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
July 15, 1996
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.)
275 Broad Hollow Road, Melville, New York 11747
(Address Of Principal Executive Offices) (Zip Code)
(516) 844-1004
(Registrant's Telephone Number, including Area Code)
Not Applicable
(Former Name Or Former Address, If Changed Since Last Report)
ITEM 5. OTHER EVENTS.
On July 15, 1996, North Fork Bancorporation,
Inc., a Delaware corporation ("North Fork"), announced
that it had entered into an Agreement and Plan of Merger,
dated as of July 15, 1996 (the "Merger Agreement"), with
North Side Savings Bank, a New York-chartered stock form
savings bank ("North Side"), pursuant to which a newly
formed wholly owned subsidiary savings bank of North Fork
will merge with and into North Side (the "Merger"), with
North Side thereafter becoming a direct, wholly owned
subsidiary of North Fork.
Pursuant to the Merger Agreement, each share of
common stock, par value $1.00 per share ("North Side
Common Stock"), of North Side outstanding on the date of
the Merger (except for shares of North Side Common
Stock held by North Side or North Fork or any of their
subsidiaries (other than shares of North Side Common
Stock (i) held directly or indirectly by North Fork or
North Side 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 and (ii) held by North Fork or North Side or any of
their respective subsidiaries in respect of a debt previously
contracted)) will be converted into the right to receive 1.556
shares (the "Exchange Ratio") of common stock, par value $2.50
per share, of North Fork ("North Fork Common Stock"). If the
"Average Closing Price" (as defined below) is less than $24.00,
North Side may, at its option, 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 North Side Common Stock have a value (valued at
the Average Closing Price) of at least $37.34. The Average
Closing Price is the average closing sales price of North Fork
Common Stock on the New York Stock Exchange for the 10 consecutive
trading days ending on the 5th business day prior to the date on
which approval of the Merger by the Board of Governors of the
Federal Reserve Board is obtained, without regard to any requisite
waiting period in respect thereof.
The shares of North Fork 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 North
Side 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
North Side, approval by the stockholders of North Fork of
the issuance of shares of North Fork Common Stock to the
stockholders of North Side pursuant to the Merger Agreement
and the receipt of all required regulatory approvals.
Following the Merger, the Board of Directors of
North Fork will be expanded by two members and Mr. Thomas
M. O'Brien, the Chairman, Chief Executive Officer and
President of North Side, and an additional director of
North Side selected by North Side and reasonably
acceptable to North Fork will be appointed to such Board
of Directors. Mr. O'Brien is also expected to serve as a
Vice Chairman of the Board of Directors.
As a condition to the execution and delivery of
the Merger Agreement, North Fork and North Side entered
into a stock option agreement, dated as of July 15, 1996
(the "Stock Option Agreement"), pursuant to which North
Side granted North Fork an option to purchase up to
961,965 shares of North Side Common Stock at a purchase
price of $34.75 per share, subject to adjustment. The
option will become exercisable upon the occurrence of
certain events described therein, none of which has
occurred as of the date hereof.
A copy of 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.
(a) Financial Statements of the Business Acquired.
Not applicable.
(b) Pro Forma Financial Information.
Not applicable.
(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
July 15, 1996, among North Fork
Bancorporation, Inc., a New York-chartered
savings bank to be formed as a wholly
owned subsidiary of North Fork
Bancorporation, Inc. and North Side
Savings Bank.
99.1 Stock Option Agreement, dated as of July
15, 1996, between North Fork
Bancorporation, Inc. and North Side
Savings Bank.
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 24, 1996
NORTH FORK BANCORPORATION, INC.
By: /s/ Daniel M. Healy
Name: Daniel M. Healy
Title: Executive Vive President
Chief Financial Officer
CONFORMED COPY
AGREEMENT AND PLAN OF MERGER
by and among
North Fork Bancorporation, Inc.,
Merger Bank
and
North Side Savings Bank
Dated as of July 15, 1996
TABLE OF CONTENTS
Page
ARTICLE I
THE MERGER
1.1. The Merger . . . . . . . . . . . . . . . 2
1.2. Effective Time . . . . . . . . . . . . . 2
1.3. Effects of the Merger . . . . . . . . . 3
1.4. Conversion of Company Common Stock . . . 3
1.5. Stock Options . . . . . . . . . . . . . 7
1.6. Merger Bank Common Stock . . . . . . . . 9
1.7. Certificate of Incorporation . . . . . . 10
1.8. By-Laws . . . . . . . . . . . . . . . . 10
1.9. Directors and Officers . . . . . . . . . 10
1.10. Tax Consequences . . . . . . . . . . . . 11
ARTICLE II
EXCHANGE OF SHARES
2.1. Parent to Make Shares Available . . . . 11
2.2. Exchange of Shares . . . . . . . . . . . 12
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
3.1. Corporate Organization . . . . . . . . . 17
3.2. Capitalization . . . . . . . . . . . . . 20
3.3. Authority; No Violation . . . . . . . . 23
3.4. Consents and Approvals . . . . . . . . . 26
3.5. Regulatory Reports; Examinations . . . . 27
3.6. Financial Statements . . . . . . . . . . 28
3.7. Broker's Fees . . . . . . . . . . . . . 30
3.8. Absence of Certain Changes or Events . . 31
3.9. Legal Proceedings . . . . . . . . . . . 32
3.10. Taxes . . . . . . . . . . . . . . . . . 33
3.11. Employees . . . . . . . . . . . . . . . 36
3.12. FDIC Reports. . . . . . . . . . . . . . 40
3.13. Company Information. . . . . . . . . . . 41
3.14. Compliance with Applicable Law . . . . . 41
3.15. Certain Contracts. . . . . . . . . . . . 42
3.16. Agreements with Regulatory Agencies . . 44
3.17. Investment Securities . . . . . . . . . 45
3.18. Takeover Provisions. . . . . . . . . . . 45
3.19. Equity and Real Estate Investments . . . 46
3.20. Environmental Matters . . . . . . . . . 46
3.21. Derivative Transactions. . . . . . . . . 48
3.22. Opinion. . . . . . . . . . . . . . . . . 50
3.23. Assistance Agreements. . . . . . . . . . 50
3.24. Loan Portfolio. . . . . . . . . . . . . 51
3.25. Property . . . . . . . . . . . . . . . . 53
3.26. Rights Agreement . . . . . . . . . . . . 54
3.27. Accounting for the Merger;
Reorganization . . . . . . . . . . . . 54
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF PARENT
4.1. Corporate Organization . . . . . . . . . 55
4.2. Capitalization . . . . . . . . . . . . . 57
4.3. Authority; No Violation . . . . . . . . 59
4.4. Consents and Approvals . . . . . . . . . 63
4.5. Financial Statements . . . . . . . . . . 64
4.6. Broker's Fees . . . . . . . . . . . . . 66
4.7. Absence of Certain Changes or Events . . 67
4.8. Legal Proceedings . . . . . . . . . . . 67
4.9. Compliance with Applicable Law . . . . . 68
4.10. SEC Reports . . . . . . . . . . . . . . 69
4.11. Parent Information . . . . . . . . . . . 70
4.12. Ownership of Company Common Stock . . . 70
4.13. Taxes . . . . . . . . . . . . . . . . . 70
4.14. Employees . . . . . . . . . . . . . . . 73
4.15. Agreements with Regulatory Agencies . . 76
4.16. Regulatory Reports; Examinations . . . . 76
4.17. Environmental Matters . . . . . . . . . 77
4.18. Derivative Transactions . . . . . . . . 79
4.19. Loan Portfolio . . . . . . . . . . . . . 80
4.20. Property . . . . . . . . . . . . . . . . 82
4.21. Investment Securities . . . . . . . . . 83
4.22. Accounting for the Merger;
Reorganization . . . . . . . . . . . . 84
4.23. Opinion . . . . . . . . . . . . . . . . 84
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
5.1. Covenants of the Company . . . . . . . . 84
5.2. Covenants of Parent . . . . . . . . . . 92
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1. Regulatory Matters. . . . . . . . . . . 94
6.2. Access to Information . . . . . . . . . 96
6.3. Stockholder Meetings . . . . . . . . . . 99
6.4. Legal Conditions to Merger . . . . . . . 100
6.5. Affiliates . . . . . . . . . . . . . . . 101
6.6. Stock Exchange Listing . . . . . . . . . 101
6.7. Employee Benefit Plans;
Existing Agreements; Employment
Agreement. . . . . . . . . . . . . . . 101
6.8. Indemnification . . . . . . . . . . . . 104
6.9. Subsequent Interim Financial
Statements . . . . . . . . . . . . . . 108
6.10. Additional Agreements . . . . . . . . . 109
6.11. Advice of Changes . . . . . . . . . . . 109
6.12. Current Information . . . . . . . . . . 110
6.13. Merger Bank . . . . . . . . . . . . . . 111
6.14. Directorships; Advisory Committee . . . 111
6.15. Accountants' Letters . . . . . . . . . . 113
6.16. Parent Rights Agreement . . . . . . . . 113
6.17. Plan of Integration . . . . . . . . . . 114
6.18. Issuance of Treasury Shares . . . . . . 114
ARTICLE VII
CONDITIONS PRECEDENT
7.1. Conditions to Each Party's Obligation
To Effect the Merger . . . . . . . . . . 114
7.2. Conditions to Obligations of Parent . 116
7.3. Conditions to Obligations of
the Company . . . . . . . . . . . . . 121
ARTICLE VIII
TERMINATION AND AMENDMENT
8.1. Termination . . . . . . . . . . . . . . 126
8.2. Effect of Termination; Expenses . . . . 131
8.3. Amendment . . . . . . . . . . . . . . . 131
8.4. Extension; Waiver . . . . . . . . . . . 132
ARTICLE IX
GENERAL PROVISIONS
9.1. Closing . . . . . . . . . . . . . . . . 133
9.2. Alternative Structure . . . . . . . . . 133
9.3. Nonsurvival of Representations,
Warranties and Agreements . . . . . . 134
9.4. Expenses . . . . . . . . . . . . . . . . 134
9.5. Notices . . . . . . . . . . . . . . . . 135
9.6. Interpretation . . . . . . . . . . . . . 136
9.7. Counterparts . . . . . . . . . . . . . . 136
9.8. Entire Agreement . . . . . . . . . . . . 136
9.9. Governing Law . . . . . . . . . . . . . 137
9.10. Enforcement of Agreement . . . . . . . . 137
9.11. Severability . . . . . . . . . . . . . . 137
9.12. Publicity . . . . . . . . . . . . . . . 138
9.13. Assignment; No Third Party
Beneficiaries . . . . . . . . . . . . 138
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of July
15, 1996, by and among North Fork Bancorporation, Inc., a
Delaware corporation ("Parent"), a New York-chartered
savings bank to be formed as a direct wholly owned
subsidiary of Parent ("Merger Bank"), and North Side
Savings Bank, a New York-chartered stock form savings
bank (the "Company"). (Merger Bank and the Company are
sometimes collectively referred to herein as the
"Constituent Corporations".)
WHEREAS, the Boards of Directors of Parent and
the Company have determined that it is in the best
interests of their respective companies and their
shareholders to consummate the business combination
transaction provided for herein in which Merger Bank
will, subject to the terms and conditions set forth
herein, merge (the "Merger") with and into the Company;
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 New
York Banking Law (the "NYBL"), at the Effective Time (as
defined in Section 1.2 hereof), Merger Bank shall merge
with and into the Company. The Company 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 New York. The name of the Surviving Corporation
shall be North Side Savings Bank. Upon consummation of
the Merger, the separate corporate existence of Merger
Bank shall terminate.
1.2. Effective Time. The Merger shall become
effective at the date and time set forth in the
certificate which shall be filed by the Superintendent of
Banking of the State of New York Department of Banking
(the "Banking Department") on the Closing Date (as
defined in Section 9.1 hereof) pursuant to Section 601-b
of the NYBL. The term "Effective Time" shall be the date
and time when the Merger becomes effective.
1.3. Effects of the Merger. At and after the
Effective Time, the Merger shall have the effects set
forth in Section 602 of the NYBL.
1.4. Conversion of Company Common Stock.
(a) At the Effective Time, subject to
Section 2.2(e) and Section 8.1(g) hereof and the last
sentence of this Section 1.4(a), each share of the common
stock, par value $1.00 per share, of the Company (the
"Company Common Stock") issued and outstanding
immediately prior to the Effective Time (other than (x)
shares of Company Common Stock held (1) in the Company's
treasury or (2) directly or indirectly by Parent or the
Company or any of their respective Subsidiaries (as
defined below) (except for Trust Account Shares and DPC
shares, as such terms are defined in Section 1.4(b)
hereof) and (y) Dissenting Shares (as defined in Section
1.4(c) hereof), if any) shall, by virtue of this
Agreement and without any action on the part of the
holder thereof, be converted into and exchangeable for
1.556 shares (the "Exchange Ratio") of the common stock,
par value $2.50 per share, of Parent ("Parent Common
Stock") (together with the number of Parent Rights (as
defined in Section 4.2 hereof) associated therewith).
All of the shares of Company Common Stock converted into
Parent Common Stock pursuant to this Article I shall no
longer be outstanding and shall automatically be
cancelled and shall cease to exist, and each certificate
(each a "Certificate") previously representing any such
shares of Company Common Stock shall thereafter only
represent the right to receive (i) the number of whole
shares of Parent Common Stock and (ii) the cash in lieu
of fractional shares into which the shares of Company
Common Stock represented by such Certificate have been
converted pursuant to this Section 1.4(a) and Section
2.2(e) hereof. Certificates previously representing
shares of Company Common Stock shall be exchanged for
certificates representing whole shares of Parent Common
Stock and cash in lieu of fractional shares issued in
consideration therefor upon the surrender of such
Certificates in accordance with Section 2.2 hereof,
without any interest thereon. If, between the date
hereof and the Effective Time, the shares of Parent
Common Stock shall be changed into a different number or
class of shares by reason of any reclassification,
recapitalization, split-up, combination, exchange of
shares or readjustment, or a stock dividend thereon shall
be declared with a record date within said period, the
Exchange Ratio shall be adjusted accordingly.
(b) At the Effective Time, 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 Parent or the
Company or any of their respective Subsidiaries (other
than shares of Company Common Stock (x) held directly or
indirectly in trust accounts, managed accounts and the
like or otherwise held in a fiduciary capacity that are
beneficially owned by third parties (any such shares, and
shares of Parent Common Stock which are similarly held,
whether held directly or indirectly by Parent or the
Company, as the case may be, being referred to herein as
"Trust Account Shares") and (y) held by Parent or the
Company or any of their respective Subsidiaries in
respect of a debt previously contracted (any such shares
of Company Common Stock, and shares of Parent Common
Stock which are similarly held, whether held directly or
indirectly by Parent or the Company, being referred to
herein as "DPC Shares")) shall be cancelled and shall
cease to exist and no stock of Parent or other
consideration shall be delivered in exchange therefor.
All shares of Parent Common Stock that are owned by the
Company or any of its Subsidiaries (other than Trust
Account Shares and DPC Shares) shall become treasury
stock of Parent.
(c) Notwithstanding anything in this
Agreement to the contrary, if, and to the extent required
by law, dissenters rights are available to holders of
Company Common Stock, then any shares of Company Common
Stock which are outstanding immediately prior to the
Effective Time and which are held by stockholders who
shall not have voted such shares in favor of the Merger
and who shall have filed with the Company a written
objection to the Merger and a demand for appraisal of
such shares in the manner provided in Section 6022 of the
NYBL ("Dissenting Shares") shall not be converted into
the right to receive, or be exchangeable for, the
consideration provided for in Section 1.4(a) hereof, but,
instead, the holders thereof shall be entitled to payment
of the appraised value of such Dissenting Shares in
accordance with the provisions of Section 6022 of the
NYBL. The Company shall (x) give Parent prompt written
notice of the receipt of any notice from a stockholder of
his intent to demand payment for his shares, (y) not
settle or offer to settle any such demands without the
prior written consent of Parent and (z) not, without the
prior written consent of Parent, waive any failure to
timely deliver a written objection to the Merger and a
demand for appraisal of such shares in accordance with
Section 6022 of the NYBL.
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(c)
hereof, be converted automatically into an option to
purchase shares of Parent Common Stock in an amount and
at an exercise price determined as provided below (and
otherwise subject to the terms of the Company's Amended
and Restated Long-Term Incentive and Capital Accumulation
Plan (the "Option Plan")):
(1) The number of shares of Parent
Common Stock to be subject to the new option
shall be equal to the product of the number of
shares of Company Common Stock subject to the
original option and the Exchange Ratio,
provided that any fractional shares of Parent
Common Stock resulting from such multiplication
shall be rounded down to the nearest share; and
(2) The exercise price per share of
Parent Common Stock under the new option shall
be equal to the exercise price per share of
Company Common Stock under the original option
divided by the Exchange Ratio, provided that
such exercise price shall be rounded up to the
nearest cent.
The adjustment provided herein with respect to any
options which are "incentive stock options" (as defined
in Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code")) shall be and is intended to be
effected in a manner which is consistent with Section
424(a) of the Code. The duration and other terms of the
new option shall be the same as the original option,
except that all references to the Company shall be deemed
to be references to Parent.
(b) Within ten days after the Effective
Time, Parent shall file with the Securities and Exchange
Commission (the "SEC") a registration statement on an
appropriate form under the Securities Act of 1933, as
amended (the "Securities Act") with respect to the shares
of Parent Common Stock subject to options to acquire
Parent Common Stock issued pursuant to Section 1.5(a)
hereof, and shall use its reasonable best efforts to
maintain the current status of the prospectus contained
therein, as well as comply with applicable state
securities or "blue sky" laws, for so long as such
options remain outstanding.
(c) Without limiting the foregoing, and
provided that the right contained in this paragraph (c)
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 Parent) 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 been
exercised and 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 Parent
Common Stock as are equal in value (determined by valuing
each share of Parent Common Stock at the Average Closing
Price (as defined in Section 8.1(g)) 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 over (ii) the aggregate exercise
price of such option.
1.6. Merger Bank Common Stock. Each of the
shares of common stock of Merger Bank, par value $0.01
per share, issued and outstanding immediately prior to
the Effective Time shall by virtue of the Merger,
automatically and without any action on the part of
Parent, become and be converted into one share of common
stock of the Surviving Corporation, which shall
thereafter constitute all of the issued and outstanding
shares of the capital stock of the Surviving Corporation.
1.7. Certificate of Incorporation. At the
Effective Time, the Restated Organization Certificate of
the Company, as in effect at the Effective Time, shall be
the Organization Certificate of the Surviving
Corporation.
1.8. By-Laws. At the Effective Time, the By-
Laws of Merger Bank, 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 set
forth in Section 6.14 hereof, the directors and officers
of Merger Bank immediately prior to the Effective Time
shall be the directors and officers of the Surviving
Corporation, each to hold office in accordance with the
Organization Certificate 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 constitute a reorganization within the meaning
of Section 368(a) of the Code, and that this Agreement
shall constitute a "plan of reorganization" for purposes
of Section 368 of the Code.
ARTICLE II
EXCHANGE OF SHARES
2.1. Parent to Make Shares Available. At or
prior to the Effective Time, Parent shall deposit, or
shall cause to be deposited, with a bank or trust company
(which may be a Subsidiary of Parent) (the "Exchange
Agent") selected by Parent and reasonably satisfactory to
the Company, for the benefit of the holders of
Certificates, for exchange in accordance with this
Article II, certificates representing the shares of
Parent Common Stock and the cash in lieu of fractional
shares (such cash and certificates for shares of Parent
Common Stock, together with any dividends or
distributions with respect thereto, being hereinafter
referred to as the "Exchange Fund") to be issued pursuant
to Section 1.4 and paid pursuant to Section 2.2(a) in
exchange for outstanding shares of Company Common Stock.
2.2. Exchange of Shares. (a) As soon as
practicable after the Effective Time, and in no event
more than three business days thereafter, the Exchange
Agent shall mail to each holder of record of a
Certificate or Certificates a form letter of transmittal
(which shall specify that delivery shall be effected, and
risk of loss and title to the Certificates shall pass,
only upon delivery of the Certificates to the Exchange
Agent) and instructions for use in effecting the
surrender of the Certificates in exchange for
certificates representing the shares of Parent Common
Stock and the cash in lieu of fractional shares into
which the shares of Company Common Stock represented by
such Certificate or Certificates shall have been
converted pursuant to this Agreement. Upon surrender of
a Certificate for exchange and cancellation to the
Exchange Agent, together with such letter of transmittal,
duly executed, the holder of such Certificate shall be
entitled to receive in exchange therefor (x) a
certificate representing that number of whole shares of
Parent Common Stock to which such holder of Company
Common Stock shall have become entitled pursuant to the
provisions of Article I hereof and (y) a check
representing the amount of cash in lieu of fractional
share, if any, which such holder has the right to receive
in respect of the Certificate surrendered pursuant to the
provisions of this Article II, and the Certificate so
surrendered shall forthwith be cancelled. No interest
will be paid or accrued on the cash in lieu of fractional
shares and unpaid dividends and distributions, if any,
payable to holders of Certificates.
(b) No dividends or other distributions
declared after the Effective Time with respect to Parent
Common Stock and payable to the holders of record thereof
shall be paid to the holder of any unsurrendered
Certificate until the holder thereof shall surrender such
Certificate in accordance with this Article II. After
the surrender of a Certificate in accordance with this
Article II, the record holder thereof shall be entitled
to receive any such dividends or other distributions,
without any interest thereon, which theretofore had
become payable with respect to shares of Parent Common
Stock represented by such Certificate.
(c) If any certificate representing
shares of Parent Common Stock is to be issued in a name
other than that in which the Certificate surrendered in
exchange therefor is registered, it shall be a condition
of the issuance thereof that the Certificate so
surrendered shall be properly endorsed (or accompanied by
an appropriate instrument of transfer) and otherwise in
proper form for transfer, and that the person requesting
such exchange shall pay to the Exchange Agent in advance
any transfer or other taxes required by reason of the
issuance of a certificate representing shares of Parent
Common Stock in any name other than that of the
registered holder of the Certificate surrendered, or
required for any other reason, or shall establish to the
satisfaction of the Exchange Agent that such tax has been
paid or is not payable.
(d) After the Effective Time, there shall
be no transfers on the stock transfer books of the
Company of the shares of Company Common Stock which were
issued and outstanding immediately prior to the Effective
Time. If, after the Effective Time, Certificates
representing such shares are presented for transfer to
the Exchange Agent, they shall be cancelled and exchanged
for certificates representing shares of Parent Common
Stock as provided in this Article II.
(e) Notwithstanding anything to the
contrary contained herein, no certificates or scrip
representing fractional shares of Parent Common Stock
shall be issued upon the surrender for exchange of
Certificates, no dividend or distribution with respect to
Parent Common Stock shall be payable on or with respect
to any fractional share, and such fractional share
interests shall not entitle the owner thereof to vote or
to any other rights of a shareholder of Parent. In lieu
of the issuance of any such fractional share, Parent
shall pay to each former stockholder of the Company who
otherwise would be entitled to receive a fractional share
of Parent Common Stock an amount in cash determined by
multiplying (i) the average of the closing sales prices
of Parent Common Stock on the New York Stock Exchange
(the "NYSE") as reported by The Wall Street Journal (or,
if not reported thereby, another authoritative source)
for the five trading days immediately preceding the date
on which the Effective Time shall occur by (ii) the
fraction of a share of Parent 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
Parent. Any stockholders of the Company who have not
theretofore complied with this Article II shall
thereafter look only to Parent for payment of their
shares of Parent Common Stock, cash in lieu of fractional
shares and unpaid dividends and distributions on the
Parent Common Stock deliverable in respect of each share
of Company Common Stock such stockholder holds as
determined pursuant to this Agreement, in each case,
without any interest thereon. Notwithstanding the
foregoing, none of Parent, Merger Bank, the Company, the
Exchange Agent or any other person shall be liable to any
former holder of shares of Company Common Stock for any
amount properly delivered to a public official pursuant
to applicable abandoned property, escheat or similar
laws.
(g) In the event any Certificate shall
have been lost, stolen or destroyed, upon the making of
an affidavit of that fact by the person claiming such
Certificate to be lost, stolen or destroyed and, if
required by Parent, the posting by such person of a bond
in such amount as Parent may direct as indemnity against
any claim that may be made against it with respect to
such Certificate, the Exchange Agent will issue in
exchange for such lost, stolen or destroyed Certificate
the shares of Parent Common Stock and cash in lieu of
fractional shares deliverable in respect thereof pursuant
to this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to
Parent as follows:
3.1. Corporate Organization. (a) The Company
is a savings bank duly organized, validly existing and in
good standing under the laws of the State of New York.
The deposit accounts of the Company are insured by the
Federal Deposit Insurance Corporation (the "FDIC")
through the Bank 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. 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 Restated Organization
Certificate and Amended and Restated Bylaws of the
Company, copies of which have previously been delivered
to Parent, 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 Parent or the Company, as
the case may be, any effect that (i) is material and
adverse to the business, assets, liabilities, results of
operations or financial condition of Parent and its
Subsidiaries taken as whole or the Company and its
Subsidiaries taken as a whole, respectively, or (ii)
materially impairs the ability of the Company, Parent or
Merger Bank to consummate the transactions contemplated
hereby; provided, however, that Material Adverse Effect
shall not be deemed to include the impact of (a) changes
in laws and regulations or interpretations thereof that
are generally applicable to the banking or savings
industries, (b) changes in generally accepted accounting
principles that are generally applicable to the banking
or savings industries, (c) expenses incurred in
connection with the transactions contemplated hereby and
(d) changes attributable to or resulting from changes in
general economic conditions, including changes in the
prevailing level of interest rates. 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) Each of the Company's 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 certificate of
incorporation, by-laws or similar governing documents of
each Subsidiary of the Company, copies of which have
previously been delivered to Parent, 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, 1992 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 10,000,000
shares of Company Common Stock and 5,000,000 shares of
preferred stock, par value $1.00 per share (the "Company
Preferred Stock"). As of the date of this Agreement,
there are (x) 4,833,997 shares of Company Common Stock
issued and outstanding and no 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)
394,340 shares of Company Common Stock reserved for
issuance pursuant to the Option Plan and (ii) 961,965
shares of Company Common Stock reserved for issuance upon
exercise of the option issued to Parent pursuant to the
Stock Option Agreement, dated as of the date hereof,
between Parent 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, except for 100,000 shares of Series A
Junior Participating Preferred Stock reserved for
issuance upon exercise of the rights distributed to
holders of the Company Common Stock pursuant to the
Rights Agreement, dated as of April 18, 1996, between the
Company and American Stock Transfer and Trust Company, as
Rights Agent (the "Rights Agreement"). 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 provided in Section 114 of the NYBL. Except as
referred to above or reflected in Section 3.2(a) of the
Disclosure Schedule which is being delivered to Parent
concurrently herewith (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, 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,
Company Preferred Stock or any other equity security of
the Company and none of the options granted under the
Option Plan have related Appreciation Rights (as such
term is defined in the Option Plan). The names of the
optionees, the date of each option to purchase Company
Common Stock granted, the number of shares subject to
each such option, the expiration date of each such
option, and the price at which each such option may be
exercised under the Option Plan 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 Parent 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 each of Parent and Merger Bank)
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
laws affecting insured depository institutions, general
principles of equity whether applied in a court of law or
a court of equity and by bankruptcy, insolvency and
similar laws affecting creditors' rights and remedies
generally.
(b) Except as set forth in Section 3.3(b)
of the Company Disclosure Schedule, neither the execution
and delivery of this Agreement by the Company, nor the
consummation by the Company of the transactions
contemplated hereby, nor compliance by the Company with
any of the terms or provisions hereof, will (i) violate
any provision of the Restated Organization Certificate or
Amended and Restated 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. (a) Except for
(i) the filing of applications or notices, as applicable,
with the Board of Governors of the Federal Reserve System
(the "Federal Reserve Board") under the Bank Holding
Company Act of 1956, as amended (the "BHC Act") and
approval of such applications or notices, (ii) the filing
of an application with the FDIC under the Bank Merger Act
and approval of such application, (iii) the filing of an
application with the Banking Department and approval of
such application, (iv) the filing with the SEC and the
FDIC of a joint proxy statement in definitive form
relating to the meetings of the Company's stockholders
and Parent's stockholders to be held in connection with
this Agreement and the transactions contemplated hereby
(the "Proxy Statement"), (v) the approval of this
Agreement by the requisite vote of the stockholders of
the Company, (vi) review of this Agreement and the
transactions contemplated hereby by the U.S. Department
of Justice ("DOJ") under federal antitrust laws, and
(vii) 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 or self-regulatory organization, as
defined in Section 3(a)(26) of the Exchange Act (each a
"Governmental Entity"), or with any third party are
necessary on behalf of the Company in connection with (1)
the execution and delivery by the Company of this
Agreement and (2) the consummation by the Company of the
Merger and the other transactions contemplated hereby.
(b) As of the date hereof, the Company is
not aware of any reasons relating to the Company or its
Subsidiaries (including, without limitation, Community
Reinvestment Act compliance) why all consents and
approvals shall not be procured from all regulatory
agencies having jurisdiction over the transactions
contemplated by this Agreement as shall be necessary for
consummation of the transactions contemplated by this
Agreement.
3.5. Regulatory Reports; Examinations. 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 any Governmental Entity and have
paid all fees and assessments due and payable in
connection therewith. Except for normal examinations
conducted by a Governmental Entity in the regular course
of the business of the Company and its Subsidiaries and
except as set forth in Section 3.5 of the Company
Disclosure Schedule, no Governmental Entity 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 Governmental Entity 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 Parent copies of (a) the
consolidated statements of condition of the Company and
its Subsidiaries as of September 30 for the fiscal years
1994 and 1995, and the related consolidated statements of
operations, changes in shareholders' equity and cash
flows for the fiscal years 1993 through 1995, inclusive,
as reported in the Company's Annual Report on Form F-2
for the fiscal year ended September 30, 1995 filed with
the FDIC pursuant to the rules and regulations of the
FDIC, in each case accompanied by the audit report of
KPMG Peat Marwick LLP, independent public accountants
with respect to the Company, and (b) the unaudited
consolidated statements of condition of the Company and
its Subsidiaries as of March 31, 1996 and the related
unaudited consolidated statements of income, cash flows
and changes in shareholders' equity for the six-month
periods then ended as reported in the Company's Quarterly
Report on Form F-4 for the period ended March 31, 1996
filed with the FDIC pursuant to the rules and regulations
of the FDIC. The September 30, 1995 consolidated
statement of condition of the Company (including the
related notes, where applicable) fairly presents the
consolidated financial position of the Company and its
Subsidiaries as of the date thereof, and the other
financial statements referred to in this Section 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 FDIC 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 F-
4. 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 or the
Option Agreement, except that the Company has engaged,
and will pay a fee or commission to, Sandler O'Neill &
Partners, L.P. ("Sandler O'Neill") in accordance with the
terms of a letter agreement between the Company and
Sandler O'Neill, a true, complete and correct copy of
which has been previously delivered by the Company to
Parent.
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, (i) since March 31, 1996,
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 (excluding the incurrence of expenses in
connection with this Agreement and the transactions
contemplated hereby), (ii) since March 31, 1996, 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, and (iii) for the period
from March 31, 1996 up until the date of this Agreement,
the Company and its Subsidiaries have carried on their
respective businesses in the ordinary course consistent
with their past practices (excluding the execution of
this Agreement and related matters).
(b) Except as set forth in Section 3.8(b)
of the Company Disclosure Schedule, since September 30,
1995, 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 September 30, 1995 (which amounts
have been previously disclosed to Parent), granted any
severance or termination pay, entered into any contract
to make or grant any severance or termination pay, or
paid any bonus other than year-end bonuses for fiscal
1995 as listed in Section 3.8 of the Company Disclosure
Schedule, (ii) suffered any strike, work stoppage, slow-
down or other labor disturbance, (iii) been a party to a
collective bargaining agreement, contract or other
agreement or understanding with a labor union or
organization, or (iv) had any union organizing
activities.
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 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 expected 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 (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 are true, correct and complete in
all material respects, and (ii) paid in full or made
adequate provision in the financial statements of the
Company (in accordance with GAAP) for all Taxes (as
hereinafter defined). No deficiencies for any Taxes have
been proposed, asserted, assessed or, to the best
knowledge of the Company, threatened against or with
respect to the Company or any of its Subsidiaries.
Except as set forth in Section 3.10(a) of the Company
Disclosure Schedule, (i) there are no liens for Taxes
upon the assets of either the Company or its Subsidiaries
except for statutory liens for current Taxes not yet due,
(ii) 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, (iii)
with respect to each taxable period of the Company and
its Subsidiaries, the federal and state income Tax
Returns of the Company and its Subsidiaries have been
audited by the Internal Revenue Service or appropriate
state tax authorities or the time for assessing and
collecting income Tax with respect to such taxable period
has closed and such taxable period is not subject to
review, (iv) neither the Company nor any of its
Subsidiaries has filed or been included in a combined,
consolidated or unitary income Tax Return other than one
in which the Company was the parent of the group filing
such Tax Return, (v) neither the Company nor any of its
Subsidiaries 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), (vi) neither
the Company nor any of its Subsidiaries is required to
include in income any adjustment pursuant to Section
481(a) of the Code (or any similar or corresponding
provision or requirement of state, local or foreign
income Tax law), 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), (vii) neither the Company nor any of its
Subsidiaries has filed a consent pursuant to Section
341(f) of the Code, and (viii) neither the Company nor
any of its Subsidiaries has made any payment or will be
obligated to make any payment (by contract or otherwise)
which will not be deductible by reason of Section 280G 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 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 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,
development 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.
(c) For 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.
(d) 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 (including, without limitation, each
employment, severance and similar 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 director, employee or former employee of
the Company, any Subsidiary or any ERISA Affiliate.
(b) The Company has heretofore delivered
to Parent 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. FDIC Reports. The Company has
previously made available to Parent an accurate and
complete copy of each (a) final registration statement,
prospectus, report, schedule and definitive proxy
statement filed since January 1, 1992 by the Company with
the FDIC pursuant to the Securities Exchange Act of 1934,
as amended (the "Exchange Act") or the rules and
regulations of the FDIC (the "Company Reports") and (b)
communication mailed by the Company to its stockholders
since January 1, 1992, and no such Company Report 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 pursuant to the
rules and regulations of the FDIC, and, as of their
respective dates, all Company Reports complied in all
material respects with the published rules and
regulations of the FDIC with respect thereto.
3.13. Company Information. The information
relating to the Company and its Subsidiaries to be
contained in (whether directly or incorporated by
reference) 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 Governmental Entity
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.
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,
plan, 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, 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 Parent, the Company, the
Surviving Corporation, 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 an agreement, not otherwise described by clause
(iii) hereof, involving the payment by the Company or any
of its Subsidiaries of more than $100,000 per annum, (v)
which materially restricts the conduct of any line of
business by the Company or any of its Subsidiaries, or
(vi) under which any of the benefits will be increased,
or the vesting of the benefits will be accelerated, by
the occurrence of any of the transactions contemplated by
this 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. Each
contract, arrangement, plan, 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
Parent true, complete and correct copies of each Company
Contract and any amendments or modifications thereof.
(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
expected 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, 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.
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 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 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 June 30, 1996 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 as of June 30, 1996
which includes security descriptions, CUSIP numbers, pool
face values, book values, coupon rates and current market
values.
3.18. Takeover Provisions. The provisions of
Article XI of the Company's Restated Organization
Certificate will not, assuming the accuracy of the
representations contained in Section 4.12 hereof, apply
to this Agreement or the Option Agreement or any of the
transactions contemplated hereby or thereby.
3.19. Equity and Real Estate Investments.
Except as set forth in Section 3.19 of the Disclosure
Schedule, neither the Company nor any of its Subsidiaries
has any (i) equity investments other than investments in
wholly owned Subsidiaries, or (ii) investments in real
estate, other than assets classified as "other real
estate owned" and set forth in Section 3.24 of the
Company Disclosure Schedule, or real estate development
projects.
3.20. Environmental Matters. Except as set
forth in Section 3.20 of the Company Disclosure Schedule:
(a) To the best of the Company's
knowledge, 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 or the discharge of, or
exposure to chemicals, pollutants, contaminants, wastes,
toxic substances, petroleum or other regulated substances
or materials (collectively, "Hazardous 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, to the best of the Company's
knowledge, 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 Hazardous Material
whether or not occurring at or on a site owned, leased or
operated by the Company or any of its Subsidiaries, any
Participation Facility or any Loan Property, except where
such noncompliance or release has not had, and cannot be
reasonably expected to result in, either individually or
in the aggregate, a Material Adverse Effect on the
Company;
(c) To the best knowledge of the Company,
during and 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 has been no release of
Hazardous 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; and
(d) The following definitions apply for
purposes of this Section 3.20: (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.
3.21. Derivative Transactions. Except as set
forth in Section 3.21 of the Company Disclosure Schedule,
since September 30, 1995, neither the 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 to
the extent required by GAAP, 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
$250,000.
3.22. Opinion. The Company has received a
written opinion from Sandler O'Neill 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.
3.23. Assistance Agreements. Except as set
forth in Section 3.23 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 Entity. Each agreement set forth in Section
3.23 of the Company Disclosure Schedule has not been
amended and is valid and binding and in full force and
effect. There have been no conflicts or disputes between
the Company and its Subsidiaries, on the one hand, and
the FDIC, on the other, regarding the interpretation or
performance of the each such agreement and neither the
Company nor any of its Subsidiaries has taken any action
which has prejudiced, compromised, terminated or altered
the rights or remedies of the Company or any of its
Subsidiaries under each such agreement.
3.24. Loan Portfolio. (a) Except as set
forth in Section 3.24 of the Company Disclosure Schedule,
neither the Company nor any of its Subsidiaries is a
party to any written or oral (i) loan agreement, note or
borrowing arrangement (including, without limitation,
leases, credit enhancements, commitments, guarantees and
interest-bearing assets) (collectively, "Loans"), other
than Loans the unpaid principal balance of which does not
exceed $250,000, under the terms of which the obligor is,
as of the date of this Agreement, over 90 days delinquent
in payment of principal or interest or in default of any
other material provision, or (ii) Loan as of the date of
this Agreement with any director, executive officer or,
to the best of the Company's knowledge, greater than five
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 3.24 of the Company Disclosure
Schedule sets forth (i) all of the Loans in original
principal amount in excess of $250,000 of the Company or
any of its Subsidiaries that as of 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, (ii) by category of Loan (i.e.,
commercial, consumer, etc.), all of the 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 and (iii) each asset
of the Company that as of the date of this Agreement is
classified as "Other Real Estate Owned" and the book
value thereof.
(b) Each Loan in original principal
amount in excess of $250,000 (i) is evidenced by notes,
agreements or other evidences of indebtedness which are
true, genuine and what they purport to be, (ii) to the
extent secured, has been secured by valid liens and
security interests which have been perfected and (iii) is
the legal, valid and binding obligation of the obligor
named therein, enforceable in accordance with its terms,
subject to bankruptcy, insolvency, fraudulent conveyance
and other laws of general applicability relating to or
affecting creditors' rights and to general equity
principles, in each case other than Loans as to which the
failure to satisfy the foregoing standards would not have
a Material Adverse Effect on the Company.
3.25. Property. Each of the Company and its
Subsidiaries has good and marketable title free and clear
of all liens, encumbrances, mortgages, pledges, charges,
defaults or equitable interests to all of the properties
and assets, real and personal, tangible or intangible,
which, individually or in the aggregate, are material,
and which are reflected on the balance sheet of the
Company as of September 30, 1995 or acquired after such
date, except (i) liens for taxes not yet due and payable,
(ii) pledges to secure deposits and other liens incurred
in the ordinary course of banking business, (iii) such
imperfections of title, easements and encumbrances, if
any, as are not material in character, amount or extent
or (iv) for dispositions and encumbrances of, or on, such
properties or assets for adequate consideration in the
ordinary course of business. All leases pursuant to
which the Company or any Subsidiary of the Company, as
lessee, leases real or personal property which,
individually or in the aggregate, are material are valid
and enforceable in accordance with their respective terms
and neither the Company nor any of its Subsidiaries nor,
to the best knowledge of the Company, any other party
thereto is in default in any material respect thereunder.
3.26. Rights Agreement. The amendment to the
Rights Agreement attached hereto as Exhibit 3.26 has been
duly authorized and adopted by the Company and will be
duly executed and effective promptly after the date of
this Agreement. Parent will not become an "Acquiring
Person" and no "Stock Acquisition Date", "Distribution
Date" or "Triggering Event" (as such terms are defined in
the Rights Agreement) will occur as a result of the
approval, execution or delivery of this Agreement or the
Option Agreement by the Company or the consummation of
the transactions contemplated hereby or thereby,
including, without limitation, the acquisition of shares
of Company Common Stock pursuant to the Option Agreement.
3.27. Accounting for the Merger;
Reorganization. As of the date hereof, the Company has
no reason to believe that the Merger will fail to qualify
(i) for pooling-of-interests treatment under GAAP or (ii)
as a reorganization under Section 368(a) of the Code.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF PARENT
Parent hereby represents and warrants to the
Company as follows:
4.1. Corporate Organization. (a) Parent is a
corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware. Parent
has the corporate power and authority to own or lease all
of its properties and assets and to carry on its business
as it is now being conducted, and is duly licensed or
qualified to do business in each jurisdiction in which
the nature of the business conducted by it or the
character or location of the properties and assets owned
or leased by it makes such licensing or qualification
necessary, except where the failure to be so licensed or
qualified would not have a Material Adverse Effect on
Parent. Parent is duly registered as a bank holding
company under the BHC Act. The Certificate of
Incorporation and By-laws of Parent, copies of which have
previously been delivered to the Company, are true,
complete and correct copies of such documents as in
effect as of the date of this Agreement.
(b) Upon its formation, Merger Bank will
be a savings bank duly organized, validly existing and in
good standing under the laws of the State of New York.
Each other Subsidiary of Parent is duly organized,
validly existing and in good standing under the laws of
the jurisdiction of its incorporation. Each Subsidiary
of Parent has the corporate power and authority to own or
lease all of its properties and assets and to carry on
its business as it is now being conducted, and is duly
licensed or qualified to do business in each jurisdiction
in which the nature of the business conducted by it or
the character or location of the properties and assets
owned or leased by it makes such licensing or
qualification necessary, except where the failure to be
so licensed or qualified would not have a Material
Adverse Effect on Parent.
(c) The minute books of Parent 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,
1992 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 Parent
consists of 50,000,000 shares of Parent Common Stock and
10,000,000 shares of preferred stock, par value $1.00 per
share ("Parent Preferred Stock"). As of June 30, 1996,
there were 24,118,315 shares of Parent Common Stock and
no shares of Parent Preferred Stock issued and
outstanding, and 924,437 shares of Parent Common Stock
held in Parent's treasury. As of the date of this
Agreement, no shares of Parent Common Stock or Parent
Preferred Stock were reserved for issuance, except that
369,661 shares of Parent Common Stock were reserved for
issuance pursuant to the Parent's dividend reinvestment
and stock purchase plans, 928,115 shares of Parent Common
Stock were reserved for issuance upon the exercise of
stock options pursuant to the Parent 1989 Executive Stock
Option Plan, the Parent 1994 Key Employee Stock Plan and
the Parent Secondary Stock Option Plan (collectively, the
"Parent Stock Plans"), 144,054 shares of Parent Common
Stock were reserved for issuance under Parent's 401(k)
plan, and 500,000 shares of Parent Series A Junior
Participating Preferred Stock were reserved for issuance
upon exercise of the rights (the "Parent Rights")
distributed to holders of Parent Common Stock pursuant to
the Rights Agreement, dated as of February 28, 1989,
between Parent and the Bank, as Rights Agent (the "Parent
Rights Agreement"). All of the issued and outstanding
shares of Parent 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. As of the date of
this Agreement, except as referred to above or reflected
in Section 4.2(a) of the Disclosure Schedule which is
being delivered by Parent to the Company herewith (the
"Parent Disclosure Schedule") and the Parent Rights
Agreement, Parent does not have and is not bound by any
outstanding subscriptions, options, warrants, calls,
commitments or agreements of any character calling for
the purchase or issuance of any shares of Parent Common
Stock or Parent Preferred Stock or any other equity
securities of Parent or any securities representing the
right to purchase or otherwise receive any shares of
Parent Common Stock or Parent Preferred Stock. The
shares of Parent Common Stock to be issued pursuant to
the Merger will be duly authorized and validly issued
and, at the Effective Time, all such shares will be fully
paid, nonassessable and free of preemptive rights, with
no personal liability attaching to the ownership thereof.
(b) Section 4.2(b) of the Parent
Disclosure Schedule sets forth a true and correct list of
all of the Subsidiaries of Parent as of the date of this
Agreement. Except as set forth in Section 4.2(b) of the
Parent Disclosure Schedule, Parent owns, directly or
indirectly, all of the issued and outstanding shares of
capital stock of each of the Subsidiaries of Parent, free
and clear of all liens, charges, encumbrances and
security interests whatsoever, and all of such shares are
duly authorized and validly issued and are fully paid,
nonassessable and free of preemptive rights, with no
personal liability attaching to the ownership thereof.
As of the date of this Agreement, no Subsidiary of Parent
has or is bound by any outstanding subscriptions,
options, warrants, calls, commitments or agreements of
any character with any party that is not a direct or
indirect Subsidiary of Parent calling for the purchase or
issuance of any shares of capital stock or any other
equity security of such Subsidiary or any securities
representing the right to purchase or otherwise receive
any shares of capital stock or any other equity security
of such Subsidiary.
4.3. Authority; No Violation. (a) Parent has
full corporate power and authority to execute and deliver
this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this
Agreement and the consummation of the transactions
contemplated hereby have been duly and validly approved
by the Board of Directors of Parent. The Board of
Directors of Parent has directed that this Agreement and
the transactions contemplated hereby be submitted to
Parent's stockholders for approval at a meeting of such
stockholders and, except for the adoption of this
Agreement by the requisite vote of Parent's stockholders,
no other corporate proceedings on the part of Parent are
necessary to consummate the transactions contemplated
hereby. This Agreement has been duly and validly
executed and delivered by Parent and (assuming due
authorization, execution and delivery by the Company)
constitutes a valid and binding obligation of Parent,
enforceable against Parent in accordance with its terms,
except as enforcement may be limited by general
principles of equity whether applied in a court of law or
a court of equity and by bankruptcy, insolvency and
similar laws affecting creditors' rights and remedies
generally.
(b) Upon its formation, Merger Bank will
have 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 will be duly and validly approved by
the Board of Directors of Merger Bank and by Parent as
the sole stockholder of Merger Bank, and, upon such
approval, no other corporate proceedings on the part of
Merger Bank will be necessary to consummate the
transactions contemplated hereby. This Agreement will be
duly and validly executed and delivered by Merger Bank
and (assuming due authorization, execution and delivery
by the Company) will constitute a valid and binding
obligation of Merger Bank, enforceable against Merger
Bank in accordance with its terms, except as enforcement
may be limited by laws affecting insured depository
institutions, general principles of equity whether
applied in a court of law or a court of equity and by
bankruptcy, insolvency and similar laws affecting
creditors' rights and remedies generally.
(c) Except as set forth in Section 4.3(c)
of the Parent Disclosure Schedule, neither the execution
and delivery of this Agreement by Parent or Merger Bank,
nor the consummation by Parent or Merger Bank, as the
case may be, of the transactions contemplated hereby, nor
compliance by Parent or Merger Bank, as the case may be,
with any of the terms or provisions hereof, will (i)
violate any provision of the Certificate of Incorporation
or By-Laws of Parent, or the articles of incorporation or
by-laws or similar governing documents of any of its
Subsidiaries or (ii) assuming that the consents and
approvals referred to in Section 4.4 are duly obtained,
(x) violate any statute, code, ordinance, rule,
regulation, judgment, order, writ, decree or injunction
applicable to Parent or any of its Subsidiaries or any of
their respective properties or assets, or (y) violate,
conflict with, result in a breach of any provision of or
the loss of any benefit under, constitute a default (or
an event which, with notice or lapse of time, or both,
would constitute a default) under, result in the
termination of or a right of termination or cancellation
under, accelerate the performance required by, or result
in the creation of any lien, pledge, security interest,
charge or other encumbrance upon any of the respective
properties or assets of Parent or any of its Subsidiaries
under, any of the terms, conditions or provisions of any
note, bond, mortgage, indenture, deed of trust, license,
lease, agreement or other instrument or obligation to
which Parent or any of its Subsidiaries is a party, or by
which they or any of their respective properties or
assets may be bound or affected, 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 Parent.
4.4. Consents and Approvals. (a) Except for
(i) the filing of applications or notices, as applicable,
with the Federal Reserve Board under the BHC Act, and
approval of such applications or notices, (ii) the filing
of an application with the FDIC under the Bank Merger Act
and approval of such applications and notices, (iii) the
filing of an application with the Banking Department and
approval of such application, (iv) the filing with the
FDIC and the SEC of the Proxy Statement and with the SEC
of the S-4, (v) the approval of this Agreement by the
requisite vote of the stockholders of Parent, (vi) review
of this Agreement and the transactions contemplated
hereby by the DOJ under federal antitrust laws, (vii) the
filing of an application with the NYSE to list the Parent
Common Stock to be issued in the Merger on the NYSE and
the approval of such application, and (viii) such filings
and approvals as are required to be made or obtained
under the securities or "Blue Sky" laws of various states
in connection with the issuance of the shares of Parent
Common Stock pursuant to this Agreement, and (ix) such
filings, authorizations or approvals as may be set forth
in Section 4.4 of the Parent Disclosure Schedule, no
consents or approvals of or filings or registrations with
any Governmental Entity or with any third party are
necessary on behalf of Parent in connection with (1) the
execution and delivery by Parent and Merger Bank of this
Agreement and (2) the consummation by Parent and Merger
Bank of the Merger and the other transactions
contemplated hereby.
(b) As of the date hereof, Parent is not
aware of any reasons relating to Parent or its
Subsidiaries (including, without limitation, Community
Reinvestment Act compliance) why all consents and
approvals shall not be procured from all regulatory
agencies having jurisdiction over the transactions
contemplated by this Agreement as shall be necessary for
consummation of the transactions contemplated by this
Agreement.
4.5. Financial Statements. Parent has
previously delivered to the Company copies of (a) the
consolidated balance sheets of Parent and its
Subsidiaries as of December 31 for the fiscal years 1994
and 1995 and the related consolidated statements of
income, changes in shareholders' equity and cash flows
for the fiscal years 1993 through 1995, inclusive, as
reported in Parent's Annual Report on Form 10-K for the
fiscal year ended December 31, 1995 filed with the SEC
under the Exchange Act, in each case accompanied by the
audit report of KPMG Peat Marwick LLP, independent public
accountants with respect to Parent, and (b) the unaudited
consolidated balance sheet of Parent and its Subsidiaries
as of March 31, 1995 and March 31, 1996 and the related
unaudited consolidated statements of income, changes in
shareholders' equity and cash flows for the three-month
periods then ended as reported in Parent's Quarterly
Report on Form 10-Q for the period ended March 31, 1996
filed with the SEC under the Exchange Act. The December
31, 1995 consolidated balance sheet of Parent (including
the related notes, where applicable) fairly presents the
consolidated financial position of Parent and its
Subsidiaries as of the date thereof, and the other
financial statements referred to in this Section 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 Parent and
its Subsidiaries for the respective fiscal periods or as
of the respective dates therein set forth; each of such
statements (including the related notes, where
applicable) 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 Parent 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 Parent nor any
Subsidiary of Parent, nor any of their respective
officers or directors, has employed any broker or finder
or incurred any liability for any broker's fees,
commissions or finder's fees in connection with any of
the transactions contemplated by this Agreement or the
Option Agreement, except that Parent has engaged, and
will pay a fee or commission to Keefe, Bruyette & Woods,
Inc. ("KBW") in accordance with the terms of a letter
agreement between Parent and KBW, a true, complete and
correct copy of which has been previously delivered by
Parent to the Company.
4.7. Absence of Certain Changes or Events.
Except as may be set forth in Section 4.7 of the Parent
Disclosure Schedule, since March 31, 1996, (i) neither
Parent nor any of its Subsidiaries has incurred any
material liability, except in the ordinary course of
business consistent with their past practices (excluding
the incurrence of expenses in connection with this
Agreement and the transactions contemplated hereby) and
except in connection with acquisitions permitted by
Section 5.2(e) hereof 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 Parent.
4.8. Legal Proceedings. (a) Except as set
forth in Section 4.8 of the Parent Disclosure Schedule,
neither Parent nor any of its Subsidiaries is a party to
any and there are no pending or, to the best of Parent's
knowledge, threatened, material legal, administrative,
arbitral or other proceedings, claims, actions or
governmental or regulatory investigations of any nature
against Parent or any of its Subsidiaries or challenging
the validity or propriety of the transactions
contemplated by this Agreement 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
expected to have a Material Adverse Effect on Parent.
(b) There is no injunction, order,
judgment, decree or regulatory restriction imposed upon
Parent, any of its Subsidiaries or the assets of Parent
or any of its Subsidiaries which has had, or could
reasonably be expected to have, a Material Adverse Effect
on Parent.
4.9. Compliance with Applicable Law. Parent
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 Parent 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
Parent, and neither Parent 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. Parent 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, 1992 by Parent with the SEC pursuant to
the Securities Act of 1933, as amended (the "Securities
Act") or the Exchange Act (the "Parent Reports") and (b)
communication mailed by Parent to its shareholders since
January 1, 1992, and no such Parent Report or
communication contained any untrue statement of a
material fact or omitted to state any material fact
required to be stated therein or necessary in order to
make the statements therein, in light of the
circumstances in which they were made, not misleading,
except that information as of a later date shall be
deemed to modify information as of an earlier date.
Parent has timely filed all Parent Reports and other
documents required to be filed by it under the Securities
Act and the Exchange Act, and, as of their respective
dates, all Parent Reports complied in all material
respects with the published rules and regulations of the
SEC with respect thereto.
4.11. Parent Information. The information
relating to Parent and its Subsidiaries to be contained
in (whether directly or incorporated by reference) the
Proxy Statement and the S-4, or in any other document
filed with any other Governmental Entity in connection
herewith, will not contain any untrue statement of a
material fact or omit to state a material fact necessary
to make the statements therein, in light of the
circumstances in which they are made, not misleading.
4.12. Ownership of Company Common Stock.
Except for the Option Agreement and as set forth in
Section 4.12 of the Parent Disclosure Schedule, neither
Parent 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
any shares of capital stock of the Company (other than
Trust Account Shares and DPC Shares).
4.13. Taxes. Except as set forth in Section
4.13 of the Parent Disclosure Schedule, each of Parent
and its Subsidiaries has (i) duly and timely filed
(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 are true, correct and complete in all material
respects, and (ii) paid in full or made adequate
provision in the financial statements of Parent (in
accordance with GAAP) for all Taxes. No deficiencies for
any Taxes have been proposed, asserted, assessed or, to
the best knowledge of Parent, threatened against or with
respect to Parent or any of its Subsidiaries. Except as
set forth in Section 4.13 of the Parent Disclosure
Schedule, (i) there are no liens for Taxes upon the
assets of either Parent or its Subsidiaries except for
statutory liens for current Taxes not yet due, (ii)
neither Parent nor any of its Subsidiaries has requested
any extension of time within which to file any Tax
Returns in respect of any fiscal year which have not
since been filed and no request for waivers of the time
to assess any Taxes are pending or outstanding, (iii)
with respect to each taxable period of Parent and its
Subsidiaries, the federal and state income Tax Returns of
Parent and its Subsidiaries have been audited by the
Internal Revenue Service or appropriate state tax
authorities or the time for assessing and collecting
income Tax with respect to such taxable period has closed
and such taxable period is not subject to review, (iv)
neither Parent nor any of its Subsidiaries has filed or
been included in a combined, consolidated or unitary
income Tax Return other than one in which Parent was the
parent of the group filing such Tax Return, (v) neither
Parent nor any of its Subsidiaries 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),
(vi) neither Parent nor any of its Subsidiaries is
required to include in income any adjustment pursuant to
Section 481(a) of the Code (or any similar or
corresponding provision or requirement of state, local or
foreign income Tax law), 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), (vii) neither Parent nor any of its
Subsidiaries has filed a consent pursuant to Section
341(f) of the Code, and (viii) neither Parent nor any of
its Subsidiaries has made any payment or will be
obligated to make any payment (by contract or otherwise)
which will not be deductible by reason of Section 280G of
the Code.
4.14. Employees. (a) Section 4.14(a) of the
Parent Disclosure Schedule sets forth a true and complete
list of each employee benefit plan, arrangement or
agreement (including, without limitation, each
employment, severance and similar agreement) that is
maintained or contributed to or required to be
contributed to as of the date of this Agreement (the
"Parent Plans") by Parent, any of its Subsidiaries or by
any trade or business, whether or not incorporated (a
"Parent ERISA Affiliate"), all of which together with
Parent would be deemed a "single employer" within the
meaning of Section 4001 of ERISA, for the benefit of any
director, employee or former employee of Parent, any
Subsidiary or any ERISA Affiliate.
(b) Except as set forth in Section 4.14(b) of
the Parent Disclosure Schedule, (i) each of the Parent
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 Parent 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
Parent 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 Parent
Plan which is subject to Title IV of ERISA, the present
value of accrued benefits under such Parent Plan, based
upon the actuarial assumptions used for funding purposes
in the most recent actuarial report prepared by such
Parent 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 Parent 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 Parent, 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 Parent, 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 Parent, its
Subsidiaries or any Parent ERISA Affiliate that has not
been satisfied in full, (vi) no Parent 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 Parent, 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 Parent, its Subsidiaries nor any ERISA Affiliate
has engaged in a transaction in connection with which
Parent, 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 Parent, threatened
or anticipated claims (other than routine claims for
benefits) by, on behalf of or against any of the Parent
Plans or any trusts related thereto and (x) the
consummation of the transactions contemplated by this
Agreement will not (y) entitle any current or former
employee or officer of Parent 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 Parent
Disclosure Schedule, neither Parent nor any of its
Subsidiaries is subject to any cease-and-desist or other
order issued by, or is a party to any written agreement,
consent agreement or memorandum of understanding with, or
is a party to any commitment letter or similar
undertaking to, or is subject to any order or directive
by, or is a recipient of any extraordinary supervisory
letter from, or has adopted any board resolutions at the
request of (each, whether or not set forth in Section
4.15 of the Parent Disclosure Schedule, a "Parent
Regulatory Agreement"), any Governmental Entity that
restricts the conduct of its business or that in any
manner relates to its capital adequacy, its credit
policies, its management or its business, nor has Parent
or any of its Subsidiaries been advised by any
Governmental Entity that it is considering issuing or
requesting any Parent Regulatory Agreement.
4.16. Regulatory Reports; Examinations.
Parent 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 Governmental Entity, and have paid all
fees and assessments due and payable in connection
therewith. Except for normal examinations conducted by a
Governmental Entity in the regular course of the business
of Parent and its Subsidiaries, except as set forth in
Section 4.16 of Parent Disclosure Schedule, no
Governmental Entity has initiated any proceeding or, to
the best knowledge of Parent, investigation into the
business or operations of Parent or any of its
Subsidiaries since December 31, 1991. There is no
unresolved material violation, criticism, or exception by
any Governmental Entity with respect to any report or
statement relating to any examinations of Parent or any
of its Subsidiaries.
4.17. Environmental Matters. Except as set
forth in Section 4.17 of the Parent Disclosure Schedule:
(a) To the best of Parent's knowledge,
each of Parent, its Subsidiaries, the Participation
Facilities and the Loan Properties (each as hereinafter
defined) are, and have been, in compliance with all
applicable 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 Parent;
(b) There is no suit, claim, action or
proceeding, pending or, to the best of Parent's
knowledge, threatened, before any Governmental Entity or
other forum in which Parent any of its Subsidiaries, any
Participation Facility or any Loan Property, has been or,
with respect to threatened proceedings, may be, named as
a defendant (x) for alleged noncompliance (including by
any predecessor), with any Environmental Laws, or (y)
relating to the release, threatened release or exposure
to Hazardous Material whether or not occurring at or on a
site owned, leased or operated by Parent or any of its
Subsidiaries, any Participation Facility or any Loan
Property, except where such noncompliance or release has
not had, and cannot be reasonably expected to result in,
either individually or in the aggregate, a Material
Adverse Effect on Parent;
(c) To the best knowledge of Parent,
during and prior to the period of (x) Parent's or any of
its Subsidiaries' ownership or operation of any of their
respective current properties, (y) Parent's or any of its
Subsidiaries' participation in the management of any
Participation Facility, or (z) Parent's or any of its
Subsidiaries' holding of a security interest in a Loan
Property, there has been no release of Hazardous
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 Parent;
and
(d) The following definitions apply for
purposes of this Section 4.17: (x) "Loan Property" means
any property in which Parent or any of its Subsidiaries
holds a security interest, and, where required by the
context, said term means the owner or operator of such
property; and (y) "Participation Facility" means any
facility in which Parent or any of its Subsidiaries
participates in the management and, where required by the
context, said term means the owner or operator of such
property.
4.18. Derivative Transactions. Except as set
forth in Section 4.18 of the Parent Disclosure Schedule,
since December 31, 1995, neither Parent 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
Parent 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
Parent and its Subsidiaries on a consolidated basis under
or with respect to each such instrument has been
reflected in the books and records of Parent and such
Subsidiaries to the extent required by GAAP consistently
applied, and no open exposure of Parent or any of its
Subsidiaries with respect to any such instrument (or with
respect to multiple instruments with respect to any
single counterparty) exceeds $250,000.
4.19. Loan Portfolio. (a) Except as set
forth in Section 4.19 of the Parent Disclosure Schedule,
neither Parent nor any of its Subsidiaries is a party to
any written or oral (i) Loan, other than Loans the unpaid
principal balance of which does not exceed $250,000,
under the terms of which the obligor 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, to the best of
Parent's knowledge, greater than five percent stockholder
of Parent or any of its Subsidiaries, or to the best
knowledge of Parent, any person, corporation or
enterprise controlling, controlled by or under common
control with any of the foregoing. Section 4.19 of the
Parent Disclosure Schedule sets forth (i) all of the
Loans in original principal amount in excess of $250,000
of Parent or any of its Subsidiaries that as of 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, (ii) by category of
Loan (i.e., commercial, consumer, etc.), all of the other
Loans of Parent 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 and (iii) each asset
of Parent that as of the date of this Agreement is
classified as "Other Real Estate Owned" and the book
value thereof.
(b) Each Loan in original principal
amount in excess of $250,000 (i) is evidenced by notes,
agreements or other evidences of indebtedness which are
true, genuine and what they purport to be, (ii) to the
extent secured, has been secured by valid liens and
security interests which have been perfected and (iii) is
the legal, valid and binding obligation of the obligor
named therein, enforceable in accordance with its terms,
subject to bankruptcy, insolvency, fraudulent conveyance
and other laws of general applicability relating to or
affecting creditors' rights and to general equity
principles, in each case other than Loans as to which the
failure to satisfy the foregoing standards would not have
a Material Adverse Effect on Parent.
4.20. Property. Each of Parent and its
Subsidiaries has good and marketable title free and clear
of all liens, encumbrances, mortgages, pledges, charges,
defaults or equitable interests to all of the properties
and assets, real and personal, tangible or intangible,
which, individually or in the aggregate, are material,
and which are reflected on the balance sheet of Parent as
of December 31, 1995 or acquired after such date, except
(i) liens for taxes not yet due and payable, (ii) pledges
to secure deposits and other liens incurred in the
ordinary course of banking business, (iii) such
imperfections of title, easements and encumbrances, if
any, as are not material in character, amount or extent
or (iv) for dispositions and encumbrances of, or on, such
properties and assets for adequate consideration in the
ordinary course of business. All leases pursuant to
which Parent or any Subsidiary, as lessee, leases real or
personal property which, individually or in the
aggregate, are material are valid and enforceable in
accordance with their respective terms and neither Parent
nor any of its Subsidiaries nor, to the best knowledge of
Parent, any other party thereto is in default in any
material respect thereunder.
4.21. Investment Securities. Section 4.21 of
the Parent Disclosure Schedule sets forth the book and
market value as of June 30, 1996 of the investment
securities, mortgage backed securities and securities
held for sale of Parent and its Subsidiaries. Section
4.21 of the Company Disclosure Schedule sets forth an
investment securities report as of June 30, 1996 which
includes security descriptions, CUSIP numbers, pool face
values, book values, coupon rates and current market
values.
4.22. Accounting for the Merger;
Reorganization. Assuming compliance by Parent with
Section 6.15 hereof, as of the date hereof, Parent has no
reason to believe that the Merger will fail to qualify
(i) for pooling-of-interests treatment under GAAP or (ii)
as a reorganization under Section 368(a) of the Code.
4.23. Opinion. Parent has received an opinion
from KBW to the effect that, subject to the terms,
conditions and qualifications set forth therein, as of
the date thereof, the aggregate consideration to be
issued by Parent pursuant to this Agreement is fair to
Parent and its stockholders from a financial point of
view. Such opinion has not been amended or rescinded as
of 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 or the Option
Agreement or with the prior written consent of Parent,
the Company and its Subsidiaries shall carry on their
respective businesses in the ordinary course consistent
with past practice. The Company will use its reasonable
best efforts to (x) preserve its business organization
and that of its Subsidiaries intact, (y) keep available
to itself and Parent the present services of the
employees of the Company and its Subsidiaries and (z)
preserve for itself and Parent 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 Parent, the Company shall not, and shall
not permit any of its Subsidiaries to:
(a) declare or pay any dividends on, or
make other distributions in respect of, any shares of its
capital stock, other than normal quarterly dividends in
an amount not in excess of the most recent quarterly
dividend paid in respect of each share of the Company
Common Stock, which dividends shall have the same record
and payment dates as the record and payment dates
relating to dividends on the Parent Common Stock, it
being the intention of the parties that the shareholders
of the Company receive dividends for any particular
quarter on either the Company Common Stock or the Parent
Common Stock but not both;
(b) (i) split, combine or reclassify any
shares of its capital stock 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 Option Plan and outstanding prior
to the date of this Agreement, in each case in accordance
with their present terms, (ii) pursuant to the Option
Agreement, and (iii) pursuant to the Rights Agreement;
(d) amend its Restated Organization
Certificate, Amended and Restated 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, (i) recommend or endorse any
takeover proposal, (ii) participate in any discussions or
negotiations, or (iii) provide third parties with any
nonpublic information, relating to any such inquiry or
proposal; provided, however, that the Company may
communicate information about any such takeover proposal
to its stockholders if, in the judgment of the Company's
Board of Directors, based upon the advice of outside
counsel, such communication is required under applicable
law. The Company will immediately cease and cause to be
terminated any existing activities, discussions or
negotiations previously conducted with any parties other
than Parent with respect to any of the foregoing. The
Company will take all actions necessary or advisable to
inform the appropriate individuals or entities referred
to in the first sentence hereof of the obligations
undertaken in this Section 5.1(e). The Company will
notify Parent immediately if any such inquiries or
takeover proposals are received by, any such information
is requested from, or any such negotiations or
discussions are sought to be initiated or continued with,
the Company, and the Company will promptly inform Parent
in writing of all of the relevant details with respect to
the foregoing. As used in this Agreement, "takeover
proposal" shall mean any tender or exchange offer,
proposal for a merger, consolidation or other business
combination involving the Company or any Subsidiary of
the Company or any proposal or offer to acquire in any
manner a substantial equity interest in, or a substantial
portion of the assets of, the Company or any Subsidiary
of the Company other than the transactions contemplated
or permitted by this Agreement and the Option Agreement;
(f) make any capital expenditures other
than expenditures 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 $25,000 individually and $200,000
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 except, in
every case, as may be required by applicable law;
(j) change its methods of accounting in
effect at September 30, 1995, 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 prevent the
Company from taking any action required by the Option
Agreement;
(m) 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, or 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;
(p) 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;
(q) 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;
(r) take any action which would cause the
termination or cancellation by the FDIC of insurance in
respect of the Company's deposits;
(s) make any loan or other extension of
credit, or commit to make any such loan or extension of
credit, to any director or officer of the Company or any
of its Subsidiaries without giving Parent five days'
notice in advance of the Company's or any of its
Subsidiaries' approval of such loan or extension of
credit or commitment relating thereto; or
(t) agree to do any of the foregoing.
5.2. Covenants of Parent. Except as set forth
in Section 5.2 of the Parent Disclosure Schedule or as
otherwise contemplated by this Agreement or consented to
in writing by the Company, Parent shall not, and shall
not permit any of its Subsidiaries to:
(a) solely in the case of Parent, declare
or pay any 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 Parent from
increasing the quarterly cash dividend on the Parent
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 except, in
every case, as may be required by applicable law;
(c) take or cause to be taken any action
which would disqualify the Merger 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 Parent to exercise its rights under the Option
Agreement; or
(d) amend its Certificate of
Incorporation or By-laws or other governing instrument in
a manner which would adversely affect in any manner the
terms of the Parent Common Stock or the ability of Parent
to consummate the transactions contemplated hereby;
(e) make any acquisition that
individually or in the aggregate can reasonably be
expected to materially adversely affect the ability of
Parent to consummate the transactions contemplated hereby
in a reasonably timely manner, or enter into any
agreement providing for, or otherwise participate in, any
merger, consolidation or other transaction in which
Parent or any surviving corporation may be required not
to consummate the Merger or any of the other transactions
contemplated hereby in accordance with the terms of this
Agreement; or
(f) agree to do any of the foregoing.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1. Regulatory Matters. (a) The parties
shall cooperate with respect to the preparation of the
Proxy Statement and the S-4 and shall promptly file such
documents with the FDIC and the SEC, as applicable. Each
of the Company and Parent shall use all reasonable
efforts to have the S-4 declared effective by the SEC
under the Securities Act and the Proxy Statement
authorized for use by the FDIC under the Exchange Act as
promptly as practicable after the respective filing
thereof, and each of the Company and Parent shall
thereafter mail the Proxy Statement to each of its
respective stockholders. Parent shall 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
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 all reasonable 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)
(it being understood that, subject to the provisions of
Section 5.2(e) hereof, any amendments to the S-4 or a
resolicitation of proxies as a consequence of a
subsequent proposed merger, stock purchase or similar
acquisition by Parent or any of its Subsidiaries shall
not violate this covenant). The Company and Parent shall
have the right to review in advance, and to the extent
practicable each will consult the other on, in each case
subject to applicable laws relating to the exchange of
information, all the information relating to the Company
or Parent, as the case may be, and any of their
respective Subsidiaries, which 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. Each party will keep the other apprised of
the status of matters relating to completion of the
transactions contemplated herein.
(c) Parent and the Company shall, upon
request, furnish each other with all information
concerning themselves, their Subsidiaries, directors,
officers and stockholders and such other matters as may
be reasonably necessary or advisable in connection with
the Proxy Statement, the S-4 or any other statement,
filing, notice or application made by or on behalf of
Parent, the Company or any of their respective
Subsidiaries to any Governmental Entity in connection
with the Merger and the other transactions contemplated
by this Agreement.
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 Parent, 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 Parent (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 Parent may
reasonably request. Neither Parent 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. Parent will hold all such
information in confidence to the extent required by, and
in accordance with, the provisions of the confidentiality
agreement, dated July 3, 1996, between Parent and the
Company (the "Confidentiality Agreement").
(b) Upon reasonable notice and subject to
applicable laws relating to the exchange of information,
Parent 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 Parent 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 Parent contained herein
are true and correct and that the covenants of Parent
contained herein have been performed in all material
respects. Neither Parent 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 Parent'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.
The Company will hold all such information in confidence
to the extent required by, and in accordance with, the
provisions of the Confidentiality Agreement.
(c) No investigation by either of the
parties or their respective representatives shall affect
the representations, warranties, covenants or agreements
of the other set forth herein.
6.3. Stockholder Meetings. The Company and
Parent each shall take all steps necessary to duly call,
give notice of, convene and hold a meeting of its
respective stockholders to be held as soon as is
reasonably practicable after the date on which the S-4 is
declared effective by the SEC and the Proxy Statement is
authorized for use by the FDIC for the purpose of voting
upon the approval of this Agreement and the consummation
of the transactions contemplated hereby. The Company and
Parent 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. The
Company and Parent shall coordinate and cooperate with
respect to the foregoing matters, with a view towards,
among other things, holding the respective meetings of
each party's stockholders on the same day.
6.4. Legal Conditions to Merger. Each of
Parent and the Company shall, and shall cause its
Subsidiaries to, use all reasonable 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 and to consummate the
transactions contemplated by this Agreement and (b) to
obtain (and to cooperate with the other party to obtain)
any consent, authorization, order or approval of, or any
exemption by, any Governmental Entity and any other third
party which is required to be obtained by the Company or
Parent or any of their respective Subsidiaries in
connection with the Merger and the other transactions
contemplated by this Agreement, and to comply with the
terms and conditions of such consent, authorization,
order or approval.
6.5. Affiliates. Each of Parent 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 Parent to approve this Agreement, a written
agreement, in the form of Exhibit 6.5(a) hereto (in the
case of affiliates of Parent) or 6.5(b) hereto (in the
case of affiliates of the Company).
6.6. Stock Exchange Listing. Parent shall use
all reasonable efforts to cause the shares of Parent
Common Stock to be issued in the Merger to be approved
for listing on the NYSE, subject to official notice of
issuance, as of the Effective Time.
6.7. Employee Benefit Plans; Existing
Agreements; Employment Agreement. (a) As soon as
practicable following the Effective Time, the employees
of the Company (the "Company Employees") shall be
entitled to participate in each of Parent's employee
benefit plans (excluding any agreement between the Parent
and an employee of the Parent or any of its Subsidiaries)
in which similarly situated employees of Parent's wholly
owned banking subsidiary participate, to the same extent
as comparable employees of Parent's wholly owned banking
subsidiary (it being understood that inclusion of Company
Employees in Parent's employee benefit plans may occur at
different times with respect to different plans). Parent
intends to continue, and to cause the Surviving
Corporation to continue, each of the existing Plans with
respect to which there exists a corresponding Parent
employee benefit plan until the date on which the
inclusion of Company Employees in Parent's corresponding
plan occurs.
(b) With respect to each Parent Plan that
is an "employee benefit plan," as defined in Section 3(3)
of ERISA, for purposes of determining eligibility to
participate, vesting, and entitlement to benefits,
including for severance benefits and vacation entitlement
(but not for accrual of pension benefits), service with
the Company shall be treated as service with the Parent;
provided however, that such service shall not be
recognized to the extent that such recognition would
result in a duplication of benefits. Such service also
shall apply for purposes of satisfying any waiting
periods, evidence of insurability requirements, or the
application of any preexisting condition limitations.
Company Employees shall be given credit for amounts paid
under a corresponding benefit plan during the same period
for purposes of applying deductibles, copayments and out-
of-pocket maximums as though such amounts had been paid
in accordance with the terms and conditions of the Parent
Plan.
(c) Following the Effective Time, Parent
shall honor and shall cause the Surviving Corporation to
honor in accordance with their terms all employment,
severance and other compensation agreements and
arrangements, including but not limited to severance
benefit plans, as in effect prior to the execution of
this Agreement and set forth in Section 6.7(c) of the
Company Disclosure Schedule (or as amended to the extent
permitted under Section 5.1(k) hereof). The provisions
of this Section 6.7(c) are intended to be for the benefit
of, and shall be enforceable by, each party to, or
beneficiary of, the foregoing agreements and
arrangements, and his or her heirs and representatives.
(d) Within 20 business days after the
Effective Time, if Thomas M. O'Brien so elects, Parent,
the Surviving Corporation and Mr. O'Brien shall enter
into an employment agreement and change-in-control
agreement in the form attached as Exhibit 6.7(d)(1) and
Exhibit 6.7(d)(2) hereto, respectively. The provisions
of this Section 6.7(d) are intended to be for the benefit
of, and shall be enforceable by, Mr. O'Brien.
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,
Parent 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 Parent;
provided, however, that (1) Parent shall have the right
to assume the defense thereof and upon such assumption
Parent shall not be liable to any Indemnified Party for
any legal expenses of other counsel or any other expenses
subsequently incurred by any Indemnified Party in
connection with the defense thereof, except that if
Parent elects not to assume such defense or counsel for
the Indemnified Parties reasonably advises that there are
issues which raise conflicts of interest between Parent
and the Indemnified Parties, the Indemnified Parties may
retain counsel reasonably satisfactory to them after
consultation with Parent, and Parent shall pay the
reasonable fees and expenses of such counsel for the
Indemnified Parties, (2) Parent shall in all cases be
obligated pursuant to this paragraph to pay for only one
firm of counsel for all Indemnified Parties, (3) Parent
shall not be liable for any settlement effected without
its prior written consent (which consent shall not be
unreasonably withheld) and (4) Parent shall have no
obligation hereunder to any Indemnified Party when and if
a court of competent jurisdiction shall ultimately
determine, and such determination shall have become final
and nonappealable, that indemnification of such
Indemnified Party in the manner contemplated hereby is
prohibited by applicable law. Any Indemnified Party
wishing to claim Indemnification under this Section 6.8,
upon learning of any such claim, action, suit, proceeding
or investigation, shall promptly notify Parent thereof,
provided that the failure to so notify shall not affect
the obligations of Parent under this Section 6.8 except
to the extent such failure to notify materially
prejudices Parent. Parent's obligations under this
Section 6.8 shall 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.
(b) Parent shall cause the Company to
maintain the Company's existing directors' and officers'
liability insurance policy (or a policy providing
coverage on substantially the same terms and conditions)
for acts or omissions occurring prior to the Effective
Time by persons who are currently covered by such
insurance policy maintained by the Company for a period
of three years following the Effective Time; provided,
however, that in no event shall Parent be required to
expend on an annual basis more than 200% of the current
amount expended by the Company (the "Insurance Amount")
to maintain or procure insurance coverage, and further
provided that if Parent is unable to maintain or obtain
the insurance called for by this Section 6.8(b) Parent
shall use all reasonable efforts to obtain as much
comparable insurance as available for the Insurance
Amount.
(c) In the event Parent or the Surviving
Corporation or any of its successors or assigns (i)
consolidates with or merges into any other person and
shall not be the continuing or surviving corporation or
entity of such consolidation or merger, or (ii) transfers
or conveys all or substantially all of its properties and
assets to any person, then, and in each such case, proper
provision shall be made so that the successors and
assigns of Parent 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 Financial Statements.
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 (other than the last
quarter of each fiscal year), Parent will deliver to the
Company Parent's Quarterly Report on Form 10-Q, as filed
with the SEC under the Exchange Act, and the Company will
deliver to Parent the Company's Quarterly Report on Form
F-4, as filed with the FDIC under the Exchange Act, and
as soon as reasonably available, but in no event more
than 90 days after the end of each fiscal year, Parent
will deliver to the Company Parent's Annual Report on
Form 10-K, as filed with the SEC under the Exchange Act,
and the Company will deliver to Parent the Company's
Annual Report on Form F-2, as filed with the FDIC 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 to vest the Surviving Corporation with full
title to all properties, assets, rights, approvals,
immunities and franchises of any of the parties to the
Merger, the proper officers and directors of each party
to this Agreement and their respective Subsidiaries shall
take all such necessary action as may be reasonably
requested by Parent.
6.11. Advice of Changes. Parent 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 Parent,
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 Parent
and to report the general status of the ongoing
operations of the Company and its Subsidiaries. Each of
the parties will promptly notify the other of any
material change in the normal course of business or in
the operation of the properties of it 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 it or any
of its Subsidiaries, and will keep the other fully
informed of such events.
6.13. Merger Bank. Parent shall cause Merger
Bank to be duly organized and to execute and deliver this
Agreement and take all necessary action to complete the
transactions contemplated hereby, subject to the terms
and conditions hereof.
6.14. Directorships; Advisory Committee.
(a) Parent shall cause its Board of Directors to be
expanded by two members and shall appoint Thomas M.
O'Brien and one of the current directors of the Company
selected by the Company and approved by Parent (which
approval shall not be unreasonably withheld) as nominees
(such persons, and any substitute person as provided in
the last sentence of this paragraph, the "Nominees") to
fill the vacancies on Parent's Board of Directors created
by such increase as of the Effective Time. In the event
any Nominee shall be nominated and elected to a class of
directors of Parent which provides for less than a three-
year term following the Effective Time, Parent shall
include such person on the list of nominees for director
presented by the Board of Directors of Parent and for
which said Board shall solicit proxies at the annual
meeting of stockholders of Parent following the Effective
Time at which directors of Parent are elected for such
class. In the event that any Nominee is unable to serve
as a director of Parent as a result of illness, death,
resignation or any other reason, Parent shall elect a
member of the Adisory Committee established pursuant to
Section 6.14(c) hereof selected by Parent as a substitute
nominee in accordance with this Section 6.14(a).
(b) The Company shall cause each of its
directors other than the Nominees to deliver to Parent
duly signed resignations which resignations shall be
effective as of the Effective Time.
(c) Parent shall appoint, as of the
Effective Time, those members of the Company's Board of
Directors immediately prior to the Effective Time, other
than the Nominees, as well as the Company's existing
Director Emeritus, in each case who are willing to serve,
as members of a newly formed advisory committee, which
committee shall meet at such times and at such places as
Parent shall determine. Each such committee member shall
receive an annual fee of $35,000, which fee shall be
payable in quarterly installments (with the first
installment to be paid at the end of the month in which
the Effective Time occurs). Parent's obligations under
this Section 6.14 shall continue for a period of three
years following the Effective Time. The provisions of
this Section 6.14(c) are intended to be for the benefit
of, and shall be enforceable by, each committee member.
6.15. Accountants' Letters. Each of Parent
and the Company shall use its reasonable efforts to cause
to be delivered to the other party a letter of its
respective independent public accountants dated (i) the
date on which the S-4 shall become effective and (ii) a
date shortly prior to the Effective Time, and addressed
to such other party, in form and substance customary for
"comfort" letters delivered by independent accountants in
accordance with Statement of Financial Accounting
Standards No. 72.
6.16. Parent Rights Agreement. Parent agrees
that any Parent Rights issued pursuant to the Parent
Rights Agreement shall be issued with respect to each
share of Parent Common Stock issued pursuant to the terms
hereof regardless whether there has occurred a
"Distribution Date" under the terms of such Parent Rights
Agreement prior to the Effective Time, as well as to take
all action necessary or advisable to enable the holder of
each such share of Parent Common Stock to obtain the
benefit of such Parent Rights notwithstanding their prior
distribution, including, without limitation, amendment of
the Parent Rights Agreement.
6.17. Plan of Integration. During the period
from the date of this Agreement to the Effective Time,
the Company and Parent shall cooperate with and assist
each other in formulating a plan of integration for the
Company, Parent and Parent's banking subsidiary.
6.18. Issuance of Treasury Shares. Parent
will use all reasonable efforts to reissue the requisite
number of shares of Parent Common Stock held as treasury
stock as of the date of this Agreement so that the Merger
will not fail to qualify for pooling of interests
accounting treatment by virtue of the number of shares of
Parent Common Stock held in Parent's treasury.
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 two-thirds 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 votes cast thereon by the
holders of the outstanding shares of Parent Common Stock
where the total votes cast by the holders of the Parent
Common Stock on such matter exceed 50% of the outstanding
shares of Parent Common Stock.
(b) NYSE Listing. The shares of Parent
Common Stock which shall be issued to the stockholders of
the Company upon consummation of the Merger shall have
been authorized for 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) 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 Parent shall have
received all state securities laws or "blue sky" permits
and other authorizations or there shall be exemptions
from registration requirements necessary to issue the
Parent Common Stock in connection with the Merger, and
neither the S-4 nor any such permit, authorization or
exemption shall be subject to a stop order or threatened
stop order by the SEC or any state securities authority.
(e) No Injunctions or Restraints;
Illegality. No order, injunction or decree issued by any
court or agency of competent jurisdiction or other legal
restraint or prohibition (an "Injunction") preventing the
consummation of the Merger or any of the other
transactions contemplated by this 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.
7.2. Conditions to Obligations of Parent. The
obligation of Parent to effect the Merger is also subject
to the satisfaction or waiver by Parent at or prior to
the Effective Time of the following conditions:
(a) Representations and Warranties. (I)
The representations and warranties of the Company set
forth in Section 3.2 and Section 3.3(a) of 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; (II) the representations and warranties
of the Company set forth in this Agreement shall be true
and correct as of the date of this Agreement and (except
to the extent such representations and warranties speak
as of an earlier date) as of the Closing Date as though
made on and as of the Closing Date; provided, however,
that for purposes of determining the satisfaction of the
condition contained in this clause (II), such
representations and warranties shall be deemed to be true
and correct unless the failure or failures of such
representations and warranties to be so true and correct,
individually or in the aggregate, represent a Material
Adverse Effect on the Company; and (III) 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
(III), 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 (III), 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 Effect on the Company.
Parent shall have received a certificate signed on behalf
of the Company by the Chief Executive Officer and the
Chief Financial Officer of the Company to the foregoing
effect.
(b) Performance of Obligations of the
Company. The Company shall have performed in all
material respects all obligations required to be
performed by it under this Agreement at or prior to the
Closing Date, and Parent shall have received a
certificate signed on behalf of the Company by the Chief
Executive Officer and the Chief Financial Officer of the
Company to such effect.
(c) 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
pursuant to the Merger 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 to which the Company or any of its
Subsidiaries is a party or is otherwise bound shall have
been obtained, except those consents or approvals for
which failure to obtain would not, individually or in the
aggregate, have a Material Adverse Effect on Parent
(after giving effect to the transactions contemplated
hereby).
(d) No Pending Governmental Actions. No
proceeding initiated by any Governmental Entity seeking
an Injunction shall be pending.
(e) Federal Tax Opinion. Parent shall
have received an opinion of Skadden, Arps, Slate, Meagher
& Flom, counsel to Parent ("Parent's Counsel"), in form
and substance reasonably satisfactory to Parent, dated as
of the Effective Time, substantially to the effect that,
on the basis of facts, representations and assumptions
set forth in such opinion which are consistent with the
state of facts existing at the Effective Time, the Merger
will be treated as a reorganization within the meaning of
Section 368(a) of the Code and that, accordingly, for
federal income tax purposes no gain or loss will be
recognized by Parent, the Company or Merger Bank as a
result of the Merger except to the extent the Company or
Merger Bank may be required to recognize any income due
to the recapture of bad debt reserves. In rendering such
opinion, Parent's Counsel may require and rely upon
representations and covenants contained in certificates
of officers of Parent, Merger Bank, the Company and
others.
(f) Pooling of Interests. Parent shall
have received a letter from KPMG Peat Marwick LLP
addressed to Parent, dated as of The Effective Time, to
the effect that, based on a review of this Agreement and
related agreements (including without limitation the
agreements referred to in Section 6.5 hereof) and the
facts and circumstances then known to it (including
without limitation the number of Dissenting Shares, if
any, in relation to the number of outstanding shares of
Company Common Stock immediately prior to the Effective
Time), the Merger shall be accounted for as a pooling-of-
interests under GAAP.
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 Parent set forth in
Section 4.2(b), 4.3(a) and Section 4.3(b) of 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; (II) the representations
and warranties of Parent 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 in this
clause (II), such representations and warranties shall be
deemed to be true and correct unless the failure or
failures of such representations and warranties to be so
true and correct, individually or in the aggregate,
represent a Material Adverse Effect on Parent (after
giving effect to the transactions contemplated hereby);
and (III) the representations and warranties of Parent
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
(III), 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 (III), 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 Effect on Parent (after
giving effect to the transactions contemplated hereby).
The Company shall have received a certificate signed on
behalf of Parent by the Chief Executive Officer and the
Chief Financial Officer of Parent to the foregoing
effect.
(b) Performance of Obligations of Parent.
Parent shall have performed in all material respects all
obligations required to be performed by it under this
Agreement at or prior to the Closing Date, and the
Company shall have received a certificate signed on
behalf of Parent by the Chief Executive Officer and the
Chief Financial Officer of Parent to such effect.
(c) 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 Parent
or any of its Subsidiaries is a party or is otherwise
bound shall have been obtained, except those for which
failure to obtain such consents and approvals would not,
individually or in the aggregate, have a Material Adverse
Effect on Parent (after giving effect to the transactions
contemplated hereby).
(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 will be treated as a
reorganization within the meaning of Section 368(a) of
the Code and that, accordingly, for federal income tax
purposes:
(i) No gain or loss will be
recognized by the Company as a result of the
Merger, except to the extent the Company or
Merger Bank may be required to recognize any
income due to the recapture of bad debt
reserves;
(ii) No gain or loss will be
recognized by the shareholders of the Company
who exchange all of their Company Common Stock
solely for Parent Common Stock pursuant to the
Merger (except with respect to cash received in
lieu of a fractional share interest in Parent
Common Stock);
(iii) The aggregate tax basis of the
Parent Common Stock received by shareholders
who exchange all of their Company Common Stock
solely for Parent Common Stock pursuant to the
Merger will be the same as the aggregate tax
basis of the Company Common Stock surrendered
in exchange therefor.
In rendering such opinion, the Company's Counsel may
require and rely upon representations and covenants
contained in certificates of officers of Parent, the
Company and others.
(f) Pooling of Interests. Parent shall
have received a letter from KPMG Peat Marwick LLP
addressed to Parent, dated as of The Effective Time, to
the effect that, based on a review of this Agreement and
related agreements (including without limitation the
agreements referred to in Section 6.5 hereof) and the
facts and circumstances then known to it (including
without limitation the number of Dissenting Shares, if
any, in relation to the number of outstanding shares of
Company Common Stock immediately prior to the Effective
Time), the Merger shall be accounted for as a pooling-of-
interests under GAAP.
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 the
Company and/or Parent:
(a) by mutual consent of the Company and
Parent in a written instrument, if the Board of Directors
of each so determines by a vote of a majority of the
members of its entire Board;
(b) by either Parent or the Company upon
written notice to the other party (i) 30 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 30-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 Parent or the Company if
the Merger shall not have been consummated on or before
June 30, 1997, unless the failure of the Closing to occur
by such date shall be due to the failure of the party
seeking to terminate this Agreement to perform or observe
the covenants and agreements of such party set forth
herein;
(d) by either Parent or the Company
(provided that the terminating party shall not be in
material breach of any of its obligations under Section
6.3 and any related obligations hereunder) if any
approval of the stockholders of either of the Company or
Parent required for the consummation of the Merger shall
not have been obtained by reason of the failure to obtain
the required vote at a duly held meeting of such
stockholders or at any adjournment or postponement
thereof;
(e) by either Parent or the Company
(provided that the terminating party is not then in
material breach of any representation, warranty, covenant
or other agreement contained herein) if there shall have
been a material breach of any of the representations or
warranties set forth in this Agreement on the part of the
other party, which breach is not cured within 30 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 any
representation or warranty, together with all other such
breaches, would entitle the party receiving such
representation or warranty not to consummate the
transactions contemplated hereby under Section 7.2(a) (in
the case of a breach of a representation or warranty by
the Company) or Section 7.3(a) (in the case of a breach
of a representation or warranty by Parent);
(f) by either Parent or the Company
(provided that the terminating party is not then in
material breach of any representation, warranty, covenant
or other agreement contained herein) if there shall have
been a material breach of any of the covenants or
agreements set forth in this Agreement on the part of the
other party, which breach shall not have been cured
within 30 days following receipt by the breaching party
of written notice of such breach from the other party
hereto; or
(g) by the Company, by action of its
Board of Directors by giving written notice of such
election to Parent within two business days after the
Valuation Period (as defined below) in the event the
Average Closing Price (as defined below) is less than
$24.00 per share; provided, however, that no right of
termination shall arise under this Section 8.1(g) if
Parent elects within five business days of receipt of
such written notice to notify the Company in writing that
it has increased the Exchange Ratio such that the value
of the product of such increased Exchange Ratio and the
Average Closing Price is not less than $37.34 per share.
As used herein, the term "Average Closing Price" means
the average closing sales price per share of Parent
Common Stock on the NYSE (as reported by The Wall Street
Journal or, if not reported thereby, another
authoritative source), for the 10 consecutive NYSE
trading days (the "Valuation Period") ending on the fifth
business day prior to the date on which the approval of
the transactions contemplated hereby by the Federal
Reserve Board is obtained, without regard to any
requisite waiting period in respect thereof; provided,
however, that if Parent shall elect to modify the
structure of the Merger pursuant to Section 9.2 hereof,
the Valuation Period shall end on the fifth business day
prior to the date on which the approval of the
transactions contemplated hereby by the FDIC is obtained,
without regard to any requisite waiting period in respect
thereof;
(h) by Parent, 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 Parent; or
(i) by the Company, if the Board of
Directors of Parent does not publicly recommend in the
Proxy Statement that Parent'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 Parent shall have
withdrawn, modified or amended such recommendation in any
respect materially adverse to the Company.
8.2. Effect of Termination; Expenses. In the
event of termination of this Agreement by either Parent
or the Company as provided in Section 8.1, this Agreement
shall forthwith become void and have no effect except
that (i) the last sentence of each of Sections 6.2(a) and
6.2(b), and Sections 8.2 and 9.4, shall survive any
termination of this Agreement and (ii) 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.
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 Parent; provided, however, that after any approval of
this Agreement by Parent's and/or 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, the closing of the Merger
(the "Closing") will take place at 10:00 a.m. on the
first day which is (a) the last business day of 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 Parent'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,
prior to the Effective Time, Parent shall be entitled to
revise the structure of the Merger such that the Company
shall be merged with and into Parent's wholly owned
banking subsidiary in existence as of the date of this
Agreement; provided, however, that such revised structure
shall (i) qualify as, a tax-free reorganization 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, and (iii) not materially delay the Closing.
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 the Option Agreement, which shall terminate
only as provided therein) 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 Parent
shall be borne equally by Parent 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 Parent, to:
North Fork Bancorporation, Inc.
275 Broad Hollow Road
Melville, New York 11747
Attention: Chief Executive Officer
with a copy to:
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, New York 10022
Attn: William S. Rubenstein, Esq.
and
(b) if to the Company, to:
North Side Savings Bank
170 Tulip Avenue
Floral Park, New York 11001
Attention: Thomas M. O'Brien
with a copy to:
Elias, Matz, Tiernan & Herrick, Esq.
734 15th Street N.W.
Washington, D.C. 20005
Attn: Timothy B. Matz, Esq.
Gerard L. Hawkins, 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. 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
July 15, 1996.
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
and the Option Agreement.
9.9. Governing Law. This Agreement shall be
governed and construed in accordance with the laws of the
State of New York, 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 each of Sections 6.2(a) and 6.2(b) of this Agreement
were not performed in accordance with its specific terms
or were otherwise breached. It is accordingly agreed
that the parties shall be entitled to an injunction or
injunctions to prevent breaches of the last sentence of
Section 6.2(a) and of Section 6.2(b) of this Agreement
and to enforce specifically the terms and provisions
thereof in any court of the United States or any state
having jurisdiction, this being in addition to any other
remedy to which they are entitled at law or in equity.
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 NASDAQ, so long as
this Agreement is in effect, neither Parent nor the
Company shall, or shall permit any of its Subsidiaries
to, issue or cause the publication of any press release
or other public announcement with respect to, or
otherwise make any public statement concerning, the
transactions contemplated by this Agreement without the
consent of the other party, which consent shall not be
unreasonably withheld.
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, Parent, Merger Bank 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 and CEO
Attest:
Name:
Title:
MERGER BANK
By:
Name:
Title:
Attest:
Name:
Title:
NORTH SIDE SAVINGS BANK
By: /s/ Thomas M. O'Brien
Name: Thomas M. O'Brien
Title: President and CEO
Attest:
/s/ Judith A. MacGregor
Name: Judith A. MacGregor
Title: Corporate Secretary
CONFORMED COPY
THE TRANSFER OF THIS AGREEMENT IS
SUBJECT TO CERTAIN PROVISIONS CONTAINED
HEREIN AND MAY BE SUBJECT TO TRANSFER RESTRICTIONS UNDER
THE FEDERAL SECURITIES LAWS AND
STATE AND FEDERAL BANKING LAWS
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of July 15,
1996 (the "Agreement"), by and between North Side Savings
Bank, a New York-chartered stock form savings bank
("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 a wholly owned subsidiary of
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 961,965 shares (subject to adjustment as set forth
herein) (the "Option Shares") of common stock, par value
$1.00 per share, of Issuer ("Issuer Common Stock") at a
purchase price (subject to adjustment as set forth
herein) of $34.75 per Option Share (the "Purchase
Price"), provided that in no event shall the number of
Option Shares for which the Option is exercisable exceed
19.9% of the issued and outstanding shares of Issuer
Common Stock without giving effect to any shares subject
to or issued pursuant to the Option.
3. Exercise of Option. (a) Provided that (i)
Grantee is not in material breach of the agreements or
covenants contained in the Merger Agreement and (ii) no
preliminary or permanent injunction or other order
against the delivery of Option Shares issued by any court
of competent jurisdiction in the United States shall be
in effect, Grantee may exercise the Option, in whole or
part, and from time to time, if, but only if, both an
Initial Triggering Event (as hereinafter defined) and a
Subsequent Triggering Event (as hereinafter defined)
shall have occurred prior to the occurrence of an
Exercise Termination Event (as hereinafter defined);
provided, however, that Grantee shall have sent the
written notice of such exercise (as provided in
subsection (d) of this Section 3) within 90 days
following such Subsequent Triggering 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 the New York Banking Law; 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. Each of the following shall be an Exercise
Termination Event: (i) the Effective Time; (ii)
termination of the Merger Agreement in accordance with
the provisions thereof if such termination occurs prior
to the occurrence of an Initial Triggering Event; or
(iii) the passage of twelve months after termination of
the Merger Agreement if such termination follows the
occurrence of an Initial Triggering Event; provided,
however, that if an Initial Triggering Event continues or
occurs beyond such termination and prior to the passage
of such twelve-month period, the Exercise Termination
Event shall be twelve months from the expiration of the
Last Triggering Event (as hereinafter defined) but in no
event more than 15 months after such termination of the
Merger Agreement. The "Last Triggering Event" shall mean
the last Initial Triggering Event to expire. The rights
set forth in Section 8 hereof shall terminate at the time
set forth in Section 8.
(b) The term "Initial Triggering Event"
shall mean any of the following events or transactions
occurring after the date hereof:
(i) Issuer or any of its Subsidiaries,
without having received Grantee's prior written
consent, shall have entered into an agreement to
engage in an Acquisition Transaction (as hereinafter
defined) with any person (other than Grantee or any
of its Subsidiaries) or Issuer or any of its
Subsidiaries, without having received Grantee's
prior written consent, shall have authorized,
recommended, proposed, or publicly announced its
intention to authorize, recommend or propose to
engage in, an Acquisition Transaction with any
person other than Grantee or a Subsidiary of
Grantee. For purposes of this Agreement,
"Acquisition Transaction" shall mean (w) a merger or
consolidation, or any similar transaction, involving
Issuer or any of its Subsidiaries (other than
internal mergers, reorganizations, consolidations or
dissolutions involving only existing Subsidiaries),
(x) a purchase, lease or other acquisition of all or
a substantial portion of the consolidated assets of
Issuer and its Subsidiaries, or (y) a purchase or
other acquisition (including by way of merger,
consolidation, Tender Offer or Exchange Offer (as
such terms are hereinafter defined), share exchange
or otherwise) of securities representing 10% or more
of the voting power of Issuer or any of its
Subsidiaries;
(ii) Any person other than Grantee or any
Subsidiary of Grantee shall have acquired beneficial
ownership or the right to acquire beneficial
ownership of 10% or more of the outstanding shares
of Issuer Common Stock (the term "beneficial
ownership" for purposes of this Option Agreement
having the meaning assigned thereto in Section 13(d)
of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and the rules and regulations
thereunder) or any person other than Grantee or any
Subsidiary of Grantee shall have commenced (as such
term is defined under the rules and regulations of
the Federal Deposit Insurance Corporation (the
"FDIC")), or shall have filed or publicly
disseminated a registration statement or similar
disclosure statement 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 10% 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);
(iii)(A) 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, (B) such meeting shall not
have been held or shall have been cancelled prior to
termination of the Merger Agreement, or (C) the
Board of Directors of Issuer shall have publicly
withdrawn or modified, or publicly announced its
interest to withdraw or modify, in any manner
adverse to Grantee, its recommendation that the
stockholders of Issuer approve the transactions
contemplated by the Merger Agreement, in each case
after it shall have been publicly announced that any
person other than Grantee or any Subsidiary of
Grantee shall have (x) made, or disclosed an
intention to make, a proposal to engage in an
Acquisition Transaction, (y) commenced a Tender
Offer, or filed or publicly disseminated a
registration statement or similar disclosure
statement with respect to an Exchange Offer, or (z)
filed an application (or given a notice), whether in
draft or final form, under any federal or state
banking laws seeking regulatory approval to engage
in an Acquisition Transaction; or
(iv) Issuer shall have breached any covenant or
obligation contained in the Merger Agreement and such
breach would entitle Grantee to terminate the Merger
Agreement in accordance with the terms thereof (without
regard to any cure periods provided for in the Merger
Agreement unless such cure is promptly effected without
jeopardizing the consummation of the Merger in accordance
with the terms of the Merger Agreement) after (A) a bona
fide proposal is made by any person other than Grantee or
any Subsidiary of Grantee to Issuer or its stockholders
to engage in an Acquisition Transaction, (B) any person
other than Grantee or any Subsidiary of Grantee states
its intention to Issuer or its stockholders to make a
proposal to engage in an Acquisition Transaction if the
Merger Agreement terminates, or (C) any person other than
Grantee or any Subsidiary of Grantee shall have filed an
application or notice, whether in draft or final form,
with any Governmental Entity to engage in an Acquisition
Transaction.
(c) The term "Subsequent Triggering Event"
shall mean either of the following events or transactions
occurring after the date hereof:
(i) The acquisition by any person of
beneficial ownership of 25% or more of the then
outstanding Issuer Common Stock; or
(ii) The occurrence of the Initial
Triggering Event described in clause (i) of
subsection (b) of this Section 3, except that the
percentage referred to in clause (y) shall be 25%.
As used in this Agreement, "Person" shall have the
meaning specified in Sections 3(a)(9) and 13(d)(3) of the
Exchange Act.
(d) In the event Grantee is entitled to
under the terms of this Agreement and 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 any
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.
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 13(f) hereof.
(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 as provided in
Section 114 of the New York Banking Law 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) In addition to any other legend that
is required by applicable law, 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 FEDERAL SECURITIES LAWS AND
STATE AND FEDERAL BANKING LAWS AND PURSUANT TO
THE TERMS OF A STOCK OPTION AGREEMENT DATED AS
OF JULY 15, 1996. 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 (i) 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 of 1933,
as amended (the "Securities Act") and (ii) a letter from
the staff of each of the relevant regulatory authorities,
or an opinion of counsel in form and substance reasonably
satisfactory to Issuer and its counsel, to the effect
that such legend is not required under applicable state
or federal banking laws.
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 Restated Organization
Certificate (the "Organization Certificate") or Amended
and Restated ByLaws 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 Option 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 and except as
provided in Section 114 of the New York Banking Law.
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 required regulatory
approvals or consents, 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 and applicable
state and federal banking laws.
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 19.9% 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 any of (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 National Association of
Securities Dealers, Inc. Automated Quotation/National
Market System ("NASDAQ") (or if Issuer Common Stock is
not quoted on NASDAQ, 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 referred to in
Section 7(c) hereof; provided, however, that in the event
of a sale of all or substantially 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 (as defined below),
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 selected by Grantee (or a majority of
interest of the Grantees if there shall be more than one
Grantee (a "Grantee Majority")) and reasonably acceptable
to Issuer, which determination shall be conclusive for
all purposes of this Agreement.
(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 19.9% 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
19.9% 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 (other than any diminution in value
resulting from the fact that the shares of Substitute
Common Stock may be restricted securities, as defined in
Rule 144 under the Securities Act) than other shares of
common stock issued by the Substitute Option Issuer).
(h) The provisions of Sections 8, 9 and
10 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. Repurchase at the Option of Grantee. (a)
At the request of Grantee at any time commencing upon the
first occurrence of a Repurchase Event (as defined in
Section 8(d) below) and ending 12 months immediately
thereafter, Issuer shall repurchase from Grantee (I) the
Option and (II) all shares of Issuer Common Stock
purchased by Grantee pursuant hereto with respect to
which Grantee then has beneficial ownership. The date on
which Grantee exercises its rights under this Section 8
is referred to as the "Request Date". Such repurchase
shall be at an aggregate price (the "Section 8 Repurchase
Consideration") equal to the sum of:
(i) the aggregate Purchase Price
paid by Grantee for any shares of Issuer Common
Stock acquired pursuant to the Option with
respect to which Grantee then has beneficial
ownership;
(ii) the excess, if any, of (x) the
Applicable Price (as defined below) for each
share of Issuer Common Stock over (y) the
Purchase Price (subject to adjustment pursuant
to Section 7), multiplied by the number of
shares of Issuer Common Stock with respect to
which the Option has not been exercised; and
(iii) the excess, if any, of the
Applicable Price over the Purchase Price
(subject to adjustment pursuant to Section 7)
paid (or, in the case of Option Shares with
respect to which the Option has been exercised
but the Closing Date has not occurred, payable)
by Grantee for each share of Issuer Common
Stock with respect to which the Option has been
exercised and with respect to which Grantee
then has beneficial ownership, multiplied by
the number of such shares.
(b) If Grantee exercises its rights under
this Section 8, Issuer shall, within 10 business days
after the Request Date, pay the Section 8 Repurchase
Consideration to Grantee in immediately available funds
by wire transfer to a bank account designated by Grantee,
and Grantee shall surrender to Issuer the Option and the
certificates evidencing the shares of Issuer Common Stock
purchased thereunder with respect to which Grantee then
has beneficial ownership, and Grantee shall warrant that
it has sole record and beneficial ownership of such
shares and that the same are then free and clear of all
liens, claims, charges and encumbrances of any kind
whatsoever. Notwithstanding the foregoing, to the extent
that prior notification to or approval of any regulatory
authority is required in connection with the payment of
all or any portion of the Section 8 Repurchase
Consideration, Grantee shall have the ongoing option to
revoke its request for repurchase pursuant to Section 8
or to require that Issuer (a) deliver from time to time
that portion of the Section 8 Repurchase Consideration
that it is not then so prohibited from paying and (b)
promptly file the required notice or application for
approval and expeditiously process the same (and each
party shall cooperate with the other in the filing of any
such notice or application and the obtaining of any such
approval). If any regulatory authority disapproves of
any part of Issuer's proposed repurchase pursuant to this
Section 8, Issuer shall promptly give notice of such fact
to Grantee and redeliver to Grantee the Option and/or
Option Shares it is then prohibited from repurchasing,
and Grantee shall have the right (x) to exercise the
Option as to the number of Option Shares for which the
Option was exercisable at the Request Date less the
number of shares covered by the Option in respect of
which payment has been made pursuant to Section 8(a)(ii)
hereof or (y) to revoke its request for repurchase with
respect to any Option Shares in respect of which such
payment has been made and exercise the Option as to the
number of Option Shares for which the Option was
exercisable at the Request Date. Notwithstanding
anything herein to the contrary, (i) all of Grantee's
rights under this Section 8 shall terminate on the date
of termination of this Option pursuant to Section 3(a)
hereof, unless this Option shall have been exercised in
whole or part prior to the date of termination and (ii)
if this Option shall have been exercised in whole or in
part prior to the date of termination described in clause
(i) above, then Grantee's rights under this Section 8
shall terminate 12 months after such date of termination.
(c) For purposes of this Agreement, the
"Applicable Price" means the highest of (i) the highest
price per share of Issuer Common Stock paid for any such
share by the person or groups described in Section
8(d)(i) hereof, (ii) the price per share of Issuer Common
Stock received by holders of Issuer Common Stock in
connection with any merger or other business combination
transaction described in Section 7(b)(i), 7(b)(ii) or
7(b)(iii) hereof or (iii) the highest closing sales price
per share of Issuer Common Stock quoted on NASDAQ (or if
Issuer Common Stock is not quoted on NASDAQ, 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) during the 60
business days preceding the Request Date; provided,
however, that in the event of a sale of less than all of
Issuer's assets, the Applicable Price 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, divided by the number
of shares of the Issuer Common Stock outstanding at the
time of such sale. If the consideration to be offered,
paid or received pursuant to either of the foregoing
clauses (i) or (ii) shall be other than in cash, the
value of such consideration shall be determined in good
faith by an independent nationally recognized investment
banking firm selected by Grantee (or a Grantee Majority)
and reasonably acceptable to Issuer, which determination
shall be conclusive for all purposes of this Agreement.
(d) As used herein, a "Repurchase Event"
shall occur if (i) any person (other than Grantee or any
of its Subsidiaries) shall have acquired beneficial
ownership of (as such term is defined in Rule 13d-3 under
the Exchange Act) or the right to acquire beneficial
ownership of, or any "group" (as such term is defined
under the Exchange Act) (other than Grantee or any
Subsidiary of Grantee) shall have been formed which
beneficially owns or has the right to acquire beneficial
ownership of, 50% or more of the then outstanding shares
of Issuer Common Stock or (ii) any of the transactions
described in Section 7(b)(i), 7(b)(ii) or 7(b)(iii)
hereof shall be consummated.
(e) Notwithstanding anything herein to
the contrary, the aggregate amount payable to Grantee
pursuant to this Section 8 shall not exceed $10,000,000.
9. 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, provided that such period of time shall be
extended by the number of days, if any, by which Issuer
shall delay the registration of the Issuer Common Stock
pursuant to the proviso contained at the end of this
sentence, as expeditiously as possible prepare and file
up to two registration statements under the Securities
Act if such registration is necessary, and up to two
registration or equivalent statements under the rules and
regulations of the Federal Deposit Insurance Corporation
(the "FDIC") (or in any event up to two suitable
disclosure statements for federal securities law purposes
if no such registration is required under the Securities
Act or the applicable rules and regulations of the FDIC)
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; provided, however, that
Issuer may delay for a period not to exceed 90 days
filing a registration or equivalent statement if Issuer
shall in good faith determine that (i) any such
registration would adversely affect an offering or
contemplated offering of securities by Issuer or (ii) the
filing of such registration or equivalent statement
would, if not so delayed, materially and adversely affect
a then proposed or pending financial project,
acquisition, merger or corporate reorganization; and
provided further, that nothing contained herein shall
limit or adversely affect in any manner Grantee's rights
contained in the fourth following sentence hereof.
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 or similar
statement prepared and filed under this Section 9, 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 or similar statement to be filed
hereunder. If during the time periods referred to in the
first sentence of this Section 9 Issuer effects a
registration under the Securities Act or the rules and
regulations of the FDIC of Issuer Common Stock for its
own account or for any other stockholder 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, and other than on the equivalent forms of
the FDIC), 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 9;
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 9, 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, Issuer shall not be required to register Option
Shares pursuant to this Section 9(i) prior to the
occurrence of a Purchase Event, (ii) within 90 days after
the effective date of a registration referred to in the
second preceding sentence pursuant to which Grantee was
afforded the opportunity to register Option Shares and
such shares were registered as requested, (iii) unless a
request therefor is made to Issuer by a Grantee or
Grantees which hold at least 25% of the aggregate number
of Option Shares (including shares of Issuer Common Stock
upon exercise of the Option) then outstanding and (iv) on
more than two occasions 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 11 hereof.
10. Listing. If Issuer Common Stock or any
other securities to be acquired upon exercise of the
Option are then authorized for quotation on NASDAQ 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
NASDAQ or such other securities exchange and will use its
best efforts to obtain approval of such listing as soon
as practicable.
11. Division of Option. Upon the occurrence
of a Purchase Event, 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.
12. Rights Agreement. Issuer shall not
approve, adopt or amend, or propose the approval and
adoption or amendment 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 Grantee is the
Beneficial Owner of shares of Issuer Common Stock (x) of
which Grantee was the Beneficial Owner on July 15, 1996,
(y) acquired or acquirable pursuant to the grant or
exercise of this Option and (z) held by Grantee or any of
its Subsidiaries as Trust Account Shares or DPC Shares
and (b) no restrictions or limitations with respect to
the exercise of any Rights acquired or acquirable by
Grantee will result or be imposed to the extent such
Rights relate to the shares of Issuer Common Stock
described in clause (a) of this Section 12. This
covenant shall survive for so long as Grantee is the
Beneficial Owner of the shares of Issuer Common Stock
described in clause (a) of this Section 12.
13. Miscellaneous. (a) Expenses. Except as
otherwise provided herein, 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, dated as of July 3, 1996, 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 New York 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:
North Fork Bancorporation, Inc.
275 Broad Hallow Road
Melville, NY 11747
Attention: Chief Executive Officer
with a copy to:
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, New York 10022
Attention: William S. Rubenstein, Esq.
If to Grantee to:
North Side Savings Bank
170 Tulip Avenue
Floral Park, NY 11001
Attention: Thomas M. O'Brien
with a copy to:
Elias, Matz, Tiernan & Herrick L.L.P.
The Walker Building
734 15th Street, N.W. 12th Floor
Washington, D.C. 20005
Attention: Timothy B. Matz, Esq. and
Gerard L. Hawkins, Esq.
(g) Counterparts. This Agreement and any
amendments hereto may be executed in two counterparts,
each of which shall be considered 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
Subsequent Triggering Event Grantee may assign its rights
under this Agreement to one or more third parties.
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.
NORTH SIDE SAVINGS BANK
By /s/ Thomas M. O'Brien
Name: Thomas M. O'Brien
Title: President & CEO
NORTH FORK BANCORPORATION, INC.
By /s/ John Adam Kanas
Name: John Adam Kanas
Title: Chairman, President and CEO
