SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
C U R R E N T R E P O R T
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
June 27, 1994
Date of Report (Date Of Earliest Event Reported)
NORTH FORK BANCORPORATION, INC.
(Exact Name Of Registrant As Specified In Its Charter)
Delaware
(State Or Other Jurisdiction Of Incorporation)
0-10280 36-3154608
(Commission File Number) (IRS Employer Identification No.)
9025 Route 25, Mattituck, New York 11952
(Address Of Principal Executive Offices) (Zip Code)
(516) 298-5000
(Registrant's Telephone Number, including Area Code)
NOT APPLICABLE
(Former Name Or Former Address, If Changed Since Last Report)
ITEM 5. OTHER EVENTS.
On June 27, 1994, North Fork Bancorporation,
Inc. ("North Fork") and Metro Bancshares Inc. ("Metro")
entered into an Agreement and Plan of Merger (the "Merger
Agreement") providing, among other things, for the merger
(the "Merger") of Metro with and into North Fork, with
North Fork surviving the Merger (the "Surviving
Corporation"). Immediately after the Merger, Bayside
Federal Savings Bank ("Bayside Federal"), Metro's
federally chartered savings bank subsidiary, will merge
(the "Subsidiary Merger") with and into North Fork Bank
("New York Bank"), North Fork's New York chartered bank
subsidiary.
Pursuant to the Merger Agreement, each share of
the common stock, par value $0.01 per share ("Metro
Common Stock"), of Metro outstanding on the date of the
Merger (except for shares of Metro Common Stock held by
Metro as treasury stock or shares held by North Fork or
any of its subsidiaries, but including shares of Metro
Common Stock (i) held directly or indirectly by North
Fork or Metro or any of their respective subsidiaries in
trust accounts, managed accounts and the like or
otherwise held in a fiduciary capacity that are
beneficially owned by third parties ("Trust Account
Shares") and (ii) held by North Fork or Metro or any of
their respective subsidiaries in respect of a debt
previously contracted ("DPC Shares")) will be converted
into a number of shares (the "Exchange Ratio") of the
common stock, par value $2.50 per share, of North Fork
("North Fork Common Stock"), determined by dividing
$25.50 by the "Average Closing Price," provided, however,
that (I) if the Average Closing Price is equal to or
greater than $15.50, the Exchange Ratio shall be 1.645
and (II) except as described in the next sentence, if the
Average Closing Price is equal to or less than $14.50,
the Exchange Ratio shall be 1.759. If the Average
Closing Price is less than $12.50, Metro may terminate
the Merger Agreement unless North Fork increases the
Exchange Ratio such that the shares of North Fork Common
Stock issued in exchange for each share of Metro Common
Stock have a nominal value (valued at the Average Closing
Price) of $21.99. The Average Closing Price is defined
as the average closing sales price of the North Fork
Common Stock on the New York Stock Exchange for the 20
consecutive trading days ending on the 5th business day
prior to the date on which the last required regulatory
approval for the Merger, the Subsidiary Merger and the
other transactions contemplated by the Merger Agreement
is obtained, without regard to any requisite waiting
periods in respect thereof.
The shares of North Fork Common Stock Common
Stock issued in the Merger will include the corresponding
number of rights attached to such shares pursuant to
North Fork's shareholder rights plan. No fractional
shares of North Fork Common Stock will be issued in the
Merger, and Metro stockholders who otherwise would be
entitled to receive a fractional share of North Fork
Common Stock will receive a cash payment in lieu thereof.
Consummation of the Merger is subject to
certain conditions, including, but not limited to,
approval of the Merger Agreement by the stockholders of
each of Metro and North Fork and the receipt of all
required regulatory approvals. In addition, Metro may
terminate the Merger Agreement during the first 30 days
following its execution if Metro reasonably determines in
good faith that the business or financial condition of
North Fork and its subsidiaries taken as a whole has
materially and adversely changed from that described in
North Fork's Annual Report on Form 10-K for the fiscal
year ended on December 31, 1993.
As a condition to the execution and delivery of
the Merger Agreement, North Fork and Metro entered into a
stock option agreement, dated as of June 27, 1994 (the
"Stock Option Agreement"), pursuant to which Metro
granted North Fork an option to purchase up to 557,795
shares of Metro Common Stock at a purchase price of
$21.00 per share, subject to adjustment. The option is
exercisable only upon the occurrence of certain events
described therein, none of which has occurred. In
addition, pursuant to the Merger Agreement, upon the
occurrence of any such event, Metro will pay North Fork a
termination fee of $2,000,000.
The Merger Agreement and the Stock Option
Agreement are attached hereto as exhibits and
incorporated herein by reference in their entirety. The
foregoing summaries of the Merger Agreement and the Stock
Option Agreement do not purport to be complete and are
qualified in their entirety by reference to such
exhibits.
ITEM 7. FINANCIAL STATEMENT AND EXHIBITS.
(c) Exhibits
The following Exhibits are filed with this
Current Report on Form 8-K:
Exhibit
Number Description
2.1 Agreement and Plan of Merger, dated as of
June 27, 1994, between North Fork
Bancorporation, Inc. and Metro Bancshares
Inc.
99.1 Stock Option Agreement, dated as of June
27, 1994, between North Fork
Bancorporation, Inc. and Metro Bancshares
Inc.
SIGNATURE
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned
hereunder duly authorized.
Dated: July 6, 1994
NORTH FORK BANCORPORATION, INC.
By: /s/ Daniel M. Healy
Name: Daniel M. Healy
Title: Executive Vice President
Chief Financial Officer
EXHIBIT INDEX
Exhibit Page
Number Description Number
2.1 Agreement and Plan of Merger, dated
as of June 27, 1994, between North
Fork Bancorporation, Inc. and Metro
Bancshares Inc.
99.1 Stock Option Agreement, dated as
of June 27, 1994, between North Fork
Bancorporation, Inc. and Metro
Bancshares Inc.
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of June
27, 1994, by and among North Fork Bancorporation, Inc., a
Delaware corporation ("Buyer") and Metro Bancshares Inc.,
a Delaware corporation (the "Company"). (Buyer and the
Company are herein sometimes collectively referred to
herein as the "Constituent Corporations".)
WHEREAS, the Boards of Directors of Buyer and
the Company have determined that it is in the best
interests of their respective companies and their
shareholders to consummate the business combination
transaction provided for herein in which the Company
will, subject to the terms and conditions set forth
herein, merge (the "Merger") with and into Buyer; and
WHEREAS, as soon as practicable after the
execution and delivery of this Agreement, North Fork
Bank, a New York chartered stock commercial bank and a
wholly owned subsidiary of Buyer ("New York Bank", and
sometimes referred to herein as the "Surviving Bank"),
and Bayside Federal Savings Bank, a federally chartered
stock savings bank and a wholly owned subsidiary of the
Company (the "Company Bank"), will enter into a
Subsidiary Agreement and Plan of Merger (the "Bank Merger
Agreement") providing for the merger (the "Subsidiary
Merger") of the Company Bank with and into New York Bank,
and it is intended that the Subsidiary Merger be
consummated immediately following the consummation of the
Merger; and
WHEREAS, the parties desire to make certain
representations, warranties and agreements in connection
with the Merger and also to prescribe certain conditions
to the Merger.
NOW, THEREFORE, in consideration of the mutual
covenants, representations, warranties and agreements
contained herein, and intending to be legally bound
hereby, the parties agree as follows:
ARTICLE I
THE MERGER
1.1. The Merger. Subject to the terms and
conditions of this Agreement, in accordance with the
Delaware General Corporation Law (the "DGCL"), at the
Effective Time (as defined in Section 1.2 hereof), the
Company shall merge with and into Buyer. Buyer shall be
the surviving corporation (hereinafter sometimes called
the "Surviving Corporation") in the Merger, and shall
continue its corporate existence under the laws of the
State of Delaware. The name of the Surviving Corporation
shall continue to be North Fork Bancorporation, Inc.
Upon consummation of the Merger, the separate corporate
existence of the Company shall terminate.
1.2. Effective Time. The Merger shall become
effective as set forth in the certificate of merger (the
"Certificate of Merger") which shall be filed with the
Secretary of State of the State of Delaware (the
"Secretary") on the Closing Date (as defined in Section
9.1 hereof). The term "Effective Time" shall be the date
and time when the Merger becomes effective, as set forth
in the Certificate of Merger.
1.3. Effects of the Merger. At and after the
Effective Time, the Merger shall have the effects set
forth in Sections 259 and 261 of the DGCL.
1.4. Conversion of Company Common Stock.
(a) At the Effective Time, subject to
Section 2.2(e) hereof, each share of the common stock,
par value $0.01 per share, of the Company (the "Company
Common Stock") issued and outstanding immediately prior
to the Effective Time (other than shares of Company
Common Stock held (x) in the Company's treasury or (y)
directly or indirectly by Buyer or the Company or any of
their respective Subsidiaries (as defined below) (except
for Trust Account Shares and DPC shares, as such terms
are defined in Section 1.4(b) hereof)) shall, by virtue
of this Agreement and without any action on the part of
the holder thereof, be converted into and exchangeable
for the number of shares (the "Exchange Ratio") of the
common stock, par value $2.50 per share, of Buyer ("Buyer
Common Stock") (together with the number of Buyer Rights
(as defined in Section 4.2 hereof) associated therewith),
determined by dividing $25.50 by the Average Closing
Price (as defined below); provided, however, that (I) if
the Average Closing Price is equal to or greater than
$15.50, the Exchange Ratio shall be 1.645 (the "Minimum
Exchange Ratio") and (II) subject to the provisions of
Section 8.1(g) hereof, if the Average Closing Price is
equal to or less than $14.50, the Exchange Ratio shall be
1.759 (the "Maximum Exchange Ratio"). As used herein,
the term "Average Closing Price" means the average
closing sales price per share of Buyer Common Stock on
the New York Stock Exchange ("NYSE") (as reported by The
Wall Street Journal or, if not reported thereby, another
authoritative source), for the 20 consecutive NYSE
trading days (the "Valuation Period") ending on the fifth
business day prior to the date on which the last of all
regulatory approvals required to consummate the
transactions contemplated hereby (including the Merger
and the Subsidiary Merger) are obtained, without regard
to any requisite waiting periods in respect thereof. All
of the shares of Company Common Stock converted into
Buyer Common Stock pursuant to this Article I shall no
longer be outstanding and shall automatically be
cancelled and shall cease to exist, and each certificate
(each a "Certificate") previously representing any such
shares of Company Common Stock shall thereafter only
represent the right to receive (i) the number of whole
shares of Buyer Common Stock and (ii) the cash in lieu of
fractional shares into which the shares of Company Common
Stock represented by such Certificate have been converted
pursuant to this Section 1.4(a) and Section 2.2(e)
hereof. Certificates previously representing shares of
Company Common Stock shall be exchanged for certificates
representing whole shares of Buyer Common Stock and cash
in lieu of fractional shares issued in consideration
therefor upon the surrender of such Certificates in
accordance with Section 2.2 hereof, without any interest
thereon. If prior to the Effective Time Buyer should
split or combine its common stock, or pay a dividend or
other distribution in such common stock, then the
Exchange Ratio, Minimum Exchange Ratio and Maximum
Exchange Ratio shall be appropriately adjusted to reflect
such split, combination, dividend or distribution.
(b) At the Effective Time, all shares of
Company Common Stock that are owned by the Company as
treasury stock and all shares of Company Common Stock
that are owned directly or indirectly by Buyer or the
Company or any of their respective Subsidiaries (other
than shares of Company Common Stock (x) held directly or
indirectly in trust accounts, managed accounts and the
like or otherwise held in a fiduciary capacity that are
beneficially owned by third parties (any such shares, and
shares of Buyer Common Stock which are similarly held,
whether held directly or indirectly by Buyer or the
Company, as the case may be, being referred to herein as
"Trust Account Shares") and (y) shares of Company Common
Stock held by Buyer or the Company or any of their
respective Subsidiaries in respect of a debt previously
contracted (any such shares of Company Common Stock, and
shares of Buyer Common Stock which are similarly held,
whether held directly or indirectly by Buyer or the
Company being referred to herein as "DPC Shares")) shall
be cancelled and shall cease to exist and no stock of
Buyer or other consideration shall be delivered in
exchange therefor. All shares of Buyer Common Stock that
are owned by the Company or any of its Subsidiaries
(other than Trust Account Shares and DPC Shares) shall
become treasury stock of Buyer.
1.5. Stock Options. (a) At the Effective
Time, each option granted by the Company (a "Company
Option") to purchase shares of Company Common Stock which
is outstanding and unexercised immediately prior thereto
shall, except as otherwise provided in Section 1.5(b)
hereof, be converted automatically into an option to
purchase shares of Buyer Common Stock in an amount and at
an exercise price determined as provided below (and
otherwise subject to the terms (including those terms, if
any, providing for accelerated vesting) of the Company's
1988 Incentive Stock Option Plan (the "1988 Incentive
Plan"), the Company's 1988 Stock Option Plan for Outside
Directors (the "1988 Option Plan"), the Company's 1993
Incentive Stock Option Plan (the "Incentive Plan") and
the Company's 1993 Stock Option Plan for Outside
Directors (the "Option Plan" and together with the 1988
Incentive Plan, the 1988 Option Plan and the Incentive
Plan, the "Company Plans"):
(1) The number of shares of Buyer
Common Stock to be subject to the new option
shall be equal to the product of the number of
shares of Company Common Stock subject to the
original option and the Exchange Ratio,
provided that any fractional shares of Buyer
Common Stock resulting from such multiplication
shall be rounded down to the nearest share; and
(2) The exercise price per share of
Buyer Common Stock under the new option shall
be equal to the exercise price per share of
Company Common Stock under the original option
divided by the Exchange Ratio, provided that
such exercise price shall be rounded up to the
nearest cent.
The adjustment provided herein with respect to any
options which are "incentive stock options" (as defined
in Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code")) shall be and is intended to be
effected in a manner which is consistent with Section
424(a) of the Code. The duration and other terms of the
new option shall be the same as the original option,
except that all references to the Company shall be deemed
to be references to Buyer. Notwithstanding anything to
the contrary contained herein, all Limited Rights (as
such term is defined in the 1988 Incentive Plan or the
Incentive Plan, as the case may be) granted under the
1988 Incentive Plan or the Incentive Plan shall terminate
and be of no further force or effect upon receipt of
consent to such termination from the grantees of such
Limited Rights. The Company will use its best efforts to
obtain such consents from all holders of Limited Rights.
(b) Without limiting the foregoing, and
provided that the right contained in this paragraph (b)
is not inconsistent with any of the conditions contained
in Article VII hereof, each holder of a Company Option
shall have the right (which right shall be exercised at
least 5 days prior to the Closing Date by written notice
to Buyer) to elect, in lieu of the provisions of Section
1.5(a), to convert, at the Effective Time, all or a
portion of his or her Company Options which have not
expired prior to the Effective Time into the right to
receive such number of shares (rounded to the nearest
whole share) of Buyer Common Stock as are equal in value
(determined by valuing each share of Buyer Common Stock
at the Average Closing Price (as defined in Section 1.4))
to the excess of (i) the product of the number of shares
of Company Common Stock subject to such option, the
Exchange Ratio and the Average Closing Price of the Buyer
Common Stock over (ii) the aggregate exercise price of
such option.
1.6. Buyer Common Stock. Except for shares of
Buyer Common Stock owned by the Company or any of its
Subsidiaries (other than Trust Account Shares and DPC
Shares), which shall be converted into treasury stock of
Buyer as contemplated by Section 1.4 hereof, the shares
of Buyer 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.
1.7. Certificate of Incorporation. At the
Effective Time, the Certificate of Incorporation of
Buyer, as in effect at the Effective Time, shall be the
Certificate of Incorporation of the Surviving
Corporation.
1.8. By-Laws. At the Effective Time, the By-
Laws of Buyer, as in effect immediately prior to the
Effective Time, shall be the By-Laws of the Surviving
Corporation until thereafter amended in accordance with
applicable law.
1.9. Directors and Officers. Except as
provided in Section 6.14 hereof, the directors and
officers of Buyer immediately prior to the Effective Time
shall be the directors and officers of the Surviving
Corporation, each to hold office in accordance with the
Certificate of Incorporation and By-Laws of the Surviving
Corporation until their respective successors are duly
elected or appointed and qualified.
1.10. Tax Consequences. It is intended that
the Merger and the Subsidiary Merger each constitute a
reorganization within the meaning of Section 368(a) of
the Code, and that this Agreement shall constitute a
"plan of reorganization" for the purposes of Section 368
of the Code.
ARTICLE II
EXCHANGE OF SHARES
2.1. Buyer to Make Shares Available. At or
prior to the Effective Time, Buyer shall deposit, or
shall cause to be deposited, with a bank or trust company
(which may be a Subsidiary of Buyer) (the "Exchange
Agent"), selected by Buyer and reasonably satisfactory to
the Company, for the benefit of the holders of
Certificates, for exchange in accordance with this
Article II, certificates representing the shares of Buyer
Common Stock and the cash in lieu of fractional shares
(such cash and certificates for shares of Buyer Common
Stock, together with any dividends or distributions with
respect thereto, being hereinafter referred to as the
"Exchange Fund") to be issued pursuant to Section 1.4 and
paid pursuant to Section 2.2(a) in exchange for
outstanding shares of Company Common Stock.
2.2. Exchange of Shares. (a) As soon as
practicable after the Effective Time, and in no event
more than three business days thereafter, the Exchange
Agent shall mail to each holder of record of a
Certificate or Certificates a form letter of transmittal
(which shall specify that delivery shall be effected, and
risk of loss and title to the Certificates shall pass,
only upon delivery of the Certificates to the Exchange
Agent) and instructions for use in effecting the
surrender of the Certificates in exchange for
certificates representing the shares of Buyer Common
Stock and the cash in lieu of fractional shares into
which the shares of Company Common Stock represented by
such Certificate or Certificates shall have been
converted pursuant to this Agreement. The Company shall
have the right to review both the letter of transmittal
and the instructions prior to the Effective Time and
provide reasonable comments thereon. Upon surrender of a
Certificate for exchange and cancellation to the Exchange
Agent, together with such letter of transmittal, duly
executed, the holder of such Certificate shall be
entitled to receive in exchange therefor (x) a
certificate representing that number of whole shares of
Buyer Common Stock to which such holder of Company Common
Stock shall have become entitled pursuant to the
provisions of Article I hereof and (y) a check
representing the amount of cash in lieu of fractional
shares, if any, which such holder has the right to
receive in respect of the Certificate surrendered
pursuant to the provisions of this Article II, and the
Certificate so surrendered shall forthwith be cancelled.
No interest will be paid or accrued on the cash in lieu
of fractional shares and unpaid dividends and
distributions, if any, payable to holders of
Certificates.
(b) No dividends or other distributions
declared after the Effective Time with respect to Buyer
Common Stock and payable to the holders of record thereof
shall be paid to the holder of any unsurrendered
Certificate until the holder thereof shall surrender such
Certificate in accordance with this Article II. After
the surrender of a Certificate in accordance with this
Article II, the record holder thereof shall be entitled
to receive any such dividends or other distributions,
without any interest thereon, which theretofore had
become payable with respect to shares of Buyer Common
Stock represented by such Certificate. No holder of an
unsurrendered Certificate shall be entitled, until the
surrender of such Certificate, to vote the shares of
Buyer Common Stock into which his Company Common Stock
shall have been converted.
(c) If any certificate representing
shares of Buyer Common Stock is to be issued in a name
other than that in which the Certificate surrendered in
exchange therefor is registered, it shall be a condition
of the issuance thereof that the Certificate so
surrendered shall be properly endorsed (or accompanied by
an appropriate instrument of transfer) and otherwise in
proper form for transfer, and that the person requesting
such exchange shall pay to the Exchange Agent in advance
any transfer or other taxes required by reason of the
issuance of a certificate representing shares of Buyer
Common Stock in any name other than that of the
registered holder of the Certificate surrendered, or
required for any other reason, or shall establish to the
satisfaction of the Exchange Agent that such tax has been
paid or is not payable.
(d) After the Effective Time, there shall
be no transfers on the stock transfer books of the
Company of the shares of Company Common Stock which were
issued and outstanding immediately prior to the Effective
Time. If, after the Effective Time, Certificates
representing such shares are presented for transfer to
the Exchange Agent, they shall be cancelled and exchanged
for certificates representing shares of Buyer Common
Stock as provided in this Article II.
(e) Notwithstanding anything to the
contrary contained herein, no certificates or scrip
representing fractional shares of Buyer Common Stock
shall be issued upon the surrender for exchange of
Certificates, no dividend or distribution with respect to
Buyer Common Stock shall be payable on or with respect to
any fractional share, and such fractional share interests
shall not entitle the owner thereof to vote or to any
other rights of a shareholder of Buyer. In lieu of the
issuance of any such fractional share, Buyer shall pay to
each former stockholder of the Company who otherwise
would be entitled to receive a fractional share of Buyer
Common Stock an amount in cash determined by multiplying
(i) the average of the closing sale prices of Buyer
Common Stock on the New York Stock Exchange as reported
by The Wall Street Journal for the five trading days
immediately preceding the date on which the Effective
Time shall occur by (ii) the fraction of a share of Buyer
Common Stock to which such holder would otherwise be
entitled to receive pursuant to Section 1.4 hereof.
(f) Any portion of the Exchange Fund that
remains unclaimed by the stockholders of the Company for
six months after the Effective Time shall be paid to
Buyer. Any stockholders of the Company who have not
theretofore complied with this Article II shall
thereafter look only to Buyer for payment of their shares
of Buyer Common Stock, cash in lieu of fractional shares
and unpaid dividends and distributions on the Buyer
Common Stock deliverable in respect of each share of
Company Common Stock such stockholder holds as determined
pursuant to this Agreement, in each case, without any
interest thereon. Notwithstanding the foregoing, none of
Buyer, the Company, the Exchange Agent or any other
person shall be liable to any former holder of shares of
Company Common Stock for any amount properly delivered to
a public official pursuant to applicable abandoned
property, escheat or similar laws.
(g) In the event any Certificate shall
have been lost, stolen or destroyed, upon the making of
an affidavit of that fact by the person claiming such
Certificate to be lost, stolen or destroyed and, if
required by Buyer, the posting by such person of a bond
in such amount as Buyer may direct as indemnity against
any claim that may be made against it with respect to
such Certificate, the Exchange Agent will issue in
exchange for such lost, stolen or destroyed Certificate
the shares of Buyer Common Stock and cash in lieu of
fractional shares deliverable in respect thereof pursuant
to this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to
Buyer as follows:
3.1. Corporate Organization. (a) The Company
is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware.
The Company has the corporate power and authority to own
or lease all of its properties and assets and to carry on
its business as it is now being conducted, and is duly
licensed or qualified to do business in each jurisdiction
in which the nature of the business conducted by it or
the character or location of the properties and assets
owned or leased by it makes such licensing or
qualification necessary, except where the failure to be
so licensed or qualified would not have a Material
Adverse Effect (as defined below) on the Company. The
Company is duly registered as a unitary savings and loan
holding company under the Home Owners' Loan Act of 1933,
as amended. The Certificate of Incorporation and By-laws
of the Company, copies of which have previously been
delivered to Buyer, are true, complete and correct copies
of such documents as in effect as of the date of this
Agreement. As used in this Agreement, the term "Material
Adverse Effect" means, with respect to Buyer, the Company
or the Surviving Corporation, as the case may be, a
material adverse effect on the business, properties,
assets, liabilities, results of operations or financial
condition of such party and its Subsidiaries taken as a
whole, other than any such effect attributable to or
resulting from general political or economic conditions
or a change in law, rule, regulation, GAAP (as defined
below) or regulatory accounting principles, which in each
case affects banking institutions or their holding
companies generally, except to the extent any such
condition or change affects the referenced party to a
materially greater extent than banking institutions or
their holding companies generally. As used in this
Agreement, the word "Subsidiary" when used with respect
to any party means any corporation, partnership or other
organization, whether incorporated or unincorporated,
which is consolidated with such party for financial
reporting purposes.
(b) The Company Bank is a savings bank
duly organized, validly existing and in good standing
under the laws of the United States of America. The
deposit accounts of the Company Bank are insured by the
Federal Deposit Insurance Corporation (the "FDIC")
through the Savings Association Insurance Fund to the
fullest extent permitted by law, and all premiums and
assessments required to be paid in connection therewith
have been paid when due by the Company Bank. Each of the
Company's other Subsidiaries is a corporation duly
organized, validly existing and in good standing under
the laws of its jurisdiction of incorporation or
organization. Each of the Company's Subsidiaries has the
corporate power and authority to own or lease all of its
properties and assets and to carry on its business as it
is now being conducted and is duly licensed or qualified
to do business in each jurisdiction in which the nature
of the business conducted by it or the character or the
location of the properties and assets owned or leased by
it makes such licensing or qualification necessary,
except where the failure to be so licensed or qualified
would not have a Material Adverse Effect on the Company.
The articles of incorporation, by-laws and similar
governing documents of each Subsidiary of the Company,
copies of which have previously been delivered to Buyer,
are true, complete and correct copies of such documents
as in effect as of the date of this Agreement.
(c) The minute books of the Company and
each of its Subsidiaries contain true, complete and
accurate records in all material respects of all meetings
and other corporate actions held or taken since December
31, 1991 of their respective stockholders and Boards of
Directors (including committees of their respective
Boards of Directors).
3.2. Capitalization. (a) The authorized
capital stock of the Company consists of 8,900,000 shares
of Company Common Stock and 5,000,000 shares of preferred
stock, par value $.01 per share (the "Company Preferred
Stock"). As of the date of this Agreement, there are (x)
5,076,504 shares of Company Common Stock issued and
outstanding and 236,474 shares of Company Common Stock
held in the Company's treasury, (y) no shares of Company
Common Stock reserved for issuance upon exercise of
outstanding stock options or otherwise except for (i)
511,909 shares of Company Common Stock reserved for
issuance pursuant to the Company Option Plans and
described in Section 3.2(a) of the Disclosure Schedule
which is being delivered to Buyer concurrently herewith
(the "Company Disclosure Schedule") and (ii) 557,795
shares of Company Common Stock reserved for issuance upon
exercise of the option issued to Buyer pursuant to the
Stock Option Agreement, dated June 27, 1994, between
Buyer and the Company (the "Option Agreement") and (z) no
shares of Company Preferred Stock issued or outstanding,
held in the Company's treasury or reserved for issuance
upon exercise of outstanding stock options or otherwise.
All of the issued and outstanding shares of Company
Common Stock have been duly authorized and validly issued
and are fully paid, nonassessable and free of preemptive
rights, with no personal liability attaching to the
ownership thereof. Except as referred to above or
reflected in Section 3.2(a) of the Company Disclosure
Schedule, and except for the Option Agreement, the
Company does not have and is not bound by any outstanding
subscriptions, options, warrants, calls, commitments or
agreements of any character calling for the purchase or
issuance of any shares of Company Common Stock or Company
Preferred Stock or any other equity security of the
Company or any securities representing the right to
purchase or otherwise receive any shares of Company
Common Stock or any other equity security of the Company.
The names of the optionees, the date of each option to
purchase Company Common Stock granted, the number of
shares subject to each such option, the number of Limited
Rights attached to such number of shares, the expiration
date of each such option, and the price at which each
such option may be exercised under the Option Plan, the
Incentive Plan, the 1988 Option Plan or the 1988
Incentive Plan, as applicable, are set forth in Section
3.2(a) of the Company Disclosure Schedule.
(b) Section 3.2(b) of the Company
Disclosure Schedule sets forth a true and correct list of
all of the Subsidiaries of the Company as of the date of
this Agreement. Except as set forth in Section 3.2(b) of
the Company Disclosure Schedule, the Company owns,
directly or indirectly, all of the issued and outstanding
shares of the capital stock of each of such Subsidiaries,
free and clear of all liens, charges, encumbrances and
security interests whatsoever, and all of such shares are
duly authorized and validly issued and are fully paid,
nonassessable and free of preemptive rights, with no
personal liability attaching to the ownership thereof.
No Subsidiary of the Company has or is bound by any
outstanding subscriptions, options, warrants, calls,
commitments or agreements of any character calling for
the purchase or issuance of any shares of capital stock
or any other equity security of such Subsidiary or any
securities representing the right to purchase or
otherwise receive any shares of capital stock or any
other equity security of such Subsidiary. Assuming
compliance by Buyer with Section 1.5 hereof, at the
Effective Time, there will not be any outstanding
subscriptions, options, warrants, calls, commitments or
agreements of any character by which the Company or any
of its Subsidiaries will be bound calling for the
purchase or issuance of any shares of the capital stock
of the Company or any of its Subsidiaries.
3.3. Authority; No Violation. (a) The
Company has full corporate power and authority to execute
and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and
delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and
validly approved by the Board of Directors of the
Company. The Board of Directors of the Company has
directed that this Agreement and the transactions
contemplated hereby be submitted to the Company's
stockholders for approval at a meeting of such
stockholders and, except for the adoption of this
Agreement by the requisite vote of the Company's
stockholders, no other corporate proceedings on the part
of the Company are necessary to approve this Agreement
and to consummate the transactions contemplated hereby.
This Agreement has been duly and validly executed and
delivered by the Company and (assuming due authorization,
execution and delivery by Buyer) constitutes a valid and
binding obligation of the Company, enforceable against
the Company in accordance with its terms, except as
enforcement may be limited by general principles of
equity whether applied in a court of law or a court of
equity and by bankruptcy, insolvency and similar laws
affecting creditors' rights and remedies generally.
(b) The Company Bank has full corporate
power and authority to execute and deliver the Bank
Merger Agreement and to consummate the transactions
contemplated thereby. The execution and delivery of the
Bank Merger Agreement and the consummation of the
transactions contemplated thereby will be duly and
validly approved by the Board of Directors of the Company
Bank. Upon the due and valid approval of the Bank Merger
Agreement by the Company as the sole stockholder of the
Company Bank and by the Board of Directors of the Company
Bank, no other corporate proceedings on the part of the
Company Bank will be necessary to consummate the
transactions contemplated thereby. The Bank Merger
Agreement, upon execution and delivery by the Company
Bank, will be duly and validly executed and delivered by
the Company Bank and will (assuming due authorization,
execution and delivery by New York Bank) constitute a
valid and binding obligation of the Company Bank,
enforceable against the Company Bank in accordance with
its terms, except as enforcement may be limited by
general principles of equity whether applied in a court
of law or a court of equity and by bankruptcy, insolvency
and similar laws affecting creditors' rights and remedies
generally.
(c) Except as set forth in Section 3.3(c)
of the Company Disclosure Schedule, neither the execution
and delivery of this Agreement by the Company or the Bank
Merger Agreement by the Company Bank, nor the
consummation by the Company or the Company Bank, as the
case may be, of the transactions contemplated hereby or
thereby, nor compliance by the Company or the Company
Bank, as the case may be, with any of the terms or
provisions hereof or thereof, will (i) violate any
provision of the Certificate of Incorporation or By-Laws
of the Company or the certificate of incorporation, by-
laws or similar governing documents of any of its
Subsidiaries, or (ii) assuming that the consents and
approvals referred to in Section 3.4 hereof are duly
obtained, (x) violate any statute, code, ordinance, rule,
regulation, judgment, order, writ, decree or injunction
applicable to the Company or any of its Subsidiaries, or
any of their respective properties or assets, or (y)
violate, conflict with, result in a breach of any
provision of or the loss of any benefit under, constitute
a default (or an event which, with notice or lapse of
time, or both, would constitute a default) under, result
in the termination of or a right of termination or
cancellation under, accelerate the performance required
by, or result in the creation of any lien, pledge,
security interest, charge or other encumbrance upon any
of the respective properties or assets of the Company or
any of its Subsidiaries under, any of the terms,
conditions or provisions of any note, bond, mortgage,
indenture, deed of trust, license, lease, agreement or
other instrument or obligation to which the Company or
any of its Subsidiaries is a party, or by which they or
any of their respective properties or assets may be bound
or affected, except (in the case of clause (y) above) for
such violations, conflicts, breaches or defaults which,
either individually or in the aggregate, would not have
or be reasonably likely to have a Material Adverse Effect
on the Company.
3.4. Consents and Approvals. Except for (a)
the filing of applications and notices, as applicable,
with the Board of Governors of the Federal Reserve System
(the "Federal Reserve Board") under the Oakar Amendment
to the Federal Deposit Insurance Act and the Bank Holding
Company Act of 1956, as amended (the "BHC Act") and
approval of such applications and notices, (b) the filing
of applications with the FDIC under the Bank Merger Act
and approval of such applications, (c) the filing of
applications with the Office of Thrift Supervision (the
"OTS") and approval of such applications, (d) the filing
of an application with the New York State Banking
Department (the "Banking Department"), which filing shall
include, if Buyer so requests pursuant to Section 6.13
hereof, an application for conversion of the Company Bank
from a federally chartered stock savings bank to a New
York chartered stock savings bank (the "State Banking
Approval"), (e) the filing with the Securities and
Exchange Commission (the "SEC") of a joint proxy
statement in definitive form relating to the meetings of
the Company's stockholders and Buyer's stockholders to be
held in connection with this Agreement and the
transactions contemplated hereby (the "Proxy Statement"),
(f) the approval of this Agreement by the requisite vote
of the stockholders of the Company, (g) the filing of the
Certificate of Merger with the Secretary pursuant to the
DGCL, (h) the filings required by the Bank Merger
Agreement, (i) the approval of the Bank Merger Agreement
by the Company as the sole stockholder of the Company
Bank and (j) such filings, authorizations or approvals as
may be set forth in Section 3.4 of the Company Disclosure
Schedule, no consents or approvals of or filings or
registrations with any court, administrative agency or
commission or other governmental authority or
instrumentality (each a "Governmental Entity") or with
any third party are necessary in connection with (1) the
execution and delivery by the Company of this Agreement,
(2) the consummation by the Company of the Merger and the
other transactions contemplated hereby, (3) the execution
and delivery by the Company Bank of the Bank Merger
Agreement, and (4) the consummation by the Company Bank
of the Subsidiary Merger and the transactions
contemplated thereby.
3.5. Reports. The Company and each of its
Subsidiaries have timely filed all material reports,
registrations and statements, together with any
amendments required to be made with respect thereto, that
they were required to file since December 31, 1991 with
(i) the OTS, (ii) the FDIC, (iii) any state banking
commissions or any other state regulatory authority (each
a "State Regulator") and (iv) any other self-regulatory
organization ("SRO") (collectively with the Federal
Reserve Board, the "Regulatory Agencies"), and all other
material reports and statements required to be filed by
them since December 31, 1991, including, without
limitation, any report or statement required to be filed
pursuant to the laws, rules or regulations of the United
States, the OTS, the FDIC, any State Regulator or any
SRO, and have paid all fees and assessments due and
payable in connection therewith. Except for normal
examinations conducted by a Regulatory Agency in the
regular course of the business of the Company and its
Subsidiaries, except as set forth in Section 3.5 of the
Company Disclosure Schedule, no Regulatory Agency has
initiated any proceeding or, to the best knowledge of the
Company, investigation into the business or operations of
the Company or any of its Subsidiaries since December 31,
1991. There is no unresolved material violation,
criticism, or exception by any Regulatory Agency with
respect to any report or statement relating to any
examinations of the Company or any of its Subsidiaries.
3.6. Financial Statements. The Company has
previously delivered to Buyer copies of (a) the
consolidated balance sheets of the Company and its
Subsidiaries as of September 30 for the fiscal years 1992
and 1993, and the related consolidated statements of
income, changes in stockholders' equity and cash flows
for the fiscal years 1991 through 1993, inclusive, as
reported in the Company's Annual Report on Form 10-K for
the fiscal year ended September 30, 1993 filed with the
SEC under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), in each case accompanied by the
audit report of KPMG Peat Marwick, independent public
accountants with respect to the Company, and (b) the
unaudited consolidated balance sheets of the Company and
its Subsidiaries as of March 31, 1994 and March 31, 1993
and the related unaudited consolidated statements of
income, cash flows and changes in stockholders' equity
for the six month periods then ended as reported in the
Company's Quarterly Report on Form 10-Q for the period
ended March 31, 1994 filed with the SEC under the
Exchange Act. The September 30, 1993 consolidated
balance sheet of the Company (including the related
notes, where applicable) fairly presents the consolidated
financial position of the Company and its Subsidiaries as
of the date thereof, and the other financial statements
referred to in this Section 3.6 (including the related
notes, where applicable) fairly present, and the
financial statements referred to in Section 6.9 hereof
will fairly present (subject, in the case of the
unaudited statements, to recurring audit adjustments
normal in nature and amount), the results of the
consolidated operations and consolidated financial
position of the Company and its Subsidiaries for the
respective fiscal periods or as of the respective dates
therein set forth; each of such statements (including the
related notes, where applicable) comply, and the
financial statements referred to in Section 6.9 hereof
will comply, in all material respects with applicable
accounting requirements and with the published rules and
regulations of the SEC with respect thereto; and each of
such statements (including the related notes, where
applicable) has been, and the financial statements
referred to in Section 6.9 hereof will be, prepared in
accordance with generally accepted accounting principles
("GAAP") consistently applied during the periods
involved, except as indicated in the notes thereto or, in
the case of unaudited statements, as permitted by Form
10-Q. The books and records of the Company and its
Subsidiaries have been, and are being, maintained in all
material respects in accordance with GAAP and any other
applicable legal and accounting requirements and reflect
only actual transactions.
3.7. Broker's Fees. Neither the Company nor
any Subsidiary of the Company nor any of their respective
officers or directors has employed any broker or finder
or incurred any liability for any broker's fees,
commissions or finder's fees in connection with any of
the transactions contemplated by this Agreement, the Bank
Merger Agreement or the Option Agreement, except that the
Company has engaged, and will pay a fee or commission to,
Keefe, Bruyette & Woods, Inc. ("Keefe, Bruyette") in
accordance with the terms of a letter agreement between
Keefe, Bruyette and the Company, a true, complete and
correct copy of which has been previously delivered by
the Company to Buyer.
3.8. Absence of Certain Changes or Events.
(a) Except as may be set forth in Section 3.8(a) of the
Company Disclosure Schedule or as disclosed in the
Company's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1994 (a true, complete and correct copy
of which has previously been delivered to Buyer), since
September 30, 1993, (i) neither the Company nor any of
its Subsidiaries has incurred any material liability,
except in the ordinary course of their business
consistent with their past practices, and (ii) no event
has occurred which has caused, or is reasonably likely to
cause, individually or in the aggregate, a Material
Adverse Effect on the Company.
(b) Except as set forth in Section 3.8(b)
of the Company Disclosure Schedule, since March 31, 1994,
the Company and its Subsidiaries have carried on their
respective businesses in the ordinary course consistent
with their past practices.
(c) Except as set forth in Section 3.8(c)
of the Company Disclosure Schedule, since March 31, 1994,
neither the Company nor any of its Subsidiaries has (i)
increased the wages, salaries, compensation, pension, or
other fringe benefits or perquisites payable to any
executive officer, employee, or director from the amount
thereof in effect as of March 31, 1994 (which amounts
have been previously disclosed to Buyer), granted any
severance or termination pay, entered into any contract
to make or grant any severance or termination pay, or
paid any bonus other than year-end bonuses for fiscal
1993 as listed in Section 3.8 of the Company Disclosure
Schedule or (ii) suffered any strike, work stoppage,
slow-down, or other labor disturbance.
3.9. Legal Proceedings. (a) Except as set
forth in Section 3.9 of the Company Disclosure Schedule,
neither the Company nor any of its Subsidiaries is a
party to any, and there are no pending or, to the 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 its Subsidiaries
or challenging the validity or propriety of the
transactions contemplated by this Agreement, the Bank
Merger Agreement or the Option 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 or be reasonably
likely to have a Material Adverse Effect on the Company.
(b) There is no injunction, order,
judgment, decree, or regulatory restriction imposed upon
the Company, any of its Subsidiaries or the assets of the
Company or any of its Subsidiaries which has had, or
could reasonably be expected to have, a Material Adverse
Effect on the Company.
3.10. Taxes. (a) Except as set forth in
Section 3.10(a) of the Company Disclosure Schedule, each
of the Company and its Subsidiaries has (i) duly and
timely filed or will duly and timely file (including
applicable extensions granted without penalty) all Tax
Returns (as hereinafter defined) required to be filed at
or prior to the Effective Time, and such Tax Returns
which have heretofore been filed are, and those to be
hereinafter filed will be, true, correct and complete and
(ii) paid in full or have made adequate provision for on
the financial statements of the Company (in accordance
with GAAP) all Taxes (as hereinafter defined) and will
pay in full or make adequate provision for all Taxes.
There are no material liens for Taxes upon the assets of
either the Company or its Subsidiaries except for
statutory liens for current Taxes not yet due. Except as
set forth in Section 3.10(a) of the Company Disclosure
Schedule, neither the Company nor any of its Subsidiaries
has requested any extension of time within which to file
any Tax Returns in respect of any fiscal year which have
not since been filed and no request for waivers of the
time to assess any Taxes are pending or outstanding. The
federal and state income Tax Returns of the Company and
its Subsidiaries have been audited by the Internal
Revenue Service or appropriate state tax authorities with
respect to those periods and jurisdictions set forth on
Section 3.10(a) of the Company Disclosure Schedule.
Except as set forth in Section 3.10(a) of the Company
Disclosure Schedule, neither the Company nor any of its
Subsidiaries (i) is a party to any agreement providing
for the allocation or sharing of Taxes (other than the
allocation of federal income taxes as provided by
Regulation 1.1552-1(a)(1) under the Code; (ii) is
required to include in income any adjustment pursuant to
Section 481(a) of the Code, by reason of the voluntary
change in accounting method (nor has any taxing authority
proposed in writing any such adjustment or change of
accounting method); or (iii) has filed a consent pursuant
to Section 341(f) of the Code.
(b) Except as set forth in Section 3.10(b) of
the Company Disclosure Schedule, neither the Company nor
any of its Subsidiaries owns, directly or indirectly
(including, without limitation, through partnerships,
corporations, trusts or other entities), interests in
real property ("Real Property Interests") situated in (A)
New York State, which by reason of the Merger or
Subsidiary Merger would be subject to either (i) the New
York State Real Property Gains Tax, (ii) the New York
State Real Property Transfer Tax, or (iii) the New York
City Real Property Transfer Tax (collectively, the "New
York Transfer Taxes"), or (B) any state other than New
York State which by reason of the Merger or Subsidiary
Merger would be subject to any tax similar to the New
York Transfer Taxes. For purposes of this Section
3.10(b), Real Property Interests include, without
limitation, titles in fee, leasehold interests,
beneficial interests, encumbrances, developments rights
or any other interests with the right to use or occupy
real property or the right to receive rents, profits or
other income derived therefrom, or any options or
contracts to purchase real property.
For the purposes of this Agreement, "Taxes"
shall mean all taxes, charges, fees, levies, penalties or
other assessments imposed by any United States federal,
state, local or foreign taxing authority, including, but
not limited to income, excise, property, sales, transfer,
franchise, payroll, withholding, social security or other
taxes, including any interest, penalties or additions
attributable thereto.
For purposes of this Agreement, "Tax Return"
shall mean any return, report, information return or
other document (including any related or supporting
information) with respect to Taxes.
3.11. Employees. (a) Section 3.11(a) of the
Company Disclosure Schedule sets forth a true and
complete list of each employee benefit plan, arrangement
or agreement that is maintained or contributed to or
required to be contributed to as of the date of this
Agreement (the "Plans") by the Company, any of its
Subsidiaries or by any trade or business, whether or not
incorporated (an "ERISA Affiliate"), all of which
together with the Company would be deemed a "single
employer" within the meaning of Section 4001 of the
Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), for the benefit of any employee or
former employee of the Company, any Subsidiary or any
ERISA Affiliate.
(b) The Company has heretofore delivered
to Buyer true and complete copies of each of the Plans
and all related documents, including but not limited to
(i) the actuarial report for such Plan (if applicable)
for each of the last two years, and (ii) the most recent
determination letter from the Internal Revenue Service
(if applicable) for such Plan.
(c) Except as set forth in Section
3.11(c) of the Company Disclosure Schedule, (i) each of
the Plans has been operated and administered in all
material respects in accordance with its terms and
applicable law, including but not limited to ERISA and
the Code, (ii) each of the Plans intended to be
"qualified" within the meaning of Section 401(a) of the
Code either (1) has received a favorable determination
letter from the IRS, or (2) is or will be the subject of
an application for a favorable determination letter, and
the Company is not aware of any circumstances likely to
result in the revocation or denial of any such favorable
determination letter, (iii) with respect to each Plan
which is subject to Title IV of ERISA, the present value
of accrued benefits under such Plan, based upon the
actuarial assumptions used for funding purposes in the
most recent actuarial report prepared by such Plan's
actuary with respect to such Plan, did not, as of its
latest valuation date, exceed the then current value of
the assets of such Plan allocable to such accrued
benefits, (iv) no Plan provides benefits, including
without limitation death or medical benefits (whether or
not insured), with respect to current or former employees
of the Company, its Subsidiaries or any ERISA Affiliate
beyond their retirement or other termination of service,
other than (w) coverage mandated by applicable law, (x)
death benefits or retirement benefits under any "employee
pension plan," as that term is defined in Section 3(2) of
ERISA, (y) deferred compensation benefits accrued as
liabilities on the books of the Company, its Subsidiaries
or the ERISA Affiliates or (z) benefits the full cost of
which is borne by the current or former employee (or his
beneficiary), (v) no liability under Title IV of ERISA
has been incurred by the Company, its Subsidiaries or any
ERISA Affiliate that has not been satisfied in full, and
no condition exists that presents a material risk to the
Company, its Subsidiaries or an ERISA Affiliate of
incurring a material liability thereunder, (vi) no Plan
is a "multiemployer pension plan," as such term is
defined in Section 3(37) of ERISA, (vii) all
contributions or other amounts payable by the Company,
its Subsidiaries or any ERISA Affiliates as of the
Effective Time with respect to each Plan in respect of
current or prior plan years have been paid or accrued in
accordance with generally accepted accounting practices
and Section 412 of the Code, (viii) neither the Company,
its Subsidiaries nor any ERISA Affiliate has engaged in a
transaction in connection with which the Company, its
Subsidiaries or any ERISA Affiliate could be subject to
either a civil penalty assessed pursuant to Section 409
or 502(i) of ERISA or a tax imposed pursuant to Section
4975 or 4976 of the Code, (ix) there are no pending, or,
to the best knowledge of the Company, threatened or
anticipated claims (other than routine claims for
benefits) by, on behalf of or against any of the Plans or
any trusts related thereto and (x) the consummation of
the transactions contemplated by this Agreement will not
(y) entitle any current or former employee or officer of
the Company or any ERISA Affiliate to severance pay,
termination pay or any other payment, except as expressly
provided in this Agreement or (z) accelerate the time of
payment or vesting or increase the amount of compensation
due any such employee or officer.
3.12. SEC Reports. The Company has previously
made available to Buyer an accurate and complete copy of
each (a) final registration statement, prospectus,
report, schedule and definitive proxy statement filed
since January 1, 1990 by the Company with the SEC
pursuant to the Securities Act of 1933, as amended (the
"Securities Act") or the Exchange Act (the "Company
Reports") and (b) communication mailed by the Company to
its stockholders since January 1, 1990, and no such
registration statement, prospectus, report, schedule,
proxy statement or communication contained any untrue
statement of a material fact or omitted to state any
material fact required to be stated therein or necessary
in order to make the statements therein, in light of the
circumstances in which they were made, not misleading,
except that information as of a later date shall be
deemed to modify information as of an earlier date. The
Company has timely filed all Company Reports and other
documents required to be filed by it under the Securities
Act and the Exchange Act, and, as of their respective
dates, all Company Reports complied in all material
respects with the published rules and regulations of the
SEC with respect thereto.
3.13. Company Information. The information
relating to the Company and its Subsidiaries to be
contained in the Proxy Statement and the registration
statement on Form S-4 (the "S-4") of which the Proxy
Statement will be included as a prospectus, or in any
other document filed with any other regulatory agency in
connection herewith, will not contain any untrue
statement of a material fact or omit to state a material
fact necessary to make the statements therein, in light
of the circumstances in which they are made, not
misleading. The Proxy Statement (except for such
portions thereof that relate only to Buyer or any of its
Subsidiaries) will comply in all material respects with
the provisions of the Exchange Act and the rules and
regulations thereunder.
3.14. Compliance with Applicable Law. The
Company and each of its Subsidiaries hold, and have at
all times held, all material licenses, franchises,
permits and authorizations necessary for the lawful
conduct of their respective businesses under and pursuant
to all, and have complied with and are not in default in
any respect under any, applicable law, statute, order,
rule, regulation, policy and/or guideline of any
Governmental Entity relating to the Company or any of its
Subsidiaries, except where the failure to hold such
license, franchise, permit or authorization or such
noncompliance or default would not, individually or in
the aggregate, have or be reasonably likely to have a
Material Adverse Effect on the Company, and neither the
Company nor any of its Subsidiaries knows of, or has
received notice of, any material violations of any of the
above.
3.15. Certain Contracts. (a) Except as set
forth in Section 3.15(a) of the Company Disclosure
Schedule, neither the Company nor any of its Subsidiaries
is a party to or bound by any contract, arrangement,
commitment or understanding (whether written or oral) (i)
with respect to the employment of any directors,
officers, employees or consultants, (ii) which, upon the
consummation of the transactions contemplated by this
Agreement or the Bank Merger Agreement will (either alone
or upon the occurrence of any additional acts or events)
result in any payment (whether of severance pay or
otherwise) becoming due from Buyer, the Company, the
Surviving Corporation, the Surviving Bank or any of their
respective Subsidiaries to any officer or employee
thereof, (iii) which is a material contract (as defined
in Item 601(b)(10) of Regulation S-K of the SEC) to be
performed after the date of this Agreement that has not
been filed or incorporated by reference in the Company
Reports, (iv) which is a consulting agreement (including
data processing, software programming and licensing
contracts) not terminable on 60 days or less notice
involving the payment of more than $100,000 per annum, in
the case of any such agreement with an individual, or
$500,000 per annum, in the case of any other such
agreement, (v) which materially restricts the conduct of
any line of business by the Company or any of its
Subsidiaries, (vi) with or to a labor union or guild
(including any collective bargaining agreement) or (vii)
(including any stock option plan, stock appreciation
rights plan, restricted stock plan or stock purchase
plan) any of the benefits of which will be increased, or
the vesting of the benefits of which will be accelerated,
by the occurrence of any of the transactions contemplated
by this Agreement or the Bank Merger Agreement, or the
value of any of the benefits of which will be calculated
on the basis of any of the transactions contemplated by
this Agreement or the Bank Merger Agreement. Each
contract, arrangement, commitment or understanding of the
type described in this Section 3.15(a), whether or not
set forth in Section 3.15(a) of the Company Disclosure
Schedule, is referred to herein as a "Company Contract".
The Company has previously delivered to Buyer true and
correct copies of each Company Contract.
(b) Except as set forth in Section
3.15(b) of the Company Disclosure Schedule, (i) each
Company Contract is valid and binding and in full force
and effect, (ii) the Company and each of its Subsidiaries
have in all material respects performed all obligations
required to be performed by it to date under each Company
Contract, except where such noncompliance, individually
or in the aggregate, would not have or be reasonably
likely to have a Material Adverse Effect on the Company,
(iii) no event or condition exists which constitutes or,
after notice or lapse of time or both, would constitute,
a material default on the part of the Company or any of
its Subsidiaries under any such Company Contract, except
where such default, individually or in the aggregate,
would not have or be reasonably likely to have a Material
Adverse Effect on the Company and (iv) no other party to
such Company Contract is, to the best knowledge of the
Company, in default in any respect thereunder.
3.16. Agreements with Regulatory Agencies.
Except as set forth in Section 3.16 of the Company
Disclosure Schedule, neither the Company nor any of its
Subsidiaries is subject to any cease-and-desist or other
order issued by, or is a party to any written agreement,
consent agreement or memorandum of understanding with, or
is a party to any commitment letter or similar
undertaking to, or is subject to any order or directive
by, or is a recipient of any extraordinary supervisory
letter from, or has adopted any board resolutions at the
request of (each, whether or not set forth on Section
3.16 of the Company Disclosure Schedule, a "Regulatory
Agreement"), any Regulatory Agency or other Governmental
Entity that restricts the conduct of its business or that
in any manner relates to its capital adequacy, its credit
policies, its management or its business, nor has the
Company or any of its Subsidiaries been advised by any
Regulatory Agency or other Governmental Entity that it is
considering issuing or requesting any Regulatory
Agreement.
3.17. Investment Securities. Section 3.17 of
the Company Disclosure Schedule sets forth the book and
market value as of March 31, 1994 of the investment
securities, mortgage backed securities and securities
held for sale of the Company and its Subsidiaries.
Section 3.17 of the Company Disclosure Schedule sets
forth an investment securities report which includes,
security descriptions, CUSIP numbers, pool face values,
book values, coupon rates and current market values.
3.18. Intellectual Property. Except where
there would be no Material Adverse Effect on the Company,
the Company and each of its Subsidiaries owns or
possesses valid and binding licenses and other rights to
use without payment all material patents, copyrights,
trade secrets, trade names, servicemarks and trademarks
used in its businesses; and neither the Company nor any
of its Subsidiaries has received any notice of conflict
with respect thereto that asserts the right of others.
The Company and each of its Subsidiaries have in all
material respects performed all the obligations required
to be performed by them and are not in default in any
material respect under any contract, agreement,
arrangement or commitment relating to any of the
foregoing, except where such non-performance or default
would not, individually or in the aggregate, have or be
reasonably likely to have a Material Adverse Effect on
the Company.
3.19. Undisclosed Liabilities. Except (a) as
set forth in Section 3.19 of the Company Disclosure
Schedule, (b) for those liabilities that are fully
reflected or reserved against on the consolidated balance
sheet of the Company as of March 31, 1994 included in its
Form 10-Q for the period ended March 31, 1994 and (c) for
liabilities incurred in the ordinary course of business
consistent with past practice since March 31, 1994 that,
either alone or when combined with all similar
liabilities, have not had, and could not reasonably be
expected to have, a Material Adverse Effect on the
Company, neither the Company nor any of its Subsidiaries
has incurred any liability of any nature whatsoever
(whether absolute, accrued, contingent or otherwise and
whether due or to become due).
3.20. State Takeover Laws. The provisions of
Section 203 of the DGCL and Section 8 of the Company's
Certificate of Incorporation will not, assuming the
accuracy of the representations contained in Section 4.12
hereof, apply to the Agreement, the Bank Merger Agreement
or the Option Agreement or any of the transactions
contemplated hereby or thereby.
3.21. Administration of Fiduciary Accounts.
The Company and each of its Subsidiaries has properly
administered in all material respects 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 Company
nor any of its Subsidiaries nor any of their respective
directors, officers or employees has committed any breach
of trust with respect to any such fiduciary account which
has had or could reasonably be expected to have a
Material Adverse Effect on the Company, 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.
3.22. Environmental Matters. Except as set
forth in Section 3.22 of the Company Disclosure Schedule:
(a) Each of the Company, its
Subsidiaries, the Participation Facilities and the Loan
Properties (each as hereinafter defined) are, and have
been, in compliance with all applicable federal, state
and local laws including common law, regulations and
ordinances and with all applicable decrees, orders and
contractual obligations relating to pollution the
discharge of, or exposure to materials in the environment
or workplace ("Environmental Laws"), except for
violations which, either individually or in the
aggregate, have not had and cannot reasonably be expected
to have a Material Adverse Effect on the Company;
(b) There is no suit, claim, action or
proceeding, pending or threatened, before any
Governmental Entity or other forum in which the Company,
any of its Subsidiaries, any Participation Facility or
any Loan Property, has been or, with respect to
threatened proceedings, may be, named as a defendant (x)
for alleged noncompliance (including by any predecessor),
with any Environmental Laws, or (y) relating to the
release, threatened release or exposure to any material
whether or not occurring at or on a site owned, leased or
operated by the Company or any of its Subsidiaries, any
Participation Facility or any Loan Property, except where
such noncompliance or release has not resulted, and
cannot be reasonably expected to result, either
individually or in the aggregate, a Material Adverse
Effect on the Company;
(c) During the period of (x) the
Company's or any of its Subsidiaries' ownership or
operation of any of their respective current properties,
(y) the Company's or any of its Subsidiaries'
participation in the management of any Participation
Facility, or (z) the Company's or any of its
Subsidiaries' holding of a security interest in a Loan
Property, there has been no release of materials in, on,
under or affecting any such property, except where such
release has not had and cannot reasonably be expected to
result in, either individually or in the aggregate, a
Material Adverse Effect on the Company. Prior to the
period of (x) the Company's or any of its Subsidiaries'
ownership or operation of any of their respective current
properties, (y) the Company's or any of its Subsidiaries'
participation in the management of any Participation
Facility, or (z) the Company's or any of its
Subsidiaries' holding of a security interest in a Loan
Property, there was no release or threatened release of
materials in, on, under or affecting any such property,
Participation Facility or Loan Property, except where
such release has not had and cannot be reasonably
expected to have, either individually or in the
aggregate, a Material Adverse Effect on the Company; and
(d) The following definitions apply for
purposes of this Section 3.22: (x) "Loan Property" means
any property in which the Company or any of its
Subsidiaries holds a security interest, and, where
required by the context, said term means the owner or
operator of such property; and (y) "Participation
Facility" means any facility in which the Company or any
of its Subsidiaries participates in the management and,
where required by the context, said term means the owner
or operator of such property.
3.23. Derivative Transactions. Except as set
forth in Section 3.23 of the Company Disclosure Schedule,
since September 30, 1993, neither Company nor any of its
Subsidiaries has engaged in transactions in or involving
forwards, futures, options on futures, swaps or other
derivative instruments except (i) as agent on the order
and for the account of others, or (ii) as principal for
purposes of hedging interest rate risk on U.S. dollar-
denominated securities and other financial instruments.
None of the counterparties to any contract or agreement
with respect to any such instrument is in default with
respect to such contract or agreement and no such
contract or agreement, were it to be a Loan (as defined
below) held by the Company or any of its Subsidiaries,
would be classified as "Other Loans Specially Mentioned",
"Special Mention", "Substandard", "Doubtful", "Loss",
"Classified", "Criticized", "Credit Risk Assets",
"Concerned Loans" or words of similar import. The
financial position of the Company and its Subsidiaries on
a consolidated basis under or with respect to each such
instrument has been reflected in the books and records of
the Company and such Subsidiaries in accordance with GAAP
consistently applied, and no open exposure of the Company
or any of its Subsidiaries with respect to any such
instrument (or with respect to multiple instruments with
respect to any single counterparty) exceeds $500,000.
3.24. Opinion. The Company has received a
written opinion, dated the date hereof, from Keefe,
Bruyette to the effect that, subject to the terms,
conditions and qualifications set forth therein, as of
the date thereof the consideration to be received by the
stockholders of the Company pursuant to this Agreement is
fair to such stockholders from a financial point of view.
Such opinion has not been amended or rescinded as of the
date of this Agreement.
3.25. Assistance Agreements. Except as set
forth in Section 3.25 of the Company Disclosure Schedule,
neither the Company nor any of its Subsidiaries is a
party to any agreement or arrangement entered into in
connection with the consummation of a federally assisted
acquisition of a depository institution pursuant to which
the Company or any of its Subsidiaries is entitled to
receive financial assistance or indemnification from any
governmental agency.
3.26. Approvals. As of the date of this
Agreement, the Company knows of no reason why all
regulatory approvals required for the consummation of the
transactions contemplated hereby (including, without
limitation, the Merger and the Subsidiary Merger) should
not be obtained without the imposition of a Burdensome
Condition (as defined below).
3.27. Loan Portfolio. Except as set forth in
Section 3.27 of the Company Disclosure Schedule, neither
the Company nor any of its Subsidiaries is a party to any
written or oral (i) loan agreement, note or borrowing
arrangement (including, without limitation, leases,
credit enhancements, commitments, guarantees and
interest-bearing assets) (collectively, "Loans"), other
than Loans the unpaid principal balance of which does not
exceed $50,000, under the terms of which the obligor is,
as of the date of this Agreement, over 90 days delinquent
in payment of principal or interest or in default of any
other provision, or (ii) Loan with any director,
executive officer or ten percent stockholder of the
Company or any of its Subsidiaries, or to the best
knowledge of the Company, any person, corporation or
enterprise controlling, controlled by or under common
control with any of the foregoing. Section 3.27 of the
Company Disclosure Schedule sets forth (i) all of the
Loans in original principal amount in excess of $50,000
of the Company or any of its Subsidiaries that as of the
date of this Agreement are classified by any bank
examiner (whether regulatory or internal) as "Other Loans
Specially Mentioned", "Special Mention", "Substandard",
"Doubtful", "Loss", "Classified", "Criticized", "Credit
Risk Assets", "Concerned Loans", "Watch List" or words of
similar import, together with the principal amount of and
accrued and unpaid interest on each such Loan and the
identity of the borrower thereunder, and (ii) by category
of Loan (i.e., commercial, consumer, etc.), all of the
other Loans of the Company and its Subsidiaries that as
of the date of this Agreement are classified as such,
together with the aggregate principal amount of and
accrued and unpaid interest on such Loans by category.
The Company shall promptly inform Buyer in writing of any
Loan that becomes classified in the manner described in
the previous sentence, or any Loan the classification of
which is changed, at any time after the date of this
Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF BUYER
Buyer hereby represents and warrants to the
Company as follows:
4.1. Corporate Organization. (a) Buyer is a
corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware. Buyer
has the corporate power and authority to own or lease all
of its properties and assets and to carry on its business
as it is now being conducted, and is duly licensed or
qualified to do business in each jurisdiction in which
the nature of the business conducted by it or the
character or location of the properties and assets owned
or leased by it makes such licensing or qualification
necessary, except where the failure to be so licensed or
qualified would not have a Material Adverse Effect on
Buyer. Buyer is duly registered as a bank holding
company under the BHC Act. The Certificate of
Incorporation and By-laws of Buyer, copies of which have
previously been made available to the Company, are true,
complete and correct copies of such documents as in
effect as of the date of this Agreement.
(b) New York Bank is a bank duly
organized, validly existing and in good standing under
the laws of the State of New York. The deposit accounts
of New York Bank are insured by the FDIC through the Bank
Insurance Fund to the fullest extent permitted by law,
and all premiums and assessments required in connection
therewith have been paid by New York Bank. Each of
Buyer's other Subsidiaries is duly organized, validly
existing and in good standing under the laws of the
jurisdiction of its incorporation. Each Subsidiary of
Buyer has the corporate power and authority to own or
lease all of its properties and assets and to carry on
its business as it is now being conducted, and is duly
licensed or qualified to do business in each jurisdiction
in which the nature of the business conducted by it or
the character or location of the properties and assets
owned or leased by it makes such licensing or
qualification necessary, except where the failure to be
so licensed or qualified would not have a Material
Adverse Effect on Buyer. The articles of organization
and by-laws of New York Bank, copies of which have
previously been made available to the Company, are true,
complete and correct copies of such documents as in
effect as of the date of this Agreement.
(c) The minute books of Buyer and each of
its Subsidiaries contain true, complete and accurate
records in all material respects of all meetings and
other corporate actions held or taken since December 31,
1991 of their respective stockholders and Boards of
Directors (including committees of their respective
Boards of Directors).
4.2. Capitalization. (a) As of the date of
this Agreement, the authorized capital stock of Buyer
consists of 50,000,000 shares of Buyer Common Stock and
10,000,000 shares of preferred stock, par value $1.00 per
share ("Buyer Preferred Stock"). As of June 20, 1994,
there were 14,248,799 shares of Buyer Common Stock and no
shares of Buyer Preferred Stock issued and outstanding,
and 487 shares of Buyer Common Stock held in Buyer's
treasury. As of the date of this Agreement, no shares of
Buyer Common Stock or Buyer Preferred Stock were reserved
for issuance, except that 657,820 shares of Buyer Common
Stock were reserved for issuance pursuant to the Buyer's
dividend reinvestment and stock purchase plans and
described in Section 4.2(a) of the Disclosure Schedule
which is being delivered by Buyer to the Company herewith
(the "Buyer Disclosure Schedule"), 580,139 shares of
Buyer Common Stock were reserved for issuance upon the
exercise of stock options pursuant to the Buyer 1982
Incentive Stock Option Plan, the Buyer 1985 Incentive
Stock Option Plan and the Buyer 1987 Long Term Incentive
Plan; the Buyer's 1989 Executive Stock Option Plan and
the Buyer's 1994 Key Employee Stock Plan (collectively,
the "Buyer Stock Plans"), 1,100,474 shares of Buyer
Common Stock were reserved for issuance upon exercise of
warrants under the warrant agreements listed on Section
4.2(a) of the Buyer Disclosure Schedule, and 500,000
shares of Buyer Series A Junior Participating Preferred
Stock were reserved for issuance upon exercise of the
rights (the "Buyer Rights") distributed to holders of
Buyer Common Stock pursuant to the Shareholder Rights
Agreement, dated as of February 28, 1989, between Buyer
and The North Fork Bank, as Rights Agent (the "Buyer
Shareholder Rights Agreement"). All of the issued and
outstanding shares of Buyer Common Stock and Buyer
Preferred Stock have been duly authorized and validly
issued and are fully paid, nonassessable and free of
preemptive rights, with no personal liability attaching
to the ownership thereof. As of the date of this
Agreement, except as referred to above or reflected in
Section 4.2(a) of the Buyer Disclosure Schedule and the
Buyer Shareholder Rights Agreement, Buyer does not have
and is not bound by any outstanding subscriptions,
options, warrants, calls, commitments or agreements of
any character calling for the purchase or issuance of any
shares of Buyer Common Stock or Buyer Preferred Stock or
any other equity securities of Buyer or any securities
representing the right to purchase or otherwise receive
any shares of Buyer Common Stock or Buyer Preferred
Stock. The shares of Buyer Common Stock to be issued
pursuant to the Merger will be duly authorized and
validly issued and, at the Effective Time, all such
shares will be fully paid, nonassessable and free of
preemptive rights, with no personal liability attaching
to the ownership thereof.
(b) Section 4.2(b) of the Buyer
Disclosure Schedule sets forth a true and correct list of
all of the Buyer Subsidiaries as of the date of this
Agreement. Except as set forth in Section 4.2(b) of the
Buyer Disclosure Schedule, Buyer owns, directly or
indirectly, all of the issued and outstanding shares of
capital stock of each of the Subsidiaries of the Buyer,
free and clear of all liens, charges, encumbrances and
security interests whatsoever, and all of such shares are
duly authorized and validly issued and are fully paid,
nonassessable and free of preemptive rights, with no
personal liability attaching to the ownership thereof.
As of the date of this Agreement, no Subsidiary of the
Buyer has or is bound by any outstanding subscriptions,
options, warrants, calls, commitments or agreements of
any character with any party that is not a direct or
indirect Subsidiary of Buyer calling for the purchase or
issuance of any shares of capital stock or any other
equity security of such Subsidiary or any securities
representing the right to purchase or otherwise receive
any shares of capital stock or any other equity security
of such Subsidiary.
4.3. Authority; No Violation. (a) Buyer has
full corporate power and authority to execute and deliver
this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this
Agreement and the consummation of the transactions
contemplated hereby have been duly and validly approved
by the Board of Directors of Buyer. The Board of
Directors of Buyer has directed that this Agreement and
the transactions contemplated hereby be submitted to
Buyer's stockholders for approval at a meeting of such
stockholders and, except for the adoption of this
Agreement by the requisite vote of Buyer's stockholders,
no other corporate proceedings on the part of Buyer are
necessary to consummate the transactions contemplated
hereby. This Agreement has been duly and validly
executed and delivered by Buyer and (assuming due
authorization, execution and delivery by the Company)
constitutes a valid and binding obligation of Buyer,
enforceable against Buyer in accordance with its terms,
except as enforcement may be limited by general
principles of equity whether applied in a court of law or
a court of equity and by bankruptcy, insolvency and
similar laws affecting creditors' rights and remedies
generally.
(b) New York Bank has full corporate
power and authority to execute and deliver the Bank
Merger Agreement and to consummate the transactions
contemplated thereby. The execution and delivery of the
Bank Merger Agreement and the consummation of the
transactions contemplated thereby will be duly and
validly approved by the Board of Directors of New York
Bank. Upon the due and valid approval of the Bank Merger
Agreement by Buyer as the sole stockholder of New York
Bank, and by the Board of Directors of New York Bank, no
other corporate proceedings on the part of New York Bank
will be necessary to consummate the transactions
contemplated thereby. The Bank Merger Agreement, upon
execution and delivery by New York Bank, will be duly and
validly executed and delivered by New York Bank and will
(assuming due authorization, execution and delivery by
the Company Bank) constitute a valid and binding
obligation of New York Bank, enforceable against New York
Bank in accordance with its terms, except as enforcement
may be limited by general principles of equity whether
applied in a court of law or a court of equity and by
bankruptcy, insolvency and similar laws affecting
creditors' rights and remedies generally.
(c) Except as set forth in Section 4.3(c)
of the Buyer Disclosure Schedule, neither the execution
and delivery of this Agreement by Buyer or the Bank
Merger Agreement by New York Bank, nor the consummation
by Buyer or New York Bank, as the case may be, of the
transactions contemplated hereby or thereby, nor
compliance by Buyer or New York Bank, as the case may be,
with any of the terms or provisions hereof or thereof,
will (i) violate any provision of the Certificate of
Incorporation or By-Laws of Buyer, or the articles of
incorporation or by-laws or similar governing documents
of any of its Subsidiaries or (ii) assuming that the
consents and approvals referred to in Section 4.4 are
duly obtained, (x) violate any statute, code, ordinance,
rule, regulation, judgment, order, writ, decree or
injunction applicable to Buyer or any of its Subsidiaries
or any of their respective properties or assets, or (y)
violate, conflict with, result in a breach of any
provision of or the loss of any benefit under, constitute
a default (or an event which, with notice or lapse of
time, or both, would constitute a default) under, result
in the termination of or a right of termination or
cancellation under, accelerate the performance required
by, or result in the creation of any lien, pledge,
security interest, charge or other encumbrance upon any
of the respective properties or assets of Buyer or any of
its Subsidiaries under, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, deed
of trust, license, lease, agreement or other instrument
or obligation to which Buyer or any of its Subsidiaries
is a party, or by which they or any of their respective
properties or assets may be bound or affected, except (in
the case of clause (y) above) for such violations,
conflicts, breaches or defaults which either individually
or in the aggregate will not have or be reasonably likely
to have a Material Adverse Effect on Buyer.
4.4. Consents and Approvals. Except for (a)
the filing of applications and notices, as applicable,
with the Federal Reserve Board under the Oakar Amendment
to the Federal Deposit Insurance Act and the BHC Act, and
approval of such applications and notices, (b) the filing
of applications with the FDIC under the Bank Merger Act
and approval of such applications, (c) the filing of
applications with the OTS and approval of such
applications, (d) the State Banking Approvals, (e) the
filing with the SEC of the Proxy Statement and the S-4,
(f) the approval of this Agreement by the requisite vote
of the stockholders of Buyer, (g) the filing of the
Certificate of Merger with the Secretary, (h) such
filings and approvals as are required to be made or
obtained under the securities or "Blue Sky" laws of
various states in connection with the issuance of the
shares of Buyer Common Stock pursuant to this Agreement,
(i) filings required by the Bank Merger Agreement, (j)
the approval of the Bank Merger Agreement by the
stockholder of New York Bank, and (k) such filings,
authorizations or approvals as may be set forth in
Section 4.4 of the Buyer Disclosure Schedule, no consents
or approvals of or filings or registrations with any
Governmental Entity or with any third party are necessary
in connection with (1) the execution and delivery by
Buyer of this Agreement, (2) the consummation by Buyer of
the Merger and the other transactions contemplated
hereby, (3) the execution and delivery by New York Bank
of the Bank Merger Agreement, and (4) the consummation of
New York Bank of the transactions contemplated by the
Bank Merger Agreement.
4.5. Financial Statements. Buyer has
previously delivered to the Company copies of (a) the
consolidated balance sheets of Buyer and its Subsidiaries
as of December 31 for the fiscal years 1992 and 1993 and
the related consolidated statements of income, changes in
shareholders' equity and cash flows for the fiscal years
1991 through 1993, inclusive, as reported in Buyer's
Annual Report on Form 10-K for the fiscal year ended
December 31, 1993 filed with the SEC under the Exchange
Act, in each case accompanied by the audit report of KPMG
Peat Marwick, independent public accountants with respect
to Buyer, and (b) the unaudited consolidated balance
sheet of Buyer and its Subsidiaries as of March 31, 1994
and March 31, 1993 and the related unaudited consolidated
statements of income, changes in shareholders' equity and
cash flows for the three-month periods then ended as
reported in Buyer's Quarterly Report on Form 10-Q for the
period ended March 31, 1994 filed with the SEC under the
Exchange Act. The December 31, 1993 consolidated balance
sheet of Buyer (including the related notes, where
applicable) fairly presents the consolidated financial
position of Buyer and its Subsidiaries as of the date
thereof, and the other financial statements referred to
in this Section 4.5 (including the related notes, where
applicable) fairly present and the financial statements
referred to in Section 6.9 hereof will fairly present
(subject, in the case of the unaudited statements, to
recurring audit adjustments normal in nature and amount),
the results of the consolidated operations and changes in
shareholders' equity and consolidated financial position
of Buyer and its Subsidiaries for the respective fiscal
periods or as of the respective dates therein set forth;
each of such statements (including the related notes,
where applicable) comply, and the financial statements
referred to in Section 6.9 hereof will comply, in all
material respects with applicable accounting requirements
and with the published rules and regulations of the SEC
with respect thereto; and each of such statements
(including the related notes, where applicable) has been,
and the financial statements referred to in Section 6.9
hereof will be, prepared in accordance with GAAP
consistently applied during the periods involved, except
as indicated in the notes thereto or, in the case of
unaudited statements, as permitted by Form 10-Q. The
books and records of Buyer and its Subsidiaries have
been, and are being, maintained in all material respects
in accordance with GAAP and any other applicable legal
and accounting requirements and reflect only actual
transactions.
4.6. Broker's Fees. Neither Buyer nor any
Subsidiary of Buyer, nor any of their respective officers
or directors, has employed any broker or finder or
incurred any liability for any broker's fees, commissions
or finder's fees in connection with any of the
transactions contemplated by this Agreement, the Bank
Merger Agreement or the Option Agreement, except that
Buyer has engaged, and will pay a fee or commission to
M.A. Schapiro & Co.
4.7. Absence of Certain Changes or Events.
Except as may be set forth in Section 4.7 of the Buyer
Disclosure Schedule, or as disclosed in Buyer's Quarterly
Report on Form 10-Q for the quarter ended March 31, 1994
(a true, complete and correct copy of which has
previously been delivered to the Company), since December
31, 1993, (i) neither Buyer nor any of its Subsidiaries
has incurred any material liability, except in the
ordinary course of their business consistent with their
past practices, and (ii) no event has occurred which has
caused, or is reasonably likely to cause, individually or
in the aggregate, a Material Adverse Effect on Buyer.
4.8. Legal Proceedings. (a) Except as set
forth in Section 4.8 of the Buyer Disclosure Schedule or
in Buyer's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1994, neither Buyer nor any of its
Subsidiaries is a party to any and there are no pending
or, to the best of Buyer's knowledge, threatened,
material legal, administrative, arbitral or other
proceedings, claims, actions or governmental or
regulatory investigations of any nature against Buyer or
any of its Subsidiaries or challenging the validity or
propriety of the transactions contemplated by this
Agreement, the Bank Merger Agreement or the Option
Agreement as to which there is a reasonable probability
of an adverse determination and which, if adversely
determined, would have or be reasonably likely to have a
Material Adverse Effect on Buyer.
(b) There is no injunction, order,
judgment, decree, or regulatory restriction imposed upon
Buyer, any of its Subsidiaries or the assets of Buyer or
any of its Subsidiaries which has had, or could
reasonably be expected to have, a Material Adverse Effect
on Buyer.
4.9. Compliance with Applicable Law. Buyer
and each of its Subsidiaries holds, and has at all times
held, all material licenses, franchises, permits and
authorizations necessary for the lawful conduct of their
respective businesses under and pursuant to all, and have
complied with and are not in default in any respect under
any, applicable law, statute, order, rule, regulation,
policy and/or guideline of any Governmental Entity
relating to Buyer or any of its Subsidiaries, except
where the failure to hold such license, franchise, permit
or authorization or such non-compliance or default would
not, individually or in the aggregate, have, or be
reasonably likely to have, a Material Adverse Effect on
Buyer, and neither Buyer nor any of its Subsidiaries
knows of, or has received notice of violation of, any
material violations of any of the above.
4.10. SEC Reports. Buyer has previously made
available to the Company an accurate and complete copy of
each (a) final registration statement, prospectus,
report, schedule and definitive proxy statement filed
since January 1, 1990 by Buyer with the SEC pursuant to
the Securities Act or the Exchange Act (the "Buyer
Reports") and (b) communication mailed by Buyer to its
shareholders since January 1, 1990, and no such
registration statement, prospectus, report, schedule,
proxy statement or communication contained any untrue
statement of a material fact or omitted to state any
material fact required to be stated therein or necessary
in order to make the statements therein, in light of the
circumstances in which they were made, not misleading,
except that information as of a later date shall be
deemed to modify information as of an earlier date.
Buyer has timely filed all Buyer Reports and other
documents required to be filed by it under the Securities
Act and the Exchange Act, and, as of their respective
dates, all Buyer Reports complied in all material
respects with the published rules and regulations of the
SEC with respect thereto.
4.11. Buyer Information. The information
relating to Buyer and its Subsidiaries to be contained in
the Proxy Statement and the S-4, or in any other document
filed with any other regulatory agency in connection
herewith, will not contain any untrue statement of a
material fact or omit to state a material fact necessary
to make the statements therein, in light of the
circumstances in which they are made, not misleading.
The S-4 (except for such portions thereof that relate
only to the Company or any of its Subsidiaries) will
comply in all material respects with the provisions of
the Exchange Act and the rules and regulations
thereunder.
4.12. Ownership of Company Common Stock;
Affiliates and Associates. (a) Except for the Stock
Option Agreement, neither Buyer nor any of its affiliates
or associates (as such terms are defined under the
Exchange Act), (i) beneficially own, directly or
indirectly, or (ii) is a party to any agreement,
arrangement or understanding for the purpose of
acquiring, holding, voting or disposing of, in each case,
any shares of capital stock of the Company (other than
Trust Account Shares and DPC Shares); and
(b) Neither Buyer nor any of its
Subsidiaries is an "affiliate" (as such term is defined
in DGCL SECTION 203(c)(1)), an "associate" (as such term is
defined in DGCL SECTION 203(c)(2)) of the Company or an
"Interested Stockholder" (as such term is defined in
Section 8 of the Company's Certificate of Incorporation).
4.13. Taxes. Except as set forth in Section
4.13 of the Buyer Disclosure Schedule, each of Buyer and
its Subsidiaries has (i) duly and timely filed or will
duly and timely file (including applicable extensions
granted without penalty) all Tax Returns required to be
filed at or prior to the Effective Time, and such Tax
Returns which have heretofore been filed are, and those
to be hereinafter filed will be, true, correct and
complete, and (ii) paid in full or have made adequate
provision for on the financial statements of Buyer (in
accordance with GAAP) all Taxes and will pay in full or
make adequate provision for all Taxes. There are no
material liens for Taxes upon the assets of either Buyer
or its Subsidiaries except for statutory liens for
current Taxes not yet due. Except as set forth in
Section 4.13 of the Buyer Disclosure Schedule, neither
Buyer nor any of its Subsidiaries has requested any
extension of time within which to file any Tax Returns in
respect of any fiscal year which have not since been
filed and no request for waivers of the time to assess
any Taxes are pending or outstanding. The federal and
state income Tax Returns of Buyer and its Subsidiaries
have been audited by the Internal Revenue Service or
appropriate state tax authorities with respect to those
periods and jurisdictions set forth on Section 4.13 of
the Buyer Disclosure Schedule. Except as set forth in
Section 4.13 of the Buyer Disclosure Schedule, neither
Buyer nor any of its Subsidiaries (i) is a party to any
agreement providing for the allocation or sharing of
Taxes (other than the allocation of federal income taxes
as provided by Regulation 1.1552-1(a)(1) under the Code);
(ii) is required to include in income any adjustment
pursuant to Section 481(a) of the Code, by reason of the
voluntary change in accounting method (nor has any taxing
authority proposed in writing any such adjustment or
change of accounting method); or (iii) has filed a
consent pursuant to Section 341(f) of the Code.
4.14. Employees. (a) Section 4.14(a) of the
Buyer Disclosure Schedule sets forth a true and complete
list of each employee benefit plan, arrangement or
agreement that is maintained or contributed to or
required to be contributed to as of the date of this
Agreement (the "Buyer Plans") by Buyer, any of its
Subsidiaries or by any trade or business, whether or not
incorporated (a "Buyer ERISA Affiliate"), all of which
together with Buyer would be deemed a "single employer"
within the meaning of Section 4001 of ERISA, for the
benefit of any employee or former employee of Buyer, any
Subsidiary or any ERISA Affiliate.
(b) Except as set forth in Section 4.14(b) of
the Buyer Disclosure Schedule, (i) each of the Buyer
Plans has been operated and administered in all material
respects in accordance with its terms and applicable law,
including but not limited to ERISA and the Code, (ii)
each of the Buyer Plans intended to be "qualified" within
the meaning of Section 401(a) of the Code has either (1)
received a favorable determination letter from the IRS,
or (2) is or will be the subject of an application for a
favorable determination letter, and Buyer is not aware of
any circumstances likely to result in the revocation or
denial of any such favorable determination letter, (iii)
with respect to each Buyer Plan which is subject to Title
IV of ERISA, the present value of accrued benefits under
such Buyer Plan, based upon the actuarial assumptions
used for funding purposes in the most recent actuarial
report prepared by such Buyer Plan's actuary with respect
to such Buyer Plan, did not, as of its latest valuation
date, exceed the then current value of the assets of such
Buyer Plan allocable to such accrued benefits, (iv) no
Plan provides benefits, including without limitation
death or medical benefits (whether or not insured), with
respect to current or former employees of Buyer, its
Subsidiaries or any ERISA Affiliate beyond their
retirement or other termination of service, other than
(w) coverage mandated by applicable law, (x) death
benefits or retirement benefits under any "employee
pension plan," as that term is defined in Section 3(2) of
ERISA, (y) deferred compensation benefits accrued as
liabilities on the books of Buyer, its Subsidiaries or
the ERISA Affiliates or (z) benefits the full cost of
which is borne by the current or former employee (or his
beneficiary), (v) no liability under Title IV of ERISA
has been incurred by Buyer, its Subsidiaries or any Buyer
ERISA Affiliate that has not been satisfied in full, (vi)
no Buyer Plan is a "multiemployer pension plan," as such
term is defined in Section 3(37) of ERISA, (vii) all
contributions or other amounts payable by Buyer, its
Subsidiaries or any ERISA Affiliate as of the Effective
Time with respect to each Plan in respect of current or
prior plan years have been paid or accrued in accordance
with generally accepted accounting practices and Section
412 of the Code, (viii) neither Buyer, its Subsidiaries
nor any ERISA Affiliate has engaged in a transaction in
connection with which Buyer, its Subsidiaries or any
ERISA Affiliate could be subject to either a civil
penalty assessed pursuant to Section 409 or 502(i) of
ERISA or a tax imposed pursuant to Section 4975 or 4976
of the Code, (ix) there are no pending, or, to the best
knowledge of Buyer, threatened or anticipated claims
(other than routine claims for benefits) by, on behalf of
or against any of the Buyer Plans or any trusts related
thereto and (x) the consummation of the transactions
contemplated by this Agreement will not (y) entitle any
current or former employee or officer of Buyer or any
ERISA Affiliate to severance pay, termination pay or any
other payment, except as expressly provided in this
Agreement or (z) accelerate the time of payment or
vesting or increase in the amount of compensation due any
such employee or officer.
4.15. Agreements with Regulatory Agencies.
Except as set forth in Section 4.15 of the Buyer
Disclosure Schedule or as disclosed in Buyer's Annual
Report on Form 10-K for the year ended December 31, 1993,
neither Buyer nor any of its Subsidiaries is subject to
any cease-and-desist or other order issued by, or is a
party to any written agreement, consent agreement or
memorandum of understanding with, or is a party to any
commitment letter or similar undertaking to, or is
subject to any order or directive by, or is a recipient
of any extraordinary supervisory letter from, or has
adopted any board resolutions at the request of (each,
whether or not set forth in Section 4.15 of the Buyer
Disclosure Schedule, a "Buyer Regulatory Agreement"), any
Regulatory Agency or other Governmental Entity that
restricts the conduct of its business or that in any
manner relates to its capital adequacy, its credit
policies, its management or its business, nor has Buyer
or any of its Subsidiaries been advised by any Regulatory
Agency or other Governmental Entity that it is
considering issuing or requesting any Regulatory
Agreement.
4.16. Undisclosed Liabilities. Except (a) as
set forth in Section 4.16 of the Buyer Disclosure
Schedule, (b) for those liabilities that are fully
reflected or reserved against on the consolidated balance
sheet of Buyer included in its Form 10-Q for the period
ended March 31, 1994 and (c) for liabilities incurred in
the ordinary course of business consistent with past
practice since March 31, 1994 that, either alone or when
combined with all similar liabilities, have not had, and
could not reasonably be expected to have, a Material
Adverse Effect on Buyer, neither Buyer nor any of its
Subsidiaries has incurred any liability of any nature
whatsoever (whether absolute, accrued, contingent or
otherwise and whether due or to become due).
4.17. Administration of Fiduciary Accounts.
Buyer and each of its Subsidiaries has properly
administered in all material respects 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 Buyer nor any
of its Subsidiaries nor any of their respective
directors, officers or employees has committed any breach
of trust with respect to any such fiduciary account which
has had or could reasonably be expected to have a
Material Adverse Effect on Buyer, 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.
4.18. Approvals. As of the date of this
Agreement, Buyer knows of no reason why all regulatory
approvals required for the consummation of the
transactions contemplated hereby (including, without
limitation, the Merger and the Subsidiary Merger) should
not be obtained without the imposition of a Burdensome
Condition.
4.19. Reports. Buyer and each of its
Subsidiaries have timely filed all material reports,
registrations and statements, together with any
amendments required to be made with respect thereto, that
they were required to file since December 31, 1991 with
any Regulatory Agency, and all other material reports and
statements required to be filed by them since December
31, 1991, including, without limitation, any report or
statement required to be filed pursuant to the laws,
rules or regulations of the United States, the Federal
Reserve Board, the FDIC, any State Regulator or any SRO,
and have paid all fees and assessments due and payable in
connection therewith. Except for normal examinations
conducted by a Regulatory Agency in the regular course of
the business of Buyer and its Subsidiaries, except as set
forth in Section 4.19 of Buyer Disclosure Schedule, no
Regulatory Agency has initiated any proceeding or, to the
best knowledge of Buyer, investigation into the business
or operations of Buyer or any of its Subsidiaries since
December 31, 1991. There is no unresolved material
violation, criticism, or exception by any Regulatory
Agency with respect to any report or statement relating
to any examinations of Buyer or any of its Subsidiaries.
4.20. Environmental Matters. Except as set
forth in Section 4.20 of the Buyer Disclosure Schedule:
(a) Each of Buyer, its Subsidiaries, the
Participation Facilities and the Loan Properties (each as
hereinafter defined) are, and have been, in compliance
with Environmental Laws, except for violations which,
either individually or in the aggregate, have not had and
cannot reasonably be expected to have a Material Adverse
Effect on Buyer;
(b) There is no suit, claim, action or
proceeding, pending or threatened, before any
Governmental Entity or other forum in which Buyer, any of
its Subsidiaries, any Participation Facility or any Loan
Property, has been or, with respect to threatened
proceedings, may be, named as a defendant (x) for alleged
noncompliance (including by any predecessor), with any
Environmental Laws, or (y) relating to the release,
threatened release or exposure to any material whether or
not occurring at or on a site owned, leased or operated
by Buyer or any of its Subsidiaries, any Participation
Facility or any Loan Property, except where such
noncompliance or release has not resulted, and cannot be
reasonably expected to result, either individually or in
the aggregate, a Material Adverse Effect on Buyer;
(c) During the period of (x) Buyer's or
any of its Subsidiaries' ownership or operation of any of
their respective current properties, (y) Buyer's or any
of its Subsidiaries' participation in the management of
any Participation Facility, or (z) Buyer's or any of its
Subsidiaries' holding of a security interest in a Loan
Property, there has been no release of materials in, on,
under or affecting any such property, except where such
release has not had and cannot reasonably be expected to
result in, either individually or in the aggregate, a
Material Adverse Effect on Buyer. Prior to the period of
(x) Buyer's or any of its Subsidiaries' ownership or
operation of any of their respective current properties,
(y) Buyer's or any of its Subsidiaries' participation in
the management of any Participation Facility, or (z)
Buyer's or any of its Subsidiaries' holding of a security
interest in a Loan Property, there was no release or
threatened release of materials in, on, under or
affecting any such property, Participation Facility or
Loan Property, except where such release has not had and
cannot be reasonably expected to have, either
individually or in the aggregate, a Material Adverse
Effect on Buyer; and
(d) The following definitions apply for
purposes of this Section 4.20: (x) "Loan Property" means
any property in which Buyer or any of its Subsidiaries
holds a security interest, and, where required by the
context, said term means the owner or operator of such
property; and (y) "Participation Facility" means any
facility in which Buyer or any of its Subsidiaries
participates in the management and, where required by the
context, said term means the owner or operator of such
property.
4.21. Derivative Transactions. Except as set
forth in Section 4.21 of the Buyer Disclosure Schedule,
since December 31, 1993, neither Buyer nor any of its
Subsidiaries has engaged in transactions in or involving
forwards, futures, options on futures, swaps or other
derivative instruments except (i) as agent on the order
and for the account of others, or (ii) as principal for
purposes of hedging interest rate risk on U.S. dollar-
denominated securities and other financial instruments.
None of the counterparties to any contract or agreement
with respect to any such instrument is in default with
respect to such contract or agreement and no such
contract or agreement, were it to be a Loan held by Buyer
or any of its Subsidiaries, would be classified as "Other
Loans Specially Mentioned", "Special Mention",
"Substandard", "Doubtful", "Loss", "Classified",
"Criticized", "Credit Risk Assets", "Concerned Loans" or
words of similar import. The financial position of Buyer
and its Subsidiaries on a consolidated basis under or
with respect to each such instrument has been reflected
in the books and records of Buyer and such Subsidiaries
in accordance with GAAP consistently applied, and no open
exposure of Buyer or any of its Subsidiaries with respect
to any such instrument (or with respect to multiple
instruments with respect to any single counterparty)
exceeds $500,000.
4.22. Loan Portfolio. Except as set forth in
Section 4.22 of the Buyer Disclosure Schedule, neither
Buyer nor any of its Subsidiaries is a party to any
written or oral (i) Loan, other than Loans the unpaid
principal balance of which does not exceed $50,000, under
the terms of which the obligor is, as of the date of this
Agreement, over 90 days delinquent in payment of
principal or interest or in default of any other
provision, or (ii) Loan as of the date of this Agreement
with any director, executive officer or ten percent
stockholder of Buyer or any of its Subsidiaries, or to
the best knowledge of Buyer, any person, corporation or
enterprise controlling, controlled by or under common
control with any of the foregoing. Section 4.22 of the
Buyer Disclosure Schedule sets forth (i) all of the Loans
in original principal amount in excess of $50,000 of
Buyer or any of its Subsidiaries that as of the date of
this Agreement are classified by any bank examiner
(whether regulatory or internal) as "Other Loans
Specially Mentioned", "Special Mention", "Substandard",
"Doubtful", "Loss", "Classified", "Criticized", "Credit
Risk Assets", "Concerned Loans", "Watch List" or words of
similar import, together with the principal amount of and
accrued and unpaid interest on each such Loan and the
identity of the borrower thereunder, and (ii) by category
of Loan (i.e., commercial, consumer, etc.), all of the
other Loans of Buyer and its Subsidiaries that as of the
date of this Agreement are classified as such, together
with the aggregate principal amount of and accrued and
unpaid interest on such Loans by category. Buyer shall
promptly inform the Company in writing of any Loan that
becomes classified in the manner described in the
previous sentence, or any Loan the classification of
which is changed, at any time after the date of this
Agreement.
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
5.1. Covenants of the Company. During the
period from the date of this Agreement and continuing
until the Effective Time, except as expressly
contemplated or permitted by this Agreement, the Bank
Merger Agreement or the Option Agreement or with the
prior written consent of Buyer, the Company and its
Subsidiaries shall carry on their respective businesses
in the ordinary course consistent with past practice and
consistent with prudent banking practice. The Company
will use its best efforts to (x) preserve its business
organization and that of its Subsidiaries intact, (y)
keep available to itself and Buyer the present services
of the employees of the Company and its Subsidiaries and
(z) preserve for itself and Buyer the goodwill of the
customers of the Company and its Subsidiaries and others
with whom business relationships exist. Without limiting
the generality of the foregoing, and except as set forth
on Section 5.1 of the Company Disclosure Schedule or as
otherwise contemplated by this Agreement or consented to
in writing by Buyer, the Company shall not, and shall not
permit any of its Subsidiaries to:
(a) solely in the case of the Company,
declare or pay any dividends on, or make other
distributions in respect of, any of its capital stock,
other than normal quarterly dividends in an amount of no
more than $0.18 per share of Company Common Stock;
(b) (i) split, combine or reclassify any
shares of its capital stock or issue or authorize or
propose the issuance of any other securities in respect
of, in lieu of or in substitution for shares of its
capital stock except upon the exercise or fulfillment of
rights or options issued or existing pursuant to employee
benefit plans, programs or arrangements, all to the
extent outstanding and in existence on the date of this
Agreement and in accordance with their present terms, and
except pursuant to the Option Agreement, or (ii)
repurchase, redeem or otherwise acquire (except for the
acquisition of Trust Account Shares and DPC Shares, as
such terms are defined in Section 1.4(b) hereof) any
shares of the capital stock of the Company or any
Subsidiary of the Company, or any securities convertible
into or exercisable for any shares of the capital stock
of the Company or any Subsidiary of the Company;
(c) issue, deliver or sell, or authorize
or propose the issuance, delivery or sale of, any shares
of its capital stock or any securities convertible into
or exercisable for, or any rights, warrants or options to
acquire, any such shares, or enter into any agreement
with respect to any of the foregoing, other than (i) the
issuance of Company Common Stock pursuant to stock
options or similar rights to acquire Company Common Stock
granted pursuant to the Company Stock Plans and
outstanding prior to the date of this Agreement, in each
case in accordance with their present terms and (ii)
pursuant to the Option Agreement;
(d) amend its Certificate of
Incorporation, By-laws or other similar governing
documents;
(e) authorize or permit any of its
officers, directors, employees or agents to directly or
indirectly solicit, initiate or encourage any inquiries
relating to, or the making of any proposal which
constitutes, a "takeover proposal" (as defined below),
or, except to the extent legally required for the
discharge of the fiduciary duties of the Board of
Directors of the Company, recommend or endorse any
takeover proposal, or participate in any discussions or
negotiations, or provide third parties with any nonpublic
information, relating to any such inquiry or proposal or
otherwise facilitate any effort or attempt to make or
implement a takeover proposal; provided, however, that
the Company may communicate information about any such
takeover proposal to its stockholders if, in the judgment
of the Company's Board of Directors, based upon the
advice of outside counsel, such communication is required
under applicable law. The Company will immediately cease
and cause to be terminated any existing activities,
discussions or negotiations previously conducted with any
parties other than Buyer with respect to any of the
foregoing. The Company will take all actions necessary
or advisable to inform the appropriate individuals or
entities referred to in the first sentence hereof of the
obligations undertaken in this Section 5.1(e). The
Company will notify Buyer immediately if any such
inquiries or takeover proposals are received by, any such
information is requested from, or any such negotiations
or discussions are sought to be initiated or continued
with, the Company, and the Company will promptly inform
Buyer in writing of all of the relevant details with
respect to the foregoing. As used in this Agreement,
"takeover proposal" shall mean any tender or exchange
offer, proposal for a merger, consolidation or other
business combination involving the Company or any
Subsidiary of the Company or any proposal or offer to
acquire in any manner a substantial equity interest in,
or a substantial portion of the assets of, the Company or
any Subsidiary of the Company other than the transactions
contemplated or permitted by this Agreement, the Bank
Merger Agreement and the Option Agreement;
(f) make any capital expenditures other
than the expenses which are set forth in Section 5.1(f)
of the Company Disclosure Schedule and expenses which (i)
are made in the ordinary course of business or are
necessary to maintain existing assets in good repair and
(ii) in any event are in an amount of no more than
$50,000 individually and $50,000 in the aggregate;
(g) enter into any new line of business;
(h) acquire or agree to acquire, by
merging or consolidating with, or by purchasing a
substantial equity interest in or a substantial portion
of the assets of, or by any other manner, any business or
any corporation, partnership, association or other
business organization or division thereof or otherwise
acquire any assets, which would be material, individually
or in the aggregate, to the Company, other than in
connection with foreclosures, settlements in lieu of
foreclosure or troubled loan or debt restructurings in
the ordinary course of business consistent with prudent
banking practices;
(i) 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 or the Bank
Merger Agreement, except, in every case, as may be
required by applicable law;
(j) change its methods of accounting in
effect at March 31, 1994, except as required by changes
in GAAP or regulatory accounting principles as concurred
to by the Company's independent auditors;
(k) (i) 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
Company or any Subsidiary of the Company and one or more
of its current or former directors, officers or employees
or (ii) except for normal increases in the ordinary
course of business consistent with past practice or
except as required by applicable law, increase in any
manner the compensation or fringe benefits of any
director, officer or employee or pay any benefit not
required by any plan or agreement as in effect as of the
date hereof (including, without limitation, the granting
of stock options, stock appreciation rights, restricted
stock, restricted stock units or performance units or
shares);
(l) take or cause to be taken any action
which would disqualify the Merger as a "pooling of
interests" for accounting purposes or a tax free
reorganization under Section 368 of the Code, provided,
however, that nothing contained herein shall limit the
ability of Buyer to exercise its rights under the Option
Agreement;
(m) except as set forth in Section 5.1(m)
of the Company Disclosure Schedule, other than activities
in the ordinary course of business consistent with prior
practice, sell, lease, encumber, assign or otherwise
dispose of, or agree to sell, lease, encumber, assign or
otherwise dispose of, any of its material assets,
properties or other rights or agreements;
(n) other than in the ordinary course of
business consistent with past practice, incur any
indebtedness for borrowed money, assume, guarantee,
endorse or otherwise as an accommodation become
responsible for the obligations of any other individual,
corporation or other entity;
(o) file any application to relocate or
terminate the operations of any banking office of it or
any of its Subsidiaries;
(p) commit any act or omission which
constitutes a material breach or default by the Company
or any of its Subsidiaries under any Regulatory Agreement
or under any material contract or material license to
which the Company or any of its Subsidiaries is a party
or by which any of them or their respective properties is
bound;
(q) make any equity investment or
commitment to make such an investment in real estate or
in any real estate development project, other than in
connection with foreclosures, settlements in lieu of
foreclosure or troubled loan or debt restructurings in
the ordinary course of business consistent with prudent
banking practices;
(r) create, renew, amend or terminate or
give notice of a proposed renewal, amendment or
termination of, any material contract, agreement or lease
for goods, services or office space to which the Company
or any of its Subsidiaries is a party or by which the
Company or any of its Subsidiaries or their respective
properties is bound;
(s) take any action which would cause the
termination or cancellation by the FDIC of insurance in
respect of the Company's deposits; or
(t) agree to do any of the foregoing.
5.2. Covenants of Buyer. During the period
from the date of this Agreement and continuing until the
Effective Time, except as expressly contemplated or
permitted by this Agreement, the Bank Merger Agreement or
the Option Agreement or with the prior written consent of
the Company, Buyer and its Subsidiaries shall carry on
their respective businesses in the ordinary course
consistent with past practice and consistent with prudent
banking practice. Buyer will use its best efforts to (x)
preserve its business organization and that of its
Subsidiaries intact and (y) preserve for itself and the
Company the goodwill of the customers of Buyer and its
Subsidiaries and others with whom business relationships
exist. Without limiting the generality of the foregoing
and except as set forth on Section 5.2 of the Buyer
Disclosure Schedule or as otherwise contemplated by this
Agreement or consented to in writing by the Company,
Buyer shall not, and shall not permit any of its
Subsidiaries to:
(a) solely in the case of Buyer, 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; provided, however,
that nothing contained herein shall prohibit Buyer from
increasing the quarterly cash dividend on the Buyer
Common Stock;
(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 or the Bank
Merger Agreement, except, in every case, as may be
required by applicable law;
(c) change its methods of accounting in
effect at March 31, 1994, except in accordance with
changes in GAAP or regulatory accounting principles as
concurred to by Buyer's independent auditors;
(d) take or cause to be taken any action
which would disqualify the Merger as a "pooling of
interests" for accounting purposes or a tax free
reorganization under Section 368 of the Code, provided,
however, that nothing contained herein shall limit the
ability of Buyer to exercise its rights under the Option
Agreement; or
(e) agree to do any of the foregoing.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1. Regulatory Matters. (a) The Company
shall promptly prepare and file with the SEC the Proxy
Statement and Buyer shall promptly prepare and file with
the SEC the S-4, in which the Proxy Statement will be
included as a prospectus. Each of the Company and Buyer
shall use all reasonable efforts to have the S-4 declared
effective under the Securities Act as promptly as
practicable after such filing, and each of the Company
and Buyer shall thereafter mail the Proxy Statement to
each of its respective stockholders. Buyer shall also
use all reasonable efforts to obtain all necessary state
securities law or "Blue Sky" permits and approvals
required to carry out the transactions contemplated by
this Agreement and the Bank Merger Agreement, and the
Company shall furnish all information concerning the
Company and the holders of Company Common Stock as may be
reasonably requested in connection with any such action.
(b) The parties hereto shall cooperate
with each other and use their best efforts to promptly
prepare and file all necessary documentation, to effect
all applications, notices, petitions and filings, and to
obtain as promptly as practicable all permits, consents,
approvals and authorizations of all third parties and
Governmental Entities which are necessary or advisable to
consummate the transactions contemplated by this
Agreement (including without limitation the Merger and
the Subsidiary Merger) (it being understood that any
amendments to the S-4 or a resolicitation of proxies as
consequence of a subsequent proposed merger, stock
purchase or similar acquisition by Buyer or any of its
Subsidiaries shall not violate this covenant). The
Company and Buyer shall have the right to review in
advance, and to the extent practicable each will consult
the other on, in each case subject to applicable laws
relating to the exchange of information, all the
information relating to the Company or Buyer, as the case
may be, and any of their respective Subsidiaries, which
appear in any filing made with, or written materials
submitted to, any third party or any Governmental Entity
in connection with the transactions contemplated by this
Agreement. In exercising the foregoing right, each of
the parties hereto shall act reasonably and as promptly
as practicable. The parties hereto agree that they will
consult with each other with respect to the obtaining of
all permits, consents, approvals and authorizations of
all third parties and Governmental Entities necessary or
advisable to consummate the transactions contemplated by
this Agreement and each party will keep the other
apprised of the status of matters relating to completion
of the transactions contemplated herein.
(c) Buyer and the Company shall, upon
request, furnish each other with all information
concerning themselves, their Subsidiaries, directors,
officers and stockholders and such other matters as may
be reasonably necessary or advisable in connection with
the Proxy Statement, the S-4 or any other statement,
filing, notice or application made by or on behalf of
Buyer, the Company or any of their respective
Subsidiaries to any Governmental Entity in connection
with the Merger and the other transactions contemplated
by this Agreement.
(d) Buyer and the Company shall promptly
furnish each other with copies of written communications
received by Buyer or the Company, as the case may be, or
any of their respective Subsidiaries, Affiliates or
Associates (as such terms are defined in Rule 12b-2 under
the Exchange Act as in effect on the date of this
Agreement) from, or delivered by any of the foregoing to,
any Governmental Entity in respect of the transactions
contemplated hereby.
6.2. Access to Information. (a) Upon
reasonable notice and subject to applicable laws relating
to the exchange of information, the Company shall, and
shall cause each of its Subsidiaries to, afford to the
officers, employees, accountants, counsel and other
representatives of Buyer, access, during normal business
hours during the period prior to the Effective Time, to
all its properties, books, contracts, commitments,
records, officers, employees, accountants, counsel and
other representatives and, during such period, the
Company shall, and shall cause its Subsidiaries to, make
available to Buyer (i) a copy of each report, schedule,
registration statement and other document filed or
received by it during such period pursuant to the
requirements of Federal securities laws or Federal or
state banking laws (other than reports or documents which
the Company is not permitted to disclose under applicable
law) and (ii) all other information concerning its
business, properties and personnel as Buyer may
reasonably request. Neither the Company nor any of its
Subsidiaries shall be required to provide access to or to
disclose information where such access or disclosure
would violate or prejudice the rights of the Company's
customers, jeopardize any attorney-client privilege or
contravene any law, rule, regulation, order, judgment,
decree, fiduciary duty or binding agreement entered into
prior to the date of this Agreement. The parties hereto
will make appropriate substitute disclosure arrangements
under circumstances in which the restrictions of the
preceding sentence apply. Buyer will hold all such
information in confidence to the extent required by, and
in accordance with, the provisions of the confidentiality
agreement, dated May 5, 1993, between Buyer and the
Company (the "Confidentiality Agreement").
(b) Upon reasonable notice and subject to
applicable laws relating to the exchange of information,
Buyer shall, and shall cause its Subsidiaries to, afford
to the officers, employees, accountants, counsel and
other representatives of the Company, access, during
normal business hours during the period prior to the
Effective Time, to such information regarding Buyer and
its Subsidiaries as shall be reasonably necessary for the
Company to fulfill its obligations pursuant to this
Agreement to prepare the Proxy Statement or which may be
reasonably necessary for the Company to confirm that the
representations and warranties of Buyer contained herein
are true and correct and that the covenants of Buyer
contained herein have been performed in all material
respects. Neither Buyer nor any of its Subsidiaries
shall be required to provide access to or to disclose
information where such access or disclosure would violate
or prejudice the rights of Buyer's customers, jeopardize
any attorney-client privilege or contravene any law,
rule, regulation, order, judgment, decree, fiduciary duty
or binding agreement entered into prior to the date of
this Agreement. The parties hereto will make appropriate
substitute disclosure arrangements under circumstances in
which the restrictions of the preceding sentence apply.
(c) All information furnished by Buyer to
the Company or its representatives pursuant hereto shall
be treated as the sole property of Buyer and, if the
Merger shall not occur, the Company and its
representatives shall return to Buyer all of such written
information and all documents, notes, summaries or other
materials containing, reflecting or referring to, or
derived from, such information. The Company shall, and
shall use its best efforts to cause its representatives
to, keep confidential all such information, and shall not
directly or indirectly use such information for any
competitive or other commercial purpose. The obligation
to keep such information confidential shall continue for
five years from the date the proposed Merger is abandoned
and shall not apply to (i) any information which (x) was
already in the Company's possession prior to the
disclosure thereof by Buyer; (y) was then generally known
to the public; or (z) was disclosed to the Company by a
third party not bound by an obligation of confidentiality
or (ii) disclosures made as required by law. It is
further agreed that, if in the absence of a protective
order or the receipt of a waiver hereunder the Company is
nonetheless, in the opinion of its counsel, compelled to
disclose information concerning Buyer to any tribunal or
governmental body or agency or else stand liable for
contempt or suffer other censure or penalty, the Company
may disclose such information to such tribunal or
governmental body or agency without liability hereunder.
(d) No investigation by either of the
parties or their respective representatives shall affect
the representations, warranties, covenants or agreements
of the other set forth herein.
6.3. Stockholder Meetings. The Company and
Buyer each shall take all steps necessary to duly call,
give notice of, convene and hold a meeting of its
respective stockholders to be held as soon as is
reasonably practicable after the date on which the S-4
becomes effective for the purpose of voting upon the
approval of this Agreement and the consummation of the
transactions contemplated hereby. The Company and Buyer
each will, through its respective Board of Directors,
except to the extent legally required for the discharge
of the fiduciary duties of such board, recommend to its
respective stockholders approval of this Agreement and
the transactions contemplated hereby and such other
matters as may be submitted to its stockholders in
connection with this Agreement. The Company and Buyer
shall coordinate and cooperate with respect to the
foregoing matters, with a view towards, among other
things, holding the respective meetings of each party's
stockholders on the same day.
6.4. Legal Conditions to Merger. Each of
Buyer and the Company shall, and shall cause its
Subsidiaries to, use their best efforts (a) to take, or
cause to be taken, all actions necessary, proper or
advisable to comply promptly with all legal requirements
which may be imposed on such party or its Subsidiaries
with respect to the Merger or the Subsidiary Merger and,
subject to the conditions set forth in Article VII
hereof, to consummate the transactions contemplated by
this Agreement and (b) to obtain (and to cooperate with
the other party to obtain) any consent, authorization,
order or approval of, or any exemption by, any
Governmental Entity and any other third party which is
required to be obtained by the Company or Buyer or any of
their respective Subsidiaries in connection with the
Merger and the Subsidiary Merger and the other
transactions contemplated by this Agreement, and to
comply with the terms and conditions of such consent,
authorization, order or approval; provided, however, that
neither Buyer nor the Company shall be obligated to take
any action pursuant to the foregoing if the taking of
such action or such compliance or the obtaining of such
consent, authorization, order or approval is likely, in
the good faith reasonable opinion of Buyer or the
Company, to result in the imposition of a Burdensome
Condition.
6.5. Affiliates. Each of Buyer and the
Company shall use its best efforts to cause each
director, executive officer and other person who is an
"affiliate" (for purposes of Rule 145 under the
Securities Act and for purposes of qualifying the Merger
for "pooling-of-interests" accounting treatment) of such
party to deliver to the other party hereto, as soon as
practicable after the date of this Agreement, and in any
event prior to the earlier of the date of the
stockholders meeting called by the Company to approve
this Agreement and the date of the stockholders meeting
called by Buyer to approve this Agreement, a written
agreement, in the form of Exhibit 6.5(a) hereto (in the
case of affiliates of Buyer) or 6.5(b) hereto (in the
case of affiliates of the Company), providing that such
person will not sell, pledge, transfer or otherwise
dispose of any shares of Buyer Common Stock or Company
Common Stock held by such "affiliate" and, in the case of
the "affiliates" of the Company, the shares of Buyer
Common Stock to be received by such "affiliate" in the
Merger: (1) in the case of shares of Buyer Common Stock
to be received by "affiliates" of the Company in the
Merger, except in compliance with the applicable
provisions of the Securities Act and the rules and
regulations thereunder; and (2) during the period
commencing 30 days prior to the Merger and ending at the
time of the publication of financial results covering at
least 30 days of combined operations of Buyer and the
Company.
6.6. Stock Exchange Listing. Buyer shall
cause the shares of Buyer Common Stock to be issued in
the Merger to be approved for listing on the New York
Stock Exchange, Inc. (the "NYSE"), subject to official
notice of issuance, as of the Effective Time.
6.7. Employee Benefit Plans; Existing
Agreements. (a) The employees of the Company (the
"Company Employees") shall be entitled to participate in
Buyer's employee benefit plans in which similarly
situated employees of Buyer participate, to the same
extent as comparable employees of Buyer. As of the
Effective Time, Buyer shall permit the Company Employees
to participate in Buyer's group hospitalization, medical,
life and disability insurance plans on the same terms and
conditions as applicable to comparable employees of Buyer
and its Subsidiaries. As of the next entry date
immediately following the Effective Time, Buyer shall
permit the Company Employees to participate in Buyer's
defined benefit pension plan, thrift plan, severance, and
similar plans on the same terms and conditions as
employees of Buyer and its Subsidiaries, giving effect
(solely for purposes of Buyer's defined benefit pension
plan and thrift plan) to years of service with the
Company and its Subsidiaries (to the extent the Company
gave effect) as if such service were with Buyer, for
purposes of eligibility and vesting, but not for benefit
accrual purposes.
(b) Following the Effective Time, Buyer shall
honor and shall cause the Surviving Bank to honor in
accordance with their terms all employment, severance and
other compensation agreements and arrangements,
including, but not limited to, severance benefit plans
listed in Section 6.7(b) of the Company Disclosure
Schedule, existing prior to the execution of this
Agreement which are between the Company and any director,
officer or employee thereof and which have been disclosed
in the Company Disclosure Schedule and previously have
been delivered to Buyer and agrees to make the payments
and provide the benefits pursuant thereto described in
Section 6.7(b) of the Company Disclosure Schedule.
(c) As of the Effective Time, Buyer will
assume, or will cause New York Bank to assume, the tax
qualified plans of the Company Bank as listed in Section
3.11(a) of the Company Disclosure Schedule. Neither
Buyer nor New York Bank shall be required to make further
contributions to such plans. As of the Effective Time,
all accrued benefits under the plans shall be fully
vested and nonforfeitable. As soon as practicable after
the Effective Time, Buyer shall terminate or shall cause
New York Bank to terminate the tax qualified plans of the
Company Bank assumed by Buyer, or New York Bank, pursuant
to this Section 6.7(c), and distribution of the accounts
of active participants immediately prior to the Effective
Time under the plans shall be made to the participants
and beneficiaries in accordance with the terms of such
plans.
(d) From and after the date of this Agreement
until the Effective Time, in anticipation of such
termination and distribution, the Company and the Company
Bank shall use their best efforts, and after the
Effective Time, Buyer and New York Bank shall use their
best efforts to take all necessary and appropriate action
to cause unallocated Company Common Stock pledged as
collateral for the loan made to the Company Bank Employee
Stock Ownership Plan ("ESOP") to be applied to repay the
outstanding securities acquisition loan, to allocate the
amount of such stock with a value in excess of the
balance of such loan to the accounts of the ESOP
participants in proportion to their account balances at
the Effective Time and to maintain the status of the ESOP
as a plan qualified under Sections 401(a) and 4975 of the
of the Code. In the event that prior to the Effective
Time, the Company or the Company Bank, or after the
Effective Time, Buyer or New York Bank, determines that
the loan may not be so repaid or that such amounts may
not be so allocated without causing the ESOP to fail to
be a tax qualified plan under Sections 401(a) and 4975 of
the Code, the Company or the Company Bank before the
Effective Time, and Buyer or New York Bank after the
Effective Time, shall take such action as each may
determine with respect to the ESOP, provided that the
assets of the ESOP shall be held or paid for the
exclusive benefit of the ESOP participants and
beneficiaries, and provided further, in no event shall
any portion of the amounts held in trust by the ESOP
revert directly or indirectly to the Company, the Company
Bank, Buyer or New York Bank or any affiliate thereof.
(e) Following the Effective Time, Buyer shall
honor and shall cause any successor corporation and its
affiliates to honor in accordance with its terms, the
Company Bank post retirement medical plan as listed in
Section 6.7(e) of the Company Disclosure Schedule with
respect to benefits being paid thereunder at the
Effective Time, and benefits thereunder to those who
would be eligible for such benefits at retirement as of
the Effective Time.
(f) Notwithstanding anything contained in an
employment agreement or other compensation arrangement,
or in this Agreement to the contrary, the Buyer shall
provide benefits under the terms of the Company Bank post
retirement medical plan to those employees listed in
Section 6.7(f) of the Company Disclosure Schedule who
terminate employment with the Company Bank after the
Effective Time, provided that such benefits shall be
continued for the lifetime of such employees' spouse in
the event that any such employee predeceases the spouse.
(g) Notwithstanding anything contained in this
Agreement to the contrary, Buyer shall provide each
employee listed in Section 6.7(g) of the Company
Disclosure Schedule with the opportunity to continue
medical/dental coverage under the Buyer's group policy
upon payment by such employee of the cost of the premiums
for such individual under the group policy for the
remainder of the employee's life or the employee first
obtains comparable benefits from another employer,
whichever is earlier.
(h) Following the Effective Time, Buyer shall
provide continued medical/dental and life insurance
benefits for each employee listed in Section 6.7(h) of
the Company Disclosure Schedule, for a one year period
following such individual's termination of employment
with the Company Bank as provided in the Special
Termination Agreements listed in Schedule 3.11(a). In
addition, Buyer shall provide each such individual with
the opportunity to continue medical/dental insurance
coverage upon payment by such employee of the cost of the
premium for such individual under the group coverage of
Buyer for a period of four years commencing on the first
anniversary of the date of such individual's termination
of employment, or, if sooner, the time the individual
obtains comparable benefits through another employer.
6.8. Indemnification. (a) In the event of
any threatened or actual claim, action, suit, proceeding
or investigation, whether civil, criminal or
administrative, including, without limitation, any such
claim, action, suit, proceeding or investigation in which
any person who is now, or has been at any time prior to
the date of this Agreement, or who becomes prior to the
Effective Time, a director or officer or employee of the
Company or any of its Subsidiaries (the "Indemnified
Parties") is, or is threatened to be, made a party based
in whole or in part on, or arising in whole or in part
out of, or pertaining to (i) the fact that he is or was a
director, officer or employee of the Company, any of the
Subsidiaries of the Company or any of their respective
predecessors or (ii) this Agreement or any of the
transactions contemplated hereby, whether in any case
asserted or arising before or after the Effective Time,
the parties hereto agree to cooperate and use their best
efforts to defend against and respond thereto. It is
understood and agreed that after the Effective Time,
Buyer shall indemnify and hold harmless, as and to the
extent permitted by Delaware law, each such Indemnified
Party against any losses, claims, damages, liabilities,
costs, expenses (including reasonable attorney's fees and
expenses in advance of the final disposition of any
claim, suit, proceeding or investigation to each
Indemnified Party to the fullest extent permitted by law
upon receipt of any undertaking required by applicable
law), judgments, fines and amounts paid in settlement in
connection with any such threatened or actual claim,
action, suit, proceeding or investigation, and in the
event of any such threatened or actual claim, action,
suit, proceeding or investigation (whether asserted or
arising before or after the Effective Time), the
Indemnified Parties may retain counsel reasonably
satisfactory to them after consultation with Buyer;
provided, however, that (1) Buyer shall have the right to
assume the defense thereof and upon such assumption Buyer
shall not be liable to any Indemnified Party for any
legal expenses of other counsel or any other expenses
subsequently incurred by any Indemnified Party in
connection with the defense thereof, except that if Buyer
elects not to assume such defense or counsel for the
Indemnified Parties reasonably advises that there are
issues which raise conflicts of interest between Buyer
and the Indemnified Parties, the Indemnified Parties may
retain counsel reasonably satisfactory to them after
consultation with Buyer, and Buyer shall pay the
reasonable fees and expenses of such counsel for the
Indemnified Parties, (2) Buyer shall in all cases be
obligated pursuant to this paragraph to pay for only one
firm of counsel for all Indemnified Parties, (3) Buyer
shall not be liable for any settlement effected without
its prior written consent (which consent shall not be
unreasonably withheld) and (4) Buyer shall have no
obligation hereunder to any Indemnified Party when and if
a court of competent jurisdiction shall ultimately
determine, and such determination shall have become final
and nonappealable, that indemnification of such
Indemnified Party in the manner contemplated hereby is
prohibited by applicable law. Any Indemnified Party
wishing to claim Indemnification under this Section 6.8,
upon learning of any such claim, action, suit, proceeding
or investigation, shall notify promptly Buyer thereof,
provided that the failure to so notify shall not affect
the obligations of Buyer under this Section 6.8 except to
the extent such failure to notify prejudices Buyer.
Buyer's obligations under this Section 6.8 continue in
full force and effect for a period of six (6) years from
the Effective Time; provided, however, that all rights to
indemnification in respect of any claim (a "Claim")
asserted or made within such period shall continue until
the final disposition of such Claim. Notwithstanding
anything to the contrary contained in this Section
6.8(a), in no event shall Buyer's obligations under this
Section 6.8(a) with respect to indemnification or the
advancement of expenses be greater than the obligations
of the Company and its Subsidiaries with respect thereto
set forth as of the date of this Agreement in the
Certificate of Incorporation, By-laws or similar
governing documents of the Company and its Subsidiaries.
(b) Buyer shall cause the persons serving
as officers and directors of the Company immediately
prior to the Effective Time to be covered for a period of
four years from the Effective Time by the directors' and
officers' liability insurance policy maintained by the
Company (provided that Buyer may substitute therefor
policies of at least the same coverage and amounts
containing terms and conditions which are not less
advantageous than such policy) with respect to acts or
omissions occurring prior to the Effective Time which
were committed by such officers and directors in their
capacity as such; provided, however, that such policy
shall be increased to an amount of at least $3,000,000.
(c) In the event Buyer 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, to the
extent necessary, proper provision shall be made so that
the successors and assigns of Buyer or the Surviving
Corporation, as the case may be, assume the obligations
set forth in this section.
(d) The provisions of this Section 6.8
are intended to be for the benefit of, and shall be
enforceable by, each Indemnified Party and his or her
heirs and representatives.
6.9. Subsequent Interim and Annual Financial
Statements. As soon as reasonably available, but in no
event later than March 31, 1995 or, in the case of the
Company, December 31, 1994, Buyer will deliver to the
Company and the Company will deliver to Buyer their
respective Annual Reports on Form 10-K for, in the case
of Buyer, the fiscal year ended December 31, 1994 and, in
the case of the Company, the fiscal year ended September
30, 1994, as filed with the SEC under the Exchange Act.
As soon as reasonably available, but in no event more
than 45 days after the end of each fiscal quarter ending
after the date of this Agreement, Buyer will deliver to
the Company and the Company will deliver to Buyer their
respective Quarterly Reports on Form 10-Q, as filed with
the SEC under the Exchange Act.
6.10. Additional Agreements. In case at any
time after the Effective Time any further action is
necessary or desirable to carry out the purposes of this
Agreement, or the Bank Merger Agreement, or to vest the
Surviving Corporation or the Surviving Bank with full
title to all properties, assets, rights, approvals,
immunities and franchises of any of the parties to the
Merger or the Subsidiary Merger, the proper officers and
directors of each party to this Agreement and their
respective Subsidiaries shall take all such necessary
action as may be reasonably requested by Buyer.
6.11. Advice of Changes. Buyer and the
Company shall promptly advise the other party of any
change or event having a Material Adverse Effect on it or
which it believes would or would be reasonably likely to
cause or constitute a material breach of any of its
representations, warranties or covenants contained
herein. From time to time prior to the Effective Time
(and on the date prior to the Closing Date), each party
will promptly supplement or amend the Disclosure
Schedules delivered in connection with the execution of
this Agreement to reflect any matter which, if existing,
occurring or known at the date of this Agreement, would
have been required to be set forth or described in such
Disclosure Schedules or which is necessary to correct any
information in such Disclosure Schedules which has been
rendered inaccurate thereby. No supplement or amendment
to such Disclosure Schedules shall have any effect for
the purpose of determining satisfaction of the conditions
set forth in Sections 7.2(a) or 7.3(a) hereof, as the
case may be, or the compliance by the Company or Buyer,
as the case may be, with the respective covenants and
agreements of such parties contained herein.
6.12. Current Information. During the period
from the date of this Agreement to the Effective Time,
the Company will cause one or more of its designated
representatives to confer on a regular and frequent basis
(not less than monthly) with representatives of Buyer and
to report (i) the general status of the ongoing
operations of the Company and its Subsidiaries and (ii)
the status of, and the action proposed to be taken with
respect to, those Loans held by the Company or any
Subsidiary of the Company which, individually or in
combination with one or more other Loans to the same
borrower thereunder, have an original principal amount of
$250,000 or more and are non-performing assets. The
Company will promptly notify Buyer of any material change
in the normal course of business or in the operation of
the properties of the Company or any of its Subsidiaries
and of any governmental complaints, investigations or
hearings (or communications indicating that the same may
be contemplated), or the institution or the threat of
significant litigation involving the Company or any of
its Subsidiaries, and will keep Buyer fully informed of
such events.
6.13. Execution and Authorization of Bank
Merger Agreement. As soon as reasonably practicable
after the date of this Agreement, (a) Buyer shall (i)
cause the Board of Directors of New York Bank to approve
the Bank Merger Agreement, (ii) cause New York Bank to
execute and deliver the Bank Merger Agreement, and (iii)
approve the Bank Merger Agreement as the sole stockholder
of New York Bank, and (b) the Company shall (i) cause the
Board of Directors of the Company Bank to approve the
Bank Merger Agreement, (ii) cause the Company Bank to
execute and deliver the Bank Merger Agreement, and (iii)
approve the Bank Merger Agreement as the sole stockholder
of the Company Bank. The Bank Merger Agreement shall
contain terms that are normal and customary in light of
the transactions contemplated hereby and such additional
terms as are necessary to carry out the purposes of this
Agreement. If Buyer, upon the advice of its counsel,
determines that there is a reasonable possibility that
the Subsidiary Merger is not legally permissible under
the laws of the State of New York or will not be approved
by the Banking Department as a result of Company's status
as a federal savings bank, Buyer shall notify the Company
accordingly and the Company shall, subject to the
requirements of applicable law, use its best efforts to
cause the Company Bank to be converted to a New York
chartered savings bank (the "Conversion") as soon as
practicable after the Company's receipt of such notice
from Buyer (but in no event prior to the day immediately
prior to the Effective Time), and, subject to the terms
and conditions hereof, both Buyer and the Company shall
use their best efforts to cause such New York chartered
savings bank to be merged with and into New York Bank
with New York Bank surviving such merger, as soon as
practicable after the Effective Time.
6.14. Directorships. Buyer shall cause its
Board of Directors to be expanded by one member and shall
appoint one of the current directors of the Company
selected by Buyer as a nominee to fill the vacancy on
Buyer's Board of Directors created by such increase as of
the Effective Time.
ARTICLE VII
CONDITIONS PRECEDENT
7.1. Conditions to Each Party's Obligation To
Effect the Merger. The respective obligation of each
party to effect the Merger shall be subject to the
satisfaction at or prior to the Effective Time of the
following conditions:
(a) Stockholder Approval. This Agreement
shall have been approved and adopted by the affirmative
vote of the holders of at least a majority of the
outstanding shares of Company Common Stock entitled to
vote thereon and by the affirmative vote of the holders
of at least a majority of the outstanding shares of Buyer
Common Stock entitled to vote thereon.
(b) NYSE Listing. The shares of Buyer
Common Stock which shall be issued to the stockholders of
the Company upon consummation of the Merger shall have
been authorized for listing on the NYSE, subject to
official notice of issuance.
(c) Other Approvals. All regulatory
approvals required to consummate the transactions
contemplated hereby (including the Merger, the Subsidiary
Merger and, if necessary to consummate the Subsidiary
Merger, the Conversion) shall have been obtained and
shall remain in full force and effect and all statutory
waiting periods in respect thereof shall have expired
(all such approvals and the expiration of all such
waiting periods being referred to herein as the
"Requisite Regulatory Approvals").
(d) S-4. The S-4 shall have become
effective under the Securities Act and no stop order
suspending the effectiveness of the S-4 shall have been
issued and no proceedings for that purpose shall have
been initiated or threatened by the SEC.
(e) No Injunctions or Restraints;
Illegality. No order, injunction or decree issued by any
court or agency of competent jurisdiction or other legal
restraint or prohibition (an "Injunction") preventing the
consummation of the Merger, the Subsidiary Merger or any
of the other transactions contemplated by this Agreement
or the Bank Merger Agreement shall be in effect. No
statute, rule, regulation, order, injunction or decree
shall have been enacted, entered, promulgated or enforced
by any Governmental Entity which prohibits, restricts or
makes illegal consummation of the Merger or the
Subsidiary Merger.
7.2. Conditions to Obligations of Buyer. The
obligation of Buyer to effect the Merger is also subject
to the satisfaction or waiver by Buyer at or prior to the
Effective Time of the following conditions:
(a) Representations and Warranties. (I)
The representations and warranties of the Company set
forth in this Agreement shall be true and correct in all
material respects as of the date of this Agreement and
(except to the extent such representations and warranties
speak as of an earlier date) as of the Closing Date as
though made on and as of the Closing Date; and (II) the
representations and warranties of the Company set forth
in this Agreement shall be true and correct in all
material respects as of the date of this Agreement and
(except to the extent such representations and warranties
speak as of an earlier date) as of the Closing Date as
though made on and as of the Closing Date; provided,
however, that for purposes of determining the
satisfaction of the condition contained in this clause
(II), 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 (II), such
representations and warranties shall be deemed to be true
and correct in all material respects 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 change from the business,
assets, financial condition or results of operations of
the Company and its Subsidiaries taken as a whole as
represented herein. Buyer shall have received a
certificate signed on behalf of the Company by the Chief
Executive Officer and the Chief Financial Officer of the
Company to the foregoing effect.
(b) Performance of Obligations of the
Company. The Company shall have performed in all
material respects all obligations required to be
performed by it under this Agreement at or prior to the
Closing Date, and Buyer shall have received a certificate
signed on behalf of the Company by the Chief Executive
Officer and the Chief Financial Officer of the Company to
such effect.
(c) No Burdensome Condition. None of the
Requisite Regulatory Approvals shall impose any term,
condition or restriction upon Buyer, the Company, the
Company Bank, the Surviving Corporation, the Surviving
Bank or any of their respective Subsidiaries that Buyer
or the Company, in good faith, reasonably determines
would so materially adversely affect the economic or
business benefits of the transactions contemplated by
this Agreement to Buyer or the Company as to render
inadvisable in the reasonable good faith judgment of
Buyer or the Company, the consummation of the Merger (a
"Burdensome Condition").
(d) Consents Under Agreements. The
consent, approval or waiver of each person (other than
the Governmental Entities referred to in Section 7.1(c))
whose consent or approval shall be required in order to
permit the succession by the Surviving Corporation or the
Surviving Bank pursuant to the Merger or the Subsidiary
Merger, as the case may be, to any obligation, right or
interest of the Company or any Subsidiary of the Company
under any loan or credit agreement, note, mortgage,
indenture, lease, license or other agreement or
instrument shall have been obtained, except where the
failure to obtain such consent, approval or waiver would
not so materially adversely affect the economic or
business benefits of the transactions contemplated by
this Agreement to Buyer as to render inadvisable, in the
reasonable good faith judgment of Buyer, the consummation
of the Merger.
(e) No Pending Governmental Actions. No
proceeding initiated by any Governmental Entity seeking
an Injunction shall be pending.
(f) Federal Tax Opinion. Buyer shall
have received an opinion of Skadden, Arps, Slate, Meagher
& Flom, counsel to Buyer ("Buyer's Counsel"), in form and
substance reasonably satisfactory to Buyer, 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 and Subsidiary Merger will
be treated as reorganizations within the meaning of
Section 368(a) of the Code and that, accordingly, for
federal income tax purposes no gain or loss will be
recognized by Buyer, the Company, New York Bank or the
Company Bank as a result of the Merger and Subsidiary
Merger except to the extent the Company Bank or New York
Bank may be required to recognize income due to the
recapture of bad debt reserves as a result of the
Subsidiary Merger. In rendering such opinion, Buyer's
Counsel may require and rely upon representations and
covenants contained in certificates of officers of Buyer,
the Company and others.
(g) Legal Opinion. Buyer shall have
received the opinion of Muldoon, Murphy & Faucette,
counsel to the Company (the "Company's Counsel"), dated
the Closing Date, substantially in the form attached
hereto as Exhibit 7.2(g). As to any matter in such
opinion which involves matters of fact or matters
relating to laws other than Federal securities or
Delaware corporate law, such counsel may rely upon the
certificates of officers and directors of the Company and
of public officials and opinions of local counsel,
reasonably acceptable to Buyer, provided a copy of such
reliance opinion shall be attached as an exhibit to the
opinion of such counsel.
(h) Pooling of Interests. Buyer shall
have received a letter from KPMG Peat Marwick addressed
to Buyer, to the effect that the Merger will qualify for
"pooling of interests" accounting treatment, unless such
firm advises Buyer that it is unable to issue a letter to
such effect solely by reason of Buyer having exercised
its right to purchase Company Common Stock pursuant to
the Option Agreement.
(i) Accountant's Letter. The Company
shall have caused to be delivered to Buyer letters from
KPMG Peat Marwick, independent public accountants with
respect to the Company, dated the date on which the
Registration Statement or last amendment thereto shall
become effective, and dated the date of the Closing, and
addressed to Buyer, with respect to the Company's
consolidated financial position and results of
operations, which letters shall be based upon agreed upon
procedures to be specified by Buyer, which procedures
shall be consistent with applicable professional
standards for letters delivered by independent
accountants in connection with comparable transactions.
(j) Subsidiary Merger. Nothing shall
have come to the attention of Buyer which would preclude
consummation of the Subsidiary Merger immediately
following consummation of the Merger.
7.3. Conditions to Obligations of the Company.
The obligation of the Company to effect the Merger is
also subject to the satisfaction or waiver by the Company
at or prior to the Effective Time of the following
conditions:
(a) Representations and Warranties. (I)
The representations and warranties of Buyer set forth in
this Agreement shall be true and correct in all material
respects as of the date of this Agreement and (except to
the extent such representations and warranties speak as
of an earlier date) as of the Closing Date as though made
on and as of the Closing Date; and (II) the
representations and warranties of Buyer set forth in this
Agreement shall be true and correct in all material
respects as of the date of this Agreement and (except to
the extent such representations and warranties speak as
of an earlier date) as of the Closing Date as though made
on and as of the Closing Date; provided, however, that
for purposes of determining the satisfaction of the
condition contained in this clause (II), 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 (II), such representations and
warranties shall be deemed to be true and correct in all
material respects 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 change from the business, assets, financial
condition or results of operations of Buyer and its
Subsidiaries taken as a whole as represented herein. The
Company shall have received a certificate signed on
behalf of Buyer by the Chief Executive Officer and the
Chief Financial Officer of Buyer to the foregoing effect.
(b) Performance of Obligations of Buyer.
Buyer shall have performed in all material respects all
obligations required to be performed by it under this
Agreement at or prior to the Closing Date, and the
Company shall have received a certificate signed on
behalf of Buyer by the Chief Executive Officer and the
Chief Financial Officer of Buyer to such effect.
(c) Consents Under Agreements. The
consent, approval or waiver of each person (other than
the Governmental Entities referred to in Section 7.1(c))
whose consent or approval shall be required in connection
with the transactions contemplated hereby under any loan
or credit agreement, note, mortgage, indenture, lease,
license or other agreement or instrument to which Buyer
or any of its Subsidiaries is a party or is otherwise
bound, except those for which failure to obtain such
consents and approvals would not, individually or in the
aggregate, have a material adverse effect on the
business, operations or financial condition of Buyer and
its Subsidiaries taken as a whole (after giving effect to
the transactions contemplated hereby), shall have been
obtained.
(d) No Pending Governmental Actions. No
proceeding initiated by any Governmental Entity seeking
an Injunction shall be pending.
(e) Federal Tax Opinion. The Company
shall have received an opinion of the Company's Counsel,
in form and substance reasonably satisfactory to the
Company, 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 and the Subsidiary Merger will
be treated as reorganizations within the meaning of
Section 368(a) of the Code and that accordingly for
federal income tax purposes:
(i) No gain or loss will be
recognized by the Company as a result of the
Merger;
(ii) No gain or loss will be
recognized by the Company Bank as a result of
the Subsidiary Merger except to the extent the
Company Bank or New York Bank may be required
to recognize income due to the recapture of bad
debt reserves as a result of the Subsidiary
Merger.
(iii) No gain or loss will be
recognized by the shareholders of the Company
who exchange all of their Company Common Stock
solely for Buyer Common Stock pursuant to the
Merger (except with respect to cash received in
lieu of a fractional share interest in Buyer
Common Stock);
(iv) The aggregate tax basis of the
Buyer Common Stock received by shareholders who
exchange all of their Company Common Stock
solely for Common Stock pursuant to the Merger
will be the same as the aggregate tax basis of
the Company Common Stock surrendered in
exchange therefor (reduced by any amount
allocable to a fractional share interest for
which cash is received).
In rendering such opinion, the Company's Counsel may
require and rely upon representations and covenants
contained in certificates of officers of Buyer, the
Company and others, including certain shareholders of the
Company.
(f) Legal Opinion. The Company shall
have received the opinion of Buyer's Counsel, dated the
Closing Date, substantially in the form attached hereto
as Exhibit 7.3(f). As to any matter in such opinion
which involves matters of fact or matters relating to
laws other than Federal securities law or Delaware
corporate law, such counsel may rely upon the
certificates of officers and directors of Buyer and of
public officials and opinions of local counsel,
reasonably acceptable to the Company, provided a copy of
such reliance opinions shall be attached as an exhibit to
the opinion of such counsel.
ARTICLE VIII
TERMINATION AND AMENDMENT
8.1. Termination. This Agreement may be
terminated at any time prior to the Effective Time,
whether before or after approval of the matters presented
in connection with the Merger by the stockholders of both
the Company and Buyer:
(a) by mutual consent of the Company and
Buyer in a written instrument, if the Board of Directors
of each so determines by a vote of a majority of the
members of its entire Board;
(b) by either Buyer or the Company upon
written notice to the other party (i) 60 days after the
date on which any request or application for a Requisite
Regulatory Approval shall have been denied or withdrawn
at the request or recommendation of the Governmental
Entity which must grant such Requisite Regulatory
Approval, unless within the 60-day period following such
denial or withdrawal a petition for rehearing or an
amended application has been filed with the applicable
Governmental Entity, provided, however, that no party
shall have the right to terminate this Agreement pursuant
to this Section 8.1(b)(i) if such denial or request or
recommendation for withdrawal shall be due to the failure
of the party seeking to terminate this Agreement to
perform or observe the covenants and agreements of such
party set forth herein or (ii) if any Governmental Entity
of competent jurisdiction shall have issued a final
nonappealable order enjoining or otherwise prohibiting
the consummation of any of the transactions contemplated
by this Agreement;
(c) by either Buyer or the Company if the
Merger shall not have been consummated on or before June
30, 1995, unless the failure of the Closing to occur by
such date shall be due to the failure of the party
seeking to terminate this Agreement to perform or observe
the covenants and agreements of such party set forth
herein;
(d) by either Buyer or the Company
(provided that the terminating party shall not be in
material breach of any of its obligations under Section
6.3) if any approval of the stockholders of either of the
Company or Buyer required for the consummation of the
Merger shall not have been obtained by reason of the
failure to obtain the required vote at a duly held
meeting of such stockholders or at any adjournment or
postponement thereof;
(e) by either Buyer or the Company
(provided that the terminating party is not then in
material breach of any representation, warranty, covenant
or other agreement contained herein) if there shall have
been a material breach of any of the representations or
warranties set forth in this Agreement on the part of the
other party, which breach is not cured within thirty days
following written notice to the party committing such
breach, or which breach, by its nature, cannot be cured
prior to the Closing; provided, however, that neither
party shall have the right to terminate this Agreement
pursuant to this Section 8.1(e) unless the breach of
representation or warranty, together with all other such
breaches, would entitle the party receiving such
representation not to consummate the transactions
contemplated hereby under Section 7.2(a) (in the case of
a breach of representation or warranty by the Company) or
Section 7.3(a) (in the case of a breach of representation
or warranty by Buyer);
(f) by either Buyer or the Company
(provided that the terminating party is not then in
material breach of any representation, warranty, covenant
or other agreement contained herein) if there shall have
been a material breach of any of the covenants or
agreements set forth in this Agreement on the part of the
other party, which breach shall not have been cured
within thirty days following receipt by the breaching
party of written notice of such breach from the other
party hereto;
(g) by the Company, by action of its
Board of Directors, whether before or after approval of
the Merger by the Company's stockholders, by giving
written notice of such election to Buyer within two NYSE
trading days after the Valuation Period in the event the
Average Closing Price is less than $12.50 per share;
provided, however, that no right of termination shall
arise under this Section 8.1(g) if Buyer elects within 5
business days of receipt of such written notice to notify
the Company in writing that it has waived its right to
utilize the Maximum Exchange Ratio and has increased the
Exchange Ratio such that the value of the consideration
(valued at the Average Closing Price) to be paid in
respect of each share of Company Common Stock to be
converted into Buyer Common Stock and cash in lieu of
fractional shares upon consummation of the Merger is
$21.99 per share;
(h) by Buyer, if the Board of Directors
of the Company does not publicly recommend in the Proxy
Statement that the Company's stockholders approve and
adopt this Agreement or if, after recommending in the
Proxy Statement that stockholders approve and adopt this
Agreement, the Board of Directors of the Company shall
have withdrawn, modified or amended such recommendation
in any respect materially adverse to Buyer;
(i) By the Company, if on or prior to the
close of business on the 30th day following the execution
of this Agreement, the Company reasonably determines in
good faith that the business or financial condition of
Buyer and its Subsidiaries taken as a whole has
materially and adversely changed from that described in
Buyer's Annual Report on Form 10-K for the fiscal year
ended on December 31,1993; or
(j) by Buyer, after the thirtieth and
prior to the close of business on the sixtieth day
following the date of this Agreement, if within thirty
days after the date of this Agreement, the Company shall
not have obtained all of the consents referred to in
Section 1.5 hereof.
8.2. Effect of Termination; Expenses. In
the event of termination of this Agreement by either
Buyer or the Company as provided in Section 8.1, this
Agreement shall forthwith become void and have no effect
except (i) the last sentence of Section 6.2(a), and
Sections 6.2(c), 8.2 and 9.4, shall survive any
termination of this Agreement, (ii) that notwithstanding
anything to the contrary contained in this Agreement, no
party shall be relieved or released from any liabilities
or damages arising out of its willful breach of any
provision of this Agreement, and (iii) in the event this
Agreement (x) is terminated subsequent to the occurrence
of a Purchase Event (as such term is defined in the
Option Agreement) or (y) is terminated by Buyer pursuant
to Section 8.1(f) hereof, and within 12 months after such
termination by Buyer pursuant to Section 8.1(f) hereof a
Purchase Event shall occur, then in addition to any other
amounts payable or stock issuable by the Company pursuant
to this Agreement or the Option Agreement, as the case
may be, the Company shall pay to Buyer a termination fee
of $2,000,000.
8.3. Amendment. Subject to compliance with
applicable law, this Agreement may be amended by the
parties hereto, by action taken or authorized by their
respective Boards of Directors, at any time before or
after approval of the matters presented in connection
with the Merger by the stockholders of either the Company
or Buyer; provided, however, that after any approval of
the transactions contemplated by this Agreement by the
Company's stockholders, there may not be, without further
approval of such stockholders, any amendment of this
Agreement which reduces the amount or changes the form of
the consideration to be delivered to the Company
stockholders hereunder other than as contemplated by this
Agreement. This Agreement may not be amended except by
an instrument in writing signed on behalf of each of the
parties hereto.
8.4. Extension; Waiver. At any time prior to
the Effective Time, the parties hereto, by action taken
or authorized by their respective Board of Directors,
may, to the extent legally allowed, (a) extend the time
for the performance of any of the obligations or other
acts of the other parties hereto, (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 agreement
on the part of a party hereto to any such extension or
waiver shall be valid only if set forth in a written
instrument signed on behalf of such party, but such
extension or waiver or failure to insist on strict
compliance with an obligation, covenant, agreement or
condition shall not operate as a waiver of, or estoppel
with respect to, any subsequent or other failure.
ARTICLE IX
GENERAL PROVISIONS
9.1. Closing. Subject to the terms and
conditions of this Agreement and the Bank Merger
Agreement, the closing of the Merger (the "Closing") will
take place at 10:00 a.m. on a date to be specified by the
parties, which shall be the first day which is (a) the
last business day of a month and (b) at least two
business days after the satisfaction or waiver (subject
to applicable law) of the latest to occur of the
conditions set forth in Article VII hereof (the "Closing
Date"), at the offices of Buyer's Counsel unless another
time, date or place is agreed to in writing by the
parties hereto.
9.2. Alternative Structure. Notwithstanding
anything to the contrary contained in this Agreement,
subject to the Company's consent, which consent shall not
be unreasonably withheld, prior to the Effective Time,
Buyer shall be entitled to revise the structure of the
Merger and/or the Subsidiary Merger and related
transactions provided that each of the transactions
comprising such revised structure shall (i) fully qualify
as, or fully be treated as part of, one or more tax-free
reorganizations within the meaning of Section 368(a) of
the Code, and not subject any of the stockholders of the
Company to adverse tax consequences or change the amount
of consideration to be received by such stockholders,
(ii) be properly treated for financial reporting purposes
as a pooling of interests, (iii) be capable of
consummation in as timely a manner as the structure
contemplated herein and (iv) not otherwise be prejudicial
to the interests of the stockholders of the Company.
This Agreement and any related documents shall be
appropriately amended in order to reflect any such
revised structure.
9.3. Nonsurvival of Representations,
Warranties and Agreements. None of the representations,
warranties, covenants and agreements in this Agreement or
in any instrument delivered pursuant to this Agreement
(other than pursuant to the Option Agreement, which shall
terminate in accordance with its terms) shall survive the
Effective Time, except for those covenants and agreements
contained herein and therein which by their terms apply
in whole or in part after the Effective Time.
9.4. Expenses. All costs and expenses
incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the
party incurring such expense, provided, however, that the
costs and expenses of printing and mailing the Proxy
Statement to the stockholders of the Company and Buyer,
and all filing and other fees paid to the SEC or any
other Governmental Entity in connection with the Merger,
the Subsidiary Merger and the other transactions
contemplated hereby, shall be borne equally by Buyer and
the Company, provided, further, however, that nothing
contained herein shall limit either party's rights to
recover any liabilities or damages arising out of the
other party's willful breach of any provision of this
Agreement.
9.5. Notices. All notices and other
communications hereunder shall be in writing and shall be
deemed given if delivered personally, telecopied (with
confirmation), mailed by registered or certified mail
(return receipt requested) or delivered by an express
courier (with confirmation) to the parties at the
following addresses (or at such other address for a party
as shall be specified by like notice):
(a) if to Buyer, to:
North Fork Bancorporation, Inc.
9025 Route 25
Mattituck, N.Y. 11952
Attention: Chief Executive Officer
with a copy to:
Skadden, Arps Slate, Meagher & Flom
919 Third Avenue
New York, New York 10022
Attn: Fred B. White, III, Esq.
and
(b) if to the Company, to:
Metro Bancshares Inc.
100 Jericho Quadrangle
Jericho, N.Y. 11753
Attention: Chief Executive Officer
with a copy to:
Muldoon, Murphy & Faucette
501 Wisconsin Avenue NW
Suite 508
Washington, D.C. 20016
Attn: Joe Passaic, Esq.
9.6. Interpretation. When a reference is made
in this Agreement to Sections, Exhibits or Schedules,
such reference shall be to a Section of or Exhibit or
Schedule to this Agreement unless otherwise indicated.
The table of contents and headings contained in this
Agreement are for reference purposes only and shall not
affect in any way the meaning or interpretation of this
Agreement. Whenever the words "include", "includes" or
"including" are used in this Agreement, they shall be
deemed to be followed by the words "without limitation".
The phrases "the date of this Agreement", "the date
hereof" and terms of similar import, unless the context
otherwise requires, shall be deemed to refer to June 27,
1994.
9.7. Counterparts. This Agreement may be
executed in counterparts, all of which shall be
considered one and the same agreement and shall become
effective when counterparts have been signed by each of
the parties and delivered to the other parties, it being
understood that all parties need not sign the same
counterpart.
9.8. Entire Agreement. This Agreement
(including the documents and the instruments referred to
herein) constitutes the entire agreement and supersedes
all prior agreements and understandings, both written and
oral, among the parties with respect to the subject
matter hereof, other than the Confidentiality Agreement,
the Bank Merger Agreement and the Option Agreement.
9.9. Governing Law. This Agreement shall be
governed and construed in accordance with the laws of the
State of Delaware, without regard to any applicable
conflicts of law.
9.10. Enforcement of Agreement. The parties
hereto agree that irreparable damage would occur in the
event that the provisions contained in the last sentence
of Section 6.2(a) and in Section 6.2(c) of this Agreement
were not performed in accordance with its specific terms
or was otherwise breached. It is accordingly agreed that
the parties shall be entitled to an injunction or
injunctions to prevent breaches of the last sentence of
Section 6.2(a) and Section 6.2(c) 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.
9.11. Severability. Any term or provision of
this Agreement which is invalid or unenforceable in any
jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or
unenforceability without rendering invalid or
unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of
any of the terms or provisions of this Agreement in any
other jurisdiction. If any provision of this Agreement
is so broad as to be unenforceable, the provision shall
be interpreted to be only so broad as is enforceable.
9.12. Publicity. Except as otherwise required
by law or the rules of the NYSE or the American Stock
Exchange, so long as this Agreement is in effect, neither
Buyer nor the Company shall, or shall permit any of its
Subsidiaries to, issue or cause the publication of any
press release or other public announcement with respect
to, or otherwise make any public statement concerning,
the transactions contemplated by this Agreement without
the consent of the other party, which consent shall not
be unreasonably withheld.
9.13. Assignment; No Third Party
Beneficiaries. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be
assigned by any of the parties hereto (whether by
operation of law or otherwise) without the prior written
consent of the other parties. Subject to the preceding
sentence, this Agreement will be binding upon, inure to
the benefit of and be enforceable by the parties and
their respective successors and assigns. Except as
otherwise expressly provided herein, this Agreement
(including the documents and instruments referred to
herein) is not intended to confer upon any person other
than the parties hereto any rights or remedies hereunder.
IN WITNESS WHEREOF, Buyer and the Company have
caused this Agreement to be executed by their respective
officers thereunto duly authorized as of the date first
above written.
NORTH FORK BANCORPORATION, INC.
By /s/ John Adam Kanas
Name: John Adam Kanas
Title: Chairman, President &
Chief Executive Officer
Attest:
/s/ Anthony J. Abate
Name: Anthony J. Abate
Vice President & Secretary
METRO BANCSHARES INC.
By /s/ David G. Herold
Name: David G. Herold
Title: Chairman and Chief
Executive Officer
Attest:
/s/ Stephen G. Wilson
Name: Stephen G. Wilson
Chief Financial Officer
THE TRANSFER OF THIS AGREEMENT IS
SUBJECT TO CERTAIN PROVISIONS CONTAINED
HEREIN AND TO RESALE RESTRICTIONS UNDER
THE SECURITIES ACT OF 1933, AS AMENDED
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of June 27,
1994 (the "Agreement"), by and between Metro Bancshares
Inc., a Delaware corporation ("Issuer"), and North Fork
Bancorporation, Inc., a Delaware corporation ("Grantee").
WHEREAS, Grantee and Issuer have entered into
an Agreement and Plan of Merger (the "Merger Agreement"),
of even date herewith, providing for, among other things,
the merger of Issuer with and into Grantee; and
WHEREAS, as a condition and inducement to
Grantee's execution of the Merger Agreement, Grantee has
requested that Issuer agree, and Issuer has agreed, to
grant Grantee the Option (as defined below);
NOW, THEREFORE, in consideration of the
foregoing and the respective representations, warranties,
covenants and agreements set forth herein and in the
Merger Agreement, and intending to be legally bound
hereby, Issuer and Grantee agree as follows:
1. Defined Terms. Capitalized terms which
are used but not defined herein shall have the meanings
ascribed to such terms in the Merger Agreement.
2. Grant of Option. Subject to the terms and
conditions set forth herein, Issuer hereby grants to
Grantee an irrevocable option (the "Option") to purchase
up to 557,795 shares (subject to adjustment as set forth
herein) (the "Option Shares") of common stock, par value
$0.01 per share, of Issuer ("Issuer Common Stock") at a
purchase price (subject to adjustment as set forth
herein) of $21.00 per Option Share (the "Purchase
Price").
3. Exercise of Option. (a) Grantee may
exercise the Option, in whole or in part, at any time and
from time to time following the occurrence of a Purchase
Event (as defined below); provided, however, that the
Option, to the extent not previously exercised, shall
terminate and be of no further force and effect upon the
earliest to occur of (i) the Effective Time, (ii) 12
months after the first occurrence of a Purchase Event (as
defined below), (iii) termination of the Merger Agreement
in accordance with the terms thereof prior to the
occurrence of a Purchase Event (other than a termination
of the Merger Agreement by Grantee pursuant to Section
8.1(f) thereof) or (iv) 12 months after the termination
of the Merger Agreement by Grantee pursuant to Section
8.1(f) thereof, provided, however, that if within 12
months after a termination of the Merger Agreement by
Grantee pursuant to Section 8.1(f) thereof a Purchase
Event shall occur, then notwithstanding anything to the
contrary contained herein, this Option shall terminate 12
months after the first occurrence of such Purchase Event;
and provided further, however, that any purchase of
shares upon exercise of the Option shall be subject to
compliance with applicable law, including, without
limitation, the Bank Holding Company Act of 1956, as
amended (the "BHC Act"); and provided further, however,
that if the Option cannot be exercised on any day because
of any injunction, order or similar restraint issued by a
court of competent jurisdiction, the period during which
the Option may be exercised shall be extended so that the
Option shall expire no earlier than on the 10th business
day after such injunction, order or restraint shall have
been dissolved or when such injunction, order or
restraint shall have become permanent and no longer
subject to appeal, as the case may be.
(b) As used herein, a "Purchase Event"
means any of the following events:
(i) Issuer shall have
authorized, recommended, publicly proposed or
entered into an agreement with any person
(other than Grantee or any affiliate of Grantee
or any person acting in concert in any respect
with Grantee) to effect an Acquisition
Transaction (as defined below), shall have
failed to publicly oppose any such Acquisition
Transaction or shall have failed to publicly
oppose a Tender Offer or an Exchange Offer (as
defined below). As used herein, the term
Acquisition Transaction shall mean (A) a
merger, consolidation or similar transaction
involving Issuer or any of its Subsidiaries
(other than internal mergers, reorganizations,
consolidations or dissolutions involving only
existing Subsidiaries), (B) the disposition, by
sale, lease, exchange or otherwise, of assets
of Issuer or any of its Subsidiaries
representing 20% or more of the consolidated
assets of Issuer and its Subsidiaries or (C)
the issuance, sale or other disposition of
(including by way of merger, consolidation,
share exchange or any similar transaction)
securities representing 20% or more of the
voting power of Issuer or any of its
Subsidiaries;
(ii) any person (other than
Grantee or any affiliate of Grantee or any
person acting in concert in any respect with
Grantee) shall have acquired Beneficial
Ownership (as such term is defined in Rule 13d-
3 promulgated under the Securities Exchange Act
of 1934, as amended (the "Exchange Act")) of,
or the right to acquire Beneficial Ownership
of, or any Group (as such term is defined under
the Exchange Act) shall have been formed which
shall have acquired Beneficial Ownership of, or
the right to acquire Beneficial Ownership of,
20% or more of the then outstanding shares of
Issuer Common Stock;
(iii) any person (other than
Grantee or any affiliate of Grantee or any
person acting in concert in any respect with
Grantee) shall have commenced (as such term is
defined in Rule 14d-2 under the Exchange Act)
or shall have filed a registration statement
under the Securities Act of 1933, as amended
(the "Securities Act") with respect to, a
tender offer or exchange offer to purchase any
shares of Issuer Common Stock such that, upon
consummation of such offer, such person would
own or control 20% or more of the then
outstanding shares of Issuer Common Stock (such
an offer being referred to herein as a "Tender
Offer" or an "Exchange Offer," respectively);
(iv) the holders of Issuer
Common Stock shall not have approved the Merger
Agreement and the transactions contemplated
thereby, at the meeting of such stockholders
held for the purpose of voting on such
agreement, or such meeting shall not have been
held or shall have been cancelled prior to
termination of the Merger Agreement, in each
case after it shall have been publicly
announced that any person (other than Grantee
or any affiliate of Grantee or any person
acting in concert in any respect with Grantee)
shall have made, or disclosed an intention to
make, a proposal to engage in an Acquisition
Transaction; or
(v) Issuer's Board of Directors
shall not have recommended to the stockholders
of Issuer that such stockholders vote in favor
of the approval of the Merger Agreement and the
transactions contemplated thereby or shall have
withdrawn or modified such recommendation in a
manner adverse to Grantee.
As used in this Agreement, "person" shall have the
meaning specified in Sections 3(a)(9) and 13(d)(3) of the
Exchange Act.
(c) In the event Grantee wishes to
exercise the Option, it shall send to Issuer a written
notice (the date of which being herein referred to as the
"Notice Date") specifying (i) the total number of Option
Shares it intends to purchase pursuant to such exercise
and (ii) a place and date not earlier than three business
days nor later than 30 business days from the Notice Date
for the closing (the "Closing") of such purchase (the
"Closing Date"). If prior notification to or approval of
the Board of Governors of the Federal Reserve System (the
"Federal Reserve Board") or any other regulatory
authority is required in connection with such purchase,
Issuer shall cooperate in good faith with Grantee in the
filing of the required notice or application for approval
and the obtaining of any such approval and the period of
time that otherwise would run pursuant to the preceding
sentence shall run instead from the date on which, as the
case may be (i) any required notification period has
expired or been terminated or (ii) such approval has been
obtained, and in either event, any requisite waiting
period shall have passed.
(d) Notwithstanding anything to the
contrary in this Agreement, Grantee shall not exercise
this Agreement if it is in material breach of the Merger
Agreement.
4. Payment and Delivery of Certificates. (a)
On each Closing Date, Grantee shall (i) pay to Issuer, in
immediately available funds by wire transfer to a bank
account designated by Issuer, an amount equal to the
Purchase Price multiplied by the number of Option Shares
to be purchased on such Closing Date and (ii) present and
surrender this Agreement to the Issuer at the address of
the Issuer specified in Section 12(f) hereof. In
addition to any other amounts payable pursuant to this
Section 4(a), upon the first exercise of the Option,
Grantee shall pay an amount, if any, by which (i)
$2,000,000 plus the product of (A) the total number of
Option Shares and (B) the difference between the
Market/Tender Offer Price (as defined below) and the
Purchase Price exceeds (ii) $4,500,000 provided, however,
that in no event shall the amount payable pursuant to
this sentence exceed $2,000,000. As used herein, the
"Market/Tender Offer Price" shall mean the higher of the
highest per share at which a Tender Offer or Exchange
Offer has been made by any person other than Grantee or
any affiliate of Grantee or person acting in concert in
any respect with Grantee for at least 20% of the shares
of Issuer Common Stock then outstanding or the highest
closing sales price per share of Issuer Common Stock
quoted on the American Stock Exchange ("AMEX") (or if
Issuer Common Stock is not quoted on the AMEX, the
highest bid price per share as quoted on the principal
trading market or securities exchange on which such
shares are traded as reported by a recognized source)
within the six-month period immediately preceding this
Agreement.
(b) At each Closing, simultaneously with
the delivery of immediately available funds and surrender
of this Agreement as provided in Section 4(a) hereof,
Issuer shall deliver to Grantee (A) a certificate or
certificates representing the Option Shares to be
purchased at such Closing, which Option Shares shall be
free and clear of all liens, claims, charges and
encumbrances of any kind whatsoever, other than any such
lien or encumbrance created by Grantee and (B) if the
Option is exercised in part only, an executed new
agreement with the same terms as this Agreement
evidencing the right to purchase the balance of the
shares of Issuer Common Stock purchasable hereunder. If
Issuer shall have issued rights or any similar securities
("Rights") pursuant to any shareholder rights, poison
pill or similar plan (a "Shareholder Rights Plan") prior
or subsequent to the date of this Agreement and such
Rights remain outstanding at the time of the issuance of
any Option Shares pursuant to an exercise of all or part
of the Option hereunder, then each Option Share issued
pursuant to such exercise shall also represent the number
of Rights issued per share of Issuer Common Stock with
terms substantially the same as and at least as favorable
to Grantee as are provided under the Shareholder Rights
Plan as then in effect.
(c) Certificates for the Option Shares
delivered at each Closing shall be endorsed with a
restrictive legend which shall read substantially as
follows:
THE TRANSFER OF THE STOCK REPRESENTED BY THIS
CERTIFICATE MAY BE SUBJECT TO RESTRICTIONS
ARISING UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND PURSUANT TO THE TERMS OF A STOCK
OPTION AGREEMENT DATED AS OF JUNE 27, 1994. A
COPY OF SUCH AGREEMENT WILL BE PROVIDED TO THE
HOLDER HEREOF WITHOUT CHARGE UPON RECEIPT BY
THE ISSUER OF A WRITTEN REQUEST THEREFOR.
It is understood and agreed that the above legend shall
be removed by delivery of substitute certificate(s)
without such legend if Grantee shall have delivered to
Issuer a copy of a letter from the staff of the
Securities and Exchange Commission (the "SEC"), or an
opinion of outside counsel reasonably satisfactory to
Issuer in form and substance reasonably satisfactory to
Issuer and its counsel, to the effect that such legend is
not required for purposes of the Securities Act.
5. Representations and Warranties of Issuer.
Issuer hereby represents and warrants to Grantee as
follows:
(a) Due Authorization. Issuer has full
corporate power and authority to enter into this
Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby
have been duly authorized by all necessary corporate
action on the part of Issuer. This Agreement has been
duly and validly executed and delivered by Issuer.
(b) No Violation. Neither the execution
and delivery of this Agreement, nor the consummation of
the transactions contemplated hereby, nor compliance by
Issuer with any of the terms or provisions hereof, will
(i) violate any provision of the Certificate of
Incorporation (the "Certificate of Incorporation") or By-
Laws of Issuer or the certificates of incorporation, by-
laws or similar governing documents of any of its
Subsidiaries or (ii) (x) assuming that all of the
consents and approvals required under applicable law for
the purchase of shares upon the exercise of the Option
are duly obtained, violate any statute, code, ordinance,
rule, regulation, judgment, order, writ, decree or
injunction applicable to Issuer or any of its
Subsidiaries, or any of their respective properties or
assets, or (y) violate, conflict with, result in a breach
of any provisions of or the loss of any benefit under,
constitute a default (or an event which, with notice or
lapse of time, or both, would constitute a default)
under, result in the termination of or a right of
termination or cancellation under, accelerate the
performance required by, or result in the creation of any
lien, pledge, security interest, charge or other
encumbrance upon any of the respective properties or
assets of Issuer or any of its Subsidiaries under, any of
the terms, conditions or provisions of any note, bond,
mortgage, indenture, deed of trust, license, lease,
agreement or other instrument or obligation to which
Issuer or any of its Subsidiaries is a party, or by which
they or any of their respective properties or assets may
be bound or affected.
(c) Authorized Stock. Issuer has taken
all necessary corporate and other action to authorize and
reserve and to permit it to issue, and, at all times from
the date of this Agreement until the obligation to
deliver Issuer Common Stock upon the exercise of the
Option terminates, will have reserved for issuance, upon
exercise of the Option, shares of Issuer Common Stock
necessary for Grantee to exercise the Option, and Issuer
will take all necessary corporate action to authorize and
reserve for issuance all additional shares of Issuer
Common Stock (together with any Rights which may have
been issued with respect thereto) or other securities
which may be issued pursuant to Section 7 upon exercise
of the Option. The shares of Issuer Common Stock to be
issued upon due exercise of the Option, including all
additional shares of Issuer Common Stock (together with
any Rights which may have been issued with respect
thereto) or other securities which may be issuable
pursuant to Section 7, upon issuance pursuant hereto,
shall be duly and validly issued, fully paid and
nonassessable, and shall be delivered free and clear of
all liens, claims, charges and encumbrances of any kind
or nature whatsoever (except any such lien or
encumbrance created by Grantee), including any preemptive
rights of any stockholder of Issuer.
(d) Board Action. By action of the Board
of Directors of Issuer prior to the execution of this
Agreement, resolutions were duly adopted approving the
execution, delivery and performance of this Agreement,
any purchase or other transaction respecting Issuer
Common Stock provided for herein, and the other
transactions contemplated hereby. Accordingly, the
provisions of Section 203 of the Delaware General
Corporation Law as they relate to Issuer and Section 8 of
Issuer's Certificate of Incorporation do not and will not
apply to this Agreement or any of the other transactions
contemplated hereby.
6. Representations and Warranties of Grantee.
Grantee hereby represents and warrants to Issuer that:
(a) Due Authorization. Grantee has
corporate power and authority to enter into this
Agreement and, subject to any approvals or consents
referred to herein, to consummate the transactions
contemplated hereby. The execution and delivery of this
Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by all
necessary corporate action on the part of Grantee. This
Agreement has been duly executed and delivered by
Grantee.
(b) Purchase Not for Distribution. This
Option is not being acquired with a view to the public
distribution thereof and neither this Option nor any
Option Shares will be transferred or otherwise disposed
of except in a transaction registered or exempt from
registration under the Securities Act.
7. Adjustment upon Changes in
Capitalization, etc. (a) In the event (i) of any change
in Issuer Common Stock by reason of a stock dividend,
stock split, split-up, recapitalization, combination,
exchange of shares or similar transaction or (ii) that
any Rights issued by Issuer shall become exercisable, the
type and number of shares or securities subject to the
Option, and the Purchase Price therefor, shall be
adjusted appropriately, and, in the case of any of the
transactions described in clause (i) above, proper
provision shall be made in the agreements governing such
transaction so that Grantee shall receive, upon exercise
of the Option, the number and class of shares or other
securities or property that Grantee would have received
in respect of Issuer Common Stock if the Option had been
exercised immediately prior to such event, or the record
date therefor, as applicable. If any additional shares
of Issuer Common Stock are issued after the date of this
Agreement (other than pursuant to an event described in
the first sentence of this Section 7(a)), the number of
shares of Issuer Common Stock subject to the Option shall
be adjusted so that, after such issuance, the Option,
together with any shares of Issuer Common Stock
previously issued pursuant hereto, equals 9.9% of the
number of shares of Issuer Common Stock then issued and
outstanding, without giving effect to any shares subject
or previously issued pursuant to the Option.
(b) In the event that Issuer shall enter into
an agreement (i) to consolidate with or merge into any
person, other than Grantee or one of its Subsidiaries,
and shall not be the continuing or surviving corporation
of such consolidation or merger, (ii) to permit any
person, other than Grantee or one of its Subsidiaries, to
merge into Issuer and Issuer shall be the continuing or
surviving corporation, but, in connection with such
merger, the then outstanding shares of Issuer Common
Stock shall be changed into or exchanged for stock or
other securities of Issuer or any other person or cash or
any other property or the outstanding shares of Issuer
Common Stock immediately prior to such merger shall after
such merger represent less than 50% of the outstanding
shares and share equivalents of the merged company, or
(iii) to sell or otherwise transfer all or substantially
all of its assets to any person, other than Grantee or
one of its Subsidiaries, then, and in each such case, the
agreement governing such transaction shall make proper
provisions so that the Option shall, upon the
consummation of any such transaction and upon the terms
and conditions set forth herein, be converted into, or
exchanged for, an option (the "Substitute Option"), at
the election of Grantee, of either (I) the Acquiring
Corporation (as defined below), (II) any person that
controls the Acquiring Corporation, or (III) in the case
of a merger described in clause (ii), the Issuer (such
person being referred to as the "Substitute Option
Issuer").
(c) The Substitute Option shall have the
same terms as the Option, provided, that if the terms of
the Substitute Option cannot, for legal reasons, be the
same as the Option, such terms shall be as similar as
possible and in no event less advantageous to Grantee.
The Substitute Option Issuer shall also enter into an
agreement with the then holder or holders of the
Substitute Option in substantially the same form as this
Agreement, which shall be applicable to the Substitute
Option.
(d) The Substitute Option shall be
exercisable for such number of shares of the Substitute
Common Stock (as hereinafter defined) as is equal to the
Assigned Value (as hereinafter defined) multiplied by the
number of shares of Issuer Common Stock for which the
Option was theretofore exercisable, divided by the
Average Price (as hereinafter defined). The exercise
price of the Substitute Option per share of the
Substitute Common Stock (the "Substitute Purchase Price")
shall then be equal to the Purchase Price multiplied by a
fraction in which the numerator is the number of shares
of the Issuer Common Stock for which the Option was
theretofore exercisable and the denominator is the number
of shares of the Substitute Common Stock for which the
Substitute Option is exercisable.
(e) The following terms have the meanings
indicated:
(I) "Acquiring Corporation" shall mean (i) the
continuing or surviving corporation of a consolidation or
merger with Issuer (if other than Issuer), (ii) Issuer in
a merger in which Issuer is the continuing or surviving
person, and (iii) the transferee of all or substantially
all of the Issuer's assets (or the assets of its
Subsidiaries).
(II) "Substitute Common Stock" shall mean the
common stock issued by the Substitute Option Issuer upon
exercise of the Substitute Option.
(III) "Assigned Value" shall mean the highest of
(i) the price per share of Issuer Common Stock at which a
tender offer or exchange offer therefor has been made by
any person (other than Grantee), (ii) the price per share
of Issuer Common Stock to be paid by any person (other
than the Grantee) pursuant to an agreement with Issuer,
and (iii) the highest closing sales price per share of
Issuer Common Stock quoted on the AMEX (or if Issuer
Common Stock is not quoted on the AMEX, the highest bid
price per share as quoted on the principal trading market
or securities exchange on which such shares are traded as
reported by a recognized source) within the six-month
period immediately preceding the agreement; provided,
however, that in the event of a sale of less than all of
Issuer's assets, the Assigned Value shall be the sum of
the price paid in such sale for such assets and the
current market value of the remaining assets of Issuer as
determined by a nationally recognized investment banking
firm selected by Grantee or by a Grantee Majority,
divided by the number of shares of Issuer Common Stock
outstanding at the time of such sale. In the event that
an exchange offer is made for the Issuer Common Stock or
an agreement is entered into for a merger or
consolidation involving consideration other than cash,
the value of the securities or other property issuable or
deliverable in exchange for the Issuer Common Stock shall
be determined by a nationally recognized investment
banking firm mutually selected by Grantee and Issuer (or
if applicable, Acquiring Corporation), provided that if a
mutual selection cannot be made as to such investment
banking firm, it shall be selected by Grantee (or a
majority of interest of the Grantees if there shall be
more than one Grantee (a "Grantee Majority")).
(IV) "Average Price" shall mean the average closing
price of a share of the Substitute Common Stock for the
one year immediately preceding the consolidation, merger
or sale in question, but in no event higher than the
closing price of the shares of the Substitute Common
Stock on the day preceding such consolidation, merger or
sale; provided that if Issuer is the issuer of the
Substitute Option, the Average Price shall be computed
with respect to a share of common stock issued by Issuer,
the person merging into Issuer or by any company which
controls or is controlled by such merging person, as
Grantee may elect.
(f) In no event, pursuant to any of the
foregoing paragraphs, shall the Substitute Option be
exercisable for more than 9.9% of the aggregate of the
shares of the Substitute Common Stock outstanding prior
to exercise of the Substitute Option. In the event that
the Substitute Option would be exercisable for more than
9.9% of the aggregate of the shares of Substitute Common
Stock but for this clause (f), the Substitute Option
Issuer shall make a cash payment to Grantee equal to the
excess of (i) the value of the Substitute Option without
giving effect to the limitation in this clause (f) over
(ii) the value of the Substitute Option after giving
effect to the limitation in this clause (f). This
difference in value shall be determined by a nationally
recognized investment banking firm selected by Grantee
(or a Grantee Majority).
(g) Issuer shall not enter into any
transaction described in subsection (b) of this Section 7
unless the Acquiring Corporation and any person that
controls the Acquiring Corporation assume in writing all
the obligations of Issuer hereunder and take all other
actions that may be necessary so that the provisions of
this Section 7 are given full force and effect
(including, without limitation, any action that may be
necessary so that the shares of Substitute Common Stock
are in no way distinguishable from or have lesser
economic value than other shares of common stock issued
by the Substitute Option Issuer).
(h) The provisions of Sections 8 and 9
shall apply to any securities for which the Option
becomes exercisable pursuant to this Section 7 and as
applicable, references in such sections to "Issuer",
"Option", "Purchase Price" and "Issuer Common Stock"
shall be deemed to be references to "Substitute Option
Issuer", "Substitute Option", "Substitute Purchase Price"
and "Substitute Common Stock", respectively.
8. Registration Rights. Issuer shall, if
requested by Grantee (or if applicable, a Grantee
Majority) at any time and from time to time within three
years of the date on which the Option first becomes
exercisable, as expeditiously as possible prepare and
file up to two registration statements under the
Securities Act if such registration is necessary in order
to permit the sale or other disposition of any or all
shares of Issuer Common Stock or other securities that
have been acquired by or are issuable to Grantee upon
exercise of the Option in accordance with the intended
method of sale or other disposition stated by Grantee,
including a "shelf" registration statement under Rule 415
under the Securities Act or any successor provision, and
Issuer shall use its best efforts to qualify such shares
or other securities under any applicable state securities
laws. Issuer shall use its best efforts to cause each
such registration statement to become effective, to
obtain all consents or waivers of other parties which are
required therefor and to keep such registration statement
effective for such period not in excess of 180 days from
the day such registration statement first becomes
effective as may be reasonably necessary to effect such
sale or other disposition. Any registration statement
prepared and filed under this Section 8, and any sale
covered thereby, shall be at Issuer's expense except for
underwriting discounts or commissions, brokers' fees and
the fees and disbursements of Grantee's counsel related
thereto. Grantee shall provide all information
reasonably requested by Issuer for inclusion in any
registration statement to be filed hereunder. If during
the time periods referred to in the first sentence of
this Section 8 Issuer effects a registration under the
Securities Act of Issuer Common Stock for its own account
or for any other stockholders of Issuer (other than on
Form S-4 or Form S-8, or any successor forms or any form
with respect to a dividend reinvestment or similar plan),
it shall allow Grantee the right to participate in such
registration, and such participation shall not affect the
obligation of Issuer to effect two registration
statements for Grantee under this Section 8; provided,
however, that, if the managing underwriters of such
offering advise Issuer in writing that in their opinion
the number of shares of Issuer Common Stock requested by
Grantee to be included in such registration, together
with the shares of Issuer Common Stock proposed to be
included in such registration, exceeds the number which
can be sold in such offering, Issuer shall include the
shares requested to be included therein by Grantee pro
rata with the shares intended to be included therein by
Issuer. In connection with any registration pursuant to
this Section 8, Issuer and Grantee shall provide each
other and any underwriter of the offering with customary
representations, warranties, covenants, indemnification
and contribution in connection with such registration.
Notwithstanding anything to the contrary contained
herein, in no event shall Issuer be obligated to effect
more than two registrations pursuant to the first
sentence of this Section 8 by reason of the fact that
there shall be more than one Grantee as a result of any
assignment of this Agreement or division of this
Agreement pursuant to Section 10 hereof.
9. Listing. If Issuer Common Stock or any
other securities to be acquired upon exercise of the
Option are then authorized for quotation on the AMEX or
any securities exchange, Issuer, upon the request of
Grantee, will promptly file an application to authorize
for quotation the shares of Issuer Common Stock or other
securities to be acquired upon exercise of the Option on
the AMEX or such other securities exchange and will use
its best efforts to obtain approval of such listing as
soon as practicable.
10. Division of Option. This Agreement (and
the Option granted hereby) are exchangeable, without
expense, at the option of Grantee, upon presentation and
surrender of this Agreement at the principal office of
Issuer for other Agreements providing for Options of
different denominations entitling the holder thereof to
purchase in the aggregate the same number of shares of
Issuer Common Stock purchasable hereunder. The terms
"Agreement" and "Option" as used herein include any other
Agreements and related Options for which this Agreement
(and the Option granted hereby) may be exchanged. Upon
receipt by Issuer of evidence reasonably satisfactory to
it of the loss, theft, destruction or mutilation of this
Agreement, and (in the case of loss, theft or
destruction) of reasonably satisfactory indemnification,
and upon surrender and cancellation of this Agreement, if
mutilated, Issuer will execute and deliver a new
Agreement of like tenor and date. Any such new Agreement
executed and delivered shall constitute an additional
contractual obligation on the part of Issuer, whether or
not the Agreement so lost, stolen, destroyed or mutilated
shall at any time be enforceable by anyone.
11. Rights Agreement. Issuer shall not
approve or adopt, or propose the approval and adoption
of, any Shareholder Rights Plan unless such Shareholder
Rights Plan contains terms which provide, to the
reasonable satisfaction of Grantee, that (a) the Rights
issued pursuant thereto will not become exercisable by
virtue of the fact that (i) Grantee is the Beneficial
Owner of shares of Issuer Common Stock (x) acquired or
acquirable pursuant to the grant or exercise of this
Option and (y) held by Grantee or any of its Subsidiaries
as Trust Account Shares or DPC Shares or (ii) while
Grantee is the Beneficial Owner of the shares of Issuer
Common Stock described in clause (a)(i), an Acquisition
Transaction involving Issuer or any of its Subsidiaries,
on the one hand, and Grantee, any of its Subsidiaries, on
the other hand, is proposed, agreed to or consummated and
(b) no restrictions or limitations with respect to the
exercise of any Rights acquired or acquirable by Grantee
will result or be imposed by virtue of the fact that
Grantee is the Beneficial Owner of the shares of Issuer
Common Stock described in clause (a)(i) of this Section
11.
12. Miscellaneous. (a) Expenses. Except as
otherwise provided in Section 8 hereof, each of the
parties hereto shall bear and pay all costs and expenses
incurred by it or on its behalf in connection with the
transactions contemplated hereunder, including fees and
expenses of its own financial consultants, investment
bankers, accountants and counsel.
(b) Waiver and Amendment. Any provision
of this Agreement may be waived at any time by the party
that is entitled to the benefits of such provision. This
Agreement may not be modified, amended, altered or
supplemented except upon the execution and delivery of a
written agreement executed by the parties hereto.
(c) Entire Agreement; No Third-Party
Beneficiary; Severability. This Agreement, together with
the Merger Agreement and the other agreements and
instruments referred to herein and therein, (a)
constitutes the entire agreement and supersedes all prior
agreements and understandings, both written and oral,
between the parties with respect to the subject matter
hereof and (b) is not intended to confer upon any person
other than the parties hereto any rights or remedies
hereunder. Notwithstanding anything to the contrary
contained in this Agreement or the Merger Agreement, this
Agreement shall be deemed to amend the confidentiality
agreement between Issuer and Grantee so as to permit
Grantee to enter into this Agreement and exercise all of
its rights hereunder, including its right to acquire
Issuer Common Stock upon exercise of the Option. If any
term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction or
a federal or state regulatory agency to be invalid, void
or unenforceable, the remainder of the terms, provisions,
covenants and restrictions of this Agreement shall remain
in full force and effect and shall in no way be affected,
impaired or invalidated. If for any reason such court or
regulatory agency determines that the Option does not
permit Grantee to acquire the full number of shares of
Issuer Common Stock as provided in Section 3 hereof (as
adjusted pursuant to Section 7 hereof), it is the express
intention of Issuer to allow Grantee to acquire such
lesser number of shares as may be permissible without any
amendment or modification hereof.
(d) Governing Law. This Agreement shall
be governed and construed in accordance with the laws of
the State of Delaware without regard to any applicable
conflicts of law rules.
(e) Descriptive Headings. The
descriptive headings contained herein are for convenience
of reference only and shall not affect in any way the
meaning or interpretation of this Agreement.
(f) Notices. All notices and other
communications hereunder shall be in writing and shall be
deemed given if delivered personally, telecopied (with
confirmation) or mailed by registered or certified mail
(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):
If to Issuer to:
Metro Bancshares Inc.
100 Jericho Quadrangle
Jericho, N.Y. 11753
Attention: David G. Herold
with a copy to:
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, New York 10022
Attention: Fred B. White, III
If to Grantee to:
North Fork Bancorporation, Inc.
9025 Route 25
Mattituck, N.Y. 11952
Attention: Daniel M. Healy
with a copy to:
Muldoon, Murphy & Faucette
5101 Wisconsin Avenue, NW
Suite 508
Washington, D.C. 20016
Attention: Joe Passaic, Esq.
(g) Counterparts. This Agreement and any
amendments hereto may be executed in two counterparts,
each of which shall be conspidered one and the same
agreement and shall become effective when both
counterparts have been signed, it being understood that
both parties need not sign the same counterpart.
(h) Assignment. Neither this Agreement
nor any of the rights, interests or obligations hereunder
or under the Option shall be assigned by any of the
parties hereto (whether by operation of law or otherwise)
without the prior written consent of the other party,
except that Grantee may assign this Agreement to a wholly
owned subsidiary of Grantee and after the occurrence of a
Purchase Event Grantee may assign its rights under this
Agreement to one or more third parties, provided,
however, that Grantee may not assign this Agreement,
without the written consent of Issuer, to any third party
who, to Grantee's knowledge, would, upon exercise of the
Option, own in excess of 6% of Issuer's then issued and
outstanding common stock. Subject to the preceding
sentence, this Agreement shall be binding upon, inure to
the benefit of and be enforceable by the parties and
their respective successors and assigns. As used in this
Agreement, Grantee shall include any person to whom this
Agreement or the Option shall be assigned by a previous
Grantee in accordance with the terms hereof.
(i) Further Assurances. In the event of
any exercise of the Option by Grantee, Issuer and Grantee
shall execute and deliver all other documents and
instruments and take all other action that may be
reasonably necessary in order to consummate the
transactions provided for by such exercise.
(j) Specific Performance. The parties
hereto agree that this Agreement may be enforced by
either party through specific performance, injunctive
relief and other equitable relief. Both parties further
agree to waive any requirement for the securing or
posting of any bond in connection with the obtaining of
any such equitable relief and that this provision is
without prejudice to any other rights that the parties
hereto may have for any failure to perform this
Agreement.
IN WITNESS WHEREOF, Issuer and Grantee have
caused this Stock Option Agreement to be signed by their
respective officers thereunto duly authorized, all as of
the day and year first written above.
METRO BANCSHARES INC.
By/s/ David G. Herold
Name: David G. Herold
Title: Chairman and Chief
Executive Officer
NORTH FORK BANCORPORATION, INC.
By/s/ John Adam Kanas
Name: John Adam Kanas
Title: Chairman, President &
Chief Executive Officer
