SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
December 16, 1998
LAKEVIEW FINANCIAL CORP.
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(Exact name of Registrant as specified in its Charter)
New Jersey 0-25106 22-334052
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(State or other jurisdiction (SEC File No.) (IRS Employer
of incorporation) Identification
Number)
1117 Main Street, Paterson, New Jersey 07503
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 201-890-1234
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Not Applicable
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(Former name or former address, if changed since last Report)
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INFORMATION TO BE INCLUDED IN REPORT
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Item 5. Other Events
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A copy of a press release issued December 16, 1998 by the Registrant is
attached hereto as Exhibit 99 and is incorporated herein by reference in its
entirety.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
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Exhibit 99 -- Press Release Concerning Merger Agreement dated December 16, 1998.
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Exhibit 99.1 -- Agreement and Plan of Merger dated December 15, 1998 between
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Lakeview Financial Corp. and Dime Bancorp, Inc.
Exhibit 99.2 -- Form of Stock Option Agreement.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this Report to be signed on its behalf by the
undersigned, hereunto duly authorized.
LAKEVIEW FINANCIAL CORP.
Date: December 16, 1998 By: /s/Kevin J. Coogan
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Kevin J. Coogan
President and Chief
Executive Officer
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Lakeview Financial Corp. Contact: Kevin J. Coogan, President
Lakeview Savings Bank (973) 890-1234
Paterson, New Jersey
December 16, 1998
FOR IMMEDIATE RELEASE
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Dime Bancorp, Inc. to Acquire Lakeview Financial Corp.
Paterson, NJ -- December 16, 1998 -- Dime Bancorp, Inc., New York, NY
(NYSE: DME) today announced it has entered into a definitive agreement to
acquire Lakeview Financial Corp. (NASDAQ: LVSB) headquartered in Paterson, New
Jersey in a tax-free transaction valued at approximately $110 million. Lakeview
is the holding company of Lakeview Savings Bank and had assets of $573 million
and deposits of $454 million at October 31, 1998. Lakeview operates eleven
offices, including seven in Passaic County and four in Bergen County.
Lawrence J. Toal, Chairman and Chief Executive Officer of Dime, said,
"The purchase of Lakeview is consistent with our community banking focus and
furthers Dime's strategic objective of increasing our consumer financial
services and business banking franchise in the attractive northern New Jersey
market. In addition to operating efficiencies, we expect to generate additional
revenues by deepening relationships with Lakeview's customers and attracting new
business to the franchise. The acquisition of Lakeview improves our market share
in Passaic County to 5.1% and makes us the 10th largest depository institution
in New Jersey, with deposits of $2.5 billion in 29 offices."
Kevin J. Coogan, President and Chief Executive Officer of Lakeview,
commented, "This transaction is exciting news for our customers and
shareholders. Our customers will be able to access a one hundred office regional
branch network, a state of the art telephone banking center accessible 24 hours
a day - seven days a week, and a broader menu of products and services. Our
shareholders will have the opportunity to participate in the growth of the
greater New York area's premier thrift."
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Under the terms of the agreement, holders of Lakeview common stock may
elect to receive either 0.9 of a share of Dime common stock or $24.26 in cash
for each outstanding share of Lakeview common stock, subject to a requirement
that, in the aggregate, 65% of Lakeview's outstanding shares will be exchanged
for Dime common stock and the remaining shares will be exchanged for cash. The
elections of Lakeview shareholders will be subject to allocation and pro-ration
if either type of the merger consideration is over-subscribed. Based on Dime's
closing price on December 15, 1998, the per share value of the transaction is
$22.68, factoring in both the stock and the cash portions of the consideration.
The transaction, which has been approved by the Boards of Directors of Dime and
Lakeview, is subject to regulatory approvals and approval of Lakeview
shareholders. The transaction is expected to close during the second quarter of
1999.
Dime said that the transaction would be accounted for as a purchase and
is expected to be accretive to earnings within six months of closing. In
connection with the acquisition agreement, Lakeview has granted Dime an option
to acquire 19.9% of Lakeview's outstanding common stock under certain
conditions.
At September 30, 1998, Dime had assets of $21.2 billion and deposits of
$13.5 billion. Dime is a regional bank serving consumers and businesses through
90 branches located throughout the greater New York City metropolitan area.
Directly and through the over 200 offices of its North American Mortgage
subsidiary, Dime also provides consumer financial services and mortgage banking
services throughout the United States.
This release contains certain forward-looking statements regarding each
of Dime Bancorp, Inc. and Lakeview Financial Corp., and the combined company
following the acquisition. Among other things, the statement that Dime expects
the transaction to be accretive to earnings within six months of closing is
forward-looking in nature and subject to uncertainty. A variety of factors could
cause actual results and experience to differ materially from the anticipated
results or other expectations expressed in such forward-looking statements. Such
factors include, but are not limited to: risks and uncertainties related to the
execution of the acquisition, including integration activities, interest rate
movements, competition from both financial and non-financial institutions,
changes in applicable laws and regulations, the timing and occurrence (or
non-occurrence) of other transactions and events that may be subject to
circumstances beyond Dime's or Lakeview's control and general economic
conditions. Dime and Lakeview assume no obligation to update the forward-looking
statements or to update the reasons why actual results could differ from those
projected in the forward-looking statements.
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AGREEMENT AND PLAN OF MERGER
dated as of December 15, 1998
between
LAKEVIEW FINANCIAL CORP.
and
DIME BANCORP, INC.
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TABLE OF CONTENTS
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RECITALS
ARTICLE I
Certain Definitions; Interpretation
1.01 Certain Definitions..........................................2
1.02 Interpretation...............................................8
ARTICLE II
The Merger
2.01 The Merger...................................................8
(a) Structure and Effects of the Merger.....................8
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(b) Certificate of Incorporation............................8
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(c) By-Laws.................................................9
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(d) Directors...............................................9
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(e) Officers................................................9
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2.02 Reservation of Right to Revise Structure.....................9
2.03 Effective Time...............................................9
2.04 Integration..................................................9
ARTICLE III
Consideration
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3.01 Consideration...............................................10
3.02 Rights as Shareholders; Stock Transfers.....................12
3.03 Fractional Shares...........................................12
3.04 Exchange Procedures.........................................13
3.05 Anti-Dilution Adjustments...................................14
3.06 Company Stock Options. P...................................14
ARTICLE IV
Actions Pending the Merger
4.01 Forbearances of the Company.................................15
4.02 Forbearances of the Acquiror................................18
ARTICLE V
Representations and Warranties
5.01 Disclosure Schedules........................................19
5.02 Standard....................................................19
5.03 Representations and Warranties of the Company...............19
5.04 Representations and Warranties of the Acquiror..............31
ARTICLE VI
Covenants
6.01 Reasonable Best Efforts. ..................................35
6.02 Shareholder Approvals.......................................35
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6.04 Press Releases..............................................36
6.05 Access; Information.........................................37
6.06 Acquisition Proposals.......................................37
6.07 Affiliate Agreements........................................38
6.08 Takeover Laws...............................................38
6.09 No Rights Triggered.........................................38
6.10 NYSE Listing................................................38
6.11 Regulatory Applications.....................................39
6.12 Indemnification.............................................39
6.13 Accountants' Letters........................................40
6.14 Notification of Certain Matters.............................41
6.15 Advisory Board..............................................41
6.16 Employee Benefits...........................................41
6.17 Certain Accounting Policies of the Company..................42
6.18 Special Dividend............................................42
ARTICLE VII
Conditions to Consummation of the Merger
7.01 Conditions to Each Party's Obligation to Effect the ........42
7.02 Conditions to Obligation of the Company.....................43
7.03 Conditions to Obligation of the Acquiror....................44
ARTICLE VIII
Termination
8.01 Termination.................................................45
8.02 Effect of Termination and Abandonment.......................46
8.03 Termination Fee.............................................46
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ARTICLE IX
Miscellaneous
9.01 Survival....................................................47
9.02 Waiver; Amendment...........................................47
9.03 Counterparts................................................47
9.04 Governing Law...............................................47
9.05 Expenses....................................................47
9.06 Notices.....................................................47
9.07 Entire Understanding; No Third Party Beneficiaries..........49
EXHIBIT A Form of Stock Option Agreement
EXHIBIT B Form of Shareholder Agreement
EXHIBIT C List of Persons to Execute Compensation-Related Agreements
EXHIBIT D Form of Subsidiary Combination Agreement
EXHIBIT E Form of Affiliate Letter
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AGREEMENT AND PLAN OF MERGER, dated as of December 15, 1998 (this
"Agreement"), by and among LAKEVIEW FINANCIAL CORP. (the "Company") and DIME
BANCORP, INC. (the "Acquiror").
RECITALS
A. The Company. The Company is a New Jersey corporation, having its
principal place of business in West Paterson, New Jersey.
B . The Acquiror. The Acquiror is a Delaware corporation, having its
principal place of business in New York, New York.
C. Stock Option Agreement. As a condition and inducement to the
Acquiror's willing ness to enter into this Agreement, following the execution
and delivery of this Agreement, the Company shall enter into a Stock Option
Agreement with the Acquiror, in substantially the form of Exhibit A, pursuant to
which the Company shall grant to the Acquiror an option to purchase, under
certain circumstances, shares of Company Common Stock.
D. Shareholder Agreements. As a further condition and inducement to the
willingness of the Acquiror to enter into this Agreement, shareholders of the
Company who are also directors or executive officers of the Company holding the
power to vote in the aggregate approximately 30% of the outstanding shares of
the Company Common Stock have agreed to enter into agreements with the Acquiror,
in the form of Exhibit B hereto, under which each shareholder will agree to vote
in favor of this Agreement.
E. Compensation-Related Agreements. Certain employees and directors of
the Company identified on Exhibit C have agreed to execute agreements related to
certain compensation matters.
F. Intention 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").
G. Board Action. The respective Boards of Directors of each of the
Acquiror and the Company have determined that it is in the best interests of
their respective companies and their shareholders to consummate the business
combination transaction provided for 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:
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ARTICLE I
Certain Definitions; Interpretation
1.01 Certain Definitions. The following terms are used in this
Agreement with the meanings assigned below:
"Acquiror" has the meaning assigned 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 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 assigned in Section 5.04(g).
"Acquisition Proposal" has the meaning assigned in Section 6.06.
"Agreement" means this Agreement, as amended or modified from time to
time in accordance with Section 9.02.
"Cash Election Shares" has the meaning assigned in Section 3.01(b).
"Closing Date" has the meaning assigned in Section 2.03.
"Code" has the meaning assigned in Recital F.
"Company" has the meaning assigned in the preamble to this Agreement.
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"Company Affiliate" has the meaning assigned 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 $2.00 per
share, of the Company.
"Company Meeting" has the meaning assigned in Section 6.02.
"Company Reports" has the meaning assigned in Section 5.03(i).
"Company Stock Option" means each option to purchase shares of Company
Common Stock outstanding under the Company Stock Plans.
"Company Stock Plans" means the Management Stock Bonus Plan and Trust
Agreement and 1993 Stock Option Plan.
"Company's SEC Documents" has the meaning assigned in Section 5.03(g).
"Compensation Plans" has, with respect to any person, the meaning
assigned in Section 5.03(m).
"Consideration" has the meaning assigned in Section 3.01(a).
"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.
"Converted Cash Election Shares" has the meaning assigned in Section
3.01(c).
"Converted Stock Election Shares" has the meaning assigned in Section
3.01(c).
"Costs" has the meaning assigned in Section 6.12(a).
"DGCL" means the General Corporation Law of the State of Delaware.
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"Disclosure Schedule" has the meaning assigned 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.
"Election" has the meaning assigned in Section 3.01(b).
"Election Deadline" has the meaning assigned in Section 3.04(a).
"Election Form" has the meaning assigned in Section 3.01(b).
"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: (1) the protection or restoration of the environment,
health or safety (in each case as relating to the environment) or natural
resources; or (2) 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 assigned
in Section 5.03(m).
"ERISA Affiliate Plan" has the meaning assigned in Section 5.03(m).
"ESOP" has the meaning assigned in Section 6.16.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations thereunder.
"Exchange Agent" has the meaning assigned in Section 3.01(b).
"Exchange Fund" has the meaning assigned in Section 3.04(b).
"Exchange Ratio" has the meaning assigned in Section 3.01(a).
"FDIC" means the Federal Deposit Insurance Corporation.
"Fee" has the meaning assigned in Section 8.03.
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"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:
(1) listed, classified or regulated pursuant to any Environmental Law; (2) any
petroleum product or by-product, asbestos-containing material, lead-containing
paint or plumbing, polychlorinated biphenyls, radioactive materials or radon; or
(3) any other substance which is or may be the subject of regulatory action by
any Governmental Authority pursuant to any Environmental Law.
"Indemnified Party" has the meaning assigned in Section 6.12(a).
"Indemnified Person" has the meaning assigned in Section 5.03(m).
"Insurance Amount" has the meaning assigned in Section 6.12(b).
"Insurance Policies" has the meaning assigned in Section 5.03(s).
"IRS" means the United States Internal Revenue Service.
"Liens" means any charge, mortgage, pledge, security interest,
restriction, claim, lien, or encumbrance.
"Loans" means loans, leases, extensions of credit, commitments to
extend credit and other assets.
"Mailing Date" has the meaning assigned in Section 3.04(a).
"Material Adverse Effect" means, with respect to the Acquiror or the
Company, any effect that (1) is both material and adverse to the financial
position, results of opera tions or business of the Acquiror and its
Subsidiaries taken as a whole, or the Company and its Subsidiaries taken as a
whole, respectively, other than (A) the effects of any change attributable to or
resulting from changes in economic conditions applicable to depository
institutions generally or in general levels of interest rates, except to the
extent that the effect of such change is materially more severe for the Acquiror
or the Company than for depositary institutions in general and (B) payments
associated with the Merger as contemplated by this Agreement; or (2) 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.
"Merger" has the meaning assigned in Section 2.01.
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"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 assigned in Section 3.04(b).
"NJBCA" means the New Jersey Business Corporation Act.
"NJBD" means the New Jersey Department of Banking and Insurance.
"NYSE" means the New York Stock Exchange, Inc.
"No-Election Shares" has the meaning assigned in Section 3.01(b).
"Old Certificates" has the meaning assigned in Section 3.04(a).
"OTS" means the Office of Thrift Supervision.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Pension Plan" has, with respect to any person, the meaning assigned in
Section 5.03(m).
"Per Share Cash Consideration" has the meaning assigned in Section
3.01(a).
"Per Share Stock Consideration" has the meaning assigned in Section
3.01(a).
"person" means any individual, bank, savings bank, corporation,
partnership, association, joint-stock company, business trust or unincorporated
organization.
"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 assigned in Section 6.03.
"Registration Statement" has the meaning assigned 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
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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.
"Special Dividend" has the meaning assigned in Section 6.18.
"Stock Election Shares" has the meaning assigned in Section 3.01(b).
"Stock Number" has the meaning assigned in Section 3.01(a).
"Stock-Selected No-Election Shares" has the meaning assigned in Section
3.01(c).
"Subsidiary" and "Significant Subsidiary" have the meanings assigned to
them in Rule 1-02 of Regulation S-X of the SEC.
"Subsidiary Combination" has the meaning assigned in Section 2.04.
"Superior Proposal" means an Acquisition Proposal made by a third party
after the date hereof which, in the good faith judgment of the Company Board,
taking into account the various legal, financial and regulatory aspects of the
proposal and the person making such proposal, (1) if accepted, is significantly
more likely than not to be consummated, and (2) if consummated, is reasonably
likely to result in a materially more favorable transaction than the Merger for
the Company and its shareholders and other relevant constituencies.
"Surviving Corporation" has the meaning assigned in Section 2.01.
"Takeover Laws" has the meaning assigned in Section 5.03(e).
"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.
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"Tax Returns" has the meaning assigned in Section 5.03(p).
"TRA" has the meaning assigned in Section 5.03(m).
"Treasury Stock" has the meaning assigned in Section 5.03(b).
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 rule of construction against the
draftsperson shall be applied in connection with the interpretation or
enforcement of this Agreement. When ever this Agreement shall require a party to
take an action, such requirement shall be deemed to constitute and undertaking
by such party to cause its Subsidiaries, and to use its reasonable best efforts
to cause its other affiliates, to take appropriate action in connection
therewith. References to "knowledge" of a person means knowledge after
reasonable diligence in the circumstances. References herein to "transaction
contemplated by this Agreement" shall be deemed to include a reference to the
Subsidiary Combination and the transactions contemplated by the Stock Option
Agreement.
ARTICLE II
The Merger
2.01 The Merger. At the Effective Time, the business combination contem
plated by this Agreement shall occur and in furtherance thereof:
(a) Structure and Effects of the Merger. The Company shall merge with
and into the Acquiror, and the separate corporate existence of the Company
shall thereupon cease (the "Merger"). The Acquiror shall be the surviving
corporation in the Merger (sometimes hereinafter referred to as the
"Surviving Corporation") and shall continue to be governed by the laws of
the State of Delaware, and the separate corporate existence of the Acquiror
with all its rights, privileges, immunities, powers and franchises shall
con tinue unaffected by the Merger. The Merger shall have the effects
specified in the DGCL and NJBCA.
(b) Certificate of Incorporation. The certificate of incorporation of
the Surviving Corporation shall be the certificate of incorporation of the
Acquiror as in effect immediately prior to the Effective Time, until duly
amended in accordance with the terms thereof and the DGCL.
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(c) By-Laws. The by-laws of the Surviving Corporation shall be the
by-laws of the Acquiror as in effect immediately prior to the Effective
Time, until duly amended in accordance with the terms thereof and the
certificate of incorporation referred to in section 2.01(b).
(d) Directors. The directors of the Surviving Corporation shall be the
directors of the Acquiror immediately prior to the Effective Time, and such
directors shall hold office until such time as their successors shall be
duly elected and qualified.
(e) Officers. The officers of the Surviving Corporation shall be the
officers of the Acquiror immediately prior to the Effective Time.
2.02 Reservation of Right to Revise Structure. At the Acquiror's
election, the Merger may alternatively be structured so that (i) the Company is
merged with and into or any other direct or indirect wholly owned subsidiary of
the Acquiror or (ii) any direct or indirect wholly owned subsidiary of the
Acquiror 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) prevent the parties from
obtaining the opinions of Malizia, Spidi, Sloane & Fisch, P.C. and Sullivan &
Cromwell referred to in Sections 7.02(d) and 7.03(d), 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. 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 DGCL and, in the
office of the Secretary of State of the State of New Jersey, of a certificate of
merger in accordance with Section 14A: 10-4.1 of the NJBCA, or at such later
date and time as may be set forth in such certificates. Subject to the terms of
this Agreement, the parties shall cause the Merger to become effective (1) on
the date that is the fifth full NYSE trading day (the "Closing Date") to occur
after the last of the conditions set forth in Article VII (other than conditions
relating solely to the delivery of documents dated the Effective Date) 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), or (2) on such date as the parties may agree in writing.
2.04 Integration. At the Effective Time, the parties hereto currently
intend to effectuate, or cause to be effectuated, the combination (the
"Subsidiary Combination") of the business of The Dime Savings Bank of New York,
FSB, with that of Lakeview Savings Bank, pursuant to a merger agreement
substantially in the form attached hereto as Exhibit D. The Company agrees to
cooperate with the Acquiror and to take all reasonable actions prior to or
following the Effective Time, including executing all requisite documentation,
as may be requested by the Acquiror to effect the Subsidiary Combination. The
Company also agrees to
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cooperate with the Acquiror and to take all reasonable restructuring steps for
regulatory purposes, as may be requested by the Acquiror to merge or otherwise
consolidate such legal entities to the extent desirable for regulatory or other
reasons.
ARTICLE III
Consideration
3.01 Consideration. (a) Subject to the terms and conditions of this
Agreement, at the Effective Time:
(1) Each share of Company Common Stock issued and outstanding
immediately prior to the Effective Time (other than shares held as treasury
stock of the Company and shares held directly or indirectly by Acquiror,
except shares held in a fiduciary capacity or in satisfaction of a debt
previously contracted) shall become and be converted into the right to
receive, at the election of each holder thereof, but subject to the
election and allocation procedures of Sections 3.01(b) and (c), the other
provisions of this Section 3.01 and possible adjustment as set forth in
Section 3.05, either:
(A) 0.9 (the "Exchange Ratio") of a share of Acquiror Common Stock (the
"Per Share Stock Consideration"), or
(B) $24.26 in cash (such sum, the "Per Share Cash Consideration" and
together with the Per Share Stock Consideration, the "Consideration");
provided, that the aggregate number of shares of Acquiror Common Stock that
shall be issued in the Merger (the "Stock Number") shall equal as nearly as
practicable the product of (a) sixty-five percent (65%), (b) the Exchange
Ratio, and (c) the number of shares of Company Common Stock outstanding as
of the Effective Time.
(2) Each share of the Company Common Stock that, immediately prior to
the Effective Time, is held as treasury stock of the Company or held
directly or indirectly by Acquiror, other than shares held in a fiduciary
capacity or in satisfaction of a debt previously contracted, shall by
virtue of the Merger be cancelled and retired and shall cease to exist, and
no exchange or payment shall be made therefor.
(b) Subject to the allocation procedures set forth in Section 3.01(c),
each record holder of Company Common Stock will be entitled (1) to elect to
receive Acquiror Common Stock for all or some of the shares of Company Common
Stock ("Stock Election
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Shares") held by such record holder, (2) to elect to receive cash for all or
some of the shares of Company Common Stock ("Cash Election Shares") held by such
record holder or (3) to indicate that such holder makes no such election for all
or some of the shares of Company Common Stock ("No-Election Shares") held by
such record holder. All such elections (each, an "Election") shall be made on a
form designed for that purpose by Acquiror and reasonably acceptable to Company
(an "Election Form"). Any shares of Company Common Stock with respect to which
the record holder thereof shall not, as of the Election Deadline (as defined
below), have properly submitted to the Exchange Agent (as defined below) a
properly completed Election Form shall be deemed to be No-Election Shares. A
record holder acting in different capacities or acting on behalf of other
persons in any way shall be entitled to submit an Election Form for each
capacity in which such record holder so acts with respect to each person for
which it so acts. The exchange agent (the "Exchange Agent") shall be a bank or
trust company selected by Acquiror and reasonably acceptable to the Company.
(c) Not later than the 15th day after the Election Deadline, Acquiror
shall cause the Exchange Agent to effect the allocation among the holders of
Company Common Stock of rights to receive the Per Share Stock Consideration or
the Per Share Cash Consideration in the Merger as follows:
(A) Number of Stock Elections Less Than Stock Number. If the number of
Stock Election Shares (on the basis of Election Forms received as of the
Election Deadline) is less than the Stock Number, then
(i) all Stock Election Shares shall be, as of the Effective Time,
converted into the right to receive the Per Share Stock Consideration,
(ii) the Exchange Agent shall allocate pro rata from among the No-
Election Shares a sufficient number of No-Election Shares such that the
sum of such number and the number of Stock Election Shares shall equal
as closely as practicable the Stock Number, and all such selected
shares ("Stock-Selected No- Election Shares") shall be, as of the
Effective Time, converted into the right to receive the Per Share Stock
Consideration, provided that if the sum of all No- Election Shares and
Stock Election Shares is less than the Stock Number, all No- Election
Shares shall be Stock-Selected No-Election Shares,
(iii) if the sum of Stock Election Shares and No-Election Shares
is less than the Stock Number, the Exchange Agent shall allocate pro
rata from among the Cash Election Shares a sufficient number of Cash
Election Shares such that the sum of such number and the number of
Stock Election Shares and Stock- Selected No-Election Shares shall
equal as closely as practicable the Stock Number, and all such selected
shares ("Converted Cash Election Shares") shall be, as of the Effective
Time, converted into the right to receive the Per Share Stock
Consideration, and
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(iv) the No-Election Shares and Cash Election Shares that are not
Stock- Selected No-Election Shares or Converted Cash Election Shares
(as the case may be) shall be, as of the Effective Time, converted into
the right to receive the Per Share Cash Consideration; or
(B) Number of Stock Elections Greater Than Stock Number. If the number
of Stock Election Shares (on the basis of Election Forms received by the
Election Deadline) is greater than the Stock Number, then
(i) all Cash Election Shares and No-Election Shares shall be, as
of the Effective Time, converted into the right to receive the Per
Share Cash Consideration,
(ii) the Exchange Agent shall allocate pro rata among the Stock
Election Shares a sufficient number of Cash Election Shares ("Converted
Stock Election Shares") such that the remainder of (x) Stock Election
Shares less (y) the Converted Stock Election Shares shall equal as
closely as practicable the Stock Number, and all Converted Stock
Election Shares shall be, as of the Effective Time, converted into the
right to receive the Per Share Cash Consideration, and
(iii) the Stock Election Shares that are not Converted Stock
Election Shares shall be, as of the Effective Time, converted into the
right to receive the Per Share Stock Consideration.
(C) Exclusion from Allocations in Sections 3.01(c)(A) and (B). For the
avoidance of doubt, cash paid by the Company for options as set forth in
Section 3.06 of this Agreement, at the election of the Company no later
than five days prior to the Closing Date, shall not be utilized in
determining any allocation as set forth in Sections 3.01(c)(A) and (B) of
this Agreement.
3.02 Rights as Shareholders; Stock Transfers. At the Effective Time,
holders of Company Common Stock shall cease to be, and shall have no rights as,
shareholders of the Company, other than the right to receive (a) any dividend or
other distribution with respect to such Company Common Stock with a record date
occurring prior to the 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 Common 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
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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) Not later than the 30th business day prior to the anticipated
Effective Date or such other date as the parties may agree in writing (the
"Mailing Date"), Acquiror shall mail an Election Form and a letter of
transmittal to each holder of record of Company Common Stock. To be
effective, an Election Form must be properly completed, signed and actually
received by the Exchange Agent not later than 5:00 p.m., New York City
time, on the 20th day after the Mailing Date (the "Election Deadline") and
accompanied by the certificates representing all the shares of Company
Common Stock ("Old Certificates") as to which the Election is being made
(or an appropriate guarantee of delivery by an eligible organization).
Acquiror shall have reasonable discretion, which it may delegate in whole
or in part to the Exchange Agent, to determine whether Election Forms have
been properly completed, signed and timely submitted or to disregard
defects in Election Forms; such decisions of Acquiror (or of the Exchange
Agent) shall be conclusive and binding. Neither Acquiror nor the Exchange
Agent shall be under any obligation to notify any person of any defect in
an Election Form submitted to the Exchange Agent. The Exchange Agent and
Acquiror shall also make all computations contemplated by Section 3.01
hereof, and, after consultation with the Company, all such computations
shall be conclusive and binding on the former holders of Company Common
Stock absent manifest error. Shares of Company Common Stock covered by an
Election Form which is not effective shall be treated as if no Election had
been made with respect to such shares of Company Common Stock. Once an
Election is made it may not be revoked.
(b) At or prior to the Effective Time, the Acquiror shall deposit, or
shall cause to be deposited, with the Exchange Agent, 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.
(c) The Surviving Corporation shall cause the New Certificates into
which shares of a shareholder's Company Common Stock are converted on the
Effective Date and/or any check in respect of any Per Share Cash
Consideration, fractional share interests or dividends or distributions
which such person shall be entitled to receive to be delivered to such
shareholder upon delivery (if not previously delivered) to the Exchange
Agent of
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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
shareholder; 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 that any such person shall be entitled to receive
pursuant to this Article III upon such delivery.
(d) Notwithstanding the foregoing, neither the Exchange Agent nor any
party hereto shall be liable to any former holder of Company Common Stock
for any amount properly delivered to a public official pursuant to
applicable abandoned property, escheat or similar laws.
(e) 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.
(f) Any portion of the Exchange Fund that remains unclaimed by the
shareholders of the Company for six months after the Effective Time shall
be returned to the Acquiror. Any shareholders 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, Per Share
Cash Consideration, cash in lieu of any fractional shares and unpaid
dividends and distributions on the Acquiror Common Stock deliverable in
respect of each share of Company Common Stock such shareholder holds as
determined pursuant to this Agreement, in each case, without any interest
thereon.
3.05 Anti-Dilution Adjustments. Should the Acquiror change (or
establish a record date for changing) the number of shares of Acquiror Common
Stock issued and outstand ing 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 Company Stock Options. Prior to the Effective Time, the Company
shall take all action necessary to cause each Company Stock Option, whether
vested or unvested,
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exercisable or unexercisable, without any action on the part of the holder to be
converted into the right to receive an amount in cash equal to the product of
(1) (A) the excess of $24.26 over (B) the exercise price per share subject to
such Company Stock Option and (2) the number of Shares subject to such Company
Stock Option payable to the holder of such Company Stock Option at any time
during the period commencing on the date hereof and ending immediately prior to
the Effective Time; provided, that the Company shall be entitled to withhold
from such cash payment any amounts required to be withheld by applicable law.
Each Company Stock Option to which this paragraph applies will be cancelled and
shall cease to exist by virtue of such payment.
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 (provided,
however, that the Company shall terminate the use of its trading account)
or, to the extent consistent therewith, fail to use reasonable efforts to
preserve intact their business organizations and assets and main tain 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, (1) issue, sell or otherwise permit to
become outstanding, or authorize the creation of, any additional shares of
Company Common Stock or any Rights with respect to Company Common Stock,
(2) permit any additional shares of Company Common Stock to become subject
to new grants of employee or director stock options, other Rights or
similar stock-based employee rights, (3) repurchase, redeem or otherwise
acquire, directly or indirectly, any shares of Company Common Stock, (4)
effect any recapitalization, reclassification, stock split or like change
in capitalization, or (5) enter into, or take any action to cause any
holders of Company Common Stock to enter into, any agreement, understanding
or commitment relating to the right of holders of Company Common Stock to
vote any shares of Company Common Stock, or cooperate in any formation of
any voting trust relating to such shares.
(c) Dividends, Etc. Make, declare, pay or set aside for payment any
dividend, other than (1) regular quarterly cash dividends on Company Common
Stock in an amount not to exceed $0.0625 per share paid with record and
payment dates consistent with past practice and (2) dividends from wholly
owned Subsidiaries to the Company or another
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wholly owned Subsidiary of the Company, as applicable (in each case, except
pursuant to Section 6.18, consistent with past practice), on or in respect
of, or declare or make any distribution on any shares of its capital stock
split, combine, redeem, reclassify, purchase or otherwise acquire, any
shares of its capital stock.
(d) Compensation; Employment Contracts; Etc. Enter into, amend, modify,
renew or terminate any employment, consulting, severance or similar
Contracts 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 (1) for normal general increases in
salary to individual employees in the ordinary course of business
consistent with past practice, (2) for other changes that are required by
applicable law, or (3) to satisfy Pre viously Disclosed Contracts existing
on the date hereof (as such Contracts are modified, as applicable, pursuant
to the agreements entered into pursuant to Recital E hereof).
(e) Benefit Plans. Enter into, establish, adopt, amend, modify or
terminate any pension, retirement, stock option, stock purchase, savings,
profit sharing, employee stock ownership, 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 current or former
directors, officers, employees, former employees of, or independent
contractors with respect to, the Company or its Subsidiaries (or any
dependent or beneficiary of any of the foregoing persons), including taking
any action that accelerates the vesting or exercisability of or the payment
or distribution with respect to, stock options, restricted stock or other
compensation or benefits payable thereunder, except, in each such case, (1)
as may be required by applicable law or (2) to satisfy Previously Disclosed
Contracts existing on the date hereof.
(f) Dispositions. Except as Previously Disclosed, sell, transfer,
mortgage, lease, encumber or otherwise dispose of or discontinue any
material portion of its assets, business or properties.
(g) Acquisitions. Except (1) pursuant to Previously Disclosed Contracts
existing on the date hereof, (2) for short-term investments for cash
management purposes, (3) pursuant to bona fide hedging transactions, or (4)
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, neither the Company nor any of its
Subsidiaries will acquire any assets, properties or deposits of another
person in any one transaction or a series of related transactions.
(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.
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(i) Accounting Methods. Implement or adopt any change in the accounting
principles, practices or methods used by the Company and its Subsidiaries,
other than as may be required by generally accepted accounting principles,
as concurred with by the Company's independent auditors.
(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) Risk Management. Except as required by applicable law or
regulation: (1) implement or adopt any material change in its interest rate
risk management and hedging policies, procedures or practices; (2) fail to
follow its existing policies or practices with respect to managing its
exposure to interest rate risk; or (3) fail to use commercially reasonable
means to avoid any material increase in its aggregate exposure to interest
rate risk.
(m) Indebtedness. Other than in the ordinary course of business
(including creation of deposit liabilities, entry into repurchase
agreements, purchases or sales of federal funds, Federal Home Loan Bank
advances, and sales of certificates of deposit) consistent with past
practice, (1) incur any indebtedness for borrowed money, (2) assume,
guarantee, endorse or otherwise as an accommodation become responsible for
the obligations of any other Person or (3) cancel, release, assign or
modify any material amount of indebtedness of any other Person.
(n) Loans. Make any loan or advance (1) other than in the ordinary
course of business consistent with lending policies as in effect on the
date hereof or (2) without prior consultation with Acquiror, other than
residential mortgage loans, in excess of $200,000; provided that in the
case of clause (1) the Company or any of its Subsidiaries may make any such
loan in the event (A) the Company or any of its Subsidiaries has delivered
to Acquiror or its designated representative a notice of its intention to
make such loan and such additional information as Acquiror or its
designated representative may reasonably require and (B) Acquiror or its
designated representative shall not have reasonably objected to such loan
by giving notice of such objection within three business days following the
delivery to Acquiror of the applicable notice of intention.
(o) Adverse Actions. (1) 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 (2) 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
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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.
(p) Tax Elections. Make any election with respect to Taxes.
(q) Commitments. Agree or commit to do, or enter into any Contract
regard ing, 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
Subsidi aries 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. (1) 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 (2) 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) Governing Documents. Amend the Acquiror Certificate or the by-laws
of the Acquiror in a manner that would be materially adverse to the holders
of the Acquiror Common Stock.
(d) Commitments. Agree or commit to do, or enter into any Contract
regard ing, anything that would be precluded by clauses (a) through (c)
without first obtaining the Company's consent.
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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 has delivered to the Company a
schedule (respec tively, its "Disclosure Schedule") setting forth, among other
things, items the disclosure of which is necessary or appropriate either (1) in
response to an express disclosure requirement contained in a provision hereof or
(2) 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.
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, (1) is not Previously Disclosed and (2)
individually or taken together with all other facts, events or circumstances
that should have been Previously Disclosed with respect to 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. 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:
(a) Organization, Standing and Authority. The Company is duly
organized, validly existing and in good standing under the laws of New
Jersey, 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 30,000,000 shares of Company Common
Stock, of which 4,818,478 shares are outstanding as of the date hereof. As
of the date hereof, 1,623,026 shares of Company Common Stock are held in
treasury by the Company (collectively, "Treasury Stock"). The outstanding
shares of Company Common Stock have been duly authorized and are validly
issued, 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, except as Previously Disclosed, there are no shares of Company
Common Stock authorized and reserved for issuance, the Company does not
have any Rights issued or outstanding with respect to Company Common Stock,
and the Company does not have any commitment to authorize, issue or sell
any Company Common Stock or Rights, except pursuant to this Agreement. The
number of shares of Company Common Stock which are issuable and reserved
for issuance upon exercise of Company Stock Options as
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of the date hereof and the exercise price of such Company Stock Options are
Previously Disclosed.
(c) Subsidiaries. (1)(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.
(2) The Company has Previously Disclosed a list of all equity
securities or similar interests of any person, or any interest in a
partnership or joint venture of any kind owned beneficially, directly or
indirectly by it and the Company has provided to the Acquiror all material
information or agreements pertaining to such interest.
(3) 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
requisite power and authority to carry on its business as it is now being
conducted and to own all its properties and assets; 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; and Lakeview Savings Bank has the requisite power and
authority to execute, deliver and perform its obligations as set forth in
the Form of Subsidiary Combination Agreement attached hereto as Exhibit D
and to consummate the transactions contemplated thereby.
(e) Corporate Authority and Action. (1) The Company has the requisite
corporate power and authority, and has taken all corporate action
necessary, in order (A) to authorize the execution and delivery of, and
performance of its obligations under, this Agreement and the Stock Option
Agreement and (B) subject only to receipt of the approval of the plan of
merger contained in this Agreement by the holders of a majority of the
outstanding shares of Company Common Stock, to consummate the Merger. This
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Agreement and the Stock Option Agreement each 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 and similar laws of general applicability
relating to or affecting creditors' rights or by general equity
principles).
(2) The Company has taken all action required to be taken by it in
order to exempt this Agreement, the Stock Option Agreement and the
transactions contemplated hereby from, and this Agreement, the Stock Option
Agreement and the transactions contemplated hereby each is exempt from, the
requirements of (A) any applicable "moratorium," "control share," "fair
price," or other antitakeover laws and regulation of any state
(collectively, "Takeover Laws"), including Section 14A-10A of the NJBCA and
(B) Articles XIV and XV of the Company Certificate.
(3) The Company has received the opinion of Sandler O'Neill & Partners,
L.P. & Company ("Sandler O'Neill"), dated the date of this Agreement, to
the effect that, as of the date of this Agreement, the Consideration to be
received in the Merger by the shareholders of the Company is fair to the
shareholders of the Company from a financial point of view.
(f) Regulatory Filings; No Defaults. (1) 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 and the other
transactions contemplated hereby, except for (A) the filing with the SEC of
the Proxy Statement in definitive form, (B) the filing of applications and
notices, as applicable, with the OTS, the NJBD and the FDIC with respect to
the Merger and the Subsidiary Combination and (C) the filing of a
certificate of merger with the Secretary of State of the State of Delaware
pursuant to the DGCL and the filing of a certificate of merger with the
Secretary of State of the State of New Jersey pursuant to the NJBCA. 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).
(2) 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 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
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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 approval under any such law, rule, regulation,
judgment, decree, order, governmental permit or license or Contract.
(g) SEC Documents; Financial Statements. (1) The Company's Annual
Reports on Form 10-K for the fiscal years ended July 31, 1996, 1997 and
1998, 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 July 31, 1998 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 shareholders' 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 shareholders' 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.
(2) Since July 31, 1998, 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.
(3) Since July 31, 1998, (A) the Company and its Subsidiaries have
conducted their respective businesses in the ordinary and usual course
consistent with past practice 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), has had or is reasonably likely to have a Material Adverse
Effect with respect to the Company.
(h) Litigation. Except as disclosed in the Company's SEC Documents
filed before the date hereof, no litigation, claim or other proceeding
before any court, arbitrator
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or Governmental Authority 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:
(1) conducts its business 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;
(2) has all permits, licenses, authorizations, orders and
approvals of, and has made all filings, applications and registrations
with, all Governmental Authorities required in order to permit them to
own or lease their properties and to conduct their businesses as
presently conducted; all such 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;
(3) has received, since December 31, 1997, 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
grounds for any of the foregoing exist), or (C) restrict ing or
disqualifying their activities (except for restrictions generally
imposed by rule, regulation or administrative policy on banking
organizations generally);
(4) is not aware of any pending or threatened investigation,
review or disciplinary proceedings by any Governmental Authority
against the Company, any of its Subsidiaries or any officer, director
or employee thereof;
(5) is not subject to any order or decree issued by, or a party to
any agreement or memorandum of understanding with, or a party to any
commitment letter or similar undertaking to, or subject to any order or
directive by, a recipient of any supervisory letter from or has adopted
any board resolutions at the request of any Governmental Authority, or
been advised by any Governmental Authority that it is considering
issuing or requesting any such agreement or other action or have
knowledge of any pending or threatened regulatory investigation; and
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<PAGE>
(6) since December 31, 1995, has timely filed all reports,
registrations and statements, together with any amendments required to
be made with respect thereto, that were required to be filed under any
applicable law, regulation or rule, with any applicable Governmental
authority (collectively, the "Company Reports"). As of their respective
dates, the Company Reports complied with the applicable statutes,
rules, regulations and orders enforced or promulgated by the regulatory
authority with which they were filed.
(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:
(1) 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
$250,000 for the remaining term of the Contract;
(2) 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);
(3) any Contract restricting the conduct of business by the
Company or any of its Subsidiaries;
(4) 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;
(5) any Contract with respect to the employment of, or payment to,
any present or former directors, officers, employees or consultants;
and
(6) any Contract involving the purchase or sale of assets with a
book value greater than $250,000 entered into since July 31, 1998.
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.
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<PAGE>
(k) IMC. The Company's Disclosure Schedule sets forth all material
facts known to the Company pertaining to the Company's investment in the
stock of and line of credit to Industry Mortgage Company.
(l) Properties. Except as disclosed 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. All buildings and all fixtures, equipment, and other
property and assets which are material to its business 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).
(m) Employee Benefit Plans. (1) The Company's Disclosure Schedule
contains a complete list of all bonus, vacation, deferred compensation,
commission- based, pension, retirement, profit-sharing, thrift, savings,
employee 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 current or former officers,
employees or directors or the beneficiaries or dependents of any of the
foregoing (collectively, the Company's "Compensation 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 Plan or to modify, change or terminate any
existing Compensation Plan in any material respect.
(2) With respect to each Compensation Plan, if applicable, the Company
has provided or made available to the Acquiror, true and complete copies of
existing: (A) Compensation 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; (I)
the most recent nondiscrimination tests performed under ERISA and the Code
(including 401(k) and 401(m) tests); and (J) documentation relating to
loans made to the Company's employee stock ownership plan and schedules
supporting all allocations made under such plan and compliance under
Sections 404 and 415 of the Code. Each Form 5500, actuarial report and
financial statement referred to in the
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<PAGE>
preceding sentence accurately reflects the contributions, liabilities and
funding levels of the applicable Compensation Plan.
(3) Each of the Compensation Plans has been administered and operated
in accordance with the terms thereof and with applicable law, including
ERISA, the Code and the Securities Act. Neither the Company, any of its
Subsidiaries nor any other person for whom indemnification by the Company
or any of its Subsidiaries could apply ("Indemnified Person") has incurred
or is likely to incur fiduciary liability under Part 4 of Title I of ERISA
with respect to any Compensation Plan. Each of the Compensation 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 with respect to "TRA" (as defined in Section 1 of IRS Revenue Procedure
93-39), and, except as Previously Disclosed, the Company is not aware of
any circumstances that would likely result in the revocation or denial of
any such favorable determination letter. None of the Company, any of its
Subsidiaries or an Indemnified Person has engaged in any transaction or
taken any action with respect to any Compensation Plan that has subjected,
or could, to the Company's knowledge, subject the Company or any of its
Subsidiaries or any Indemnified Person to a tax or penalty imposed by
either Section 4975 of the Code or Section 502 of ERISA. There is no
pending or, to the Company's knowledge, threatened litigation or
governmental audit, examination or investigation relating to the Company's
Compensation Plans.
(4) No liability under Title IV of ERISA (other than premiums to the
PBGC) has been or is reasonably expected to be incurred by the Company or
any of its Subsidi aries with respect to any "single-employer plan" (within
the meaning of Section 4001 (a)(15) of ERISA) or Multiemployer Plan
currently or formerly maintained or contributed to by any of them, or the
single-employer plan or Multiemployer Plan of any entity (an "ERISA
Affiliate") which is 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"). No notice of a "reportable event," within the meaning of
Section 4043 of ERISA for which the 30-day reporting requirement has not
been waived, has been required to be filed for any Pension Plan or any
ERISA Affiliate within the 12-month period ending on the date hereof. The
PBGC has not instituted proceedings to terminate any Pension Plan or ERISA
Affiliate Plan and, to the Company's knowledge, no condition exists that
presents a material risk that such proceedings will be instituted. To the
knowledge of the Company, there is no pending investigation or enforcement
action by the PBGC, the Department of Labor (the "DOL") or IRS or any other
governmental agency with respect to any Compensation Plan.
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<PAGE>
(5) All contributions, premiums and payments required to have been made
under the terms of any of the Compensation Plans or applicable law have
been timely made or reflected in the Company's SEC Documents. Neither any
of the Pension Plans nor ERISA Affiliate Plans 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, or which
can reasonably be expected to result in, the imposition of any lien on the
assets of the Com pany or any of its Subsidiaries with respect to, any
Pension Plan or any ERISA Affiliate Plan pursuant to Section 401(a)(29) or
Section 412(n) of the Code or pursuant to ERISA.
(6) Under each Pension Plan which is a single-employer plan, as of the
last day of the most recent plan year ended prior to the date hereof, the
actuarially determined present value of all "benefit liabilities," within
the meaning of Section 4001(a)(16) of ERISA (as determined on the basis of
the actuarial assumptions contained in the Plan's most recent actuarial
valuation), did not exceed the then current value of the assets of such
plan. Under each of the Pension Plans, to the Company's knowledge, there
has been no adverse change in the financial condition of any Pension Plan
(with respect to either assets or benefits) since July 31, 1997.
(7) No Compensation Plan provides benefits, including death or medical
benefits, with respect to any employees or former employees of the Company
or any of its Subsidiaries (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 Pension Plan,
(C) disability benefits under any Compensation Plan which is an employee
welfare benefit plan (as defined under Section 3(1) of ERISA) that have
been fully provided for by insurance or otherwise, or (D) benefits in the
nature of severance pay under any Compensation Plan. The Company and its
Subsidiaries may amend or terminate any Compensation Plan which provides
post-retirement or termination of employment benefits at any time without
incurring any liability thereunder. There has been no communication to
employees, former employees or their spouses, beneficiaries or dependents
by the Company or any of its Subsidiaries that promised or guaranteed such
employees retiree health or life insurance or other retiree death benefits
on a permanent basis or promised or guaranteed that any such benefits could
not be modified, eliminated or terminated.
(8) Neither the execution and delivery of this Agreement nor the
consumma tion of the transactions contemplated hereby including, without
limitation, as a result of any termination of employment prior to, at or
following the Effective Time, will (A) result in any increase in
compensation or any payment (including, without limitation, severance,
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
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<PAGE>
Compensation Plan or otherwise from the Company or any of its Subsidiaries,
(B) increase any benefits otherwise payable under any Compensation Plan, or
(C) result in any acceleration of the time of payment, funding or vesting
of any such benefit.
(9) Neither the Company nor any of its Subsidiaries maintains any
compensa tion plans, programs or arrangements the payments under which are
or would not reasonably be expected to be deductible as a result of the
limitations under Section 162(m) of the Code and the regulations issued
thereunder. None of the Company, the Surviving Corporation or any of their
respective Subsidiaries will be obligated to make a payment as a result,
directly or indirectly, of the transactions contemplated by this Agreement
that would not reasonably be expected to be deductible as a result of the
limitations under Section 162(m) of the Code and the regulations issued
thereunder.
(10) As a result, directly or indirectly, of the transactions
contemplated by this Agreement (including, without limitation, as a result
of any termination of employment prior to, at or following the Effective
Time), none of the Acquiror, the Company the Surviving Corporation, or any
of their respective Subsidiaries will be obligated to make a payment that
would be characterized as an "excess parachute payment" to an individual
who is a "disqualified individual" (as such terms are defined in Section
280G of the Code), without regard to whether such payment is reasonable
compensation for personal services performed or to be performed in the
future.
(11) The only persons receiving or entitled to receive benefits under
the Lakeview Savings Bank's Supplemental Retirement Plan for Senior
Officers (the "SERP") are Messrs. Kevin J. Coogan, Kevin M. McCloskey and
Anthony A. Gallo. Each of such persons has waived the receipt of any
benefits under the SERP prior to the date hereof and no benefits will be
payable to any person under the SERP.
(n) 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.
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<PAGE>
(o) Environmental Matters. To the Company's knowledge: (1) the Company
and each of its Subsidiaries has complied at all times with applicable
Environmental Laws; (2) 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; (3) neither the Company
nor any of its Subsidiaries would reasonably be expected to be ruled to be
the owner or operator under any Environmental Law of any property in which
it has currently or formerly held a Lien; (4) 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; (5) 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; (6) 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; (7) the Company, is not aware of any circumstances
or conditions involving the Company or any of its Subsidia ries, 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 (8)
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.
(p) Tax Matters. (1) 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; (2) all Tax Returns filed by the Company and its Sub
sidiaries are complete and accurate; (3) all Taxes shown to be due and
payable (without regard to whether such Taxes have been assessed) on such
Tax Returns (or, with respect to Tax Returns for which an extension has
been timely filed, will be required to be shown as due and payable when
such Tax Returns are filed) have been paid or adequate reserves have been
established for the payment of such Taxes; (4) no audit or examination or
refund litigation with respect to any such Tax Return is pending or, to the
Company's knowledge, has been threatened; (5) all deficiencies asserted or
assessments made as a result of any examination of a Tax Return of the
Company or any of its Subsidiaries have been paid in full; (6) no waivers
of statute of limitations have been given by or requested with respect to
any Taxes of the Company or its Subsidiaries; (7) the Company and its
Subsidiaries have never been a member of an affiliated, combined,
consolidated or
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<PAGE>
unitary Tax group for purposes of filing any Tax Return (other than a
consolidated group of which the Company was the common parent); (8) no
closing agreements, private letter rulings, technical advice memoranda or
similar agreement or rulings have been entered into or issued by any taxing
authority with respect to the Company or any of its Subsidi aries; (9) no
tax is required to be withheld pursuant to Section 1445 of the Code as a
result of the transfer contemplated by this Agreement; (10) the Company and
its Subsidi aries are not bound by any tax indemnity, tax sharing or tax
allocation agreement or arrangement; and (11) the Company and its
Subsidiaries have withheld and paid all Taxes that they are required to
withhold from compensation income of their employees.
(q) 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 (1) in accordance with prudent business
practices and all applicable laws, rules, regulations and regulatory
policies and (2) with counterparties believed to be financially responsible
at the time; and each of them consti tutes 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 Subsidia ries, nor to the Company's
knowledge any other party thereto, is in breach of any of its obligations
under any such agreement or arrangement.
(r) 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.
(s) 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.
(t) 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,
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excluding a fee to be paid by the Company to Sandler O'Neill in an amount
and on terms Previously Disclosed.
(u) Year 2000 Compliance. The Company and its Subsidiaries have taken
all reasonable steps necessary to address the software, accounting and
recordkeeping issues raised in order for the data processing systems used
in the business conducted by the Company and its Subsidiaries to be
substantially Year 2000 compliant on or before the end of 1999.
(v) Disclosure. The information Previously Disclosed or otherwise
provided to the Acquiror in connection with this Agreement does not contain
any untrue statement of a material fact or omit to state any material fact
necessary in order to make the state ments contained therein, in the light
of the circumstances in which they are being made, not misleading. The
copies of all documents furnished to the Acquiror hereunder are true and
complete.
5.04 Representations and Warranties of the Acquiror. 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. The Acquiror is duly
organized, validly existing and in good standing under the laws of
Delaware, and 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. (1) As of the date hereof, the authorized capital
stock of the Acquiror consists solely of 350,000,000 shares of Acquiror
Common Stock, of which 111,883,481 shares were outstanding as of November
30, 1998, 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 Previously Disclosed, 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 November 30, 1998, are Previously Disclosed in the Acquiror's
Disclosure Schedule.
(2) 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 and free of
preemptive rights, with no personal liability attaching to the ownership
thereof.
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<PAGE>
(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.
(d) Corporate Power. The Acquiror and each of its Significant
Subsidiaries has the requisite power and authority to carry on its business
as it is now being conducted and to own all its properties and assets; the
Acquiror has the corporate power and authority to execute, deliver and
perform its obligations under this Agreement and to consummate the
transactions contemplated hereby; and The Dime Savings Bank of New York,
FSB has the requisite power and authority to execute, deliver and perform
its obligations as set forth in the Form of Subsidiary Combination
Agreement attached hereto as Exhibit D and to consummate the transactions
contemplated thereby.
(e) Corporate Authority. The Acquiror has the requisite corporate power
and authority, and has taken all corporate action necessary in order to
authorize the execution and delivery of, and performance of its obligations
under, this Agreement and the Stock Option Agreement and to consummate the
Merger. This Agreement and the Stock Option Agreement each is a valid and
legally binding agreement of the Acquiror enforce able in accordance with
its terms (except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, and similar laws of general
applicability relating to or affecting creditors' rights or by general
equity principles).
(f) Regulatory Approvals; No Defaults. (1) 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 of this Agreement or to consummate the Merger except for
(A) the filing of applications and notices, as applicable, with the OTS,
the NJBD and the FDIC with respect to the Merger and the Subsidiary
Combination; (B) approval of the listing on the NYSE of the Acquiror Common
Stock to be issued in the Merger (and related Acquiror Rights); (C) the
filing and declaration of effectiveness of the Registration Statement; (D)
the filing of a certificate of merger with the Secretary of State of the
State of Delaware pursuant to the DGCL and the filing of a certificate of
merger with the Secretary of State of the State of New Jersey pursuant to
the NJBCA; and (E) 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).
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(2) 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. (1) The Acquiror's Annual
Reports on Form 10-K for the fiscal years ended December 31, 1995, 1996 and
1997, and all other reports, registration statements, definitive proxy
statements or information statements filed or to be filed by the Acquiror
subsequent to December 31, 1997 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 shareholders' 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 shareholders' 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.
(2) Since December 31, 1997, 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), has had or is reasonably likely to have a Material Adverse
Effect with respect to the Acquiror.
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(3) Since December 31, 1997, the Acquiror has carried on its business
in the ordinary course consistent with past practice except for actions
that are permitted pursuant to the proviso of Section 4.02(a).
(h) Litigation. Except as disclosed in the Acquiror's SEC Documents
filed before the date hereof, no litigation, claim or other proceeding
before any court, arbitrator or 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.
(i) Compliance with Laws. The Acquiror and each of its Subsidiaries:
(1) conducts its business 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;
(2) 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;
(3) has received, since December 31, 1997 no notification or
communication from any Governmental Authority (A) asserting that the
Acquiror or any of its Subsidi aries 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 (nor, to the Acquiror's knowledge, do any
grounds for any of the foregoing exist) or (C) restricting or disqualifying
their activities (except for restrictions generally imposed by rule,
regulation or administrative policy on banking organizations generally);
and
(4) is not subject to any order or decree issued by, or a party to any
agreement or memorandum of understanding with, or a party to any commitment
letter or similar undertaking to, or subject to any order or directive by,
a recipient of any supervisory letter from or has adopted any board
resolutions at the request of any Governmental Authority, or been advised
by any Governmental Authority that it is considering issuing or requesting
any such agreement or other action or have knowledge of any pending or
threatened regulatory investigation.
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(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 Credit Suisse First Boston.
(k) Disclosure. The information Previously Disclosed or otherwise
provided to the Company in connection with this Agreement does not contain
any untrue statement of a material fact or omit to state any material fact
necessary in order to make the state ments contained therein, 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.
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, 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 Shareholder Approvals. The Company agrees to take, in accordance
with applicable law, applicable stock exchange rules, the Company Certificate
and the Company ByLaws, all action necessary to convene an appropriate meeting
of shareholders 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 shareholders for consummation of the Merger and the transactions
contemplated hereby, and to solicit shareholder approval and adoption (including
any adjournment or postponement, the "Company Meeting"), as promptly as
practicable after the Registration Statement is declared effective. The Company
Board is recommending and, unless the Company Board, after having consulted with
and considered the written advice of outside counsel to the Company Board, has
determined in good faith that to do so would result in a failure by the
directors to discharge properly their fiduciary duties in accordance with New
Jersey law, the Company Board will continue to recommend that the Company's
shareholders approve this Agreement and take any other action required to permit
consummation of the transactions contemplated hereby.
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
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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 its 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 shareholders as may be reasonably requested in
connection with the foregoing.
(b) Each of the Company and the Acquiror agrees, as to itself and its
Subsidi aries, that none of the information supplied or to be supplied by it for
inclusion or incorporation by reference in (1) 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 (2) the
Proxy Statement and any amendment or supplement thereto will, at the date of
mailing to shareholders 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, is false or misleading with respect to any
material fact, or 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.
(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.
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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 for any release or statement that, in
the written opinion of outside counsel to the Company, is required by law or
regulation and as to which the Company has used its best efforts to discuss with
the Acquiror in advance, provided that such release or statement has not been
caused by, or is not the result of, a previous disclosure by or at the direction
of the Company or any of its representatives that was not permitted by this
Agreement).
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 informa tion, 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 (1) 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 (2) all other
information concern ing 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 represen tatives to keep
confidential, all information and documents obtained pursuant to this Section
6.05 unless such information (1) was already known to such party, (2) becomes
available to such party from other sources not known by such party to be bound
by a confidentiality obligation, (3) is disclosed with the prior written
approval of the party to which such information pertains or (4) 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.
(c) 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 agree ment 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
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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
contem plated 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 with respect to an Acquisition
Proposal, directly or through representatives, if (a) the Company Board, after
having consulted with and considered the written advice of outside counsel to
the Company Board, 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
New Jersey law and (b) the Company has received from such person a
confidentiality agreement in substantially the same form as entered into by
Acquiror. 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, 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 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. 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 E.
6.08 Takeover Laws. No party shall knowingly 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
neces sary 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
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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 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.
6.11 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 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
party appraised of the status of material matters relating to completion of the
transactions contemplated hereby. Copies of applications and correspondence with
such Governmental Authorities promptly shall be provided to the other party.
(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 share holders 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 Subsidia
ries to any third party or Governmental Authority.
6.12 Indemnification. (a) 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 applicable law, the
Company Certificate and the Company ByLaws 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).
(b) For a period of three years from the Effective Time, Acquiror shall
use its reasonable 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
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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 twice the current
amount spent 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 6.12(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 Acquirer's insur ance carrier for the purpose of obtaining such
insurance.
(c) Any Indemnified Party wishing to claim indemnification under Sec
tion 6.12(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 6.12(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), (1) the Acquiror or the Surviving Corporation shall have the
right to assume the defense thereof and the 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, (2) the Indemnified Parties will cooperate
in the defense of any such matter and (3) 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 consolida tion 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 6.12.
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6.13 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,
letters of KPMG Peat Marwick LLP, indepen dent auditors, dated (1) the date on
which the Registration Statement shall become effective and (2) a date shortly
prior to the Effective Date, and addressed to such other party, and such direc
tors and officers, in form and substance customary for "comfort" letters
delivered by independent accountants in accordance with Statement of Accounting
Standards No. 72. The Acquiror agrees to bear the expense of the letter referred
to in clause (2) above.
6.14 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 (1) 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 (2) would cause or
constitute a material breach of any of its representations, warranties,
covenants or agreements contained herein.
6.15 Advisory Board. The Acquiror agrees to establish, and to maintain
for a period of one year following the Effective Date, an advisory board for New
Jersey on which each person who was a director of the Company immediately prior
to the Effective Time shall be invited to serve. Each person serving on such
advisory board shall be eligible to receive a fee of $20,000 per annum.
6.16 Employee Benefits. Acquiror agrees that the employees of the
Company and its Subsidiaries who are employed by Acquiror or any of its
Subsidiaries after the Effective Date will be provided for at least one year
after the Effective Date with benefits under employee benefit plans during their
period of employment which are no less favorable in the aggregate than those
provided by Acquiror to similarly situated employees of Acquiror and its
Subsidiaries. Acquiror will cause each employee benefit plan of Acquiror and its
Subsidiaries in which employees of the Company and its Subsidiaries are eligible
to participate to take into account for purposes of eligibility and vesting
thereunder, but not for purposes of benefit accrual, the service of such
employees with the Company and its Subsidiaries as if such service were with
Acquiror and its Subsidiaries, to the same extent that such service was credited
under a comparable plan of the Company and its Subsidiaries. Employees of the
Company and its Subsidiaries shall not be subject to any waiting periods or
pre-existing condition limitations under the medical, dental and health plans of
the Company or its Subsidiaries in which they are eligible to participate.
Employees of the Company and its Subsidiaries will retain credit for unused sick
leave and vacation pay which has been accrued as of the Effective Time and for
purposes of determining the entitlement of such employees to sick leave and
vacation pay following the Effective Time, the service of such employees with
the Company and its Subsidiaries shall be treated as if such service was with
the Acquiror and its Subsidiaries.
The Company and its Subsidiaries will comply with applicable law and
the terms of the relevant Compensation Plan with respect to the voting of any
Company Common Stock
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held by any such Plan. The Company's Employee Stock Ownership Plan (the "ESOP")
may be terminated as of the Effective Date in accordance with the terms of the
ESOP (but not before such date); provided, however, that no distributions may be
made to participants in connection with such termination except as directed by
Acquiror. The Company will adopt amendments to the ESOP as are reasonably
requested by Acquiror in connection with the termination. Contribu tions to the
ESOP and to any profit sharing, defined benefit plan or other pension plan
maintained by the Company or any of its Subsidiaries will only be made after the
date of this Agreement to the extent approved in writing in advance by Acquiror.
6.17 Certain Accounting Policies of the Company. Upon the request of
the Acquiror, the Company shall, consistent with generally accepted accounting
principles and regu latory accounting principles, use its best efforts to record
any accounting adjustments required to conform the loan, litigation and other
reserve and real estate valuation policies and practices (including loan
classifications and levels of reserves) of the Company and its Subsidiaries so
as to reflect consistently on a mutually satisfactory basis the policies and
practices of the Acquiror; provided, however, that the Company shall not be
obligated to record any such accounting adjustments (1) unless and until the
Company shall be satisfied that the conditions to the obliga tion of the parties
to consummate the Merger will be satisfied or waived on or before the Closing
Date, and (2) in no event until the day prior to the Closing Date.
6.18 Special Dividend. Unless otherwise requested by the Acquiror,
immedi ately prior to the Effective Date, the Company shall cause Lakeview
Savings Bank, to pay in cash the maximum dividend (the "Special Dividend")
permitted to be paid to the Company under applicable law and regulation.
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) Shareholder Approval. This Agreement shall have been duly adopted
by the affirmative vote of the holders of the requisite number of the
outstanding shares of Company Common Stock entitled to vote thereon in
accordance with applicable law, the Company Articles 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 required for the consummation of the Merger
and the Subsidiary Combination, and for
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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 been such that the Acquiror would not reasonably have
entered into this Agreement had such condition or restriction been known as
of the date hereof.
(c) Third Party Consents. All consents or approvals of all persons,
other than Governmental Authorities, 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.
(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 as of
the date of this Agreement and as of the Effective Date as though made on
and as of the Effective Date
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(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 a senior
officer of Acquiror to such effect.
(b) Performance of Obligations of the Acquiror. The Acquiror 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
Company shall have received a certificate, dated the Effective Date, signed
on behalf of the Acquiror by a senior officer of the Acquiror to such
effect.
(c) Opinion of Counsel. The Company shall have received an opinion,
dated the Effective Date, of Sullivan & Cromwell, 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 Malizia, Spidi, Sloane & Fisch, P.C., counsel to the Company,
to the effect that (1) the Merger constitutes a "reorganization" within the
meaning of Section 368 of the Code and (2) no gain or loss will be
recognized by shareholders of the Company to the extent they receive shares
of Acquiror Common Stock as Consideration in exchange for shares of Company
Common Stock.
(e) Accountants' Letters. The Company shall have received the letters
referred to in Section 6.14 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 as of
the date of this Agree ment 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 Chief Financial Officer
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
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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) Payment of Special Dividend. Unless Acquiror otherwise requests,
Lakeview Savings Bank shall have paid the Special Dividend.
(d) Tax Opinion of the Acquiror's Counsel. The Acquiror shall have
received an opinion of Sullivan & Cromwell, 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.
(e) Accountants' Letters. The Acquiror and its directors and officers
who sign the Registration Statement shall have received the letters
referred to in Section 6.14 from KPMG Peat Marwick 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:
(1) a breach by the other party of any representation or warranty 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; or (2)
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 September 30, 1999, except to the extent that
the failure of the Merger then to be consum mated arises out of or results
from the 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 (1) 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 (2) any share holder
approval required by Section 6.02 herein is not obtained at the Company
Meeting.
(e) Failure to Recommend, Etc. By the Acquiror, if (1) prior to the
effective ness of the Registration Statement, the Company Board shall not
have recommended adoption and approval of this Agreement to the Company's
shareholders, (2) at any time prior to the receipt of the approval of the
Company's shareholders contemplated by Section 7.01(a), the Company Board
shall have 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 (3) the Company
Board participates in (or authorizes participation in) negotiations
regarding the substan tive terms of an Acquisition Proposal).
(f) Acceptance of Superior 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
Proposal 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 constitute a Superior Proposal;
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 (1) written notice of the Com pany's intention to terminate at
least five days prior to termination and (2) simultaneously with such
termination, the Fee referred to in Section 8.03.
(g) Stock Option Agreement, Shareholder Agreements and Compensation-
Related Agreements. By the Acquiror, if (1) the Stock Option Agreement
shall not have been executed and delivered by the Company by the close of
business on the day following the date of execution of this Agreement; (2)
shareholders of the Company holding the power to vote in the aggregate
approximately 30% of the outstanding shares of Company Common Stock, shall
have not executed and delivered Shareholder Agreements in the form of
Exhibit B hereto by the close of business on the second day following the
date of execution of this Agreement; or (3) the employees identified on
Exhibit C shall not have executed compensation-related agreements as
Previously Disclosed by the Company and the Acquiror by the close of
business on the second day following the date of execution of this
Agreement.
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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. If (1) the Acquiror terminates this Agreement
pursuant to Section 8.01(b) (at a time when the Company could not also do so
pursuant to Section 8.01(b)) or Section 8.01(e) or (2) the Company terminates
this Agreement pursuant to Section 8.01(f), then, within five business days of a
termination pursuant to Section 8.01(e) and simultaneously with a termination
pursuant to Section 8.01(f), the Company shall pay the Acquiror by wire transfer
in immediately available funds a fee of $400,000 (the "Fee").
ARTICLE IX
Miscellaneous
9.01 Survival. No representations, warranties, agreements and covenants
contained in this Agreement (1) other than those contained in Sections 6.05(b),
8.02, and 8.03 and in this Article IX, shall survive the termination of this
Agreement if this Agreement is terminated prior to the Effective Time, or (2)
other than those contained in Sections 6.12, 6.15 and in this Article IX, shall
survive the Effective Time.
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 modi fied at any time, by an agreement in writing executed by
both parties, except that, after approval of the Merger by the shareholders of
the Company, no amendment may be made which under applicable law requires
further approval of such shareholders without obtaining such required further
approval.
9.03 Counterparts. This Agreement may be executed in one or more
counter parts, 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 Sections 8.03 and 6.13, each party hereto
will bear all expenses incurred by it in connection with this Agreement and the
transactions contemplated hereby, except that printing and postage expenses and
SEC registration fees shall be shared equally between the Company and the
Acquiror.
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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:
Kevin J. Coogan
President and Chief Executive Officer
Lakeview Financial Corp.
989 McBride Avenue
West Paterson, NJ 07424
Facsimile: (973) 890-1846
With a copy to:
Samuel J. Malizia, Esq.
Malizia, Spidi, Sloane & Fisch, P.C.
One Franklin Square
1301 K Street, N.W.
Suite 700 East
Washington, D.C. 20005
Facsimile: (202) 434-4661
If to the Acquiror, to:
Chief Financial Officer
Dime Bancorp, Inc.
589 Fifth Avenue
3rd Floor
New York, New York 10017
Facsimile: (212) 326-6194
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With a copies to:
General Counsel
Dime Bancorp, Inc.
589 Fifth Avenue
3rd Floor
New York, New York 10017
Facsimile: (212) 326-6110
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, the Stock Option Agreement and the
Exhibits hereto) represents the entire understanding of the parties hereto with
reference to the transactions con templated hereby and this Agreement supersedes
any and all other oral or written agreements heretofore made. Except for Section
6.12, 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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EXHIBIT A
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FORM OF STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of December 16, 1998, between LAKEVIEW
FINANCIAL CORP., a New Jersey corporation ("Issuer"), and DIME BANCORP, INC., an
Delaware corporation ("Grantee").
RECITALS
A. Grantee and Issuer have entered into an Agreement and Plan of
Merger, dated as of December 15, 1998 (as amended, supplemented or replaced from
time to time, the "Merger Agreement") contemplating a business combination
between Issuer and Grantee (the "Merger"). Capitalized terms used in this
Agreement and not defined herein shall have the meanings assigned thereto in the
Merger Agreement.
B. As a condition and inducement to the willingness of Grantee to
execute (and pursue the transactions contemplated by) the Merger Agreement, and
in consideration therefor, Issuer has agreed to grant Grantee the Option (as
defined below).
C. The Board of Directors of Issuer has approved the Merger Agreement
and the transactions contemplated thereby (including the Merger and the grant of
the Option (as defined below)) prior to the date hereof.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements set forth herein and in the Merger Agreement, the
parties hereto agree as follows:
1. Grant of Option. Issuer hereby grants to Grantee an unconditional,
irrevocable option (the "Option") to purchase, subject to the terms hereof, up
to an aggregate of 958,877 fully paid and nonassessable shares of the common
stock, par value $2.00 per share, of Issuer ("Common Stock") at a price per
share equal to $21.50 (such price, as adjusted if applicable, the "Option
Price"); provided that in no event shall the number of shares for which this
Option is exercisable exceed 19.9% of the issued and outstanding shares of
Common Stock. The number of shares of Common Stock that may be received upon the
exercise of the Option and the Option Price are subject to adjustment as set
forth below.
2. Exercise of Option. (a) The Holder (as defined below) may exercise
the Option, in whole or part, if, but only if, both a Preliminary Event (as
defined below) and a Triggering Event (as defined below) occur before the
occurrence of an Exercise Termination Event (as defined below), provided that
the Holder shall have sent the written notice of such exercise (as provided in
Section 2(e)) within 90 days following the first Triggering Event to occur (or
such later period as provided in Section 10). Each
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of the following shall be an "Exercise Termination Event": (1) the Effective
Time of the Merger; (2) the termination of the Merger Agreement in accordance
with the provisions thereof, if such termination occurs prior to the occurrence
of an Preliminary Event and is not a termination by Grantee pursuant to Section
8.01(b) or (e) of the Merger Agreement; or (3) the passage of eighteen months
(or such longer period as provided in Section 10) after termination of the
Merger Agreement, if such termination is concurrent with or follows the
occurrence of an Preliminary Event or is a termination by Grantee pursuant to
Section 8.01(b) or (e) of the Merger Agreement. The term "Holder" shall mean the
holder or holders of the Option. Notwithstanding anything to the contrary
contained herein, (1) the Option may not be exercised at any time when Grantee
shall be in material breach of any of its representations, warranties, covenants
or agreements contained in the Merger Agreement such that Issuer shall be
entitled to terminate the Merger Agreement pursuant to Section 8.01(b) thereof
and (2) this Agreement shall automatically terminate upon the termination of the
Merger Agreement by Issuer pursuant to Section 8.01(b) thereof as a result of
the material breach by Grantee of its representations, warranties, covenants or
agreements contained in the Merger Agreement.
(b) The term "Preliminary Event" shall mean any of the following events
or transactions occurring on or after the date hereof:
(1) Issuer or any Issuer Subsidiary (as defined below), without having
received Grantee's prior written consent, shall have entered into an
agreement to engage in an Acquisition Transaction (as defined below) with
any person (the term "person" for purposes of this Agreement having the
meaning assigned thereto in Sections 3(a)(9) and 13(d)(3) of the Securities
Exchange Act of 1934, as amended, and the rules and regulations thereunder
(collectively, the "1934 Act")) other than Grantee or any Grantee
Subsidiary (as defined below) or the Board of Directors of Issuer (the
"Issuer Board") shall have recommended that the shareholders of Issuer
approve or accept any Acquisition Transaction other than the Merger. For
purposes of this Agreement:
(A) "Acquisition Transaction" shall mean (x) a merger or
consolidation, or any similar transaction, involving Issuer or an
Issuer Subsidiary (other than mergers, consolidations or similar
transactions (1) involving solely Issuer and/or one or more wholly
owned Subsidiaries of the Issuer or (2) in which the voting securities
of Issuer outstanding immediately prior thereto continue to represent
(by either remaining outstanding or being converted into the voting
securities of the surviving entity of any such transaction) at least
50% of the combined voting power of the
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voting securities of the Issuer or the surviving entity outstanding
immediately after the consummation of such merger, consolidation, or
similar transaction, provided that any such transaction is not entered
into in violation of the terms of the Merger Agreement), (y) a
purchase, lease or other acquisition of 25% or more of the assets of
Issuer or an Issuer Subsidiary, or (z) 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 Issuer or an Issuer Subsidiary;
(B) "Subsidiary" shall have the meaning set forth in Rule 12b-2
under the 1934 Act;
(C) "Significant Subsidiary" shall have the meaning set forth in
Rule 1-02 of Regulation S-X promulgated by the Securities and Exchange
Commission (the "SEC");
(D) "Issuer Subsidiary" shall mean any Significant Subsidiary of
Issuer; and
(E) "Grantee Subsidiary" shall mean any Subsidiary of Grantee.
(2) Any person other than the Grantee, any Grantee Subsidiary or the
Issuer's employee stock ownership plan shall have acquired beneficial
ownership or the right to acquire beneficial ownership of 15% or more of
the outstanding shares of Common Stock (the term "beneficial ownership" for
purposes of this Agreement having the meaning assigned thereto in Section
13(d) of the 1934 Act);
(3) The shareholders of Issuer shall have voted and failed to approve
the Merger Agreement or 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 the Merger Agreement or shall have
been cancelled prior to termination of the Merger Agreement if, prior to
such meeting (or if such meeting shall not have been held or shall have
been cancelled, prior to such termination), it shall have been publicly
announced that any person (other than Grantee or any Grantee Subsidiary)
shall have made, or disclosed an intention to make, a proposal to engage in
an Acquisition Transaction;
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(4) The Issuer Board shall have withdrawn or modified (or publicly
announced its intention to withdraw or modify) in any manner adverse to
Grantee its recommendation that the shareholders of Issuer approve the
transactions contemplated by the Merger Agreement, or Issuer or an Issuer
Subsidiary shall have authorized, recommended or proposed (or publicly
announced its intention to authorize, recommend or propose) an agreement to
engage in an Acquisition Transaction with any person other than Grantee or
a Grantee Subsidiary;
(5) Any person other than Grantee or any Grantee Subsidiary shall have
made a proposal to Issuer or its shareholders to engage in an Acquisition
Transaction and such proposal shall have been publicly announced;
(6) Any person other than Grantee or any Grantee Subsidiary 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 shareholders to approve the
issuance of shares to be offered in such an exchange or tender offer); or
(7) Issuer shall have willfully breached any covenant or obligation
contained in the Merger Agreement after any person other than Grantee or a
Grantee Subsidiary shall have made a proposal to Issuer or its shareholders
to engage in an Acquisition Transaction, and following such breach Grantee
would be entitled to terminate the Merger Agreement (whether immediately or
after the giving of notice or both).
(c) The term "Triggering Event" shall mean any of the following events
or transactions occurring after the date hereof:
(1) The acquisition by any person (other than Grantee or any Grantee
Subsidiary) of beneficial ownership of 25% or more of the then outstanding
Common Stock; or
(2) The occurrence of the Preliminary Event described in Section
2(b)(1), except that the percentage referred to in clause (z) of Section
2(b)(1)(A) shall be 25%.
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(d) Issuer shall notify Grantee promptly in writing of the occurrence
of any Preliminary Event or Triggering Event promptly after becoming aware of
the occurrence thereof, it being understood that the giving of such notice by
Issuer shall not be a condition to the right of the Holder to exercise the
Option.
(e) In the event the Holder is entitled to and wishes to exercise the
Option (or any portion thereof), it shall send to Issuer a written notice (the
date of which being herein referred to as the "Notice Date") specifying (1) the
total number of shares it will purchase pursuant to such exercise and (2) a
place and date not earlier than three business days nor later than 60 business
days from the Notice Date for the closing of such purchase (the "Closing Date");
provided that, if prior notification to or approval of the Office of Thrift
Supervision (the "OTS") or any other regulatory or antitrust agency is required
in connection with such purchase, the Holder shall promptly file the required
notice or application for approval, shall promptly notify Issuer of such filing,
and shall expeditiously process the same and the period of time that otherwise
would run pursuant to this sentence shall run instead from the date on which any
required notification periods have expired or been terminated or such approvals
have been obtained and any requisite waiting period or periods shall have
passed. Any exercise of the Option shall be deemed to occur on the Notice Date
relating thereto.
(f) At the closing referred to in Section 2(e), the Holder shall (1)
pay to Issuer the aggregate purchase price for the shares of Common Stock
purchased pursuant to the exercise of the Option in immediately available funds
by wire transfer to a bank account designated by Issuer and (2) present and
surrender this Agreement to Issuer at its principal executive offices; provided
that the failure or refusal of the Issuer to designate such a bank account or
accept surrender of this Agreement shall not preclude the Holder from exercising
the Option.
(g) At such closing, simultaneously with the delivery of immediately
available funds as provided in Section 2(f), Issuer shall deliver to the Holder
a certificate or certificates representing the number of shares of Common Stock
purchased by the Holder and, if the Option shall have been exercised in part
only, a new Option evidencing the rights of the Holder thereof to purchase the
balance of the shares purchasable hereunder.
(h) Certificates for Common Stock delivered at a closing hereunder may
be endorsed with a restrictive legend that shall read substantially as follows:
"The transfer of the shares represented by this certificate is subject
to certain provisions of an agreement, dated as of December _____,
1998, between the registered holder hereof and Issuer and to resale
restrictions
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<PAGE>
arising under the Securities Act of 1933, as amended. A copy of such
agreement is on file at the principal office of Issuer and will be
provided to the holder hereof without charge upon receipt by Issuer of
a written request therefor."
It is understood and agreed that: (1) the reference to the resale restrictions
of the Securities Act of 1933, as amended (the "1933 Act") in the above legend
shall be removed by delivery of substitute certificate(s) without such
reference, if the Holder shall have delivered to Issuer a copy of a letter from
the staff of the SEC, or an opinion of counsel, in form and substance reasonably
satisfactory to Issuer, to the effect that such legend is not required for
purposes of the 1933 Act, (2) the reference to the provisions of this Agreement
in the above legend shall be removed by delivery of substitute certificate(s)
without such reference, if the shares have been sold or transferred in
compliance with the provisions of this Agreement and under circumstances that do
not require the retention of such reference in the reasonable opinion of counsel
to the Holder and (3) the legend shall be removed in its entirety if the
conditions in the preceding clauses (1) and (2) are both satisfied. In addition,
such certificates shall bear any other legend as may be required by law.
(i) Upon the giving by the Holder to Issuer of the written notice of
exercise of the Option provided for under Section 2(e) and the tender of the
applicable purchase price in immediately available funds, the Holder shall be
deemed to be the holder of record of the shares of Common Stock issuable upon
such exercise, notwithstanding that the stock transfer books of Issuer shall
then be closed or that certificates representing such shares of Common Stock
shall not then be actually delivered to the Holder. Issuer shall pay all
expenses, and any and all United States federal, state and local taxes and other
charges that may be payable in connection with the initial preparation, issue
and delivery of stock certificates under this Section 2 in the name of the
Holder or its assignee, transferee or designee.
(j) In the event Issuer does not have sufficient authorized but
unissued shares of Common Stock to permit exercise of the Option, upon the
occurrence of a Triggering Event, for the full number of shares of Common Stock
for which the Holder elects to exercise the Option, the Issuer shall make a cash
payment to the Holder, at the Closing Date specified in, and in accordance with
the other provisions of, this Section 2, in an amount equal to the product of
(1) the difference between the Fair Market Value (as defined below) and the
Option Price and (2) the number of shares of Common Stock subject to the Option
for which the Holder provides notice to Issuer, pursuant to Section 2(e) of this
Agreement, of its election to exercise that the Issuer is unable to deliver due
to insufficient authorized shares. For purposes of this Section 2(j), Fair
Market Value shall mean the average of the "bid" and "ask" prices per share of
Common
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Stock reported by the Nasdaq National Market (as published in The Wall Street
Journal or, if not published therein, another authoritative source) for the ten
trading days immediately preceding the Closing Date. Upon the payment of the
cash amount calculated pursuant to this Section 2(j), the number of Option
Shares subject to the Option shall be reduced by the number of shares of Common
Stock for which each cash payment is made.
3. Certain Agreements of Issuer. Issuer agrees: (1) that it will not,
by charter amendment or through reorganization, consolidation, merger,
dissolution or sale of assets, or by any other voluntary act, avoid or seek to
avoid the observance or per formance of any of the covenants, stipulations or
conditions to be observed or performed hereunder by Issuer, (2) promptly to take
all action as may from time to time be required (including (x) complying with
all applicable premerger notification, reporting and waiting period requirements
specified in 15 U.S.C. Section 18a and regulations promulgated thereunder and
(y) in the event that, under the Home Owners' Loan Act, as amended (the "HOLA"),
or any state or other federal banking law, prior approval of or notice to the
OTS or to any state or other federal regulatory authority is necessary before
the Option may be exercised, cooperating fully with the Holder in preparing such
applications or notices and providing such information to the OTS or such state
or other federal regulatory authority as they may require) in order to permit
the Holder to exercise the Option and Issuer duly and effectively to issue
shares of Common Stock pursuant hereto and (3) promptly to take all action
provided in Sections 5 and 8 as and when required pursuant to such Sections.
4. Exchange of Option. This Agreement (and the Option granted hereby)
are exchangeable, without expense, at the option of the Holder, upon
presentation and surrender of this Agreement at the principal office of Issuer,
for other Agreements providing for Options of different denominations entitling
the Holder thereof to purchase, on the same terms and subject to the same
conditions as are set forth herein, in the aggre gate the same number of shares
of Common Stock purchasable hereunder. The terms "Agreement" and "Option" as
used herein include any Agreements and related Options for which this Agreement
(and the Option granted hereby) may be exchanged. Upon receipt by Issuer from
Holder of evidence reasonably satisfactory to it of the loss, theft, destruction
or mutilation of this Agreement, and (in the case of loss, theft, destruction or
mutilation) of reasonably satisfactory indemnification by Holder, and upon
surrender and cancellation of this Agreement, if mutilated, Issuer will execute
and deliver a new Agreement of like tenor and date in substitution for the lost,
stolen, destroyed or mutilated Agreement.
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5. Adjustments. In addition to the adjustment provided for in Section
1, the number of shares of Common Stock purchasable upon the exercise of the
Option and the Option Price shall be subject to adjustment from time to time as
follows:
(a) In the event of any change in, or distributions in respect of, the
Common Stock by reason of stock dividends, split-ups, mergers,
recapitalizations, combinations, subdivisions, conversions, exchanges of
shares or the like, the type and number of shares of Common Stock
purchasable upon exercise hereof shall be appropriately adjusted and proper
provision shall be made so that, in the event that any additional shares of
Common Stock are to be issued or otherwise become outstanding as a result
of any such change (other than pursuant to an exercise of the Option), the
number of shares of Common Stock that remain subject to the Option shall be
increased so that, after such issuance and together with shares of Common
Stock previously issued pursuant to the exercise of the Option (as adjusted
on account of any of the foregoing changes in the Common Stock), it equals
19.9% of the number of shares of Common Stock then issued and outstanding;
and
(b) Whenever the number of shares of Common Stock purchasable upon
exercise hereof is adjusted as provided in Section 5(a), the Option Price
shall be adjusted by multiplying the Option Price immediately prior to the
adjustment by a fraction, the numerator of which shall be equal to the
number of shares of Common Stock purchasable prior to the adjustment and
the denominator of which shall be equal to the number of shares of Common
Stock purchasable after the adjustment.
6. Registration under Securities Laws. Upon the occurrence of the first
Triggering Event that occurs prior to an Exercise Termination Event, Issuer
shall, at the request of Grantee delivered within twelve months (or such later
period as provided in Section 10) of such Triggering Event (whether on its own
behalf or on behalf of any subsequent Holder of this Option (or part thereof) or
any of the shares of Common Stock issued pursuant hereto), promptly prepare,
file and keep current a registration statement under the 1933 Act covering any
shares issued and issuable pursuant to this Option and shall use its reasonable
best efforts to cause such registration statement to become effective and remain
current in order to permit the sale or other disposition of any shares of Common
Stock issued upon total or partial exercise of this Option ("Option Shares") in
accordance with any plan of disposition requested by Grantee (it being
understood and agreed that Grantee shall use its reasonable efforts to ensure
that any such sale or disposition shall be effected on a widely distributed
basis so that upon consummation thereof, no purchaser or transferee shall
beneficially own more than 2% of the Common Stock then outstanding). Issuer will
use its reasonable best efforts to cause such
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registration statement promptly to become effective and then to remain effective
for such period not in excess of 180 days from the day such registration
statement first becomes effective or such shorter time as may be reasonably
necessary to effect such sales or other dispositions. Grantee shall have the
right to demand no more than two such registrations. The Issuer shall bear the
costs of such registrations (including, but not limited to, Issuer's attorneys'
fees, printing costs and filing fees), except for underwriting discounts or
commissions, brokers' fees and the fees and disbursements of Grantee's counsel
related thereto. The foregoing notwithstanding, if, at the time of any request
by Grantee for registration of Option Shares as provided above, Issuer is in
registration with respect to an underwritten public offering by Issuer of shares
of Common Stock, and if in the good faith judgment of the managing underwriter
or managing underwriters, or, if none, the sole underwriter or underwriters, of
such offering the offer and sale of the Option Shares would interfere with the
successful marketing of the shares of Common Stock offered by Issuer, the number
of Option Shares otherwise to be covered in the registration statement
contemplated hereby may be reduced; provided that, after any such required
reduction, the number of Option Shares to be included in such offering for the
account of the Holder shall constitute at least 25% of the total number of
shares to be sold by the Holder and Issuer in the aggregate; and provided,
further, that, if such reduction occurs, then Issuer shall file a registration
statement for the balance as promptly as practicable thereafter as to which no
reduction pursuant to this Section 6 shall be permitted or occur and the Holder
shall thereafter be entitled to one additional registration and the twelve month
period referred to in the first sentence of this section shall be increased to
twenty-four months. Each such Holder shall provide all information reasonably
requested by Issuer for inclusion in any registration statement to be filed
hereunder. If requested by any such Holder in connection with such registration,
Issuer shall become a party to any underwriting agreement relating to the sale
of such shares, but only to the extent of obligating itself in respect of
representations, warranties, indemnities and other agreements customarily
included in such underwriting agreements for Issuer. Upon receiving any request
under this Section 6 from any Holder, Issuer agrees to send a copy thereof to
any other person known to Issuer to be entitled to registration rights under
this Section 6, in each case by promptly mailing the same, postage prepaid, to
the address of record of the persons entitled to receive such copies.
Notwithstanding anything to the contrary contained herein, in no event shall the
number of registrations that Issuer is obligated to effect be increased by
reason of the fact that there shall be more than one Holder as a result of any
assignment or division of this Agreement.
7. Repurchase. (a) At any time after the occurrence of a Repurchase
Event (as defined below) (1) at the request of the Holder, delivered prior to an
Exercise Termination Event (or such later period as provided in Section 10),
Issuer (or any successor thereto) shall repurchase the Option from the Holder at
a price (the "Option Repurchase Price") equal to (A) the amount by which the
market/offer price (as defined
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below) exceeds the Option Price (B) multiplied by the number of shares for which
this Option may then be exercised and (2) at the request of the owner of Option
Shares from time to time (the "Owner"), delivered prior to an Exercise
Termination Event (or such later period as provided in Section 10), Issuer (or
any successor thereto) shall repurchase such number of the Option Shares from
the Owner as the Owner shall designate at a price (the "Option Share Repurchase
Price") equal to the market/offer price multiplied by the number of Option
Shares so designated. The term "market/offer price" shall mean the highest of
(1) the highest price per share of Common Stock paid by any person that acquires
beneficial ownership of 50% or more of the then outstanding Common Stock, (2)
the price per share of Common Stock to be paid by any third party pursuant to an
agreement with Issuer entered into after the date hereof and prior to the date
the Holder gives notice of the required repurchase of this Option or the Owner
gives notice of the required repurchase of Option Shares, as the case may be,
(3) the highest last sale price for shares of Common Stock within the six-month
period immediately preceding the date the Holder gives notice of the required
repurchase of this Option or the Owner gives notice of the required repurchase
of Option Shares, as the case may be, or (4) in the event of a sale of all or
any substantial part of Issuer's or Issuer's Subsidiary's assets or deposits,
the sum of the net price paid in such sale for such assets or deposits and the
current market value of the remaining net assets of Issuer or Issuer Subsidiary
as determined by a nationally recognized investment banking firm selected by the
Holder or the Owner, as the case may be, and reasonably acceptable to Issuer,
divided by the number of shares of Common Stock of Issuer outstanding at the
time of such sale on a fully-diluted basis. In determining the market/offer
price, the value of consideration other than cash shall be determined by a
nationally recognized investment banking firm selected by the Holder or Owner,
as the case may be, and reasonably acceptable to Issuer. Notwithstanding
anything to the contrary herein, neither the Option Repurchase Price nor the
Option Share Repurchase Price in the aggregate shall be less than the Surrender
Price (as defined in Section 11).
(b) The Holder and the Owner, as the case may be, may exercise its
right to require Issuer to repurchase the Option and any Option Shares pursuant
to this Section 7 by surrendering for such purpose to Issuer, at its principal
office, a copy of this Agreement or certificates for Option Shares, as
applicable, accompanied by a written notice or notices stating that the Holder
or the Owner, as the case may be, elects to require Issuer to repurchase this
Option and/or the Option Shares in accordance with the provisions of this
Section 7. As promptly as practicable, and in any event within ten business days
after the surrender of the Option and/or certificates representing Option Shares
and the receipt of such notice or notices relating thereto, Issuer shall deliver
or cause to be delivered to the Holder the Option Repurchase Price and/or to the
Owner the Option Share Repurchase Price therefor or the portion thereof that
Issuer is not then prohibited under applicable law, regulation and
administrative policy from so delivering.
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(c) To the extent that Issuer is prohibited under applicable law or
regulation, or as a consequence of administrative policy, from repurchasing the
Option and/or the Option Shares in full, Issuer shall immediately so notify the
Holder and/or the Owner and thereafter deliver or cause to be delivered, from
time to time, to the Holder and/or the Owner, as appropriate, the portion of the
Option Repurchase Price and the Option Share Repurchase Price, respectively,
that it is no longer prohibited from delivering, within five business days after
the date on which Issuer is no longer so prohibited; provided that, if Issuer at
any time after delivery of a notice of repurchase pursuant to Section 7(b) is
prohibited under applicable law or regulation, or as a consequence of
administrative policy, from delivering to the Holder and/or the Owner, as
appropriate, the Option Repurchase Price and the Option Share Repurchase Price,
respectively, in full (and Issuer hereby undertakes to use its reasonable best
efforts to obtain all required regulatory and legal approvals and to file any
required notices as promptly as practicable in order to accomplish such
repurchase), the Holder or Owner may revoke its notice of repurchase of the
Option and/or the Option Shares whether in whole or to the extent of the
prohibition, whereupon, in the latter case, Issuer shall promptly (1) deliver to
the Holder and/or the Owner, as appropriate, that portion of the Option
Repurchase Price and/or the Option Share Repurchase Price that Issuer is not
prohibited from delivering and (2) deliver, as appropriate, either (A) to the
Holder, a new Agreement evidencing the right of the Holder to purchase that
number of shares of Common Stock obtained by multiplying the number of shares of
Common Stock for which the surrendered Agreement was exercisable at the time of
delivery of the notice of repurchase by a fraction, the numerator of which is
the Option Repurchase Price less the portion thereof theretofore delivered to
the Holder and the denominator of which is the Option Repurchase Price, and/or
(B) to the Owner, a certificate for the Option Shares it is then so prohibited
from repurchasing. If an Exercise Termination Event shall have occurred prior to
the date of the notice by Issuer described in the first sentence of this Section
7(c), or shall be scheduled to occur at any time before the expiration of a
period ending on the thirtieth day after such date, the Holder shall nonetheless
have the right to exercise the Option until the expiration of such 30-day
period.
(d) For purposes of this Section 7, a "Repurchase Event" shall be
deemed to have occurred upon the occurrence of any of the following events or
transactions after the date hereof:
(1) The acquisition by any person (other than Grantee or any Grantee
Subsidiary) of beneficial ownership of 50% or more of the then outstanding
Common Stock; or
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(2) The consummation of any Acquisition Transaction described in
Section 2(b) (1) hereof, except that the percentage referred to in clause
(z) of the definition of Acquisition Transaction shall be 50%.
8. Substitute Option. (a) In the event that prior to an Exercise
Termination Event, Issuer shall enter into an agreement (1) to consolidate with
or merge into any person, other than Grantee or a Grantee Subsidiary, or engage
in a plan of exchange with any person, other than Grantee or a Grantee
Subsidiary and Issuer shall not be the continuing or surviving corporation of
such consolidation or merger or the acquirer in such plan of exchange, (2) to
permit any person, other than Grantee or a Grantee Subsidiary, to merge into
Issuer or be acquired by Issuer in a plan of exchange and Issuer shall be the
continuing or surviving or acquiring corporation, but, in connection with such
merger or plan of exchange, the then outstanding shares of Common Stock shall be
changed into or exchanged for stock or other securities of any other person or
cash or any other property or the then outstanding shares of Common Stock shall
after such merger or plan of exchange represent less than 50% of the outstanding
shares and share equivalents of the merged or acquiring company, or (3) to sell
or otherwise transfer all or substantially all of its or any Issuer Subsidiary's
assets to any person, other than Grantee or a Grantee Subsidiary, then, and in
each such case, the agreement governing such transaction shall make proper
provision so that the Option shall, upon the consummation of any such
transaction and upon the terms and conditions set forth herein, be converted
into, or exchanged for, an option (the "Substitute Option"), at the election of
the Holder, of either (A) the Acquiring Corporation (as defined below) or (B)
any person that controls the Acquiring Corporation.
(b) The following terms have the meanings indicated:
(1) "Acquiring Corporation" shall mean (A) the continuing or surviving
person of a consolidation or merger with Issuer (if other than Issuer), (B)
the acquiring person in a plan of exchange in which Issuer is acquired, (C)
the Issuer in a merger or plan of exchange in which Issuer is the
continuing or surviving or acquiring person and (D) the transferee of all
or substantially all of Issuer's assets (or the assets of an Issuer
Subsidiary).
(2) "Substitute Common Stock" shall mean the common stock issued by the
issuer of the Substitute Option upon exercise of the Substitute Option.
(3) "Assigned Value" shall mean the market/offer price, as defined in
Section 7(a).
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(4) "Average Price" shall mean the average closing or last sale price
(as the case may be) of a share of the Substitute Common Stock for one year
immediately preceding the consolidation, merger or sale in question, but in
no event higher than the closing price of the shares of Substitute Common
Stock on the day preceding such consolidation, merger or sale; provided
that, if Issuer is the issuer of the Substitute Option, the Average Price
shall be computed with respect to a share of common stock issued by the
person merging into Issuer or by any company which controls or is
controlled by such person, as the Holder may elect.
(c) The Substitute Option shall have the same terms as the Option;
provided that, if the terms of the Substitute Option cannot, for legal reasons,
be the same as the Option, such terms shall be as similar as possible and in no
event less advantageous to the Holder. The issuer of the Substitute Option shall
also enter into an agreement with the then Holder or Holders of the Substitute
Option in substantially the same form as this Agreement (after giving effect for
such purpose to the provisions of Section 9), which agreement shall be
applicable to the Substitute Option.
(d) The Substitute Option shall be exercisable for such number of
shares of Substitute Common Stock as is equal to the Assigned Value multiplied
by the number of shares of Common Stock for which the Option was exercisable
immediately prior to the event described in the first sentence of Section 8(a),
divided by the Average Price. The exercise price of the Substitute Option per
share of Substitute Common Stock shall then be equal to the Option Price
multiplied by a fraction, the numerator of which shall be the number of shares
of Common Stock for which the Option was exercisable immediately prior to the
event described in the first sentence of Section 8(a) and the denominator of
which shall be the number of shares of Substitute Common Stock for which the
Substitute Option is exercisable.
(e) In no event, pursuant to any of the foregoing paragraphs, shall the
Substitute Option be exercisable for more than 19.9% of the shares of Substitute
Common Stock outstanding prior to exercise of the Substitute Option. In the
event that the Substitute Option would be exercisable for more than 19.9% of the
shares of Substitute Common Stock outstanding prior to exercise but for this
Section 8(e), the issuer of the Substitute Option (the "Substitute Option
Issuer") shall make a cash payment to Holder equal to the excess of (1) the
value of the Substitute Option without giving effect to the limitation in this
Section 8(e) over (2) the value of the Substitute Option after giving effect to
the limitation in this Section 8(e). This difference in value shall be
determined by a nationally recognized investment banking firm selected by the
Holder and reasonably acceptable to Issuer.
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(f) Issuer shall not enter into any transaction described in Section
8(a) unless the Acquiring Corporation and any person that controls the Acquiring
Corporation assume in writing all the obligations of Issuer hereunder.
9. Repurchase of Substitute Option. (a) At the request of the holder of
the Substitute Option (the "Substitute Option Holder"), the Substitute Option
Issuer shall repurchase the Substitute Option from the Substitute Option Holder
at a price (the "Substitute Option Repurchase Price") equal to (x) the amount by
which the Highest Closing Price (as defined below) exceeds the exercise price of
the Substitute Option (y) multiplied by the number of shares of Substitute
Common Stock for which the Substitute Option may then be exercised, and at the
request of the owner (the "Substitute Share Owner") of shares of Substitute
Common Stock (the "Substitute Shares"), the Substitute Option Issuer shall
repurchase the Substitute Shares at a price (the "Substitute Share Repurchase
Price") equal to the Highest Closing Price multiplied by the number of
Substitute Shares so designated. The term "Highest Closing Price" shall mean the
highest closing or last sale price (as the case may be) for shares of Substitute
Common Stock within the six-month period immediately preceding the date the
Substitute Option Holder gives notice of the required repurchase of the
Substitute Option or the Substitute Share Owner gives notice of the required
repurchase of the Substitute Shares, as applicable.
(b) The Substitute Option Holder and the Substitute Share Owner, as the
case may be, may exercise its respective rights to require the Substitute Option
Issuer to repurchase the Substitute Option and the Substitute Shares pursuant to
this Section 9 by surrendering for such purpose to the Substitute Option Issuer,
at its principal office, the agreement for such Substitute Option (or, in the
absence of such an agreement, a copy of this Agreement) and/or certificates for
Substitute Shares accompanied by a written notice or notices stating that the
Substitute Option Holder or the Substitute Share Owner, as the case may be,
elects to require the Substitute Option Issuer to repurchase the Substitute
Option and/or the Substitute Shares in accordance with the provisions of this
Section 9. As promptly as practicable and in any event within five business days
after the surrender of the Substitute Option and/or certificates representing
Substitute Shares and the receipt of such notice or notices relating thereto,
the Substitute Option Issuer shall deliver or cause to be delivered to the
Substitute Option Holder the Substitute Option Repurchase Price and/or to the
Substitute Share Owner the Substitute Share Repurchase Price therefor or the
portion thereof which the Substitute Option Issuer is not then prohibited under
applicable law, regulation and administrative policy from so delivering.
(c) To the extent that the Substitute Option Issuer is prohibited under
applicable law or regulation, or as a consequence of administrative policy, from
repurchasing the Substitute Option and/or the Substitute Shares in part or in
full, the
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Substitute Option Issuer shall immediately so notify the Substitute Option
Holder and/or the Substitute Share Owner and thereafter deliver or cause to be
delivered, from time to time, to the Substitute Option Holder and/or the
Substitute Share Owner, as appropriate, the portion of the Substitute Option
Repurchase Price and/or the Substitute Share Repurchase Price, respectively,
which it is no longer prohibited from delivering, within five business days
after the date on which the Substitute Option Issuer is no longer so prohibited;
provided that, if the Substitute Option Issuer is at any time after delivery of
a notice of repurchase pursuant to Section 9(b) prohibited under applicable law
or regulation, or as a consequence of administrative policy, from delivering to
the Substitute Option Holder and/or the Substitute Share Owner, as appropriate,
the Substitute Option Repurchase Price and the Substitute Share Repurchase
Price, respectively, in full (and the Substitute Option Issuer shall use its
reasonable best efforts to receive all required regulatory and legal approvals
as promptly as practicable in order to accomplish such repurchase), the
Substitute Option Holder and/or Substitute Share Owner may revoke its notice of
repurchase of the Substitute Option or the Substitute Shares either in whole or
to the extent of prohibition, whereupon, in the latter case, the Substitute
Option Issuer shall promptly (1) deliver to the Substitute Option Holder or
Substitute Share Owner, as appropriate, that portion of the Substitute Option
Repurchase Price or the Substitute Share Repurchase Price that the Substitute
Option Issuer is not prohibited from delivering and (2) deliver, as appropriate,
either (A) to the Substitute Option Holder, a new Substitute Option evidencing
the right of the Substitute Option Holder to purchase that number of shares of
the Substitute Common Stock obtained by multiplying the number of shares of the
Substitute Common Stock for which the surrendered Substitute Option was
exercisable at the time of delivery of the notice of repurchase by a fraction,
the numerator of which is the Substitute Option Repurchase Price less the
portion thereof theretofore delivered to the Substitute Option Holder and the
denominator of which is the Substitute Option Repurchase Price, and/or (B) to
the Substitute Share Owner, a certificate for the Substitute Option Shares it is
then so prohibited from repurchasing. If an Exercise Termination Event shall
have occurred prior to the date of the notice by the Substitute Option Issuer
described in the first sentence of this Section 9(c), or shall be scheduled to
occur at any time before the expiration of a period ending on the thirtieth day
after such date, the Substitute Option Holder shall nevertheless have the right
to exercise the Substitute Option until the expiration of such 30-day period.
10. Extension of Time Periods. The time periods for exercise of certain
rights under Sections 2, 6, 7 and 9 shall be extended: (a) to the extent
necessary to obtain all regulatory approvals for the exercise of such rights
(for so long as the Holder, Owner, Substitute Option Holder or Substitute Share
Owner, as the case may be, is using commercially reasonable efforts to obtain
such regulatory approvals), and for the expiration of all statutory waiting
periods, (b) during the pendency of any temporary restraining order, injunction
or other legal bar to exercise of such rights and (c) to the
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extent necessary to avoid liability under Section 16(b) of the 1934 Act by
reason of such exercise.
11. Surrender Value. (a) Grantee in its sole discretion may, at any
time during which Issuer would be required to repurchase the Option or any
Option Shares pursuant to Section 7, surrender the Option (together with any
Option Shares issued to and then owned by the Grantee or any affiliate thereof)
to Issuer in exchange for a cash payment equal to the Surrender Price (as
defined herein); provided, however, that Grantee may not exercise its rights
pursuant to this Section 11 if Issuer has previously repurchased the Option (or
any portion thereof) or any Option Shares pursuant to Section 7. The "Surrender
Price" shall be equal to the sum of (1) $5,500,000 and (2) if applicable, the
aggregate purchase price previously paid pursuant hereto by Grantee with respect
to any Option Shares, minus the sum of (3) if applicable, the amount of the net
cash profit, if any, received by Grantee pursuant to the arm's-length sale of
Option Shares (or any other securities into which such Option Shares were
converted or exchanged) to any party not affiliated with Grantee, and (4) the
amount of any Fee paid pursuant to the Merger Agreement.
(b) Grantee may exercise its right to surrender the Option and any
Option Shares pursuant to this Section 11 by surrendering for such purchase to
Issuer, at its principal office, a copy of this Agreement, together with
certificates for Option Shares, if any, accompanied by a written notice stating
(1) that Grantee elects to surrender the Option and Option Shares, if any, in
accordance with the provisions of this Section 11 and (2) the Surrender Price.
Within two business days after the surrender of the Option and the Option
Shares, if applicable, Issuer shall deliver or cause to be delivered to Grantee
the Surrender Price.
(c) To the extent that the Issuer is prohibited under applicable law or
regulation from paying the Surrender Price to Grantee in full, Issuer shall
immediately so notify Grantee and thereafter deliver, or cause to be delivered,
from time to time, to Grantee, that portion of the Surrender Price that Issuer
is not or no longer prohibited from paying, within two business days after the
date on which Issuer is no longer so prohibited; provided, however, that if
Issuer at any time after delivery of a notice of Surrender pursuant to Section
11(b) is prohibited under applicable law or regulation from paying to Grantee
the Surrender Price in full, (1) Issuer shall (A) use its best efforts to obtain
all required regulatory and legal approvals and to file any required notices as
promptly as practicable in order to make such payments, (B) within two business
days of the submission or receipt of any documents relating to any such
regulatory and legal approvals, provide Grantee with copies of the same, and (C)
keep Grantee advised of both the status of any such request for regulatory and
legal approvals and any discussions with
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any relevant regulatory or other third party reasonably related to the same, and
(2) Grantee may revoke such notice of surrender by delivery of a notice of
revocation, the Exercise Termination Event shall be extended to a date six
months from the date on which the Exercise Termination Event would have occurred
if not for the provisions of this Section 11(c) (during which period Grantee may
exercise any of its rights hereunder, including any and all rights pursuant to
this Section 11).
(d) Grantee shall have rights substantially identical to those set
forth in paragraphs (a), (b) and (c) of this Section 11 with respect to the
Substitute Option and the Substitute Option Issuer during any period in which
the Substitute Option Issuer would be required to repurchase the Substitute
Option pursuant to Section 9.
12. Representations and Warranties. Issuer hereby represents and
warrants to Grantee as follows:
(a) Issuer has full corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the Merger
Agreement and the consummation of the transactions contemplated hereby and
thereby have been duly and validly authorized by the Issuer Board prior to
the date hereof and no other corporate proceedings on the part of Issuer
are necessary to authorize this Agreement or to consummate the transactions
so contemplated. This Agreement has been duly and validly executed and
delivered by Issuer.
(b) Issuer has taken all necessary corporate action to authorize and to
permit it to issue, that number of shares of Common Stock equal to the
maximum number of shares of Common Stock issuable hereunder, and all such
shares, upon issuance pursuant thereto, will be duly authorized, validly
issued, fully paid, nonassessable, and will be delivered free and clear of
all claims, liens, encum brances and security interests and not subject to
any preemptive rights.
13. Assignment. Neither of the parties hereto may assign any of its
rights or obligations under this Agreement or the Option created hereunder to
any other person, without the express written consent of the other party, except
that in the event a Preliminary Event or Triggering Event shall have occurred
prior to an Exercise Termina tion Event, Grantee, subject to the express
provisions hereof, may assign in whole or in part its rights and obligations
hereunder following the date of such Preliminary Event or Triggering Event;
provided that until the date 15 days following the date on which the OTS has
approved an application by Grantee to acquire the shares of Common Stock subject
to the Option, Grantee may not assign its rights under the Option except in (a)
a
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widely dispersed public distribution, (b) a private placement in which no one
party acquires the right to purchase in excess of 2% of the voting shares of
Issuer, (c) an assignment to a single party (e.g., a broker or investment
banker) for the sole purpose of conducting a widely dispersed public
distribution on Grantee's behalf, or (d) any other manner approved by the OTS.
14. Filings and Consents. Each of Grantee and Issuer will use its
reasonable best efforts to make all filings with, and to obtain consents of, all
third parties and governmental authorities necessary to the consummation of the
transactions contem plated by this Agreement, including, without limitation,
applying to the OTS under the HOLA for approval to acquire the shares issuable
hereunder, but Grantee shall not be obligated to apply to state banking
authorities for approval to acquire the shares of Common Stock issuable
hereunder until such time, if ever, as it deems appropriate to do so.
15. Specific Performance. The parties hereto acknowledge that damages
would be an inadequate remedy for a breach of this Agreement by either party
hereto and that the obligations of the parties hereto shall be enforceable by
either party hereto through injunctive or other equitable relief. In connection
therewith both parties waive the posting of any bond or similar requirement.
16. Severability. If any term, provision, covenant or restriction
contained in this Agreement is held by a court or a federal or state regulatory
agency of competent jurisdiction to be invalid, void or unenforceable, the
remainder of the terms, provisions and covenants and restrictions contained in
this Agreement shall remain in full force and effect, and shall in no way be
affected, impaired or invalidated. If for any reason such court or regulatory
agency determines that the Holder is not permitted to acquire, or Issuer is not
permitted to repurchase pursuant to Section 7, the full number of shares of
Common Stock provided in Section 1 hereof (as adjusted pursuant to Section 5
hereof), it is the express intention of Issuer to allow the Holder to acquire or
to require Issuer to repurchase such lesser number of shares as may be
permissible, without any amendment or modification hereof.
17. Notices. All notices, requests, claims, demands and other com
munications hereunder shall be deemed to have been duly given when delivered in
person, by facsimile transmission, or by registered or certified mail (postage
prepaid, return receipt requested) at the respective addresses or numbers of the
parties set forth in the Merger Agreement.
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18. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without regard to the
conflict of law principles thereof.
19. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.
20. Expenses. Except as otherwise expressly provided herein, each of
the parties hereto shall bear and pay all costs and expenses incurred by it or
on its behalf in connection with the transactions contemplated hereunder,
including fees and expenses of its own financial consultants, investment
bankers, accountants and counsel.
21. Entire Agreement, Etc. Except as otherwise expressly provided
herein or in the Merger Agreement, this Agreement contains the entire agreement
between the parties with respect to the transactions contemplated hereunder and
supersedes all prior arrangements or understandings in respect thereof, written
or oral. The terms and conditions of this Agreement shall inure to the benefit
of and be binding upon the parties hereto and their respective successors and
permitted assignees. Nothing in this Agreement, expressed or implied, is
intended to confer upon any party, other than the parties hereto, and their
respective successors and assignees, any rights, remedies, obligations or
liabilities under or by reason of this Agreement, except as expressly provided
herein.
* * *
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