<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 12, 1997
REGISTRATION NO. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
------------------------
DIME BANCORP, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
DELAWARE 6712 11-3197414
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
</TABLE>
589 FIFTH AVENUE
NEW YORK, NEW YORK 10017
(212) 326-6170
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
GENE C. BROOKS, ESQ.
DIME BANCORP, INC.
589 FIFTH AVENUE
NEW YORK, NEW YORK 10017
(212) 326-6170
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF AGENT FOR SERVICE)
------------------------
COPIES TO:
<TABLE>
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MITCHELL S. EITEL, ESQ. MARIO A. PONCE, ESQ.
SULLIVAN & CROMWELL SIMPSON THACHER & BARTLETT
125 BROAD STREET 425 LEXINGTON AVENUE
NEW YORK, NEW YORK 10004 NEW YORK, NEW YORK 10017
(212) 558-4000 (212) 455-2000
</TABLE>
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: At the
Effective Time as described in the attached Proxy Statement-Prospectus.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
==========================================================================================================
PROPOSED MAXIMUM PROPOSED
OFFERING PRICE PER MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO BE SHARE OF COMMON AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED(1) STOCK PER UNIT OFFERING PRICE(2) FEE(3)
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------
Common Stock, $0.01 par value (and
associated Preferred Stock 21,500,000 shares
Purchase Rights).................. (with Rights) N/A $422,380,048 $47,733
==========================================================================================================
</TABLE>
(1) This Registration Statement covers the maximum number of the Registrant's
securities that may be issued in the transaction described herein.
(2) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457(f) under the Securities Act of 1933 based on the
average of the high and low sales prices per share of common stock of North
American Mortgage Company on the New York Stock Exchange on September 10,
1997.
(3) Pursuant to Section 14(g)(1)(B) of the Securities Exchange Act of 1934, and
Rule 457(b) under the Securities Act of 1933, the fee of $80,261 paid by
North American Mortgage Company on August 1, 1997 upon the filing of the
preliminary proxy material relating to the transaction described herein has
been credited against the registration fee payable in connection with this
filing.
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
================================================================================
<PAGE> 2
[NORTH AMERICAN MORTGAGE LOGO]
NORTH AMERICAN MORTGAGE COMPANY(R)
<TABLE>
<S> <C>
EXECUTIVE HEADQUARTERS: MAILING ADDRESS:
3883 Airway Drive P.O. Box 808005
Santa Rosa, California Petaluma, California 94975-8008
(707) 546-3310
</TABLE>
September 15, 1997
Dear Stockholder:
You are cordially invited to attend a Special Meeting of the Stockholders
of North American Mortgage Company ("NAMC"), to be held on October 13, 1997, at
10:00 a.m. (local time), at the New York Hilton and Towers, Morgan Suite, 1335
Avenue of the Americas, New York, New York 10019.
At the Special Meeting, NAMC stockholders will be asked to consider and
vote upon a proposal to adopt an Agreement and Plan of Combination, dated as of
June 22, 1997 and amended and restated as of July 31, 1997 (the "Merger
Agreement"), among NAMC, Dime Bancorp, Inc. ("Dime"), The Dime Savings Bank of
New York, FSB ("Dime Bank") and 47th St. Property Corporation ("Merger Sub").
Pursuant to the Merger Agreement, NAMC will be acquired by Dime Bank in a merger
of Merger Sub into NAMC (the "Merger"), and NAMC will become an indirect,
wholly-owned subsidiary of Dime. Each outstanding share of NAMC common stock
(except for shares held by NAMC as treasury stock) will be converted into the
right to receive 1.37 shares (the "Exchange Ratio") of Dime common stock,
subject to adjustment in certain circumstances described in the accompanying
Proxy Statement-Prospectus. NAMC stockholders will receive cash in lieu of any
fractional shares that would otherwise be issued in the Merger.
Your Board of Directors has carefully reviewed and considered the terms and
conditions of the Merger and has received the opinions of Morgan Stanley & Co.
Incorporated, NAMC's financial advisor, that, as of June 22, 1997 and the date
hereof, and based on and subject to certain matters stated therein, the Exchange
Ratio is fair from a financial point of view to NAMC stockholders. A copy of
that opinion dated the date hereof is attached as Appendix B to the accompanying
Proxy Statement-Prospectus. THE BOARD OF DIRECTORS OF NAMC HAS UNANIMOUSLY
APPROVED THE MERGER AGREEMENT AND DETERMINED THAT IT IS IN THE BEST INTERESTS OF
NAMC AND ITS STOCKHOLDERS AND UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE ADOPTION
OF THE MERGER AGREEMENT.
You should read carefully the accompanying Notice of Special Meeting of
Stockholders and the Proxy Statement-Prospectus for details of the Merger and
additional related information.
Whether or not you expect to attend the Special Meeting, it is very
important that your shares be represented. Please complete, sign and date the
enclosed proxy card and return it promptly in the enclosed postage-paid
envelope. If you attend the Special Meeting, you may vote in person if you wish,
even though you previously have returned your proxy card.
Thank you and I look forward to seeing you at the Special Meeting.
Sincerely,
/s/ John F. Farrell
Chairman of the Board
and Chief Executive Officer
<PAGE> 3
[NORTH AMERICAN MORTGAGE LOGO]
NORTH AMERICAN MORTGAGE COMPANY(R)
<TABLE>
<S> <C>
EXECUTIVE HEADQUARTERS: MAILING ADDRESS:
3883 Airway Drive P.O. Box 808005
Santa Rosa, California Petaluma, California 94975-8008
(707) 546-3310
</TABLE>
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD OCTOBER 13, 1997
NOTICE IS HEREBY GIVEN that a Special Meeting of Stockholders (the "Special
Meeting") of North American Mortgage Company, a Delaware corporation ("NAMC"),
will be held at 10:00 a.m. (local time) on October 13, 1997 at the New York
Hilton and Towers, Morgan Suite, 1335 Avenue of the Americas, New York, New York
10019.
The Special Meeting is called for the purpose of considering and voting
upon a proposal to adopt the Agreement and Plan of Combination dated as of June
22, 1997 and amended and restated as of July 31, 1997 (the "Merger Agreement"),
among NAMC, Dime Bancorp, Inc., The Dime Savings Bank of New York, FSB and 47th
St. Property Corporation. A copy of the Merger Agreement is attached as Appendix
A to the Proxy Statement-Prospectus accompany this Notice.
The proposed merger and other related matters are more fully described in
the attached Proxy Statement-Prospectus and the Appendices thereto.
The Board of Directors has fixed the close of business on September 8, 1997
as the record date for the determination of the stockholders entitled to notice
of and to vote at the Special Meeting and any adjournments or postponements
thereof. Only holders of record of NAMC's Common Stock on the record date are
entitled to vote at the Special Meeting. A list of such stockholders will be
available at the time and place of the meeting and, during ordinary business
hours for the ten days prior to the meeting, at the office of the Secretary of
NAMC at the above address.
If you would like to attend the meeting and your shares are held by a
broker, bank or other nominee, you must bring to the meeting a recent brokerage
statement or a letter from the nominee confirming your beneficial ownership of
the shares. You must also bring a form of personal identification. In order to
vote your shares at the meeting, you must obtain from the nominee a proxy issued
in your name.
You can ensure that your shares are voted at the meeting by signing and
dating the enclosed proxy and returning it in the envelope provided. Sending in
a signed proxy will not affect your right to attend the meeting and vote in
person.
Whether or not you expect to attend, WE URGE YOU TO SIGN AND DATE THE
ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ENVELOPE PROVIDED.
By Order of the Board of Directors,
/s/ Carolyn Vogt
Carolyn Owens Vogt, Secretary
September 15, 1997
<PAGE> 4
PROXY STATEMENT
NORTH AMERICAN MORTGAGE COMPANY
SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON OCTOBER 13, 1997
------------------------
PROSPECTUS
DIME BANCORP, INC.
COMMON STOCK, PAR VALUE $.01 PER SHARE
(AND ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS)
------------------------
This Proxy Statement-Prospectus is being furnished to the stockholders of
North American Mortgage Company, a Delaware corporation ("NAMC"), in connection
with the solicitation of proxies by the Board of Directors of NAMC for use at a
Special Meeting of Stockholders, to be held on October 13, 1997 at 10:00 a.m.
(local time), at the New York Hilton and Towers, Morgan Suite, 1335 Avenue of
the Americas, New York, New York 10019 (including any adjournments or
postponements thereof, the "Special Meeting").
At the Special Meeting, the holders of common stock, par value $.01 per
share, of NAMC ("NAMC Common Stock") will consider and vote upon a proposal to
adopt the Agreement and Plan of Combination, dated as of June 22, 1997 and
amended and restated as of July 31, 1997 ("Merger Agreement"), by and among
NAMC, Dime Bancorp, Inc., a Delaware corporation ("Dime"), The Dime Savings Bank
of New York, FSB, a federal savings bank and a wholly-owned subsidiary of Dime
("Dime Bank"), and 47th St. Property Corporation, a Delaware corporation and a
wholly-owned subsidiary of Dime Bank ("Merger Sub"), pursuant to which Dime will
acquire NAMC by means of a merger of Merger Sub with and into NAMC (the
"Merger"). In the Merger, each share (except for shares held by NAMC as treasury
stock) of NAMC Common Stock issued and outstanding, together with attached
rights to purchase Series A Cumulative Preferred Stock of NAMC (the "NAMC
Rights"), will be converted into 1.37 shares (as such number may be adjusted,
the "Exchange Ratio") of common stock, par value $.01 per share, of Dime ("Dime
Common Stock"). Each share of Dime Common Stock has attached to it one right
(each, a "Dime Right") to purchase preferred stock of Dime under circumstances
related to a person acquiring 20% or more of the outstanding shares of Dime
Common Stock. The Exchange Ratio is subject to adjustment (1) upward if the
average closing price per share of Dime Common Stock declines by more than 20%
over a designated period both in absolute terms (i.e., from the $19.00 "starting
price" to below $15.20) and relative to the stock prices of 18 other companies
and certain other conditions are met or (2) upward or downward if Dime takes
certain actions affecting its capitalization. In addition, as a result of the
Merger, each outstanding option to purchase NAMC Common Stock will be converted
into an option to purchase Dime Common Stock. For a description of the Merger
Agreement, which is included in its entirety as Appendix A to this Proxy
Statement-Prospectus, see "THE MERGER." For a description of Dime Common Stock
(and the attached Dime Rights), see "DESCRIPTION OF DIME CAPITAL STOCK."
This Proxy Statement-Prospectus also constitutes a prospectus of Dime with
respect to up to 21,500,000 shares of fully paid and nonassessable shares of
Dime Common Stock (together with attached Dime Rights) issuable in connection
with the Merger.
HOLDERS OF NAMC COMMON STOCK SHOULD CAREFULLY READ THIS PROXY
STATEMENT-PROSPECTUS, INCLUDING THE MATERIAL IT INCORPORATES BY REFERENCE AND
THE MATERIAL UNDER THE HEADING "RISK FACTORS" BEGINNING ON PAGE 16.
Dime Common Stock and NAMC Common Stock are listed on the New York Stock
Exchange, Inc. (the "NYSE") under the trading symbols "DME" and "NAC,"
respectively. The last sale price of Dime Common Stock reported on the NYSE
Composite Transactions Tape on September 11, 1997 was $20 per share. This Proxy
Statement-Prospectus and the accompanying notice of meeting and form of proxy
are first being mailed to NAMC stockholders on or about September 15, 1997.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROXY STATEMENT-PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
THESE SECURITIES ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF A BANK OR SAVINGS
ASSOCIATION AND ARE NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY.
------------------------
THE DATE OF THIS PROXY STATEMENT-PROSPECTUS IS SEPTEMBER 15, 1997.
<PAGE> 5
AVAILABLE INFORMATION
NAMC and Dime each is subject to the information requirements of the
Securities Exchange Act of 1934 (the "Exchange Act"), and, in accordance
therewith, each files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information can be inspected and copied at the public
reference facilities maintained by the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549 and at the Commission's regional offices in New York
(Seven World Trade Center, New York, New York 10048) and Chicago (Citicorp
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511), and
copies of such material can be obtained from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed
rates. More recent materials filed by Dime and NAMC also may be accessed
electronically by means of the Commission's home page on the Internet at
http://www.sec.gov. In addition, NAMC Common Stock and Dime Common Stock are
listed on the NYSE, and material filed by NAMC and Dime should be available for
inspection at the offices of the NYSE at 20 Broad Street, New York, New York
10005.
Dime became the holding company of Dime Bank pursuant to a reorganization
effected on May 25, 1994, and, until that time, Dime Bank was subject to the
information requirements of the Exchange Act and filed reports, proxy statements
and other information with the Office of Thrift Supervision (the "OTS"). Such
reports, proxy statements and other information filed by Dime Bank prior to May
25, 1994 can be inspected and copied at the public reference facilities
maintained by the OTS at the Office of Public Information, Office of Thrift
Supervision, 1700 G Street, N.W., Washington, D.C. 20552, and also can be
obtained by written request from such office at prescribed rates.
Dime has filed with the Commission a Registration Statement on Form S-4 (as
it may be amended, the "Registration Statement") under the Securities Act of
1933 (the "Securities Act") with respect to the shares of Dime Common Stock
(together with attached Dime Rights) to be issued in the Merger. This Proxy
Statement-Prospectus does not contain all of the information contained in the
Registration Statement. Such additional information may be inspected or copied
at the public reference facilities of the Commission or accessed electronically
by means of the Commission's home page (the address of each of which is set
forth above).
Statements contained in this Proxy Statement-Prospectus (or in any document
it incorporates by reference) concerning the provisions of any contract or other
document are not necessarily complete, and in each instance reference is made to
the copy of such contract or other document filed as an exhibit to the
Registration Statement or such other document, each such statement being
qualified in its entirety by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission by Dime (File No.
1-13094) and NAMC (File No. 1-11017) under the Exchange Act are incorporated by
reference in this Proxy Statement-Prospectus:
(1) Dime's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996;
(2) Dime's Quarterly Report on Form 10-Q for the quarters ended March
31, 1997 and June 30, 1997;
(3) Dime's Current Reports on Form 8-K filed on April 23 and 25, 1997,
May 10, 1997, June 16, 23 and 27, 1997 and July 25, 1997;
(4) The descriptions of Dime Common Stock and Dime Rights set forth in
Dime's Registration Statements on Form 8-A filed pursuant to Section 12 of
the Exchange Act and any amendment to those descriptions so filed with the
Commission;
(5) NAMC's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996 and Amendment No. 1 thereto on Form 10-K/A;
ii
<PAGE> 6
(6) NAMC's Quarterly Report on Form 10-Q for the quarters ended March
31, 1997 and June 30, 1997;
(7) NAMC's Current Report on Form 8-K filed on June 24, 1997; and
(8) The descriptions of NAMC Common Stock and attached rights to
purchase Series A Cumulative Preferred Stock of NAMC (the "NAMC Rights")
set forth in NAMC's Registration Statements on Form 8-A filed pursuant to
Section 12 of the Exchange Act and any amendment to those descriptions so
filed with the Commission.
All documents filed by NAMC or Dime pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Proxy Statement-Prospectus and
prior to the termination of the offering of the Dime Common Stock (together with
attached Dime Rights) to which this Proxy Statement-Prospectus relates shall be
deemed to be incorporated by reference into this Proxy Statement-Prospectus and
to be a part hereof from the date of filing of such documents. Any statement
contained in a document incorporated or deemed to be incorporated by reference
herein shall be deemed to be modified or superseded for purposes of this Proxy
Statement-Prospectus to the extent that a statement contained herein, or in any
subsequently filed document that also is or is deemed incorporated by reference
herein, modifies or supersedes such statement. Any statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Proxy Statement-Prospectus.
Notwithstanding the foregoing, the information contained in any document
that is described in Item 402(a)(8) of the Commission's Regulation S-K is not
incorporated by reference in this Proxy Statement-Prospectus.
All information contained in this Proxy Statement-Prospectus relating to
NAMC has been supplied by NAMC, and all information contained herein relating to
Dime has been supplied by Dime.
------------------------
THIS PROXY STATEMENT-PROSPECTUS INCORPORATES BY REFERENCE DOCUMENTS WHICH
ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. NAMC AND DIME WILL PROVIDE
WITHOUT CHARGE TO ANY PERSON TO WHOM THIS PROXY STATEMENT-PROSPECTUS IS
DELIVERED, INCLUDING ANY BENEFICIAL HOLDER OF NAMC COMMON STOCK, UPON WRITTEN OR
ORAL REQUEST OF SUCH PERSON AND BY FIRST CLASS MAIL OR OTHER EQUALLY PROMPT
MEANS WITHIN ONE BUSINESS DAY OF RECEIPT OF SUCH REQUEST, A COPY OF ANY OR ALL
OF THE FOREGOING DOCUMENTS INCORPORATED HEREIN BY REFERENCE (OTHER THAN EXHIBITS
TO SUCH DOCUMENTS WHICH ARE NOT SPECIFICALLY INCORPORATED THEREIN BY REFERENCE).
REQUESTS FOR DOCUMENTS RELATING TO DIME SHOULD BE DIRECTED TO DIME BANCORP,
INC., 589 FIFTH AVENUE, NEW YORK, NEW YORK 10017, ATTENTION: INVESTOR RELATIONS
DEPARTMENT, TELEPHONE NUMBER (212) 326-6170, AND REQUESTS FOR DOCUMENTS RELATING
TO NAMC SHOULD BE DIRECTED TO NORTH AMERICAN MORTGAGE COMPANY, 3883 AIRWAY
DRIVE, SANTA ROSA CALIFORNIA, 95403-1699, ATTENTION: CHIEF FINANCIAL OFFICER,
TELEPHONE NUMBER (707) 523-5049. IN ORDER TO ENSURE TIMELY DELIVERY OF ANY OF
THE DOCUMENTS, REQUESTS SHOULD BE MADE BY OCTOBER 6, 1997.
------------------------
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED IN THIS PROXY STATEMENT-PROSPECTUS OR INCORPORATED
BY REFERENCE HEREIN IN CONNECTION WITH THE OFFERING AND THE SOLICITATION MADE BY
THIS PROXY STATEMENT-PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY NAMC OR
DIME. THIS PROXY STATEMENT-PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO PURCHASE ANY SECURITIES, NOR DOES IT CONSTITUTE THE
SOLICITATION OF A PROXY, IN ANY JURISDICTION TO OR FROM ANY PERSON TO OR FROM
WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER, OR SOLICITATION OF AN OFFER, OR PROXY
SOLICITATION WITHIN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS PROXY
STATEMENT-PROSPECTUS NOR THE DISTRIBUTION OF SECURITIES HEREUNDER SHALL, UNDER
ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF NAMC OR DIME SINCE THE DATE HEREOF OR THAT THE INFORMATION HEREIN OR
IN THE DOCUMENTS INCORPORATED HEREIN BY REFERENCE IS CORRECT AS OF ANY TIME
SUBSEQUENT TO THE DATE HEREOF OR THE DATES THEREOF.
iii
<PAGE> 7
TABLE OF CONTENTS
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PAGE
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AVAILABLE INFORMATION................... ii
INCORPORATION OF CERTAIN DOCUMENTS BY
REFERENCE............................. ii
SUMMARY................................. 2
The Parties........................... 2
The Special Meeting................... 2
The Merger............................ 3
Comparison of Rights of
Stockholders....................... 6
DIME BANCORP, INC. AND SUBSIDIARIES
SELECTED CONSOLIDATED FINANCIAL
DATA.................................. 7
NORTH AMERICAN MORTGAGE COMPANY AND
SUBSIDIARIES SELECTED CONSOLIDATED
FINANCIAL DATA........................ 10
UNAUDITED PRO FORMA COMBINED SELECTED
FINANCIAL DATA........................ 12
COMPARATIVE UNAUDITED PER SHARE DATA.... 14
MARKET PRICE DATA....................... 15
RISK FACTORS............................ 16
General Business Risks................ 16
Interest Rate Risk.................... 16
Competition........................... 16
Regulation............................ 16
Elimination of the Thrift Charter..... 17
THE SPECIAL MEETING..................... 17
Date, Time, Place and Purpose......... 17
Record Date and Shares Entitled to
Vote............................... 17
Vote Required......................... 17
Ownership by Directors and Executive
Officers........................... 18
Proxies............................... 18
No Appraisal Rights................... 19
THE MERGER.............................. 19
Effects of the Merger; Exchange
Ratio.............................. 19
Background of the Merger.............. 20
Reasons for the Merger................ 21
Recommendation of the NAMC Board...... 23
Opinion of Morgan Stanley............. 23
Effective Time of the Merger.......... 26
Exchange Procedures................... 26
Conditions to Consummation............ 27
Regulatory Approvals.................. 27
Price-Based Termination............... 28
Termination Fee....................... 29
No Solicitation of Acquisition
Proposals.......................... 31
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PAGE
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Conduct of Business Pending the
Merger............................. 31
Amendment, Waiver and Alternative
Structure.......................... 32
Termination........................... 33
Interests of Certain Persons in the
Merger............................. 33
Employee-Related Matters.............. 39
Certain Federal Income Tax
Consequences....................... 39
Accounting Treatment.................. 40
Stock Exchange Listing................ 41
Expenses.............................. 41
Dime Stock Repurchase................. 41
Resales of Dime Common Stock.......... 41
PRO FORMA COMBINED FINANCIAL
STATEMENTS............................ 42
DESCRIPTION OF DIME CAPITAL STOCK....... 48
Authorized Stock...................... 48
Common Stock.......................... 48
Dime Preferred Stock.................. 49
Stockholder Protection Rights Plan.... 49
Certain Other Provisions.............. 50
COMPARISON OF CERTAIN RIGHTS OF
STOCKHOLDERS.......................... 54
Restrictions on Transfer.............. 54
Certain Regulatory Limitations........ 55
Classification of Board of
Directors.......................... 55
Removal of Directors.................. 55
Amendment of Certificate and
By-Laws............................ 55
Stockholder Nominations and
Proposals.......................... 56
Special Meetings of Stockholders and
Stockholder Action by Written
Consent............................ 56
Rights Plans.......................... 56
CERTAIN REGULATORY CONSIDERATIONS....... 57
Regulatory Capital Requirements....... 57
Limitations on Capital
Distributions...................... 58
Transactions with Affiliates.......... 59
EXPERTS................................. 59
VALIDITY OF DIME COMMON STOCK........... 60
STOCKHOLDER PROPOSALS................... 60
APPENDICES..............................
Appendix A: Agreement and
Plan of Combination................ A-1
Appendix B: Opinion of
Morgan Stanley & Co.
Incorporated....................... B-1
</TABLE>
<PAGE> 8
SUMMARY
The following is a summary of certain information contained elsewhere (or
incorporated by reference) in this Proxy Statement-Prospectus. It is not
intended to be a complete description of all material facts relating to NAMC,
Dime, the Special Meeting or the Merger and is qualified in all respects by the
more detailed information contained elsewhere or incorporated by reference in
this Proxy Statement-Prospectus.
THE PARTIES
NAMC. NAMC is a Delaware corporation engaged primarily in the mortgage
banking business, and, as such, it originates, acquires, sells and services
mortgage loans that are principally first-lien mortgage loans secured by
one-to-four family residences. NAMC also sells servicing rights associated with
a portion of such loans. NAMC and its predecessors have been engaged in the
mortgage banking business since 1948, and NAMC currently operates 104
origination offices located in 30 states. At June 30, 1997, NAMC had
consolidated total assets of $863.6 million and stockholders' equity of $214.6
million.
NAMC's principal executive offices are located at 3883 Airway Drive, Santa
Rosa, California 95403, and its telephone number is (707) 523-5000.
Dime and Dime Bank. Dime is a Delaware corporation and the holding company
for Dime Bank. Dime is registered with the OTS, and is subject to regulation and
examination, as a savings and loan holding company. At June 30, 1997, Dime had
consolidated total assets of $20.09 billion, deposits of $13.34 billion and
stockholders' equity of $1.06 billion.
Dime's only current business is the operation of Dime Bank as a subsidiary.
Headquartered in New York City, Dime Bank currently operates 90 branches in the
greater New York metropolitan area and one branch in Florida. Through Dime Bank
and its subsidiaries, Dime also provides mortgage banking and consumer financial
services in selected markets throughout the United States. Dime Bank was
organized in 1859, converted from a state charter to a federal charter in 1983
and converted to stock ownership in 1986.
On January 13, 1995, Dime consummated a merger of equals (the "Anchor
Merger") with Anchor Bancorp, Inc. ("Anchor"), which was the parent company of
Anchor Savings Bank FSB ("Anchor Savings"). Based on total assets as of December
31, 1995, the Anchor Merger created the largest savings association
headquartered on the East Coast and the fifth largest publicly traded thrift
institution in the United States. On August 12, 1994, Anchor acquired The
Lincoln Savings Bank, FSB ("Lincoln") and immediately thereafter merged Lincoln
with and into Anchor Savings.
On April 30, 1997, Dime Bank acquired (the "BFS Acquisition") BFS Bankorp,
Inc. ("BFS Bankorp"), which was the parent company of Bankers Federal Savings
FSB ("Bankers Federal"). On the same day, Bankers Federal merged with and into
Dime Bank. At the date of the BFS Acquisition, BFS Bankorp had consolidated
total assets of $633.9 million and deposits of $448.6 million.
Dime's principal executive offices are located at 589 Fifth Avenue, New
York, New York 10017, and its telephone number is (212) 326-6170.
Merger Sub. Merger Sub is a Delaware corporation and a wholly owned
subsidiary of Dime Bank. Merger Sub was formed for the purpose of entering into
the Merger Agreement and consummating the Merger.
THE SPECIAL MEETING
Date, Time, Place and Purpose. The Special Meeting is scheduled to be held
on October 13, 1997 at 10:00 a.m. (local time), at the New York Hilton and
Towers, Morgan Suite, 1335 Avenue of the Americas, New York, New York 10019. The
purpose of the Special Meeting is to consider and vote upon a proposal to adopt
the Merger Agreement. See "THE SPECIAL MEETING -- Date, Time, Place and
Purpose."
Record Date and Shares Entitled to Vote. Holders of record of NAMC Common
Stock at the close of business on September 8, 1997 (such date and time, the
"Record Date") are entitled to notice of and to vote
2
<PAGE> 9
at the Special Meeting. On the Record Date, there were 14,039,575 shares of NAMC
Common Stock outstanding. See "THE SPECIAL MEETING -- Record Date and Shares
Entitled to Vote."
Vote Required and Ownership by Interested Parties. Adoption of the Merger
Agreement requires the affirmative vote of the holders of a majority of the
shares of NAMC Common Stock outstanding and entitled to vote thereon. Record
holders of NAMC Common Stock as of the Record Date are entitled to one vote per
share.
As of the Record Date, the directors and executive officers of NAMC and
their affiliates beneficially owned, in the aggregate, 1,464,405 shares of NAMC
Common Stock, representing approximately 10.4% of such shares outstanding, and
such directors and executive officers have indicated that they intend to vote
their shares of NAMC Common Stock for the adoption of the Merger Agreement. The
directors and executive officers of Dime and their affiliates beneficially
owned, as of the Record Date, no shares of NAMC Common Stock. See "THE SPECIAL
MEETING -- Vote Required" and "-- Ownership by Directors and Executive
Officers."
BECAUSE THE VOTE OF NAMC STOCKHOLDERS REQUIRED IN ORDER TO ADOPT THE MERGER
AGREEMENT IS BASED UPON THE NUMBER OF OUTSTANDING SHARES OF NAMC COMMON STOCK,
AND NOT ONLY THOSE SHARES THAT ARE ACTUALLY VOTED, THE FAILURE BY ANY NAMC
STOCKHOLDER (OR A BROKER WHO HAS BEEN INSTRUCTED TO VOTE SHARES) TO SUBMIT A
PROXY CARD (OR VOTE IN PERSON AT THE SPECIAL MEETING) WILL HAVE THE SAME EFFECT
AS A "NO" VOTE WITH RESPECT TO THE ADOPTION OF THE MERGER AGREEMENT.
No Appraisal Rights. No stockholder of NAMC will have any appraisal rights
under the Delaware General Corporation Law in connection with, or as a result
of, the matters to be acted upon at the Special Meeting. See "THE SPECIAL
MEETING -- No Appraisal Rights."
THE MERGER
Effects of the Merger and Exchange Ratio. At the effective time of the
Merger (the "Effective Time"), Merger Sub will merge with and into NAMC, with
NAMC surviving the Merger as a wholly owned subsidiary of Dime Bank (NAMC, as
the surviving corporation in the Merger, is sometimes referred to in this
Summary as the "Surviving Corporation").
At the Effective Time, each share (except for shares held by NAMC as
treasury stock) of NAMC Common Stock issued and outstanding, together with
attached NAMC Rights, will be converted into 1.37 shares (as such number may be
adjusted, the "Exchange Ratio") of Dime Common Stock, together with attached
Dime Rights. In addition, as a result of the Merger, each outstanding option to
purchase NAMC Common Stock will be converted into an option to purchase Dime
Common Stock.
The Exchange Ratio may be adjusted (1) upward or downward if Dime takes
certain actions affecting its capitalization or (2) upward as discussed under
"THE MERGER -- Price-Based Termination," which relates to a decline in the price
of Dime Common Stock by more than 20% over a designated period both in absolute
terms (i.e., from the $19.00 "starting price" to below $15.20) and relative to
the stock prices of 18 other companies. If the Exchange Ratio is adjusted before
the Special Meeting is held, Dime and NAMC will, if appropriate, amend the
Registration Statement and provide NAMC stockholders with supplemental
prospectus/proxy materials. In determining if amending the Registration
Statement is appropriate, Dime and NAMC will consider whether the effect of the
adjustment would be material to NAMC stockholders in voting on the adoption of
the Merger Agreement. See "THE MERGER -- Effects of the Merger; Exchange Ratio,"
"-- Price-Based Termination" and "-- Employee-Related Matters."
Recommendation of the NAMC Board and Reasons for the Merger. THE BOARD OF
DIRECTORS OF NAMC (THE "NAMC BOARD") HAS UNANIMOUSLY APPROVED THE MERGER
AGREEMENT, DETERMINED THAT IT IS IN THE BEST INTERESTS OF NAMC AND ITS
STOCKHOLDERS AND UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE ADOPTION OF THE MERGER
AGREEMENT. In making this determination, the NAMC Board considered a number of
factors discussed herein. For a discussion of the factors considered by the NAMC
Board in reaching its determination, see "THE MERGER -- Reasons for the Merger"
and "-- Recommendation of the NAMC Board."
3
<PAGE> 10
Opinion of Morgan Stanley. Morgan Stanley & Co. Incorporated ("Morgan
Stanley") served as financial adviser to NAMC in connection with the Merger and
has rendered its written opinions to the NAMC Board that, as of June 22, 1997
and as of the date of this Proxy Statement-Prospectus, the Exchange Ratio is
fair, from a financial point of view, to the NAMC stockholders. A copy of the
opinion of Morgan Stanley dated the date of this Proxy Statement-Prospectus (the
"Morgan Stanley Opinion") is included as Appendix B to this Proxy
Statement-Prospectus and should be read in its entirety with respect to the
assumptions made, the matters considered and limits of the review undertaken by
Morgan Stanley in rendering its opinions, and for a description of the
investment banking and financial advisory services provided in the past by
Morgan Stanley for NAMC. See "THE MERGER -- Opinion of Morgan Stanley" for a
further description of the Morgan Stanley Opinion and of the fees payable to
Morgan Stanley by NAMC (substantially all of which fees are payable only upon
consummation of the Merger).
Effective Time of the Merger. The Merger will become effective at the date
and time that a certificate of merger is filed with the Secretary of State of
Delaware or such later date and time as is specified in such certificate.
Pursuant to the Merger Agreement, the parties intend to cause the Effective Time
to occur on the fifth business day after the satisfaction or waiver of the last
of the closing conditions set forth in the Merger Agreement (or, at the election
of Dime, the last business day of the month in which such day occurs). It is
currently anticipated that the Effective Time of the Merger will occur in
October 1997, although no assurances can be given (the occurrence and timing of
the Effective Time being subject to satisfaction or waiver of the closing
conditions). See "THE MERGER -- Effective Time" and "-- Conditions to
Consummation."
Conditions to the Merger and Regulatory Approval. The respective
obligations of NAMC and Dime to consummate the Merger are subject to various
conditions, including the adoption of the Merger Agreement by the holders of the
requisite number of shares of NAMC Common Stock, the receipt of necessary
regulatory approvals, the receipt of opinions of counsel regarding certain
federal income tax aspects of the Merger and other customary closing conditions.
See "THE MERGER -- Conditions to Consummation."
The regulatory approvals necessary to consummate the Merger include (1) the
expiration of the waiting period provided under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 ("HSR Act") and (2) the prior approval of the OTS with
respect to a subsidiary of NAMC that will be acquired by Dime Bank as a result
of the Merger. With respect to the requirements of the HSR Act, on August 11,
1997 the Federal Trade Commission and the Antitrust Division of the Department
of Justice granted early termination of the applicable waiting period. With
respect to the required OTS approval, Dime has filed an application with the OTS
and is responding to a request from the OTS for additional information. It is
currently anticipated that the OTS will act on Dime's application before the
date of the Special Meeting, although no assurances can be given as to the
timing or outcome of such action. See "THE MERGER -- Regulatory Approvals."
Termination. The Merger Agreement may be terminated, among other things
(1) by mutual consent of NAMC and Dime or (2) by either NAMC or Dime, if the
other party materially breaches the Merger Agreement, the Merger is not
consummated by December 31, 1997, necessary regulatory approvals are denied or
the approval of NAMC stockholders solicited by this Proxy Statement-Prospectus
is not received. See "THE MERGER -- Termination."
Price-Based Termination. In addition, the Merger Agreement contains a
price-based termination provision. Under this provision, the Merger may be
terminated by NAMC at any time during the five-day period following the date of
the receipt of the approval of the OTS required for consummation of the Merger,
if (1) the average closing price of Dime Common Stock over a designated period
is less than $15.20 (representing a decline of more than 20 percentage points
from the $19.00 "starting price"), (2) the decline in price of Dime Common Stock
since the date of the Merger Agreement exceeds by more than 20 percentage points
the decline of an index composed of a group of common stocks of other companies
and (3) Dime elects not to increase the Exchange Ratio as specified in the
Merger Agreement. In making any decision to terminate the Merger Agreement under
this provision, the NAMC Board would have a fiduciary obligation to consider
whether the Merger no longer was in the best interests of NAMC and its
stockholders and would consult with its financial and other advisers and
consider all financial and other information it deemed relevant
4
<PAGE> 11
to its decision (including the factors it originally considered in approving the
Merger Agreement, as described in "THE MERGER -- Reasons for the Merger"). The
matter would not, however, be resubmitted to NAMC stockholders.
The price-based termination provision is designed to protect NAMC
stockholders from the risk that the average price per share of Dime Common Stock
declines by more than 20% both in absolute terms (i.e., from the $19.00
"starting price" to below $15.20) and relative to the stock prices of the
comparison companies. Accordingly, if the stock of the relevant companies were
(on average) to decline by 20%, a decline in the price of Dime Common Stock to
$15.00 per share over the relevant period, for example, would not give NAMC a
termination right under this provision. Because the price-based termination
provision is linked to the date on which necessary OTS approval is received and
because Dime currently anticipates action on its application with OTS before the
date of the Special Meeting (as described under "-- Conditions to the Merger and
Regulatory Approval"), it is currently anticipated that this price-based
termination provision will have expired before the date of the Special Meeting.
See "THE MERGER -- Price-Based Termination."
Termination Fee. NAMC has agreed to pay Dime a fee of $15,000,000 (the
"Termination Fee") if the Merger is not consummated under certain circumstances,
primarily involving the acquisition by a third party of a controlling interest
in NAMC. The Termination Fee may discourage competing offers to the Merger and
is intended to increase the likelihood that the Merger will be consummated in
accordance with the terms of the Merger Agreement. See "THE
MERGER -- Termination Fee."
Interests of Certain Persons in the Merger. Certain members of NAMC's
management and the NAMC Board may be deemed to have interests in the Merger in
addition to their interest, if any, as stockholders of NAMC generally. These
interests include, among other things, provisions in the Merger Agreement
relating to indemnification and eligibility for certain employee benefits from
the Surviving Corporation and Dime. In addition, in connection with the Merger,
NAMC has agreed to make payments to certain officers of NAMC in lieu of existing
severance benefits and in lieu of stock options that NAMC previously committed
to grant. These payments are in addition to amounts owed under the employment
and consulting agreements referred to in the following paragraph. Consummation
of the Merger also will result in certain employees of NAMC becoming eligible
for certain benefits in the event their employment is terminated and in the
accelerated vesting of employee stock options.
In addition, in anticipation of the Merger Agreement, Dime Mortgage, Inc.
("DMI") entered into letter agreements with each of Terrance G. Hodel, Harold B.
Bonnikson, Gary F. Moore and Martin S. Hughes regarding initial compensation
arrangements in respect of such executives' employment with DMI following the
Merger (each, an "Employment Letter Agreement"). Generally, the Employment
Letter Agreements provide for certain compensation (including base salary and
incentive awards) and benefits (including life, medical and other insurance
plans or programs made available by DMI to its full-time salaried employees) to
be provided during the respective initial term of each executive's employment
with DMI following the Merger. DMI also entered into a letter agreement with
John F. Farrell, Jr., regarding initial compensation and benefit arrangements in
respect of Mr. Farrell's services as a consultant to DMI following the Merger
(the "Consulting Letter Agreement"). Each Employment Letter Agreement and the
Consulting Letter Agreement will become effective, and are expressly subject to
and conditioned, upon the consummation of the Merger.
In summary, the following will be received by certain directors and
executive officers of NAMC as a result of the Merger: (1) payments from NAMC to
seven executive officers of NAMC of $5,220,532 (plus additional payments based
on bonus awards) in lieu of certain existing benefits referred to above, (2)
employment and consulting agreements between DMI and five executive officers of
NAMC providing for first-year salaries (or consulting payments) of $1,544,348
and minimum first-year bonuses of $575,000 (such arrangements are for varying
terms from less than 90 days to more than one year and provide for additional
severance compensation in certain circumstances) and (3) in accordance with the
terms of the Merger Agreement applicable to all stockholders of NAMC, the
directors and executive officers of NAMC will receive 772,327 shares of Dime
Common Stock and options for 1,402,651 shares of Dime Common Stock in exchange
for NAMC Common Stock and options for NAMC Common Stock held by them, based on
holdings as of the Record Date (such shares of Dime Common Stock, including the
shares underlying the
5
<PAGE> 12
options for Dime Common Stock, have an aggregate value of $43,499,560 based on
the last sale price of Dime Common Stock on September 11, 1997). None of the
directors and executive officers of NAMC is expected to become a director or
executive officer of Dime. See "THE MERGER -- Interests of Certain Persons in
the Merger" and "-- Treatment of Certain Stock Options."
Accounting Treatment and Federal Income Tax Consequences. For accounting
and financial reporting purposes, it is intended that the Merger will be treated
as a purchase by Dime of NAMC under generally accepted accounting principles.
For federal income tax purposes, it is intended that the Merger will be treated
as a "reorganization" within the meaning of Section 368(a) of the Internal
Revenue Code of 1986, as amended (the "Code"), and, accordingly, (1) no gain or
loss will be recognized by NAMC, Dime, Dime Bank or Merger Sub as a result of
the Merger and (2) no gain or loss will be recognized by NAMC stockholders upon
the receipt of Dime Common Stock in exchange for NAMC Common Stock, except that
NAMC stockholders may recognize gain or loss as a result of the receipt of cash
in exchange for fractional shares. The obligations of Dime and NAMC to
consummate the Merger are subject to the receipt of opinions of tax counsel to
the effect that the Merger will be treated as a reorganization within the
meaning of Section 368(a) of the Code. See "THE MERGER -- Accounting Treatment"
and "-- Certain Federal Income Tax Consequences." Opinions of tax counsel to
that effect are also included as exhibits to the Registration Statement.
Stock Exchange Listing. The shares of Dime Common Stock to be issued in
the Merger will be listed on the NYSE.
Stock Repurchase. In connection with the Merger, Dime intends to
repurchase up to 6.9 million shares of Dime Common Stock. See "THE
MERGER -- Dime Stock Repurchase."
COMPARISON OF RIGHTS OF STOCKHOLDERS
At the Effective Time, holders of NAMC Common Stock will automatically
become stockholders of Dime. The rights of stockholders of Dime are governed by
the Delaware General Corporation Law (the "DGCL") and Dime's Amended and
Restated Certificate and by-laws. Although rights of NAMC stockholders are also
governed by the DGCL, the rights of stockholders of Dime differ from the rights
of NAMC stockholders with respect to certain important matters, including
restrictions on transfer, certain regulatory limitations, amendment of the
certificate of incorporation and by-laws, classification of the Board of
Directors and stockholder proposals. For a summary of these differences, see
"COMPARISON OF RIGHTS OF STOCKHOLDERS."
6
<PAGE> 13
DIME BANCORP, INC. AND SUBSIDIARIES
SELECTED CONSOLIDATED FINANCIAL DATA
The following table sets forth, in summary form, certain financial data for
each of the years in the five-year period ended December 31, 1996 and for each
of the six-month periods ended June 30, 1997 and 1996. The selected consolidated
financial data at or for each of the years in the five-year period ended
December 31, 1996 are qualified in their entirety by the detailed information
and the consolidated financial statements of Dime and notes thereto (which have
been audited by KPMG Peat Marwick LLP, independent certified public accountants)
included, with the related auditor's report for the three-year period ended
December 31, 1996 (which refers to a change in the method of accounting for
goodwill), in documents incorporated by reference in this Proxy
Statement-Prospectus and should be read in conjunction therewith. See
"INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE." The following summary
consolidated financial data at or for the six-month periods ended June 30, 1997
and 1996 are derived from unaudited financial statements that, in the opinion of
Dime's management, include all adjustments (consisting only of normal recurring
adjustments) necessary for a fair presentation of the consolidated financial
position and results of operations for such periods. Results for the six-month
period ended June 30, 1997 are not necessarily indicative of the results
expected for the full fiscal year ending December 31, 1997.
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED
JUNE 30, FOR THE YEAR ENDED DECEMBER 31,
------------------------- -------------------------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
----------- ----------- ----------- ----------- ----------- ----------- -----------
(IN THOUSANDS, EXCEPT PER SHARE DATA AND RATIOS)
<S> <C> <C> <C> <C> <C> <C> <C>
RESULTS OF OPERATIONS DATA
Interest income............... $ 663,839 $ 676,343 $ 1,350,698 $ 1,357,131 $ 1,136,862 $ 980,111 $ 1,243,664
Interest expense.............. 427,469 447,930 889,403 947,505 707,785 589,939 753,288
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net interest income... 236,370 228,413 461,295 409,626 429,077 390,172 490,376
Provision for loan losses..... 33,000 20,750 41,000 39,650 55,799 95,489 103,684
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net interest income
after provision for
loan losses......... 203,370 207,663 420,295 369,976 373,278 294,683 386,692
----------- ----------- ----------- ----------- ----------- ----------- -----------
Non-interest income:
Banking service fees........ 14,156 13,186 27,373 22,325 19,953 19,269 18,677
Loan servicing fees, net.... 20,138 18,737 37,866 38,997 38,846 41,857 51,216
Securities and insurance
brokerage fees............ 11,818 10,307 21,064 15,532 16,885 22,336 22,111
Net gains (losses) on sales
activities................ 4,133 (1,445) (12,716) (12,415) 2,925 36,606 28,544
Other....................... 6,596 6,271 12,391 10,273 11,291 14,313 17,112
----------- ----------- ----------- ----------- ----------- ----------- -----------
Total non-interest
income.............. 56,841 47,056 85,978 74,712 89,900 134,381 137,660
----------- ----------- ----------- ----------- ----------- ----------- -----------
Non-interest expense:
General and administrative
expense................... 146,071 141,027 292,795 285,901 294,474 294,755 323,122
Savings Association
Insurance Fund
recapitalization
assessment................ -- -- 26,280 -- -- -- --
Other real estate owned
expense, net.............. 4,633 4,652 10,072 12,892 11,013 77,393 50,204
Amortization of mortgage
servicing assets.......... 10,469 10,221 19,382 20,652 20,297 31,740 45,596
Restructuring and Merger-
related expense........... -- 3,504 3,504 15,331 58,258 4,000 3,000
----------- ----------- ----------- ----------- ----------- ----------- -----------
Total non-interest
expense............. 161,173 159,404 352,033 334,776 384,042 407,888 421,922
----------- ----------- ----------- ----------- ----------- ----------- -----------
</TABLE>
7
<PAGE> 14
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED
JUNE 30, FOR THE YEAR ENDED DECEMBER 31,
1997 1996 1996 1995 1994 1993 1992
----------- ----------- ----------- ----------- ----------- ----------- -----------
(IN THOUSANDS, EXCEPT PER SHARE DATA AND RATIOS)
<S> <C> <C> <C> <C> <C> <C> <C>
Minority interest-preferred
stock dividends of
subsidiary.................. $ -- $ -- $ -- $ -- $ 11,433 $ 1,312 $ --
----------- ----------- ----------- ----------- ----------- ----------- -----------
Income before income tax
expense (benefit),
extraordinary item and
cumulative effect of a
change in accounting
principle................... 99,038 95,315 154,240 109,912 67,703 19,864 102,430
Income tax expense
(benefit)................... 38,350 39,271 49,984 47,727 (53,138) (68,959) 41,642
----------- ----------- ----------- ----------- ----------- ----------- -----------
Income before extraordinary
item and cumulative effect
of a change in accounting
principle................... 60,688 56,044 104,256 62,185 120,841 88,823 60,788
Extraordinary item-loss on
early extinguishment of
debt........................ -- -- -- -- -- -- (2,760)
Cumulative effect of a change
in accounting principle for
goodwill, securities
available for sale and
mortgage servicing assets,
respectively................ -- -- -- -- (92,887) (1,187) (7,066)
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net income.................... $ 60,688 $ 56,044 $ 104,256 $ 62,185 $ 27,954 $ 87,636 $ 50,962
=========== =========== =========== =========== =========== =========== ===========
Net income attributable to
common stock................ $ 60,688 $ 56,044 $ 104,256 $ 62,185 $ 27,954 $ 87,636 $ 39,403
=========== =========== =========== =========== =========== =========== ===========
Pro forma amounts assuming
changes in accounting
principles for goodwill and
mortgage servicing assets
were applied retroactively:
Income before extraordinary
item and cumulative effect
of a change in accounting
principle................. $ 120,841 $ 90,133 $ 52,120
Extraordinary item.......... -- -- (2,760)
Cumulative effect of a
change in accounting
principle for securities
available for sale, net of
income tax benefit........ -- (1,187) --
----------- ----------- -----------
Net income.................... $ 120,841 $ 88,946 $ 49,360
=========== =========== ===========
Net income attributable to
common stock................ $ 120,841 $ 88,946 $ 37,801
=========== =========== ===========
PRIMARY AND FULLY DILUTED
EARNINGS PER COMMON SHARE
Primary:
Income before extraordinary
item and cumulative effect
of a change in accounting
principle................. $ 0.57 $ 0.51 $ 0.96 $ 0.57 $ 1.12 $ 0.91 $ 0.89
Extraordinary item.......... -- -- -- -- -- -- (0.05)
Cumulative effect of a
change in accounting
principle................. -- -- -- -- (0.86) (0.01) (0.13)
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net income.................. $ 0.57 $ 0.51 $ 0.96 $ 0.57 $ 0.26 $ 0.90 $ 0.71
=========== =========== =========== =========== =========== =========== ===========
Fully diluted:
Income before extraordinary
item and cumulative effect
of a change in accounting
principle................. $ 0.57 $ 0.51 $ 0.95 $ 0.57 $ 1.12 $ 0.91 $ 0.89
Extraordinary item.......... -- -- -- -- -- -- (0.05)
Cumulative effect of a
change in accounting
principle................. -- -- -- -- (0.86) (0.01) (0.13)
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net income.................. $ 0.57 $ 0.51 $ 0.95 $ 0.57 $ 0.26 $ 0.90 $ 0.71
=========== =========== =========== =========== =========== =========== ===========
</TABLE>
8
<PAGE> 15
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED
JUNE 30, FOR THE YEAR ENDED DECEMBER 31,
1997 1996 1996 1995 1994 1993 1992
----------- ----------- ----------- ----------- ----------- ----------- -----------
(IN THOUSANDS, EXCEPT PER SHARE DATA AND RATIOS)
<S> <C> <C> <C> <C> <C> <C> <C>
Pro forma amounts assuming
changes in accounting
principles for goodwill and
mortgage servicing assets
were applied retroactively:
Primary and fully diluted:
Income before extraordinary
item and cumulative effect
of a change in accounting
principle................. $ 1.12 $ 0.93 $ 0.73
Extraordinary item.......... -- -- (0.05)
Cumulative effect of a
change in accounting
principle for securities
available for sale, net of
income tax benefit........ -- (0.01) --
----------- ----------- -----------
Net income.................... $ 1.12 $ 0.92 $ 0.68
=========== =========== ===========
AVERAGE COMMON SHARES
OUTSTANDING
Primary....................... 106,342 109,560 109,097 109,742 107,668 97,153 55,344
Fully diluted................. 106,397 109,709 109,249 109,862 107,700 97,367 55,386
FINANCIAL CONDITION DATA
Total assets.................. $20,087,176 $19,544,289 $18,870,108 $20,326,620 $19,647,937 $18,098,984 $16,680,405
Securities available for
sale........................ 3,166,733 3,536,119 2,589,572 4,070,865 530,714 658,204 898,279
Securities held to maturity... 4,015,006 4,555,205 4,363,971 5,085,736 8,609,897 8,159,747 6,678,036
Loans receivable.............. 11,594,123 10,179,734 10,738,057 9,830,313 9,351,622 7,906,573 7,629,100
Allowance for loan losses..... 101,026 124,902 106,495 128,295 170,383 157,515 248,429
Deposits...................... 13,335,199 12,661,587 12,856,739 12,572,203 12,811,269 11,091,362 13,039,885
Borrowed funds................ 5,500,284 5,730,021 4,815,191 6,614,552 5,758,734 5,850,575 2,888,269
Stockholders' equity.......... 1,059,288 992,368 1,022,337 976,530 905,125 904,982 635,843
ASSET QUALITY
Non-performing assets......... $ 127,078 $ 296,267 $ 244,845 $ 315,800 $ 415,866 $ 641,743 $ 1,010,877
Non-performing assets to total
assets...................... 0.63% 1.52% 1.30% 1.55% 2.12% 3.55% 6.06%
Non-accrual loans to loans
receivable.................. 0.89 2.40 1.78 2.60 3.66 3.68 10.19
Allowance for loan losses to
loans receivable............ 0.87 1.23 0.99 1.31 1.82 1.99 3.26
Allowance for loan losses to
non-accrual loans........... 97.95 51.10 55.58 50.29 49.84 54.14 31.97
OTHER DATA
Book value per common
share(1).................... $ 10.21 $ 9.33 $ 9.76 $ 9.03 $ 8.43 $ 8.48 $ 8.79
Tangible book value per common
share(1).................... 9.74 9.24 9.67 8.94 8.39 7.59 6.81
Net interest margin for the
period...................... 2.52% 2.37% 2.40% 2.07% 2.36% 2.47% 2.91%
Return on average assets(2)... 0.62 0.56 0.52 0.30 0.15 0.53 0.29
Return on average
stockholders' equity(2)..... 11.66 11.32 10.36 6.56 3.25 11.02 8.21
Average stockholders' equity
to average assets........... 5.35 4.95 5.05 4.62 4.57 4.82 3.52
Stockholders' equity to total
assets...................... 5.27 5.08 5.42 4.80 4.61 5.00 3.81
Loans serviced for others..... $10,819,061 $ 9,216,144 $11,036,624 $ 9,514,560 $ 8,713,047 $ 8,265,354 $ 9,039,183
</TABLE>
- ---------------
(1) For 1995, 1994 and 1993, the computation assumes the exercise of a warrant
issued to the Federal Deposit Insurance Corporation in July 1993 to acquire
8.4 million shares of Dime Common Stock at $0.01 per share. This warrant was
actually exercised in May 1996.
(2) Ratios for the six months ended June 30, 1997 and 1996 have been annualized.
9
<PAGE> 16
NORTH AMERICAN MORTGAGE COMPANY AND SUBSIDIARIES
SELECTED CONSOLIDATED FINANCIAL DATA
The following table sets forth, in summary form, certain financial data for
each of the years in the five-year period ended December 31, 1996 and for each
of the six-month periods ended June 30, 1997 and 1996. The selected consolidated
financial data at or for each of the years in the five-year period ended
December 31, 1996 are qualified in their entirety by the consolidated financial
statements of NAMC and notes thereto (which have been audited by Ernst & Young
LLP, independent certified public accountants) included, with the related
auditor's report for the three-year period ended December 31, 1996, in documents
incorporated by reference in this Proxy Statement-Prospectus and should be read
in conjunction therewith. See "INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE."
The following summary consolidated financial data at or for the six-month period
ended June 30, 1997 and 1996 are derived from unaudited financial statements
that, in the opinion of NAMC's management, include all adjustments (consisting
only of normal recurring adjustments) necessary for a fair presentation of the
consolidated financial position and results of operations for such periods.
Results for the six-month period ended June 30, 1997 are not necessarily
indicative of the results expected for the full fiscal year ending December 31,
1997.
<TABLE>
<CAPTION>
AT OR FOR THE SIX MONTHS
ENDED JUNE 30, AT OR FOR THE YEAR ENDED DECEMBER 31,
------------------------ --------------------------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
-------- -------- -------- -------- -------- ---------- ----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
RESULTS OF OPERATIONS
DATA
Revenues:
Loan administration
fees, net........... $ 23,193 $ 23,729 $ 47,900 $ 46,508 $ 51,204 $ 41,210 $ 29,122
Loan origination
fees................ 45,040 40,879 84,605 69,282 75,140 125,807 80,860
Gain (loss) from sales
of loans............ 56,237 48,971 101,153 81,652 (14,951) 37,912 26,508
Net interest income... 13,765 13,620 28,680 27,534 29,491 30,021 24,425
Gain from sales of
servicing........... 21,590 15,487 37,634 46,037 120,739 88,821 52,102
Other................. 6,506 4,449 9,441 8,445 7,172 7,594 6,279
-------- -------- -------- -------- -------- -------- --------
Total
revenues...... 166,331 147,135 309,413 279,458 268,795 331,365 219,296
-------- -------- -------- -------- -------- -------- --------
Expenses:
Amortization and
impairment of
purchased and
originated
servicing........... 10,963 3,200 13,082 11,988 1,595 7,498 8,607
Other expenses........ 131,302 117,036 241,349 203,753 255,963 250,435 163,233
-------- -------- -------- -------- -------- -------- --------
Total
expenses...... 142,265 120,236 254,431 215,741 257,558 257,933 171,840
-------- -------- -------- -------- -------- -------- --------
Income before income tax
expense............... 24,066 26,899 54,982 63,717 11,237 73,432 47,456
Income tax expense...... 9,754 10,768 22,029 23,262 3,055 25,738 7,290
Net income.............. $ 14,312 $ 16,131 $ 32,953 $ 40,455 $ 8,182 $ 47,694 $ 40,166
Net income per share
(1)................... $ 1.02 $ 1.10 $ 2.30 $ 2.69 $ .53 $ 3.17
Dividends per share..... $ 0.12 $ 0.12 $ .24 $ .24 $ .24 $ .21 $ .05
SUPPLEMENTAL PRO FORMA
INFORMATION(2)
Supplemental pro forma
net income............ $ 32,456
Supplemental pro forma
net income per
share................. $ 2.37
Weighted average shares
outstanding(3)........ 14,040 14,676 14,317 15,039 15,480 15,035 13,704
</TABLE>
10
<PAGE> 17
<TABLE>
<CAPTION>
AT OR FOR THE SIX MONTHS
ENDED JUNE 30, AT OR FOR THE YEAR ENDED DECEMBER 31,
1997 1996 1996 1995 1994 1993 1992
-------- -------- -------- -------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
FINANCIAL CONDITION DATA
Total assets............ $863,559 $792,477 $853,657 $746,368 $765,374 $1,627,843 $1,020,560
Term loans.............. -- -- -- -- -- -- 16,388
Purchase money notes.... -- -- -- -- 10,580 12,091 13,473
Notes payable........... 75,758 74,838 75,724 74,801 99,699 99,592 --
Subordinated debt....... 10,070 10,070 10,070 10,070 10,070 10,070 9,967
Total liabilities....... 648,922 605,587 650,256 553,224 612,269 1,462,463 945,117
Stockholders'
equity/partners
capital............... 214,637 186,890 203,401 193,144 153,105 165,380 75,443
SELECTED OPERATING DATA
(IN MILLIONS)
Volume of loans
originated............ $ 4,401 $ 4,942 $ 9,473 $ 7,495 $ 9,755 $ 17,607 $ 11,789
Loan servicing portfolio
at end of period...... 12,728 13,836 13,293 14,109 14,839 17,280 11,813
</TABLE>
- ---------------
(1) Results for the years ended December 31, 1996 and 1995 are not directly
comparable to results for 1994 and prior years due to the adoption of
Statement of Financial "Accounting Standards No. 122, Accounting for
Mortgage Servicing Rights."
(2) Supplemental pro forma net income is computed by adjusting revenues and
expenses for interest savings from the net proceeds of NAMC's initial public
offering, additional operating expenses caused by the corporate structure
and income taxes on adjusted net income that would have been payable had
NAMC purchased IMCO Realty Services, a California limited partnership, at
the beginning of the first period presented in NAMC's Registration Statement
related to its initial public offering. Supplemental pro forma net income is
then computed on the basis of the weighted average number of shares that
would have been outstanding during the year.
(3) 1992 is pro forma.
11
<PAGE> 18
DIME BANCORP, INC. AND SUBSIDIARIES
AND
NORTH AMERICAN MORTGAGE COMPANY AND SUBSIDIARIES
UNAUDITED PRO FORMA COMBINED SELECTED FINANCIAL DATA
The following table sets forth, in summary form, certain unaudited pro
forma combined financial data giving effect to the Merger, which will be
accounted for as a purchase, and to the pro forma adjustments described in the
Notes to the Unaudited Pro Forma Combined Financial Statements. For a
description of the purchase method of accounting, see "THE MERGER -- Anticipated
Accounting Treatment." This information should be read in conjunction with the
historical consolidated financial statements of Dime and NAMC, including the
respective notes thereto, which are incorporated by reference in this Proxy
Statement-Prospectus, and in conjunction with the consolidated historical
financial data for NAMC and Dime and the other pro forma information, including
the notes thereto, appearing elsewhere in this Proxy Statement-Prospectus. Pro
forma information does not include the proposed repurchase by Dime of up to 6.9
million shares of Dime Common Stock. See "INCORPORATION OF CERTAIN DOCUMENTS BY
REFERENCE," "UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION" and "THE
MERGER -- Dime Stock Repurchase." The pro forma financial data are not
necessarily indicative of the future position or future results of operations of
the combined companies or of the financial position or the results of operations
of the combined companies that would have actually occurred had the Merger been
consummated at the dates specified.
<TABLE>
<CAPTION>
PRO FORMA COMBINED
-----------------------------------------------
FOR THE SIX MONTHS FOR THE YEAR ENDED
ENDED JUNE 30, 1997 DECEMBER 31, 1996
--------------------- -------------------
(IN THOUSANDS, EXCEPT PER SHARE DATA AND
RATIOS)
<S> <C> <C>
RESULTS OF OPERATIONS DATA:
Net interest income................................... $ 246,915 $ 483,506
Provision for loan losses............................. 33,000 41,000
Non-interest income................................... 207,693 363,754
Non-interest expense.................................. 304,382 608,868
Income tax expense.................................... 47,198 69,953
-------- --------
Net income............................................ $ 70,028 $ 127,439
======== ========
Primary earnings per common share..................... $ 0.56 $ 0.99
Fully diluted earnings per common share............... 0.56 0.99
AVERAGE COMMON SHARES OUTSTANDING:
Primary............................................. 125,814 128,558
Fully diluted....................................... 125,998 128,711
</TABLE>
12
<PAGE> 19
<TABLE>
<CAPTION>
PRO FORMA COMBINED
AT JUNE 30, 1997(1)
----------------------------
(IN THOUSANDS, EXCEPT PER
SHARE DATA AND RATIOS)
<S> <C>
FINANCIAL CONDITION DATA
Total assets......................................................... $ 21,082,673
Loans held for sale.................................................. 794,749
Securities available for sale........................................ 3,166,733
Securities held to maturity.......................................... 4,015,006
Loans receivable..................................................... 11,594,123
Allowance for loan losses............................................ (101,026)
Deposits............................................................. 13,335,199
Securities sold under agreements to repurchase....................... 4,265,905
Guaranteed preferred beneficial interests in Dime's junior
subordinated deferrable interest debentures........................ 196,477
Other borrowed funds................................................. 1,610,397
Stockholders' equity................................................. 1,399,663
OTHER DATA
Book value per common share.......................................... $ 11.44
Stockholders' equity to total assets................................. 6.64%
Loans serviced for others............................................ $ 23,547,084
</TABLE>
- ---------------
(1) Includes assets and liabilities of BFS Bankorp, which was acquired on April
30, 1997.
13
<PAGE> 20
COMPARATIVE UNAUDITED PER SHARE DATA
The following table sets forth certain historical, pro forma and pro forma
equivalent per share information with respect to Dime Common Stock and NAMC
Common Stock. The pro forma data do not purport to be indicative of the results
of future operations or the results that would have occurred had the Merger been
consummated at the beginning of the periods indicated. The information set forth
below should be read in conjunction with, and is qualified in its entirety by,
the respective historical financial statements of Dime and NAMC incorporated by
reference, and the pro forma combined statements and accompanying discussion and
notes contained, in this Proxy Statement-Prospectus. See "INCORPORATION OF
CERTAIN DOCUMENTS BY REFERENCE" and "UNAUDITED PRO FORMA COMBINED FINANCIAL
INFORMATION."
<TABLE>
<CAPTION>
HISTORICAL NAMC
----------------- PRO FORMA PRO FORMA
PER COMMON SHARE DIME NAMC COMBINED EQUIVALENT(1)
- -------------------------------------------------- ------ ------ --------- -------------
<S> <C> <C> <C> <C>
Net income:
Primary:
Year ended December 31, 1996................. $ 0.96 $ 2.30 $ 0.99 $ 1.36
Six months ended June 30, 1997............... 0.57 1.02 0.56 0.77
Fully diluted:
Year ended December 31, 1996................. $ 0.95 $ 2.30 $ 0.99 $ 1.36
Six months ended June 30, 1997............... 0.57 1.02 0.56 0.77
Cash dividends declared:
Year ended December 31, 1996................. $ -- $ 0.24 $ --(2) $ --
Six months ended June 30, 1997(3)............ 0.04 0.12 0.04(2) 0.05
Book value:
At December 31, 1996......................... $ 9.76 $14.45 N/A N/A
At June 30, 1997............................. 10.21 15.33 $ 11.44 $ 15.67
</TABLE>
- ---------------
(1) NAMC pro forma equivalent per share amounts were computed by multiplying the
pro forma combined amounts by the Exchange Ratio.
(2) Pro forma cash dividends represent historical dividends of Dime.
(3) On July 24, 1997, Dime declared a cash dividend of $0.04 per common share,
which is payable on September 8, 1997 to stockholders of record as of the
close of business on August 14, 1997.
14
<PAGE> 21
MARKET PRICE DATA
Dime Common Stock and NAMC Common Stock are listed on the NYSE (symbols
"DME" and "NAC", respectively). The following table presents, for the periods
indicated, the per share high and low last sale prices for Dime Common Stock and
NAMC Common Stock, as reported on the NYSE Composite Transactions reporting
system.
<TABLE>
<CAPTION>
DIME COMMON STOCK NAMC COMMON STOCK
-------------------- --------------------
CALENDAR PERIOD HIGH LOW HIGH LOW
- --------------------------------------- ---- --- ---- ---
<S> <C> <C> <C> <C>
1995:
First Quarter........................ $ 9 $ 7 5/8 $18 $14 5/8
Second Quarter....................... 10 3/8 8 3/4 25 5/8 17 3/8
Third Quarter........................ 12 1/4 10 1/8 26 20 5/8
Fourth Quarter....................... 11 7/8 10 3/8 25 1/4 20 3/8
1996:
First Quarter........................ 12 3/8 10 7/8 26 1/4 19 3/4
Second Quarter....................... 13 1/4 11 1/2 20 3/4 15 3/4
Third Quarter........................ 13 3/4 11 3/4 19 15
Fourth Quarter....................... 16 1/2 14 1/4 23 18 5/8
1997:
First Quarter........................ 17 7/8 14 5/8 21 7/8 18 1/2
Second Quarter....................... 19 14 7/8 24 3/8 17 5/8
Third Quarter (through September 11,
1997)............................. 20 1/4 17 27 7/16 22 3/4
</TABLE>
The following table sets forth the last reported sales price of Dime Common
Stock, the last reported sales price of NAMC Common Stock and the equivalent
price per share of NAMC Common Stock giving effect to the Merger on (1) June 20,
1997, the last trading day before the announcement of the Merger Agreement, and
(2) on September 11, 1997, the last practicable trading day before the printing
of this Proxy Statement-Prospectus.
<TABLE>
<CAPTION>
DIME NAMC NAMC PRO FORMA
MARKET PRICE AS OF COMMON STOCK COMMON STOCK EQUIVALENT(1)
- --------------------------------------- ------------ ------------ --------------
<S> <C> <C> <C>
June 20, 1997.......................... $ 19 $ 23 1/4 $ 26
September 11, 1997..................... $ 20 $ 27 5/16 $27.40
</TABLE>
- ---------------
(1) The pro forma equivalent per share market price of NAMC Common Stock on a
given date represents the market price of Dime Common Stock on such date
multiplied by the Exchange Ratio.
Except as discussed under "THE MERGER -- Price-Based Termination" and in
certain other limited circumstances, the Exchange Ratio is fixed. Because the
market price of Dime Common Stock is subject to fluctuation, NAMC stockholders
are not assured of receiving any specific market value of Dime Common Stock at
the Effective Time, and the market price of Dime Common Stock at such time may
be higher or lower than the market price at the time the Merger Agreement was
executed, at the date of mailing of this Proxy Statement-Prospectus or at the
time of the Special Meeting. NAMC stockholders are advised to obtain current
market quotations for shares of Dime Common Stock and NAMC Common Stock.
15
<PAGE> 22
RISK FACTORS
NAMC stockholders should carefully consider the following risk factors, in
addition to the other information included in this Proxy Statement-Prospectus,
when evaluating Dime and its business in connection with their vote on adoption
of the Merger Agreement.
GENERAL BUSINESS RISKS
Dime's business is subject to various material business risks. For example,
changes in prevailing interest rates can have significant effects on Dime's
business. Some of the risks to which Dime's business is subject may become more
acute in periods of economic slowdown or recession. Such conditions could lead
to a potential decline in demand for Dime's loan origination services. In
addition, during such periods foreclosures generally increase and could result
in an increased incidence of claims and legal actions against Dime.
INTEREST RATE RISK
Dime realizes its income primarily from the differential or "spread"
between the interest earned on loans and investments and the interest paid on
deposits and borrowings. Net interest spreads are affected by the difference
between the maturities and the repricing characteristics of interest-earning
assets and interest-bearing liabilities. As is typical of most thrift
institutions, Dime's interest-bearing liabilities reprice or mature, on the
average, sooner than its interest-earning assets. Additionally, the
characteristics of many of Dime's interest-earning assets (such as prepayment
options, interest rate caps and similar features) are sensitive to changes in
the level of interest rates. Although Dime utilizes a variety of techniques in
an effort to manage its interest rate risk, Dime remains subject to a
significant level of interest rate risk. In addition, changes in the
relationship between long-term and short-term interest rates (the "yield curve
slope or shape") can adversely impact Dime's net interest spread and net
interest income. Further, as a result of the Merger, the level of Dime's
mortgage servicing assets is anticipated to increase substantially. Declining
interest rates generally result in increased prepayments of the loans underlying
such assets, which could result in the loss of net future servicing revenues
and, accordingly, a decline in the value of Dime's mortgage servicing assets.
COMPETITION
Dime experiences substantial competition both in attracting and retaining
deposits and in making loans. Its most direct competition for deposits
historically has come from other thrift institutions and commercial banks doing
business in the greater New York metropolitan area. However, as with all banking
organizations, Dime has experienced increasing competition from nonbanking
sources. For example, Dime faces competition for funds from non-bank investment
alternatives, such as money market mutual fund shares and corporate and
governmental debt securities, among others. Dime's competition for loans comes
principally from other thrift institutions, commercial banks, mortgage banking
companies, consumer finance companies, insurance companies and other
institutional lenders. A number of institutions with which Dime competes for
deposits and loans have significantly greater resources, including assets and
capital, than Dime.
REGULATION
Each of Dime, as a savings and loan holding company, and Dime Bank, as a
federal savings bank, is subject to significant regulation, which has materially
affected their businesses as well as the businesses of other banking
organizations in the past and is likely to do so in the future. Statutes and
regulations now affecting Dime and Dime Bank may be changed at any time, and the
interpretation of these statutes and regulations by examining authorities is
also subject to change. There can be no assurance that future changes in the
regulations or in their interpretation will not adversely affect the business of
Dime or Dime Bank. As a savings and loan holding company, Dime is subject to
regulation and examination by the OTS. As a federal saving association, Dime
Bank is subject to examination from time to time by the OTS, its primary
regulator, and the Federal Deposit Insurance Corporation (the "FDIC"), as
administrator of the Banking Insurance Fund (the "BIF") and the Savings
Association Insurance Fund (the "SAIF"). There can be no assurance that the OTS
or the FDIC may not, as a result of such
16
<PAGE> 23
examination or otherwise, impose various requirements or regulatory sanctions
upon Dime Bank or Dime. See "CERTAIN REGULATORY CONSIDERATIONS."
ELIMINATION OF THE THRIFT CHARTER
Members of Congress have expressed their intention to consider legislation
in 1997 that generally would require federal savings associations, such as Dime
Bank, to convert to a national bank charter (or a state charter). It is
uncertain to what extent, if at all, the existing branch and investment powers
of federal savings associations, such as Dime Bank, that are impermissible for
national banks, would be grandfathered. In addition, the proposals express the
intent that savings and loan holding companies, such as Dime, should convert to
bank holding companies. It is also uncertain to what extent, if at all, the
existing powers of savings and loan holding companies that are impermissible for
bank holding companies would be grandfathered. Consequently, it is impossible at
this time to evaluate the ultimate form any legislation might take or what the
effect upon Dime might be.
THE SPECIAL MEETING
DATE, TIME, PLACE AND PURPOSE
This Proxy Statement-Prospectus is being furnished to holders of NAMC
Common Stock in connection with the solicitation of proxies by the Board of
Directors of NAMC (the "NAMC Board") for use at the Special Meeting (which
includes any adjournments or postponements). The Special Meeting is scheduled to
be held on October 13, 1997 at 10:00 a.m. (local time), at the New York Hilton
and Towers, Morgan Suite, 1335 Avenue of the Americas, New York, New York 10019.
At the Special Meeting, the holders of record of NAMC Common Stock will
consider and vote upon a proposal to adopt the Merger Agreement, pursuant to
which Dime will acquire NAMC by means of the Merger.
THE NAMC BOARD HAS UNANIMOUSLY APPROVED THE MERGER AGREEMENT AND DETERMINED
THAT IT IS IN THE BEST INTERESTS OF NAMC AND ITS STOCKHOLDERS AND UNANIMOUSLY
RECOMMENDS A VOTE "FOR" THE ADOPTION OF THE MERGER AGREEMENT.
RECORD DATE AND SHARES ENTITLED TO VOTE
The NAMC Board has fixed the close of business on September 8, 1997 as the
record date (such date and time, the "Record Date") for the determination of
NAMC stockholders entitled to notice of and to vote at the Special Meeting and
only holders of record of NAMC Common Stock on the Record Date shall be entitled
to vote at the Special Meeting. On the Record Date, there were 14,039,575 shares
of NAMC Common Stock issued and outstanding and held by approximately 803
holders of record.
VOTE REQUIRED
Each record holder of NAMC Common Stock on the Record Date is entitled to
one vote per share, exercisable in person or by properly executed proxy, on all
matters to be presented at the Special Meeting. The presence, in person or by
proxy, of the holders of a majority of shares of NAMC Common Stock outstanding
and entitled to vote at the Special Meeting is necessary to constitute a quorum
at the Special Meeting. For this purpose, abstentions and broker non-votes will
be counted in determining the shares present at the Special Meeting.
Adoption of the Merger Agreement requires the affirmative vote of the
holders of a majority of the shares of NAMC Common Stock outstanding and
entitled to vote thereon. In determining whether the proposal to adopt the
Merger Agreement has received the requisite number of affirmative votes,
abstentions and broker non-votes will have the same effect as a vote AGAINST
adoption of the Merger Agreement.
BECAUSE THE VOTE OF NAMC STOCKHOLDERS REQUIRED IN ORDER TO ADOPT THE MERGER
AGREEMENT IS BASED UPON THE NUMBER OF OUTSTANDING SHARES OF NAMC COMMON STOCK,
AND NOT ONLY THOSE SHARES THAT ARE
17
<PAGE> 24
ACTUALLY VOTED, THE FAILURE BY ANY NAMC STOCKHOLDER (OR A BROKER WHO HAS BEEN
INSTRUCTED TO VOTE SHARES OF NAMC COMMON STOCK) TO SUBMIT A PROXY CARD (OR VOTE
IN PERSON AT THE SPECIAL MEETING) WILL HAVE THE SAME EFFECT AS A VOTE AGAINST
ADOPTION OF THE MERGER AGREEMENT.
OWNERSHIP BY DIRECTORS AND EXECUTIVE OFFICERS
As of the Record Date, the directors and executive officers of NAMC and
their affiliates beneficially owned, in the aggregate, 1,464,405 shares of NAMC
Common Stock (including 900,663 shares which could be acquired upon the exercise
of presently exercisable options), representing approximately 10.4% of such
shares outstanding. The directors and executive officers of NAMC have indicated
that they intend to vote the shares of NAMC Common Stock held by them for the
adoption of the Merger Agreement. The directors and executive officers of Dime
and their affiliates beneficially owned, as of the Record Date, no shares of
NAMC Common Stock.
PROXIES
Each copy of this Proxy Statement-Prospectus mailed to NAMC stockholders is
accompanied by a proxy card furnished in connection with the NAMC Board's
solicitation of proxies for use at the Special Meeting.
NAMC STOCKHOLDERS SHOULD NOT SEND ANY STOCK CERTIFICATES WITH THEIR PROXY
CARDS.
All shares of NAMC Common Stock that are entitled to vote and are
represented at the Special Meeting by properly executed proxies received prior
to or at such meeting, and not duly revoked, will be voted at the Special
Meeting in accordance with the instructions indicated on such proxies. Proxies
that do not contain voting instructions will be voted FOR the adoption of the
Merger Agreement.
If any other matters are properly presented for consideration at the
Special Meeting, including consideration of a motion to adjourn or postpone the
Special Meeting to another time and/or place (which may be for the purpose of
soliciting additional proxies or otherwise), the persons named in the enclosed
proxy cards and acting thereunder will have discretion to vote on such matters
in accordance with their best judgment; provided, however, that no proxy that is
voted against the proposal to adopt the Merger Agreement will be voted in favor
of any adjournment or postponement of the Special Meeting. NAMC has no knowledge
of any matters to be presented at the Special Meeting other than those matters
described in this Proxy Statement-Prospectus.
A grant of a proxy on the enclosed proxy card does not preclude a NAMC
stockholder from voting in person at the Special Meeting. A NAMC stockholder may
revoke a proxy at any time prior to its exercise (1) by attending the Special
Meeting and voting in person or (2) submitting to the Secretary of NAMC a duly
executed revocation or proxy bearing a later date, provided that such revocation
or proxy is actually received by the Secretary before the taking of the vote at
the Special Meeting. Attendance in person at the Special Meeting will not of
itself constitute revocation of a proxy. In addition, NAMC stockholders whose
shares of NAMC Common Stock are not registered in their own name will need
additional documentation from the record holder of such shares to vote
personally at the Special Meeting. Any written notice of revocation or
subsequent proxy should be sent so as to be delivered to North American Mortgage
Company, 3883 Airway Drive, Santa Rosa, California 95403, Attention: Secretary.
If fewer shares of NAMC Common Stock are voted in favor of the adoption of
the Merger Agreement than the number required for adoption, it is expected that
the Special Meeting will be adjourned or postponed in order to allow additional
time for obtaining proxies or votes. At any subsequent reconvening of the
Special Meeting, all proxies obtained prior to such adjournment or postponement
will be voted in such manner as such proxies would have been voted at the
original convening of the Special Meeting (except for any proxies that shall
have been theretofore effectively revoked or withdrawn), notwithstanding that
they may have been effectively voted on the same or any other matter at a
previous meeting.
The cost of soliciting proxies from holders of record of NAMC Common Stock
will be borne by NAMC, except that each of NAMC and Dime will bear equally the
cost of printing this Proxy Statement-Prospectus and Commission registration
fees related to the Registration Statement. In addition to solicitation by mail,
the
18
<PAGE> 25
directors, officers and employees of NAMC and its subsidiaries may solicit
proxies from NAMC stockholders in person or by telephone, telegram or other
means of communication. Such directors, officers and employees will not receive
additional compensation but may be reimbursed by NAMC for reasonable
out-of-pocket expenses in connection with any such solicitation. Arrangements
will also be made with brokerage houses and other custodians, nominees and
fiduciaries for the forwarding of solicitation material to the beneficial owners
of NAMC Common Stock held of record by such persons, and NAMC will reimburse
such custodians, nominees and fiduciaries for their reasonable out-of-pocket
expenses in connection therewith.
NAMC has retained Morrow & Co., Inc. ("Morrow") to assist in the
solicitation of proxies from NAMC stockholders in connection with the Special
Meeting. Pursuant to NAMC's agreement with Morrow, Morrow will provide various
proxy advisory and solicitation services for NAMC in connection with the Special
Meeting at a cost of approximately $10,000, plus reasonable out-of-pocket
expenses. Any questions or requests for assistance regarding NAMC's proxies and
related materials may be directed in writing to Gerald Mucha, 909 Third Avenue,
20th Floor, New York, New York 10022, or by telephone (toll free) at (800)
662-5200.
NO APPRAISAL RIGHTS
No NAMC stockholder will have any rights of appraisal under the Delaware
General Corporation Law (the "DGCL") in connection with, or as a result of, the
matters to be acted upon at the Special Meeting.
THE MERGER
The following section reviews the material aspects of the Merger and the
Merger Agreement. It is not intended to be complete and, to the extent it
relates to matters contained in the Merger Agreement or the Morgan Stanley
Opinion (as defined below), it is qualified in its entirety by reference to the
full text of those documents, copies of which are included as Appendices A and B
to this Proxy Statement-Prospectus, respectively, and which are incorporated
herein by reference. NAMC STOCKHOLDERS ARE URGED TO READ THE MERGER AGREEMENT
AND THE MORGAN STANLEY OPINION CAREFULLY.
EFFECTS OF THE MERGER; EXCHANGE RATIO
At the effective time of the Merger (the "Effective Time"), Merger Sub will
merge with and into NAMC, with NAMC surviving the Merger as a wholly owned
subsidiary of Dime Bank (NAMC, as the surviving corporation in the Merger, is
sometimes referred to in this Proxy Statement-Prospectus as the "Surviving
Corporation").
At the Effective Time, except as described in the following two paragraphs,
each share of NAMC Common Stock issued and outstanding immediately prior to the
Effective Time, together with attached NAMC Rights, will be converted into 1.37
shares (as such number may be adjusted in accordance with the Merger Agreement,
as described below, the "Exchange Ratio") of Dime Common Stock, together with
attached Dime Rights.
Any shares of NAMC Common Stock held by NAMC as treasury stock and any
shares of $0.20 Series A Convertible Preferred Stock of NAMC that are otherwise
held by NAMC or its subsidiaries will be canceled and retired, and no
consideration will be issued in exchange therefor.
No fractional shares of Dime Common Stock will be issued in connection with
the Merger, and cash will be paid in lieu of fractional shares that would
otherwise be issuable in the Merger. The amount of such cash payment will be
determined by multiplying the fraction of a share of Dime Common Stock to which
the holder is entitled (after taking into account all certificates representing
NAMC Common Stock delivered by such holder in accordance with the procedures
described in "-- Exchange Procedures") by the "Average Price" of a share of Dime
Common Stock, which will be the average of the last sale prices thereof as
reported on the NYSE Composite Transactions Reporting System during the 5
trading days immediately preceding the date on which the Effective Time occurs.
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The Exchange Ratio was arrived at through arm's-length negotiations between
NAMC and Dime. See "-- Background of the Merger" and "-- Reasons for the
Merger." The Exchange Ratio may be adjusted (1) upward or downward if Dime takes
certain actions affecting its capitalization or (2) upward as described in
"-- Price-Based Termination." If the Exchange Ratio is adjusted before the
Special Meeting is held, Dime and NAMC will, if appropriate, amend the
Registration Statement and provide NAMC stockholders with supplemental
prospectus/proxy materials. In determining if amending the Registration
Statement is appropriate, Dime and NAMC will consider whether the effect of the
adjustment would be material to NAMC stockholders in voting on the adoption of
the Merger Agreement. For certain information concerning the market price per
share of Dime Common Stock and NAMC Common Stock, see "MARKET PRICE DATA."
BACKGROUND OF THE MERGER
In the third quarter of 1994, NAMC retained Morgan Stanley as its financial
advisor to consider strategic alternatives for the enhancement of stockholder
value. Morgan Stanley, on behalf of NAMC, contacted a number of major financial
institutions about their interest in a possible acquisition of NAMC. Although
NAMC had discussions with several parties, in October 1994, NAMC announced by
means of a press release that it had not received any proposals that it believed
were in the best interests of NAMC stockholders and that it planned to continue
to grow its business and to provide enhanced value to its stockholders as an
independent entity. The determination to continue to grow NAMC as an independent
entity was made by the NAMC Board in the exercise of its fiduciary duties and
was based on the NAMC Board's belief that pursuing such course at that time was
in the best interests of NAMC and its stockholders. Thereafter, the NAMC Board
and senior management, together with Morgan Stanley, continued to explore
strategic alternatives for NAMC.
On April 18, 1997, Salomon Brothers Inc, on behalf of Dime, contacted John
F. Farrell, Jr., NAMC's Chairman and Chief Executive Officer, and indicated that
a thrift institution was interested in exploring a possible business combination
with NAMC. During the week of May 5, 1997, representatives of Dime met with
representatives of NAMC and expressed preliminary interest in a possible
combination of Dime and NAMC. On May 14, 1997, Dime and NAMC executed a
customary confidentiality and standstill agreement with respect to the exchange
of nonpublic information between the companies and certain other matters and
Dime commenced a due diligence review of NAMC, which included a series of
meetings among senior management of both parties.
On May 23, 1997, after reviewing the possibility of the acquisition with
the Strategic Planning Committee of its Board of Directors (consisting of
Derrick D. Cephas, Frederick C. Chen, J. Barclay Collins, II, Margaret G.
Osmer-McQuade, Howard Smith, Ira T. Wender and Lawrence J. Toal), Dime submitted
a preliminary indication of interest for the acquisition by Dime of all of the
shares of NAMC Common Stock. Dime indicated a preliminary value range of $24.00
to $26.00 per share of NAMC Common Stock. Following NAMC's receipt of Dime's
preliminary indication of interest, representatives of Dime and NAMC, together
with their respective financial advisors, met in late May 1997 at NAMC's
headquarters in Santa Rosa to discuss Dime's preliminary indication of interest.
During the period from June 7 through June 17, 1997, representatives of
Dime, together with its legal and financial advisors, conducted a due diligence
review of NAMC's business, operations and financial condition. During the same
period, representatives of NAMC, together with its legal and financial advisors
similarly conducted a due diligence review of Dime's business, operations and
financial condition.
While the companies were conducting their respective due diligence
investigations and up through the announcement of the Merger on June 22, 1997,
representatives of NAMC and Dime and their respective financial advisors and
legal counsel were in frequent contact to negotiate the terms of the definitive
agreements for the Merger and the related transactions, the terms of which are
described elsewhere in this Proxy Statement-Prospectus under "THE MERGER."
On June 18, 1997, the NAMC Board met to consider the proposed transaction.
At the meeting, the NAMC Board reviewed the terms of the proposed transaction
and the provisions contained in the draft of the Merger
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Agreement, and the other related agreements, that were being negotiated with
Dime and its advisors. The NAMC Board also received the financial analysis and
advice of Morgan Stanley and Morgan Stanley's views on the fairness of Dime's
proposed exchange ratio to the holders of NAMC Common Stock. NAMC's legal
counsel and auditors made presentations and reviewed with the NAMC Board the
current terms contained in the draft agreements. In addition to discussing these
terms, the presentation by legal counsel included a discussion of the fiduciary
duties of the NAMC Board and the presentation by auditors included a discussion
of certain transaction structures that could be used and the accounting methods
in connection therewith. After discussion, the NAMC Board directed Mr. Farrell
to continue discussions with Mr. Toal in respect of the remaining issues in the
draft agreements that were not yet resolved.
On June 18, 1997, the Strategic Planning Committee of the Board of
Directors of Dime (the "Dime Board") and, on June 19, 1997, the Dime Board met
to consider the proposed transaction. At the meetings, the terms of the proposed
transaction and the provisions contained in the draft of the Merger Agreement,
and the other related agreements, were reviewed. At those meetings, the
Strategic Planning Committee and the Dime Board also received the financial
analysis and advice of Salomon Brothers Inc. and BT Securities Corporation and
the legal advice of Dime's outside counsel regarding the current terms contained
in the draft agreements. After discussion, both the Committee and the Dime Board
directed Mr. Toal to continue discussions with Mr. Farrell, in respect of the
remaining issues in the draft agreements that were not yet resolved.
Following the Board meetings, Messrs. Farrell and Toal, and their
respective legal and financial advisors, had a number of discussions and
negotiations resulting in the resolution of the remaining significant issues and
a revised proposal from Dime.
On June 22, 1997, the NAMC Board met to consider the further negotiations
of the proposed merger transaction. Members of NAMC's senior management, NAMC's
legal counsel and its financial advisors updated the NAMC Board on the results
of the negotiations that occurred since the June 18 meeting of the NAMC Board.
At the meeting, Morgan Stanley rendered its oral opinion, confirmed by a
subsequent written opinion dated June 22, 1997 that, as of such date, and based
on and subject to certain matters stated therein, the Exchange Ratio was fair
from a financial point of view to stockholders of NAMC. After discussion and
consideration, the NAMC Board voted unanimously to approve the Merger, the
Merger Agreement and all of the related transactions.
On June 22, 1997, the Dime Board met to consider the further negotiations
of the proposed merger transaction. Members of Dime's senior management, Dime's
legal counsel and its financial advisors updated the Dime Board on the results
of the negotiations that occurred since the June 19 meeting of the Dime Board.
After discussion and consideration, the Dime Board voted unanimously to approve
the Merger, the Merger Agreement and all of the related transactions.
The Merger Agreement and other related transaction documents were then
executed and delivered by each of Dime and NAMC, and on June 23, 1997, the
Merger was publicly announced jointly by Dime and NAMC.
REASONS FOR THE MERGER
NAMC's Reasons for the Merger. The determination of the NAMC Board to
approve the Merger Agreement was based upon consideration of a number of
factors. The following list includes the material factors considered by the NAMC
Board in its evaluation of the Merger.
1. The NAMC Board's knowledge of the business, operations, financial
condition, competitive position and prospects of NAMC and the nature of the
industry in which NAMC operates, both on a historical and prospective basis.
2. The NAMC Board's consideration of, among other things, information with
respect to the financial condition, results of operations and business of NAMC,
on both an historical and a prospective basis, and the influence of current
industry, economic and market conditions.
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3. The NAMC Board's consideration of the increased competitiveness in the
mortgage banking industry, particularly for mortgage companies owned by
financial institutions, and conclusion that the combined business enterprise of
Dime and NAMC, with greater access to cost effective capital, a broader array of
product offerings and broader geographic coverage, would have a much stronger
market position than NAMC on a stand-alone basis.
4. The NAMC Board's conclusion that the combined business enterprise, with
the experience of the management teams of both Dime and NAMC, would enable Dime
to realize the full potential of the combined Dime/NAMC mortgage business.
5. The NAMC Board's conclusion that the Merger would provide NAMC
stockholders with an opportunity to have continued equity participation in a
larger, somewhat more diversified enterprise with equity value that will be
considerably larger than NAMC's current market value.
6. The NAMC Board's conclusion that the terms and conditions of the Merger
Agreement, generally, are reasonable and fair to NAMC stockholders.
7. The NAMC Board's consideration of the presentation of Morgan Stanley at
the special meeting on June 22, 1997, including Morgan Stanley's opinion that,
as of the date of the Merger Agreement, based upon and subject to the various
conditions set forth in their opinion, the Exchange Ratio is fair, from a
financial point of view, to the NAMC stockholders. See "-- Opinion of Morgan
Stanley."
8. The NAMC Board's consideration of the results of the due diligence
review which had been conducted with respect to Dime's business, operations, and
competitive position and the potential operating efficiencies and synergies that
are expected to result from the Merger.
9. The NAMC Board's consideration of the previous inquiries from and
discussions with, third parties concerning possible strategic transactions.
10. The NAMC Board's review of the historical and prospective market prices
of the NAMC Common Stock compared to the Merger consideration.
In view of the wide variety of material factors considered in connection
with its evaluation of the Merger, the NAMC Board did not find it practical to,
and did not, quantify or otherwise attempt to assign relative weights to the
specific factors considered in reaching its determination.
Dime's Reasons for the Merger. The Dime Board has approved the Merger
Agreement and determined that the Merger is in the best interests of Dime and
its stockholders. In approving the Merger Agreement, the Dime Board considered a
number of factors, including the following material factors:
1. A variety of factors relating to the overall strategic focus of
Dime, including Dime's desire to accelerate its transformation from a
traditional thrift to a regional bank that also provides mortgage banking
and consumer financial in selected national markets.
2. The Dime Board's review, based in part on a presentation by Dime's
management and its financial advisers of, the business, operations,
earnings and financial condition of NAMC on a historical, prospective and
pro forma basis combined with Dime and in comparison to other comparable
companies and the opportunities for operating efficiencies in the form of
cost reductions and revenue enhancements that are expected to result from
the Merger.
3. The Dime Board's review of the due diligence investigations
conducted by Dime's management and advisers, including the results of the
investigations regarding NAMC's infrastructure, including its information
systems and pricing mechanisms, its management, its loan origination
capabilities and the credit quality of its loan originations.
4. The terms of the Merger Agreement.
5. The financial advice rendered by Salomon Brothers Inc and BT
Securities Corporation.
The Dime Board did not assign any specific or relative weight to the
foregoing factors in its consideration.
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RECOMMENDATION OF THE NAMC BOARD
FOR THE REASONS DESCRIBED ABOVE, THE MEMBERS OF THE NAMC BOARD, AT THE
MEETING OF THE NAMC BOARD HELD ON JUNE 22, 1997, UNANIMOUSLY APPROVED THE MERGER
AGREEMENT, DETERMINED IT IS IN THE BEST INTERESTS OF NAMC AND ITS STOCKHOLDERS
AND UNANIMOUSLY RECOMMENDED THAT HOLDERS OF RECORD OF NAMC COMMON STOCK VOTE
"FOR" THE ADOPTION OF THE MERGER AGREEMENT.
OPINION OF MORGAN STANLEY
NAMC retained Morgan Stanley to act as NAMC's financial advisor in
connection with the Merger and related matters based upon its qualifications,
expertise and reputation, as well as Morgan Stanley's prior investment banking
relationship and familiarity with NAMC. Morgan Stanley has delivered its written
opinions to the NAMC Board that, as of June 22, 1997 and as of the date of this
Proxy Statement-Prospectus (the "Morgan Stanley Opinion") and subject to certain
considerations, the Exchange Ratio was fair from a financial point of view to
NAMC's stockholders.
THE FULL TEXT OF THE MORGAN STANLEY OPINION, WHICH SETS FORTH, AMONG OTHER
THINGS, ASSUMPTIONS MADE, PROCEDURES FOLLOWED, MATTERS CONSIDERED, AND
LIMITATIONS ON THE REVIEW UNDERTAKEN, IS ATTACHED AS APPENDIX B TO THIS PROXY
STATEMENT-PROSPECTUS. NAMC STOCKHOLDERS ARE URGED TO, AND SHOULD, READ THE
MORGAN STANLEY OPINION CAREFULLY AND IN ITS ENTIRETY. MORGAN STANLEY'S OPINION
IS DIRECTED TO THE NAMC BOARD AND THE FAIRNESS OF THE EXCHANGE RATIO FROM A
FINANCIAL POINT OF VIEW TO NAMC STOCKHOLDERS, AND IT DOES NOT ADDRESS ANY OTHER
ASPECT OF THE MERGER NOR DOES IT CONSTITUTE A RECOMMENDATION TO ANY NAMC
STOCKHOLDER AS TO HOW TO VOTE AT THE SPECIAL MEETING. THE SUMMARY OF THE MORGAN
STANLEY OPINION SET FORTH IN THIS PROXY STATEMENT-PROSPECTUS IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO THE FULL TEXT OF SUCH OPINION.
In connection with rendering its opinion dated the date hereof, Morgan
Stanley, among other things: (i) reviewed certain publicly available financial
statements and other information of NAMC and Dime, respectively; (ii) reviewed
certain internal financial statements and other financial and operating data
concerning NAMC and Dime prepared by the managements of NAMC and Dime,
respectively; (iii) reviewed certain financial projections of NAMC and Dime
prepared by the managements of NAMC and Dime, respectively; (iv) discussed the
past and current operations and financial condition and the prospects of NAMC
and Dime with senior executives of NAMC and Dime, respectively; (v) analyzed the
pro forma impact of the Merger on the combined company's earnings per share,
consolidated capitalization and financial ratios; (vi) reviewed the reported
prices and trading activity for the NAMC Common Stock and the Dime Common Stock;
(vii) compared the financial performance of NAMC and Dime and the prices and
trading activity of the NAMC Common Stock and the Dime Common Stock with that of
certain other comparable publicly-traded companies and their securities; (viii)
discussed the results of regulatory examinations of Dime with senior management
of Dime; (ix) discussed the strategic objectives of the Merger and the plan for
the combined company with senior executives of NAMC and Dime; (x) reviewed and
discussed with the senior managements of NAMC and Dime certain estimates of the
cost savings and revenue enhancements projected by NAMC and Dime for the
combined company; (xi) reviewed the financial terms, to the extent publicly
available, of certain comparable precedent transactions; (xii) participated in
discussions and negotiations among representatives of NAMC and Dime and their
financial and legal advisors; (xiii) reviewed the Merger Agreement and certain
related documents; and (xiv) considered other factors as they deemed
appropriate.
In rendering its opinion dated the date hereof, Morgan Stanley assumed, and
relied upon without independent verification, the accuracy and completeness of
the information supplied or otherwise made available to Morgan Stanley by NAMC
and Dime for the purposes of its opinion. With respect to the financial
projections, including the estimates of cost savings and revenue enhancements
expected to result from the Merger, Morgan Stanley assumed that they have been
reasonably prepared on bases reflecting the best currently available estimates
and judgments of the future financial performance of NAMC and Dime. Morgan
Stanley did not make any independent valuation or appraisal of the assets or
liabilities of NAMC and Dime, nor was Morgan Stanley furnished with any such
appraisals. In addition, Morgan Stanley assumed that the Merger will be
consummated in accordance with the terms set forth in the Merger Agreement.
Morgan
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Stanley's opinion is necessarily based on economic, market and other conditions
as in effect on, and the information made available to Morgan Stanley as of the
date of the Morgan Stanley Opinion.
The following is a summary of the material financial analyses (and the
underlying assumptions thereof) performed by Morgan Stanley and reviewed with
the NAMC Board on June 22, 1997 in connection with rendering its written opinion
on such date.
Trading Analysis. As part of its analysis, Morgan Stanley compared certain
financial information of NAMC with corresponding publicly available information
of two mortgage banking companies (the "Peer Group"). The Peer Group consisted
of Countrywide Credit Industries, Inc. ("Countrywide") and HomeSide, Inc.
("HomeSide"). Historical information used in connection with the ratios provided
below with respect to the Peer Group is as of the quarter ended February 28,
1997 and with respect to NAMC, as of the quarter ended March 31, 1997. Morgan
Stanley analyzed the relative performance and value of NAMC Common Stock by
comparing certain market trading statistics and operating statistics for NAMC
with the Peer Group. Market information used in calculating the ratio provided
below is as of June 20, 1997. Earnings per share estimates for NAMC and the Peer
Group were based on Institutional Brokers Estimate System (I/B/E/S) estimates as
of June 12, 1997. I/B/E/S is a data service that monitors and publishes
compilations of earnings estimates produced by selected research analysts
regarding companies of interest to institutional shareholders. Morgan Stanley
noted that NAMC traded at 8.8x estimated earnings per share for 1997,
Countrywide traded at 11.9x, and HomeSide traded at 11.2x. Morgan Stanley also
noted that NAMC derived 18% of its net revenues for the quarter ended March 31,
1997 from servicing sales compared to 0% for Countrywide and HomeSide for the
quarter ended February 28, 1997. Morgan Stanley also calculated the multiple at
which NAMC and the Peer Group traded above their per share adjusted book value
(book value adjusted to reflect estimated off-balance sheet value of servicing
portfolios, which was valued at 5.0x the average servicing fee of the
portfolios). Morgan Stanley noted that NAMC traded at 1.4x adjusted book value
and Countrywide and HomeSide traded at 2.1x and 1.3x, respectively.
Component Valuation. Morgan Stanley performed a component valuation of
NAMC Common Stock, which estimated values for NAMC's mortgage origination
operations, its servicing portfolio and its tangible book value. The financial
information used for this analysis was as of March 31, 1997. As part of this
analysis, Morgan Stanley estimated the after-tax value of NAMC's servicing
portfolio based on current market values for servicing rights with similar
characteristics to NAMC's servicing portfolio. Morgan Stanley also estimated the
value of NAMC's origination operations based on a discounted cash flow valuation
as well as precedent analysis of estimated premiums paid for origination
operations in other mortgage banking transactions. In addition, Morgan Stanley
estimated the tangible book value of NAMC by subtracting certain intangibles
from its common equity. This analysis resulted in an implied range of value for
the NAMC Common Stock ranging from approximately $18.50 to $24.50 per share.
Precedent Transaction Valuation. Morgan Stanley performed an analysis of
eleven mortgage banking transactions ("Precedent Transactions") deemed
comparable to the Merger in order to calculate a valuation range for the NAMC
Common Stock. Multiples of adjusted book value implied by the consideration paid
in Precedent Transactions were applied to the adjusted book value of NAMC to
yield a range of values for NAMC Common Stock. The Precedent Transactions
consisted of FirstCity Financial Corp./Harbor Financial Group, Inc., Norwest
Corporation/Directors Mortgage Loan Corp., BankAmerica Corporation/Arbor
National Holdings, Inc., Fleet Financial Group, Inc./Plaza Home Mortgage Corp.,
Chase Manhattan Corporation/American Residential Holding Corp., Chemical Banking
Corporation/Margaretten Financial Corp., Boatman's Bancshares, Inc./National
Mortgage Co., First Security Corporation/Crossland Mortgage Acquisition Corp.,
Barnett Banks, Inc./Loan America Financial Corp., First Tennessee National
Corporation/SNMC Management Corp. and First Tennessee National
Corporation/Maryland National Mortgage Corporation.
Ranges of multiples paid to adjusted book value derived from the Precedent
Transactions of 1.0x to 1.5x were applied to the adjusted book value of NAMC to
yield an implied range of value for the NAMC Common Stock ranging from
approximately $16.00 to $24.75 per share.
Pro Forma Merger Analysis. Morgan Stanley analyzed the financial impact of
the Merger on the holders of Dime Common Stock, including the NAMC stockholders,
following the Merger. This analysis
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showed that, after giving effect to the Merger, before the impact of one-time
merger-related charges, current owners of Dime Common Stock would realize an
increase in fully diluted reported earnings per share and return on equity in
1998 and 1999 compared to Dime on a stand-alone basis. Morgan Stanley also
analyzed the change in Dime's tangible common equity to assets ratio and noted
that it would decrease slightly following the Merger. The assumptions which were
considered in connection with this analysis included the Exchange Ratio,
earnings estimates for Dime and NAMC, Dime's estimates of the synergies in
connection with the Merger and certain share repurchases by Dime.
No company or transaction used in the comparable company and comparable
transaction analyses is identical to NAMC or the Merger. Accordingly, an
analysis of the results of the foregoing necessarily involves complex
considerations and judgments concerning financial and operating characteristics
of NAMC and other factors that could affect the public trading value of the
companies to which they are being compared. Mathematical analysis (such as
determining the average or median) is not in itself a meaningful method of using
comparable transaction data or comparable company data.
The preparation of a fairness opinion is a complex process and is not
necessarily susceptible to a partial analysis or summary description. In
arriving at its opinion, Morgan Stanley considered the results of all its
analyses as a whole and did not attribute any particular weight to any analysis
or factor considered by it. Morgan Stanley believes that selecting any portion
of its analyses, without considering all analyses, would create an incomplete
view of the process underlying its opinion. In addition, Morgan Stanley may have
deemed various assumptions more or less probable than other assumptions, so that
the ranges of valuations resulting from any particular analysis described above
should not be taken to be Morgan Stanley's view of the actual value of NAMC.
In performing its analyses, Morgan Stanley made numerous assumptions with
respect to industry performance, general business and economic conditions and
other matters, many of which are beyond the control of NAMC or Dime. The
analyses performed by Morgan Stanley are not necessarily indicative of actual
values, which may be significantly more or less favorable than suggested by such
analyses. Such analyses were prepared solely as a part of Morgan Stanley's
analysis of the fairness from a financial point of view of the Exchange Ratio
and were conducted in connection with the delivery of Morgan Stanley's opinion.
The analyses do not purport to be appraisals or to reflect the prices at which
NAMC might actually be sold.
As described above, the Morgan Stanley opinion dated June 22, 1997 and the
information provided by Morgan Stanley to the NAMC Board were two of a number of
factors taken into consideration by the NAMC Board in making its determination
to recommend approval of the Merger Agreement and the transactions contemplated
thereby. Consequently, the Morgan Stanley analyses described above should not be
viewed as determinative of the opinion of the entire NAMC Board or the view of
NAMC's management with respect to the value of NAMC. Although Morgan Stanley
evaluated the fairness of the Exchange Ratio to the holders of shares of NAMC
Common Stock, the Exchange Ratio was determined through negotiations between
NAMC and its advisors and Dime, and was approved by the entire NAMC Board. In
addition, NAMC did not provide specific instructions to or place any limitations
upon Morgan Stanley with respect to the procedures followed or factors
considered by Morgan Stanley in performing its analyses or rendering its
fairness opinion.
The NAMC Board retained Morgan Stanley based upon its experience and
expertise. Morgan Stanley is an internationally recognized investment banking
and advisory firm. As part of its investment banking business, Morgan Stanley is
regularly engaged in the valuation of businesses and securities in connection
with mergers and acquisitions, negotiated underwritings, competitive biddings,
secondary distributions of listed and unlisted securities, private placements
and valuation for estate, corporate and other purposes. Morgan Stanley makes a
market in NAMC Common Stock. In the course of its business, Morgan Stanley and
its affiliates may actively trade the debt and equity securities of NAMC and
Dime for their own account and for the accounts of customers and, accordingly,
may at any time hold a long or short position in such securities. In the past,
Morgan Stanley has provided financial advisory and investment banking services
to NAMC for which services Morgan Stanley received customary fees.
Pursuant to a letter dated May 13, 1997, NAMC has agreed to pay Morgan
Stanley: (i) an advisory fee estimated to be between $100,000 and $200,000,
which is payable if the Merger is not consummated, and (ii) a transaction fee
estimated to be approximately $5 million based on the share price of Dime Common
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Stock as of September 11, 1997, which is payable upon the consummation of the
Merger. Any advisory fee paid will be credited against the transaction fee. In
addition, NAMC has agreed, among other things, to reimburse Morgan Stanley for
all reasonable out-of-pocket expenses incurred in connection with the services
provided by Morgan Stanley and to indemnify and hold harmless Morgan Stanley and
certain related parties from and against certain liabilities and expenses, which
may include certain liabilities under the federal securities laws, in connection
with its engagement.
EFFECTIVE TIME OF THE MERGER
The Merger will become effective at the date and time that a certificate of
merger is filed with the Secretary of State of Delaware or such later date and
time as is specified in such certificate. Pursuant to the Merger Agreement, the
parties intend to cause the Effective Time to occur on the fifth business day
after the satisfaction or waiver of the last of the closing conditions set forth
in the Merger Agreement (or, at the election of Dime, the last business day of
the month in which such day occurs). See "-- Conditions to Consummation." It is
currently anticipated that the Effective Time of the Merger will occur in
October 1997, although no assurances can be given (the occurrence and timing of
the Effective Time being subject to the satisfaction or waiver of the closing
conditions).
EXCHANGE PROCEDURES
For a period of six months from and after the Effective Time, BankBoston,
N.A. will act as exchange agent (the "Exchange Agent") to effect the exchange of
certificates previously representing shares of NAMC Common Stock in connection
with the Merger. As promptly as practicable after the Effective Time, the
Surviving Corporation will send or cause to be sent to each holder of record of
NAMC Common Stock immediately prior to the Effective Time transmittal materials
for use in exchanging such holder's certificates previously representing shares
of NAMC Common Stock in exchange for certificates representing shares of Dime
Common Stock.
NAMC STOCKHOLDERS SHOULD NOT SEND IN ANY STOCK CERTIFICATES UNTIL THEY
RECEIVE TRANSMITTAL MATERIALS FROM THE EXCHANGE AGENT.
Upon delivery of one or more certificates previously representing shares of
NAMC Common Stock, together with properly completed transmittal materials, the
holder of such certificate will be entitled to receive, in exchange therefor, a
certificate or certificates representing the number of shares of Dime Common
Stock to which such holder is entitled pursuant to the Merger Agreement and,
where applicable, a check for the amount to be paid to such holder in lieu of
any fractional shares of Dime Common Stock, determined in the manner described
in "-- Effects of the Merger; Exchange Ratio," without interest. However, any
NAMC stockholder who at the time of the Special Meeting is an affiliate of NAMC
(as that term is used in Rule 145 under the Securities Act) must also execute an
affiliate's agreement letter pursuant to the Merger Agreement in connection with
the surrender of their certificates formerly representing NAMC Common Stock. See
"-- Resales of Dime Common Stock."
If any certificate representing Dime Common Stock or cash payment is to be
issued or made in a name other than that in which the certificate previously
representing NAMC Common Stock that is surrendered in exchange therefor is
registered, the certificate so surrendered must be properly endorsed or
otherwise be in proper form for transfer, and the person requesting such
exchange must pay to the Exchange Agent or Dime, as the case may be, in advance
any transfer or other taxes due by reason of the issuance of a certificate
representing shares of Dime Common Stock or the making of a cash payment in any
name other than that of the registered holder of the certificate surrendered or
must establish to the satisfaction of Dime that such tax has been paid or is not
payable.
No dividends or other distributions on Dime Common Stock with a record date
after the Effective Time will be paid to any holder of certificates representing
shares of NAMC Common Stock that have been converted in the Merger into Dime
Common Stock until the holder becomes entitled (by following the procedures
described above) to receive certificates representing such shares of Dime Common
Stock. After becoming entitled to receive certificates representing such shares
of Dime Common Stock, the holder will also be entitled to receive any such
dividends or other distributions (without interest) that theretofore had become
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payable with respect to such shares. In addition, such shares of Dime Common
Stock will not be eligible to vote until the holder is so entitled to receive
certificates representing such shares.
At the Effective Time, no transfers of shares of NAMC Common Stock will be
made on the stock transfer books of NAMC or the Surviving Corporation. If
certificates formerly representing shares of NAMC Common Stock are presented for
transfer after the Effective Time, they will be canceled and exchanged for
shares of Dime Common Stock and cash in lieu of fractional shares of Dime Common
Stock, if any, deliverable in respect thereof.
At the end of the six-month period following the Effective Time, any
certificates representing Dime Common Stock and any cash remaining in the
possession of the Exchange Agent (together with any dividends in respect
thereof) will be returned to Dime and any holders of certificates formerly
representing NAMC Common Stock who have not exchanged their certificates must
look only to Dime for the Dime Common Stock, cash in lieu of fractional shares
and unpaid dividends and distributions on the Dime Common Stock. None of NAMC,
Dime, Dime Bank, Merger Sub or the Exchange Agent will be liable to any former
NAMC stockholder for any amount properly delivered to a public official pursuant
to applicable abandoned property, escheat or similar laws.
CONDITIONS TO CONSUMMATION
The respective obligations of NAMC and Dime to consummate the Merger are
subject to the fulfillment, or the waiver by both parties, of certain
conditions, including: (1) the adoption of the Merger Agreement by the holders
of the requisite number of shares of NAMC Common Stock; (2) the receipt and
effectiveness of all required regulatory approvals described under
"-- Regulatory Approvals" (and the expiration of all related waiting periods),
without any such approval being conditioned or restricted in a manner that would
result in a material adverse effect (as defined in the Merger Agreement) on Dime
or NAMC; (3) the receipt and effectiveness of all material consents and
approvals from all persons (other than governmental entities) required for or in
connection with the execution, delivery and performance of the Merger Agreement
and the consummation of the Merger; (4) the absence of action by any court or
other governmental entity that prohibits consummation of the transactions
contemplated by the Merger Agreement; and (5) the receipt of approval for
listing of Dime Common Stock to be issued in the Merger, subject to official
notice of issuance, on the NYSE.
The obligations of NAMC to consummate the Merger are further subject to the
fulfillment, or the waiver by NAMC, of certain additional conditions, including
the following: (1) the truth and correctness of the representations of Dime in
the Merger Agreement and the performance by Dime, Dime Bank and Merger Sub in
all material respects of their obligations under the Merger Agreement; (2) the
receipt by NAMC of an opinion of Sullivan & Cromwell, counsel to Dime, to the
effect that the shares of Dime Common Stock to be issued in the Merger, when
issued in accordance with the terms of the Merger Agreement, will be duly
authorized, validly issued, fully paid and non-assessable; (3) the receipt of an
opinion of Simpson Thacher & Bartlett, special counsel to NAMC, as to certain
tax consequences described under "-- Certain Federal Income Tax Consequences";
and (4) the delivery by Dime of certain letters of independent certified public
accountants.
The obligations of Dime to consummate the Merger are further subject to the
fulfillment, or the waiver by Dime, of certain additional conditions, including
the following: (1) the truth and correctness of the representations of NAMC in
the Merger Agreement and the performance by NAMC in all material respects of its
obligations under the Merger Agreement; (2) the receipt of an opinion of
Sullivan & Cromwell, counsel to Dime, as to certain tax consequences described
under "-- Certain Federal Income Tax Consequences"; and (3) the delivery by NAMC
of certain letters of independent certified public accountants.
If the receipt of either of the tax opinions referred to in the preceding
two paragraphs is waived as a condition to the Merger or if the federal income
tax consequences of the Merger are materially different than as described under
"-- Certain Federal Income Tax Consequences," Dime and NAMC will resolicit
proxies from NAMC stockholders and provide them with supplemental
prospectus/proxy materials.
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REGULATORY APPROVALS
The Merger cannot proceed in the absence of the requisite regulatory
approvals. See "-- Conditions to Consummation" and "-- Termination." There can
be no assurance that all such regulatory approvals will be obtained, that such
approvals will be received on a timely basis or that such approvals will not be
subject to conditions that would cause them to fail to fulfill the conditions
set forth in the Merger Agreement and described under "-- Conditions to
Consummation."
Consummation of the Merger is subject to the expiration of the waiting
period provided under the Hart-Scott-Rodino Antitrust Improvements Act of 1976
(the "HSR Act"). Under the HSR Act, the Merger cannot be consummated until the
30th day following the later of the date of filing by Dime or NAMC of a
premerger notification and report form with respect to the Merger. During that
period, the Federal Trade Commission (the "FTC") or the United States Department
of Justice (the "DOJ") may challenge the Merger on antitrust grounds. In
addition, the FTC or the DOJ may extend the waiting period if necessary to
receive additional information from Dime or NAMC. Dime and NAMC each filed the
required pre-merger notice under the HSR Act with the FTC and the Antitrust
Division of the DOJ on August 1, 1997, and the FTC and the DOJ granted early
termination of the waiting period under the HSR Act on August 11, 1997.
Consummation of the Merger is also subject to the prior approval of the OTS
under the Home Owner's Loan Act ("HOLA") and Section 559.3(e)(2) of the related
OTS Regulations with respect to the activities of a subsidiary of NAMC that will
be acquired by Dime Bank as a result of the Merger (and therefor be operated as
a service corporation subsidiary of Dime Bank). Dime filed an application for
such approval with the OTS on July 30, 1997 and is responding to a request by
the OTS for additional information. The foregoing approval requires a
determination by the OTS that the proposed activities are reasonably related to
the activities of financial institutions. It is currently anticipated that the
OTS will act on Dime's application before the date of Special Meeting, although
(as noted above) no assurances can be given as to the timing or outcome of such
action.
PRICE-BASED TERMINATION
The Merger Agreement may be terminated by NAMC, if the NAMC Board so
determines by a majority vote, at any time during the five-day period commencing
with the date of receipt of all OTS approvals required for consummation of the
Merger (the "Determination Date"), if both of the following conditions are
satisfied:
(1) The Average Closing Price (as defined below) on the Determination
Date of shares of Dime Common Stock shall be less than $15.20 (the product
of 0.80 and $19.00 (which is the Starting Price, as defined in the Merger
Agreement)); and
(2) (a) The number obtained by dividing the Average Closing Price on
the Determination Date by $19.00 (such number, the "Acquiror Ratio") shall
be less than (b) the number obtained by dividing the Index Price (as
defined below) on the Determination Date by the Index Price on June 20,
1997 and subtracting 0.20 from the quotient (such number, the "Index
Ratio");
subject, however, to the following four sentences. If NAMC elects to exercise
its termination right pursuant to the foregoing, it must give prompt written
notice to Dime (provided that such notice of election may be withdrawn at any
time within the aforementioned five-day period). During the five-day period
commencing with its receipt of such notice, Dime shall have the option of
adjusting the Exchange Ratio to the lesser of (1) a number equal to a quotient
(rounded to the nearest one-thousandth), the numerator of which is the product
of $15.20 and the Exchange Ratio (as then in effect) and the denominator of
which is the Average Closing Price, and (2) a number equal to a quotient
(rounded to the nearest one-thousandth), the numerator of which is the Index
Ratio multiplied by the Exchange Ratio (as then in effect) and the denominator
of which is the Acquiror Ratio. If Dime determines to so increase the Exchange
Ratio within such five-day period, it shall give prompt written notice to NAMC
of its determination and the revised Exchange Ratio, whereupon no termination
shall occur pursuant to the foregoing and the Merger Agreement shall remain in
effect in accordance with its terms (except as the Exchange Ratio shall have
been so modified). An increase
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in the Exchange Ratio may cause the number of shares of Dime Common Stock to be
issued in the Merger to exceed the number indicated on the cover page of this
Proxy Statement-Prospectus.
For purposes of this provision, the following definitions apply:
"Average Closing Price" means the average of the daily last sale
prices of Dime Common Stock as reported on the NYSE Composite Transactions
Reporting System (as reported in The Wall Street Journal or, if not
reported therein, in another authoritative source) for the ten consecutive
NYSE full trading days (in which such shares are traded on the NYSE) ending
at the close of trading on the Determination Date.
"Index Group" means the following group of 18 companies: H.F. Ahmanson
& Company; Astoria Financial Corporation; Bank United Corp.; Commercial
Federal Corporation; Charter One Financial, Inc.; Coast Savings Financial,
Inc.; Downey Financial Corp.; Golden West Financial Corporation; Glendale
Federal Bank, FSB; GreenPoint Financial Corp.; Long Island Bancorp, Inc.;
New York Bancorp Inc.; Peoples Heritage Financial Group, Inc.; Roslyn
Bancorp, Inc.; St. Paul Bancorp, Inc.; Sovereign Bancorp, Inc.; Washington
Mutual, Inc.; and Washington Federal, Inc. If the common stock of any of
the listed companies ceases to be publicly traded or any proposal for the
acquisition or sale of such company is announced, the company will be
removed from the Index Group (and the weights referred to in the definition
of "Index Price" will be redistributed in accordance with the Merger
Agreement).
"Index Price" means, on a given date, the weighted average (weighted
in accordance with the factors listed in the definition of "Index Group" in
the Merger Agreement) of the closing prices on such date of the common
stocks of the companies composing the Index Group.
In making any decision to terminate the Merger Agreement pursuant to this
provision, the NAMC Board would have a fiduciary obligation to consider whether
the Merger no longer was in the best interests of NAMC and its stockholders and
would consult with its financial and other advisers and consider all financial
and other information it deemed relevant to its decision (including the factors
it originally considered in approving the Merger Agreement, as described in
"Reasons for the Merger"). The matter would not, however, be resubmitted for the
vote or approval of NAMC stockholders.
The price-based termination provision is designed to protect NAMC
stockholders from the risk that the average price per share of Dime Common Stock
declines by more than 20% both in absolute terms (i.e., from the $19.00
"starting price" to below $15.20) and relative to the stock prices of the
comparison companies (i.e., the "Index Price"). Accordingly, if the stock of the
comparison companies were (on average) to decline by 20%, a decline in the price
of Dime Common Stock to $15.00 per share over the relevant period, for example,
would not give NAMC a termination right under this provision. Because the
Determination Date is the date on which necessary OTS approvals are received and
because Dime currently anticipates action on its application with OTS before the
date of the Special Meeting (as described under " -- Regulatory Approvals"), it
is currently anticipated that this price-based termination provision will have
expired before the date of the Special Meeting. NAMC stockholders may call
Dime's Investor Relations Department at the number indicated on page iii of this
Proxy Statement-Prospectus for information as to whether the price-based
termination provision has expired.
TERMINATION FEE
NAMC has agreed to pay Dime a fee of $15,000,000 (the "Termination Fee")
following the occurrence of a Fee Trigger Event (as defined below); provided
that Dime's right to receive the termination fee shall be discontinued if any of
the following (each, a "Fee Termination Event") occurs prior to a Fee Trigger
Event:
(1) The Effective Time;
(2) Termination of the Merger Agreement in accordance with the
provisions thereof, if such termination occurs prior to the occurrence of a
Preliminary Fee Trigger Event, other than a Listed Termination (a "Listed
Termination" is a termination (a) by Dime because of a knowing, intentional
or grossly negligent breach by NAMC of certain of its obligations, (b) by
Dime under circumstances where
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the NAMC Board has withdrawn its support for the Merger or participated in
negotiations regarding the substantive terms of a bona fide Acquisition
Proposal (as defined below) or (c) by NAMC to accept an Acquisition
Proposal as an alternative to the Merger, in each case, unless at the time
of such termination (i) NAMC is entitled to terminate the Merger Agreement
because of a knowing, intentional or grossly negligent breach by Dime of
certain of its obligations and (ii) NAMC shall have notified Dime in
writing of such breach);
(3) Fifteen months after termination of the Merger Agreement, if such
termination (a) follows, or occurs at the same time as, a Preliminary Fee
Trigger Event (other than, termination by NAMC (i) because of a knowing,
intentional or grossly negligent breach by Dime of certain of its
obligations or (ii) under the termination provision described under
"-- Price-Based Termination" (and Dime does not elect to increase the
Exchange Ratio as described therein), in which case the right to receive
the Termination Fee shall terminate at termination of the Merger Agreement)
or (b) is a Listed Termination.
"Preliminary Fee Trigger Event" means any of the following events or
transactions occurring on or after June 22, 1997:
(1) NAMC or any subsidiary of NAMC, without having received Dime's
prior written consent, shall have entered into an agreement to engage in an
Acquisition Transaction with any person other than Dime or any of its
subsidiaries or the NAMC Board shall have recommended that the stockholders
of NAMC approve or accept any Acquisition Transaction other than the Merger
("Acquisition Transaction" means (a) a merger or consolidation, or any
similar transaction, involving NAMC or any subsidiary of it (other than
certain mergers, consolidations or similar transactions involving solely
NAMC and its wholly-owned subsidiaries), (b) a purchase, lease or other
acquisition of all or any substantial part of the assets or deposits of
NAMC or any subsidiary of it or (3) a purchase or other acquisition
(including by way of merger, consolidation, share exchange or otherwise) of
securities representing 15% or more of the voting power of NAMC or any
subsidiary of it);
(2) Any person, other than Dime or any of its subsidiaries, shall have
acquired beneficial ownership or the right to acquire beneficial ownership
of 15% or more of the outstanding shares of NAMC Common Stock;
(3) The stockholders of NAMC shall have voted and failed to adopt the
Merger Agreement at the Special Meeting, or the Special Meeting shall not
have been held in violation of the Merger Agreement or shall have been
canceled prior to termination of the Merger Agreement, in each case, if
prior to the Special Meeting (or if the Special Meeting shall not have been
held or shall have been canceled, prior to such termination), it shall have
been publicly announced that any person (other than Dime or any of its
subsidiaries) shall have made, or disclosed an intention to make, a bona
fide proposal to engage in an Acquisition Transaction;
(4) The NAMC Board shall have withdrawn or modified (or disclosed its
intention to withdraw or modify), in a manner adverse in any respect to
Dime, its recommendation that the holders of record of NAMC Common Stock
approve the Merger Agreement, or NAMC or any subsidiary of it shall have
authorized, recommended, proposed (or publicly announced its intention to
authorize, recommend or propose) an agreement to engage in an Acquisition
Transaction with any person other than Dime or any of its subsidiaries;
(5) Any person, other than Dime or any of its subsidiaries, shall have
made a bona fide proposal to NAMC or its stockholders, by public
announcement or written communication that is or becomes the subject of
public disclosure, to engage in an Acquisition Transaction;
(6) Any person, other than Dime or any of its subsidiaries, shall have
filed with the Commission a registration statement or tender offer
materials with respect to a potential exchange or tender offer that would
constitute an Acquisition Transaction (or filed a preliminary proxy
statement with the Commission with respect to a potential vote by its
stockholders to approve the issuance of shares to be offered in such an
exchange offer); or
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(7) NAMC shall have willfully breached any covenant or obligation
contained in the Merger Agreement in anticipation of engaging in an
Acquisition Transaction, and following such breach Dime would be entitled
to terminate the Merger Agreement (whether immediately or after the giving
of notice or passage of time or both).
The term "Fee Trigger Event" means either of the following events or
transactions occurring after June 22, 1997: (1) The acquisition by any person
(other than Dime or any of its subsidiaries) of beneficial ownership of 25% or
more of the then outstanding NAMC Common Stock; or (2) the occurrence of the
Preliminary Fee Trigger Event described in (1) above, except that in order to
constitute a "Fee Trigger Event" any purchase or other acquisition, other than
by Dime or its subsidiaries, of securities representing voting power of NAMC
must amount to an acquisition of 25% or more of the voting power of NAMC.
If the NAMC stockholders fail to adopt the Merger Agreement, either Dime or
NAMC may terminate the Merger Agreement in accordance with its terms. See
"-- Termination." If no Preliminary Fee Trigger Event or Fee Trigger Event
occurs at or prior to such termination, Dime's right to the Termination Fee will
discontinue. However, if a Fee Trigger Event has occurred, Dime will be entitled
to the Termination Fee. Also, if a Preliminary Fee Trigger Event has occurred,
Dime's rights to the Termination Fee will continue until 15 months after such
termination of the Merger Agreement, and Dime will be entitled to the
Termination Fee in accordance with the terms of the Merger Agreement should a
Fee Trigger Event occur in that period.
NO SOLICITATION OF ACQUISITION PROPOSALS
In the Merger Agreement, NAMC has agreed that it shall not, and shall cause
its subsidiaries and its and its subsidiaries' respective officers, directors,
agents, advisors and affiliates not to, solicit or encourage inquiries or
proposals with respect to any tender or exchange offer, proposal for a merger,
consolidation or other business combination involving NAMC or any of its
subsidiaries or any proposal or offer to acquire in any manner a substantial
equity interest in, or a substantial portion of the assets of, NAMC or any of
its subsidiaries, other than the transactions contemplated by the Merger
Agreement (any of the foregoing, an "Acquisition Proposal") or engage in any
negotiations concerning, or provide any confidential information or data to, or
have any discussions with, any person relating to an Acquisition Proposal;
provided that, if NAMC is not otherwise in violation of such restriction, the
NAMC Board may provide information to, and may engage in such negotiations or
discussions with, a person, directly or through representatives, if (1) the NAMC
Board, after having consulted with and considered the written advice of counsel,
has determined in good faith that the provision of such information or the
engaging in such negotiations or discussion is required in order to discharge
properly the directors' fiduciary duties in accordance with Delaware law and (2)
NAMC has received from such person a confidentiality agreement in substantially
customary form. NAMC has agreed to notify Dime promptly (within 24 hours) if any
Acquisition Proposal is received by it.
CONDUCT OF BUSINESS PENDING THE MERGER
NAMC. The Merger Agreement contains certain restrictions on the conduct of
NAMC's business pending consummation of the Merger. Among other agreements,
until the Effective Time and subject to certain exceptions, NAMC has agreed that
it will not, and will cause each of its subsidiaries not to, without the prior
written consent of Dime: (1) conduct its business other than in the ordinary and
usual course or fail to use reasonable efforts to preserve its business
organizations and assets and maintain its rights, franchises and existing
relations with customers, suppliers, employees and business associates; (2)
issue, sell or permit to become outstanding additional shares of NAMC capital
stock, securities convertible into such stock, or options or rights of any kind
to acquire any of such stock or permit any additional shares of such stock to
become subject to new grants of employee or director stock options or similar
stock-based employee rights; (3) declare or pay any dividend (other than regular
quarterly cash dividends on NAMC Common Stock in an amount not to exceed $0.06
per share and certain dividends by wholly owned subsidiaries), or declare or
make any distribution, on any shares of its capital stock or indirectly adjust,
split, combine, redeem, reclassify, purchase or otherwise acquire, any shares of
its capital stock; (4) enter into, amend or renew any written employment,
severance or similar agreements with directors, officers, employees or
independent contractors or
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grant any salary or wage increase, except for individual increases in
compensation in the ordinary course and other limited exceptions; (5) establish,
modify or amend any pension, retirement or other employee benefit, incentive or
welfare plan or arrangement, including taking any action that accelerates the
vesting or exercisability of stock options; (6) sell, encumber or otherwise
transfer of or discontinue any material portion of its assets, business or
properties; sell, assign or otherwise transfer any rights to service loans,
other than servicing rights in respect of certain first mortgage loans held by
NAMC or one of its Subsidiaries in its warehouse of first mortgage loans; or,
except in the ordinary course of business and in a manner consistent with past
practice, sell, transfer, lease or encumber any loans; (7) acquire assets for
consideration in excess of $250,000 or any servicing right in a "bulk"
transaction, other than purchases of mortgage loans, certain short-term
investments, bona fide hedging transactions or in satisfaction of a debt
previously contracted, in each case in the ordinary course consistent with past
practice; (8) amend its governing documents; (9) change its accounting
principles or practices, except as required by generally accepted accounting
principles; (10) enter into, terminate or modify in a material respect any
material contract, other than in the ordinary course consistent with past
practice; (11) settle other than certain immaterial claims; (12) take actions
reasonably likely to cause certain of the conditions to consummation of the
Merger not to be satisfied; (13) make any changes or fail to follow its policies
or practices with respect to managing its exposure to interest rate risk or
materially alter certain of its loan policies (including underwriting, pricing
and warehousing); (14) incur indebtedness of borrowed money other than certain
indebtedness in the ordinary course consistent with past practice or pursuant to
a specified facility; (15) open or close certain offices; or (16) agree to take
any of the foregoing actions.
Modification of Certain NAMC Policies. The Merger Agreement requires that
NAMC, upon the request of Dime, consistent with generally accepted accounting
principles and regulatory accounting principles, use its reasonable best efforts
to record certain accounting adjustments intended to conform the loan,
litigation and other accrual and reserve policies of NAMC and its subsidiaries
so as to reflect the policies of Dime. However, NAMC will not be obligated to
take any such action unless and until it is satisfied that the conditions to the
obligation of the parties to consummate the Merger will be satisfied or waived
on or before the Effective Time, and in no event until the day prior to the
Effective Time. The representations, warranties and covenants of NAMC contained
in the Merger Agreement will not be deemed to be untrue or breached in any
respect for any purpose as a consequence of any action undertaken by NAMC solely
on account of the foregoing.
Dime. Among other agreements, until the Effective Time and subject to
certain exceptions, Dime has agreed that it will not, and will cause each of its
subsidiaries not to, without the prior written consent of NAMC: (1) conduct its
business other than in the ordinary and usual course (although this requirement
is limited so that it in no way affects the ability of Dime or its subsidiaries
to engage in any business, asset or deposit acquisition or disposition, or
merger, consolidation or other business combination transaction); (2) take
actions reasonably likely to cause certain of the conditions to consummation of
the Merger not to be satisfied; (3) declare or pay any dividend (other than
regular quarterly cash dividends on Dime Common Stock and certain dividends by
subsidiaries), or declare or make any distribution, on any shares of its capital
stock; (4) amend its governing documents in any manner materially adverse to
NAMC stockholders; or (5) agree to take any of the foregoing actions.
AMENDMENT, WAIVER AND ALTERNATIVE STRUCTURE
Amendment and Waiver. Prior to the Effective Time, any provision of the
Merger Agreement may be (1) waived by the party benefitted by such provision or
(2) amended or modified at any time, by an agreement in writing among NAMC,
Dime, and Dime Bank approved by their respective Boards of Directors. After the
vote of NAMC stockholders, however, the Merger Agreement may not be amended in
any manner that under applicable law would require further approval of such
stockholders without obtaining such further approval.
Alternative Structure. The Merger Agreement provides that, at Dime Bank's
election, the transaction contemplated by the Merger Agreement may be
alternatively structured so that (1) NAMC is merged with and into Dime, Dime
Bank or any other direct or indirect wholly owned subsidiary of Dime or (2) any
direct or indirect wholly owned subsidiary of Dime (other than Merger Sub) is
merged with and into NAMC,
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provided that, no alternative structure will (a) alter the amount or kind of
consideration to be issued in the Merger or adversely treat the holders of stock
options issued under NAMC's employee benefit plans, (b) adversely affect the tax
treatment of the Merger or (c) materially impede or delay consummation of the
transactions contemplated by the Merger Agreement. In the event such an election
is made, the parties have agreed to execute an appropriate amendment to the
Merger Agreement.
TERMINATION
The Merger Agreement may be terminated and the Merger abandoned at any time
prior to the Effective Time, whether before or after the adoption by NAMC
stockholders of the Merger Agreement, under certain circumstances. Among other
things, the Merger Agreement may be terminated by the mutual consent of NAMC and
Dime or by action of the Board of Directors of either NAMC or Dime if (1) the
Merger is not consummated by December 31, 1997, (2) any governmental approval or
authorization required for the consummation of the Merger is denied or (3) the
Merger Agreement shall not have been adopted by the requisite vote of NAMC
stockholders.
The Merger Agreement also may be terminated by NAMC if (1) Dime breaches
any representation or warranty contained in the Merger Agreement and such breach
cannot be or has not been cured within 30 days after the giving of written
notice of such breach, or if Dime breaches any covenant or agreement contained
in the Merger Agreement which breach cannot be or has not been cured within 30
days after the giving of written notice of such breach and which breach would be
reasonably likely to have a material adverse effect (as defined in the Merger
Agreement) on Dime, or (2) if without breaching certain provisions of the Merger
Agreement, NAMC enters into a definitive agreement with a third party providing
for an Acquisition Transaction on terms determined, in good faith, by the NAMC
Board, after consultation with and considering the advice of its legal and
financial advisors, to be more favorable to NAMC stockholders than the Merger.
The Merger Agreement may be terminated by Dime if (1) NAMC breaches any
representation or warranty contained in the Merger Agreement and such breach
cannot be or has not been cured within 30 days after the giving of written
notice of such breach or if NAMC breaches any covenant or agreement which breach
cannot be cured within 30 days after the giving of written notice of such breach
and which breach would be reasonably likely to have a material adverse effect on
NAMC, (2) the NAMC Board withdraws, modifies or changes in a manner adverse to
Dime its approval or recommendation of the Merger Agreement or (3) the NAMC
Board authorizes participation in or participates in any negotiations regarding
the substantive terms of a bona fide formal Acquisition Proposal.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
Certain members of NAMC's management and its Board of Directors may be
deemed to have interests in the Merger in addition to their general interests,
if any, as NAMC stockholders. In each case, the NAMC Board was aware of these
factors or, with respect to interests that arose subsequent to the Merger
Agreement, was aware of their potential, and considered them, among other
matters, in approving the Merger Agreement.
Letter Agreements with Executive Officers Generally. In anticipation of
Dime, Dime Bank and NAMC entering into the Merger Agreement, Dime Mortgage,
Inc., a wholly owned subsidiary of Dime Bank ("DMI"), entered into letter
agreements concerning initial compensation arrangements with DMI following the
Merger with each of Terrance G. Hodel, Harold B. Bonnikson, Gary F. Moore and
Martin S. Hughes (each, an "Employment Letter Agreement"). In addition, DMI
entered into a letter agreement with John F. Farrell, Jr., regarding initial
compensation and benefit arrangements in respect of Mr. Farrell's services as a
consultant to DMI following the Merger (the "Consulting Letter Agreement"). Each
Employment Letter Agreement and the Consulting Letter Agreement shall become
effective, and is expressly subject to and conditioned, upon the occurrence of
the Effective Time. Each executive's employment or retention by DMI, and DMI's
agreement to be bound by the terms of the respective Employment Letter
Agreements and the Consulting Letter Agreement, is expressly conditioned upon
and subject to the occurrence of the Effective Time. If for any reason the
Effective Time does not occur as contemplated in the Merger Agreement, DMI shall
have no obligation to employ or retain the executives and shall have no further
obligation or liability to
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the executives under the Employment Letter Agreements or the Consulting Letter
Agreement whatsoever, and the terms of the Employment Letter Agreements and the
Consulting Letter Agreement shall become automatically void and without further
effect. In addition, NAMC has agreed in the Merger Agreement not to terminate
the employment of any of the preceding officers provided with Employment Letter
Agreements without the prior written consent of Dime, to use its reasonable best
efforts to maintain the continued employment of such officers until the
Effective Time and not to encourage any such officer to breach or violate any
employment agreement or other arrangement (including the Employment Letter
Agreements) the officer may have with Dime or any subsidiary of it.
If the mortgage banking operations of DMI are transferred to a direct or
indirect subsidiary of Dime (including the Surviving Corporation), then the
Employment Letter Agreements and the Consulting Letter Agreement will be assumed
by, and be binding upon, such entity. Benefits payable under the Employment
Letter Agreements will be reduced as applicable to comply with any Regulatory
Restrictions (as defined in the Employment Letter Agreements) and will be
reduced by the smallest amount necessary to avoid the imposition of an excise
tax under Section 4999 of the Code or any corresponding successor provisions.
Any such limitation will be applied as determined by DMI in its sole discretion.
All payments under the Employment Letter Agreements will be reduced by all
applicable withholding and other taxes.
Letter Agreements of Messrs. Hughes and Hodel. The Employment Letter
Agreement for Mr. Hughes is for a term of 90 days from the date of the Effective
Time, but DMI in its sole discretion upon 30 days' notice may extend the term
for an additional one month period. The Employment Letter Agreement for Mr.
Hodel is for a term of one year from the date of the Effective Time. Messrs.
Hughes and Hodel will receive an initial salary at an annualized rate of
$265,000 per annum and $550,000 per annum, respectively, and each will be
eligible to participate in DMI's incentive plan; provided that (i) the minimum
incentive award for 1997 for Messrs. Hughes and Hodel will be an amount equal to
$95,000 and $225,000, respectively, less the total amount of any performance or
other bonuses or awards paid or accrued to be paid to such executive under the
annual executive bonus plan or any other bonus plan or arrangement for 1997 by
NAMC and its subsidiaries prior to the date of the Effective Time, and (ii) if
the term shall include a portion of calendar year 1998, Messrs. Hughes and Hodel
will receive at the end of the term a minimum incentive award for 1998 of
$95,000 and $225,000, respectively (prorated for the portion of the term
comprising calendar year 1998); provided, further, that the incentive awards
above shall not be payable if the executive's employment is terminated prior to
December 31, 1997 with respect to clause (i) or the expiration of the applicable
term with respect to clause (ii) by the executive or by DMI for cause (as
defined in the Employment Letter Agreement). During the term of their respective
Employment Letter Agreements, Messrs. Hughes and Hodel will be eligible to
participate in such life, medical and other insurance plans or programs as are
made available by DMI to its full-time salaried employees. Additionally, Mr.
Hodel will be eligible during the term to participate in one or more programs
providing defined contribution retirement benefits with the rate of employer
contributions (or deemed employer contributions) not less in the aggregate than
that previously provided by NAMC (but with no such contributions required in
respect of any payments to be made pursuant to the Merger Agreement). Mr. Hodel
has agreed that for the period commencing on the date of his Employment Letter
Agreement and ending on the first anniversary of the later of his termination of
employment with DMI or NAMC, he will not solicit or otherwise encourage any
employee, agent or representative of DMI or any person who was employed by DMI
or NAMC as an employee, agent or representative at the time of such termination
of employment or during the six month period prior to the later of his
termination of employment with DMI or NAMC (or their parents or subsidiaries),
to terminate his or her employment with DMI (or NAMC) or such parent or
subsidiary, or to become an officer, board member, owner, partner, consultant,
employee, agent or representative of any person, firm, corporation, association
or other entity engaged in the mortgage banking business; provided that Mr.
Hodel shall not be precluded from soliciting for employment any person
terminated by DMI or NAMC subsequent to his termination without cause. Messrs.
Hughes and Hodel have also agreed not to disclose any non-public, confidential
information regarding NAMC except as approved by DMI in the course of DMI's
business for DMI's benefit, or when required by law. As a further condition to
DMI's agreement to enter into and be bound by their Employment Letter
Agreements, each of Messrs. Hughes and Hodel has agreed to waive any rights to
any severance or other benefits in connection with the termination of such
Executive's employment with NAMC or DMI
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(except to the extent of certain benefits under the terms of the Merger
Agreement described below under "Certain Payments"), including without
limitation, as may be provided in a termination agreement, dated February 7,
1995, between such Executive and NAMC, and under the NAMC Senior Executive
Severance Pay Plan; provided that Messrs. Hughes and Hodel will continue to be
eligible during the one-year period following the termination of employment with
DMI for medical and life insurance benefits on the same basis as if such
employment had continued for that year. Each of Messrs. Hughes and Hodel will
have no right to receive any severance pay, severance benefit, or any other
compensation or benefit for any period after the date of termination by DMI of
such executive's employment for cause or following voluntary termination by such
Executive of his employment prior to the end of the term.
Letter Agreement of Mr. Moore. Under his Employment Letter Agreement, Mr.
Moore will receive an initial salary at a rate of $185,000 per annum and will be
eligible to participate in DMI's incentive plan during 1997 with a target
incentive opportunity equal to 35% of annualized base salary; provided, that the
amount of any incentive opportunity payment will be reduced by the total amount
of any performance or other bonuses or awards paid or accrued under the annual
executive bonus plan or any other bonus plan or arrangement for 1997 by NAMC and
its subsidiaries prior to the date of the Effective Time. Later levels of target
incentive opportunity and other terms of participation will be as set by DMI's
Board of Directors or a committee thereof. Mr. Moore will be eligible to
participate in such life, medical and other insurance plans or programs as are
made available by DMI to its full-time salaried employees and will be eligible
to participate in one or more qualified and non-qualified programs providing
defined contribution retirement benefits with the rate of employer contributions
(or deemed employer contributions) not less in the aggregate than that
previously provided by NAMC. In addition to the terms described above, the terms
of Mr. Moore's employment will be set forth in a separate employment agreement,
described below; provided that upon termination of his employment by DMI other
than for cause, or upon his voluntary termination of employment with DMI within
30 days of any DMI-imposed requirement that Mr. Moore relocate his principal
place of business to any location in excess of 50 miles from Santa Rosa,
California, the total of the cash severance benefits under his Employment Letter
Agreement and the separate employment agreement (the "Minimum Severance Amount")
shall be at least $330,375. If the total of any such cash severance payments
payable either (x) as salary continuation other than in connection with a Change
in Control (as defined in the separate employment agreement), or (y) as a lump
sum in connection with a Change in Control, shall be less than the Minimum
Severance Amount, then DMI shall pay Mr. Moore the difference as a lump sum
within thirty days after the effective date of termination of his employment.
Mr. Moore has agreed to waive any rights to any severance or other benefits in
connection with the termination of his employment with NAMC or DMI under any
severance agreement, arrangement or plan to which he is a party or in which he
is a participant, including without limitation, the NAMC Senior Executive
Severance Pay Plan.
Letter Agreement of Mr. Bonnikson. Under his Employment Letter Agreement,
Mr. Bonnikson will receive an initial salary at a rate of $265,000 per annum and
will be eligible to participate in DMI's incentive plan during 1997; provided
that the minimum incentive award will be an amount equal to $155,000, less the
total amount of any performance or other bonuses or awards paid or accrued to be
paid to him under the annual executive bonus plan or any other bonus plan or
arrangement for 1997 by NAMC and its subsidiaries prior to the date of the
Effective Time; provided, further, that the incentive award will not be payable
if, prior to December 31, 1997, Mr. Bonnikson voluntarily terminates his
employment or DMI terminates his employment for cause (as defined in a separate
employment agreement, the terms of which are described below). In addition, Mr.
Bonnikson will receive a special incentive award in the amount of $100,000
payable twelve months after the date of the Effective Time unless prior to the
end of such twelve-month period he terminates his employment or is terminated by
DMI for cause. Later levels of target incentive opportunity and other terms of
participation will be as set by DMI's Board of Directors or a committee thereof.
Mr. Bonnikson will be eligible to participate in such life, medical and other
insurance plans or programs as are made available by DMI to other similarly
situated employees of DMI and will be eligible to participate in one or more
qualified and non-qualified programs providing defined contribution retirement
benefits with the rate of employer contributions (or deemed employer
contributions) not less in the aggregate than that previously provided by NAMC
(but with no such contributions required in respect of the special incentive
award described above, any Supplemental Payments (as defined below) or any
payment required to insure payment
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of the Minimum Severance Amount (as defined below)). In addition to the terms
described above, the terms of Mr. Bonnikson's employment will be set forth in a
separate employment agreement, described below; provided that (i) the
non-solicitation provisions of such separate employment agreement will be
limited to a nine-month duration rather than a twelve-month duration in the
event that, during the initial twelve-month term of the separate employment
agreement, his employment is terminated for any reason other than cause and (ii)
upon termination of employment by DMI for any reason other than cause, the total
of the cash severance benefits under his Employment Letter Agreement and the
separate employment agreement (the "Minimum Severance Amount") shall be at least
$350,927.25 if the effective date of such termination of employment is within
the first twelve months of the commencement of the term of the separate
employment agreement, or at least $701,854.50 if the effective date of such
termination of employment occurs thereafter. If the total of any such cash
severance payments payable under the separate employment agreement either (x) as
salary continuation other than in connection with a Change in Control (as will
be defined in the separate employment agreement), or (y) as a lump sum in
connection with a Change in Control shall be less than the Minimum Severance
Amount, then DMI shall pay Mr. Bonnikson the difference as a lump sum within
thirty days after the effective date of termination of his employment. In
addition, DMI will make supplemental payments (the "Supplemental Payments") to
Mr. Bonnikson in the aggregate amount of $350,927.25, payable in twelve equal
monthly installments, commencing on the date that is one month following the
Effective Time; provided that in the event Mr. Bonnikson voluntarily terminates
his employment other than for good reason (as defined in the Employment Letter
Agreement) or on account of death or permanent disability, or DMI terminates his
employment for cause, at any time prior to the end of such twelve-month period,
Mr. Bonnikson will receive only the amount of such supplemental payment accrued
as of the last full month ending prior to the date notice of such termination is
given. As a further condition to DMI's agreement to enter into and be bound by
the Employment Letter Agreement, Mr. Bonnikson has agreed to waive any rights to
any severance or other benefits in connection with the termination of his
employment with NAMC or DMI, under any severance agreement, arrangement or plan
to which he is a party or in which he is a participant, including without
limitation, as may be provided in a termination agreement, dated December 11,
1995, between such executive and NAMC, and under the NAMC Senior Executive
Severance Pay Plan.
Consulting Letter Agreement of Mr. Farrell. The Consulting Letter
Agreement with Mr. Farrell is for a term of six months from the date of the
Effective Time and provides that Mr. Farrell will provide such consulting
services as may be requested by the Chief Executive Officer or Chief Operating
Officer of DMI; provided, that Mr. Farrell will not be required to devote more
than 20 hours per week to such services and that Mr. Farrell will not be
obligated to render any services during any period when he is unable to do so
due to illness, disability or injury. As compensation for Mr. Farrell's
commitment to perform, and the performance of, such services, DMI will pay Mr.
Farrell at the monthly rate of $46,558, plus reimbursement for reasonable
expenses incurred in the performance of such services. During the term of the
Consulting Letter Agreement and for one year thereafter, Mr. Farrell will
continue to receive the same or substantially the same employee benefits as
those provided by NAMC as of the date of the Consulting Letter Agreement,
including, without limitation, life and medical benefits, and any such
additional benefits DMI makes available following the Effective Time to
supplement such benefits, on the same basis as if his employment with NAMC had
continued with DMI following the Effective Time and throughout such period. In
addition, DMI will pay, throughout the term of the Consulting Letter Agreement
and for a period of six months thereafter, all rents, utilities, costs and
expenses necessary for Mr. Farrell to maintain exclusive possession of the
offices currently leased by NAMC in New York, New York, as occupied on the date
of the Consulting Letter Agreement (the "Offices"), and to continue to have the
use of the two-person secretarial and support staff at the Offices at the same
level of compensation and benefits in effect on such date. At the end of such
six-month period, DMI must use its reasonable best efforts to cause Mr. Farrell
to be permitted to assume the lease with respect to the Offices. Mr. Farrell has
agreed that, throughout the term of the Consulting Letter Agreement and for one
year thereafter, he will not solicit or otherwise encourage any employee, agent
or representative of DMI or any person who was employed by DMI or NAMC as an
employee, agent or representative at the time of the termination of his
retention by DMI or at the end of the term of the Consulting Letter Agreement,
to terminate his or her employment with DMI (or NAMC) or such parent or
subsidiary, or to become an officer,
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board member, owner, partner, consultant, employee, agent or representative of
any person, firm, corporation, association or other entity engaged in the
mortgage banking business; provided that Mr. Farrell will not be precluded from
soliciting for employment any person terminated by DMI subsequent to the
expiration of the term of the Consulting Letter Agreement. Mr. Farrell has
further agreed, unless and to the extent that DMI otherwise has consented in
writing, not to disclose any non-public information concerning DMI and its
subsidiaries pertaining to DMI's business (including that of its subsidiaries),
except (i) while retained by DMI, in the business of and for the benefit of DMI,
or (ii) when required by law upon the advice of counsel.
Separate Employment Agreements for Messrs. Moore and Bonnikson. The
following describes the terms of the employment agreement (the "Employment
Agreement") that Dime has agreed to enter into with each of Messrs. Moore and
Bonnikson, to the extent such terms do not conflict with the terms of the
Employment Letter Agreements with Messrs. Moore and Bonnikson. The Employment
Agreement provides that the initial term thereof ends March 1, 1999, but it is
automatically extended for additional one-year periods unless sooner terminated.
Compensation payments are automatically deferred to the extent necessary to
comply with Dime's policy regarding Section 162(m) of the Code, and any such
deferred payments are payable under the terms of the Dime Bancorp, Inc.
Voluntary Deferred Compensation Plan. In the event of permanent disability, full
salary (less available disability insurance benefits) is provided for up to one
year (or, if less, the end of the remaining term of the Employment Agreement),
with continued life, medical and dental insurance coverage (the "Insurance") for
the remaining term (so long as contributions are made). If, prior to a Change in
Control (as defined under the Employment Agreement), DMI terminates the
executive's employment other than for cause (as defined under the Employment
Agreement), DMI will continue to pay salary and maintain such executive's
Insurance as in effect (subject to continuing executive contributions)
immediately prior to such termination, for a period of 12 months (which period
may be increased by a multiplier of 1.25, 1.375 or 1.5 for executives age 50 to
54, 55 to 59 or age 60 or over, respectively). Such severance payments are
subject to limitation to the extent necessary to comply with applicable
regulatory restrictions.
The Employment Agreement provides for special benefits ("CIC Benefits") to
be paid, in lieu of the severance benefits described in the preceding paragraph,
upon certain terminations of the executive's employment within a designated
period following a Change in Control. The CIC Benefits consist of (i) a lump-sum
payment of two times annual salary plus bonus opportunity; (ii) vesting (in
accordance with original terms) of all stock options that do not otherwise vest
upon a Change in Control, and provision for continued exercisability of all
outstanding options for their full remaining terms (to the extent permitted by
the underlying stock option plan), in each case without regard to the
executive's termination of employment; (iii) continuation of Insurance
(including disability coverage) for the remaining term of the Employment
Agreement at the time of termination (so long as continued contributions are
made by the executive); (iv) supplemental benefits (including benefits related
to matching contributions under the Retirement 401(k) Investment Plan of Dime
Bancorp, Inc.) under otherwise applicable defined contribution plans in which
the executive participates, to replace any accrued defined contribution
retirement benefits that are lost due to not being vested as of the time of
termination; and (v) in the event the employer relocates its principal executive
offices following a Change in Control and as a result the executive changes his
principal residence, relocation benefits consisting of moving expenses and
reimbursement of any loss incurred on the sale of such residence. Upon certain
terminations of employment following certain change in control events, the CIC
Benefits will be reduced so that no payments will be required to be made that
would trigger any excise taxes under Section 4999 of the Code. Upon certain
other terminations of employment following certain change in control events, the
CIC Benefits will not be subject to such reduction and a gross-up payment for
the tax costs related to any imposition of such excise taxes will be payable.
The Employment Agreement also imposes upon the executive confidentiality
requirements following termination of employment and, except if the termination
occurs after a Change in Control, a one-year non-solicitation period. All
payments are limited if compliance with the Employment Agreement would violate
FDIC "golden parachute" regulations. The Employment Agreement also contains
provisions generally limiting payments to the extent necessary to comply with
applicable laws and regulations and other mandatory provisions relating to the
taking of regulatory action against the executive, the employer or its
affiliates. Payments are not otherwise limited in the event that the executive
obtains other employment.
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Certain Payments. In lieu of any cash payment that might otherwise be paid
or payable upon a termination of employment under any Termination Agreement
previously entered into by NAMC or any applicable severance plan, NAMC has
agreed to pay certain executive officers of NAMC lump sum cash payments at the
Effective Time. Under this agreement, Messrs. John F. Farrell, Jr., Terrance G.
Hodel, Martin S. Hughes, Michael Conway, Robert A. Rosen and Robert J. Gallagher
will be entitled to $1,426,658 (plus two-thirds of any bonus for 1997),
$1,576,667, $821,250, $415,000 (plus one-half of any bonus for 1997), $445,956
(or $222,978 if Mr. Rosen is offered a Comparable Position with NAMC or any
successor to NAMC (whether by merger, stock sale or the purchase of assets of
NAMC or any business unit thereof), as such term is defined in the NAMC Senior
Executive Severance Pay Plan) (plus one-half of any bonus for 1997) and $415,000
(plus one-half of any bonus for 1997), respectively, upon consummation of the
Merger, less the amount of any applicable withholding. In addition, Mr. Gary F.
Moore will be entitled to $120,000 (less the amount of any applicable
withholding) in respect of stock options that NAMC committed to grant but never
granted. These cash payments are in addition to any amounts payable under the
Employment Letter Agreements and the Consulting Letter Agreement.
Indemnification and Directors' and Officers' Insurance. The Merger
Agreement provides that Dime will indemnify and hold harmless the past and
present directors and officers of NAMC and its subsidiaries against certain
liabilities for six years following the Effective Time to the fullest extent
that NAMC was permitted to indemnify its directors and officers under the laws
of the State of Delaware and its governing documents on the date of the Merger
Agreement (and Dime will pay expenses in advance of the final disposition of any
action or proceeding to the fullest extent permissible under applicable law,
provided that the person to whom expenses are advanced provides an undertaking
to repay such expenses if it is ultimately determined that such person is not
entitled to indemnification). Dime has also agreed to use its best efforts to
provide, for such period, that portion of director's and officer's liability
insurance that serves to reimburse present and former directors and officers of
NAMC and its subsidiaries (determined as of the Effective Time) with respect to
claims arising from facts or events that occurred before the Effective Time
(which insurance will contain at least the same coverage and amounts as
currently provided by NAMC), although Dime will not be required to expend more
than 200% of the amount currently expended by NAMC for such insurance. If Dime
is unable to maintain or obtain such coverage, it shall use its reasonable best
efforts to obtain as much comparable coverage as is available for such amount.
In addition, Dime has agreed that the by-laws of the Surviving Corporation will
contain provisions no less favorable with respect to indemnification than are
set forth in NAMC's by-laws (the "NAMC By-Laws") and that those provisions will
not be modified, for a period of six years from the Effective Time, in any
manner that would adversely and retroactively affect the rights thereunder of
directors, officers, employees or agents of NAMC at the Effective Time. Dime has
agreed that any successor will be required to assume it obligations set forth in
this paragraph.
Employee Stock Options. As described more fully under "-- Employee-Related
Matters," at the Effective Time, each outstanding option to purchase NAMC Common
Stock (1) will convert into an option to purchase Dime Common Stock and (2) is
expected to fully vest and become immediately exercisable and to remain
exercisable for the remaining term of such option.
Severance Benefits. Executive officers of NAMC who are not retained after
the Merger will be entitled to special severance benefits under, and in
accordance with the provisions of, NAMC's Senior Executive Severance Pay Plan
and NAMC's Severance Pay Plan, to the extent not waived in consideration for the
lump sum cash payment described above.
Post-Merger Compensation and Benefits. Employees of NAMC and its
subsidiaries who, as of the Effective Time, become employed by the Surviving
Corporation, Dime or any of their subsidiaries will receive (from the Effective
Time until December 31, 1998) certain designated benefits that are no less
favorable, in the aggregate, than the designated benefits enjoyed by such
employees immediately prior to the Effective Time. See "-- Employee-Related
Matters." None of the directors and executive officers of NAMC is expected to
become a director or executive officer of Dime.
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EMPLOYEE-RELATED MATTERS
Employee Stock Options. At the Effective Time, each outstanding option to
purchase shares of NAMC Common Stock (each, a "NAMC Option") will be converted
automatically into an option to purchase shares of Dime Common Stock with the
same terms as the NAMC Option, except that: (1) the number of shares of Dime
Common Stock purchasable upon exercise shall be equal to the number of shares of
NAMC Common Stock that were purchasable under the NAMC Option immediately prior
to the Effective Time multiplied by the Exchange Ratio, and rounding to the
nearest whole share, and (2) the per share exercise price under each NAMC Option
shall be adjusted by dividing such price by the Exchange Ratio, and rounding
down to the nearest cent (but with different rounding rules to apply to the
extent required under the Code where options are intended to be incentive stock
options). At the Effective Time, Dime will assume each NAMC Option and NAMC's
Incentive Stock Option Plan, but solely with respect to such assumed NAMC
Options.
Under NAMC's Incentive Stock Option Plan, the adoption by NAMC stockholders
of the Merger Agreement would result in, among other effects, each NAMC Option
becoming fully and immediately exercisable and remaining exercisable for the
duration of the term of such option. In order to effectuate the conversion and
assumption of NAMC Options, however, NAMC has agreed to take certain actions
that could otherwise have the effect of causing such options not to become
exercisable as described in the preceding sentence. Accordingly, the Merger
Agreement permits, and it is expected that NAMC will take, action to cause each
NAMC Option to fully vest and become immediately exercisable at the Effective
Time and to remain exercisable after the Effective Time for the remaining term
of such NAMC Option. In addition, NAMC has agreed to take all action necessary
with respect to the NAMC Incentive Stock Option Plan to permit Dime's assumption
of the NAMC Incentive Stock Option Plan and the NAMC Options.
Benefit Plans. From the Effective Time until December 31, 1998, Dime will
cause the Surviving Corporation and its subsidiaries to maintain for employees
of NAMC and its Subsidiaries who as of the Effective Time become employed by the
Surviving Corporation, Dime or any of their subsidiaries (the "Covered
Employees"), for so long as they are so employed during such period (1) salary
and bonus opportunities (but explicitly excluding commissions and equity grant
opportunities), (2) employee pension benefits in respect of plans intended to be
qualified under Section 401(a) of the Code, (3) employee welfare benefits and
(4) broad-based severance plans (collectively, "Designated Benefits"), that are
no less favorable, in the aggregate, than the Designated Benefits enjoyed by
such employees immediately prior to the Effective Time. In addition, to the
extent an employee benefit plan, program or arrangement maintained or
contributed to by Dime and its subsidiaries is made available to Covered
Employees, the prior service with NAMC and its subsidiaries of each such Covered
Employee will be treated as if it were service rendered to Dime or its
subsidiaries, as the case may be, solely for purposes of eligibility to
participate and for vesting thereunder. Following the Effective Time, Dime shall
cause the Surviving Corporation to cause any and all pre-existing condition
limitations (to the extent such limitations did not apply to a pre-existing
condition under NAMC's plans) and eligibility waiting periods under any health
plans to be waived with respect to Covered Employees who, immediately prior to
the Effective Time, participated in a health plan maintained by NAMC, and their
eligible dependents. Dime shall honor, pursuant to the terms of NAMC's
compensation and benefit plans disclosed to Dime as of the date of the Merger
Agreement, and to the extent consistent with applicable law and the Merger
Agreement, all employee benefit obligations to current and former NAMC employees
under such plans.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following describes the material federal income tax consequences of the
Merger to NAMC stockholders who hold their shares of NAMC Common Stock as
capital assets. This discussion is based on current laws and interpretations
thereof, which are subject to change. The discussion does not take account of
rules that may apply to NAMC stockholders that are subject to special treatment
under the Code (including, without limitation, insurance companies, dealers in
securities, certain retirement plans, financial institutions, tax exempt
organizations, stockholders who acquired shares pursuant to the exercise of an
employee stock option or otherwise as compensation, or foreign persons). Also,
the discussion does not address state, local or
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foreign tax consequences. Consequently, each NAMC stockholder should consult its
own tax advisor as to the specific tax consequences of the Merger to that
stockholder.
Tax Opinions. The obligations of Dime and NAMC to consummate the Merger
are subject to the receipt of the opinions of tax counsel outlined below.
Neither Dime nor NAMC has requested or will request an advance ruling from the
Internal Revenue Service (the "IRS") as to the tax consequences of the Merger.
The obligation of Dime to consummate the Merger is conditioned on the
receipt by Dime of an opinion of its counsel, Sullivan & Cromwell, to the effect
that for federal income tax purposes the Merger constitutes a "reorganization"
within the meaning of Section 368 of the Code.
The obligation of NAMC to consummate the Merger is conditioned on the
receipt by NAMC of an opinion of its counsel, Simpson Thacher & Bartlett, to the
effect that for federal income tax purposes (1) the Merger constitutes a
"reorganization" within the meaning of Section 368 of the Code and (2) the
exchange in the Merger of NAMC Common Stock for shares of Dime Common Stock will
not result in the recognition of income, gain or loss to NAMC stockholders
(except to the extent of any cash paid in lieu of fractional shares).
The above-described tax opinions will be based upon certain representations
and assumptions (including, for example, representations regarding satisfaction
of the continuity of interest and continuity of business enterprise requirements
and the solely for voting stock requirement) to be referred to in the opinion
letters.
Consequences to NAMC Stockholders. Under the reorganization provisions of
the Code, no gain or loss will be recognized by holders of NAMC Common Stock as
a result of the surrender of their shares of NAMC Common Stock in exchange for
shares of Dime Common Stock pursuant to the Merger (except as discussed below
with respect to cash received in lieu of fractional shares). The aggregate tax
basis of the shares of Dime Common Stock received in the Merger (including any
fractional shares of Dime Common Stock deemed received) will be the same as the
aggregate tax basis of the shares of NAMC Common Stock surrendered in exchange
therefor in the Merger. The holding period of the shares of Dime Common Stock
received (including the holding period of fractional shares of Dime Common Stock
deemed received) will include the holding period of shares of NAMC Common Stock
surrendered in exchange therefor.
If a NAMC stockholder receives cash in lieu of a fractional share interest
in Dime Common Stock in the Merger, such fractional share interest will be
treated as having been received by such stockholder, and such cash amount will
be treated as having been received in redemption of the fractional share
interest. Under Section 302 of the Code, if such redemption is "not essentially
equivalent to a dividend" after giving effect to the constructive ownership
rules of the Code, the stockholder will generally recognize capital gain or loss
equal to the cash amount received for the fractional share of Dime Common Stock
reduced by the portion of the stockholder's tax basis in shares of NAMC Common
Stock surrendered that is allocable to the fractional share interest in Dime
Common Stock. Under these rules, a minority NAMC stockholder should recognize
capital gain or loss on the receipt of cash in lieu of a fractional share
interest in Dime Common Stock. The capital gain will be taxed at a lower rate if
the NAMC stockholder's holding period in the fractional share interest is more
than one year.The capital gains rate will be further reduced if the NAMC
stockholder's holding period in the fractional share interest is more than 18
months.
ALTHOUGH THE PRECEDING DISCUSSION ADDRESSES THE MATERIAL FEDERAL INCOME TAX
CONSEQUENCES OF THE MERGER (OTHER THAN FOR STOCKHOLDERS SUBJECT TO SPECIAL
TREATMENT UNDER THE CODE), IT DOES NOT PURPORT TO BE A COMPLETE ANALYSIS OR
DISCUSSION OF ALL POTENTIAL TAX EFFECTS RELEVANT TO THE MERGER. NAMC
STOCKHOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS AS TO THE SPECIFIC TAX
CONSEQUENCES TO THEM OF THE MERGER, INCLUDING TAX RETURN REPORTING REQUIREMENTS,
THE APPLICABILITY AND EFFECT OF FEDERAL, STATE, LOCAL, AND OTHER APPLICABLE TAX
LAWS AND THE EFFECT OF ANY PROPOSED CHANGES IN THE TAX LAWS.
ACCOUNTING TREATMENT
For accounting and financial reporting purposes, the Merger is intended to
be treated as a purchase by Dime of NAMC under generally accepted accounting
principles. Under the purchase method of accounting, the assets and liabilities
of the corporation not surviving a merger are, as of the effective date of the
merger, recorded at their respective fair values and added to those of the
surviving corporation. Financial statements of
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the surviving corporation issued after consummation of the merger reflect such
values and are not restated retroactively to reflect the historical financial
position or results of operations of the corporation not surviving.
All unaudited pro forma financial information contained in this Proxy
Statement-Prospectus has been prepared using the purchase method to account for
the Merger. See "UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION."
STOCK EXCHANGE LISTING
An application will be filed to list on the NYSE the Dime Common Stock
issuable in the Merger. Approval of the listing of shares of Dime Common Stock
to be issued in the Merger, subject to official notice of issuance, is a
condition precedent to consummation of the Merger. See "-- Conditions to
Consummation."
EXPENSES
The Merger Agreement provides that each party will bear all expenses
incurred by it in connection with the Merger Agreement and the transactions
contemplated thereby, except that printing expenses (including of this Proxy
Statement-Prospectus) and Commission registration fees will be shared equally
between NAMC and Dime.
DIME STOCK REPURCHASE
The Dime Board has authorized and Dime intends to repurchase up to 6.9
million shares of Dime Common Stock in connection with the Merger. Such shares
will be purchased over time at prevailing market prices in the open market or in
privately negotiated transactions. There can be no assurances, however, as to
whether Dime will actually repurchase all such shares or as to the timing of
such repurchase.
RESALES OF DIME COMMON STOCK
The Dime Common Stock issuable in the Merger will have been registered
under the Securities Act but will not be freely transferable if held by persons
who may be deemed to be "affiliates" of NAMC, as that term is used in Rule 145
(c) and (d) under the Securities Act. Affiliates may not sell their shares of
Dime Common Stock acquired pursuant to the Merger, except pursuant to an
effective registration statement under the Securities Act covering those shares
or in compliance with Rule 145 under the Securities Act or another applicable
exemption from the registration requirements of the Securities Act. Persons who
may be deemed to be affiliates of NAMC generally include individuals or entities
that control, are controlled by or are under common control with NAMC and may
include certain officers and directors of NAMC as well as principal shareholders
of NAMC.
NAMC has agreed in the Merger Agreement to deliver to Dime, no later than
the 15th day prior to the mailing of this Proxy Statement-Prospectus, a schedule
of each person that, to NAMC's knowledge, is or is reasonably likely to be, as
of the date of the Special Meeting, an affiliate of NAMC. NAMC has also agreed
in the Merger Agreement to use its reasonable best efforts to cause each person
who may be deemed to be an affiliate of NAMC to execute and deliver to NAMC and
Dime, on or before the date of mailing of this Proxy Statement-Prospectus, an
agreement providing that such person will not offer, sell, pledge, transfer or
otherwise dispose of any shares of Dime Common Stock to be received by such
person in the Merger, except in compliance with the applicable provisions of the
Securities Act and the rules and regulations thereunder. Such persons will not
be able to exchange any certificates representing NAMC Common Stock for
certificates representing Dime Common Stock until they have duly executed and
delivered such agreements. The form of the agreement is set forth as Exhibit C
to the Merger Agreement. This Proxy Statement-Prospectus does not cover any
resales of Dime Common Stock received by affiliates of NAMC.
41
<PAGE> 48
PRO FORMA COMBINED FINANCIAL STATEMENTS
(UNAUDITED)
The unaudited pro forma combined financial statements of Dime and NAMC
which follow are presented to show the impact on Dime's historical financial
position and results of operations of the Merger, which will be accounted for as
a purchase. Under the purchase method of accounting, the assets and liabilities
of NAMC are adjusted to their estimated fair value and combined with the
recorded carrying values of Dime's assets and liabilities.
In accordance with the Merger Agreement, each share of NAMC Common Stock
outstanding immediately prior to the Effective Time will be converted into 1.37
shares (subject to possible adjustment) of Dime Common Stock. In addition, the
Merger Agreement provides that, at the Effective Time, each outstanding option
issued by NAMC to acquire NAMC Common Stock will be converted, after giving
effect to the Exchange Ratio, into an option to purchase shares of Dime Common
Stock.
The Unaudited Pro Forma Combined Statement of Financial Condition of Dime
and NAMC at June 30, 1997 was prepared as if the Merger had been consummated on
that date. The Unaudited Pro Forma Combined Statements of Income for the six
months ended June 30, 1997 and the year ended December 31, 1996 were prepared as
if the Merger had been consummated at the beginning of each of the respective
periods. The impact of the BFS Acquisition, which was consummated as of the
close of business on April 30, 1997 and is being accounted for as a purchase,
has not been reflected in the Unaudited Pro Forma Combined Statements of Income
for the six months ended June 30, 1997 and the year ended December 31, 1996
because it is not material to such pro forma presentations.
The unaudited pro forma combined financial statements are intended for
informational purposes only and are not necessarily indicative of the future
financial position or future results of operations of the combined companies, or
of the financial position or the results of operations of the combined companies
that would have actually occurred had the Merger been in effect as of June 30,
1997 or been consummated at the beginning of the periods shown.
42
<PAGE> 49
DIME AND NAMC
PRO FORMA COMBINED STATEMENT OF FINANCIAL CONDITION
JUNE 30, 1997
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
HISTORICAL
------------------------ PRO FORMA PRO FORMA
DIME NAMC ADJUSTMENTS COMBINED
----------- -------- ----------- -----------
<S> <C> <C> <C> <C>
ASSETS
Cash and due from banks................... $ 163,450 $ 9,676 $ -- $ 173,126
Money market investments.................. 35,824 157 -- 35,981
Loans held for sale....................... 228,487 554,767 11,495 794,749
Securities available for sale............. 3,166,733 -- -- 3,166,733
Securities held to maturity............... 4,015,006 -- -- 4,015,006
Federal Home Loan Bank of New York
stock................................... 272,176 -- -- 272,176
Loans receivable, net..................... 11,493,097 -- -- 11,493,097
Premises and equipment, net............... 113,174 38,676 -- 151,850
Mortgage servicing assets................. 122,131 163,596 32,600 318,327
Other assets.............................. 477,098 96,687 87,843 661,628
----------- -------- -------- -----------
Total assets.................... $20,087,176 $863,559 $ 131,938 $21,082,673
=========== ======== ======== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits................................ $13,335,199 $ -- $ -- $13,335,199
Securities sold under agreements to
repurchase........................... 4,265,905 -- -- 4,265,905
Guaranteed preferred beneficial
interests in Dime's junior
subordinated deferrable interest
debentures........................... 196,477 -- -- 196,477
Other borrowed funds.................... 1,037,902 572,495 -- 1,610,397
Other liabilities....................... 192,405 76,427 6,200 275,032
----------- -------- -------- -----------
Total liabilities.................... 19,027,888 648,922 6,200 19,683,010
----------- -------- -------- -----------
Stockholders' equity:
Common stock............................ 1,083 164 (18) 1,229
Additional paid-in capital.............. 914,386 113,159 162,842 1,190,387
Retained earnings....................... 212,737 144,064 (150,264) 206,537
Treasury stock, at cost................. (70,428) (42,750) 113,178 --
Net unrealized gain on securities
available for sale, net of taxes..... 2,237 -- -- 2,237
Unearned compensation................... (727) -- -- (727)
----------- -------- -------- -----------
Total stockholders' equity........... 1,059,288 214,637 125,738 1,399,663
----------- -------- -------- -----------
Total liabilities and
stockholders' equity.......... $20,087,176 $863,559 $ 131,938 $21,082,673
=========== ======== ======== ===========
</TABLE>
See Notes to Pro Forma Combined Financial Statements.
43
<PAGE> 50
DIME AND NAMC
PRO FORMA COMBINED STATEMENT OF INCOME
FOR THE SIX MONTHS ENDED JUNE 30, 1997
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
HISTORICAL
--------------------- PRO FORMA PRO FORMA
DIME NAMC ADJUSTMENTS COMBINED
-------- -------- ----------- ---------
<S> <C> <C> <C> <C>
Net interest income............................ $236,370 $ 10,545 $ -- $ 246,915
Provision for loan losses...................... 33,000 -- -- 33,000
-------- -------- ------- --------
Net interest income after provision for loan
losses.................................... 203,370 10,545 -- 213,915
-------- -------- ------- --------
Non-interest income:
Net gains on sales activities................ 4,133 122,819 -- 126,952
Other........................................ 52,708 28,033 -- 80,741
-------- -------- ------- --------
Total non-interest income............ 56,841 150,852 -- 207,693
-------- -------- ------- --------
Non-interest expense:
General and administrative expense........... 146,071 125,778 3,434 275,283
Other real estate owned expense, net......... 4,633 591 -- 5,224
Amortization of mortgage servicing assets.... 10,469 10,962 2,444 23,875
-------- -------- ------- --------
Total non-interest expense........... 161,173 137,331 5,878 304,382
-------- -------- ------- --------
Income before income tax expense............... 99,038 24,066 (5,878) 117,226
Income tax expense............................. 38,350 9,754 (906) 47,198
-------- -------- ------- --------
Net income..................................... $ 60,688 $ 14,312 $(4,972) $ 70,028
======== ======== ======= ========
Primary earnings per common share.............. $ 0.57 $ 1.02 $ 0.56
======== ======== ========
Fully diluted earnings per common share........ $ 0.57 $ 1.02 $ 0.56
======== ======== ========
Primary average common shares outstanding...... 106,342 14,040 125,814
======== ======== ========
Fully diluted average common shares
outstanding.................................. 106,397 14,040 125,998
======== ======== ========
</TABLE>
See Notes to Pro Forma Combined Financial Statements.
44
<PAGE> 51
DIME AND NAMC
PRO FORMA COMBINED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1996
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
HISTORICAL
--------------------- PRO FORMA PRO FORMA
DIME NAMC ADJUSTMENTS COMBINED
-------- -------- ----------- ---------
<S> <C> <C> <C> <C>
Net interest income............................ $461,295 $ 22,211 $ -- $ 483,506
Provision for loan losses...................... 41,000 -- -- 41,000
-------- -------- -------- --------
Net interest income after provision for loan
losses.................................... 420,295 22,211 -- 442,506
-------- -------- -------- --------
Non-interest income:
Net (losses) gains on sales activities....... (12,716) 223,405 -- 210,689
Other........................................ 98,694 54,371 -- 153,065
-------- -------- -------- --------
Total non-interest income............ 85,978 277,776 -- 363,754
-------- -------- -------- --------
Non-interest expense:
General and administrative expense........... 292,795 230,476 6,942 530,213
Savings Association Insurance Fund
recapitalization assessment............... 26,280 -- -- 26,280
Other real estate owned expense, net......... 10,072 1,444 -- 11,516
Amortization of mortgage servicing assets
.......................................... 19,382 13,085 4,888 37,355
Restructuring and merger-related expense..... 3,504 -- -- 3,504
-------- -------- -------- --------
Total non-interest expense........... 352,033 245,005 11,830 608,868
-------- -------- -------- --------
Income before income tax expense............... 154,240 54,982 (11,830) 197,392
Income tax expense............................. 49,984 22,029 (2,060) 69,953
-------- -------- -------- --------
Net income..................................... $104,256 $ 32,953 $ (9,770) $ 127,439
======== ======== ======== ========
Primary earnings per common share.............. $ 0.96 $ 2.30 $ 0.99
======== ======== ========
Fully diluted earnings per common share........ $ 0.95 $ 2.30 $ 0.99
======== ======== ========
Primary average common shares outstanding ..... 109,097 14,317 128,558
======== ======== ========
Fully diluted average common shares
outstanding.................................. 109,249 14,317 128,711
======== ======== ========
</TABLE>
See Notes to Pro Forma Combined Financial Statements.
45
<PAGE> 52
NOTES TO PRO FORMA COMBINED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 -- BASIS OF PRESENTATION
The unaudited pro forma combined financial statements are based on the
historical financial statements of Dime and its subsidiaries and NAMC and its
subsidiaries, after giving effect to the Merger under the purchase method of
accounting, and on the assumptions and adjustments discussed in the notes which
follow. Certain reclassifications have been made to the historical financial
statements of NAMC in order to conform to Dime's presentation. The Unaudited Pro
Forma Combined Statement of Financial Condition at June 30, 1997 was prepared as
if the Merger had been consummated on that date. The Unaudited Pro Forma
Combined Statements of Income for the six months ended June 30, 1997 and the
year ended December 31, 1996 were prepared as if the Merger had been consummated
at the beginning of each of the respective periods.
Purchase accounting adjustments reflected in the unaudited pro forma
combined financial statements are preliminary in nature and have been determined
by Dime based upon the best information currently available. The actual purchase
accounting adjustments associated with the Merger will be made on the basis of
appraisals and evaluations at the Effective Time, and therefore, will differ
from those reflected in the unaudited pro forma combined financial statements.
No adjustments have been reflected in the unaudited pro forma combined
financial statements for cost savings or increased revenues that are expected to
be realized as a result of the Merger. Transactions between Dime and NAMC were
not material in relation to the unaudited pro forma combined financial
statements, and therefore, such intercompany amounts were not eliminated from
the unaudited pro forma combined financial statements.
It is expected that Dime will incur direct acquisition costs and
restructuring and other charges as a result of the Merger. The determination of
these costs and charges is ongoing and subject to refinement. Except as noted
below, such costs and charges have not been reflected in the unaudited pro forma
combined financial statements. Upon and during the first year following the
consummation of the Merger, Dime expects to incur pre-tax charges associated
with the Merger, primarily related to personnel and systems costs, of
approximately $10 million, which will be reflected in its consolidated statement
of income. The $6.2 million after-tax impact of such charges has been reflected
in the Unaudited Pro Forma Combined Statement of Financial Condition as a
reduction of retained earnings and an increase in other liabilities.
NOTE 2 -- PURCHASE PRICE
The market value of Dime Common Stock to be issued in connection with the
Merger was computed as follows:
(In thousands, except Exchange Ratio and Per Share Data)
<TABLE>
<S> <C>
Shares of NAMC Common Stock outstanding at June 30, 1997.................. 14,005(A)
Exchange Ratio............................................................ 1.37
--------
Equivalent shares of NAMC Common Stock outstanding...................... 19,187(B)
Average market price per share of Dime Common Stock for the three business
days prior to and subsequent to June 22, 1997, the date of the Merger
Agreement............................................................... $ 18.063
--------
Total market value of Dime Common Stock to be issued................. $346,575
========
</TABLE>
- ---------------
(A) The actual number of shares of NAMC Common Stock to be exchanged in the
Merger will be those outstanding immediately prior to the Effective Time.
(B) For purposes of the Unaudited Pro Forma Combined Statement of Financial
Condition, it was assumed that all of the 4.5 million shares of Dime Common
Stock held in treasury at June 30, 1997 would be issued in connection with
the Merger.
46
<PAGE> 53
NOTES TO PRO FORMA COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
The unaudited pro forma combined financial statements do not give effect to
Dime's plan, which was announced in connection with the Merger, to repurchase
approximately 6.9 million shares of Dime Common Stock. As of June 30, 1997, no
shares of Dime Common Stock had been repurchased under this program.
NOTE 3 -- ALLOCATION OF PURCHASE PRICE
The purchase price for NAMC Common Stock was allocated as follows:
(In thousands)
<TABLE>
<S> <C>
Historical net assets of NAMC at June 30, 1997............................ $214,637
Loans held for sale estimated fair value adjustment....................... 11,495
Mortgage servicing assets estimated fair value adjustment................. 32,600
Elimination of NAMC intangible assets..................................... (8,904)
Deferred income taxes..................................................... (16,756)
Identifiable intangible assets arising from the Merger.................... 2,860
Goodwill arising from the Merger.......................................... 110,643
--------
Total purchase price................................................. $346,575
========
</TABLE>
NOTE 4 -- PRO FORMA ADJUSTMENTS IN THE UNAUDITED PRO FORMA COMBINED STATEMENTS
OF INCOME
The following table summarizes the pro forma adjustments to non-interest
expense reflected in the Unaudited Pro Forma Combined Statements of Income.
<TABLE>
<CAPTION>
SIX
MONTHS YEAR
ENDED ENDED
JUNE 30, DECEMBER 31,
(In thousands) 1997 1996
-------- ------------
<S> <C> <C>
Non-interest expense:
General and administrative expense:
Amortization of goodwill arising from the Merger................ $3,688 $ 7,376
Amortization of identifiable intangible assets arising from the
Merger......................................................... 313 69
Elimination of NAMC's amortization of goodwill.................. (160) (315)
Elimination of NAMC's amortization of identifiable intangible
assets......................................................... (407) (188)
------ -------
Total general and administrative expense................... 3,434 6,942
Amortization of mortgage servicing assets............................ 2,444 4,888
------ -------
Total non-interest expense................................. $5,878 $ 11,830
====== =======
</TABLE>
Goodwill arising from the Merger has been amortized over a 15-year period
using the straight-line method. Identifiable intangible assets have been
amortized over a 14-year period. The excess of the fair value over the carrying
value of NAMC's mortgage servicing assets has been amortized over a period of
approximately 12 years. Income taxes for the six months ended June 30, 1997 and
for the year ended December 31, 1996 associated with those pro forma adjustments
required to be tax effected have been calculated using tax rates of 38.0% and
42.6%, respectively.
NOTE 5 -- PRO FORMA COMBINED EARNINGS PER SHARE
In computing pro forma combined primary and fully diluted earnings per
share, the weighted average outstanding shares used was based upon Dime's
historical amounts, as increased by the shares of Dime Common Stock assumed
issued in the Merger, and the dilutive impact (using the treasury stock method)
of outstanding options to purchase NAMC Common Stock issued by NAMC after giving
effect to the Exchange Ratio.
47
<PAGE> 54
DESCRIPTION OF DIME CAPITAL STOCK
The following summary of certain provisions of the Amended and Restated
Certificate of Incorporation of Dime (the "Dime Certificate") and Dime's by-laws
(the "Dime By-Laws") and of the Dime Rights Agreement (as defined below) is not
intended to be complete and is qualified in its entirety by reference to such
documents, each of which is an exhibit to the Registration Statement of which
this Proxy Statement-Prospectus is a part.
AUTHORIZED STOCK
The Dime Certificate authorizes 200 million shares of Dime Common Stock and
40 million shares of preferred stock, par value $0.01 per share (the "Dime
Preferred Stock").
COMMON STOCK
The shares of Dime Common Stock entitle the holders thereof (1) to
dividends when, as and if declared by the Dime Board, subject to any rights of
any holders of Dime Preferred Stock that may be outstanding, (2) to one vote per
share on each matter properly submitted to stockholders for their vote and (3)
to participate ratably in the net assets of Dime in the event of liquidation,
dissolution or winding up, subject to the prior rights of creditors and of
holders of any Dime Preferred Stock that may be outstanding. Holders of Dime
Common Stock are not entitled to preemptive rights.
Restrictions on Transfer of Stock. The Dime Certificate limits transfers
of shares of Dime Common Stock and other interests that would be treated as
stock of Dime under the Code or applicable IRS regulations and certain options
that would cause either a person or an entity to become a 5% stockholder or
increase a 5% stockholder's percentage ownership interest in Dime. This
limitation is intended to prevent transfers of stock of Dime from triggering an
"ownership change," which would result in the limitation of certain potential
tax benefits available to Dime. This limitation would not prevent the settlement
of any transaction entered into through the facilities of the NYSE, and it
expires on January 14, 1998.
Dividends. Dime's ability to pay dividends is limited by certain
restrictions generally imposed on Delaware corporations. Under these
restrictions, dividends may be paid only out of a Delaware corporation's
surplus, as defined by the DGCL, or if there should be no surplus, its net
profits for the fiscal year in which the dividend is declared and/or the
preceding fiscal year.
The principal source of income of Dime consists of dividends and other
capital distributions, if any, from the Bank, which will be subject to
regulatory restrictions. See "CERTAIN REGULATORY CONSIDERATIONS -- Regulatory
Capital Requirements."
Dime is also subject to a limitation under the terms of its 10.5% Senior
Notes due November 2005 (the "10.5% Senior Notes") on the payment of dividends
or other distributions on Dime Common Stock as well as purchases, redemptions
and acquisitions of Dime Common Stock and payments in respect of subordinated
debt of Dime (collectively, "Restricted Distributions"), until such time as the
10.5% Senior Notes have been rated "investment grade" for a period of three
calendar months. In general, Dime is not permitted to make Restricted
Distributions if, at such time or after giving effect thereto, (1) Dime is in
default with respect to the 10.5% Senior Notes; (2) the Bank would fail to meet
any of its OTS capital requirements (as described in "CERTAIN REGULATORY
CONSIDERATIONS -- Regulatory Capital Requirements"); or (3) the aggregate amount
of dividends or other distributions on the Dime Common Stock subsequent to
December 17, 1994 would exceed the sum of (a) $5 million, plus (b) 50% of Dime's
consolidated net income from that date (but, if there should be a net loss from
such date, minus 100% of such net loss), plus (c) 100% of the net proceeds
received by Dime from any capital stock issued by Dime after December 17, 1994.
The payment of dividends or other distributions by Dime is also subject to
restrictions imposed by the indenture governing its 8.9375% Senior Notes due
July 2003. Under the terms of that indenture, Dime is prohibited from declaring
or paying any dividends on, or purchasing, redeeming or otherwise acquiring or
retiring for value any of its capital stock now or hereafter outstanding, or
returning any capital to holders of its capital stock (each, a "Distribution"),
except that Dime may declare and pay dividends in capital stock of
48
<PAGE> 55
Dime and make any form of Distribution in cash or property (other than Dime's
capital stock) if the amount of such Distribution, together with the amount of
all previous Distributions subsequent to June 30, 1993, does not exceed in the
aggregate the sum of $10 million, plus 75% of Dime's consolidated net income
based on Dime's financial statements contained in periodic public filings with
the Commission for each fiscal quarter after June 30, 1993 (but reduced by 100%
of the net losses incurred in any quarter), plus 100% of the net proceeds
received by Dime in respect of capital stock issued subsequent to September 1,
1993.
DIME PREFERRED STOCK
Shares of Dime Preferred Stock are issuable from time to time in one or
more series as may be determined from time to time by the Dime Board. The
powers, designations, preferences and relative, participating, optional or other
rights, if any, and the qualifications, limitations or restrictions thereof,
including, but not limited to, the number of shares constituting any series of
Dime Preferred Stock, the dividend rights, redemption rights, liquidation
preferences, voting rights and conversion rights of any such series, shall be as
fixed by resolution of the Board of Directors of Dime.
STOCKHOLDER PROTECTION RIGHTS PLAN
Each share of Dime Common Stock has attached to it one Dime Right issued
pursuant to a Stockholder Protection Rights Agreement, dated as of October 20,
1995 (the "Dime Rights Agreement"), between Dime and the First National Bank of
Boston, as Rights Agent. Each Dime Right entitles its registered holder to
purchase one-hundredth of a share of Participating Preferred Stock, par value
$0.01 per share, for $50 (the "Exercise Price"), subject to adjustment, after
the close of business on the earlier of (1) the tenth business day after
commencement of a tender or exchange offer which, if consummated, would result
in a Person (as defined in the Dime Rights Agreement) becoming the Beneficial
Owner (as defined in the Dime Rights Agreement) of 20% or more of the
outstanding shares of Dime Common Stock (an "Acquiring Person") and (2) the
tenth business day after the first date (the "Flip-in Date") of public
announcement that a Person has become an Acquiring Person. In any case, the time
described in the foregoing sentence is referred to as the "Separation Time."
The Dime Rights will not be exercisable until the business day following
the Separation Time. The Dime Rights will expire on the earlier of (1) the close
of business on November 6, 2005; (2) the Redemption Time (as defined below); (3)
the Exchange Time (as defined below); or (4) the merger of Dime into another
corporation pursuant to an agreement entered into prior to a Flip-in Date (such
time when the Dime Rights expire being the "Expiration Time"). The Board of
Directors of Dime may, at its option, at any time prior to occurrence of a
Flip-in Date, redeem all the Dime Rights at a price of $0.01 per Right (the
"Redemption Price," and such time when the Dime Rights are redeemed being the
"Redemption Time").
If a Flip-in Date occurs, Dime has agreed in the Dime Rights Agreement to
ensure and provide that each Dime Right (other than Dime Rights Beneficially
Owned by the Acquiring Person or any Affiliate or Associate (each as defined in
the Dime Rights Agreement) thereof or by any transferees, direct or indirect, of
any of the foregoing, which Dime Rights shall become void) will constitute the
right to purchase from Dime shares of Dime Common Stock having an aggregate
market price (calculated in the manner set forth in the Dime Rights Agreement)
equal to twice the Exercise Price for an amount in cash equal to the
then-current Exercise Price. In addition, the Board of Directors of Dime may, at
its option, at any time after a Flip-in Date and prior to the time that an
Acquiring Person becomes the beneficial owner of more than 50% of the
outstanding shares of Dime Common Stock, elect to exchange the Dime Rights for
shares of Dime Common Stock at an exchange ratio of one share of Dime Common
Stock per Dime Right (such time when the Dime Rights are exchanged being the
"Exchange Time").
Dime has agreed in the Dime Rights Agreement not to consolidate or merge,
or engage in certain other transactions, with an Acquiring Person without
entering into a supplemental agreement with the Acquiring Person providing that,
upon consummation or occurrence of the transaction, each Dime Right shall
thereafter constitute the right to purchase common stock of the Acquiring Person
having an aggregate market price equal to twice the Exercise Price for an amount
in cash equal to the then-current Exercise Price.
49
<PAGE> 56
The Dime Rights will not prevent a takeover of Dime. The Dime Rights,
however, may have certain anti-takeover effects. The Dime Rights may cause
substantial dilution to a person or group that acquires 20% or more of the
outstanding Dime Common Stock unless the Dime Rights are first redeemed by the
Dime Board. A description of the Dime Rights Agreement specifying the terms of
the Dime Rights has been included in reports filed by Dime under the Exchange
Act, which reports are incorporated herein by reference. See "INCORPORATION OF
CERTAIN DOCUMENTS BY REFERENCE." The foregoing description of the Dime Rights is
qualified in its entirety by reference to the Dime Rights Agreement.
CERTAIN OTHER PROVISIONS
Board of Directors. The Dime Certificate and Dime By-Laws provide that the
number of directors shall be fixed from time to time by the Dime Board. The
directors are divided into three classes of as nearly equal size as possible,
with one class elected annually to serve for a term of three years. The
classification of the Dime Board could moderate the pace of any change in
control of Dime because a stockholder with a majority interest in Dime would
have to wait for at least two consecutive annual meetings of stockholders to
elect a majority of the members of the Dime Board. The inability to change the
composition of the Dime Board immediately, even if such change in composition
were deemed by a majority of the holders of Dime Common Stock to be in their
best interests, may tend to discourage a takeover of Dime.
Cumulative Voting. Under the DGCL, the certificate of incorporation of a
corporation may authorize cumulative voting. The Dime Certificate does not
authorize cumulative voting, and therefore, cumulative voting is not available
in the election of directors of Dime.
Stockholder Nominations. The Dime Certificate and the Dime By-Laws provide
that stockholder nominations for election of directors at an annual meeting of
stockholders must be stated in writing and filed with the Secretary of Dime not
less than 60 days nor more than 90 days in advance of the anniversary of the
date of the notice mailed to the stockholders in connection with the previous
year's annual meeting. With respect to an election of directors to be held at a
special meeting of stockholders, notice of nomination must be delivered not
later than the close of business on the seventh day following the date on which
notice of such meeting is first given to stockholders. The Dime By-Laws also
require that any notice of nomination by a stockholder set forth certain
information concerning such stockholder and his or her nominee, including, among
other things, such information regarding the nominee as would be required to be
included in a proxy statement filed pursuant to the proxy rules of the
Commission had the nominee been nominated by the Dime Board, and the consent of
the nominee to serve as a director of Dime if elected. The presiding officer at
the meeting may refuse to acknowledge the nomination of any person not made in
compliance with the foregoing procedures.
The provisions regarding stockholder nominations for election of directors
contained in the Dime Certificate and the Dime By-Laws do not give the Dime
Board any power to approve or disapprove stockholder nominations for election of
directors, and will not preclude a stockholder contest for the election of
directors, if the prescribed procedures are followed. They may, however, have
the effect of precluding a contest for the election of directors if the
prescribed procedures are not followed and may have the effect of discouraging a
third party from conducting a solicitation of proxies or otherwise attempting to
elect its own slate of directors.
Removal of Directors. The Dime Certificate and the Dime By-Laws provide
that directors may be removed only for cause (defined as a felony conviction or
a final adjudication that a director is liable for gross negligence or
misconduct in the performance of his or her duties to Dime) and only with the
affirmative vote of at least two-thirds of the shares of capital stock of Dime
entitled to vote at an election of directors. In addition, the Dime Certificate
and the Dime By-Laws give a majority of the directors the ability to remove a
director if such removal is directed by a federal banking agency.
The provisions of the Dime Certificate and the Dime By-Laws giving the Dime
Board the power to fix the exact number of directors and to fill any vacancies
or newly created positions and allowing removal of directors only for cause upon
the vote of at least two-thirds of the shares entitled to vote at an election of
directors are intended to insure that the classified board provisions are not
circumvented by the removal of incumbent
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directors. Furthermore, as discussed below, stockholders will not have the
ability to call special meetings of stockholders; as a result, a stockholder
seeking to have a director removed for cause generally will be able to do so
only at an annual meeting of stockholders. These provisions of the Dime
Certificate and the Dime By-Laws make the removal of any director more
difficult, even if such removal is believed by a majority of stockholders to be
in their best interests. In addition, these provisions of the Dime Certificate
and the Dime By-Laws could make a takeover of Dime more difficult under
circumstances where the potential acquiror seeks to do so through obtaining
control of the Dime Board.
Special Meetings of Stockholders. As permitted by the DGCL, the Dime
Certificate and the Dime By-Laws provide that special meetings of stockholders
may be called by the Chairman of the Board (or, if there is none, the Chief
Executive Officer) with the approval of a majority of the Dime Board or by a
majority of the Dime Board. Special meetings may not be called by stockholders.
The provisions relating to special meetings of stockholders are intended to
enable the Dime Board to determine if it is appropriate for Dime to incur the
expense of a special meeting in order to present a proposal to its stockholders.
If the Dime Board determines not to call a special meeting, stockholder
proposals could not be presented to the stockholders for action until the next
annual meeting. In addition, these provisions of the Dime Certificate could make
a takeover of Dime more difficult under circumstances where the potential
acquiror seeks to do so through obtaining control of the Dime Board.
Action of Stockholders by Written Consent. The Dime Certificate permits
any action required to be taken at a meeting of its stockholders to be taken
without a meeting only if the written consent of 100% of stockholders is
obtained.
The purpose of this provision of the Dime Certificate is to prevent any
person or persons holding the requisite percentage of the voting stock of Dime
to take corporate action without giving notice to other stockholders and without
the procedures of a stockholder meeting. In a publicly-held corporation with
many stockholders, the practical effect of requiring 100% of the stockholders to
consent to any action is tantamount to requiring stockholders to act only at a
duly held stockholder meeting.
Voting at a Meeting. The Dime By-Laws provide that when a quorum is
present at any meeting, the vote of the holders of a majority of the stock that
has voting power present in person or represented by proxy (for this purpose,
shares abstaining and "broker non-votes" are deemed to be present at such
meeting) shall decide any question properly brought before such meeting, unless
the question is one upon which, by express provision of law, the Dime
Certificate, a certificate of designation of any series of Dime Preferred Stock
or the Dime By-Laws, a different vote is required, in which case such express
provision shall govern and control the decision of such question.
Notwithstanding the above, in the case of any proposal submitted to the
stockholders for the purpose, as determined by the Dime Board, which is not
required to be the sole purpose, of satisfying any term or condition of the
Exchange Act or the Code, any successor to such statutes or any rules or
regulations promulgated thereunder or any other law or regulation applicable to
Dime, the vote (and the manner of calculating such vote) required for purposes
of the Dime By-Laws with respect to such proposal shall be the vote (and the
manner of calculating such vote) required to satisfy the applicable term or
condition.
Notice of Stockholder Proposals. The Dime By-Laws provide that proposals
by stockholders of business to be considered at an annual meeting must be stated
in writing and filed with the Secretary not less than 60 days nor more than 90
days in advance of the anniversary date of the notice of meeting mailed to
stockholders in connection with the previous year's annual meeting. The date for
the annual meeting of stockholders is fixed as the fourth Friday of April or
such earlier or later date as the Dime Board may direct.
The Dime By-Laws also provide that the notice required to be delivered by a
stockholder who wishes to propose business at an annual meeting must set forth
certain information concerning such stockholder.
The Dime By-Laws further provide that the number of proposals that may be
submitted by a stockholder is limited to two and set forth the reasons that a
proposal could be deemed out of order, which generally correspond to those
established by the rules of the Commission that govern when a corporation may
exclude stockholder proposals from its proxy materials. The types of proposals
that Dime does not have to consider if
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raised by a stockholder in connection with an annual meeting include, among
others, those that, if adopted, would be violative of laws or regulations, would
result in a breach or violation of contract, would be impossible to effectuate,
are not a proper matter for stockholder action or relate to ordinary business
operations.
The procedures set forth in the Dime By-Laws may have the effect of
precluding a stockholder proposal if the prescribed procedures are not followed
or if a proposal of the type described above is submitted.
Limitation of Liability and Indemnification of Directors and Officers. The
Dime Certificate contains provisions expressly permitted under the DGCL that
limit certain types of causes of action that can be maintained by a corporation
(or by stockholders on behalf of the corporation) against its directors.
Accordingly, in any action by Dime or its stockholders against the directors of
Dime, the directors will not be personally liable to Dime or its stockholders
for monetary damages for breach of fiduciary duty as directors, except for (1)
any breach of the directors' duty of loyalty to Dime or its stockholders, (2)
acts or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (3) improper dividends or distributions or (4)
transactions involving improper personal benefit.
Dime provides indemnification rights to any person who is made or
threatened to be made a party to any action (other than an action by or in the
right of Dime) by reason of the fact that such person has served as a director
or officer of Dime (or of any other entity, including Dime Bank, at the request
of Dime) with respect to costs, expenses, judgments, fines and amounts paid in
settlement. Subject to applicable banking laws and regulations, these
indemnification provisions apply if such person acted in good faith and in a
manner he or she reasonably believed to be in (or not opposed to) the best
interests of Dime and, with respect to a criminal action, if such person had no
reasonable cause to believe that his or her conduct was unlawful. The persons
described in the preceding sentence are entitled to indemnification rights in an
action by or in the right of Dime with respect to costs, expenses and amounts
paid in settlement, subject to the same standards, except where there is an
adjudication of liability (in which case indemnification is permitted only upon
a court determination that indemnification is, in view of all the circumstances,
fair and reasonable). The Dime Certificate also provides for Dime to advance
expenses of litigation described in this paragraph on an on-going basis.
Under the Dime Certificate, indemnification of the costs and expenses of
defending any action is required to be made to any director or officer who is
successful (on the merits or otherwise) in defending the action. Furthermore,
indemnification also is required to be made with respect to all amounts referred
to in the preceding paragraph, unless a determination is made by a majority of
disinterested directors (or if the disinterested directors so request, or if a
quorum of disinterested directors does not exist, by independent counsel or by
the stockholders) that indemnification is not proper because the director or
officer has not met the applicable standard of conduct.
The Dime Certificate also permits (but does not require) Dime to indemnify
and advance expenses to its non-officer employees and agents in connection with
any civil, criminal, administrative or investigative actions, suits or
proceedings.
The Dime Certificate also provides that if the DGCL is amended to expand
the permitted indemnification of directors and officers, then Dime will
indemnify directors and officers to the fullest extent permitted by such
amendment.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers, employees and agents of Dime pursuant
to Delaware law, or otherwise, Dime has been advised that in the opinion of the
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by Dime of
expenses incurred or paid by a director, officer, employee or agent of Dime in
the successful defense of any action, suit or proceeding) is asserted by such
director, officer, employee or agent in connection with the securities being
registered, Dime will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question of whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
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Dime is not permitted to prepay (which would include the direct or indirect
transfer of any funds or assets and any segregation thereof for the purpose of
making, or pursuant to any agreement to make, any payment thereafter) any legal
expenses or amounts of, or costs incurred in connection with, any settlement of,
or judgment or penalty with respect to, any claim, proceeding or action, if made
in contemplation of, or after, any insolvency of Dime or Dime Bank or with a
view to, or having the result of, preventing the proper application of the
assets of Dime Bank to creditors or preferring one creditor over another.
Further, the FDIC is authorized by statute to prohibit or limit, by regulation
or order, both Dime and Dime Bank from indemnifying officers, directors and
employees for liability or legal expense with regard to any administrative
proceeding or civil action by any federal or state banking agency which results
in a final order pursuant to which such person is assessed a civil money
penalty, is removed or prohibited from participating in the conduct of the
affairs of the institution or is required to cease and desist or take
affirmative action ordered by the agency.
Amendment of Certificate of Incorporation. The Dime Certificate provides
that amendment of certain of its provisions requires, in addition to the
approval of the Dime Board, the approval of stockholders holding two-thirds of
the total votes eligible to be cast at a meeting. The provisions subject to the
two-thirds stockholder approval requirement include amendments of the provisions
relating to (1) the Dime Board (including, without limitation, the size and
classes of the Dime Board, the lack of cumulative voting in the election of
directors and the removal of directors), (2) special meetings of stockholders,
(3) amendment of the Dime By-Laws by stockholders, (4) written consents of
stockholders, (5) stockholder proposals and (6) amendment of the two-thirds
stockholders approval requirement itself. Amendment of any other provision of
the Dime Certificate requires, in addition to the approval of the Dime Board,
approval only of a majority of the total votes eligible to be cast at a meeting.
Amendment of By-Laws. The Dime Certificate and the Dime By-Laws provide
that the Dime By-Laws may be amended by either a resolution adopted by a
majority of the Dime Board or the approval of two-thirds of the total votes
eligible to be cast at a meeting of stockholders.
The requirement of an increased stockholder vote for the amendment of the
Dime By-Laws is intended to prevent a stockholder controlling a majority of the
Dime Common Stock from avoiding the requirements of important provisions of the
Dime By-Laws simply by amending or repealing them. Thus, the holders of a
minority of the shares of the Dime Common Stock could block the future repeal or
modification of the Dime By-Laws even if such action were deemed beneficial by
the holders of more than a majority (although less than two-thirds) of the Dime
Common Stock.
Business Combinations. Except as described below, Dime may effect a merger
or consolidation or sell all or substantially all of its assets if authorized by
the Dime Board and the holders of a majority of the outstanding Dime Common
Stock in accordance with the relevant provisions of the DGCL. Dime may, however,
acquire another corporation or bank (including through a merger with a
subsidiary of Dime), for cash or stock, in a transaction that does not require
any stockholder approval (except that, under NYSE listing requirements, the
issuance in an acquisition of shares equal to 20% or more of the number of
shares of Dime Common Stock then outstanding will generally require approval by
the affirmative vote of a majority of those shares of Dime Common Stock voting
at a meeting at which the matter is presented).
In 1988, Delaware enacted a statute designed to provide Delaware
corporations with limited protection against hostile takeovers. The statute,
which is codified in Section 203 of the DGCL ("Section 203"), is intended to
discourage certain takeover practices by impeding the ability of a hostile
acquiror to engage in certain transactions with the target company.
In general, Section 203 provides that a person or entity that owns 15% or
more of the outstanding voting stock of a Delaware corporation (an "Interested
Stockholder") may not consummate a merger or other business combination
transaction with such corporation at any time during the three-year period
following the date such person or entity became an Interested Stockholder,
unless an exemption described below is applicable. The term "business
combination" is defined broadly to cover a wide range of corporate transactions
including mergers, sales of assets, issuances of stock, transactions with
subsidiaries and the receipt of disproportionate financial benefits.
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The statute exempts the following transactions from the requirements of
Section 203: (1) any business combination if, prior to the date a person became
an Interested Stockholder, the board of directors approved either the business
combination or the transaction which resulted in the stockholder becoming an
Interested Stockholder, (2) any business combination involving a person who
acquired at least 85% of the outstanding voting stock in the transaction in
which he or she became an Interested Stockholder, with the number of shares
outstanding calculated without regard to those shares owned by the corporation's
directors who are also officers or by certain employee stock plans, (3) any
business combination with an Interested Stockholder that is approved by the
board of directors and by a two-thirds of the outstanding voting stock not owned
by the Interested Stockholder, and (4) certain business combinations that are
proposed after the corporation had received other acquisition proposals and that
are approved or not opposed by a majority of certain continuing members of the
board of directors. The Dime Certificate does not contain an election, as
permitted by the DGCL, to be exempt from the requirements of Section 203.
Appraisal Rights. Under the DGCL, for as long as there are more than 2,000
holders of the Dime Common Stock or the Dime Common Stock is listed on the NYSE,
Dime stockholders will not be entitled to appraisal rights in connection with
mergers, consolidations and sales of assets unless such stockholders are
required to accept for their Dime Common Stock consideration other than stock of
the resulting corporation or stock of another corporation that is held by more
than 2,000 holders or is listed or quoted on a national securities exchange or
the NASDAQ (or cash in lieu of fractional shares).
Other Factors Affecting Acquisitions of Control. The preceding discussion
has focused on certain provisions of the Dime Certificate and the Dime By-Laws,
as well as certain provisions of Delaware law applicable to Dime. In addition,
as discussed above, the Dime Certificate authorizes the issuance of 200 million
shares of Dime Common stock and 40 million shares of Dime Preferred Stock. The
authorized but unissued shares of Dime Common Stock and Dime Preferred Stock
provide the Dime Board with flexibility to effect, among other transactions,
financings, acquisitions, stock dividends, stock splits and employee stock
options without the need for a stockholder vote. The Dime Board, consistent with
its fiduciary duties, could also authorize the issuance of these shares, and
could establish voting, conversion, liquidation and other rights for the Dime
Preferred Stock being issued, in an effort to deter attempts to gain control of
Dime.
In addition, Dime is subject to federal statutes and regulations concerning
changes in control, or potential changes in control, of depository institutions.
In particular, under HOLA, before any company may acquire control (as defined in
HOLA) of Dime, that company must obtain OTS approval. Also, under the Change in
Bank Control Act (the "CIBCA"), before any person may acquire control (as
defined under the CIBCA; generally, ownership or control of 10% or more of the
outstanding shares of voting stock) of Dime, it must submit 60 days' prior
written notice to the OTS and such notice must not be disapproved.
COMPARISON OF CERTAIN RIGHTS OF STOCKHOLDERS
At the Effective Time, as a consequence of the Merger, all holders of NAMC
Common Stock will become holders of Dime Common Stock, and their rights as
stockholders of Dime will be determined by DGCL, the Dime Certificate and the
Dime By-Laws. The following is a summary of material differences between the
rights of NAMC stockholders and the rights of Dime stockholders. This summary is
not intended to be complete and is qualified in its entirety by reference to
applicable provisions of the DGCL and is also qualified by reference to the
amended and restated certificates of incorporation and by-laws of each of NAMC
and Dime, as well as the Dime Rights Agreement and the NAMC Rights Agreement.
RESTRICTIONS ON TRANSFER
As described under "DESCRIPTION OF DIME CAPITAL STOCK -- Restrictions on
Transfer of Stock," the Dime Certificate limits, through January 14, 1998,
transfers of shares of Dime Common Stock (and certain other interests) that
would cause either a person or an entity to become a 5% stockholder or increase
a 5% stockholder's percentage ownership interest in Dime. This limitation is
intended to prevent transfers of stock of Dime from triggering an "ownership
change," which would result in the limitation of certain potential tax benefits
available to Dime.
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The Amended and Restated Certificate of Incorporate of NAMC (the "NAMC
Certificate") and the NAMC By-Laws do not contain a similar provision limiting
transfers of shares.
CERTAIN REGULATORY LIMITATIONS
Dime is subject to federal statutes and regulations concerning changes in
control, or potential changes in control, of depository institutions. In
particular, under HOLA, before any company may acquire control (as defined in
HOLA) of Dime, that company must obtain OTS approval. Also, under CIBCA, before
any person may acquire control (as defined under the CIBCA) of Dime, it must
submit 60 days' prior written notice to the OTS and such notice must not be
disapproved.
NAMC is not subject to similar statutory or regulatory limitations on
acquisitions of control, although various states in which NAMC is licensed
require filings in connection with changes in control.
CLASSIFICATION OF BOARD OF DIRECTORS
The Dime Certificate and Dime By-Laws provide for the classification of the
Dime Board into three classes, with directors serving staggered three-year
terms.
The NAMC Certificate and NAMC By-Laws do not provide for the classification
of the NAMC Board, which consists of a single class of directors who are elected
annually.
REMOVAL OF DIRECTORS
The Dime Certificate and the Dime By-Laws provide that directors may be
removed only for cause (defined as a felony conviction or an adjudication that a
director is liable for gross negligence or misconduct in the performance of his
or her duties to Dime) and only with the affirmative vote of at least two-thirds
of the shares of capital stock of Dime entitled to vote at an election of
directors. In addition, the Dime Certificate and Dime By-Laws give a majority of
the Dime Board the ability to remove a director if such removal is directed by a
federal banking agency.
The NAMC Certificate and NAMC By-Laws do not contain limitations on the
rights of stockholders to remove directors and do not authorize the NAMC Board
to remove directors. Under the DGCL, directors may be removed, with or without
cause, by a vote of the majority of the shares of capital stock of NAMC entitled
to vote at an election of directors. Any director elected by the holders of a
certain class of shares may be removed only by such class in accordance with the
DGCL.
AMENDMENT OF CERTIFICATE AND BY-LAWS
Certificate Amendments. Under the Dime Certificate, amending, adopting
provisions inconsistent with, or repealing, certain provisions in the Dime
Certificate requires the approval of the holders of at least two-thirds of the
total votes eligible to be cast at a meeting for the election of directors: The
provisions subject to the two-thirds stockholder approval requirement include
provisions relating to: (1) the Dime Board (including, without limitation, the
size and classes of the Dime Board, the lack of cumulative voting in the
election of directors and the removal of directors); (2) special meetings of
stockholders; (3) amendment of the Dime By-Laws by stockholders; (4) written
consent of stockholders; (5) stockholder proposals and (6) amendment of the
two-thirds stockholder approval requirement itself. Under the DGCL, all other
amendments of the Dime Certificate require the affirmative vote of holders of a
majority of the total votes eligible to be cast at a meeting for the election of
directors (unless a class vote is required by the DGCL).
The NAMC Certificate does not contain any supermajority voting provisions,
and amendments to the NAMC Certificate therefore generally require the
affirmative vote of holders of a majority of the votes eligible to be cast, as
specified in the DGCL.
By-Law Amendments. The Dime Certificate and the Dime By-Laws provide that
the Dime By-Laws may be amended by either resolution of the Dime Board or by the
affirmative vote of at least two-thirds of the total votes eligible to be cast
at a meeting for the election of directors.
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The NAMC Certificate and NAMC By-Laws provide that the NAMC By-Laws may be
amended by action of the NAMC Board or by action of a majority of the NAMC
stockholders entitled to vote. NAMC stockholders may change or repeal any
by-laws adopted by the directors.
STOCKHOLDER NOMINATIONS AND PROPOSALS
Nominations. As discussed under "DESCRIPTION OF DIME CAPITAL
STOCK -- Certain Other Provisions -- Stockholder Nominations," the Dime
Certificate and Dime By-Laws impose certain requirements on stockholder
nominations, whether at annual or special meetings.
NAMC's By-Laws impose requirements on stockholder nominations at annual
meetings similar to those imposed by the Dime By-Laws. The NAMC By-Laws,
however, do not address stockholder nominations with respect to an election to
be held at a special meeting.
Proposals. As discussed under "DESCRIPTION OF DIME CAPITAL
STOCK -- Certain Other Provisions -- Stockholder Nominations," the Dime By-Laws
impose timing, content and number limitations on proposals by Dime stockholders
of business to be considered at an annual meeting.
The NAMC By-Laws impose timing limitations on stockholder proposals that
are substantially similar to those imposed by the Dime By-Laws. The NAMC By-Laws
do not, however, impose similar content and number limitations.
SPECIAL MEETINGS OF STOCKHOLDERS AND STOCKHOLDER ACTION BY WRITTEN CONSENT
The Dime Certificate provides that special meetings of Dime Stockholders
may be called by the Chairman of the Board (or, if there is none, the Chief
Executive Officer) with the approval of a majority of the Dime Board or by a
majority of the Dime Board. The Dime Certificate permits any action required to
be taken at a meeting of its stockholders to be taken without a meeting only if
the written consent of all stockholders entitled to vote is obtained.
The NAMC By-Laws provide that special meetings of NAMC stockholders may be
called by resolution of the Board of Directors. The NAMC By-Laws also require
that any action required to be taken at a meeting of its stockholders may be
taken without a meeting only if written consent of all stockholders entitled to
vote is obtained.
RIGHTS PLANS
As discussed under "DESCRIPTION OF DIME CAPITAL STOCK -- Stockholder
Protection Rights Plan," each share of Dime Common Stock has attached to it one
Dime Right issued pursuant to the Dime Rights Agreement.
Each share of NAMC Common Stock has attached to it one NAMC Right issued
pursuant to a Rights Agreement, dated as of October 19, 1992 (as amended, the
"NAMC Rights Agreement"), between NAMC and The Bank of New York, as Rights Agent
(the "NAMC Rights Agent"). The NAMC Rights operate in substantially the same
manner as the Dime Rights, and each NAMC Right entitles its registered holder to
purchase from NAMC one-hundredth of a share of Series A Cumulative Preferred
Stock, par value $0.01 per share, for $70.00, subject to possible adjustment,
after a Distribution Date (as defined in the NAMC Rights Agreement).
A Distribution Date for purposes of the NAMC Rights Agreement is
substantially identical to the Separation Time for purposes of the Dime Rights
Agreement except that (1) an Acquiring Person is a person who has acquired 15%
or more of the outstanding shares of NAMC Common Stock and (2) that a
Distribution Date also will occur upon the declaration by the NAMC Board that a
person is an "Adverse Person." The NAMC Board may declare a person to be an
"Adverse Person," after a determination that such person, alone or together with
its affiliates and associates, has become the beneficial owner of 10% or more of
the outstanding shares of NAMC Common Stock and a determination by the NAMC
Board, after reasonable inquiry and investigation, that (1) such beneficial
ownership by such person is intended to cause, is reasonably
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likely to cause or will cause NAMC to repurchase the NAMC Common Stock
beneficially owned by such person or to cause pressure on NAMC to take action or
enter into a transaction or series of transactions which would provide such
person with short-term financial gain under circumstances where the NAMC Board
determines that the best long-term interest of NAMC and its stockholders, but
for the actions and possible actions of such person, would not be served by
taking such actions or entering into such transaction or series of transactions
at that time or (2) such beneficial ownership is causing, or is reasonably
likely to cause, a material adverse impact (including but not limited to,
impairment of relationships with customers or impairment of NAMC's ability to
maintain its competitive position) on the business prospects of NAMC.
The NAMC Rights will expire at the close of business on December 31, 2002,
unless previously exchanged or redeemed by NAMC.
NAMC and the NAMC Rights Agent have executed and delivered an Amendment,
dated as of June 22, 1997 (the "NAMC Amendment"), to the NAMC Rights Agreement
that provides that, until the termination of the Merger Agreement, neither Dime
nor any affiliate or associate of Dime shall be deemed to be an "Acquiring
Person" or an "Adverse Person" under the NAMC Rights Agreement as a result of
their acquisition of beneficial ownership of shares of NAMC Common Stock by
reason of the Merger Agreement, or by reason of the consummation of any
transaction contemplated by the Merger Agreement. By exempting Dime from the
definition of Acquiring Person and Adverse Person, the NAMC Amendment in effect
provides that neither the approval, execution or delivery of the Merger
Agreement nor the consummation of any transaction contemplated by the Merger
Agreement shall be deemed to cause the occurrence of a Distribution Date under
the NAMC Rights Agreement.
Descriptions of the NAMC Rights Agreement and the NAMC Amendment specifying
the terms of the NAMC Rights have been included in reports filed by NAMC under
the Exchange Act, which reports are incorporated herein by reference. See
"INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE." The foregoing description of
the NAMC Rights is qualified in its entirety by reference to the NAMC Rights
Agreement and the NAMC Amendment.
CERTAIN REGULATORY CONSIDERATIONS
As a savings and loan holding company, Dime is subject to supervision by
the OTS. Dime Bank is a federally chartered savings bank subject to
comprehensive regulation, examination and supervision by the OTS, as the primary
federal regulator of savings associations, and by the FDIC, as the administrator
of the federal deposit insurance funds. A portion of Dime Bank's deposits is
insured by the SAIF and a portion is insured by the BIF. Dime Bank is required
to file reports with the OTS and the FDIC concerning its activities and
financial condition. Dime Bank is a member of the Federal Home Loan Bank of New
York and is subject to certain limited regulation by the Board of Governors of
the Federal Reserve System.
The description of statutory provisions and regulations applicable to
savings associations and savings and loan holding companies set forth below does
not purport to be a complete description of the statues and regulations
described or of all such statutes and regulations and their effects on Dime Bank
and Dime. The regulatory scheme has been established primarily for the
protection of depositors and the financial system generally and is not intended
for the protection of stockholders or other creditors.
As a holding company, Dime's ability to pay dividends and make other
distributions is largely dependent on its ability to receive dividends and other
funds from Dime Bank. In addition to the other limitations described above on
Dime's ability to pay dividends or other distributions on its capital stock,
Dime is also affected by statutes and regulations relating to the business of
federal savings associations that have the effect of limiting such transfers of
funds from Dime Bank to Dime. The nature and extent of such restrictions are
dependent upon the institution's level of regulatory capital and its income.
REGULATORY CAPITAL REQUIREMENTS
Under federal statute and OTS regulations, savings associations are
required to comply with each of three separate capital adequacy standards. Such
institutions are required to have "core capital" (or "leverage")
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equal to at least 3% of adjusted total assets, "tangible capital" equal to at
least 1.5% of adjusted total assets and "total risk-based capital" equal to at
least 8% of risk-weighted assets.
"Core capital" includes common stockholders' equity (including common
stock, common stock surplus and retained earnings but excluding any net
unrealized gains or losses, net of related taxes, on certain securities
available for sale), noncumulative perpetual preferred stock and any related
surplus and minority interests in the equity accounts of fully consolidated
subsidiaries. Intangible assets, other than mortgage servicing rights ("MSRs")
valued in accordance with applicable regulations and purchased credit card
relationships ("PCCRs"), generally must be deducted from core capital. MSRs and
PCCRs may comprise only up to 50% of core capital.
"Tangible capital" means core capital less any intangible assets (except
for MSRs includable in core capital).
For purposes of the risk-based capital requirement, "total risk-based
capital" means core capital plus supplementary capital, so long as the amount of
supplementary capital that is used to satisfy the requirement does not exceed
the amount of core capital. "Supplementary capital" includes, among other
things, general valuation loan and lease loss allowances up to a maximum of
1.25% of risk-weighed assets. Risk-weighted assets are determined by multiplying
certain categories of the savings association's assets, including off-balance
sheet equivalents, by an assigned risk weight of 0% to 100% based on the credit
risk associated with those assets as specified in OTS regulations.
As of June 30, 1997, Dime Bank had core capital and tangible capital of
$1.13 billion, which was equal to 5.66% of adjusted total assets, and total
risk-based capital of $1.23 billion, which was equal to 12.03% of risk-weighted
assets, and exceeded the capital requirements imposed by the OTS.
In 1991, Congress enacted the so-called "prompt corrective action"
provisions of the Federal Deposit Insurance Act ("the FDI Act"), which
established five capital-based categories for depository institutions insured by
the FDIC: "well capitalized," "adequately capitalized," "undercapitalized,"
"significantly undercapitalized," and "critically undercapitalized." The OTS is
required to take certain mandatory action and is authorized to take other
discretionary action with respect to savings associations in the three
undercapitalized categories. Under OTS regulations, an institution is treated as
well capitalized if its ratio of total risk-based capital to risk-weighted
assets is 10% or more, its ratio of core capital to risk-weighted assets is 6%
or more, its ratio of core capital to adjusted total assets is 5% or more and it
is not subject to any order or directive by the OTS to meet a specific capital
level. At June 30, 1997, Dime Bank continued to satisfy the published standards
for a well capitalized institution.
LIMITATIONS ON CAPITAL DISTRIBUTIONS
A savings association such as Dime Bank may not make a capital distribution
(or pay management fees to its holding company) if, following such distribution,
the association will be "undercapitalized" under the prompt corrective action
provisions described above. In addition, OTS regulations limit the ability of a
savings association to pay dividends and make other capital distributions
according to the institution's level of capital and income, with the greatest
flexibility afforded to institutions that meet or exceed their OTS capital
requirements. For this purpose, "capital distributions" include cash dividends,
payments to repurchase, redeem, retire or otherwise acquire a savings
association's shares, payments to stockholders of another institution in a
cash-out merger, other distributions charged against capital and any other
transaction that the OTS determines to entail a payout of capital. To the extent
that the OTS regulations described below and the prompt corrective action
provisions are inconsistent, the prompt corrective action provisions control.
Under current OTS regulations, a savings association's ability to pay
dividends depends on its level of regulatory capital as well as its earnings. A
savings association that exceeds its OTS regulatory capital requirements both
before and after a proposed dividend (or other distribution of capital) (a "Tier
1 Institution") and has not been advised by the OTS that it is in need of more
than normal supervision may, after prior notice to but without the approval of
the OTS, make capital distributions during a calendar year up to the higher of
(1) 100% of its net income to date during the calendar year plus the amount that
would
58
<PAGE> 65
reduce by one-half its "surplus capital ratio" (the percentage by which the
institution's ratio of total capital to assets exceeds the ratio of its fully
phased-in capital requirement to assets) at the beginning of the calendar year
or (2) 75% of its net income over the most recent four-quarter period. In
addition, a Tier 1 Institution may make capital distributions in excess of the
foregoing limits if the OTS does not object within a 30-day period following
notice by the institution. Under OTS regulation, a Tier 3 Institution (i.e., an
institution that does not meet its OTS capital requirements) generally cannot
make any capital distribution without the prior written approval of the OTS. A
Tier 1 Institution that has been notified by the OTS that it is in need of "more
than normal supervision" must, under OTS regulations, be treated as a Tier 2 or
a Tier 3 Institution. Under OTS regulations, a Tier 2 Institution may, after
prior notice but without the approval of the OTS, make capital distributions in
an amount up to 75% of its net income during the most recent fourth-quarter
period. Dime Bank is currently a Tier 1 Institution. The OTS may also prohibit a
proposed capital distribution that would otherwise be permitted by the
regulation if the OTS determines that the distribution would constitute an
unsafe or unsound practice. In addition, a savings association that has
converted from mutual to stock form (such as Dime Bank) may not declare or pay a
dividend on, or repurchase, any of its capital stock if the effect of such
action would be to reduce the regulatory capital of the institution below the
amount required for its liquidation account.
TRANSACTIONS WITH AFFILIATES
Under federal law and regulation, transactions between a savings
association and its "affiliates," which term includes its holding company and
other companies controlled by its holding company, are subject to quantitative
and qualitative restrictions. Savings associations are restricted in their
ability to engage in certain types of transactions with their affiliates,
including transactions that could provide funds to a holding company for the
payment of capital distributions. These "covered transactions" include (1)
lending or extending credit to, or guaranteeing credit of, an affiliate, (2)
purchasing assets from an affiliate, (3) accepting securities issued by an
affiliate as collateral for a loan or extension of credit and (4) issuing a
guarantee, acceptance or letter of credit on behalf of an affiliate. Covered
transactions are permitted between a savings association and single affiliate up
to 10% of the capital stock and surplus of the association, and between a
savings association and all of its affiliates up to 20% of the capital stock and
surplus of the institution. The purchase of low-quality assets by a savings
association from an affiliate is not permitted. Each loan or extension of credit
to an affiliate by a savings association must be secured by collateral with a
market value ranging from 100% to 130% (depending on the type of collateral) of
the amount of credit extended. Notwithstanding the foregoing, a savings
association is not permitted to make a loan or extension of credit to any
affiliate unless the affiliate is engaged only in activities that the Federal
Reserve Board has determined to be permissible for bank holding companies.
Savings associations also are prohibited from purchasing or investing in
securities issued by an affiliate, other than shares of a subsidiary. Covered
transactions between a savings association and an affiliate, and certain other
transactions with or benefitting an affiliate, must be on terms and conditions
at least as favorable to the institution as those prevailing at the time for
comparable transactions with non-affiliated companies. This arm's-length
requirement applies to all covered transactions, as well as to (a) the sale of
securities or other assets to an affiliate, (b) the payment of money or the
furnishing of services to an affiliate, (c) any transaction in which an
affiliate acts as agent or broker or receives a fee for its services to the
savings association or to any other person, or (d) any transaction or series of
transactions with a third party if any affiliate has a financial interest in the
third party or is a participant in the transaction or series of transactions.
EXPERTS
The consolidated financial statements of Dime and subsidiaries as of
December 31, 1996 and 1995, and for each of the years in the three-year period
ended December 31, 1996 have been incorporated by reference herein and in the
registration statement in reliance upon the report of KPMG Peat Marwick LLP,
independent certified public accountants, incorporated by reference herein, and
upon the authority of said firm as experts in accounting and auditing. Such
report refers to a change in the method of accounting for goodwill.
The consolidated financial statements of NAMC and subsidiaries as of
December 31, 1996 and 1995, and for each of the years in the three-year period
ended December 31, 1996 incorporated by reference herein and
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<PAGE> 66
in the registration statement have been audited by Ernst & Young LLP,
independent auditors, as set forth in their report thereon incorporated by
reference herein, and are included in reliance upon such report given upon the
authority of such firm as experts in accounting and auditing.
VALIDITY OF DIME COMMON STOCK
The validity of the shares of Dime Common Stock to be issued to holders of
NAMC Common Stock pursuant to the Merger will be passed upon for Dime by
Sullivan & Cromwell, New York, New York.
STOCKHOLDER PROPOSALS
To be considered for inclusion in NAMC's Proxy Statement and Form of Proxy
relating to NAMC's Annual Meeting of Stockholders to be held in 1998 (if the
Merger has not been consummated prior to the date of the meeting), a stockholder
proposal must be received by the Secretary of NAMC at 3883 Airway Drive, Santa
Rosa, California 95403 no later than December 30, 1997.
To be considered for inclusion in Dime's Proxy Statement and Form of proxy
relating to Dime's Annual Meeting of Stockholders to be held in 1998, a
stockholder proposal must be received by the Secretary of Dime at Dime Bancorp,
Inc., 589 Fifth Avenue, New York, New York 10017 no later than December 3, 1997.
Any such proposal will be subject to 17 C.F.R. sec. 240.14a-8 promulgated
by the Commission under the Exchange Act.
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<PAGE> 67
APPENDIX A
[CONFORMED COPY]
================================================================================
AGREEMENT AND PLAN OF COMBINATION
DATED AS OF JUNE 22, 1997
BY AND AMONG
NORTH AMERICAN MORTGAGE COMPANY
DIME BANCORP, INC.
THE DIME SAVINGS BANK OF NEW YORK, FSB
AND
47TH ST. PROPERTY CORPORATION
------------------------
AMENDED AND RESTATED
AS OF
JULY 31, 1997
------------------------
================================================================================
<PAGE> 68
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
RECITALS.............................................................................. 1
ARTICLE I
Certain Definitions; Interpretation................................................... 1
1.01 Certain Definitions............................................................ 1
1.02 Interpretation................................................................. 6
ARTICLE II
The Merger............................................................................ 6
2.01 The Merger..................................................................... 6
2.02 Reservation of Right to Revise Structure....................................... 7
2.03 Effective Time................................................................. 7
ARTICLE III
Consideration......................................................................... 7
3.01 Consideration.................................................................. 7
3.02 Rights as Stockholders; Stock Transfers........................................ 8
3.03 Fractional Shares.............................................................. 8
3.04 Exchange Procedures............................................................ 8
3.05 Anti-Dilution Provisions....................................................... 9
3.06 Options........................................................................ 9
ARTICLE IV
Actions Pending the Merger............................................................ 10
4.01 Forbearances of the Company.................................................... 10
4.02 Forbearances of the Acquiror................................................... 12
4.03. Coordination of Dividends..................................................... 13
ARTICLE V
Representations and Warranties........................................................ 13
5.01 Disclosure Schedules........................................................... 13
5.02 Standard....................................................................... 13
5.03 Representations and Warranties of the Company.................................. 13
5.04 Representations and Warranties of the Acquiror................................. 24
ARTICLE VI
Covenants............................................................................. 28
6.01 Reasonable Best Efforts........................................................ 28
6.02 Stockholder Approvals.......................................................... 28
6.03 Registration Statement......................................................... 28
6.04 Press Releases................................................................. 29
6.05 Access; Information............................................................ 29
6.06 Acquisition Proposals.......................................................... 29
6.07 Affiliate Agreements........................................................... 30
6.08 Takeover Laws.................................................................. 30
6.09 No Rights Triggered............................................................ 30
6.10 Rights Agreement............................................................... 30
6.11 NYSE Listing................................................................... 30
6.12 Regulatory Applications........................................................ 30
6.13 Indemnification................................................................ 31
6.14 Benefit Plans.................................................................. 32
</TABLE>
<PAGE> 69
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
6.15 Accountants' Letters........................................................... 32
6.16 Notification of Certain Matters................................................ 33
6.17 Certain Policies of the Company................................................ 33
6.18 Employee Benefits.............................................................. 33
6.19 Certain Payments at Effective Time............................................. 33
6.20 Certain Employee Agreements.................................................... 34
ARTICLE VII
Conditions to Consummation of the Merger.............................................. 34
7.01 Conditions to Each Party's Obligation to Effect the Merger..................... 34
7.02 Conditions to Obligation of the Company........................................ 35
7.03 Conditions to Obligation of the Acquiror....................................... 35
ARTICLE VIII
Termination........................................................................... 36
8.01 Termination.................................................................... 36
8.02 Effect of Termination and Abandonment.......................................... 37
8.03 Termination Fee................................................................ 37
ARTICLE IX
Miscellaneous......................................................................... 39
9.01 Survival....................................................................... 39
9.02 Waiver; Amendment.............................................................. 39
9.03 Counterparts................................................................... 39
9.04 Governing Law.................................................................. 39
9.05 Expenses....................................................................... 39
9.06 Notices........................................................................ 39
9.07 Entire Understanding; No Third Party Beneficiaries............................. 40
EXHIBIT A Form of Amendment to Company Rights Agreement
EXHIBIT B Form of Company Affiliate Letter
</TABLE>
<PAGE> 70
AGREEMENT AND PLAN OF COMBINATION, dated as of June 22, 1997 and amended
and restated as of July 31, 1997 (this "Agreement"), by and among North American
Mortgage Company (the "Company"), Dime Bancorp, Inc. (the "Acquiror"), The Dime
Savings Bank of New York, FSB (the "Bank"), and 47th St. Property Corporation
("Merger Sub").
RECITALS
A. The Company. The Company is a Delaware corporation, having its
principal place of business in Santa Rosa, California.
B. The Acquiror. The Acquiror is a Delaware corporation, having its
principal place of business in New York, New York.
C. The Bank. The Bank is a federal savings bank and a wholly owned
subsidiary of the Acquiror, having its principal place of business in New York,
New York.
D. Merger Sub. Merger Sub is a Delaware corporation and a wholly owned
subsidiary of the Bank. Merger Sub has engaged in no business other than as an
incident to the transactions contemplated by this Agreement.
E. Intentions of the Parties. It is the intention of the parties to this
Agreement that the business combination contemplated hereby be treated as a
"reorganization" under Section 368 of the Internal Revenue Code of 1986, as
amended (the "Code").
F. Board Action. The respective Boards of Directors of each of Acquiror,
the Bank and the Company have determined that it is in the best interests of
their respective companies and their stockholders to consummate the business
combination transaction provided for in this Agreement.
NOW, THEREFORE, in consideration of the premises, and of the mutual
covenants, representations, warranties and agreements contained herein, the
parties agree as follows:
ARTICLE I
CERTAIN DEFINITIONS; INTERPRETATION
1.01 Certain Definitions. The following terms are used in this Agreement
with the meanings set forth below:
"Acquiror" has the meaning set forth in the preamble to this Agreement.
"Acquiror Certificate" means the Amended and Restated Certificate of
Incorporation of the Acquiror.
"Acquiror Common Stock" means the common stock, par value $0.01 per share,
of the Acquiror.
"Acquiror Person" has the meaning set forth in Section 8.03(b).
"Acquiror Preferred Stock" means the preferred stock, par value $1.00 per
share, of the Acquiror.
"Acquiror Rights" means the rights to purchase Acquiror Stock outstanding
from time to time pursuant to the Acquiror Rights Agreement.
"Acquiror Rights Agreement" means the Stockholders Protection Rights
Agreement, dated as of October 20, 1995, between the Acquiror and the First
National Bank of Boston, as Rights Agent.
"Acquiror Stock" means, collectively, the Acquiror Common Stock and the
Acquiror Preferred Stock.
"Acquiror's SEC Documents" has the meaning set forth in Section 5.04(g).
"Acquisition Transaction" means (i) a merger or consolidation, or any
similar transaction, involving the Company or any subsidiary of it (other than
mergers, consolidations or similar transactions involving solely the Company
and/or one or more wholly-owned subsidiaries of the Company; provided that any
such transaction
<PAGE> 71
is not entered into in violation of the terms of this Agreement), (ii) a
purchase, lease or other acquisition of all or any substantial part of the
assets or deposits of the Company or any subsidiary of it, or (iii) a purchase
or other acquisition (including by way of merger, consolidation, share exchange
or otherwise) of securities representing 15% or more of the voting power of the
Company or any subsidiary of it.
"Agency" means the HUD, FHA, VA, FNMA, FHLMC, GNMA or a State Agency, as
applicable.
"Agreement" means this Agreement, as amended or modified from time to time
in accordance with Section 9.02.
"Average Closing Price" means the average of the daily last sale prices of
Acquiror Common Stock as reported on the NYSE Composite Transactions Reporting
System (as reported in The Wall Street Journal or, if not reported therein, in
another authoritative source) for the ten consecutive NYSE full trading days (in
which such shares are traded on the NYSE) ending at the close of trading on the
Determination Date.
"Bank" has the meaning set forth in the preamble to this Agreement.
"Code" has the meaning set forth in Recital D.
"Company" has the meaning set forth in the preamble to this Agreement.
"Company Affiliate" has the meaning set forth in Section 6.07.
"Company Board" means the Board of Directors of the Company.
"Company By-Laws" means the Amended and Restated By-laws of the Company.
"Company Certificate" means the Amended and Restated Certificate of
Incorporation of the Company.
"Company Common Stock" means the common stock, par value $0.01 per share,
of the Company.
"Company Convertible Preferred Stock" means the $0.20 Series A Convertible
Preferred Stock of the Company.
"Company Meeting" has the meaning set forth in Section 6.02.
"Company Preferred Stock" means the preferred stock, par value $0.01 per
share, of the Company.
"Company Rights" means the rights to purchase Company Stock outstanding
from time to time pursuant to the Company Rights Agreement.
"Company Rights Agreement" means the Shareholder Rights Agreement, dated as
of October 19, 1992, between the Company and The Bank of New York, as Rights
Agent.
"Company Stock" means, collectively, the Company Common Stock and the
Company Preferred Stock.
"Company Stock Option" means each outstanding option to purchase shares of
Company Common Stock.
"Company's SEC Documents" has the meaning set forth in Section 5.03(g).
"Compensation and Benefit Plans" has, with respect to any person, the
meaning set forth in Section 5.03(l).
"Consideration" has the meaning set forth in Section 3.01.
"Contract" means, with respect to any person, any agreement, indenture,
undertaking, debt instrument, contract, lease or other commitment to which such
person or any of its Subsidiaries is a party or by which any of them is bound or
to which any of their properties is subject.
"Costs" has the meaning set forth in Section 6.13(a).
"Determination Date" means the date of receipt of all OTS approvals
necessary to consummate the Merger.
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"DGCL" means the General Corporation Law of the State of Delaware.
"Disclosure Schedule" has the meaning set forth in Section 5.01.
"DOL" means the United States Department of Labor.
"Effective Date" means the date on which the Effective Time occurs.
"Effective Time" means the date and time at which the Merger becomes
effective.
"Environmental Laws" means any federal, state or local law, regulation,
order, decree, permit, authorization, common law or agency requirement with
force of law relating to: (a) the protection or restoration of the environment,
health or safety (in each case as relating to the environment) or natural
resources; or (b) the handling, use, presence, disposal, release or threatened
release of any Hazardous Substance.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" has, with respect to any person, the meaning set forth in
Section 5.03(l).
"ERISA Affiliate Plan" has the meaning set forth in Section 5.03(l).
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations thereunder.
"Exchange Agent" has the meaning set forth in Section 3.04.
"Exchange Fund" has the meaning set forth in Section 3.04.
"FDIC" means the Federal Deposit Insurance Corporation.
"Fee" has the meaning set forth in Section 8.03(a).
"Fee Termination Event" has the meaning set forth in Section 8.03(a).
"Fee Trigger Event" has the meaning set forth in Section 8.03(c).
"FHA" means the Federal Housing Administration.
"FHLMC" means the Federal Home Loan Mortgage Corporation.
"FHMA" means the Farmers' Home Mortgage Administration.
"FNMA" means the Federal National Mortgage Association.
"GNMA" means the Government National Mortgage Association.
"Governmental Authority" means any court, administrative agency or
commission or other federal, state or local governmental authority or
instrumentality.
"Hazardous Substance" means any substance in any concentration that is: (a)
listed, classified or regulated pursuant to any Environmental Law; (b) any
petroleum product or by-product, asbestos-containing material, lead-containing
paint or plumbing, polychlorinated biphenyls, radioactive materials or radon; or
(c) any other substance which is or may be the subject of regulatory action by
any Governmental Authority pursuant to any Environmental Law.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976.
"HUD" means the United States Department of Housing and Urban Development.
"Indemnified Party" has the meaning set forth in Section 6.13(a).
"Index Group" means the group of the eighteen (18) companies listed below,
the common stock of all of which shall be publicly traded and as to which there
shall not have been, since the Starting Date and before the Determination Date,
an announcement of a proposal for the acquisition or sale of such company. In
the event that the common stock of any such company ceases to be publicly traded
or any such announcement is
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made with respect to any such company, such company will be removed from the
Index Group, and the weights (which have been determined based on market
capitalization) redistributed proportionately for purposes of determining the
Index Price. The eighteen (18) companies and the weights attributed to them are
as follows:
<TABLE>
<CAPTION>
COMPANY WEIGHTING TICKER
------------------------------------------------------- --------- ------
<S> <C> <C>
Ahmanson & Company (H.F.).............................. 14.0 AHM
Astoria Financial Corporation.......................... 2.8 ASFC
Bank United Corp....................................... 3.5 BNKU
Commercial Federal Corporation......................... 2.4 CFB
Charter One Financial.................................. 7.1 COFI
Coast Savings Financial................................ 2.7 CSA
Downey Financial Corp.................................. 1.8 DSL
Golden West Financial.................................. 12.5 GDW
Glendale Federal Bank FSB.............................. 4.2 GLN
GreenPoint Financial Corp.............................. 9.2 GPT
Long Island Bancorp Inc................................ 2.6 LISB
New York Bancorp Inc................................... 2.7 NYB
Peoples Heritage Finl Group............................ 3.0 PHBK
Roslyn Bancorp Inc..................................... 2.5 RSLN
St. Paul Bancorp Inc................................... 2.3 SPBC
Sovereign Bancorp Inc.................................. 3.0 SVRN
Washington Mutual Inc.................................. 21.0 WAMU
Washington Federal Inc................................. 3.9 WFSL
----
100.0%
</TABLE>
"Index Price" means, on a given date, the weighted average (weighted in
accordance with the factors listed in the definition of "Index Group") of the
closing prices on such date of the common stocks of the companies composing the
Index Group.
"Insurance Amount" has the meaning set forth in Section 6.13(b).
"Insurer" means a person who insures or guarantees all or any portion of
the risk of loss upon borrower default on any of the Loans, including, without
limitation, the FHA, the VA and any private mortgage insurer, and providers of
life, hazard, flood, disability, title or other insurance with respect to any of
the Loans or the collateral therefor.
"Investor" means (i) the FHLMC, the FNMA, the GNMA, or any other person, as
the case may be, that owns any of the Loans or any portion of a Pool of Loans or
holds beneficial title to the Loans or any portion of a Pool of Loans, but shall
not mean the holder of mortgage-backed securities or mortgage pass-through
securities except to the extent that the consent of such holder may be required
in order for the Company or any of its Subsidiaries to continue to have
servicing rights with respect to the Loans related thereto and (ii) any person
who owns servicing rights for loans serviced or master serviced by the Company
or any of its Subsidiaries pursuant to a Loan Servicing Agreement.
"Investor Commitment" means any commitment of a person to purchase Loans
from the Company or any of its Subsidiaries.
"IRS" means the United States Internal Revenue Service.
"Liens" means any charge, mortgage, pledge, security interest, restriction,
claim, lien, or encumbrance.
"Listed Termination" means a termination of this Agreement (i) by the
Acquiror pursuant to Section 8.01(b) because of a knowing, intentional or
grossly negligent breach by the Company, (ii) by the Acquiror pursuant to
Section 8.01(e) or (iii) by the Company pursuant to Section 8.01(f), in each
case, unless at the
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time of such termination (A) the Company is entitled to terminate this Agreement
pursuant to Section 8.01(b) because of a knowing, intentional or grossly
negligent breach by the Acquiror and (B) the Company shall have notified the
Acquiror in writing of such breach.
"Loan" has the meaning set forth in Section 5.03(t).
"Loan Servicing Agreement" has the meaning set forth in Section 5.03(t).
"Material Adverse Effect" means, with respect to the Acquiror or the
Company, any effect that (i) is material and adverse to the financial position,
results of operations or business of the Acquiror and its Subsidiaries taken as
a whole, or the Company and its Subsidiaries taken as a whole, respectively, or
(ii) would materially impair the ability of either the Acquiror or the Company
to perform its obligations under this Agreement or otherwise materially threaten
or materially impede the consummation of the Merger and the other transactions
contemplated by this Agreement; provided, however, that Material Adverse Effect
shall not be deemed to include the impact of (a) changes in banking and similar
laws of general applicability or interpretations thereof by courts or
governmental authorities, (b) changes in generally accepted accounting
principles or regulatory accounting requirements applicable to savings
associations and their holding companies generally and (c) events or conditions
generally adversely affecting the mortgage banking industry, including general
changes in interest rates and other changes in general business or economic
conditions.
"Merger" has the meaning set forth in Section 2.01.
"Multiemployer Plan" means, with respect to any person, a multiemployer
plan within the meaning of Section 3(37) of ERISA.
"New Certificates" has the meaning set forth in Section 3.04.
"NYSE" means the New York Stock Exchange, Inc.
"Old Certificates" has the meaning set forth in Section 3.04.
"OTS" means the Office of Thrift Supervision.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Pension Plan" has, with respect to any person, the meaning set forth in
Section 5.03(l).
"person" means any individual, bank, corporation, partnership, association,
joint-stock company, business trust or unincorporated organization.
"Pool" means a pool of Loans originated, acquired or serviced by the
Company or any of its Subsidiaries.
"Preliminary Fee Trigger Event" has the meaning set forth in Section
8.03(b).
"Previously Disclosed" means, with respect to the Company or the Acquiror,
information set forth in such party's Disclosure Schedule.
"Proxy Statement" has the meaning set forth in Section 6.03.
"Registration Statement" has the meaning set forth in Section 6.03.
"Representatives" means, with respect to any person, such person's
directors, officers, employees, legal or financial advisors or any
representatives of such legal or financial advisors.
"Rights" means, with respect to any person, securities or obligations
convertible into or exercisable or exchangeable for, or giving any person any
right to subscribe for or acquire, or any options, calls or commitments relating
to, or any stock appreciation right or other instrument the value of which is
determined in whole or in part by reference to the market price or value of,
shares of capital stock of such person.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations thereunder.
"Securitization Instruments" has the meaning set forth in Section 5.03(t).
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"Securitization Servicer" has the meaning set forth in Section 5.03(t).
"Securitization Transaction" has the meaning set forth in Section 5.03(t).
"Serviced Loans" has the meaning set forth in Section 5.03(t).
"Starting Date" means June 20, 1997.
"Starting Price" shall mean $19.00.
"State Agency" means any state agency with authority to regulate the
business of the Company, determine the investment or servicing requirements with
regard to loans originated, purchased or serviced by the Company, or otherwise
participate in or promote mortgage lending.
"Subsidiary" and "Significant Subsidiary" have the meanings ascribed to
them in Rule 1-02 of Regulation S-X of the SEC.
"Surviving Corporation" has the meaning set forth in Section 2.01.
"Takeover Laws" has the meaning set forth in Section 5.03(n).
"Taxes" means all taxes, charges, fees, levies or other assessments,
however denominated, including, without limitation, all net income, gross
income, gross receipts, sales, use, ad valorem, goods and services, capital,
transfer, franchise, profits, license, withholding, payroll, employment,
employer health, excise, estimated, severance, stamp, occupation, property or
other taxes, custom duties, fees, assessments or charges of any kind whatsoever,
together with any interest and any penalties, additions to tax or additional
amounts imposed by any taxing authority whether arising before, on or after the
Effective Date.
"Tax Returns" has the meaning set forth in Section 5.03(q).
"Treasury Stock" has the meaning set forth in Section 5.03(b).
"Warehouse Loans" has the meaning set forth in Section 5.03(t).
1.02 Interpretation. When a reference is made in this Agreement to
Sections, Exhibits or Schedules, such reference shall be to a Section of, or
Exhibit or Schedule to, this Agreement unless otherwise indicated. The table of
contents and headings contained in this Agreement are for reference purposes
only and are not part of this Agreement. Whenever the words "include,"
"includes" or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation." No provision of this Agreement shall
be construed to require the Company, the Acquiror or any of their respective
Subsidiaries or affiliates to take any action which would violate applicable law
(whether statutory or common law), rule or regulation.
ARTICLE II
THE MERGER
2.01 The Merger. (a) Subject to and upon the terms and conditions of this
Agreement, at the Effective Time, Merger Sub shall merge with and into the
Company (the "Merger"), the separate corporate existence of Merger Sub shall
cease and the Company shall survive and continue to exist as a Delaware
corporation (the Company, as the surviving corporation in the Merger, sometimes
being referred to herein as the "Surviving Corporation").
(b) Effectiveness and Effects of the Merger. Subject to the satisfaction
or waiver of the conditions set forth in Article VII, the Merger shall become
effective upon the filing in the office of the Secretary of State of the State
of Delaware of a certificate of merger in accordance with Section 251 of the
Delaware General Corporation Law (the "DGCL"), or at such later date and time as
may be set forth in such articles and certificate. The Merger shall have the
effects prescribed in the DGCL.
(c) Certificate of Incorporation and By-Laws. The certificate of
incorporation and by-laws of the Surviving Corporation shall be, respectively,
the certificate of incorporation of the Company, as in effect
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immediately prior to the Effective Time, and the by-laws of the Company, as in
effect immediately prior to the Effective Time.
(d) Directors. At the Effective Time, the directors of the Surviving
Corporation shall be the directors of Merger Sub immediately prior to the
Effective Time, and such directors, together with any additional directors as
may thereafter be elected, shall hold such office until such time as their
successors shall be duly elected and qualified.
(e) Officers. At the Effective Time, the officers of the Surviving
Corporation shall be the officers of Merger Sub immediately prior to the
Effective Time, together with any additional officers as may be agreed upon
prior thereto by the Acquiror and the Company or as may be appointed thereafter.
2.02 Reservation of Right to Revise Structure. At the Bank's election,
the Merger may alternatively be structured so that (i) the Company is merged
with and into Acquiror, the Bank, or any other direct or indirect wholly owned
subsidiary of Acquiror (provided, that in such event the Company makes no
representation as to whether any consents are required, or any agreements are
adversely affected, thereby) or (ii) any direct or indirect wholly owned
subsidiary of Acquiror (other than Merger Sub) is merged with and into the
Company; provided, however, that no such change shall (a) alter or change the
amount or kind of the Consideration or the treatment of the holders of Company
Stock Options, (b) adversely affect the tax treatment of the Company's
stockholders as a result of receiving the Consideration or prevent the parties
from obtaining the opinions of Simpson Thacher & Bartlett or Sullivan & Cromwell
referred to in Section 7.02(d) and 7.03(c), respectively, or (c) materially
impede or delay consummation of the transactions contemplated by this Agreement.
In the event of such an election, the parties agree to execute an appropriate
amendment to this Agreement in order to reflect such election.
2.03 Effective Time. Subject to the satisfaction or waiver of the
conditions set forth in Article VII, the parties shall cause the Merger to
become effective on the date that is (i) the fifth business day (the "Initial
Closing Date") to occur after the last of the conditions set forth in Sections
7.01, 7.02 or 7.03 shall have been satisfied or waived in accordance with the
terms of this Agreement (or, at the election of the Acquiror, on the last
business day of the month in which such day occurs; provided that, if the
Acquiror shall make such election, it shall waive the condition set forth in
Section 7.03(a) as to other than an intentional, knowing or grossly negligent
breach (so long as such condition is satisfied on the Initial Closing Date)).
ARTICLE III
CONSIDERATION
3.01 Consideration. Subject to the terms and conditions of this
Agreement, at the Effective Time, automatically by virtue of the Merger and
without any action on the part of any stockholder:
(a) Outstanding Company Common Stock. Each share, excluding Treasury
Stock, of Company Common Stock, issued and outstanding immediately prior to
the Effective Time, together with the related Company Rights, shall become
and be converted into the right to receive 1.37 shares (subject to possible
adjustment as set forth in Sections 3.05 and 8.01(g), the "Exchange Ratio")
of Acquiror Common Stock (together with the related Acquiror Rights) (the
"Consideration").
(b) Outstanding Merger Sub Common Stock. Each share of common stock,
par value $0.01 per share, of Merger Sub issued and outstanding immediately
prior to the Effective Time shall be unchanged and shall remain issued and
outstanding as one share of common stock of the Surviving Corporation.
(c) Treasury Shares. Each share of Company Stock held as Treasury
Stock (which includes all shares of Company Convertible Preferred Stock)
immediately prior to the Effective Time shall be canceled and retired at
the Effective Time and no consideration shall be issued in exchange
therefor.
3.02 Rights as Stockholders; Stock Transfers. At the Effective Time,
holders of Company Stock shall cease to be, and shall have no rights as,
stockholders of the Company, other than the right to receive (a) any dividend or
other distribution with respect to such Company Stock with a record date
occurring prior to the
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Effective Time and (b) the consideration provided under this Article III. After
the Effective Time, there shall be no transfers on the stock transfer books of
the Company or the Surviving Corporation of shares of Company Stock.
3.03 Fractional Shares. Notwithstanding any other provision in this
Agreement, no fractional shares of Acquiror Common Stock and no certificates or
scrip therefor, or other evidence of ownership thereof, will be issued in the
Merger; instead, the Acquiror shall pay to each holder of Company Common Stock
who otherwise would be entitled to a fractional share of Acquiror Common Stock
(after taking into account all Old Certificates delivered by such holder) an
amount in cash (without interest) determined by multiplying such fraction by the
average of the last sale prices of Acquiror Common Stock, as reported by the
NYSE Composite Transactions Reporting System (as reported in The Wall Street
Journal or, if not reported therein, in another authoritative source), for the
five consecutive NYSE full trading days immediately preceding the Effective
Date.
3.04 Exchange Procedures. (a) At or prior to the Effective Time, the
Acquiror shall deposit, or shall cause to be deposited, with an exchange agent
appointed prior to the Effective Time by the Acquiror (the "Exchange Agent"), as
agent for the benefit of the holders of certificates formerly representing
shares of Company Common Stock ("Old Certificates"), for exchange in accordance
with this Article III, certificates representing the shares of Acquiror Common
Stock ("New Certificates") and an estimated amount of cash (such cash and New
Certificates, together with any dividends or distributions with a record date
occurring after the Effective Date with respect thereto (without any interest on
any such cash, dividends or distributions), being hereinafter referred to as the
"Exchange Fund") to be issued as Consideration.
(b) As promptly as practicable after the Effective Date, the Surviving
Corporation shall send or cause to be sent to each former holder of record of
shares (other than Treasury Stock) of Company Common Stock immediately prior to
the Effective Time transmittal materials for use in exchanging such
stockholder's Old Certificates for Merger Consideration. The Surviving
Corporation shall cause the New Certificates into which shares of a
stockholder's Company Common Stock are converted on the Effective Date and/or
any check in respect of any fractional share interests or dividends or
distributions which such person shall be entitled to receive to be delivered to
such stockholder upon delivery to the Exchange Agent of Old Certificates
representing such shares of Company Common Stock (or indemnity satisfactory to
the Surviving Corporation and the Exchange Agent, if any of such certificates
are lost, stolen or destroyed) owned by such stockholder; provided that New
Certificates and/or any such check shall not be issued to any Company Affiliate
unless and until such Company Affiliate has delivered an agreement pursuant to
Section 6.07. No interest will be paid on any Consideration, including cash to
be paid in lieu of fractional share interests, or in respect of dividends or
distributions which any such person shall be entitled to receive pursuant to
this Article II upon such delivery.
(c) Notwithstanding the foregoing, neither the Exchange Agent nor any party
hereto shall be liable to any former holder of Company Stock for any amount
properly delivered to a public official pursuant to applicable abandoned
property, escheat or similar laws.
(d) No dividends or other distributions on Acquiror Common Stock with a
record date occurring after the Effective Time shall be paid to the holder of
any unsurrendered Old Certificate representing shares of Company Common Stock
converted in the Merger into the right to receive shares of such Acquiror Common
Stock until the holder thereof shall be entitled to receive New Certificates in
exchange therefor in accordance with this Article III, and no such shares of
Company Common Stock shall be eligible to vote until the holder of Old
Certificates is entitled to receive New Certificates in accordance with this
Article III. After becoming so entitled in accordance with this Article III, the
record holder thereof also shall be entitled to receive any such dividends or
other distributions, without any interest thereon, which theretofore had become
payable with respect to shares of Acquiror Common Stock such holder had the
right to receive upon surrender of the Old Certificate.
(e) Any portion of the Exchange Fund that remains unclaimed by the
stockholders of the Company for six months after the Effective Time shall be
returned to the Acquiror. Any stockholders of the Company who have not
theretofore complied with this Article III shall thereafter look only to the
Acquiror for payment of the shares of Acquiror Common Stock, cash in lieu of any
fractional shares and unpaid dividends and
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distributions on the Acquiror Common Stock deliverable in respect of each share
of Company Common Stock such stockholder holds as determined pursuant to this
Agreement, in each case, without any interest thereon.
3.05 Anti-Dilution Provisions. Should the Acquiror change (or establish a
record date for changing) the number of shares of Acquiror Common Stock issued
and outstanding prior to the Effective Date by way of a stock split, stock
dividend, recapitalization or similar transaction with respect to the
outstanding Acquiror Common Stock and the record date therefor shall be prior to
the Effective Date, the Exchange Ratio shall be proportionately adjusted.
3.06 Options. (a) At the Effective Time, each Company Stock Option shall
cease to represent a right to acquire shares of Company Common Stock and shall
be converted automatically into an option to purchase shares of Acquiror Common
Stock, and Acquiror shall assume each such Company Stock Option subject to the
terms thereof; provided, however, that from and after the Effective Time, (i)
the number of shares of Acquiror Common Stock purchasable upon exercise of such
Company Stock Option shall be equal to the number of shares of Company Common
Stock that were purchasable under such Company Stock Option immediately prior to
the Effective Time multiplied by the Exchange Ratio, and rounding to the nearest
whole share, and (ii) the per share exercise price under each such Company Stock
Option shall be adjusted by dividing the per share exercise price of each such
Company Stock Option by the Exchange Ratio, and rounding down to the nearest
cent. The terms of each Company Stock Option shall, in accordance with its
terms, be subject to further adjustment as appropriate to reflect any stock
split, stock dividend, recapitalization or other similar transaction with
respect to Acquiror Common Stock on or subsequent to the Effective Date.
Notwithstanding the foregoing, each Company Stock Option which is intended to be
an "incentive stock option" (as defined in Section 422 of the Code) shall be
adjusted in accordance with the requirements of Section 424 of the Code.
Accordingly, with respect to any incentive stock options, fractional shares
shall be rounded down to the nearest whole number of shares and where necessary
the per share exercise price shall be rounded down to the nearest cent.
(b) In order to effectuate the adjustment of the Company Stock Options
provided for in the provision to Section 3.06(a), the Company represents and
warrants to, and agrees with, the Acquiror that the Company (or as appropriate,
the Company Board) shall take all action required to be taken such that (i)
holders of Stock Options issued under the Company's Incentive Stock Option Plan
will not receive the cash payment for such Stock Options as provided in the
second sentence of Section 10 of such Plan (which shall be effected either by
resolving that this Agreement and the transactions contemplated hereby
(including the Company Meeting and any Merger) do not constitute a "Change of
Control" for purposes of such Section or by taking such other action with the
prior consent of Acquiror, provided that such other action is taken prior to the
date on which a "Change of Control" would otherwise occur in the absence of the
Company Board resolution to the contrary) and (ii) under Section 11 of the
Company's Incentive Stock Option Plan, at the Effective Time, all Company Stock
Options shall be adjusted as provided in Section 3.06(a) (and shall not be
canceled in exchange for payment as contemplated by clause (ii) of the first
sentence of that Section). Notwithstanding any other provision in this
Agreement, the Company shall be permitted to take such action or to cause such
action to be taken as may be required for each Company Stock Option (x) to fully
vest and become immediately exercisable at the Effective Time and (y) to remain
exercisable after the Effective Time for the remaining term of such Company
Stock Option, in both cases notwithstanding the action of the Company referred
to in the first sentence of this Section 3.06(b).
(c) At or prior to the Effective Time, the Company shall take all action
necessary with respect to the Company's Incentive Stock Option Plan to permit
the assumption of the then outstanding Company Stock Options by Acquiror
pursuant to this Section. The Company shall take all action necessary, including
obtaining any required consents from optionees, to provide that following the
Effective Time no participant in the Company's Incentive Stock Option Plan or
other plans, programs or arrangements of the Company or any of its Subsidiaries
shall have any right thereunder to acquire equity securities of the Company, the
Surviving Corporation or any subsidiary thereof and to permit Acquiror to assume
the Company's Incentive Stock Option Plan. The Company shall further take all
action necessary to amend the Company's Incentive Stock Option Plan to eliminate
automatic grants or awards thereunder, if any, following the Effective Time. At
the Effective Time, Acquiror shall assume the Company's Incentive Stock Option
Plan; provided, that such
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assumption shall be only in respect of the assumed Company Stock Options and
that Acquiror shall have no obligation with respect to any awards under the
Company's Incentive Stock Option Plan other than the assumed Company Stock
Options or to make any additional grants or awards under such assumed plan.
(d) The Acquiror shall take all corporate action necessary to reserve for
issuance a sufficient number of shares of Acquiror Common Stock for delivery
pursuant to the terms set forth in this Section 3.06. Subject to any applicable
limitations under the Securities Act, Acquiror shall either (i) file a
registration statement on Form S-8 (or any successor form), effective as of the
Effective Time, with respect to the shares of Acquiror Common Stock issuable
upon exercise of the Stock Options, or (ii) file any necessary amendments to the
Company's previously filed registration statement(s) on Form S-8 in order that
the Acquiror will be deemed a "successor registrant" thereunder, and, in either
event the Acquiror shall use its reasonable best efforts to maintain the
effectiveness of such registration statement(s) (and maintain the current status
of the prospectus or prospectuses relating thereto) for so long as such options
shall remain outstanding.
ARTICLE IV
ACTIONS PENDING THE MERGER
4.01 Forbearances of the Company. From the date hereof until the earlier
of the termination of this Agreement or the Effective Time, except as expressly
contemplated by this Agreement or the Disclosure Schedule, without the prior
written consent of the Acquiror, the Company will not, and will cause each of
its Subsidiaries not to:
(a) Ordinary Course. Conduct the business of the Company and its
Subsidiaries other than in the ordinary and usual course or, to the extent
consistent therewith, fail to use reasonable efforts to preserve intact
their business organizations and assets and maintain their rights,
franchises and existing relations with customers, suppliers, employees and
business associates.
(b) Capital Stock. Other than pursuant to Rights Previously Disclosed
and outstanding on the date hereof, (i) issue, sell or otherwise permit to
become outstanding, or authorize the creation of, any additional shares of
Company Stock or any Rights, (ii) enter into any agreement with respect to
the foregoing, or (iii) permit any additional shares of Company Stock to
become subject to new grants of employee or director stock options, other
Rights or similar stock-based employee rights. Without limiting the
foregoing, the Company will not issue or agree to issue any shares of
Company Stock or Rights under the Company's 1997 Amended Incentive Stock
Option Plan or the Company's 1997 Amended Employee Stock Purchase Plan
other than pursuant to Rights Previously Disclosed and outstanding on the
date hereof.
(c) Dividends, Etc. (i) Make, declare, pay or set aside for payment
any dividend, other than (A) subject to Section 4.03 hereof, regular
quarterly cash dividends on Company Common Stock in an amount not to exceed
$0.06 per share paid with record and payment dates consistent with past
practice and (B) dividends from wholly owned Subsidiaries to the Company or
another wholly owned Subsidiary of the Company, as applicable (in each case
having record and payment dates consistent with past practice), on or in
respect of, or declare or make any distribution on any shares of its
capital stock or (ii) directly or indirectly adjust, split, combine,
redeem, reclassify, purchase or otherwise acquire, any shares of its
capital stock.
(d) Compensation; Employment Agreements; Etc. Enter into, amend,
modify or renew any written employment, consulting, severance or similar
agreements or arrangements with any directors, officers, employees of, or
independent contractors with respect to, the Company or its Subsidiaries,
or grant any salary, wage or other increase or increase any employee
benefit (including incentive or bonus payments), except (i) for normal
individual increases in compensation to employees in the ordinary course of
business consistent with past practice, (ii) for other changes that are
required by applicable law, or (iii) to satisfy Previously Disclosed
obligations.
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(e) Benefit Plans. Enter into, establish, adopt, amend or modify any
pension, retirement, stock option, stock purchase, savings, profit sharing,
deferred compensation, consulting, bonus, group insurance or other employee
benefit, incentive or welfare contract, plan or arrangement, or any trust
agreement (or similar arrangement) related thereto, in respect of any
directors, officers, employees of, or independent contractors with respect
to, the Company or its Subsidiaries, including taking any action that
accelerates the vesting or exercisability of stock options, restricted
stock or other compensation or benefits payable thereunder, except, in each
such case, (i) as may be required by applicable law or (ii) to satisfy
Previously Disclosed obligations.
(f) Dispositions. Except (i) pursuant to Previously Disclosed
Investor Commitments existing on the date hereof or (ii) as otherwise
Previously Disclosed, (A) sell, transfer, mortgage, lease, encumber or
otherwise dispose of or discontinue any material portion of its assets,
business or properties; (B) sell, assign or otherwise transfer any rights
to service loans, other than servicing rights in respect of first mortgage
loans held by the Company or one of its Subsidiaries in its warehouse of
first mortgage loans originated by the Company or one of its Subsidiaries
(x) on a retail basis or (y) on a wholesale basis where such wholesale
loans are jumbo loans, adjustable rate mortgage loans, or other wholesale
mortgage loans registered with private investors, in each case where such
sales are in a manner consistent with past practice; or (C) except in the
ordinary course of business and in a manner consistent with past practice,
sell, transfer, lease or encumber any Loans.
(g) Acquisitions. Except (i) (A) pursuant to Previously Disclosed
contractual obligations existing on the date hereof, (B) the purchase or
repurchase of mortgage loans and/or loan servicing rights, (C) short-term
investments for cash management purposes (including transactions that the
Company may enter into to utilize escrow balances), (D) pursuant to bona
fide hedging transactions, or (E) by way of foreclosures or otherwise in
satisfaction of debts previously contracted in good faith, in each case in
the ordinary and usual course of business consistent with past practice, or
(ii) as Previously Disclosed, neither the Company nor any of its
Subsidiaries will: (x) acquire any assets in any one transaction or a
series of related transactions for consideration in excess of $250,000 or
enter into any contract, agreement, commitment or arrangement with respect
thereto; or (y) acquire any servicing right in a "bulk" transaction.
(h) Governing Documents. Amend the Company Certificate, the Company
By-laws or the certificate of incorporation or by-laws (or similar
governing documents) of any of the Company's Subsidiaries.
(i) Accounting Methods. Implement or adopt any change in its
accounting principles, practices or methods, other than as may be required
by generally accepted accounting principles.
(j) Contracts. Except in the ordinary course of business consistent
with past practice, enter into or terminate any material Contract or amend
or modify in any material respect any of its existing material Contracts.
(k) Claims. Settle any claim, action or proceeding, except for any
claim, action or proceeding involving solely money damages in an amount,
individually or in the aggregate, that is not material to the Company and
its Subsidiaries, taken as a whole.
(l) Adverse Actions. (i) Take any action reasonably likely to prevent
or impede the Merger from qualifying as a reorganization within the meaning
of Section 368 of the Code; or (ii) knowingly take any action that is
intended or is reasonably likely to result in (A) any of its
representations and warranties set forth in this Agreement being or
becoming untrue in any material respect at any time at or prior to the
Effective Time, (B) any of the conditions to the Merger set forth in
Article VII not being satisfied or (C) a material breach of any provision
of this Agreement; except, in each case, as may be required by applicable
law.
(m) Risk Management; Loan Policies. Except as required by applicable
law or regulation, to comply with modifications of rules, regulations or
requirements imposed by any Agency and except (after prior consultation
with Acquiror) for changes required by the Company's or any of its
subsidiaries'
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traditional conduits for the sale of non-conventional loans: (i) implement
or adopt any material change in its interest rate risk management and
hedging (which term includes buying futures and forward commitments from
financial institutions) policies, procedures or practices; (ii) fail to
follow its existing policies or practices with respect to managing its
exposure to interest rate risk; (iii) fail to use commercially reasonable
means to avoid any material increase in its aggregate exposure to interest
rate risk against loans held in the Company's pipeline; or (iv) materially
alter its methods or policies of underwriting, pricing, originating,
warehousing, selling and servicing, or buying or selling rights to service
loans.
(n) Indebtedness. Incur any indebtedness for borrowed money other
than: (i) indebtedness used to fund or purchase mortgage Loans in the
ordinary course of business consistent with past practice; (ii) pursuant to
its "Warehouse Line of Credit Facility" (i.e., the Second Amended and
Restated Revolving Credit Agreement, dated as of January 23, 1996, with a
group of banks headed by The First National Bank of Chicago); and (iii)
indebtedness arising from repurchase agreements with FNMA, FHLMC and
investment banks and other financial institutions in the ordinary course of
business and consistent with past practice.
(o) Offices. Open any new branch offices, or close any existing
branch office for the retail origination of mortgage loans, except for
closures where (i) the term of such lease expires in 1997 and the Company
or its Subsidiary has not renewed such lease, (ii) the Company or its
Subsidiary had previously planned to close such branch office or (iii) such
closure is in the ordinary course of business and in a manner consistent
with past practice (in the case of (i) and (ii), as Previously Disclosed).
(p) Commitments. Agree or commit to do anything that would be
precluded by clauses (a) through (o) without first obtaining the Acquiror's
consent.
4.02 Forbearances of the Acquiror. From the date hereof until the
Effective Time, except as expressly contemplated by this Agreement, without the
prior written consent of the Company, the Acquiror will not, and will cause each
of its Subsidiaries not to:
(a) Ordinary Course. Conduct the business of the Acquiror and its
Subsidiaries other than in the ordinary and usual course; provided that
this Section 4.02(a) shall in no way affect the ability of the Acquiror or
its Subsidiaries to engage in any business, asset or deposit acquisition or
disposition, or merger, consolidation or other business combination
transaction.
(b) Adverse Actions. (i) Take any action reasonably likely to prevent
or impede the Merger from qualifying as a reorganization within the meaning
of Section 368 of the Code; or (ii) knowingly take any action that is
intended or is reasonably likely to result in (A) any of its
representations and warranties set forth in this Agreement being or
becoming untrue in any material respect at any time at or prior to the
Effective Time, (B) any of the conditions to the Merger set forth in
Article VII not being satisfied or (C) a material breach of any provision
of this Agreement; except, in each case, as may be required by applicable
law.
(c) Dividends, Etc. Make, declare, pay or set aside for payment any
dividend (other than, subject to Section 4.03 hereof, regular quarterly
cash dividends on Acquiror Common Stock and dividends from Subsidiaries to
the Acquiror or another Subsidiary of the Acquiror), on or in respect of,
or declare or make any distribution on any shares of its capital stock.
(d) Governing Documents. Amend the Acquiror Certificate or the
by-laws of Acquiror in a manner that would be materially adverse to the
holders of Acquiror Common Stock.
(e) Commitments. Agree or commit to do anything that would be
precluded by clauses (a) through (d) without first obtaining the Company's
consent.
4.03. Coordination of Dividends. Each of the Company and Acquiror shall
coordinate with the other regarding the declaration and payment of any dividends
in respect of the Company Common Stock and Acquiror Common Stock and the record
dates and the payment dates relating thereto, it being the intention of the
Company and Acquiror that holders of Company Common Stock shall not receive two
dividends, or fail to
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receive one dividend, for any single calendar quarter with respect to their
shares of Company Common Stock and/or any shares of Acquiror Common Stock that
any such holder receives in exchange therefor pursuant to the Merger.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.01 Disclosure Schedules. On or prior to the date hereof, the Company
has delivered to the Acquiror and the Acquiror (on behalf of itself, the Bank
and Merger Sub) has delivered to the Company a schedule (respectively, its
"Disclosure Schedule") setting forth, among other things, items the disclosure
of which is necessary or appropriate either in response to an express disclosure
requirement contained in a provision hereof or as an exception to one or more
representations or warranties contained in Section 5.03 or 5.04, respectively,
or to one or more of its covenants contained in Article IV; provided, that (a)
no such item is required to be set forth in a Disclosure Schedule as an
exception to a representation or warranty if its absence would not result in the
related representation or warranty being deemed untrue or incorrect under the
standard established by Section 5.02, and (b) the mere inclusion of an item in a
Disclosure Schedule as an exception to a representation or warranty shall not be
deemed an admission by a party that such item (or any non-disclosed item or
information of comparable or greater significance) represents a material
exception or fact, event or circumstance or that such item is reasonably likely
to result in a Material Adverse Effect with respect to the Company or the
Acquiror, respectively.
5.02 Standard. No representation or warranty of the Company or the
Acquiror contained in Section 5.03 or 5.04 shall be deemed untrue or incorrect,
and no party hereto shall be deemed to have breached a representation or
warranty, as a consequence of the existence of any fact, event or circumstance
unless such fact, event or circumstance, individually or taken together with all
other facts, events or circumstances inconsistent with any representation or
warranty contained in Section 5.03 or 5.04 has had or is reasonably likely to
have a Material Adverse Effect with respect to the Company or the Acquiror,
respectively.
5.03 Representations and Warranties of the Company. Subject to Sections
5.01 and 5.02 and except as Previously Disclosed in a paragraph of its
Disclosure Schedule corresponding to the relevant paragraph below, the Company
hereby represents and warrants to the Acquiror, the Bank and Merger Sub:
(a) Organization, Standing and Authority. The Company is a
corporation, duly organized, validly existing and in good standing under
the laws of the State of Delaware, and is duly qualified to do business and
is in good standing in all the jurisdictions where its ownership or leasing
of property or assets or the conduct of its business requires it to be so
qualified.
(b) Company Stock. As of the date hereof, the authorized capital
stock of the Company consists solely of (i) 50,000,000 shares of Company
Common Stock, of which 13,986,899 shares are outstanding as of the date
hereof and (ii) 20,000,000 shares of Company Preferred Stock, of which
748,179 shares are outstanding (in the form of Company Convertible
Preferred Stock) as of the date hereof. As of the date hereof, 2,433,016
shares of Company Common Stock are held in treasury by the Company and
748,179 shares of Company Convertible Preferred Stock are otherwise owned
by the Company or its Subsidiaries (collectively, "Treasury Stock"). The
outstanding shares of Company Stock have been duly authorized and are
validly issued and outstanding, fully paid and nonassessable, and subject
to no preemptive rights (and were not issued in violation of any preemptive
rights). As of the date hereof, other than the Company Rights and except as
Previously Disclosed in its Disclosure Schedule, there are no shares of
Company Stock authorized and reserved for issuance, the Company does not
have any Rights issued or outstanding with respect to Company Stock, and
the Company does not have any commitment to authorize, issue or sell any
Company Stock or Rights, except pursuant to this Agreement. Since May 29,
1997, the Company has issued no shares of Company Stock or Rights or
reserved any shares for such purposes except pursuant to Previously
Disclosed plans or commitments. The number of shares of Company Stock which
are issuable and reserved for issuance upon exercise of Company Stock
Options as of the date hereof are Previously Disclosed in the Company's
Disclosure Schedule.
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(c) Subsidiaries. (i)(A) The Company has Previously Disclosed a list
of all its Subsidiaries together with the jurisdiction of organization of
each such Subsidiary, (B) the Company owns, directly or indirectly, all the
issued and outstanding equity securities of each of its Subsidiaries, (C)
no equity securities of any of its Subsidiaries are or may become required
to be issued (other than to it or its Subsidiaries) by reason of any
Rights, (D) there are no contracts, commitments, understandings or
arrangements by which any of such Subsidiaries is or may be bound to sell
or otherwise transfer any equity securities of any such Subsidiaries (other
than to it or its Subsidiaries), (E) there are no contracts, commitments,
understandings, or arrangements relating to its rights to vote or to
dispose of such securities (other than to it or its Subsidiaries), and (F)
all the equity securities of each such Subsidiary held by the Company or
its Subsidiaries are fully paid and nonassessable and are owned by the
Company or its Subsidiaries free and clear of any Liens.
(ii) The Company does not own beneficially, directly or indirectly,
any equity securities or similar interests of any person, or any
interest in a partnership or joint venture of any kind, other than its
Subsidiaries.
(iii) Each of the Company's Subsidiaries has been duly organized
and is validly existing and in good standing under the laws of the
jurisdiction of its organization, and is duly qualified to do business
and in good standing in all the jurisdictions where its ownership or
leasing of property or assets or the conduct of its business requires it
to be so qualified.
(d) Corporate Power. The Company and each of its Subsidiaries has the
corporate power and authority to carry on its business as it is now being
conducted and to own all its properties and assets; and the Company has the
corporate power and authority to execute, deliver and perform its
obligations under this Agreement and to consummate the transactions
contemplated hereby.
(e) Corporate Authority. Subject in the case of this Agreement to
adoption of the agreement of merger set forth in this Agreement by the
holders of at least a majority of the outstanding shares of Company Common
Stock entitled to vote thereon, this Agreement and the transactions
contemplated hereby have been authorized by all requisite corporate action
on the part of the Company. This Agreement is a valid and legally binding
obligation of the Company, enforceable in accordance with its terms (except
as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and similar laws of general
applicability relating to or affecting creditors' rights or by general
equity principles).
(f) Regulatory Filings; No Defaults. (i) No consents or approvals of,
or filings or registrations with, any Governmental Authority or with any
third party are required to be made or obtained by the Company or any of
its Subsidiaries in connection with the execution, delivery or performance
by the Company of this Agreement, or to consummate the Merger except for
(A) the filing of a notice under the HSR Act, (B) filings of applications
or notices with Previously Disclosed mortgage banking licensing or
supervisory authorities, (C) the filing with the SEC of the Proxy Statement
in definitive form, and (D) the filing of a certificate of merger with the
Secretary of State of the State of Delaware pursuant to the DGCL. As of the
date hereof, the Company is not aware of any reason why the approvals of
all Governmental Authorities necessary to permit consummation of the
transactions contemplated by this Agreement will not be received without
the imposition of a condition or requirement described in Section 7.01(b).
(ii) Subject to receipt of the regulatory approvals, and expiration
of the waiting periods, referred to in the preceding paragraph and the
making of required filings under federal and state securities laws, the
execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby and thereby do not
and will not (A) constitute a breach or violation of, or a default
under, or give rise to any Lien, any acceleration of remedies or any
right of termination under, any law, rule or regulation or any judgment,
decree, order, governmental permit or license, or Contract of the
Company or of any of its Subsidiaries or to which the Company or any of
its Subsidiaries or properties is subject or bound, (B) constitute a
breach or violation of, or a default under, the Company Certificate or
the Company By-laws, or (C) require any consent or
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approval under any such law, rule, regulation, judgment, decree, order,
governmental permit or license or Contract.
(g) SEC Documents; Financial Statements. (i) The Company's Annual
Reports on Form 10-K for the fiscal years ended December 31, 1994, 1995 and
1996, and all other reports, registration statements, definitive proxy
statements or information statements filed or to be filed by the Company or
any of its Subsidiaries subsequent to December 31, 1994 under the
Securities Act, or under Sections 13(a), 13(c), 14 or 15(d) of the Exchange
Act, in the form filed or to be filed (collectively, the "Company's SEC
Documents") with the SEC, as of the date filed, (A) complied or will comply
in all material respects as to form with the applicable requirements under
the Securities Act or the Exchange Act, as the case may be, and (B) did not
(or if amended or superseded by a filing prior to the date of this
Agreement, then as of the date of such filing) and will 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 the light of the circumstances under which they were made, not
misleading; and each of the balance sheets contained in or incorporated by
reference into any such SEC Document (including the related notes and
schedules thereto) fairly presents, or will fairly present, the financial
position of the Company and its Subsidiaries as of its date, and each of
the statements of income and changes in stockholders' equity and cash flows
or equivalent statements in such SEC Documents (including any related notes
and schedules thereto) fairly presents, or will fairly present, the results
of operations, changes in stockholders' equity and changes in cash flows,
as the case may be, of the Company and its Subsidiaries for the periods to
which they relate, in each case in accordance with generally accepted
accounting principles consistently applied during the periods involved,
except in each case as may be noted therein, subject to normal year-end
audit adjustments in the case of unaudited statements.
(ii) Since December 31, 1996, on a consolidated basis the Company
and its Subsidiaries have not incurred any liability other than in the
ordinary course of business consistent with past practice.
(iii) Since December 31, 1996, (A) the Company and its Subsidiaries
have conducted their respective businesses in the ordinary and usual
course consistent with past practice (excluding the incurrence of
expenses related to this Agreement and the transactions contemplated
hereby) and (B) no event has occurred or circumstance arisen that,
individually or taken together with all other facts, events and
circumstances (described in any paragraph of Section 5.03 or otherwise),
is reasonably likely to have a Material Adverse Effect with respect to
the Company.
(iv) The Company has Previously Disclosed a list of all write-downs
of assets of the Company and its Subsidiaries since December 31, 1996,
including write-downs of interest participations, interest-only strips,
residual interest strips or originated loan servicing rights. To the
Company's knowledge, there are no other write-downs that the Company and
its Subsidiaries would be required to make to ensure that financial
statements prepared as of the end of the month in which the Effective
Date occurs fairly present the financial condition of the Company and
its Subsidiaries as of such date.
(h) Litigation. No litigation, claim or other proceeding before any
court or governmental agency is pending against the Company or any of its
Subsidiaries and, to the Company's knowledge, no such litigation, claim or
other proceeding has been threatened.
(i) Compliance with Laws. The Company and each of its Subsidiaries:
(i) in the conduct of its business, is in compliance with all
applicable federal, state, local and foreign statutes, laws,
regulations, ordinances, rules, judgments, orders or decrees applicable
thereto or to the employees conducting such businesses, including,
without limitation, the Equal Credit Opportunity Act, the Fair Housing
Act, the Home Mortgage Disclosure Act and all other applicable fair
lending laws and other laws relating to discriminatory business
practices;
(ii) has all permits, licenses, authorizations, orders and
approvals of, and has made all filings, applications and registrations
with, all Governmental Authorities that are required in order to permit
them to own or lease their properties and to conduct their businesses as
presently conducted; all such
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permits, licenses, certificates of authority, orders and approvals are
in full force and effect and, to the Company's knowledge, no suspension
or cancellation of any of them is threatened; and
(iii) has received, since December 31, 1995, no notification or
communication from any Governmental Authority (A) asserting that the
Company or any of its Subsidiaries is not in compliance with any of the
statutes, regulations, or ordinances that such Governmental Authority
enforces or (B) threatening to revoke any license, franchise, permit, or
governmental authorization (nor, to the Company's knowledge, do any
grounds for any of the foregoing exist).
(j) Material Contracts; Defaults. The Company has Previously
Disclosed a complete and accurate list of all material Contracts to which
the Company or any of its Subsidiaries is a party, including the following
categories:
(i) any Contract that (A) is not terminable at will both without
cost or other liability to the Company or any of its Subsidiaries and
upon notice of ninety (90) days or less and (B) which provides for fees
or other payments in excess of $150,000 per annum or in excess of
$300,000 for the remaining term of the Contract;
(ii) any Contract with a term beyond the Effective Time under which
the Company or any of its Subsidiaries created, incurred, assumed, or
guaranteed (or may create, incur, assume, or guarantee) indebtedness for
borrowed money (including capitalized lease obligations);
(iii) any Contract restricting the conduct of business by the
Company or any of its Subsidiaries;
(iv) any Contract to which the Company or any of its Subsidiaries
is a party, on the one hand, and under which any affiliate, officer,
director, employee or equity holder of any of the Company or any of its
Subsidiaries, on the other hand, is a party or beneficiary;
(v) any Contract between the Company or any of its Subsidiaries and
any insurance company which has authorized the Company or any of its
Subsidiaries to act as such insurance company's representative in the
sale, placement, writing or administration of insurance;
(vi) any Contract with respect to the employment of, or payment to,
any present or former directors, officers, employees or consultants;
(vii) any Contract involving the purchase or sale of assets with a
book value greater than $300,000 entered into since December 31, 1996;
and
(viii) any Contract with respect to a warehouse line of credit, any
Loan Servicing Agreement and any Investor Commitment.
Neither the Company nor any of its Subsidiaries nor, to the Company's
knowledge, any other party thereto is in default under any such Contract
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.
(k) Properties. Except as reserved against in the financial
statements filed in its SEC Documents on or before the date hereof, the
Company and its Subsidiaries have good and marketable title, free and clear
of all Liens (other than Liens for current taxes not yet delinquent) to all
of the material properties and assets, tangible or intangible, reflected in
such financial statements as being owned by the Company and its
Subsidiaries as of the dates thereof. To the Company's knowledge, all
buildings and all fixtures, equipment, and other property and assets which
are material to its business on a consolidated basis and are held under
leases or subleases by any of the Company and its Subsidiaries are held
under valid leases or subleases enforceable in accordance with their
respective terms (except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other laws affecting
creditors' rights generally and to general equity principles).
(l) Employee Benefit Plans. (i) The Company's Disclosure Schedule
contains a complete list of all bonus, vacation, deferred compensation,
pension, retirement, profit-sharing, thrift, savings, employee
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stock ownership, stock bonus, stock purchase, restricted stock, stock
appreciation and stock option plans, all employment or severance contracts,
all medical, dental, disability, severance, health and life plans, all
other employee benefit and fringe benefit plans, contracts or arrangements
and any "change of control" or similar provisions in any plan, contract or
arrangement maintained or contributed to by the Company or any of its
Subsidiaries for the benefit of officers, former officers, employees,
former employees, directors, former directors, independent contractors or
the beneficiaries of any of the foregoing (collectively, the Company's
"Compensation and Benefit Plans"). Neither the Company Board nor any
executive officers of the Company or any of its Subsidiaries has taken or
initiated any formal action to create any additional material Compensation
and Benefit Plan or to modify or change any existing Compensation and
Benefit Plan in any material respect.
(ii) With respect to each Compensation and Benefit Plan, if
applicable, the Company has provided, made available, or will make
available upon request, to Acquiror, true and complete copies of
existing: (A) Compensation and Benefit Plan documents and amendments
thereto; (B) trust instruments and insurance contracts; (C) two most
recent Forms 5500 filed with the IRS; (D) the most recent actuarial
report and financial statement; (E) the most recent summary plan
description; (F) forms filed with the PBGC (other than for premium
payments); (G) the most recent determination letter issued by the IRS;
(H) any Form 5310 or Form 5330 filed with the IRS; and (I) the most
recent nondiscrimination tests performed under ERISA and the Code
(including 401(k) and 401(m) tests).
(iii) Each of the Company's Compensation and Benefit Plans has been
administered in accordance with the terms thereof and with applicable
law, including ERISA and the Code. Each of the Company's Compensation
and Benefit Plans which is an "employee pension benefit plan" within the
meaning of Section 3(2) of ERISA ("Pension Plan") and which is intended
to be qualified under Section 401(a) of the Code has received a
favorable determination letter from the IRS, and, except as Previously
Disclosed, the Company is not aware of any circumstances reasonably
likely to result in the revocation or denial of any such favorable
determination letter. Neither the Company nor any of its Subsidiaries
has engaged in a transaction, or omitted to take any action, with
respect to any Compensation and Benefit Plan that would reasonably be
expected to subject the Company or any of its Subsidiaries to a tax or
penalty imposed by either Section 4975 of the Code or Section 502 of
ERISA in an amount which would be material, assuming for purposes of
Section 4975 of the Code that the taxable period of any such transaction
expired as of the date hereof. There is no pending or, to the Company's
knowledge, threatened litigation or governmental audit, examination or
investigation relating to the Company's Compensation and Benefit Plans.
(iv) No liability under Title IV of ERISA (other than contributions
and premiums required in connection therewith) has been or is reasonably
expected to be incurred by the Company or any of its Subsidiaries with
respect to any "single-employer plan" (within the meaning of Section
4001 (a)(15) of ERISA) or Multiemployer Plan currently or formerly
maintained by any of them, or the single-employer plan or Multiemployer
Plan of any entity (an "ERISA Affiliate") which currently is or formerly
was considered one employer with the Company under Section 4001(a)(14)
of ERISA or Section 414(b) or (c) of the Code (an "ERISA Affiliate
Plan").
(v) Except as Previously Disclosed, all contributions, premiums and
payments required to have been made under the terms of any of the
Company's Compensation and Benefit Plans or applicable law have been
timely made or reflected in the Company's SEC Documents. Neither any of
the Company's Pension Plans nor ERISA Affiliate Plan has an "accumulated
funding deficiency" (whether or not waived) within the meaning of
Section 412 of the Code or Section 302 of ERISA. None of the Company,
any of its Subsidiaries or any ERISA Affiliate has provided, or is
required to provide, security to, nor are there any circumstances
requiring imposition of any lien on the assets of the Company or any of
its Subsidiaries with respect to, any Pension Plan or any ERISA
Affiliate Plan pursuant to ERISA or the Code. The Company's Disclosure
Schedule contains a list of all of the Company's ERISA Affiliate Plans.
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(vi) Under each of the Company's Pension Plans and ERISA Affiliate
Plans, to the Company's knowledge, there has been no material adverse
change in the financial condition of any Pension Plan or ERISA Affiliate
Plan (with respect to either assets or benefits) since the last day of
the most recent plan year.
(vii) Except as Previously Disclosed, neither the Company nor any
of its Subsidiaries has any obligations under any Compensation and
Benefit Plan to provide benefits, including death or medical benefits,
with respect to any of their employees (or their spouses, beneficiaries,
or dependents) beyond the retirement or other termination of service of
any such employee other than (A) coverage mandated by Part 6 of Title I
of ERISA or Section 4980B of the Code, (B) retirement or death benefits
under any employee pension benefit plan (as defined under Section 3(2)
of ERISA), (C) disability benefits under any employee welfare plan that
have been fully provided for by insurance or otherwise, or (D) benefits
in the nature of severance pay.
(viii) Except as set forth in the Company's SEC Documents or as
Previously Disclosed, neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby
including, without limitation, as a result of any termination of
employment prior to or following the Effective Time, will (A) result in
any increase in compensation or any payment (including, without
limitation, severance, unemployment compensation, golden parachute or
otherwise) becoming due to any current or former director, officer or
employee of the Company or any of its Subsidiaries under any
Compensation and Benefit Plan or otherwise from the Company or any of
its Subsidiaries, (B) increase any benefits otherwise payable under any
Compensation and Benefit Plan, or (C) result in any acceleration of the
time of payment or vesting of any such benefit.
(ix) The Company and its Subsidiaries do not maintain any
Compensation and Benefit Plans covering foreign Employees who are not
residents of the United States.
(m) Labor Matters. Neither the Company nor any of its Subsidiaries is
a party to or is bound by any collective bargaining Contract or
understanding with a labor union or labor organization, nor is the Company
or any of its Subsidiaries the subject of a proceeding asserting that it or
any such Subsidiary has committed an unfair labor practice (within the
meaning of the National Labor Relations Act) or seeking to compel the
Company or any such Subsidiary to bargain with any labor organization as to
wages or conditions of employment, nor is there any strike or other labor
dispute involving it or any of its Subsidiaries pending or, to the
Company's knowledge, threatened, nor is the Company aware of any activity
involving it or any of its Subsidiaries' employees seeking to certify a
collective bargaining unit or engaging in other organizational activity.
(n) Takeover Laws. The Company has taken all action required to be
taken by it in order to exempt this Agreement and the transactions
contemplated hereby from, and this Agreement and the transactions
contemplated hereby are exempt from, the requirements of any "moratorium,"
"control share," "fair price" or other antitakeover laws and regulations of
any state (collectively, "Takeover Laws"), including, without limitation
the State of Delaware, including Section 203 of the DGCL, assuming the
accuracy of the representations contained in Section 5.04(l) (without
giving effect to the knowledge qualification thereof).
(o) Company Rights Agreement. There has occurred no "Distribution
Date" or "Stock Acquisition Date" (as defined in the Company Rights
Agreement). The Company and the Rights Agent will have, no later than the
first business day after the date hereof, duly and validly amended the
Company Rights Agreement, by executing and delivering an amendment in
substantially the form of Exhibit B.
(p) Environmental Matters. (i) The Company and each of its
Subsidiaries has complied at all times with applicable Environmental Laws;
(ii) no property (including buildings and any other structures) currently
or formerly owned or operated by the Company or any of its Subsidiaries or
in which the Company or any of its Subsidiaries has a Lien, has been
contaminated with, or has had any release of, any Hazardous Substance
except as Previously Disclosed; (iii) neither the Company nor any of its
Subsidiaries would reasonably be expected to be ruled to be the owner or
operator under any
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Environmental Law of any property in which it has currently or formerly
held a Lien; (iv) neither the Company nor any of its Subsidiaries is
subject to liability for any Hazardous Substance disposal or contamination
on any other third-party property; (v) neither the Company nor any of its
Subsidiaries has received any notice, demand letter, claim or request for
information alleging any violation of, or liability under, any
Environmental Law; (vi) neither the Company nor any of its Subsidiaries is
subject to any order, decree, injunction or other agreement with any
Governmental Authority or any third party relating to any Environmental
Law; (vii) the Company, which does not perform an environmental review of
the mortgaged property at the time of Loan Origination, is not aware of any
circumstances or conditions involving the Company or any of its
Subsidiaries, any currently or formerly owned or operated property, or any
Lien held by the Company or any of its Subsidiaries (including the presence
of asbestos, underground storage tanks, lead products, polychlorinated
biphenyls or gas station sites) that would reasonably be expected to result
in any claims, liability or investigations or result in any restrictions on
the ownership, use, or transfer of any property pursuant to any
Environmental Law; and (viii) the Company has delivered to the Acquiror
copies of all environmental reports, studies, sampling data,
correspondence, filings and other environmental information in its
possession or reasonably available to it relating to the Company, any of
its Subsidiaries, any currently or formerly owned or operated property or
any property in which the Company or any of its Subsidiaries has held a
Lien.
(q) Tax Matters. (i) All returns, declarations, reports, estimates,
information returns and statements required to be filed on or before the
Effective Date under federal, state, local or any foreign tax laws ("Tax
Returns") with respect to the Company or any of its Subsidiaries, have been
or will be timely filed, or requests for extensions have been timely filed
and have not expired; (ii) all Tax Returns filed by the Company are
complete and accurate; (iii) all Taxes shown to be due and payable (without
regard to whether such Taxes have been assessed) on such Tax Returns have
been paid or adequate reserves have been established for the payment of
such Taxes; and (iv) no audit or examination or refund litigation with
respect to any Tax Return is pending or, to the Company's knowledge, has
been threatened.
(r) Risk Management. All swaps, caps, floors, option agreements,
futures and forward contracts and other similar risk management
arrangements, whether entered into for the Company's own account, or for
the account of one or more of the Company's Subsidiaries or their
customers, were entered into (i) in accordance with prudent business
practices and all applicable laws, rules, regulations and regulatory
policies and (ii) with counterparties believed to be financially
responsible at the time; and each of them constitutes the valid and legally
binding obligation of the Company or one of its Subsidiaries, enforceable
in accordance with its terms (except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer and similar laws of general applicability relating to or affecting
creditors' rights or by general equity principles), and are in full force
and effect. Neither the Company nor its Subsidiaries, nor to the Company's
knowledge any other party thereto, is in breach of any of its obligations
under any such agreement or arrangement.
(s) Names and Trademarks. The Company (or one of its Subsidiaries)
has the right to use the names, service-marks and trademarks Previously
Disclosed in Section 5.03(s) of its Disclosure Letter in each state of the
United States, free and clear of any Liens, and no other person has the
right to use such name in any such state.
(t) Mortgage Banking Business. (i) Licenses and Qualifications. The
Company (or any Subsidiary of it that services or originates Loans, as the
case may be) (A) is an approved (1) HUD mortgagee and servicer for
FHA-insured loans, (2) lender and servicer for VA-insured loans, (3)
seller/servicer of one-to-four-family first and second mortgages for FNMA
and FHLMC and (4) GNMA issuer and servicer of GNMA-guaranteed
mortgage-backed securities, (B) has all other certifications,
authorizations, licenses, permits and other approvals necessary to conduct
its current business, (C) is in good standing under all applicable federal,
state and local laws and regulations thereunder as a lender and servicer
and (D) is in good standing with all authorities and servicers for the
state bond programs in which it participates. As of the date hereof, there
is no pending or, to the Company's knowledge, threatened cancellation or
reduction of any Investor Commitment or other loan sale Contract to which
the Company or any of its Subsidiaries is a party, and the obligations of
the Company and each of its
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Subsidiaries under each such Contract are being performed by the Company or
such Subsidiary, as the case may be, in accordance with its terms. The
Company has no reason to believe that the underwriting waivers from FNMA
and FHLMC, under current agreements with the Company, will be restricted or
rescinded, or that the guarantee fees payable to FNMA and FHLMC will be
increased as a result of the Company's or its Subsidiaries' credit
performance, or that the Company or its Subsidiaries will suffer a forced
reduction of the master commitment amount relating to FNMA or FHLMC
purchases or swaps of loans, nor has any such restriction, rescission,
increase or reduction occurred at any time since December 31, 1995.
(ii) Title to Loans. All loans held for the Company's account,
whether or not for future sale or delivery to an investor (the
"Warehouse Loans"), are owned by the Company free and clear of any Lien,
other than Liens in favor of the Company's lender banks pursuant to
warehouse lines of credit and forward sale commitments or similar
agreements to sell any such loans to investors in the ordinary course,
and all Warehouse Loans meet all requirements for sale to the intended
investors. Each mortgage or deed of trust securing a Warehouse Loan has
been duly recorded or submitted for recordation in due course in the
appropriate filing office in the name of the Company or one of its
Subsidiaries as mortgagee. Neither the Company nor any of its
Subsidiaries has released any security for any Warehouse Loan, except
upon receipt of reasonable consideration for such release (as documented
in the applicable Loan file), or accepted prepayment of any such
Warehouse Loan which has not been promptly applied to such Warehouse
Loan.
(iii) Compliance. Each Warehouse Loan and each loan which is being
serviced by the Company or one of its Subsidiaries for the account of
others (the "Serviced Loans", and together with the Warehouse Loans, the
"Loans") was underwritten and originated, and the loan documents and
loan files maintained by the Company or its Subsidiaries with respect
thereto are being maintained by the Company or such Subsidiaries, in
compliance with all applicable laws and regulations and, if applicable,
the requirements of the Investor acquiring such Loan (or, if there is no
such Investor, in accordance with the Company's underwriting standards
then in effect) and the requirements of each Insurer of such Loan (if
any) in effect and applicable at the time such insurance was obtained.
The Company and its Subsidiaries have not done or failed to do, or
caused to be done or omitted to be done, any act, the effect of which
would operate to invalidate or materially impair (i) any approvals of
any Agency or the FHA to insure, (ii) any VA guarantee or commitment of
the VA to guarantee, (iii) any private mortgage insurance or commitment
of any private mortgage insurer to insure, (iv) any title insurance
policy, (v) any hazard insurance policy, (vi) any flood insurance
policy, (vii) any fidelity bond, direct surety bond, errors and
omissions or other insurance policy required by any Agency, Investor or
Insurer, (viii) any surety or guaranty agreement, (ix) any guaranty
issued by GNMA, FNMA or FHLMC to the Company or any of its Subsidiaries
respecting mortgage backed securities issued by the Company or any of
its Subsidiaries and other like guarantees or (x) the rights of the
Company or any of its Subsidiaries under any Loan Servicing Agreement or
Investor Commitment. No Agency, Investor or Insurer has (i) claimed that
the Company or any of its Subsidiaries have violated or have not
complied on a recurring basis with the applicable underwriting standards
with respect to Loans sold by the Company or any of its Subsidiaries to
an Investor or (ii) imposed restrictions on the activities (including
commitment authority) of the Company or any of its Subsidiaries.
(iv) Loan Files. The loan documents relating to a Loan maintained
in the loan files of the Company and its Subsidiaries were in compliance
with all applicable laws and regulations at the time of the origination,
assumption or modification of such Loan, as the case may be. The loan
files maintained by the Company and its Subsidiaries contain originals
(or, where necessitated by the terms of the applicable mortgage
servicing agreements, contain true, correct and complete copies) of the
documents relating to each Loan and the information contained in such
loan files with respect to each such Loan is true, complete and accurate
and in compliance with all applicable laws and regulations. Except as
set forth in the loan documents relating to a Loan maintained in the
loan files of the Company or its Subsidiaries, the terms of the note,
bond, deed of trust and mortgage for each
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such Loan have not been impaired, waived, altered or modified in any
respect from the date of their origination except by a written
instrument which written instrument has been recorded, or submitted for
recordation in due course, if recordation is necessary to protect the
interests of the owner thereof. The substance of any such waiver,
alteration or modification has been communicated to and approved by (A)
the relevant Investor and Insurer (if any), to the extent required by
the relevant Investor and Insurer requirements, and (B) the title
Insurer, to the extent required by the relevant policies, and the terms
of any such waiver, alteration or modification are reflected in the loan
documents. Except as set forth in the loan documents maintained in the
loan files by the Company or its Subsidiaries, no mortgagor has been
released from such mortgagor's obligations with respect to the
applicable Loan.
(v) Loan Servicing Agreements. All of the Contracts pursuant to
which the Company or any of its Subsidiaries has the right and/or
obligation to service loans (each, a "Loan Servicing Agreement") are (A)
valid and binding obligations of the Company or such Subsidiary, and to
the knowledge of the Company, of all the other parties thereto, (B) in
full force and effect, (C) enforceable in accordance with their terms
(except where enforcement thereof may be limited by bankruptcy,
insolvency or other similar laws affecting the enforcement of creditors'
rights generally and by general equity principles) and (D) owned by the
Company or such Subsidiary free and clear of any Lien, except pursuant
to the loan and security agreements Previously Disclosed in the
Company's Disclosure Schedule. There is no default by the Company or any
of its Subsidiaries or claim of default against the Company or any of
its Subsidiaries by any party under any such Loan Servicing Agreement,
and, except for the consummation of the transactions contemplated by
this Agreement, no event has occurred which with the passage of time or
the giving of notice or both would constitute a default by any party
under any such Loan Servicing Agreement or would result in any such
mortgage servicing agreement being terminable by any party thereto.
There is no pending or, to the knowledge of the Company, threatened
cancellation of any Loan Servicing Agreement and the obligations of the
Company or any of its Subsidiaries under each Loan Servicing Agreement
are being performed by the Company or such Subsidiary in accordance with
the terms of such Agreement and applicable rules or regulations. The
Company and its Subsidiaries are not subservicers with respect to any of
the Serviced Loans.
(vi) No Recourse. None of the Company's or any of its
Subsidiaries' servicing rights are subject to recourse against the
servicer, and none of the Company or any of its Subsidiaries is subject
to recourse in connection with any Loans sold by it, in each case for
losses on liquidation of a loan, borrower defaults or repurchase
obligations upon the occurrence of nonpayment or other events, other
than events entitling Investors to request a repurchase of a loan
because of alleged breaches of customary representations and warranties
relating to the origination or servicing thereof.
(vii) Escrow Account. Unless otherwise prohibited by law or an
executed escrow waiver, the Company or its Subsidiaries collect all
escrows related to the Loans, and all escrow accounts have been
maintained by the Company, its Subsidiaries and, to the Company's
knowledge, all prior servicers in accordance with the related loan
documents, all applicable laws, rules, regulations, and requirements of
Investors, Insurers and Governmental Authorities, and in accordance with
the applicable Loan Servicing Agreements. The Company has credited to
the account of borrowers all interest required to be paid on any escrow
account in accordance with applicable law and the terms of such
agreements and loan documents. All escrow, custodial, and suspense
accounts related to the Loans are held in the Company's (or
Subsidiary's) name or the investor's name by the Company.
(viii) Advances. There are no servicing or other Contracts to
which the Company or any of its Subsidiaries is a party which obligates
any of them to make servicing advances for principal and interest
payments with respect to defaulted or delinquent Loans other than in a
manner as provided in standard and customary agreements with FNMA, FHLMC
or GNMA. To the extent made, any such advances are valid and subsisting
amounts owing to the Company or its Subsidiary, as the case may be,
subject to the terms of the applicable Loan Servicing Agreement.
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(ix) Single Family Loans. All of the Loans are secured by single
family (i.e., one to four family) residential real property or, to the
extent that a Loan is secured by property other than a single family
residential property, such Loan is not a Warehouse Loan and has not been
sold to any person where either the Company or any of its Subsidiaries
has any recourse obligation.
(x) ARM Adjustments. With respect to each Loan for which the
interest rate is not fixed for the entire term of the loan, the Company
or its Subsidiaries, as the case may be, has, since the date it
commenced servicing such loan and, to the Company's knowledge, all prior
servicers have (A) properly and accurately entered into its system all
data required to service the loan in accordance with the related loan
documents and all regulations, (B) properly and accurately adjusted the
monthly payment on each payment adjustment date, (C) properly and
accurately calculated the amortization of principal and interest on each
payment adjustment date, in each case in compliance with all applicable
laws, rules and regulations and the related loan documents, and (D)
executed and delivered any and all necessary notices required under, and
in a form that complies with, all applicable laws, rules and regulations
and the terms of the related loan documents regarding the interest rate
and payment adjustments.
(xi) Pools. Each Loan included in a Pool meets all eligibility
requirements (including, without limitation, all applicable requirements
for obtaining mortgage insurance certificates and loan guaranty
certificates) for inclusion in such Pool. All of such Pools have been
finally certified or, if required, recertified in accordance with all
applicable laws, rules and regulations, except where the time for
certification or recertification has not expired. No Pools have been
improperly certified. The loan file for each Loan included in a Pool
contains all documents and instruments necessary for the final
certification or recertification of such Pool. No Loan has been bought out
of a Pool without all required prior written approvals of the applicable
Investors. Neither the execution, delivery or performance of this Agreement
by the Company nor the consummation by the Company of the transactions
contemplated hereby will require any Pool to be recertified. The aggregate
unpaid principal balance outstanding of the Loans in each Pool equals or
exceeds the amount owing to the applicable Investors.
(xii) Securitization Transactions.
(A) The Company and each of its Subsidiaries, as servicer under the
applicable Loan Servicing Agreement, (the "Securitization Servicer") of
each outstanding transaction under which the Company or any of its
Subsidiaries have sold or pledged Loans in a securitization, whether
sold under the Securities Act or otherwise (a "Securitization
Transaction"), has complied in all material respects with all Contracts,
including the Loan Servicing Agreements, and all conditions to be
performed or satisfied by it with respect to all agreements and
arrangements pursuant to which such person is bound under such
Securitization Transaction (collectively, "Securitization Instruments").
(B) No Securitization Servicer or, to the Company's knowledge, no
trustee or issuer with respect to any Securitization has taken any
action which would reasonably be expected to adversely affect the
characterization or tax treatment for federal, state or local income or
franchise tax purposes of the issuer or any securities issued in a
Securitization Transaction, and all required federal, state and local
tax and information returns relating to any Securitization Transaction
have been properly filed.
(C) Each representation and warranty made by the Company or any of
its Subsidiaries in each "Purchase Agreement," "Pooling and Servicing
Agreement," "Placement Agency Agreement," "Servicer's Indemnification
Agreement" and any other Securitization Instrument to which any of them
was a party in any Securitization Transaction was true and correct in
all material respects whenever made or reaffirmed by any of them and the
Company and each of its Subsidiaries have each fully performed and
carried out each covenant and agreement made by any of them in any such
Securitization Instrument.
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(D) No rating agency has downgraded, or given the Company or any of
its Subsidiaries any indication that it is considering a downgrading of
any securities issued in any Securitization Transaction, or of its
rating of any Securitization Servicer.
(xiii) Mortgage Insurance. Each Loan which is indicated in the
related loan documents to have FHA insurance is insured under the National
Housing Act or qualifies for such insurance. Each Loan which is indicated
in the related loan documents to be guaranteed by the VA is guaranteed
under the provisions of Chapter 37 of Title 38 of the United States Code to
the extent required by the applicable Investor or qualifies for such
guarantee. As to each FHA insurance certificate, each VA guarantee
certificate, and each Loan which is indicated in the related loan file to
be insured by private mortgage insurance, the Company has complied with
applicable provisions of the insurance or guarantee contract and applicable
laws and regulations, the insurance or guarantee is in full force and
effect with respect to each such Loan, and to the knowledge of the Company,
there does not exist any event or condition which, but for the passage of
time or the giving of notice or both, can result in a revocation of any
such insurance or guarantee or constitute adequate grounds for the
applicable Insurer to refuse to provide insurance or guarantee payments
thereunder.
(xiv) Taxes and Insurance. Each Loan has been covered by a policy of
hazard insurance and flood insurance, to the extent required by the Loan
Servicing Agreements relating thereto or any laws, rules, regulations or
Investor or Insurer requirements applicable to such Loan, all in a form
usual and customary in the industry and which is in full force and effect,
and all amounts due and payable under each policy have been, or will be,
paid prior to the date such payments are due; and all taxes, assessments,
ground rents or other applicable charges or fees due and payable as to each
Loan have been, or will be, paid prior to the date such payments are due.
Any and all claims under such insurance policies have been submitted and
processed in accordance with the applicable Investor's and Insurer's
requirements. Such insurance policies name the Company (or a Subsidiary of
it) and its successors and assigns as mortgagee.
(xv) Title Insurance. To the extent required by the applicable
Investor, each Loan is covered by an ALTA lender's title insurance policy
or other generally acceptable form of policy of insurance acceptable to the
relevant Investor, and each such title insurance policy is issued by an
Insurer acceptable to the applicable Investor and qualified to do business
in the jurisdiction where the collateral securing such Loan is located, and
insures the originator and its successors and assigns as to the first
priority lien of the mortgage in the original principal amount of the Loan
(or, in the case of a second mortgage, the second priority lien). The
applicable Investor, as assignee of the originator's rights, is an insured
of such lender's title insurance policy, and such lender's policy is in
full force and effect. Neither the Company nor, to the Company's knowledge,
any prior servicer has performed any act or omission which would impair the
coverage of such lender's policy.
(xvi) Condemnation. The Company has no notice of and has no knowledge
of any proceeding pending or threatened for the partial or total
condemnation of any of the collateral securing any of the Loans, and the
Company has no notice or knowledge that all or any part of such collateral
has been or will be condemned.
(xvii) Tape. The Company has previously delivered to the Acquiror a
tape (magnetic media) on which certain information regarding the servicing
portfolio of the Company and its Subsidiaries as of May 31, 1997 is
recorded. Such tape completely and accurately contains the list of serviced
loans as of such date. The loan characteristics recorded on such tape have
been Previously Disclosed, and the information contained on such tape is
complete and accurate.
(u) Books and Records. The books and records of the Company and its
Subsidiaries have been fully, properly and accurately maintained in all
material respects, and there are no material inaccuracies or discrepancies
of any kind contained or reflected therein, and they fairly present the
financial position of the Company and its Subsidiaries. None of the
records, systems, controls, data or information of the Company and its
Subsidiaries are recorded, stored, maintained, operated or otherwise wholly
or partly dependent on or held by any means (including any electronic,
mechanical or photographic process, whether computerized or not) which
(including all means of access thereto and therefrom) are not under
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the exclusive ownership and direct control of the Company or its
Subsidiaries or accountants retained by the Company or its Subsidiaries.
(v) Insurance. The Company's Disclosure Schedule sets forth all of
the insurance policies, binders, or bonds maintained by the Company or its
Subsidiaries ("Insurance Policies"). The Company and its Subsidiaries are
insured with reputable insurers against such risks and in such amounts as
the management of the Company reasonably has determined to be prudent in
accordance with industry practices. All of the Insurance Policies are in
full force and effect; the Company and its Subsidiaries are not in material
default thereunder; and all claims thereunder have been filed in due and
timely fashion.
(w) No Brokers. No action has been taken by the Company that would
give rise to any valid claim against any party hereto for a brokerage
commission, finder's fee or other like payment with respect to the
transactions contemplated by this Agreement, excluding a fee to be paid by
the Company to Morgan Stanley & Co. Incorporated in an amount and on terms
Previously Disclosed.
(x) Ownership of Acquiror Common Stock. As of the date hereof,
neither the Company nor, to its knowledge, any of its affiliates or
associates (as such terms are defined under the Exchange Act) (i)
beneficially owns, directly or indirectly, or (ii) is party to any
agreement, arrangement or understanding for the purpose of acquiring,
holding, voting or disposing of, in each case, any outstanding shares of
Acquiror Common Stock (other than shares held in a bona fide fiduciary
capacity or in satisfaction of a debt previously contracted in good faith).
(y) Disclosure. The representations and warranties contained in this
Section 5.03 do not contain any untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements
contained in this Section 5.03, in the light of the circumstances in which
they are being made, not misleading. The copies of all documents furnished
to the Acquiror, the Bank and Merger Sub hereunder are true and complete
copies of the originals thereof.
5.04 Representations and Warranties of the Acquiror. Subject to Sections
5.01 and 5.02 and except as Previously Disclosed in a paragraph of its
Disclosure Schedule corresponding to the relevant paragraph below, the Acquiror
hereby represents and warrants to the Company as follows:
(a) Organization, Standing and Authority. Each of the Acquiror, the
Bank and Merger Sub is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization, and each
is duly qualified to do business and is in good standing in the
jurisdictions where its ownership or leasing of property or assets or the
conduct of its business requires it to be so qualified.
(b) Acquiror Stock. (i) As of the date hereof, the authorized capital
stock of the Acquiror consists solely of 200,000,000 shares of Acquiror
Common Stock, of which 103,726,095 shares were outstanding as of May 31,
1997, and 40,000,000 shares of Acquiror Preferred Stock, of which no shares
are outstanding as of the date hereof. As of the date hereof, other than
the Acquiror Rights and except as set forth in its Disclosure Schedule,
there are no shares of Acquiror Stock authorized and reserved for issuance,
the Acquiror does not have any Rights issued or outstanding with respect to
Acquiror Stock, and the Acquiror does not have any commitment to authorize,
issue or sell any Acquiror Stock or Rights, except pursuant to this
Agreement. The number of shares of Acquiror Common Stock which are issuable
and reserved for issuance upon exercise of any employee or director stock
options to purchase shares of Acquiror Common Stock, and the number and
terms of any Rights, as of the date hereof, are Previously Disclosed in the
Acquiror's Disclosure Schedule.
(ii) The shares of Acquiror Common Stock to be issued as
Consideration, when issued in accordance with the terms of this Agreement,
will be duly authorized, validly issued, fully paid and nonassessable.
(c) Subsidiaries. Each of the Acquiror's Significant Subsidiaries has
been duly organized and is validly existing and in good standing under the
laws of the jurisdiction of its organization, and is duly qualified to do
business and in good standing in the jurisdictions where its ownership or
leasing of property or the conduct of its business requires it to be so
qualified.
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(d) Corporate Power. The Acquiror and each of its Significant
Subsidiaries has the corporate power and authority to carry on its business
as it is now being conducted and to own all its properties and assets; each
of the Acquiror and the Bank has the corporate power and authority to
execute, deliver and perform its obligations under this Agreement and to
consummate the transactions contemplated hereby; and Merger Sub has the
corporate power and authority to execute, deliver and perform its
obligations under this Agreement and to consummate the transactions
contemplated hereby.
(e) Corporate Authority. This Agreement and the transactions
contemplated hereby have been authorized by all requisite corporate action
on the part of Acquiror, the Bank and Merger Sub. This Agreement is a valid
and legally binding agreement of each of the Acquiror, the Bank and Merger
Sub, in each case enforceable in accordance with its terms (except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and similar laws of general
applicability relating to or affecting creditors' rights or by general
equity principles).
(f) Regulatory Approvals; No Defaults. (i) No consents or approvals
of, or filings or registrations with, any Governmental Authority or with
any third party are required to be made or obtained by the Acquiror or any
of its Subsidiaries in connection with the execution, delivery or
performance by the Acquiror, the Bank or Merger Sub of this Agreement or to
consummate the Merger except for (A) the filing of a notice under the HSR
Act, (B) the filing of applications and notices, as applicable, with the
OTS and the FDIC; (C) approval of the listing on the NYSE of the Acquiror
Common Stock to be issued in the Merger (and related Acquiror Rights); (D)
the filing and declaration of effectiveness of the Registration Statement;
(E) the filing of a certificate of merger with the Secretary of State of
the State of Delaware pursuant to the DGCL; and (F) such filings as are
required to be made or approvals as are required to be obtained under the
securities or "Blue Sky" laws of various states in connection with the
issuance of Acquiror Common Stock in the Merger. As of the date hereof, the
Acquiror is not aware of any reason why the approvals of all Governmental
Authorities necessary to permit consummation of the transactions
contemplated hereby will not be received without the imposition of a
condition or requirement described in Section 7.01(b).
(ii) Subject to receipt of the regulatory approvals, and expiration of
the waiting periods, referred to in the preceding paragraph and the making
of all required filings under federal and state securities laws, the
execution, delivery and performance of this Agreement and the consummation
of the transactions contemplated hereby do not and will not (A) constitute
a breach or violation of, or a default under, or give rise to any Lien, any
acceleration of remedies or any right of termination under, any law, rule
or regulation or any judgment, decree, order, governmental permit or
license, or Contract of the Acquiror or of any of its Subsidiaries or to
which the Acquiror or any of its Subsidiaries or properties is subject or
bound, (B) constitute a breach or violation of, or a default under, the
certificate of incorporation or by-laws (or similar governing documents) of
the Acquiror or any of its Subsidiaries, or (C) require any consent or
approval under any such law, rule, regulation, judgment, decree, order,
governmental permit or license, agreement, indenture or instrument.
(g) SEC Documents; Financial Statements. (i) The Acquiror's Annual
Reports on Form 10-K for the fiscal years ended December 31, 1994, 1995 and
1996, and all other reports, registration statements, definitive proxy
statements or information statements filed or to be filed by the Acquiror
or any of its Subsidiaries subsequent to December 31, 1994 under the
Securities Act, or under Sections 13(a), 13(c), 14 or 15(d) of the Exchange
Act, in the form filed or to be filed (collectively, the "Acquiror's SEC
Documents") with the SEC, as of the date filed, (A) complied or will comply
in all material respects as to form with the applicable requirements under
the Securities Act or the Exchange Act, as the case may be, and (B) did not
(or if amended or superseded by a filing prior to the date of this
Agreement, then as of the date of such filing) and will 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 the light of the circumstances under which they were made, not
misleading; and each of the balance sheets contained in or incorporated by
reference into any such SEC Document (including the related notes and
schedules thereto) fairly presents, or will fairly present, the financial
position of the Acquiror and its Subsidiaries as of its date, and each of
the statements of income and changes in stockholders' equity and cash flows
or
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equivalent statements in such SEC Documents (including any related notes
and schedules thereto) fairly presents, or will fairly present, the results
of operations, changes in stockholders' equity and changes in cash flows,
as the case may be, of the Acquiror and its Subsidiaries for the periods to
which they relate, in each case in accordance with generally accepted
accounting principles consistently applied during the periods involved,
except in each case as may be noted therein, subject to normal year-end
audit adjustments in the case of unaudited statements.
(ii) Since December 31, 1996, on a consolidated basis the Acquiror and
its Subsidiaries have not incurred any liability other than in the ordinary
course of business consistent with past practice.
(iii) Since December 31, 1996, no event has occurred or circumstance
arisen that, individually or taken together with all other facts,
circumstances and events (described in any paragraph of Section 5.04 or
otherwise), is reasonably likely to have a Material Adverse Effect with
respect to the Acquiror.
(h) Litigation; Regulatory Action. (i) Other than as set forth in its
SEC Documents filed on or before the date hereof, no litigation, claim or
other proceeding before any Governmental Authority is pending against the
Acquiror or any of its Subsidiaries and, to the Acquiror's knowledge, no
such litigation, claim or other proceeding has been threatened.
(ii) Neither the Acquiror nor any of its Subsidiaries or properties is
a party to or is subject to any order, decree, agreement, memorandum of
understanding or similar arrangement with, or a commitment letter or
similar submission to, or extraordinary supervisory letter from the FDIC or
the OTS, nor has the Acquiror or any of its Subsidiaries been advised by
the FDIC or the OTS that such agency is contemplating issuing or requesting
(or is considering the appropriateness of issuing or requesting) any such
order, decree, agreement, memorandum of understanding, commitment letter,
supervisory letter or similar submission.
(i) Compliance with Laws. The Acquiror and each of its Subsidiaries:
(i) in the conduct of its business, is in compliance with all
applicable federal, state, local and foreign statutes, laws,
regulations, ordinances, rules, judgments, orders or decrees applicable
thereto or to the employees conducting such businesses, including,
without limitation, the Equal Credit Opportunity Act, the Fair Housing
Act, the Community Reinvestment Act, the Home Mortgage Disclosure Act
and all other applicable fair lending laws and other laws relating to
discriminatory business practices;
(ii) has all permits, licenses, authorizations, orders and
approvals of, and has made all filings, applications and registrations
with, all Governmental Authorities that are required in order to permit
them to conduct their businesses substantially as presently conducted;
all such permits, licenses, certificates of authority, orders and
approvals are in full force and effect and, to the best of its
knowledge, no suspension or cancellation of any of them is threatened;
and
(iii) has received, since December 31, 1995, no notification or
communication from any Governmental Authority (A) asserting that the
Acquiror or any of its Subsidiaries is not in compliance with any of the
statutes, regulations or ordinances that such Governmental Authority
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 the Bank (nor, to the
Acquiror's knowledge, do any grounds for any of the foregoing exist).
(j) No Brokers. No action has been taken by the Acquiror that would
give rise to any valid claim against any party hereto for a brokerage
commission, finder's fee or other like payment with respect to the
transactions contemplated by this Agreement, excluding a fee to be paid by
the Acquiror to Salomon Brothers Inc.
(k) Employee Benefit Plans. (i) Each of the Acquiror's Compensation
and Benefit Plans has been administered in accordance with the terms
thereof and with applicable law, including ERISA and the Code. Each of the
Acquiror's Pension Plans which is intended to be qualified under Section
401(a) of the
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Code has received a favorable determination letter from the IRS, and,
except as Previously Disclosed, the Acquiror is not aware of any
circumstances reasonably likely to result in the revocation or denial of
any such favorable determination letter. There is no pending or, to the
Acquiror's knowledge, threatened litigation or governmental audit,
examination or investigation relating to the Acquiror's Compensation and
Benefit Plans.
(ii) No liability under Title IV of ERISA (other than contributions
and premiums required in connection therewith) has been or is reasonably
expected to be incurred by the Acquiror or any of its Subsidiaries with
respect to any "single-employer plan" (within the meaning of Section 4001
(a)(15) of ERISA) or Multiemployer Plan currently or formerly maintained by
any of them, or the single-employer plan or Multiemployer Plan of any ERISA
Affiliate.
(iii) Except as Previously Disclosed, all contributions, premiums and
payments required to have been made under the terms of any of the
Acquiror's Compensation and Benefit Plans or applicable law have been
timely made or reflected in the Acquiror's SEC Documents. Neither any of
the Acquiror's Pension Plans nor any ERISA Affiliate Plan of the Acquiror
or any of its Subsidiaries has an "accumulated funding deficiency" (whether
or not waived) within the meaning of Section 412 of the Code or Section 302
of ERISA. None of the Acquiror, any of its Subsidiaries or any ERISA
Affiliate has provided, or is required to provide, security to, nor are
there any circumstances requiring the imposition of a lien on the assets of
the Company or any of its Subsidiaries with respect to, any Pension Plan or
to any ERISA Affiliate Plan pursuant to ERISA or the Code.
(iv) Under each of the Acquiror's Pension Plans and ERISA Affiliate
Plans, to the Acquiror's knowledge, there has been no material adverse
change in the financial condition of any Pension Plan or ERISA Affiliate
Plan (with respect to either assets or benefits) since the last day of the
most recent plan year.
(v) Except as Previously Disclosed, neither the Acquiror nor any of
its Subsidiaries has any obligations under any Acquiror Compensation and
Benefit Plan to provide benefits, including death or medical benefits, with
respect to employees (or their spouses, beneficiaries or dependents) of it
or its Subsidiaries beyond the retirement or other termination of service
of any such employee other than (A) coverage mandated by Part 6 of Title I
of ERISA or Section 4980B of the Code, (B) retirement or death benefits
under any employee pension benefit plan (as defined under Section 3(2) of
ERISA), (C) disability benefits under any employee welfare plan that have
been fully provided for by insurance or otherwise, or (D) benefits in the
nature of severance pay.
(l) Ownership of Company Common Stock. As of the date hereof, neither
the Acquiror nor, to its knowledge, any of its affiliates or associates (as
such terms are defined under the Exchange Act) (i) beneficially owns
directly or indirectly, or (ii) is party to any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or disposing
of, in each case, any outstanding shares of Company Common Stock (other
than shares held in a bona fide fiduciary capacity or in satisfaction of a
debt previously contracted in good faith).
(m) Tax Matters. (i) All Tax Returns with respect to the Acquiror or
any of its Subsidiaries, have been or will be timely filed, or requests for
extensions have been timely filed and have not expired; (ii) all Tax
Returns filed by the Acquiror are complete and accurate; (iii) all Taxes
shown to be due and payable (without regard to whether such Taxes have been
assessed) on such Tax Returns have been paid or adequate reserves have been
established for the payment of such Taxes; and (iv) no audit or examination
or refund litigation with respect to any Tax Return is pending or, to the
Acquiror's knowledge, has been threatened.
(n) Disclosure. The representations and warranties contained in this
Section 5.04 do not contain any untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements
contained in this Section 5.04, in the light of the circumstances in which
they are being made, not misleading. The copies of all documents furnished
to the Company hereunder are true and complete copies of the original
thereof.
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ARTICLE VI
COVENANTS
6.01 Reasonable Best Efforts. Subject to the terms and conditions of this
Agreement, each of the Company and the Acquiror agrees to use its reasonable
best efforts in good faith to take, or cause to be taken (including causing any
of its Subsidiaries to take), all actions, and to do, or cause to be done, all
things necessary, proper or desirable, or advisable under applicable laws, so as
to permit consummation of the Merger as promptly as practicable and otherwise to
enable consummation of the transactions contemplated hereby and shall cooperate
fully with the other party hereto to that end.
6.02 Stockholder Approvals. The Company agrees to take, in accordance
with applicable law, applicable stock exchange rules, the Company Certificate
and the Company By-Laws, all action necessary to convene an appropriate meeting
of stockholders of the Company to consider and vote upon the approval and
adoption of this Agreement and any other matters required to be approved by the
Company's stockholders for consummation of the Merger (including any adjournment
or postponement, the "Company Meeting") as promptly as practicable after the
Registration Statement is declared effective. Unless the Company Board, after
having consulted with and considered the written advice of outside counsel, has
determined in good faith that it is otherwise required in order to discharge
properly the directors' fiduciary duties in accordance with Delaware law, the
Company Board shall recommend such approval, and the Company shall take all
reasonable, lawful action to solicit such approval by its stockholders.
6.03 Registration Statement. (a) The Acquiror agrees to prepare a
registration statement on Form S-4 (the "Registration Statement"), to be filed
by the Acquiror with the SEC in connection with the issuance of Acquiror Common
Stock (and related Acquiror Rights) in the Merger (including the proxy statement
and prospectus and other proxy solicitation materials of the Company
constituting a part thereof (the "Proxy Statement") and all related documents).
The Company agrees to cooperate, and to cause its Subsidiaries to cooperate,
with the Acquiror, its counsel and its accountants, in preparation of the
Registration Statement and the Proxy Statement; and, provided that the Company
and its Subsidiaries have cooperated as required above, the Acquiror agrees to
file the Proxy Statement in preliminary form with the SEC as promptly as
reasonably practicable, and to file the Registration Statement with the SEC as
soon as reasonably practicable after any SEC comments with respect to the
preliminary Proxy Statement are resolved. Each of the Company and the Acquiror
agrees to use all reasonable best efforts to cause the Registration Statement to
be declared effective under the Securities Act as promptly as reasonably
practicable after filing thereof. The Acquiror also agrees to use all reasonable
best efforts to obtain all necessary state securities law or "Blue Sky" permits
and approvals required to carry out the transactions contemplated by this
Agreement. The Company agrees to furnish to the Acquiror all information
concerning the Company, its Subsidiaries, officers, directors and stockholders
as may be reasonably requested in connection with the foregoing.
(b) Each of the Company and the Acquiror agrees, as to itself and its
Subsidiaries, that none of the information supplied or to be supplied by it for
inclusion or incorporation by reference in (i) the Registration Statement will,
at the time the Registration Statement and each amendment or supplement thereto,
if any, becomes effective under the Securities Act, contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading, and (ii) the
Proxy Statement and any amendment or supplement thereto will, at the date of
mailing to stockholders and at the time of the Company Meeting, contain any
untrue statement which, at the time and in the light of the circumstances under
which such statement is made, will be false or misleading with respect to any
material fact, or which will omit to state any material fact necessary in order
to make the statements therein not false or misleading or necessary to correct
any statement in any earlier statement in the Proxy Statement or any amendment
or supplement thereto. Each of the Company and the Acquiror further agrees that
if it shall become aware prior to the Effective Date of any information
furnished by it that would cause any of the statements in the Proxy Statement to
be false or misleading with respect to any material fact, or to omit to state
any material fact necessary to make the statements therein not false or
misleading, to promptly inform the other party thereof and to take the necessary
steps to correct the Proxy Statement.
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(c) The Acquiror agrees to advise the Company, promptly after the Acquiror
receives notice thereof, of the time when the Registration Statement has become
effective or any supplement or amendment has been filed, of the issuance of any
stop order or the suspension of the qualification of the Acquiror Stock for
offering or sale in any jurisdiction, of the initiation or threat of any
proceeding for any such purpose, or of any request by the SEC for the amendment
or supplement of the Registration Statement or for additional information.
6.04 Press Releases. Each of the Company and the Acquiror agrees that it
will not, without the prior approval of the other party, issue any press release
or written statement for general circulation relating to the transactions
contemplated hereby, except as otherwise required by applicable law or
regulation or NYSE rules.
6.05 Access; Information. (a) Each of the Company and the Acquiror agrees
that upon reasonable notice and subject to applicable laws relating to the
exchange of information, it shall afford the other party and the other party's
officers, employees, counsel, accountants and other authorized representatives,
such access during normal business hours throughout the period prior to the
Effective Time to the books, records (including, without limitation, tax returns
and work papers of independent auditors), properties, personnel and to such
other information as any party may reasonably request and, during such period,
it shall furnish promptly to such other party (i) a copy of each material
report, schedule and other document filed by it pursuant to the requirements of
federal or state securities or banking laws, and (ii) all other information
concerning the business, properties and personnel of it as the other may
reasonably request.
(b) Each of the Company and the Acquiror agrees that it will not, and will
cause its representatives not to, use any information obtained pursuant to this
Section 5.05 for any purpose unrelated to the consummation of the transactions
contemplated by this Agreement. Subject to the requirements of law, each party
will keep confidential, and will cause its representatives to keep confidential,
all information and documents obtained pursuant to this Section 6.05 unless such
information (i) was already known to such party, (ii) becomes available to such
party from other sources not known by such party to be bound by a
confidentiality obligation, (iii) is disclosed with the prior written approval
of the party to which such information pertains or (iv) is or becomes readily
ascertainable from published information or trade sources. In the event that
this Agreement is terminated or the transactions contemplated by this Agreement
shall otherwise fail to be consummated, each party shall promptly cause all
copies of documents or extracts thereof containing information and data as to
another party hereto to be returned to the party which furnished the same. No
investigation by either party of the business and affairs of the other shall
affect or be deemed to modify or waive any representation, warranty, covenant or
agreement in this Agreement, or the conditions to either party's obligation to
consummate the transactions contemplated by this Agreement.
6.06 Acquisition Proposals. The Company agrees that it shall not, and
shall cause its Subsidiaries and its and its Subsidiaries' officers, directors,
agents, advisors and affiliates not to, solicit or encourage inquiries or
proposals with respect to, or engage in any negotiations concerning, or provide
any confidential information to, or have any discussions with, any person
relating to, any tender or exchange offer, proposal for a merger, consolidation
or other business combination involving the Company or any of its Subsidiaries
or any proposal or offer to acquire in any manner a substantial equity interest
in, or a substantial portion of the assets or deposits of, the Company or any of
its Subsidiaries, other than the transactions contemplated by this Agreement
(any of the foregoing, an "Acquisition Proposal"); provided, that, if the
Company is not otherwise in violation of this Section 6.06, the Company Board
may provide information to, and may engage in such negotiations or discussions
with, a person, directly or through representatives, if (a) the Company Board,
after having consulted with and considered the written advice of counsel, has
determined in good faith that the provision of such information or the engaging
in such negotiations or discussion is required in order to discharge properly
the directors' fiduciary duties in accordance with Delaware law and (b) the
Company has received from such person a confidentiality agreement in
substantially customary form. The Company also agrees immediately to cease and
cause to be terminated any activities, discussions or negotiations conducted
prior to the date of this Agreement with any parties other than the Acquiror or
the Bank, with respect to any of the foregoing. The Company shall promptly
(within 24 hours) advise the Acquiror following the receipt by it of any
Acquisition Proposal and the substance thereof (including the identity of the
person making such
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Acquisition Proposal), and advise the Acquiror of any developments with respect
to such Acquisition Proposal immediately upon the occurrence thereof.
6.07 Affiliate Agreements. Not later than the 15th day prior to the
mailing of the Proxy Statement, the Company shall deliver to the Acquiror a
schedule of each person that, to the Company's knowledge, is or is reasonably
likely to be, as of the date of the Company Meeting, deemed to be an "affiliate"
of it (each, a "Company Affiliate") as that term is used in Rule 145 under the
Securities Act or SEC Accounting Series Releases 130 and 135. The Company agrees
to use its reasonable best efforts to cause each person who may be deemed to be
a Company Affiliate to execute and deliver to the Company and the Acquiror on or
before the date of mailing of the Proxy Statement an agreement in the form
attached hereto as Exhibit B.
6.08 Takeover Laws. No party shall take any action that would cause the
transactions contemplated by this Agreement to be subject to requirements
imposed by any Takeover Law and each of them shall take all necessary steps
within its control to exempt (or ensure the continued exemption of) the
transactions contemplated by this Agreement from, or if necessary challenge the
validity or applicability of, any applicable Takeover Law, as now or hereafter
in effect.
6.09 No Rights Triggered. The Company shall take all reasonable steps
necessary to ensure that the entering into of this Agreement and the
consummation of the transactions contemplated hereby and any other action or
combination of actions, or any other transactions contemplated hereby, do not
and will not result in the grant of any rights to any person (a) under the
Company Certificate or the Company By-Laws or (b) under any material agreement
to which it or any of its Subsidiaries is a party (except as expressly
contemplated by the mandatory provisions under its stock option plans, as
applicable).
6.10 Rights Agreement. The Company shall take all necessary action (i) to
render the Company Rights Agreement inapplicable to the Merger and the other
transactions contemplated by this Agreement and (ii) to ensure that neither the
Acquiror, the Bank nor Merger Sub will become an "Acquiring Person" and that no
"Stock Acquisition Date" or a "Distribution Date" (as such terms are defined in
the Rights Agreement) will occur and that the exercisability of the Company
Rights Agreement will not be triggered, in each case as a result of the
execution or delivery of this Agreement or any amendment hereto or thereto or
the consummation of the Merger, or the consummation of the other transactions
contemplated by this Agreement. Except (a) as provided in Section 5.03(o) or in
the immediately preceding sentence or (b) if the Company Board, after having
consulted with and considered the written advice of outside counsel, has
determined in good faith that it is otherwise required in order to discharge
properly the directors' fiduciary duties in accordance with Delaware law, the
Company Board shall not (i) amend the Company Rights Agreement or (ii) take any
action with respect to, or make any determination under, the Company Rights
Agreement, including the determination that the Acquiror or any of its
Subsidiaries is an "Adverse Person," a redemption of the Company Rights or any
action to facilitate an Acquisition Transaction.
6.11 NYSE Listing. The Acquiror agrees to use its reasonable best efforts
to list, prior to the Effective Date, on the NYSE, subject to official notice of
issuance, the shares of Acquiror Common Stock to be issued to the holders of
Company Common Stock in the Merger.
6.12 Regulatory Applications. (a) The Acquiror and the Company and their
respective Subsidiaries shall cooperate and use their respective reasonable best
efforts to prepare all documentation, to effect all filings and to obtain all
permits, consents, approvals and authorizations of all third parties and
Governmental Authorities necessary to consummate the transactions contemplated
by this Agreement. Each of the Acquiror and the Company shall have the right to
review in advance, and to the extent practicable each will consult with the
other, in each case subject to applicable laws relating to the exchange of
information, with respect to, all material written information submitted to any
third party or any Governmental Authority in connection with the transactions
contemplated by this Agreement. In exercising the foregoing right, each of the
Acquiror and the Company agrees to act reasonably and as promptly as
practicable. Each of the Acquiror and the Company agrees that it will consult
with the other party hereto with respect to the obtaining of all material
permits, consents, approvals and authorizations of all third parties and
Governmental Authorities necessary or advisable to consummate the transactions
contemplated by this Agreement and each party will keep the other
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party appraised of the status of material matters relating to completion of the
transactions contemplated hereby.
(b) Each of the Acquiror and the Company agrees, upon request, to furnish
the other party with all information concerning itself, its Subsidiaries,
directors, officers and stockholders and such other matters as may be reasonably
necessary or advisable in connection with any filing, notice or application made
by or on behalf of such other party or any of its Subsidiaries to any third
party or Governmental Authority.
6.13 Indemnification. (a) The by-laws of the Surviving Corporation shall
contain provisions no less favorable with respect to indemnification than are
set forth in Article VII of the Company By-Laws, which provisions shall not be
amended, repealed or otherwise modified, for a period of six years from the
Effective Time, in any manner that would adversely affect the rights thereunder
of individuals who at the Effective Time were directors, officers, employees or
agents of the Company with respect to any action, suit or proceeding arising out
of, or relating to, any actions, transactions or facts occurring prior to the
Effective Time. Following the Effective Date and for a period of six years
thereafter, the Acquiror shall indemnify, defend and hold harmless the present
and former directors and officers of the Company and its Subsidiaries (each, an
"Indemnified Party") against all costs or expenses (including reasonable
attorneys' fees), judgments, fines, losses, claims, damages or liabilities
(collectively, "Costs") incurred in connection with any claim, action, suit,
proceeding or investigation, whether civil, criminal, administrative or
investigative, arising out of actions or omissions occurring at or prior to the
Effective Time (including, without limitation, the transactions contemplated by
this Agreement), whether asserted or claimed prior to, at or after the Effective
Time, to the fullest extent that the Company is permitted to indemnify its
directors and officers under the laws of the State of Delaware, the Company
Certificate and the Company By-Laws as in effect on the date hereof (and
Acquiror shall, or shall cause the Surviving Corporation to, also advance
expenses as incurred to the fullest extent permitted under applicable law
provided the person to whom expenses are advanced provides an undertaking to
repay such advances if it is ultimately determined that such person is not
entitled to indemnification); provided that any determination required to be
made with respect to whether an officer's or director's conduct complies with
the standards set forth under Delaware law, the Company Certificate and the
Company By-Laws shall be made by independent counsel (which shall not be counsel
that provides material services to the Acquiror) selected by the Acquiror and
reasonably acceptable to such officer or director; and provided, further, that
in the absence of applicable Delaware judicial precedent to the contrary, such
counsel, in making such determination, shall presume such officer's or
director's conduct complied with such standard and the Acquiror shall have the
burden to demonstrate that such officer's or director's conduct failed to comply
with such standard.
(b) For a period of six years from the Effective Time, the Acquiror shall
use its best efforts to provide that portion of director's and officer's
liability insurance that serves to reimburse the present and former officers and
directors of the Company or any of its Subsidiaries (determined as of the
Effective Time) with respect to claims against such directors and officers
arising from facts or events which occurred before the Effective Time, which
insurance shall contain at least the same coverage and amounts, and contain
terms and conditions no less advantageous, as that coverage currently provided
by the Company; provided, however, that in no event shall the Acquiror be
required to expend more than 200 percent of the current amount expended by the
Company (the "Insurance Amount") to maintain or procure such directors and
officers insurance coverage; provided, further, that if the Acquiror is unable
to maintain or obtain the insurance called for by this Section 6.13(b), the
Acquiror shall use its reasonable best efforts to obtain as much comparable
insurance as is available for the Insurance Amount; provided, further, that
officers and directors of the Company or any Subsidiary may be required to make
application and provide customary representations and warranties to the
Acquirer's insurance carrier for the purpose of obtaining such insurance.
(c) Any Indemnified Party wishing to claim indemnification under Section
6.13(a), upon learning of any claim, action, suit, proceeding or investigation
described above, shall promptly notify the Acquiror thereof; provided that the
failure so to notify shall not affect the obligations of the Acquiror under
Section 6.13(a) unless and to the extent that the Acquiror is actually
prejudiced as a result of such failure. In the event of any such claim, action,
suit, proceeding or investigation (whether arising before or after the Effective
Time), (i) the Acquiror or the Surviving Corporation shall have the right to
assume the defense thereof and the
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Acquiror shall not be liable to such Indemnified Parties for any legal expenses
of other counsel or any other expenses subsequently incurred by such Indemnified
Parties in connection with the defense thereof, except that if the Acquiror or
the Surviving Corporation elects not to assume such defense or counsel for the
Indemnified Parties advises that there are issues that raise conflicts of
interest between the Acquiror or the Surviving Corporation and the Indemnified
Parties, the Indemnified Parties may retain counsel satisfactory to them, and
the Acquiror or the Surviving Corporation shall pay all reasonable fees and
expenses of such counsel for the Indemnified Parties promptly as statements
therefor are received; provided, however, that the Acquiror shall be obligated
pursuant to this paragraph (c) to pay for only one firm of counsel for all
Indemnified Parties in any jurisdiction unless the use of one counsel for such
Indemnified Parties would present such counsel with a conflict of interest, (ii)
the Indemnified Parties will cooperate in the defense of any such matter and
(iii) the Acquiror shall not be liable for any settlement effected without its
prior written consent, which consent shall not be unreasonably withheld; and
provided, further, that the Acquiror shall not have any obligation hereunder to
any Indemnified Party when and if a court of competent jurisdiction shall
ultimately determine, and such determination shall have become final and
non-appealable, that the indemnification of such Indemnified Party in the manner
contemplated hereby is prohibited by applicable law.
(d) If the Acquiror or any of its successors or assigns shall consolidate
with or merge into any other entity and shall not be the continuing or surviving
entity of such consolidation or merger or shall transfer all or substantially
all of its assets to any entity, then and in each case, proper provision shall
be made so that the successors and assigns of the Acquiror shall assume the
obligations set forth in this Section 6.13.
6.14 Benefit Plans. From the Effective Time until December 31, 1998,
Acquiror shall cause the Surviving Corporation and its Subsidiaries to maintain
for employees of the Company and its Subsidiaries who as of the Effective Time
become employed by the Surviving Corporation or the Acquiror or any of their
Subsidiaries (the "Covered Employees"), (a) salary and bonus opportunities (but
explicitly excluding commissions and equity grant opportunities), (b) employee
pension benefits in respect of plans intended to be qualified under Section
401(a) of the Code, (c) employee welfare benefits and (d) broad-based severance
plans (the items covered in (a) through (d) hereinafter referred to as
"Designated Benefits"), that are no less favorable, in the aggregate, than the
Designated Benefits enjoyed by such Covered Employees immediately prior to the
Effective Time. For purposes of all employee benefit plans, programs and
arrangements maintained or contributed to by the Acquiror and its Subsidiaries
(including without limitation, the Surviving Corporation), the Acquiror shall,
or shall cause its Subsidiaries to, cause each such plan, program or arrangement
to treat the prior service with the Company and its Subsidiaries of each Covered
Employee (to the same extent such service is recognized under analogous plans,
programs or arrangements of the Company or its Subsidiaries immediately prior to
the Effective Time) as service rendered to the Acquiror or its Subsidiaries, as
the case may be, solely for purposes of eligibility to participate and for
vesting thereunder. Following the Effective Time, the Acquiror shall cause the
Surviving Corporation to cause any and all pre-existing condition limitations
(to the extent such limitations did not apply to a pre-existing condition under
the Compensation and Benefit Plans) and eligibility waiting periods under any
health plans to be waived with respect to Covered Employees who, immediately
prior to the Effective Time, participated in a health plan and their eligible
dependents. All discretionary awards and benefits under any employee benefit
plans of the Acquiror shall be subject to the discretion of the persons or
committee administering such plans. The Acquiror shall honor, pursuant to the
terms of the Company Compensation and Benefit Plans Previously Disclosed, and to
the extent consistent with applicable law, all employee benefit obligations to
current and former employees of the Company under such plans.
6.15 Accountants' Letters. Each of the Company and the Acquiror shall use
its reasonable best efforts to cause to be delivered to the other party, and
such other party's directors and officers who sign the Registration Statement, a
letter of Ernest & Young LLP and KPMG Peat Marwick LLP, respectively,
independent auditors, dated (i) the date on which the Registration Statement
shall become effective and (ii) a date shortly prior to the Effective Date, and
addressed to such other party, and such directors and officers, in form and
substance customary for "comfort" letters delivered by independent accountants
in accordance with Statement of Accounting Standards No. 72.
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6.16 Notification of Certain Matters. Each of the Company and the
Acquiror shall give prompt notice to the other of any fact, event or
circumstance known to it that (i) is reasonably likely, individually or taken
together with all other facts, events and circumstances known to it, to result
in any Material Adverse Effect with respect to it or (ii) would cause or
constitute a material breach of any of its representations, warranties,
covenants or agreements contained herein.
6.17 Certain Policies of the Company. Upon the request of the Acquiror,
the Company shall, consistent with generally accepted accounting principles and
regulatory accounting principles, use its reasonable best efforts to record
certain accounting adjustments intended to conform the loan, litigation and
other accrual and reserve policies (including loan classifications and levels of
reserves) of the Company and its Subsidiaries so as to reflect the policies of
the Acquiror; provided, however, that the Company shall not be obligated to
record any such accounting adjustments pursuant to this Section 6.17 (a) unless
and until the Company shall be satisfied that the conditions to the obligation
of the parties to consummate the Merger will be satisfied or waived on or before
the Effective Time, and (b) in no event until the day prior to the Effective
Date. The Company's representations, warranties and covenants contained in this
Agreement shall not be deemed to be untrue or breached in any respect for any
purpose as a consequence of any modifications or changes undertaken solely on
account of this Section 6.17.
6.18 Employee Benefits. The Company shall, with the prior approval of the
Acquiror, take any necessary or appropriate action to effect a correction of any
errors made in connection with contributions made to the Company's Savings Plan
or Retirement Plan (including, to the extent appropriate, making any necessary
corrective contributions in order to satisfy the nondiscrimination requirements
under Sections 401(k)(3) and 401(m)(2) of the Code). With respect to any options
granted under the Company's Incentive Stock Option Plan, the Company Board shall
refrain from canceling any such options and causing cash to be paid in
consideration therefor. The Company Board (or such members of the Company Board
authorized to so act), in accordance with the Company's Incentive Stock Option
Plan, shall take timely action to adopt a resolution providing and declaring
that the consummation of the Merger, shareholder approval of the Merger, as well
as all transactions or events contemplated thereby or related thereto, shall not
constitute a "Change of Control" for purposes of such Incentive Stock Option
Plan or, with the prior consent of the Acquiror, take such other action as shall
prevent any holder of a Stock Option from having a right to receive, pursuant to
Section 10 of such Plan, a cash payment as a result of this Agreement and the
transactions contemplated hereby; provided that such other action be taken prior
to the date on which a "Change of Control" would otherwise occur in the absence
of the Company Board resolution to the contrary. The Company shall take such
action as is reasonably necessary to provide that, after the date of this
Agreement, no employee of the Company or any of its Subsidiaries who is
otherwise eligible to participate in the Company's Senior Executive Severance
Pay Plan shall be eligible to participate in, or receive a benefit under, the
Company's Severance Pay Plan, so as to prevent any employee of the Company or
any of its subsidiaries from receiving a severance benefit under both such
plans. With respect to the Company Annual Executive Bonus Plan (the "AEBP"), the
aggregate Target Pool (as such term is defined in the AEBP) for the 1997
calendar year Valuation Period shall not exceed $2,000,000. To the extent a
change of control (as defined in the AEBP) occurs prior to the end of such
Valuation Period, however, such Target Pool shall be pro-rated in the same ratio
as the number of months in the Valuation Period completed as of the date of such
change of control bears to 12 (provided, however, that such pro-rated amount
shall be reduced by $273,750) and the Committee thereunder shall determine the
amounts to be paid under the AEBP and the Company shall make such payments, if
any, at the Effective Time. Notwithstanding the foregoing or any provision of
this Agreement, the Company shall take such action as may be required for each
Company Stock Option to fully vest and become immediately exercisable at the
Effective Time and to remain exercisable for the remaining term of such Company
Stock Option.
6.19 Certain Payments at Effective Time. In lieu of and in satisfaction
for the amount of any cash payment which might otherwise be paid or payable upon
a termination of employment under any Termination Agreement previously entered
into by the Company or any applicable severance plan, the Company shall pay to
the individuals listed on Schedule 6.19 of the Company's Disclosure Schedule in
a cash lump sum at the Effective Time the amounts set forth in such Schedule
6.19, less the amount of any applicable withholding. In
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addition, at the Effective Time payment shall also be made in respect of
Previously Disclosed obligations in respect of stock options that were never
granted to the individual included on Schedule 6.19 of the Company's Disclosure
Schedule, less the amount of any applicable withholding.
6.20 Certain Employee Agreements. The Company shall not terminate the
employment of Messrs. Terrance G. Hodel, Harold B. Bonnikson, Gary F. Moore and
Martin S. Hughes (each, an "Identified Employee") without the prior written
consent of the Acquiror (such consent not to be unreasonably withheld) and,
subject to the terms and conditions of this Agreement, shall use its reasonable
best efforts (a) to maintain the continued employment of each Identified
Employee with the Company until the Effective Date and (b) not in any way to
encourage (or permit the encouragement of) any Identified Employee to breach or
violate any employment agreement or other arrangement such Identified Employee
may have with the Acquiror or any Subsidiary of it.
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER
7.01 Conditions to Each Party's Obligation to Effect the Merger. The
respective obligation of each of the Acquiror and the Company to consummate the
Merger is subject to the fulfillment or written waiver by the Acquiror and the
Company prior to the Effective Time of each of the following conditions:
(a) Stockholder Approval. This Agreement shall have been duly adopted
by the affirmative vote of the holders of at least a majority of the
outstanding shares of Company Common Stock entitled to vote thereon in
accordance with Section 251 of the DGCL, other applicable law and the
Company Certificate and the Company By-Laws.
(b) Governmental and Regulatory Consents. All approvals and
authorizations of, filings and registrations with, and notifications to,
all Governmental Authorities (except to the extent that such Governmental
Authorities are acting in the capacity of Insurer or Investor) required for
the consummation of the Merger and for the prevention of any termination of
any material right, privilege, license or agreement of either the Acquiror
or the Company or their respective Subsidiaries shall have been obtained or
made and shall be in full force and effect and all waiting periods required
by law shall have expired; provided, however, that none of the preceding
shall be deemed obtained or made if it shall be subject to any condition or
restriction the effect of which would have a Material Adverse Effect on the
Acquiror (including the Company as a Subsidiary after the Merger) or on the
Surviving Corporation.
(c) Third Party Consents. All consents or approvals of all persons,
other than Governmental Authorities (except to the extent that such
Governmental Authorities are acting in the capacity of Insurer or
Investor), 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 the
Surviving Corporation.
(d) No Injunction. No Governmental Authority of competent
jurisdiction shall have enacted, issued, promulgated, enforced or entered
any statute, rule, regulation, judgment, decree, injunction or other order
(whether temporary, preliminary or permanent) which is in effect and
prohibits consummation of the transactions contemplated by this Agreement.
(e) Registration Statement. The Registration Statement shall have
become effective under the Securities Act and no stop order suspending the
effectiveness of the Registration Statement shall have been issued and no
proceedings for that purpose shall have been initiated or threatened by the
SEC.
(f) Blue Sky Approvals. All permits and other authorizations under
the federal and state securities laws (other than that referred to in
Section 7.01(e)) and other authorizations necessary to consummate the
transactions contemplated hereby and to issue the shares of Acquiror Common
Stock (and related Acquiror Rights) to be issued in the Merger shall have
been received and be in full force and effect.
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(g) Listing. The shares of Acquiror Common Stock (and related
Acquiror Rights) to be issued in the Merger shall have been approved for
listing on the NYSE, subject to official notice of issuance.
7.02 Conditions to Obligation of the Company. The obligation of the
Company to consummate the Merger is also subject to the fulfillment or written
waiver by the Company prior to the Effective Time of each of the following
conditions:
(a) Representations and Warranties. The representations and
warranties of the Acquiror set forth in this Agreement shall be true and
correct (after giving effect to the standard set forth in Section 5.02 of
this Agreement) as of the date of this Agreement and as of the Effective
Date as though made on and as of the Effective Date (except that
representations and warranties that by their terms speak as of the date of
this Agreement or some other date shall be true and correct only as of such
date), and the Company shall have received a certificate, dated the
Effective Date, signed on behalf of the Acquiror by the Chief Executive
Officer and the Treasurer of the Acquiror to such effect.
(b) Performance of Obligations of the Acquiror. The Acquiror, the
Bank and Merger Sub shall have performed in all material respects all
obligations required to be performed by them under this Agreement at or
prior to the Effective Time, and the Company shall have received a
certificate, dated the Effective Date, signed on behalf of the Acquiror by
the Chief Executive Officer and the Treasurer of the Acquiror to such
effect.
(c) Opinion of Counsel. The Company shall have received an opinion,
dated the Effective Date, of Sullivan & Cromwell, special counsel to the
Acquiror, to the effect that the shares of Acquiror Common Stock to be
issued as Consideration, when issued in accordance with the terms hereof,
will be duly authorized, validly issued, fully paid and nonassessable.
(d) Tax Opinion of Company's Counsel. The Company shall have received
an opinion of Simpson Thacher & Bartlett, special counsel to the Company,
to the effect that (i) the Merger constitutes a "reorganization" within the
meaning of Section 368 of the Code and (ii) no gain or loss will be
recognized by stockholders of the Company who receive shares of Acquiror
Common Stock as Consideration in exchange for shares of Company Common
Stock, except that gain or loss may be recognized as to cash received in
lieu of fractional share interests.
(e) Accountants' Letters. The Company shall have received the letters
referred to in Section 6.15 from KPMG Peat Marwick LLP, the Acquiror's
independent auditors.
7.03 Conditions to Obligation of the Acquiror. The obligation of the
Acquiror to consummate the Merger is also subject to the fulfillment or written
waiver by the Acquiror prior to the Effective Time of each of the following
conditions:
(a) Representations and Warranties. The representations and
warranties of the Company set forth in this Agreement shall be true and
correct (after giving effect to the standard set forth in Section 5.02 of
this Agreement) as of the date of this Agreement and as of the Effective
Date as though made on and as of the Effective Date (except that
representations and warranties that by their terms speak as of the date of
this Agreement or some other date shall be true and correct only as of such
date) and the Acquiror shall have received a certificate, dated the
Effective Date, signed on behalf of the Company by the Chief Executive
Officer and the Treasurer of the Company to such effect.
(b) Performance of Obligations of the Company. The Company shall have
performed in all material respects all obligations required to be performed
by it under this Agreement at or prior to the Effective Time, and the
Acquiror shall have received a certificate, dated the Effective Date,
signed on behalf of the Company by the Chief Executive Officer and the
Chief Financial Officer of the Company to such effect.
(c) Tax Opinion of Acquiror's Counsel. The Acquiror shall have
received an opinion of Sullivan & Cromwell, special counsel to the
Acquiror, dated the Effective Date, to the effect that the Merger
constitutes a "reorganization" within the meaning of Section 368 of the
Code.
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(d) Accountants' Letters. The Acquiror and its directors and officers
who sign the Registration Statement shall have received the letters
referred to in Section 6.15 from Ernst & Young LLP, the Company's
independent auditors.
ARTICLE VIII
TERMINATION
8.01 Termination. This Agreement may be terminated, and the Merger may be
abandoned:
(a) Mutual Consent. At any time prior to the Effective Time, by the
mutual consent of the Acquiror and the Company, if the Board of Directors
of each so determines by vote of a majority of the members of its entire
Board.
(b) Breach. At any time prior to the Effective Time, by the Acquiror
or the Company, in each case if its Board of Directors so determines by
vote of a majority of the members of its entire Board, in the event of
either: (i) a breach by the other party of any representation or warranty
contained herein (subject to the standard set forth in Section 5.02), which
breach cannot be or has not been cured within 30 days after the giving of
written notice to the breaching party of such breach; or (ii) a breach by
the other party of any of the covenants or agreements contained herein,
which breach cannot be or has not been cured within 30 days after the
giving of written notice to the breaching party of such breach and which
breach would be reasonably likely, individually or in the aggregate, to
have a Material Adverse Effect on the breaching party.
(c) Delay. At any time prior to the Effective Time, by the Acquiror
or the Company, in each case if its Board of Directors so determines by
vote of a majority of the members of its entire Board, in the event that
the Merger is not consummated by December 31, 1997, except to the extent
that the failure of the Merger then to be consummated arises out of or
results from the knowing action or inaction of the party seeking to
terminate pursuant to this Section 8.01(c).
(d) No Approval. By the Company or the Acquiror, in each case if its
Board of Directors so determines by a vote of a majority of the members of
its entire Board, in the event (i) the approval of any Governmental
Authority required for consummation of the Merger and the other
transactions contemplated by this Agreement shall have been denied by final
nonappealable action of such Governmental Authority or (ii) any stockholder
approval required by Section 6.02 herein is not obtained at the Company
Meeting.
(e) Failure to Recommend, Etc. By the Acquiror, if (i) at any time
prior to the Company Meeting the Company Board shall have failed to make
its recommendation referred to in Section 6.02, withdrawn such
recommendation or modified or changed such recommendation in a manner
adverse to the interests of the Acquiror (whether in accordance with
Section 6.02 or otherwise) or (ii) the Company Board participates in (or
authorizes participation in) negotiations regarding the substantive terms
of a bona fide formal Acquisition Proposal).
(f) Acceptance of an Acquisition Proposal. By the Company, if,
without breaching Section 6.06, the Company shall contemporaneously enter
into a definitive agreement with a third party providing for an Acquisition
Transaction on terms determined in good faith by the Company Board, after
consulting with and considering the written advice of the Company's outside
counsel and financial advisors, to be more favorable to the stockholders of
the Company than the Merger; provided, that the right to terminate this
Agreement under this Section 8.01(f) shall not be available to the Company
unless it delivers to the Acquiror simultaneously with such termination the
fee referred to in Section 8.03.
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(g) Possible Adjustment. By the Company, if the Company Board so
determines by a vote of a majority of the members of the entire Company
Board, at any time during the five-day period commencing with the
Determination Date, if both of the following conditions are satisfied:
(i) The Average Closing Price on the Determination Date of shares
of Acquiror Common Stock shall be less than the product of 0.80 and the
Starting Price; and
(ii) (A) The number obtained by dividing the Average Closing Price
on the Determination Date by the Starting Price (such number, the
"Acquiror Ratio") shall be less than (B) the number obtained by dividing
the Index Price on the Determination Date by the Index Price on the
Starting Date and subtracting 0.20 from the quotient in this Section
8(g)(ii)(B) (such number, the "Index Ratio");
subject, however, to the following four sentences. If the Company
elects to exercise its termination right pursuant to this Section 8.01(g),
it shall give prompt written notice to the Acquiror; provided that such
notice of election may be withdrawn at any time within the aforementioned
five-day period. During the five-day period commencing with its receipt of
such notice, the Acquiror shall have the option of adjusting the Exchange
Ratio to the lesser of (i) a number equal to a quotient (rounded to the
nearest one-thousandth), the numerator of which is the product of 0.80, the
Starting Price and the Exchange Ratio (as then in effect) and the
denominator of which is the Average Closing Price, and (ii) a number equal
to a quotient (rounded to the nearest one-thousandth), the numerator of
which is the Index Ratio multiplied by the Exchange Ratio (as then in
effect) and the denominator of which is the Acquiror Ratio. If the Acquiror
determines so to increase the Exchange Ratio within such five-day period,
it shall give prompt written notice to the Company of its determination and
the revised Exchange Ratio, whereupon no termination shall occur pursuant
to this Section 8.01(g) and this Agreement shall remain in effect in
accordance with its terms (except as the Exchange Ratio shall have been so
modified), and any references in this Agreement to the "Exchange Ratio"
shall thereafter be deemed to refer to the Exchange Ratio as adjusted
pursuant to this Section 8.01(g). If the Acquiror or any company belonging
to the Index Group declares or effects a stock dividend, reclassification,
recapitalization, split-up, combination, exchange of shares or similar
transaction between the Starting Date and the Determination Date, the
prices for the common stock of the Acquiror or such company shall be
appropriately adjusted for the purposes of applying this Section 8.01(g).
8.02 Effect of Termination and Abandonment. In the event of termination
of this Agreement and the abandonment of the Merger pursuant to this Article
VIII, no party to this Agreement shall have any liability or further obligation
to any other party hereunder except (a) as set forth in Sections 8.03 and 9.01
and (b) that termination will not relieve a breaching party from liability for
any willful breach of this Agreement giving rise to such termination.
8.03 Termination Fee. (a) The Company hereby agrees to pay to the
Acquiror, and the Acquiror shall be entitled to payment of, a cash fee (the
"Fee") of $15,000,000 following the occurrence of a Fee Trigger Event; provided,
that the Acquiror's right to receive the Fee shall be discontinued if any of the
following (each, a "Fee Termination Event") occurs prior to a Fee Trigger Event:
(i) The Effective Time;
(ii) Termination of this Agreement in accordance with the provisions
hereof, if such termination occurs prior to the occurrence of a Preliminary
Fee Trigger Event, other than a Listed Termination; or
(iii) Fifteen months after termination of this Agreement, if such
termination (A) follows, or occurs at the same time as, a Preliminary Fee
Trigger Event (other than, termination by the Company pursuant to (x)
Section 8.01(b) because of a knowing, intentional or grossly negligent
breach by the Acquiror or (y) Section 8.01(g), in which case the right to
receive the Fee shall terminate at termination of this Agreement) or (B) is
a Listed Termination.
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(b) The term "Preliminary Fee Trigger Event" shall mean any of the
following events or transactions occurring on or after the date hereof:
(i) The Company or any subsidiary of the Company, without having
received the Acquiror's prior written consent, shall have entered into an
agreement to engage in an Acquisition Transaction with any person (the term
"person" for purposes of this Section 8.03 having the meaning assigned
thereto in Sections 3(a)(9) and 13(d)(3) of the Exchange Act) other than
the Acquiror or any of its Subsidiaries (each an "Acquiror Person") or the
Company Board shall have recommended that the stockholders of the Company
approve or accept any Acquisition Transaction other than the Merger.
(ii) Any person, other than an Acquiror Person, shall have acquired
beneficial ownership or the right to acquire beneficial ownership of 15% or
more of the outstanding shares of Company Common Stock (the term
"beneficial ownership" for purposes of this Section 8.03 having the meaning
assigned thereto in Section 13(d) of the Exchange Act);
(iii) The stockholders of the Company shall have voted and failed to
adopt this Agreement and the Merger at a meeting which has been held for
that purpose or any adjournment or postponement thereof, or such meeting
shall not have been held in violation of this Agreement or shall have been
canceled prior to termination of this Agreement, in each case, if, prior to
such meeting (or if such meeting shall not have been held or shall have
been canceled, prior to such termination), it shall have been publicly
announced that any person (other than an Acquiror Person) shall have made,
or disclosed an intention to make, a bona fide proposal to engage in an
Acquisition Transaction;
(iv) The Company Board shall have withdrawn or modified (or disclosed
its intention to withdraw or modify) in a manner adverse in any respect to
the Acquiror its recommendation referred to in Section 6.02, or the Company
or any Subsidiary of it shall have authorized, recommended, proposed (or
publicly announced its intention to authorize, recommend or propose) an
agreement to engage in an Acquisition Transaction with any person other
than an Acquiror Person;
(v) Any person, other than an Acquiror Person, shall have made a bona
fide proposal to the Company or its stockholders, by public announcement or
written communication that is or becomes the subject of public disclosure,
to engage in an Acquisition Transaction;
(vi) Any person, other than an Acquiror Person, shall have filed with
the SEC a registration statement or tender offer materials with respect to
a potential exchange or tender offer that would constitute an Acquisition
Transaction (or filed a preliminary proxy statement with the SEC with
respect to a potential vote by its stockholders to approve the issuance of
shares to be offered in such an exchange offer); or
(vii) The Company shall have willfully breached any covenant or
obligation contained in this Agreement in anticipation of engaging in an
Acquisition Transaction, and following such breach the Acquiror would be
entitled to terminate this Agreement (whether immediately or after the
giving of notice or passage of time or both).
(c) The term "Fee Trigger Event" shall mean any of the following events or
transactions occurring after the date hereof:
(i) The acquisition by any person (other than an Acquiror Person) of
beneficial ownership of 25% or more of the then outstanding Company Common
Stock; or
(ii) The occurrence of the Preliminary Fee Trigger Event described in
Section 8.03(b)(i), except that the percentage referred to in clause (iii)
of the definition of "Acquisition Transaction" shall be deemed 25%.
(d) The Company shall notify the Acquiror promptly in writing of its
knowledge of the occurrence of a Preliminary Fee Trigger Event or Fee Trigger
Event; provided, however, that the giving of such notice shall not be a
condition to the right of the Acquiror to the Fee.
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(e) The Fee shall be payable, without setoff, by wire transfer in
immediately available funds, to an account specified by the Acquiror, not later
than three New York City business days following the first occurrence of a Fee
Trigger Event.
ARTICLE IX
MISCELLANEOUS
9.01 Survival. No representations, warranties, agreements and covenants
contained in this Agreement (other than in this Article IX) shall survive the
Effective Time or termination of this Agreement if this Agreement is terminated
prior to the Effective Time; provided, however, that if this Agreement is
terminated prior to the Effective Time, the agreements of the parties contained
in Sections 6.05(b), 8.02, 8.03 and Article IX shall survive such termination.
9.02 Waiver; Amendment. Prior to the Effective Time, any provision of
this Agreement may be (a) waived by the party benefitted by the provision, or
(b) amended or modified at any time, by an agreement in writing between the
parties hereto approved by their respective Boards of Directors and executed in
the same manner as this Agreement, except that, after approval of the Merger by
the stockholders of the Company, no amendment may be made which under applicable
law requires further approval of such stockholders without obtaining such
required further approval.
9.03 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to constitute an original.
9.04 Governing Law. This Agreement shall be governed by, and interpreted
in accordance with, the laws of the State of New York applicable to contracts
made and to be performed entirely within such State.
9.05 Expenses. Subject to Section 8.03, each party hereto will bear all
expenses incurred by it in connection with this Agreement and the transactions
contemplated hereby, except that printing expenses and SEC registration fees
shall be shared equally between the Company and the Acquiror.
9.06 Notices. All notices, requests and other communications hereunder to
a party shall be in writing and shall be deemed given (a) on the date of
delivery, if personally delivered or telecopied (with confirmation), (b) on the
first business day following the date of dispatch, if delivered by a recognized
next-day courier service, or (c) on the third business day following the date of
mailing, if mailed by registered or certified mail (return receipt requested),
in each case to such party at its address or telecopy number set forth below or
such other address or numbers as such party may specify by notice to the parties
hereto.
If to the Company, to:
President
North American Mortgage Company
3883 Airway Drive
Santa Rose, California 95403
Facsimile: (704) 542-6721
With a copy to:
James M. Cotter, Esq.
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Facsimile: (212) 455-2502.
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If to the Acquiror, to:
Gene C. Brooks, Esq.
Dime Bancorp, Inc.
509 Fifth Avenue
New York, New York 10017
Facsimile: (212) 386-6110
With a copy to:
Mitchell S. Eitel, Esq.
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Facsimile: (212) 558-3588.
9.07 Entire Understanding; No Third Party Beneficiaries. This Agreement
(together with the Disclosure Schedules) represents the entire understanding of
the parties hereto with reference to the transactions contemplated hereby and
this Agreement supersedes any and all other oral or written agreements
heretofore made. Except for Section 6.13, insofar as such Section expressly
provides certain rights to the Indemnified Parties named therein, nothing in
this Agreement, expressed or implied, is intended to confer upon any person,
other than the parties hereto or their respective successors and permitted
assigns, any rights, remedies, obligations or liabilities under or by reason of
this Agreement.
* * *
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers, all as of the day and year first
above written.
NORTH AMERICAN MORTGAGE COMPANY
By: /s/ JOHN F. FARRELL, JR.
------------------------------------
Name: John F. Farrell, Jr.
Title: Chairman and Chief Executive
Officer
DIME BANCORP, INC.
By: /s/ LAWRENCE J. TOAL
------------------------------------
Name: Lawrence J. Toal
Title: Chief Executive Officer,
President and Chief Operating
Officer
THE DIME SAVINGS BANK OF
NEW YORK, FSB
By: /s/ LAWRENCE J. TOAL
------------------------------------
Name: Lawrence J. Toal
Title: Chief Executive Officer,
President and Chief Operating
Officer
47TH ST. PROPERTY CORPORATION
By: /s/ D. JAMES DARAS
------------------------------------
Name: D. James Daras
Title: Senior Vice President
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EXHIBIT A
FORM OF AMENDMENT TO COMPANY RIGHTS AGREEMENT
AMENDMENT, dated as of June 22, 1997 (the "Amendment"), to the Stockholder
Rights Agreement, dated as of October 19, 1992 (as amended, the "Rights
Agreement"), between North American Mortgage Company, a Delaware corporation
(the "Company"), and The Bank of New York, a New York banking corporation, as
Rights Agent (the "Rights Agent").
WITNESSETH
WHEREAS, on October 19, 1992, the Board of Directors of the Company
authorized and declared a dividend distribution of one Right for each share of
Common Stock outstanding at the close of business on the Record Date, each Right
representing the right to purchase one one-hundredth of a share of Preferred
Stock upon the terms and conditions set forth in the Rights Agreement;
WHEREAS, the Rights remain issued and outstanding and the Rights Agreement
remains in effect with respect thereto;
WHEREAS, no Distribution Date has occurred;
WHEREAS, the Company, Dime Bancorp, Inc., a Delaware corporation ("Dime"),
and The Dime Savings Bank of New York, FSB, a federal savings bank (the "Bank"),
have entered into an Agreement and Plan of Combination (the "Combination
Agreement"), pursuant to which the Bank would acquire the assets and assume the
liabilities of the Company (or assign the right to acquire such assets and
assume such liabilities to a corporation wholly owned and controlled by the
Bank); and
WHEREAS, in connection with the approval, execution, and delivery of the
Combination Agreement, the Board of Directors of the Company has approved, in
accordance with Section 27 of the Rights Agreement, this Amendment and has
directed the appropriate officers of the Company to take all appropriate steps
to execute and deliver this Amendment.
NOW, THEREFORE, in consideration of the premises and mutual agreements
herein set forth, the parties hereby agree as follows:
(1) Amendment to Section 1(a)
The first paragraph of Section 1(a) of the Rights Agreement is hereby
amended to read in its entirety as follows:
"(a) 'Acquiring Person' shall mean any Person who or which, together
with all Affiliates (as hereinafter defined) and Associates (as hereinafter
defined) of such Person, shall be the Beneficial Owner (as hereinafter
defined) of 15% or more of the shares of Common Stock, but shall not
include (i) the Company, (ii) any Subsidiary (as such term is hereinafter
defined) of the Company, (iii) any employee benefit plan or compensation
arrangement of the Company or any Subsidiary of the Company, (iv) any
Person holding shares of Common Stock organized, appointed or established
by the Company or any Subsidiary of the Company for or pursuant to the
terms of any such employee benefit plan or compensation arrangement, or (v)
until the termination of the Combination Agreement in accordance with its
terms, Dime or any Affiliate or Associate of Dime, as a result of their
acquisition of Beneficial Ownership of shares of Common Stock by reason of
the approval, execution, or delivery of the Combination Agreement, or by
reason of the consummation of any transaction contemplated by the
Combination Agreement, so long as Dime and any Affiliate or Associate of
Dime is not the Beneficial Owner of any shares of Common Stock other than
(w) shares of Common Stock of which Dime or any Affiliate or Associate of
Dime is or becomes the Beneficial Owner by reason of the approval,
execution, or delivery of the Combination Agreement, or by reason of the
consummation of any transaction contemplated by the Combination Agreement,
(x) shares of Common Stock Beneficially Owned by Dime or any Affiliate or
Associate of Dime on the date hereof, (y) shares of Common Stock of which
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Dime or any Affiliate or Associate of Dime inadvertently becomes the
Beneficial Owner after the date hereof, provided that the number of such
shares of Common Stock does not exceed 1/2 of 1% of the shares of Common
Stock outstanding on the date hereof and that Dime or any such Affiliate or
Associate, as the case may be, divests such shares of Common Stock as soon
as practicable after it becomes aware of such acquisition of Beneficial
Ownership, and (z) shares of Common Stock Beneficially Owned or otherwise
held by Dime or any Affiliate or Associate of Dime in fiduciary capacity or
in satisfaction of debts previously contracted in good faith (the Persons
described in clauses (i) through (v) above are referred to herein as
'Exempt Persons')."
(2) Amendment to Section 1(b)
Section 1(b) of the Rights Agreement is hereby amended to read in its
entirety as follows:
"(b) 'Adverse Person' shall mean any Person declared to be an Adverse
Person by the Board of Directors upon a determination of the Board of
Directors that the criteria set forth in Section 11(a)(ii)(B) apply to such
Person, provided, however, that the Board of Directors shall not declare
Dime or any Affiliate or Associate of Dime to be an Adverse Person (i) as a
result of the Combination Agreement, their acquisition of Beneficial
Ownership of shares of Common Stock by reason of the Combination Agreement,
or by reason of the consummation of any transaction contemplated by the
Combination Agreement or (ii) unless the Combination Agreement has been
terminated in accordance with its terms."
(3) Addition of Section 1(z).
A new Section 1(z) of the Rights Agreement is inserted, to read in its
entirety as follows:
"(z) 'Dime' shall mean Dime Bancorp, Inc., a Delaware corporation, and
its successors."
(4) Addition of Section 1(aa).
A new Section 1(aa) of the Rights Agreement is inserted, to read in its
entirety as follows:
"(aa) 'Combination Agreement' shall mean the Agreement and Plan of
Combination, dated as of June 22, 1997, by and among the Company, Dime, and
The Dime Savings Bank of New York, FSB, a federal savings bank, as the same
may be amended from time to time."
(5) Amendment of Section 7(a). The first sentence of Section 7(a) of the
Rights Agreement is hereby amended to read in its entirety as follows:
"(a) Subject to Section 7(e) hereof, the registered holder of any
Right Certificate may exercise the Rights evidenced thereby (except as
otherwise provided herein) in whole or in part at any time after the
Distribution Date upon surrender of the Right Certificate, with the form of
election to purchase and the certificate on the reverse side thereof duly
executed, along with a signature guarantee and such other and further
documentation as the Rights Agent may reasonably request, to the Rights
Agent at the office or offices of the Rights Agent designated for such
purpose, together with payment of the aggregate Exercise Price of the total
number of one one-hundredth of a share of Preferred Stock (or other
securities, cash or other assets, as the case may be) as to which such
surrendered Rights are then exercised, at or prior to the earlier of (i)
the close of business on December 31, 2002 (the 'Final Expiration date'),
(ii) the time at which the Rights are redeemed as provided in Section 23
hereof, (iii) the time at which such Rights are exchanged as provided in
Section 24 hereof or (iv) the effective time of the business combination
provided for in the Combination Agreement (the earlier if (i), (ii), (iii)
or (iv) being herein referred to as the 'Expiration Date')."
(6) Effectiveness. This Amendment shall be deemed to be in force and
effective immediately prior to the execution and delivery of the Combination
Agreement. Except as amended hereby, the Rights Agreement shall remain in full
force and effect and shall be otherwise unaffected hereby.
(7) Defined Terms. Unless otherwise defined herein, all capitalized terms
used but not otherwise defined herein shall have the meanings assigned them in
the Rights Agreement.
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(8) Governing Law. This Amendment shall be deemed to be a contract made
under the laws of the State of New York and for all purposes shall be governed
by and construed in accordance with the laws of such State applicable to
contracts made and to be performed entirely within New York.
(9) Counterparts. This Amendment may be executed in any number of
counterparts, each of which shall for all purposes be deemed an original and all
of which shall together constitute but one and the same instrument.
* * *
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed as of the day and year first above written.
NORTH AMERICAN MORTGAGE COMPANY
By:
------------------------------------
Name:
Title:
THE BANK OF NEW YORK, as Rights Agent
By:
------------------------------------
Name:
Title:
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<PAGE> 115
EXHIBIT B
FORM OF COMPANY AFFILIATE LETTER
, 1997
North American Mortgage Company
3833 Airway Drive
Santa Rose, California 95403
Dime Bancorp, Inc.
589 Fifth Avenue
New York, New York 10017
Ladies and Gentlemen:
I have been advised that I may be deemed to be an "affiliate" of North
American Mortgage Company, a Delaware corporation (the "Company"), as that term
is defined in Rule 145 promulgated by the Securities and Exchange Commission
(the "SEC") under the Securities Act of 1933, as amended (the "Securities Act").
I understand that pursuant to the terms of the Agreement and Plan of
Combination, dated as of June 22, 1997 (as amended from time to time and
including the exhibits thereto, the "Agreement"), by and among the Company, Dime
Bancorp, Inc., a Delaware corporation (the "Acquiror"), The Dime Savings Bank of
New York, FSB, a federal savings bank (the "Bank"), and 47th St. Property
Corporation ("Merger Sub"), Merger Sub plans to merge with and into the Company
(the "Merger").
I further understand that as a result of the Merger, I may receive shares
of common stock, par value $0.01 per share, of the Acquiror ("Acquiror Common
Stock") (i) in exchange for shares of common stock, par value $0.01 per share,
of the Company ("Company Common Stock") or (ii) as a result of the exercise of
Rights (as defined in the Agreement).
I have carefully read this letter and reviewed the Agreement and discussed
their requirements and other applicable limitations upon my ability to sell,
transfer, or otherwise dispose of Acquiror Common Stock and Company Common
Stock, to the extent I felt necessary, with my counsel or counsel for the
Company.
I represent, warrant and covenant with and to the Acquiror that in the
event I receive any Acquiror Common Stock as a result of the Merger:
1. I shall not make any sale, transfer, or other disposition of such
Acquiror Stock unless (i) such sale, transfer or other disposition has been
registered under the Securities Act, (ii) such sale, transfer or other
disposition is made in conformity with the provisions of Rule 145 under the
Securities Act (as such rule may be amended from time to time), or (iii) in
the opinion of counsel in form and substance reasonably satisfactory to the
Acquiror, or under a "no-action" letter obtained by me from the staff of
the SEC, such sale, transfer or other disposition will not violate or is
otherwise exempt from registration under the Securities Act.
2. I understand that the Acquiror is under no obligation to register
the sale, transfer or other disposition of shares of Acquiror Common Stock
by me or on my behalf under the Securities Act or to take any other action
necessary in order to make compliance with an exemption from such
registration available.
3. I understand that stop transfer instructions will be given to the
Acquiror's transfer agent with respect to the shares of Acquiror Common
Stock issued to me as a result of the Merger and that there will be placed
on the certificates for such shares, or any substitutions therefor, a
legend stating in substance:
"The shares represented by this certificate were issued in a
transaction to which Rule 145 promulgated under the Securities Act of
1933 applies. The shares represented by this certificate may be
transferred only in accordance with the terms of a letter agreement
between the registered holder
A-46
<PAGE> 116
hereof and Dime Bancorp, Inc., a copy of which agreement is on file at
the principal offices of Dime Bancorp, Inc."
4. I understand that, unless transfer by me of the Acquiror Common
Stock issued to me as a result of the Merger has been registered under the
Securities Act or such transfer is made in conformity with the provisions
of Rule 145(d) under the Securities Act, the Acquiror reserves the right,
in its sole discretion, to place the following legend on the certificates
issued to my transferee:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933 and were acquired from a
person who received such shares in a transaction to which Rule 145 under
the Securities Act of 1933 applies. The shares have been acquired by the
holder not with a view to, or for resale in connection with, any
distribution thereof within the meaning of the Securities Act of 1933
and may not be offered, sold, pledged or otherwise transferred except in
accordance with an exemption from the registration requirements of the
Securities Act of 1933."
It is understood and agreed that the legends set forth in paragraphs (3)
and (4) above shall be removed by delivery of substitute certificates without
such legend if I shall have delivered to the Acquiror (i) a copy of a
"no-action" letter from the staff of the SEC, or an opinion of counsel in form
and substance reasonably satisfactory to the Acquiror, to the effect that such
legend is not required for purposes of the Securities Act, or (ii) evidence or
representations satisfactory to the Acquiror that the Acquiror Common Stock
represented by such certificates is being or has been sold in conformity with
the provisions of Rule 145(d).
I further understand and agree that this letter agreement shall apply to
all shares of Company Common Stock and Acquiror Common Stock that I am deemed to
beneficially own pursuant to applicable federal securities laws and I further
represent, warrant and covenant with and to the Acquiror that I will have, and
will cause each of the other parties whose shares are deemed to be beneficially
owned by me to have, all shares of Company Common Stock or Acquiror Common Stock
owned by me or such parties registered in my name or the name of such parties,
as applicable, prior to the effective date of the Merger and not in the name of
any bank, broker or dealer, nominee or clearing house.
Very truly yours,
--------------------------------------
Name:
Accepted this day of
, 1997.
NORTH AMERICAN MORTGAGE COMPANY
By:
--------------------------------------------------------
Name:
Title:
DIME BANCORP, INC.
By:
--------------------------------------------------------
Name:
Title:
A-47
<PAGE> 117
APPENDIX B
MORGAN STANLEY
MORGAN STANLEY & CO.
INCORPORATED
1585 BROADWAY
NEW YORK, NEW YORK 10036
(212) 761-4000
September 15, 1997
North American Mortgage Company
3883 Airway Drive
Santa Rosa, California 95403-1699
Members of the Board:
We understand that North American Mortgage Company ("North American"), Dime
Bancorp, Inc. ("Dime"), The Dime Savings Bank of New York, FSB, a wholly owned
subsidiary of Dime ("Bank Sub") and 47th St. Property Corporation, a wholly
owned subsidiary of Bank Sub ("Merger Sub") have entered into an Agreement and
Plan of Combination, dated as of June 22, 1997 and amended and restated as of
July 31, 1997 (the "Agreement"), which provides among other things for the
merger (the "Merger") of Merger Sub with and into North American. Pursuant to
the Merger North American will become an indirect wholly owned subsidiary of
Dime and each issued and outstanding share of common stock, par value $.01 per
share (the "North American Common Stock"), other than shares held in treasury,
will be converted into the right to receive 1.37 shares (the "Exchange Ratio")
of common stock, par value $.01 per share, of Dime (the "Dime Common Stock").
The terms and conditions of the Merger are more fully set forth in the
Agreement.
You have asked for our opinion as to whether the Exchange Ratio pursuant to
the Agreement is fair from a financial point of view to the holders of shares of
the North American Common Stock.
For purposes of the opinion set forth herein, we have:
(i) reviewed certain publicly available financial statements and other
information of North American and Dime, respectively;
(ii) reviewed certain internal financial statements and other financial
and operating data concerning North American and Dime prepared by the
managements of North American and Dime, respectively;
(iii) reviewed certain financial projections of North American and Dime
prepared by the managements of North American and Dime, respectively;
(iv) discussed the past and current operations and financial condition and
the prospects of North American and Dime with senior executives of
North American and Dime, respectively;
(v) analyzed the pro forma impact of the Merger on the combined company's
earnings per share, consolidated capitalization and financial ratios;
(vi) reviewed the reported prices and trading activity for the North
American Common Stock and the Dime Common Stock;
(vii) compared the financial performance of North American and Dime and the
prices and trading activity of the North American Common Stock and
the Dime Common Stock with that of certain other comparable
publiclytraded companies and their securities;
B-1
<PAGE> 118
MORGAN STANLEY
North American Mortgage Company
September 15, 1997
Page 2
(viii) discussed the results of regulatory examinations of Dime with senior
management of Dime;
(ix) discussed the strategic objectives of the Merger and the plan for the
combined company with senior executives of North American and Dime;
(x) reviewed and discussed with the senior managements of North American
and Dime certain estimates of the cost savings and revenue
enhancements projected by North American and Dime for the combined
company;
(xi) reviewed the financial terms, to the extent publicly available, of
certain comparable precedent transactions;
(xii) participated in discussions and negotiations among representatives of
North American and Dime and their financial and legal advisors;
(xiii) reviewed the Agreement and certain related documents; and
(xiv) considered other factors as we have deemed appropriate.
We have assumed and relied upon without independent verification the accuracy
and completeness of the information supplied or otherwise made available to us
by North American and Dime for the purposes of this opinion. With respect to the
financial projections, including the estimates of cost savings and revenue
enhancements expected to result from the Merger, we have assumed that they have
been reasonably prepared on bases reflecting the best currently available
estimates and judgments of the future financial performance of North American
and Dime. We have not made any independent valuation or appraisal of the assets
or liabilities of North American and Dime, nor have we been furnished with any
such appraisals. In addition, we have assumed the Merger will be consummated in
accordance with the terms set forth in the Agreement. Our opinion is necessarily
based on economic, market and other conditions as in effect on, and the
information made available to us as of, the date hereof.
We have acted as financial advisor to the Board of Directors of North American
in connection with this transaction and will receive a fee for our services. In
the past, Morgan Stanley & Co. Incorporated and its affiliates have provided
financial advisory and financing services for North American and have received
fees for the rendering of these services. It is understood that this letter is
for the information of the Board of Directors of North American and may not be
used for any other purpose without our prior written consent, except that this
opinion may be included in its entirety in any filing with the Securities and
Exchange Commission in connection with the Merger. In addition, we express no
opinion or recommendation as to how the holders of shares of the North American
Common Stock should vote at the shareholders meeting held in connection with the
Transaction.
Based on the foregoing, we are of the opinion on the date hereof that the
Exchange Ratio pursuant to the Agreement is fair from a financial point of view
to the holders of shares of the North American Common Stock.
Very truly yours,
MORGAN STANLEY & CO. INCORPORATED
By: /s/ KIRK R. WILSON
------------------------------------
Kirk R. Wilson
Managing Director
B-2
<PAGE> 119
PROXY NORTH AMERICAN MORTGAGE COMPANY PROXY
FOR SPECIAL MEETING OF STOCKHOLDERS OCTOBER 13, 1997
PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints each of John F. Farrell, Jr., Terrance
G. Hodel and Martin S. Hughes proxies with full power of substitution, with the
powers (each having full power to act without the others, and if two or more of
them act together, by action of a majority of them) the undersigned would
possess if personally present, to vote, as designated on the reverse side, all
shares of the $.01 par value Common Stock of the undersigned in North American
Mortgage Company ("NAMC") at the Special Meeting of Stockholders to be held on
October 13, 1997 (the "Special Meeting"), and at any adjournment or
postponement thereof.
1. The authorization and adoption of the Agreement and Plan of
Combination, dated as of June 22, 1997 and amended and restated as of July 31,
1997, among NAMC, Dime Bancorp, Inc., The Dime Savings Bank of New York, FSB
and 47th St. Property Corporation.
FOR ________ AGAINST ________ ABSTAIN ________
2. In their discretion, the proxies are authorized to vote upon any
other matter that may properly come before the Special Meeting or any
adjournment or postponement thereof.
This proxy, when properly executed, will be voted in accordance with
the undersigned's direction as set forth herein. IF NO DIRECTION IS MADE, THIS
PROXY WILL BE VOTED FOR PROPOSAL 1. This Proxy may be revoked in writing prior
to its exercise.
(Continued and to be dated and signed on reverse side)
<PAGE> 120
Please sign your name exactly as it appears below. If shares are held jointly,
all joint owners should sign. If shares are held by a corporation, please sign
the full corporate name by the president or any other authorized corporate
officer. If shares are held by a partnership, please sign the full partnership
name by an authorized person. If you are signing as an attorney, executor,
administrator, trustee or guardian, please set forth your full title as such.
---------------------------------------
(Number of Shares)
---------------------------------------
(Please print your name)
---------------------------------------
(Signature of Shareholder)
Dated: __________________________, 1997
---------------------------------------
(Please print your name)
---------------------------------------
(Signature of Shareholder)
Dated: __________________________, 1997
The undersigned hereby revokes any
proxies heretofore given to vote upon or
act with respect to such shares and
hereby ratifies and confirms all that
said attorneys, agents, proxies, the
substitutes or any of them may lawfully
do by virtue hereof.
(When signing as an attorney, executor,
administrator, trustee, guardian, etc.,
give title as such. If joint account,
each joint owner should sign.)
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF NAMC AND WILL BE
VOTED FOR PROPOSAL 1 ON THE REVERSE UNLESS OTHERWISE INDICATED.
<PAGE> 121
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law contains detailed
provisions for indemnification of directors and officers of Delaware
corporations against expenses, judgments, fines and settlements in connection
with litigation.
The Restated Certificate of Incorporation, as amended, of Dime Bancorp,
Inc. ("Dime") and its directors' and officers' liability insurance policy
provide for indemnification of the directors and officers of Dime against
certain liabilities. Reference is made to the text under the heading
"DESCRIPTION OF DIME CAPITAL STOCK -- Certain Other Provisions -- Limitation of
Liability and Indemnification of Directors and Officers" in the accompanying
Proxy Statement-Prospectus.
In addition, Dime maintains a directors' and officers' insurance policy.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits.
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
- ----------- --------------------------------------------------------------------------
<C> <S>
2 Agreement and Plan of Combination, dated as of June 22, 1997 and amended
and restated as of July 31, 1997, by and among North American Mortgage
Company, Dime, The Dime Savings Bank of New York, FSB and 47th Property
Corporation (included as Appendix A to the Proxy Statement-Prospectus)
3.1 Certificate of Incorporation of Dime, incorporated by reference to
Appendix A to the Proxy Statement-Prospectus filed under cover of Dime's
Registration Statement on Form S-4 (No. 33-86002)
3.2 Amendment to Certificate of Incorporation of Dime, dated June 14, 1995,
incorporated by reference to Exhibit 3(ii) to Dime's Annual Report on Form
10-K for the fiscal year ended December 31, 1995, filed with the
Commission on April 1, 1996, as amended on Form 10-K/A, filed with the
Commission on May 15, 1996 (File No. 1-13094)
3.3 By-Laws of Dime, incorporated by reference to Exhibit 3 to Dime's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1997, filed
with the Commission on August 14, 1997 (File No. 1-13094)
4 Stockholder Protection Rights Agreement, dated as of October 20, 1995,
between Dime and the First National Bank of Boston, as Rights Agent,
incorporated by reference to Exhibit (1) of the Registration Statement on
Form 8-A of Dime filed with the Commission on November 3, 1995 (File No.
1-13094)
5 Opinion of Sullivan & Cromwell
8.1 Tax opinion of Sullivan & Cromwell
8.2 Tax opinion of Simpson Thacher & Bartlett
10.1 Employment Letter Agreement, dated July 17, 1997, between Dime Mortgage,
Inc. ("DMI") and Gary F. Moore
10.2 Employment Letter Agreement, dated June 22, 1997, between DMI and Terrance
G. Hodel
</TABLE>
II-1
<PAGE> 122
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
- ----------- --------------------------------------------------------------------------
<C> <S>
10.3 Employment Letter Agreement, dated June 22, 1997, between DMI and Harold
B. Bonnikson
10.4 Employment Letter Agreement, dated June 22, 1997, between DMI and Martin
S. Hughes
10.5 Consulting Letter Agreement, dated June 26, 1997, between DMI and John F.
Farrell, Jr.
21 Subsidiaries of Dime
23.1 Consent of KPMG Peat Marwick LLP
23.2 Consent of Ernst & Young LLP
23.3 Consent of Morgan Stanley & Co. Incorporated
23.4 Consent of Sullivan & Cromwell (included in Exhibit 5)
23.5 Consent of Sullivan & Cromwell (included in Exhibit 8.1)
23.6 Consent of Simpson Thacher & Bartlett (included in Exhibit 8.2)
24 Power of Attorney (included in the signature pages to this Registration
Statement)
</TABLE>
(b) Financial Statement Schedule.
None.
(c) Reports, Opinions and Appraisals.
None.
ITEM 22. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933 (the "Securities Act");
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Securities and Exchange Commission pursuant to Rule 424(b) if,
in the aggregate, the changes in volume and price represent no more than
a 20 percent change in the maximum aggregate offering price set forth in
the "Calculation of Registration Fee" table in the effective
registration statement; and
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in this Registration Statement
or any material change to such information in this Registration
Statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if
the registration statement is on Form S-3, Form S-8 or Form F-3, and the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the registrant pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in the
registration statement.
II-2
<PAGE> 123
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof;
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in this
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) The undersigned Registrant hereby undertakes as follows: that prior to
any public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this registration statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c), the
issuer undertakes that such reoffering prospectus will contain the information
called for by the applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the information called
for by the other items of the applicable form.
(d) The Registrant undertakes that every prospectus: (i) that is filed
pursuant to paragraph (c) immediately preceding, or (ii) that purports to meet
the requirements of Section 10(a)(3) of the Securities Act and is used in
connection with an offering of securities subject to Rule 415, will be filed as
a part of an amendment to the registration statement and will not be used until
such amendment is effective, and that, for purposes of determining any liability
under the Securities Act, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(e) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by the controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
(f) The undersigned Registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11 or 13 of this form within one business day of receipt of such
request, and to send the incorporated documents by first class mail or other
equally prompt means. This includes information contained in documents filed
subsequent to the effective date of the registration statement through the date
of responding to the request.
(g) The undersigned Registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-3
<PAGE> 124
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in The City of New York,
State of New York, on the 12th day of September, 1997.
DIME BANCORP, INC.
By: /s/ LAWRENCE J. TOAL
------------------------------------
(Lawrence J. Toal)
(Chief Executive Officer, President
and
Chief Operating Officer)
POWER OF ATTORNEY
Each person whose signature appears below on this Registration statement
hereby constitutes and appoints Lawrence J. Toal and Gene C. Brooks, and each of
them, with full power to act without the other, his true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution,
for him and in his name, place and stead, in any and all capacities (unless
revoked in writing) to sign any and all amendments (including post-effective
amendments thereto) to this Registration Statement to which this power of
attorney is attached, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission,
granting to such attorney-in-fact and agents, and each of them, full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in connection therewith, as full to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that such
attorneys-in-fact and agents or any of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated as of September 12th, 1997.
<TABLE>
<CAPTION>
SIGNATURE TITLE
- ------------------------------------------ -------------------------------------------------
<C> <S>
/s/ LAWRENCE J. TOAL Chief Executive Officer, President, Chief
- ------------------------------------------ Operating Officer and a Director (Principal
(Lawrence J. Toal) Executive Officer)
/s/ JAMES M. LARGE, JR. Chairman of the Board
- ------------------------------------------
(James M. Large, Jr.)
/s/ DERRICK D. CEPHAS A Director
- ------------------------------------------
(Derrick D. Cephas)
/s/ FREDERICK C. CHEN A Director
- ------------------------------------------
(Frederick C. Chen)
/s/ J. BARCLAY COLLINS II A Director
- ------------------------------------------
(J. Barclay Collins II)
/s/ RICHARD W. DALRYMPLE A Director
- ------------------------------------------
(Richard W. Dalrymple)
</TABLE>
II-4
<PAGE> 125
<TABLE>
<CAPTION>
SIGNATURE TITLE
- ------------------------------------------ -------------------------------------------------
<C> <S>
/s/ JAMES F. FULTON A Director
- ------------------------------------------
(James F. Fulton)
/s/ VIRGINIA M. KOPP A Director
- ------------------------------------------
(Virginia M. Kopp)
/s/ JOHN MORNING A Director
- ------------------------------------------
(John Morning)
/s/ MARGARET G. OSMER-MCQUADE A Director
- ------------------------------------------
(Margaret G. Osmer-McQuade)
/s/ SALLY HERNANDEZ-PINERO A Director
- ------------------------------------------
(Sally Hernandez-Pinero)
/s/ DR. PAUL A. QUALBEN A Director
- ------------------------------------------
(Dr. Paul A. Qualben)
/s/ EUGENE G. SCHULZ, JR. A Director
- ------------------------------------------
(Eugene G. Schulz, Jr.)
/s/ HOWARD SMITH A Director
- ------------------------------------------
(Howard Smith)
/s/ DR. NORMAN R. SMITH A Director
- ------------------------------------------
(Dr. Norman R. Smith)
/s/ IRA T. WENDER A Director
- ------------------------------------------
(Ira T. Wender)
/s/ ANTHONY R. BURRIESCI Chief Financial Officer
- ------------------------------------------
(Anthony R. Burriesci)
/s/ HAROLD E. REYNOLDS Controller
- ------------------------------------------
(Harold E. Reynolds)
</TABLE>
II-5
<PAGE> 126
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
- ----------- ----------------------------------------------------------------------------------
<C> <S>
2 Agreement and Plan of Combination, dated as of June 22, 1997 and amended and
restated as of July 31, 1997, by and among North American Mortgage Company, Dime,
The Dime Savings Bank of New York, FSB and 47th Property Corporation (included as
Appendix A to the Proxy Statement-Prospectus)
3.1 Certificate of Incorporation of Dime, incorporated by reference to Appendix A to
the Proxy Statement-Prospectus filed under cover of Dime's Registration Statement
on Form S-4 (No. 33-86002)
3.2 Amendment to Certificate of Incorporation of Dime, dated June 14, 1995,
incorporated by reference to Exhibit 3(ii) to Dime's Annual Report on Form 10-K
for the fiscal year ended December 31, 1995, filed with the Commission on April 1,
1996, as amended on Form 10-K/A, filed with the Commission on May 15, 1996 (File
No. 1-13094)
3.3 By-Laws of Dime, incorporated by reference to Exhibit 3 to Dime's Quarterly Report
on Form 10-Q for the quarter ended June 30, 1997, filed with the Commission on
August 14, 1997 (File No. 1-13094)
4 Stockholder Protection Rights Agreement, dated as of October 20, 1995, between
Dime and the First National Bank of Boston, as Rights Agent, incorporated by
reference to Exhibit (1) of the Registration Statement on Form 8-A of Dime filed
with the Commission on November 3, 1995 (File No. 1-13094)
5 Opinion of Sullivan & Cromwell
8.1 Tax opinion of Sullivan & Cromwell
8.2 Tax opinion of Simpson Thacher & Bartlett
10.1 Employment Letter Agreement, dated July 17, 1997, between Dime Mortgage, Inc.
("DMI") and Gary F. Moore
10.2 Employment Letter Agreement, dated June 22, 1997, between DMI and
Terrance G. Hodel
10.3 Employment Letter Agreement, dated June 22, 1997, between DMI and
Harold B. Bonnikson
10.4 Employment Letter Agreement, dated June 22, 1997, between DMI and
Martin S. Hughes
10.5 Consulting Letter Agreement, dated June 26, 1997, between DMI and John F. Farrell,
Jr.
21 Subsidiaries of Dime
23.1 Consent of KPMG Peat Marwick LLP
23.2 Consent of Ernst & Young LLP
23.3 Consent of Morgan Stanley & Co. Incorporated
23.4 Consent of Sullivan & Cromwell (included in Exhibit 5)
23.5 Consent of Sullivan & Cromwell (included in Exhibit 8.1)
23.6 Consent of Simpson Thacher & Bartlett (included in Exhibit 8.2)
24 Power of Attorney (included in the signature pages to this Registration Statement)
</TABLE>
<PAGE> 1
Exhibit 5
[Sullivan & Cromwell letterhead]
September 11, 1997
Dime Bancorp, Inc.,
589 Fifth Avenue,
New York, New York 10017.
Ladies and Gentlemen:
In connection with the registration under the Securities Act of
1933 (the "Act") of 21,500,000 shares (the "Securities") of Common Stock, par
value $.01 per share, of Dime Bancorp, Inc., a Delaware corporation (the
"Company"), issuable in connection with the acquisition by the Company of North
American Mortgage Company, a Delaware corporation (the "Acquisition"), and
related stock purchase rights (the "Rights") to be issued pursuant to the
Stockholder Protection Rights Agreement, dated as of October 20, 1995 (the
"Rights Agreement"), between the Company and the First National Bank of Boston,
as Rights Agent (the "Rights Agent"), we, as your counsel, have examined such
corporate records, certificates and other documents, and such questions of law,
as we have considered necessary or appropriate for the purposes of this opinion.
Upon the basis of such examination, we advise you that, in our opinion:
(1) When the registration statement relating to the Securities and
the Rights (the "Registration Statement") has become effective under
the Act and the Securities to be issued in connection with the
Acquisition have been duly issued and delivered as contemplated by the
Registration Statement, the Securities will be validly issued, fully
paid and nonassessable.
(2) Assuming that the Rights Agreement has been duly authorized,
executed and delivered by the Rights
<PAGE> 2
Dime Bancorp, Inc. -2-
Agent, then when the Registration Statement has become effective under
the Act and Securities have been validly issued and exchanged as
contemplated by the Registration Statement, the Rights attributable to
the Securities will be validly issued.
In connection with our opinion set forth in paragraph (2) above,
we note that the question whether the Board of Directors of the Company might be
required to redeem the Rights at some future time will depend upon the facts and
circumstances existing at that time and, accordingly, is beyond the scope of
such opinion.
The foregoing opinion is limited to the General Corporation Law of
the State of Delaware, and we are expressing no opinion as to the effect of the
laws of any other jurisdiction.
We have relied as to certain matters on information obtained from
public officials, officers of the Company and other sources believed by us to be
responsible.
We hereby consent to the filing of this opinion as an exhibit to
the Registration Statement and to the reference to us under the heading
"Validity of Dime Common Stock" in the Prospectus. In giving such consent, we do
not thereby admit that we are in the category of persons whose consent is
required under Section 7 of the Act.
Very truly yours,
/s/ SULLIVAN & CROMWELL
<PAGE> 1
Exhibit 8.1
[Sullivan & Cromwell letterhead]
September 11, 1997
Dime Bancorp, Inc.,
589 Fifth Avenue,
New York, New York 10017.
Ladies and Gentlemen:
We have acted as counsel to Dime Bancorp, Inc., a Delaware
corporation ("Dime"), in connection with the Agreement and Plan of Combination,
dated as of June 22, 1997 and amended and restated as of July 31, 1997 (the
"Agreement"), by and among North American Mortgage Company, a Delaware
corporation ("NAMC"), Dime, The Dime Savings Bank of New York, FSB, a federal
savings bank ("Dime Bank"), and 47th St. Property Corporation, a Delaware
corporation ("Merger Sub"). We render this opinion to you, in part, pursuant to
Section 7.03(c) of the Agreement. All capitalized terms used and not otherwise
defined herein shall have the meanings provided in the Agreement.
For purposes of this opinion we have reviewed the Agreement and
such other documents and matters of law and fact as we have considered necessary
or appropriate, and we have assumed, with your consent, the following:
(i) The Merger will be completed in the manner set forth in the
Agreement and the Registration Statement on Form S-4 of Dime (the
"Registration Statement"), including the Proxy Statement of NAMC and
Prospectus of Dime contained therein (the "Prospectus").
(ii) The representations contained in the letters of
representation from Dime, Dime Bank and NAMC to us dated September 3,
1997, September 3, 1997, and August 29, 1997, respectively, will be
true and complete on the Effective Date.
<PAGE> 2
Dime Bancorp, Inc. -2-
On the basis of the foregoing, and our consideration of such other
matters of fact and law as we have deemed necessary or appropriate, it is our
opinion, under presently applicable federal income tax law, that:
(1) The Merger will constitute a reorganization under Section
368(a)(1)(B) of the Internal Revenue Code of 1986, as amended (the
"Code"); and
(2) No gain or loss will be recognized for federal income tax
purposes by NAMC stockholders upon the exchange in the Merger of shares
of NAMC Common Stock solely for Dime Common Stock (except with respect
to cash received in lieu of a fractional share interest in Dime Common
Stock).
The tax consequences described above may not be applicable to NAMC stockholders
that acquired the stock of NAMC pursuant to the exercise of an employee stock
option or right or otherwise as compensation, that hold NAMC stock as part of a
"straddle" or "conversion transaction" or that are insurance companies,
securities dealers, financial institutions or foreign persons.
We hereby consent to the filing of this opinion as an exhibit to
the Registration Statement and to the reference to us under the heading "The
Merger -- Certain Federal Income Tax Consequences" in the Prospectus. In giving
such consent, we do not thereby admit that we are in the category of persons
whose consent is required under Section 7 of the Securities Act of 1933.
Very truly yours,
/s/ SULLIVAN & CROMWELL
<PAGE> 1
Exhibit 8.2
[Simpson Thacher & Bartlett Letterhead]
(212) 455-2000
September 12, 1997
Re: Agreement and Plan of Combination, dated as of June 22, 1997, by
and among North American Mortgage Company, Dime Bancorp, Inc., The
Dime Savings Bank of New York, FSB and 47th St. Property
Corporation, as amended and restated as of July 31, 1997
North American Mortgage Company
3883 Airway Drive
Santa Rosa, California 95403
Ladies and Gentlemen:
You have requested our opinion with respect to certain United States
federal income tax consequences of the proposed transaction in which 47th St.
Property Corporation ("Merger Sub") will merge with and into North American
Mortgage Company ("NAMC") (the "Merger"), with NAMC surviving the Merger as a
wholly owned subsidiary of The Dime Savings Bank of New York, FSB ("Dime Bank").
All capitalized terms used but not defined herein have the meanings ascribed to
them in the Agreement and Plan of Combination, dated as of June 22, 1997, by and
among NAMC, Dime Bancorp, Inc. ("Dime"), Dime Bank and Merger Sub, as amended
and restated as of July 31, 1997 (the "Merger Agreement"). This opinion is being
delivered pursuant to Section 7.02(d) of the Merger Agreement.
<PAGE> 2
North American Mortgage Company -2- September 12, 1997
In acting as counsel to NAMC in connection with the Merger, we have, in
preparing our opinion, as hereinafter set forth, participated in the preparation
of the Merger Agreement and the preparation and filing with the Securities and
Exchange Commission of the Proxy Statement of NAMC and Prospectus of Dime
Bancorp, Inc. (the "Proxy-Prospectus") constituting a part of the Registration
Statement on Form S-4 relating to the proposed Merger and to the NAMC Common
Stock to be issued to Merger Sub stockholders in the Merger pursuant to the
Merger Agreement (the "Registration Statement"), to which this opinion appears
as an exhibit.
You have requested that we render the opinions set forth below. In
rendering such opinions, we have assumed with your consent (i) that the Merger
will be effected in accordance with the Merger Agreement, (ii) that at the time
of the Closing we will receive representation letters from NAMC, Dime and Dime
Bank (forms of which are attached hereto as Exhibits A, B and C, respectively)
and that such representation letters of NAMC, Dime and Dime Bank will be true
and accurate as of the date thereof and will remain true and accurate as of the
Effective Time unless we are otherwise notified in writing; (iii) that the
representations and warranties contained in the Merger Agreement, and statements
as to factual matters contained in the Proxy-Prospectus, are true, correct and
complete as of the date hereof and will be true, correct and complete as of the
Effective Time; and (iv) that the parties have complied with and, if applicable,
will continue to comply with, the covenants contained in the Merger Agreement.
We have examined the documents referred to above and the original, or copies
certified or
<PAGE> 3
North American Mortgage Company -3- September 12, 1997
otherwise identified to our satisfaction, of such records, documents,
certificates or other instruments and made such other inquiries as in our
judgment are necessary and appropriate to enable us to render the opinions set
forth below. We have not, however, undertaken any independent investigation of
any factual matter set forth in any of the foregoing.
If the Merger is effected on a factual basis different from that
contemplated above, any or all of the opinions expressed herein may be
inapplicable. Further, our opinions are based on (i) the Internal Revenue Code
of 1986, as amended (the "Code"), (ii) Treasury Regulations, (iii) judicial
precedents and (iv) administrative interpretations (including the current ruling
practice of the Internal Revenue Service) as of the date hereof. If there is any
subsequent change in the applicable law or regulations, or if there are
subsequently any new administrative or judicial interpretations of the law or
regulations, any or all of the individual opinions expressed herein may become
inapplicable.
Subject to the foregoing and to the qualifications and limitations set
forth herein, and assuming that the Merger is effected in accordance with the
terms of the Merger Agreement and the General Corporation Law of the State of
Delaware and as described in the Registration Statement, we are of the opinion
that for United States federal income tax purposes:
(1) The Merger will be treated as a reorganization within the meaning
of Section 368(a) of the Code, and NAMC, Dime and Dime Bank will each
be a party to that reorganization within the meaning of Section 368(b)
of the Code;
<PAGE> 4
North American Mortgage Company -4- September 12, 1997
(2) No gain or loss will be recognized by NAMC, Dime or Dime Bank
pursuant to the Merger;
(3) No gain or loss will be recognized by holders of NAMC Common
Stock upon the cancellation of their NAMC Common Stock, together with
the associated NAMC Rights and conversion thereof into Dime Common
Stock, together with the associated Dime Rights, pursuant to the
Merger, except that a holder of NAMC Common Stock that receives cash in
lieu of a fractional share interest in Dime Common Stock will generally
recognize capital gain or loss equal to the difference between the cash
received and the tax basis allocated to the fractional share interest
as if the fractional share interest had been distributed as part of the
Merger and then redeemed by NAMC for cash; and
(4) The statements set forth under the caption "Certain Federal
Income Tax Consequences" in the Registration Statement, insofar as they
constitute statements of United States federal income tax law or legal
conclusions, accurately summarize the material United States federal
income tax consequences of the Merger.
We express our opinions herein only as to those matters specifically
set forth above and no opinion should be inferred as to the tax consequences of
the Merger under any state, local or foreign law, or with respect to other areas
of United States federal taxation. The foregoing opinion does not address
certain federal income tax consequences applicable to special classes of
taxpayers including, without limitation, foreign corporations, tax-exempt
entities, persons who do not hold their NAMC Common Stock as capital assets and
persons who acquired NAMC Common Stock pursuant to the exercise of an employee
option or otherwise as compensation.
This opinion is not binding on the Internal Revenue Service and there
can be no assurance, and none is thereby given, that the Internal Revenue
Service will not take a
<PAGE> 5
North American Mortgage Company -5- September 12, 1997
position contrary to one or more of the positions reflected in the foregoing
opinion, or that our opinion will be upheld by the courts if challenged by the
Internal Revenue Service.
We are members of the Bar of the State of New York, and we do not
express any opinion herein concerning any law other than the federal law of the
United States. We hereby consent to the filing of this opinion with the
Securities and Exchange Commission as an exhibit to the Registration Statement
and to the use of our name under the caption "Certain Federal Income Tax
Consequences -- Tax Opinions" in the Registration Statement.
Very truly yours,
/s/ SIMPSON THACHER & BARTLETT
<PAGE> 6
Exhibit A
[NAMC Letterhead]
August 29, 1997
Re: Agreement and Plan of Combination dated as of June 22, 1997 by and
among North American Mortgage Company, Dime Bancorp, Inc., The
Dime Savings Bank of New York, FSB and 47th St. Property
Corporation, Amended and Restated as of July 31, 1997
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Ladies and Gentlemen:
The following facts and representations are being furnished to you in
connection with the preparation of your tax opinion to be provided in connection
with the Merger. We understand that you will be relying on such facts and
representations in delivering your opinion and that the delivery of such opinion
is a condition precedent to the Merger. Unless otherwise defined herein,
capitalized terms shall have the meanings ascribed to them in the Agreement and
Plan of Combination dated as of June 22, 1997 by and among North American
Mortgage Company ("NAMC"), Dime Bancorp, Inc. ("Dime"), The Dime Savings Bank of
New York, FSB ("Dime Bank") and 47th St. Property Corporation ("Merger Sub"),
Amended and Restated as of July 31, 1997 (the "Merger Agreement").
The following facts and representations are true and accurate as of the
date hereof, and you may assume that such facts and representations will remain
true and accurate through and including the Effective Time unless we notify you
in writing:
1. The Merger will be effected in accordance with the Merger Agreement.
<PAGE> 7
Simpson Thacher & Bartlett -2- August 29, 1997
Sullivan & Cromwell
2. The fair market value of the Dime Common Stock received (including
any fractional shares for which cash is received) by each holder of NAMC Common
Stock will be approximately equal to the fair market value of the NAMC Common
Stock surrendered in the Merger.
3. There is no plan or intention by the shareholders of NAMC who own 5
percent or more of the NAMC Common Stock, and to the best of the knowledge of
the management of NAMC, there is no plan or intention on the part of the
remaining holders of NAMC Common Stock to sell, exchange, or otherwise dispose
of a number of shares of Dime stock received in the Merger that would reduce the
NAMC shareholders' ownership of Dime Common Stock to a number of shares having a
value, as of the Effective Date, of less than 50 percent of the value of all of
the formerly outstanding NAMC Common Stock as of the Effective Date. For
purposes of this representation, shares of NAMC Common Stock exchanged for cash
in lieu of fractional shares of Dime Common Stock will be treated as outstanding
NAMC Common Stock on the Effective Date. Moreover, shares of NAMC Common Stock
and shares of Dime Common Stock held by NAMC shareholders and otherwise sold,
redeemed, or disposed of prior or subsequent to the Merger will be considered in
making this representation.
4. NAMC has no plan or intention to issue additional shares of its
stock that would result in Dime Bank losing control of NAMC within the meaning
of Section 368(c)(1) of the Internal Revenue Code of 1986, as amended (the
"Code").
5. Dime, Dime Bank, NAMC and the holders of NAMC Common Stock will pay
their respective expenses, if any, incurred in connection with the Merger,
except that printing expenses and SEC registration fees shall be shared equally
between NAMC and Dime.
6. To the knowledge of the management of NAMC, none of the NAMC stock
acquired by Dime Bank will be subject to any liabilities.
7. At the Effective Time, NAMC will not have outstanding any warrants,
options, convertible securities, or any other type of right pursuant to which
any person could acquire stock in NAMC that, if exercised or converted, would
affect Dime Bank's acquisition or retention of control of NAMC, as defined in
Section 368(c)(1) of the Code.
8. NAMC is not an investment company as defined in Section
368(a)(2)(F)(iii) and (iv) of the Code.
9. There will be no dissenters exercising statutory rights under the
General Corporation Law of the State of Delaware pursuant to the Merger.
10. On the Effective Date, the fair market value of the assets of NAMC
will exceed the sum of its liabilities plus the liabilities, if any, to which
the assets are subject.
<PAGE> 8
Simpson Thacher & Bartlett -3- August 29, 1997
Sullivan & Cromwell
11. The payment of cash in lieu of fractional shares of Dime Common
Stock is solely for the purpose of avoiding the expense and inconvenience to
Dime of issuing fractional shares and does not represent separately
bargained-for consideration. The total cash consideration that will be paid in
the Merger to the holders of NAMC Common Stock instead of issuing fractional
shares of Dime Common Stock will not exceed one percent of the total
consideration that will be issued in the Merger to the holders of NAMC Common
Stock in exchange for their shares of NAMC Common Stock. The fractional share
interests of each NAMC shareholder will be aggregated, and no holder of NAMC
Common Stock will receive cash in an amount equal to or greater than the value
of one full share of Dime Common Stock.
12. None of the compensation received by any stockholder-employee of
NAMC will be separate consideration for, or allocable to, any such shareholder-
employee's shares of NAMC stock. None of the shares of Dime Common Stock
received by any such stockholder-employee will be separate consideration for, or
allocable to, any employment, consulting or similar arrangement. The
compensation paid to any such stockholder-employee will be for services actually
rendered and will be commensurate with amounts paid to third parties bargaining
at arm's length for similar services.
NAMC acknowledges that your tax opinion may not accurately describe the
effects of the Merger if any of the foregoing facts or representations are
inaccurate in any respect.
Very truly yours,
North American Mortgage Company
/s/ Terrance G. Hodel
___________________________________
By: Terrance G. Hodel
Title: President and Chief Operating
Officer
<PAGE> 9
Exhibit B
[Dime Bancorp, Inc. Letterhead]
September 3, 1997
Re: Agreement and Plan of Combination dated as of June 22, 1997 by and
among North American Mortgage Company, Dime Bancorp, Inc., The
Dime Savings Bank of New York, FSB and 47th St. Property
Corporation, Amended and Restated as of July 31, 1997
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Ladies and Gentlemen:
The following facts and representations are being furnished to you in
connection with the preparation of your tax opinion to be provided in connection
with the Merger. We understand that you will be relying on such facts and
representations in delivering your opinion and that the delivery of such opinion
is a condition precedent to the Merger. Unless otherwise defined herein,
capitalized terms shall have the meanings ascribed to them in the Agreement and
Plan of Combination dated as of June 22, 1997 by and among North American
Mortgage Company ("NAMC"), Dime Bancorp, Inc. ("Dime"), The Dime Savings Bank of
New York, FSB ("Dime Bank") and 47th St. Property Corporation ("Merger Sub"),
Amended and Restated as of July 31, 1997 (the "Merger Agreement").
The following facts and representations are true and accurate as of the
date hereof, and you may assume that such facts and representations will remain
true and accurate through and including the Effective Time unless we notify you
in writing:
1. The Merger will be effected in accordance with the Merger Agreement.
<PAGE> 10
Simpson Thacher & Bartlett -2- September 3, 1997
Sullivan & Cromwell
2. The fair market value of the Dime Common Stock received (including
any fractional shares for which cash is received) by each holder of NAMC Common
Stock will be approximately equal to the fair market value of the NAMC Common
Stock surrendered in the Merger.
3. Dime has no plan or intention to (nor to cause Dime Bank to)
liquidate NAMC; merge NAMC into another corporation; cause NAMC to sell or
otherwise dispose of any of its assets, except for dispositions made in the
ordinary course of business; or sell or otherwise dispose of any of the NAMC
stock acquired in the Merger, except for transfers described in Section
368(a)(2)(C) of the Internal Revenue Code of 1986, as amended (the "Code").
4. Dime has no plan or intention to reacquire any of the Dime Common
Stock issued in the Merger.
5. Dime, Dime Bank, NAMC and the holders of NAMC Common Stock will pay
their respective expenses, if any, incurred in connection with the Merger,
except that printing expenses and SEC registration fees shall be shared equally
between NAMC and Dime.
6. Dime Bank will acquire NAMC stock solely in exchange for Dime
voting stock (except to the extent of cash paid in lieu of fractional shares of
Dime voting stock). For purposes of this representation, NAMC stock redeemed for
cash or other property furnished by Dime or Dime Bank will be considered as
acquired by Dime Bank. Further, no liabilities of NAMC or the holders of NAMC
stock will be assumed by Dime or Dime Bank. Nor will any of the NAMC stock be
subject to any liabilities.
7. Dime does not own, directly or indirectly, nor has it owned during
the past five years, directly or indirectly, any stock of NAMC.
8. Dime is not an investment company as defined in Section
368(a)(2)(F)(iii) and (iv) of the Code.
9. The payment of cash in lieu of fractional shares of Dime Common
Stock is solely for the purpose of avoiding the expense and inconvenience to
Dime of issuing fractional shares and does not represent separately
bargained-for consideration. The total cash consideration that will be paid in
the Merger to the holders of NAMC Common Stock instead of issuing fractional
shares of Dime Common Stock will not exceed one percent of the total
consideration that will be issued in the Merger to the holders of NAMC Common
Stock in exchange for their shares of NAMC Common Stock. The fractional share
interests of each NAMC shareholder will be aggregated, and no holder of NAMC
Common Stock will receive cash in an amount equal to or greater than the value
of one full share of Dime Common Stock.
<PAGE> 11
Simpson Thacher & Bartlett -3- September 3, 1997
Sullivan & Cromwell
Dime acknowledges that your tax opinion may not accurately describe the
effects of the Merger if any of the foregoing facts or representations are
inaccurate in any respect.
Very truly yours,
DIME BANCORP, INC.
/s/ Gene C. Brooks
___________________
By: Gene C. Brooks
Title: Executive Vice
President and
General Counsel
<PAGE> 12
Exhibit C
[The Dime Savings Bank of New York, FSB Letterhead]
September 3, 1997
Re: Agreement and Plan of Combination dated as of June 22, 1997 by and
among North American Mortgage Company, Dime Bancorp, Inc., The
Dime Savings Bank of New York, FSB and 47th St. Property
Corporation, Amended and Restated as of July 31, 1997
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Ladies and Gentlemen:
The following facts and representations are being furnished to you in
connection with the preparation of your tax opinion to be provided in connection
with the Merger. We understand that you will be relying on such facts and
representations in delivering your opinion and that the delivery of such opinion
is a condition precedent to the Merger. Unless otherwise defined herein,
capitalized terms shall have the meanings ascribed to them in the Agreement and
Plan of Combination dated as of June 22, 1997 by and among North American
Mortgage Company ("NAMC"), Dime Bancorp, Inc. ("Dime"), The Dime Savings Bank of
New York, FSB ("Dime Bank") and 47th St. Property Corporation ("Merger Sub"),
Amended and Restated as of July 31, 1997 (the "Merger Agreement").
The following facts and representations are true and accurate as of the
date hereof, and you may assume that such facts and representations will remain
true and accurate through and including the Effective Time unless we notify you
in writing:
1. The Merger will be effected in accordance with the Merger Agreement.
<PAGE> 13
Simpson Thacher & Bartlett -2- September 3, 1997
Sullivan & Cromwell
2. The fair market value of the Dime Common Stock received (including
any fractional shares for which cash is received) by each holder of NAMC Common
Stock will be approximately equal to the fair market value of the NAMC Common
Stock surrendered in the Merger.
3. Dime Bank has no plan or intention to liquidate NAMC; merge NAMC
into another corporation; cause NAMC to sell or otherwise dispose of any of its
assets, except for dispositions made in the ordinary course of business; or sell
or otherwise dispose of any of the NAMC stock acquired in the Merger, except for
transfers described in Section 368(a)(2)(C) of the Internal Revenue Code of
1986, as amended (the "Code").
4. Dime Bank has no plan or intention to acquire any of the Dime
Common Stock issued in the Merger.
5. Dime, Dime Bank, NAMC and the holders of NAMC Common Stock will pay
their respective expenses, if any, incurred in connection with the Merger,
except that printing expenses and SEC registration fees shall be shared equally
between NAMC and Dime.
6. Dime Bank will acquire NAMC stock solely in exchange for Dime
voting stock (except to the extent of cash paid in lieu of fractional shares of
Dime voting stock). For purposes of this representation, NAMC stock redeemed for
cash or other property furnished by Dime or Dime Bank will be considered as
acquired by Dime Bank. Further, no liabilities of NAMC or the holders of NAMC
stock will be assumed by Dime or Dime Bank. Nor will any of the NAMC stock be
subject to any liabilities.
7. Dime Bank does not own, directly or indirectly, nor has it owned
during the past five years, directly or indirectly, any stock of NAMC.
8. Following the transaction, NAMC will continue its historic business
or use a significant portion of its historic business assets in a business.
9. Dime Bank is not an investment company as defined in Section
368(a)(2)(F)(iii) and (iv) of the Code.
10. The payment of cash in lieu of fractional shares of Dime Common
Stock is solely for the purpose of avoiding the expense and inconvenience to
Dime of issuing fractional shares and does not represent separately
bargained-for consideration. The total cash consideration that will be paid in
the Merger to the holders of NAMC Common Stock instead of issuing fractional
shares of Dime Common Stock will not exceed one percent of the total
consideration that will be issued in the Merger to the holders of NAMC Common
Stock in exchange for their shares of NAMC Common Stock. The fractional share
interests of each NAMC shareholder will be aggregated, and no
<PAGE> 14
Simpson Thacher & Bartlett -3- September 3, 1997
Sullivan & Cromwell
holder of NAMC Common Stock will receive cash in an amount equal to or greater
than the value of one full share of Dime Common Stock.
Dime Bank acknowledges that your tax opinion may not accurately
describe the effects of the Merger if any of the foregoing facts or
representations are inaccurate.
Very truly yours,
THE DIME SAVINGS BANK
OF NEW YORK, FSB
/s/ Gene C. Brooks
______________________
By: Gene C. Brooks
Title: Executive Vice President
and General Counsel
<PAGE> 1
Exhibit 10.1
DIME MORTGAGE, INC.
6200 Courtney Campbell Causeway
Tampa, Florida 33607
July 17, 1997
Gary F. Moore
c/o North American Mortgage Company
3883 Airway Drive
Santa Rosa, California 95403-1699
Re: Agreement Regarding Initial Employment Terms
Dear Mr. Moore:
This letter agreement (the "Letter Agreement") is intended to detail
elements of your initial compensation arrangements with Dime Mortgage, Inc.
("DMI") to become applicable upon your commencement of employment by DMI. This
Letter Agreement replaces and supersedes the Agreement Regarding Initial
Employment Terms between you and DMI dated June 22, 1997, which shall be of no
further force or effect. DMI agrees to employ you, and you agree to be employed
by DMI, on the following terms and conditions:
1. As an employee of DMI, your principal duties will include
responsibility for DMI's information technology systems and operations, and for
human resources activities domiciled in Santa Rosa, California. Your place of
employment will be Santa Rosa, California. You will also have responsibility for
such other duties as may be assigned to you by DMI from time to time. Your
initial annual salary will be at a rate of $185,000.00 per annum. You will be
eligible to participate in DMI's incentive plan during 1997 with a target
incentive opportunity equal to 35% of your annualized base salary. The amount of
any incentive opportunity payment to be made to you by DMI will be reduced by
the total amount of any performance or other bonuses or awards which are paid,
or accrued to be paid, to you under the annual executive bonus plan or any other
bonus plan or arrangement in respect of 1997 by North American Mortgage Company
(and its subsidiaries) prior to the date of Consummation (as defined below).
Later levels of target incentive opportunity and other terms of participation
will be as set by DMI's Board of Directors or a committee thereof. You will be
eligible to participate in such life, medical
<PAGE> 2
2
and other insurance plans or programs as are made available by DMI to other
similarly situated employees of DMI. You will be eligible to participate in one
or more qualified and non-qualified programs providing defined contribution
retirement benefits with the rate of employer contributions (or deemed employer
contributions) not less in the aggregate than that previously provided by North
American Mortgage Company.
2. In addition to the terms described in this Letter Agreement, the
terms of your employment will be as set forth in an employment agreement to be
executed by you and DMI (the "Employment Agreement") which will contain terms
substantially in accordance with those described in Exhibit A attached hereto
and made a part of this Letter Agreement. Your employment by DMI will commence,
and DMI agrees to execute and deliver the Employment Agreement contemporaneous
with, consummation ("Consummation") of the transaction contemplated by that
certain Agreement and Plan of Combination, dated as of June 22, 1997, between
Dime Bancorp, Inc. and North American Mortgage Company (the "Transaction
Agreement"). (If in connection with the transactions contemplated by the
Transaction Agreement, the mortgage banking operations of DMI are transferred to
another entity that is a direct or indirect subsidiary of Dime Bancorp, Inc.,
then this Letter Agreement and the Employment Agreement shall be assumed by, and
be binding upon, such entity, and the term "DMI" as used herein and in the
Employment Agreement shall mean such entity.) Your employment by DMI, and DMI's
agreement to enter into the Employment Agreement, is expressly conditioned upon
and subject to Consummation. If for any reason the Consummation does not occur
as contemplated in the Transaction Agreement, DMI shall have no obligation to
employ you, or to enter into the Employment Agreement, shall have no further
obligation or liability to you whatsoever, and the terms of this Letter
Agreement shall become automatically void and without further effect.
3. DMI agrees that notwithstanding anything to the contrary
contained in the Employment Agreement, upon termination by DMI of your
employment under the Employment Agreement for any reason other than for "cause"
(as defined in the Employment Agreement), or upon your voluntary termination of
employment with DMI within 30 days of any DMI-imposed requirement that you
relocate your principal place of business to any location in excess of 50 miles
from Santa Rosa, California, the total of your cash severance benefits under the
Employment Agreement and this Letter Agreement shall be at least $330,375 (the
"Minimum Severance Amount"). If the total of any cash severance payments payable
to you under the Employment Agreement in respect of a termination of employment
by DMI, as provided in the preceding sentence, or upon your voluntary
termination of employment with DMI, as provided in the preceding sentence,
either (i) as salary continuation other than in connection with a Change in
Control (as
<PAGE> 3
3
defined in the Employment Agreement), or (ii) as a lump sum in connection with a
Change in Control, shall be less than the Minimum Severance Amount, then DMI
shall pay you the difference between the total of such cash severance payments
payable to you under the Employment Agreement and such Minimum Severance Amount
as a lump sum, within 30 days after the effective date of termination of your
employment. In connection therewith, you hereby agree you will not be entitled
to, and shall by and upon your execution of this Letter Agreement be deemed to
have irrevocably waived, any rights to severance benefits to which you are or
may become entitled prior to the Consummation or other termination of the
Transaction Agreement, or otherwise in connection with the transactions
contemplated by the Transaction Agreement under any severance agreement,
arrangement or plan to which you are party or in which you are a participant,
including, without limitation, as provided under the North American Mortgage
Company Senior Executive Severance Pay Plan (the "Severance Pay Plan"), and that
upon the effectiveness of the Employment Agreement, your right to any benefits
under the Severance Pay Plan or any other arrangement providing severance
benefits with North American Mortgage Company shall finally terminate and be of
no further force or effect.
4. Any payments due you under this Letter Agreement shall be reduced
by all applicable withholding and other taxes. Nothing in this Letter Agreement
confers upon you the right to continue in the employment of DMI or interferes
with or restricts in any way the right of DMI to terminate your employment at
any time, with or without cause.
5. Notwithstanding anything in the foregoing, if any statute,
regulation, order, agreement or regulatory interpretation thereof that is valid
and binding upon DMI, including, without limitation, 12 USC Section 1828(k) and
regulations thereunder (each a "Regulatory Restriction") restricts, prohibits or
limits the amount of any payment or the provision of any benefit that DMI would
otherwise be liable for pursuant to this Letter Agreement, then the amount that
DMI will pay to you will not exceed the maximum amount permissible under such
Regulatory Restriction; provided, that if such Regulatory Restriction shall
subsequently be rescinded, superseded, amended or otherwise determined not to
restrict, limit or prohibit payment by DMI of amounts otherwise due you
hereunder, DMI shall promptly thereafter pay to you any amounts (or the value of
any benefit) previously withheld from you as a result of such Regulatory
Restriction. As of the date hereof, DMI represents there are no Regulatory
Restrictions restricting your right to the payments contemplated hereby.
Further, if any amount otherwise payable hereunder would be deemed to constitute
a parachute payment (a "Parachute Payment") within the meaning of Section 280G
of the Internal Revenue Code of 1986, as amended (the "Code"), and if any such
Parachute Payment, when added to any other payments that are deemed to
constitute Parachute Payments, would otherwise result in the imposition of an
excise tax
<PAGE> 4
4
under Section 4999 of the Code, the amounts payable hereunder shall be reduced
by the smallest amount necessary to avoid the imposition of such excise tax. Any
such limitation shall be applied to such compensation and benefit amounts, and
in such order, as DMI shall determine in its sole discretion. References to the
Code hereunder shall be to the Code as presently in effect or to the
corresponding provisions of any succeeding law.
6. This Letter Agreement shall be governed by the laws of the State
of New York, without regard to conflict of laws principles applied in the State
of New York. In the event of any conflict between the express provisions of this
Letter Agreement and the Employment Agreement, the express provisions of the
Employment Agreement shall be controlling. Except as otherwise provided above,
this Letter Agreement may only be amended in writing signed by both parties
hereto.
Please indicate your acceptance to the terms of this Letter
Agreement by signing below. This Letter Agreement may be executed in separate
counterparts, each of which when so executed and delivered shall be an original,
but all of which together shall constitute but one and the same instrument.
Very truly yours,
DIME MORTGAGE, INC.
By: /s/ D. James Daras
________________________________________
AGREED AND ACCEPTED
/s/ Gary F. Moore
_____________________________
Gary F. Moore
Date: July 17, 1997
<PAGE> 5
EXHIBIT A
STANDARD FORM EMPLOYMENT AGREEMENT
Employer: Dime Mortgage, Inc. ("Employer")
Term: The initial term of the Employment Agreement ends March 1, 1999. The
Agreement provides for automatic renewal on each March 1st (commencing and
including March 1, 1998) for an additional year (so that at that point they
would have a two-year term) unless prior written notice of nonrenewal is given
by either party, at least 10 days in advance. The Agreement also provides that
the Board of Directors, or a Committee or subcommittee of the Board (if so
delegated by the Board) will annually review it to determine whether or not to
give the notice of nonrenewal.
Duties: The Agreement specifies the position and duties of each individual
officer and permits the assignment of comparable or additional duties or
positions.
Compensation: The Agreement gives the Board of Directors or a committee
thereof broad latitude in adjusting compensation levels, except that decreases
in annual salary may not exceed 25% in any one year, other than decreases that
are applied generally to officers of comparable rank. Compensation payments are
automatically deferred to the extent necessary to comply with Dime Bancorp, Inc.
("Bancorp") policy regarding Code Section 162(m) ($1 million dollar cap on
deductible compensation). To the extent so deferred, those amounts are payable
under the applicable provisions of the Voluntary Deferred Compensation Plan.
Benefits are generally as provided by applicable Employer plans.
Death & Disability: The Agreement provides no special death benefits.
However, full salary (less available disability insurance benefits) is provided
for up to one year of permanent disability (or, if less, the end of the
remaining term of the agreement), with continued life, medical and dental
insurance coverage for the remaining term (as long as continued contributions
are made).
Severance Benefits: The Agreement provides that if, prior to a Change in
Control, Dime terminates the officer's employment (other than for cause),
Employer will continue, during a
<PAGE> 6
2
"Severance Period," to pay the officer's salary and to maintain the officer's
life, medical and dental insurance coverage as in effect (subject to continuing
officer contributions) immediately prior to termination. The base Severance
Period is either six months for officers who have been employed for two years or
less (including service with North American Mortgage Company) or twelve months
for those employed for more than two years. The base Severance Period may be
increased by an "age multiplier," which increases the Severance Period for
officers age fifty and over as follows: 1.25x for officers age 50 to 54, 1.375x
for officers age 55 to 59, and 1.5x for officers age 60 or over. All such
severance payments are subject to limitation to the extent necessary to comply
with applicable regulatory restrictions. Finally, no benefits are provided upon
a termination for cause or if the officer voluntarily terminates. For purposes
of the Agreement, "cause" means the officer's personal dishonesty, incompetence,
willful misconduct, breach of fiduciary duty involving personal profit,
intentional failure to perform assigned duties, willful violation of any law,
rule or regulation (other than traffic violations or similar offenses) or final
cease and desist order or material breach of any provision of the Agreement.
Change in Control: The Agreement provides for Change in Control benefits
to apply in lieu of the otherwise applicable severance benefits if, during a
specified period following a Change in Control, the officer's employment is
terminated by Employer (other than for cause) or, in certain circumstances,
either constructively terminated or terminated by the officer.
For these purposes, a Change in Control includes any of the following:
1. A merger, consolidation or reorganization where voting securities of
Bancorp (or The Dime Savings Bank of New York, FSB (the "Bank")),
either as still outstanding or after conversion into other
securities, do not continue to represent at least 65% of the
combined voting power of the resulting entity.
2. Shareholder approval for the liquidation or sale of substantially
all of the assets of Bancorp or the Bank.
3. Acquisition of more than 35% of the stock of Bancorp or the Bank by
a person or entity or persons or entities acting as a group.
4. If the directors designated for election by the nominating committee
of Bancorp or the Bank stop constituting a majority of the members
of the Board of Directors of
<PAGE> 7
3
Bancorp or the Bank.
5. Entering into a binding agreement which, if consummated, would
result in a change in control as described in items (1) or (3)
above, a sale of substantially all assets of Bancorp or the Bank, or
adoption of a Plan of Liquidation.
The Agreement provides that in addition to an involuntary termination by
Employer (which includes a termination in connection with permanent disability
but not a termination for cause), Change in Control benefits are also generally
payable on a constructive termination (where the officer terminates his or her
employment, following a material lessening of the officer's responsibilities, or
where his or her salary is reduced below its pre-Change in Control level).
Change in Control benefits are also payable if the officer voluntarily
terminates his or her employment after a Transfer of Control (defined below).
Change in Control benefits are only payable if the termination of
employment, as described above (or notice thereof), occurs during the remaining
term of the agreement in effect at the time of the Change in Control, with the
added requirement that voluntary terminations after a Transfer of Control (or
notice thereof), not on account of constructive termination, must occur within
90 days of the Transfer of Control. Non-renewal of the Agreement by Employer
during the remaining term of the agreement in effect at the time of the Change
in Control is treated as the equivalent of an involuntary termination for
purposes of triggering Change in Control benefits (with the employee then
eligible for Change in Control benefits at the end of the remaining term of the
Agreement). Change in Control benefits (limited as described below) include the
following:
(a) a lump-sum payment of two times annual salary plus bonus
opportunity;
(b) vesting in accordance with their original terms of all stock options
that do not otherwise vest upon a Change in Control, and provision
for continued exercisability of all outstanding options for their
full remaining terms (to the extent permitted by the underlying
stock option plan), in each case without regard to the officer's
termination of employment;
(c) continuation of life, disability, medical and dental insurance
coverage for the remaining term of the agreement at the time of
termination (as long as continued
<PAGE> 8
4
contributions are made by the officer);
(d) supplemental (non-qualified) benefits (including benefits related to
401(k) match) under otherwise generally applicable Employer defined
contribution plans in which the officer participates, to replace any
accrued defined contribution retirement benefits that are lost
because they were not vested at the time of termination.
In addition, if following a Change in Control, Employer relocates its
principal executive offices and as a result the officer changes his or her
principal residence, the Agreement provides that he or she will receive
relocation benefits consisting of moving expenses and reimbursement of any loss
incurred on the sale of that residence.
Unless there has been a Transfer of Control, these Change in Control
benefits, as well as other benefits payable under the Agreement, are capped so
that no payments will be required to be made that should trigger any excise
taxes relating to "golden parachute payments." The cap on Change in Control
benefits also applies, even after a Transfer of Control, if the benefits are
payable on account of a voluntary termination (and not on account of
constructive termination or deemed involuntary termination) within 90 days after
the Transfer of Control.
If, however, the Change in Control were deemed a Transfer of Control, and
the termination were on account of involuntary termination (other than for
cause) or a covered constructive termination or deemed involuntary termination,
no cutback would apply, and a gross-up for the tax costs related to any golden
parachute excise tax would apply instead.
A Transfer of Control is defined as:
1. a merger, consolidation or reorganization where voting securities of
Bancorp (or the Bank) either as still outstanding or after
conversion into other securities, do not continue to represent at
least 65% of the combined voting power of the resulting entity, and
that transaction has not been recommended for approval by the
Bancorp Board; or
2. a merger, consolidation or reorganization where either (i) voting
securities of Bancorp (or the Bank) either as still outstanding or
after conversion into other securities, do not continue to represent
at least 45% of the combined voting power of the resulting entity,
or where (ii) Bancorp's or the Bank's directors constitute less than
45% of the directors of the resulting entity; or
<PAGE> 9
5
3. any of the Change in Control events (other than the entering into a
binding agreement that would result in a Change in Control) that the
Board of Bancorp or the Bank, as appropriate, determines is a
Transfer of Control for purposes of the Agreement, but with the
additional rule that if it is an express condition precedent to the
consummation of any Change in Control event or occurrence that the
Bancorp or Bank Board refrain from making a "Transfer of Control"
designation, then the event or occurrence will automatically
constitute a Transfer of Control.
Confidentiality and Other Post-Termination Obligations. The Agreement
would provide that following any termination of employment, the officer may not
disclose any confidential information, must return all material documents
relating to the business of Employer and its affiliates (including Bancorp and
the Bank), and (except if the termination occurs after a Change in Control) may
not solicit, for one year following termination, the employment of any person
who is or recently was an employee of Employer or its affiliates.
Additional Provisions: Following a Change in Control, the Agreement
provides that the officer will be entitled to receive legal fees if he or she is
required to bring an action to enforce the Agreement and is the prevailing
party. All payments under the Agreement are expressly limited if compliance
would violate any FDIC "golden parachute" regulations. The Agreement also
contains provisions more generally limiting payments to the extent necessary to
comply with applicable laws and regulations and mandatory provisions relating to
the taking of regulatory action against the officer, Employer or its affiliates.
The Agreement does not limit the payment of severance or other benefits (to the
extent not otherwise capped) notwithstanding that the officer obtains other
employment.
<PAGE> 1
Exhibit 10.2
DIME MORTGAGE, INC.
6200 Courtney Campbell Causeway
Tampa, Florida 33607
June 22, 1997
Terrance G. Hodel
616 Biscayne Drive
San Rafael, California 94901
Re: Agreement Regarding Initial Employment Terms
Dear Mr. Hodel:
This letter agreement (the "Letter Agreement") is intended to detail
elements of your initial compensation arrangements with Dime Mortgage, Inc.
("DMI") to become applicable upon your commencement of employment by DMI. DMI
agrees to employ you, and you agree to be employed by DMI, on the following
terms and conditions:
1. As an employee of DMI, your principal responsibilities will
include assisting the CEO and COO of DMI in matters relating to the
consolidation of North American Mortgage Company's operations with those of DMI
following Consummation (as defined below), including the consolidation of
origination networks. Your title will be Vice Chairman. Your place of employment
will be Santa Rosa, California. You will also have responsibility for such other
duties as may be assigned to you by the CEO or COO of DMI from time to time. You
will be employed by DMI for a term of one (1) year (the "Term") from the date of
Consummation.
Your salary will be at a rate of $550,000 (the "Base Salary") per
annum, payable with respect to the period of your employment by DMI in
accordance with DMI's normal payroll practices. You will be eligible to
participate in DMI's incentive plan during 1997 and the portion of 1998
comprising the Term; provided that: (1) you will receive a minimum incentive
award of (x) $225,000 for calendar year 1997 less (y) the total amount of any
performance or other bonuses or awards which are paid, or accrued to be paid, to
you under the annual executive bonus plan or any other bonus plan or arrangement
in respect of 1997 by North American Mortgage Company (and its subsidiaries)
prior to the date of Consummation in respect of such year and (2) at the end of
the Term you will receive a
<PAGE> 2
2
minimum incentive award of $225,000 as pro rated for the portion of the Term
comprising calendar year 1998, except that no such incentive award will be
payable to you by DMI if, prior to December 31, 1997, in the case of clause (1),
or prior to the end of the Term, in the case of clause (2) your employment is
terminated (a) by you or (b) by DMI for "cause" (as defined below). You will be
eligible during the Term to participate in such life, medical, and other
insurance plans or programs as are made available by DMI to its full-time
salaried employees. During the Term, you will be eligible to participate in one
or more programs providing defined contribution retirement benefits with the
rate of employer contributions (or deemed employer contributions) not less in
the aggregate than that previously provided by North American Mortgage Company
(but with no such contributions to be made or accrue with respect to any
payments to be made pursuant to the "Transaction Agreement" or otherwise
pursuant to Section 3 of this Letter Agreement (as defined below)). In
consideration of DMI's agreement to employ you under the terms described above,
and otherwise in consideration of the payments to be made to you pursuant to
Schedule 6.19 to the Transaction Agreement, you agree that, for the period
commencing on the date of this Letter Agreement, and ending on the first
anniversary of the later of your termination of employment (for any reason) with
DMI and with North American Mortgage Company, you covenant and agree that you
will not solicit or otherwise encourage any employee, agent or representative of
DMI or any person who was employed by DMI or by North American Mortgage Company
as an employee, agent or representative at the time of your termination of
employment or during the six month period prior to the later of your termination
of employment with DMI and with North American Mortgage Company (or their
parents or subsidiaries), to terminate his or her employment with DMI (or North
American Mortgage Company) or such parent or subsidiary, or to become an
officer, board member, owner, partner, consultant, employee, agent or
representative of any person, firm, corporation, association or other entity
engaged in the mortgage banking business; provided that the foregoing shall not
preclude you from soliciting for employment any person terminated by DMI or
North American Mortgage Company subsequent to your termination without cause.
Unless otherwise consented to by DMI in writing, during or following your
employment by DMI, you will not disclose or make accessible to any other person,
firm, corporation, association or other entity any confidential non-public
information regarding North American Mortgage Company, DMI or their parents or
subsidiaries, except (i) as approved by DMI in the course of DMI's business for
DMI's benefit, or (ii) when required to do so by law.
2. This Letter Agreement shall become effective, and is expressly
subject to and conditioned, upon the consummation ("Consummation") of the
transaction contemplated by that certain Agreement and Plan of Combination,
dated as of June 22, 1997, between Dime Bancorp, Inc. ("Bancorp") and North
American Mortgage Company
<PAGE> 3
3
(the "Transaction Agreement"). (If in connection with the transactions
contemplated by the Transaction Agreement, the mortgage banking operations of
DMI are transferred to another entity that is a direct or indirect subsidiary of
Dime Bancorp, Inc. then this Letter Agreement shall be assumed by, and be
binding upon, such entity and the term "DMI" as used herein shall mean such
entity.) Accordingly, your employment by DMI, and DMI's agreement to be bound by
the terms hereof, is expressly conditioned upon and subject to Consummation. If
for any reason the Consummation does not occur as contemplated in Transaction
Agreement, or if you voluntarily terminate your employment with North American
Mortgage Company prior to the Consummation, DMI shall have no obligation to
employ you, shall have no further obligation or liability to you under this
Letter Agreement whatsoever, and the terms of this Letter Agreement shall become
automatically void and without further effect.
3. It is a further condition to DMI's agreement to enter into and be
bound by the terms of this Letter Agreement that you hereby agree you will not
be entitled to, and shall by and upon your execution of this Letter Agreement be
deemed to have irrevocably waived, any rights to any severance or other benefits
in connection with the termination of your employment with North American
Mortgage Company or DMI (except to the extent of any benefits to be properly
provided to you pursuant to Schedule 6.19 to the Transaction Agreement that have
not yet been paid), whether under any severance agreement, arrangement or plan
to which you are otherwise a party or in which you may otherwise be a
participant, including, without limitation, as may otherwise be provided in that
certain Termination Agreement, dated as of February 7, 1995 between you and
North American Mortgage Company (the "Termination Agreement"), and under the
North American Mortgage Company Senior Executive Severance Pay Plan (the
"Severance Pay Plan"), and that upon effectiveness of this Letter Agreement, the
Termination Agreement and your right to any benefits under the Severance Pay
Plan shall finally terminate and be of no further force or effect; provided,
however, that you will continue to be eligible during the one (1) year period
following the termination of your employment with DMI for medical and life
insurance benefits on the same basis as if your employment by DMI had continued
for that year.
4. You shall have no right to receive any severance pay or severance
benefit or any other compensation or benefit for any period after the date of
the termination by DMI of your employment for cause or following the voluntary
termination by you of your employment prior to the end of the Term. As used in
this Letter Agreement, "cause" shall mean your personal dishonesty,
incompetence, willful misconduct, breach of fiduciary duty involving personal
profit, intentional failure to perform assigned duties or willful
<PAGE> 4
4
violation of any law, rule or regulation (other than traffic violations or
similar offenses) or final cease-and-desist order.
5. Notwithstanding the foregoing, if any statute, regulation, order,
agreement or regulatory interpretation thereof that is valid and binding upon
DMI, including, without limitation, 12 USC Section 1828(k) and regulations
thereunder (each a "Regulatory Restriction") restricts, prohibits or limits the
amount of any payment or the provision of any benefit that DMI would otherwise
be liable for pursuant to this Letter Agreement, then the amount that DMI will
pay to you will not exceed the maximum amount permissible under such Regulatory
Restriction; provided, that if such Regulatory Restriction shall subsequently be
rescinded, superseded, amended or otherwise determined not to restrict, limit or
prohibit payment by DMI of amounts otherwise due you hereunder, DMI shall
promptly thereafter pay to you any amounts (or the value of any benefit)
previously withheld from you as a result of such Regulatory Restriction. As of
the date hereof, DMI represents there are no Regulatory Restrictions restricting
your rights to payments contemplated hereby. Further, if any amount otherwise
payable hereunder would be deemed to constitute a parachute payment (a
"Parachute Payment") within the meaning of Section 280G of the Internal Revenue
Code of 1986, as amended (the "Code"), and if any such Parachute Payment, when
added to any other payments that are deemed to constitute Parachute Payments,
would otherwise result in the imposition of an excise tax under Section 4999 of
the Code, the amounts payable hereunder shall be reduced by the smallest amount
necessary to avoid the imposition of such excise tax. Any such limitation shall
be applied to such compensation and benefit amounts, and in such order, as DMI
shall determine in its sole discretion. References to the Code hereunder shall
be to the Code as presently in effect or to the corresponding provisions of any
succeeding law. Furthermore, to the extent required to be included herein, all
of the provisions required to be included in this Letter Agreement pursuant to
12 C.F.R. 563.39(b) are hereby deemed to be incorporated herein by reference and
to be a part of this Letter Agreement.
6. This Letter Agreement is intended solely to detail certain of
your initial compensation arrangements with DMI. Nothing in this Letter
Agreement confers upon you the right to continue in the employment of DMI or
interferes with or restricts in any way the right of DMI to terminate your
employment at any time, with or without cause.
7. Any payments due you hereunder shall be reduced by all applicable
withholding and other taxes.
8. This Letter Agreement shall be governed by the laws of the State
of New York, without regard to conflict of laws principles applied in the State
of New York.
<PAGE> 5
5
Except as otherwise provided above, this Letter Agreement may only be amended in
writing signed by both parties hereto.
Please indicate your acceptance to the terms of this Letter
Agreement by signing below. This Letter Agreement may be executed by the parties
hereto in separate counterparts, each of which when so executed and delivered
shall be an original, but all of which together shall constitute but one and the
same instrument.
Very truly yours,
DIME MORTGAGE, INC.
By: /s/ D. James Daras
-----------------------------------------
AGREED AND ACCEPTED
/s/ Terrance G. Hodel
- -----------------------------
Terrance G. Hodel
Date: June 22, 1997
<PAGE> 1
Exhibit 10.3
DIME MORTGAGE, INC.
6200 Courtney Campbell Causeway
Tampa, Florida 33607
June 22, 1997
Harold Bonnikson
4773 Baytree Place
Santa Rosa, California 95405
Re: Agreement Regarding Initial Employment Terms
Dear Mr. Bonnikson:
This letter agreement (the "Letter Agreement") is intended to detail
elements of your initial compensation arrangements with Dime Mortgage, Inc.
("DMI") to become applicable upon your commencement of employment by DMI. DMI
agrees to employ you, and you agree to be employed by DMI, on the following
terms and conditions:
1. As an employee of DMI, your principal duties will include
responsibility for the management of DMI's production network. You will also
have responsibility for such other duties as may be assigned to you by DMI from
time to time. Your place of employment will be Santa Rosa, California. Your
initial annual salary will be at the rate of $265,000.00 per annum. You will be
eligible to participate in DMI's incentive plan during 1997; provided, that you
will receive a minimum incentive award in the amount of (x) $155,000 for such
year less (y) the total amount of any performance or other bonuses or awards
which are paid, or accrued to be paid, to you by North American Mortgage Company
(and its subsidiaries) prior to the date of Consummation (as defined below) in
respect of such year, except that no incentive award will be payable to you by
DMI if prior to December 31, 1997 your employment is terminated (a) by you or
(b) by DMI for "cause" (as defined in the Employment Agreement referenced
below). In addition, you will receive a special incentive award in the amount of
$100,000 payable twelve (12) months after the date of Consummation unless prior
to the end of such twelve month period your employment is terminated (a) by you
or (b) by DMI for "cause." Later levels of target incentive opportunity and
other terms of participation will be as set by DMI's Board of Directors or a
committee thereof. You will be eligible to participate in such life, medical and
other insurance plans or programs as are made available by DMI to other
similarly
<PAGE> 2
2
situated employees of DMI. You will be eligible to participate in one or more
qualified and non-qualified programs providing defined contribution retirement
benefits with the rate of employer contributions (or deemed employer
contributions) not less in the aggregate than that previously provided by North
American Mortgage Company (but with no such contributions to be made or to
accrue with respect to the special incentive award described above, or with
respect to any payments to be made pursuant to Section 3 of this Letter
Agreement).
2. In addition to the terms described in this Letter Agreement, the
terms of your employment will be as set forth in an employment agreement to be
executed by you and DMI (the "Employment Agreement") which will contain terms
substantially in accordance with those described in Exhibit A attached hereto
and made a part of this Letter Agreement, provided, however, that the
non-solicitation provisions of the Employment Agreement as so executed shall be
limited to a nine (9) month duration rather than a (12) month duration in the
event that, during the initial twelve (12) month term of the Employment
Agreement, your employment is terminated for any reason other than for "cause."
Your employment by DMI will commence, and DMI agrees to execute and deliver the
Employment Agreement contemporaneous with, consummation ("Consummation") of the
transaction contemplated by that certain Agreement and Plan of Combination,
dated as of June 22, 1997, between Dime Bancorp, Inc. and North American
Mortgage Company (the "Transaction Agreement"). (If in connection with the
transactions contemplated by the Transaction Agreement, the mortgage banking
operations of DMI are transferred to another entity that is a direct or indirect
subsidiary of Dime Bancorp, Inc. then this Letter Agreement and the Employment
Agreement shall be assumed by, and be binding upon, such entity, and the term
"DMI" as used herein and in the Employment Agreement shall mean such entity.)
Your employment by DMI, and DMI's agreement to enter into the Employment
Agreement, is expressly conditioned upon and subject to Consummation. If for any
reason the Consummation does not occur as contemplated in the Transaction
Agreement, DMI shall have no obligation to employ you, or to enter into the
Employment Agreement, shall have no further obligation or liability to you
whatsoever, and the terms of this Letter Agreement shall become automatically
void and without further effect.
3. It is a further condition to DMI's agreement to employ you under
this Letter Agreement and the Employment Agreement that you hereby agree you
will not be entitled to, and shall by and upon your execution of this Letter
Agreement be deemed to have irrevocably waived, any rights to severance benefits
to which you are or may become entitled prior to the Consummation or other
termination of the Transaction Agreement, or otherwise in connection with the
transactions contemplated by the Transaction Agreement under any severance
agreement, arrangement or plan to which you are party or in which you
<PAGE> 3
3
are a participant, including, without limitation, as provided in that certain
Termination Agreement, dated as of December 11, 1995 between you and North
American Mortgage Company (the "Termination Agreement"), and under the North
American Mortgage Company Senior Executive Severance Pay Plan (the "Severance
Pay Plan"), and that upon the effectiveness of the Employment Agreement, the
Termination Agreement and your right to any benefits under the Severance Pay
Plan shall finally terminate and be of no further force or effect. For and in
consideration of the foregoing, DMI agrees that:
(a) In connection with you entering into DMI's employ pursuant to the
Employment Agreement, DMI shall make supplemental payments to you in the
aggregate amount of $350,927.25, which shall accrue and be payable to you
in twelve equal monthly installments, in arrears, commencing on the date
that is one month following the Consummation; provided that in the event
you voluntarily terminate your employment other than for "good reason" (as
defined below) or on account of death or permanent disability, or your
employment is terminated by DMI for "cause" (as defined in the Employment
Agreement) at any time prior to the end of such twelve month period, you
shall be entitled to receive, and DMI shall be obligated to pay, only the
amount of such supplemental payment as shall have accrued as of the last
full month ending prior to the date notice of such termination is given.
For these purposes, "good reason" means any material reduction in your
duties and responsibilities from those initially contemplated herein, a
reduction in your base salary or target incentive opportunity under DMI's
incentive plan, or any requirement that you relocate your principal place
of business to any location in excess of 50 miles from Santa Rosa,
California.
(b) Notwithstanding anything to the contrary contained in the Employment
Agreement, and in addition to any payments described in (a) above, upon
termination by DMI of your employment under the Employment Agreement for
any reason other than for "cause" (as defined in the Employment Agreement)
the total of your cash severance benefits under the Employment Agreement
and this Letter Agreement shall be at least $350,927.25 if the effective
date of your termination of employment is within the first twelve (12)
months of the commencement of the term of the Employment Agreement, or at
least $701,854.50 if the effective date of your termination of employment
occurs thereafter (as applicable, each the "Minimum Severance Amount"). If
the total of any cash severance payments payable to you under the
Employment Agreement in respect of a termination of employment by DMI
other than for "cause" (as defined in the Employment Agreement) either (i)
as salary continuation other than in connection with a Change in Control
(as defined in the Employment Agreement), or (ii) as a lump sum in
connection with a Change
<PAGE> 4
4
in Control, shall be less than the Minimum Severance Amount, then DMI
shall pay you the difference between the total of such cash severance
payments payable to you under the Employment Agreement and such Minimum
Severance Amount as a lump sum, within thirty (30) days after the
effective date of termination of your employment.
4. Any payments due you under this Letter Agreement shall be reduced
by all applicable withholding and other taxes. Nothing in this Letter Agreement
confers upon you the right to continue in the employment of DMI or interferes
with or restricts in any way the right of DMI to terminate your employment at
any time, with or without cause.
5. Notwithstanding anything in the foregoing, if any statute,
regulation, order, agreement or regulatory interpretation thereof that is valid
and binding upon DMI, including, without limitation, 12 USC Section 1828(k) and
regulations thereunder (each a "Regulatory Restriction") restricts, prohibits or
limits the amount of any payment or the provision of any benefit that DMI would
otherwise be liable for pursuant to this Letter Agreement, then the amount that
DMI will pay to you will not exceed the maximum amount permissible under such
Regulatory Restriction; provided, that if such Regulatory Restriction shall
subsequently be rescinded, superseded, amended or otherwise determined not to
restrict, limit or prohibit payment by DMI of amounts otherwise due you
hereunder, the DMI shall promptly thereafter pay to you any amounts (or the
value of any benefit) previously withheld from you as a result of such
Regulatory Restriction. As of the date hereof, DMI represents there are no
Regulatory Restrictions restricting your right to the payments contemplated
hereby. Further, if any amount otherwise payable hereunder would be deemed to
constitute a parachute payment (a "Parachute Payment") within the meaning of
Section 280G of the Internal Revenue Code of 1986, as amended (the "Code"), and
if any such Parachute Payment, when added to any other payments that are deemed
to constitute Parachute Payments, would otherwise result in the imposition of an
excise tax under Section 4999 of the Code, the amounts payable hereunder shall
be reduced by the smallest amount necessary to avoid the imposition of such
excise tax. Any such limitation shall be applied to such compensation and
benefit amounts, and in such order, as DMI shall determine in its sole
discretion. References to the Code hereunder shall be to the Code as presently
in effect or to the corresponding provisions of any succeeding law.
6. This Letter Agreement shall be governed by the laws of the State
of New York, without regard to conflict of laws principles applied in the State
of New York. In the event of any conflict between the express provisions of this
Letter Agreement and the Employment Agreement, the express provisions of the
Employment Agreement shall
<PAGE> 5
5
be controlling. Except as otherwise provided above, this Letter Agreement may
only be amended in writing signed by both parties hereto.
Please indicate your acceptance to the terms of this Letter
Agreement by signing below. This Letter Agreement may be executed by the parties
hereto in separate counterparts, each of which when so executed and delivered
shall be an original, but all of which together shall constitute but one and the
same instrument.
Very truly yours,
DIME MORTGAGE, INC.
By: /s/ D. James Daras
________________________________________
AGREED AND ACCEPTED
/s/ Harold Bonnikson
_____________________________
Harold Bonnikson
Date: June 22, 1997
<PAGE> 6
EXHIBIT A
STANDARD FORM EMPLOYMENT AGREEMENT
Employer: Dime Mortgage, Inc. ("Employer")
Term: The initial term of the Employment Agreement ends March 1, 1999. The
Agreement provides for automatic renewal on each March 1st (commencing and
including March 1, 1998) for an additional year (so that at that point they
would have a two-year term) unless prior written notice of nonrenewal is given
by either party, at least 10 days in advance. The Agreement also provides that
the Board of Directors, or a Committee or subcommittee of the Board (if so
delegated by the Board) will annually review it to determine whether or not to
give the notice of nonrenewal.
Duties: The Agreement specifies the position and duties of each individual
officer and permits the assignment of comparable or additional duties or
positions.
Compensation: The Agreement gives the Board of Directors or a committee
thereof broad latitude in adjusting compensation levels, except that decreases
in annual salary may not exceed 25% in any one year, other than decreases that
are applied generally to officers of comparable rank. Compensation payments are
automatically deferred to the extent necessary to comply with Dime Bancorp, Inc.
("Bancorp") policy regarding Code Section 162(m) ($1 million dollar cap on
deductible compensation). To the extent so deferred, those amounts are payable
under the applicable provisions of the Voluntary Deferred Compensation Plan.
Benefits are generally as provided by applicable Employer plans.
Death & Disability: The Agreement provides no special death benefits.
However, full salary (less available disability insurance benefits) is provided
for up to one year of permanent disability (or, if less, the end of the
remaining term of the agreement), with continued life, medical and dental
insurance coverage for the remaining term (as long as continued contributions
are made).
Severance Benefits: The Agreement provides that if, prior to a Change in
Control, Dime terminates the officer's employment (other than for cause),
Employer will continue, during a
<PAGE> 7
2
"Severance Period," to pay the officer's salary and to maintain the officer's
life, medical and dental insurance coverage as in effect (subject to continuing
officer contributions) immediately prior to termination. The base Severance
Period is either six months for officers who have been employed for two years or
less (including service with North American Mortgage Company) or twelve months
for those employed for more than two years. The base Severance Period may be
increased by an "age multiplier," which increases the Severance Period for
officers age fifty and over as follows: 1.25x for officers age 50 to 54, 1.375x
for officers age 55 to 59, and 1.5x for officers age 60 or over. All such
severance payments are subject to limitation to the extent necessary to comply
with applicable regulatory restrictions. Finally, no benefits are provided upon
a termination for cause or if the officer voluntarily terminates. For purposes
of the Agreement, "cause" means the officer's personal dishonesty, incompetence,
willful misconduct, breach of fiduciary duty involving personal profit,
intentional failure to perform assigned duties, willful violation of any law,
rule or regulation (other than traffic violations or similar offenses) or final
cease and desist order or material breach of any provision of the Agreement.
Change in Control: The Agreement provides for Change in Control benefits
to apply in lieu of the otherwise applicable severance benefits if, during a
specified period following a Change in Control, the officer's employment is
terminated by Employer (other than for cause) or, in certain circumstances,
either constructively terminated or terminated by the officer.
For these purposes, a Change in Control includes any of the following:
1. A merger, consolidation or reorganization where voting securities of
Bancorp (or The Dime Savings Bank of New York, FSB (the "Bank")),
either as still outstanding or after conversion into other
securities, do not continue to represent at least 65% of the
combined voting power of the resulting entity.
2. Shareholder approval for the liquidation or sale of substantially
all of the assets of Bancorp or the Bank.
3. Acquisition of more than 35% of the stock of Bancorp or the Bank by
a person or entity or persons or entities acting as a group.
4. If the directors designated for election by the nominating committee
of Bancorp or the Bank stop constituting a majority of the members
of the Board of Directors of
<PAGE> 8
3
Bancorp or the Bank.
5. Entering into a binding agreement which, if consummated, would
result in a change in control as described in items (1) or (3)
above, a sale of substantially all assets of Bancorp or the Bank, or
adoption of a Plan of Liquidation.
The Agreement provides that in addition to an involuntary termination by
Employer (which includes a termination in connection with permanent disability
but not a termination for cause), Change in Control benefits are also generally
payable on a constructive termination (where the officer terminates his or her
employment, following a material lessening of the officer's responsibilities, or
where his or her salary is reduced below its pre-Change in Control level).
Change in Control benefits are also payable if the officer voluntarily
terminates his or her employment after a Transfer of Control (defined below).
Change in Control benefits are only payable if the termination of
employment, as described above (or notice thereof), occurs during the remaining
term of the agreement in effect at the time of the Change in Control, with the
added requirement that voluntary terminations after a Transfer of Control (or
notice thereof), not on account of constructive termination, must occur within
90 days of the Transfer of Control. Non-renewal of the Agreement by Employer
during the remaining term of the agreement in effect at the time of the Change
in Control is treated as the equivalent of an involuntary termination for
purposes of triggering Change in Control benefits (with the employee then
eligible for Change in Control benefits at the end of the remaining term of the
Agreement). Change in Control benefits (limited as described below) include the
following:
(a) a lump-sum payment of two times annual salary plus bonus
opportunity;
(b) vesting in accordance with their original terms of all stock options
that do not otherwise vest upon a Change in Control, and provision
for continued exercisability of all outstanding options for their
full remaining terms (to the extent permitted by the underlying
stock option plan), in each case without regard to the officer's
termination of employment;
(c) continuation of life, disability, medical and dental insurance
coverage for the remaining term of the agreement at the time of
termination (as long as continued
<PAGE> 9
4
contributions are made by the officer);
(d) supplemental (non-qualified) benefits (including benefits related to
401(k) match) under otherwise generally applicable Employer defined
contribution plans in which the officer participates, to replace any
accrued defined contribution retirement benefits that are lost
because they were not vested at the time of termination.
In addition, if following a Change in Control, Employer relocates its
principal executive offices and as a result the officer changes his or her
principal residence, the Agreement provides that he or she will receive
relocation benefits consisting of moving expenses and reimbursement of any loss
incurred on the sale of that residence.
Unless there has been a Transfer of Control, these Change in Control
benefits, as well as other benefits payable under the Agreement, are capped so
that no payments will be required to be made that should trigger any excise
taxes relating to "golden parachute payments." The cap on Change in Control
benefits also applies, even after a Transfer of Control, if the benefits are
payable on account of a voluntary termination (and not on account of
constructive termination or deemed involuntary termination) within 90 days after
the Transfer of Control.
If, however, the Change in Control were deemed a Transfer of Control, and
the termination were on account of involuntary termination (other than for
cause) or a covered constructive termination or deemed involuntary termination,
no cutback would apply, and a gross-up for the tax costs related to any golden
parachute excise tax would apply instead.
A Transfer of Control is defined as:
1. a merger, consolidation or reorganization where voting securities of
Bancorp (or the Bank) either as still outstanding or after
conversion into other securities, do not continue to represent at
least 65% of the combined voting power of the resulting entity, and
that transaction has not been recommended for approval by the
Bancorp Board; or
2. a merger, consolidation or reorganization where either (i) voting
securities of Bancorp (or the Bank) either as still outstanding or
after conversion into other securities, do not continue to represent
at least 45% of the combined voting power of the resulting entity,
or where (ii) Bancorp's or the Bank's directors constitute less than
45% of the directors of the resulting entity; or
<PAGE> 10
5
3. any of the Change in Control events (other than the entering into a
binding agreement that would result in a Change in Control) that the
Board of Bancorp or the Bank, as appropriate, determines is a
Transfer of Control for purposes of the Agreement, but with the
additional rule that if it is an express condition precedent to the
consummation of any Change in Control event or occurrence that the
Bancorp or Bank Board refrain from making a "Transfer of Control"
designation, then the event or occurrence will automatically
constitute a Transfer of Control.
Confidentiality and Other Post-Termination Obligations. The Agreement
would provide that following any termination of employment, the officer may not
disclose any confidential information, must return all material documents
relating to the business of Employer and its affiliates (including Bancorp and
the Bank), and (except if the termination occurs after a Change in Control) may
not solicit, for one year following termination, the employment of any person
who is or recently was an employee of Employer or its affiliates.
Additional Provisions: Following a Change in Control, the Agreement
provides that the officer will be entitled to receive legal fees if he or she is
required to bring an action to enforce the Agreement and is the prevailing
party. All payments under the Agreement are expressly limited if compliance
would violate any FDIC "golden parachute" regulations. The Agreement also
contains provisions more generally limiting payments to the extent necessary to
comply with applicable laws and regulations and mandatory provisions relating to
the taking of regulatory action against the officer, Employer or its affiliates.
The Agreement does not limit the payment of severance or other benefits (to the
extent not otherwise capped) notwithstanding that the officer obtains other
employment.
<PAGE> 1
Exhibit 10.4
DIME MORTGAGE, INC.
6200 Courtney Campbell Causeway
Tampa, Florida 33607
June 22, 1997
Martin S. Hughes
c/o North American Mortgage Company
3883 Airway Drive
Santa Rosa, California 95403-1699
Re: Agreement Regarding Initial Employment Terms
Dear Mr. Hughes:
This letter agreement (the "Letter Agreement") is intended to detail
elements of your initial compensation arrangements with Dime Mortgage, Inc.
("DMI") to become applicable upon your commencement of employment by DMI. DMI
agrees to employ you, and you agree to be employed by DMI, on the following
terms and conditions:
1. As an employee of DMI, your principal responsibilities will
include assisting the CEO and COO of DMI in matters relating to the
consolidation of North American Mortgage Company's operations with those of DMI
following Consummation (as defined below). You will also have responsibility for
such other duties as may be assigned to you by the CEO or COO of DMI from time
to time. Your place of employment will be Santa Rosa, California. You will be
employed by DMI for a term of ninety (90) days (the "Term") from the date of
Consummation, provided, that the Term may be extended for an additional one (1)
month period at the request of DMI in its sole discretion upon notice given to
you not later than 30 days prior to the expiration of the initial ninety day
term.
Your salary will be at a rate of $265,000 (the "Base Salary") per
annum, payable with respect to the period of your employment by DMI in
accordance with DMI's normal payroll practices. You will be eligible to
participate in DMI's incentive plan during 1997 and the portion of 1998
comprising the Term; provided, that: (1) you will receive a minimum incentive
award of (x) $95,000 for calendar year 1997 less (y) the total amount of any
performance or other bonuses or awards which are paid, or accrued to be paid, to
you under the annual executive bonus plan or any other bonus plan or arrangement
in respect
<PAGE> 2
2
of 1997 by North American Mortgage Company (and its subsidiaries) prior to the
date of Consummation in respect of such year; and (2) if the Term (after taking
into account any extension thereof as provided in the preceding paragraph) shall
include a portion of calendar year 1998, you will receive at the end of the Term
a minimum incentive award of $95,000 as pro rated for the portion of the Term
comprising calendar year 1998; except that no such incentive award shall be
payable to you by DMI if prior to December 31, 1997, in the case of clause (1),
or prior to the end of the Term, in the case of clause (2), your employment is
terminated (a) by you or (b) by DMI for "cause" (as defined below). You will be
eligible during the Term to participate in such life, medical, and other
insurance plans or programs as are made available by DMI to its full-time
salaried employees. In consideration of DMI's agreement to employ you under the
terms described above, and otherwise in consideration of the payments to be made
to you pursuant to Schedule 6.19 of the "Transaction Agreement" (as defined
below), unless otherwise consented to by DMI in writing, you will not disclose
or make accessible to any other person, firm, corporation, association or other
entity any confidential, non-public information regarding North American
Mortgage Company, DMI or their parents or subsidiaries, except (i) as approved
by DMI in the course of DMI's business for DMI's benefit, or (ii) when required
to do so by law.
2. This Letter Agreement shall become effective, and is expressly
subject to and conditioned, upon the consummation ("Consummation") of the
transaction contemplated by that certain Agreement and Plan of Combination,
dated as of June 22, 1997, between Dime Bancorp, Inc. ("Bancorp") and North
American Mortgage Company (the "Transaction Agreement"). (If in connection with
the transactions contemplated by the Transaction Agreement, the mortgage banking
operations of DMI are transferred to another entity that is a direct or indirect
subsidiary of Bancorp, then this Letter Agreement shall be assumed by, and be
binding upon, such entity and the term "DMI" as used herein shall mean such
entity.) Accordingly, your employment by DMI, and DMI's agreement to be bound by
the terms hereof, is expressly conditioned upon and subject to Consummation. If
for any reason the Consummation does not occur as contemplated in the
Transaction Agreement, DMI shall have no obligation to employ you, shall have no
further obligation or liability to you under this Letter Agreement whatsoever,
and the terms of this Letter Agreement shall become automatically void and
without further effect.
3. It is a further condition to DMI's agreement to enter into and be
bound by the terms of this Letter Agreement that you hereby agree you will not
be entitled to, and shall by and upon your execution of this Letter Agreement be
deemed to have irrevocably waived, any rights to any severance or other benefits
in connection with the termination of your employment with North American
Mortgage Company or DMI (except
<PAGE> 3
3
to the extent of any benefits to be properly provided to you pursuant to
Schedule 6.19 to the Termination Agreement that have not yet been paid), whether
under any severance agreement, arrangement or plan to which you are otherwise a
party or in which you may otherwise be a participant, including without
limitation, as may be provided in that certain Termination Agreement, dated as
of February 7, 1995 between you and North American Mortgage Company (the
"Termination Agreement"), and under the North American Mortgage Company Senior
Executive Severance Pay Plan (the "Severance Pay Plan"), and that upon
effectiveness of this Letter Agreement, the Termination Agreement and your right
to any benefits under the Severance Pay Plan shall finally terminate and be of
no further force or effect; provided, however, that you will continue to be
eligible during the one (1) year period following the termination of your
employment with DMI for medical and life insurance benefits on the same basis as
if your employment by DMI had continued for that year.
4. You shall have no right to receive any severance pay or severance
benefit or any other compensation or benefit for any period after the date of
the termination by DMI of your employment for cause or following the voluntary
termination by you of your employment prior to the end of the Term. As used in
this Letter Agreement "cause" shall mean your personal dishonesty, incompetence,
willful misconduct, breach of fiduciary duty involving personal profit,
intentional failure to perform assigned duties or willful violation of any law,
rule or regulation (other than traffic violations or similar offenses) or final
cease-and-desist order.
5. Notwithstanding the foregoing, if any statute, regulation, order,
agreement or regulatory interpretation thereof that is valid and binding upon
DMI, including, without limitation, 12 USC Section 1828(k) and regulations
thereunder (each a "Regulatory Restriction") restricts, prohibits or limits the
amount of any payment or the provision of any benefit that DMI would otherwise
be liable for pursuant to this Letter Agreement, then the amount that DMI will
pay to you will not exceed the maximum amount permissible under such Regulatory
Restriction; provided, that if such Regulatory Restriction shall subsequently be
rescinded, superseded, amended or otherwise determined not to restrict, limit or
prohibit payment by DMI of amounts otherwise due you hereunder, DMI shall
promptly thereafter pay to you any amounts (or the value of any benefit)
previously withheld from you as a result of such Regulatory Restriction. As of
the date hereof, DMI represents there are no Regulatory Restrictions restricting
your rights to payments contemplated hereby. Further, if any amount otherwise
payable hereunder would be deemed to constitute a parachute payment (a
"Parachute Payment") within the meaning of Section 280G of the Internal Revenue
Code of 1986, as amended (the "Code"), and if any such Parachute Payment, when
added to any other payments that are deemed to
<PAGE> 4
4
constitute Parachute Payments, would otherwise result in the imposition of an
excise tax under Section 4999 of the Code, the amounts payable hereunder shall
be reduced by the smallest amount necessary to avoid the imposition of such
excise tax. Any such limitation shall be applied to such compensation and
benefit amounts, and in such order, as DMI shall determine in its sole
discretion. References to the Code hereunder shall be to the Code as presently
in effect or to the corresponding provisions of any succeeding law. Furthermore,
to the extent required to be included herein, all of the provisions required to
be included in this Letter Agreement pursuant to 12 C.F.R. 563.39(b) are hereby
deemed to be incorporated herein by reference and to be a part of this Letter
Agreement.
6. This Letter Agreement is intended solely to detail certain of
your initial compensation arrangements with DMI. Nothing in this Letter
Agreement confers upon you the right to continue in the employment of DMI or
interferes with or restricts in any way the right of DMI to terminate your
employment at any time, with or without cause.
7. Any payments due you hereunder shall be reduced by all applicable
withholding and other taxes.
8. This Letter Agreement shall be governed by the laws of the State
of New York, without regard to conflict of laws principles applied in the State
of New York. Except as otherwise provided above, this Letter Agreement may only
be amended in writing signed by both parties hereto.
Please indicate your acceptance to the terms of this Letter
Agreement by signing below. This Letter Agreement may be executed in separate
counterparts, each of which when so executed and delivered shall be an original,
but all of which together shall constitute but one and the same instrument.
Very truly yours,
DIME MORTGAGE, INC.
By: /s/ D. James Daras
----------------------------------------
AGREED AND ACCEPTED
/s/ Martin S. Hughes
- ---------------------------
Martin S. Hughes
<PAGE> 1
Exhibit 10.5
June 26, 1997
John F. Farrell, Jr.
7 Dairy Road
Greenwich, Connecticut 06830
Re: Agreement Regarding Consulting Terms
Dear Mr. Farrell:
This letter agreement (the "Letter Agreement") is intended to detail
elements of your compensation arrangements with Dime Mortgage Inc. ("DMI") to
become applicable upon the commencement of your consulting arrangement with DMI.
DMI agrees to retain you as a consultant, and you agree to be retained by DMI as
an independent consultant, and not as an employee or officer, but as an
independent contractor, on the following terms and conditions:
1. You agree that for a term of six months (the "Term") from the date
of Consummation (as defined below), you will render such consulting services as
may be requested of you from time to time by the CEO or COO of DMI at such time
or times as may be mutually convenient to DMI and you. DMI agrees to provide you
with sufficient prior notice of the need for consulting services, having regard
to your other interests. DMI acknowledges that you will not be required to
devote more than 20 hours per week to fulfill the consulting services hereunder.
You also will not be obligated to render any services under this Letter
Agreement during any such period when you are unable to do so due to illness,
disability or injury.
2. DMI agrees to pay you for your commitment to perform the services
provided for under this Letter Agreement and the performance of any services
requested by DMI in accordance with the preceding paragraphs at the monthly rate
of $46,558; payable in accordance with DMI's customary payroll practices. You
will also be entitled to reimbursement for reasonable expenses incurred by you
in the performance of your duties hereunder. You will also, throughout the Term
and for a period of one year thereafter, continue to receive the same or
substantially the same employee benefits as those employee benefits North
American Mortgage Company ("NAMC") provided to you as of the date hereof,
including, without limitation, life and medical benefits, and any such
additional benefits DMI makes available following the Consummation to supplement
such benefits, on the same basis as if your employment with NAMC on the date
hereof had continued with DMI following the Consummation and throughout such
period.
3. DMI shall be responsible for the payment, throughout the Term and
for a period of six months thereafter, of all rents, utilities, costs and
expenses necessary for you to maintain exclusive possession of the offices
currently leased by NAMC in New York, New York, as occupied on the date hereof
(the "Office"), and to continue the current retention of the two-person
secretarial/support staff at the Office at the same level of compensation and
benefits as currently in effect. As of the end of such period, DMI shall use its
reasonable best efforts to cause you to be permitted to assume the lease with
respect to the Office. You agree that DMI will have reasonable access to inspect
the Office during the Term to the extent required by such lease.
4. During and following the Term, you shall not, unless and to the
extent that DMI otherwise has consented in writing, divulge, disclose or make
accessible to any other person, corporation or other entity any Confidential
Information pertaining to DMI's business (including that of its subsidiaries),
except (i) while retained by DMI, in the business of and for the benefit of the
DMI, or (ii) when required to do so by law upon the advice of counsel.
"Confidential Information" shall mean non-public information concerning DMI and
its subsidiaries.
5. This Letter Agreement shall become effective, and is expressly
subject to and conditioned upon, the consummation ("Consummation") of the
transaction contemplated by that certain Agreement and Plan of Combination,
dated as of June 22, 1997, between Dime Bancorp, Inc. ("Bancorp") and NAMC (the
"Transaction Agreement"). (If in connection with the transactions contemplated
by the Transaction Agreement, the mortgage banking operations of DMI are
transferred to another entity that is a direct or indirect subsidiary of
Bancorp, then this Letter Agreement shall be assumed by, and be binding upon,
such entity and the term "DMI" as used herein shall mean such entity.)
Accordingly, the retention of your consulting services by DMI, and DMI's
agreement to be bound by the terms hereof, is expressly conditioned upon and
subject to the Consummation. If for any reason the Consummation does not occur
as contemplated in the Transaction Agreement, DMI shall have no obligation to
retain your services, shall have no further obligation or liability to you under
this Letter Agreement whatsoever, and the terms of this Letter Agreement shall
become automatically void and without further effect.
6. Throughout the Term and for a period of one year thereafter, you
covenant and agree that you will not solicit or otherwise encourage any
employee, agent or representative of DMI or any person who was employed by DMI
or by NAMC as an employee, agent or representative at
<PAGE> 2
2
the time of the termination of your retention or at the end of the Term, to
terminate his or her employment with DMI (or NAMC) or such parent or subsidiary,
or to become an officer, board member, owner, partner, consultant, employee,
agent or representative of any person, firm, corporation, association, or other
entity engaged in the mortgage banking business; provided that the foregoing
shall not preclude you from soliciting for employment any person terminated by
DMI subsequent to the expiration of the Term.
7. The respective rights and obligations of the parties hereunder
shall survive any termination of this Letter Agreement to the extent necessary
to the intended preservation of such rights and obligations.
8. This Letter Agreement shall be construed, interpreted and governed
in accordance with the laws of the State of New York without reference to rules
relating to conflicts of law. Except as otherwise provided herein, this Letter
Agreement may only be amended in a writing signed by both parties hereto.
9. This Letter Agreement may be executed in two or more counterparts,
each of which will be deemed an original.
Please indicate your acceptance to the terms of this Letter Agreement
by signing below.
Very truly yours,
DIME MORTGAGE, INC.
By: /s/ D. James Daras
----------------------------
Title: Vice President
AGREED AND ACCEPTED
/s/ John F. Farrell, Jr.
- ----------------------------
John F. Farrell, Jr.
Date: June 30, 1997
<PAGE> 1
Exhibit 21
SUBSIDIARIES OF
DIME BANCORP, INC.
(As of 9/3/97)
Dime Capital Trust I*
Dime Capital Trust II*
The Dime Savings Bank of New York, FSB
SUBSIDIARIES OF
THE DIME SAVINGS BANK OF NEW YORK, FSB
(AS OF 9/3/97)
Accord Agency, Inc.
Accord Realty Management Corporation
Acorn Properties Inc.
Anchor Mortgage Resources, Inc.(1)
Anchor Properties of New Jersey, Inc.
Anchor Property Corp.
Anchor Residential Facilities Corporation(2)
Anchor Systems Corp.(3)
April Park Corp.
ASB Agency, Inc.
69-30 Austin Holding Corp.
Bankers Federal Service Corporation
Beech Real Estate Management Inc.
BFED I Corp.
BFS Credit Corp.
BFS Financial Corporation(4)
555 Biltmore, Inc.(5)
Cedar Real Estate Management Corp.
445 Cedarhurst, Inc.
The Chelsea Accord Corporation
Colonial Bristol Inc.
The Dalton Accord Corporation(6)
The Dime Agency, Inc.
Dime CRE, Inc.
Dime Florida Consolidation Corp.(7)
Dime Funding, Inc.
Dime Mortgage, Inc.(8)
- ------------
* This business trust is owned by Dime Bancorp, Inc.
(1) Formerly known as Mortgage Resources, Inc.
(2) Formerly known as Anchor Facilities Corp.
(3) Formerly known as Suburban Coastal Systems Corporation f/k/a Coastal
Computer Services, Inc.
(4) Formerly known as BFS Finance Corp.
(5) Formerly known as Alhambra Circle, Inc.
(6) Formerly known as the Sutton East Accord Corporation.
(7) Formerly known as Dime Mortgage Company, Inc. f/k/a The Dime Real Estate
Services, Inc.
(8) Formerly known as Dime Mortgage of Georgia, Inc.
<PAGE> 2
Dime Mortgage of New Jersey, Inc.(9)
Dime NJ Agency, Inc.(10)
The Dime Real Estate Services--Connecticut, Inc.
Dime Securities of New York, Inc.(11)
DNJ Agency, Inc.
Dogwood Real Estate Corp.
The E-F Battery Accord Corporation
Evergreen Real Estate Corp.
Fameslinc, Inc.(12)
Fayette Properties Inc.
Fayette Properties of New Jersey, Inc.
F.C. Ltd.
Fir Real Estate Corp.
Garden Management Co., Inc.
Granny Road Land Corp.
Greenleaf Real Estate Corp.
Harmony Agency, Inc.(13)
Hemlock Real Estate Management Corp.
Heritage Community Service Corp.
Inservco, Inc.
Iris Real Estate Management Corp.
John Street Service Corp.
Juniper Real Estate Management Corp.
1101 Kennedy, Inc.
Lakeview Land Corp.(14)
Lawrence Avenue Corp.(15)
520 Linc, Inc.
Lincoln Barry Gardens Acquisition Corp.
Lincoln Realty Capital, Inc.(16)
Lincoln RRE Corporation
Lincoln Tudor Court Acquisition Corp.
Lincoln Ventures Group Ltd.
Locust Real Property Management Inc.
Maple Real Property Management Inc.
Medford Associates, Inc.
Midway Holdings Inc.(17)
The Mount Kisco Accord Corporation
78 New Linc Corporation(18)
New Pelhamco Inc.
Nickel Purchasing Company, Inc.
Nifty Corp.
- -------------
(9) Formerly known as Dime of New Jersey, Inc.
(10) Formerly known as ASB/NJ Agency Inc. f/k/a Suburban Coastal Insurance
Services, Inc. f/k/a Coastal Insurance Services, Inc.
(11) Formerly known as TDA Securities Inc.
(12) Formerly known as 3489 Broadlinc, Inc.
(13) Formerly known as Allrisk Agency, Inc.
(14) Formerly known as 685 Parker Street Inc.
(15) Formerly known as 220 Central Avenue Corp. f/k/a Hicks Street, Inc.
(16) Formerly known as Accord Properties, Inc.
(17) Formerly known as Midway Green Inc.
(18) Formerly known as 78 New Linc Corp.
<PAGE> 3
Northeast Appraisals, Inc.
Northshore Consolidation Corp.(19)
Nutmeg Real Estate Corp.
Oak Real Estate Corp.
847218 Ontario Limited
847219 Ontario Limited
847220 Ontario Limited
847221 Ontario Limited
Panther Lane Inc.
Pelham Venture Inc.
620-622 Pelhamdale Avenue Owners Corporation
Pembroke and Livingston, Inc.
Pine Real Estate Management Corp.
Plainview Inn, Inc.
1804 Plaza Corp.(20)
Recon Services Corp.(21)
Reservoir Avenue Management, Inc.
The Seventh Avenue Accord Corporation
299 Shore Lee Corp.
The Sixth Avenue Accord Corporation
Sky Resort, Inc.
Somerset Consolidation Corporation
Standard of Georgia Insurance Agency, Inc.
47th Street Property Corp.
Uniondale Holdings Inc.
Vanderventer Corp.
952 W. Third St. Corp.(22)
Waccaboro Corp.
Wappingers Falls Development Corp.
Windy Ridge Corp.
Yellowstone Venture, Inc.
- --------------
(19) Formerly known as Dime Consolidation Company, Inc.
(20) Formerly known as Prince Farms Development Corp. f/k/a Pearl Plaza Inc.
f/k/a Park Lane South Corp.
(21) Formerly known as 1441 Grant Linc, Inc.
(22) Formerly known as Macarthur Inc.
<PAGE> 1
Exhibit 23.1
Independent Auditors' Consent
The Board of Directors
Dime Bancorp, Inc.:
We consent to the incorporation by reference in the registration statement on
Form S-4 of Dime Bancorp, Inc., of our report dated January 27, 1997, relating
to the consolidated statements of financial condition of Dime Bancorp, Inc. and
subsidiaries as of December 31, 1996 and 1995, and the related consolidated
statements of income, changes in stockholders' equity and cash flows for each
of the years in the three-year period ended December 31, 1996, which report
appears in the December 31, 1996 Annual Report on Form 10-K of Dime Bancorp,
Inc., and the references to our Firm under the headings "Selected Consolidated
Financial Data" and "Experts" in the registration statement. Our report
included an explanatory paragraph that described a change in the method of
accounting for goodwill, as discussed in the notes to those statements.
/s/ KPMG PEAT MARWICK LLP
New York, New York
September 11, 1997
<PAGE> 1
Exhibit 23.2
Consent of Independent Auditors
North American Mortgage Company
Dime Bancorp, Inc.
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-4) of Dime Bancorp, Inc. (Dime) relating to the
registration of 21,500,000 shares of Dime common stock expected to be issued in
connection with the proposed acquisition by Dime of North American Mortgage
Company (NAMC) and to the incorporation by reference therein of our report dated
January 31, 1997, with respect to the consolidated financial statements of NAMC
and its subsidiaries, incorporated by reference in its Annual Report (Form 10-K
and Amendment 1 thereto on Form 10-K/A) for the year ended December 31, 1996,
filed with the Securities and Exchange Commission.
/s/ Ernst & Young LLP
San Francisco, California
September 11, 1997
<PAGE> 1
Exhibit 23.3
CONSENT OF
MORGAN STANLEY & CO. INCORPORATED
September 12, 1997
Dime Bancorp, Inc.
589 Fifth Avenue
New York, NY 10017
Dear Sirs:
We hereby consent to the inclusion in the Registration Statement of Dime
Bancorp, Inc. ("Dime") on Form S-4, relating to the proposed merger of North
American Mortgage Company with and into a subsidiary of Dime, of our opinion
letter appearing as Appendix B to the Prospectus and Proxy Statement which is
part of the Registration Statement, and to the references of our firm name
therein. In giving such consent, we do not thereby admit that we come within the
category of persons whose consent is required under Section 7 of the Securities
Act of 1933, as amended, or the rules and regulations adopted by the Securities
and Exchange Commission thereunder, nor do we admit that we are experts with
respect to any part of the Registration Statement within the meaning of the term
"experts" as used in the Securities Act of 1933, as amended, or the rules and
regulations of the Securities and Exchange Commission thereunder.
Very truly yours,
MORGAN STANLEY & CO. INCORPORATED
By: /s/ Kirk R. Wilson
______________________________________
Kirk R. Wilson
Managing Director
