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AGREEMENT AND PLAN OF MERGER
DATED AS OF MARCH 15, 2004
BETWEEN
CARVER BANCORP, INC.,
CARVER FEDERAL SAVINGS BANK
AND
INDEPENDENCE FEDERAL SAVINGS BANK
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TABLE OF CONTENTS
PAGE
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RECITALS..........................................................................................................1
ARTICLE I CERTAIN
DEFINITIONS....................................................................................1
1.01. Certain
Definitions.....................................................................................1
ARTICLE II THE
MERGER............................................................................................6
2.01. The
Merger..............................................................................................6
2.02. Effective Date and Effective Time;
Closing..............................................................7
ARTICLE III CONSIDERATION; EXCHANGE
PROCEDURES...................................................................8
3.01. Merger
Consideration....................................................................................8
3.02. Rights as Shareholders; Stock
Transfers.................................................................8
3.03. Exchange
Procedures.....................................................................................8
ARTICLE IV ACTIONS PENDING
ACQUISITION...........................................................................9
4.01. Conduct of the Company's Business
Prior to the Effective
Time...........................................9
4.02. Forbearances of the
Company............................................................................10
4.03. Forbearances of
Parent.................................................................................13
ARTICLE V REPRESENTATIONS AND
WARRANTIES........................................................................14
5.01. Disclosure
Schedule....................................................................................14
5.02. Representations and Warranties of
the
Company..........................................................14
5.03. Representations and Warranties of
Parent and
CFSB......................................................28
ARTICLE VI
COVENANTS............................................................................................29
6.01. Reasonable Best
Efforts................................................................................29
6.02. Shareholder
Approval...................................................................................29
6.03. Securities and Regulatory
Filings......................................................................30
6.04. Press
Releases.........................................................................................31
6.05. Access;
Information....................................................................................31
6.06. Acquisition
Proposals..................................................................................32
6.07.
Indemnification........................................................................................33
6.08. Benefit
Plans..........................................................................................35
6.09. Notification of Certain
Matters........................................................................36
6.10. Certain Policies of the
Company........................................................................36
6.11. Antitakeover
Provisions................................................................................36
6.12. Voting
Agreements......................................................................................37
6.13. Financial
Statements...................................................................................37
6.14. Additional
Agreements..................................................................................37
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ARTICLE VII CONDITIONS TO CONSUMMATION OF THE
MERGER............................................................38
7.01. Conditions to Each Party's
Obligation to Effect the
Merger.............................................38
7.02. Conditions to Obligation of the
Company................................................................38
7.03. Conditions to Obligations of
Parent....................................................................39
7.04. Frustration of Closing
Conditions......................................................................40
ARTICLE VIII
TERMINATION........................................................................................40
8.01.
Termination............................................................................................40
8.02. Effect of Termination and
Abandonment..................................................................41
ARTICLE IX
MISCELLANEOUS........................................................................................43
9.01.
Survival...............................................................................................43
9.02. Waiver;
Amendment......................................................................................43
9.03.
Counterparts...........................................................................................43
9.04. Governing
Law..........................................................................................43
9.05.
Expenses...............................................................................................44
9.06.
Notices................................................................................................44
9.07. Entire Understanding; No Third
Party
Beneficiaries.....................................................45
9.08.
Severability...........................................................................................46
9.09. Enforcement of the
Agreement...........................................................................46
9.10.
Interpretation.........................................................................................46
9.11.
Assignment.............................................................................................46
9.12. Alternative
Structure..................................................................................46
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Exhibit A.........Form of Voting Agreement
for Directors and Executive Officers
Exhibit B.........Form of Voting Agreement
for Shareholders
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AGREEMENT AND PLAN OF MERGER, dated as of March 15, 2004 (the
"Agreement"), between Carver Bancorp, Inc.
("Parent"), Carver Federal Savings
Bank ("CFSB") and Independence Federal
Savings Bank (the "Company").
RECITAL
A. THE COMPANY. The Company is a federally
chartered savings bank.
B. CFSB. CFSB is a federally chartered
savings bank.
C. PARENT. Parent is a Delaware
corporation.
D. BOARD ACTION. The Board of Directors of
each of Parent, CFSB and the Company
(i) has determined that this Agreement and
the business combination and related
transactions contemplated hereby are in the
best interests of their respective
companies and stockholders, (ii) has
determined that this Agreement and the
transactions contemplated hereby are
consistent with, and in furtherance of,
their respective business strategies and
(iii) has approved this Agreement at
meetings of each of such Boards of
Directors.
NOW, THEREFORE, in consideration of the premises and of the
mutual
covenants, representations, warranties and
agreements contained herein, the
parties agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
1.01. CERTAIN DEFINITIONS. The following
terms are used in this Agreement with
the meanings set forth below:
"Acquisition
Proposal" has the meaning set forth in Section 6.06.
"Affiliate" has the meaning set forth in Section 5.02(ee).
"Agreement" means this Agreement, as amended or modified from time
to
time in accordance with Section 9.02.
"Articles of Combination" means the articles of combination to be
filed
with the OTS pursuant to 12 C.F.R. Section
552.13 in order to effectuate the
Merger.
"Bank Secrecy Act" means the Bank Secrecy Act of 1970, as
amended.
"Benefits Plans" has the meaning set forth in Section 5.02(m).
"Business Day" means Monday through Friday of each week, except a
legal
holiday recognized as such by the U.S.
Government or any day on which banking
institutions in the District of Columbia or
the State of New York are authorized
or obligated to close.
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"Certificate" means any certificate which immediately prior to
the
Effective Time represented shares of
Company Common Stock.
"CFSB" has the meaning set forth in the preamble.
"Closing" and "Closing Date" have the meanings set forth in
Section
2.02(b).
"Code" means the Internal Revenue Code of 1986, as amended.
"Community Reinvestment Act" means the Community Reinvestment Act
of
1977, as amended.
"Company" has the meaning set forth in the preamble to this
Agreement.
"Company Board" means the Board of Directors of the Company.
"Company Bylaws" means the bylaws of the Company.
"Company Charter" means the Federal stock charter of the Company,
as
amended.
"Company Common Stock" means the common stock, $0.01 par value
per
share, of the Company.
"Company Group" means any "affiliated group" (as defined in
Section
1504(a) of the Code) that includes the
Company and IFC or any predecessor of the
Company.
"Company Loan Property" has the meaning set forth in Section
5.02(p).
"Company Meeting" has the meaning set forth in Section 6.02.
"Company Preferred Stock" means the preferred stock, $0.01 par
value
per share, of the Company.
"Company Regulatory Authorities" has the meaning set forth in
Section
5.02(i).
"Company Stock" means, collectively, the Company Common Stock and
the
Company Preferred Stock.
"Derivatives Contract" has the meaning set forth in Section
5.02(r).
"Disclosure Schedule" has the meaning set forth in Section
5.01.
"Effective Date" has the meaning set forth in Section 2.02(a).
"Effective Time" has the meaning set forth in Section 2.02(a).
"EGTRAA" means the Economic Growth and Tax Relief Reconciliation
Act of
2001, as amended.
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"Employees" has the meaning set forth in Section 5.02(m).
"Environmental Laws" has the meaning set forth in Section
5.02(p).
"Equal Credit Opportunity Act" means the Equal Credit Opportunity
Act,
as amended.
"Equity Investment" means (i) an Equity Security; and (ii) an
ownership
interest in any company or other entity,
any membership interest that includes a
voting right in any company or other
entity, any interest in real estate; and
any investment or transaction which in
substance falls into any of these
categories even though it may be structured
as some other form of investment or
transaction.
"Equity Security" means any stock (other than adjustable-rate
preferred
stock, money market (auction rate)
preferred stock or other instrument
determined by the OTS to have the character
of debt securities), certificate of
interest or participation in any
profit-sharing agreement, collateral-trust
certificate, preorganization certificate or
subscription, transferable share,
investment contract, or voting-trust
certificate; any security convertible into
such a security; any security carrying any
warrant or right to subscribe to or
purchase any such security; and any
certificate of interest or participation in,
temporary or interim certificate for, or
receipt for any of the foregoing.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as
amended.
"ERISA Affiliate" has the meaning set forth in Section
5.02(m)(iii).
"Exchange Act" means the Securities Exchange Act of 1934, as
amended,
and the rules and regulations
thereunder.
"Exchange Act Documents" has the meaning set forth in Section
5.02(g).
"Exchange Agent" means American Stock Transfer & Trust Company,
or such
other exchange agent as may be designated
by Parent and reasonably acceptable to
the Company to act as agent for purposes of
conducting the exchange procedures
described in Section 3.03.
"Excluded Shares" means shares of Company Common Stock held
directly or
indirectly by Parent or CFSB (other than
shares held in a fiduciary (including
custodial or agency) capacity or as a
result of debts previously contracted in
good faith) and Treasury Stock.
"Fair Housing Act" means the Fair Housing Act, as amended.
"FDIC" means the Federal Deposit Insurance Corporation.
"GAAP" means accounting principles generally accepted in the
United
States of America.
"Governmental Authority" means any federal, state or local
court,
administrative agency or commission or
other governmental authority or
instrumentality.
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"Hazardous Substance" has the meaning set forth in Section
5.02(p).
"IFC" shall have the meaning set forth in Section 5.02(c).
"Indemnified Party" and "Indemnifying Party" have the meanings
set
forth in Section 6.07(a).
"Insurance Amount" has the meaning set forth in Section
6.07(c).
"Insurance Policies" has the meaning set forth in Section
5.02(x).
"Interim Bank" has the meaning set forth in Section 2.01(a).
"knowledge" of any person which is not an individual means,
with
respect to any specific matter, the actual
knowledge of such person's directors,
executive officers and any other officer
having primary responsibility for such
matter.
"Liens" means any charge, mortgage, pledge, security interest,
restriction, claim, lien or
encumbrance.
"Loans" has the meaning set forth in Section 5.02(s).
"Material Adverse Effect" means an effect which (A) is material
and
adverse to the business, financial
condition, results of operations or prospects
of the Company and IFC taken as a whole or
Parent and CFSB and their respective
subsidiaries taken as a whole, as the
context may dictate, other than any such
effect attributable to or resulting from
(i) any change in banking or similar
laws, rules or regulations of general
applicability or interpretations thereof
by courts or governmental authorities,
except to the extent that any such laws,
rules or regulations affects the referenced
party to a materially greater extent
than banks, thrifts or their holding
companies generally, (ii) any change in
GAAP (as defined herein) or regulatory
accounting principles, which affect
banks, thrifts or their holding companies
generally, except to the extent any
such change affects the referenced party to
a materially greater extent than
banks, thrifts or their holding companies
generally, (iii) changes in general
economic conditions affecting thrifts
generally, except to the extent any such
change affects the referenced party to a
materially greater extent than thrifts
generally, (iv) any attack on or by,
outbreak or escalation of hostilities or
acts of terrorism involving, the United
States, any declaration of war by
Congress or any other national or
international calamity or emergency, which
affects the referenced party to a
materially greater extent than banks, thrifts
or their holding companies generally, (v)
reasonable and customary expenses
incurred in connection with the Merger,
(vi) the announcement or pendancy of the
Merger or (vii) any change in interest
rates, provided, that any such change in
interest rates shall not affect the
referenced party to a materially greater
extent than banks, thrifts or their holding
companies generally, and provided,
further, that any such change shall not
have a materially adverse effect on the
ability from a legal or regulatory
standpoint of such party and its subsidiaries
to consummate the transactions contemplated
hereby, or (B) adversely affects the
ability of the Company, IFC, Parent or
CFSB, as the context may dictate, to
perform its material obligations hereunder
or (C) materially and adversely
affects the timely consummation of the
transactions contemplated hereby.
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"Merger" has the meaning set forth in Section 2.01(a).
"Merger Consideration" means $21.00 in cash, without interest, for
each
share of Company Common Stock that is
issued and outstanding immediately prior
to the Effective Time (other than Excluded
Shares).
"Nasdaq" means The Nasdaq Stock Market, Inc.'s Small Cap
Market.
"National Labor Relations Act" means the National Labor Relations
Act,
as amended.
"OREO" means other real estate owned.
"OTS" means the Office of Thrift Supervision.
"Parent" has the meaning set forth in the preamble to this
Agreement.
"Parent Board" means the Board of Directors of Parent.
"Pension Plan" has the meaning set forth in Section
5.02(m)(ii).
"Person" means any individual, bank, corporation, partnership,
association, joint-stock company, business
trust, limited liability company,
savings bank, savings association,
unincorporated organization or other
organization or firm of any kind or
nature.
"Previously Disclosed" by a party shall mean subject to Section
5.01,
information set forth in a section of its
Disclosure Schedule corresponding to
the section of this Agreement where such
term is used.
"Proxy Statement" means the proxy statement, together with any
amendments and supplements thereto, to be
delivered to holders of Company Common
Stock in connection with the solicitation
of their approval of this Agreement.
"Rights" means, with respect to any Person, warrants, options,
rights,
convertible securities and other
arrangements or commitments which obligate the
Person to issue or dispose of any of its
capital stock or other ownership
interests.
"SAIF" means the Savings Association Insurance Fund maintained by
the
FDIC.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended, and
the
rules and regulations thereunder.
"Subsidiary" has the meaning ascribed to that term in Rule 405 of
the
SEC under the Securities Act.
"Superior Proposal" has the meaning set forth in Section 6.02.
"Surviving Corporation" has the meaning set forth in Section
2.01(a).
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"Tax" and "Taxes" mean all federal, state, local or foreign
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, custom duties,
unemployment or other taxes of any kind
whatsoever, together with any interest,
additions or penalties thereto.
"Tax Returns" means any return, declaration or other report
(including
elections, declarations, schedules,
estimates and information returns) with
respect to any Taxes.
"Transaction" means the Merger.
"Treasury Stock" means shares of Company Stock held by the Company
or
IFC other than in a fiduciary (including
custodial or agency) capacity or as a
result of debts previously contracted in
good faith.
ARTICLE II
THE MERGER
2.01. THE MERGER.
(a) THE MERGER. CFSB shall charter an interim savings bank
("Interim
Bank") duly organized and validly existing
under Section 5 of the Home Owner's
Loan Act prior to the Effective Date. Upon
the terms and subject to the
satisfaction or waiver of the conditions
set forth in this Agreement, on the
Effective Date, Interim Bank shall be
merged with and into the Company (the
"Merger") with the Company as the surviving
entity (the "Surviving
Corporation"), which shall continue to be
governed by the laws of the United
States, and CFSB will become the sole
stockholder of the Company, pursuant to
the provisions of, and with the effect
provided in, the rules and regulations of
the OTS, the terms and conditions of an
agreement and plan of merger to be
entered into between Interim Bank and the
Company on reasonable and customary
terms, and the Articles of Combination. The
separate corporate existence of
Interim Bank shall thereupon cease. The
separate corporate existence of the
Surviving Corporation with all of its
rights, privileges, immunities, powers and
franchises shall continue unaffected by the
Merger. The name of the Surviving
Corporation shall be "Independence Federal
Savings Bank." At the Effective Time,
the charter and bylaws of the Company shall
be amended in their entirety to
conform to the charter and bylaws of
Interim Bank in effect immediately prior to
the Effective Time and shall become the
charter and bylaws of the Corporation.
The directors and officers of the Surviving
Corporation immediately after the
Merger shall be the directors and officers
of Interim Bank immediately prior to
the Merger, until such time as their
successors shall be duly elected and
qualified. The authorized capital stock of
the Surviving Corporation upon
consummation of the Merger shall be as set
forth in Interim Bank's charter
immediately prior to the Merger. The Merger
shall not be effective unless and
until approved by the OTS. It is intended
that the Merger will qualify as a
"qualified stock purchase" within the
meaning of Section 338 of the Code.
(b) EFFECTS OF THE MERGER. At the Effective Time, the effects of
the
Merger shall be as provided in the rules
and regulations of the OTS including 12
C.F.R. Section
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552.13(l). Without limiting the generality
of the foregoing, and subject
thereto, at the Effective Time, all the
property, rights, privileges, powers and
franchises of the Company shall vest in the
Surviving Corporation, and all
debts, liabilities, obligations,
restrictions, disabilities and duties of the
Company shall become the debts,
liabilities, obligations, restrictions,
disabilities and duties of the Surviving
Corporation.
(c) TRANSFER OF ASSETS AND LIABILITIES; DISSOLUTION. Immediately
after
the Merger, the Surviving Corporation will
liquidate and transfer all of its
assets and liabilities to CFSB and will
dissolve voluntarily pursuant to the
regulations of the OTS by filing a
certificate of dissolution with the OTS and
surrendering its charter for cancellation,
pursuant to the provisions of, and
with the effect provided in, the rules and
regulations of the OTS and the plan
of liquidation and dissolution.
(d)
ADDITIONAL ACTIONS. If, at any time after the Effective Time,
the
Surviving Corporation shall consider that
any further assignments or assurances
in law or any other acts are necessary or
desirable to (i) vest, perfect or
confirm, of record or otherwise, in the
Surviving Corporation its right, title
or interest in, to or under any of the
rights, properties or assets of the
Company acquired or to be acquired by the
Surviving Corporation as a result of,
or in connection with, the Merger, or (ii)
otherwise carry out the purposes of
this Agreement, the Company shall be deemed
to have granted to the Surviving
Corporation an irrevocable power of
attorney to execute and deliver all such
proper deeds, assignments and assurances in
law and to do all acts necessary or
proper to vest, perfect or confirm title to
and possession of such rights,
properties or assets in the Surviving
Corporation and otherwise to carry out the
purposes of this Agreement, and the proper
officers and directors of the
Surviving Corporation are fully authorized
in the name of the Surviving
Corporation or otherwise to take any and
all such action.
2.02. EFFECTIVE DATE AND EFFECTIVE TIME; CLOSING.
(a) Subject to the satisfaction or waiver of the conditions set
forth
in Article VII (other than those conditions
that by their nature are to be
satisfied at the consummation of the
Merger, but subject to the fulfillment or
waiver of those conditions), the parties
shall cause the Articles of Combination
relating to the Merger to be filed with the
OTS on (i) a date selected by Parent
after such satisfaction or waiver which is
within ten (10) Business Days
following such satisfaction or waiver or
(ii) such other date to which the
parties may mutually agree in writing. The
Merger provided for herein shall
become effective upon such filing or on
such date as may be specified therein,
provided that it is within the
aforementioned ten (10) Business Day period. The
date of such filing or such later specified
date is herein called the "Effective
Date." The "Effective Time" of the Merger
shall be the time of such filing or as
set forth on the endorsement of such
articles by the OTS in such filing.
(b) A closing (the "Closing") shall take place immediately prior to
the
Effective Time at 10:00 a.m., Eastern Time,
at the offices of Thacher Proffitt &
Wood LLP., Two World Financial Center, New
York, New York 10281, or at such
other place, at such other time, or on such
other date as the parties may
mutually agree upon (such date, the
"Closing Date"). At the Closing, there shall
be delivered to Parent and the Company the
certificates and other documents
required to be delivered under Article VII
hereof.
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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 Merger and
without any action on the part of any
Person:
(a) OUTSTANDING COMPANY COMMON STOCK. Each share of Company
Common
Stock, other than Excluded Shares, issued
and outstanding immediately prior to
the Effective Time shall become and be
converted into the right to receive the
Merger Consideration.
(b) EXCLUDED SHARES. As of the Effective Time, each Excluded
Share
shall be canceled and retired, and no
consideration shall be issued in exchange
therefor.
3.02. RIGHTS AS SHAREHOLDERS; STOCK TRANSFERS. At the Effective
Time,
holders of Company Common Stock shall cease
to be, and shall have no rights as,
shareholders of the Company other than the
right to receive the Merger
Consideration provided under this Article
III. After the Effective Time, there
shall be no transfers on the stock transfer
books of the Company of shares of
Company Common Stock.
3.03. EXCHANGE PROCEDURES.
(a) As soon as practicable after the Effective Time, but no later
than
ten (10) Business Days after the Effective
Time, Parent shall cause the Exchange
Agent to mail or make available to each
holder of record of a Certificate a
notice and letter of transmittal disclosing
the effectiveness of the Merger and
the procedure for exchanging Certificates
for the Merger Consideration. Such
letter of transmittal, which shall be in a
form and contain any other provisions
as Parent may reasonably determine, shall
specify that delivery shall be
effected and risk of loss and title shall
pass only upon proper delivery of
Certificates to the Exchange Agent.
(b) At or prior to the Effective Time, Parent shall deliver, by
wire
transfer in immediately available funds, to
the Exchange Agent for the benefit
of the Company's shareholders (other than
the holders of Excluded Shares) an
amount of cash equal to the aggregate
Merger Consideration for payment of the
aggregate Merger Consideration to such
holders of Company Common Stock.
(c) Each holder of any outstanding Certificate (other than holders
of
Excluded Shares) that upon proper delivery
and surrender of a Certificate or
Certificates to the Exchange Agent,
together with a properly completed and duly
executed letter of transmittal, will, upon
acceptance thereof by the Exchange
Agent, be entitled to receive in exchange
therefore a check in an amount equal
to the product of the Merger Consideration
and the number of shares of Company
Common Stock represented by the Certificate
or Certificates delivered and
surrendered pursuant to the provisions
hereof, and the Certificate or
Certificates so surrendered shall forthwith
be canceled. The Exchange Agent
shall accept Certificates upon compliance
with such reasonable terms and
conditions as the Exchange Agent may impose
to effect an orderly exchange in
accordance with customary exchange
practices. No interest will be paid or
accrued on the Merger Consideration. Each
outstanding Certificate which is not
surrendered to
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<PAGE>
the Exchange Agent shall evidence ownership
of only the right to
receive the Merger Consideration without
interest.
(d) The Exchange Agent shall not be obligated to deliver the
Merger
Consideration until the holder surrenders a
Certificate as provided in this
Section 3.03, or, in lieu thereof, an
appropriate affidavit of loss and
indemnity agreement and/or a bond as may be
required in each case by the
Exchange Agent or Parent, and a duly
executed letter of transmittal. In the
event of a transfer of ownership of Company
Common Stock that is not registered
in the stock transfer books of the Company,
the proper amount of cash may be
paid in exchange therefore to a person
other than the person in whose name the
Certificate is registered if the
Certificate so surrendered shall be properly
endorsed to such person or accompanied by
an executed form of assignment
separate from the Certificate, in each case
signed exactly as the name of the
registered holder appears on such
Certificate, and otherwise in proper form for
transfer and the person requesting such
exchange shall pay to the Exchange Agent
in advance any transfer or other taxes
required by reason of the payment to a
person other than the registered holder of
the Certificate surrendered or
otherwise establish to the satisfaction of
the Exchange Agent that such tax has
been paid or is not payable.
(e) Any portion of the cash (including, without limitation, all
interest and other income received by the
Exchange Agent in respect of all funds
made available to it) delivered to the
Exchange Agent by Parent pursuant to
Section 3.03(b) that remains unclaimed by
the former shareholders of the Company
for six months after the Effective Time
shall be delivered by the Exchange Agent
to Parent. Any shareholders of the Company
who have not theretofore complied
with this Section 3.03 shall thereafter
look only to Parent for the Merger
Consideration. Neither the Exchange Agent
nor any of the parties hereto shall be
liable to any holder of Company Common
Stock represented by any Certificate for
any consideration paid to a public official
pursuant to applicable abandoned
property, escheat or similar laws. Parent
and the Exchange Agent shall be
entitled to rely upon the stock transfer
books of the Company to establish the
identity of those persons entitled to
receive the Merger Consideration, which
books shall be conclusive as evidence of
the registered holders of Company
Common Stock.
(f) The Exchange Agent or Parent shall be entitled to deduct
and
withhold from the Merger Consideration
otherwise payable pursuant to this
Agreement to any holder of Certificates
such amounts as the Exchange Agent or
Parent (or any Affiliate thereof) is
required to deduct and withhold with
respect to the making of such payment under
the Code or any applicable federal,
state, local or foreign tax law or
regulation thereunder. To the extent that
such amounts are so withheld by the
Exchange Agent or Parent, such withheld
amounts shall be treated for all purposes
of this Agreement as having been paid
to the holder of the Certificates in
respect of which such deduction and
withholding was made.
ARTICLE IV
ACTIONS PENDING ACQUISITION
4.01. CONDUCT OF THE COMPANY'S BUSINESS PRIOR TO THE EFFECTIVE
TIME.
Except as expressly provided in this
Agreement, during the period from the date
of this Agreement to the
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<PAGE>
Effective Time, the Company shall use
commercially reasonable efforts to, and
shall cause IFC to use commercially
reasonable efforts to, (i) conduct its
business in the ordinary and usual course
consistent with past practices and
prudent banking practice; (ii) maintain and
preserve intact its business
organization, properties, leases and
advantageous business relationships and
retain the services of its officers and key
employees, (iii) take no action
which would adversely affect or delay the
ability of the Company, Parent or CFSB
to perform its covenants and agreements on
a timely basis under this Agreement,
(iv) take no action which would adversely
affect or delay the ability of the
Company, Parent or CFSB to obtain any
necessary approvals, consents or waivers
of any Governmental Authority required for
the transactions contemplated hereby
or which would reasonably be expected to
result in any such approvals, consents
or waivers containing any material
condition or restriction, and (v) take no
action that results in or is reasonably
likely to have a Material Adverse Effect
on the Company and IFC taken as a
whole.
4.02. FORBEARANCES OF THE COMPANY. Without limiting the covenants
set
forth in Section 4.01 hereof, from the date
hereof until the Effective Time,
except as expressly contemplated or
permitted by this Agreement or as Previously
Disclosed, without the prior written
consent of Parent, which consent shall not
be unreasonably withheld or delayed, the
Company will not, and will cause IFC
not to:
(a) CAPITAL STOCK. Issue, sell or otherwise permit to become
outstanding, or authorize the creation of,
any additional shares of stock or any
Rights, or change the terms of any
Rights.
(b) DIVIDENDS; ETC. Make, declare, pay or set aside for payment
any
dividend on or in respect of, or declare or
make any distribution on, or
directly or indirectly adjust, split,
combine, redeem, reclassify, purchase or
otherwise acquire, any shares of its
capital stock or any securities or
obligations convertible into or
exchangeable for any shares of its capital
stock, other than dividends from IFC to the
Company.
(c) COMPENSATION; EMPLOYMENT AGREEMENTS; ETC. (i) Enter into or
amend
any employment, consulting, severance or
similar agreements or arrangements with
any director, officer, consultant or
employee of the Company or IFC except, the
employment agreement to be entered into
with the Chief Executive Officer of the
Company substantially in the form included
in Section 4.02(c) of the Company's
Disclosure Schedule, or (ii) grant any
increase in director's fees or benefits
or grant any salary or wage increase or
increase any employee benefit or pay any
incentive or bonus payments except with
respect to annual merit payments not to
exceed an increase of 5% of the prior years
compensation for each individual or
an average increase of 3% of the prior
years compensation for all employees,
each such merit increase is to be supported
by a written performance appraisal
or (iii) hire any employee (other than an
at-will employee with no termination
or severance benefits), director or
consultant with an annual compensation in
excess of $50,000, or announce or notify
any person of an intent to do any of
the foregoing.
(d) BENEFIT PLANS. Except as set forth in Section 4.02(d) of
the
Company's Disclosure Schedule, pay any
pension or retirement allowance not
required by an existing plan or agreement
to any director, officer, employee or
consultant; voluntarily accelerate the
vesting of any other compensation or
benefit; terminate or increase the costs to
the Company or IFC of any Benefits
Plan; make any discretionary contributions
to any Benefits Plan; alter, amend or
revise
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any compensation, arrangements, practices
or policies; enter into, establish,
adopt or amend any Benefits Plan (as
defined in Section 5.02(m)) or establish or
fund any trust or account related to any
Benefits Plan in respect of any
director, officer, employee or consultant
of the Company or IFC except (i) as
may be required by or to make consistent
with applicable law, including without
limitation the EGTRRA, (ii) to satisfy
contractual obligations existing as of
the date hereof and set forth in Section
4.02(d) of the Company's Disclosure
Schedule, (iii) as is permitted pursuant to
Section 4.02(c); or announce or
notify any person of an intent to do any of
the foregoing or (iv) as may be
required to vest all account balances under
the Independence Federal Savings
Bank 401(k) Savings Plan.
(e) DISPOSITIONS. Except as set forth in Section 4.02(e) of the
Company's Disclosure Schedule, sell,
transfer, mortgage, encumber or otherwise
dispose of or discontinue any of its
assets, deposits, business, leases or
properties (which includes sales of student
loans, residential loans and
mortgage, mortgage related and other
securities as part of balance sheet
management) except in the ordinary course
of business consistent with past
practice, and in a transaction that,
together with all other such transactions,
is not material to the Company and IFC
taken as a whole.
(f) ACQUISITIONS. Acquire or agree to acquire (other than by way
of
foreclosures or acquisitions of control in
a bona fide fiduciary capacity or in
satisfaction of debts previously contracted
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 other entity.
(g) CAPITAL EXPENDITURES. Make any capital expenditures other than
(i)
capital expenditures in the ordinary course
of business consistent with past
practice in amounts not exceeding $10,000
individually.
(h) GOVERNING DOCUMENTS. Amend the Company Charter or Company
Bylaws or
the articles of incorporation or bylaws (or
equivalent documents) of IFC.
(i) ACCOUNTING METHODS. Implement or adopt any change in its
accounting
principles, practices or methods, other
than as may be required by a
Governmental Entity or by laws or
regulations or GAAP.
(j) CONTRACTS. Except as set forth in Section 4.02(j) of the
Company's
Disclosure Schedule or as otherwise
expressly permitted by this Article IV,
enter into any contract or agreement that
is not terminable within 30 days, or
make any change in, or terminate, any of
its leases or contracts, other than
with respect to those involving aggregate
payments of less than, or the
provision of goods or services with a
market value of less than $10,000 per
annum and other than contracts or
agreements otherwise permitted under this
Section 4.02.
(k) CLAIMS. Enter into any settlement or similar agreement with
respect
to any action, suit, proceeding, order or
investigation to which the Company or
IFC is or becomes a party after the date of
this Agreement except for any
settlement which does not involve precedent
for any other material action, suit,
proceeding, order or investigation and
which involves solely money damages in an
amount for money damages in excess of
$10,000.
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<PAGE>
(l) BANKING OPERATIONS. Enter into any new line of business or
materially change its lending, investment,
underwriting, risk and asset
liability management and other banking
policies or alter the loan approval
levels for any officer or employee of the
Company with authority to approve loan
originations or grant such authority to any
person who does not have such
authority as of the date hereof, except as
required by applicable law,
regulation or policies imposed by any
Governmental Authority.
(m) DERIVATIVES CONTRACTS. Enter into any Derivatives Contract.
(n) INDEBTEDNESS. Except as set forth in Section 4.02(n) of the
Company's Disclosure Schedule, incur any
indebtedness for borrowed money other
than deposits, federal funds purchased,
cash management accounts, non-callable
short-term (one year or less) borrowings
from the Federal Home Loan Bank and
securities sold under agreements to
repurchase, in each case in the ordinary
course of business consistent with past
practice; assume, guarantee, endorse or
otherwise as an accommodation become
responsible for the obligations of any
other Person, other than in the ordinary
and usual course consistent with past
practice; pledge any of its assets to
secure any borrowings other than as
required pursuant to the terms of
borrowings of the Company or IFC in effect at
the date hereof or in connection with
borrowings or reverse repurchase
agreements permitted hereunder; except as
set forth in Section 4.02(n) of the
Company's Disclosure Schedule, cancel,
release or assign any indebtedness of any
Person in an amount in excess of
$10,000.
(o) INVESTMENT SECURITIES. Acquire or make any investment in
(other
than by way of foreclosures or acquisitions
in a bona fide fiduciary capacity or
in satisfaction of debts previously
contracted in good faith, in each case in
the ordinary course of business consistent
with past practice) any debt security
or Equity Investment, including
mortgage-backed and mortgage related securities,
other than U.S. government and U.S.
government agency securities with final
maturities not greater than five years or
mortgage-backed or mortgage related
securities which would not be considered
"high risk" securities pursuant to
Thrift Bulletin Number 52 issued by the
OTS, that are purchased in the ordinary
course of business consistent with past
practice, in either case, with a
purchase price no greater than 101.5% of
par value.
(p) WAIVER OR RELEASE. Except in the ordinary course of business
and in
amounts less than $10,000, waive or release
any material right or collateral or
cancel or compromise any extension of
credit or other debt or claim.
(q) LOANS, LEASES; ETC. Except pursuant to commitments existing at
the
date hereof which have previously been
declared in writing to Parent, make,
renegotiate, renew, increase, extend or
purchase any loan, lease (credit
equivalent), advance, credit enhancement or
other extension of credit, or make
any commitment in respect of any of the
foregoing, except in conformity with
existing lending practices in amounts to
any individual borrower not to exceed
$500,000 for non-residential loans, and
$800,000 for residential loans;
provided, however, that any residential
loan in excess of $500,000 shall be
originated for sale]; provided, however,
that the Company and IFC may not,
except pursuant to binding sales
commitments existing as of the date hereof and
disclosed on Section 4.02(q) of the
Company's Disclosure Schedule, make,
renegotiate, renew, increase, extend or
purchase any (i) loan that is
underwritten based on no or limited
verification of income or loans commonly
known or referred to as "no
documentation
12
<PAGE>
loans;" or (ii) loans, advances or
commitments to directors, officers or other
affiliated parties of the Company or IFC
(other than loans on primary residences
in accordance with existing policies).
(r) SERVICING RIGHTS. Purchase or sell servicing rights (other
than
loan sales with servicing released) with
respect to loans the principal balance
of which, either individually or in the
aggregate, exceeds $1,000,000.
(s) CONDITION OF PROPERTIES; INSURANCE. Fail to (i) use
commercially
reasonable best efforts to maintain all its
properties in repair, order and
condition no worse than on the date of this
Agreement or (ii) maintain insurance
until the Effective Date upon all of its
properties and with respect to the
conduct of its business in amount and kind
as now in existence and, if not
available at rates presently paid by it, in
such amount and kind as would be
appropriate in the exercise of good
business judgment.
(t) REAL ESTATE INVESTMENTS. Make any investment or commitment
to
invest in real estate or in any real estate
development project, other than real
estate acquired in satisfaction of
defaulted mortgage loans and investments or
commitments approved by the board of
directors of the Company prior to the date
of this Agreement and disclosed in writing
to Parent.
(u) NEW BRANCHES. Establish or make any commitment relating to
the
establishment of any new branch or other
office facilities.
(v) ADVERSE ACTIONS. Take any action that is intended or is
reasonably
likely to result in (i) 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, (ii) any of
the conditions to the Merger set
forth in Article VII not being satisfied or
(iii) a material violation of any
provision of this Agreement, except, in
each case, as may be required by
applicable law or regulation.
(w) COMMITMENTS. Enter into any contract with respect to, or
otherwise
agree or commit to do, any of the
foregoing.
4.03. FORBEARANCES OF PARENT. From the date hereof until the
Effective
Time, except as expressly contemplated or
permitted by this Agreement, without
the prior written consent of the Company,
Parent will not, and will ensure that
CFSB will not:
(a) ADVERSE ACTIONS. Take any action that is intended or is
reasonably
likely to result in (i) 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, (ii) any of
the conditions to the Merger set
forth in Article VII not being satisfied or
(iii) a material violation of any
provision of this Agreement, except, in
each case, as may be required by
applicable law or regulation.
(b) COMMITMENTS. Enter into any contract with respect to, or
otherwise
agree or commit to do, any of the
foregoing.
13
<PAGE>
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.01. DISCLOSURE SCHEDULE. On or prior to the date hereof, the
Company
has delivered to Parent and Parent has
delivered to Company, a schedule (its
"Disclosure Schedule") setting forth, among
other things, items the disclosure
of which is necessary or appropriate either
in response to an express disclosure
requirement contained in a provision hereof
or as an exception to one or more
representations or warranties contained in
Section 5.02 or Section 5.03 or to
one or more of the Company's covenants
contained in Article IV, provided, that
any matter disclosed in any section of a
party's Disclosure Schedule shall be
considered disclosed for other sections of
the Disclosure Schedule, but only to
the extent such matter on its face would be
reasonably expected to be pertinent
to a particular section of the Disclosure
Schedule.
5.02. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. Subject to
Section
5.01 and except as Previously Disclosed,
the Company hereby represents and
warrants to Parent:
(a) ORGANIZATION, STANDING AND AUTHORITY. The Company is duly
organized, validly existing and in good
standing as a federally chartered
savings bank under the laws of the United
States. The Company is duly qualified
to do business and is in good standing in
each jurisdiction where its ownership
or leasing of property or assets or the
conduct of its business requires it to
be so qualified and has in effect all
federal, state, local and foreign
governmental authorizations necessary for
it to own or lease its properties and
assets and to carry on its business as now
conducted except, in each case, for
such failures to be so qualified, in good
standing or authorized as would not,
either individually or in the aggregate,
have a Material Adverse Effect.
(b) COMPANY CAPITAL STOCK. (i) The authorized capital stock of
the
Company consists solely of 4,000,000 shares
of Company Common Stock, of which
1,552,519 shares are outstanding as of the
date hereof, and 500,000 shares of
Company Preferred Stock, of which no shares
are outstanding. As of the date
hereof, no shares of the Company Common
Stock were held in treasury by the
Company or otherwise directly or indirectly
owned by the Company. The
outstanding shares of Company Common Stock
have been duly authorized and validly
issued and are fully paid and
non-assessable and, with respect to shares of
Treasury Stock, are free and clear of all
Liens (other than those imposed by
applicable federal or state securities
laws); none of the outstanding shares of
Company Common Stock have been issued in
violation of the preemptive rights of
any Person; and there are no agreements or
understandings to which the Company
or IFC is a party or by which either of
them is bound with respect to the voting
or disposition of any such shares.
(ii) No bonds, debentures, notes or other indebtedness of the
Company
having the right
to vote on any matters on which the Company's shareholders
may vote are
issued or outstanding.
(iii) As of the date of this Agreement, there are no shares of
Company
Stock reserved
for issuance and the Company neither has nor is bound by any
outstanding
Rights obligating the Company or IFC to issue, deliver or sell,
or cause to be
issued,
14
<PAGE>
delivered or
sold, any additional shares of Company Stock or obligating the
Company to
grant, extend or enter into any such Right. As of the date
hereof, there
are no outstanding contractual obligations of the Company to
repurchase,
redeem or otherwise acquire any shares of Company Stock.
(c) SUBSIDIARY.
(i) (A) The only Subsidiary of the Company is Independence
Financial
Corporation, a
District of Columbia corporation ("IFC"), (B) the Company
owns, directly
or indirectly, all the issued and outstanding equity
securities of
IFC, (C) no equity securities of IFC are or may become
required to be
issued (other than to the Company) by reason of any Right or
otherwise, (D)
there are no contracts, commitments, understandings or
arrangements by
which IFC is or may be bound to sell or otherwise transfer
any of its
equity securities (other than to the Company), (E) there are no
contracts,
commitments, understandings, or arrangements relating to the
Company's rights
to vote or to dispose of such securities and (F) all the
equity
securities of IFC held by the Company are fully paid and
nonassessable
and are owned by the Company free and clear of any Liens.
(ii) Except for securities and other interests held in a
fiduciary
capacity and
beneficially owned by third parties or taken in consideration
of debts
previously contracted, the Company does not own beneficially,
directly or
indirectly, any equity securities or similar interests of any
Person or any
interest in a partnership or joint venture of any kind other
than IFC and
stock in the Federal Home Loan Bank of Atlanta.
(iii) IFC has been duly organized and is validly existing in
good
standing under
the laws of the jurisdiction of its organization. IFC 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 except where failure to be so qualified or
in good standing
would not, either individually or in the aggregate, have a
Material Adverse
Effect.
(d) CORPORATE POWER. Each of the Company and IFC has the
corporate
power and authority to carry on its
business as it is now being conducted and to
own all its properties and assets; and the
Company has the corporate power and
authority to execute, deliver and perform
its obligations under this Agreement
and to consummate the transactions
contemplated hereby, subject to receipt of
all necessary approvals of Governmental
Authorities and the approval of the
Company's shareholders of this
Agreement.
(e) CORPORATE AUTHORITY. Subject to the approval of this Agreement
by
the shareholders of the Company, this
Agreement and the Merger have been
authorized by all necessary corporate
action of the Company and the Company
Board on or prior to the date hereof. The
Company has duly executed and
delivered this Agreement and, assuming due
authorization, execution and delivery
by Parent and CFSB, this Agreement is a
valid and legally binding obligation of
the Company, enforceable in accordance with
its terms (except as enforceability
may be limited by applicable bankruptcy,
insolvency, reorganization,
15
<PAGE>
moratorium, fraudulent transfer and similar
laws of general applicability
relating to or affecting creditors' rights
or by general equity principles).
(f) REGULATORY
APPROVALS; NO DEFAULTS.
(i) No consents or approvals of, or waivers by, or filings or
registrations
with, any Governmental Authority or with any third party are
required to be
made or obtained by the Company or IFC in connection with
the execution,
delivery or performance by the Company of this Agreement or
to consummate
the Merger, except for (A) filings of applications or notices
with, and
approvals or waivers by, the OTS, (B) the filing of the Proxy
Statement and
form of proxy with, and clearance of the same by, the OTS,
(C) the filing
of Articles of Combination with the OTS and (D) the approval
of this
Agreement by the holders of two-thirds of the outstanding shares
of
Company Common
Stock. As of the date hereof, the Company is not aware of
any reason why
the approvals set forth above and referred to in Section
7.01(b) will not be received in a
timely manner and without the imposition
of a condition,
restriction or requirement of the type described in Section
7.01(b).
(ii) Subject to receipt, or the making, of the consents, approvals
and
filings referred to in the
preceding paragraph, and the expiration of
related waiting
periods, the execution, delivery and performance of this
Agreement by the
Company and the consummation of the Merger do not and will
not (A)
constitute a breach or violation of, or a default under any
law,
rule or
regulation or any judgment, decree, order, governmental permit
or
license, or
agreement, indenture or instrument of the Company or IFC or to
which the
Company or IFC or any of their respective properties is subject
or bound, (B)
constitute a breach or violation of, or a default under (or
an event which
with due notice or lapse of time or both would constitute a
default under),
or result in the termination of, accelerate the performance
required by, or
result in the creation of any Lien upon any of the
properties or
assets of the Company or IFC under, any of the terms,
conditions or
provisions of any note, bond, indenture, deed of trust, loan
agreement or
other agreement, instrument or obligation to which the Company
or IFC is a
party, or to which any of their respective properties or assets
may be bound or
affected, (C) constitute a breach or violation of, or a
default under,
the charter, articles of incorporation or bylaws (or similar
governing
documents) of the Company or IFC or (D) require any consent or
approval under
any such law, rule, regulation, judgment, decree, order,
governmental
permit or license, agreement, indenture or instrument, except,
with respect to
(B) and (D) above, in each case as would not, either
individually or
in the aggregate, have a Material Adverse Effect.
16
<PAGE>
(g) FINANCIAL
REPORTS; UNDISCLOSED LIABILITIES.
(i) Except as set forth in Section 5.02(g)(i) of the Company's
Disclosure
Schedule, the Thrift Financial Report as of December 31, 2003
filed by the
Company with the OTS pursuant to 12 C.F.R. 563.180, a copy of
which was
previously provided to Parent, is true and correct in all
material
respects.
(ii) The Company's Annual Reports on Form 10-KSB for the fiscal
years
ended December
31, 2002, December 31, 2001 and December 31, 2000 and all
other reports,
registration statements, definitive proxy statements or
information
statements filed or to be filed by it subsequent to December
31, 1999 under
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act in the
form filed or to
be filed with the OTS (collectively, the Company's
"Exchange Act
Documents"), as of the date filed or to be filed, (A)
complied or will
comply in all material respects with the applicable
accounting
requirements and securities regulations of the SEC and the OTS,
as applicable,
and have been prepared in accordance with GAAP applied on a
consistent basis
during the periods involved (except as may be indicated in
the notes
thereto or, in the case of the unaudited financial statements,
as
permitted by
Form 10-QSB of the SEC) 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 the light of
the circumstances under which they were made, not
misleading,
except that information as of a later date shall be deemed to
modify
information as of an earlier date; and each of the balance
sheets
contained in any
such Exchange Act Document (including the related notes
and schedules
thereto) fairly presents, or will fairly present, the
consolidated
financial position of the Company and IFC as of its date, and
each of the
consolidated statements of income and changes in shareholders'
equity and cash
flows or equivalent statements in such Exchange Act
Documents
(including any related notes and schedules thereto) fairly
presents, or
will fairly present, the consolidated results of operations,
changes in
shareholders' equity and changes in cash flows, as the case may
be, of the
Company and IFC for the periods to which they relate, in each
case in
accordance with GAAP consistently applied during the periods
involved.
(iii) Since December 31, 2002, neither the Company nor IFC has
incurred any
liability other than in the ordinary course of business
consistent with
past practice (excluding the incurrence of expenses related
to this
Agreement and the Merger).
(iv) Since
December 31, 2002, (A) the Company and IFC have conducted
their respective
businesses in the ordinary and usual course consistent
with past
practice (except as specifically contemplated by this Agreement
or Previously
Disclosed and excluding the incurrence of expenses related to
this Agreement
and the Merger) and (B) no event has occurred or
circumstance
arisen that, individually or taken together with all other
facts,
circumstances and events (described in any paragraph of this
Section
5.02 or
otherwise), is likely to have a Material Adverse Effect on the
Company and IFC
taken as a whole.
(v) No agreement pursuant to which any loans or other assets have
been
or shall be sold
by the Company or IFC entitled the buyer of such loans or
other assets
to
17
<PAGE>
cause the
Company or IFC to repurchase such loan or other asset or the
buyer to pursue
any other form of recourse against the Company or IFC other
than as
Previously Disclosed or agreements similar thereto as may be
entered into
after the date hereof.
(vi) Except as set forth in Section 5.02(g)(vi) of the
Company's
Disclosure
Schedule, since December 31, 2002, no cash, stock or other
dividend or any
other distribution with respect to the Company Stock has
been declared,
set aside or paid. No shares of Company Stock have been
purchased,
redeemed or otherwise acquired, directly or indirectly, by the
Company since
December 31, 2002, and no agreements have been made to do the
foregoing.
(h) LITIGATION. Except as set forth in Section 5.02(h) of the
Company's
Disclosure Schedule, no material
litigation, claim or other proceeding before
any court or governmental agency is pending
against the Company or IFC or any of
their respective directors or executive
officers (in their capacity as director
or executive officer) and, to the Company's
knowledge, no such litigation, claim
or other proceeding has been threatened and
there are no facts which could
reasonably give rise to such litigation,
claim or other proceeding.
(i) REGULATORY
MATTERS.
(i) Except as set forth in Section 5.02(i)(i) of the Company's
Disclosure
Schedule, neither the Company nor IFC nor any of their
respective
properties is a party to or is subject to any order, decree,
agreement,
memorandum of understanding or similar arrangement with, or a
party to a
commitment letter or similar submission to, or is subject to
any
action,
proceeding, order or directive by, or a recipient of any
extraordinary
supervisory letter from, any federal or state governmental
agency or
authority charged with the supervision or regulation of
financial
institutions or
issuers of securities or engaged in the insurance of
deposits or the
supervision or regulation of it (collectively, the "Company
Regulatory
Authorities"). The Company and IFC have paid or accrued all
material
assessments made or imposed by any Company Regulatory
Authority.
(ii) Neither the Company nor IFC has been advised by, or has
any
knowledge of
facts which would be reasonably likely to give rise to an
advisory notice
by, any Company Regulatory Authority that such Company
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,
supervisory
letter or similar submission.
(j) COMPLIANCE WITH LAWS. Except as set forth in Section 5.02(j) of
the
Company's Disclosure Schedule: (i) each of
the Company and IFC is in material
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 Truth in Lending Act, the Equal Credit
Opportunity Act, the Fair Housing
Act, the Community Reinvestment Act, the
Home Mortgage Disclosure Act, the USA
PATRIOT Act, the Bank Secrecy Act and all
other applicable fair lending laws and
other laws relating to discriminatory
business practices; and
18
<PAGE>
(ii) Each of the Company and IFC 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 substantially as presently conducted and all such
permits,
licenses, certificates of authority, orders and approvals are
in
full force and
effect and, to the Company's knowledge, no suspension or
cancellation of
any of them is threatened.
(k) MATERIAL
CONTRACTS; DEFAULTS.
(i) Except for documents listed on Section 5.02(k) of the
Company's
Disclosure
Schedule, neither the Company nor IFC is a party to, bound by
or
subject to any
agreement, contract, arrangement, commitment or
understanding
(whether written or oral) (i) which is a material contract
(as defined in
Item 601(b)(10) of Regulation S-K of the SEC) to be
performed after
the date of this Agreement that has not been filed or
incorporated by
reference in the Company's Exchange Act Documents, (ii)
which is a
consulting agreement (including data processing, software
programming and
licensing contracts) not terminable on 30 days or less
notice and
involving the payment of more than $25,000 (iii) which is with
any executive
officer or other key employee of the Company or IFC the
benefits of
which are contingent, or the terms of which are materially
altered, upon
the occurrence of a transaction involving the Company or IFC
of the nature
contemplated by this Agreement, (iv) which is with any
employee or
director of the Company or IFC providing any term of employment
or compensation
guarantee extending for a period longer than 30 days or for
the payment of
in excess of $30,000 per annum, (v) including any stock
option plan,
phantom stock or stock appreciation rights plan, restricted
stock plan or
stock purchase plan, any of the benefits of which will be
increased, or
the vesting or payment of the benefits of which will be
accelerated, by
the occurrence of any of the transactions contemplated by
this Agreement
or the value of any of the benefits of which will be
calculated on
the basis of any of the transactions contemplated by this
Agreement or
(vi) which restricts the conduct of any business by the
Company or IFC.
The Company has previously delivered to Parent true and
correct copies
of each such contract.
(ii) Neither the Company nor IFC is in default under any
contract,
agreement,
commitment, arrangement, lease, insurance policy or other
instrument 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 receives 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. Other than as Previously
Disclosed or
agreements similar thereto as may be entered into after the
date hereof, no
material power of attorney or similar authorization given
directly or
indirectly by the Company or IFC is currently outstanding,
except in each
case as would not, either individually or in the aggregate,
have a Material
Adverse Effect.
(l) NO BROKERS. No action has been taken by the Company or IFC
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 Transaction,
other than with respect to financial
advisory
19
<PAGE>
services performed for the Company by Keefe
Bruyette & Woods, Inc. pursuant to
an agreement, a true and complete copy of
which has been previously delivered to
Parent.
(m) EMPLOYEE
BENEFIT PLANS.
(i) All benefit and compensation plans, contracts, policies or
arrangements
covering current or former employees of the Company and IFC
(the
"Employees") and current or former directors of the Company
including,
but not limited
to, "employee benefit plans" within the meaning of Section
3(3) of ERISA,
and deferred compensation, pension, retirement, savings,
profit sharing,
consulting, group insurance, severance, stock option, stock
purchase, stock
ownership, stock appreciation rights, stock based,
incentive and
bonus plans and other benefit plans, contracts, agreements,
arrangements
(the "Benefits Plans"), and all trust agreements relating
thereto, are
disclosed in the Company's Disclosure Schedule. True and
complete copies
of all Benefits Plans (including, but not limited to, any
trust
instruments and insurance contracts forming a part of
