the extent
that the terms and provisions of this Section impose more stringent restrictions
and limitations on the parties, the terms and provisions of this Section shall
supersede the previously executed and delivered confidentiality agreements.
4.10. Best Efforts.
Each party hereto agrees to use such party's best efforts to
cause the conditions within its control to be satisfied and to effect the
Merger.
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5. CONDITIONS
5.1. Conditions to Obligations of the Parties.
The obligations of each party to consummate the transactions
contemplated by this Agreement are subject to the satisfaction, on or before the
Closing Date, of each of the following conditions precedent:
5.1.1. Termination. This Agreement shall not have been
terminated in accordance with its terms.
5.1.2. Regulatory Approvals. All Regulatory Approvals shall
have been obtained; no Regulatory Approval shall contain any condition that
would require any material modification or nonperformance of the terms of this
Agreement; all Regulatory Approvals shall remain in full force and effect and
all conditions and requirements set forth in any Regulatory Approval that are
required to be satisfied on or before the Closing Date, including the expiration
of any waiting periods, shall have been satisfied or properly waived.
5.1.3 Shareholder Approvals. This Agreement (including the
Plan of Merger) shall have been approved by the requisite vote of the
shareholders of MET Holdings and TeleBanc in accordance with applicable Laws and
the respective certificate of incorporation and bylaws of MET Holdings and
TeleBanc.
5.1.4. Matters Regarding TeleBanc Stock.
(a) Registration Statement. The Registration Statement shall
have been declared effective by the SEC, shall remain effective and shall not be
subject to a stop order or any threatened stop order.
(b) Blue Sky. The shares of TeleBanc Stock to be issued in
exchange for MET Holdings Stock as part of the Merger Consideration shall have
been qualified or registered for offering and sale under the securities or "Blue
Sky" Laws of each jurisdiction within the United States in which shareholders of
MET Holdings reside where such qualification or registration is necessary, and
no order suspending the sale of such shares of TeleBanc Stock in any such
jurisdiction shall have been issued on or before the Closing Date, such
qualification or registration shall remain in effect and no proceedings to
suspend the sale of such shares shall have been instituted or, to the Knowledge
of any of TeleBanc's directors and officers, shall be contemplated.
5.1.5. Escrow Agreements. TeleBanc, MET Holdings and the
Escrow Agent(s) shall have entered into the Caplan/Smilow Escrow Agreement and
the Stockholder Escrow Agreement.
5.2. Conditions to Obligations of TeleBanc.
The obligations of TeleBanc to consummate the transactions
contemplated by this Agreement are subject to the satisfaction, on or before the
Closing Date, of each of the following conditions precedent, any one or more of
which may be waived by TeleBanc, in its sole and absolute discretion:
5.2.1. Representations and Warranties. The representations and
warranties of MET Holdings contained in this Agreement shall be true, correct
and complete in all material respects when made on the date of this Agreement
and on the Closing Date.
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5.2.2. Regulatory Approvals. The Regulatory Approvals shall
not contain any condition, obligation or other term which TeleBanc reasonably
determines to be materially burdensome.
5.2.3. Other Approvals. Except for such consents, approvals,
permits and other authorizations that, if not obtained, would not, individually
or in the aggregate, have a material adverse effect on the business, financial
condition, results of operations or prospects of MET Holdings and each MET
Holdings Subsidiary, taken as a whole, MET Holdings shall have obtained (i) the
consent or approval of other persons in connection with any lease, agreement or
other arrangement, the benefits of which cannot be retained upon consummation of
the transactions contemplated hereby without such consent or approval, (ii) all
permits or other authorizations other than Regulatory Approvals required to
consummate the transactions contemplated hereby, and (iii) from each of the
holders of the Promissory Notes, a waiver of the right of repayment set forth in
Section 6 of its respective Promissory Note.
5.2.4. Fairness Opinion. TeleBanc shall have received from the
Financial Advisor, or such other financial adviser as TeleBanc may select, an
opinion dated the date of or immediately before the date of this Agreement and
an update of such opinion dated within five Business Days before the Closing
Date, concluding that, in such financial adviser's opinion, the Merger
Consideration is fair, from a financial point of view, to TeleBanc and its
shareholders (other than MET Holdings).
5.2.5. No Material Adverse Change. As of the Closing Date,
there shall have been no Material Adverse Change in MET Holdings from that which
was represented and warranted on the date of this Agreement pursuant to this
Agreement.
5.2.6. Tax Opinion. TeleBanc shall have received the Tax
Opinion. The Tax Opinion shall have been obtained without the imposition of any
condition that is materially burdensome to TeleBanc. The Tax Opinion shall
remain in full force and effect and all conditions and requirements set forth
therein that are required to be satisfied on or before the Closing Date shall
have been satisfied or properly waived.
5.2.7. Compliance. MET Holdings shall have in all material
respects performed all obligations and agreements and complied with all
covenants contained in this Agreement to be performed and complied with by MET
Holdings on or prior to the Closing Date. There shall not exist a Default or
matter that, with notice and/or passage of time, would constitute a Default by
MET Holdings under this Agreement.
5.3. Conditions to Obligations of MET Holdings.
The obligations of MET Holdings to consummate the transactions
contemplated by this Agreement are subject to the satisfaction, on or before the
Closing Date, of each of the following conditions precedent, any one or more
which may be waived by MET Holdings, at its sole and absolute discretion:
5.3.1. Representations and Warranties. The representations and
warranties of TeleBanc contained in this Agreement shall be true, correct and
complete in all material respects when made on the date of this Agreement and as
of the Closing Date.
5.3.2. No Material Adverse Change. As of the Closing Date,
there shall have been no Material Adverse Change in TeleBanc from that which was
represented and warranted on the date of this Agreement pursuant to this
Agreement.
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5.3.3. Compliance. TeleBanc shall have in all material
respects performed all obligations and agreements and complied with all
covenants contained in this Agreement to be performed and complied with by
TeleBanc on or prior to the Closing Date. There shall not exist a Default or
matter that, with notice and/or passage of time, would constitute a Default by
TeleBanc under this Agreement.
6. CLOSING
6.1. Time and Place of Closing.
The Closing shall take place on the Closing Date at 9:00 a.m.
at TeleBanc's corporate office, located in Arlington, Virginia, or at such other
time and place on the Closing Date as the parties may mutually agree.
6.2. TeleBanc Deliveries.
On the Closing Date, TeleBanc shall deliver or cause to be
delivered to MET Holdings, or in the case of the Merger Consideration, to an
agent (the "Exchange Agent") for the stockholders of MET Holdings receiving all
of the Merger Consideration other than the Caplan/Smilow Escrow Shares and the
Stockholder Escrow Shares, which shares shall be delivered to the Escrow
Agent(s), with each instrument being dated as of the Closing Date and fully
executed, attested, notarized and acknowledged, as appropriate, (i) the Merger
Consideration, (ii) the Amended and Restated Certificate of Incorporation of
TeleBanc certified by the Secretary of State of Delaware, and (iii) such
documents and instruments as MET Holdings may deem reasonably necessary to
consummate the Merger and any other transactions contemplated by this Agreement,
provided that such documents and instruments are consistent with the parties'
intent as expressed in this Agreement.
6.3. MET Holdings Deliveries.
On the Closing Date, MET Holdings shall deliver or cause to be
delivered to TeleBanc, with each document and instrument being dated as of the
Closing Date and fully executed, attested, notarized and acknowledged, as
appropriate, (i) the Restated Certificate of Incorporation of MET Holdings, as
amended, certified by the Secretary of State of Delaware, and (ii) such
documents and instruments as TeleBanc may deem reasonably necessary to
consummate the Merger and any other transactions contemplated by this Agreement,
provided that such documents and instruments are consistent with the parties'
intent as expressed in this Agreement.
6.4. Fees and Closing Costs.
6.4.1 Each party shall pay all reasonable fees and costs of
its own attorneys, accountants, financial advisers and other professionals
incurred in connection with the transactions contemplated by this Agreement, and
TeleBanc hereby expressly consents to the payment by MET Holdings, and MET
Holdings hereby expressly consents to the payment by TeleBanc, before or
simultaneously with the Closing, of such reasonable fees and costs for which the
other is responsible under this Section.
6.4.2 Expenses in connection with the "Blue Sky" registration
and approvals of TeleBanc Stock shall be paid by TeleBanc.
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6.4.3 All other fees and expenses incurred in connection with
the transactions contemplated hereby shall be paid by the party incurring such
expenses.
7. TERMINATION
7.1. Mutual Consent.
The parties may terminate this Agreement at any time by mutual
written agreement.
7.2. Other Termination.
Provided that there does not then exist any Default by the
party or parties giving such notice, MET Holdings, on the one hand, or TeleBanc,
on the other, may terminate this Agreement by giving notice (a "Termination
Notice") to the other at the time designated in this Section or, in the absence
of such designation, at any time up to and including the Closing Date, if any
one or more of the following shall have occurred and be continuing:
7.2.1. Termination By Any Party. Any party may terminate this
Agreement under any one or more of the following circumstances:
(a) at any time after March 31, 1997, if the Closing shall not
have occurred for any reason other than a Default by the party giving such
notice;
(b) this Agreement is not approved by the requisite vote of
the shareholders of MET Holdings or TeleBanc.
(c) any Application for Regulatory Approval is denied or
withdrawn and is not modified or supplemented and resubmitted in a manner that
the party giving the notice believes is responsive to the comments of the
applicable Governmental Authority within 90 days after it is so denied or
withdrawn;
(d) a court or other Governmental Authority of competent
jurisdiction shall have issued an order, writ, injunction or decree or shall
have taken any other action permanently restraining or otherwise prohibiting the
Merger and such order, writ, injunction, decree or other action shall have
become final and nonappealable.
7.2.2. Termination By TeleBanc. TeleBanc may terminate this
Agreement under any one or more of the following circumstances:
(a) at any time if there shall have occurred a Default by MET
Holdings;
(b) on the Closing Date, if any Closing Condition set forth in
Section 5.1 or Section 5.2 shall not have been satisfied;
(c) at any time if a Material Adverse Change in MET Holdings
has occurred and;
(d) at any time up to and including 45 days from the date
hereof if, based upon its corporate investigation of MET Holdings, TeleBanc
reasonably, determines that the business and operations of MET Holdings are not
substantially as represented and warranted on the date hereof.
7.2.3. Termination By MET Holdings. MET Holdings may terminate
this Agreement under any one or more of the following circumstances:
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(a) at any time if there shall have occurred a Default by
TeleBanc;
(b) on the Closing Date, if any condition precedent set forth
in Section 5.1 or Section 5.3 shall not have been satisfied; and
(c) at any time if a Material Adverse Change in TeleBanc has
occurred.
7.3. Effect of Termination.
Termination of this Agreement pursuant to this Section 7 shall
not relieve any party of any liability for a Default or other breach, default or
nonperformance under this Agreement.
8. MISCELLANEOUS
8.1. Notices.
Unless expressly provided otherwise in this Agreement, any
notice, request, demand or other communication required to be given under this
Agreement shall be in writing, shall be deemed to be given or delivered (a) on
the date of personal delivery of the notice, request, demand or other
communication at or before 4:00 p.m. Eastern Standard Time (or Eastern Daylight
Savings Time if then in effect in Virginia), (b) on the third Business Day after
the day of mailing of such notice, request, demand or other communication by
United States Registered Mail or United States Certified Mail, postage prepaid,
or (c) on the next Business Day after mailing of such notice, request, demand or
other communication by express courier, freight charges prepaid, to the parties
(including any person or entity designated for receipt of a photocopy thereof)
at the following addresses or at such other address as any of the parties may
hereafter specify in the aforementioned manner:
If to TeleBanc: TeleBanc Financial Corporation
1111 North Highland Street
Arlington, Virginia 22201
Attention: Aileen Lopez Pugh
And to: Hogan & Hartson L.L.P.
Columbia Square
555 Thirteenth Street, N.W.
Washington, D.C. 20004-1109
Attention: Stuart G. Stein, Esq.
If to MET Holdings: MET Holdings Corporation
405 Park Avenue, Suite 1104
New York, New York 10022
Attention: Emidio Morizio
8.2. Entire Agreement.
Except as expressly provided otherwise in this Agreement, this
Agreement constitutes the entire agreement of the parties hereto with respect to
the matters addressed herein and, except as expressly set forth herein,
supersedes all prior or contemporaneous contracts, covenants, agreements,
representations, warranties and statements, whether written or oral, with
respect to such matters.
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8.3. Amendment.
This Agreement may not be amended, changed, modified or
terminated, except by written instrument executed by all parties to this
Agreement.
8.4. Waiver.
Except as expressly provided herein, no waiver by any party of
any failure or refusal of any other party to comply with one or more of its
obligations under this Agreement shall be deemed a waiver of any other or
subsequent failure or refusal to so comply by such other party. No waiver shall
be valid unless in writing signed by the party to be charged and only to the
extent therein set forth.
8.5. Severability.
If any term or provision of this Agreement or application
thereof to any person or circumstances shall, to any extent, be found by a court
of competent jurisdiction to be invalid or unenforceable, the remainder of this
Agreement, or the application of such term or provision to persons or
circumstances other than those as to which it is held invalid or unenforceable,
shall not be affected thereby and each other term or provision of this Agreement
shall be valid and be enforced to the fullest extent permitted by law unless, as
a result, the intent of the parties as expressed in this Agreement would be
violated.
8.6. Captions.
The title of this Agreement and the headings of the various
paragraphs of this Agreement have been inserted only for the purposes of
convenience, and are not part of this Agreement and shall not be deemed in any
manner to modify, explain, expand or restrict any of the provisions of this
Agreement.
8.7. Governing Law.
Both parties to this Agreement are Delaware corporations. This
Agreement shall be construed and enforced according to the laws of that State
(not including the choice of law rules thereof), unless and to the extent that
the laws of the United States govern the performance of this Agreement.
8.8. No Third Party Beneficiaries.
Except as expressly provided herein, this Agreement is made
and entered into for the sole protection and benefit of the parties hereto, and
no other person or entity shall have any right of action hereon, right to claim
any right or benefit from the terms contained herein or be deemed a third party
beneficiary hereunder.
8.9. Assignability.
All terms and provisions of this Agreement shall be binding
upon and inure to the benefit of the parties hereto, and their respective
transferees, successors and assigns; provided, however, that neither this
Agreement nor any rights, privileges, duties and obligations of the parties
hereto may be assigned or delegated by any party hereto without the prior
written consent of the
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other party to this Agreement and any such purported or attempted assignment
shall be null and void ab initio and of no force or effect.
8.10. Parties Not Partners.
Nothing contained in this Agreement shall constitute any party
as a partner with, agent for or principal of any one or more of the other
parties or their successors and assigns.
8.11. Counterparts.
This Agreement and the documents and instruments to be
executed and delivered pursuant to this Agreement may be executed in any number
of counterparts, each of which shall be deemed an original, but all of which
together shall constitute but one instrument.
8.12. Cumulative Remedies.
Unless expressly provided otherwise herein, the remedies of
each party provided for herein shall be cumulative and concurrent and shall
include all other rights and remedies available at law or in equity, may be
pursued singly, successively or together, at the sole and absolute discretion of
the applicable party and may be exercised as often as occasion therefor shall
arise.
8.13. Time of Performance.
If any payment to be made or obligation to be performed
hereunder is to be made or performed on a day other than a Business Day, it
shall be deemed to be made or performed in a timely manner if done on the next
succeeding Business Day.
8.14. Further Assurances.
Subject to the terms and conditions of this Agreement, each of
the parties agrees to use its best efforts to take, or cause to be taken, all
action and do, or cause to be done, all things necessary, proper or desirable to
satisfy the Closing Conditions and to consummate and make effective the Merger
and the other transactions contemplated by this Agreement. If, any time after
the Closing Date, any further action is necessary, proper or desirable to effect
the purposes of this Agreement, the proper officers and directors of each party
of this Agreement shall take all such further action.
8.15. Time of Essence.
Time is of the essence of this Agreement.
8.16. Survival.
(a) Except as specifically provided otherwise herein, none of
the representations, warranties, covenants or agreements of TeleBanc contained
in this Agreement or in any certificate or instrument delivered pursuant to this
Agreement shall survive the Closing except to the extent that performance
thereof is to occur subsequent to the Closing Date.
(b) Except as specifically provided otherwise herein, all of
the representations, warranties, covenants or agreements of MET Holdings
contained in this Agreement or in any
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certificate or instrument delivered pursuant to this Agreement shall survive the
Closing for a period of two years from the Closing Date; provided, however, that
this two year period shall be extended with respect to claims in respect of
taxes or employee benefits to 30 days after the expiration of the applicable
statutory period for such assessments.
8.17. Indemnification of TeleBanc.
After the Closing, TeleBanc and its successors and assigns,
shall be indemnified and held harmless against and from any loss, liability,
obligation, claim, demand, damage, or expense, including without limitation
reasonable attorneys' fees and disbursements, which is directly or indirectly
suffered or incurred at any time by TeleBanc or any of its successors or
assigns, and which arises directly or indirectly out of or by virtue of, or
relates directly or indirectly to, any of the following:
(a) for any claim made by TeleBanc of any false, misleading or
inaccurate representation or warranty made by MET Holdings in this Agreement or
in any certificate or instrument delivered pursuant to this Agreement, or any
breach of or omission with respect to any such representation or warranty;
(b) for any claim made by TeleBanc of any breach, violation,
or nonfulfillment by MET Holdings of, or any failure by MET Holdings to perform
any covenant, agreement, obligation or other provision contained in this
Agreement;
(c) for any violation of the obligations of MET Holdings set
forth in Sections 4.3(b) and (c); and
(d) for any action, lawsuit or other proceeding arising from
or relating to any of the foregoing if a claim is made by TeleBanc within the
applicable period set forth in Section 8.16(b).
Any claim by TeleBanc or its successors or assigns pursuant to
this Section 8.17 shall be satisfied only by recourse to the Stockholder Escrow
Shares and only to the extent any such shares remain in the Escrow Account
provided for in Section 2.2.1(c).
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the date first above written.
TELEBANC FINANCIAL CORPORATION
By: /s/ Mark Rollinson
Name: Mark Rollinson
ATTEST
By: /s/ Sang-Hee Yi
Asst. Secretary
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MET HOLDINGS CORPORATION
By: /s/ Mitchell Caplan
Name: Mitchell Caplan
Title: President
ATTEST
By:_______________________
Secretary
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EXHIBIT LIST
EXHIBIT A Statement of Earnings Requirements
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EXHIBIT A
Statement of Earnings Requirements
Between the Closing Date and up to and including the Escrow Termination
Date, at such time as Arbor has $1,875,000 of cumulative net income, determined
in accordance generally accepted accounting principles, as measured from the
Closing Date (the "Initial Arbor Earnings Goal"), then, for each $10.31 of
additional cumulative net income (determined in accordance with generally
accepted accounting principles, of Arbor, as measured at the end of each fiscal
quarter) one share of the TeleBanc Stock deposited in the Stockholder Escrow
Account pursuant to Section 2.2.1(c) of the Agreement and Plan of Merger (the
"Release Ratio") shall be released from escrow, pursuant to the terms of Section
2.2.1(c) and the Stockholder Escrow Agreement.
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