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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
May 30, 1995
CHARTER ONE FINANCIAL, INC.
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(Exact name of Registrant as specified in its Charter)
Delaware 0-16311 34-1567092
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(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification
incorporation) No.)
1215 Superior Avenue, Cleveland, Ohio 44114
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (216) 566-5300
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Item 5. Other Events
------------
On May 30, 1995, Charter One Financial, Inc. ("Charter One")
entered into an Agreement and Plan of Merger (the "Merger
Agreement") with FirstFed Michigan Corporation ("FirstFed")
pursuant to which FirstFed will merge with and into Charter One
(the "Merger") in a "merger of equals" transaction. Upon the
Merger, each share of common stock, $0.01 par value, of FirstFed
shall be converted into the right to receive 1.2 shares of common
stock, $0.01 par value, of Charter One ("Charter One Common
Stock").
The joint press release of Charter One and FirstFed and
supplementary information about the Merger were filed as Exhibits
to Charter One's Current Report on Form 8-K, filed with the
Securities and Exchange Commission on May 31, 1995. The Merger
Agreement is filed as an Exhibit to this Form 8-K/A and is
incorporated herein by reference. The related Stock Option
Agreements and forms of Voting Agreements are included as exhibits
to the Merger Agreement.
In connection with the Merger Agreement, Charter One amended
the Rights Agreement, dated as of November 20, 1989 (the "Rights
Agreement"), between Charter One and The First National Bank of
Boston, as Rights Agent. Charter One amended the Rights
Agreement to exempt the Merger Agreement, the Stock Option
Agreement granting an option to FirstFed to purchase shares of
Charter One Common Stock, the Voting Agreements and the
transactions contemplated thereby, from the application of the
Rights Agreement. The amendment to the Rights Agreement is
attached as an exhibit to the Merger Agreement.
The foregoing information does not purport to be complete and
is qualified in its entirety by reference to the Exhibits to this
Report.
Item 7. Financial Statements and Exhibits.
---------------------------------
(c) Exhibits.
The Exhibits listed on the accompanying Exhibit Index are
filed as part of this Report and are incorporated herein by
reference.
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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 thereunto duly authorized.
CHARTER ONE FINANCIAL, INC.
Date: June 2, 1995 By: /s/ Charles John Koch
------------------------------
Charles John Koch
President and Chief Executive
Officer
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EXHIBIT INDEX
Exhibit
Number Description
2 Agreement and Plan of Merger, dated May 30, 1995, by and
between Charter One Financial, Inc. and FirstFed Michigan
Corporation
4 Amendment to Rights Agreement, dated May 26, 1995, by
and between Charter One Financial, Inc. and The First
National Bank of Boston, as Rights Agent (attached as
Exhibit 2.10(c) to the Agreement and Plan of Merger)
99.1 Joint press release of Charter One Financial, Inc.
and FirstFed Michigan Corporation, dated May 30, 1995*
99.2 Supplementary information regarding the Merger*
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* Previously filed as Exhibits to Charter One's Current
Report on Form 8-K, dated May 31, 1995, to which this Form 8-K/A
relates
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EXHIBIT 2
AGREEMENT AND PLAN OF MERGER
By and Between
Charter One Financial, Inc.
And
FirstFed Michigan Corporation
Dated as of May 30, 1995
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TABLE OF CONTENTS
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Article I - The Merger and Related Matters . . . . . . . . 3
1.1 Merger; Surviving Corporation
and Institution . . . . . . . . . . . . . . . . . . 3
1.2 Effective Time of the Merger . . . . . . . . . . . . 3
1.3 Conversion of Shares . . . . . . . . . . . . . . . . 4
1.4 Surviving Corporation in
the Company Merger. . . . . . . . . . . . . . . . . 5
1.5 Authorization for Issuance of Charter
Common Stock; Exchange of Certificates. . . . . . . 6
1.6 No Fractional Shares . . . . . . . . . . . . . . . . 8
1.7 Stockholders' Meetings . . . . . . . . . . . . . . . 8
1.8 FirstFed Stock Options . . . . . . . . . . . . . . . 10
1.9 Registration Statement;
Prospectus/Joint Proxy Statement. . . . . . . . . . 11
1.10 Cooperation; Regulatory Approvals. . . . . . . . . . 13
1.11 Closing. . . . . . . . . . . . . . . . . . . . . . . 14
1.12 Closing of Transfer Books. . . . . . . . . . . . . . 14
1.13 Bank Merger. . . . . . . . . . . . . . . . . . . . . 14
Article II - Representations and Warranties . . . . . . . . 15
2.1 Organization, Good Standing, Authority,
Insurance, Etc. . . . . . . . . . . . . . . . . . . 15
2.2 Capitalization . . . . . . . . . . . . . . . . . . . 16
2.3 Ownership of Subsidiaries. . . . . . . . . . . . . . 16
2.4 Financial Statements and Reports . . . . . . . . . . 17
2.5 Absence of Changes . . . . . . . . . . . . . . . . . 18
2.6 Prospectus/Joint Proxy Statement . . . . . . . . . . 18
2.7 No Broker's or Finder's Fees . . . . . . . . . . . . 19
2.8 Litigation and Other Proceedings . . . . . . . . . . 19
2.9 Compliance with Law. . . . . . . . . . . . . . . . . 19
2.10 Corporate Actions. . . . . . . . . . . . . . . . . . 20
2.11 Authority. . . . . . . . . . . . . . . . . . . . . . 21
2.12 Employment Arrangements. . . . . . . . . . . . . . . 22
2.13 Employee Benefits. . . . . . . . . . . . . . . . . . 22
2.14 Information Furnished. . . . . . . . . . . . . . . . 24
2.15 Property and Assets. . . . . . . . . . . . . . . . . 24
2.16 Agreements and Instruments . . . . . . . . . . . . . 24
2.17 Material Contract Defaults . . . . . . . . . . . . . 25
2.18 Tax Matters. . . . . . . . . . . . . . . . . . . . . 25
2.19 Environmental Matters. . . . . . . . . . . . . . . . 26
2.20 Loan Portfolio; Portfolio Management . . . . . . . . 26
2.21 Real Estate Loans and Investments. . . . . . . . . . 27
2.22 Derivatives Contracts. . . . . . . . . . . . . . . . 27
2.23 Exceptions to Representations
and Warranties. . . . . . . . . . . . . . . . . . . 27
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Article III - Covenants . . . . . . . . . . . . . . . . . . 28
3.1 Investigations; Access and Copies. . . . . . . . . . 28
3.2 Conduct of Business. . . . . . . . . . . . . . . . . 29
3.3 No Solicitation. . . . . . . . . . . . . . . . . . . 32
3.4 Stockholder Approvals. . . . . . . . . . . . . . . . 33
3.5 Accountants' Letters . . . . . . . . . . . . . . . . 33
3.6 Resale Letter Agreements;
Accounting and Tax Treatment. . . . . . . . . . . . 34
3.7 Publicity. . . . . . . . . . . . . . . . . . . . . . 34
3.8 Cooperation Generally. . . . . . . . . . . . . . . . 34
3.9 Additional Financial Statements and Reports. . . . . 34
3.10 Dividend Adjustment. . . . . . . . . . . . . . . . . 35
3.11 Stock Exchange Listing . . . . . . . . . . . . . . . 35
3.12 Certificate of Incorporation . . . . . . . . . . . . 35
3.13 Employee Benefits and Agreement. . . . . . . . . . . 35
3.14 Conforming Adjustments . . . . . . . . . . . . . . . 40
3.15 Amendments to Charter Rights Agreement . . . . . . . 41
Article IV - Conditions of the Merger;
Termination of Agreement . . . . . . . . . . . . . . . . . 41
4.1 General Conditions . . . . . . . . . . . . . . . . . 41
4.2 Conditions to Obligations of Charter . . . . . . . . 43
4.3 Conditions to Obligations of FirstFed. . . . . . . . 44
4.4 Termination of Agreement and
Abandonment of Merger . . . . . . . . . . . . . . . 45
Article V - Termination of Obligations;
Payment of Expenses. . . . . . . . . . . . . . . . . . . . 47
5.1 Termination; Lack of Survival of
Representations and Warranties. . . . . . . . . . . 47
5.2 Payment of Expenses. . . . . . . . . . . . . . . . . 47
Article VI - Certain Post-Merger Agreements . . . . . . . . 48
6.1 Registration of Stock Underlying Stock Options . . . 48
6.2 Reports to the SEC . . . . . . . . . . . . . . . . . 48
6.3 Indemnification. . . . . . . . . . . . . . . . . . . 48
6.4 Directors, Executive Officers and Committees
of Surviving Corporation . . . . . . . . . . . . . 50
6.5 Directors, Executive Officers and Committees
of Charter Bank. . . . . . . . . . . . . . . . . . 53
6.6 Publication of Combined Financial Results . . . . . . 54
6.7 Registration Rights . . . . . . . . . . . . . . . . . 54
Article VII - General . . . . . . . . . . . . . . . . . . . 55
7.1 Amendments . . . . . . . . . . . . . . . . . . . . . 55
7.2 Confidentiality. . . . . . . . . . . . . . . . . . . 56
7.3 Governing Law. . . . . . . . . . . . . . . . . . . . 56
7.4 Notices. . . . . . . . . . . . . . . . . . . . . . . 56
7.5 No Assignment. . . . . . . . . . . . . . . . . . . . 57
7.6 Headings . . . . . . . . . . . . . . . . . . . . . . 57
7.7 Counterparts . . . . . . . . . . . . . . . . . . . . 57
7.8 Construction and Interpretation. . . . . . . . . . . 57
7.9 Entire Agreement . . . . . . . . . . . . . . . . . . 57
7.10 Severability . . . . . . . . . . . . . . . . . . . . 57
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7.11 No Third Party Beneficiaries . . . . . . . . . . . . 58
7.12 No Employment Solicitation . . . . . . . . . . . . . 58
Schedules:
Schedule I Disclosure Schedule for Charter
Schedule II Disclosure Schedule for FirstFed
Exhibits:
Exhibit A Charter Stock Option Agreement
Exhibit B FirstFed Stock Option Agreement
Exhibit C Form of Charter Voting Agreement
Exhibit D Form of FirstFed Voting Agreement
Exhibit 1.1(a) Bank Merger Agreement
Exhibit 1.8(d) List of Option Holders
Exhibit 2.10(c) Rights Amendment
Exhibit 3.6(a) Form of Charter Affiliate
Agreement
Exhibit 3.6(b) Form of FirstFed Affiliate
Agreement
Exhibit 3.13(c) Severance Policy
Exhibit 3.13(g) Form of Employment Agreement for
Mr. Harling
Exhibit 4.2(a) Form of Opinion of Counsel
for FirstFed
Exhibit 4.3(a) Form of Opinion of Counsel
for Charter
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AGREEMENT AND PLAN OF MERGER
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THIS AGREEMENT AND PLAN OF MERGER ("Agreement") is dated as of
May 30, 1995, by and among Charter One Financial, Inc., a Delaware
corporation ("Charter") and FirstFed Michigan Corporation, a
Michigan corporation ("FirstFed"). Each of Charter and FirstFed is
sometimes individually referred to herein as a "party," and Charter
and FirstFed are sometimes collectively referred to herein as the
"parties."
RECITALS
WHEREAS, Charter, a non-diversified, unitary savings and loan
holding company, with principal offices in Cleveland, Ohio, owns
all of the issued and outstanding capital stock of Charter One
Bank, F.S.B., a federally chartered savings bank ("Charter Bank"),
with principal offices in Cleveland, Ohio. As of the date hereof,
Charter has 90 million authorized shares of common stock, par value
$0.01 per share ("Charter Common Stock"), of which 22,520,551
shares are outstanding, and 10 million authorized shares of
preferred stock, none of which is outstanding.
WHEREAS, FirstFed, a non-diversified, unitary savings and loan
holding company, with principal offices in Detroit, Michigan, owns
all of the issued and outstanding capital stock of First Federal of
Michigan, a federally chartered savings association ("FirstFed
Bank"), with principal offices in Detroit, Michigan. As of the
date hereof, FirstFed has 100 million authorized shares of common
stock, par value $0.01 per share ("FirstFed Common Stock"), of
which 18,714,442 shares are outstanding, and 40 million authorized
shares of preferred stock, none of which is outstanding.
WHEREAS, Charter and FirstFed desire to combine their
respective holding companies through a tax-free, stock-for-stock
merger so that the respective stockholders of Charter and FirstFed
will have an equity ownership in the combined holding company.
WHEREAS, neither the Board of Directors of Charter nor the
Board of Directors of FirstFed seeks to sell its respective holding
company at this time but both Boards desire to merge their
respective holding companies in a transaction structured as a
merger of equals.
WHEREAS, it is intended that to accomplish this result,
FirstFed will be merged with and into Charter, with Charter as the
surviving corporation. Such merger is referred to herein as the
"Company Merger." Charter after the Company Merger is sometimes
referred to herein as the "Surviving Corporation."
WHEREAS, immediately following consummation of the Company
Merger, FirstFed Bank will be merged with and into Charter Bank,
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with Charter Bank as the surviving savings institution. Such
merger is referred to herein as the "Bank Merger." The Company
Merger and the Bank Merger are sometimes collectively referred to
herein as the "Merger."
WHEREAS, it is intended that (i) for federal income tax
purposes the Merger shall qualify as a reorganization within the
meaning of Section 368 of the Internal Revenue Code of 1986, as
amended (the "Internal Revenue Code") and this Agreement shall
constitute a plan of reorganization pursuant to Section 368 of the
Internal Revenue Code and (ii) the Merger shall qualify for pooling
of interests accounting treatment under generally accepted
accounting principles.
WHEREAS, as an inducement to and condition of Charter's
willingness to enter into this Agreement and the Charter Stock
Option Agreement, FirstFed will grant to Charter on the first
business day next following the date of execution of this Agreement
an option pursuant to the FirstFed Stock Option Agreement, and as
an inducement to and condition of FirstFed's willingness to enter
into this Agreement and the FirstFed Stock Option Agreement,
Charter will grant to FirstFed on the first business day next
following the date of execution of this Agreement an option
pursuant to the Charter Stock Option Agreement. The Charter Stock
Option Agreement and the FirstFed Stock Option Agreement are
attached hereto as Exhibits A and B, respectively. References
herein to the "Stock Option Agreement" shall refer in the case of
Charter to the Charter Stock Option Agreement and in the case of
FirstFed to the FirstFed Stock Option Agreement.
WHEREAS, concurrently with the execution and delivery of this
Agreement, and as a condition and inducement to the parties'
willingness to enter into this Agreement, Charter and each of the
directors of FirstFed, and FirstFed and each of the directors of
Charter, have entered into voting agreements in the forms attached
hereto as Exhibits C and D, respectively (the "Voting Agreements").
WHEREAS, the Boards of Directors of Charter and FirstFed (at
meetings duly called and held) have determined that this Agreement
and the transactions contemplated hereby are in the best interests
of Charter and FirstFed, respectively, and their respective
stockholders and have approved this Agreement and the Stock Option
Agreement. Consummation of the Merger is subject to the prior
approval of the Office of Thrift Supervision ("OTS") and the
stockholders of Charter and FirstFed, among other conditions
specified herein.
NOW THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements hereinafter
set forth, the parties hereby agree as follows:
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ARTICLE I
THE MERGER AND RELATED MATTERS
1.1 Merger; Surviving Corporation and Institution. Subject
to the terms and conditions of this Agreement, and pursuant to the
provisions of the Delaware General Corporation Law (the "DGCL"),
the Michigan Business Corporation Act ("MBCA"), the Home Owners
Loan Act, as amended ("HOLA"), and the rules and regulations
promulgated thereunder (the "Thrift Regulations"), (a) at the
Company Merger Effective Time (as hereinafter defined),
(i) FirstFed shall be merged with and into Charter pursuant to the
terms and conditions set forth herein, (ii) the separate corporate
existence of FirstFed shall cease, and (iii) Charter as the
Surviving Corporation shall continue to be governed by the laws of
the State of Delaware, and, (b) thereafter, at the Bank Merger
Effective Time (as hereinafter defined) FirstFed Bank shall be
merged with and into Charter Bank pursuant to the terms and
conditions set forth herein and in the Bank Merger Agreement
substantially in the form attached hereto as Exhibit 1.1(a). The
Company Merger shall have the effects specified in the DGCL and the
MBCA, Section 1.4(e) hereof and the Company Merger Agreement. Upon
consummation of the Bank Merger, the separate existence of FirstFed
Bank shall cease, and Charter Bank shall continue as the surviving
institution of the Bank Merger. The name of Charter Bank, as the
surviving institution of the Bank Merger, shall be "Charter One
Bank, F.S.B." From and after the Bank Merger Effective Time,
Charter Bank as the surviving institution of the Bank Merger shall
possess all of the properties and rights and be subject to all of
the liabilities and obligations of Charter Bank and FirstFed Bank,
all as more fully set forth in the Thrift Regulations, Section 1.13
hereof and the Bank Merger Agreement.
1.2 Effective Time of the Merger. As soon as practicable
after each of the conditions set forth in Article IV hereof has
been satisfied or waived, Charter and FirstFed will file, or cause
to be filed, certificates of merger with the appropriate
authorities of Delaware and Michigan for the Company Merger and
articles of combination with the OTS for the Bank Merger, which
certificates of merger and articles of combination shall in each
case be in the form required by and executed in accordance with the
applicable provisions of law and the Thrift Regulations,
respectively. The Company Merger shall become effective at the
time and date which is the later of the time at which (i) the
Delaware certificate of merger is filed with the appropriate
authorities of Delaware and (ii) the Michigan certificate of merger
is filed with the appropriate authorities of Michigan ("Company
Merger Effective Time"), which shall be immediately following the
Closing (as defined in Section 1.11 hereof) and on the same day as
the Closing if practicable, or at such other date and time as may
be agreed to by the parties and specified in the certificates of
merger in accordance with applicable law. The Bank Merger shall
become effective at the time the articles of combination for such
merger are endorsed by the OTS pursuant to Section 552.13(k) of the
Thrift Regulations (the "Bank Merger Effective Time"). The parties
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shall cause the Company Merger to become effective before the Bank
Merger.
1.3 Conversion of Shares.
(a) At the Company Merger Effective Time, by virtue of
the Company Merger and without any action on the part of Charter or
FirstFed or the holders of shares of Charter or FirstFed Common
Stock:
(i) Each outstanding share of FirstFed Common Stock
issued and outstanding at the Company Merger Effective Time, except
as provided in clause (a)(ii) of this Section and Section 1.6
hereof, shall cease to be outstanding, shall cease to exist and
shall be converted into and represent solely 1.20 shares of Charter
Common Stock (the "Conversion Ratio"), including the corresponding
number of rights associated with the Charter Common Stock pursuant
to the Rights Agreement, dated November 20, 1989, between Charter
and The First National Bank of Boston as Rights Agent (the "Charter
Rights Agreement"), (as amended as contemplated herein) and shall
no longer be a share of FirstFed Common Stock.
(ii) Any shares of FirstFed Common Stock which are
owned or held by either party hereto or any of their respective
Subsidiaries (as defined in Section 2.1 hereof) (other than in a
fiduciary capacity) at the Company Merger Effective Time shall
cease to exist, the certificates for such shares shall as promptly
as practicable be cancelled, such shares shall not be converted
into or represent any shares of Charter Common Stock, and no shares
of capital stock of Charter shall be issued or exchanged therefor.
(iii) Each share of Charter Common Stock issued and
outstanding immediately before the Company Merger Effective Time
shall remain an outstanding share of Common Stock of Charter as the
Surviving Corporation.
(iv) The holders of certificates representing
shares of FirstFed Common Stock shall cease to have any rights as
stockholders of FirstFed, except such rights, if any, as they may
have pursuant to applicable law.
(v) Subject to Section 3.2 herein, if the issued
and outstanding shares of Charter or FirstFed Common Stock shall,
during the period commencing on the date hereof and ending with the
Company Merger Effective Time, through a reorganization,
recapitalization, stock split, reverse stock split, stock dividend,
reclassification, combination of shares or similar corporate
rearrangement in the capitalization of Charter or FirstFed, as the
case may be, increase or decrease in number or be changed into or
exchanged for a different kind or number of securities, then an
appropriate and proportionate adjustment shall be made to the
Conversion Ratio.
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1.4 Surviving Corporation in the Company Merger.
(a) The name of the Surviving Corporation in the Company
Merger shall be "Charter One Financial, Inc.." The headquarters of
the Surviving Corporation shall be located in Cleveland, Ohio.
(b) The Restated Certificate of Incorporation of Charter
as in effect at the Company Merger Effective Time shall as of the
Company Merger Effective Time be amended as contemplated in Section
1.7(a) herein and the Restated Certificate of Incorporation, as so
amended, shall be the Certificate of Incorporation of Charter as
the Surviving Corporation until amended as provided therein or by
law; provided, however, if the Charter stockholders shall fail to
approve any of the amendments to Charter's Restated Certificate of
Incorporation as contemplated in Section 1.7(a) herein, then the
Restated Certificate of Incorporation of Charter as the Surviving
Corporation shall not include those amendments not so approved.
(c) At the Company Merger Effective Time, the Bylaws of
Charter, as then in effect shall be amended to conform to the
agreements of the parties as reflected in Section 6.4 herein, and
such Bylaws, as so amended shall be the Bylaws of Charter as the
Surviving Corporation, until amended as provided therein or as
otherwise permitted by the DGCL.
(d) The directors and executive officers of Charter as
the Surviving Corporation following the Company Merger shall be as
provided in Section 6.4 herein until such directors or officers are
replaced or additional directors or officers are elected or
appointed in accordance with the provisions of Section 6.4 of this
Agreement, the Restated Certificate of Incorporation or the Bylaws
of Charter as the Surviving Corporation.
(e) From and after the Company Merger Effective Time:
(i) Charter as the Surviving Corporation shall
possess all assets and property of every description, and every
interest in the assets and property, wherever located, and the
rights, privileges, immunities, powers, franchises, and authority,
of a public as well as of a private nature, of each of Charter and
FirstFed, and all obligations belonging or due to each of Charter
and FirstFed, all of which shall vest in Charter as the Surviving
Corporation without further act or deed. Title to any real estate
or any interest in the real estate vested in Charter or FirstFed
shall not revert or in any way be impaired by reason of the Company
Merger.
(ii) Charter as the Surviving Corporation will be
liable for all the obligations of each of Charter and FirstFed.
Any claim existing, or action or proceeding pending, by or against
Charter or FirstFed, may be prosecuted to judgement, with right of
appeal, as if the Company Merger had not taken place, or Charter as
the Surviving Corporation may be substituted in its place.
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(iii) All the rights of creditors of each of
Charter and FirstFed will be preserved unimpaired, and all liens
upon the property of Charter and FirstFed will be preserved
unimpaired only on the property affected by such liens immediately
before the Company Merger Effective Time.
1.5 Authorization for Issuance of Charter Common Stock;
Exchange of Certificates.
(a) Charter shall reserve for issuance a sufficient
number of shares of its common stock for the purpose of issuing its
shares to FirstFed's stockholders in accordance with this Article
I.
(b) After the Company Merger Effective Time, holders of
certificates theretofore representing outstanding shares of
FirstFed Common Stock (other than as provided in Section 1.3(a)(ii)
hereof), upon surrender of such certificates to an exchange agent
appointed jointly by Charter and FirstFed on behalf of the
Surviving Corporation (the "Exchange Agent"), shall be entitled to
receive certificates for the number of whole shares of Charter
Common Stock into which shares of FirstFed Common Stock theretofore
evidenced by the certificates so surrendered shall have been
converted, as provided in Section 1.3 hereof, and cash payments in
lieu of fractional shares, if any, as provided in Section 1.6
hereof. As soon as practicable after the Company Merger Effective
Time, the Exchange Agent will send a notice and transmittal form to
each FirstFed stockholder of record at the Company Merger Effective
Time whose FirstFed Common Stock shall have been converted into
Charter Common Stock advising such stockholder of the effectiveness
of the Company Merger and the procedure for surrendering to the
Exchange Agent outstanding certificates formerly representing
FirstFed Common Stock in exchange for new certificates for Charter
Common Stock. Upon surrender, each certificate representing
FirstFed Common Stock shall be cancelled.
(c) Until surrendered as provided in this Section 1.5
hereof, each outstanding certificate which, before the Company
Merger Effective Time, represented FirstFed Common Stock (other
than shares cancelled at the Company Merger Effective Time pursuant
to Section 1.3(a)(ii) hereof) will be deemed for all corporate
purposes to represent the number of whole shares of Charter Common
Stock into which the shares of FirstFed Common Stock formerly
represented thereby were converted and the right to receive cash in
lieu of fractional shares. However, until such outstanding
certificates formerly representing FirstFed Common Stock are so
surrendered, no dividend or distribution payable to holders of
record of Charter Common Stock shall be paid to any holder of such
outstanding certificates, but upon surrender of such outstanding
certificates by such holder there shall be paid to such holder the
amount of any dividends or distribution, without interest,
theretofore paid with respect to such whole shares of Charter
Common Stock, but not paid to such holder, and which dividends or
distribution had a record date occurring on or after the Company
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Merger Effective Time and the amount of any cash, without interest,
payable to such holder in lieu of fractional shares pursuant to
Section 1.6 hereof. After the Company Merger Effective Time, there
shall be no further registration of transfers on the records of
FirstFed of outstanding certificates formerly representing shares
of FirstFed Common Stock and, if a certificate formerly
representing such shares is presented to Charter as the Surviving
Corporation, it shall be forwarded to the Exchange Agent for
cancellation and exchange for a certificate representing shares of
Charter Common Stock and cash for fractional shares (if any), as
herein provided. Following one year after the Company Merger
Effective Time, the Exchange Agent shall return to Charter as the
Surviving Corporation any certificates for Charter Common Stock and
cash remaining in the possession of the Exchange Agent (together
with any dividends in respect thereof) and thereafter shareholders
of FirstFed shall look exclusively to Charter as the Surviving
Corporation for shares of the Charter Common Stock and cash to
which they are entitled hereunder.
(d) All shares of Charter Common Stock and cash in lieu
of any fractional share issued and paid upon the conversion of
FirstFed Common Stock in accordance with the above terms and
conditions shall be deemed to have been issued and paid in full
satisfaction of all rights pertaining to such FirstFed Common
Stock.
(e) If any new certificate for Charter Common Stock is
to be issued in a name other than that in which the certificate
surrendered in exchange thereof is registered, it shall be a
condition of the issuance therefor that the certificate surrendered
in exchange shall be properly endorsed and otherwise in proper form
for transfer and that the person requesting such transfer pay to
the Exchange Agent any transfer or other taxes required by reason
of the issuance of a new certificate representing shares of Charter
Common Stock in any name other than that of the registered holder
of the certificate surrendered, or establish to the satisfaction of
the Exchange Agent that such tax has been paid or is not payable.
(f) In the event any certificate representing FirstFed
Common Stock shall have been lost, stolen or destroyed, the
Exchange Agent shall issue in exchange for such lost, stolen or
destroyed certificate, upon the making of an affidavit of that fact
by the holder thereof, such shares of Charter Common Stock and cash
for fractional shares, if any, as may be required pursuant hereto;
provided, however, that the Surviving Corporation or the Exchange
Agent may, in its discretion and as a condition precedent to the
issuance thereof, require the owner of such lost, stolen or
destroyed certificate to deliver a bond in such sum as it may
direct as indemnity against any claim that may be made against the
Surviving Corporation, Charter, FirstFed, the Exchange Agent or any
other party with respect to the certificate alleged to have been
lost, stolen or destroyed.
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1.6 No Fractional Shares. Notwithstanding any term or
provision hereof, no fractional shares of Charter Common Stock, and
no certificates or scrip therefor, or other evidence of ownership
thereof, will be issued upon the conversion of or in exchange for
any shares of FirstFed Common Stock; no dividend or distribution
with respect to Charter Common Stock shall be payable on or with
respect to any fractional share interest; and no such fractional
share interest shall entitle the owner thereof to vote or to any
other rights of a stockholder of Charter as the Surviving
Corporation. In lieu of such fractional share interest, any holder
of FirstFed Common Stock who would otherwise be entitled to a
fractional share of Charter Common Stock will, upon surrender of
his certificate or certificates representing FirstFed Common Stock
outstanding immediately before the Company Merger Effective Time,
be paid the applicable cash value of such fractional share
interest, which shall be equal to the product of the fraction of
the share to which such holder would otherwise have been entitled
and the closing price of Charter Common Stock on the trading day
immediately prior to the Company Merger Effective Time. For the
purposes of determining any such fractional share interests, all
shares of FirstFed Common Stock owned by a FirstFed stockholder
shall be combined so as to calculate the maximum number of whole
shares of Surviving Corporation Common Stock issuable to such
FirstFed stockholder.
1.7 Stockholders' Meetings.
(a) Charter shall, at the earliest practicable date,
hold a meeting of its stockholders (the "Charter Stockholders'
Meeting") to submit for stockholder approval this Agreement and the
Merger. The affirmative vote of a majority of the issued and
outstanding shares of Charter Common Stock entitled to vote shall
be required for such approval. At the Charter Stockholders'
Meeting Charter shall also submit for stockholder approval
amendments to its Restated Certificate of Incorporation as follows:
(i) an amendment to Article FOURTH, paragraph A,
increasing (A) the number of authorized shares
of all classes of stock to 200 million shares,
(B) the number of authorized shares of common
stock to 180 million shares and (C) the number
of authorized shares of preferred stock to 20
million shares;
(ii) an amendment to Article FIFTH (A) deleting the
title thereof, deleting the first full
paragraph thereof and deleting paragraphs A,
B, C, D and E thereof and relettering
paragraphs F and G thereof as paragraphs A and
B, and (B) revising clause (vi) of paragraph F
(as relettered as paragraph (A)) to read as
follows:
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(vi) "Related Person" shall mean any
Person (other than the Corporation,
Subsidiaries of the Corporation, pension,
profit sharing, employee stock ownership or
other employee benefit plans of the
Corporation and its Subsidiaries, entities
organized or established by the Corporation or
any Subsidiary of the Corporation pursuant to
the terms of such plans and trustees of or
fiduciaries with respect to such plans acting
in such capacity) that purports, or is deemed,
to be the Beneficial Owner of twenty percent
(20%) (but for purposes of Article TENTH such
percentage shall be ten percent (10%)) or more
of the issued and outstanding shares of Voting
Stock of the Corporation without giving effect
to the provisions of paragraph A of Article
SIXTH. Notwithstanding the foregoing, except
as used in Article TENTH, the term "Related
Person" shall not include any Person acquiring
Beneficial Ownership of shares of Voting Stock
of the Corporation in excess of twenty percent
(20%) of the issued and outstanding shares of
Voting Stock of the Corporation if (i) the
acquisition of Beneficial Ownership of such
shares in excess of twenty percent (20%) of
the issued and outstanding shares of Voting
Stock of the Corporation was approved in
advance by a majority of the Continuing
Directors, or (ii) Beneficial Ownership of
such excess shares was acquired at any time
directly from the Corporation or a Subsidiary
of the Corporation pursuant to an agreement
with the Corporation or a Subsidiary of the
Corporation.
(iii) an amendment to Article SIXTH (A) deleting
paragraph F therein and (B) revising paragraph
A therein by changing the term "ten percent
(10%)" to "twenty percent (20%)"; and
(iv) an amendment to Article SEVENTH, paragraph A,
to increase the maximum number of authorized
directors to not more than 16 persons.
The votes to so amend Charter's Restated Certificate of
Incorporation by the Charter stockholders shall be as required by
the DGCL and the Restated Certificate of Incorporation (as may be
applicable).
(b) FirstFed shall, at the earliest practicable date,
hold a meeting of its stockholders (the "FirstFed Stockholders'
Meeting") to submit for stockholder approval this Agreement, the
Company Merger Agreement and the Merger. The affirmative vote of
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a majority of the issued and outstanding shares of FirstFed Common
Stock entitled to vote shall be required for such approval.
1.8 FirstFed Stock Options.
(a) At the Company Merger Effective Time, by virtue of
the Merger and without any action on the part of any holder of an
option, each outstanding option (other than those referenced in
paragraph (d) to this Section 1.8) under the stock option plans of
FirstFed (the "FirstFed Option Plans") shall continue outstanding
as an option to purchase, in place of the purchase of each share of
FirstFed Common Stock, the number of shares (rounded up to the
nearest whole share) of Charter Common Stock that would have been
received by the optionee in the Merger had the option been
exercised in full (without regard to any limitations contained
therein on exercise) for shares of FirstFed Common Stock
immediately before the Company Merger upon the same terms and
conditions under the relevant option as were applicable immediately
before the Company Merger Effective Time, except for appropriate
pro rata adjustments as to the relevant option price for shares of
Charter Common Stock substituted therefor so that the aggregate
option exercise price of shares subject to an option immediately
following the assumption and substitution shall be the same as the
aggregate option exercise price for such shares immediately before
such assumption and substitution. The Surviving Corporation shall
take such actions as may be required to effectuate the foregoing.
It is intended that the foregoing assumption shall be undertaken
consistent with and in a manner that will not constitute a
"modification" under Section 424 of the Internal Revenue Code as to
any stock option which is an "incentive stock option".
(b) At all times after the Company Merger Effective
Time, the Surviving Corporation shall reserve for issuance such
number of shares of Charter Common Stock as necessary so as to
permit the exercise of options granted under the FirstFed Option
Plans in the manner contemplated by this Agreement and the
instruments pursuant to which such options were granted. Charter
shall make all filings required under federal and state securities
laws no later than the Company Merger Effective Time so as to
permit the exercise of such options and the sale of the shares
received by the optionee upon such exercise at and after the
Company Merger Effective Time and Charter and the Surviving
Corporation shall continue to make such filings thereafter as may
be necessary to permit the continued exercise of options and sale
of such shares.
(c) Following the Company Merger Effective Time, in case
of any reclassification, reorganization, recapitalization, stock
dividend or distribution, subdivision, combination or exchange of
the outstanding shares of Charter Common Stock or in case of any
consolidation or merger of Charter as the Surviving Corporation
with or into any other corporation, or in the case of any sale or
transfer of all or substantially all of Charter's assets, then, the
rights of the optionees who then hold outstanding options under the
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FirstFed Option Plans shall be appropriately adjusted so that the
optionees will be in the same position as if their options had been
exercised immediately before such corporate action or transaction.
The provisions hereof shall similarly apply following the Company
Merger Effective Time to successive reclassifications,
reorganizations, recapitalizations, stock dividends or
distributions, subdivisions, combinations or exchanges,
consolidations, mergers, sales or transfers.
(d) The holders of outstanding options under the
FirstFed stock option plans who are listed (together with the
number of outstanding non-vested options each such person holds) on
Exhibit 1.8(d) hereto shall, but only with respect to options not
fully vested as of the Company Merger Effective Time and in lieu of
the assumption of their non-vested options by Charter and
notwithstanding that such option is not then exercisable, receive
as of the Company Merger Effective Time in exchange for such non-
vested options, and in cancellation of such option (to be reflected
in a written agreement), the number of shares of Charter Common
Stock (rounded up to the next whole share,) that have a value
(based upon the closing price of the Charter Common Stock on the
trading day immediately prior to the Company Merger Effective Time)
equal to the fair value of such options. The fair value of such
options shall be determined in good faith by Charter and FirstFed
with the advice of a financial advisor, with experience in such
valuations, selected by Charter and FirstFed.
1.9 Registration Statement; Prospectus/Joint Proxy Statement.
(a) For the purposes (i) of holding the Charter
Stockholders' Meeting, (ii) of registering with the Securities and
Exchange Commission ("SEC") and with applicable state securities
authorities the Charter Common Stock to be issued to holders of
FirstFed Common Stock in connection with the Merger and (iii) of
holding the FirstFed Stockholders' Meeting, the parties shall
cooperate in the preparation of an appropriate registration
statement (such registration statement, together with all and any
amendments and supplements thereto, is referred to herein as the
"Registration Statement"), including the Prospectus/Joint Proxy
Statement satisfying all applicable requirements of applicable
state laws, and of the Securities Act of 1933 (the "Securities
Act") and the Securities Exchange Act of 1934 (the "Exchange Act")
and the rules and regulations thereunder (such Prospectus/Joint
Proxy Statement, together with any and all amendments or
supplements thereto, is referred to herein as the "Prospectus/Joint
Proxy Statement").
(b) Charter shall furnish such information concerning
Charter and its Subsidiaries as is necessary in order to cause the
Prospectus/Joint Proxy Statement, insofar as it relates to such
entities, to comply with Section 1.9(a) hereof. Charter agrees
promptly to advise FirstFed if at any time before the FirstFed or
Charter Stockholders' Meeting any information provided by Charter
in the Prospectus/Joint Proxy Statement becomes incorrect or
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<PAGE>
incomplete in any material respect and to provide the information
needed to correct such inaccuracy or omission. Charter shall
furnish FirstFed with such supplemental information as may be
necessary in order to cause such Prospectus/Joint Proxy Statement,
insofar as it relates to Charter and its Subsidiaries, to comply
with Section 1.9(a) hereof.
(c) FirstFed shall furnish Charter with such information
concerning FirstFed and its Subsidiaries as is necessary in order
to cause the Prospectus/Joint Proxy Statement, insofar as it
relates to such entities, to comply with Section 1.9(a) hereof.
FirstFed agrees promptly to advise Charter if at any time before
the Charter or FirstFed Stockholders' Meeting any information
provided by FirstFed in the Prospectus/Joint Proxy Statement
becomes incorrect or incomplete in any material respect and to
provide Charter with the information needed to correct such
inaccuracy or omission. FirstFed shall furnish Charter with such
supplemental information as may be necessary in order to cause the
Prospectus/Joint Proxy Statement, insofar as it relates to FirstFed
and its Subsidiaries, to comply with Section 1.9(a).
(d) Charter shall promptly file the Registration
Statement with the SEC and applicable state securities agencies.
Charter and FirstFed shall use all reasonable efforts to cause the
Registration Statement to become effective under the Securities Act
and applicable state securities laws at the earliest practicable
date. FirstFed authorizes Charter to utilize in the Registration
Statement the information concerning FirstFed and its Subsidiaries
provided to Charter for the purpose of inclusion in the
Prospectus/Joint Proxy Statement. Charter shall advise FirstFed
promptly when the Registration Statement has become effective and
of any supplements or amendments thereto, and Charter shall furnish
FirstFed with copies of all such documents. Before the Company
Merger Effective Time or the termination of this Agreement, each
party shall consult with the other with respect to any material
(other than the Prospectus/Joint Proxy Statement) that might
constitute a "prospectus" relating to the Merger within the meaning
of the Securities Act.
(e) Charter and FirstFed shall consult with each other
in order to identify all persons or entities who are or may be
deemed to be "affiliates" of either Charter or FirstFed
("Affiliates") within the meaning of Rule 145 under the Securities
Act. Each of Charter and FirstFed shall use there best efforts to
ensure that their respective Affiliates are aware of the guidelines
of the SEC with respect to the sale by affiliates of stock of
companies engaging in a business combination transaction to be
accounted for as a pooling of interests as set forth in Topic 2-E
of the SEC staff accounting bulletin series. Notwithstanding
anything contained in this Agreement to the contrary, all shares of
Charter Common Stock issued to such Charter and FirstFed Affiliates
who do not enter into the written letter agreement contemplated in
Section 3.6 herein in connection with the Company Merger shall bear
a legend upon the face thereof stating that transfer of the
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securities is or may be restricted by the provisions of the
Securities Act and/or pooling of interests accounting requirements,
and notice shall be given to Charter's transfer agent of such
restriction for all Affiliates; provided that such legend shall be
removed by delivery of a substitute certificate without such legend
if (i) any such shares of Charter Common Stock shall have been
registered under the Securities Act for sale, transfer or other
disposition and are sold, transferred or otherwise disposed of, or
(ii) any such shares of stock are sold in accordance with the
provisions of paragraphs (c), (e), (f) and (g) of Rule 144
promulgated under the Securities Act, or (iii) such person is not
at the time an affiliate of Charter and has been the beneficial
owner of the Charter Common Stock for at least two years (or such
period as may be prescribed by the Securities Act and the rules and
regulations promulgated thereunder), or (iv) Charter shall have
received a letter from the staff of the SEC, or an opinion of
counsel reasonably acceptable to Charter, to the effect that the
stock transfer restrictions and the legend are not required for
purposes of the Securities Act. So long as shares of such Charter
Common Stock are subject to the restrictions set forth in this
Section 1.9, no transfer of such Charter Common Stock shall be
allowed unless and until the transfer agent is provided with such
information as may reasonably be requested by counsel for Charter
to ensure that such transfer will not violate applicable provisions
of the Securities Act or rules, regulations or policies of the SEC.
1.10 Cooperation; Regulatory Approvals. The parties shall
cooperate, and shall cause each of their respective affiliates and
Subsidiaries to cooperate, in the preparation and submission by
them, as promptly as reasonably practicable, of such applications,
petitions, and other documents and materials as any of them may
reasonably deem necessary or desirable to the OTS, Federal Trade
Commission ("FTC"), Department of Justice ("DOJ"), SEC, Secretary
of State of Delaware and Michigan, other regulatory authorities,
holders of the voting shares of common stock of Charter and
FirstFed, and any other persons for the purpose of obtaining any
approvals or consents necessary to consummate the transactions
contemplated hereby. Each party will have the right to review and
comment on such applications, petitions and other documents and
materials in advance and shall furnish to the other copies thereof
promptly after filing or submission thereof. Any such materials
must be reasonably acceptable to both Charter and FirstFed prior to
filing with any regulatory authority or transmission to
stockholders or other third parties, except to the extent that
Charter or FirstFed is legally required to proceed prior to
obtaining the acceptance of the other party hereto. The parties
agree to use their best efforts to file applications with OTS
within 30 days of the date of this Agreement. Each party agrees to
consult with the other with respect to obtaining all necessary
consents and approvals, and each will keep the other apprised of
the status of matters relating to such approvals and consents and
the consummation of the transactions contemplated hereby. At the
date hereof, no party is aware of any reason that the regulatory
approvals required to be obtained by it would not be obtained or
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would be obtained subject to conditions that would have or result
in a material adverse effect on Charter as the Surviving
Corporation or Charter Bank as the surviving institution in the
Bank Merger.
1.11 Closing. If (i) this Agreement has been duly approved
by the stockholders of Charter and FirstFed, and (ii) all relevant
conditions of this Agreement have been satisfied or waived, a
closing (the "Closing") shall take place as promptly as practicable
thereafter at the principal office of Charter, or at such other
place as the parties agree, at which the parties will exchange
certificates, opinions, letters and other documents as required
hereby and will make the filings described in Section 1.2 hereof.
Such Closing will take place within thirty (30) days after the
satisfaction or waiver of all conditions and/or obligations
precedent to Closing contained in Article IV of this Agreement, or
at such other time as the parties agree. The parties shall use
their best efforts to cause the Closing to occur on or before
December 31, 1995.
1.12 Closing of Transfer Books. At the Company Merger
Effective Time, the transfer books for FirstFed Common Stock shall
be closed, and no transfer of shares of FirstFed Common Stock shall
thereafter be made on such books.
1.13 Bank Merger.
(a) At the Bank Merger Effective Time, each share of
FirstFed Bank common stock issued and outstanding immediately prior
thereto shall, by virtue of the Bank Merger, be cancelled. No new
shares of the capital stock or other securities or obligations of
FirstFed Bank shall be issued or be deemed issued with respect to
or in exchange for such cancelled shares, and such cancelled shares
of common stock of FirstFed Bank shall not be converted into any
shares or other securities or obligations of any other entity.
(b) At the Bank Merger Effective Time, the charter and
bylaws of Charter Bank, as then in effect, shall be amended to
conform to the agreements of the parties as reflected in Section
6.5 herein, and such Charter and Bylaws, as so amended, shall be
the Charter and Bylaws of Charter Bank as the surviving institution
of the Bank Merger, and may thereafter be amended in accordance
with applicable law.
(c) The directors and executive officers of Charter Bank
as the surviving institution following the Bank Merger shall be as
provided in Section 6.5 hereof until such directors or officers are
replaced or additional directors or officers are elected or
appointed in accordance with the provisions of this Agreement, the
Charter or Bylaws of Charter Bank.
(d) The liquidation account established by FirstFed Bank
pursuant to the plan of conversion adopted in connection with its
conversion from mutual to stock form shall continue to be
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maintained by Charter Bank after the Bank Merger Effective Time for
the benefit of those persons and entities who had interests in the
FirstFed liquidation account as of the Bank Merger Effective Time
and who continue to have rights therein. If required by the rules
and regulations of the OTS, Charter Bank shall amend its charter
specifically to provide for the continuation of the liquidation
account established by FirstFed Bank.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
Charter represents and warrants to FirstFed, and FirstFed
represents and warrants to Charter, except as disclosed in the
Disclosure Schedules delivered by each party to the other pursuant
to Section 2.23 herein, as follows:
2.1 Organization, Good Standing, Authority, Insurance, Etc.
It is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation.
Section 2.1 of its Disclosure Schedule lists each "subsidiary" of
it within the meaning of Section 10(a)(1)(G) of HOLA (individually
a "Subsidiary" and collectively the "Subsidiaries"). Each of its
Subsidiaries is duly organized, validly existing and in good
standing under the laws of the respective jurisdiction under which
it is organized, as set forth in Section 2.1 of its Disclosure
Schedule. It and each of its Subsidiaries have all requisite power
and authority and to the extent required by applicable law are
licensed to own, lease and operate its respective properties and
conduct its respective business as it is now being conducted. It
has delivered to the other party a true, complete and correct copy
of the articles of incorporation, certificate of incorporation or
other organizing document and of the bylaws, as in effect on the
date of this Agreement, of it and each of its Subsidiaries. It and
each of its Subsidiaries are qualified to do business as foreign
corporations and are in good standing in each jurisdiction in which
qualification is necessary under applicable law, except to the
extent that any failures to so qualify would not, in the aggregate,
have a material adverse effect on it and its Subsidiaries, taken as
a whole. Each of its Subsidiaries that is a federally insured
savings institution ("Bank Subsidiary") is a member in good
standing of its applicable Federal Home Loan Bank, and all eligible
accounts issued by such institution are insured by the Savings
Association Insurance Fund ("SAIF") to the maximum extent permitted
under applicable law. Each of its Bank Subsidiaries is a "domestic
building and loan association" as defined in Section 7701(a)(19) of
the Internal Revenue Code and is a "qualified thrift lender" as
defined in Section 10(m) of the HOLA and the rules and regulations
thereunder. It is duly registered as a savings and loan holding
company under the HOLA.
Its minute books and those of each of its Subsidiaries contain
complete and accurate records of all meetings and other corporate
actions taken by their respective stockholders and Boards of
Directors (including the committees of such Boards).
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2.2 Capitalization. (a) Its authorized capital stock and the
number of issued and outstanding shares of its capital stock are
accurately set forth in the recitals in this Agreement, subject, in
the case of Charter to an increase in the authorized number of
shares of its capital stock, common stock and preferred stock as
contemplated in Section 1.7(a) herein. All outstanding shares of
its common stock are duly authorized, validly issued, fully paid,
nonassessable and free of preemptive rights. Except (i) in the
case of the representations and warranties of Charter, with respect
to preferred share purchase rights outstanding under the Rights
Agreement or (ii) as set forth in Section 2.2 of its Disclosure
Schedule or (iii) with respect to the Stock Option Agreement, as of
the date of this Agreement, there are no options, convertible
securities, warrants or other rights (preemptive or otherwise) to
purchase or acquire any of its capital stock from it and no oral or
written agreement, contract, arrangement, understanding, plan or
instrument of any kind to which it or any of its Subsidiaries is
subject with respect to the issuance, voting or sale of issued or
unissued shares of its capital stock. A true and complete copy of
each plan or agreement pursuant to which such options, convertible
securities, warrants or other rights have been granted or issued,
as in effect on the date of this Agreement, is included in Section
2.2 of its Disclosure Schedule. Only the holders of its common
stock have the right to vote at meetings of its stockholders on
matters to be voted thereat (including the Company Merger). It is
not aware of any event or circumstance with respect to its
operations which would disqualify the Merger from being accounted
for as a pooling of interests (in this regard neither it nor any of
its Subsidiaries has at any time during the two year period
immediately prior to the date hereof repurchased or otherwise
acquired any shares of its common stock, except as set forth in
Section 2.2 of its Disclosure Schedule).
(b) With respect to the shares of Charter Common Stock
to be issued in the Company Merger, Charter represents and warrants
that such shares when so issued in accordance with this Agreement
will be duly authorized, validly issued, fully paid and
nonassessable and not subject to any preemptive rights or other
liens.
2.3 Ownership of Subsidiaries. All outstanding shares of
capital stock of its Subsidiaries are validly issued, fully paid,
nonassessable and owned beneficially and of record by it or one of
its Subsidiaries free and clear of any lien, claim, charge,
restriction or encumbrance (collectively, "Encumbrance"), except as
set forth in Section 2.3 of its Disclosure Schedule. There are no
options, convertible securities, warrants or other rights
(preemptive or otherwise) to purchase or acquire any capital stock
of any of its Subsidiaries and no contracts to which it or any of
its Subsidiaries is subject with respect to the issuance, voting or
sale of issued or unissued shares of the capital stock of any of
its Subsidiaries. Neither it nor any of its Subsidiaries owns more
than 2% of the capital stock or other equity securities (including
securities convertible or exchangeable into such securities) of or
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more than 2% of the aggregate profit participations in any
"company" (as defined in Section 10(a)(1)(C) of the HOLA) other
than a Subsidiary or as otherwise set forth in Section 2.3 of its
Disclosure Schedule.
2.4 Financial Statements and Reports. (a) No registration
statement, offering circular, proxy statement, schedule or report
filed by it or any of its Subsidiaries with the SEC or the OTS
under the Securities Act or the Securities Exchange Act ("SEC
Reports"), on the date of effectiveness in the case of such
registration statements, or on the date of filing in the case of
such reports or schedules, or on the date of mailing in the case of
such proxy statements, contained any untrue statement of a material
fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading. For
the past five years, it and its Subsidiaries have timely filed all
reports and documents required to be filed by them with the SEC,
the OTS or the Federal Deposit Insurance Corporation ("FDIC") under
various securities and financial institution laws and regulations
except to the extent that all failures to so file, in the
aggregate, would not have a material adverse effect on the
business, financial condition or results of operations of it and
its consolidated Subsidiaries, taken as a whole; and all such
documents, as finally amended, complied in all material respects
with applicable requirements of law and, as of their respective
date or the date as amended, did not contain any untrue statement
of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not
misleading. Except to the extent stated therein, all financial
statements and schedules included in the documents referred to in
the preceding sentences (or to be included in similar documents to
be filed after the date hereof) (i) are or will be (with respect to
financial statements in respect of periods ending after March 31,
1995), in accordance with its books and records and those of any of
its consolidated Subsidiaries, and (ii) present (and in the case of
financial statements in respect of periods ending after March 31,
1995, will present) fairly the consolidated financial position and
the consolidated results of operations or income, changes in
stockholders' equity and cash flows of it and its Subsidiaries as
of the dates and for the period indicated in accordance with
generally accepted accounting principles applied on a basis
consistent with prior periods (except for the omission of notes to
unaudited statements and in the case of interim financial
statements to normal recurring year-end adjustments normal in
nature and amounts). Its audited consolidated financial statements
at December 31, 1994 and for the year then ended and the
consolidated financial statements for all periods thereafter up to
the Closing reflect or will reflect, as the case may be, all
liabilities (whether accrued, absolute, contingent, unliquidated or
otherwise, whether due or to become due and regardless of when
asserted) as of such date of it and its Subsidiaries required to be
reflected in such financial statements according to generally
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accepted accounting principles and contain or will contain (as the
case may be) adequate reserves for losses on loans and properties
acquired in settlement of loans, taxes and all other material
accrued liabilities and for all reasonably anticipated material
losses, if any, as of such date in accordance with generally
accepted accounting principles. There exists no set of
circumstances that could reasonably be expected to result in any
liability or obligation material to it or its Subsidiaries, taken
as a whole, except as disclosed in such consolidated financial
statements at December 31, 1994 or for transactions effected or
actions occurring or expected to be taken after December 31, 1994
(i) in the ordinary course of business, (ii) as permitted by this
Agreement or (iii) as disclosed in the SEC Reports filed with the
SEC since January 1, 1992 and before the date of this Agreement. A
true and complete copy of such December 31, 1994 financial
statements has been delivered by it to the other party.
(b) It has delivered to the other party each SEC Report
filed, used or circulated by it with respect to periods since
January 1, 1992 through the date of this Agreement and will
promptly deliver each such SEC Report filed, used or circulated
after the date hereof, each in the form (including exhibits and any
amendments thereto) filed with the SEC or the OTS (or, if not so
filed, in the form used or circulated), including, without
limitation, its Annual Reports on Form 10-K and its Quarterly
Reports on Form 10-Q
2.5 Absence of Changes.
(a) Since December 31, 1994, there has been no material
adverse change affecting it and its Subsidiaries, taken as a whole.
There is no occurrence, event or development of any nature existing
or, to its best knowledge, threatened which may reasonably be
expected to have a material adverse effect upon it or any of its
Subsidiaries.
(b) Except as set forth in Section 2.5 of its Disclosure
Schedule or in its SEC Reports filed with the SEC since January 1,
1992 and before the date of this Agreement, since December 31,
1994, each of it and its Subsidiaries has owned and operated its
respective assets, properties and businesses in the ordinary course
of business and consistent with past practice.
2.6 Prospectus/Joint Proxy Statement. At the time the
Prospectus/Joint Proxy Statement is mailed to the stockholders of
Charter and FirstFed for the solicitation of proxies for the
approvals referred to in Section 1.7 hereof and at all times after
such mailings up to and including the times of such approvals, such
Prospectus/Joint Proxy Statement (including any supplements
thereto), with respect to all information set forth therein
relating to it (including its Subsidiaries) and its stockholders,
its common stock, this Agreement, the Merger and the other
transactions contemplated hereby, will:
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(a) Comply in all material respects with applicable
provisions of the Securities Act, the Securities Exchange Act and
the rules and regulations under such Acts; and
(b) Not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or
necessary in order to make the statements contained therein, in
light of the circumstances under which it is made, not misleading.
2.7 No Broker's or Finder's Fees. No agent, broker,
investment banker, person or firm acting on behalf or under
authority of it or any of its Subsidiaries is or will be entitled
to any broker's or finder's fee or any other commission or similar
fee directly or indirectly in connection with the Merger or any
other transaction contemplated hereby, except as set forth in
Section 2.7 of its Disclosure Schedule.
2.8 Litigation and Other Proceedings. Except for matters
which would not have a material adverse effect on it and its
Subsidiaries taken as a whole, or except as set forth in Section
2.8 of its Disclosure Schedule or its SEC Reports filed with the
SEC since January 1, 1992, neither it nor any of its Subsidiaries
is a defendant in, nor is any of its property subject to, any
pending or, to its best knowledge, threatened claim, action, suit,
investigation or proceeding or subject to any judicial order,
judgment or decree.
2.9 Compliance with Law. Except as set forth in Section 2.9
of its Disclosure Schedule or its SEC Reports filed with the SEC
since January 1, 1992:
(a) It and each of its Subsidiaries are in compliance in
all material respects with all laws, regulations, ordinances,
rules, judgments, orders or decrees applicable to their respective
operations or with respect to which compliance is a condition of
engaging in their respective business, including without limitation
the Equal Credit Opportunity Act, the Fair Housing Act, the
Community Reinvestment Act, the Home Owners' Disclosure Act and all
other applicable fair lending laws or other laws relating to
discrimination. Neither it nor any of its Subsidiaries has
received notice from any federal, state or local government or
governmental agency of any material violation of, and does not know
of any material violations of, any of the above.
(b) It and each of its Subsidiaries have all permits,
licenses, certificates of authority, orders and approvals of, and
have made all filings, applications and registrations with, all
federal, state, local and foreign governmental or regulatory bodies
that are required in order to permit them to carry on their
respective businesses as they are presently conducted.
(c) It and each of its Subsidiaries have received since
January 1, 1992 no notification or communication from any
governmental entity (including, but not limited to, the OTS and any
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other regulatory authority) or the staff thereof (A) asserting that
it or any of its Subsidiaries is not in compliance with any of the
statutes, regulations or ordinances that such governmental entity
administers or enforces; (B) threatening to revoke any license,
franchise, permit or governmental authorization; or (C) threatening
or contemplating revocation or limitation of, or which would have
the effect of revoking or limiting, the FDIC deposit insurance of
any Bank Subsidiary (nor, to the best knowledge of its executive
officers, do any grounds for any of the foregoing exist); and
(d) It and each of its Subsidiaries are not required to
give prior notice to any federal banking or savings institution
regulatory agency of the proposed addition of an individual to
their respective board of directors or the employment of an
individual as a senior executive officer.
2.10 Corporate Actions.
(a) Its Board of Directors (or its Bank Subsidiary that
is a named party to the Bank Merger Agreement, as applicable) has
(i) duly approved the Merger, this Agreement, the Bank Merger
Agreement, each Stock Option Agreement, and the Voting Agreements
and authorized its officers to execute and deliver this Agreement,
the Bank Merger Agreement, each Stock Option Agreement and the
Voting Agreements and to take all action necessary to consummate
the Merger and the other transactions contemplated hereby, (ii)
authorized and directed the submission for stockholders' approval
of this Agreement, the Merger and any related matters requiring
such approval including, in the case of Charter, amendments to the
Restated Certificate of Incorporation of Charter as contemplated in
Section 1.7(a) herein and, (iii) in the case of the representations
and warranties of Charter, (A) approved the execution of the
Charter Stock Option Agreement and authorized and approved the
Company Merger (before execution by Charter of this Agreement and
before the date of execution of the Charter Stock Option Agreement)
in accordance with Section 203 of the DGCL and (B) not taken any
action to readopt the restriction set forth in paragraph A of
Article FIFTH of its Restated Certificate of Incorporation, not
extended the period through which such restriction operates and
such restriction is not presently in effect.
(b) Its Board of Directors has taken all necessary
action to exempt this Agreement, the Bank Merger Agreement, the
Voting Agreements and the Stock Option Agreement and the
transactions contemplated hereby and thereby from, and this
Agreement, the Bank Merger Agreement and the Stock Option Agreement
and the transactions contemplated hereby and thereby are exempt
from, (i) any applicable state takeover laws, (ii) any state laws
limiting or restricting the voting rights of stockholders, (iii)
any state laws requiring a stockholder approval vote in excess of
the vote normally required in transactions of similar type not
involving a "related person," "interested stockholder" or person or
entity of similar type and (iv) any provision in its or any of its
Subsidiaries' articles of incorporation, certificate of
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incorporation, charter or bylaws, (A) restricting or limiting stock
ownership or the voting rights of stockholders or (B) requiring a
stockholder approval vote in excess of the vote normally required
in transactions of similar type not involving a "related person,"
interested stockholder" or person or entity of similar type.
(c) In the case of the representations and
warranties of Charter, the Board of Directors of Charter has
approved, and has authorized Charter to enter into and keep in
effect (including, to the extent applicable, subsequent to
termination of this Agreement) an amendment (the "Rights
Amendment") to the Charter Rights Agreement (a copy of which Rights
Amendment has been executed by both parties thereto and is attached
hereto as Exhibit 2.10(c)) pursuant to which none of the execution
and delivery of this Agreement, or the Charter Stock Option
Agreement or consummation of the Merger or the purchase of shares
of Charter Common Stock pursuant to the Charter Stock Option
Agreement will cause (i) the rights issued pursuant to the Charter
Rights Agreement to become exercisable under the Rights Agreement,
(ii) FirstFed or any permitted transferee under the Charter Stock
Option Agreement to become an "Acquiring Person" (as such term is
defined in the Charter Rights Agreement) or (iii) a "Distribution
Date" or "Stock Acquisition Date" (as such terms are defined in the
Rights Agreement) to occur upon, as a result of or in connection
with any such event.
2.11 Authority. Except as set forth in Section 2.11 of its
Disclosure Schedule, neither the execution and delivery of and
performance of its obligations under this Agreement, the Bank
Merger Agreement and the Stock Option Agreement by it or its
applicable Bank Subsidiary nor consummation of the Merger will
violate any of the provisions of, or constitute a breach or default
under or give any person the right to terminate or accelerate
payment or performance under, (i) its articles of incorporation,
certificate of incorporation or bylaws, or the articles of
incorporation, certificate of incorporation, charter or bylaws of
any of its Subsidiaries, (ii) any regulatory restraint on the
acquisition of it or control thereof, (iii) any law, rule,
ordinance or regulation or judgment, decree, order, award or
governmental or non-governmental permit or license to which it or
any of its Subsidiaries is subject or (iv) any material agreement,
lease, contract, note, mortgage, indenture, arrangement or other
obligation or instrument ("Contract") to which it or any of its
Subsidiaries is a party or is subject or by which any of its or
their properties or assets is bound. The parties acknowledge that
the consummation of the Merger and the other transactions
contemplated hereby is subject to various regulatory approvals. It
or its applicable Bank Subsidiary has all requisite corporate power
and authority to enter into this Agreement, the Bank Merger
Agreement and each Stock Option Agreement and to perform its
obligations hereunder and thereunder, except, with respect to this
Agreement and the Company Merger, the approval of its stockholders
required under applicable law. Other than the receipt of
Governmental Approvals (as defined in Section 4.1(c)), the approval
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of its stockholders and except as set forth in Section 2.11 of its
Disclosure Schedule with respect to any Contract, no consents or
approvals are required on its behalf or on behalf of any of its
Subsidiaries in connection with the consummation of the
transactions contemplated by this Agreement, the Bank Merger
Agreement and each Stock Option Agreement. This Agreement and each
Stock Option Agreement constitute the valid and binding obligations
of it, and each is enforceable in accordance with its terms, except
as enforceability may be limited by applicable laws relating to
bankruptcy, insolvency or creditors rights generally and general
principles of equity.
2.12 Employment Arrangements. Except as set forth in Section
2.12 of its Disclosure Schedule, there are no agreements, plans or
other arrangements with respect to employment, severance or other
benefits with any current or former directors, officers or
employees of it or any of its Subsidiaries which may not be
terminated without penalty or expense (including any augmentation
or acceleration of benefits) on 30 days' or less notice to any such
person. Except as set forth in Section 2.12 of its Disclosure
Schedule, no payments and benefits (including any augmentation or
acceleration of benefits) to current or former directors, officers
or employees of it or any of its Subsidiaries resulting from the
transactions contemplated hereby or the termination of such
person's service or employment within two years following
consummation of the Merger will cause the imposition of excise
taxes under Section 4999 of the Internal Revenue Code or the
disallowance of a deduction to it, the Surviving Corporation, or
any of their respective Subsidiaries pursuant to Sections 162, 280G
or any other section of the Internal Revenue Code.
2.13 Employee Benefits. (a) Neither it nor any of its
Subsidiaries maintains any funded deferred compensation plans
(including profit sharing, pension, retirement savings or stock
bonus plans), unfunded deferred compensation arrangements or
employee benefit plans as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), other
than any plans ("Employee Plans") set forth in Section 2.13 of its
Disclosure Schedule (true and correct copies of which it has
delivered to the other party). Neither it nor any of its
Subsidiaries has incurred or reasonably expects to incur any
liability to the Pension Benefit Guaranty Corporation except for
required premium payments which, to the extent due and payable,
have been paid. The Employee Plans intended to be qualified under
Section 401(a) of the Internal Revenue Code are so qualified, and
it is not aware of any fact which would adversely affect the
qualified status of such plans. Except as set forth in Section
2.13 of its Disclosure Schedule, neither it nor any of its
Subsidiaries (a) provides health, medical, death or survivor
benefits to any former employee, director or officer or beneficiary
thereof or (b) maintains any form of current (exclusive of base
salary and base wages) or deferred compensation, bonus, stock
option, stock appreciation right, benefit, severance pay,
retirement, employee stock ownership, incentive, group or
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individual health insurance, welfare or similar plan or arrangement
for the benefit of any single or class of directors, officers or
employees, whether active or retired (collectively "Benefit
Arrangements").
(b) Except as disclosed in Section 2.13 of its
Disclosure Schedule, all Employee Plans and Benefit Arrangements
which are in effect were in effect for substantially all of
calendar year 1994 and there has been no material amendment thereof
(other than amendments required to comply with applicable law or as
contemplated by Section 3.13 herein) or material increase in the
cost thereof or benefits payable thereunder on or after January 1,
1994.
(c) To its best knowledge, with respect to all Employee
Plans and Benefit Arrangements, it and each of its Subsidiaries are
in substantial compliance with the requirements prescribed by any
and all statutes, governmental or court orders or rules or
regulations currently in effect, including but not limited to ERISA
and the Internal Revenue Code, applicable to such Employee Plans or
Benefit Arrangements. No condition exists that could constitute
grounds for the termination of any Employee Plan under Section 4042
of ERISA; no "prohibited transaction," as defined in Section 406 of
ERISA and Section 4975 of the Internal Revenue Code, has occurred
with respect to any Employee Plan, or any other employee benefit
plan maintained by it or any of its Subsidiaries which is covered
by Title I of ERISA, which could subject any person to liability
under Title I of ERISA or to the imposition of any tax under
Section 4975 of the Internal Revenue Code which could have an
adverse effect on the business, assets, financial condition,
results of operations or prospects of it or any of its
Subsidiaries; to its best knowledge, no Employee Plan subject to
Part III of Subtitle B of Title I of ERISA or Section 412 of the
Internal Revenue Code, or both, has incurred any "accumulated
funding deficiency," as defined in Section 412 of the Internal
Revenue Code, whether or not waived; neither it nor any of its
Subsidiaries has failed to make any contribution or pay any amount
due and owing as required by the terms of any Employee Plan or
Benefit Arrangement. To its best knowledge, neither it nor any of
its Subsidiaries has incurred or expects to incur, directly or
indirectly, any liability under Title IV of ERISA arising in
connection with the termination of, or a complete or partial
withdrawal from, any plan covered or previously covered by Title IV
of ERISA which could constitute a liability of Charter as the
Surviving Corporation or any of its Subsidiaries at or after the
Company Merger Effective Time. In the case of the representations
and warranties of FirstFed, (i) the present value of "benefit
liabilities" (within the meaning of 4001(a)(16) of ERISA) under the
Defined Benefit Plan (as defined in Section 3.13(a)), as of its
latest valuation date and based upon the actuarial assumptions
currently prescribed for plan terminations by the Pension Benefit
Guaranty Corporation, did not exceed the then current value of the
assets of such plan allocable to such accrued benefits, and (ii)
there have been no reportable events under Section 4043 of ERISA
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(with respect to which the 30-day notice requirement has not been
waived by regulation) with respect to the Defined Benefit Plan.
2.14 Information Furnished. No statement contained in any
schedule, certificate or other document furnished (whether before,
on or after the date of this Agreement) or to be furnished in
writing by or on behalf of it to the other party pursuant to this
Agreement contains or will contain any untrue statement of a
material fact or any material omission. To its best knowledge, no
information which is material to the Merger and necessary to make
the representations and warranties herein not misleading has been
withheld from the other party.
2.15 Property and Assets. (i) It and its Subsidiaries have
good and marketable title to all of their real property reflected
in the financial statements at December 31, 1994, referred to in
Section 2.4 hereof (other than property sold or transferred in the
ordinary course of business since the date of such financial
statements) or acquired subsequent thereto, free and clear of all
Encumbrances, except for (a) such items shown in such financial
statements or in the notes thereto, (b) liens for current real
estate taxes not yet delinquent, (c) customary easements,
restrictions of record and title exceptions that have no material
adverse effect upon the value or use of such property, (d) pledges
or liens incurred in the ordinary course of business and (e) as
otherwise specifically indicated in its SEC Reports filed with the
SEC since January 1, 1992 and before the date of this Agreement or
in Section 2.15 of its Disclosure Schedule. (ii) It and its
Subsidiaries enjoy peaceful and undisturbed possession under all
material leases for the use of real property under which they are
the lessee; all of such leases are valid and binding and in full
force and effect, and neither it nor any of its Subsidiaries is in
default in any material respect under any such lease. No default
will arise under any material real property or material personal
property lease by reason of consummation of the Merger without the
lessor's consent except as set forth in Section 2.15 of its
Disclosure Schedule. (iii) There has been no material physical
loss, damage or destruction, whether or not covered by insurance,
affecting the real properties of it and its Subsidiaries since
December 31, 1994. Except as set forth in Section 2.15 of its
Disclosure Schedule, all property and assets material to its or any
of its Subsidiaries' respective business and currently used by it
or any of its Subsidiaries are, in all material respects, in good
operating condition and repair.
2.16 Agreements and Instruments. Except as set forth in its
SEC Reports filed with the SEC since January 1, 1992 and before the
date of this Agreement or in Section 2.16 of its Disclosure
Schedule, neither it nor any of its Subsidiaries is a party to (a)
any material agreement, arrangement or commitment not made in the
ordinary course of business, (b) any agreement, indenture or other
instrument relating to the borrowing of money by it or any of its
Subsidiaries or the guarantee by it or of its Subsidiaries of any
such obligation (other than Federal Home Loan Bank advances with a
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maturity of one year or less from the date hereof), (c) any
agreements to make loans or for the provision, purchase or sale of
goods, services or property between it or any of its Subsidiaries
and any director or officer of it or any of its Subsidiaries or any
affiliate or member of the immediate family of any of the
foregoing, (d) any agreements with or concerning any labor or
employee organization to which it or any of its Subsidiaries is a
party, (e) any agreements between it or any of its Subsidiaries and
any five percent or more stockholder of it and (f) any agreements,
directives, orders or similar arrangements between or involving it
or any of its Subsidiaries and any state or federal savings
institution regulatory authority.
2.17 Material Contract Defaults. Neither it or any of its
Subsidiaries nor the other party thereto is in default in any
respect under any contract, agreement, commitment, arrangement,
lease, insurance policy or other instrument to which it or any
Subsidiary of it is a party or by which its respective assets,
business or operations may be bound or affected or under which it
or its respective assets, business or operations receives benefits,
which default is reasonably expected to have either individually or
in the aggregate a material adverse effect on it or any of its
Subsidiaries, and there has not occurred any event that, with the
lapse of time or the giving of notice or both, would constitute
such a default.
2.18 Tax Matters. (a) It and each of its Subsidiaries have
duly and properly filed all federal, state, local and other tax
returns and reports required to be filed by them and have made
timely payments of all taxes due and payable, whether disputed or
not; the current status of audits of such returns or reports by the
Internal Revenue Service ("IRS") and other applicable tax
authorities is as set forth in Section 2.18 of its Disclosure
Schedule; and, except as set forth in Section 2.18 of its
Disclosure Schedule, there is no agreement by it or any of its
Subsidiaries for the extension of time or for the assessment or
payment of any taxes payable. Except as set forth in Section 2.18
of its Disclosure Schedule, neither the IRS nor any other taxing
authority is now asserting or, to its best knowledge, threatening
to assert any deficiency or claim for additional taxes (or interest
thereon or penalties in connection therewith), nor is it aware of
any basis for any such assertion or claim. It and each of its
Subsidiaries have complied in all material respects with applicable
IRS backup withholding requirements. It and each of its
Subsidiaries have complied with all applicable state law tax
collection and reporting requirements.
(b) Adequate provision for any unpaid federal, state,
local or foreign taxes due or to become due from it or any of its
Subsidiaries for all periods through and including December 31,
1994 has been made and is reflected in its December 31, 1994
consolidated financial statements referred to in Section 2.4 and
has been or will be made with respect to periods ending after
December 31, 1994.
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2.19 Environmental Matters. To its best knowledge, except as
set forth in Section 2.19 of its Disclosure Schedule neither it nor
any of its Subsidiaries owns, leases or otherwise controls any
property affected by toxic waste, radon gas or other hazardous
conditions or constructed in part with the use of asbestos.
Neither it nor any of its Subsidiaries is aware of, nor has it or
any of its Subsidiaries received written notice from any
governmental or regulatory body of, any past, present or future
conditions, activities, practices or incidents which may interfere
with or prevent compliance or continued compliance with hazardous
substance laws or any regulation, order, decree, judgment or
injunction, issued, entered, promulgated or approved thereunder or
which may give rise to any common law or legal liability or
otherwise form the basis of any claim, action, suit, proceeding,
hearing or investigation based on or related to the manufacture,
processing, distribution, use, treatment, storage, disposal,
transport or handling, or the emission, discharge, release or
threatened release into the environment, of any pollutant,
contaminant, chemical or industrial, toxic or hazardous substance
or waste. There is no civil, criminal or administrative claim,
action, suit, proceeding, hearing or investigation pending or, to
its knowledge, threatened against it or any of its Subsidiaries
relating in any way to such hazardous substance laws or any
regulation, order, decree, judgment or injunction issued, entered,
promulgated or approved thereunder.
2.20 Loan Portfolio; Portfolio Management. (a) All evidences
of indebtedness reflected as assets in its financial statements at
December 31, 1994, referred to in Section 2.4 herein, or originated
or acquired since such date, are (except with respect to those
assets which are no longer assets of it or any of its Subsidiaries)
binding obligations of the respective obligers named therein except
as enforcement may be limited by bankruptcy, insolvency or other
similar laws affecting the enforcement of creditors rights
generally and except as to the availability of equitable remedies,
including specific performance, which are subject to the discretion
of the court before which a proceeding is brought, and the payment
of no material amount thereof (either individually or in the
aggregate with other evidences of indebtedness) is subject to any
defenses or offsets which have been threatened or asserted against
it or any Subsidiary. All such indebtedness which is secured by an
interest in real property is secured by a valid and perfected
mortgage lien having the priority specified in the loan documents.
All loans originated or purchased by it or any of its Subsidiaries
were at the time entered into and at all times owned by it or its
Subsidiaries in compliance in all material respects with all
applicable laws and regulations (including, without limitation, all
consumer protection laws and regulations). It and its Subsidiaries
(as applicable) administer their loan and investment portfolios
(including, but not limited to, adjustments to the interest rate
and payment on adjustable mortgage loans) in accordance with all
applicable laws and regulations and the terms of applicable
instruments. The records of it and any of its Subsidiaries (as
applicable) regarding all loans outstanding on its books are
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accurate in all material respects. The risk classification system
utilized by its Bank Subsidiaries has been established in
accordance with the requirements of the OTS.
(b) Section 2.20 of its Disclosure Schedule sets forth
a list, accurate and complete in all material respects, of the
aggregate amounts of loans, extensions of credit and other assets
of it and its Subsidiaries that have been adversely designated,
criticized or classified by it as of March 31, 1995, separated by
category of classification or criticism (the "Asset
Classification"); and no amounts of loans, extensions of credit or
other assets that have been adversely designated, classified or
criticized as of the date hereof by any representative of any
government entity as "Special Mention," "Substandard," "Doubtful,"
"Loss" or words of similar import are excluded from the amounts
disclosed in the Asset Classification, other than amounts of loans,
extensions of credit or other assets that were charged off by it or
any of its Subsidiaries before the date hereof.
2.21 Real Estate Loans and Investments. Except for properties
acquired in settlement of loans, there are no facts, circumstances
or contingencies known to it or any of its Subsidiaries which exist
and would require a material reduction under generally accepted
accounting principles in the present carrying value of any of the
real estate investments, joint ventures, construction loans, other
investments or other loans of it or any of its Subsidiaries (either
individually or in the aggregate with other loans and investments).
2.22 Derivatives Contracts. Neither it nor any of its
Subsidiaries is a party to or has agreed to enter into an exchange-
traded or over-the-counter swap, forward, future, option, cap,
floor or collar financial contract or any other contract not
included in its financial statement as of December 31, 1994 filed
as part of its SEC Reports or disclosed in its Form 10-Q as filed
with the SEC for the quarter ended March 31, 1995 (or in its
financial statement included therein) which is a derivatives
contract (including various combinations thereof) (each, a
"Derivatives Contract") or owns securities that are identified in
Thrift Bulletin No. 65 or otherwise referred to as structured notes
(each, a "Structured Note"), except for those Derivatives Contracts
and Structured Notes set forth in Section 2.22 of its Disclosure
Schedule, including a list, as applicable, of any of its or any of
its Subsidiaries' assets pledged as security for a Derivatives
Contract.
2.23 Exceptions to Representations and Warranties. (a) On or
before the date hereof, Charter has delivered to FirstFed and
FirstFed has delivered to Charter its respective Disclosure
Schedule setting forth, among other things, exceptions to any and
all of its representations and warranties in Article II, provided
that each exception set forth in a Disclosure Schedule shall be
deemed disclosed for purposes of all representations and warranties
if such exception is contained in a section of the Disclosure
Schedule corresponding to a Section in Article II and provided
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further that (i) no such exception is required to be set forth in
a Disclosure Schedule if its absence would not result in the
related representation or warranty being deemed untrue or incorrect
under the standard established by Section 2.23(b) and (ii) the mere
inclusion of an exception in a Disclosure Schedule shall not be
deemed an admission by a party that such exception represents a
material fact, event or circumstance or would result in a material
adverse effect or material adverse change.
(b) No representation or warranty of Charter or FirstFed
contained in Article II shall be deemed untrue or incorrect, and no
party shall be deemed to have breached a representation or warranty
contained herein, as a consequence of the existence of any fact,
circumstance or event if such fact, circumstance or event,
individually or taken together with all similar facts,
circumstances or events, would not, or in the case of Section 2.8
is not reasonably likely to, have a material adverse effect or
material adverse change.
As used in this Agreement, the term "material adverse effect"
or "material adverse change" means an effect or change which (i) is
materially adverse to the business, financial condition, results of
operations or prospects of Charter or FirstFed and its respective
Subsidiaries taken as a whole or (ii) enables any person to prevent
the consummation of the transactions contemplated hereby; provided
however that any effect or change resulting from (A) actions or
omissions of Charter or FirstFed taken with the prior consent of
the other in contemplation of the transactions provided for herein
or (B) circumstances affecting the savings institution industry
generally (including changes in laws or regulations, accounting
principles or general levels of interest rates including, without
limitation, the effects of changes in interest rates on earnings,
portfolio market value and interest rate risk exposure) shall be
deemed not to be or have a material adverse effect or material
adverse change.
ARTICLE III
COVENANTS
3.1 Investigations; Access and Copies. Between the date of
this Agreement and the Company Merger Effective Time, each party
agrees to give to the other party and its respective
representatives and agents full access (to the extent lawful) to
all of the premises, books, records and employees of it and its
Subsidiaries at all reasonable times and to furnish and cause its
Subsidiaries to furnish to the other party and its respective
agents or representatives access to and true and complete copies of
such financial and operating data, all documents with respect to
matters to which reference is made in Article II of this Agreement
or on any list, schedule or certificate delivered or to be
delivered in connection herewith and such other documents, records,
or information with respect to the business and properties of it
and its subsidiaries as the other party or its respective agents or
representatives shall from time to time reasonably request;
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provided however, that any such inspection (a) shall be conducted
in such manner as not to interfere unreasonably with the operation
of the business of the entity inspected and (b) shall not affect
any of the representations and warranties hereunder. Each party
will also give prompt written notice to the other party of any
event or development which, (x) had it existed or been known on the
date of this Agreement, would have been required to be disclosed
under this Agreement, (y) would cause any of its representations
and warranties contained herein to be inaccurate or otherwise
materially misleading or (z) materially relates to the satisfaction
of the conditions set forth in Article IV of this Agreement.
Notwithstanding anything to the contrary herein, neither party
hereto nor any of its Subsidiaries shall be required to provide
access to or to disclose information where such access or
disclosure would jeopardize the attorney-client privilege of the
institution in possession or control of such information or
contravene any law, rule, regulation, order, judgment, decree,
fiduciary duty or binding agreement entered into prior to the date
of this Agreement or, in the event of any litigation or threatened
litigation between the parties over the terms of this Agreement,
where access to information may be adverse to the interests of such
party. To the extent reasonably practicable, the parties hereto
will make appropriate substitute disclosure arrangements under
circumstances in which the restrictions of the preceding sentence
apply.
3.2 Conduct of Business. Between the date of this Agreement
and the Company Merger Effective Time or the termination of this
Agreement (whichever occurs first), each party agrees, on behalf of
itself and each of its respective Subsidiaries, except as
contemplated herein or insofar as the Chief Executive Officer of
Charter or the Chief Executive Officer or the Chief Financial
Officer of FirstFed shall otherwise consent in writing (which
consent shall not be unreasonably withheld):
(a) That it and its Subsidiaries shall (i) except as
contemplated in this Agreement, conduct their business only in the
ordinary course consistent with past practices, (ii) maintain their
books and records in accordance with past practices and (iii) use
all reasonable efforts to preserve intact their business
organizations and assets, to maintain their rights, franchises and
existing relations with customers, suppliers, employees and
business associates and to take no action that would (A) adversely
affect the ability of any of them to obtain the Governmental
Approvals (as defined in Section 4.1(c) herein) or which would
reasonably be expected to hinder or delay receipt of the
Governmental Approvals or (B) adversely affect its ability to
perform its obligations under this Agreement, the Company Merger
Agreement, the Bank Merger Agreement or the applicable Stock Option
Agreement;
(b) That it and its Subsidiaries shall not: (i) declare,
set aside or pay any dividend or make any other distribution with
respect to its capital stock, except for (A) the payment of
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dividends consistent with Section 3.10, (B) the declaration and
payment of regular quarterly cash dividends by Charter in an amount
not in excess of $0.19 per outstanding share of Charter Common
Stock (except that beginning with the first dividend declared by
the Charter Board of Directors subsequent to October 1, 1995 and
every six months thereafter such dividend may be increased by $.02
per share from the dividend last declared prior thereto) and the
declaration and payment of regular quarterly cash dividends by
FirstFed in an amount not in excess of $0.15 per outstanding share
of FirstFed Common Stock (except that beginning with the first
dividend declared by the FirstFed Board of Directors subsequent to
July 1, 1995 and every six months thereafter such dividend may be
increased by $.01 per share from the dividend last declared prior
thereto), in each case with usual record and payment dates for such
dividends consistent with such parties' past dividend practices,
and (C) dividends or distributions by a wholly owned Subsidiary of
such party to such party; (ii) reacquire or buy any of its
outstanding shares; (iii) issue or sell or buy any shares of
capital stock of it or any of its Subsidiaries, except shares of
its common stock issued pursuant to the Stock Option Agreement and
shares issued pursuant to exercise of stock options previously
issued and identified in Section 2.2 of its Disclosure Schedule;
(iv) effect any stock split, stock dividend, reverse stock split
other reclassification or recapitalization of its common stock; or
(v) except with respect to the Stock Option Agreement, grant any
options or issue any warrants exercisable for or securities
convertible or exchangeable into capital stock of it or any of its
Subsidiaries or grant any stock appreciation or other rights with
respect to shares of capital stock of it or of any of its
Subsidiaries; or (vi) purchase or acquire any of the outstanding
shares of capital stock of the other party hereto or any Subsidiary
thereof other than as contemplated by the Stock Option Agreement or
in connection with the Merger as contemplated herein;
(c) That, except where the provisions herein are limited
to a specific party and/or its Subsidiaries, it and its
Subsidiaries shall not: (i) sell, dispose of or pledge any
significant assets of it or of any of its Subsidiaries other than
in the ordinary course of business consistent with past practices
or in connection with the borrowing of funds consistent with the
provisions hereinafter contained; (ii) merge or consolidate it or
any of its Subsidiaries with or into any other entity or otherwise
acquire any other entity or except in accordance with its written
business plan in effect on the date hereof acquire any significant
assets; (iii) sell or pledge or agree to sell or pledge or permit
any lien to exist on any stock of any of its Subsidiaries owned by
it; (iv) change the articles of incorporation or certificate of
incorporation, charter, bylaws or other governing instruments of it
or any of its Subsidiaries, except as contemplated in this
Agreement; (v) engage in any lending activities other than in the
ordinary course of business consistent with past practices but
subject to the restrictions contained in Section 3.2(e) hereof and
provided Charter and FirstFed and their respective Subsidiaries
collectively shall limit their new loans to a Relationship (as
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defined herein) to $15,000,000; for purposes of this Agreement, a
"Relationship" means common borrowers, guarantors or partners or
other relationships considered related or affiliated by management
of the lending entity; (vi) form any new subsidiary (except in the
case of Charter it may form a consumer finance subsidiary) or cause
or permit a material change in the activities presently conducted
by any Subsidiary or make additional investments in subsidiaries in
excess of $25,000,000 except for Charter's leasing subsidiary where
such investment shall not exceed $100,000,000; (vii) except to
hedge interest rate risk on certificates of deposit with respect to
Charter, engage in any off balance sheet interest rate swap, cap or
floor agreement; (viii) engage in any activity not contemplated by
its written business plan in effect on the date hereof; (ix)
purchase any equity securities other than Federal Home Loan Bank
stock; (x) make any investment which would cause any Banking
Subsidiary not to be a qualified thrift lender under Section 10(m)
of the HOLA or a "domestic building and loan association" as
defined in Section 7701(a)(19) of the Internal Revenue Code;
(xi) authorize capital expenditures other than in the ordinary and
usual course of business; (xii) implement or adopt any change in
its accounting principles, practices or methods other than as may
be required by generally accepted accounting principles; or
(xiii) engage any independent auditors other than such auditors
engaged as of the date hereof. The limitations contained in this
Section 3.2(c) shall also be deemed to constitute limitations as to
the making of any commitment with respect to any of the matters set
forth in this Section 3.2(c).
(d) That, except where the provisions herein are limited to
a specific party and/or its Subsidiaries, it and its Subsidiaries
shall not: (i) in the case of FirstFed and its Subsidiaries incur
any debt obligation (excluding deposits) or other obligation for
borrowed money with terms in excess of one year; (ii) in the case
of Charter and its Subsidiaries incur any additional debt
obligation (excluding deposits) or other obligation for borrowed
money other than replacing existing debt with other debt and
creating additional debt consistent with its written business plan
in effect on the date hereof; (iii) allow the use of its common
stock by optionees to pay any option exercise price or to satisfy
tax liabilities under the FirstFed Option Plans or the option plans
of Charter; (iv) grant any general increase in compensation or
benefits to its employees or officers or pay any bonuses to its
employees or officers except in accordance with policies or budgets
in effect on the date hereof; (v) except as contemplated by Section
3.13 hereof, enter into, extend, renew, modify, amend or otherwise
change any employment or severance agreements with any of its
directors, officers or employees; (vi) grant any increase in fees
or other increases in compensation or other benefits to any of its
present or former directors in such capacity; or (vii) except as
contemplated by Section 3.13 hereof, establish or sponsor any new
Employee Plan or Benefit Arrangement or effect any change in its
Employee Plans or Benefit Arrangements (unless such change is
required by applicable law or, in the opinion of its counsel, is
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necessary to maintain continued qualification of any tax-qualified
plan that provides for retirement benefits).
(e) That, except where the provisions herein are limited to
a specific party and/or its Subsidiaries, it and its Subsidiaries
shall not: (i) extend, restructure, modify or otherwise amend or
alter any of the following types of commercial real estate loans or
commitments: (A) any loan secured by real estate (or commitment to
be secured by) real estate, in the case of FirstFed and its
Subsidiaries located in the State of Michigan or in the case of
Charter and its Subsidiaries located in the State of Ohio, with a
loan balance (or commitment amount) of $15,000,000 or greater if
debt service coverage in the prior year was 1.2 or greater, but if
such debt service coverage is less than 1.2 such limit shall be
$3,000,000; (B) any loan or commitment to a Relationship that has
or would have (if the commitment was fully implemented) loans
exceeding $15,000,000; (C) any loan secured by (or commitment to be
secured by) real estate located outside the State of Michigan in
the case of FirstFed and its Subsidiaries or located outside the
State of Ohio in the case of Charter and its Subsidiaries with a
loan balance of or a commitment amount of $1,500,000 or greater;
(D) any loan exceeding $1,000,000 as of the date of this Agreement
which is more than 90 days delinquent as to payment, in bankruptcy
or foreclosure, or carried as a restructured troubled debt; or (E)
any loan with a balance of $500,000 or greater and internally
classified as Special Mention, Sub-Standard, Doubtful, or Loss as
of the date of this Agreement; for purposes of the dollar amounts
set forth in subparts (A) - (E) above any specific reserves or
allocated general reserves shall be reversed; (ii) foreclose upon,
or take a deed-in-lieu of foreclosure to, any commercial real
estate securing a loan with an outstanding balance including
accrued interest of $1,000,000 or greater; (iii) take any
individual commercial mortgage or multi-family loan application in
an amount greater than $10,000,000 or acquisition and development
loan application in an amount greater than $3,000,000; (iv) make
any residential loan in an amount greater than $1,000,000; (v)
enter into or renew any contract for the purchase of consumer loans
(as defined by the rules and regulations of OTS), on a whole loan
or participation basis; or (vi) originate mobile home loans during
calendar year 1995 (including pipeline loans in process) in an
aggregate amount exceeding $6,000,000.
3.3 No Solicitation. Each party agrees, on behalf of itself
and each of its Subsidiaries, that it will not authorize or permit
any officer, director, employee, investment banker, financial
consultant, attorney, accountant or other representative of it or
any of its Subsidiaries, directly or indirectly, to initiate
contact with any person or entity in an effort to solicit, initiate
or encourage any "Takeover Proposal" (as such term is defined
below). Except as the fiduciary duties of its Board of Directors
may otherwise require (as determined in good faith after
consultation with legal counsel), each party agrees that it will
not authorize or permit any officer, director, employee, investment
banker, financial consultant, attorney, accountant or other
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representative of it or any of its Subsidiaries, directly or
indirectly, (A) to cooperate with, or furnish or cause to be
furnished any non-public information concerning its business,
properties or assets to, any person or entity in connection with
any Takeover Proposal; (B) to negotiate any Takeover Proposal with
any person or entity; or (C) to enter into any agreement, letter of
intent or agreement in principle as to any Takeover Proposal. Each
party agrees that it shall promptly give written notice to the
other upon becoming aware of any Takeover Proposal, such notice to
contain, at a minimum, the identity of the persons submitting the
Takeover Proposal, a copy of any written inquiry or other
communication, the terms of any Takeover Proposal, any information
requested or discussions sought to be initiated and the status of
any requests, negotiations or expressions of interest. As used in
this Agreement, "Takeover Proposal" shall mean any proposal, other
than as contemplated by this Agreement, for a merger or other
business combination involving either party or any of their
respective Bank Subsidiaries or for the acquisition of a twenty-
five percent (25%) or greater equity interest in either party or
any of their respective Bank Subsidiaries, or for the acquisition
of a substantial portion of the assets of either party or any of
their respective Bank Subsidiaries.
3.4 Stockholder Approvals. The parties shall call the
meetings of their respective stockholders to be held for the
purpose of voting upon the Merger and related matters, as referred
to in Section 1.7 hereof, as soon as practicable. In connection
with the Charter and FirstFed Stockholders' Meetings, the
respective Boards of Directors shall recommend approval of this
Agreement, the Merger and any other matters requiring stockholder
action (including, in the case of Charter, the amendments to its
Restated Certificate of Incorporation as contemplated in Section
1.7(a) herein) relating to the transactions contemplated herein
(and such recommendation shall be contained in the Prospectus/Joint
Proxy Statement) unless as a result of an unsolicited Takeover
Proposal received by a party after the date hereof, the Board of
Directors of such party determines in good faith after consultation
with legal counsel and an investment banking firm of recognized
standing that to do so would constitute a breach of the fiduciary
duties of such Board of Directors to the stockholders of such
party. Each of the parties shall use its best efforts to solicit
from its stockholders proxies in favor of approval and to take all
other action necessary or helpful to secure a vote of the holders
of the outstanding shares of its common stock in favor of the
Merger and, in the case of Charter, the amendments to its Restated
Certificate of Incorporation as contemplated in Section 1.7(a)
herein, except as the fiduciary duties of its Board of Directors
may otherwise require.
3.5 Accountants' Letters. Each party agrees to use all
reasonable efforts to cause to be delivered to the other, and such
other party's directors and officers who sign the Registration
Statement, a letter of its independent auditors, dated (i) the date
on which the Registration Statement shall become effective and
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(ii) a date on or shortly prior to the date of the Closing, and
addressed to such other party, and such directors and officers, in
form and substance customary for "comfort" letters delivered by
independent accountants in connection with registration statements
similar to the Registration Statement.
3.6 Resale Letter Agreements; Accounting and Tax Treatment.
After execution of this Agreement, (i) each party shall use its
respective best efforts to cause to be delivered to the other from
each Affiliate of it within the meaning of Rule 145, a written
letter agreement as of a date on or immediately prior to the date
of the Charter Stockholders' Meeting or the FirstFed Stockholders'
Meeting, respectively, in the forms as set forth in Exhibits 3.6(a)
and 3.6(b), regarding restrictions on resale of shares of the
Charter Common Stock, to ensure compliance with applicable
restrictions imposed under the federal securities laws and
generally accepted accounting principles for pooling of interests
accounting treatment and prior to the Company Merger Effective Time
each of the parties shall use its best efforts to secure such
written letter agreement from persons who become an Affiliate of it
subsequent to the date of its Stockholders' Meeting, and (ii)
neither party shall take any action which would prevent the Merger
and the other transactions contemplated hereby from (A) qualifying
for accounting treatment as a pooling of interests or
(B) qualifying as a reorganization within the meaning of
Section 368 of the Internal Revenue Code, provided that nothing
hereunder shall limit the ability of either party to exercise its
rights under the Stock Option Agreement.
3.7 Publicity. Between the date of this Agreement and the
Company Merger Effective Time, neither party nor any of its
Subsidiaries shall, without the prior approval of the other party,
issue or make, or permit any of its directors, employees, officers
or agents to issue or make, any press release, disclosure or
statement to the press or any third party with respect to the
Merger or the other transactions contemplated hereby, except as
required by law. The parties shall cooperate when issuing or
making any press release, disclosure or statement with respect to
the Merger or the other transactions contemplated hereby.
3.8 Cooperation Generally. Between the date of this
Agreement and the Company Merger Effective Time, the parties and
their respective Subsidiaries shall in conformance with the
provisions of this Agreement use their best efforts, and take all
actions necessary or appropriate, to consummate the Merger and the
other transactions contemplated hereby at the earliest practicable
date.
3.9 Additional Financial Statements and Reports. As soon as
reasonably practicable after they become publicly available, each
party shall furnish to the other its statements of financial
condition, statements of operations or statements of income,
statements of cash flows and statements of changes in stockholders'
equity at all dates and for all periods normally prepared before
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the Closing. Such financial statements will be prepared in
conformity with generally accepted accounting principles applied on
a consistent basis and fairly present the financial condition,
results of operations and cash flows of the respective parties
(subject, in the case of unaudited financial statements, to (a)
normal year-end audit adjustments, (b) any other adjustments
described therein and (c) the absence of notes which, if presented,
would not differ materially from those included with its most
recent audited consolidated financial statements), and all of such
financial statements will be prepared in conformity with the
requirements of Form 10-Q or Form 10-K, as applicable, under the
Exchange Act.
3.10 Dividend Adjustment. If the customary payment date for
the next regular cash dividend payable after the Company Merger
Effective Time on the Common Stock of Charter as the Surviving
Corporation which is eligible to be received by the former holders
of FirstFed Common Stock is more than ninety (90) days after the
payment date of the last regular cash dividend paid or to be paid
on the Common Stock of FirstFed prior to the Company Merger
Effective Time (such number of days over ninety (90) days being the
"Dividend Lag Period"), then FirstFed may declare and set aside
immediately prior to the Company Merger Effective Time, and may pay
at a date it may select in its discretion, a Special Pro-Rata
Dividend pursuant to this Section 3.10. Any such Special Pro-Rata
Dividend shall be payable in cash, and shall not exceed an amount
per share which is the product of (i) the amount of the dividend
permitted to be paid by FirstFed pursuant to Section 3.2(b)(1)(B)
herein, times (ii) a fraction, the numerator of which is the
Dividend Lag Period and the denominator of which is ninety (90)
days.
3.11 Stock Exchange Listing. Charter agrees to use all
reasonable efforts to cause to be listed on the NASDAQ National
Market, subject to official notice of issuance, the shares of
Charter Common Stock to be issued in the Merger.
3.12 Certificate of Incorporation. During the period that
the Charter Stock Option Agreement is in effect, and (if
applicable) upon and following purchase of the shares of Charter
Common Stock pursuant to the terms of the Charter Stock Option
Agreement, (i) Charter shall not readopt the restriction set forth
in paragraph A of Article FIFTH of Charter's Restated Certificate
of Incorporation or otherwise seek to extend the period through
which such restriction operates and Charter shall not under any
circumstances seek to enforce Article FIFTH during such period, and
(ii) except as contemplated herein, without the prior written
consent of FirstFed, Charter shall not amend or seek to amend
Articles FIFTH, SIXTH or TENTH of its Restated Certificate of
Incorporation.
3.13 Employee Benefits and Agreements. (a) The FirstFed
Salaried Employees' Retirement Plan, as amended and restated
effective January 1, 1993 and as subsequently amended (the "Defined
Benefit Plan"), FirstFed Supplemental Executive Retirement Plan, as
amended and restated effective January 1, 1994 (the "SERP"),
FirstFed Equity Performance and Appreciation Plan (the "EPAP") and
FirstFed Management Incentive Award Plan ("MIAP") shall each be
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terminated by FirstFed and its Subsidiaries at or prior to the
Company Merger Effective Time (or alternatively in the case of the
Defined Benefit Plan and the SERP, which shall both be frozen on
the same date, frozen or continued following the Company Merger
Effective Time until excess assets under the Defined Benefit Plan
can be allocated on a plan termination basis in accordance with
ERISA and the Internal Revenue Code to participants, former
participants, if applicable, or their respective beneficiaries).
To the extent permitted under applicable law, FirstFed may at any
time amend its Defined Benefit Pension Plan and SERP to freeze the
accrual of future benefits as of any date on or before the Company
Merger Effective Time, to permit participants and their
beneficiaries to elect to receive their accrued benefits in the
form of a lump sum payment rather than an annuity, and to adjust
the formula and qualifications for determining benefits under the
Defined Benefit Plan in any manner associated with assuring that
any excess funding in said plan (as of the calculation date for the
termination of the Defined Benefit Plan) inures solely to the
benefit of individuals who have become participants in the Defined
Benefit Pension Plan at or prior to the Company Merger Effective
Time. Notwithstanding the foregoing, on and after the Company
Merger Effective Time, no additional material contributions shall
be made to FirstFed's Defined Benefit Plan from the assets of
FirstFed, Charter or any of their respective Subsidiaries, and
FirstFed shall cause the Defined Benefit Plan to be terminated,
frozen, or continued in a manner that does not result in any
material funding obligation by FirstFed, Charter or any of their
respective Subsidiaries. In this context, an amount shall be
presumed to be immaterial if it either totals less than $100,000,
is necessary to satisfy the minimum funding requirements under
ERISA or the Code, or is necessary for the Defined Benefit Plan to
be fully funded on a termination basis based on benefit levels in
effect on the date of execution of this Agreement.
FirstFed and its Subsidiaries may continue to make and to
accrue benefits or awards under the SERP and MIAP, as well as to
continue to accrue for existing awards under the EPAP for
accounting purposes, until the Company Merger Effective Time
consistent with the methodology heretofore utilized by it during
calendar year 1995, except that FirstFed may adjust such
methodology to reflect a short fiscal year for purposes of
providing benefits under the MIAP, and may determine said accruals
by projecting the future value of FirstFed's Common Stock
consistent with current methodology, and by adjusting their
financial results to disregard conforming or other charges
undertaken pursuant to Section 3.14 of this Agreement; provided
that FirstFed and its Subsidiaries may amend the SERP in order to
offset any increase in benefits under the Defined Benefit Plan due
to amendments to the Defined Benefit Plan that allocate any excess
funding to participants in the Defined Benefit Plan (or the
beneficiaries of such individuals). Notwithstanding the
termination of the SERP, EPAP, and MIAP at or prior to the Company
Merger Effective Time, (i) outstanding rights and awards as of the
date of termination thereof to participants shall not be diminished
or otherwise adversely affected by virtue of such termination and,
(ii) long-term awards under the MIAP shall become fully vested and
payable in a lump sum on or before the Company Merger Effective
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Time. No further award or grant of benefits shall be made under
the EPAP. The full value of all benefits and awards under the
SERP, MIAP and EPAP shall, to the extent not previously accrued on
or before December 31, 1994, be accrued by FirstFed and its
Subsidiaries for financial reporting purposes prior to the Company
Merger Effective Time.
(b) Pending the Company Merger Effective Time, FirstFed
and its Subsidiaries shall be entitled to make, or accrue for,
employer contributions to the FirstFed Salaried Employees' Profit
Sharing Plan, as amended and restated effective January 1, 1993
(the "Profit Sharing Plan") in a manner consistent with the
methodology heretofore utilized by it during calendar year 1995 and
consistent therewith the Plan may be amended to provide that
"Profit Sharing Earnings" (as defined in the Profit Sharing Plan)
shall be calculated through the Company Merger Effective Time and
multiplied by 4.5% to determine the employer contribution for the
Plan Year in which the Merger occurs, to specify the manner in
which compensation of Plan participants is to be determined for
such period and to specify a date by which participants must elect
whether amounts contributed on their behalf shall be paid to them
in cash or contributed to the Plan; provided that FirstFed and its
Subsidiaries may determine said accruals by adjusting their
financial results to disregard conforming or other charges
undertaken pursuant to Section 3.14 of this Agreement. After the
Company Merger Effective Time, Charter may terminate the Profit
Sharing Plan, continue the Profit Sharing Plan on terms consistent
with Section 3.13(h) hereof, or merge the Profit Sharing Plan with
another tax-qualified retirement plan maintained by Charter or its
Subsidiaries, all in its sole discretion, but in a manner
consistent with ERISA and the applicable provisions of the Internal
Revenue Code. The vested benefits of participants in the Profit
Sharing Plan shall not be reduced by virtue of any such
termination, continuation, or merger of the Profit Sharing Plan.
(c) With the exception of those employees of FirstFed,
Charter and their respective Subsidiaries who currently have
written employment, change in control or severance agreements
("Contract Severance Agreements"), each employee of FirstFed,
Charter and their respective Subsidiaries whose employment is
involuntarily terminated due to a job elimination by Charter or any
of their respective Subsidiaries at or within one year after the
Company Merger Effective Time shall be entitled to receive (i) a
severance payment determined in accordance with Exhibit 3.13(c)
hereto, and (ii) for full-time employees only, continued medical
coverage and group-term life insurance under the then current
Charter group plan for medical and group-term life insurance
coverage for a period of 18 months after such termination at the
same cost being paid by such employee for individual and dependent
coverage immediately prior to the Company Merger Effective Time.
Moreover, COBRA-like group medical coverage for each such employee
shall be made available to each such employee for up to an
additional 18 month period, at a maximum cost of $500 per month for
an employee's family group medical coverage (with Charter as the
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Surviving Corporation paying any premiums in excess of $500 per
month). For purposes hereof, an employee described in subparagraph
(1) of Exhibit 3.13(c) shall be deemed to have his or her
employment involuntarily terminated due to a job elimination if (i)
Charter or one of its Subsidiaries discharges the employee from
employment for a reason other than "just cause", or (ii) the
employee resigns from employment with Charter Bank as a result of
either a reduction in the employee's cash compensation as in effect
on the Company Merger Effective Time, or a requirement that the
employee perform his or her principal services at a location more
than 50 miles from the employee's primary office on the Company
Merger Effective Time. The outplacement programs and practices
that are disclosed in Section 2.13 of FirstFed Disclosure Schedule
hereto shall be continued for the benefit of employees of FirstFed
and its Subsidiaries.
(d) With respect to those former employees of FirstFed
and its Subsidiaries who continue as employees of Charter and its
Subsidiaries after the Company Merger Effective Time (the
"Continuing Employees"), their regular salary in effect at FirstFed
and its Subsidiaries on the Company Merger Effective Time shall be
increased on the Company Merger Effective Time by an amount
equivalent on an after-tax basis to the cost, at said time, that
FirstFed and its Subsidiaries were incurring to provide group
dental insurance for their employees (but not to exceed $50 per
month). The vacation, leave and sick day policies currently in
effect at FirstFed and its Subsidiaries shall be continued for the
benefit of their employees through December 31, 1995, and if the
Company Merger Effective Time occurs prior to January 1, 1996,
Charter and its Subsidiaries shall continue such policies through
December 31, 1995 for the benefit of Continuing Employees. If the
Company Merger Effective Time takes place after December 31, 1995,
FirstFed and its Subsidiaries shall adopt the vacation, leave and
sick day policies of Charter and its Subsidiaries effective as of
January 1, 1996; provided that FirstFed's adoption of said policies
may, in FirstFed's discretion, be contingent on the Company Merger
becoming effective. The Continuing Employees shall receive past
service credit for purposes of determining vacation benefits
provided by Charter and its Subsidiaries for their employment with
FirstFed and its Subsidiaries (including service with any entity
acquired by FirstFed or FirstFed Bank).
The post-retirement benefit adjustment plan, retiree
medical plan and retiree life insurance program that are disclosed
in Section 2.13 of FirstFed Disclosure Schedule shall be continued
for the benefit of those retirees from FirstFed and its
Subsidiaries currently receiving such benefits, except that the
post-retirement benefit adjustment plan may be terminated by
FirstFed and its Subsidiaries prior to the Company Merger Effective
Time and FirstFed may amend the Defined Benefit Plan to provide the
post-retirement adjustments formerly provided under said plan (and
the full value of all benefits and awards thereunder shall, to the
extent not previously accrued on or before December 31, 1994, be
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accrued by FirstFed and its Subsidiaries for financial reporting
purposes prior to the Company Merger Effective Time).
(e) Charter and FirstFed recognize and acknowledge that
the Company Merger constitutes a change in control for purposes of
FirstFed's Contract Severance Agreements. Charter and Charter Bank
shall honor each FirstFed Contract Severance Agreement in effect on
the date hereof that is disclosed in Section 2.12 of FirstFed
Disclosure Schedule, unless the executive covered thereby enters
into a new agreement with Charter Bank cancelling his FirstFed
Contract Severance Agreement. Charter and FirstFed agree that any
such new agreement shall provide for a term of employment following
the Company Merger Effective Time of not less than four months.
(f) Each employee of Charter Bank that does not have a
Contract Severance Agreement and (i) holds a similar position at
Charter Bank to that held by an employee of FirstFed Bank with a
Contract Severance Agreement and (ii) whose employment is
involuntarily terminated by Charter Bank due to a job elimination
at or within two years after the Company Merger Effective Time
shall be entitled to the identical severance payment that would be
provided to a similarly situated FirstFed Bank employee under the
same circumstances pursuant to Section 3.13(e) above.
(g) Charter agrees to continue to employ Messrs. Charles
John Koch, John D. Koch, Mark D. Grossi, and Robert J. Vana and to
employ Richard W. Neu as of the Company Merger Effective Time
pursuant to employment agreements and supplemental retirement
agreements to be negotiated in good faith and in a form to be
mutually acceptable to Charter, FirstFed and each of the
individuals within 15 business days from the date hereof, in
exchange for the cancellation and termination of their existing
employment agreements, salary continuation agreements, and other
existing employment rights with Charter and Charter Bank or
FirstFed and FirstFed Bank, as applicable. Charter agrees to
employ C. Gene Harling as of the Company Merger Effective Time
pursuant to a new employment agreement in the form attached hereto
as Exhibit 3.13(g). Charter and FirstFed recognize and
acknowledge that the change in Mr. Harling's position that will
result from the Company Merger constitutes "Good Reason" under his
existing Contract Severance Agreement with FirstFed and FirstFed
Bank. Accordingly, at the Company Merger Effective Time, Charter
and Charter Bank shall pay severance benefits to Mr. Harling in the
amounts set forth in his existing Contract Severance Agreement and
shall otherwise honor the terms of his Contract Severance
Agreement.
(h) Subject to the provisions set forth in Section
3.13(a), (b), (c) and (d) above, from and after the Company Merger
Effective Time, Charter and its Subsidiaries shall have the right
to continue, amend, or terminate any of the employee benefit and
welfare plans and programs of FirstFed and its Subsidiaries. To
the extent permitted by applicable law, from and after the Company
Merger Effective Time the former employees of FirstFed and its
Subsidiaries who are continuing employees of Charter or its
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Subsidiaries (the "Continuing Employees") shall be entitled to
participate in the Charter employee benefit and welfare plans and
programs (except to the extent that coverage is provided under a
continuing FirstFed plan or program, it being agreed and understood
that there shall be no duplication of benefits) on the same basis
that similarly-situated employees of Charter and its Subsidiaries
are entitled to participate in such plans and programs including,
but not limited to tax-qualified retirement plans and Charter's
Executive Goal Achievement Plan (but not earlier than January 1,
1996 in the case of participation in Charter's Executive Goal
Achievement Plan or similar calendar-year incentive bonus plans)
and supplemental health and life insurance programs for similarly-
situated executive employees. For 1995 payments or awards under
Charter's Executive Goal Achievement Plan and its similar calendar-
year incentive bonus plans, determinations will be calculated by
adjusting the financial results of Charter and its Subsidiaries to
disregard conforming or other charges undertaken pursuant to
Section 3.14 of this Agreement, and will be made by the Initial
Directors who prior to the Company Merger Effective Time served as
directors of Charter, consistent with prior practice. For purposes
of eligibility, participation and vesting in such Charter plans and
programs, the Continuing Employees shall receive past service
credit for their full-time employment with FirstFed and its
Subsidiaries (including service with any entity acquired by
FirstFed or FirstFed Bank). The Continuing Employees will not be
subject to any exclusion or penalty for pre-existing conditions
that were covered under the FirstFed medical plan immediately prior
to the Company Merger Effective Time or any waiting period relating
to coverage under the Charter medical plan and they will receive
full credit for prior service and payment of current and past
premiums, co-payments and deductibles. If, on or after the date
hereof, Charter or its Subsidiaries adopts a new "employee benefit
plan" within the meaning of ERISA for the benefit of its employees
generally, then to the extent participants receive a credit for
past service with Charter or its Subsidiaries, equivalent credit
shall be given to Continuing Employees for past service with
FirstFed or its Subsidiaries.
(i) Notwithstanding any other provision of this
Agreement, Charter agrees that FirstFed and its Subsidiaries may
take such actions on or before the Company Merger Effective Time as
are necessary or appropriate to effectuate the purposes of this
Section 3.13, including but not limited to (i) the adoption and
execution of agreements and amendments relating to the plans and
programs referenced herein, and (ii) adoption and the execution of
agreements renewing the Contract Severance Agreements for an
additional term of two years, and (iii) the adoption and execution
of any amendment required by applicable law.
3.14 Conforming Adjustments. The parties and their
respective Subsidiaries shall cooperate in the establishment of
additional accruals and reserves ("Conforming Adjustments"). These
Conforming Adjustments enable both parties to conform accounting
policies and practices as well as to conform their interest rate
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risk position. The Conforming Adjustments shall, to the extent
determined by the parties, be made immediately prior to the Closing
but after the satisfaction or waiver of all conditions and/or
obligations precedent to Closing contained in Article IV of this
Agreement as confirmed by the parties at such time.
Notwithstanding anything to the contrary contained in this
Agreement, (a) no Conforming Adjustment shall be taken into account
for purposes of determining contributions to qualified or non-
qualified employee benefit plans and (b) no Conforming Adjustment,
or any litigation or regulatory proceeding relating thereto, or any
other effect on any party resulting from its compliance with this
Section 3.14, shall constitute or be deemed to be a breach,
violation of or failure to satisfy any representation, warranty,
covenant, condition or other provision of this Agreement or
otherwise be considered in determining whether any such breach,
violation or failure to satisfy shall have occurred or be deemed to
constitute or cause a material adverse effect or material adverse
change on either party hereto or their Subsidiaries, taken as a
whole.
3.15 Amendments to Charter Rights Agreement. Charter shall
cause the Charter Rights Agreement to be further amended, effective
as of the Company Merger Effective Time, such that each time the
percentage "10%" appears in Sections 1(a) and 24(a)(ii) of the
Charter Rights Agreement (and other applicable sections thereof) it
shall be deleted and replaced with the percentage "20%".
ARTICLE IV
CONDITIONS OF THE MERGER;
TERMINATION OF AGREEMENT
4.1 General Conditions. The obligations of each party to
effect the Company Merger shall be subject to the satisfaction (or
written waiver by such party, to the extent such condition is
waivable) of the following conditions before the Company Merger
Effective Time:
(a) Stockholder Approval. The holders of the
outstanding shares of Charter and FirstFed Common Stock shall have
approved this Agreement and the Company Merger as specified in
Section 1.7 hereof or as otherwise required by applicable law.
(b) No Proceedings. No order shall have been entered
and remain in force restraining or prohibiting the Merger in any
legal, administrative, arbitration, investigatory or other
proceedings (collectively, "Proceedings") by any governmental or
judicial or other authority.
(c) Governmental Approvals. To the extent required by
applicable law or regulation, all approvals of or filings with any
governmental authority (collectively, "Governmental Approvals"),
including without limitation those of the OTS, the FDIC, the FTC,
the DOJ, the SEC and any state securities authorities, shall have
been obtained or made, and any waiting periods shall have expired
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in connection with the consummation of the Merger, provided however
that none of the preceding shall be deemed obtained or made if it
shall be conditioned or restricted in a manner that would have or
result in a material adverse effect on Charter as the Surviving
Corporation as the parties hereto shall reasonably and in good
faith agree. All other statutory or regulatory requirements for
the valid consummation of the Merger and related transactions shall
have been satisfied.
(d) Registration Statement. The Registration Statement
shall have been declared effective and shall not be subject to a
stop order of the SEC (and no proceedings for that purpose shall
have been initiated or threatened by the SEC) and, if the offer and
sale of the Surviving Corporation Common Stock in the Merger
pursuant to this Agreement is subject to the securities laws of any
state, shall not be subject to a stop order of any state securities
authority.
(e) Federal Tax Opinion. Each party shall have received
an opinion of its tax counsel, dated as of the Company Merger
Effective Time, to the effect that for federal income tax purposes:
(i) The Company Merger and the Bank Merger will
each qualify as a "reorganization" under Section 368(a)
of the Internal Revenue Code.
(ii) No gain or loss will be recognized by Charter,
Charter Bank, FirstFed or FirstFed Bank by reason of the
Company Merger or the Bank Merger.
(iii) No gain or loss will be recognized by any
stockholder of FirstFed upon the exchange of FirstFed
Common Stock solely for Charter Common Stock in the
Company Merger.
(iv) The basis of the Charter Common Stock received
by each stockholder of FirstFed who exchanges FirstFed
Common Stock for Charter Common Stock in the Company
Merger will be the same as the basis of the FirstFed
Common Stock surrendered in exchange therefor (subject to
any adjustments required as the result of receipt of cash
in lieu of a fractional share of Surviving Corporation
Common Stock).
(v) The holding period of the Charter Common Stock
received by a stockholder of FirstFed in the Company
Merger will include the holding period of the FirstFed
Common Stock surrendered in exchange therefore, provided
that such shares of FirstFed Common Stock were held as a
capital asset by such stockholders at the Company Merger
Effective Time.
(vi) Cash received by a FirstFed shareholder in
lieu of a fractional share interest of Charter Common
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Stock as part of the Company Merger will be treated as
having been received as a distribution in full payment in
exchange for the fractional share interest of Charter
Common Stock which such stockholder would otherwise be
entitled to receive and will qualify as capital gain or
loss (assuming the FirstFed stock was a capital asset in
such stockholder's hands at the Company Merger Effective
Time).
(f) Third Party Consents. All consents or approvals of
all persons (other than the Governmental Approvals referenced in
Section 4.1(c) herein) required for or in connection with the
execution, delivery and performance of this Agreement and the
consummation of the Merger shall have been obtained and shall be in
full force and effect, unless the failure to obtain any such
consent or approval is not reasonably likely to have, individually
or in the aggregate, a material adverse effect on Charter as the
Surviving Corporation as the parties hereto shall reasonably and in
good faith agree.
(g) Listing. The shares of Charter Common Stock to be
issued in the Company Merger shall have been approved for listing
on the National Association of Securities Dealers Automated
Quotation National Market ("NASDAQ National Market"), subject to
official notice of issuance.
(h) Accountants' Pooling Letter. Each party shall have
received a letter, dated as of the Company Merger Effective Time,
from its independent auditors to the effect that the Merger will
qualify for pooling-of-interests accounting treatment under
Accounting Principles Board Opinion No. 16 and SEC Accounting
Series Releases 130 and 135, as amended, if consummated in
accordance with this Agreement.
(i) Affiliates Letters. Each party shall have received
from the other party hereto the letter agreements from all
affiliates of the other as contemplated in Section 3.6 herein.
(j) Employment Agreements. There shall exist no
impediment or restriction upon the ability of Charter as the
Surviving Corporation to enter into the employment agreements and
supplemental executive retirement agreements contemplated by
Section 3.13(g) hereof.
4.2 Conditions to Obligations of Charter. The obligations of
Charter to effect the Merger and the other transactions
contemplated hereby shall be subject to the satisfaction or written
waiver by Charter of the following additional conditions before the
Company Merger Effective Time:
(a) Opinion of Counsel for FirstFed. Charter shall have
received the opinions of counsel to FirstFed, dated the date of the
Closing, substantially in the form set forth in Exhibit 4.2(a)
hereof.
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(b) Accountants' Letter. Charter shall have received
from FirstFed's independent auditors the letters referred to in
Section 3.5 hereof.
(c) No Material Adverse Effect. Between the date of
this Agreement and the Closing, FirstFed shall not have been
affected by any event or change which has had or caused a material
adverse effect or material adverse change on FirstFed and its
Subsidiaries, taken as a whole.
(d) Representations and Warranties to be True;
Fulfillment of Covenants and Conditions. (i) The representations
and warranties of FirstFed and its subsidiaries shall be true and
correct (subject to Section 2.23 hereof) as of the date hereof and
at the Company Merger Effective Time with the same effect as though
made at the Company Merger Effective Time (or on the date when made
in the case of any representation or warranty which specifically
relates to an earlier date) except where the failure to be true and
correct would not have, or would not reasonably be expected to
have, a material adverse effect, on FirstFed and its Subsidiaries,
taken as a whole; (ii) FirstFed and its Subsidiaries shall have
performed all obligations and complied with each covenant, in all
material respects, and satisfied all conditions under this
Agreement on its part to be satisfied at or before the Company
Merger Effective Time; and (iii) FirstFed shall have delivered to
Charter a certificate, dated the Company Merger Effective Time and
signed by its chief executive officer and chief financial officer,
certifying as to the satisfaction of clauses (i) and (ii) hereof.
(e) No Litigation. Neither FirstFed nor any FirstFed
Subsidiary shall be subject to any pending litigation which, if
determined adversely to FirstFed or any FirstFed Subsidiary, would
have a material adverse effect on FirstFed and its Subsidiaries,
taken as a whole.
4.3 Conditions to Obligations of FirstFed. The obligations
of FirstFed to effect the Merger and the other transactions
contemplated hereby shall be subject to the satisfaction or written
waiver by FirstFed of the following additional conditions before
the Company Merger Effective Time:
(a) Opinion of Counsel for Charter. FirstFed shall have
received the opinions of counsel to Charter, dated the date of the
Closing, substantially in the form set forth in Exhibit 4.3(a)
hereto.
(b) Accountant's Letter. FirstFed shall have received
from Charter's independent auditors the letters referred to in
Section 3.5 hereof.
(c) No Material Adverse Effect. Between the date of
this Agreement and Closing, Charter shall not have been affected by
any event or change which has had or caused a material adverse
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effect or material adverse change on Charter and its Subsidiaries,
taken as a whole.
(d) Representations and Warranties to be True;
Fulfillment of Covenants and Conditions. (i) The representations
and warranties of Charter and its Subsidiaries shall be true and
correct (subject to Section 2.23 hereof) as of the date hereof and
at the Company Merger Effective Time with the same effect as though
made at the Company Merger Effective Time (or on the date when made
in the case of any representation or warranty which specifically
relates to an earlier date) except where the failure to be true and
correct would not have, or would not reasonably be expected to
have, a material adverse effect on Charter and its Subsidiaries,
taken as a whole; (ii) Charter and its Subsidiaries shall have
performed all obligations and complied with each covenant, in all
material respects, and satisfied all conditions under this
Agreement on its part to be satisfied at or before the Company
Merger Effective Time; and (iii) Charter shall have delivered to
FirstFed a certificate, dated the Company Merger Effective Time and
signed by its chief executive officer and chief financial officer,
certifying as to the satisfaction of clauses (i) and (ii) hereof.
(e) Surviving Corporation Common Stock. A certificate
for the required number of whole shares of Charter Common Stock, as
determined pursuant to Section 1.3 herein, and cash for fractional
share interests, as so determined, shall have been delivered to the
Exchange Agent.
(f) No Litigation. Neither Charter nor any Charter
Subsidiary shall be subject to any pending litigation which, if
determined adversely to Charter or any Charter Subsidiary, would
have a material adverse effect on Charter and its Charter
Subsidiaries, taken as a whole.
(g) Rights Agreement. Neither a Distribution Date nor
a Stock Acquisition Date (as such terms are defined in the Rights
Agreement) shall have occurred and the Charter Rights shall not
have become nonredeemable and shall not become nonredeemable upon
consummation of the Merger.
4.4 Termination of Agreement and Abandonment of Merger. This
Agreement, the Company Merger Agreement and the Bank Merger
Agreement may be terminated at any time before the Company Merger
Effective Time, whether before or after approval thereof by the
stockholders of Charter or FirstFed, as provided below:
(a) Mutual Consent. By mutual consent of the parties,
evidenced by their written agreement.
(b) Closing Delay. At the election of either party,
evidenced by written notice, if (i) the Closing shall not have
occurred on or before May 31, 1996, or such later date as shall
have been agreed to in writing by the parties, provided however
that the right to terminate under this Section 4.4(b) shall not be
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available to any party whose failure to perform an obligation
hereunder has been the cause of, or has resulted in, the failure of
the Closing to occur on or before such date; (ii) any approval or
authorization of any governmental entity, the lack of which would
result in the failure to satisfy the closing condition set forth in
Section 4.1(c) hereof, shall have been denied by such governmental
entity, or such governmental entity shall have requested the
withdrawal of any application therefor or indicated an intention to
deny, or impose a condition of a type referred to in the proviso to
Section 4.1(c) with respect to, such approval or authorization, or
(iii) the approval of the stockholders of Charter or FirstFed
referred to in Section 4.1(a) shall not have been obtained,
provided that the electing party is not then in breach of its
obligations under Section 3.4 hereof.
(c) Conditions to Charter Performance Not Met. By
Charter upon delivery of written notice of termination to FirstFed
if any event occurs which renders impossible of satisfaction in any
material respect one or more of the conditions to the obligations
of Charter to effect the Merger set forth in Sections 4.1 and 4.2
and noncompliance is not waived in writing by Charter.
(d) Conditions to FirstFed Performance Not Met. By
FirstFed upon delivery of written notice of termination to Charter
if any event occurs which renders impossible of satisfaction in any
material respect one or more of the conditions to the obligations
of FirstFed to effect the Merger set forth in Sections 4.1 and 4.3
and noncompliance is not waived in writing by FirstFed.
(e) Breach. By either Charter or FirstFed if there has
been a material breach of the other party's representations and
warranties (as contemplated in this Agreement), covenants or
agreements set forth in this Agreement of which written notice has
been given to such breaching party and which has not been fully
cured or cannot be fully cured within the earlier of (i) 30 days of
receipt of such notice or (ii) 5 days prior to the Closing and
which breach would, in the reasonable opinion of the non-breaching
party, individually or in the aggregate, have, or be reasonably
likely to have, a material adverse effect on the breaching party
and its Subsidiaries, taken as a whole, or upon consummation of the
transactions contemplated by this Agreement.
(f) Charter Election. By Charter if (i) the Board of
Directors of FirstFed shall not have publicly recommended in the
Prospectus/Joint Proxy Statement that its stockholders approve and
adopt this Agreement or shall have withdrawn, modified or changed
in a manner adverse to Charter its approval or recommendation of
this Agreement, (ii) the Board of Directors of FirstFed shall have
authorized FirstFed to enter into any agreement, letter of intent
or agreement in principle with the intent to pursue or effect a
Takeover Proposal or (iii) the Board of Directors of Charter shall
have failed to recommend to its stockholders the adoption of this
Agreement or shall have withdrawn, modified or changed such
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recommendation pursuant to the exercise of its fiduciary
obligations under Section 3.4 herein.
(g) FirstFed Election. By FirstFed if (i) the Board of
Directors of Charter shall not have publicly recommended in the
Prospectus/Joint Proxy Statement that its stockholders approve and
adopt this Agreement or withdrawn, modified or changed in a manner
adverse to FirstFed its approval or recommendation of this
Agreement, (ii) the Board of Directors of Charter shall have
authorized Charter to enter into any agreement, letter of intent or
agreement in principle with the intent to pursue or effect a
Takeover Proposal or (iii) the Board of Directors of FirstFed shall
have failed to recommend to its stockholders the adoption of this
Agreement or shall have withdrawn, modified or changed such
recommendation pursuant to the exercise of its fiduciary
obligations under Section 3.4 herein.
ARTICLE V
TERMINATION OF OBLIGATIONS; PAYMENT OF EXPENSES
5.1 Termination; Lack of Survival of Representations and
Warranties. In the event of the termination and abandonment of
this Agreement pursuant to Section 4.4 hereof, this Agreement shall
become void and have no effect, except (i) the provisions of
Section 3.2(b)(vi), Sections 2.7 (No Broker's or Finder's Fees),
3.7 (Publicity), 5.2 (Payment of Expenses) and 7.2
(Confidentiality) hereof shall survive any such termination and
abandonment, and (ii) a termination pursuant to Section 4.4(c),
4.4(d) or 4.4(e) of this Agreement shall not relieve the breaching
party from liability for any uncured intentional and willful breach
of a representation, warranty, covenant or agreement giving rise to
such termination.
The representations, warranties and agreements set forth in
this Agreement shall not survive the Company Merger Effective Time
and shall be terminated and extinguished at the Company Merger
Effective Time, and from and after the Company Merger Effective
Time no party shall have any liability to the other on account of
any breach or failure of any of those representations, warranties
and agreements, provided however that the foregoing clause (i)
shall not apply to agreements of the parties which by their terms
are intended to be performed after the Company Merger Effective
Time by the Surviving Corporation or Charter Bank or otherwise and
(ii) shall not relieve any party or person for liability for fraud,
deception or intentional misrepresentation.
5.2 Payment of Expenses. Each party shall bear and pay all
costs and expenses incurred by it or on its behalf in connection
with the transactions contemplated hereby, except that the costs of
printing and mailing the Prospectus/Joint Proxy Statement shall be
shared equally by the parties.
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ARTICLE VI
CERTAIN POST-MERGER AGREEMENTS
6.1 Registration of Stock Underlying Stock Options. In order
to permit the exercise of options to purchase Charter Common Stock
which were originally granted under the FirstFed Option Plans and
are to be substituted and assumed by Charter as the Surviving
Corporation under the provisions of Section 1.8 hereof, at and
after the Company Merger Effective Time the Surviving Corporation
shall take all such actions as may be necessary or appropriate in
order to carry out fully the provisions of Section 1.8 hereof.
6.2 Reports to the SEC. Subject to Section 6.6 herein,
Charter as the Surviving Corporation shall continue to file all
reports and data with the SEC necessary to permit stockholders of
Charter and FirstFed who may be deemed affiliates of Charter or
FirstFed within the meaning of Rule 145 under the Securities Act to
sell the Surviving Corporation Common Stock held or received by
them in connection with the Merger pursuant to Rules 144 and 145
under such Act if they would otherwise be so entitled. After the
Company Merger Effective Time, the Surviving Corporation will file
with the SEC all reports, statements and other materials required
by the federal securities laws on a timely basis.
6.3 Indemnification. (a) Charter as the Surviving
Corporation and successor in interest to FirstFed, shall honor and
assume the existing Indemnification Agreements between FirstFed and
its directors. In addition, from and after the Company Merger
Effective Time, Charter as the Surviving Corporation shall
indemnify, defend and hold harmless each person who is now, or who
has been at any time before the date hereof or who becomes before
the Company Merger Effective Time, an officer, director or employee
of either Charter or FirstFed or any of their respective
Subsidiaries (the "Indemnified Parties") against all losses,
claims, damages, costs, expenses (including attorney's fees),
liabilities or judgments or amounts that are paid in settlement
(which settlement shall require the prior written consent of
Charter as the Surviving Corporation, which consent shall not be
unreasonably withheld) of or in connection with any claim, action,
suit, proceeding or investigation, whether civil, criminal, or
administrative (each a "Claim"), in which an Indemnified Party is,
or is threatened to be made, a party or a witness based in whole or
in part on or arising in whole or in part out of the fact that such
person is or was a director, officer or employee of either Charter
or FirstFed or any of their respective Subsidiaries if such Claim
pertains to any matter or fact arising, existing or occurring
before the Company Merger Effective Time (including, without
limitation, the Merger and the other transactions contemplated
hereby), regardless of whether such Claim is asserted or claimed
before, or at or after, the Company Merger Effective Time (the
"Indemnified Liabilities"), to the fullest extent permitted under
applicable state or federal law in effect as of the date hereof or
as amended applicable to a time before the Company Merger Effective
Time and under Charter's or FirstFed's governing corporation
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documents (as the case may be), and Charter as the Surviving
Corporation shall pay expenses in advance of the final disposition
of any such action or proceeding to each Indemnified Party to the
full extent permitted by applicable state or federal law in effect
as of the date hereof or as amended applicable to a time before the
Company Merger Effective Time upon receipt of any undertaking
required by applicable law. Any Indemnified Party wishing to claim
indemnification under this Section 6.3(a), upon learning of any
Claim, shall notify Charter as the Surviving Corporation (but the
failure so to notify Charter as the Surviving Corporation shall not
relieve it from any liability which it may have under this Section
6.3(a) except to the extent such failure materially prejudices
Charter as the Surviving Corporation) and shall deliver to Charter
as the Surviving Corporation the undertaking, if any, required by
applicable law. Charter as the Surviving Corporation shall insure,
to the extent permitted under applicable law, that all limitations
of liability existing in favor of the Indemnified Parties as
provided in Charter's or FirstFed's governing corporation documents
(as the case may be), as in effect as of the date hereof, or
allowed under applicable state or federal law as in effect as of
the date hereof or as amended applicable to a time before the
Company Merger Effective Time, with respect to claims or
liabilities arising from facts or events existing or occurring
before the Company Merger Effective Time (including, without
limitation, the transactions contemplated hereby), shall survive
the Company Merger.
(b) From and after the Company Merger Effective Time,
the directors, officers and employees of Charter and FirstFed
hereto or any of their respective Subsidiaries who become
directors, officers or employees of Charter as the Surviving
Corporation or any of its Subsidiaries, except for the
indemnification rights provided pursuant to the Indemnification
Agreements between FirstFed and its directors and as set forth in
paragraph (a) of this Section 6.3, shall have indemnification
rights having prospective application only. The prospective
indemnification rights shall consist of such rights to which
directors, officers and employees of Charter as the Surviving
Corporation and its Subsidiaries are entitled under the provisions
of the governing corporation documents of Charter as the Surviving
Corporation and its Subsidiaries, as in effect from time to time
after the Company Merger Effective Time, as applicable, and
provisions of applicable state and federal law as in effect from
time to time after the Company Merger Effective Time.
(c) For a period of six years from and after the Company
Merger Effective Time, Charter as the Surviving Corporation shall
cause to be maintained in effect the current policies of directors'
and officers' liability insurance maintained by FirstFed and the
FirstFed Subsidiaries (provided that Charter may substitute
therefor policies from financially capable insurers of at least the
same coverage and amounts containing terms and conditions which are
substantially no less advantageous or in the event such coverage is
provided through Charter's insurer it may be on terms and
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conditions (other than coverage and amounts) consistent with
Charter's coverage) with respect to claims arising from facts or
events which occurred before the Company Merger Effective Time.
Following consummation of the Merger, the directors and officers of
the Surviving Corporation shall be covered by the directors' and
officers' liability insurance maintained by the Surviving
Corporation.
(d) The obligations of Charter as the Surviving
Corporation provided under paragraphs (a) (b) and (c) of this
Section 6.3 are intended to be enforceable against the Surviving
Corporation directly by the Indemnified Parties and shall be
binding on all respective successors and permitted assigns of
Charter as the Surviving Corporation.
6.4 Directors, Executive Officers and Committees of Surviving
Corporation.
(a) At the Company Merger Effective Time, the Board of
Directors of Charter as the Surviving Corporation shall be fixed at
either 16 directors, if the shareholders of Charter at the Charter
Stockholders Meeting approve the amendment to Article Seventh of
Charter's Restated Certificate of Incorporation increasing the
maximum number of directors to 16 persons by the requisite vote, or
14 directors, if such amendment is not approved by the requisite
vote, (the "Initial Directors"), one-half of whom in either case
shall be selected by the Board of Directors of Charter and one-half
of whom shall be selected by the Board of Directors of FirstFed, in
each case prior to the Company Merger Effective Time. As soon as
practicable, the Boards of Directors of Charter and FirstFed shall
each select those persons it is to select who are to serve on the
Board of Directors of Charter as the Surviving Corporation.
Thereafter, Charter and FirstFed shall agree as to the class and
term for each of the persons so selected as a director (it being
the intention that to the greatest extent practicable, the Charter
and FirstFed directors shall serve in equal number in each of the
Surviving Corporation's three classes of directors). Charter and
its Board of Directors shall take all necessary corporate action
prior to the Company Merger Effective Time to effectuate this
agreement of the parties including the election of the designated
persons as directors of Charter as the Surviving Corporation,
effective at the Company Merger Effective Time, for the agreed upon
classes and terms. For a period of four years following the
Company Merger Effective Time, Charles J. Koch and Jerome L.
Schostak shall serve as the Chairman and Vice Chairman,
respectively, of the Board of Directors of Charter as the Surviving
Corporation.
(b) It is the intention of Charter and FirstFed, and
their respective Boards of Directors, that until at least the
fourth anniversary of the Company Merger Effective Time, the Board
of Directors of Charter as the Surviving Corporation (and each of
the committees thereof other than the Executive Committee) shall
consist of an equal number of persons serving on or representing
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the Boards of Directors of Charter and FirstFed, respectively,
prior to the Company Merger Effective Time. In this regard, if any
Initial Director (or successor thereto) does not continue to serve
as a director of the Surviving Corporation for any reason
whatsoever during such four year period (a "Departing Director"),
his/her successor will be the person recommended (i) in the case of
a Departing Director who either was a director of Charter prior to
the Company Merger Effective Time or was a successor to such a
director, by the remaining directors of Charter as the Surviving
Corporation who prior to the Company Merger Effective Time served
as directors of Charter and, if applicable, any successors to those
Charter directors or (ii) in the case of a Departing Director who
either was a director of FirstFed prior to the Company Merger
Effective Time or was a successor to such a director, by the
remaining directors of Charter as the Surviving Corporation who
prior to the Company Merger Effective Time served as directors of
FirstFed and, if applicable, any successors to those FirstFed
directors. Charter and the Surviving Corporation shall take all
necessary corporate action, whether prior or subsequent to the
Company Merger Effective Time, to effectuate this agreement of the
parties and, after the Company Merger Effective Time, Charter's
Board of Directors (or committee thereof) will nominate, support
the solicitation of proxies in favor of, and otherwise actively use
its best efforts to secure the election of directors on a basis
consistent with the foregoing.
(c) For a period of four years following the Company
Merger Effective Time, a vote of two-thirds of the entire Board of
Directors of the Surviving Corporation shall be necessary to
approve (i) any amendment to the Restated Certificate of
Incorporation or Bylaws of the Surviving Corporation, (ii) any
merger, acquisition, sale of substantially all of its assets or
other extraordinary corporate transaction involving the Surviving
Corporation, Charter Bank or any other significant financial
institution subsidiary of Charter as the Surviving Corporation or
(iii) the dismissal or replacement of any of the executive officers
of Charter as the Surviving Corporation or Charter Bank or other
significant financial institution subsidiary. Charter and the
Surviving Corporation shall take all necessary corporate action,
whether prior or subsequent to the Company Merger Effective Time,
to effectuate this agreement of the parties. Notwithstanding
anything to the contrary herein, amendment to the Restated
Certificate of Incorporation or Bylaws of Charter or the Surviving
Corporation specifically provided for or contemplated in this
Agreement shall require the vote of directors as set forth in
Charter's Restated Certificate of Incorporation or Bylaws.
(d) After the Company Merger Effective Time, those
persons who served as directors of either Charter or FirstFed prior
to the Company Merger Effective Time and who do not become the
Initial Directors shall serve (unless such person determines not to
serve) as directors emeriti of Charter as the Surviving Corporation
with benefits at least as favorable as those currently provided to
directors emeriti of Charter.
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(e) For a period of four years following the Company
Merger Effective Time, regularly scheduled meetings of the Board of
Directors of Charter as the Surviving Corporation shall be held
such that there shall be equal numbers of meetings during any such
year at sites as selected by the Initial Directors who were
previously directors of Charter (including their successors) and at
sites as selected by the Initial Directors who were previously
directors of FirstFed (including their successors). Charter and
the Surviving Corporation shall take all necessary corporate
action, whether prior or subsequent to the Company Merger Effective
Time, to effectuate this agreement of the parties.
(f) It is the intention of the parties that the fees and
benefits to be received by the directors of Charter as the
Surviving Corporation shall be no less favorable than those
currently provided for directors of either Charter or FirstFed,
whichever is greater. In addition, the Initial Vice Chairman of
the Board of Charter as the Surviving Corporation shall receive
compensation in an amount equal to one hundred fifteen percent
(115%) of the compensation he is currently receiving as Chairman of
FirstFed's executive committees.
(g) The Executive Officers of the Surviving Corporation
following the Company Merger Effective Time shall be: Charles J.
Koch - Chairman of the Board, President and Chief Executive
Officer; Richard W. Neu - Senior Vice President and Treasurer; John
D. Koch - Senior Vice President; Mark D. Grossi - Senior Vice
President; and Robert J. Vana - Chief Corporate Counsel and
Secretary.
(h) For a period of at least four years following the
Company Merger Effective Time, the Board of Directors of Charter as
the Surviving Corporation shall have a five person Executive
Committee and such other committees as the Board shall establish in
accordance with Section 141 of the DGCL, Charter's Certificate of
Incorporation and the Bylaws. The five members of the Executive
Committee shall be Messrs. Charles J. Koch (who shall be the
Chairman of the Executive Committee), Jerome L. Schostak, John D.
Koch, Mark D. Grossi and Richard W. Neu and they shall each serve
for a period of four years. The Executive Committee shall not have
such power or authority as is specifically excluded to it pursuant
to Section 141 of the DGCL. The Executive Committee shall act by
majority vote to carry out the policies, plans, practices and
directions previously approved by the Board of Directors (or those
approved by eighty percent (80%) of the members of the Executive
Committee) and to otherwise enable Charter, as the Surviving
Corporation, to conduct its business in the normal and regular
course consistent with Charter's then current policies, plans,
practices and directions. All other determinations by the
Executive Committee shall require the affirmative vote of eighty
percent (80%) of its members. Prior to the Company Merger
Effective Time, Charter and FirstFed shall reasonably agree as to
the initial members of each other committee of the Board of
Directors of Charter as the Surviving Corporation. Each of such
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committees (other than the Executive Committee) shall have an even
number of members, and at the Company Merger Effective Time and for
four years thereafter, one-half of the members of each such other
committee shall consist of directors who served as directors of
Charter prior to the Company Merger Effective Time (or their
successors) and the other half shall consist of directors who
served as directors of FirstFed prior to the Company Merger
Effective Time (or their successors).
(i) Notwithstanding anything to the contrary, none of
the persons who serve as directors of FirstFed shall be subject to
an age restriction relating to service as a director of Charter as
the Surviving Corporation and Charter and the Surviving Corporation
shall take all necessary corporate action to effectuate this
agreement of the parties.
(j) Those provisions of this Section 6.4 intended to
survive the Company Merger Effective Time shall survive the Company
Merger Effective Time and remain in effect until the fourth
anniversary thereof, terminating thereafter.
6.5 Directors, Executive Officers and Committees of Charter
Bank.
(a) Subject to OTS approval if necessary, at the Bank
Merger Effective Time, the Board of Directors of Charter Bank shall
be fixed at the same number of persons who serve as directors of
Charter as the Surviving Corporation, all of whom shall be the same
persons who become the Initial Directors of the Surviving
Corporation. Each such Initial Director shall serve as a director
of Charter Bank subsequent to the Bank Merger Effective Time during
the same period each serves as a director of the Surviving
Corporation. Charter Bank and its Board of Directors shall take
all necessary corporate action prior to the Bank Merger Effective
Time to effectuate the election of the designated persons as
directors of Charter Bank, effective at the Bank Merger Effective
Time, for the agreed upon classes and terms. Following the Bank
Merger Effective Time, until the fourth anniversary thereafter, the
Board of Directors of Charter Bank shall consist of the same
persons who serve as directors of Charter as the Surviving
Corporation and any person who becomes a director of Charter as
the Surviving Corporation shall become a director of Charter Bank.
Committees of Charter Bank following the Bank Merger Effective Time
(other than the Executive Committee) shall consist of an equal
number of persons who prior to the Bank Merger Effective Time
served as directors of Charter Bank and FirstFed Bank, or their
successors. Notwithstanding anything to the contrary, none of the
persons who serve as directors of FirstFed or FirstFed Bank shall
be subject to an age restriction relating to service as a director
of Charter Bank and Charter Bank shall take all necessary corporate
action to effectuate this agreement of the parties.
(b) Meetings of Charter Bank's Board of Directors
following the Bank Merger Effective Time shall be held at the same
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dates and sites as the meetings of the Surviving Corporation's
Board of Directors.
(c) It is the intention of the parties that the fees and
benefits to be received by the directors of Charter Bank following
the Bank following the Bank Merger shall be no less favorable than
those currently provided for directors of either Charter Bank or
FirstFed Bank, whichever is greater.
(d) The Executive Officers of Charter Bank following the
Bank Merger Effective Time shall be: Charles J. Koch - Chairman,
President and Chief Executive Officer; Richard W. Neu - Executive
Vice President - Chief Financial Officer; John D. Koch - Executive
Vice President - Chief Lending and Credit Officer; Mark D. Grossi -
Executive Vice President - Retail Banking; and Robert J. Vana -
Chief Corporate Counsel and Secretary.
(e) For a period of at least four years following the
Bank Merger Effective Time, the Board of Directors of Charter Bank
shall have a five person Executive Committee. The five members of
the Executive Committee shall be Messrs. Charles J. Koch (who shall
be the Chairman of the Executive Committee), Jerome L. Schostak,
John D. Koch, Mark D. Grossi and Richard W. Neu and they shall each
serve for a period of four years. The Executive Committee shall
not have such power or authority as is specifically excluded
pursuant to Section 141 of the DGCL. The Executive Committee shall
act by majority vote to carry out the policies, plans, practices
and directions previously approved by the Board of Directors (or
those approved by eighty percent (80%) of the members of the
Executive Committee) and to otherwise enable Charter Bank, to
conduct its business in the normal and regular course consistent
with Charter Bank's then current policies, plans, practices and
directions. All other determinations by the Executive Committee
shall require the affirmative vote of eighty percent (80%) of its
members.
(f) Those provisions of this Section 6.5 intended to
survive the Company Merger Effective Time shall survive the Bank
Merger Effective Time and remain in effect until the fourth
anniversary thereof.
6.6 Publication of Combined Financial Results. The Surviving
Corporation shall publish no later than 30 days after the end of
the first month which includes at least 30 days of post-Merger
combined operations, combined sales and net income figures and any
other financial information necessary as contemplated by and in
accordance with the terms of SEC Accounting Series Release No. 135
and any related accounting rules.
6.7 Registration Rights. If, at any time during the three
year period following the Company Merger Effective Time, one or
more of those Affiliates that have delivered affiliate letters to
Charter, as contemplated in Section 3.6 herein, and who have
received as a result of the Company Merger in excess of one percent
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(1%) of the issued and outstanding shares of Charter Common Stock
immediately subsequent to the Closing of the Company Merger,
determine to transfer Charter Common Stock received in the Company
Merger, then, in such event, Charter shall, upon the written
request of such Affiliate making such demand, file with the SEC and
with such state securities divisions as are requested on behalf of
such Affiliate, as promptly as practicable after receiving such
request, an appropriate registration statement under the Securities
Act registering such shares of Charter Common Stock and to make its
best efforts to have such registration declared effective under the
Securities Act and to remain effective for up to six months (with
the right of such Affiliate to request from Charter an extension
for up to an additional three month period) to facilitate the
aforesaid transfer. Charter shall be obligated to make only two
(2) such registrations for all Affiliates. Upon receipt of such
written request for registration, Charter shall use all reasonable
efforts to notify in writing all other such Affiliates (who have
not joined in such request) of such request and invite all such
other Affiliates to join in such registration, with respect to the
Charter Common Stock received by any other such Affiliate(s) in the
Merger. Charter shall be obligated to make this registration at
its expense (excluding any underwriting or brokerage commission or
discounts, fees and expenses of counsel for such Affiliates and any
applicable transfer taxes). Each such Affiliate demanding or
joining in such a registration shall provide all information
reasonably requested by Charter for inclusion in the registration
statement to be filed hereunder. The filing of any registration
statement hereunder may be delayed for such period of time, not to
exceed 180 days, as may be reasonably required to facilitate any
public distribution by Charter of its Common Stock. Charter and
such Affiliates making or joining in the demand shall take all
action as they shall mutually agree in good faith in order to
expedite or facilitate the registration and sale of the shares
hereunder, including without limitation filing amendments to the
registration statement, cooperating in customary due diligence,
providing customary indemnities, printing and distributing
prospectuses, and entering into customary underwriting and related
agreements.
ARTICLE VII
GENERAL
7.1 Amendments. Subject to applicable law, this Agreement
may be amended, whether before or after any stockholder approval
hereof, by an agreement in writing executed in the same manner as
this Agreement and authorized or ratified by the Boards of
Directors of the parties hereto, provided that after the approval
of this Agreement by the stockholders of either party hereto, no
such amendment may change the amount or form of the consideration
to be delivered hereunder pursuant to Section 1.3 herein without
their approval.
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7.2 Confidentiality. All information disclosed by any party
to any other party, whether prior or subsequent to the date of this
Agreement including, without limitation, any information obtained
pursuant to Section 3.1 hereof, shall be kept confidential by such
other party and shall not be used by such other party otherwise
than as herein contemplated, all in accordance with the terms of
the existing confidentiality agreement between the parties (the
"Confidentiality Agreement"). In the event of the termination of
this Agreement, each party shall use all reasonable efforts to
return upon request to the other party all documents (and
reproductions thereof) received from such other party (and, in the
case of reproductions, all such reproductions) that include
information subject to the confidentiality requirement set forth
above.
7.3 Governing Law. This Agreement and the legal relations
between the parties shall be governed by and construed in
accordance with the laws of the State of Delaware without taking
into account any provision regarding choice of law, except to the
extent certain matters may be governed by federal law by reason of
preemption.
7.4 Notices. Any notices or other communications required or
permitted hereunder shall be sufficiently given if sent by
registered mail or certified mail, postage prepaid, addressed, as
follows:
If to Charter, to
Charter One Financial, Inc.
1215 Superior Avenue
Cleveland, Ohio 44114
Attention: Charles J. Koch
Chairman of the Board and President
with a copy to:
Silver, Freedman & Taff, L.L.P.
1100 New York Avenue, N.W.
Washington, D.C. 20006
Attention: Barry P. Taff, Esquire
If to FirstFed, to
FirstFed Michigan Corporation
1001 Woodward Avenue
Detroit, Michigan 48226
Attention: C. Gene Harling
Chairman of the Board and President
with a copy to:
Housley Goldberg Kantarian & Bronstein, P.C.
1220 19th Street, N.W., Suite 700
Washington, D.C. 20036
Attention: Harry K. Kantarian, Esquire
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or such other address as shall be furnished in writing by either
party to the other, and any such notice or communication shall be
deemed to have been given two business days after the date of such
mailing (except that the notice of change of address shall not be
deemed to have been given until received by the addressee).
Notices may also be sent by telegram, telex, facsimile transmission
or hand delivery and in such event shall be deemed to have been
given as of the date received by the addressee.
7.5 No Assignment. This Agreement may not be assigned by any
party hereto, by operation of law or otherwise, except as
contemplated hereby.
7.6 Headings. The descriptive headings of the several
Articles and Sections of this Agreement are inserted for
convenience only and do not constitute a part of this Agreement.
7.7 Counterparts. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the
same agreement and shall become effective when one or more
counterparts have been signed by each party and delivered to each
other party.
7.8 Construction and Interpretation. Except as the context
otherwise requires, all references herein to any state or federal
regulatory agency shall also be deemed to refer to any predecessor
or successor agency, and all references to state and federal
statutes or regulations shall also be deemed to refer to any
successor statute or regulation.
7.9 Entire Agreement. This Agreement, together with the
schedules, lists, exhibits and certificates required to be
delivered hereunder, and any amendment hereafter executed and
delivered in accordance with Section 7.1, constitutes the entire
agreement of the parties and supersedes any prior written or oral
agreement or understanding among any parties pertaining to the
Merger, except that the Confidentiality Agreement shall remain in
full force and effect as contemplated in Section 7.2 herein and
except with respect to the applicable Stock Option Agreement.
7.10 Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective
and valid under applicable law, but if any provision of this
Agreement is held to be prohibited by or invalid under applicable
law then such provision will be ineffective only to the extent of
such prohibition or invalidity, without invalidating the remainder
of such provision or the remaining provisions of the Agreement.
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7.11 No Third Party Beneficiaries. Nothing in this Agreement
shall entitle any person (other than the parties hereto and their
respective successors and assigns permitted hereby) to any claim,
cause of action, remedy or right of any kind, except for those
provisions which are intended to be for the benefit of the persons
covered thereby and may be enforced by such persons, including
without limitation, as provided in Sections 1.8, 3.13, 6.1, 6.3,
6.4, 6.5 and 6.7.
7.12 No Employment Solicitation. If this Agreement is
terminated, the parties hereto agree that, for a period of two
years subsequent to such termination (i) none of the parties shall,
without first obtaining the prior written consent of the other,
directly or indirectly, actively solicit the employment of any
current director, officer or employee of the other party and (ii)
none of the parties will actively solicit business relationships
with clients of the other party solely as a result of review of the
information contemplated in Section 7.2 herein.
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IN WITNESS WHEREOF, each party has caused this Agreement to be
executed on its behalf by its duly authorized officers as of the
date set forth above.
CHARTER ONE FINANCIAL, INC. FIRSTFED MICHIGAN CORPORATION
By: /S/ CHARLES JOHN KOCH By: /S/ C. GENE HARLING
-------------------------- --------------------------
Name: Charles John Koch Name: C. Gene Harling
Title: President Title: CHM/CEO
<PAGE>
Exhibit A
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated May 31, 1995, between Charter One
Financial, Inc., a Delaware corporation ("Issuer"), and FirstFed Michigan
Corporation, a Michigan corporation ("Grantee").
W I T N E S S E T H:
WHEREAS, Grantee and Issuer have entered into an Agreement and Plan of
Merger dated May 30, 1995 (the "Merger Agreement"), which agreement has been
executed by the parties hereto prior to this Agreement; and
WHEREAS, as a condition to Grantee's entering into the Merger Agreement
and in consideration therefor, Issuer has agreed to grant Grantee the Option
(as hereinafter defined):
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements set forth herein and in the Merger Agreement, the
parties hereto agree as follows:
1.(a) Issuer hereby grants to Grantee an unconditional, irrevocable
option (the "Option") to purchase, subject to the terms hereof, up to
4,481,589 fully paid and nonassessable shares of its common stock, par value
$0.01 per share ("Common Stock"), at a price of $24.75 per share (such price,
as adjusted if applicable, the "Option Price"); provided, however, that in
the event Issuer issues or agrees to issue any shares of Common Stock (other
than as permitted under the Merger Agreement) at a price less than $24.75 per
share such Option Price shall be equal to such lesser price. The number of
shares of Common Stock that may be received upon the exercise of the Option
and the Option Price are subject to adjustment as herein set forth.
(b) In the event that any additional shares of Common Stock are issued
or otherwise become outstanding after the date of this Agreement (other than
pursuant to this Agreement), the number of shares of Common Stock subject to
the Option shall be increased so that, after such issuance, it equals 19.9%
of the number of shares of Common Stock then issued and outstanding without
giving effect to any shares subject or issued pursuant to the Option.
Nothing contained in this Section 1(b) or elsewhere in this Agreement shall
be deemed to authorize Issuer or Grantee to breach any provision of the
Merger Agreement.
2.(a) The Holder (as hereinafter defined) may exercise the Option, in
whole or part, 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 that the Holder shall
have sent the written notice of such exercise (as provided in subsection (e)
of this Section 2) within 180 days following the first such Subsequent
Triggering Event. Each of the following shall be an Exercise Termination
Event: (i) the Company Merger Effective Time (as defined in the Merger
<PAGE>
Agreement); (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 or occurs at
the same time as the occurrence of an Initial Triggering Event. The term
"Holder" shall mean the holder or holders of the Option (including Grantee or
any subsequent transferee(s)).
(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 (each an "Issuer
Subsidiary"), 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 (the term "person"
for purposes of this Agreement having the meaning assigned thereto in
Sections 3(a)(9) and 13(d)(3) of the Securities Exchange Act of 1934,
and the rules and regulations thereunder (the "1934 Act") other than
Grantee or any of its Subsidiaries (each a "Grantee Subsidiary"). For
purposes of this Agreement, "Acquisition Transaction" shall mean (x) a
merger or consolidation, or any similar transaction, involving Issuer or
any Significant Subsidiary (as defined in Rule 1-02 of Regulation S-X
promulgated by the SEC) of Issuer, (y) a purchase, lease or other
acquisition of all or substantially all of the assets of Issuer or any
Significant Subsidiary of Issuer, or (z) a purchase or other acquisition
(including by way of merger, consolidation, share exchange or otherwise)
of beneficial ownership of securities representing 25% or more of the
voting power of Issuer or any Significant Subsidiary of Issuer; provided
that the term "Acquisition Transaction" does not include any internal
merger or consolidation involving only the Issuer and/or Issuer
Subsidiaries;
(ii) (A) Any person other than Grantee, or any Grantee Subsidiary,
or any Issuer Subsidiary acting in a fiduciary capacity (collectively,
"Excluded Persons"), alone or together with such person's affiliates and
associates (as such terms are defined in Rule 12b-2 under the 1934 Act),
shall have acquired beneficial ownership or the right to acquire
beneficial ownership of 25% or more of the outstanding shares of Common
Stock (the term "beneficial ownership" for purposes of this Option
Agreement having the meaning assigned thereto in Section 13(d) of the
1934 Act, and the rules and regulations thereunder) or (B) any group (as
such term is defined in Section 13(d)(3) of the 1934 Act), other than a
group of which any Excluded Person is a member, shall have been formed
that beneficially owns 25% or more of the shares of Common Stock then
outstanding;
(iii) Any person other than Grantee or any Grantee Subsidiary shall
have made a bona fide proposal to Issuer or its shareholders by public
announcement or written communication that is or becomes the subject of
public disclosure to (A) engage in an Acquisition Transaction or (B)
commence a tender or exchange offer the consummation
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<PAGE>
of which would result in such person acquiring beneficial ownership of
securities representing 25% or more of Issuer's voting power;
(iv) The Board of Directors of Issuer shall have failed to
recommend to its stockholders the adoption of the Merger Agreement or
shall have withdrawn, modified or changed in a manner adverse to Grantee
such recommendation;
(v) After a proposal is made by a third party (other than an
Excluded Person) to Issuer to engage in an Acquisition Transaction,
Issuer shall have intentionally and knowingly breached any
representation, warranty, covenant or agreement contained in the Merger
Agreement and such breach (x) would entitle Grantee to terminate the
Merger Agreement pursuant to Section 4.4(e) therein (without regard to
any grace period provided for therein) and (y) shall not have been cured
prior to the Notice Date (as defined below); or
(vi) Any person other than Grantee or any Grantee Subsidiary, other
than in connection with a transaction to which Grantee has given its
prior written consent, shall have filed an application or notice with
the Office of Thrift Supervision ("OTS") or other federal or state bank
regulatory authority, which application or notice has been accepted for
processing, for approval 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 other than an Excluded Person of
beneficial ownership of 25% or more of the then outstanding Common
Stock; or
(ii) The occurrence of the Initial Triggering Event described in
subparagraph (i) of subsection (b) of this Section 2.
(d) Issuer shall notify Grantee promptly in writing of the occurrence of
any Initial Triggering Event or Subsequent Triggering Event (together, a
"Triggering Event"), it being understood that the giving of such notice by
Issuer shall not be a condition to the right of the Holder to exercise the
Option.
(e) In the event the Holder is entitled to and wishes to exercise the
Option, it shall send to Issuer a written notice (the date of which is herein
referred to as the "Notice Date") specifying (i) the total number of shares
it will purchase pursuant to such exercise and (ii) a place and date not
earlier than three business days nor later than 60 business days from the
Notice Date for the closing of such purchase (the "Closing Date"); provided
that if prior notification to or approval of the OTS or any other regulatory
agency is required in connection with such purchase, the Holder shall
promptly file the required notice or application for approval and shall
expeditiously process the same and the period of time that otherwise would
run pursuant to this sentence shall run instead from the date on which any
required notification periods have expired or been
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<PAGE>
terminated or such approvals have been obtained and any requisite waiting
period or periods shall have passed. Any exercise of the Option shall be
deemed to occur on the Notice Date relating thereto.
(f) At each closing referred to in subsection (e) of this Section 2, the
Holder shall pay to Issuer the aggregate purchase price for the shares of
Common Stock purchased pursuant to the exercise of the Option in immediately
available funds by wire transfer to a bank account designated by Issuer,
provided that failure or refusal of Issuer to designate such a bank account
shall not preclude the Holder from exercising the Option.
(g) At such closing, simultaneously with the delivery of immediately
available funds as provided in subsection (f) of this Section 2, Issuer shall
deliver to the Holder a certificate or certificates representing the number
of shares of Common Stock purchased by the Holder and, if the Option should
be exercised in part only, a new Option evidencing the rights of the Holder
thereof to purchase the balance of the shares purchasable hereunder.
(h) Certificates for Common Stock delivered at a closing hereunder may
be endorsed with a restrictive legend that shall read substantially as
follows:
"The transfer of the shares represented by this certificate is
subject to certain provisions of an agreement between the registered
holder hereof and Issuer and to resale restrictions arising under the
Securities Act of 1933, as amended. A copy of such agreement is on file
at the principal office of Issuer and will be provided to the holder
hereof without charge upon receipt by Issuer of a written request
therefor."
It is understood and agreed that: (i) the reference to the resale
restrictions of the Securities Act of 1933 ("1933 Act") in the above legend
shall be removed by delivery of substitute certificate(s) without such
reference if the Holder shall have delivered to Issuer a copy of a letter
from the staff of the SEC, or an opinion of counsel, in form and substance
satisfactory to Issuer, to the effect that such legend is not required for
purposes of the 1933 Act; (ii) the reference to the provisions of this
Agreement in the above legend shall be removed by delivery of substitute
certificate(s) without such reference if the shares have been sold or
transferred in compliance with the provisions of this Agreement and under
circumstances that do not require the retention of such reference; and (iii)
the legend shall be removed in its entirety if the conditions in the
preceding clauses (i) and (ii) are both satisfied. In addition, such
certificates shall bear any other legend as may be required by law.
(i) Upon the giving by the Holder to Issuer of the written notice of
exercise of the Option provided for under subsection (e) of this Section 2
and the tender of the applicable purchase price in immediately available
funds, the Holder shall be deemed to be the holder of record of the shares of
Common Stock issuable upon such exercise, notwithstanding that the stock
transfer books of Issuer shall then be closed or that certificates
representing such shares of Common Stock shall not then be actually delivered
to the Holder. Issuer shall pay all expenses, and any and all United States
federal, state and local taxes and other charges that may be payable in
connection
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<PAGE>
with the preparation, issue and delivery of stock certificates under this
Section 2 in the name of the Holder or its assignee, transferee or designee.
3. Issuer agrees: (i) that it shall at all times maintain, free from
preemptive rights, sufficient authorized but unissued or treasury shares of
Common Stock so that the Option may be exercised without additional
authorization of Common Stock after giving effect to all other options,
warrants, convertible securities and other rights to purchase Common Stock;
(ii) that it will not, by charter amendment or through reorganization,
consolidation, merger, dissolution or sale of assets, or by any other
voluntary act, avoid or seek to avoid the observance or performance of any of
the covenants, stipulations or conditions to be observed or performed
hereunder by Issuer; (iii) promptly to take all action as may from time to
time be required (including (x) complying with all premerger notification,
reporting and waiting period requirements specified in 15 U.S.C. Section 18a and
regulations promulgated thereunder and (y) in the event, under the Home
Owners' Loan Act, as amended ("HOLA"), or the Change in Bank Control Act of
1978, as amended, or any state banking law, prior approval of or notice to
the OTS, or to any state regulatory authority is necessary before the Option
may be exercised, cooperating fully with the Holder in preparing such
applications or notices and providing such information to the OTS or such
state regulatory authority as they may require) in order to permit the Holder
to exercise the Option and Issuer duly and effectively to issue shares of
Common Stock pursuant hereto; and (iv) promptly to take all action provided
herein to protect the rights of the Holder against dilution.
4. This Agreement (and the Option granted hereby) are exchangeable,
without expense, at the option of the Holder, 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, on the same terms and subject to the same conditions as are set
forth herein, in the aggregate the same number of shares of Common Stock
purchasable hereunder. The terms "Agreement" and "Option" as used herein
include any Stock Option 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.
5. In addition to the adjustment in the number of shares of Common Stock
that are purchasable upon exercise of the Option pursuant to Section 1 of
this Agreement, in the event of any change in Common Stock by reason of stock
dividends, split-ups, mergers, recapitalizations, combinations, subdivisions,
conversions, exchanges of shares, distributions, or the like, the type and
number, and/or the price, of shares of Common Stock purchasable upon exercise
hereof shall be appropriately adjusted.
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<PAGE>
6. Upon the occurrence of a Subsequent Triggering Event that occurs
prior to an Exercise Termination Event, Issuer shall, at the request of the
Holder delivered at the time of and together with a written notice of
exercise in accordance with Section 2(e) hereof (whether on its own behalf or
on behalf of any subsequent holder of this Option (or part thereof) or any of
the shares of Common Stock issued pursuant hereto), promptly prepare, file
and keep current a shelf registration statement under the 1933 Act covering
any shares issued or issuable pursuant to this Option and shall use its best
efforts to cause such registration statement to become effective and remain
current in order to permit the sale or other disposition of any shares of
Common Stock issued upon total or partial exercise of this Option ("Option
Shares") in accordance with any plan of disposition requested by the Holder.
Issuer will use its best efforts to cause such registration statement first
to become effective and then to remain effective for such period not in
excess of 180 days from the day such registration statement first becomes
effective or such shorter time as may be reasonably necessary to effect such
sales or other dispositions. The Holder shall have the right to demand not
more than two such registrations under this Agreement and all other
agreements for which this agreement may be exchanged pursuant to Section 4
hereof; provided, however, that Issuer shall be required to bear the expenses
related only to the first such registration, and the Holder shall bear such
expenses to the extent related to the second. The foregoing notwithstanding,
if, at the time of any request by the Holder for registration of Option
Shares as provided above, Issuer is in registration with respect to an
underwritten public offering of shares of Common Stock, and if in the good
faith judgment of the managing underwriter or managing underwriters, or, if
none, the sole underwriter or underwriters, of such offering the inclusion of
the Holder's Option or Option Shares would interfere with the successful
marketing of the shares of Common Stock offered by Issuer, the number of
Option Shares otherwise to be covered in the registration statement
contemplated hereby may be reduced; and provided, however, that after any
such required reduction the number of Option Shares to be included in such
offering for the account of the Holder shall constitute at least 25% of the
total number of shares to be issued by the Holder and Issuer in the
aggregate; and provided further, however, that if such reduction occurs, then
the Issuer shall file a registration statement for the balance as promptly as
practical and no reduction shall thereafter occur. Each such Holder shall
provide all information reasonably requested by Issuer for inclusion in any
registration statement to be filed hereunder. If requested by any such
Holder in connection with such registration, Issuer shall become a party to
any underwriting agreement relating to the sale of such shares, but only to
the extent of obligating itself in respect of representations, warranties,
indemnities and other agreements customarily included in such underwriting
agreements for the Issuer. Upon receiving any request under this Section 6
from any Holder, Issuer agrees to send a copy thereof to any other person
known to Issuer to be entitled to registration rights under this Section 6,
in each case by promptly mailing the same, postage prepaid, to the address of
record of the persons entitled to receive such copies.
7.(a) In the event that prior to an Exercise Termination Event, 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
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<PAGE>
merger, the then outstanding shares of Common Stock shall be changed into or
exchanged for stock or other securities of any other person or cash or any
other property or the then outstanding shares of Common Stock 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 provision 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 the Holder, of either (x) the
Acquiring Corporation (as hereinafter defined) or (y) any person that
controls the Acquiring Corporation.
(b) The following terms have the meanings indicated:
(1) "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 Issuer's assets.
(2) "Substitute Common Stock" shall mean the shares of capital
stock (or similar equity interest) with the greatest voting power in
respect of the election of directors (or other persons similarly
responsible for direction of the business and affairs) of the issuer of
the Substitute Option.
(3) "Assigned Value" shall mean the highest of (i) the price per
share of common stock at which a tender offer or exchange offer therefor
has been made, (ii) the price per share of common stock to be paid by
any third party pursuant to an agreement with Issuer, or (iii) in the
event of a sale of all or substantially all of Issuer's assets, 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 the Holder or the Owner,
as the case may be, divided by the number of shares of Common Stock of
Issuer outstanding at the time of such sale. In determining the
market/offer price, the value of consideration other than cash shall be
determined by a nationally recognized investment banking firm selected
by the Holder or Owner, as the case may be.
(4) "Average Price" shall mean the average closing price of a share
of the Substitute Common Stock for the six months immediately preceding
the consolidation, merger or sale in question, but in no event higher
than the closing price of the shares of 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 the person
merging into Issuer or by any company which controls or is controlled by
such person, as the Holder may elect.
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<PAGE>
(c) The Substitute Option shall have the same terms and conditions as
the Option, provided, that if any term or condition of the Substitute Option
cannot, for legal reasons, be the same as the Option, such term or condition
shall be as similar as possible and in no event less advantageous to the
Holder. The issuer of the Substitute Option 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 Substitute Common Stock as is equal to (i) the product of (A) the Assigned
Value and (B) the number of shares of Common Stock for which the Option is
then exercisable, divided by (ii) the Average Price. The exercise price of
the Substitute Option per share of Substitute Common Stock shall then be
equal to the Option Price multiplied by a fraction, the numerator of which
shall be the number of shares of Common Stock for which the Option is then
exercisable and the denominator of which shall be the number of shares of
Substitute Common Stock for which the Substitute Option is exercisable.
(e) In no event, pursuant to any of the foregoing paragraphs, shall the
Substitute Option be exercisable for more than 19.9% of the shares of
Substitute Common Stock outstanding prior to exercise of the Substitute
Option.
(f) Issuer shall not enter into any transaction described in subsection
(a) of this Section 8 unless the Acquiring Corporation and any person that
controls the Acquiring Corporation assume in writing all the obligations of
Issuer hereunder.
8. The 180-day period for exercise of certain rights under Sections 2
and 6 shall be extended: (i) to the extent necessary to obtain all
regulatory approvals for the exercise of such rights, and for the expiration
of all statutory waiting periods; and (iii) to the extent necessary to avoid
liability under Section 16(b) of the 1934 Act by reason of such exercise.
9. Issuer hereby represents and warrants to Grantee as follows:
(a) Issuer has full corporation 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 authorized by
the Board of Directors of Issuer and no other corporate proceedings on the
part of Issuer are necessary to authorize this Agreement or to consummate the
transactions so contemplated. This Agreement has been duly and validly
executed and delivered by Issuer. This Agreement is the valid and legally
binding obligation of Issuer.
(b) Issuer has taken all necessary corporate action to authorize and
reserve and to permit it to issue, and at all times from the date hereof
through the termination of this Agreement in accordance with its terms will
have reserved for issuance upon the exercise of the Option, that number of
shares of Common Stock equal to the maximum number of shares of Common Stock
at any time and from time to time issuable hereunder, and all such shares,
upon issuance pursuant
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<PAGE>
hereto, will be duly authorized, validly issued, fully paid, nonassessable,
and will be delivered free and clear of all claims, liens, encumbrance and
security interests and not subject to any preemptive rights.
(c) Issuer has taken all necessary action to exempt this Agreement, and
the transactions contemplated hereby and thereby from, and this Agreement and
the transactions contemplated hereby and thereby are exempt from, (i) any
applicable state takeover laws, (ii) any state laws limiting or restricting
the voting rights of stockholders and (iii) any provision in its or any of
its subsidiaries' articles of incorporation, certificate of incorporation,
charter or bylaws restricting or limiting stock ownership or the voting
rights of stockholders. The Rights Amendment, as defined in the Merger
Agreement, has been executed by the parties thereto, is in full force and
effect and will not be rescinded, amended or terminated without the prior
written consent of Grantee. No other amendments will be made to the Rights
Agreement (as defined in the Merger Agreement) without the prior written
consent of Grantee.
(d) The execution, delivery and performance of this Agreement does not
or will not, and the consummation by Issuer of any of the transactions
contemplated hereby will not, constitute or result in (i) a breach or
violation of, or a default under, its certificate of incorporation or bylaws,
or the comparable governing instruments of any of its subsidiaries, or (ii)
a breach or violation of, or a default under, any agreement, lease, contract,
note, mortgage, indenture, arrangement or other obligation of it or any of
its subsidiaries (with or without the giving of notice, the lapse of time or
both) or under any law, rule, ordinance or regulation or judgment, decree,
order, award or governmental or nongovernmental permit or license to which it
or any of its subsidiaries is subject, that would, in any case referred to in
this clause (ii), give any other person the ability to prevent or enjoin
Issuer's performance under this Agreement in any material respect.
10. Grantee hereby represents and warrants to Issuer that:
(a) Grantee has corporate power and authority to enter into this
Agreement and, subject to any approvals or consents referred to herein, to
consummate the transactions contemplated hereby. The execution and delivery
of this Agreement and the consummation of the transactions contemplated
hereby have been duly authorized by all necessary corporate action on the
part of Grantee. This Agreement has been duly executed and delivered by
Grantee.
(b) 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 applicable federal and state securities laws
and regulations.
11. Neither of the parties hereto may assign any of its rights or
obligations under this Option Agreement or the Option created hereunder to
any other person, without the express written consent of the other party,
except (i) to any wholly-owned Subsidiary or (ii) that in the event a
Subsequent Triggering Event shall have occurred prior to an Exercise
Termination Event,
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<PAGE>
Grantee, subject to the express provisions hereof, may assign in whole or in
part its rights and obligations hereunder to one or more transferees.
12. Each of Grantee and Issuer will use its best efforts to make all
filings with, and to obtain consents of, all third parties and governmental
authorities necessary to the consummation of the transactions contemplated by
this Agreement.
13. Notwithstanding anything to the contrary herein, in the event that
the Holder or Owner or any Related Person thereof is a person making an offer
or proposal to engage in an Acquisition Transaction (other than the
transactions contemplated by the Merger Agreement), then in the case of a
Holder or any Related Person thereof, the Option held by it shall immediately
terminate and be of no further force or effect. A Related Person of a Holder
or Owner means any Affiliate (as defined in Rule 12b-2 of the rules and
regulations under the 1934 Act) of the Holder or Owner and any person that is
the beneficial owner of 20% or more of the voting power of the Holder or
Owner, as the case may be.
14. The parties hereto acknowledge that damages would be an inadequate
remedy for a breach of this Agreement by either party hereto and that the
obligations of the parties hereto shall be enforceable by either party hereto
through injunctive or other equitable relief.
15. If any term, provision, covenant or restriction contained in this
Agreement is held by a court or a federal or state regulatory agency of
competent jurisdiction to be invalid, void or unenforceable, the remainder of
the terms, provisions and covenants and restrictions contained in 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 Holder is not permitted to acquire the
full number of shares of Common Stock provided in Section 1(a) hereof (as
adjusted pursuant to Section 1(b) or 5 hereof), it is the express intention
of Issuer to allow the Holder to acquire such lesser number of shares as may
be permissible, without any amendment or modification hereof.
16. All notices, requests, claims, demands and other communications
hereunder shall be deemed to have been duly given when delivered in person,
by cable, telegram, telecopy or telex, or by registered or certified mail
(postage prepaid, return receipt requested) at the respective addresses of
the parties set forth in the Merger Agreement.
17. This Agreement shall be governed by and construed in accordance
with the laws of the State of Delaware, regardless of the laws that might
otherwise govern under applicable principles of conflicts of laws thereof.
18. This Agreement may be executed in two or more counterparts, each of
which shall be deemed to be an original, but all of which shall constitute
one and the same agreement.
19. Except as otherwise expressly 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
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<PAGE>
contemplated hereunder, including fees and expenses of its own financial
consultants, investment bankers, accountants and counsel. Notwithstanding
anything to the contrary contained herein or in the Merger Agreement, in the
event a Subsequent Triggering Event shall occur prior to an Exercise
Termination Event Issuer shall pay to Grantee upon demand the amount of the
expenses incurred by Grantee in connection with this Agreement and the Merger
Agreement and the transactions contemplated hereby and thereby.
20. Except as otherwise expressly provided herein, in the Voting
Agreements or in the Merger Agreement, this Agreement contains the entire
agreement between the parties with respect to the transactions contemplated
hereunder and supersedes all prior arrangements or understandings with
respect thereof, written or oral. The terms and conditions of this Agreement
shall inure to the benefit of and be binding upon the parties hereto and
their respective successors and permitted assigns. Nothing in this
Agreement, expressed or implied, is intended to confer upon any party, other
than the parties hereto, and their respective successors except as assigns,
any rights, remedies, obligations or liabilities under or by reason of this
Agreement, except as expressly provided herein.
21. Capitalized terms used in this Agreement and not defined herein
shall have the meanings assigned thereto in the Merger Agreement.
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<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its officers thereunto duly authorized, all as of
the date first above written.
CHARTER ONE FINANCIAL, INC.
By:
--------------------------------
President
FIRSTFED MICHIGAN CORPORATION
By:
-------------------------------
President
<PAGE>
Exhibit B
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated May 31, 1995, between FirstFed Michigan
Corporation, a Michigan corporation ("Issuer"), and Charter One Financial,
Inc., a Delaware corporation ("Grantee").
W I T N E S S E T H:
WHEREAS, Grantee and Issuer have entered into an Agreement and Plan of
Merger dated May 30, 1995 (the "Merger Agreement"), which agreement has been
executed by the parties hereto prior to this Agreement; and
WHEREAS, as a condition to Grantee's entering into the Merger Agreement
and in consideration therefor, Issuer has agreed to grant Grantee the Option
(as hereinafter defined):
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements set forth herein and in the Merger Agreement, the
parties hereto agree as follows:
1. (a) Issuer hereby grants to Grantee an unconditional, irrevocable
option (the "Option") to purchase, subject to the terms hereof, up to
3,724,173 fully paid and nonassessable shares of its common stock, par value
$0.01 per share ("Common Stock"), at a price of $26.50 per share (such price,
as adjusted if applicable, the "Option Price"); provided, however, that in
the event Issuer issues or agrees to issue any shares of Common Stock (other
than as permitted under the Merger Agreement) at a price less than $26.50 per
share such Option Price shall be equal to such lesser price. The number of
shares of Common Stock that may be received upon the exercise of the Option
and the Option Price are subject to adjustment as herein set forth.
(b) In the event that any additional shares of Common Stock are issued
or otherwise become outstanding after the date of this Agreement (other than
pursuant to this Agreement), the number of shares of Common Stock subject to
the Option shall be increased so that, after such issuance, it equals 19.9%
of the number of shares of Common Stock then issued and outstanding without
giving effect to any shares subject or issued pursuant to the Option.
Nothing contained in this Section 1(b) or elsewhere in this Agreement shall
be deemed to authorize Issuer or Grantee to breach any provision of the
Merger Agreement.
2. (a) The Holder (as hereinafter defined) may exercise the Option, in
whole or part, 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 that the Holder shall
have sent the written notice of such exercise (as provided in subsection (e)
of this Section 2) within 180 days following the first such Subsequent
Triggering Event. Each of the following shall be an Exercise Termination
Event: (i) the Company Merger Effective Time (as defined in the Merger
<PAGE>
Agreement); (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 or occurs at
the same time as the occurrence of an Initial Triggering Event. The term
"Holder" shall mean the holder or holders of the Option (including Grantee or
any subsequent transferee(s)).
(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 (each an "Issuer
Subsidiary"), 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 (the term "person"
for purposes of this Agreement having the meaning assigned thereto in
Sections 3(a)(9) and 13(d)(3) of the Securities Exchange Act of 1934,
and the rules and regulations thereunder (the "1934 Act") other than
Grantee or any of its Subsidiaries (each a "Grantee Subsidiary"). For
purposes of this Agreement, "Acquisition Transaction" shall mean (x) a
merger or consolidation, or any similar transaction, involving Issuer or
any Significant Subsidiary (as defined in Rule 1-02 of Regulation S-X
promulgated by the SEC) of Issuer, (y) a purchase, lease or other
acquisition of all or substantially all of the assets of Issuer or any
Significant Subsidiary of Issuer, or (z) a purchase or other acquisition
(including by way of merger, consolidation, share exchange or otherwise)
of beneficial ownership of securities representing 25% or more of the
voting power of Issuer or any Significant Subsidiary of Issuer; provided
that the term "Acquisition Transaction" does not include any internal
merger or consolidation involving only Issuer and/or Issuer
Subsidiaries;
(ii) (A) Any person other than Grantee, or any Grantee Subsidiary,
or any Issuer Subsidiary acting in a fiduciary capacity (collectively,
"Excluded Persons"), alone or together with such person's affiliates and
associates (as such terms are defined in Rule 12b-2 under the 1934 Act),
shall have acquired beneficial ownership or the right to acquire
beneficial ownership of 25% or more of the outstanding shares of Common
Stock (the term "beneficial ownership" for purposes of this Option
Agreement having the meaning assigned thereto in Section 13(d) of the
1934 Act, and the rules and regulations thereunder) or (B) any group (as
such term is defined in Section 13(d)(3) of the 1934 Act), other than a
group of which any Excluded Person is a member, shall have been formed
that beneficially owns 25% or more of the shares of Common Stock then
outstanding;
(iii) Any person other than Grantee or any Grantee Subsidiary shall
have made a bona fide proposal to Issuer or its shareholders by public
announcement or written communication that is or becomes the subject of
public disclosure to (A) engage in an Acquisition Transaction or (B)
commence a tender or exchange offer the consummation
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<PAGE>
of which would result in such person acquiring beneficial ownership of
securities representing 25% or more of Issuer's voting power;
(iv) The Board of Directors of Issuer shall have failed to
recommend to its stockholders the adoption of the Merger Agreement or
shall have withdrawn, modified or changed in a manner adverse to Grantee
such recommendation;
(v) After a proposal is made by a third party (other than an
Excluded Person) to Issuer to engage in an Acquisition Transaction,
Issuer shall have intentionally and knowingly breached any
representation, warranty, covenant or agreement contained in the Merger
Agreement and such breach (x) would entitle Grantee to terminate the
Merger Agreement pursuant to Section 4.4(e) therein (without regard to
any grace period provided for therein) and (y) shall not have been cured
prior to the Notice Date (as defined below); or
(vi) Any person other than Grantee or any Grantee Subsidiary, other
than in connection with a transaction to which Grantee has given its
prior written consent, shall have filed an application or notice with
the Office of Thrift Supervision ("OTS") or other federal or state bank
regulatory authority, which application or notice has been accepted for
processing, for approval 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 other than an Excluded Person of
beneficial ownership of 25% or more of the then outstanding Common
Stock; or
(ii) The occurrence of the Initial Triggering Event described in
subparagraph (i) of subsection (b) of this Section 2.
(d) Issuer shall notify Grantee promptly in writing of the occurrence of
any Initial Triggering Event or Subsequent Triggering Event (together, a
"Triggering Event"), it being understood that the giving of such notice by
Issuer shall not be a condition to the right of the Holder to exercise the
Option.
(e) In the event the Holder is entitled to and wishes to exercise the
Option, it shall send to Issuer a written notice (the date of which is herein
referred to as the "Notice Date") specifying (i) the total number of shares
it will purchase pursuant to such exercise and (ii) a place and date not
earlier than three business days nor later than 60 business days from the
Notice Date for the closing of such purchase (the "Closing Date"); provided
that if prior notification to or approval of the OTS or any other regulatory
agency is required in connection with such purchase, the Holder shall
promptly file the required notice or application for approval and shall
expeditiously process the same and the period of time that otherwise would
run pursuant to this sentence shall run instead from the date on which any
required notification periods have expired or been
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<PAGE>
terminated or such approvals have been obtained and any requisite waiting
period or periods shall have passed. Any exercise of the Option shall be
deemed to occur on the Notice Date relating thereto.
(f) At each closing referred to in subsection (e) of this Section 2, the
Holder shall pay to Issuer the aggregate purchase price for the shares of
Common Stock purchased pursuant to the exercise of the Option in immediately
available funds by wire transfer to a bank account designated by Issuer,
provided that failure or refusal of Issuer to designate such a bank account
shall not preclude the Holder from exercising the Option.
(g) At such closing, simultaneously with the delivery of immediately
available funds as provided in subsection (f) of this Section 2, Issuer shall
deliver to the Holder a certificate or certificates representing the number
of shares of Common Stock purchased by the Holder and, if the Option should
be exercised in part only, a new Option evidencing the rights of the Holder
thereof to purchase the balance of the shares purchasable hereunder.
(h) Certificates for Common Stock delivered at a closing hereunder may
be endorsed with a restrictive legend that shall read substantially as
follows:
"The transfer of the shares represented by this certificate is
subject to certain provisions of an agreement between the registered
holder hereof and Issuer and to resale restrictions arising under the
Securities Act of 1933, as amended. A copy of such agreement is on file
at the principal office of Issuer and will be provided to the holder
hereof without charge upon receipt by Issuer of a written request
therefor."
It is understood and agreed that: (i) the reference to the resale
restrictions of the Securities Act of 1933 ("1933 Act") in the above legend
shall be removed by delivery of substitute certificate(s) without such
reference if the Holder shall have delivered to Issuer a copy of a letter
from the staff of the SEC, or an opinion of counsel, in form and substance
satisfactory to Issuer, to the effect that such legend is not required for
purposes of the 1933 Act; (ii) the reference to the provisions of this
Agreement in the above legend shall be removed by delivery of substitute
certificate(s) without such reference if the shares have been sold or
transferred in compliance with the provisions of this Agreement and under
circumstances that do not require the retention of such reference; and (iii)
the legend shall be removed in its entirety if the conditions in the
preceding clauses (i) and (ii) are both satisfied. In addition, such
certificates shall bear any other legend as may be required by law.
(i) Upon the giving by the Holder to Issuer of the written notice of
exercise of the Option provided for under subsection (e) of this Section 2
and the tender of the applicable purchase price in immediately available
funds, the Holder shall be deemed to be the holder of record of the shares of
Common Stock issuable upon such exercise, notwithstanding that the stock
transfer books of Issuer shall then be closed or that certificates
representing such shares of Common Stock shall not then be actually delivered
to the Holder. Issuer shall pay all expenses, and any and all United States
federal, state and local taxes and other charges that may be payable in
connection
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<PAGE>
with the preparation, issue and delivery of stock certificates under this
Section 2 in the name of the Holder or its assignee, transferee or designee.
3. Issuer agrees: (i) that it shall at all times maintain, free from
preemptive rights, sufficient authorized but unissued or treasury shares of
Common Stock so that the Option may be exercised without additional
authorization of Common Stock after giving effect to all other options,
warrants, convertible securities and other rights to purchase Common Stock;
(ii) that it will not, by charter amendment or through reorganization,
consolidation, merger, dissolution or sale of assets, or by any other
voluntary act, avoid or seek to avoid the observance or performance of any of
the covenants, stipulations or conditions to be observed or performed
hereunder by Issuer; (iii) promptly to take all action as may from time to
time be required (including (x) complying with all premerger notification,
reporting and waiting period requirements specified in 15 U.S.C. Section 18a and
regulations promulgated thereunder and (y) in the event, under the Home
Owners' Loan Act, as amended ("HOLA"), or the Change in Bank Control Act of
1978, as amended, or any state banking law, prior approval of or notice to
the OTS, or to any state regulatory authority is necessary before the Option
may be exercised, cooperating fully with the Holder in preparing such
applications or notices and providing such information to the OTS or such
state regulatory authority as they may require) in order to permit the Holder
to exercise the Option and Issuer duly and effectively to issue shares of
Common Stock pursuant hereto; and (iv) promptly to take all action provided
herein to protect the rights of the Holder against dilution.
4. This Agreement (and the Option granted hereby) are exchangeable,
without expense, at the option of the Holder, 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, on the same terms and subject to the same conditions as are set
forth herein, in the aggregate the same number of shares of Common Stock
purchasable hereunder. The terms "Agreement" and "Option" as used herein
include any Stock Option 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.
5. In addition to the adjustment in the number of shares of Common
Stock that are purchasable upon exercise of the Option pursuant to Section 1
of this Agreement, in the event of any change in Common Stock by reason of
stock dividends, split-ups, mergers, recapitalizations, combinations,
subdivisions, conversions, exchanges of shares, distributions, or the like,
the type and number, and/or the price, of shares of Common Stock purchasable
upon exercise hereof shall be appropriately adjusted.
-5-
<PAGE>
6. Upon the occurrence of a Subsequent Triggering Event that occurs
prior to an Exercise Termination Event, Issuer shall, at the request of the
Holder delivered at the time of and together with a written notice of
exercise in accordance with Section 2(e) hereof (whether on its own behalf or
on behalf of any subsequent holder of this Option (or part thereof) or any of
the shares of Common Stock issued pursuant hereto), promptly prepare, file
and keep current a shelf registration statement under the 1933 Act covering
any shares issued or issuable pursuant to this Option and shall use its best
efforts to cause such registration statement to become effective and remain
current in order to permit the sale or other disposition of any shares of
Common Stock issued upon total or partial exercise of this Option ("Option
Shares") in accordance with any plan of disposition requested by the Holder.
Issuer will use its best efforts to cause such registration statement first
to become effective and then to remain effective for such period not in
excess of 180 days from the day such registration statement first becomes
effective or such shorter time as may be reasonably necessary to effect such
sales or other dispositions. The Holder shall have the right to demand not
more than two such registrations under this Agreement and all other
agreements, for which this agreement may be exchanged pursuant to Section 4
hereof; provided, however, that Issuer shall be required to bear the expenses
related only to the first such registration, and the Holder shall bear such
expenses to the extent related to the second. The foregoing notwithstanding,
if, at the time of any request by the Holder for registration of Option
Shares as provided above, Issuer is in registration with respect to an
underwritten public offering of shares of Common Stock, and if in the good
faith judgment of the managing underwriter or managing underwriters, or, if
none, the sole underwriter or underwriters, of such offering the inclusion of
the Holder's Option or Option Shares would interfere with the successful
marketing of the shares of Common Stock offered by Issuer, the number of
Option Shares otherwise to be covered in the registration statement
contemplated hereby may be reduced; and provided, however, that after any
such required reduction the number of Option Shares to be included in such
offering for the account of the Holder shall constitute at least 25% of the
total number of shares to be issued by the Holder and Issuer in the
aggregate; and provided further, however, that if such reduction occurs, then
the Issuer shall file a registration statement for the balance as promptly as
practical and no reduction shall thereafter occur. Each such Holder shall
provide all information reasonably requested by Issuer for inclusion in any
registration statement to be filed hereunder. If requested by any such
Holder in connection with such registration, Issuer shall become a party to
any underwriting agreement relating to the sale of such shares, but only to
the extent of obligating itself in respect of representations, warranties,
indemnities and other agreements customarily included in such underwriting
agreements for the Issuer. Upon receiving any request under this Section 6
from any Holder, Issuer agrees to send a copy thereof to any other person
known to Issuer to be entitled to registration rights under this Section 6,
in each case by promptly mailing the same, postage prepaid, to the address of
record of the persons entitled to receive such copies.
7. (a) In the event that prior to an Exercise Termination Event, 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
-6-
<PAGE>
merger, the then outstanding shares of Common Stock shall be changed into or
exchanged for stock or other securities of any other person or cash or any
other property or the then outstanding shares of Common Stock 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 provision 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 the Holder, of either (x) the
Acquiring Corporation (as hereinafter defined) or (y) any person that
controls the Acquiring Corporation.
(b) The following terms have the meanings indicated:
(1) "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 Issuer's assets.
(2) "Substitute Common Stock" shall mean the shares of capital
stock (or similar equity interest) with the greatest voting power in
respect of the election of directors (or other persons similarly
responsible for direction of the business and affairs) of the issuer of
the Substitute Option.
(3) "Assigned Value" shall mean the highest of (i) the price per
share of common stock at which a tender offer or exchange offer therefor
has been made, (ii) the price per share of common stock to be paid by
any third party pursuant to an agreement with Issuer, or (iii) in the
event of a sale of all or substantially all of Issuer's assets, 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 the Holder or the Owner,
as the case may be, divided by the number of shares of Common Stock of
Issuer outstanding at the time of such sale. In determining the
market/offer price, the value of consideration other than cash shall be
determined by a nationally recognized investment banking firm selected
by the Holder or Owner, as the case may be.
(4) "Average Price" shall mean the average closing price of a share
of the Substitute Common Stock for the six months immediately preceding
the consolidation, merger or sale in question, but in no event higher
than the closing price of the shares of 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 the person
merging into Issuer or by any company which controls or is controlled by
such person, as the Holder may elect.
-7-
<PAGE>
(c) The Substitute Option shall have the same terms and conditions as
the Option, provided, that if any term or condition of the Substitute Option
cannot, for legal reasons, be the same as the Option, such term or condition
shall be as similar as possible and in no event less advantageous to the
Holder. The issuer of the Substitute Option 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 Substitute Common Stock as is equal to (i) the product of (A) the Assigned
Value and (B) the number of shares of Common Stock for which the Option is
then exercisable, divided by (ii) the Average Price. The exercise price of
the Substitute Option per share of Substitute Common Stock shall then be
equal to the Option Price multiplied by a fraction, the numerator of which
shall be the number of shares of Common Stock for which the Option is then
exercisable and the denominator of which shall be the number of shares of
Substitute Common Stock for which the Substitute Option is exercisable.
(e) In no event, pursuant to any of the foregoing paragraphs, shall the
Substitute Option be exercisable for more than 19.9% of the shares of
Substitute Common Stock outstanding prior to exercise of the Substitute
Option.
(f) Issuer shall not enter into any transaction described in subsection
(a) of this Section 8 unless the Acquiring Corporation and any person that
controls the Acquiring Corporation assume in writing all the obligations of
Issuer hereunder.
8. The 180-day period for exercise of certain rights under Sections 2
and 6 shall be extended: (i) to the extent necessary to obtain all
regulatory approvals for the exercise of such rights, and for the expiration
of all statutory waiting periods; and (iii) to the extent necessary to avoid
liability under Section 16(b) of the 1934 Act by reason of such exercise.
9. Issuer hereby represents and warrants to Grantee as follows:
(a) Issuer has full corporation 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 authorized by
the Board of Directors of Issuer and no other corporate proceedings on the
part of Issuer are necessary to authorize this Agreement or to consummate the
transactions so contemplated. This Agreement has been duly and validly
executed and delivered by Issuer. This Agreement is the valid and legally
binding obligation of Issuer.
(b) Issuer has taken all necessary corporate action to authorize and
reserve and to permit it to issue, and at all times from the date hereof
through the termination of this Agreement in accordance with its terms will
have reserved for issuance upon the exercise of the Option, that number of
shares of Common Stock equal to the maximum number of shares of Common Stock
at any time and from time to time issuable hereunder, and all such shares,
upon issuance pursuant
-8-
<PAGE>
hereto, will be duly authorized, validly issued, fully paid, nonassessable,
and will be delivered free and clear of all claims, liens, encumbrance and
security interests and not subject to any preemptive rights.
(c) Issuer has taken all necessary action to exempt this Agreement, and
the transactions contemplated hereby and thereby from, and this Agreement and
the transactions contemplated hereby and thereby are exempt from, (i) any
applicable state takeover laws, (ii) any state laws limiting or restricting
the voting rights of stockholders and (iii) any provision in its or any of
its subsidiaries' articles of incorporation, certificate of incorporation,
charter or bylaws restricting or limiting stock ownership or the voting
rights of stockholders.
(d) The execution, delivery and performance of this Agreement does not
or will not, and the consummation by Issuer of any of the transactions
contemplated hereby will not, constitute or result in (i) a breach or
violation of, or a default under, its certificate of incorporation or bylaws,
or the comparable governing instruments of any of its subsidiaries, or (ii)
a breach or violation of, or a default under, any agreement, lease, contract,
note, mortgage, indenture, arrangement or other obligation of it or any of
its subsidiaries (with or without the giving of notice, the lapse of time or
both) or under any law, rule, ordinance or regulation or judgment, decree,
order, award or governmental or nongovernmental permit or license to which it
or any of its subsidiaries is subject, that would, in any case referred to in
this clause (ii), give any other person the ability to prevent or enjoin
Issuer's performance under this Agreement in any material respect.
10. Grantee hereby represents and warrants to Issuer that:
(a) Grantee has corporate power and authority to enter into this
Agreement and, subject to any approvals or consents referred to herein, to
consummate the transactions contemplated hereby. The execution and delivery
of this Agreement and the consummation of the transactions contemplated
hereby have been duly authorized by all necessary corporate action on the
part of Grantee. This Agreement has been duly executed and delivered by
Grantee.
(b) 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 applicable federal and state securities laws
and regulations.
11. Neither of the parties hereto may assign any of its rights or
obligations under this Option Agreement or the Option created hereunder to
any other person, without the express written consent of the other party,
except (i) to any wholly-owned Subsidiary or (ii) that in the event a
Subsequent Triggering Event shall have occurred prior to an Exercise
Termination Event, Grantee, subject to the express provisions hereof, may
assign in whole or in part its rights and obligations hereunder to one or
more transferees.
-9-
<PAGE>
12. Each of Grantee and Issuer will use its best efforts to make all
filings with, and to obtain consents of, all third parties and governmental
authorities necessary to the consummation of the transactions contemplated by
this Agreement.
13. Notwithstanding anything to the contrary herein, in the event that
the Holder or Owner or any Related Person thereof is a person making an offer
or proposal to engage in an Acquisition Transaction (other than the
transactions contemplated by the Merger Agreement), then in the case of a
Holder or any Related Person thereof, the Option held by it shall immediately
terminate and be of no further force or effect. A Related Person of a Holder
or Owner means any Affiliate (as defined in Rule 12b-2 of the rules and
regulations under the 1934 Act) of the Holder or Owner and any person that is
the beneficial owner of 20% or more of the voting power of the Holder or
Owner, as the case may be.
14. The parties hereto acknowledge that damages would be an inadequate
remedy for a breach of this Agreement by either party hereto and that the
obligations of the parties hereto shall be enforceable by either party hereto
through injunctive or other equitable relief.
15. If any term, provision, covenant or restriction contained in this
Agreement is held by a court or a federal or state regulatory agency of
competent jurisdiction to be invalid, void or unenforceable, the remainder of
the terms, provisions and covenants and restrictions contained in 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 Holder is not permitted to acquire the
full number of shares of Common Stock provided in Section 1(a) hereof (as
adjusted pursuant to Section 1(b) or 5 hereof), it is the express intention
of Issuer to allow the Holder to acquire such lesser number of shares as may
be permissible, without any amendment or modification hereof.
16. All notices, requests, claims, demands and other communications
hereunder shall be deemed to have been duly given when delivered in person,
by cable, telegram, telecopy or telex, or by registered or certified mail
(postage prepaid, return receipt requested) at the respective addresses of
the parties set forth in the Merger Agreement.
17. This Agreement shall be governed by and construed in accordance
with the laws of the State of Delaware, regardless of the laws that might
otherwise govern under applicable principles of conflicts of laws thereof.
18. This Agreement may be executed in two or more counterparts, each of
which shall be deemed to be an original, but all of which shall constitute
one and the same agreement.
19. Except as otherwise expressly 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. Notwithstanding anything to the contrary contained
herein or in the Merger Agreement, in the event a Subsequent Triggering Event
shall occur prior to an
-10-
<PAGE>
Exercise Termination Event Issuer shall pay to Grantee upon demand the amount
of the expenses incurred by Grantee in connection with this Agreement and the
Merger Agreement and the transactions contemplated hereby and thereby.
20. Except as otherwise expressly provided herein, in the Voting
Agreement or in the Merger Agreement, this Agreement contains the entire
agreement between the parties with respect to the transactions contemplated
hereunder and supersedes all prior arrangements or understandings with
respect thereof, written or oral. The terms and conditions of this Agreement
shall inure to the benefit of and be binding upon the parties hereto and
their respective successors and permitted assigns. Nothing in this
Agreement, expressed or implied, is intended to confer upon any party, other
than the parties hereto, and their respective successors except as assigns,
any rights, remedies, obligations or liabilities under or by reason of this
Agreement, except as expressly provided herein.
20. Capitalized terms used in this Agreement and not defined herein
shall have the meanings assigned thereto in the Merger Agreement.
-11-
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its officers thereunto duly authorized, all as of
the date first above written.
FIRSTFED MICHIGAN CORPORATION
By:
-------------------------------------
President
CHARTER ONE FINANCIAL, INC.
By:
------------------------------------
President
<PAGE>
Exhibit C
VOTING AGREEMENT
This Voting Agreement dated as of May 30, 1995, is entered into between
Charter One Financial, Inc. ("Charter"), and the undersigned stockholder
("Stockholder") of FirstFed Michigan Corporation ("FirstFed").
W I T N E S S E T H:
WHEREAS, FirstFed and Charter have proposed to enter into an Agreement
and Plan of Merger (the "Agreement"), dated as of today, which contemplates
the combination of FirstFed and Charter by means of mergers between FirstFed
and Charter and between First Federal of Michigan, a subsidiary of FirstFed,
and Charter One Bank, F.S.B., a subsidiary of Charter (the "Merger"); and
WHEREAS, Charter is willing to expend the substantial time, effort and
expense necessary to implement the Merger only if Stockholder enters into
this Voting Agreement; and
WHEREAS, the Stockholder believes that the Merger is in his/her best
interest and the best interest of FirstFed;
NOW, THEREFORE, in consideration of the premises, Stockholder hereby
agrees as follows:
1. Voting Agreement - Stockholder shall vote, or cause to be voted,
all of the shares of common stock, par value $.01 per share, of FirstFed
("FirstFed Stock") he/she now or hereafter owns and over which he/she now
has, or prior to the record date for voting at the Meeting (as hereinafter
defined) acquires, voting control in favor of the Merger at the meeting of
stockholders of FirstFed to be called for the purpose of approving the Merger
(the "Meeting"); provided, however, that the Stockholder shall have no
obligation to vote his/her shares of FirstFed Stock in favor of the Merger in
the event that the Board of Directors of FirstFed is not recommending
approval of the Merger at the time of the Meeting as permitted by Section 3.4
of the Agreement.
2. No Competing Transaction - Stockholder shall not vote any of
his/her shares of FirstFed Stock in favor of any other merger or sale of all
or substantially all the assets of FirstFed to any person other than Charter
or its affiliates until closing of the Merger, termination of the Agreement
or abandonment of the Merger by the mutual agreement of FirstFed and Charter,
whichever comes first.
3. Transfers Subject to Agreement - Stockholder shall not transfer any
of his/her shares of FirstFed Stock unless the transferee, prior to such
transfer, executes a voting agreement with respect to the transferred shares
substantially to the effect of this Voting Agreement and reasonably
satisfactory to Charter; provided that this restriction on transfer shall not
apply to sales or transfers by Stockholder in ordinary open market or
brokerage sales of the FirstFed Stock.
4. No Ownership Interest - Nothing contained in this Voting Agreement
shall be deemed to vest in Charter any direct or indirect ownership or
incidents of ownership of or with respect to any shares of FirstFed Stock.
All rights, ownership and economic benefits of and relating to the shares of
FirstFed Stock shall remain and belong to Stockholder and Charter shall have
no authority to manage, direct,
<PAGE>
restrict, regulate, govern or administer any of the policies or operations of
FirstFed or exercise any power or authority to direct Stockholder in the
voting of any of his/her shares of FirstFed Stock, except as otherwise
expressly provided herein, or the performance of his/her duties or
responsibilities as a director of FirstFed.
5. Documents Delivered - Stockholder acknowledges having reviewed the
Agreement and its attachments and that reports, proxy statements and other
information with respect to Charter filed with the Securities and Exchange
Commission (the "Commission") were, prior to his execution of this Voting
Agreement, available for inspection and copying at the Offices of the
Commission and that Charter delivered the following such documents to
FirstFed:
(a) Charter's Annual Report on Form 10-K for the year ended
December 31, 1994;
(b) Charter's proxy statement for its 1995 Annual Meeting of
Stockholders; and
(c) Charter's Annual Report to Stockholders for the year ended
December 31, 1994;
6. Amendment and Modification - This Voting Agreement may be amended,
modified or supplemented at any time by the written approval of such
amendment, modification or supplement by Stockholder and Charter.
7. Entire Agreement - This Voting Agreement evidences the entire
agreement among the parties hereto with respect to the matters provided for
herein and there are no agreements, representations or warranties with
respect to the matters provided for herein; other than those set forth
herein and in the Agreement. This Voting Agreement supersedes any agreements
among FirstFed and the Stockholder concerning the Merger, disposition or
control of the stock of FirstFed.
8. Severability - The parties agree that if any provision of this
Voting Agreement shall under any circumstances be deemed invalid or
inoperative, this Voting Agreement shall be construed with the invalid or
inoperative provisions deleted and the rights and obligations of the parties
shall be construed and enforced accordingly.
9. Counterparts - This Voting Agreement may be executed in two
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same investment.
10. Governing Law - The validity, construction enforcement and effect
of this Voting Agreement shall be governed by the internal laws of the State
of Delaware.
11. Headings - The headings for the paragraphs of this Voting Agreement
are inserted for convenience only and shall not constitute a part hereof or
affect the meaning or interpretation of this Voting Agreement.
12. Termination - This Voting Agreement shall terminate upon the
consummation of the Merger, termination of the Agreement or abandonment of
the Merger by the mutual agreement of FirstFed and Charter, whichever comes
first.
13. Successors - This Voting Agreement shall be binding upon and
inure to the benefit of Charter and its successors, and Stockholder, such
Stockholder's respective executors, personal
-2-
<PAGE>
representatives, administrators, heirs, legatees, guardians and other legal
representatives. This Voting Agreement shall survive the death or incapacity
of Stockholder. This Voting Agreement may be assigned by Charter only to an
affiliate of Charter.
CHARTER ONE FINANCIAL, INC.
By:
-------------------------------------
STOCKHOLDER
-----------------------------------------
<PAGE>
Exhibit D
VOTING AGREEMENT
This Voting Agreement dated as of May 30, 1995, is entered into between
FirstFed Michigan Corporation ("FirstFed"), and the undersigned stockholder
("Stockholder") of Charter One Financial, Inc. ("Charter").
W I T N E S S E T H:
WHEREAS, Charter and FirstFed have proposed to enter into an Agreement
and Plan of Merger (the "Agreement"), dated as of today, which contemplates
the combination of Charter and FirstFed by means of mergers between Charter
and FirstFed and between Charter One Bank, F.S.B., a subsidiary of Charter,
and First Federal of Michigan, a subsidiary of FirstFed (the "Merger"); and
WHEREAS, FirstFed is willing to expend the substantial time, effort and
expense necessary to implement the Merger only if Stockholder enters into
this Voting Agreement; and
WHEREAS, the Stockholder believes that the Merger is in his/her best
interest and the best interest of Charter;
NOW, THEREFORE, in consideration of the premises, Stockholder hereby
agrees as follows:
1. Voting Agreement - Stockholder shall vote, or cause to be voted,
all of the shares of common stock, par value $.01 per share, of Charter
("Charter Stock") he/she now or hereafter owns and over which he/she now has,
or prior to the record date for voting at the Meeting (as hereinafter
defined) acquires, voting control in favor of the Merger at the meeting of
stockholders of Charter to be called for the purpose of approving the Merger
(the "Meeting"); provided, however, that the Stockholder shall have no
obligation to vote his/her shares of Charter Stock in favor of the Merger in
the event that the Board of Directors of Charter is not recommending approval
of the Merger at the time of the Meeting as permitted by Section 3.4 of the
Agreement.
2. No Competing Transaction - Stockholder shall not vote any of
his/her shares of Charter Stock in favor of any other merger or sale of all
or substantially all the assets of Charter to any person other than FirstFed
or its affiliates until closing of the Merger, termination of the Agreement
or abandonment of the Merger by the mutual agreement of Charter and FirstFed,
whichever comes first.
3. Transfers Subject to Agreement - Stockholder shall not transfer
any of his/her shares of Charter Stock unless the transferee, prior to such
transfer, executes a voting agreement with respect to the transferred shares
substantially to the effect of this Voting Agreement and reasonably
satisfactory to FirstFed; provided that this restriction on transfer shall
not apply to sales or transfers by Stockholder in ordinary open market or
brokerage sales of the Charter Stock.
4. No Ownership Interest - Nothing contained in this Voting Agreement
shall be deemed to vest in FirstFed any direct or indirect ownership or
incidents of ownership of or with respect to any shares of Charter Stock.
All rights, ownership and economic benefits of and relating to the shares of
Charter Stock shall remain and belong to Stockholder and FirstFed shall have
no authority to manage,
<PAGE>
direct, restrict, regulate, govern or administer any of the policies or
operations of Charter or exercise any power or authority to direct
Stockholder in the voting of any of his/her shares of Charter Stock, except
as otherwise expressly provided herein, or the performance of his/her duties
or responsibilities as a director of Charter.
5. Documents Delivered - Stockholder acknowledges having reviewed the
Agreement and its attachments and that reports, proxy statements and other
information with respect to FirstFed filed with the Securities and Exchange
Commission (the "Commission") were, prior to his execution of this Voting
Agreement, available for inspection and copying at the Offices of the
Commission and that FirstFed delivered the following such documents to
Charter:
(a) FirstFed's Annual Report on Form 10-K for the year ended
December 31, 1994;
(b) FirstFed's proxy statement for its 1995 Annual Meeting of
Stockholders; and
(c) FirstFed's Annual Report to Stockholders for the year ended
December 31, 1994;
6. Amendment and Modification - This Voting Agreement may be amended,
modified or supplemented at any time by the written approval of such
amendment, modification or supplement by Stockholder and FirstFed.
7. Entire Agreement - This Voting Agreement evidences the entire
agreement among the parties hereto with respect to the matters provided for
herein and there are no agreements, representations or warranties with
respect to the matters provided for herein; other than those set forth
herein and in the Agreement. This Voting Agreement supersedes any agreements
among Charter and the Stockholder concerning the Merger, disposition or
control of the stock of Charter.
8. Severability - The parties agree that if any provision of this
Voting Agreement shall under any circumstances be deemed invalid or
inoperative, this Voting Agreement shall be construed with the invalid or
inoperative provisions deleted and the rights and obligations of the parties
shall be construed and enforced accordingly.
9. Counterparts - This Voting Agreement may be executed in two
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same investment.
10. Governing Law - The validity, construction enforcement and effect
of this Voting Agreement shall be governed by the internal laws of the State
of Delaware.
11. Headings - The headings for the paragraphs of this Voting Agreement
are inserted for convenience only and shall not constitute a part hereof or
affect the meaning or interpretation of this Voting Agreement.
12. Termination - This Voting Agreement shall terminate upon the
consummation of the Merger, termination of the Agreement or abandonment of
the Merger by the mutual agreement of Charter and FirstFed, whichever comes
first.
2
<PAGE>
13. Successors - This Voting Agreement shall be binding upon and inure
to the benefit of FirstFed and its successors, and Stockholder, such
Stockholder's respective executors, personal representatives, administrators,
heirs, legatees, guardians and other legal representatives. This Voting
Agreement shall survive the death or incapacity of Stockholder. This Voting
Agreement may be assigned by FirstFed only to an affiliate of FirstFed.
FIRSTFED MICHIGAN CORPORATION
By:
------------------------------------
STOCKHOLDER
----------------------------------------
<PAGE>
Exhibit 1.1(a)
PLAN OF MERGER
OF
FIRST FEDERAL OF MICHIGAN
INTO
CHARTER ONE BANK, F.S.B.
PLAN OF MERGER, dated as of the 30th day of May, 1995 by and
between Charter One Bank, F.S.B., a savings bank chartered under
the laws of the United States of America (the "Bank" or the
"Resulting Association"), and First Federal of Michigan, a savings
association chartered under the laws of the United States of
America ("First Federal"), such institutions being sometimes
hereinafter called the "Constituent Associations" or, individually,
"Constituent Association".
WITNESSETH:
WHEREAS, all of the outstanding capital stock of the Bank is
owned directly or indirectly by Charter One Financial, Inc.
("Charter");
WHEREAS, Charter, parent corporation of the Bank, and FirstFed
Michigan Corporation ("FirstFed"), parent corporation of First
Federal, have entered into an Agreement and Plan of Merger ("Merger
Agreement") pursuant to which, following the merger of FirstFed
with and into Charter, First Federal shall be merged with and into
the Bank.
WHEREAS, the Boards of Directors of the Bank and First Federal
each believe that it is in the best interests of the institutions
and their stockholders to merge the Bank and First Federal into a
single federally chartered savings bank in order that (i) the
merged institution may operate with an improved competitive
position and operating efficiency and (ii) the parent company of
the Bank, Charter, will retain the advantage of a unitary savings
and loan holding company status.
NOW, THEREFORE, in consideration of the mutual covenants,
agreements and provisions hereinafter contained, and for the
purpose of prescribing the terms and conditions of said merger and
<PAGE>
mode of carrying the same into effect, the Bank and First Federal
have agreed and do hereby agree and covenant as follows:
1. Plan of Merger: The merger provided for herein shall be
effected as follows:
(a) The execution and delivery of this Agreement by the
Bank and First Federal shall have been duly approved by at least a
two-thirds (2/3) vote of the Board of Directors of the Bank and
First Federal, respectively.
(b) The Office of Thrift Supervision or any successor
thereto ("OTS") shall have approved the merger.
(c) The merger shall be approved by the shareholder of
the Bank and by the shareholder of First Federal.
(d) Thereupon First Federal shall be merged with and
into the Bank.
2. Effect of Merger. When this Plan of Merger shall become
effective in accordance with the laws and regulations of the United
States of America:
(a) The separate existence of First Federal shall cease
and First Federal shall be merged into the Bank, which shall be the
savings bank resulting from the merger and shall continue its
existence under the name "Charter One Bank, F.S.B." The date on
which such merger becomes effective is hereinafter called the
"Effective Time".
(b) The Charter and Bylaws of the Bank, as then in
effect, shall be amended to conform to the agreements of Charter
and FirstFed as reflected in Section 6.5 of the Merger Agreement
and such Charter and Bylaws, as so amended, shall be the Charter
and Bylaws of the Resulting Association and may thereafter be
amended in accordance with applicable law.
(c) The Directors of the Resulting Association from and
after the Effective Time shall be either sixteen (16) or fourteen
(14) in number, to be determined in accordance with Sections 6.4
and 6.5 of the Merger Agreement, and shall be those persons whose
name, residence address and terms of office are identified in
Exhibit 1 hereto. The directors of the Bank following the
Effective Time shall be elected in accordance with the procedures
set forth in Section 6.5 of the Merger Agreement and committees
thereof shall be as provided in such Section 6.5. Notwithstanding
anything to the contrary, none of the persons who serve as
directors of First Federal shall be subject to an age restriction
relating to service as a director of the Bank and the Bank shall
take all necessary corporate action to effectuate this agreement of
the parties. Meetings of the Bank's Board of Directors following
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<PAGE>
the Effective Time shall be held at the same dates and sites as the
meetings of Charter's Board of Directors, as is contemplated in
Section 6.4 of the Merger Agreement. Those provisions of this
Section 2(c) intended to survive the Effective Time shall survive
the Effective Time and remain in effect until the fourth
anniversary thereof.
(d) The executive officers of the Bank following the
Effective Time shall be Charles J. Koch - Chairman, President and
Chief Executive Officer; Richard W. Neu - Executive Vice President
- - Chief Financial Officer; John D. Koch - Executive Vice President
- - Chief Lending and Credit Officer; Mark D. Grossi - Executive Vice
President - Retail Banking; and Robert J. Vana - Chief Corporate
Counsel and Secretary.
(e) All savings accounts of First Federal shall be and
become savings accounts in the Resulting Association without change
in their respective terms, maturity, minimum required balances or
withdrawal value. Each savings account of First Federal shall, as
of the Effective Time, be considered, for purpose of interest
declared by the Resulting Association thereafter, as if it had been
a savings account of the Resulting Association at the time said
savings account was opened in First Federal and at all times
thereafter until such account ceases to be a savings account of the
Resulting Association. Appropriate evidence of savings account
ownership interest in the Resulting Association shall be provided,
as necessary, after consummation of the merger by the Resulting
Association to each savings account holder of First Federal.
(f) All savings accounts of the Bank prior to
consummation of the merger shall continue to be savings accounts in
the Resulting Association after consummation of the merger without
any change whatsoever in any of the provisions of such savings
accounts, including, without limitation, their respective terms,
maturity, minimum required balances or withdrawal value.
(g) All of the assets, properties, obligations and
liabilities of every kind and character, real, personal and mixed,
tangible and intangible, choses in action, rights, and credits then
owned by either the Bank or First Federal, or which would inure or
be subject to either of them, shall immediately by operation of law
and without any conveyance or transfer and without any further act
or deed, be vested in and become the property and obligations of
the Resulting Association which shall have, hold and enjoy the same
in its own right as fully and to the same extent as the same were
possessed, held and enjoyed by the Bank and First Federal
immediately prior to the consummation of the merger. The Resulting
Association shall be deemed to be and shall be a continuation of
the entity and identity both of the Bank and of First Federal and
the rights and obligations of the Bank and of First Federal shall
remain unimpaired; and the Resulting Association, upon the
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<PAGE>
consummation of the merger, shall succeed to all of such rights and
obligations and the duties and liabilities connected therewith.
(h) The main office of the Bank at 1215 Superior Avenue,
Cleveland, Ohio, shall be the main office of the Resulting
Association and branch offices thereof will be located at the
locations set forth in Exhibit 2 hereof.
(i) The liquidation account of First Federal as in
effect as of the Effective Time shall be assumed in full by the
Resulting Association.
3. Disposition of Shares:
(a) All of the shares of First Federal capital stock
issued and outstanding on the Effective Time, and all rights in
respect thereof, shall be cancelled.
(b) The shares of capital stock of the Bank outstanding
immediately prior to consummation of the merger shall constitute
the only outstanding shares of capital stock of the Resulting
Association following consummation of the merger.
4. Effective Time of Merger. The merger provided for herein
shall become effective on the date of endorsement of the Articles
of Combination by the Secretary of the OTS (the "Effective Time").
The merger shall not be effective unless and until approved by the
OTS. The merger shall also not be effective until after the
effective time of the merger of FirstFed with and into Charter as
set forth in the Merger Agreement by and between FirstFed and
Charter.
5. Action by Shareholders: The shareholders of the Bank and
First Federal, respectively, shall take appropriate action to vote
to approve this Plan of Merger.
6. Condition of Closing: The obligations of the parties
hereto to consummate the transactions contemplated herein shall be
subject to approval by the OTS and fulfillment or wavier (as may be
applicable) of the conditions set forth in Article IV of the Merger
Agreement.
7. Amendment: This Agreement may be amended or modified at
any time by a written instrument signed by the Bank and First
Federal.
8. Paragraph Headings: The paragraph headings in this Plan
of Merger are for convenience only; they form no part of this Plan
of Merger and shall not affect its interpretation.
- 4 -
<PAGE>
9. Governing Law: This Plan of Merger shall be governed by
the laws of the State of Ohio, except to the extent federal law
governs.
10. Termination. This Plan of Merger shall automatically
terminate without any further action of the parties hereto upon
termination of the Merger Agreement.
11. Miscellaneous: This Plan of Merger may be executed in
counterparts, each of which shall be deemed an original and all of
which constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Plan
of Merger to be executed on their behalf by their duly authorized
representatives as of the day and year first above written.
FIRST FEDERAL OF MICHIGAN CHARTER ONE BANK, F.S.B.
By: By:
--------------------------- ---------------------------
Name: Name:
Title: Title:
By: By:
--------------------------- ---------------------------
Name: Name:
Title: Secretary Title: Secretary
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<PAGE>
Exhibit 2.10(c)
AMENDMENT TO RIGHTS AGREEMENT
-----------------------------
AMENDMENT, dated as of May 26, 1995 to the Rights
Agreement, dated as of November 20, 1989 (the "Rights Agreement"),
between Charter One Financial, Inc., a Delaware corporation (the
"Company"), and The First National Bank of Boston, as Rights Agent
(the "Rights Agent").
W I T N E S E T H:
WHEREAS, the Company and the Rights Agent have heretofore
executed and entered into the Rights Agreement; and
WHEREAS, no Distribution Date (as defined in the Rights
Agreement) has occurred; and
WHEREAS, pursuant to Section 27 of the Rights Agreement,
the Company may from time to time supplement or amend the Rights
Agreement in accordance with the provisions of Section 27 thereof;
and
WHEREAS, it is proposed that the Company enter into an
Agreement and Plan of Merger (as it may be amended or supplemented
from time to time, the "Merger Agreement"), substantially in the
form set forth in Exhibit A to this Amendment, between the Company
and FirstFed Michigan Corporation ("FirstFed"), as the same may be
amended from time to time (all capitalized terms used in this
Amendment and not otherwise defined herein shall have the meaning
ascribed thereto in the Merger Agreement); and
<PAGE>
WHEREAS, it is proposed that the Company enter into a
Stock Option Agreement (as it may be amended or supplemented from
time to time, the "Option Agreement"), substantially in the form
set forth in Exhibit B to this Amendment, between the Company and
FirstFed, as the same may be amended from time to time; and
WHEREAS, it is proposed that each member of the Board of
Directors of the Company enter into a Voting Agreement (as it may
be amended or supplemental from time to time, the "Voting
Agreements"), substantially in the form set forth in Exhibit C to
this Amendment, between the members of the Board of Directors of
the Company and FirstFed, as the same may be amended from time to
time; and
WHEREAS, the Board of Directors has determined that the
merger and the other transactions contemplated by the Merger
Agreement, the Option Agreement and the Voting Agreements are fair
to and in the best interests of the Company and its shareholders;
and
WHEREAS, the Board of Directors has determined that it is
in the best interest of the Company and its shareholders to amend
the Rights Agreement to exempt the Merger Agreement, the Option
Agreement, the Voting Agreements and the transactions contemplated
thereby (including, without limitation, the option granted by the
Company pursuant to the Option Agreement and the agreement of the
members of the Board of Directors of the Company to vote in favor
of the Merger Agreement pursuant to the Voting Agreements) from the
application of the Rights Agreement; and
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<PAGE>
WHEREAS, the Board of Directors of the Company has
approved and adopted this Amendment and directed that the proper
officers take all appropriate steps to execute and put into effect
this Amendment.
NOW, THEREFORE, the Company hereby amends the Rights
Agreement as follows:
1. Section 1(a) of the Rights Agreement is hereby
modified and amended by deleting the percentage 10% wherever it
appears and substituting the percentage 20%.
2. Section 1(a) of the Rights Agreement is hereby
further modified and amended by adding the following proviso at the
end thereof:
"; provided, further, that neither
FirstFed Michigan Corporation, a
Michigan corporation ("FirstFed"),
nor any of its subsidiaries, nor any
other Person, shall be deemed to be
an Acquiring Person by virtue of the
Agreement and Plan of Merger (as it
may be amended or supplemented from
time to time, the "Merger
Agreement"), to be entered into on
or about May 30, 1995 between the
Company and FirstFed, the Stock
Option Agreement (as it may be
amended or supplemented from time to
time, the "Option Agreement") to be
entered into on or about May 31,
1995 between the Company and
FirstFed, the Voting Agreements (as
they may be amended or supplemented
from time to time, the "Voting
Agreements") to be entered into on
or about May 30, 1995 between the
members of the Board of Directors of
the Company and FirstFed, or by
virtue of any of the transactions
contemplated by the Merger
Agreement, the Option Agreement and
the Voting Agreements. Without
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<PAGE>
limiting the foregoing, neither
FirstFed nor any of its
subsidiaries, nor with respect to
clauses (ii)-(v) below, any other
Person, shall be deemed to be an
Acquiring Person by virtue of the
fact that FirstFed or its permitted
transferee is the Beneficial Owner
solely of Common Stock of the
Company (i) of which FirstFed or
such subsidiary was the Beneficial
Owner on May 26, 1995, (ii) acquired
or acquirable pursuant to the grant
or exercise of the option granted
pursuant to the Option Agreement,
(iii) acquired or acquirable
pursuant to the Voting Agreements,
(iv) held directly or indirectly in
trust accounts, managed accounts and
the like or otherwise held in a
fiduciary capacity for third parties
and (v) held in respect of a debt
previously contracted; and provided
further, however, that in the event
that FirstFed or any of its
subsidiaries acquires beneficial
ownership of any shares of Common
Stock other than the shares
described in clauses (i)-(v) above
("Subsequently Acquires Shares"),
then the shares described in clauses
(i)-(iii) above, together with such
Subsequently Acquired Shares, shall
be considered in determining whether
FirstFed or any of its subsidiaries
shall have become an Acquiring
Person."
3. Section 24(a)(ii) of the Rights Agreement is hereby
modified and amended by deleting the percentage 10% wherever
it appears and substituting the percentage 20%.
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<PAGE>
4. Section 30 of the Rights Agreement is hereby
modified and amended to add the following sentence at the end
thereof:
"Nothing in this Agreement shall be
construed to give any holder of
Rights or any other Person any legal
or equitable rights, remedy or claim
under this Agreement in connection
with any transactions contemplated
by the Merger Agreement, the Option
Agreement or the Voting Agreements."
5. This Amendment shall be effective immediately upon
its execution and the Rights Agreement shall continue in full force
and effect as amended hereby.
6. This Amendment may be executed in counterparts.
5
<PAGE>
IN WITNESS WHEREOF, this Amendment has been duly executed
by the Company and the Rights Agent as of the day and year first
written above.
CHARTER ONE FINANCIAL, INC.
/s/ ROBERT J. VANA
-----------------------------------
By: Robert J. Vana, Secretary
THE FIRST NATIONAL BANK OF BOSTON
as Rights Agent
/s/ COLLEEN H. SHEA
------------------------------------
By: Colleen H. Shea
ADMINISTRATION MANAGER
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