<PAGE>
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): MARCH 11, 1998
FIRSTPLUS FINANCIAL GROUP, INC.
- ------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
NEVADA 0-27750 75-2561085
- ------------------------------- ---------------- ------------------
(State or other jurisdiction of (Commission File (IRS Employer
incorporation) Number) Identification No.
1600 VICEROY, 8TH FLOOR DALLAS, TEXAS 75235
- ----------------------------------------------------- ------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (214) 599-6400
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
<PAGE>
ITEM 5. OTHER EVENTS.
On March 11, 1998, FIRSTPLUS Financial Group, Inc. (the "Company") and
LIFE Financial Corporation ("LIFE") entered into an Agreement and Plan of
Merger (the "Merger Agreement") whereby LIFE will be acquired by the Company.
Under the Merger Agreement, a newly formed, wholly owned subsidiary of the
Company will merge with and into LIFE, with LIFE being the surviving
corporation in the merger ("Merger"). The Merger is structured as a
stock-for-stock merger whereby LIFE stockholders will receive approximately
$20.00 in value of FIRSTPLUS voting common stock for each share of LIFE common
stock, to the extent FIRSTPLUS common stock trades between $30.00 and $40.00
per share.
It is anticipated that the Merger will be treated as a tax-free
reorganization under Section 368(a)(2)(E) of the Internal Revenue Code of
1986, as amended and a "pooling of interests."
Completion of the Merger is subject to certain conditions, including (i)
approval by the stockholders of LIFE; (ii) approval by the Office of Thrift
Supervision and other requisite regulatory authorities; (iii) receipt of an
opinion of counsel for LIFE that the Merger will be treated as a tax-free
reorganization for federal income tax purposes; and (iv) other conditions to
closing that are customary in transactions of this type.
The terms of the Merger and the transactions related thereto are
contained in the Merger Agreement, which is filed as an exhibit to this
current report on Form 8-K. Reference is made to such document for a more
complete description of the terms and provisions of the proposed acquisition.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED.
Not Applicable.
(b) PRO FORMA FINANCIAL INFORMATION.
Not Applicable.
(c) EXHIBITS.
The following exhibits are furnished in accordance with Item 601 of
Regulation S-K.
10.1 Agreement and Plan of Merger, dated as of March 11, 1998
99.1 Press Release
2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf of the
undersigned hereunto duly authorized.
FIRSTPLUS FINANCIAL GROUP, INC.
Date: March 12, 1998 By: /s/ Eric C. Green
--------------------------
Name: Eric C. Green
Title: President
<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of March 11, 1998 (the "Agreement")
by and among LIFE FINANCIAL CORPORATION, a Delaware corporation (the "Seller"),
FIRSTPLUS FINANCIAL GROUP, INC., a Nevada corporation (the "Company") and Life
Financial Acquisition, Inc., a Delaware corporation and a wholly owned
subsidiary of the Company (the "Subsidiary").
WHEREAS, the Boards of Directors of the Company and the Seller have each
determined that it is fair to and in the best interests of their respective
stockholders for the Subsidiary to merge with and into the Seller (the "Merger")
upon the terms and subject to the conditions set forth herein and in accordance
with the Delaware General Corporation Law (the "DGCL");
WHEREAS, the respective Boards of Directors of the Company and the Seller
have each approved the Merger of the Subsidiary with and into the Seller, upon
the terms and subject to the conditions set forth herein, and adopted in this
Agreement;
WHEREAS, for federal income tax purposes, it is intended that the Merger
shall qualify as a reorganization under the provisions of Section 368(a)(2)(E)
of the Internal Revenue Code of 1986, as amended (the "Code");
WHEREAS, as a condition to the willingness of the Company to enter into
this Agreement, the directors of the Seller will, within thirty (30) days of the
date of this Agreement, enter into voting agreements with the Company with
respect to the voting of their shares of the Seller in favor of the transactions
contemplated by this Agreement (the "Voting Agreements").
WHEREAS, under generally accepted accounting principles ("GAAP") it is
intended that the Merger shall be accounted for as a pooling of interests; and
WHEREAS, the Company and the Seller desire to make certain representations,
warranties and agreements in connection with the Merger and also to prescribe
various conditions to the Merger.
NOW, THEREFORE, in consideration of the foregoing premises and the
representations, warranties and agreements contained herein, and subject to the
terms and conditions set forth herein, the parties agree as follows:
ARTICLE I--THE MERGER
1.1 THE MERGER. Upon the terms and subject to the conditions set forth in
this Agreement, and in accordance with the DGCL, at the Effective Time (as
defined in SECTION 1.2) the Subsidiary shall be merged with and into the Seller.
As a result of the Merger, the separate corporate existence of the Subsidiary
shall cease and the Seller shall continue as the surviving corporation of the
Merger (the "Surviving Corporation").
<PAGE>
1.2 EFFECTIVE TIME. As promptly as practicable after the satisfaction or,
if permissible, waiver of the conditions set forth in ARTICLE VII, the parties
shall cause the Merger to be consummated by filing a certificate of merger (the
"Certificate of Merger") with the State of Delaware, in such form as required by
and executed in accordance with the relevant provisions of the DGCL (the date
and time of such filing is referred to as the "Effective Time").
1.3 EFFECT OF THE MERGER. At the Effective Time, the effect of the Merger
shall be as provided in this Agreement and the applicable provisions of the
DGCL. Without limiting the generality of the foregoing, and subject thereto, at
the Effective Time, except as otherwise provided herein, all the property,
rights, privileges, powers and franchises of the Subsidiary and the Seller shall
vest in the Surviving Corporation and all debts, liabilities and duties of the
Subsidiary and the Seller shall become the debts, liabilities and duties of the
Surviving Corporation.
1.4 CERTIFICATE OF INCORPORATION AND BYLAWS. At the Effective Time, the
Certificate of Incorporation of the Subsidiary (the "Subsidiary Certificate")
and the Bylaws of the Subsidiary ("Subsidiary Bylaws") as in effect immediately
prior to the Effective Time shall be the Certificate of Incorporation and the
Bylaws of the Surviving Corporation.
1.5 DIRECTORS AND OFFICERS. At the Effective Time, the directors of the
Subsidiary immediately prior to the Effective Time shall be the directors of the
Surviving Corporation, each to hold office in accordance with the Certificate of
Incorporation and Bylaws of the Surviving Corporation. At the Effective Time,
the officers of the Subsidiary immediately prior to the Effective Time shall be
the officers of the Surviving Corporation, in each case until their respective
successors are duly elected or appointed. At the Effective Time, the directors
and officers of Life Bank, a Seller Subsidiary (as defined in Section 2.1(a))
("Life Bank"), immediately prior to the Effective Time shall be the directors
and officers of Life Bank.
1.6 CONVERSION OF SECURITIES. Subject to SECTION 1.8(e) regarding
fractional shares, at the Effective Time, by virtue of the Merger and without
any action on the part of the holder of the following securities, the Company,
the Subsidiary or the Seller:
(a) Each share of the common stock, par value $0.01 per share, of the
Seller ("Seller Common Stock"), issued and outstanding immediately prior to the
Effective Time (referred to as the "Shares"), other than Shares held by the
Company for its own account or any Company Subsidiary (as defined in SECTION
3.1(a) below) for its own account, shall cease to be outstanding and shall be
converted into and become the right to receive that number of shares of voting
common stock, par value $0.01 per share, of the Company ("Company Common Stock")
as is equal to the number determined by dividing (i) 20 (which number represents
the deemed per share dollar value of the Seller Common Stock) by (ii) the
Company Share Value (as defined below) (the "Exchange Ratio"). The "Company
Share Value" shall be a number equal to the per share dollar value of the
average closing sale price of the Company Common Stock as reported on the New
York Stock Exchange ("NYSE") for the thirty consecutive trading days immediately
preceding the second business day prior to the Effective Time; PROVIDED,
HOWEVER, that the Company Share Value shall in no event be
2
<PAGE>
less than 30 nor greater than 40 (resulting in an Exchange Ratio of not
greater than 0.667 nor less than 0.500).
(b) Each share of Seller Common Stock held as treasury stock shall be
canceled and extinguished without conversion into Company Common Stock or
payment therefor.
(c) Each share of Seller Common Stock held by the Company for its own
account or any Company Subsidiary for its own account shall be canceled and
extinguished without conversion into Company Common Stock or payment therefor.
(d) Each share of Seller Common Stock held by any incentive plan of Seller
or any Seller Subsidiary and unallocated to participants thereunder shall be
canceled and extinguished without conversion into Company Common Stock or
payment therefor.
1.7 ADJUSTMENTS FOR DILUTION AND OTHER MATTERS. If prior to the Effective
Time, (i) the Seller shall declare a stock dividend or distribution upon or
subdivide, split up, reclassify or combine the Seller Common Stock, or declare a
dividend or make a distribution on Seller Common Stock in any security
convertible into Seller Common Stock, or (ii) the Company shall declare a stock
dividend or distribution upon or subdivide, split up, reclassify or combine the
Company Common Stock or declare a dividend or make a distribution on Company
Common Stock in any security convertible into Company Common Stock, appropriate
adjustment or adjustments will be made to the Exchange Ratio and the methodology
for calculating the Exchange Ratio as set forth in SECTION 1.6.
1.8 EXCHANGE OF CERTIFICATES.
(a) EXCHANGE AGENT. At or prior to the Effective Time, the Company shall
deposit, or shall cause to be deposited with an exchange agent chosen by the
Company and which is reasonably acceptable to the Seller (the "Exchange Agent"),
for the benefit of the holders of Shares for exchange in accordance with this
ARTICLE I, through the Exchange Agent, certificates representing the shares of
Company Common Stock and cash in lieu of fractional shares (such certificates
for shares of Company Common Stock, together with the amount of cash payable in
lieu of fractional shares and any dividends or distributions with respect to
such Company Common Stock are referred to herein as the "Exchange Fund") payable
and issuable pursuant to SECTION 1.6 in exchange for outstanding Shares;
provided, however, that the Company need not deposit the cash for fractional
shares into the Exchange Fund until such time as such funds are to be
distributed by the Exchange Agent.
(b) EXCHANGE PROCEDURES. As soon as practicable after the Effective Time,
the Exchange Agent shall mail to each holder of record of a certificate or
certificates which immediately prior to the Effective Time represented
outstanding Shares which Shares were converted into the right to receive shares
of Company Common Stock pursuant to SECTION 1.6 (a "Certificate" or
"Certificates"), (i) a letter of transmittal (which shall specify that delivery
shall be effected, and risk of loss and title to the Certificates shall pass,
only upon delivery of the Certificates to the Exchange Agent and shall
3
<PAGE>
be in such form and have such other provisions as the Company may reasonably
specify) and (ii) instructions for use in effecting the surrender of the
Certificates in exchange for certificates representing shares of Company
Common Stock. The Seller shall have the right to review both the letter of
transmittal and the instructions prior to the Effective Time and to provide
reasonable comments thereon. Upon surrender of a Certificate for
cancellation to the Exchange Agent together with such letter of transmittal,
duly executed, the holder of such Certificate shall be entitled to receive in
exchange therefor a certificate representing that number of whole shares of
Company Common Stock which such holder has the right to receive in respect of
the Certificate surrendered pursuant to the provisions of this ARTICLE I
(after taking into account all Shares then held by such holder), and the
Certificate so surrendered shall forthwith be canceled. In the event of a
transfer of ownership of Shares which is not registered in the transfer
records of the Seller, a certificate representing the number of shares of
Company Common Stock may be issued to a transferee if the Certificate
representing such Shares is presented to the Exchange Agent, accompanied by
all documents required to evidence and effect such transfer and by evidence
that any applicable stock transfer taxes have been paid. In the event any
Certificate shall have been lost, stolen or destroyed, upon the making of an
affidavit of that fact by the person claiming such Certificate to be lost,
stolen or destroyed and the posting by such person of a bond in such amount
as the Company may direct as indemnity against any claim that may be made
against it or the Exchange Agent with respect to such Certificate, the
Exchange Agent will issue in exchange for such lost, stolen or destroyed
Certificate a certificate representing the number of shares of Company Common
Stock. Until surrendered as contemplated by this SECTION 1.8, each
Certificate shall be deemed at any time after the Effective Time to represent
only the right to receive upon such surrender the certificate representing
shares of Company Common Stock, dividends, cash in lieu of any fractional
shares of Company Common Stock as contemplated by SECTION 1.8(e) and other
distributions as contemplated by SECTION 1.8(c).
(c) DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES. No dividends or
other distributions declared or made after the Effective Time with respect to
Company Common Stock with a record date after the Effective Time shall be paid
to the holder of any unsurrendered Certificate with respect to the shares of
Company Common Stock represented thereby, and no cash payment in lieu of
fractional shares shall be paid to any such holder pursuant to SECTION 1.8(e),
until the holder of such Certificate shall surrender such Certificate. Subject
to the effect of applicable laws, following surrender of any such Certificate,
there shall be paid to the holder of the certificates representing whole shares
of Company Common Stock issued in exchange therefor, without interest, (i)
promptly, the amount of any cash payable with respect to a fractional share of
Company Common Stock to which such holder is entitled pursuant to SECTION 1.8(e)
and the amount of dividends or other distributions with a record date after the
Effective Time theretofore paid with respect to such whole shares of Company
Common Stock, and (ii) at the appropriate payment date, the amount of dividends
or other distribution, with a record date after the Effective Time but prior to
surrender and a payment date occurring after surrender, payable with respect to
such whole shares of Company Common Stock.
(d) NO FURTHER RIGHTS IN THE SHARES. All shares of Company Common Stock
issued and cash paid upon conversion of the Shares in accordance with the terms
hereof (including any cash paid
4
<PAGE>
pursuant to SECTION 1.8(e)) shall be deemed to have been issued in full
satisfaction of all rights pertaining to such Shares.
(e) NO FRACTIONAL SHARES. No certificates or scrip representing
fractional shares of Company Common Stock shall be issued upon the surrender for
exchange of Certificates, and such fractional share interest will not entitle
the owner thereof to vote or to any rights of a stockholder of the Company.
Each holder of a fractional share interest shall be paid an amount in cash equal
to the product obtained by multiplying such fractional share interest to which
such holder (after taking into account all fractional share interests then held
by such holder) would otherwise be entitled by the Company Share Value.
(f) TERMINATION OF EXCHANGE FUND. Any portion of the Exchange Fund which
remains undistributed to the former stockholders of the Seller for six months
after the Effective Time shall be delivered to the Company, upon demand, and any
former stockholders of the Seller who have not theretofore complied with this
ARTICLE I shall thereafter look only to the Company to claim their shares of
Company Common Stock, any cash in lieu of fractional shares of Company Common
Stock and any dividends or distributions with respect to Company Common Stock,
in each case without interest thereon, and subject to SECTION 1.8(g).
(g) NO LIABILITY. Neither the Company nor the Seller shall be liable to
any former holder of Shares for any such Shares (or dividends or distributions
with respect thereto) or cash or other payment delivered to a public official
pursuant to any abandoned property, escheat or similar laws.
1.9 STOCK TRANSFER BOOKS. At the Effective Time, the stock transfer books
of the Seller shall be closed and there shall be no further registration of
transfers of shares of the Seller Common Stock thereafter on the records of the
Seller. From and after the Effective Time, the holders of Certificates shall
cease to have any rights with respect to such Shares except as otherwise
provided herein or by law. On or after the Effective Time, any Certificates
presented to the Exchange Agent or the Company for any reason shall be converted
into shares of Company Common Stock and cash in lieu of fractional shares in
accordance with this ARTICLE I.
1.10 COMPANY COMMON STOCK. The shares of Company Common Stock, issued and
outstanding immediately prior to the Effective Time shall be unaffected by the
Merger and at the Effective Time, such shares shall remain issued and
outstanding.
1.11 TREATMENT OF COMMON STOCK OF SUBSIDIARY. Each issued and outstanding
share of common stock, par value $0.01 per share, of the Subsidiary shall be
converted into one fully paid and nonassessable share of common stock, par value
$0.01 per share, of the Surviving Corporation.
1.12 FURTHER ASSURANCES. At and after the Effective Time, the officers and
directors of the Surviving Corporation and the Company will be authorized to
execute and deliver, in the name and on behalf of the Seller, any deeds, bills
of sale, assignments or assurances and to take and do, in the name and on behalf
of the Seller, any other actions and things to vest, perfect or conform of
5
<PAGE>
record or otherwise in the Surviving Corporation any and all right, title and
interest in, to and under any of the rights, properties or assets acquired or to
be acquired by the Surviving Corporation as a result of, or in connection with,
the Merger.
ARTICLE II--REPRESENTATIONS AND WARRANTIES OF THE SELLER
Except as set forth in the Disclosure Schedule delivered by the Seller to
the Company prior to the execution of this Agreement (the "Seller Disclosure
Schedule"), which will identify exceptions by specific Section references, the
Seller hereby represents and warrants to the Company that:
2.1 ORGANIZATION AND QUALIFICATION: SUBSIDIARIES
(a) The Seller is a company duly organized, validly existing and in good
standing under the laws of the State of Delaware, and is registered as a
nondiversified unitary savings and loan holding company under the Home Owners'
Loan Act of 1933, as amended ("HOLA"). Each subsidiary of the Seller ("Seller
Subsidiary" or collectively, "Seller Subsidiaries"), except for Life Bank is a
corporation duly organized, validly existing and in good standing under the laws
of the state of its incorporation. Life Bank, a Seller Subsidiary, is a
federally-chartered savings association duly organized and validly existing
under the laws of the United States of America, and is a "Qualified Thrift
Lender," as that term is defined under the HOLA. Each of the Seller and the
Seller Subsidiaries has the requisite corporate power and authority and is in
possession of all franchises, grants, authorizations, licenses, permits,
easements, consents, certificates, approvals and orders ("Seller Approvals")
necessary to own, lease and operate its properties and to carry on its business
as it is now being conducted, including, without limitation, appropriate
authorizations from the Federal Deposit Insurance Corporation (the "FDIC") and
the Office of Thrift Supervision ("OTS"), and neither the Seller nor any Seller
Subsidiary has received any notice of proceedings relating to the revocation or
modification of any Seller Approvals, except in each case where the failure to
be so organized, existing and in good standing or to have such power, authority,
Seller Approvals and revocations or modifications would not, individually or in
the aggregate, have a Material Adverse Effect (as defined below) with respect to
the Seller. The deposit accounts of Life Bank are insured by the FDIC to the
extent permitted by law.
(b) The Seller and each Seller Subsidiary, other than Life Bank, is duly
qualified or licensed as a foreign corporation to do business, and is in good
standing, in each jurisdiction where the character of its properties owned,
leased or operated by it or the nature of its activities makes such
qualification or licensing necessary, except where such failures to be so duly
qualified or licensed and in good standing would not, either individually or in
the aggregate, have a Material Adverse Effect with respect to the Seller.
(c) A true and complete list of all of the Seller Subsidiaries, together
with (i) the Seller's percentage ownership of each Seller Subsidiary and (ii)
laws under which the Seller Subsidiary is incorporated, is set forth on SECTION
2.1(c) of the Seller Disclosure Schedule. Except as set forth on SECTION 2.1(c)
of the Seller Disclosure Schedule, the Seller and/or one or more of the Seller
6
<PAGE>
Subsidiaries owns beneficially and of record all of the outstanding shares of
capital stock of each of the Seller Subsidiaries. Except for the entities set
forth on SECTION 2.1(c) of the Seller Disclosure Schedule, the Seller does not
directly or indirectly own any equity or similar interests in, or any interests
convertible into or exchangeable or exercisable for any equity or similar
interest in, any corporation, partnership, joint venture or other business
association or entity other than in the ordinary course of business, and in no
event in excess of 5% of the outstanding equity securities of such entity.
(d) As used in this Agreement, the term "Material Adverse Effect" means,
with respect to the Company or the Seller, as the case may be, (i) any adverse
effect on the business, assets, properties, liabilities, results of operations
or financial condition of, and which is material with respect to, the Company
and the Company Subsidiaries taken as whole or the Seller and the Seller
Subsidiaries taken as a whole, respectively, or (ii) any effect that materially
impairs the ability of the Company or the Seller to consummate the transactions
contemplated hereby; provided, however, that Material Adverse Effect shall not
be deemed to include the impact of (a) actions contemplated by this Agreement,
(b) changes in laws and regulations or interpretations thereof that are
generally applicable to the banking or savings industries, (c) changes in
generally accepted accounting principles that are generally applicable to the
banking or savings industries, (d) reasonable expenses incurred in connection
with the transactions contemplated hereby, and (e) changes attributable to or
resulting from changes in general economic conditions affecting banks, savings
institutions or their holding companies generally, including changes in the
prevailing level of interest rates.
(e) The minute books of the Seller and each of the Seller Subsidiaries
since December 31, 1994 contain true, complete and accurate records in all
material respects of all meetings and other corporate actions held or taken of
their respective stockholders and Boards of Directors (including committees of
their respective Boards of Directors).
2.2 CERTIFICATE OF INCORPORATION AND BYLAWS. The Seller has heretofore
furnished to the Company a complete and correct copy of the Certificate of
Incorporation and the Bylaws, as amended or restated, of the Seller ("Seller
Certificate" or "Seller Bylaws") and each Seller Subsidiary. Such Certificates
of Incorporation and Bylaws of the Seller and each Seller Subsidiary are in full
force and effect. Neither the Seller nor any Seller Subsidiary is in violation
of any of the provisions of its Certificate of Incorporation or Bylaws.
2.3 CAPITALIZATION. The authorized capital stock of the Seller consists
of 25,000,000 shares of Seller Common Stock and 5,000,000 shares of preferred
stock, par value $0.01 per share ("Seller Preferred Stock"). As of the date of
this Agreement, (i) 6,546,716 shares of Seller Common Stock are issued and
outstanding (of which none are restricted shares under employee benefit plans
which have not and will not be awarded), all of which are duly authorized,
validly issued, fully paid and non-assessable, and were not issued in violation
of any preemptive right of any Seller stockholder, (ii) no shares of Seller
Common Stock are held in the treasury of the Seller, (iii) 654,671 shares of
Seller Common Stock which are reserved for future issuance pursuant to
outstanding stock options issued pursuant to the Stock Plans. As of the date of
this Agreement, no shares of Seller
7
<PAGE>
Preferred Stock are issued and outstanding. Except as set forth in clause
(iii) above, there are no options, warrants or other rights, agreements,
arrangements or commitments of any character, including without limitation
voting agreements or arrangements, relating to the issued or unissued capital
stock of the Seller or any Seller Subsidiary or obligating the Seller or any
Seller Subsidiary to issue or sell any shares of capital stock of, or other
equity interests in, the Seller or any Seller Subsidiary. All options under
the Stock Plans have been validly issued as of their respective grant dates.
All shares of Seller Common Stock subject to issuance as aforesaid, upon
issuance on the terms and conditions specified in the instruments pursuant to
which they are issuable, shall be duly authorized, validly issued, fully paid
and nonassessable. There are no obligations, contingent or otherwise, of the
Seller or any Seller Subsidiary to repurchase, redeem or otherwise acquire
any shares of Seller Common Stock or the capital stock of any Seller
Subsidiary or to provide funds to or make any investment (in the form of a
loan, capital contribution or otherwise) in any Seller Subsidiary or any
other entity, except for loan commitments and other funding obligations
entered into in the ordinary course of business. Each of the outstanding
shares of capital stock of each Seller Subsidiary are duly authorized,
validly issued, fully paid and nonassessable, and were not issued in
violation of any preemptive rights of any Seller Subsidiary stockholder, and
such shares owned by the Seller or another Seller Subsidiary are owned free
and clear of all security interests, liens, claims, pledges, agreements,
limitations of the Seller's voting rights, charges or other encumbrances of
any nature whatsoever.
2.4 AUTHORITY. The Seller has the requisite corporate power and authority
to execute and deliver this Agreement to perform its obligations hereunder and
to consummate the transactions contemplated hereby (other than, with respect to
the Merger, the approval and adoption of this Agreement by the Seller's
stockholders in accordance with the applicable law and the Seller Certificate
and Seller Bylaws). The execution and delivery of this Agreement by the Seller
and the consummation by the Seller of the transactions contemplated hereby have
been duly and validly authorized by all necessary corporate action and no other
corporate proceedings on the part of the Seller are necessary to authorize this
Agreement or to consummate the transactions so contemplated hereby (other than,
with respect to the Merger, the approval and adoption of this Agreement by the
Seller's stockholders in accordance with applicable law and the Seller
Certificate and Seller Bylaws). This Agreement has been duly executed and
delivered by, and constitutes a valid and binding obligation of the Seller and,
assuming due authorization, execution and delivery by the Company, is
enforceable against the Seller in accordance with its terms, except as
enforcement may be limited by laws affecting insured depository institutions,
general principles of equity whether applied in a court of law or a court of
equity and by bankruptcy, insolvency and similar laws affecting creditors'
rights and remedies generally.
2.5 NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) The execution and delivery of this Agreement by the Seller does not,
and the performance of this Agreement and the transactions contemplated hereby
by the Seller shall not, (i) conflict with or violate the Seller Certificate or
Seller Bylaws or the Certificates of Incorporation, charters or Bylaws of any
Seller Subsidiary, (ii) conflict with or violate any federal, state or local
law,
8
<PAGE>
statute, ordinance, rule, regulation, order, judgment or decree
(collectively, "Laws") applicable to the Seller or any Seller Subsidiary or
by which its or any of their respective properties is bound or affected, or
(iii) result in any breach of or constitute a default (or an event that with
notice or lapse of time or both would become a default) under, or give to
others any rights of termination, amendment, acceleration cancellation of, or
result in the creation of a lien or encumbrance on any of the properties or
assets of the Seller or any Seller Subsidiary pursuant to, any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise
or other instrument or obligation to which the Seller or any Seller
Subsidiary is a party or by which the Seller or any Seller Subsidiary or its
or any of their respective properties is bound or affected, except in the
case of clauses (ii) and (iii) for any such conflicts, violations, breaches,
defaults or other occurrences that individually or in the aggregate, would
not have or be reasonably likely to have a Material Adverse Effect with
respect to the Seller. The Board of Directors of the Seller has taken all
actions necessary including approving the transactions contemplated herein.
(b) The execution and delivery of this Agreement by the Seller does not,
and the performance of this Agreement by the Seller shall not, require any
consent, approval, authorization or permit of, or filing with or notification to
any governmental or regulatory authority, domestic or foreign, except (i) for
applicable requirements, if any, of the Securities Act of 1933, as amended (the
"Securities Act"), the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), state securities or blue sky laws ("Blue Sky Laws"), the HOLA,
and the filing of the appropriate Certificate of Merger or other documents as
required by the DGCL and (ii) where the failure to obtain such consents,
approvals, authorizations or permits, or to make such filings or notification,
would not prevent or delay consummation of the Merger, or otherwise prevent the
Seller from performing its obligations under this Agreement and would not have a
Material Adverse Effect with respect to the Seller.
2.6 COMPLIANCE: PERMITS. Neither the Seller nor any Seller Subsidiary is
in conflict with, or in default or violation of, (i) any Law applicable to the
Seller or any Seller Subsidiary or by which its or any of their respective
properties is bound or affected, or (ii) any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other instrument or
obligation to which the Seller or any Seller Subsidiary is a party or by which
the Seller or any Seller Subsidiary or its or any of their respective properties
is bound or affected, except for any such conflicts, defaults or violations
which would not, individually or in the aggregate, have a Material Adverse
Effect with respect to the Seller.
2.7 SECURITIES AND BANKING REPORTS; FINANCIAL STATEMENTS.
(a) The Seller and each Seller Subsidiary have filed all forms, reports
and documents required to be filed with (1) the Securities and Exchange
Commission (the "SEC"), and as of the date of this Agreement has delivered to
the Company (i) its Quarterly Reports on Form 10-Q for the periods ended
June 30, 1997 and September 30, 1997, (ii) all proxy statements relating to the
Seller's meetings of stockholders (whether annual or special), (iii) all Current
Reports on Form 8-K filed by the Seller with the SEC, (iv) all other reports or
registration statements filed by the Seller with the
9
<PAGE>
SEC and (v) all amendments and supplements to all such reports and
registration statements filed by the Seller with the SEC (collectively, the
"Seller SEC Reports") and (2) the OTS, the FDIC and any other applicable
federal or state securities or banking authorities, and as of the date of
this Agreement has delivered to the Company all such reports filed since
January 1, 1993 (all such reports and statements are collectively referred to
with the Seller SEC Reports as the "Seller Reports"). The Seller Reports,
including all Seller Reports filed after the date of this Agreement, (i) were
or will be prepared in all material respects in accordance with the
requirements of applicable Law and (ii) did not at the time they were filed,
or will not at the time they are filed, contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(b) Each of the consolidated financial statements (including, in each
case, any related notes thereto) contained in the Seller SEC Reports, including
any Seller SEC Reports filed since the date of this Agreement and prior to or on
the Effective Time, have been prepared in accordance with GAAP applied on a
consistent basis throughout the periods involved (except as may be indicated in
the notes thereto) and each fairly presents the consolidated financial position
of the Seller and the Seller Subsidiaries as of the respective dates thereof and
the consolidated results of its operations and changes in financial position for
the periods indicated, except that any unaudited interim financial statements
were or are subject to normal and recurring year-end adjustments that were not
or are not expected to be material in amount.
(c) Except (i) for the liabilities that are fully reflected or reserved
against on the consolidated statement of financial condition of the Seller
included in the Seller's Form 10-Q for the quarter ended September 30, 1997,
(ii) for the liabilities incurred in the ordinary course of business consistent
with past practice since September 30, 1997, and (iii) neither the Seller nor
any Seller Subsidiary has incurred any liability of any nature whatsoever
(whether absolute, accrued, contingent or otherwise due or to become due), that,
either alone or when combined with all similar liabilities, has had, or would
reasonably be expected to have, a Material Adverse Effect with respect to the
Seller.
2.8 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed in the
Seller SEC Reports filed prior to the date of this Agreement or set forth in
SECTION 2.8 of the Seller Disclosure Schedule and except for the transactions
contemplated by this Agreement, since September 30, 1997 to the date of this
Agreement, the Seller and the Seller Subsidiaries have conducted their
businesses only in the ordinary course and in a manner consistent with past
practice and, since September 30, 1997, there has not been (i) any change in the
financial condition, results of operations or business of the Seller and any of
the Seller Subsidiaries having a Material Adverse Effect with respect to the
Seller, (ii) any damage, destruction or loss (whether or not covered by
insurance) with respect to any assets of the Seller or any of the Seller
Subsidiaries having a Material Adverse Effect with respect to Seller, (iii) any
change by the Seller in its accounting methods, principles or practices, (iv)
any revaluation by the Seller of any of its assets in any material respect, (v)
any declaration, setting aside or payment of any dividends or distributions in
respect of shares of Seller Common Stock or any
10
<PAGE>
redemption, purchase or other acquisition of any of its securities or any of
the securities of any Seller Subsidiary, (vi) any strike, work stoppage,
slow-down or other labor disturbance suffered by the Seller or the Seller
Subsidiaries, (vii) any collective bargaining agreement, contract or other
agreement or understanding with a labor union or organization to which the
Seller or the Seller Subsidiaries have been a party, (viii) any union
organizing activities relating to employees of the Seller or the Seller
Subsidiaries, or (ix) any increase in the wages, salaries, compensation,
pension or other fringe benefits or perquisites payable to any executive
officer, employee or director, any grant of severance or termination pay, any
contract entered into to make or grant any severance or termination pay, or
any bonus paid other than year-end bonuses for fiscal 1997 as listed in
SECTION 2.8 of the Seller Disclosure Schedule.
2.9 ABSENCE OF LITIGATION.
(a) Except as set forth in SECTION 2.9 of the Seller Disclosure
Schedule, neither the Seller nor any of the Seller Subsidiaries is a party to
any, and there are no pending or, to the best of the Seller's knowledge,
threatened, legal, administrative, arbitral or other proceedings, claims,
actions or governmental or regulatory investigations of any nature against
the Seller or any of the Seller Subsidiaries or challenging the validity or
propriety of the transactions contemplated by this Agreement as to which
there is reasonable probability of an adverse determination and which, if
adversely determined, would, individually or in the aggregate, have a
Material Adverse Effect with respect to the Seller.
(b) There is no injunction, order, judgment, decree or regulatory
restriction imposed upon the Seller, any of the Seller Subsidiaries or the
assets of the Seller or any of the Seller Subsidiaries which has had a
Material Adverse Effect with respect to the Seller.
2.10 EMPLOYEE BENEFIT PLANS.
(a) PLANS OF THE SELLER. SECTION 2.10(a) of the Seller Disclosure
Schedule lists (i) all employee benefit plans (as defined in Section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA")),
and all bonus, stock option, stock purchase, restricted stock, incentive,
deferred compensation, retiree medical or life insurance, supplemental
retirement, severance or other benefit plans, programs or arrangements, and
all material employment, termination, severance or other employment contracts
or employment agreements, with respect to which the Seller or any Seller
Subsidiary has any obligation (collectively, the "Plans"). The Seller has
furnished or made available to the Company a complete and accurate copy of
each Plan (or a description of the Plans, if the Plans are not in writing)
and a complete and accurate copy of each material document prepared in
connection with each such Plan, including, without limitation, and where
applicable, a copy of (i) each trust or other funding arrangement, (ii) each
summary plan description and summary of material modifications, (iii) the
three (3) most recently filed IRS Forms 5500 and related schedules, (iv) the
most recently issued IRS determination letter for each such Plan and (v) the
three (3) most recently prepared actuarial and financial statements in
connection with each such Plan.
11
<PAGE>
(b) ABSENCE OF CERTAIN TYPES OF PLANS. Except as disclosed in SECTION
2.10(b) of the Seller Disclosure Schedule, no member of the Seller's
"controlled group," within the meaning of Section 4001(a)(14) of ERISA,
maintains or contributes to, or within the five years preceding the date of
this Agreement has maintained or contributed to, an employee pension benefit
plan subject to Title IV of ERISA ("Title IV Plan"). No Title IV Plan is a
"multiemployer pension plan" as defined in Section (3)37 of ERISA. Except as
disclosed in SECTION 2.10(b) of the Seller Disclosure Schedule, none of the
Plans obligates the Seller or any of the Seller Subsidiaries to pay material
separation, severance, termination or similar-type benefits solely as a
result of any transaction contemplated by this Agreement or as a result of a
"change in control," within the meaning of such term under Section 280G of
the Code. Except as disclosed in SECTION 2.10(b) of the Seller Disclosure
Schedule, or as required by COBRA, none of the Plans provides for or promises
retiree medical, disability or life insurance benefits to any current or
former employee, officer or director or life insurance benefits to any
current or former employee, officer or director of the Seller or any of the
Seller Subsidiaries. Each of the Plans is subject only to the laws of the
United States or a political subdivision thereof.
(c) COMPLIANCE WITH APPLICABLE LAW. Except as disclosed in SECTION
2.10(c) of the Seller Disclosure Schedule, each Plan has been operated in all
respects in accordance with the requirements of all applicable Law and all
persons who participate in the operation of such Plans and all Plan
"fiduciaries" (within the meaning of Section 3(21) of ERISA) have acted in
accordance with the provisions of all applicable Law, except where such
violations of applicable Law would not, individually or in the aggregate,
have a Material Adverse Effect with respect to the Seller. The Seller and
the Seller Subsidiaries have performed all obligations required to be
performed by any of them under, are not in any respect in default under or in
violation of, and the Seller and the Seller Subsidiaries have no knowledge of
any default or violation by any party to, any Plan, except where such
failures, defaults or violations would not, individually or in the aggregate,
have a Material Adverse Effect with respect to the Seller. No legal action,
suit or claim is pending or, to the knowledge of the Seller or the Seller
Subsidiaries, threatened with respect to any Plan (other than claims for
benefits in the ordinary course) and, except as disclosed in SECTION 2.10(c)
of the Seller Disclosure Schedule, to the knowledge of the Seller or the
Seller Subsidiaries, no fact or event exists that could give rise to any such
action, suit or claim. Except as disclosed in SECTION 2.10(c) of the Seller
Disclosure Schedule, neither the Seller nor any Seller Subsidiary has
incurred any material liability to the Pension Benefit Guaranty Corporation
(other than for premiums which have been paid when due) or any material
liability under Section 302 of ERISA or Section 412 of the Code that has not
been satisfied in full and no condition exists that presents a material risk
of incurring any such liability.
(d) QUALIFICATION OF CERTAIN PLANS. Each Plan that is intended to be
qualified under Section 401(a) of the Code or Section 401(k) of the Code
(including each trust established in connection with such a Plan that is
intended to be exempt from Federal income taxation under Section 501(a) of
the Code) has received a favorable determination letter from the IRS (as
defined herein) that it is so qualified, and, except as disclosed in SECTION
2.10(d) of the Seller Disclosure Schedule, the Seller is not aware of any
fact or event that has occurred since the date of such determination
12
<PAGE>
letter from the IRS to adversely affect the qualified status of any such
Plan. Except as disclosed in SECTION 2.10(d) of the Seller Disclosure
Schedule, no trust maintained or contributed by the Seller or any of the
Seller Subsidiaries is intended to be qualified as a voluntary employees'
beneficiary association or is intended to be exempt from federal income
taxation under Section 501(c)(9) of the Code.
(e) ABSENCE OF CERTAIN LIABILITIES AND EVENTS. Except for matters
disclosed in SECTION 2.10(e) of the Seller Disclosure Schedule, there has
been no prohibited transaction (within the meaning of Section 406 of ERISA or
Section 4975 of the Code) with respect to any Plan. The Seller and each of
the Seller Subsidiaries has not incurred any liability for any excise tax
arising under Section 4972 or 4980B of the Code that would individually or in
the aggregate have a Material Adverse Effect with respect to the Seller, and,
to the knowledge of the Seller or the Seller Subsidiaries, no fact or event
exists that could give rise to any such liability.
(f) PLAN CONTRIBUTIONS. All contributions, premiums or payments
required to be made prior to the Effective Time with respect to any Plan have
been made on or before the Effective Time.
(g) FUNDED STATUS OF PLANS AND RIGHTS TO TERMINATE. With respect to
each Title IV Plan, the present value of all accrued benefits under each such
Plan, based upon the actuarial assumptions used for funding purposes in the
most recent actuarial report prepared by each such Plan's actuary with
respect to each such Plan did not exceed, as of the most recent valuation
date, the then current value of assets of such Plan, allocable to each
accrued benefit. No provision of any such Plan, nor any amendment thereto,
would result in any limitation on the Seller or the Seller Subsidiaries
rights to terminate each such Plan and to receive any residual amounts under
Section 4044 of ERISA.
(h) STOCK OPTIONS. SECTION 2.10(h) of the Seller Disclosure Schedule
sets forth a true and complete list of each current or former employee,
officer or director of the Seller or any Seller Subsidiary who holds any
option to purchase Seller Common Stock as of the date of this Agreement,
together with the number of shares of Seller Common Stock subject to such
option, the date of grant of such option, the plan under which the options
were granted, the option price of such option, the vesting schedule for such
option, whether such option is intended to qualify as an incentive stock
option within the meaning of Section 422 of the Code (an "ISO"), and the
expiration date of such option. SECTION 2.10(h) of the Seller Disclosure
Schedule also sets forth the total number of such ISOs and such non-qualified
options.
(i) EMPLOYMENT CONTRACTS. Except for employment, severance, consulting
or other similar contracts with any employees, consultants, officers or
directors of the Seller or any of the Seller Subsidiaries disclosed in
SECTION 2.10(i) of the Seller Disclosure Schedule, neither the Seller nor any
Seller Subsidiary is a party to any such contracts. Neither the Seller nor
any Seller Subsidiary is a party to any collective bargaining agreements.
13
<PAGE>
(j) EFFECT OF AGREEMENT. Except as disclosed in SECTION 2.10(j) of the
Seller Disclosure Schedule, the consummation of the transactions contemplated
by this Agreement will not, either alone or in conjunction with another
event, entitle any current or former employee of the Seller or any Seller
Subsidiary to severance pay, unemployment compensation or any other payment,
except as expressly provided herein, or accelerate the time of payment or
vesting or increase the compensation due any such employee or former
employee, in each case, except as expressly provided herein.
2.11 REGISTRATION STATEMENT; PROXY STATEMENT/PROSPECTUS. The
information supplied by the Seller for inclusion in the Registration
Statement (as defined in SECTION 3.11) shall not at the time the Registration
Statement is declared effective contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein not misleading. The
information supplied by the Seller for inclusion in the proxy
statement/prospectus to be sent to the stockholders of the Seller in
connection with the meeting of the Seller's stockholders to consider the
Merger (the "Seller Stockholders' Meeting") (such proxy statement/prospectus
as amended or supplemented is referred to herein as the "Proxy
Statement/Prospectus") shall not at the date the Proxy Statement/Prospectus
(or any amendment thereof or supplement thereto) is first mailed to
stockholders, at the time of the Seller Stockholders' Meeting and at the
Effective Time, be false or misleading with respect to any material fact
required to be stated herein, or omit to state any material fact required to
be stated therein or necessary in order to make the statements made therein,
in the light of the circumstances under which they are made, not misleading.
If at any time prior to the Effective Time any event relating to the Seller
or any of its affiliates, officers or directors should be discovered by the
Seller that should be set forth in an amendment to the Registration Statement
or a supplement to the Proxy Statement/Prospectus, the Seller shall promptly
inform the Company. Notwithstanding the foregoing, the Seller makes no
representation or warranty with respect to any information about, or supplied
or omitted by, the Company which is contained in any of the foregoing
documents.
2.12 TITLE TO PROPERTY. The Seller and each of the Seller Subsidiaries
has good and marketable title to all of their respective properties and
assets, real and personal, free and clear of all mortgage liens, and free and
clear of all other liens, charges and encumbrances except liens for taxes not
yet due and payable, pledges to secure deposits and such minor imperfections
of title, if any, as do not materially detract from the value of or interfere
with the present use of the property affected thereby or which, individually
or in the aggregate, would not have a Material Adverse Effect with respect to
the Seller; and all leases pursuant to which the Seller or any of the Seller
Subsidiaries lease from others material amounts of real or personal property
are in good standing, valid and effective in accordance with their respective
terms, and there is not, under any of such leases, any existing material
default or event of default (or event which with notice or lapse of time, or
both, would constitute a material default and in respect of which the Seller
or such Seller Subsidiary has not taken adequate steps to prevent such a
default from occurring). Substantially all of the Seller's and each of the
Seller Subsidiaries' buildings and equipment in regular use have been
reasonably maintained and are in good and serviceable condition, reasonable
wear and tear excepted.
14
<PAGE>
2.13 ENVIRONMENTAL MATTERS. Except as set forth in SECTION 2.13 of the
Seller Disclosure Schedule, the Seller represents and warrants that to the
best of the Seller's knowledge: (i) each of the Seller, the Seller
Subsidiaries and properties owned and operated by the Seller or the Seller
Subsidiaries, are in compliance with all applicable federal, state and local
laws including common law, rules, guidance, regulations and ordinances and
with all applicable decrees, orders, judgments, and contractual obligations
relating to the environment or Hazardous Materials which are hereinafter
defined as chemicals, pollutants, contaminants, wastes, toxic substances,
compounds, products, solid, liquid, gas, petroleum or other regulated
substances or materials which are hazardous, toxic or otherwise harmful to
the environment ("Environmental Laws"), except for violations which, either
individually or in the aggregate would not have a Material Adverse Effect
with respect to the Seller; (ii) there is no asbestos or any material amount
of ureaformaldehyde materials in or on any property owned or operated by the
Seller or Seller Subsidiaries and no electric transformers or capacitors,
other than those owned by public utility companies, on any such properties
contain any PCB's; (iii) there are no underground or aboveground storage
tanks located on, in or under any properties currently or formerly owned or
operated by the Seller or any of the Seller Subsidiaries; (iv) the Seller or
the Seller Subsidiaries have not received any notice from any governmental
agency or third party notifying the Seller or the Seller Subsidiaries of any
Environmental Claim (as defined herein); (v) there are no circumstances with
respect to any properties currently owned or operated by the Seller or any of
the Seller Subsidiaries that to the best of the Seller's knowledge (a) will
form the basis on an Environmental Claim against the Seller or the Seller
Subsidiaries or any properties currently or formerly owned or operated by the
Seller or any of the Seller Subsidiaries or (b) will cause any properties
currently owned or operated by the Seller or any of the Seller Subsidiaries
to be subject to any restrictions or ownership, occupancy, use or
transferability under any applicable Environmental Law or require
notification to or consent of any Governmental Authority (as defined herein)
or third party pursuant to any Environmental Law; and (vi) neither the Seller
nor any Seller Subsidiary has received any written communication from any
federal or state agency naming the Seller or any Seller Subsidiary as a
potentially responsible party for environmental contamination with respect to
any property on which the Seller or any Seller Subsidiary holds a security
interest.
The following definitions apply for purposes of this SECTION 2.13: (a)
"Environmental Claims" shall mean any and all administrative, regulatory,
judicial or private actions, suits, demands, demand letters, notices, claims,
liens, notices of non-compliance or violation, investigations, allegations,
injunctions or proceedings relating in any way to (i) any Environmental Law;
(ii) any Hazardous Material including without limitation any abatements,
removal, remedial, corrective or other response action in connection with any
Hazardous Material, Environmental Law or order of a Governmental Authority or
(iii) any actual or alleged damage, injury, threat or harm to the
environment, which individually or in the aggregate would have a Material
Adverse Effect with respect to the Seller; (b) "Governmental Authority" shall
mean any applicable federal, state, regional, county or local person or body
having governmental authority.
2.14 ABSENCE OF AGREEMENTS. Neither the Seller nor any Seller
Subsidiary is a party to any agreement or memorandum of understanding with,
or a party to any commitment letter or similar undertaking to, or is subject
to any order or directive by, or is a recipient of any extraordinary
15
<PAGE>
supervisory letter that restricts materially the conduct of its business
(including any contract containing covenants which limit the ability of the
Seller or of any Seller Subsidiary to compete in any line of business or with
any person or which involve any restriction of the geographical area in
which, or method by which, the Seller or any Seller Subsidiary may carry on
its business (other than as may be required by Law or applicable regulatory
authorities)), or in any manner relates to its capital adequacy, its credit
policies or its management, except for those the existence of which has been
disclosed in writing to the Company prior to the date of this Agreement, nor
has the Seller been advised that any federal, state, or governmental agency
is contemplating issuing or requesting (or is considering the appropriateness
of issuing or requesting) any such order, decree, agreement, memorandum of
understanding, extraordinary supervisory letter, commitment letter or similar
submission.
2.15 TAXES. Except as provided in SECTION 2.15 of the Seller Disclosure
Schedule, the Seller and the Seller Subsidiaries have timely filed all
material Tax Returns (as defined below) required to be filed by them or will
duly and timely file (including any extension periods) such Tax Returns, and
the Seller and the Seller Subsidiaries have timely paid and discharged all
material Taxes (as defined below) due in connection with or with respect to
the filing of such Tax Returns and have timely paid all other material Taxes
as are due, except such as are being contested in good faith by appropriate
proceedings and with respect to which the Seller is maintaining reserves
adequate for their payment. To the best of the Seller's knowledge, the
liability for Taxes set forth on each such Tax Return adequately reflects the
Taxes required to be reflected on such Tax Return. For purposes of this
Agreement, "Tax" or "Taxes" shall mean taxes, charges, fees, levies, and
other governmental assessments and impositions of any kind, payable to any
federal, state, local or foreign governmental entity or taxing authority or
agency, including, without limitation, (i) income, franchise, profits, gross
receipts, estimated, ad valorem, value added, sales, use, service, real or
personal property, capital stock, license, payroll, withholding, disability,
employment, social security, workers compensation, unemployment compensation,
utility, severance, production, excise, stamp, occupation, premiums, windfall
profits, transfer and gains taxes, (ii) customs duties, imposts, charges,
levies or other similar assessments of any kind, and (iii) interest,
penalties and additions to tax imposed with respect thereto; and "Tax
Returns" shall mean returns, reports, and information statements with respect
to Taxes required to be filed with the United States Internal Revenue Service
(the "IRS") or any other governmental entity or taxing authority or agency,
domestic or foreign, including, without limitation, consolidated, combined
and unitary tax returns. Except as otherwise disclosed in SECTION 2.15 of
the Seller's Disclosure Schedule, to the best of the Seller's knowledge,
neither the IRS nor any other governmental entity or taxing authority or
agency is now asserting, either through audits, administrative proceedings or
court proceedings, any deficiency or claim for additional Taxes. Except as
otherwise disclosed in SECTION 2.15 of the Seller's Disclosure Schedule,
neither the Seller nor any of the Seller Subsidiaries has granted any waiver
of any statute of limitations with respect to, or any extension of a period
for the assessment of, any Tax. Except as otherwise disclosed in SECTION
2.15 of the Seller's Disclosure Schedule and except for statutory liens for
current taxes not yet due, to the best of the Seller's knowledge there are no
material tax liens on any assets of the Seller or any of the Seller
Subsidiaries. Except as otherwise disclosed in SECTION 2.15 of the Seller's
Disclosure Schedule neither the Seller nor any of the Seller Subsidiaries has
received a ruling or entered into an agreement
16
<PAGE>
with the IRS or any other taxing authority that would have a Material Adverse
Effect with respect to the Seller, after the Effective Time. Except as
otherwise disclosed in SECTION 2.15 of the Seller's Disclosure Schedule, no
agreements relating to allocating or sharing of Taxes exist among the Seller
and the Seller Subsidiaries. Neither the Seller nor any of the Seller
Subsidiaries has made an election under Section 341(f) of the Code.
2.16 INSURANCE. SECTION 2.16 of the Seller Disclosure Schedule lists
all material policies of insurance of the Seller and the Seller Subsidiaries
currently in effect. To the best of the Seller's knowledge, neither the
Seller nor any of the Seller Subsidiaries has any liability for unpaid
premiums or premium adjustments not properly reflected on the Seller's
financial statements included in the Seller's Quarterly Report on Form 10-Q
for the quarter ended September 30, 1997.
2.17 BROKERS. No broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by
or on behalf of Seller, except as provided in that certain letter agreement
between the Seller and Keefe, Bruyette & Woods, Inc. regarding such fees.
2.18 TAX MATTERS AND POOLING.
(a) Neither the Seller nor, to the best of the Seller's knowledge, any
of its affiliates has through the date of this Agreement taken or agreed to
take any action that would prevent the Merger from qualifying as (i) a
reorganization under Section 368(a)(2)(E) of the Code or (ii) for pooling of
interests accounting treatment under GAAP.
(b) To the Seller's knowledge, there is no plan or intention on the
part of stockholders of the Seller who will receive Company Common Stock to
sell or otherwise dispose of an amount of Company Common Stock to be received
in the Merger that would reduce their ownership of Company Common Stock to a
number of shares having in the aggregate a value at the time of the Merger of
less than 50 percent of the total value of the Seller Common Stock
outstanding immediately prior to the Merger.
2.19 MATERIAL ADVERSE EFFECT. Since September 30, 1997, there has been
no Material Adverse Effect with respect to the Seller.
2.20 MATERIAL CONTRACTS. Except as disclosed in SECTION 2.20 of the
Seller Disclosure Schedule (which may reference other sections of such
Schedule) and, except as included as exhibits in the Seller SEC Reports,
neither the Seller nor any Seller Subsidiary is a party to or obligated under
any contract, agreement or other instrument or understanding that is not
terminable by the Seller or the Seller Subsidiary without additional payment
or penalty within 60 days and obligates the Seller or any Seller Subsidiary
for payments or other consideration with a value in excess of $50,000, or
would require disclosure by the Seller pursuant to Item 601(b)(10) of
Regulation S-K under the Exchange Act.
17
<PAGE>
2.21 OPINION OF FINANCIAL ADVISOR. The Seller has received the opinion
of Keefe, Bruyette & Woods, Inc. on the date of this Agreement to the effect
that, as of the date of this Agreement, the consideration to be received in
the Merger by the Seller's stockholders is fair to the Seller's stockholders
from a financial point of view, and Seller will promptly, after the date of
this Agreement, deliver a copy of such opinion to the Company.
2.22 VOTE REQUIRED. The affirmative vote of a majority of the votes
that holders of the outstanding shares of Seller Common Stock are entitled to
cast is the only vote of the holders of any class or series of the Seller
capital stock necessary to approve the Merger.
2.23 INTANGIBLE PROPERTY. The Seller or Seller Subsidiaries are the
owners of all right, title and interest in and to each item of intangible
personal property and each other invention, process, design, formula,
license, royalty arrangement, trade secret, know how and proprietary
technique necessary for the conduct of their respective businesses, except
where the failure to own such rights, title and interest would not have a
Material Adverse Effect with respect to the Seller. The Seller or Seller
Subsidiaries have the right and authority to use each item of intangible
personal property and each other invention, process, design, formula,
license, royalty arrangement, trade secret, know how and proprietary
technique necessary for the conduct of the business of the Seller and/or the
Subsidiaries; and such use does not conflict with, infringe upon or violate
any patent, trademark, trade name, trademark or trade name registration,
copyright, copyright registration or any pending application relating thereto
of any other person, firm or corporation.
2.24 LOANS.
(a) The Seller and Seller Subsidiaries have properly administered
all accounts for which it acts as a fiduciary, including but not limited to,
accounts for which it serves as a trustee, agent, custodian, personal
representative, guardian, conservator or investment advisor, in accordance
with the terms of the governing documents and applicable state and federal
law and regulation and common law. Neither the Seller, any Seller Subsidiary
nor any director, officer or employee of the Seller or any Seller Subsidiary
has committed any breach of trust with respect to any such fiduciary account,
and the accountings for each such fiduciary account are true and correct in
all material respects and accurately reflect the assets of such fiduciary
account.
(b) All evidences of indebtedness and leases that are reflected as
assets of the Seller or any Seller Subsidiary are legal, valid and binding
obligations of the respective obligors thereof, enforceable in accordance
with their respective terms (except as limited by applicable bankruptcy,
insolvency, reorganization, moratorium and similar laws affecting creditors
generally and the availability of injunctive relief, specific performance and
other equitable remedies) and are not subject to any known or to the best of
Seller's knowledge threatened defenses, offsets or counterclaims that may be
asserted against the Company or any Subsidiary or the present holder thereof.
The credit files of the Seller and the Seller Subsidiaries contain all
material information known to the Seller or any Seller Subsidiary that is
reasonably required to evaluate in accordance with generally prevailing
practices in the banking industry the collectibility of the loan portfolio of
the
18
<PAGE>
Seller and the Subsidiaries (including loans that will be outstanding if any
of them advances funds they are obligated to advance). The Seller has
disclosed all of the substandard, doubtful, loss, nonperforming or loans
identified by the Seller or any Seller Subsidiary as problem loans on the
internal watch list of the Seller or any Seller Subsidiary, a copy of which
as of a recent date has been provided to the Company.
2.25 STATE TAKEOVER STATUTES; ABSENCE OF SUPERMAJORITY PROVISION. No
provision of the DGCL or the Seller's Certificate of Incorporation or Bylaws
or other governing instruments of the Seller Subsidiaries or the terms of any
rights plan or other takeover defense mechanism of the Seller would, directly
or indirectly, restrict or impair the ability of the Seller or the Company to
consummate the Merger nor will any such provisions restrict or impair the
ability of the stockholders of the Company to exercise the same rights to
vote or otherwise exercise the same rights as the other stockholders of the
Seller in the event that the stockholders of the Company were to acquire
securities of the Seller.
ARTICLE III--REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND
THE SUBSIDIARY
Except as set forth in the Disclosure Schedule delivered by the Company
to the Seller prior to the execution of this Agreement (the "Company
Disclosure Schedule"), which shall identify exceptions by specific Section
references, the Company and the Subsidiary hereby represent and warrant to
the Seller that:
3.1 ORGANIZATION AND QUALIFICATION; SUBSIDIARIES.
(a) The Company is a corporation duly organized, validly existing and
in good standing under the laws of the State of Nevada. Each subsidiary of
the Company (a "Company Subsidiary" or, collectively "Company Subsidiaries")
is a corporation duly organized, validly existing and in good standing under
the laws of the state of its incorporation. Each of the Company and the
Company Subsidiaries have the requisite corporate power and authority and are
in possession of all franchises, grants, authorizations, licenses, permits,
easements, consents, certificates, approvals and orders ("Company Approvals")
necessary to own, lease and operate their respective properties and to carry
on their respective business as now being conducted and neither the Company
nor any Company Subsidiary has received any notice of proceedings relating to
the revocation or modification of any Company Approvals, except in each case
where the failure to be so organized, existing and in good standing or to
have such power, authority, Company Approvals and revocations or
modifications would not, individually or in the aggregate, have a Material
Adverse Effect with respect to the Company. The deposit accounts of
FIRSTPLUS Bank Strategic Origination, a Company Subsidiary and California
industrial loan company, are insured by the FDIC to the extent permitted by
law.
(b) The Company and each Company Subsidiary is duly qualified or
licensed as a foreign corporation to do business, and is in good standing, in
each jurisdiction where the character of its properties owned, leased or
operated by it or the nature of its activities makes such qualification or
19
<PAGE>
licensing necessary, except for such failures to be so duly qualified or
licensed and in good standing that would not, either individually or in the
aggregate, have a Material Adverse Effect with respect to the Company.
(c) A true and complete list of all of the Company Subsidiaries, except
for the Subsidiary, is set forth in Exhibit 21 to the Company's Annual
Report on Form 10-K for the year ended September 30, 1997 ("Exhibit 21")
previously delivered to the Seller. The Company and/or one or more of the
Company Subsidiaries owns beneficially and of record substantially all of the
outstanding shares of capital stock of each of the Company Subsidiaries.
Except for the Company Subsidiaries, set forth on Exhibit 21, the Company
does not directly or indirectly own any equity or similar interests in, or
any interests convertible into or exchangeable or exercisable for any equity
or similar interest in, any corporation, partnership, joint venture or other
business, other than in the ordinary course of business, and in no event in
excess of 5% of the outstanding equity securities of such entity.
(d) The minute books of the Company and each of the Company
Subsidiaries since December 31, 1994 contain true, complete and accurate
records in all material respects of all meetings and other corporate actions
held or taken of their respective stockholders and Boards of Directors
(including committees of their respective Boards of Directors).
3.2 ARTICLES OF INCORPORATION AND BYLAWS. The Company has previously
furnished to the Seller a complete and correct copy of the Company Articles
and the Company Bylaws. The Company Articles and Company Bylaws are in full
force and effect. The Company is not in violation of any of the provisions
of the Company Articles or the Company Bylaws.
3.3 CAPITALIZATION.
(a) The authorized capital stock of the Company consists of (i)
100,000,000 shares of Voting Company Common Stock of which, as of January 30,
1998, 37,342,461 shares were issued and outstanding, 25,000,000 shares of
nonvoting Company Common Stock of which, as of January 30, 1998, 623,679
shares were issued and outstanding. In addition, as of January 30, 1998,
3,334,685 shares of Company Common Stock were reserved for issuance under
stock option plans of the Company. All of the outstanding shares of the
Company's capital stock have been duly authorized and validity issued and are
fully paid and non-assessable. Except as set forth above, as of the date of
this Agreement there are no options, warrants or other rights, agreements,
arrangements or commitments of any character relating to the issued or
unissued capital stock of the Company or any Company Subsidiary or obligating
the Company or any Company Subsidiary to issue or sell any shares of capital
stock of, or other equity interests in, the Company or any Company
Subsidiary. There are no obligations, contingent or otherwise, of the
Company or any Company Subsidiary to repurchase, redeem or otherwise acquire
any share of Company Common Stock or the Capital Stock of any Company
Subsidiary.
20
<PAGE>
(b) The shares of Company Common Stock to be issued pursuant to the Merger
will, upon issuance in accordance with the provisions of this Agreement, be duly
authorized, validly issued, fully paid and nonassessable.
3.4 AUTHORITY. The Company and the Subsidiary have the requisite
corporate power and authority to execute and deliver this Agreement and to
perform their respective obligations hereunder and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by the Company and the Subsidiary and the consummation by the Company and the
Subsidiary of the transactions contemplated hereby have been duly and validly
authorized by all necessary corporate action on the part of the Company and the
Subsidiary and no other corporate proceedings on the part of the Company and the
Subsidiary are necessary to authorize this Agreement or to consummate the
transactions so contemplated hereby. This Agreement has been duly and validly
executed and delivered by the Company and the Subsidiary and constitutes the
valid and binding obligation of the Company and the Subsidiary and assuming the
authorization, execution and delivery by the Seller, is enforceable against the
Company and the Subsidiary in accordance with its terms, except as enforcement
may be limited by laws affecting insured depository institutions, general
principles of equity, whether applied in a court of law or a court of equity,
and by bankruptcy, insolvency and similar laws affecting creditors' rights and
remedies generally.
3.5 NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) The execution and delivery of this Agreement by the Company and the
Subsidiary does not, and the performance of this Agreement by the Company and
the Subsidiary shall not, (i) conflict with or violate the Company Articles or
Company Bylaws or the Articles of Incorporation or Bylaws of any Company
Subsidiary, (ii) conflict with or violate any Laws applicable to the Company or
any Company Subsidiary or by which any of their respective properties is bound
or affected, or (iii) result in any breach of or constitute a default (or an
event which with notice or lapse of time or both would become a default) under,
or give to others any rights of termination, amendment, acceleration or
cancellation of, or result in the creation of a lien or encumbrance on any of
the properties or assets of the Company or any Company Subsidiary pursuant to,
any note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation to which the Company or any
Company Subsidiary is a party or by which the Company or any Company Subsidiary
or its or any of their respective properties is bound or affected, except in the
case of clause (ii) and (iii) for any such conflicts, violations, breaches,
defaults or other occurrences that would not, individually or in aggregate, have
a Material Adverse Effect with respect to the Company.
(b) The execution and delivery of this Agreement by the Company and the
Subsidiary does not, and the performance of this Agreement by the Company shall
not, require any consent, approval, authorization or permit of, or filing with
or notification to, any governmental or regulatory authority, domestic or
foreign, except (i) for applicable requirements, if any, of the Securities Act,
the Exchange Act, Blue Sky Laws, the HOLA, and the filing of appropriate merger
or other documents as required by applicable law and (ii) where the failure to
obtain such consents, approvals, authorizations or permits, or to make such
filings or notifications, would not prevent or delay consummation of the
21
<PAGE>
Merger, or otherwise prevent the Company from performing its obligations
under this Agreement, and would not have a Material Adverse Effect with
respect to the Company.
3.6 COMPLIANCE; PERMITS. Neither the Company nor any Company Subsidiary
is in conflict with, or in default or violation of, (i) any Law applicable to
the Company or any Company Subsidiary or by which its or any of their respective
properties is bound or affected, or (ii) any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other instrument or
obligation to which the Company or any Company Subsidiary is a party or by which
the Company or any Company Subsidiary or any of its or any of their respective
properties is bound or affected, except for any such conflicts, defaults or
violations which would not, individually or in aggregate, have a Material
Adverse Effect with respect to the Company.
3.7 SECURITIES AND BANKING REPORTS; FINANCIAL STATEMENTS.
(a) The Company and each Company Subsidiary have filed all forms, reports
and documents required to be filed with the SEC, and as of the date of this
Agreement have delivered or made available to Seller, in the form filed with the
SEC, (i) its Transitional Quarterly Report on Form 10-Q for the quarter ended
December 31, 1997, (ii) its Annual Reports on Form 10-K for the fiscal years
ended September 30, 1996 and 1997, respectively, (iii) all proxy statements
relating to the Company's meetings of stockholders (whether annual or special)
held since February 14, 1996, (iv) all Current Reports on Form 8-K filed by the
Company with the SEC since February 14, 1996, (v) all other reports or
registration statements (other than Quarterly Reports on Form 10-Q not referred
to in clause (i) above) filed by the Company with the SEC since February 14,
1996, and (vi) all amendments and supplements to all such reports and
registration statements filed by the Company with the SEC since February 14,
1996 (collectively, the "Company SEC Reports") and any other applicable federal
or state securities authorities (all such reports and statements are
collectively referred to with the Company SEC Reports as the "Company Reports").
The Company Reports, including all Company Reports filed after the date of this
Agreement, (i) were or will be prepared in accordance with the requirements of
applicable Law and (ii) did not at the time they were filed, or will not at the
time they are filed, contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading.
(b) Each of the consolidated financial statements (including, in each
case, any related notes thereto) contained in the Company SEC Reports, including
any Company SEC Reports filed since the date of this Agreement and prior to or
on the Effective Time, have been prepared in accordance with GAAP applied on a
consistent basis throughout the periods involved (except as may be indicated in
the notes thereto) and each fairly presents the consolidated financial position
of the Company and the Company Subsidiaries as of the respective dates thereof
and the consolidated results of its operations and changes in financial position
for the periods indicated, except that any unaudited interim financial
statements were or are subject to normal and recurring year-end adjustments,
which were not or are not expected to be material in amount.
22
<PAGE>
(c) Except (i) for the liabilities that are fully reflected or reserved
against on the consolidated statement of financial condition of the Company
included in the Company Form 10-Q for the quarter ended December 31, 1997, (ii)
for the liabilities incurred in the ordinary course of business consistent with
past practice since December 31, 1997, and (iii) neither the Company nor any
Company Subsidiary has incurred any liability of any nature whatsoever (whether
absolute, accrued, contingent or otherwise and whether due or to become due)
that, either alone or when combined with all similar liabilities, has had, or
would reasonably be expected to have, a Material Adverse Effect with respect to
the Company.
3.8 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed in the
Company SEC Reports filed prior to the date of this Agreement, since December
31, 1997 to the date of this Agreement, the Company and the Company Subsidiaries
have conducted their businesses only in the ordinary course and in a manner
consistent with past practice and, since December 31, 1997, there has not been
(i) any change in the financial condition, results of operations or business of
the Company or any of the Company Subsidiaries having a Material Adverse Effect
with respect to the Company, (ii) any damage, destruction or loss (whether or
not covered by insurance) with respect to any assets of the Company or any of
the Company Subsidiaries having a Material Adverse Effect with respect to the
Company, (iii) any change by the Company or any Company Subsidiaries in its
accounting methods, principles or practices, (iv) any revaluation by the Company
or any Company Subsidiaries of any of its assets in any respect, or (v) to the
date of this Agreement, any entry by the Company or any of the Company
Subsidiaries into any commitment or transactions which have had or are
reasonably expected to have a Material Adverse Effect with respect to the
Company.
3.9 ABSENCE OF LITIGATION.
(a) Neither the Company nor any of the Company Subsidiaries is a party to
any, and there are no pending or, to the best of the Company's knowledge,
threatened, legal, administrative, arbitral or other proceedings, claims,
actions or governmental or regulatory investigations of any nature against the
Company or any of the Company Subsidiaries or challenging the validity or
propriety of the transactions contemplated by this Agreement as to which there
is a reasonable probability of an adverse determination and which, if adversely
determined, would, individually or in the aggregate, have a Material Adverse
Effect with respect to the Company.
(b) There is no injunction, order, judgement, decree or regulatory
restriction imposed upon the Company, any of the Company Subsidiaries or the
assets of the Company or any of the Company Subsidiaries which has had a
Material Adverse Effect with respect to the Company.
3.10 EMPLOYEE BENEFIT PLANS.
(a) COMPLIANCE WITH APPLICABLE LAWS. Each of the Company's "employee
benefit plans" within the meaning of Section 3(3) of ERISA, for the benefit of
employees of the Company and the Company Subsidiaries (the "Company Plans") has
been operated in all respects in accordance with the requirements of all
applicable Law and all persons who participate in the operation of such
23
<PAGE>
Company Plans and all Company Plan "fiduciaries" (within the meaning of
Section 3(21) of ERISA) have acted in accordance with the provisions of all
applicable Law, except where such violations of applicable Law would not,
individually or in the aggregate, have a Material Adverse Effect with respect
to the Company. The Company and the Company Subsidiaries have performed all
obligations required to be performed by any of them under, are not in any
respect in default under or in violation of, and the Company and the Company
Subsidiaries have no knowledge of any defaults or violation by any party to,
any Company Plan, except where such failures, defaults or violations would
not, individually or in the aggregate, have a Material Adverse Effect with
respect to the Company. No legal action, suit or claim is pending or, to the
knowledge of the Company or the Company Subsidiaries, threatened with respect
to any Company Plan (other than claims for benefits in the ordinary course)
and, to the knowledge of the Company or the Company Subsidiaries, no fact or
event exists that could give rise to any such action, suit or claim.
(b) QUALIFICATION OF CERTAIN PLANS. Each Company Plan that is intended to
be qualified under Section 401(a) of the Code or Section 401(k) of the Code
(including each trust, established in connection with such a Plan that is
intended to be exempt from Federal income taxation under Section 501(a) of the
Code) has either received a favorable determination letter from the IRS (as
defined herein) that it is so qualified, or the Company is actively pursuing
such action as may be necessary to ensure qualified status or operation, and the
Company is not aware of any fact or event that has occurred since the date of
any such determination letter from the IRS which may adversely affect the
qualified status or operations of any Company Plan or the exempt status of any
such trust, except where such failure or event would not have a Material Adverse
Effect with respect to the Company. No trust maintained or contributed to by
the Company or any of the Company Subsidiaries is intended to be qualified as a
voluntary employees' beneficiary association or is intended to be exempt from
federal income taxation under Section 501(c)(9) of the Code.
(c) ABSENCE OF CERTAIN LIABILITIES AND EVENTS. There have been no
prohibited transactions (within the meaning of Section 406 of ERISA or Section
4975 of the Code) with respect to any Company Plan. The Company and each of the
Company Subsidiaries has not incurred any liability for any excise tax arising
under Section 4972 or 4980B of the Code and, to the knowledge of the Company or
the Company Subsidiaries, no fact or event exists that could give rise to any
such liability.
(d) PLAN CONTRIBUTIONS. All contributions, provisions or payments
required to be made with respect to any Company Plan have been made on or before
their due dates.
3.11 REGISTRATION STATEMENT; PROXY STATEMENT/PROSPECTUS. The information
supplied by the Company for inclusion in the registration statement on Form S-4
of the Company (the "Registration Statement") pursuant to which the shares of
Company Common Stock to be issued in the Merger will be registered with the SEC
shall not, at the time the Registration Statement (including any amendments or
supplements thereto) is declared effective by the SEC, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, not
misleading. The information supplied by the
24
<PAGE>
Company for inclusion in the Proxy Statement/Prospectus shall not, at the
date the Proxy Statement/Prospectus (or any amendment thereof or supplement
thereto) is first mailed to stockholders, at the time of the Seller
Stockholders' Meeting and at the Effective Time, be false or misleading with
respect to any material fact required to be stated therein, or omit to state
any material fact necessary in order to make the statements made therein, in
light of the circumstances under which they are made, not misleading. If at
any time prior to the Effective Time any event relating to the Company or any
of its affiliates, officers or directors should be discovered by the Company
which should be set forth in an amendment to the Registration Statement or a
supplement to the Proxy Statement/Prospectus, the Company will promptly
inform the Seller. The Registration Statement and the Proxy
Statement/Prospectus shall comply in all material respects as to form with
the requirements of the Securities Act, the Exchange Act and the rules and
regulations thereunder. Notwithstanding the foregoing, the Company makes no
representation or warranty with respect to any information about, or supplied
or omitted by, Seller which is contained in any of the foregoing documents.
3.12 TITLE TO PROPERTY. The Company and each of the Company Subsidiaries
has good and marketable title to all of their respective properties and assets,
real and personal, free and clear of all mortgage liens, and free and clear of
all other liens, charges and encumbrances except liens for taxes not yet due and
payable and such minor imperfections of title, if any, as do not materially
detract from the value of or interfere with the present use of the property
affected thereby or which, individually or in the aggregate, would not have a
Material Adverse Effect with respect to the Company; and all leases pursuant to
which the Company or any of the Company Subsidiaries lease from others material
amounts of real or personal property are in good standing, valid and effective
in accordance with their respective terms, and there is not, under any of such
leases, any existing material default or event of default (or event which with
notice or lapse of time, or both, would constitute a material default and in
respect of which the Company or such subsidiary has not taken adequate steps to
prevent such a default from occurring). Substantially all of the Company's and
each of the Company Subsidiaries' buildings and equipment in regular use have
been reasonably maintained and are in good and serviceable condition, reasonable
wear and tear excepted.
3.13 ABSENCE OF AGREEMENTS. Neither the Company nor any of the Company
Subsidiaries is a party to any agreement or memorandum of understanding with, or
a party to any commitment letter or similar undertaking to, or is subject to any
order or directive by, or is a recipient of any extraordinary supervisory letter
which restricts materially the conduct of its business (including any contract
containing covenants which limit the ability of the Company or Company
Subsidiary to compete in any line of business or with any person or which
involve any restriction of the geographical area in which, or method by which,
the Company or any Company Subsidiary may carry on its business (other than as
may be required by Law or applicable regulatory authorities)), in any manner
relates to its capital adequacy, its credit policies, or its management, except
for those the existence of which has been disclosed to Seller prior to the date
of this Agreement, nor has the Company been advised that any federal, state, or
governmental agency is contemplating issuing or requesting (or is considering
the appropriateness of issuing or requesting) any such order, decree, agreement,
memorandum of understanding, extraordinary supervisory letter, commitment letter
or similar submission.
25
<PAGE>
3.14 TAXES. The Company and the Company Subsidiaries have timely filed all
material Tax Returns required to be filed by them, or will duly and timely file
(including all extension periods) such Tax Returns, and the Company and the
Company Subsidiaries have timely paid and discharged all material Taxes due in
connection with or with respect to the filing of such Tax Returns and have
timely paid all other material Taxes as are due, except such as are being
contested in good faith by appropriate proceedings and with respect to which
Seller is maintaining reserves adequate for their payment. To the best
knowledge of the Company, neither the IRS nor any other governmental entity or
taxing authority or agency is now asserting, either through audits,
administrative proceedings or court proceedings, any deficiency or claim for
additional Taxes. Neither the Company nor any of the Company's Subsidiaries has
granted any waiver of any statute of limitations with respect to, or any
extension of a period for the assessment of, any Tax. Except for statutory
liens for current taxes not yet due, there are no material tax liens on any
assets of the Company or any of the Company Subsidiaries. Except as otherwise
disclosed in SECTION 3.14 of the Company Disclosure Schedule neither the Company
nor any of the Company Subsidiaries has received a ruling or entered into an
agreement with the IRS or any other taxing authority that would have a Material
Adverse Effect with respect to the Company, after the Effective Time.
No agreements relating to allocating or sharing of Taxes exist among the
Company and the Company Subsidiaries. Neither the Company nor any of the
Company Subsidiaries has made an election under Section 341(f) of the Code.
3.15 BROKERS. No broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of the Company.
3.16 TAX MATTERS AND POOLING. Neither the Company nor, to the Company's
knowledge, any of its affiliates has through the date of this Agreement taken or
agreed to take any action that would prevent the Merger from qualifying (i) as a
reorganization under Section 368(a)(2)(E) of the Code or (ii) for
pooling-of-interests accounting treatment under GAAP.
3.17 MATERIAL ADVERSE EFFECT. Since December 31, 1997 there has been no
Material Adverse Effect with respect to the Company.
3.18 ENVIRONMENTAL MATTERS. The Company represents and warrants that to
the best of the Company's knowledge: (i) each of the Company, the Company
Subsidiaries and properties owned and operated by the Company or the Company
Subsidiaries, are in compliance with all applicable federal, state and local
laws including common law, rules, guidance, regulations and ordinances and with
all Environmental Laws, except for violations which, either individually or in
the aggregate would not have a Material Adverse Effect with respect to the
Company; (ii) there is no asbestos or any material amount of ureaformaldehyde
materials in or on any property owned or operated by the Company or Company
Subsidiaries and no electric transformers or capacitors, other than those owned
by public utility companies, on any such properties contain any PCB's; (iii)
there are no underground or aboveground storage tanks located on, in or under
any properties currently or
26
<PAGE>
formerly owned or operated by the Company or any of the Company Subsidiaries;
(iv) the Company or the Company Subsidiaries have not received any notice
from any governmental agency or third party notifying the Company or the
Company Subsidiaries of any Environmental Claim; (v) there are no
circumstances with respect to any properties currently owned or operated by
the Company or any of the Company Subsidiaries that to the best of the
Company's knowledge (a) will form the basis on an Environmental Claim against
the Company or the Company Subsidiaries or any properties currently or
formerly owned or operated by the Company or any of the Company Subsidiaries
or (b) will cause any properties currently owned or operated by the Company
or any of the Company Subsidiaries to be subject to any restrictions or
ownership, occupancy, use or transferability under any applicable
Environmental Law or require notification to or consent of any Governmental
Authority or third party pursuant to any Environmental Law; and (vi) neither
the Company nor any Company Subsidiary has received any written communication
from any federal or state agency naming the Company or any Company Subsidiary
as a potentially responsible party for environmental contamination with
respect to any property on which the Company or any Company Subsidiary holds
a security interest.
ARTICLE IV--COVENANTS OF THE SELLER
4.1 AFFIRMATIVE COVENANTS. The Seller hereby covenants and agrees with
the Company that from and after the date of this Agreement and prior to the
Effective Time, unless the prior written consent of the Company shall have been
obtained and except as otherwise contemplated herein, it will and it will cause
each Seller Subsidiary to:
(a) operate its business only in the ordinary course consistent with past
practices;
(b) use all reasonable efforts to preserve intact its business
organization and assets, maintain its rights and franchises, retain the services
of its officers and key employees and maintain its relationships with customers;
(c) use all reasonable efforts to maintain and keep its properties in as
good repair and condition as at present, ordinary wear and tear excepted;
(d) use all reasonable efforts to keep in full force and effect insurance
and bonds comparable in amount and scope of coverage to that now maintained by
it;
(e) use all reasonable efforts to perform in all material respects all
obligations required to be performed by it under all material contracts, leases,
and documents relating to or affecting its assets, properties, and business;
(f) take such reasonable actions as are requested by the Company to
complete the Merger; and
27
<PAGE>
(g) provide to the Company the Seller's audited consolidated financial
statements for the year ended December 31, 1997 promptly upon their completion.
4.2 NEGATIVE COVENANTS. Except as specifically contemplated by this
Agreement, from the date of this Agreement until the Effective Time, the Seller
shall not do, or permit any Seller Subsidiary to do, without the prior written
consent of the Company, any of the following:
(a) except as required by applicable Law or to maintain qualification
pursuant to the Code, adopt, amend, renew or terminate any Plan or any
agreement, arrangement, plan or policy between the Seller or any Seller
Subsidiary and one or more of its current or former directors, officers or
employees or (ii) except for normal increases in the ordinary course of business
consistent with past practice, and subject to the specific provisions of
ANNEX B, or, except as required by applicable law, increase in any manner the
base salary, bonus incentive compensation or fringe benefits of any director,
officer or employee or pay any benefit not required by any plan or agreement as
in effect as of the date hereof (including, without limitation, the granting of
stock options, stock appreciation rights, restricted stock, restricted stock
units or performance units or shares);
(b) declare or pay any dividend on, or make any other distribution in
respect of, its outstanding shares of capital stock, except for dividends by a
Seller Subsidiary to the Seller;
(c)(i) redeem, purchase or otherwise acquire any shares of its capital
stock or any securities or obligations convertible into or exchangeable for any
shares of its capital stock, or any options, warrants, conversion or other
rights to acquire any shares of its capital stock or any such securities or
obligations; (ii) merge with or into any other corporation or bank, permit any
other corporation or bank to merge into it or consolidate with any other
corporation or bank, or effect any reorganization or recapitalization; (iii)
purchase or otherwise acquire any substantial portion of the assets, or more
than 5% of any class of stock, of any corporation, bank or other business other
than in the ordinary course of business and consistent with past practice; (iv)
liquidate, sell, dispose of, or encumber any assets or acquire any assets, other
than in the ordinary course of its business consistent with past practice; or
(v) split, combine or reclassify any of its capital stock or issue or authorize
or propose the issuance of any other securities in respect of, in lieu of or in
substitution for shares of its capital stock;
(d) except with respect to options listed on SECTION 2.10(h) of the
Seller Disclosure Schedule, issue, deliver, award, grant or sell, or
authorize or propose the issuance, delivery, award, grant or sale of, any
shares of any class of capital stock of the Seller or any Seller Subsidiary
(including shares held in treasury) or any rights, warrants or options to
acquire, any such shares, other than the issuance of Seller Common Stock
issuable upon exercise of employee or director stock options outstanding as
of the date of this Agreement or pursuant to Seller Plans, in effect as of
the date of this Agreement;
(e) authorize, permit or cause any of its officers, directors,
employees or agents to directly or indirectly solicit, initiate or encourage
any inquiries relating to, or the making of any proposal that
28
<PAGE>
constitutes, a "Takeover Proposal" (as defined in SECTION 8.1(g)), or (i)
recommend, endorse or agree to any Takeover Proposal, (ii) participate in any
discussions or negotiations with respect to a Takeover Proposal, or (iii)
provide third parties with any nonpublic information relating to any such
inquiry or proposal; provided, however, that the Seller may, and may
authorize and permit its officers, directors, employees or agents to, provide
third parties with nonpublic information, otherwise facilitate any effort or
attempt by any third party to make or implement a takeover proposal and
participate in discussions and negotiations with any third party relating to
any takeover proposal, if the Seller, after having consulted with and
considered the advice of outside counsel, has determined in good faith that
such actions are necessary for the discharge of the fiduciary duties of the
Seller's Board of Directors. The Seller will immediately cease and cause to
be terminated any existing activities, discussions or negotiations previously
conducted with any parties other than the Company with respect to any of the
foregoing. The Seller will notify the Company immediately if any such
inquiries or takeover proposals are received by, any such information is
requested from, or any such negotiations or discussions are sought to be
initiated or continued with, the Seller, and the Seller shall keep the
Company informed, on a current basis, of the status of any such discussions
and negotiations;
(f) propose or adopt any amendments to its Certificate of Incorporation or
Bylaws in any way adverse to the Company;
(g) change any of its methods of accounting in effect at September 30,
1997 or change any of its methods of reporting income or deductions for federal
income tax purposes from those employed in the preparation of the federal income
tax returns for the taxable year ending December 31, 1996, except as may be
required by Law or GAAP;
(h) change in any material respect any lending, investment, liability
management or other material policies concerning the business or operations of
the Seller or any of the Seller Subsidiaries, except as required by Law,
including, without limitation: (i) acquire or sell any contracts for the
purchase or sale of financial or other futures or any put or call options, or
enter into any hedges or interest rate swaps relating to cash, securities, or
any commodities whatsoever or enter into any other derivative transaction; (ii)
sell, assign, transfer, pledge, mortgage or otherwise encumber, or permit any
encumbrances to exist with respect to, any of its assets with a value in excess
of $50,000 individually, except in the ordinary course of business consistent
with past practice; (iii) make any investment with an interest maturity of five
years or more except in the ordinary course of business consistent with past
practice; (iv) except for transactions disclosed in SECTION 4.2(h) of the Seller
Disclosure Schedule, incur any material liabilities or material obligations,
whether directly or by way of guaranty, including any obligation for borrowed
money, whether or not evidenced by a note, bond, debenture or similar
instrument, except in the ordinary course of business consistent with past
practice and in no event in excess of $50,000 individually except for borrowings
from the FHLB or pursuant to repurchase agreements consistent with past
practices; (v) enter into any agreement with respect to any acquisition of a
material amount of assets or securities or any discharge, waiver, satisfaction,
release or relinquishment of any material contract rights, liens, encumbrances,
debt or claims, not in the ordinary course of business and consistent with past
practices and in no event with
29
<PAGE>
a value in excess of $50,000 individually except for satisfaction of liens on
loans receivable consistent with past practice; (vi) settle any claim,
action, suit, litigation, proceeding, arbitration, investigation or
controversy of any kind, for any amount in excess of $50,000, net of any
insurance proceeds, or in any manner which would restrict in any material
respect the operations or business of the Seller or any of the Seller
Subsidiaries; (vii) make any capital expenditure, except in the ordinary
course and consistent with past practice and in no event in excess of $50,000
individually; or (viii) take any action or fail to take any action which
individually or in the aggregate can be expected to have a Material Adverse
Effect with respect to the Seller;
(i) take or cause to be taken any action which would disqualify the Merger
(i) as a tax-free reorganization under Section 368(a)(2)(E) of the Code or (ii)
for pooling of interests accounting treatment under GAAP; and
(j) agree in writing or otherwise to do any of the foregoing.
4.3 LETTER OF THE SELLER'S ACCOUNTANTS. The Seller shall use its
reasonable best efforts to cause to be delivered to the Company "comfort"
letters of Deloitte & Touche LLP, the Seller's independent public accountants,
dated the date on which the Registration Statement shall become effective and
the Effective Time, respectively, and addressed to the Company, in a form
reasonably satisfactory to the Company and reasonably customary in scope and
substance for letters delivered by independent public accountants in connection
with registration statements similar to the Registration Statement and
transactions such as those contemplated by this Agreement.
4.4 ACCESS AND INFORMATION.
(a) From the date of this Agreement and until the Effective Time and upon
reasonable notice, and subject to applicable laws relating to the exchange of
information, the Seller shall, and shall cause each Seller Subsidiary to, afford
to the Company's officers, employees, accountants, legal counsel and other
representatives of the Company, access, during normal business hours, to all its
properties, books, contracts, commitments and records. From the date of this
Agreement and until the Effective Time, the Seller shall (and shall cause each
Seller Subsidiary to) furnish promptly (as soon as available or received by the
Seller or any Seller Subsidiary) to the Company (i) a copy of each Seller Report
filed by it or received by it (to the extent not prohibited by Law and if so
prohibited the Seller shall promptly so notify the Company) after the date of
this Agreement and prior to the Effective Time pursuant to the requirements of
federal or state securities laws, the HOLA or any other federal or state banking
laws or any other applicable Laws promptly after such documents are available,
(ii) the monthly financial statements of the Seller and the Seller Subsidiaries
(as prepared by the Seller in accordance with its normal accounting procedures)
promptly after such financial statements are available without further request
by the Company, (iii) a copy of any action, including all minutes, taken by the
Board of Directors, or any committee thereof, of the Seller and the Seller
Subsidiaries and any documents or other materials of any kind provided to such
Boards or committees promptly after such action, minutes, materials or other
documents become available without further request by the Company, (iv) a copy
of each Tax Return filed by the Seller and each
30
<PAGE>
Seller Subsidiary for the three most recent years available, a copy of any
correspondence received from the IRS or any other governmental entity or
taxing authority or agency and any other correspondence relating to Taxes, and
any other documents relating to Taxes as the Company may reasonably request,
and (v) all other information concerning its business, properties and
personnel as the Company may reasonably request, other than in each case
reports or documents which the Seller is not permitted to disclose under
applicable Law or binding agreement entered into prior to the date of this
Agreement. The parties will make appropriate substitute disclosure
arrangements under circumstances in which the restrictions of the preceding
sentence apply.
(b) Unless otherwise required by Law, the parties will hold any such
information which is nonpublic in confidence until such time as such information
becomes publicly available through no wrongful act of either party, and in the
event of termination of this Agreement for any reason each party shall promptly
return all nonpublic documents obtained from any other party, and any copies
made of such documents, to such other party or destroy such documents and
copies.
4.5 UPDATE DISCLOSURE; BREACHES.
(a) From and after the date of this Agreement until the Effective Time,
the Seller shall update the Seller Disclosure Statement on a regular basis by
written notice to the Company to reflect any matters which have occurred from
and after the date of this Agreement which, if existing on the date of this
Agreement, would have been required to be described therein; provided that, (i)
to the extent that any information that would be required to be included in an
update under this SECTION 4.5(a) would have in the past been contained in
internal reports prepared by the Seller or any Seller Subsidiary in the ordinary
course, such update may occur by delivery of such internal reports prepared in
accordance with past practice, with appropriate steps taken by the Seller to
identify relevant information contained therein, and (ii) to the extent that
updating required under this Section is unduly burdensome to the Seller, the
Seller and the Company will use their best efforts to develop alternate updating
procedures utilizing, wherever possible, existing reporting systems.
(b) The Seller shall, in the event it becomes aware of the impending or
threatened occurrence of any event or condition which would cause or constitute
a material breach (or would have caused or constituted a material breach had
such event occurred or been known prior to the date of this Agreement) of any of
its representations or agreements contained or referred to herein, given prompt
written notice thereof to the Company and use its best efforts to prevent or
promptly remedy the same.
4.6 AFFILIATES. Within thirty (30) days after the date of this Agreement,
(a) the Seller shall deliver to the Company a letter identifying all persons who
are then "affiliates" of the Seller, including, without limitation, all
directors and executive officers of the Seller, for purposes of Rule 145
promulgated under the Securities Act and/or for the purposes of applicable SEC
accounting releases with respect to pooling-of-interests accounting treatment
(each a "Seller Affiliate") and (b) the Seller shall advise the persons
identified in such letter of the resale restrictions imposed by applicable
securities laws and regulations governing pooling-of-interests accounting
treatment and
31
<PAGE>
shall use reasonable efforts to obtain from each person identified in such
letter a written agreement, substantially in the form attached hereto as
ANNEX A. The Seller shall use its reasonable best efforts to obtain from any
person who becomes an affiliate of the Seller after the Seller's delivery of
the letter referred to above, and on or prior to the Effective Time, a
written agreement substantially in such form as soon as practicable after
attaining such status.
4.7 TAX TREATMENT AND POOLING. The Seller will use its reasonable best
efforts to cause the Merger to qualify for pooling of interests accounting
treatment and as a reorganization under Section 368(a)(2)(E) of the Code.
4.8 EXPENSES. All Expenses (as defined below) incurred by the Company and
the Seller shall be borne solely and entirely by the party which has incurred
the same, except that the parties shall share equally in the out-of-pocket
expenses relating to the printing of the Registration Statement and the Proxy
Statement/Prospectus, and all SEC, New York Stock Exchange ("NYSE"), and other
regulatory filing and listing fees incurred in connection herewith. "Expenses"
as used in this Agreement shall include all reasonable out-of-pocket expenses
(including, without limitation, all fees and expenses of counsel, accountants,
investment bankers, experts and consultants to the party and its affiliates)
incurred by a party or on its behalf in connection with or related to the
authorization, preparation and execution of this Agreement, the solicitation of
stockholder approvals and all other matters related to the closing of the
transactions contemplated hereby.
4.9 DELIVERY OF STOCKHOLDER LIST. The Seller shall arrange to have its
transfer agent deliver to the Company or its designee, from time to time prior
to the Effective Time, a true and complete list or computer tape setting forth
the names and addresses of the Seller stockholders, their holdings of stock as
of the latest practicable date, and such other stockholder information as the
Company may reasonably request.
ARTICLE V--COVENANTS OF THE COMPANY
5.1 AFFIRMATIVE COVENANTS. The Company hereby covenants and agrees with
the Seller that from and after the date of this Agreement and prior to the
Effective Time, unless the prior written consent of the Seller shall have been
obtained and except as otherwise contemplated herein, it will and it will cause
each Company Subsidiary to:
(a) maintain its corporate existence in good standing and maintain all
books and records in accordance with accounting principles and practices as
utilized in the Company's or the Company Subsidiaries', as the case may be,
financial statements applied on a consistent basis;
(b) conduct its business in the ordinary course of business consistent
with past practices and in a manner that does not violate any Law, except for
possible violations which individually or in the aggregate do not, and, insofar
as reasonably can be foreseen, in the future will not, have a Material Adverse
Effect with respect to the Company; and
32
<PAGE>
(c) use all reasonable efforts to preserve intact its business
organization and assets, maintain its rights and franchises, retain the services
of its officers and key employees and maintain its relationships with customers.
5.2 NEGATIVE COVENANTS. Except as otherwise contemplated by this
Agreement, from the date of this Agreement until the Effective Time, the Company
shall not do, or agree to commit to do, or permit any Company Subsidiaries to
do, without the prior written consent of the Seller any of the following:
(a) solely in the case of the Company, declare or pay any extraordinary or
special dividends on or make any other extraordinary or special distributions in
respect of any of its capital stock unless appropriate adjustment or adjustments
are made to the Exchange Ratio as set forth in SECTION 1.6;
(b) take any action that is intended or may reasonably be expected to
result in any of its representations and warranties set forth in this Agreement
being or becoming untrue in any material respect, or in any of the conditions to
the Merger set forth in ARTICLE VII not being satisfied, or in a violation of
any provision of this Agreement except, in every case, as may be required by
applicable Law;
(c) take or cause to be taken any action which would disqualify the Merger
(i) as a tax free organization under Section 368(a)(2)(E) of the Code or (ii)
for pooling of interests accounting treatment under GAAP;
(d) amend its Articles of Incorporation or Bylaws or other governing
instrument in a manner which would adversely affect in any manner the terms of
the Company Common Stock or the ability of the Company to consummate the
transactions contemplated hereby;
(e) enter into any agreement providing for, or otherwise participate in,
any merger consolidation or other transaction in which the Company or any
surviving corporation would be required not to consummate the Merger or any of
the other transactions contemplated hereby in accordance with the terms of this
Agreement, as the case may be; or
(f) agree to do any of the foregoing.
5.3 ACCESS AND INFORMATION.
(a) From the date of this Agreement and until the Effective Time and upon
reasonable notice and subject to applicable laws relating to the exchange of
information, the Company shall, and shall cause each Company Subsidiary to,
afford to the Seller's officers, employees, accountants, legal counsel and other
representatives of the Seller, access, during normal business hours, to all its
properties, books, contracts, commitments and records. From the date of this
Agreement and until the Effective Time, the Company shall (and shall cause each
Company Subsidiary to) furnish promptly
33
<PAGE>
(as soon as available or received by the Company or any Company Subsidiary)
to the Seller (i) a copy of each Company Report filed by it or received by it
(to the extent not prohibited by Law and if so prohibited, the Company shall
promptly so notify the Seller) after the date of this Agreement and prior to
the Effective Time pursuant to the requirements of federal or state
securities laws or any other applicable Laws promptly after such documents
are available and (ii) all other information concerning the business,
properties and personnel of the Company or the Company Subsidiaries as the
Seller may reasonably request, other than in each case reports or documents
which the Company is not permitted to disclose under applicable law or
binding agreement entered in to prior to the date of this Agreement. The
parties will make appropriate substitute disclosure arrangements under
circumstances in which the restrictions of the preceding sentence apply.
(b) Unless otherwise required by Law, the parties will hold any such
information which is nonpublic in confidence until such time as such information
becomes publicly available through no wrongful act of either party, and in the
event of termination of this Agreement for any reason each party shall promptly
return all nonpublic documents obtained from any other party, and any copies
made of such documents, to such other party or destroy such documents or copies.
5.4 UPDATE DISCLOSURE: BREACHES.
(a) From and after the date of this Agreement until the Effective Time,
the Company shall update the Company Disclosure Statement on a regular basis by
written notice to the Seller to reflect any matters which have occurred from and
after the date of this agreement which, if existing on the date of this
Agreement, would have been required to be described therein; provided that, to
the extent that updating required under this Section is unduly burdensome to the
Company, the Company and the Seller will use their best efforts to develop
alternate updating procedures utilizing, wherever possible, existing reporting
systems.
(b) The Company shall, in the event it becomes aware of the impending or
threatened occurrence of any event or condition which would cause or constitute
a material breach (or would have caused or constituted a material breach had
such event occurred or been known prior to the date of this Agreement) of any of
its representations of agreements contained or referred to herein, give prompt
written notice thereof to the Seller and use its best efforts to prevent or
promptly remedy the same.
5.5 STOCK EXCHANGE LISTING. The Company shall use all reasonable efforts
to cause the shares of Company Common Stock to be issued in the Merger to be
approved for listing on the NYSE prior to the Effective Time.
5.6 TAX TREATMENT AND POOLING. The Company will use its reasonable best
efforts to cause the Merger to qualify (i) as a reorganization under Section
368(a)(2)(E) of the Code and (ii) for pooling of interests accounting treatment
under GAAP.
34
<PAGE>
ARTICLE VI--ADDITIONAL AGREEMENTS
6.1 PROXY STATEMENT/PROSPECTUS; REGISTRATION STATEMENT. As promptly as
practicable after the execution of this Agreement, the Seller and the Company
shall prepare and file with the SEC the Proxy Statement/Prospectus and
Registration Statement under the Securities Act and the Exchange Act relating to
the approval of the Merger by the stockholders of the Seller and shall use all
reasonable efforts to cause the Registration Statement to become effective as
soon thereafter as practicable. The Proxy Statement/Prospectus shall include
the recommendation of the Board of Directors of the Seller in favor of the
Merger.
6.2 MEETING OF THE SELLER'S STOCKHOLDERS. The Seller shall promptly after
the date of this Agreement take all action necessary in accordance with the DGCL
and Seller Certificate and the Seller Bylaws to convene the Seller Stockholders'
Meeting. The Seller shall use its best efforts to solicit from stockholders of
the Seller proxies in favor of the Merger and shall take all other action
necessary or advisable to secure the vote or consent of stockholders required by
the DGCL to approve the Merger.
6.3 APPROPRIATE ACTION; CONSENTS; FILINGS. The Seller and the Company
shall use all reasonable efforts to (i) take, or cause to be taken, all
appropriate action, and do, or cause to be done, all things necessary, proper or
advisable under applicable Law to consummate and make effective the transactions
contemplated by this Agreement, (ii) obtain all consents, licenses, permits,
waivers, approvals, authorizations or orders required under Law (including,
without limitation, all foreign and domestic (federal, state and local)
governmental and regulatory rulings and approvals and parties to contracts)
required in connection with the authorization, execution and delivery of this
Agreement and the consummation by them of the transactions contemplated hereby,
(iii) make all necessary filings, and thereafter make any other required
submissions, with respect to this Agreement and the Merger required under (A)
the Securities Act and the Exchange Act and the rules and regulations
thereunder, and any other applicable federal or state securities laws, (B)
applicable federal or state banking laws and (C) any other applicable Law;
provided that, the Company and the Seller shall cooperate with each other in
connection with the making of all such filings, including providing copies of
all such documents to the non-filing party and its advisors prior to filing and,
if requested, to accept all reasonable additions, deletions or changes suggested
in connection therewith. The Seller and the Company shall furnish all
information required for any application or other filing to be made pursuant to
the rules and regulations of any applicable Law (including all information
required to be included in the Proxy Statement/Prospectus and the Registration
Statement) in connection with the transactions contemplated by this Agreement.
In case at any time after the Effective Time any further action is necessary or
desirable to carry out the purposes of this Agreement, the proper officers and
directors of each party to this Agreement shall use all reasonable efforts to
take all such necessary action.
6.4 EMPLOYEE STOCK OPTIONS AND OTHER EMPLOYEE BENEFIT MATTERS. ANNEX B
sets forth certain agreements and obligations of the Seller and the Company with
respect to the Stock Plans and the Seller's employee benefit plans and other
employee benefit matters, including but not
35
<PAGE>
limited to: (i) the treatment of outstanding options under the Stock Plans;
(ii) the granting of options under the Company stock option plans; (iii)
payments pursuant to existing employment agreements; (iv) the entering into
of new employment and noncompetition agreements between the Company and
certain officers of the Seller; and (v) the defined benefit plans.
6.5 NOTIFICATION OF CERTAIN MATTERS. The Seller shall give prompt notice
to the Company, and the Company shall give prompt notice to the Seller, of (i)
the occurrence or non-occurrence of any event, the occurrence or non-occurrence
of which would be likely to cause any representation or warranty contained in
this Agreement to be untrue or inaccurate and (ii) any failure of the Seller or
the Company, as the case may be, to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it hereunder;
provided, however, that the delivery of any notice pursuant to this SECTION 6.6
shall not limit or otherwise affect the remedies available hereunder to the
party receiving such notice.
6.6 PUBLIC ANNOUNCEMENTS. The Company and the Seller shall consult with
each other before issuing any press release or otherwise making any public
statements with respect to the Merger and shall not issue any such press release
or make any such public statement prior to such consultation, except as may be
required by Law or any listing agreement with or rule of the National
Association of Securities Dealers, Inc.
6.7 CUSTOMER RETENTION. To the extent permitted by law or applicable
regulation, the Seller shall use all reasonable efforts to assist the Company in
its efforts to retain the Seller's customers for the Surviving Corporation.
Such efforts may include making introductions of the Company's employees to such
customers, assisting in the mailing of information prepared by the Company and
reasonably acceptable to the Seller, to such customers and actively
participating in any "transitional marketing programs" as the Company shall
reasonably request.
6.8 TAIL POLICY. The Company shall purchase, and for a period of four (4)
years after the Effective Time, the Company shall use its best efforts to
maintain, directors and officers liability insurance "tail" or "runoff" coverage
with respect to wrongful acts and/or omissions committed or allegedly committed
prior to the Effective Time. Such coverage shall have an aggregate coverage
limit under the Seller's existing directors and officers liability policy, and
in all other respects shall be at least comparable to such existing policy;
provided, however, that in no event shall the Company be required to expend on
an annual basis more than 200% of the current amount expended by the Seller (the
"Insurance Amount") to maintain or procure insurance coverage, and further
provided that if the Company is unable to maintain or obtain the insurance
called for by this SECTION 6.8 Company shall use all reasonable efforts to
obtain as much comparable insurance as available for the Insurance Amount. In
the event the Company or the Surviving Corporation or any of its successors or
assigns (i) consolidates with or merges into any other person and shall not be
the continuing or surviving corporation or entity of such consolidation or
merger, or (ii) transfers or conveys all or substantially all of its properties
and assets to any person, then, and in each such case, proper provision shall be
made so that the successors and assigns of the Company or the Surviving
Corporation, as the case may be, assume the obligations set forth in this
section. The provisions of this SECTION 6.8 are
36
<PAGE>
intended to be for the benefit of, and shall be enforceable by, each such
director and officer and his or her heirs and representatives.
6.9 INDEMNIFICATION. For a period of six (6) years following the
Effective Time, the Company will indemnify the individuals serving as directors
and officers of the Seller immediately prior to the Effective Time against all
liabilities and claims relating to their service in such capacities with the
Seller prior to the Effective Time to the same extent as such directors and
officers would have been indemnified by the Seller pursuant to the Seller
Certificate. The provisions of this Section are intended to be for the benefit
of, and shall be enforceable by, each such director and officer and his or her
heirs and representatives.
ARTICLE VII--CONDITIONS OF MERGER
7.1 CONDITIONS TO OBLIGATION OF EACH PARTY TO EFFECT THE MERGER. The
respective obligations of each party to effect the Merger shall be subject to
the satisfaction at or prior to the Effective Time of the following conditions:
(a) EFFECTIVENESS OF THE REGISTRATION STATEMENT. The Registration
Statement shall have been declared effective by the SEC under the Securities
Act. No stop order suspending the effectiveness of the Registration Statement
shall have been issued by the SEC and no proceedings for that purpose shall, on
or prior to the Effective Time, have been initiated or, to the knowledge of the
Company or the Seller, threatened by the SEC.
(b) STOCKHOLDER APPROVAL. This Agreement and the Merger shall have been
approved and adopted by the requisite vote of the stockholders of the Seller.
(c) REGULATORY APPROVALS. (i) The Merger shall have been approved by the
applicable regulatory authorities, including, without limitation, the OTS, which
approvals shall not contain any materially burdensome conditions that would
significantly adversely affect the Company; (ii) all conditions required to be
satisfied prior to the Effective Time imposed by the terms of such approval
shall have been satisfied; and (iii) all waiting periods relating to such
approval shall have expired.
(d) NO ORDER. No federal or state governmental or regulatory authority or
other agency or commission, or federal or state court of competent jurisdiction,
shall have enacted, issued, promulgated, enforced or entered any statute, rule,
regulation, executive order, decree, injunction or other order (whether
temporary, preliminary or permanent) which is in effect restricting, preventing
or prohibiting consummation of the transactions contemplated by this Agreement.
(e) POOLING OF INTERESTS. The Seller and the Company shall have received
a letter of the Seller's independent public accountants, dated as of the closing
date of the Merger (the "Closing Date"), in form and substance reasonably
satisfactory to the Seller and the Company, stating that the Seller is an entity
that qualifies for pooling of interests accounting treatment pursuant to GAAP
and
37
<PAGE>
applicable SEC regulations. The Seller and the Company shall also have
received a letter of the Company's independent accountants, dated the Closing
Date, in form and substance reasonably satisfactory to the Seller and the
Company, stating that the transactions effected pursuant to this Agreement
will qualify as a pooling of interests pursuant to GAAP and applicable SEC
regulations.
(f) HART-SCOTT-RODINO ACT. If filing under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended ("HSR Act"), is required to be
made prior to consummation of the Merger, early termination shall have been
granted or applicable waiting periods shall have expired under the HSR Act.
7.2 ADDITIONAL CONDITIONS TO OBLIGATIONS OF THE COMPANY. The obligations
of the Company to effect the Merger are also subject to the following
conditions:
(a) REPRESENTATIONS AND WARRANTIES. Each of the representations and
warranties of the Seller contained in this Agreement, without giving effect to
any update to the Seller Disclosure Schedule or notice to the Company under
SECTION 4.5 or 6.5, shall be true and correct as of the date of this Agreement
and (except to the extent such representations and warranties speak as of an
earlier date) as of the Effective Time as though made on and as of the Effective
Time; provided, however, that for purposes of determining the satisfaction of
the condition contained in this clause, no effect shall be given to any
exception in such representations and warranties relating to materiality or a
Material Adverse Effect, and provided, further, however, that, for purposes of
this clause, such representation and warranties shall be deemed to be true and
correct unless the failure or failures of such representations and warranties to
be so true and correct, individually or in the aggregate, represent a Material
Adverse Effect with respect to the Seller. Company shall have received a
certificate signed on behalf of the Seller by the Chief Executive Officer or
President and the Chief Financial Officer of the Seller to the foregoing effect.
(b) AGREEMENTS AND COVENANTS. The Seller shall have performed or complied
in all material respects with all agreements and covenants required by this
Agreement to be performed or complied with by it on or prior to the Effective
Time.
(c) CONSENTS OBTAINED. All Seller Approvals and all filings required to
be made by the Seller for the authorization, execution and delivery of this
Agreement and the consummation by it of the transactions contemplated hereby
shall have been obtained and made by the Seller, except those for which failure
to obtain such Seller Approvals or make such filings would not individually or
in the aggregate, have a Material Adverse Effect with respect to the Seller.
(d) NO CHALLENGE. There shall not be pending any action, proceeding or
investigation before any court or administrative agency or by a government
agency (i) challenging or seeking material damages in connection with, the
Merger or the conversion of Seller Common Stock into Company Common Stock
pursuant to the Merger or (ii) seeking to restrain, prohibit or limit the
exercise of full rights of ownership or operation by the Company or the Company
Subsidiaries of all
38
<PAGE>
or any portion of the business or assets of the Seller, which in either case
is reasonably likely to have a Material Adverse Effect with respect to the
Seller or the Company.
(e) COMFORT LETTERS. The Company shall have received from Deloitte &
Touche LLP the "comfort" letters referred to in SECTION 4.3.
(f) NO MATERIAL ADVERSE CHANGES. Since the date of the Agreement, there
has not been any change in the financial condition, results of operations or
business of the Seller and the Seller Subsidiaries, taken as a whole, that
either individually or in the aggregate would have a Material Adverse Effect
with respect to the Seller. The Company shall have received a certificate of
the Chief Executive Officer or President and the Chief Financial Officer of the
Seller to that effect.
(g) OPINION OF COUNSEL. The Company shall have received from Patton
Boggs, L.L.P., independent counsel to the Seller ("Seller's Counsel") an opinion
dated the Effective Time, in form and substance reasonably satisfactory to the
Company, covering the matters set forth in ANNEX C, which opinion shall be based
on such assumptions and containing such qualifications and limitations as are
appropriate and reasonably satisfactory to the Company.
(h) VOTING AGREEMENT. Within thirty (30) days of the date of this
Agreement, the directors of the Seller shall have entered into the Voting
Agreements, substantially in the form of ANNEX E.
7.3 ADDITIONAL CONDITIONS TO OBLIGATIONS OF THE SELLER. The obligation of
the Seller to effect the Merger is also subject to the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. Each of the representations and
warranties of the Company set forth in this Agreement, without giving effect to
any notice to the Seller under SECTION 5.4 or 6.5, shall be true and correct as
of the date of this Agreement and (except to the extent such representation and
warranties speak as of an earlier date) as of the Effective Time, as though made
on and as of the Effective Time; provided, however, that for purposes of
determining the satisfaction of the condition contained in this clause, no
effect shall be given to any exception in such representations and warranties
relating to materiality or a Material Adverse Effect, and provided, further,
however, that, for purposes of this clause, such representations and warranties
shall be deemed to be true and correct unless the failure or failures of such
representations and warranties to be so true and correct, individually or in the
aggregate, represent a Material Adverse Effect with respect to the Company. The
Seller shall have received a certificate signed on behalf of the Company by the
Chief Executive Officer or President and the Chief Financial Officer of the
Company to the foregoing effect.
(b) AGREEMENTS AND COVENANTS. The Company shall have performed or
complied in all material respects with all agreements and covenants required by
this Agreement to be performed or complied with by it on or prior to the
Effective Time.
39
<PAGE>
(c) CONSENTS UNDER AGREEMENTS. All consents, waivers, approvals,
authorizations or orders required to be obtained, and all filings required to be
made by the Company for the authorizations, execution and delivery of this
Agreement and the consummation by it of the transactions contemplated hereby
shall have been obtained and made by the Company, except where failure to obtain
any consents, waivers, approvals, authorizations or orders required to be
obtained or any filings required to be made would not have a Material Adverse
Effect with respect to the Company.
(d) FEDERAL TAX OPINION. The Seller shall have received an opinion of
Seller's Counsel, in form and substance reasonably satisfactory to the Seller,
dated as of the Effective Time, substantially to the effect that on the basis of
facts, representations and assumptions set forth in such opinion which are
consistent with the state of facts existing at the Effective Time, the Merger
will be treated as a reorganization within the meaning of Section 368 of the
Code, and that, accordingly, for federal income tax purposes:
(i) No gain or loss will be recognized by the Seller as a result of
the Merger;
(ii) No gain or loss will be recognized by the stockholders of the
Seller (except with respect to cash received in lieu of a fractional share
interest in Company Common Stock); and
(ii) The aggregate tax basis of the company Common Stock received by
stockholders of Seller pursuant to the Merger will be the same as the aggregate
tax basis of the Seller Common Stock surrendered in exchange therefor reduced by
any amount allocable to a fractional share interest for which cash is received).
In rendering such opinion, Seller's Counsel may require and rely upon
representations and covenants contained in certificates of officers of Company,
the Seller and others.
(e) NO CHALLENGE. There shall not be pending any action, proceeding or
investigation before any court or administrative agency or by a government
agency (i) challenging or seeking material damages in connection with, the
Merger or the conversion of Seller Common Stock into Company Common Stock
pursuant to the Merger or (ii) seeking to restrain, prohibit or limit the
exercise of full rights of ownership or operation by the Company or the Company
Subsidiaries of all or any portion of the business or assets of Seller, which in
either case is reasonably likely to have a Material Adverse Effect with respect
to the Seller or the Company.
(f) NO MATERIAL ADVERSE CHANGES. Since the date of the Agreement, there
has not been any change in the financial condition, results of operations or
business of the Company and the Company Subsidiaries, taken as a whole, that
either individually or in the aggregate would have a Material Adverse Effect
with respect to the Company. The Seller shall have received a certificate of
the Chief Executive Officer or President and the Chief Financial Officer of the
Company to that effect.
(g) OPINION OF COUNSEL. The Seller shall have received from Company
Counsel an opinion dated the Effective Time, in form and substance reasonably
satisfactory to the Seller, covering
40
<PAGE>
the matters set forth in ANNEX D, which opinion shall be based on such
assumptions and contain such qualifications and limitations as are appropriate
and reasonably satisfactory to the Seller.
ARTICLE VIII--TERMINATION, AMENDMENT AND WAIVER
8.1 TERMINATION. This Agreement may be terminated at any time prior to
the Effective Time:
(a) by mutual consent of the Company and the Seller by a vote of a
majority of the members of the entire Boards of Directors of the Company and
Seller;
(b) by either the Company or the Seller if any approval of the
stockholders of the Seller required for the consummation of the Merger shall not
have been obtained by reason of the failure to obtain the required vote at a
duly held meeting of such stockholders or at any adjournment or postponement
thereof;
(c) by the Seller or the Company (i) if there has been a breach in any
material respect (except that where any statement in a representation or
warranty expressly includes a standard of materiality, such statement shall have
been breached in any respect) of any representation, warranty, covenant or
agreement on the part of Seller, on the one hand, or the Company, on the other
hand, set forth in this Agreement, or (ii) if any representation or warranty of
Seller, on the one hand, or the Company, on the other hand, shall be discovered
to have become untrue in any material respect (except that where any statement
in a representation or warranty expressly includes a standard of materiality,
such statement shall have become untrue in any respect), in either case (i) or
(ii) which breach or other condition has not been cured within 10 business days
following receipt by the nonterminating party of notice of such breach or other
condition, or which breach by its nature, cannot be cured prior to Closing;
provided, however, neither party shall have the right to terminate this
Agreement pursuant to this SECTION 8.1(c) unless the breach of any
representation or warranty (but not breaches of covenants or agreements),
together with all other such breaches, would entitle the party receiving such
representation or warranty not to consummate the transactions contemplated
hereby under SECTION 7.2(a) (in the case of a breach of a representation or
warranty by the Seller) or SECTION 7.3(a) (in the case of a breach of a
representation or warranty by the Company); and, provided further that
notwithstanding anything in this Agreement to the contrary, the Seller may
declare the Company in breach of SECTION 3.8(iii) or (iv) only in the event the
Company is otherwise in breach of such sections and the Company Share Value
determined in accordance with SECTION 1.6(a) is less than 30, in which event the
Company may cure such breach by issuing additional Company Common Stock in
connection with the Merger to bring such Company Share Value to 30; and,
provided further this Agreement may not be terminated pursuant to this clause
(c) by the breaching party or party making any representation or warranty which
shall have become untrue in any material respect;
(d) by either the Company or the Seller if any permanent injunction
preventing the consummation of the Merger shall have become final and
nonappealable;
41
<PAGE>
(e) by either the Company or the Seller if the Merger shall not have been
consummated by November 1, 1998, for a reason other than the failure of the
party seeking termination to comply with its obligations under this Agreement;
provided that if the Merger shall not have been consummated on or prior to
November 1, 1998 as a result of proceedings of a governmental authority or
litigation, then the date on which either the Company or the Seller may
terminate this agreement under this SECTION 8.1(e) shall be extended to the
earlier of (i) the elapse of a reasonable period of time necessary to consummate
the Merger following the final termination of proceedings of a governmental
authority or litigation or (ii) December 31, 1998;
(f) by either the Company or the Seller if any regulatory authority has
denied approval of the Merger, and neither the Company nor the Seller has,
within 30 days after the entry of such order denying approval, filed a petition
seeking review of such order as provided by applicable law;
(g) by the Seller, upon three business days' prior notice to the Company,
if as a result of a Takeover Proposal with respect to the Seller that the Board
of Directors of the Seller has determined to be a Superior Takeover Proposal,
and the Board of Directors of the Seller determines in good faith (after
consultation with and based on the advice of its outside counsel) that the
acceptance of such Superior Takeover Proposal could reasonably be required by
the fiduciary obligations of such directors under applicable law; provided,
however, that prior to any such termination, the Seller shall advise the Company
in writing of the determination of the Board of Directors of the Seller that the
Board of Directors of the Seller has determined that such Takeover Proposal is a
Superior Takeover Proposal, which notice will include a summary of such Takeover
Proposal. During such three business day period, the Company may propose to the
Seller an alternative transaction, and the Company shall, and shall cause its
respective financial and legal advisors to, negotiate with the Company in good
faith with respect to such adjustments in the terms and conditions of this
Agreement so that such Takeover Proposal would not constitute a Superior
Takeover Proposal and thereby enable the Seller to proceed with the transactions
contemplated herein. "Takeover proposal" shall mean (i) any tender or exchange
offer, proposal for a merger, consolidation or other business combination
involving the Seller or Seller Subsidiaries, (ii) any proposal or offer to
acquire from the Seller in any manner, directly or indirectly, any equity or
voting securities of the Seller in excess of 15% of the equity voting securities
of the Seller or Seller Subsidiaries thereof or a material amount of the assets
of the Seller and Seller Subsidiaries, taken as a whole, or (iii) any proposal
or offer to acquire from the stockholders of the Seller by tender offer,
exchange offer or otherwise more than 15% of the outstanding common stock of the
Seller; provided, however, that a "Takeover Proposal" shall not mean the Merger
or any alternative transaction between the Company and the Seller that may be
proposed as contemplated hereby. "Superior Takeover Proposal" means any bona
fide Takeover Proposal to acquire, directly or indirectly, for consideration
consisting of cash, securities or a combination thereof, all of the common stock
of the Seller then outstanding or all or substantially all of the assets of the
Seller on terms that the Board of Directors of the Seller determines in its good
faith reasonable judgment (after consultation with a financial advisor of
nationally recognized reputation) to be more favorable to the Seller's
stockholders than the Merger; or
42
<PAGE>
(h) by the Company if the Board of Directors of the Seller or any
committee thereof shall withdraw or modify, or propose to withdraw or modify, in
a manner adverse to the Company, the approval by the Board of Directors of the
Seller of this Agreement or the Merger or take any action having such effect.
8.2 EFFECT OF TERMINATION. In the event of the termination of this
Agreement pursuant to SECTION 8.1, this Agreement shall forthwith become void
and all rights and obligations of any party shall cease except: (i) as set forth
in SECTION 9.1 of this Agreement and (ii) nothing herein shall relieve any party
from liability for any willful breach of this Agreement or shall restrict either
party's rights in the case thereof.
8.3 SELLER TERMINATION PAYMENTS. If this Agreement is terminated:
(i) pursuant to Section 8.1(g) (fiduciary out);
(ii) pursuant to SECTION 8.1(b) (failure to obtain stockholder
approval), following a failure of the stockholders of the Seller to grant the
necessary approval described in SECTION 7.1(b) if at the time prior to the
Seller Stockholders' Meeting called for the purpose of voting on the Merger
there shall have been a Takeover Proposal with respect to the Seller and the
Board of Directors of the Seller shall have withdrawn its recommendation of this
Agreement or the Merger; or
(iii) as a result of a material breach of SECTION 6.2 by the
Seller (approval of stockholders),
then the Seller shall pay the Company a termination fee equal to $7.0 million,
payable in cash or immediately available funds within five business days of such
termination (the "Termination Fee").
8.4 WAIVER. At any time prior to the Effective Time, the parties may (a)
extend the time for the performance of any of the obligations or other acts of
the other party, (b) waive any inaccuracies in the representations and
warranties contained herein or in any document delivered pursuant hereto and (c)
waive compliance with any of the agreements or conditions contained herein. Any
such extension or waiver shall be valid only if set forth in a written
instrument signed on behalf of such party, but such extension or waiver or
failure to insist on strict compliance with an obligation, covenant, agreement
or condition shall not operate as a waiver of, or estoppel with respect to, any
subsequent or other failure.
ARTICLE IX--GENERAL PROVISIONS
9.1 NON-SURVIVAL OF REPRESENTATIONS; WARRANTIES AND AGREEMENTS. The
representation, warranties and agreements in this Agreement shall terminate at
the Effective Time or upon the termination of this Agreement pursuant to ARTICLE
VIII, except that the agreements set forth in ARTICLE I, SECTION 6.4 (including
ANNEX B), SECTION 6.8 and SECTION 8.3, shall survive the
43
<PAGE>
Effective Time and those set forth in SECTIONS 4.4(b), 4.8, 5.3(b) and ARTICLE
IX hereof shall survive termination indefinitely.
9.2 ENFORCEMENT OF AGREEMENT. The parties agree that irreparable damage
would occur in the event that the provisions contained in each of SECTIONS
4.4(b), 5.3(b) and 6.4 (including ANNEX B) of this Agreement were not performed
in accordance with its specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of SECTIONS 4.4(b), 5.3(b) and 6.4 (including
ANNEX B) of this Agreement and to enforce specifically the terms and provisions
thereof in any court of the United States or any state having jurisdiction, this
being in addition to any other remedy to which they are entitled at law or in
equity.
9.3 NOTICES. All Notices and other communications given or made pursuant
hereto shall be in writing and shall be deemed given if delivered personally,
telecopied (with confirmation), mailed by register or certified mail (postage
prepaid, return receipt requested) to the parties at the following addresses (or
at such other address for a party as shall be specified by like notice) and
shall be effective upon receipt:
(a) If to the Company:
FIRSTPLUS Financial Group, Inc.
1600 Viceroy, 8th Floor
Dallas, Texas 75235
Telecopier: (214) 599-7651
Attention: President
With a copy to:
Jenkens & Gilchrist, a Professional Corporation
1445 Ross Ave., Suite 3200
Dallas, Texas 75202
Telecopier: (214) 855-4300
Attention: Ronald J. Frappier
(b) If to the Seller:
Life Financial Corporation
10540 North Magnolia Avenue
Suite B
Riverside, California 92505-1814
Telecopier: (909) 637-4220
Attention: Daniel L. Perl
44
<PAGE>
With a copy to:
Patton Boggs, L.L.P.
2550 M Street, N.W.
5th Floor
Washington, D.C. 20037-1350
Telecopier: (202) 457-6315
Attention: Joseph G. Passaic, Jr.
9.4 CERTAIN DEFINITIONS. For purposes of this Agreement, the term:
(a) "affiliate" means a person that directly or indirectly, through one or
more intermediaries, controls, is controlled by, or is under common control
with, the first mentioned person; including, without limitation, any partnership
or joint venture in which any person (either alone, or though or together with
any other subsidiary) has, directly or indirectly, an interest of 5% or more;
(b) "business day" means any day other than a day on which federally-
chartered banks are required or authorized to be closed;
(c) "control" (including the terms "controlled by" and "under common
control with") means the possession, directly or indirectly or as trustee or
executor, of the power to direct or cause the direction of the management or
policies of a person, whether through the ownership of stock or as trustee or
executor, by contract or credit arrangement or otherwise;
(d) "person" means an individual, corporation, partnership, association,
trust, unincorporated organization, other entity or group (as defined in Section
13(d) of the Exchange Act); and
(e) "subsidiary" or "subsidiaries" of Seller, the Company, the Surviving
Corporation, or any other person, means any corporation, partnership, joint
venture or other legal entity of which the Seller, the Company, the Surviving
Corporation or such other person, as the case may be (either alone or through or
together with any other subsidiary), owns, directly or indirectly, 50% or more
of the stock or other equity interests the holders of which are generally
entitled to vote for the election of the board of directors or other governing
body of such corporation or other legal entity.
9.5 HEADINGS. The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.
9.6 SEVERABILITY. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner adverse to
any party.
45
<PAGE>
Upon such determination that any term or other provision is invalid, illegal
or incapable of being enforced, the parties hereto shall negotiate in good
faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner to the end that
transactions contemplated hereby are fulfilled to the extent possible.
9.7 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement of
the parties and supersedes all prior agreements and undertakings, both written
and oral, between the parties, or any of them, with respect to the subject
matter hereof and, except as otherwise expressly provided herein, are not
intended to confer upon any other person any rights or remedies hereunder.
9.8 ASSIGNMENT. This Agreement shall not be assigned by operation of law
or otherwise, except that the Company may assign all or any of its rights
hereunder to any affiliate provided that no such assignment shall relieve the
assigning party of its obligations hereunder.
9.9 PARTIES IN INTEREST. This Agreement shall be binding upon and inure
solely to the benefit of each party and nothing in this Agreement, express or
implied, is intended to or shall confer upon any other person any right, benefit
or remedy of any nature whatsoever under or by reason of this Agreement, other
than SECTION 6.4 (including ANNEX B) and SECTION 6.8 (which are intended to be
for the benefit of the directors, officers and employees of the Seller and the
Seller Subsidiaries and may be enforced by such persons).
9.10 GOVERNING LAW. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Texas, regardless of the laws that
might otherwise govern under applicable principles of conflicts of law.
9.11 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, and by the different parties in separate counterparts, each of
which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
9.12 TIME IS OF THE ESSENCE. Time is of the essence with respect to this
Agreement.
9.13 AMENDMENT. This Agreement may be amended by the parties by action
taken by or on behalf of their respective Boards of Directors at any time
prior to the Effective Time; provided, however, that, after approval of the
Merger by the stockholders of the Seller, no amendment may be made, without
further approval of such stockholders which would reduce the amount or change
the type of consideration into which each share of Seller Common Stock shall be
converted pursuant to this Agreement upon consummation of the Merger. This
Agreement may not be amended except by an instrument in writing signed by the
parties.
46
<PAGE>
IN WITNESS WHEREOF, the Seller, the Company and the Subsidiary have caused
this Agreement to be executed as of the date first written above by their
respective officers thereunto duly authorized.
LIFE FINANCIAL CORPORATION
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
FIRSTPLUS FINANCIAL GROUP, INC.
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
LIFE FINANCIAL ACQUISITION, INC.
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
<PAGE>
CROSS REFERENCES TO SELLER DISCLOSURE SCHEDULE
(Seller Reps & Warranties)
Section 2.1(c) - List of Seller Subsidiaries
Section 2.8 - Absence of Certain Changes or Events
Section 2.9 - Litigation
Section 2.10(a) - Employee Benefit Plans
Section 2.10(b) - Certain Types of Plans ("controlled group")
Section 2.10(c) - Compliance with Applicable Law
Section 2.10(d) - Qualification of Certain Plans
Section 2.10(e) - Certain Liabilities and Events
Section 2.10(h) - Stock Options
Section 2.10(i) - Employment Contracts
Section 2.10(j) - Effect of Agreement re Compensation
Section 2.13 - Environmental Matters (properties owned/compliance)
Section 2.15 - Taxes
Section 2.16 - Insurance
Section 2.20 - Material Contracts
Section 4.2(h) - Transactions
<PAGE>
- ------------------------------------------------------------------------------
News Release . . . .
- ------------------------------------------------------------------------------
FIRSTPLUS Financial Group, Inc.
Daniel T. Phillips, Chairman/CEO
Eric C. Green, President
William P. Benac, CFO
Stephen Hunter, VP Investor Relations,
214-599-6300
LIFE Financial Corporation
Daniel L. Perl, Chief Executive Officer
(909) 637-4020
FOR IMMEDIATE RELEASE
- ---------------------
Michele Katz/Ian Hirsch/Michael Mahony
Press: Brian Maddox/Estelle Bieber
Morgan-Walke Associates
(212) 850-5600
FIRSTPLUS FINANCIAL GROUP, INC. TO ACQUIRE LIFE FINANCIAL
CORPORATION
DALLAS, TX, March 12, 1998 - FIRSTPLUS Financial Group, Inc. (NYSE: "FP") and
LIFE Financial Corporation (NASDAQ: "LFCO") today announced that the two
companies have entered into a definitive agreement whereby FIRSTPLUS will
acquire LIFE Financial in a stock-for-stock merger valued at approximately
$138 million. The transaction is structured to provide approximately $20.00
in value of FIRSTPLUS stock for each share of LIFE Financial stock to the
extent FIRSTPLUS stock trades between $30.00 and $40.00 per share. This
transaction is expected to close in either the third or fourth quarter of
1998. The acquisition is expected to be accounted for as a pooling of
interests.
LIFE, which has $409 million in assets, is the holding company for Life Bank,
a federally chartered Savings and Loan Association, and has experienced
considerable growth since Daniel L. Perl, Chairman and CEO, joined the
company in 1994. Perl, who has over 20 years of commercial and residential
lending experience, directed a rebound in Life Bank's earnings from a net
loss of $650,000 in calendar 1994 to a net profit of $12.7 million in
calendar 1997. LIFE completed its initial public offering in June 1997 at
$11.00 per share, and its closing price on Wednesday, March 11, 1998 was $18
per share.
-more-
[Letterhead]
<PAGE>
FIRSTPLUS FINANCIAL GROUP, INC. PAGE 2
For the 1997 calendar year, LIFE, and its subsidiary Life Bank, originated
$771 million of nonconventional mortgage loans, comprised principally of high
loan-to-value residential second mortgages, sub-prime first- and second-lien
mortgages, and commercial mortgages, all purchased through smaller
correspondents or originated through brokers. In addition, during the past
two years, LIFE implemented a retail origination program, which currently
encompasses nine retail offices throughout southern California, a HELOC
program and a commercial mortgage lending program, which focuses on owners of
income-producing commercial properties seeking loans up to $1.5 million.
Dan Phillips, FIRSTPLUS Chairman and CEO, noted the following: "LIFE is an
ideal merger partner for FIRSTPLUS because it furthers several important
FIRSTPLUS strategic goals. First, LIFE gives FIRSTPLUS immediate access to the
small correspondent and broker loan origination channel. FIRSTPLUS has not
previously capitalized on this origination channel with respect to
high-loan-to-value loans, and has only moderately developed this channel with
respect to B/C loans. Second, LIFE's servicing systems and infrastructure
accommodate HELOC and first lien loans (including escrow maintenance
functions), which will enable FIRSTPLUS to more quickly develop these and
related products. Third, LIFE services and originates commercial loans,
typically collateralized by full recourse first liens on income-producing
properties, which we believe is a business FIRSTPLUS can aggressively grow.
Fourth, while LIFE is a relatively inexpensive source of funding, we expect
to improve its cost of funds by expanding its deposit-taking branches and
developing a marketing strategy to increase commercial personal checking
accounts, potentially with Dan Marino as a spokesman. Fifth, LIFE can
be used as a platform for a variety of loan products, including credit cards.
Finally, LIFE also offers FIRSTPLUS access to a competent and efficient
whole-loan trading infrastructure."
Daniel L. Perl, LIFE's Chairman and CEO commented, "LIFE significantly
benefits from this merger because LIFE receives immediate access to loan
origination, servicing, risk management and marketing technologies and
infrastructures. FIRSTPLUS is a more efficient securitizer, and when
integrated with FIRSTPLUS's consumer finance operation, LIFE will be able to
offer a more diverse product-line to its customers. In addition, FIRSTPLUS,
through its previous Citizens Thrift and Loan acquisition, has a proven track
record of operating an FDIC-insured institution, making it an ideal merger
partner."
"This is FIRSTPLUS's most significant acquisition to date," continued Mr.
Phillips, "In addition to the strategic value of the combination, the
transaction, excluding the effect of transaction costs and related charges,
is expected to be immediately accretive to FIRSTPLUS's earnings, and during
calendar 1999 should be approximately $0.040 per share accretive. This
projected accretion will be accomplished through more efficient
securitization execution of LIFE's production, improved operating
efficiencies, and better first-lien sale execution as FIRSTPLUS utilizes
LIFE's B/C loan platform and whole-loan trading infrastructure. As more
marketing synergies and cost savings opportunities develop, and as LIFE's low
cost of funds are more frequently utilized, we expect the transaction to
continue to contribute accretively to future earnings."
-more-
<PAGE>
FIRSTPLUS FINANCIAL GROUP, INC. PAGE 3
FIRSTPLUS Financial Group, Inc. is a specialized consumer finance company
that, through its subsidiaries, originates, purchases, services and
securitizes consumer finance receivables, primarily home improvement and debt
consolidation loans, collateralized by liens on the borrower's home. The
Company, headquartered in Dallas, has regional offices in Columbia, South
Carolina; Columbus, Ohio; Denver, Colorado; Greenvile, South Carolina; Holly
Springs, Mississippi; Mission Viejo, California; Salt Lake City, Utah; and
Tustin, California; and a network of origination branches nationwide.
LIFE Financial Corporation conducts it business from fifteen locations: the
corporate headquarters and regional lending center located in Riverside,
California, additional regional lending centers located in Boston,
Massachusetts, Jacksonville, Florida, and the Denver, Colorado metropolitan
area, the Bank's home office in San Bernardino, California, an additional
savings branch office in Riverside, California and nine retail lending offices
in Southern California.
The two companies will hold a joint press conference this morning, Thursday,
March 12, 1998 at 10:00 a.m., eastern standard time at the Palace Hotel, 455
Madison Avenue, New York, NY on the 4th Floor, in the Holmes Suite. Anyone
interested in joining the press conference via teleconference call can do so
by dialing (800) 289-0730, confirmation number 443928. A digitized replay
will be available by dialing (402) 220-0103 available until noon, March 16,
1998.
The closing of the acquisition is subject to the receipt of all regulatory
approvals and approval by the stockholders of LIFE Financial Corporation, as
well as other customary conditions to closing; consequently, there can be no
assurance that the transaction will be consummated.
The above statements in this press release contain forward-looking statements
that involve a number of risks and uncertainties. In addition to the factors
discussed in this press release, reference is made to the Form 8-K, filed by
the Company with the Securities and Exchange Commission on December 19, 1996,
for a list of, and discussion with respect to, certain factors that could
cause actual results to differ materially from the forward-looking statements
contained herein.
Keefe, Bruyette & Woods, Inc. acted as financial advisor to LIFE. Banc One
Capital Corporation acted as financial advisor to FIRSTPLUS.
# # #
