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Exhibit 2.1
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AGREEMENT AND PLAN OF MERGER
dated as of May 17, 1999
by and between
CHARTER ONE FINANCIAL, INC.
CHARTER MICHIGAN BANCORP, INC.
and
ST. XXXX BANCORP, INC.
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TABLE OF CONTENTS
ARTICLE I
CERTAIN DEFINITIONS
1.01 Certain Definitions.............................................2
ARTICLE II
THE TRANSACTION
2.01 The Company Merger..............................................8
2.02 Bank Merger.....................................................9
2.03 Effective Date and Effective Time..............................10
2.04 Reservation of Right to Revise Transaction.....................10
ARTICLE III
CONSIDERATION; EXCHANGE PROCEDURES
3.01 Merger Consideration...........................................10
3.02 Rights as Stockholders; Stock Transfers........................11
3.03 Fractional Shares..............................................11
3.04 Exchange Procedures............................................11
3.05 Anti-Dilution Provisions.......................................13
3.06 Options........................................................13
ARTICLE IV
ACTIONS PENDING TRANSACTION
4.01 Forbearances of St. Xxxx.......................................14
4.02 Forbearances of COFI...........................................18
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ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.01 Disclosure Schedules...........................................19
5.02 Standard.......................................................20
5.03 Representations and Warranties of St. Xxxx.....................20
5.04 Representations and Warranties of COFI.........................31
ARTICLE VI
COVENANTS
6.01 Reasonable Best Efforts........................................37
6.02 Stockholder Approvals..........................................37
6.03 Registration Statement.........................................38
6.04 Press Releases.................................................39
6.05 Access; Information............................................39
6.06 St. Xxxx Proposal..............................................40
6.07 Affiliate Agreements...........................................40
6.08 Takeover Laws..................................................41
6.09 Certain Policies...............................................41
6.10 Listing........................................................41
6.11 Regulatory Applications........................................41
6.12 Officers' and Directors' Insurance; Indemnification............42
6.13 Benefit Plans..................................................44
6.14 Notification of Certain Matters................................44
6.15 Directors......................................................44
6.16 Advisory Board Membership......................................44
6.17 COFI Fee.......................................................45
6.18 St. Xxxx Fee...................................................45
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE COMPANY MERGER
7.01 Conditions to Each Party's Obligation to Effect the
Company Merger................................................46
7.02 Conditions to Obligation of St. Xxxx...........................47
7.03 Conditions to Obligation of COFI...............................48
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ARTICLE VIII
TERMINATION
8.01 Termination....................................................49
8.02 Effect of Termination and Abandonment..........................53
ARTICLE IX
MISCELLANEOUS
9.01 Survival.......................................................53
9.02 Waiver; Amendment..............................................53
9.03 Counterparts...................................................53
9.04 Governing Law..................................................53
9.05 Expenses.......................................................54
9.06 Notices........................................................54
9.07 Entire Understanding; No Third Party Beneficiaries.............55
9.08 Interpretation; Effect.........................................55
EXHIBIT A Form of Stock Option Agreement
EXHIBIT B Form of Support Agreement
EXHIBIT C Form of Subsidiary Plan of Merger
EXHIBIT D Form of St. Xxxx Affiliate Agreement
EXHIBIT E Form of COFI Affiliate Agreement
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AGREEMENT AND PLAN OF MERGER, dated as of May 17, 1999 (this
"Agreement"), by and between St. Xxxx Bancorp, Inc. ("St. Xxxx"), Charter One
Financial, Inc. ("COFI") and Charter Michigan Bancorp Inc., a wholly-owned
first-tier Subsidiary of COFI ("Charter Michigan").
RECITALS
A. St. Xxxx. St. Xxxx is a Delaware corporation, having its principal
place of business in Chicago, Illinois.
B. COFI. COFI is a Delaware corporation, having its principal place of
business in Cleveland, Ohio.
C. Charter Michigan. Charter Michigan is a Michigan corporation, having
its principal place of business in Dearborn, Michigan.
D. Stock Option Agreement. As an inducement to the willingness of COFI
to enter into this Agreement , St. Xxxx has agreed to grant to COFI on the date
hereof an option pursuant to a stock option agreement ("Stock Option
Agreement"), in the form of Exhibit A.
E. Support Agreements. As a further inducement to the willingness of
COFI to enter into this Agreement, each director of St. Xxxx has agreed to enter
into a support agreement with COFI (each a "Support Agreement") on the date
hereof, in the form of Exhibit B; provided however the aggregate number of
shares that shall be subject to all of the Support Agreements shall not exceed
4.9% of the outstanding St. Xxxx Common Stock (as hereinafter defined) as of the
date hereof.
F. Intentions of the Parties. It is the intention of the parties to
this Agreement that the combination of St. Xxxx and Charter Michigan be
accounted for under the "pooling-of-interests" accounting method and that each
of the business combinations 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 COFI,
Charter Michigan and St. Xxxx have determined that it is in the best interests
of their respective companies and their stockholders to consummate a strategic
business alliance between St. Xxxx and COFI by the merger of St. Xxxx with and
into Charter Michigan and the other business combination contemplated herein.
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
1.01 Certain Definitions. The following terms are used in this
Agreement with the meanings set forth below:
"Administrator" means the chief officer of the Michigan Department of
Commerce.
"Agreement" means this Agreement, as amended or modified from time to time
in accordance with Section 9.02.
"Annual Proxy Statement" means in the case of either St. Xxxx or COFI its
Proxy Statement for its Annual Meeting of Shareholders held in 1999 as filed
with the SEC and submitted to its shareholders.
"Average Closing Price" has the meaning set forth in Section 8.01(f).
"Bank Merger" has the meaning set forth in Section 2.02.
"Charter Michigan" has the meaning set forth in the preamble to this
Agreement.
"Charter Michigan Board" means the Board of Directors of Charter Michigan.
"Charter One Bank" has the meaning set forth in Section 2.02.
"Code" has the meaning set forth in the Recitals to this Agreement.
"COFI" has the meaning set forth in the preamble to this Agreement.
"COFI Acquisition Transaction" has the meaning set forth in Section 6.18.
"COFI Affiliate" has the meaning set forth in Section 6.07(a).
"COFI Board" means the Board of Directors of COFI.
"COFI Common Stock" means the common stock, par value $0.01 per share, of
COFI.
"COFI Meeting" has the meaning set forth in Section 6.02.
"COFI Proposal" has the meaning set forth in Section 6.18.
"COFI Ratio" has the meaning set forth in Section 8.01(f).
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"COFI Rights Agreement" means that certain Rights Agreement between COFI
and The First National Bank of Boston, as Rights Agent, dated November 24, 1989,
as amended on May 26, 1995.
"Commissioner" means the Illinois Commissioner of Banks and Real Estate.
"Company Merger" has the meaning set forth in Section 2.01.
"Compensation and Benefit Plans" has the meaning set forth in Section
5.03(m).
"Costs" has the meaning set forth in Section 6.12(a).
"Delaware Secretary" means the Secretary of State of the State of Delaware.
"Determination Date" has the meaning set forth in Section 8.01(f).
"DGCL" means the Delaware General Corporation Law.
"Disclosure Schedule" has the meaning set forth in Section 5.01.
"DOJ" means the United States Department of Justice.
"DOL" means the United States Department of Labor.
"Effective Date" means the date on which the Effective Time occurs.
"Effective Time" means the effective time of the Company Merger as provided
for in Section 2.03.
"Environmental Laws" shall mean any federal, state or local law, statute,
ordinance, rule, regulation, code, license, permit, authorization, approval,
consent, order, judgment, decree, injunction or agreement with any Governmental
Authority relating to (i) the protection, preservation or restoration of the
environment (including, without limitation, air, water vapor, surface water,
groundwater, drinking water supply, surface soil, subsurface soil, plant and
animal life or any other natural resource), and/or (ii) the use, storage,
recycling, treatment, generation, transportation, processing, handling,
labeling, production, release or disposal of Materials of Environmental Concern.
The term Environmental Law includes without limitation (i) the Comprehensive
Environmental Response, Compensation and Liability Act, as amended, 42 U.S.C.
Section 9601, et seq; the Resource Conservation and Recovery Act, as amended, 42
U.S.C. Section 6901, et seq; the Clean Air Act, as amended, 42 U.S.C. Section
7401, et seq; the Federal Water Pollution Control Act, as amended, 33 U.S.C.
Section 1251, et seq; the Toxic Substances Control Act, as amended, 15 U.S.C.
Section 9601, et seq; the Emergency Planning and Community Right to Know Act, 42
U.S.C. Section 1101, et seq; the Safe Drinking Water Act, 42 U.S.C. Section
300f, et seq; and all comparable state and local laws, and (ii) any common law
(including without limitation common law that may impose strict liability) that
may
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impose liability or obligations for injuries or damages due to, or threatened as
a result of, the presence of or exposure to any Materials of Environmental
Concern.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" has the meaning set forth in Section 5.03(m).
"ERISA Affiliate Plan" has the meaning set forth in Section 5.03(m).
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations thereunder.
"Exchange Agent" has the meaning set forth in Section 3.04(a).
"Exchange Fund" has the meaning set forth in Section 3.04(a).
"Exchange Ratio" has the meaning set forth in Section 3.01(a).
"FDIC" means the Federal Deposit Insurance Corporation.
"FFIEC" means the Federal Financial Institutions Examination Council.
"FRB" means the Board of Governors of the Federal Reserve System.
"Governmental Authority" means any court, administrative agency or
commission or other federal, state or local governmental authority or
instrumentality.
"Indemnified Parties" has the meaning set forth in Section 6.12(c).
"Index Group" has the meaning set forth in Section 8.01(f).
"Index Price" has the meaning set forth in Section 8.01(f).
"Index Ratio" has the meaning set forth in Section 8.01(f).
"Insurance Amount" has the meaning set forth in Section 6.12(a).
"IRS" means the Internal Revenue Service.
"knowledge" means to the actual knowledge of any director, executive
officer, or officer responsible for environmental matters of a party to this
Agreement or any of its Subsidiaries but also including its general counsel if
he is not an executive officer.
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"Lien" means any charge, mortgage, pledge, security interest, restriction,
claim, lien, or encumbrance.
"Material Adverse Effect" means, with respect to COFI or St. Xxxx, any
effect that (i) is material and adverse to the financial position, results of
operations, business, or operations of COFI and its Subsidiaries taken as a
whole or St. Xxxx and its Subsidiaries taken as a whole, respectively, or (ii)
would materially impair the ability of COFI, Charter Michigan or St. Xxxx to
perform its obligations under this Agreement or otherwise materially impede the
consummation of the Company Merger; provided, however, that Material Adverse
Effect shall not be deemed to include the impact of (a) changes in thrift,
banking and similar laws of general applicability or interpretations thereof by
courts or governmental authorities, or other changes affecting depository
institutions generally, including changes in general economic conditions and
changes in prevailing interest and deposit rates, (b) changes in generally
accepted accounting principles or regulatory accounting requirements applicable
to thrifts, banks and their holding companies generally, (c) any modifications
or changes to valuation policies and practices or restructuring charges, in each
case taken pursuant to this Agreement by any of the parties hereto or their
respective Subsidiaries or otherwise by COFI or its Subsidiaries in accordance
with generally accepted accounting principles, (d) changes resulting from
expenses (such as legal, accounting and investment bankers' fees) incurred in
connection with this Agreement and (e) actions or omissions of COFI or St. Xxxx
taken with the prior written consent of St. Xxxx or COFI, as applicable, in
contemplation of the transactions contemplated hereby.
"Materials of Environmental Concern" shall mean pollutants, contaminants,
wastes, toxic substances, petroleum and petroleum products and any other
materials regulated under Environmental Laws.
"MBCA" means the Michigan Business Corporation Act.
"Merger Consideration" has the meaning set forth in Section 2.04.
"NASDAQ" means The Nasdaq National Market.
"New Certificates" has the meaning set forth in Section 3.04(a).
"1998 Form 10-K" means the Annual Report on Form 10-K for the fiscal year
ended December 31, 1998 of St. Xxxx or COFI, whichever is applicable, in the
form filed with the SEC.
"NYSE" means the New York Stock Exchange, Inc.
"Old Certificates" has the meaning set forth in Section 3.04(a).
"OTS" means the Office of Thrift Supervision.
"PBGC" means the Pension Benefit Guaranty Corporation.
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"Pension Plan" has the meaning set forth in Section 5.03(m).
"Person" means any individual, bank, corporation, partnership, limited
liability company, association, joint-stock company, business trust or
unincorporated organization.
"Previously Disclosed" by a party shall mean information set forth in its
Disclosure Schedule or in its Annual Proxy Statement or 1998 Form 10-K.
"Proxy Statement" has the meaning set forth in Section 6.03.
"Registration Statement" has the meaning set forth in Section 6.03.
"Regulatory Authority" has the meaning set forth in Section 5.03(i).
"Representatives" means, with respect to any Person, such Person's
directors, officers, employees, accountants, legal or financial advisors or any
representatives of such legal or financial advisors.
"Rights" means, with respect to any Person, securities or obligations
convertible into or exercisable or exchangeable for, or giving any person any
right to subscribe for or acquire, or any options, calls or commitments relating
to, or any stock appreciation right or other instrument the value of which is
determined in whole or in part by reference to the market price or value of,
shares of capital stock of such Person.
"SEC" means the Securities and Exchange Commission.
"SEC Documents" has the meaning set forth in Section 5.03(g).
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations thereunder.
"Specified Representations" has the meaning set forth in Section 5.02.
"Starting Date" has the meaning set forth in Section 8.01(f).
"Starting Price" has the meaning set forth in Section 8.01(f).
"Stock Option Agreement" has the meaning set forth in the Recitals to this
Agreement.
"St. Xxxx" has the meaning set forth in the preamble to this Agreement.
"St. Xxxx Acquisition Transaction" has the meaning set forth in Section
6.17.
"St. Xxxx Affiliate" has the meaning set forth in Section 6.07(a).
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"St. Xxxx Arrangements" has the meaning set forth in Section 6.13(a).
"St. Xxxx Bank" has the meaning set forth in Section 2.02.
"St. Xxxx Board" means the Board of Directors of St. Xxxx.
"St. Xxxx By-Laws" means the Bylaws of St. Xxxx.
"St. Xxxx Certificate" means the Certificate of Incorporation of St. Xxxx.
"St. Xxxx Common Stock" means the common stock, par value $0.01 per share,
of St. Xxxx.
"St. Xxxx Meeting" has the meaning set forth in Section 6.02.
"St. Xxxx Preferred Stock" means the serial preferred stock, par value
$0.01 per share, of St. Xxxx.
"St. Xxxx Proposal" has the meaning set forth in Section 6.17.
"St. Xxxx Rights" has the meaning set forth in Section 5.03(o).
"St. Xxxx Rights Agreement" means that certain Rights Agreement between St.
Xxxx and The First National Bank of Boston, Rights Agent, dated as of October
26, 1992.
"St. Xxxx Xxxxx" means, collectively, St. Xxxx Common Stock and St. Xxxx
Preferred Stock.
"St. Xxxx Xxxxx Option" has the meaning set forth in Section 3.06(a).
"St. Xxxx Xxxxx Plans" means the St. Xxxx Bancorp, Inc. Stock Option Plan
dated ___________, 1998 as modified by Amendments No. 1 and 2 thereto approved
by shareholders on May 13, 1992 and May 4, 1994, respectively; the St. Xxxx
Bancorp, Inc. 1995 Incentive Plan approved by shareholders on May 3, 1995 as
modified by an amendment thereto approved by shareholders on May 6 ,1998; the
St. Xxxx Bancorp, Inc. Employee Incentive Plan as approved by the Board of
Directors on May 19, 1997; and the Xxxxxxx Bancorporation Stock Option Plan and
the Xxxxxxx Bancorporation, Inc. 1997 Long-Term Stock Incentive Plan to the
extent assumed by St. Xxxx in connection with the conversion of Xxxxxxx
Bancorporation, Inc., stock options to rights to acquire St. Xxxx Common Stock
pursuant to the merger of Xxxxxxx Bancorporation, with and into St. Xxxx.
"Subsidiary" has the meaning ascribed to it in Rule 1-02 of Regulation S-X
of the SEC.
"Support Agreement" has the meaning set forth in the Recitals to this
Agreement.
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"Surviving Corporation" has the meaning set forth in Section 2.01.
"Takeover Laws" has the meaning set forth in Section 5.03(o).
"Tax" and "Taxes" means all federal, state, local or foreign taxes,
charges, fees, levies or other assessments, however denominated, including,
without limitation, all net income, gross income, gains, gross receipts, sales,
use, ad valorem, goods and services, capital, production, transfer, franchise,
windfall profits, license, withholding, payroll, employment, disability,
employer health, excise, estimated, severance, stamp, occupation, property,
environmental, unemployment 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, in each case imposed by any taxing or
Governmental Authority whether arising before, on or after the Effective Date.
"Tax Returns" means any return, amended return or other report (including
elections, declarations, disclosures, schedules, estimates and information
returns) required to be filed with any Governmental Authority with respect to
any Tax.
"Transaction" means the Company Merger and the Bank Merger.
"Treasury Stock" shall mean shares of St. Xxxx Xxxxx held by St. Xxxx or
any of its Subsidiaries or by COFI or any of its Subsidiaries, in each case
other than in a fiduciary capacity or as a result of debts previously contracted
in good faith.
ARTICLE II
THE TRANSACTION
2.01 The Company Merger.
(a) Company Merger. At the Effective Time, St. Xxxx shall
merge with and into Charter Michigan (the "Company Merger"), the
separate corporate existence of St. Xxxx shall cease and Charter
Michigan shall survive and continue to exist as a Michigan corporation
(Charter Michigan, as the surviving corporation in the Company Merger,
sometimes being referred to herein as the "Surviving Corporation").
(b) Corporate Law Filings. Subject to the satisfaction or
waiver of the conditions set forth in Article VII, the Company Merger
shall become effective upon the occurrence of the filing in the office
of the Delaware Secretary of a certificate of merger in accordance with
Section 252 of the DGCL and the filing in the office of and endorsement
by the Administrator of a certificate of merger in accordance with
Section 735 of the MBCA or such later date and time as may be set forth
in such certificates of merger.
(c) Effects of Company Merger. The Company Merger shall have
the effects prescribed in the DGCL and the MBCA, including but not
limited to, Charter Michigan, as
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the Surviving Corporation, thereupon and thereafter possessing all of
the rights, privileges, immunities and franchises, of a public as well
as of a private nature, of each of the corporations so merged and
Charter Michigan, as the Surviving Corporation, becoming responsible
and liable for all the liabilities, obligations and penalties of each
of the corporations so merged. All rights of creditors and obligors and
all liens on the property of each of St. Xxxx and Charter Michigan
shall be preserved unimpaired.
(d) Articles of Incorporation and By-Laws of Surviving
Corporation. The Articles of Incorporation and Bylaws of Charter
Michigan immediately after the Company Merger shall be those of Charter
Michigan as in effect immediately prior to the Effective Time.
(e) Directors and Officers of the Surviving Corporation. The
directors and officers of Charter Michigan immediately after the
Company Merger shall be the directors and officers of Charter Michigan
immediately prior to the Effective Time, until such time as their
successors shall be duly elected and qualified. Immediately after the
Effective Time, COFI and Charter Michigan shall cause each of Xxxxxx X.
Xxxxxx and Xxxxxxx X. Xxxxx to be added to the Charter Michigan Board
for a term expiring in April 2002, unless such individual does not
qualify to serve under guidelines of applicable Regulatory Authorities.
(f) Service of Process. At the Effective Time, Charter
Michigan, as the Surviving Corporation, consents to be sued and served
with process in the State of Delaware and irrevocably appoints the
Delaware Secretary as its agent to accept service of process in any
proceeding in the State of Delaware to enforce against it any
obligation of St. Xxxx.
(g) Principal Office. The location of the principal office of
Charter Michigan, as the Surviving Corporation, in the State of
Michigan is 00000 Xxxxxxxx Xxxxxx, 0xx Xxxxx, Xxxxxxxx, Xxxxxxxx 00000.
(h) Plan of Merger. At the reasonable request of any party,
St. Xxxx, COFI and Charter Michigan shall enter into a separate plan of
merger reflecting the terms of the Company Merger for purposes of any
state law filing requirement.
2.02 Bank Merger. As soon as practicable at or after the Effective
Time, unless otherwise determined by COFI, St. Xxxx Federal Bank For Savings, a
federally chartered savings bank and wholly owned Subsidiary of St. Xxxx ("St.
Xxxx Bank"), shall be merged with and into Charter One Bank, F.S.B., a federally
chartered savings bank and wholly-owned Subsidiary of Charter Michigan ("Charter
One Bank"). Such merger is hereinafter sometimes referred to as the "Bank
Merger". The Bank Merger shall be implemented pursuant to the Subsidiary Plan of
Merger, in substantially the form of Exhibit C. In order to obtain the necessary
regulatory approvals for the Bank Merger, the parties hereto shall cause the
following to be accomplished prior to the filing of applications for regulatory
approval: (a) St. Xxxx shall cause the Board of Directors of St. Xxxx Bank to
approve the Subsidiary Plan of Merger, St. Xxxx as the sole stockholder of St.
Xxxx Bank shall approve the Subsidiary Plan of Merger, and St. Xxxx shall cause
the Subsidiary Plan of Merger to be duly
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executed by St. Xxxx Bank and delivered to COFI; and (b) Charter Michigan shall
cause the Board of Directors of Charter One Bank to approve the Subsidiary Plan
of Merger, Charter Michigan as the sole stockholder of Charter One Bank shall
approve the Subsidiary Plan of Merger, and Charter Michigan shall cause the
Subsidiary Plan of Merger to be duly executed by Charter One Bank and delivered
to St. Xxxx. At the request of COFI, St. Xxxx shall cause St. Xxxx Bank, and
Charter Michigan shall cause Charter One Bank, to execute articles of
combination to make effective the Bank Merger and cause such articles to be
timely and appropriately filed and endorsed by OTS so that the Bank Merger shall
become effective as soon as practicable at or after the Effective Time.
2.03 Effective Date and Effective Time. Subject to the satisfaction or
waiver of the conditions set forth in Article VII, the parties shall cause the
effective date of the Company Merger (the "Effective Date") to occur on (i) the
fifth business day (the "Fifth Business Day") after the last of the conditions
set forth in Article VII to be satisfied prior to the Effective Date shall have
been satisfied or waived in accordance with the terms of this Agreement (or, if
the Fifth Business Day would be within the last ten days of a calendar month, at
the election of COFI by written notice to St. Xxxx not later than two business
days after the last such condition in Article VII is satisfied or waived, on the
last business day of the month in which such satisfaction or waiver occurs) or
(ii) such other date to which St. Xxxx and COFI may agree in writing. The time
on the Effective Date when the Company Merger shall become effective is referred
to as the "Effective Time."
2.04 Reservation of Right to Revise Transaction. COFI may at any time
prior to the Effective Time, with the prior written consent of St. Xxxx (such
consent not to be unreasonably withheld or delayed), change the method of
effecting the Company Merger if and to the extent it deems such change to be
necessary, appropriate or desirable; provided, however, that no such change
shall (i) alter or change the amount or kind of consideration to be issued to
holders of St. Xxxx Common Stock as provided for in this Agreement (the "Merger
Consideration"), (ii) adversely affect the tax treatment of St. Paul's
stockholders as a result of receiving the Merger Consideration or the Company
Merger qualifying for "pooling-of-interests" accounting treatment, (iii)
materially impede or delay consummation of the Company Merger, (iv) result in
any representation or warranty of any party set forth in this Agreement becoming
incorrect in any material respect, or (v) diminish the benefits, including
membership on the COFI Board or COFI advisory board, to be received by the
directors, officers or employees of St. Xxxx and its Subsidiaries as set forth
in this Agreement or in any separate agreement entered into by COFI and St. Xxxx
on the date hereof.
ARTICLE III
CONSIDERATION; EXCHANGE PROCEDURES
3.01 Merger Consideration. Subject to the provisions of this Agreement,
at the Effective Time, automatically by virtue of the Company Merger and without
any action on the part of any Person:
(a) Outstanding St. Xxxx Common Stock. Each share, excluding
Treasury Stock, of St. Xxxx Common Stock issued and outstanding
immediately prior to the Effective Time
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shall become and be converted into, subject to Sections 3.03, 3.05 and
8.01(f) hereof, .945 of a share of COFI Common Stock (the "Exchange
Ratio"), including the corresponding number of Rights associated with
the COFI Common Stock pursuant to the COFI Rights Agreement. The
Exchange Ratio shall be subject to adjustment as set forth in Sections
3.05 and 8.01(f).
(b) Outstanding Charter Michigan Common Stock. Each share of
Charter Michigan common stock issued and outstanding or held in
treasury immediately prior to the Effective Time shall remain issued
and outstanding or held in treasury and continue to be an identical
issued and outstanding or treasury share of Charter Michigan common
stock after the Effective Time.
(c) Outstanding COFI Common Stock. Each share of COFI Common
Stock issued and outstanding or held in treasury immediately prior to
the Effective Time shall remain issued and outstanding or held in
treasury and shall be unaffected by the Company Merger.
(d) Treasury Shares. Each share of St. Xxxx Common Stock held
as Treasury Stock immediately prior to the Effective Time shall be
canceled and retired at the Effective Time, and no consideration shall
be issued in exchange therefor.
3.02 Rights as Stockholders; Stock Transfers. At the Effective Time,
holders of St. Xxxx Xxxxx shall cease to be, and shall have no rights as,
stockholders of St. Xxxx, other than to receive any dividend or other
distribution with respect to such St. Xxxx Common Stock permitted under this
Agreement with a record date occurring prior to the Effective Time and the
consideration provided under this Article III. After the Effective Time, there
shall be no transfers on the stock transfer books of St. Xxxx or the Surviving
Corporation of shares of St. Xxxx Xxxxx.
3.03 Fractional Shares. Notwithstanding any other provision hereof, no
fractional shares of COFI Common Stock and no certificates or scrip therefor, or
other evidence of ownership thereof, will be issued in the Company Merger;
instead, COFI shall pay to each holder of St. Xxxx Common Stock who would
otherwise be entitled to a fractional share of COFI Common Stock (after taking
into account all Old Certificates delivered by such holder) an amount in cash
(without interest) determined by multiplying such fraction by the closing sale
price of COFI Common Stock, on the NASDAQ or the NYSE, whichever is applicable
(as reported in The Wall Street Journal or, if not reported therein, in another
authoritative source), for the last trading day immediately preceding the
Effective Date.
3.04 Exchange Procedures.
(a) Deposit of New Certificates, Etc. At or prior to the
Effective Time, COFI shall deposit, or shall cause to be deposited,
with an independent exchange agent to be selected by COFI and
reasonably acceptable to St. Xxxx (the "Exchange Agent"), for the
benefit of the holders of certificates formerly representing shares of
St. Xxxx Common Stock
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("Old Certificates"), for exchange in accordance with this Article III,
certificates representing the shares of COFI 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 paid
pursuant to this Article III in exchange for outstanding shares of St.
Xxxx Common Stock.
(b) Transmittal and Deliveries. As promptly as practicable
after the Effective Date, COFI shall send or cause to be sent to each
former holder of record of shares of St. Xxxx Common Stock immediately
prior to the Effective Time transmittal materials (which shall specify
that risk of loss and title to Old Certificates shall pass only upon
acceptance of such Old Certificates by COFI or the Exchange Agent) for
use in exchanging such stockholder's Old Certificates for the
consideration set forth in this Article III. COFI shall cause the New
Certificates or uncertificated shares of COFI Common Stock registered
on the stock transfer books of COFI ("Registered Shares") into which
shares of a stockholder's St. Xxxx Common Stock are converted on the
Effective Date and/or any check in respect of any fractional share
interest or dividends or distributions which such person shall be
entitled to receive to be delivered to such stockholder upon delivery
to the Exchange Agent of Old Certificates representing such shares of
St. Xxxx Common Stock (or indemnity reasonably satisfactory to COFI and
the Exchange Agent, if any of such certificates are lost, stolen or
destroyed) owned by such stockholder. No interest will be paid on any
such cash to be paid in lieu of a fractional share interest or in
respect of dividends or distributions which any such person shall be
entitled to receive pursuant to this Article III upon such delivery.
Old Certificates surrendered for exchange by any person identified by
St. Xxxx pursuant to Section 6.07 as a St. Xxxx Affiliate shall not be
exchanged for New Certificates or Registered Shares representing COFI
Common Stock until COFI has received a written agreement from such
person as specified in Section 6.07. COFI and the Exchange Agent shall
be entitled to rely upon the stock transfer books of St. Xxxx to
establish the identity of those persons entitled to receive the
consideration specified in this Agreement, which books shall be
conclusive with respect thereto. In the event of a dispute with respect
to ownership of stock represented by any Old Certificate, COFI or the
Exchange Agent shall be entitled to deposit any consideration in
respect thereof in escrow with an independent third party and
thereafter be relieved with respect to any claims thereto.
(c) Escheat. Notwithstanding the foregoing, neither the
Exchange Agent nor any party hereto shall be liable to any former
holder of St. Xxxx Xxxxx for any amount properly delivered to a public
official pursuant to applicable abandoned property, escheat or similar
laws.
(d) Restrictions on the Payment of Dividends and Voting. No
dividends or other distributions with respect to COFI Common Stock with
a record date occurring after the Effective Time shall be paid to the
holder of any unsurrendered Old Certificates representing shares of St.
Xxxx Common Stock converted in the Company Merger into the right to
receive
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shares of such COFI Common Stock until the holder thereof shall be
entitled to receive New Certificates or Registered Shares in exchange
therefor in accordance with the procedures set forth in this Section
3.04. Registered holders of unsurrendered Old Certificates shall be
entitled to vote after the Effective Time at any meeting of COFI
stockholders with a record date at or after the Effective Time the
number of whole shares of COFI Common Stock represented by such Old
Certificates, regardless of whether such holders have exchanged their
Old Certificates. After becoming so entitled in accordance with this
Section 3.04, 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
COFI Common Stock such holder had the right to receive upon surrender
of the Old Certificates.
(e) Return of Exchange Fund to COFI. Any portion of the
Exchange Fund that remains unclaimed by the stockholders of St. Xxxx
for twelve months after the Effective Time shall be paid to COFI. Any
stockholder of St. Xxxx who has not theretofore complied with this
Article III shall thereafter look only to COFI for payment of the
shares of COFI Common Stock, cash in lieu of any fractional share and
unpaid dividends and distributions on COFI Common Stock deliverable in
respect of shares of St. Xxxx Common Stock such stockholder holds as
determined pursuant to this Agreement, in each case, without any
interest thereon.
3.05 Anti-Dilution Provisions. In the event COFI changes (or
establishes a record date for changing) the number of shares of COFI Common
Stock issued and outstanding prior to the Effective Date as a result of a stock
split, stock dividend, recapitalization or similar transaction with respect to
the outstanding COFI Common Stock and the record date therefor shall be prior to
the Effective Date, the Exchange Ratio shall be proportionately adjusted.
3.06 Options.
(a) Conversion. At the Effective Time, each option outstanding
on the date of this Agreement to purchase shares of St. Xxxx Common
Stock under the St. Xxxx Xxxxx Plans (each, a "St. Xxxx Xxxxx Option")
and remaining outstanding immediately prior to the Effective Time
shall, at the Effective Time, be assumed by COFI and each such St. Xxxx
Xxxxx Option shall continue to be outstanding, but shall represent an
option to purchase shares of COFI Common Stock in an amount and at an
exercise price determined as provided below (and otherwise subject to
the terms of the applicable St. Xxxx Xxxxx Plan and St. Xxxx Xxxxx
Option):
(i) the number of shares of COFI Common Stock to be
subject to the continuing St. Xxxx Xxxxx Option shall be equal
to the product of the number of shares of St. Xxxx Common
Stock subject to the St. Xxxx Xxxxx Option immediately prior
to the Effective Time and the Exchange Ratio, provided that
any fractional share of COFI Common Stock resulting from such
multiplication shall be rounded down to the nearest whole
share; and
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(ii) the exercise price per share of COFI Common
Stock under the continuing St. Xxxx Xxxxx Option shall be
equal to the exercise price per share of St. Xxxx Common Stock
under the St. Xxxx Xxxxx Option immediately prior to the
Effective Time divided by the Exchange Ratio, provided that
such exercise price shall be rounded down to the nearest cent.
It is intended that the foregoing assumption shall be
undertaken consistent with and in a manner that will not constitute a
"modification" under Section 424 of the Code as to any St. Xxxx Xxxxx
Option which is an "incentive stock option".
(b) Reservation of COFI Common Stock and Securities Filings.
At all times after the Effective Time, COFI shall reserve for issuance
such number of shares of COFI Common Stock as necessary so as to permit
the exercise of continuing options in the manner contemplated by this
Agreement and the instruments pursuant to which such options were
granted. COFI shall make all filings required under federal and state
securities laws promptly after the Effective Time so as to permit the
exercise of such continuing options and the sale of the shares received
by the optionee upon such exercise at and after the Effective Time and
COFI shall continue to make such filings thereafter as may be necessary
to permit the continued exercise of continuing options and sale of such
shares.
ARTICLE IV
ACTIONS PENDING TRANSACTION
4.01 Forbearances of St. Xxxx. From the date hereof until the Effective
Time, except as expressly contemplated by this Agreement or any separate
agreement entered into by St. Xxxx and COFI on the date hereof, without the
prior written consent of COFI (which consent under subsections (h), (k), (l) and
(m) shall not be unreasonably withheld or delayed), St. Xxxx will not, and will
cause each of its Subsidiaries not to:
(a) Ordinary Course. Conduct the business of St. Xxxx and its
Subsidiaries other than in the ordinary and usual course consistent
with past practice or fail to use reasonable efforts to (i) preserve
intact in any material respect their business organizations and assets
and (ii) maintain their rights, franchises and existing relations with
customers, suppliers, employees and business associates, or take any
action reasonably likely to materially impair St. Paul's ability to
perform any of its obligations under this Agreement.
(b) St. Xxxx Xxxxx. Other than pursuant to St. Xxxx Xxxxx
Options outstanding on the date hereof and the Serve Corps Mortgage
Corporation earn out, in each case as Previously Disclosed (i) issue,
sell or otherwise permit to become outstanding, or authorize the
creation of, any additional shares of St. Xxxx Xxxxx or any Rights,
(ii) enter into any agreement with respect to the foregoing, or (iii)
permit any additional shares of St. Xxxx Xxxxx to become subject to new
grants of employee or director stock options, other Rights or similar
stock-based employee rights.
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(c) Other Securities. Issue any other capital securities,
capital stock of any Subsidiary, debentures, or subordinated notes.
(d) Dividends, Etc. (i) Make, declare, pay or set aside for
payment any dividend (other than (A), quarterly cash dividends on St.
Xxxx Common Stock in an amount not to exceed $0.20 per share with
record and payment dates consistent with past practice, (provided the
declaration of the last quarterly dividend by St. Xxxx xxxxx to the
Effective Time and the payment thereof shall be coordinated with COFI
so that holders of St. Xxxx Common Stock do not receive dividends on
both St. Xxxx Common Stock and COFI Common Stock received in the
Company Merger in respect of such calendar quarter or fail to receive a
dividend on either St. Xxxx Common Stock or COFI Common Stock received
in the Company Merger in respect of such calendar quarter) and (B)
dividends from wholly owned Subsidiaries to St. Xxxx or another wholly
owned Subsidiary of St. Xxxx) on or in respect of, or declare or make
any distribution on any shares of St. Xxxx Xxxxx or (ii) directly or
indirectly adjust, split, combine, redeem, reclassify, purchase or
otherwise acquire, any shares of its capital stock or Rights.
(e) Compensation; Employment Agreements, Etc. Enter into or
amend or renew any employment, consulting, severance or similar
agreements or arrangements with any director, officer or employee of
St. Xxxx or its Subsidiaries, or grant any salary or wage increase or
increase any employee benefit (including incentive or bonus payments)
except (i) for oral at will employment agreements, (ii) for normal
individual increases in compensation to employees in the ordinary
course of business consistent with past practice, (iii) for other
changes that are required by applicable law, or (iv) to satisfy
contractual obligations existing as of the date hereof that are
Previously Disclosed provided, however, that St. Xxxx and its
Subsidiaries may consistent with past practice extend employment and
severance agreements in effect on the date hereof that contain
evergreen provisions for an additional one year period.
(f) Benefit Plans. Enter into, establish, adopt, renew, or
amend (except as may be required by existing contractual obligations
existing as of the date hereof that are Previously Disclosed or
applicable law) any pension, profit sharing, employee stock ownership,
retirement, stock option, stock appreciation, phantom stock, stock
purchase, savings, 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 director, officer or employee of St.
Xxxx or its Subsidiaries, or take any action to accelerate the vesting
or exercisability of stock options or other compensation or benefits
payable thereunder.
(g) Dispositions. Except as Previously Disclosed, sell,
transfer, mortgage, encumber or otherwise dispose of or discontinue any
of its assets, deposits, business or properties except in the ordinary
course of business for fair value consistent with past practice.
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(h) Acquisitions. Except as permitted by Section 4.01(s)
acquire (other than by way of foreclosures or acquisitions of control
in a bona fide fiduciary capacity or in satisfaction of debts
contracted prior to the date hereof in good faith, in each case in the
ordinary and usual course of business consistent with past practice)
all or any portion of, the assets, business, deposits or properties of
any Person or entity.
(i) Governing Documents. Amend the St. Xxxx Certificate, St.
Xxxx By-laws or the certificate or articles of incorporation, charter
or by-laws (or similar governing documents) of any of St. Paul's
Subsidiaries.
(j) Accounting Methods. Implement or adopt any change in its
accounting principles, practices or methods, other than as may be
required by generally accepted accounting principles.
(k) Contracts. Except to satisfy Previously Disclosed written
commitments outstanding on the date hereof, to extend the term of
employment and severance agreements to the extent permitted by Section
4.01(e), and to renew real and personal property leases in the ordinary
course of business where the renewal option would otherwise expire,
enter into or terminate any material agreement or amend or modify in
any material respect or renew any of its existing material agreements.
(l) Claims. Except in the ordinary course of business
consistent with past practice or involving an amount not in excess of
$250,000, settle any claim, action or proceeding.
(m) Foreclose. Foreclose upon or otherwise take title to or
possession or control of any real property without first obtaining a
phase one environmental report thereon; provided, however, that St.
Xxxx and its Subsidiaries shall not be required to obtain such a report
with respect to any real property having a fair market value of less
than $1,000,000 or one-to four-family, non-agricultural residential
property of five acres or less to be foreclosed upon unless it has
reason to believe that such property might be in violation of or
require remediation under Environmental Laws.
(n) Deposit Taking and Other Bank Activities. In the case of
St. Xxxx Bank (i) voluntarily make any material changes in or to its
deposit mix; (ii) increase or decrease the rate of interest paid on
time deposits or on certificates of deposit, except in a manner and
pursuant to policies consistent with past practice; or (iii) incur any
liability or obligation relating to retail banking and branch
merchandising, marketing and advertising activities and initiatives
materially in excess of the amounts Previously Disclosed;
(o) Facilities. Except for ATMs and a new branch to be located
in Naperville, Illinois, open any new offices or facilities or expand
any existing office or facility; and except for the Xxxxxx Grove branch
and any in-store locations whose host stores are closing or relocating,
or as Previously Disclosed, close or relocate any office or facility.
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(p) Investments. Enter into any material securities
transaction for its own account or purchase or otherwise acquire any
material amount of investment securities for its own account except
purchases and sales of securities consistent with past practice in
order to maintain investment portfolios at St. Xxxx and its
Subsidiaries that have risk and asset mix characteristics substantially
similar to those of the respective investment portfolios as of the date
hereof.
(q) Capital Expenditures. Purchase or lease fixed assets where
the amount paid or committed thereof is in excess of $450,000
individually or $1,500,000 in the aggregate, except for amounts
Previously Disclosed or for emergency repairs or replacements.
(r) Lending. (i) Make any material changes in its policies
concerning loan underwriting or which persons may approve loans or fail
to comply with such policies as previously provided in writing to COFI;
or (ii) make or commit to make any new loan or letter of credit, or any
new or additional discretionary advance under any existing loan or line
of credit, or restructure any existing loan or line of credit (other
than (A) in the case of a consumer loan or extension of credit
consistent with policies currently in effect as previously provided in
writing to COFI, (B) in the case of a loan secured by a first mortgage
on an owner occupied one-to-four single-family principal residence
consistent with policies currently in effect as previously provided in
writing to COFI and in a principal amount not in excess of $1,250,000,
(C) in the case of a loan secured by a first mortgage on commercial
real property (i) which is with full personal recourse to the borrower
and made in accordance with underwriting policies currently in effect
as previously provided in writing to COFI in a principal amount not in
excess of $5,000,000 or (ii) which is an exception to its underwriting
policies currently in effect as previously provided in writing to COFI,
or without full personal recourse to the borrower, in a principal
amount not in excess of $2,000,000, (D) in the case of a commercial
loan secured by a first lien on accounts receivable, inventory or other
tangible assets which also provides full personal recourse to the
borrower in a principal amount not in excess of $2,000,000, or (E) in
the case of loans outstanding on the date hereof to one borrower (or
group of affiliated borrowers) the restructuring of loans with an
aggregate principal balance not in excess of $2,000,000; provided in
the case of subparts (A)-(D) the loan exposure to one borrower (or
group of affiliated borrowers) shall not exceed $25,000,000) in each
case without the prior written consent of COFI acting through its Chief
Executive Officer or Executive Vice President of Lending in a written
notice to St. Xxxx, which approval or rejection shall be given within
three business days after delivery by St. Xxxx to such officer of COFI
of the complete loan package;
(s) Acquisition of Loans. Purchase any loan, loan
participation or other interest in any loan, except for the purchase by
St. Xxxx Bank of adjustable rate first mortgage whole loans in an
aggregate amount not to exceed $750 million through December 31, 1999
(and $100 million per month thereafter) on owner occupied one-to-four
single family principal residences (and non-owner occupied rental
property to the extent provided below) with each individual loan having
a principal amount not in excess of $1.5 million consistent with
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current policies and guidelines in effect on the date hereof as
Previously Disclosed, such purchases are to be from existing servicers
only with each purchased pool of mortgages not exceeding $100 million
with whole loans secured by one-to-four single family non-owner
occupied property representing not more than 15% of the dollar value of
any mortgage pool.
(t) Land Development Operations. Engage in any single land
development acquisition transaction involving an amount in excess of
$250,000.
(u) Adverse Actions. (i) Take any action or fail to take any
action while knowing that such action or inaction would, or is
reasonably likely to, prevent or impede (A) the Company Merger from
qualifying for "pooling-of-interests" accounting treatment or (B) the
Company Merger or the Bank Merger from qualifying as a reorganization
within the meaning of Section 368 of the Code; or (ii) knowingly take
any action or fail to 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 except as
expressly permitted by this Agreement, (B) any of the conditions to the
Company Merger set forth in Article VII not being satisfied except as
expressly permitted by this Agreement or (C) a material violation of
any provision of this Agreement except, in each case, as may be
required by applicable law or regulation.
(v) Risk Management. Except as required by applicable law or
regulation, (i) implement or adopt any material change in its interest
rate and other risk management policies, procedures or practices; (ii)
fail to follow its existing policies or practices with respect to
managing its exposure to interest rate and other risk; or (iii) fail to
use commercially reasonable means to avoid any material increase in its
aggregate exposure to interest rate risk.
(w) Indebtedness. Incur any indebtedness for borrowed money
other than Federal Home Loan Bank advances with a term not in excess of
three years in an aggregate amount not to exceed $750 million through
December 31, 1999 (and $100 million per month thereafter) in the
ordinary course of business.
(x) Commitments. Agree or commit to do any of the foregoing.
4.02 Forbearances of COFI. From the date hereof until the Effective
Time, except as expressly contemplated by this Agreement, without the prior
written consent of St. Xxxx, COFI will not, and will cause each of its
Subsidiaries not to:
(a) Preservation. Fail to use reasonable efforts to (i)
preserve intact in any material respect their business organizations
and assets and (ii) maintain their rights, franchises and existing
relations with customers, suppliers, employees and business associates,
or take any action reasonably likely to materially impair the ability
of COFI or Charter Michigan to perform any of its obligations under
this Agreement.
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(b) Extraordinary Dividends. Make, declare, pay or set aside
for payment any extraordinary dividend or distribution other than in
the form of COFI Stock.
(c) Adverse Actions. (i) Take any action or fail to take any
action while knowing that such action or inaction would, or is
reasonably likely to, prevent or impede (A) the Company Merger from
qualifying for "pooling-of-interests" accounting treatment or (B) the
Company Merger or the Bank Merger from qualifying as a reorganization
within the meaning of Section 368 of the Code; or (ii) knowingly take
any action or fail to 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 except as
expressly permitted by this Agreement, (B) any of the conditions to the
Company Merger set forth in Article VII not being satisfied except as
expressly permitted by this Agreement or (C) a material violation of
any provision of this Agreement except, in each case, as may be
required by applicable law or regulation; provided, however, that
nothing contained herein shall limit the ability of COFI to exercise
its rights under the Stock Option Agreement.
(d) Accounting Methods. Implement or adopt any material change
in its accounting principles, practices or methods, other than as may
be required by generally accepted accounting principles.
(e) Commitments. Agree or commit to do any of the foregoing.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.01 Disclosure Schedules. On or prior to the date hereof, COFI has
delivered to St. Xxxx a schedule and St. Xxxx has delivered to COFI a schedule
(respectively, its "Disclosure Schedule") which sets forth, among other things,
items the disclosure of which is necessary or appropriate either in response to
an express disclosure requirement contained in a provision hereof or as an
exception to one or more representations or warranties contained in Section 5.03
(other than Section 5.03(f)(ii)(A)-(C) for which no disclosure is permitted) or
5.04 or to one or more of its covenants contained in Article IV and which are
not disclosed in such party's Annual Proxy Statement or 1998 Form 10-K;
provided, that (a) no such item is required to be set forth in a Disclosure
Schedule as an exception to a Specified Representation if its absence would not
be reasonably likely to result in the Specified Representation being deemed
untrue or incorrect under the standard established by Section 5.02 and (b) the
mere inclusion of an item in a Disclosure Schedule as an exception to a
Specified Representation shall not be deemed an admission by a party that such
item represents a material exception or fact, event or circumstance or that such
item is reasonably likely to result in a Material Adverse Effect on the party
making the representation, and St. Paul's representations, warranties and
covenants contained in this Agreement shall not be deemed to be untrue or
breached as a result of effects arising solely from actions taken in compliance
with a written request of COFI.
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5.02 Standard. No representation or warranty of St. Xxxx or COFI
contained in Xxxxxxx 0.00(x), (x)(xxx), (x), (x), (x)(x), (x), (x), (x), (x),
(x), (x), (x), (x) and (x) or 5.04(a), (c), (d), (e), (f), (k), (l), (m), (n),
(o) (q) and (r) (collectively, the "Specified Representations") shall be deemed
untrue or incorrect, and no party hereto shall be deemed to have breached a
Specified Representation, as a consequence of the existence of any fact, event
or circumstance unless such fact, circumstance or event, individually or taken
together with all other facts, events or circumstances inconsistent with such
Specified Representation has had or is reasonably likely to have a Material
Adverse Effect.
5.03 Representations and Warranties of St. Xxxx. Subject to Sections
5.01 and 5.02 and except as Previously Disclosed (which exception shall not
apply to Section 5.03(f)(ii)(A)-(C)) (with St. Xxxx using its reasonable best
efforts to disclose information in its Disclosure Schedule corresponding to the
relevant paragraph below), St. Xxxx hereby represents and warrants to COFI:
(a) Organization, Standing and Authority. St. Xxxx is a
corporation duly organized, validly existing and in good standing under
the laws of the State of Delaware. St. Xxxx is duly qualified to do
business and is in good standing in the states of the United States and
any foreign jurisdictions where its ownership or leasing of property or
assets or the conduct of its business requires it to be so qualified.
(b) St. Xxxx Xxxxx. The authorized capital stock of St. Xxxx
consists solely of (i) 80,000,000 shares of St. Xxxx Common Stock, of
which 40,010,058 shares were outstanding, and 1,608,791 shares were
held in treasury, as of the business day prior to the date hereof, and
(ii) 10,000,000 shares of St. Xxxx Preferred Stock, of which no shares
are outstanding. The outstanding shares of St. Xxxx Xxxxx have been
duly authorized and are validly issued and outstanding, fully paid and
nonassessable, and subject to no preemptive rights (and were not issued
in violation of any preemptive rights). As of the date hereof, there
are no shares of St. Xxxx Xxxxx authorized and reserved for issuance,
St. Xxxx does not have any Rights issued or outstanding with respect to
St. Xxxx Xxxxx, and St. Xxxx does not have any commitment to authorize,
issue or sell any St. Xxxx Xxxxx or Rights, other than pursuant to this
Agreement and the Stock Option Agreement. The number of shares of St.
Xxxx Common Stock which are issuable upon exercise of each St. Xxxx
Xxxxx Option outstanding as of the date hereof and the exercise price
per share are Previously Disclosed.
(c) Subsidiaries. (i)(A) St. Xxxx has Previously Disclosed a
list of all of its Subsidiaries together with the jurisdiction of
organization of each such Subsidiary, (B) it owns, directly or
indirectly, all the issued and outstanding equity securities of each of
its Subsidiaries, (C) no equity securities of any of St. Paul's
Subsidiaries are or may become required to be issued (other than to St.
Xxxx or its wholly-owned Subsidiaries) by reason of any Right or
otherwise, (D) there are no contracts, commitments, understandings or
arrangements by which any of St. Paul's Subsidiaries is or may become
bound to sell or otherwise transfer any equity securities of any such
Subsidiaries (other than to St. Xxxx or its wholly-owned Subsidiaries),
(E) there are no contracts, commitments, understandings, or
arrangements relating to St. Paul's rights to vote or to dispose of
such securities of its Subsidiaries and (F) all the equity securities
of each St. Xxxx Subsidiary held by St. Xxxx or
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its Subsidiaries are fully paid and nonassessable and are owned by St.
Xxxx or its Subsidiaries free and clear of any Liens.
(ii) Except for stock in the Federal Home Loan Bank
of Chicago and readily marketable securities, neither St. Xxxx
nor any St. Xxxx Subsidiary owns beneficially any equity
securities or similar interests of any Person, or any interest
in a partnership, limited liability company, or joint venture
of any kind, other than a St. Xxxx Subsidiary.
(iii) Each of St. Paul's Subsidiaries has been duly
organized and is validly existing 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. Each of St. Xxxx and its Subsidiaries has
the corporate power and authority to carry on its business as it is now
being conducted and to own all its properties and assets; and St. Xxxx
has the corporate power and authority to execute, deliver and perform
its obligations under this Agreement and the Stock Option Agreement and
to consummate the transactions contemplated hereby and thereby.
(e) Corporate Authority. Subject in the case of this Agreement
to receipt of the requisite approval of this Agreement (including the
agreement of merger set forth herein) by the holders of two-thirds of
the outstanding shares of St. Xxxx Common Stock entitled to vote
thereon (which is the only St. Xxxx stockholder vote required thereon),
this Agreement, the Stock Option Agreement and the transactions
contemplated hereby and thereby have been authorized, deemed advisable
and approved by all necessary corporate action of St. Xxxx and the St.
Xxxx Board (by unanimous vote) on or prior to the date hereof. This
Agreement is a valid and legally binding obligation of St. Xxxx,
enforceable in accordance with its terms (except as enforceability may
be limited by applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer and similar laws of general
applicability relating to or affecting creditors' rights or by general
equity principles).
(f) Regulatory Filings; No Defaults. (i) No consents or
approvals of, or filings or registrations with, any Governmental
Authority are required to be made or obtained by St. Xxxx or any of its
Subsidiaries in connection with the execution, delivery or performance
by St. Xxxx of this Agreement or the Stock Option Agreement or the
consummation of the Company Merger or the Bank Merger except for (A)
filings of applications or notices with Regulatory Authorities, (B)
filings with the SEC and state securities authorities, and (C) the
filing of (and endorsement of, if required) certificates of merger and
articles of combination with the Delaware Secretary, the Administrator
and the OTS. As of the date hereof, St. Xxxx is not aware of any reason
why the approvals set forth in Section 7.01(b) will not be received in
a timely manner without the imposition of a condition, restriction or
requirement of the type described in Section 7.01(b).
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(ii) Subject to receipt from Regulatory Authorities
of the regulatory approvals referred to in the preceding
paragraph, and expiration of related waiting periods, and
required filings under federal and state securities laws, the
execution, delivery and performance of this Agreement (other
than the Bank Merger) and the Stock Option Agreement and the
consummation of the Company Merger and the exercise of rights
under the Stock Option Agreement 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
agreement, license, indenture or instrument of St. Xxxx or of
any of its Subsidiaries or to which St. Xxxx or any of its
Subsidiaries or properties is subject or bound, (B) constitute
a breach or violation of, or a default under, the St. Xxxx
Certificate or the St. Xxxx By-Laws, (C) require any consent
or approval under any such law, rule, regulation, judgment,
decree, order, governmental permit or license, agreement,
license, indenture or instrument or (D) result in any penalty
payment relating to borrowed funds, advances or financial
instruments; subject in the case of subparts A-C hereof to
breaches, violations, defaults or rights of termination
arising out of the consummation of the Company Merger that
would not have a Material Adverse Effect, individually or in
the aggregate, on St. Xxxx and the St. Xxxx Subsidiaries taken
as a whole; and provided real property leases to which St.
Xxxx is the successor in interest by virtue of the merger of
Xxxxxxx Bancorporation, with and into St. Xxxx (the "Xxxxxxx
Leases") shall not be taken into account, individually or in
the aggregate, in determining whether the representations in
this Section 5.03(f)(ii) have been breached.
(g) Financial Reports, SEC Documents, and Material Adverse
Effect. (i) St. Paul's 1998 Form 10-K and all other reports,
registration statements, definitive proxy statements or information
statements filed or to be filed by it or any of its Subsidiaries
subsequent to December 31, 1998 under the Securities Act, or under
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act, in the form
filed or to be filed (collectively, St. Paul's "SEC Documents") with
the SEC, as of the date filed, (A) complied or will comply in all
material respects with the applicable requirements under the Securities
Act or the Exchange Act, as the case may be, and (B) did not 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 light of the circumstances under which they were
made, not misleading; and each of the balance sheets or statements of
condition 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 St. Xxxx
and its Subsidiaries as of its date, and each of the statements of
income or results of operations and changes in stockholders' equity and
cash flows or equivalent statements in such SEC Documents (including
any related notes and schedules thereto) fairly presents, or will
fairly present, in all material respects, the results of operations,
changes in stockholders' equity and cash flows, as the case may be, of
St. Xxxx and its Subsidiaries for the periods to which they relate, in
each case in accordance with generally accepted accounting principles
consistently
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applied during the periods involved, except in each case as may be
noted therein, subject to normal year-end audit adjustments and the
absence of footnotes in the case of unaudited statements.
(ii) Except for liabilities incurred in connection
with negotiation of and compliance with this Agreement and
otherwise in connection with the transactions contemplated
hereby, since December 31, 1998 to the date hereof, St. Xxxx
and its Subsidiaries have not incurred any material liability
other than in the ordinary course of business consistent with
past practice.
(iii) Since December 31, 1998, (A) St. Xxxx and its
Subsidiaries have to the date hereof conducted their
respective businesses in the ordinary and usual course
consistent with past practice (excluding matters related to
this Agreement and the transactions contemplated hereby) and
(B) there has not occurred any event or circumstance that,
individually or taken together with all other facts,
circumstances and events (described in any paragraph of
Section 5.03 or otherwise), would constitute a Material
Adverse Effect with respect to St. Xxxx.
(h) Litigation. No material litigation, claim or other
proceeding before any Governmental Authority is pending against St.
Xxxx or any of its Subsidiaries and, to St. Paul's knowledge, no such
litigation, claim or other proceeding has been threatened.
(i) Regulatory Matters. (i) Neither St. Xxxx nor any of its
Subsidiaries or properties is a party to or is subject to any order,
decree, agreement, memorandum of understanding or similar arrangement
with, or a commitment letter to, or extraordinary supervisory letter
from, any federal or state governmental agency or authority charged
with the supervision or regulation of financial institutions and trust
companies (or their holding companies) or issuers of securities or
engaged in the insurance of deposits (including, without limitation,
the FRB, the OTS, the Commissioner, the DOJ, and the FDIC) or the
supervision or regulation of it or any of its Subsidiaries
(collectively, the "Regulatory Authorities").
(ii) Neither St. Xxxx nor any of its Subsidiaries has
been advised by any Regulatory Authority that such Regulatory
Authority is contemplating issuing or requesting (or is
considering the appropriateness of issuing or requesting) any
such order, decree, agreement, memorandum of understanding,
commitment letter, or extraordinary supervisory letter.
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(j) Compliance with Laws. Except for violations and acts of
noncompliance that are not material to the business, assets,
properties, operations or financial performance or condition of St.
Xxxx or any of its Subsidiaries, each of St. Xxxx and its Subsidiaries:
(i) is in substantial 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 of
1977, the Home Mortgage Disclosure Act and all other
applicable fair lending laws and other laws relating to
discriminatory business practices;
(ii) has all permits, licenses, authorizations,
orders and approvals of, and has made all filings,
applications and registrations with, all Governmental
Authorities that are required in order to permit them to own
or lease their properties and to conduct their businesses as
presently conducted; all such permits, licenses, certificates
of authority, orders and approvals are in full force and
effect and, to St. Paul's knowledge, no suspension or
cancellation of any such permit, license, certificate, order
or approval is threatened or will result from the consummation
of the transactions contemplated by this Agreement; and
(iii) has received, since December 31, 1998, no
notification or communication from any Governmental Authority
(A) asserting that St. Xxxx or any of its Subsidiaries is not
in compliance in any material respect with any of the
statutes, regulations, or ordinances which such Governmental
Authority enforces or (B) threatening to revoke any material
license, franchise, permit, or governmental authorization
(nor, to St. Paul's knowledge, do any grounds for any of the
foregoing exist).
(k) Material Contracts; Real Estate Leases; Defaults. As of
the date hereof, except for this Agreement, the Stock Option Agreement
and those agreements and other documents filed as exhibits to its SEC
Documents, neither it nor any of its Subsidiaries is a party to, bound
by or subject to any agreement, contract, arrangement, commitment or
understanding (whether written or oral) (i) that is a "material
contract" within the meaning of Item 601(b)(10) of the SEC's Regulation
S-K or (ii) that restricts or limits in any material way the conduct of
business by it or any of its Subsidiaries (it being understood that any
non-compete or similar provision shall be deemed material). Each real
estate lease (including White Hen Pantry Store ATMs but excluding other
ATMs) that may require the consent of the lessor or its agent resulting
from the Company Merger or the Bank Merger by virtue of a prohibition
or restriction relating to assignment, by operation of law or
otherwise, or change in control, is listed in the St. Xxxx Disclosure
Schedule identifying the section of the lease that contains such
prohibition or restriction. Neither St. Xxxx nor any of its
Subsidiaries is in default in any material respect under any material
contract, agreement, commitment, arrangement, lease, insurance policy
or other instrument to which it is a party,
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by which its respective assets, business, or operations may be bound or
affected, or under which it or its respective assets, business, or
operations receive benefits, 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.
(l) Brokers. No action has been taken by St. Xxxx 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 Previously
Disclosed fee to be paid by St. Xxxx to Xxxxxxx Xxxxx & Co.
(m) Employee Benefit Plans. (i) St. Xxxx has Previously
Disclosed a complete and accurate list of all existing bonus,
incentive, deferred compensation, pension, retirement, profit-sharing,
thrift, savings, employee stock ownership, stock bonus, stock purchase,
restricted stock, stock option, stock appreciation, phantom stock,
severance, welfare and fringe benefit plans, employment, severance and
change in control agreements and all similar practices, policies and
arrangements maintained by St. Xxxx or any of its Subsidiaries in which
any employee or former employee, consultant or former consultant or
director or former director of St. Xxxx or any of its Subsidiaries
participates or to which any such employees, consultants or directors
are a party other than plans and programs involving immaterial
obligations (the "Compensation and Benefit Plans"). Except as expressly
contemplated by a separate agreement entered into by St. Xxxx and COFI
on the date hereof, neither St. Xxxx nor any of its Subsidiaries has
any commitment to create any additional Compensation and Benefit Plan
or to modify, change or renew any existing Compensation and Benefit
Plan.
(ii) Each Compensation and Benefit Plan has been
operated and administered in all material respects in
accordance with its terms and with applicable law, including,
but not limited to, ERISA, the Code, the Securities Act, the
Exchange Act, the Age Discrimination in Employment Act, or any
regulations or rules promulgated thereunder, and all material
filings, disclosures and notices required by ERISA, the Code,
the Securities Act, the Exchange Act, the Age Discrimination
in Employment Act and any other applicable law have been
timely made. Each Compensation and Benefit Plan which is an
"employee pension benefit plan" within the meaning of Section
3(2) of ERISA (a "Pension Plan") and which is intended to be
qualified under Section 401(a) of the Code has received a
favorable determination letter from the IRS, and St. Xxxx is
not aware of any circumstances which are reasonably likely to
result in revocation of any such favorable determination
letter. There is no material pending or, to the knowledge of
St. Xxxx, threatened legal action, suit or claim relating to
the Compensation and Benefit Plans (other than routine claims
for benefits). Neither St. Xxxx nor any of its Subsidiaries
has engaged in a transaction, or omitted to take any action,
with respect to any Compensation and Benefit Plan that would
reasonably be expected to subject St. Xxxx or any of its
Subsidiaries to a material tax or penalty imposed by either
Section 4975 of the Code
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or Section 502 of ERISA, assuming for purposes of Section 4975
of the Code that the taxable period of any such transaction
expired as of the date hereof.
(iii) No material liability (other than for payment
of premiums to the PBGC which have been made or will be made
on a timely basis) under Title IV of ERISA has been or is
expected to be incurred by St. Xxxx or any of its Subsidiaries
with respect to any ongoing, frozen or terminated
"single-employer plan", within the meaning of Section
4001(a)(15) of ERISA, currently or formerly maintained by any
of them, or any single-employer plan of any entity (an "ERISA
Affiliate") which is considered one employer with St. Xxxx
under Section 4001(a)(14) of ERISA or Section 414(b) or (c) of
the Code (an "ERISA Affiliate Plan"). None of St. Xxxx, any of
its Subsidiaries or any ERISA Affiliate has contributed, or
has been obligated to contribute, to a multiemployer plan
under Subtitle E of Title IV of ERISA at any time since
September 26, 1980. 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 Compensation and Benefit Plan or by any
ERISA Affiliate Plan 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 St.
Paul's knowledge, no condition exists that presents a material
risk that such proceedings will be instituted by the PBGC. To
the knowledge of St. Xxxx, there is no pending investigation
or enforcement action by the PBGC, DOL or IRS or any other
Governmental Authority with respect to any Compensation and
Benefit Plan. Under each Pension Plan and ERISA Affiliate
Plan, as of the date of the most recent actuarial valuation
performed prior to the date of this Agreement, 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 such
actuarial valuation of such Pension Plan or ERISA Affiliate
Plan), did not exceed the then current value of the assets of
such Pension Plan or ERISA Affiliate Plan and since such date
there has been neither a material adverse change in the
financial condition of such Pension Plan or ERISA Affiliate
Plan nor any amendment or other change to such Pension Plan or
ERISA Affiliate Plan that would increase the amount of
benefits thereunder which reasonably could be expected to
change such result.
(iv) All material contributions required to be made
under the terms of any Compensation and Benefit Plan or ERISA
Affiliate Plan or any employee benefit arrangements under any
collective bargaining agreement to which St. Xxxx or any of
its Subsidiaries is a party have been timely made or have been
reflected on St. Paul's financial statements. Neither any
Pension Plan nor any ERISA Affiliate Plan has an "accumulated
funding deficiency" (whether or not waived) within the meaning
of Section 412 of the Code or Section 302 of ERISA. None of
St. Xxxx, any of its Subsidiaries or any ERISA Affiliate (x)
has provided, or would reasonably be expected to be required
to provide, security to any Pension Plan or to any ERISA
Affiliate Plan pursuant to Section 401(a)(29) of the Code, and
(y) has taken any
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action, or omitted to take any action, that has resulted, or
would reasonably be expected to result, in the imposition of a
lien under Section 412(n) of the Code or pursuant to ERISA.
(v) Neither St. Xxxx nor any of its Subsidiaries has
any obligations to provide retiree health and life insurance
or other retiree death benefits under any Compensation and
Benefit Plan, other than benefits mandated by Section 4980B of
the Code. There has been no communication to employees by St.
Xxxx or any of its Subsidiaries that would reasonably be
expected to promise or guarantee such employees retiree health
or life insurance or other retiree death benefits on a
permanent basis.
(vi) St. Xxxx and its Subsidiaries do not maintain
any Compensation and Benefit Plans covering foreign employees.
(vii) Except as expressly contemplated by a separate
agreement entered into by St. Xxxx and COFI on the date
hereof, the consummation of the transactions contemplated by
this Agreement would not, directly or indirectly (including,
without limitation, as a result of any termination of
employment prior to or following the Effective Time)
reasonably be expected to (A) entitle any employee, consultant
or director to any payment (including severance pay or similar
compensation) or any increase in compensation, (B) result in
the vesting or acceleration of any benefits under any
Compensation and Benefit Plan or (C) result in any material
increase in benefits payable under any Compensation and
Benefit Plan.
(viii) Neither St. Xxxx nor any of its Subsidiaries
maintains any compensation plans, programs or arrangements the
payments under which 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.
(ix) To the knowledge of St. Xxxx, 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 or following the
Effective Time), none of COFI, St. Xxxx or 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.
(x) There are no SARs, LSARs, shares of restricted
stock, performance shares or performance units (as such terms
are defined in the St. Xxxx 1995 Incentive Plan) outstanding
under the St. Xxxx Xxxxx Plans and neither St. Xxxx nor any
St. Xxxx Subsidiary has any commitment or obligation to make
any awards thereof.
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(xi) There are no phantom stock shares or awards
outstanding.
(n) Labor Matters. Neither St. Xxxx nor any of its
Subsidiaries is a party to or is bound by any collective bargaining
agreement, contract or other agreement or understanding with a labor
union or labor organization, nor is St. Xxxx 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 St. Xxxx 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 St.
Paul's knowledge, threatened, nor is St. Xxxx aware of any activity
involving its or any of its Subsidiaries' employees seeking to certify
a collective bargaining unit or engaging in other organizational
activity.
(o) Takeover Laws; St. Xxxx Rights Agreement; Dissenters
Rights. This Agreement, the Stock Option Agreement and the transactions
contemplated hereby and thereby are not subject to the requirements of
any "moratorium," "control share", "fair price", "affiliate
transactions", "business combination" or other antitakeover laws and
regulations of any state, including the provisions of Section 203 of
the DGCL ("Takeover Laws") applicable to St. Xxxx or any St. Xxxx
Subsidiary. The provisions of Article 12 of the St. Xxxx Certificate do
not apply to the entering into of this Agreement, the Stock Option
Agreement and the transactions contemplated hereby and thereby,
including the Company Merger. It has (i) duly approved an appropriate
amendment to the St. Xxxx Rights Agreement and (ii) taken all other
action necessary or appropriate so that the entering into of this
Agreement and the Stock Option Agreement and the consummation of the
transactions contemplated hereby and thereby do not and will not result
in the ability of any Person to exercise any Rights, as defined in the
St. Xxxx Rights Agreement (the "St. Xxxx Rights"), or enable or require
the St. Xxxx Rights to separate from the shares of St. Xxxx Common
Stock to which they are attached or to be triggered or become
exercisable. No "Distribution Date" or "Shares Acquisition Date" (as
such terms are defined in the St. Xxxx Rights Agreement) has occurred
or will occur in connection with the entering into of this Agreement,
the Stock Option Agreement and the transactions contemplated hereby and
thereby. The holders of St. Xxxx Common Stock will not have dissenters'
rights in connection with the Company Merger.
(p) Environmental Matters. To St. Paul's knowledge, neither
the conduct nor operation of St. Xxxx or its Subsidiaries nor any
condition of any property currently or previously owned or operated by
any of them (including, without limitation, in a fiduciary or agency
capacity), or on which any of them holds a Lien, results or resulted in
a violation of any Environmental Laws and to St. Paul's knowledge, no
condition has existed or event has occurred with respect to any of them
or any such property that, with notice or the passage of time, or both,
is reasonably likely to result in any liability to St. Xxxx or any St.
Xxxx Subsidiary under or by reason of any Environmental Laws or
Materials of Environmental Concern. To St. Paul's knowledge, except for
any notice for which, in St. Paul's reasonable judgment, there is no
reasonable basis, neither St. Xxxx nor any of its
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Subsidiaries has received any notice from any person or entity that St.
Xxxx or its Subsidiaries or the operation or condition of any property
ever owned, operated, or held as collateral or in a fiduciary capacity
by any of them are or were in violation of or otherwise are alleged to
have liability under any Environmental Law or relating to Materials of
Environmental Concern, including, but not limited to, responsibility
(or potential responsibility) for the cleanup or other remediation of
Materials of Environmental Concern at, on, beneath, or originating from
any such property.
(q) Tax Matters. (i) (a) All Tax Returns that are required to
be filed by or with respect to St. Xxxx or its Subsidiaries have been
duly filed, or requests for extensions have been timely filed (or an
extension is automatic) and any such extension has been granted and has
not been rescinded, (b) all Taxes shown to be due on Tax Returns
referred to in clause (a), if filed, and all Taxes required to be shown
on the Tax Returns for which extensions have been granted have been
paid in full or adequate provision has been made for such Taxes on St.
Xxxx=s most recent balance sheet provided to COFI, (c) the Tax Returns
referred to in clause (a) that have been filed have been examined by
the IRS or the appropriate state, local or foreign taxing authority or
the period for assessment of the Taxes in respect of which such Tax
Returns were required to be filed has expired, (d) all deficiencies
asserted or assessments made as a result of such examinations have been
paid in full or non-material amounts are being contested in good faith,
(e) no material issues that have been raised by the relevant taxing
authority in connection with the examination of any of the Tax Returns
referred to in clause (a) are currently pending, and (f) no waivers of
statutes of limitation have been given by or requested with respect to
any Taxes of St. Xxxx or its Subsidiaries. St. Xxxx has made available
to COFI true and correct copies of the United States federal income Tax
Returns filed by St. Xxxx and its Subsidiaries for each of the three
most recent fiscal years ended on or before December 31, 1998. Neither
St. Xxxx nor any of its Subsidiaries has any material liability with
respect to income, franchise or similar Taxes that accrued on or before
the end of the most recent period covered by St. Paul's SEC Documents
filed prior to the date hereof in excess of the amounts accrued with
respect thereto that are reflected in the financial statements included
in St. Paul's SEC Documents filed on or prior to the date hereof. As of
the date hereof, neither St. Xxxx nor any of its Subsidiaries has any
reason to believe that any conditions exist that might prevent or
impede the Company Merger or the Bank Merger from qualifying as a
reorganization within the meaning of Section 368(a) of the Code.
(ii) No Tax is required to be withheld pursuant to
Section 1445 of the Code as a result of the transfer
contemplated by this Agreement.
(iii) St. Xxxx and its Subsidiaries will not be
liable for any taxes as a result of the Company Merger.
(r) Risk Management Instruments. All material interest rate
swaps, caps, floors, option agreements, futures and forward contracts
and other similar risk management arrangements, whether entered into
for St. Paul's own account, or for the account of one or
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34
more of St. Paul's Subsidiaries or their customers (all of which are
Previously Disclosed), were entered into (i) in accordance with prudent
business practices and in all material respects in compliance with all
applicable laws, rules, regulations and regulatory policies and (ii)
with counterparties believed to be financially responsible at the time;
and each of them constitutes the valid and legally binding obligation
of St. Xxxx 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 is in full
force and effect. Neither St. Xxxx nor its Subsidiaries, nor to St.
Paul's knowledge any other party thereto, is in breach of any of its
obligations under any such agreement or arrangement in any material
respect.
(s) Insurance. St. Xxxx has Previously Disclosed all of the
material insurance policies, binders, or bonds maintained by St. Xxxx
or its Subsidiaries. St. Xxxx and its Subsidiaries are insured with
reputable insurers against such risks and in such amounts as the
management of St. Xxxx reasonably has determined to be prudent in
accordance with industry practices and in accordance in all material
respects with all contractual obligations. All such insurance policies
are in full force and effect; St. Xxxx and its Subsidiaries are not in
material default thereunder; and all material claims thereunder have
been filed in due and timely fashion.
(t) Accounting Treatment. As of the date hereof, St. Xxxx is
aware of no reason why the Company Merger will fail to qualify for
"pooling-of-interests" accounting treatment.
(u) Year 2000 Compliant. Neither St. Xxxx nor any of its
Subsidiaries has received, or has reason to believe that it will
receive, a rating of less than "satisfactory" on any OTS Year 2000
Report of Examination. St. Xxxx has Previously Disclosed a complete and
accurate copy of its plan for addressing the issues set forth in the
statements of the FFIEC dated May 5, 1997, entitled "Year 2000 Project
Management Awareness," and December 17, 1997, entitled "Safety and
Soundness Guidelines Concerning the Year 2000 Business Risk," as such
issues affect it and its Subsidiaries, and such plan is in material
compliance with the schedule set forth in the FFIEC statements. Neither
St. Xxxx nor any of its Subsidiaries, to the extent applicable, has
received, or has reason to believe that it will receive, a rating of
less than satisfactory on any Year 2000 examination by the Commissioner
or any other applicable Governmental Authority of the State of
Illinois. St. Xxxx and its Subsidiaries shall complete Year 2000
testing and certification in accordance with the requirements set forth
in a separate letter from St. Xxxx to COFI of even date herewith.
(v) Governmental Reviews. No investigation or review by any
Governmental Authority with respect to St. Xxxx or any St. Xxxx
Subsidiary is pending or, to the knowledge of St. Xxxx, threatened, nor
has any Governmental Authority indicated to St. Xxxx or any St.
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35
Xxxx Subsidiary an intention to conduct the same, other than normal or
routine regulatory examinations.
(w) Fairness Opinion. On the date of this Agreement, Xxxxxxx
Xxxxx & Co. has provided to the St. Xxxx Board a written fairness
opinion to the effect that the Exchange Ratio is fair to the
stockholders of St. Xxxx from a financial point of view.
(x) Compliance with Servicing Obligations. St. Xxxx and the
St. Xxxx Subsidiaries are in compliance in all material respects with
all contract, agency and investor requirements and guidelines, and all
applicable laws, rules and regulations of Governmental Authorities,
relating to the servicing and administration of loans by them, or any
of them, including but not limited to, properly and timely making
interest rate adjustments to adjustable rate loans.
5.04 Representations and Warranties of COFI. Subject to Sections 5.01
and 5.02 and except as Previously Disclosed (with COFI using its reasonable best
efforts to disclose information in its Disclosure Schedule corresponding to the
relevant paragraph below), COFI hereby represents and warrants to St. Xxxx as
follows:
(a) Organization, Standing and Authority. COFI is a
corporation duly organized, validly existing and in good standing under
the laws of the State of Delaware. COFI is duly qualified to do
business and is in good standing in the states of the United States and
foreign jurisdictions where its ownership or leasing of property or
assets or the conduct of its business requires it to be so qualified.
(b) COFI Stock. (i) As of the date hereof, the authorized
capital stock of COFI consists solely of (A) 360,000,000 shares of COFI
Common Stock, of which no more than 166,401,568 shares were
outstanding, and zero shares were held in treasury, as of the day prior
to the date hereof and (B) 20,000,000 shares of preferred stock, $0.01
par value per share, of which none were issued and outstanding on the
date hereof. As of the date hereof, COFI does not have any Rights
issued or outstanding with respect to COFI Common Stock and COFI does
not have any commitment to authorize, issue or sell any COFI Common
Stock or Rights, other than pursuant to (A) this Agreement, (B)
outstanding stock options (and any mandatory future awards under stock
option plans) that have been Previously Disclosed, (C) its dividend
reinvestment plan on terms Previously Disclosed, and (D) the COFI
Rights Agreement. The outstanding shares of COFI Common Stock have been
duly authorized and are validly issued and outstanding, fully paid and
nonassessable, and subject to no preemptive rights (and were not issued
in violation of any preemptive rights).
(ii) The shares of COFI Common Stock to be issued in
exchange for shares of St. Xxxx Common Stock in the Company
Merger, when issued in accordance with the terms of this
Agreement, will be duly authorized, validly issued, fully paid
and nonassessable and subject to no preemptive rights.
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(c) Subsidiaries. Each of COFI's Subsidiaries has been duly
organized and is validly existing in good standing under the laws of
the jurisdiction of its organization, and is duly qualified to do
business and is 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 and COFI owns, directly or indirectly,
all the issued and outstanding equity securities of each of its
Subsidiaries.
(d) Corporate Power. Each of COFI and its Subsidiaries has the
corporate power and authority to carry on its business as it is now
being conducted and to own all its properties and assets; and each of
COFI and Charter Michigan has the corporate power and authority to
execute, deliver and perform its obligations under this Agreement and,
in the case of COFI, the Stock Option Agreement, and to consummate the
transactions contemplated hereby and thereby.
(e) Corporate Authority. Subject to the approval of the issuance of
COFI Common Stock to be issued in the Company Merger by the holders of a
majority of the outstanding COFI Common Stock in accordance with the NASDAQ or
NYSE rules, whichever is applicable (which is the only COFI stockholder vote
required thereon), this Agreement, the Stock Option Agreement and the
transactions contemplated hereby and thereby have been authorized, deemed
advisable and approved by all necessary corporate action of COFI and Charter
Michigan and the COFI Board and the Charter Michigan Board on or prior to the
date hereof. This Agreement is a valid and legally binding agreement of COFI and
Charter Michigan, enforceable in accordance with its terms (except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and similar laws of general
applicability relating to or affecting creditors= rights or by general equity
principles).
(f) Regulatory Filings; No Defaults. (i) No consents or
approvals of, or filings or registrations with, any Governmental
Authority or with any third party are required to be made or obtained
by COFI or any of its Subsidiaries in connection with the execution,
delivery or performance by COFI or Charter Michigan of this Agreement
or the consummation of the Company Merger or the Bank Merger except for
(A) the filings referred to in Section 5.03(f)(i); (B) 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 COFI Common Stock in the Company Merger; and (C)
receipt of the approvals set forth in Section 7.01(b). As of the date
hereof, COFI is not aware of any reason why the approvals set forth in
Section 7.01(b) will not be received in a timely manner without the
imposition of a condition, restriction or requirement of the type
described in Section 7.01(b).
(ii) Subject to the satisfaction of the requirements
referred to in the preceding paragraph, and expiration of the
related waiting periods, and required filings under federal
and state securities laws, the execution, delivery and
performance of this Agreement and the consummation of the
Company Merger do not and will not (A) constitute a breach or
violation of, or a default under, or give
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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
agreement, license, indenture or instrument of COFI or of any
of its Subsidiaries or to which COFI 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 COFI 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,
license, indenture or instrument.
(g) Financial Reports, SEC Documents; Material Adverse Effect,
and Other Matters. (i) COFI's SEC Documents, as of the date filed, (A)
complied or will comply in all material respects with the applicable
requirements under the Securities Act or the Exchange Act, as the case
may be, and (B) did not 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 light of the
circumstances under which they were made, not misleading; and each of
the balance sheets or statements of condition 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 COFI and its Subsidiaries as of its
date, and each of the statements of income or results of operations and
changes in stockholders' equity and cash flows or equivalent statements
in such SEC Documents (including any related notes and schedules
thereto) fairly presents, or will fairly present, in all material
respects, the results of operations, changes in stockholders' equity
and cash flows, as the case may be, of COFI 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
financial statements.
(ii) Since December 31, 1998, (A) COFI and its
Subsidiaries have to the date hereof conducted their
respective businesses and incurred their respective material
liabilities in the ordinary and usual course consistent with
past practice (excluding branch and deposit purchases and
matters related to this Agreement and the transactions
contemplated hereby) and (B) there has not occurred any event
or circumstance that, individually or taken together with all
other facts, circumstances and events (described in any
paragraph of Section 5.04 or otherwise), would constitute a
Material Adverse Effect with respect to COFI.
(iii) As of the date of this Agreement, neither COFI
nor any of its Subsidiaries is in default in any material
respect under any material contract (as defined in Section
5.03(k)) to which it is a party, by which its respective
assets, business or operations may be bound or affected, or
under which it or its respective assets, business or
operations receive benefits, 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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(h) Litigation; Regulatory Action. (i) No material litigation,
claim or other proceeding before any Governmental Authority is pending
against COFI or any of its Subsidiaries and, to COFI's knowledge, no
such litigation, claim or other proceeding has been threatened.
(ii) Neither COFI nor any of its Subsidiaries or
properties is a party to or is subject to any order, decree,
agreement, memorandum of understanding or similar arrangement
with, or a commitment letter to, or extraordinary supervisory
letter from a Regulatory Authority, nor has COFI or any of its
Subsidiaries been advised by a Regulatory Authority that such
agency is contemplating issuing or requesting (or is
considering the appropriateness of issuing or requesting) any
such order, decree, agreement, memorandum of understanding,
commitment letter or extraordinary, supervisory letter.
(ii) Compliance with Laws. Except for violations and acts of
noncompliance that are not material to the business, assets,
properties, operations or financial performance or condition of COFI or
any of its Subsidiaries, each of COFI and its Subsidiaries:
(i) is in substantial 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 of
1977, the Home Mortgage Disclosure Act and all other
applicable fair lending laws and other laws relating to
discriminatory business practices; and
(ii) has all permits, licenses, authorizations,
orders and approvals of, and has made all filings,
applications and registrations with, all Governmental
Authorities that are required in order to permit them to
conduct their businesses substantially as presently conducted;
all such permits, licenses, certificates of authority, orders
and approvals are in full force and effect and, to the best of
its knowledge, no suspension or cancellation of any such
permit, license, certificate, order or approval is threatened
or will result from the consummation of the transactions
contemplated by this Agreement; and
(iii) has received, since December 31, 1998, no
notification or communication from any Governmental Authority
(A) asserting that COFI or any of its Subsidiaries is not in
compliance in any material respect with any of the statutes,
regulations, or ordinances which such Governmental Authority
enforces or (B) threatening to revoke any material license,
franchise, permit, or governmental authorization (nor, to
COFI's knowledge, do any grounds for any of the foregoing
exist).
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(j) Brokers. No action has been taken by COFI 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, except for a fee to be
paid by COFI to Xxxxxxx Xxxxx Xxxxxx.
(k) Takeover Laws. COFI 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 and thereby from,
and this Agreement, the Stock Option Agreement and the transactions
contemplated hereby and thereby are exempt from, the requirements of
any Takeover Laws applicable to COFI or Charter Michigan or their
Subsidiaries.
(l) Environmental Matters. To COFI's knowledge, neither the
conduct nor operation of COFI or its Subsidiaries nor any condition of
any property currently or previously owned or operated by any of them
(including, without limitation, in a fiduciary or agency capacity), or
on which any of them holds a Lien, results or resulted in a violation
of any Environmental Laws and to COFI's knowledge no condition has
existed or event has occurred with respect to any of them or any such
property that, with notice or the passage of time, or both, is
reasonably likely to result in any liability to COFI or any COFI
Subsidiary under or by reason of Environmental Laws or Materials of
Environmental Concern. To COFI's knowledge, except for any notice for
which, in COFI's reasonable judgment, there is no reasonable basis,
neither COFI nor any of its Subsidiaries has received any notice from
any person or entity that COFI or its Subsidiaries or the operation or
condition of any property ever owned, operated, or held as collateral
or in a fiduciary capacity by any of them are or were in violation of
or otherwise are alleged to have liability under any Environmental Law
or relating to Materials of Environmental Concern, including, but not
limited to, responsibility (or potential responsibility) for the
cleanup or other remediation of any Materials of Environmental Concern
at, on, beneath, or originating from any such property.
(m) Tax Matters. (i) All Tax Returns that are required to be
filed by or with respect to COFI or its Subsidiaries have been duly
filed, or requests for extensions have been timely filed (or an
extension is automatic) and any such extension has been granted and has
not been rescinded, (ii) all Taxes shown to be due on Tax Returns
referred to in clause (i) , if filed, and all Taxes required to be
shown on the Tax Returns for which extensions have been granted have
been paid in full or adequate provision has been made for such Taxes on
COFI=s most recent balance sheet provided to St. Xxxx, (iii) the Tax
Returns referred to in clause (i) that have been filed have been
examined by the IRS or the appropriate state, local or foreign taxing
authority or the period for assessment of the Taxes in respect of which
such Tax Returns were required to be filed has expired, (iv) all
deficiencies asserted or assessments made as a result of such
examinations have been paid in full, or non-material amounts are being
contested in good faith, (v) no material issues that have been raised
by the relevant taxing authority in connection with the examination of
any of the Tax Returns referred to in clause (i) are currently pending,
and (vi) no waivers of statutes of limitation have been given by or
requested with respect to any Taxes of COFI or its Subsidiaries.
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Neither COFI nor any of its Subsidiaries has any material liability
with respect to income, franchise or similar Taxes that accrued on or
before the end of the most recent period covered by COFI's SEC
Documents filed prior to the date hereof in excess of the amounts
accrued with respect thereto that are reflected in the financial
statements included in COFI's SEC Documents filed on or prior to the
date hereof. As of the date hereof, neither COFI nor any of its
Subsidiaries has any reason to believe that any conditions exist that
might prevent or impede the Company Merger or the Bank Merger from
qualifying as a reorganization within the meaning of Section 368(a) of
the Code.
(n) Accounting Treatment. As of the date hereof, COFI is aware
of no reason why the Company Merger will fail to qualify for
"pooling-of-interests" accounting treatment.
(o) COFI Ownership of St. Xxxx Xxxxx. Neither COFI nor any of
its Subsidiaries either beneficially owns any shares of St. Xxxx Common
Stock or, other than as contemplated by this Agreement and the Stock
Option Agreement, has any option, warrant or right of any kind to
acquire the beneficial ownership of any shares of St. Xxxx Common
Stock.
(p) Year 2000. Neither COFI nor any of its Subsidiaries has
received, or has reason to believe that it will receive, a rating of
less than "satisfactory" on any OTS Year 2000 Report of Examination.
COFI has Previously Disclosed a complete and accurate copy of its plan
for addressing the issues set forth in the statements of the FFIEC
dated May 5, 1997, entitled "Year 2000 Project Management Awareness,"
and December 17, 1997, entitled "Safety and Soundness Guidelines
Concerning the Year 2000 Business Risk," as such issues affect it and
its Subsidiaries, and such plan is in material compliance with the
schedule set forth in the FFIEC statements. COFI is in compliance with
FFIEC guidelines in all material respects.
(q) Governmental Reviews. No investigation or review by any
Governmental Authority with respect to COFI or any of its Subsidiary is
pending or, to the knowledge of COFI, threatened, nor has any
Governmental Authority indicated to COFI or any of its Subsidiary an
intention to conduct the same, other than normal or routine regulatory
examinations.
(r) Risk Management Instruments. All material interest rate
swaps, caps, floors, option agreements, futures and forward contracts
and other similar risk management arrangements, whether entered into
for COFI's own account, or for the account of one or more of COFI's
Subsidiaries or their customers, were entered into (i) in accordance
with prudent business practices and in all material respects in
compliance with all applicable laws, rules, regulations and regulatory
policies and (ii) with counterparties believed to be financially
responsible at the time; and each of them constitutes the valid and
legally binding obligation of COFI 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
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relating to or affecting creditors' rights or by general equity
principles), and is in full force and effect. Neither COFI nor its
Subsidiaries, nor to COFI's knowledge any other party thereto, is in
breach of any of its obligations under any such agreement or
arrangement in any material respect.
(s) Fairness Opinion. On the date of this Agreement, Xxxxxxx
Xxxxx Xxxxxx has provided to the COFI Board a written fairness opinion
to the effect that the Exchange Ratio is fair to the stockholders of
COFI from a financial point of view.
(t) Employee Benefit Plans. Each employee benefit plan,
program, policy or arrangement (including, but not limited to employee
benefit plans (as defined in section 3(3) of ERISA) which COFI or any
of its Subsidiaries maintain or contribute to for the benefit of their
current or former employees complies and has been administered in form
and in operation in all material respects with all applicable
requirements of law and no notice has been issued by any Governmental
Authority questioning or challenging such compliance.
ARTICLE VI
COVENANTS
6.01 Reasonable Best Efforts. Subject to the terms and conditions of
this Agreement, each of St. Xxxx and COFI 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 Transaction as promptly as
practicable and otherwise to enable consummation of the Transaction and shall
cooperate fully with the other party hereto to that end. Such reasonable best
efforts shall include, without limitation, using reasonable best efforts to
obtain all necessary consents, approvals or waivers from Regulatory Authorities
necessary for the consummation of the Transaction and opposing vigorously any
litigation or administrative proceeding or directive relating to this Agreement
or the Transaction, including, promptly appealing any adverse court or agency
order. Without limiting the generality of the foregoing, each of St. Xxxx and
COFI agrees to use its reasonable best efforts to cause the Company Merger to be
consummated on or before October 31, 1999.
6.02 Stockholder Approvals. COFI and St. Xxxx agree to take, in
accordance with applicable law or NASDAQ or NYSE rules, whichever is applicable,
and their certificates of incorporation and by-laws, all action necessary to
convene an appropriate meeting of their stockholders to consider and vote upon,
in the case of St. Xxxx, the adoption of this Agreement and in the case of COFI
to approve the issuance of COFI Common Stock to be issued in the Company Merger,
and in each case any other matter required to be approved by such stockholders
for consummation of the Company Merger (including any adjournment or
postponement, the "COFI Meeting" or "St. Xxxx Meeting", whichever is
applicable), in each case as promptly as practicable after the Registration
Statement is declared effective. The COFI Board and the St. Xxxx Board shall
each recommend such adoption or approval, and COFI and St. Xxxx shall take all
reasonable, lawful action to solicit such adoption or approval by its
stockholders; provided if either the St. Xxxx Board
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or COFI Board concludes by at least a two-thirds vote of its entire membership
that such recommendation would result in a violation of its fiduciary duties to
stockholders under applicable law (as determined in good faith after
consultation with counsel) arising by virtue of St. Paul's receipt of a St. Xxxx
Proposal or COFI's receipt of a COFI Proposal, whichever is applicable, then
such Board will not be required to make such recommendations.
6.03 Registration Statement. (a) COFI agrees to promptly prepare a
registration statement on Form S-4 (the "Registration Statement") which, subject
to compliance by St. Xxxx with Sections 6.03(b) and (c), will comply in all
material respects with applicable federal securities laws to be filed by COFI
with the SEC in connection with the issuance of COFI Common Stock in the Company
Merger (including the joint proxy statement and prospectus and other proxy
solicitation materials of COFI and St. Xxxx constituting a part thereof (the
"Proxy Statement") and all related documents). St. Xxxx agrees to cooperate, and
to cause its Subsidiaries to cooperate, with COFI, its counsel and its
accountants, in preparation of the Registration Statement and the Proxy
Statement; and provided that St. Xxxx and its Subsidiaries have cooperated as
required above, COFI agrees to file the Registration Statement (or the form of
the Proxy Statement) in preliminary form with the SEC as promptly as reasonably
practicable and shall use reasonable best efforts to cause such filing to occur
within 45 days after execution of this Agreement. If COFI files the Proxy
Statement in preliminary form, it agrees 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 St. Xxxx and COFI agrees
to use all reasonable efforts to cause the Registration Statement to be declared
effective under the Securities Act as promptly as reasonably practicable after
filing thereof. COFI also agrees to use all reasonable efforts to obtain, prior
to the effective date of the Registration Statement, all necessary state
securities law or "Blue Sky" permits and approvals required to carry out the
transactions contemplated by this Agreement. St. Xxxx agrees to furnish to COFI
all information concerning St. Xxxx, its Subsidiaries, officers, directors and
stockholders as may be reasonably requested in connection with the foregoing.
(b) Each of St. Xxxx and COFI agrees, as to itself and its
Subsidiaries, that none of the information supplied or to be supplied
by it for inclusion or incorporation by reference in (i) the
Registration Statement will, at the time the Registration Statement and
each amendment or supplement thereto, if any, becomes effective under
the Securities Act, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, and (ii) the
Proxy Statement and any amendment or supplement thereto will, at the
date of mailing to stockholders and at the time of the COFI Meeting or
the St. Xxxx Meeting, as the case may be, 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 or any statement which, in the light of the circumstances
under which such statement is made, will be false or misleading with
respect to any material fact, or which will omit to state any material
fact necessary in order to make the statements therein not false or
misleading or necessary to correct any statement in any earlier
statement in the Proxy Statement or any amendment or supplement
thereto. Each of St. Xxxx and COFI further agrees that if it shall
become aware prior to the Effective Date of any information furnished
by it that would cause
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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) COFI agrees to advise St. Xxxx, promptly after COFI
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 COFI Common 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.
(d) Each of COFI and St. Xxxx, in consultation with the other,
shall employ professional proxy solicitors to assist it in contacting
stockholders in connection with soliciting votes on the matters to be
considered and voted upon at the COFI Meeting and St. Xxxx Meeting.
6.04 Press Releases. Each of St. Xxxx and COFI agrees that it will not,
without the prior approval of the other party, issue any press release or
written statement for general circulation relating to the transactions
contemplated hereby, except as otherwise required by applicable law or
regulation or NASDAQ or NYSE rules, whichever is applicable, and then only after
making reasonable efforts to first consult with the other party.
6.05 Access; Information. (a) Each of St. Xxxx and COFI agrees that
upon reasonable notice and subject to applicable laws relating to the exchange
of information, it shall afford the other party and the other party=s
Representatives, such access during normal business hours throughout the period
prior to the Effective Time to the books, records (including, without
limitation, Tax Returns and work papers of independent auditors), properties,
personnel and to such other information as any party may reasonably request and,
during such period, it shall furnish promptly to such other party (i) a copy of
each material report, schedule and other document filed by it pursuant to the
requirements of federal or state securities or banking laws, and (ii) all other
information concerning the business, properties and personnel of it and its
Subsidiaries as the other may reasonably request. St. Xxxx shall also permit
COFI or its environmental consultant, at the sole expense of COFI, to conduct
environmental audits, studies and tests on real property currently owned, leased
or used by St. Xxxx or any of its Subsidiaries or upon which any of them have a
Lien; provided however COFI shall not conduct any subsurface or phase II
environmental assessments on any such property unless the phase I environmental
assessment (or in the absence thereof based upon the advise of COFI's
environmental consultant) indicates a reasonable basis for conducting further
assessments, studies or testing. In the event any subsurface or phase II site
assessments are conducted (which assessments shall be at COFI's sole expense),
COFI shall indemnify St. Xxxx for all costs and expenses associated with
returning the property to its previous condition. St. Xxxx shall provide copies
to COFI of any phase I site assessments or other environmental reports in its or
its Subsidiaries' possession or control with respect to any real property
previously or currently owned, leased or used by St. Xxxx or any of its
Subsidiaries or upon which any of them has a Lien. COFI
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shall not have the right to conduct a phase I or phase II assessment with
respect to any real property upon which St. Xxxx or its Subsidiaries have a
Lien.
(b) Each of St. Xxxx and COFI agrees that it will not, and
will cause its Representatives not to, use any information obtained
pursuant to this Section 6.05 (as well as any other information
obtained prior to the date hereof in connection with the entering into
of this Agreement) for any purpose unrelated to the consummation of the
transactions contemplated by this Agreement. Subject to the
requirements of law, each party will keep confidential, and will cause
its Representatives to keep confidential, all information and documents
obtained pursuant to this Section 6.05 (as well as any other
information obtained prior to the date hereof in connection with the
entering into of this Agreement) unless such information (i) was
already known to such party, (ii) becomes available to such party from
other sources not known by such party to be bound by a confidentiality
obligation, (iii) is disclosed with the prior written approval of the
party to which such information pertains or (iv) is or becomes readily
ascertainable from published information or trade sources. In the event
that this Agreement is terminated or the transactions contemplated by
this Agreement shall otherwise fail to be consummated, each party shall
promptly cause all copies of documents, extracts thereof or notes,
analyses, compilations, studies or other documents containing
information and data as to another party hereto to be returned to the
party which furnished the same. No investigation by either party of the
business and affairs of the other shall affect or be deemed to modify
or waive any representation, warranty, covenant or agreement in this
Agreement, or the conditions to either party's obligation to consummate
the transactions contemplated by this Agreement.
(c) During the period from the date of this Agreement to the
Effective Time, each party shall promptly furnish the other with copies
of all monthly and other interim financial statements produced in the
ordinary course of business as the same shall become available.
6.06 St. Xxxx Proposal. St. Xxxx agrees that it shall not, and shall
cause its Subsidiaries and its and its Subsidiaries' officers, directors,
agents, advisors and affiliates not to, solicit or encourage inquiries or
proposals with respect to, or engage in any negotiations concerning, or provide
any confidential information to, or have any discussions with, any person
relating to, any St. Xxxx Proposal. It shall immediately cease and cause to be
terminated any activities, discussions or negotiations conducted prior to the
date of this Agreement with any parties other than COFI with respect to any of
the foregoing and shall use its reasonable best efforts to enforce any
confidentiality or similar agreement relating to a St. Xxxx Proposal in
existence on the date hereof. St. Xxxx shall promptly (within 24 hours) advise
COFI following the receipt by St. Xxxx of any St. Xxxx Proposal and the
substance thereof (including the identity of the person making such St. Xxxx
Proposal), and advise COFI of any material developments with respect to such St.
Xxxx Proposal immediately upon the occurrence thereof. Notwithstanding the
foregoing, after receipt of a St. Xxxx Proposal and during the period prior to a
St. Xxxx Meeting, St. Xxxx xxx provide information at the request of or enter
into negotiations with a third party with respect thereto, if the fiduciary
duties of the St. Xxxx Board would so require (as determined in good faith after
consultation with legal counsel) under applicable law.
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6.07 Affiliate Agreements. (ai Not later than the 15th day prior to the
mailing of the Proxy Statement, (i) COFI shall deliver to St. Xxxx a schedule of
each person that, to the best of its knowledge, is or is reasonably likely to
be, as of the date of the COFI Meeting, deemed to be an "affiliate" of COFI
(each, a "COFI Affiliate") as that term is used in SEC Accounting Series
Releases 130 and 135; and (ii) St. Xxxx shall deliver to COFI a schedule of each
person that, to the best of its knowledge, is or is reasonably likely to be, as
of the date of the St. Xxxx Meeting, deemed to be an "affiliate" of St. Xxxx
(each, a "St. Xxxx Affiliate") as that term is used in Rule 145 under the
Securities Act or SEC Accounting Series Releases 130 and 135.
(b) Each of St. Xxxx and COFI shall use its respective
reasonable best efforts to cause each person who may be deemed to be a
St. Xxxx Affiliate or a COFI Affiliate, as the case may be, to execute
and deliver to St. Xxxx and COFI on or before the date of mailing of
the Proxy Statement an agreement in the form attached hereto as Exhibit
D or Exhibit E, respectively.
6.08 Takeover Laws. No party hereto shall take any action that would
cause the transactions contemplated by this Agreement or the Stock Option
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 and the
Stock Option Agreement from, or if necessary challenge the validity or
applicability of, any applicable Takeover Law, as now or hereafter in effect.
6.09 Certain Policies. Prior to the Effective Date, St. Xxxx shall, and
shall cause its Subsidiaries, but only to the extent consistent with generally
accepted accounting principles and on a basis mutually satisfactory to it and
COFI, to modify and change its loan, litigation and real estate valuation
policies and practices (including loan classifications and levels of reserves)
so as to be applied on a basis that is consistent with that of COFI; provided,
however, that St. Xxxx shall not be obligated to take any such action pursuant
to this Section 6.09 unless and until COFI acknowledges that all conditions to
its obligations to consummate the Company Merger have been satisfied or waived
and certifies to St. Xxxx that COFI's representations and warranties, subject to
Section 5.02, are true and correct as of such date and that COFI is otherwise in
material compliance with this Agreement and is prepared to consummate the
Company Merger. St. Paul's representations, warranties and covenants contained
in this Agreement shall not be deemed to be untrue or breached in any respect
for any purpose as a consequence of any modifications or changes undertaken
solely on account of this Section 6.09.
6.10 Listing. COFI agrees to use its best efforts to list, prior to
the Effective Time, on the NASDAQ or NYSE, whichever is applicable, subject to
official notice of issuance, the shares of COFI Common Stock to be issued to the
holders of St. Xxxx Common Stock in the Company Merger.
6.11 Regulatory Applications. (a) COFI and St. Xxxx and their
respective Subsidiaries shall cooperate and use their respective reasonable best
efforts to promptly 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
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contemplated by this Agreement and shall use reasonable best efforts to file
within 45 days of the date hereof, the applications necessary to obtain the
permits, consents, approvals and authorizations of all Regulatory Authorities
necessary to consummate the Transaction. Each of COFI and St. Xxxx shall have
the right to review in advance, and to the extent practicable each will consult
with the other, in each case subject to applicable laws relating to the exchange
of information, with respect to, all material written information submitted to
any third party or any Governmental Authority in connection with the
transactions contemplated by this Agreement. In exercising the foregoing right,
each of the parties hereto agrees to act reasonably and as promptly as
practicable. Each party hereto 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 apprised of the status of
material matters relating to completion of the transactions contemplated hereby.
(b) Each party agrees, upon request, to furnish the other
party with all information concerning itself, its Subsidiaries,
directors, officers and stockholders and such other matters as may be
reasonably necessary or advisable in connection with any filing, notice
or application made by or on behalf of such other party or any of its
Subsidiaries to any third party or Governmental Authority.
6.12 Officers' and Directors' Insurance; Indemnification.
(a) For six years after the Effective Time COFI shall maintain
officers' and directors' liability insurance covering the persons who
are presently covered by St. Paul's current officers' and directors'
liability insurance policy with respect to actions, omissions, events,
matters or circumstances occurring at or prior to the Effective Time,
on terms which are at least as favorable as the terms of said current
policy, provided that it shall not be required to expend in the
aggregate during the coverage period more than an amount equal to 300%
of the annual premium most recently paid by St. Xxxx (the "Insurance
Amount") to maintain or procure insurance coverage pursuant hereto, and
further provided that if COFI is unable to maintain or obtain the
insurance called for by this Section 6.12(a), COFI 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 St. Xxxx or any of its Subsidiaries may be required to
make application and provide customary representations and warranties
to COFI's insurance carrier for the purpose of obtaining such
insurance.
(b) From and after the Effective Time, COFI shall, and shall
cause its Subsidiaries to, maintain and preserve the rights to
indemnification of officers and directors provided for in the
Certificate of Incorporation or other charter document (a "Charter")
and By-Laws of St. Xxxx and each of its Subsidiaries as in effect on
the date hereof with respect to indemnification for liabilities and
claims arising out of acts, omissions, events, matters or circumstances
occurring or existing prior to the Effective Time, including, without
limitation, the transactions contemplated by this Agreement, to the
extent such rights to
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indemnification are not in excess of that permitted by applicable state
or federal laws or Regulatory Authorities.
(c) In addition to and without limitation of the rights set
forth in Section 6.12(b), from and after the Effective Time, COFI shall
to the fullest extent permitted under applicable law indemnify and hold
harmless each present and former director and officer of St. Xxxx
(collectively, the "Indemnified Parties") against any and all costs,
expenses (including attorneys' fees), judgments, fines, losses, claims,
damages, liabilities and amounts paid in settlement in connection with
any pending, threatened or completed claim, action, suit, proceeding or
investigation, whether civil, criminal, administrative or
investigative, arising out of or pertaining to any act, omission,
event, matter or circumstance occurring or existing prior to or at the
Effective Time (including, without limitation, any claim, action, suit,
proceeding or investigation arising out of or pertaining to the
transactions contemplated by this Agreement), and in the event of any
such claim, action, suit, proceeding or investigation (whether arising
before or after the Effective Time) (i) COFI shall advance expenses to
each such Indemnified Party to the fullest extent permitted by law,
including the payment of the fees and expenses of one counsel with
respect to a matter, and one local counsel in each applicable
jurisdiction, if necessary or appropriate, selected by such Indemnified
Party or multiple Indemnified Parties, it being understood that they
collectively shall only be entitled to one counsel and one local
counsel in each applicable jurisdiction where necessary or appropriate
(unless a conflict shall exist between Indemnified Parties in which
case they may retain separate counsel), all such counsel shall be
reasonably satisfactory to COFI, promptly after statements therefor are
received and (ii) COFI will cooperate in the defense of any such
matter.
(d) Any determination required to be made with respect to
whether an Indemnified Party=s conduct complies with the standards for
or prerequisites to indemnification set forth under the DGCL, or the
Charter and By-Law provisions referred to in Section 6.12(b), shall be
made by independent counsel selected by COFI (which shall not be
counsel that provides any services to COFI or any of its Subsidiaries)
and reasonably acceptable to the Indemnified Party, and COFI shall pay
such counsel's fees and expenses.
(e) This Section 6.12 shall survive the Effective Time, is
intended to benefit each of the Indemnified Parties (each of whom shall
be entitled to enforce this Section against COFI), and shall be binding
on all successors and assigns of COFI.
(f) In the event COFI or any of its successors or assigns (i)
consolidates with or merges into any other person and shall not be the
continuing or surviving corporation or entity of such consolidation or
merger, or (ii) transfers all or substantially all of its properties
and assets to one or more other Persons, then, and in each such case,
proper provision shall be made so that the successors and assigns of
COFI, assume, and are jointly and severally liable with COFI with
respect to, the obligations set forth in this Section 6.12.
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(g) COFI shall pay all expenses (including attorneys' fees)
that may be reasonably incurred by any Indemnified Party in enforcing
the indemnity and other obligations provided for in this Section 6.12
if the Indemnified Party is successful in whole or any material part or
if any dispute relating thereto is settled or compromised.
6.13 Benefit Plans.
(a) At the Effective Time, COFI or a COFI Subsidiary shall be
substituted for St. Xxxx or a St. Xxxx Subsidiary as the sponsoring
employer under those employee benefit and welfare plans with respect to
which St. Xxxx or any of its Subsidiaries is a sponsoring employer, and
any other employee benefit programs, policies, agreements and
arrangements in each case as Previously Disclosed and in effect
immediately prior to the Effective Time (collectively, the "St. Xxxx
Arrangements") subject to the terms of any separate agreement entered
into by COFI and St. Xxxx on the date hereof and shall assume and be
vested with all of the powers, rights, duties, obligations and
liabilities previously vested in St. Xxxx or the applicable St. Xxxx
Subsidiary with respect to each such St. Xxxx Arrangement. Except as
expressly contemplated by a separate agreement entered into by St. Xxxx
and COFI on the date hereof or as otherwise covered under the St. Xxxx
Arrangements, each such St. Xxxx Arrangement shall be continued in
effect by COFI or any applicable COFI Subsidiary after the Effective
Time without a termination or discontinuance thereof as a result of the
Company Merger or the Bank Merger, subject to the power reserved to
COFI or any applicable COFI Subsidiary under each such St. Xxxx
Arrangement to subsequently amend or terminate the St. Xxxx
Arrangement, which amendments or terminations shall comply with
applicable law. Notwithstanding the preceding sentence, COFI agrees
that, for periods prior to January 1, 2000, it shall not make any
adverse changes to the contribution formula as in effect on the date
hereof under the St. Xxxx Employees' Pension Plan. St. Xxxx, each St.
Xxxx Subsidiary, and COFI will use all reasonable efforts (i) to effect
said substitutions and assumptions, and such other actions contemplated
under this Agreement, and (ii) to amend such St. Xxxx Arrangements as
to the extent necessary to provide for said substitutions and
assumptions, and such other actions contemplated under this Agreement.
(b) Any separate agreement entered into by St. Xxxx and COFI
on the date hereof relating to employee or director benefits is
incorporated herein by reference and shall be deemed a part of this
Agreement.
6.14 Notification of Certain Matters. Each of St. Xxxx and COFI shall
give prompt notice to the other of any fact, event or circumstance known to it
that (i) is reasonably likely, individually or taken together with all other
facts, events and circumstances known to it, to result in any Material Adverse
Effect with respect to it, (ii) would cause or constitute a breach of any of its
representations, warranties, covenants or agreements contained herein as of the
date of this Agreement or (iii) would cause or constitute a material breach of
any of its representations, warranties, covenants or agreements contained herein
arising from events or circumstances after the date of this Agreement or
otherwise.
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6.15 Directors. (i) At the Effective Time, COFI agrees to cause Xxxxxx
X. Xxxxxx and Xxxxxxx X. Xxxxx to be elected to the COFI Board, and to the Board
of Directors of Charter One Bank, in each case for a term expiring in April 2002
unless such individual does not qualify to serve under guidelines of applicable
Regulatory Authorities.
6.16 Advisory Board Membership. At the Effective Time, each member of
the St. Xxxx Board (other than Xxxxxx X. Xxxxxx and Xxxxxxx X. Xxxxx) shall be
offered the opportunity to become a member of the Illinois advisory board to be
established by COFI for a three year term, which advisory board shall advise
COFI with respect to the geographic areas in which St. Xxxx Bank operates as of
the date hereof; provided, however, any person serving on such advisory board
who subsequently becomes a director of COFI or any COFI Subsidiary shall cease
to be a member of the advisory board on the date that he or she commences
serving as a director of COFI or any COFI Subsidiary.
6.17 COFI Fee. (a) If (i) the St. Xxxx Board shall have failed to
unanimously recommend adoption of this Agreement to the St. Xxxx stockholders,
withdrawn such recommendation or modified or changed such recommendation in a
manner adverse in any respect to the interests of COFI, (ii) St. Xxxx shall be
in material and willful breach of any of its covenants contained in this
Agreement such that COFI shall be entitled to terminate this Agreement pursuant
to Section 8.01(b), or (iii) the stockholders of St. Xxxx do not adopt this
Agreement at the St. Xxxx Meeting, in each case after there has been proposed by
a third party a St. Xxxx Acquisition Transaction (the "St. Xxxx Proposal"), then
except as provided in Section 6.17(b), upon termination of this Agreement St.
Xxxx shall pay COFI a fee of $45 million. In addition, the $45 million fee shall
be payable by St. Xxxx to COFI upon a termination of this Agreement by St. Xxxx
pursuant to Section 8.01(g). No fee shall be payable pursuant to this Section
6.17(a) if either (x) COFI has acquired any shares pursuant to the exercise of
its Option (as defined in the Stock Option Agreement), St. Xxxx has repurchased
the Option pursuant to the Stock Option Agreement or St. Xxxx has paid COFI the
Surrender Price (as defined in the Stock Option Agreement) pursuant to the Stock
Option Agreement or (y) COFI refuses to execute and deliver a written release of
all of COFI's rights under the Stock Option Agreement against delivery and
payment of the $45 million fee set forth above. Any payment made pursuant to
this Section 6.17(a) shall be made in immediately available funds upon demand.
(b) The fee provided for in Section 6.17(a) shall not be
payable if St. Xxxx has terminated, or has the right to terminate, this
Agreement pursuant to Section 8.01(b), 8.01(d)(i), 8.01(d)(ii) as a
result of the COFI stockholders failing to approve the issuance of COFI
Common Stock to be issued in the Company Merger at the COFI Meeting or
8.01(e).
For purposes of the foregoing, "St. Xxxx Acquisition
Transaction" shall have the same meaning as the term "Acquisition
Transaction" in the Stock Option Agreement except that the percentage
referred to in clause (z) of the second sentence of Section 2(b)(i)
thereof shall be 25%.
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6.18 St. Xxxx Fee. (a) If (i) the COFI Board shall have failed to
unanimously recommend to the COFI stockholders approval of the issuance of COFI
Common Stock to be issued in the Company Merger, withdrawn such recommendation
or modified or changed such recommendation in a manner adverse in any respect to
the interests of St. Xxxx, (ii) COFI shall be in material and willful breach of
any of its covenants contained in this Agreement such that St. Xxxx shall be
entitled to terminate this Agreement pursuant to Section 8.01(b), or (iii) the
stockholders of COFI do not approve the issuance of the COFI Common Stock to be
issued in the Company Merger at the COFI Meeting, in each case after there has
been proposed by a third party a COFI Acquisition Transaction (the "COFI
Proposal"), then except as provided in Section 6.18(b), upon termination of this
Agreement COFI shall pay St. Xxxx a fee of $45 million. Any payment made
pursuant to this Section 6.18(a) shall be made in immediately available funds
upon demand.
(b) The fee provided for in Section 6.18(a) shall not be
payable if COFI has terminated, or has the right to terminate, this
Agreement pursuant to Section 8.01(b), 8.01(d)(i), 8.01(d)(ii) as a
result of the St. Xxxx stockholders failing to adopt this Agreement at
the St. Xxxx Meeting or 8.01(e).
For purposes of the foregoing, "COFI Acquisition Transaction" shall
have the same meaning as the term St. Xxxx Acquisition Transaction as such term
is defined for purposes of Section 6.17, except that COFI shall be substituted
for St. Xxxx as the target of such acquisition transaction.
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE COMPANY MERGER
7.01 Conditions to Each Party's Obligation to Effect the Company
Merger. The respective obligation of each of COFI and St. Xxxx to consummate the
Company Merger is subject to the fulfillment or written waiver by COFI and St.
Xxxx xxxxx to the Effective Time of each of the following conditions:
(a) Stockholder Approvals. This Agreement shall have been duly
adopted by the requisite vote of the stockholders of St. Xxxx under the
DGCL and the St. Xxxx Certificate and the issuance of COFI Common Stock
as contemplated by this Agreement shall have been approved by the
requisite vote of the COFI stockholders under NASDAQ or NYSE rules,
whichever is applicable.
(b) Regulatory Approvals. All regulatory approvals required to
consummate the Company Merger shall have been obtained and shall remain
in full force and effect and all statutory waiting periods in respect
thereof shall have expired and no such approvals shall contain (i) any
conditions, restrictions or requirements which the COFI Board
reasonably determines would either before or after the Effective Time
have a Material Adverse Effect on COFI and its Subsidiaries taken as a
whole or (ii) any conditions, restrictions or requirements that are not
customary and usual for approvals of such type and which the
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COFI Board reasonably determines would either before or after the
Effective Time be unduly burdensome.
(c) 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 Company Merger.
(d) 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.
(e) Blue Sky Approvals. All permits and other authorizations
under state securities laws necessary to consummate the transactions
contemplated hereby and to issue the shares of COFI Common Stock to be
issued in the Company Merger shall have been received and be in full
force and effect.
(f) Listing. The shares of COFI Common Stock to be issued in
the Company Merger shall have been approved for listing on the NASDAQ
or NYSE, whichever is applicable, subject to official notice of
issuance.
(g) Permits, Authorizations. Each of COFI and St. Xxxx shall
have obtained all permits, authorizations, waivers, approvals and
consents (other than the Xxxxxxx Leases) required for the lawful
consummation of the Company Merger, unless the failure to obtain such
permits, authorizations, waivers, approvals and consents is not
reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on COFI and its Subsidiaries or St. Xxxx and its
Subsidiaries.
7.02 Conditions to Obligation of St. Xxxx. The obligation of St. Xxxx
and its Subsidiaries to consummate the Company Merger is also subject to the
fulfillment or written waiver by St. Xxxx xxxxx to the Effective Time of each of
the following conditions:
(a) Representations and Warranties. The representations and warranties
of COFI set forth in this Agreement shall be true and correct in all material
respects, subject in the case of Specified Representations to the standard set
forth in Section 5.02, as of the date of this Agreement and as of the Effective
Date as though made on and as of the Effective Date (except that (i)
representations and warranties that by their terms speak as of the date of this
Agreement or some other date shall be true and correct as of such date and (ii)
with respect to any information provided by COFI pursuant to Section 6.14(iii)
or discovered by St. Xxxx relating to (A) the Specified Representations or (B)
Section 5.04 (g)(i), (h)(i), (h)(ii) other than relating to Year 2000 compliant
matters or (i)(iii) other than relating to Year 2000 compliant matters, in each
case, on account of events arising after the date of this Agreement, the
representations and warranties in (x) the Specified Representations and (y)
Sections 5.04 (g)(i), (h)(i), (h)(ii) other than relating to Year 2000
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compliant matters and (i)(iii) other than relating to Year 2000 compliant
matters shall be deemed true and correct as of the Effective Date unless such
information individually or taken together with other facts, events and
circumstances has resulted in or is reasonably likely to result in a Material
Adverse Effect on COFI), and St. Xxxx shall have received a certificate, dated
the Effective Date, signed on behalf of COFI by the Chief Executive Officer and
the Chief Financial Officer of COFI to such effect.
(b) Performance of Obligations of COFI. COFI and its
Subsidiaries shall have performed in all material respects all
obligations required to be performed by them under this Agreement at or
prior to the Effective Time, and St. Xxxx shall have received a
certificate, dated the Effective Date, signed on behalf of COFI by the
Chief Executive Officer and the Chief Financial Officer of COFI to such
effect.
(c) Opinion of St. Paul's Counsel. St. Xxxx shall have
received an opinion of Xxxxx, Xxxxx & Xxxxx, counsel to St. Xxxx, dated
the date of or shortly prior to the first mailing of the Proxy
Statement and the Effective Date, to the effect that, on the basis of
facts, representations and assumptions set forth in such opinion, (i)
the Company Merger constitutes a Areorganization@ within the meaning of
Section 368 of the Code and (ii) no gain or loss will be recognized by
stockholders of St. Xxxx who receive shares of COFI Common Stock in
exchange for shares of St. Xxxx Common Stock, except that gain or loss
may be recognized as to cash received in lieu of fractional share
interests. In rendering its opinion, Xxxxx, Xxxxx & Xxxxx may require
and rely upon representations contained in letters from St. Xxxx, COFI
and others.
7.03 Conditions to Obligation of COFI. The obligation of COFI and its
Subsidiaries to consummate the Company Merger is also subject to the fulfillment
or written waiver by COFI prior to the Effective Time of each of the following
conditions:
(a) Representations and Warranties. The representations and
warranties of St. Xxxx set forth in this Agreement shall be true and
correct in all material respects, subject in the case of Specified
Representations to the standard set forth in Section 5.02, as of the
date of this Agreement and as of the Effective Date as though made on
and as of the Effective Date (except that (i) representations and
warranties that by their terms speak as of the date of this Agreement
or some other date shall be true and correct as of such date and (ii)
with respect to any information provided by St. Xxxx pursuant to
Section 6.14(iii) or discovered by COFI relating to (A) the Specified
Representations or (B) Section 5.03(g)(i), (h), (i) other than relating
to Year 2000 compliant matters or (j)(iii) other than relating to Year
2000 compliant matters, in each case, on account of events arising
after the date of this Agreement, the representations and warranties in
(x) the Specified Representations and (y) Sections 5.03(g)(i), (h), (i)
other than relating to Year 2000 compliant matters and (j)(iii) other
than relating to Year 2000 compliant matters shall be deemed true and
correct as of the Effective Date unless such information individually
or taken together with other facts, events and circumstances has
resulted in or is reasonably likely to result in a Material Adverse
Effect on St. Xxxx) and COFI shall have received a certificate, dated
the Effective Date,
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signed on behalf of St. Xxxx by the Chief Executive Officer and the
Chief Financial Officer of St. Xxxx to such effect.
(b) Performance of Obligations of St. Xxxx. St. Xxxx and its
Subsidiaries shall have performed in all material respects all
obligations required to be performed by them under this Agreement at or
prior to the Effective Time, and COFI shall have received a
certificate, dated the Effective Date, signed on behalf of St. Xxxx by
the Chief Executive Officer and the Chief Financial Officer of St. Xxxx
to such effect.
(c) Opinion of COFI's Counsel. COFI shall have received an
opinion of Silver, Xxxxxxxx & Taff, special counsel to COFI, dated the
date of or shortly prior to the first mailing of the Proxy Statement
and the Effective Date, to the effect that, on the basis of facts,
representations and assumptions set forth in such opinion, the Company
Merger constitutes a reorganization under Section 368 of the Code. In
rendering its opinion, Silver, Xxxxxxxx & Xxxx may require and rely
upon representations contained in letters from COFI, St. Xxxx and
others.
(d) Accounting Treatment. COFI shall have received from each
of Ernst & Young LLP, St. Paul's independent auditors, and Deloitte &
Touche, LLP, COFI's independent auditors, letters, dated the date of or
shortly prior to the Effective Time.
ARTICLE VIII
TERMINATION
8.01 Termination. This Agreement may be terminated, and the
Transactions may be abandoned:
(a) Mutual Consent. At any time prior to the Effective Time,
by the mutual consent of COFI and St. Xxxx, 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 COFI
or St. Xxxx, if its Board of Directors so determines by vote of a
majority of the members of its entire Board, in the event of either:
(i) a breach by the other party of any representation or warranty
contained herein, which breach would cause the condition in Section
7.02(a) or 7.03(a), as applicable, to not be satisfied and which breach
cannot be or has not been cured within 30 days after the giving of
written notice to the breaching party of such breach; or (ii) a breach
by the other party in any material respect 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.
(c) Delay. At any time prior to the Effective Time, by COFI or
St. Xxxx, if its Board of Directors so determines by vote of a majority
of the members of its entire Board,
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in the event that the Company Merger is not consummated by February 28,
2000, except to the extent that the failure of the Company Merger then
to be consummated arises out of or results from the knowing action or
inaction of the party seeking to terminate pursuant to this Section
8.01(c).
(d) No Approval. By St. Xxxx or COFI, if its Board of
Directors so determines by a vote of a majority of the members of its
entire Board, in the event (i) the approval of any Governmental
Authority required for consummation of the Company Merger shall have
been denied by final nonappealable action of such Governmental
Authority or (ii) any stockholder approval required by Section 7.01(a)
herein is not obtained at the St. Xxxx Meeting or the COFI Meeting.
(e) Failure to Recommend, Etc. At any time prior to the St.
Xxxx Meeting, by COFI if the St. Xxxx Board shall have failed to
unanimously recommend adoption of this Agreement to the St. Xxxx
stockholders, withdrawn such recommendation or modified or changed such
recommendation in a manner adverse in any respect to the interests of
COFI; or at any time prior to the COFI Meeting, by St. Xxxx, if the
COFI Board shall have failed to unanimously recommend to the COFI
stockholders approval of the issuance of COFI Common Stock to be issued
pursuant to the Company Merger, withdrawn such recommendation or
modified or changed such recommendation in a manner adverse in any
respect to the interests of St. Xxxx.
(f) Possible Adjustment. By St. Xxxx, if its Board of
Directors so determines by a vote of a majority of the members of its
entire Board, at any time during the ten-day period commencing two days
after the Determination Date (or such shorter period of time from the
Determination Date to the Effective Date as contemplated by Section
2.03(i)), if both of the following conditions are satisfied:
(i) the Average Closing Price shall be less
than the product of 0.825 and the Starting
Price; and
(ii) (A) the number obtained by dividing the
Average Closing Price by the Starting Price
(such number being referred to herein as the
"COFI Ratio") shall be less than (B) the number
obtained by dividing the Index Price on the
Determination Date by the Index Price on the
Starting Date and subtracting 0.175 from the
quotient in this clause (ii)(B) (such number
being referred to herein as the "Index Ratio");
subject, however, to the following three sentences. If St. Xxxx elects
to exercise its termination right pursuant to the immediately preceding
sentence, it shall give prompt written notice thereof to COFI;
provided, that such notice of election to terminate may be withdrawn at
any time within the above stated period. During the five-day period
commencing with its receipt of such notice, COFI shall have the option
of adjusting the Exchange Ratio to equal the lesser of (x) a number
equal to a quotient (rounded to the
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nearest one-ten-thousandth), the numerator of which is the product of
0.825, the Starting Price and the Exchange Ratio (as then in effect)
and the denominator of which is the Average Closing Price, and (y) a
number equal to a quotient (rounded to the nearest one-ten-thousandth),
the numerator of which is the Index Ratio multiplied by the Exchange
Ratio (as then in effect) and the denominator of which is the COFI
Ratio. If COFI so elects, within such five-day period, it shall give
prompt written notice to St. Xxxx of such election and the revised
Exchange Ratio, whereupon no termination shall have occurred pursuant
to this Section 8.01(f) and this Agreement shall remain in full force
and effect in accordance with its terms (except as the Exchange Ratio
shall have been so modified and except that the Effective Date shall
occur on the later of the Effective Date as determined pursuant to
Section 2.03(i) or (ii) or on the fifth business day after COFI=s
election as provided in the immediately preceding sentence, and any
references in this Agreement to AExchange Ratio" shall thereafter be
deemed to refer to the Exchange Ratio as adjusted pursuant to this
Section 8.01(f).
For purposes of this Section 8.01(f), the following terms shall have
the meanings indicated:
"Average Closing Price" means the average of the daily last sale
prices of COFI Common Stock as reported on NASDAQ or NYSE, whichever is
applicable (as reported in The Wall Street Journal or, if not reported
therein, in another mutually agreed upon authoritative source) for the
ten consecutive full trading days in which such shares are traded on
NASDAQ or NYSE, whichever is applicable, ending at the close of trading
on the Determination Date.
"Determination Date" means the day that is the latest of (i) the
day of expiration of the last waiting period with respect to any
approval of any Governmental Authority required for consummation of the
Company Merger, (ii) the day on which the last of such approvals is
obtained, and (iii) the day on which the last of the required
stockholder approvals has been received.
"Index Group" means the 16 financial institutions and financial
institution holding companies listed below, the common stock of all
which shall be publicly traded and as to which there shall not have
been, since the Starting Date and before the Determination Date, any
public announcement of a proposal for such company (a) to be acquired
or for such company to acquire another company or companies in a
transaction with a value exceeding 25% of the acquiror=s market
capitalization as of the Starting Date or (b) to convert from a mutual
holding company to a stock form of organization. In the event that the
common stock of any such company ceases to be publicly traded or any
such announcement is made with respect to any such company, such
company will be removed from the Index Group and the weights (which
have been determined based on the number of outstanding shares of
common stock) redistributed proportionately for purposes of determining
the Index Price. The 16 financial institutions and financial
institution holding companies and the weights attributed to them are as
follows:
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Holding Company Weighting
--------------- ---------
Huntington Bancshares Incorporated 14.56%
Summit Bancorp 11.97%
North Fork Bancorporation, Inc. 9.75%
Xxxxxxxx & Ilsley Corporation 7.23%
Dime Bancorp, Incorporated 7.71%
Peoples Heritage Financial Group, Inc. 7.21%
Old Kent Financial Corporation 7.15%
GreenPoint Financial Corporation 7.55%
TCF Financial Corporation 5.83%
Commercial Federal Corporation 4.22%
Golden West Financial Corporation 3.90%
Washington Federal, Inc. 3.87%
Astoria Financial Corporation 3.83%
Xxxxxxx Financial Corporation 2.49%
Bank United Corporation 2.19%
M&T Bank Corporation 0.54%
Total 100.00%
"Index Price" on a given date means the weighted average (weighted in
accordance with the factors listed above) of the closing prices of the companies
comprising the Index Group.
"Starting Date" means May 14, 1999.
"Starting Price" shall mean $30.28.
If any company belonging to the Index Group or COFI declares or
effects a stock split, stock dividend, recapitalization, exchange of
shares or similar transaction between the Starting Date and the
Determination Date, the prices for the common stock of such company or
COFI shall be appropriately adjusted for the purposes of applying this
Section 8.01(f).
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(g) St. Xxxx Proposal. Provided that St. Xxxx is not in breach of
Section 6.02 or 6.06 of this Agreement, by St. Xxxx, if its Board of
Directors so determines by at least a two-thirds vote of the members of
its entire Board, to allow St. Xxxx to enter into an agreement in
respect of a St. Xxxx Proposal which provides more favorable
consideration to St. Xxxx=s stockholders from a financial point of view
than the consideration to be received by such stockholders in the
Company Merger.
8.02 Effect of Termination and Abandonment. In the event of
termination of this Agreement and the abandonment of the Company Merger pursuant
to this Article VIII, no party to this Agreement shall have any liability or
further obligation to any other party hereunder except (i) as set forth in
Section 9.01 and (ii) that termination will not relieve a breaching party from
liability for any willful breach of this Agreement giving rise to such
termination. Provided, however, if a party pursues its rights under Section 6.17
or 6.18, whichever is applicable, then such party shall not be entitled to any
other relief. Conversely, if a party pursues a remedy pursuant to this Section
8.02, then it shall waive its rights under Section 6.17 or 6.18, whichever is
applicable. Provided, further, that nothing contained herein shall diminish the
rights of COFI under the Stock Option Agreement which may be separately
exercised and enforced pursuant to the terms and provisions thereof.
ARTICLE IX
MISCELLANEOUS
9.01 Survival. No representations, warranties, agreements and covenants
contained in this Agreement shall survive the Effective Time (other than the
agreements and covenants contained in Section 6.12, 6.13, 6.15, 6.16 and this
Article IX which shall survive the Effective Time) or the termination of this
Agreement if this Agreement is terminated prior to the Effective Time (other
than Sections 6.05(b), 6.17, 6.18, 8.02 and this Article IX which shall survive
such termination).
9.02 Waiver; Amendment. Prior to the Effective Time, any provision of
this Agreement may be (i) waived by the party benefitted by the provision, or
(ii) amended or modified at any time, by an agreement in writing between the
parties hereto executed in the same manner as this Agreement, except that after
the St. Xxxx Meeting, the consideration to be received by the St. Xxxx
stockholders for each share of St. Xxxx Common Stock shall not thereby be
decreased.
9.03 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to constitute an original.
9.04 Governing Law. This Agreement shall be governed by, and
interpreted in accordance with, the laws of the State of Delaware applicable to
contracts made and to be performed entirely within such State (except to the
extent that mandatory provisions of Federal law or of the MBCA are applicable).
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58
9.05 Expenses. Each party hereto will bear all expenses incurred by it
in connection with this Agreement and the transactions contemplated hereby,
except that printing expenses and SEC fees shall be shared equally between St.
Xxxx and COFI.
9.06 Notices. All notices, requests and other communications hereunder
to a party shall be in writing and shall be deemed given if personally
delivered, telecopied (with confirmation) or mailed by registered or certified
mail (return receipt requested) to such party at its address set forth below or
such other address as such party may specify by notice to the parties hereto.
If to St. Xxxx, to:
St. Xxxx Bancorp, Inc.
0000 Xxxx Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx, Chief Executive Officer
and
Xxxxxxxx Xxxxxxxx, General Counsel
With a copy to:
Xxxxx, Xxxxx & Xxxxx
000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx Xxxxxx
If to COFI or Charter Michigan, to:
Charter One Financial, Inc.
0000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxx
Attention: Xxxxxxx X. Xxxx, Chief Executive Officer
and
Xxxxxx X. Xxxx, Chief Corporate Counsel
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With a copy to:
Silver, Xxxxxxxx & Xxxx LLP
0000 Xxx Xxxx Xxxxxx, X.X.
7th Floor East
Washington, D.C. 20005
Attention: Xxxxx Xxxx
9.07 Entire Understanding; No Third Party Beneficiaries. This
Agreement, the Stock Option Agreement, the Confidentiality Agreement dated April
13, 1999 between St. Xxxx and COFI and any agreement entered into between St.
Xxxx and COFI on the date hereof represent the entire understanding of the
parties hereto with reference to the transactions contemplated hereby and
thereby and this Agreement supersedes any and all other oral or written
agreements heretofore made (other than the Stock Option Agreement and any
agreement entered into between St. Xxxx and COFI on the date hereof). Except for
Section 6.12, 6.13, 6.15 and 6.16, nothing in this Agreement expressed or
implied, is intended to confer upon any person, other than the parties hereto or
their respective successors, any rights, remedies, obligations or liabilities
under or by reason of this Agreement.
9.08 Interpretation; Effect. When a reference is made in this Agreement
to Sections, Exhibits or Schedules, such reference shall be to a Section of, or
Exhibit or Schedule to, this Agreement unless otherwise indicated. The table of
contents and headings contained in this Agreement are for reference purposes
only and are not part of this Agreement. Whenever the words "include,"
"includes" or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation." No provision of this Agreement shall
be construed to require St. Xxxx, COFI or any of their respective Subsidiaries,
affiliates or directors to take any action which would violate applicable law
(whether statutory or common law), rule or regulation.
* * *
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The parties hereto have caused this Agreement to be executed in
counterparts by their duly authorized officers, all as of the day and year first
above written.
ST. XXXX BANCORP, INC.
By /s/ Xxxxxx X. Xxxxxx
-------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Chairman of the Board
and Chief Executive Officer
CHARTER ONE FINANCIAL, INC.
By /s/ Xxxxxxx X. Xxxx
-------------------------------------
Name: Xxxxxxx X. Xxxx
Title: Chairman of the Board and
Chief Executive Officer
CHARTER MICHIGAN BANCORP, INC.
By /s/ Xxxxxxx X. Xxxx
-------------------------------------
Name: Xxxxxxx X. Xxxx
Title: Chairman of the Board and
Chief Executive Officer
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EXHIBIT A
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of May 17, 1999, between Charter One
Financial, Inc., a Delaware corporation ("Grantee"), and St. Xxxx Bancorp, Inc.,
a Delaware corporation ("Issuer").
W I T N E S S E T H:
WHEREAS, Grantee, Charter Michigan Bancorp, Inc. and Issuer have entered
into an Agreement and Plan of Merger (the "Merger Agreement") on even date
herewith;
WHEREAS, as an inducement to the willingness of Grantee to enter into the
Merger Agreement, Issuer has agreed to grant Grantee the Option (as hereinafter
defined); and
WHEREAS, the Board of Directors of Issuer has approved the grant of the
Option and the Merger Agreement;
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements set forth herein and in the Merger Agreement, the parties hereto
agree as follows:
1. (a) Issuer hereby grants to Grantee an unconditional, irrevocable
option (the "Option") to purchase, subject to the terms hereof, up to an
aggregate of 4,384,730 fully paid and nonassessable shares of the common stock,
par value $0.01 per share, of Issuer ("Common Stock") at a price per share equal
to the average of last reported sale prices per share of Common Stock as
reported on the NASDAQ National Market on May 13 and 14, 1999; provided,
however, that in the event Issuer issues or agrees to issue any shares of Common
Stock (other than shares of Common Stock issued pursuant to stock options
granted pursuant to any employee benefit plan prior to the date hereof) at a
price less than such average price per share (as adjusted pursuant to subsection
(b) of Section 5), such price shall be equal to such lesser price (such price,
as adjusted if applicable, the "Option Price"); provided, further, that in no
event shall the number of shares for which this Option is exercisable exceed 11%
of the issued and outstanding shares of Common Stock immediately prior to such
exercise without giving effect to any shares subject or issued pursuant to the
Option. The number of shares of Common Stock that may be received upon the
exercise of the Option and the Option Price are subject to adjustment as herein
set forth.
(b) In the event that any additional shares of Common Stock are issued or
otherwise become outstanding after the date of this Agreement (other than
pursuant to this Agreement and other than pursuant to an event described in
Section 5(a) hereof), the number of shares of Common Stock subject to the Option
shall be increased so that, after such issuance, such number together with any
shares of Common Stock previously issued pursuant hereto, equals 11% of the
number of shares of Common Stock then issued and outstanding without giving
effect to any shares subject or issued pursuant to the Option. Nothing contained
in this Section l(b) or elsewhere in this Agreement shall be deemed to authorize
Issuer to issue shares in breach of any provision of the Merger Agreement.
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2. (a) The Holder (as hereinafter defined) may exercise the Option, in
whole or part, if, but only if, both an Initial Triggering Event (as hereinafter
defined) and a Subsequent Triggering Event (as hereinafter defined) shall have
occurred prior to the occurrence of an Exercise Termination Event (as
hereinafter defined), provided that the Holder shall have sent the written
notice of such exercise (as provided in subsection (e) of this Section 2) within
six (6) months following such Subsequent Triggering Event (or such later period
as provided in Section 10). Each of the following shall be an Exercise
Termination Event: (i) the Effective Time of the Company Merger; (ii)
termination of the Merger Agreement in accordance with the provisions thereof if
such termination occurs prior to the occurrence of an Initial Triggering Event
except a termination by Grantee pursuant to Section 8.01(b) or Section 8.01(e)
of the Merger Agreement (each, a "Listed Termination"); (iii) the passage of
fifteen (15) months (or such longer period as provided in Section 10) after
termination of the Merger Agreement if such termination follows the occurrence
of an Initial Triggering Event or a Listed Termination or (iv) the date on which
the stockholders of the Grantee shall have voted and failed to approve the
issuance of Grantee common stock to be issued in the Company Merger (unless (A)
Issuer shall then be in material breach of its covenants or agreements contained
in the Merger Agreement or (B) on or prior to such date, the stockholders of
Issuer shall have also voted and failed to approve and adopt the Merger
Agreement). The term "Holder" shall mean the holder or holders of the Option.
Notwithstanding anything to the contrary contained herein, (i) the Option may
not be exercised at any time when Grantee shall be in material breach of any of
its 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 as a result of a material breach and (ii) this Agreement shall
automatically terminate upon (x) the proper termination of the Merger Agreement
by Issuer pursuant to Section 8.01(b)(ii) thereof as a result of the material
breach by Grantee of its covenants or agreements contained in the Merger
Agreement or by Issuer or Grantee pursuant to Section 8.01(d)(i) or (y) the
acceptance by the Grantee of the $45 million fee from Issuer pursuant to Section
6.17(a) of the Merger Agreement.
(b) The term "Initial Triggering Event" shall mean any of the following
events or transactions occurring on or after the date hereof:
(i) Issuer or any Significant Subsidiary (as defined in Rule 1-02 of
Regulation S-X promulgated by the Securities and Exchange Commission (the
"SEC")) (an "Issuer Subsidiary"), without having received Grantee's prior
written consent, shall have entered into an agreement to engage in an
Acquisition Transaction (as hereinafter defined) with any person (the term
"person" for purposes of this Agreement having the meaning assigned
thereto in Sections 3(a)(9) and 13(d)(3) of the Securities Exchange Act of
1934, as amended (the "1934 Act"), and the rules and regulations
thereunder) other than Grantee or any of its Subsidiaries (each a "Grantee
Subsidiary") or the Board of Directors of Issuer (the "Issuer Board")
shall have recommended that the stockholders of Issuer approve or accept
any Acquisition Transaction other than the Company Merger. For purposes of
this Agreement, (a) "Acquisition Transaction" shall mean (x) a merger or
consolidation, or any similar transaction, involving Issuer or any Issuer
Subsidiary (other than mergers, consolidations or similar transactions (i)
involving solely Issuer and/or one or more wholly-owned (except for
directors' qualifying
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shares and a de minimis number of other shares) Subsidiaries of the
Issuer, provided, any such transaction is not entered into in violation of
the terms of the Merger Agreement or (ii) in which the stockholders of
Issuer immediately prior to the completion of such transaction own at
least 50% of the Common Stock of the Issuer (or the resulting or surviving
entity in such transaction) immediately after completion of such
transaction, provided any such transaction is not entered into in
violation of the terms of the Merger Agreement), (y) a purchase, lease or
other acquisition of all or any substantial part of the assets or deposits
of Issuer or any Issuer Subsidiary, or (z) a purchase or other acquisition
(including by way of merger, consolidation, share exchange or otherwise)
of securities representing 10% or more of the voting power of Issuer or
any Issuer Subsidiary and (b) "Subsidiary" shall have the meaning set
forth in Rule 12b-2 under the 1934 Act;
(ii) Any person other than the Grantee or any Grantee Subsidiary shall
have acquired beneficial ownership or the right to acquire beneficial
ownership of 10% 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, and the rules
and regulations thereunder);
(iii) The stockholders of Issuer shall have voted and failed to adopt
the Merger Agreement at a meeting which has been held for that purpose or
any adjournment or postponement thereof, or such meeting shall not have
been held 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 of its Subsidiaries) shall have made, or publicly disclosed an
intention to make, a proposal to engage in an Acquisition Transaction;
(iv) (x) The Issuer Board shall have withdrawn or modified (or
publicly announced its intention to withdraw or modify) in any manner
adverse in any respect to Grantee its recommendation that the stockholders
of Issuer approve the transactions contemplated by the Merger Agreement,
(y) Issuer or any Issuer Subsidiary, without having received Grantee's
prior written consent, shall have authorized, recommended, proposed (or
publicly announced its intention to authorize, recommend or propose) an
agreement to engage in an Acquisition Transaction with any person other
than Grantee or a Grantee Subsidiary, or (z) Issuer shall have provided
information to or engaged in negotiations or discussions with a third
party relating to a possible Acquisition Transaction.
(v) Any person other than Grantee or any Grantee Subsidiary shall have
made a proposal to Issuer or its stockholders to engage in an Acquisition
Transaction and such proposal shall have been publicly announced;
(vi) 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
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statement with the SEC with respect to a potential vote by its
stockholders to approve the issuance of shares to be offered in such an
exchange offer);
(vii) Issuer shall have willfully breached any covenant or obligation
contained in the Merger Agreement in anticipation of engaging in an
Acquisition Transaction, and following such breach Grantee would be
entitled to terminate the Merger Agreement (whether immediately or after
the giving of notice or passage of time or both); or
(viii) Any person other than Grantee or any Grantee Subsidiary other
than in connection with a transaction to which Grantee has given its prior
written consent shall have filed an application or notice with the Board
of Governors of the Federal Reserve System (the "Federal Reserve Board")
or other federal or state bank or thrift regulatory or antitrust
authority, which application or notice has been accepted for processing,
for approval to engage in an Acquisition Transaction.
(c) The term "Subsequent Triggering Event" shall mean any of the following
events or transactions occurring after the date hereof:
(i) 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
(ii) The occurrence of the Initial Triggering Event described in
clause (i) of subsection (b) of this Section 2, except that the percentage
referred to in clause (z) of the second sentence thereof shall be 25%.
(d) Issuer shall notify Grantee promptly in writing of the occurrence of
any Initial Triggering Event or Subsequent Triggering Event (together, a
"Triggering Event"), it being understood that the giving of such notice by
Issuer shall not be a condition to the right of the Holder to exercise the
Option.
(e) In the event the Holder is entitled to and wishes to exercise the
Option (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 (i) the
total number of shares it will purchase pursuant to such exercise and (ii) a
place and date not earlier than three business days nor later than 60 business
days from the Notice Date for the closing of such purchase (the "Closing Date");
provided, that if prior notification to or approval of the Federal Reserve Board
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.
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(f) At the closing referred to in subsection (e) of this Section 2, the
Holder shall (i) 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 (ii)
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 subsection (f) of this Section 2, Issuer shall
deliver to the Holder a certificate or certificates representing the number of
shares of Common Stock purchased by the Holder and, if the Option should be
exercised in part only, a new Option evidencing the rights of the Holder thereof
to purchase the balance of the shares purchasable hereunder.
(h) Certificates for Common Stock delivered at a closing hereunder may be
endorsed with a restrictive legend that shall read substantially as follows:
"The transfer of the shares represented by this certificate is subject
to certain provisions of an agreement between the registered holder hereof
and Issuer and to resale restrictions arising under the Securities Act of
1933, as amended. A copy of such agreement is on file at the principal
office of Issuer and will be provided to the holder hereof without charge
upon receipt by Issuer of a written request therefor."
It is understood and agreed that: (i) the reference to the resale restrictions
of the Securities Act of 1933, 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; (ii) the reference to the provisions of this Agreement
in the above legend shall be removed by delivery of substitute certificate(s)
without such reference if the shares have been sold or transferred in compliance
with the provisions of this Agreement and under circumstances that do not
require the retention of such reference in the opinion of counsel to the Holder;
and (iii) the legend shall be removed in its entirety if the conditions in the
preceding clauses (i) and (ii) are both satisfied. In addition, such
certificates shall bear any other legend as may be required by law.
(i) Upon the giving by the Holder to Issuer of the written notice of
exercise of the Option provided for under subsection (e) of this Section 2 and
the tender of the applicable purchase price in immediately available funds, the
Holder shall be deemed, subject to the receipt of any necessary regulatory
approvals, 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 preparation, issue and
delivery of stock certificates under this Section 2 in the name of the Holder or
its assignee, transferee or designee.
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3. Issuer agrees: (i) that it shall at all times maintain, free from
preemptive rights, sufficient authorized but unissued or treasury shares of
Common Stock so that the Option may be exercised without additional
authorization of Common Stock after giving effect to all other options,
warrants, convertible securities and other rights to purchase Common Stock; (ii)
that it will not, by charter amendment or through reorganization, consolidation,
merger, dissolution or sale of assets, or by any other voluntary act, avoid or
seek to avoid the observance or performance of any of the covenants,
stipulations or conditions to be observed or performed hereunder by Issuer;
(iii) promptly to take all action as may from time to time be required
(including (x) complying with all 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, under the Bank Holding
Company Act of 1956, as amended (the "BHCA"), or the Change in Bank Control Act
of 1978, as amended, or any state or other federal thrift or banking law, prior
approval of or notice to the Federal Reserve Board 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 Federal Reserve Board 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 (iv) promptly to take all action provided herein to
protect the rights of the Holder against dilution.
4. This Agreement (and the Option granted hereby) are exchangeable,
without expense, at the option of the Holder, upon presentation and surrender of
this Agreement at the principal office of Issuer, for other Agreements providing
for Options of different denominations entitling the holder thereof to purchase,
on the same terms and subject to the same conditions as are set forth herein, in
the aggregate the same number of shares of Common Stock purchasable hereunder.
The terms "Agreement" and "Option" as used herein include any Agreements and
related Options for which this Agreement (and the Option granted hereby) may be
exchanged. Upon receipt by Issuer of evidence reasonably satisfactory to it of
the loss, theft, destruction or mutilation of this Agreement, and (in the case
of loss, theft or destruction) of reasonably satisfactory indemnification, and
upon surrender and cancellation of this Agreement, if mutilated, Issuer will
execute and deliver a new Agreement of like tenor and date. Any such new
Agreement executed and delivered shall constitute an additional contractual
obligation on the part of Issuer, whether or not the Agreement so lost, stolen,
destroyed or mutilated shall at any time be enforceable by anyone.
5. In addition to the adjustment in the number of shares of Common Stock
that are purchasable upon exercise of the Option pursuant to Section 1 of this
Agreement, 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 provided in this Section 5.
(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
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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 11% of the number of shares of Common Stock issued and outstanding
immediately prior to such issuance.
(b) Whenever the number of shares of Common Stock purchasable upon
exercise hereof is adjusted as provided in this Section 5, the Option Price
shall be adjusted by multiplying the Option Price 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. Upon the occurrence of a Subsequent Triggering Event that occurs prior
to an Exercise Termination Event, Issuer shall, at the request of Grantee
delivered within twelve (12) months (or such later period as provided in Section
10) of such Subsequent 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. Issuer will use
its reasonable best efforts to cause such 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 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, however, that after any such required reduction the number of Option
Shares to be included in such offering for the account of the Holder shall
constitute at least 25% of the total number of shares to be sold by the Holder
and Issuer in the aggregate; and provided further, however, 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 (12) month period
referred to in the first sentence of this section shall be increased to
twenty-four (24) months.
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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. (a) At any time after the occurrence of a Repurchase Event (as defined
below) (i) 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 the amount by which (A) the
market/offer price (as defined below) exceeds (B) the Option Price, multiplied
by the number of shares for which this Option may then be exercised and (ii) 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 (i) the price per share of Common Stock at
which a tender or exchange offer therefor has been made, (ii) the price per
share of Common Stock to be paid by any third party pursuant to an agreement
with Issuer, (iii) the highest closing 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 (iv) in the event of a sale
of all or any substantial part of Issuer'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 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. 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.
(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
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accordance with the provisions of this Section 7. As promptly as practicable,
and in any event within five 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 and regulation from so delivering.
(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, however, that if
Issuer at any time after delivery of a notice of repurchase pursuant to
paragraph (b) of this Section 7 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 (i) 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 (ii) 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 subsection (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:
(i) 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
(ii) the consummation of any Acquisition Transaction described in
Section 2(b)(i) hereof, except that the percentage referred to in clause
(z) shall be 50%.
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8. (a) In the event that prior to an Exercise Termination Event, Issuer
shall enter into an agreement (i) to consolidate with or merge into any person,
other than Grantee or 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, (ii) 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 (iii) to sell or otherwise transfer all
or a substantial part of its or the Issuer Subsidiary's assets or deposits 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
(x) the Acquiring Corporation (as hereinafter defined) or (y) any person that
controls the Acquiring Corporation.
(b) The following terms have the meanings indicated:
(i) "Acquiring Corporation" shall mean (i) the continuing or surviving
person of a consolidation or merger with Issuer (if other than Issuer),
(ii) the acquiring person in a plan of exchange in which Issuer is
acquired, (iii) the Issuer in a merger or plan of exchange in which Issuer
is the continuing or surviving or acquiring person, and (iv) the
transferee of all or a substantial part of Issuer's assets or deposits (or
the assets or deposits of the Issuer Subsidiary).
(ii) "Substitute Common Stock" shall mean the common stock issued by
the issuer of the Substitute Option upon exercise of the Substitute
Option.
(iii) "Assigned Value" shall mean the market/offer price, as defined
in Section 7.
(iv) "Average Price" shall mean the average closing price 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
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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 11% of the shares of Substitute
Common Stock outstanding immediately prior to exercise of the Substitute Option.
In the event that the Substitute Option would be exercisable for more than 11%
of the shares of Substitute Common Stock outstanding immediately prior to
exercise but for this clause (e), the issuer of the Substitute Option (the
"Substitute Option Issuer") shall make a cash payment to Holder equal to the
excess of (i) the value of the Substitute Option without giving effect to the
limitation in this clause (e) over (ii) the value of the Substitute Option after
giving effect to the limitation in this clause (e). This difference in value
shall be determined by a nationally recognized investment banking firm selected
by the Holder.
(f) Issuer shall not enter into any transaction described in subsection
(a) of this Section 8 unless the Acquiring Corporation and any person that
controls the Acquiring Corporation assume in writing all the obligations of
Issuer hereunder.
9. (a) At the request of the holder of the Substitute Option (the
"Substitute Option Holder"), the issuer of the Substitute Option (the
"Substitute Option Issuer") shall repurchase the Substitute Option from the
Substitute Option Holder at a price (the "Substitute Option Repurchase Price")
equal to the amount by which (i) the Highest Closing Price (as hereinafter
defined) exceeds (ii) the exercise price of the Substitute Option, 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 price 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.
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(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 and regulation 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 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 (5) business days
after the date on which the Substitute Option Issuer is no longer so prohibited;
provided, however, that if the Substitute Option Issuer is at any time after
delivery of a notice of repurchase pursuant to subsection (b) of this Section 9
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 (i) 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
(ii) 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
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have occurred prior to the date of the notice by the Substitute Option Issuer
described in the first sentence of this subsection (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. The 30-day, 6-month, 12-month, 18-month or 24-month periods for
exercise of certain rights under Sections 2, 6, 7, 9, 12 and 15 shall be
extended: (i) 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; and (ii) to the extent necessary to avoid
liability under Section 16(b) of the 1934 Act by reason of such exercise.
11. 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 consummation of the
transactions contemplated hereby 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) This Agreement, and the transactions contemplated hereby are not
subject to the requirements of any "moratorium," "control share", "fair price",
"affiliate transactions", "business combination" or other antitakeover laws and
regulations of any state. applicable to Issuer. The provisions of Article 12 of
Issuer's certificate of incorporation do not apply to the entering into of this
Agreement and the transactions contemplated hereby. Issuer has (i) duly approved
an appropriate amendment to its Rights Agreement and (ii) taken all other action
necessary or appropriate so that the entering into of this Agreement and the
consummation of the transactions contemplated hereby do not and will not result
in the ability of any Person to exercise any Rights, as defined in its Rights
Agreement, or enable or require any such Rights to separate from the shares of
Common Stock to which they are attached or to be triggered or become
exercisable.
(c) Issuer has taken all necessary corporate action to authorize and
reserve and to permit it to issue, and at all times from the date hereof through
the termination of this Agreement in accordance with its terms will have
reserved for issuance upon the exercise of the Option, that number of shares of
Common Stock equal to the maximum number of shares of Common Stock at any time
and from time to time issuable hereunder, and all such shares, upon issuance
pursuant thereto, will be duly authorized, validly issued, fully paid,
nonassessable, and will be delivered free and clear of all claims, liens,
encumbrance and security interests and not subject to any preemptive rights.
12. 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
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of the other party, except that in the event a Subsequent Triggering Event shall
have occurred prior to an Exercise Termination Event, Grantee, subject to the
express provisions hereof, may assign in whole or in part its rights and
obligations hereunder; provided, however, that until the date 15 days following
the date on which the Federal Reserve Board or other applicable regulatory
authority 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 (i) a widely dispersed public distribution, (ii) a private placement
in which no one party acquires the right to purchase in excess of 2% of the
voting shares of Issuer, (iii) an assignment to a single party (e.g., a broker
or investment banker) for the purpose of conducting a widely dispersed public
distribution on Grantee's behalf or (iv) any other manner approved by the
Federal Reserve Board or other applicable regulatory authority.
13. 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
contemplated by this Agreement, including, without limitation, applying to the
Federal Reserve Board under the BHCA, to the extent required, 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.
14. (a) Notwithstanding any other provision of this Agreement, in no event
shall the Grantee's Total Profit (as hereinafter defined) exceed $45 million
and, if it otherwise would exceed such amount, the Grantee, at its sole
election, shall either (a) reduce the number of shares of Common Stock subject
to this Option, (b) deliver to Issuer for cancellation Option Shares previously
purchased by Grantee, (c) pay cash to Issuer, or (d) any combination thereof, so
that Grantee's actually realized Total Profit shall not exceed $45 million after
taking into account the foregoing actions.
(b) Notwithstanding any other provision of this Agreement, this Option may
not be exercised for a number of shares as would, as of the date of exercise,
result in a Notional Total Profit (as defined below) of more than $45 million;
provided that nothing in this sentence shall restrict any exercise of the Option
permitted hereby on any subsequent date.
(c) As used herein, the term "Total Profit" shall mean the aggregate
amount (before taxes) of the following: (i) the amount received by Grantee
pursuant to Issuer's repurchase of the Option (or any portion thereof) pursuant
to Section 7, (ii) (x) the amount received by Grantee pursuant to Issuer's
repurchase of Option Shares pursuant to Section 7, less (y) Grantee's purchase
price for such Option Shares, (iii) (x) the net cash amounts received by Grantee
pursuant to the sale of Option Shares (or any other securities into which such
Option Shares are converted or exchanged) to any unaffiliated party, less (y)
the Grantee's purchase price of such Option Shares, (iv) any amounts received by
Grantee on the transfer of the Option (or any portion thereof) to any
unaffiliated party, and (v) any amount equivalent to the foregoing with respect
to the Substitute Option.
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(d) As used herein, the term 'Notional Total Profit" with respect to any
number of shares as to which Grantee may propose to exercise this Option shall
be the Total Profit determined as of the date of such proposed exercise assuming
that this Option were exercised on such date for such number of shares and
assuming that such shares, together with all other Option Shares held by Grantee
and its affiliates as of such date, were sold for cash at the closing market
price for the Common Stock as of the close of business on the preceding trading
day (less customary brokerage commissions).
15. (a) Grantee may, at any time following a Repurchase Event and prior to
the occurrence of an Exercise Termination Event (or such later period as
provided in Section 10), relinquish the Option (together with any Option Shares
issued to and then owned by Grantee) to Issuer in exchange for a cash fee equal
to the Surrender Price; provided, however, that Grantee may not exercise its
rights pursuant to this Section 15 if Issuer has repurchased the Option (or any
portion thereof) or any Option Shares pursuant to Section 7. The "Surrender
Price" shall be equal to $45 million (i) plus, if applicable, Grantee's purchase
price with respect to any Option Shares and (ii) minus, if applicable, the
excess of (A) the net cash amounts, if any, received by Grantee pursuant to the
arms' length sale of Option Shares (or any other securities into which such
Option Shares were converted or exchanged) to any unaffiliated party, over (B)
Grantee's purchase price of such Option Shares.
(b) Grantee may exercise its right to relinquish the Option and any Option
Shares pursuant to this Section 15 by surrendering 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 (i) that Grantee elects to
relinquish the Option and Option Shares, if any, in accordance with the
provisions of this Section 15 and (ii) accept the Surrender Price. The Surrender
Price shall be payable in immediately available funds on or before the second
business day following receipt of such notice by Issuer.
(c) To the extent that Issuer is prohibited under applicable law or
regulation, or as a consequence of administrative policy, 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,
the portion of the Surrender Price that it is no longer prohibited from paying,
within five 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 paragraph (b) of this Section 15 is prohibited
under applicable law or regulation, or as a consequence of administrative
policy, from paying to Grantee the Surrender Price in full, (i) Issuer shall (A)
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 make such payments, (B) within five 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, as well as any discussions with
any relevant regulatory or other third party reasonably related to the same and
(ii) Grantee may revoke such notice of surrender by delivery of a notice of
revocation to Issuer and, upon delivery of such 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
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have occurred if not for the provisions of this Section 15(c) (during which
period Grantee may exercise any of its rights hereunder, including any and all
rights pursuant to this Section 15).
16. 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.
17. 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 l(a) hereof (as adjusted pursuant to Section l(b) or 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.
18. All notices, requests, claims, demands and other communications
hereunder shall be deemed to have been duly given when delivered in person, by
fax, telecopy, or by registered or certified mail (postage prepaid, return
receipt requested) at the respective addresses of the parties set forth in the
Merger Agreement.
19. This Agreement shall be governed by and construed in accordance with
the laws of the State of Delaware, without regard to the conflict of law
principles thereof (except to the extent that mandatory provisions of Federal
law are applicable).
20. 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.
21. 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.
22. 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 with respect thereof, written or oral. The terms
and conditions of this Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective successors and permitted assignees.
Nothing in this Agreement, expressed or implied, is intended to confer upon any
party, other than the parties
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hereto, and their respective successors except as assignees, any rights,
remedies, obligations or liabilities under or by reason of this Agreement,
except as expressly provided herein.
23. Capitalized terms used in this Agreement and not defined herein shall
have the meanings assigned thereto in the Merger Agreement.
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Each of the parties has caused this Agreement to be executed on its behalf
by its officer thereunto duly authorized, all as of the date first above
written.
ST. XXXX BANCORP, INC.
By
-------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Chief Executive Officer
CHARTER ONE FINANCIAL, INC.
By
-------------------------------------
Name: Xxxxxxx X. Xxxx
Title: Chief Executive Officer
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EXHIBIT B
FORM OF SUPPORT AGREEMENT
May 17, 1999
Charter One Financial, Inc.
0000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
Dear Sirs:
The undersigned understands that Charter One Financial, Inc. ("COFI"),
Charter Michigan Bancorp Inc., a wholly owned subsidiary of COFI ("Charter
M.B.") and St. Xxxx Bancorp, Inc. ("St. Xxxx") are entering into an Agreement
and Plan of Merger (the "Merger Agreement") dated as of May 17, 1999 providing
for, among other things, the merger of St. Xxxx into Charter M.B. (the "Company
Merger"), in which the outstanding shares of common stock of St. Xxxx will be
exchanged for common stock of COFI and fractional share interests.
The undersigned is a stockholder of St. Xxxx and is entering into this
agreement solely in his capacity as a stockholder of St. Xxxx (and not in his
capacity as a director or officer of St. Xxxx) to induce COFI to enter into the
Merger Agreement and to consummate the transactions contemplated thereby.
The undersigned confirms his or her agreement with COFI as follows:
1. The undersigned represents and warrants that he or she is the record
or beneficial owner of the shares of common stock of St. Xxxx listed on Schedule
I hereto (the "Shares"), free and clear of all liens, charges, encumbrances,
voting agreements and commitments of every kind.
2. Except as required by law or with the prior consent of COFI, the
undersigned agrees that prior to the termination of this agreement the
undersigned will not, and will not permit any company, trust or other entity
controlled by the undersigned to, contract to sell, sell or otherwise transfer
or dispose of any of the Shares or any interest therein or securities
convertible thereunto or any voting rights with respect thereto, other than
pursuant to the Company Merger; provided, however, that nothing herein shall
prohibit any such transfer or disposition to or for the benefit of any relative
of the undersigned or any estate, company, trust, foundation or partnership
controlled or held for the benefit of the undersigned or any relative or heir of
the undersigned that agrees to be bound by the terms of this agreement.
3. The undersigned agrees that all of the Shares, will be voted by the
undersigned in
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Charter One Financial, Inc.
May 17, 1999
Page 2
favor of the adoption of the Merger Agreement.
4. The undersigned agrees to, and will cause any company, trust or
other entity (other than St. Xxxx and its subsidiaries) controlled by the
undersigned to, cooperate fully with COFI in connection with the Merger
Agreement and the transactions contemplated thereby. The undersigned agrees that
the undersigned will not, and will not permit any such company, trust or other
entity (other than St. Xxxx and its subsidiaries) to, directly or indirectly,
(including through its officers, directors, employees or other representatives)
solicit or encourage any inquiries or proposals with respect to, or engage in
any negotiations concerning, or provide any confidential information to, or have
any discussions with, any third party, relating to any acquisition, purchase of
all or a substantial portion of the assets of, or any equity interest in, St.
Xxxx or a St. Xxxx subsidiary (an "Acquisition Proposal"); provided, however,
that nothing herein shall be deemed to limit the undersigned in his or her
capacity as a director or officer of St. Xxxx or any of its subsidiaries.
5. The undersigned represents and warrants to COFI that (i) the
undersigned has all necessary power and authority to enter into this agreement
and (ii) this agreement is the legal, valid and binding agreement of the
undersigned, and is enforceable against the undersigned in accordance with its
terms.
6. This agreement shall automatically terminate (i) upon the mutual
agreement of the parties hereto, (ii) upon termination of the Merger Agreement
in accordance with its terms, (iii) at the Effective Time (as defined in the
Merger Agreement) or (iv) upon the exercise by COFI of the Option (as defined in
the Stock Option Agreement dated as of May 17, 1999 between COFI and St. Xxxx).
7. This agreement may be amended, modified or supplemented at any time
by the written approval of such amendment, modification or supplement by the
undersigned and COFI.
8. This agreement only applies to the Shares and not to any other
common stock of St. Xxxx owned of record or beneficially by the undersigned or
otherwise controlled by the undersigned. The Shares under this agreement
together with the Shares under all other support agreements executed by other
directors of St. Xxxx are limited in the aggregate to 4.9% of the issued and
outstanding common stock of St. Xxxx.
9. This agreement evidences the entire agreement between the parties
hereto with respect to the matters provided for herein and there are no
agreements, representations or warranties with respect to the matters provided
for herein other than those set forth herein.
10. The parties agree that if any provision of this agreement shall
under any circumstances be deemed invalid or inoperative, this agreement shall
be construed with the invalid
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Charter One Financial, Inc.
May 17, 1999
Page 3
or inoperative provisions deleted and the rights and obligations of the parties
shall be construed and enforced accordingly.
11. This agreement may be executed in two counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same agreement.
12. The validity, construction, enforcement and effect of this
agreement shall be governed by the internal laws of the State of Delaware.
13. This agreement shall inure to the benefit of COFI and its
successors, and shall be binding upon and inure to the benefit of the
undersigned and his successors, permitted transferees, executors, personal
representatives, administrators, heirs, legatees, guardians and other legal
representatives. This agreement shall survive the death or incapacity of the
undersigned.
14. Nothing in this agreement shall be construed to give COFI any
rights to exercise or direct the exercise of voting power as owner of the
Shares, either beneficially or otherwise, for any purpose.
15. The undersigned agrees that in the event of his breach of this
agreement COFI shall be entitled to such remedies and relief against the
undersigned as are available at law or in equity. The undersigned acknowledges
that there is not an adequate remedy at law to compensate COFI for a violation
of this agreement, and irrevocably waives, to the extent permitted by law, any
defense that he might have based on the adequacy of a remedy at law which might
be asserted as a bar to specific performance, injunctive relief, or other
equitable relief. The undersigned agrees to the granting of injunctive relief
without the posting of any bond and further agrees that if any bond shall be
required, such bond shall be in a nominal amount.
[The remainder of this page intentionally left blank.]
82
Charter One Financial, Inc.
May 17, 1999
Page 4
Please confirm that the foregoing correctly states the understanding
between the undersigned and COFI by signing and returning to COFI a counterpart
hereof.
Very truly yours,
------------------------------------------
Name:
Accepted as of the 17th day
of May, 1999
CHARTER ONE FINANCIAL, INC.
By:
--------------------------------------
Chief Executive Officer
83
Schedule I
Number of Shares subject to Support
Agreement .............................................
84
EXHIBIT C
SUBSIDIARY PLAN OF MERGER
SUBSIDIARY PLAN OF MERGER (this "Agreement") dated ________, 1999, by
and between Charter One Bank F.S.B. (the "Bank") and St. Xxxx Federal Bank For
Savings ("St. Xxxx Bank").
WHEREAS, the Board of Directors of Charter Michigan Bancorp ("Charter
Michigan"), as the sole stockholder of the Bank, and the Board of Directors of
St. Xxxx Bancorp, Inc. ("St. Xxxx"), as the sole stockholder of St. Xxxx Bank,
have approved this Agreement, and deem it advisable and in the best interests of
their respective stockholders to consummate the merger between the Bank and St.
Xxxx Bank (the "Bank Merger"); and
WHEREAS, the Board of Directors of St. Xxxx Bank and the Board of
Directors of the Bank have approved, and deem it advisable to consummate the
Bank Merger by and between St. Xxxx Bank and the Bank upon the terms provided
for herein, all in accordance with the provisions of 12 C.F.R. xx.xx. 552.13 and
563.22.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, and
intending to be legally bound hereby, the parties hereto agree as follows:
ARTICLE I
THE MERGER
1.1 Effective Time of the Bank Merger. Subject to the provisions of
this Agreement, the Bank Merger shall become effective in accordance with the
terms of the articles of combination (the "Articles of Combination") which shall
be filed with the Secretary (the "Secretary") of the OTS on the Effective Date.
The term "Effective Time" shall be the date and time when the Bank Merger
becomes effective, as specified on the endorsement of the Articles of
Combination by the Secretary approving the Bank Merger.
1.2 Effects of the Merger. (a) At the Effective Time, (i) the separate
existence of St. Xxxx Bank shall cease and St. Xxxx Bank shall be merged with
and into the Bank (the Bank is sometimes referred to herein as the "Surviving
Bank"), (ii) the charter of the Bank as in effect immediately prior to the
Effective Time shall be the charter of the Surviving Bank until duly amended in
accordance with applicable law, and the name of the Surviving Bank shall be
"Charter One Bank F.S.B.", (iii) the bylaws of the Bank as in effect immediately
prior to the Effective Time shall be the bylaws of the Surviving Bank, until
duly amended in accordance with applicable law and (iv) the officers of the Bank
immediately prior to the Effective Time shall be the officers of the Surviving
Bank, each
85
to hold office in accordance with the Charter and Bylaws of the Surviving Bank
until their respective successors are duly elected or appointed and qualified.
(b) At and after the Effective Time, the Bank Merger shall have all the
effects set forth in 12 C.F.R. ss. 552.13(l) and as provided in the Agreement
and Plan of Merger by and among Charter One Financial, Inc., Charter Michigan
and St. Xxxx dated as of May 17, 1999 (the "Parent Merger Agreement").
1.3 Headquarters. The headquarters or home office of the Surviving Bank
shall be at the Bank's current home office address and all offices of the
Surviving Bank shall be located as set forth on Schedule 1.3 hereto.
1.4 Board of Directors. On and after the Effective Time, the names,
residential addresses and terms of office of the directors of the Surviving Bank
are as set forth on Schedule 1.4 hereto, each to hold office until his or her
successor is elected and qualified or otherwise selected in accordance with the
Bylaws of the Surviving Bank.
1.5 Deposit Accounts. After the Effective Time, the Surviving Bank will
continue to issue deposit accounts on the same basis as the Bank immediately
prior to the Effective Time until duly amended in accordance with applicable
law.
ARTICLE II
EFFECT OF THE BANK MERGER ON THE CAPITAL STOCK
OF THE CONSTITUENT BANKS; EXCHANGE OF CERTIFICATES
2.1 St. Xxxx Bank Capital Stock. At the Effective Time, by virtue of
the Bank Merger and without any action on the part of the holder of any shares
of common stock, $.__ par value, of St. Xxxx Bank (the "St. Xxxx Bank Common
Stock"), all shares of St. Xxxx Bank Common Stock shall automatically be
cancelled and retired and shall cease to exist and no consideration shall be
delivered in exchange therefor.
2.2 Bank Common Stock. The shares of common stock, $.01 par value, of
the Bank issued and outstanding immediately prior to the Effective Time shall
remain outstanding and unchanged.
ARTICLE III
LIQUIDATION ACCOUNT
For purposes of granting a limited priority claim to the assets of the
Surviving Bank in the unlikely event (and only upon such event) of a complete
liquidation of the Surviving Bank to persons who continue to maintain savings
accounts with the Surviving Bank after the Bank Merger, and who, immediately
prior to the Effective Time had a subaccount balance (as described in 12
2
86
C.F.R. ss. 563b.3(f)(4)) with respect to any liquidation account of St. Xxxx
Bank, the Surviving Bank shall, at the time of the Bank Merger, establish a
liquidation account(s) in an amount equal to the liquidation account(s) of St.
Xxxx Bank immediately prior to the Effective Time, which liquidation account(s)
shall participate pari passu with any other liquidation accounts of the
Surviving Bank. If the balance in any savings account to which a subaccount
balance relates at the close of business on the last day of any fiscal year of
the Surviving Bank after the Effective Time is less than the balance in such
savings account at the Effective Time or at the close of business on the last
day of any other fiscal year of the Surviving Bank after the Effective Time,
such subaccount balance shall be reduced in an amount proportionate to the
reduction in such savings account balance. No subaccount balance shall be
increased, notwithstanding any increase in the balance of the related savings
account. If such related savings account is closed, such subaccount shall be
reduced to zero upon such closing. In the event of a complete liquidation of the
Surviving Bank, and only in such event, the amount distributable to each
accountholder will be determined in accordance with the OTS rules and
regulations pertaining to conversions by savings and loan associations from
mutual to stock form of organization, on the basis of such accountholder's
subaccount balance with the Surviving Bank at the time of its liquidation. No
merger, consolidation, purchase of bulk assets with assumption of savings
accounts and other liabilities, or similar transaction, whether or not the
Surviving Bank is the surviving institution, will be deemed to be a complete
liquidation for this purpose, and, in any such transaction, the liquidation
account shall be assumed by the surviving institution.
ARTICLE IV
TERMINATION AND AMENDMENT
4.1 Termination. This Agreement shall automatically terminate upon any
termination of the Parent Merger Agreement. This Agreement may otherwise be
terminated at any time prior to the Effective Time by mutual consent of the Bank
and St. Xxxx Bank in a written instrument, if the Board of Directors of each so
determines by a vote of a majority of the members of its entire Board.
4.2 Effect of Termination. In the event of termination of this
Agreement as provided in Section 4.1, this Agreement shall forthwith become void
and there shall be no liability or obligation under this Agreement on the part
of the Bank, St. Xxxx Bank or their respective officers, directors or
affiliates.
4.3 Amendment. This Agreement may be amended by the parties hereto, by
action taken or authorized by their respective Boards of Directors. This
Agreement may not be amended except by an instrument in writing signed on behalf
of each of the parties hereto.
3
87
ARTICLE V
GENERAL PROVISIONS
5.1 Definitions. All capitalized terms which are used but not defined
herein shall have the meanings set forth in the Parent Merger Agreement.
5.2 Entire Agreement. Except as otherwise set forth in this Agreement
or the Parent Merger Agreement (including the documents and the instruments
referred to herein or therein), this Agreement constitutes the entire agreement,
and supersedes all prior agreements and understandings, both written and oral,
among the parties with respect to the subject matter hereof.
5.3 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Ohio applicable to contracts made and
to be performed in the State of Ohio (except to the extent that mandatory
provisions of Federal law are applicable).
5.4 Counterparts. This Agreement may be executed in counterparts which
together shall constitute one agreement.
4
88
IN WITNESS WHEREOF, each of Bank and St. Xxxx Bank has caused this
Agreement to be executed by its duly authorized officers as of the date first
above written.
CHARTER ONE BANK F.S.B.
ATTEST:
By: By:
--------------------------- -------------------------------------
Secretary President and Chief Executive Officer
St. Xxxx Bank, F.S.B.
ATTEST:
By: By:
-------------------------- --------------------------------------
Secretary President and Chief Executive Officer
5
89
SCHEDULE 1.3
[TO BE COMPLETED]
OFFICES OF SURVIVING BANK
-------------------------
HOME OFFICE
BRANCH OFFICES
90
SCHEDULE 1.4
[TO BE COMPLETED]
DIRECTORS OF SURVIVING BANK TERM TO EXPIRE
--------------------------- --------------
91
EXHIBIT D
FORM OF ST. XXXX AFFILIATE AGREEMENT
____________, 1999
St. Xxxx Bancorp, Inc.
0000 Xxxx Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx, Chief Executive Officer
Charter One Financial, Inc.
0000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
Attention: Xxxxxxx X. Xxxx, Chief Executive Officer
Ladies and Gentlemen:
I have been advised that I may be deemed to be, but do not admit
that I am, an "affiliate" of St. Xxxx Bancorp, Inc., a Delaware corporation
("St. Xxxx"), as that term is defined in Rule 145 promulgated by the Securities
and Exchange Commission (the "SEC") under the Securities Act of 1933, as amended
(the "Securities Act"), and/or SEC Accounting Series Releases 130 and 135. I
understand that pursuant to the terms of the Agreement and Plan of Merger, dated
as of May 17, 1999 (the "Merger Agreement"), by and between St. Xxxx, Charter
One Financial, Inc., a Delaware corporation ("COFI"), and Charter Michigan
Bancorp, Inc., a Michigan corporation ("Charter Michigan"), St. Xxxx plans to
merge with and into Charter Michigan (the "Merger") and that the Merger is
intended to be accounted for under the "pooling-of-interests" accounting method.
I further understand that as a result of the Merger, I may receive
shares of common stock, par value $0.01 per share, of COFI ("COFI Stock") (i) in
exchange for shares of common stock, par value $0.01 per share, of St. Xxxx
("St. Xxxx Xxxxx") or (ii) as a result of the exercise of Rights (as defined in
the Merger Agreement).
I have carefully read this letter and reviewed the Merger Agreement
and discussed their requirements and other applicable limitations upon my
ability to sell, transfer, or otherwise dispose of COFI Stock and St. Xxxx
Xxxxx, to the extent I felt necessary, with my counsel or counsel for St. Xxxx.
I represent, warrant and covenant with and to COFI that in the event
I receive any COFI Stock as a result of the Merger:
92
1. I shall not make any sale, transfer, or other disposition of such
COFI Stock unless (i) such sale, transfer or other disposition has
been registered under the Securities Act, (ii) such sale, transfer
or other disposition is made in conformity with the provisions of
Rule 145 under the Securities Act (as such rule may be amended
from time to time), or (iii) in the opinion of counsel in form and
substance reasonably satisfactory to COFI, or under a Ano-action@
letter obtained by me from the staff of the SEC, such sale,
transfer or other disposition will not violate or is otherwise
exempt from registration under the Securities Act.
2. I understand that COFI is under no obligation to register the
sale, transfer or other disposition of shares of COFI Stock by me
or on my behalf under the Securities Act or to take any other
action necessary in order to make compliance with an exemption
from such registration available.
3. I understand that stop transfer instructions will be given to
COFI's transfer agent with respect to shares of COFI Stock issued
to me as a result of the Merger and that there will be placed on
the certificates for such shares, or any substitutions therefor, a
legend stating in substance:
"The shares represented by this certificate were issued in a
transaction to which Rule 145 promulgated under the Securities
Act of 1933 applies. The shares represented by this
certificate may be transferred only in accordance with the
terms of a letter agreement, dated _______, 1999, between the
registered holder hereof and _____________, a copy of which
agreement is on file at the principal offices of St. Xxxx
Bancorp, Inc."
4. I understand that, unless transfer by me of the COFI Stock issued
to me as a result of the Merger has been registered under the
Securities Act or such transfer is made in conformity with the
provisions of Rule 145(d) under the Securities Act, COFI reserves
the right, in its sole discretion, to place the following legend
on the certificates issued to my transferee:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933 and were acquired
from a person who received such shares in a transaction to
which Rule 145 under the Securities Act of 1933 applies. The
shares have been acquired by the holder not with a view to, or
for resale in connection with, any distribution thereof within
the meaning of the Securities Act of 1933 and may not be
offered, sold, pledged or otherwise transferred except in
2
93
accordance with an exemption from the registration
requirements of the Securities Act of 1933."
It is understood and agreed that the legends set forth in
paragraphs (3) and (4) above shall be removed by delivery of substitute
certificates without such legends if I shall have delivered to COFI (i) a copy
of a "no action" letter from the staff of the SEC, or an opinion of counsel in
form and substance reasonably satisfactory to COFI, to the effect that such
legend is not required for purposes of the Securities Act, or (ii) evidence or
representations satisfactory to COFI that the COFI Stock represented by such
certificates is being or has been sold in conformity with the provisions of Rule
145(d).
I further represent, warrant and covenant with and to COFI that I
will not sell, transfer or otherwise dispose of, or reduce my risk relative to,
any shares of St. Xxxx Xxxxx or COFI Stock (whether or not acquired by me in the
Merger) during the period commencing 30 days prior to the effective date of the
Merger and ending at such time as COFI notifies me that results covering at
least 30 days of combined operations of St. Xxxx and COFI after the Merger have
been published by COFI. I understand that COFI is not obligated to publish such
combined financial results except in accordance with its normal financial
reporting practice.
I further understand and agree that this letter agreement shall
apply to all shares of St. Xxxx Xxxxx and COFI Stock that I am deemed to
beneficially own pursuant to applicable federal securities law.
I also understand that the Merger is intended to be treated as a
"pooling-of-interests" for accounting purposes, and I agree that if St. Xxxx or
COFI advises me in writing that additional restrictions apply to my ability to
sell, transfer, or otherwise dispose of St. Xxxx Xxxxx or COFI Stock in order
for COFI to be entitled to use the pooling-of-interests accounting method, I
will abide by such restrictions.
Very truly yours,
By__________________________
Name:
3
94
Accepted this ____ day of _______________, 1999.
ST. XXXX BANCORP, INC.
By________________________
Name: Xxxxxx X. Xxxxxx
Title: Chief Executive Officer
CHARTER ONE FINANCIAL, INC.
By________________________
Name: Xxxxxxx X. Xxxx
Title: Chief Executive Officer
4
95
EXHIBIT E
FORM OF COFI AFFILIATE AGREEMENT
____________, 1999
Charter One Financial, Inc.
0000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
Attention: Xxxxxxx X. Xxxx, Chief Executive Officer
Ladies and Gentlemen:
I have been advised that I may be deemed to be, but do not admit
that I am, an "affiliate" of Charter One Financial, Inc., a Delaware corporation
("COFI"), as that term is defined in the Securities and Exchange Commission's
Accounting Series Releases 130 and 135. I understand that pursuant to the terms
of the Agreement and Plan of Merger, dated as of May 17, 1999 (the "Merger
Agreement"), by and between St. Xxxx Bancorp, Inc., a Delaware corporation ("St.
Xxxx"), COFI, and Charter Michigan Bancorp, Inc., a Michigan corporation
("Charter Michigan"), St. Xxxx plans to merge with and into Charter Michigan
(the "Merger") and that the merger is intended to be accounted for under the
"pooling-of-interests" accounting method.
I have carefully read this letter and reviewed the Merger Agreement
and discussed their requirements and other applicable limitations upon my
ability to sell, transfer, or otherwise dispose of common stock of COFI and St.
Xxxx, to the extent I felt necessary, with my counsel or counsel for COFI.
I hereby represent, warrant and covenant with and to COFI that:
1. I will not sell, transfer or otherwise dispose of, or reduce
my risk relative to, any shares of common stock of St. Xxxx or
COFI (whether or not acquired by me in the Merger) during the
period commencing 30 days prior to the effective date of the
Merger and ending at such time as COFI notifies me that
results covering at least 30 days of combined operations of
St. Xxxx and COFI after the Merger have been published by
COFI. I understand that COFI is not obligated to publish such
combined financial results except in accordance with its
normal financial reporting practice.
2. I further understand and agree that this letter agreement
shall apply to all shares of common stock of St. Xxxx and COFI
that I am deemed to beneficially own pursuant to applicable
federal securities laws.
96
3. If COFI advises me in writing that additional restrictions
apply to my ability to sell, transfer, or otherwise dispose of
common stock of St. Xxxx or COFI in order for COFI to be
entitled to use the "pooling-of-interests" accounting method,
I will abide by such restrictions.
Very truly yours,
By__________________________
Name:
Accepted this ____ day of _______________, 1999.
CHARTER ONE FINANCIAL, INC.
By________________________
Name: Xxxxxxx X. Xxxx
Title: Chief Executive Officer
2
