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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (date of earliest event reported) October 14, 1998
1ST BERGEN BANCORP
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(Exact name of registrant as specified in its charter)
NEW JERSEY 0-27686 22-3409845
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(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
250 VALLEY BOULEVARD, WOOD-RIDGE, NEW JERSEY 07075
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(Address of Principal Executive Offices)
Registrant's telephone number, including area code (201) 939-3400
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Page 1 of 4
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ITEM 5. OTHER
The Registrant signed a definitive Agreement and Plan of Reorganization by
and among Kearny Federal Savings Bank ("Kearny"), Registrant, and Registrant's
wholly-owned subsidiary, South Bergen Savings Bank on October 14, 1998. A copy
of such Agreement is attached hereto as Exhibit 2.1. A copy of the agreement
relating to the granting of an option on the securities of Registrant in favor
of Kearny is attached hereto as Exhibit 2.2. The Registrant issued a joint press
release with Kearny on October 15, 1998, announcing the signing of the
Agreement. A copy of such press release is attached hereto as Exhibit 99.1 and
is incorporated herein by reference in its entirety.
Consummation of the transactions contemplated by the Agreement is subject
to several conditions, including receipt of applicable regulatory approvals and
approvals by the shareholders of Registrant.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
Exhibit No. Description
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2.1 Agreement and Plan of Reorganization dated October 14, 1998,
by and among Kearny Federal Savings Bank, 1st Bergen Bancorp,
and South Bergen Savings Bank.
2.2 Stock Option Agreement dated October 14, 1998.
99.1 Press Release dated October 15, 1998.
Page 2 of 4
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, 1st
Bergen Bancorp has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
1ST BERGEN BANCORP
(Registrant)
Dated: October 19, 1998 By: /s/ Albert E. Gossweiler
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Albert E. Gossweiler
Executive Vice President and
Chief Financial Officer
Page 3 of 4
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EXHIBIT INDEX
Exhibit No. Description
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2.1 Agreement and Plan of Reorganization dated October 14, 1998,
by and among Kearny Federal Savings Bank, 1st Bergen Bancorp,
and South Bergen Savings Bank.
2.2 Stock Option Agreement dated October 14, 1998.
99.1 Press Release dated October 15, 1998.
Page 4 of 4
EXHIBIT 2.1
AGREEMENT AND PLAN OF REORGANIZATION
BY AND AMONG
KEARNY FEDERAL SAVINGS BANK
1ST BERGEN BANCORP AND
SOUTH BERGEN SAVINGS BANK
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AGREEMENT AND PLAN OF REORGANIZATION
TABLE OF CONTENTS
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Page
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Recitals.................................................................... 1
ARTICLE 1
TERMS OF THE REORGANIZATION
1.1 The Reorganization.......................................................... 2
(a) Bancorp Merger....................................................... 2
(b) Bank Merger.......................................................... 2
(c) Merger of Bancorp into Kearny........................................ 2
(d) Effect on Outstanding Shares......................................... 2
(e) Resulting Company......................................................3
1.2 Adoption and Execution and Delivery of Documents providing for the
Reorganization............................................................... 3
1.3 Effective Time and Closing of the Reorganization............................ 3
1.4 Modification of Structure................................................... 3
1.5 Charter, Bylaws, Directors, Officers and Name of the Resulting Company........3
(a) Charter.............................................................. 3
(b) Bylaws............................................................... 4
(c) Directors and Officers............................................... 4
(d) Advisory Board....................................................... 4
(e) Name................................................................. 4
1.6 Availability of Information................................................. 4
1.7 Bancorp Stock Options....................................................... 4
1.8 Employment Agreements....................................................... 4
1.9 Employees................................................................... 4
1.10 Management Stock Bonus Plan...................................................5
1.11 ESOP and Directors Retirement Plan............................................5
1.12 Mechanics of Payment of Consideration....................................... 5
(a) Surrender of Certificates............................................ 5
(b) Stock Transfer Books ............................................... 6
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF KEARNY FEDERAL SAVINGS BANK
2.1 Organization and Corporate Authority........................................ 6
2.2 Authorization, Execution and Delivery; Reorganization Agreement Not in
Breach ..................................................................... 7
2.3 No Legal Bar................................................................ 7
2.4 Government Approvals......................................................... 7
2.5 Kearny Financial Statements ............................................... 8
2.6 Litigation................................................................... 8
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ARTICLE 2
REPRESENTATION AND WARRANTIES OF KEARNY FEDERAL SAVINGS BANK
2.7 Compliance with Laws......................................................... 8
2.8 Material Contract Defaults................................................... 8
2.9 Disclosure................................................................... 9
2.10 Delays....................................................................... 9
2.11 Corporate Approval........................................................... 9
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF BANCORP AND STOCK BANK
3.1 Organization and Qualification of Bancorp and Subsidiaries................... 9
3.2 Authorization, Execution and Delivery; Reorganization Agreement Not in
Breach....................................................................... 9
3.3 No Legal Bar................................................................ 10
3.4 Government and Other Approvals.............................................. 10
3.5 Licenses, Franchises and Permits............................................ 10
3.6 Charter Documents........................................................... 11
3.7 Bancorp Financial Statements................................................ 11
3.8 Absence of Certain Changes...................................................11
3.9 Deposits.................................................................... 12
3.10 Properties.................................................................. 12
3.11 Condition of Fixed Assets and Equipment..................................... 13
3.12 Tax Matters................................................................. 13
3.13 Litigation.................................................................. 13
3.14 Environmental Materials..................................................... 14
3.15 Insurance................................................................... 14
3.16 Books and Records........................................................... 14
3.17 Capitalization of Bancorp................................................... 15
3.18 Sole Agreement.............................................................. 15
3.19 Disclosure.................................................................. 15
3.20 Absence of Undisclosed Liabilities.......................................... 16
3.21 Allowance for Possible Loan or REO Losses................................... 16
3.22 Loan Portfolio.............................................................. 16
(a) Enforceability........................................................17
(b) No Modifications..................................................... 17
(c) Owner................................................................ 17
(d) Collateral Documents................................................. 17
(e) Litigation........................................................... 17
(f) Participation........................................................ 17
3.23 Compliance with Laws........................................................ 17
3.24 Employee Benefit Plans...................................................... 18
3.25 Material Contracts.......................................................... 19
3.26 Material Contract Defaults.................................................. 19
3.27 Reports..................................................................... 19
3.28 Exchange Act and Nasdaq Small Cap Market.................................... 19
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3.29 Statements True and Correct................................................. 20
3.30 Investment Securities....................................................... 20
3.31 Certain Regulatory Matters.................................................. 20
3.32 Corporate Approval.......................................................... 20
3.33 Broker's and Finder's Fees.................................................. 21
3.34 Year 2000 Readiness......................................................... 21
3.35 Liquidation Account......................................................... 21
3.36 Derivatives Contracts....................................................... 21
ARTICLE 4
COVENANTS OF KEARNY
4.1 Regulatory and Other Approvals.............................................. 21
4.2 Preparation of Regulatory Applications...................................... 22
4.3 Employee Benefits........................................................... 22
4.4 Notification................................................................ 23
4.5 Tax Representations......................................................... 23
4.6 Directors and Officers Indemnification and Insurance Coverage............... 23
4.7 Conduct of Kearny Prior to the Effective Time................................24
ARTICLE 5
COVENANTS OF BANCORP AND STOCK BANK
5.1 Preparation of Registration Statement and Applications For Required Consent..24
5.2 Conduct of Business -- Affirmative Covenants................................ 25
5.3 Conduct of Business -- Negative Covenants................................... 27
5.4 Conduct of Business -- Certain Actions...................................... 29
5.5 New Jersey Environmental Notice............................................. 30
5.6 Voting Agreement.............................................................30
5.7 Liquidation Account Computations.............................................30
ARTICLE 6
CONDITIONS TO CLOSING
6.1 Conditions to the Obligations of Bancorp.................................... 30
(a) Performance.......................................................... 30
(b) Representations and Warranties....................................... 30
(c) Documents............................................................ 30
(d) Opinion of Kearny's Counsel.......................................... 31
(e) Fairness Opinion..................................................... 31
6.2 Conditions to the Obligations of Kearny..................................... 32
(a) Performance.......................................................... 32
(b) Representations and Warranties....................................... 32
(c) Documents............................................................ 32
(d) Inspections Permitted................................................ 32
(e) No Material Adverse Change........................................... 33
(f) Opinion of Bancorp's Counsel......................................... 33
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(g) Other Business Combinations, Etc..................................... 33
(h) Regulatory Approvals................................................. 33
(i) Bancorp Stockholder Approval......................................... 33
6.3 Conditions to Obligations of All Parties.................................... 34
(a) No Pending or Threatened Claims...................................... 34
(b) Governmental Approvals and Acquiescence Obtained..................... 34
(c) Approval of Stockholders............................................. 34
(d) Effectiveness of Registration Statement.............................. 34
ARTICLE 7
TERMINATION
7.1 Termination................................................................. 34
7.2 Effect of Termination....................................................... 35
ARTICLE 8
GENERAL PROVISIONS
8.1 Notices..................................................................... 35
8.2 Governing Law............................................................... 36
8.3 Counterparts................................................................ 36
8.4 Publicity................................................................... 36
8.5 Entire Agreement............................................................ 37
8.6 Severability................................................................ 37
8.7 Modifications, Amendments and Waivers....................................... 37
8.8 Interpretation.............................................................. 37
8.9 Payment of Expenses......................................................... 38
8.10 Attorneys' Fees............................................................. 38
8.11 No Survival of Representations and Warranties............................... 38
8.12 No Waiver................................................................... 38
8.13 Remedies Cumulative......................................................... 38
8.14 Confidentiality............................................................. 38
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ATTACHMENTS
Exhibit 5.6 Voting Agreement
Exhibit G - Stock Option Agreement
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AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Reorganization
Agreement"), dated as of October 14, 1998, is entered into by and among Kearny
Federal Savings Bank ("Kearny" or the "Surviving Corporation"), a mutual savings
bank incorporated and existing under the laws of the United States whose
executive offices are located at 614 Kearny Avenue, Kearny, New Jersey 07032;
1st Bergen Bancorp ("Bancorp"), a corporation organized and existing under the
laws of the State of New Jersey, which is a registered savings and loan holding
company and whose principal offices are located at 250 Valley Boulevard,
Wood-Ridge, New Jersey 07075; and South Bergen Savings Bank ("Stock Bank"), a
federal savings bank, chartered and existing under the laws of the United
States, whose main office is located at 250 Valley Boulevard, Wood-Ridge, New
Jersey 07075 and which is a wholly owned subsidiary of Bancorp.
Kearny, Bancorp and Stock Bank are sometimes referred to herein as the
"Parties."
RECITALS
A. Bancorp is the beneficial owner and holder of record of 1,000 shares
of no par value per share common stock, of Stock Bank, which constitute all of
the shares of common stock of Stock Bank issued and outstanding (the "Stock Bank
Common Stock").
B. The Boards of Directors of Bancorp and Stock Bank deem it desirable
and in the best interests of Bancorp and Stock Bank and the shareholders of
Bancorp (the "Bancorp Shareholders") that Stock Bank be merged with and into
Kearny (which would survive the merger as the Surviving Corporation, as defined
herein) on the terms and subject to the conditions set forth in this
Reorganization Agreement and in the manner provided in this Reorganization
Agreement and the Plans of Merger attached hereto.
C. The Board of Directors of Kearny deems it desirable and in the best
interests of Kearny that Stock Bank be merged with and into Kearny on the terms
and subject to the conditions set forth in this Reorganization Agreement and in
the manner provided in this Reorganization Agreement and the Plans of Merger.
D. The Parties desire for Kearny to acquire Bancorp pursuant to the
transactions set forth in this Reorganization Agreement on or after the
Effective Time.
E. Pursuant to this Reorganization Agreement, each share of Bancorp
Common Stock outstanding at the Effective Time will be converted into cash in
the amount of $24.00 (the "Cash Merger Consideration"). Holders of options to
purchase Bancorp Common Stock will be entitled to receive cash in an amount
equal to the difference between the Cash Merger Consideration and the exercise
price.
F. It is agreed that the number of shares of Bancorp Common Stock
(including 105,720 shares issued under any restricted or management stock bonus
plan) outstanding is 2,585,243. In addition, there are currently outstanding
options to purchase 264,050 shares of Bancorp Common Stock at $13.975 per share.
G. Concurrently with the execution and delivery of this Reorganization
Agreement, and as
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a condition and inducement to Kearny's willingness to enter into this
Reorganization Agreement, Kearny and the Bancorp have entered into a Stock
Option Agreement (the "Option Agreement") pursuant to which Bancorp has granted
to Kearny an option to purchase shares of Bancorp's common stock, no par value
per share, upon the terms and conditions therein contained.
NOW THEREFORE, in consideration of the foregoing premises and the mutual
representations, warranties, covenants and agreements herein contained and for
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the Parties agree as follows:
AGREEMENT
ARTICLE 1
TERMS OF THE REORGANIZATION
1.1 The Reorganization. Subject to the terms and conditions of
this Reorganization Agreement, and in accordance with the provisions of the laws
of the State of New Jersey, and the rules and regulations of the Office of
Thrift Supervision ("OTS"), the Parties hereby agree that the following
corporate transactions (collectively referred to herein as the "Reorganization")
shall occur substantially concurrently as set forth below in accordance with
applicable laws and regulations and the provisions of this Reorganization:
(a) Bancorp Merger. Pursuant to this Reorganization Agreement and an
agreement and plan of merger, among Kearny, Bancorp and a to-be-formed New
Jersey corporation ("Merger Sub") which is to be wholly owned by Kearny, Merger
Sub shall be merged with and into Bancorp pursuant to the provisions of the New
Jersey Business Corporation Act ("NJBCA") (the "Bancorp Merger") and, in
connection therewith, each share of common stock, no par value per share, of
Bancorp ("Bancorp Common Stock") outstanding immediately prior to the effective
time of the Bancorp Merger shall be canceled in exchange for the right to
receive the Cash Merger Consideration specified in this Reorganization Agreement
and an agreement and plan of merger, with the result that Bancorp will become a
wholly owned subsidiary of Kearny.
(b) Bank Merger. Pursuant to this Reorganization Agreement and an
agreement and plan of merger, between Stock Bank and Kearny, Stock Bank shall
merge with and into Kearny (the "Bank Merger") simultaneously with or
immediately following consummation of the transactions referred to in Section
1.1(a) hereof, with the result that Kearny will acquire all of the assets and
liabilities of Stock Bank and Stock Bank shall cease to exist.
(c) Merger of Bancorp into Kearny. Simultaneously with or immediately
following consummation of the transactions referred to in Sections 1.1(a) and
(b) hereof, Bancorp shall merge with and into Kearny with the result that Kearny
shall acquire all of the assets and liabilities of Bancorp and Bancorp shall
cease to exist.
(d) Effect on Outstanding Shares. By virtue of the Bancorp Merger,
automatically and
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without any action on the part of the holder thereof, each share of Bancorp
Common Stock issued and outstanding at the Effective Time (other than (i) shares
held directly or indirectly by Kearny; (ii) shares held as treasury stock of
Bancorp and (iii) unallocated shares held in Bancorp's Management Stock Bonus
Plan (the "MSBP")) shall become and be converted into the right to receive
$24.00 in cash without interest (the "Cash Merger Consideration"). At the
Effective Time, each share of Bancorp Common Stock held directly or indirectly
by Kearny (if any), and shares held as treasury stock of Bancorp and unallocated
shares held in Bancorp's MSBP, shall be canceled and retired and cease to exist,
and no exchange or payment shall be made with respect thereto. Simultaneously,
as of the Effective Time, each share of Merger Sub shall be converted into
shares of Bancorp.
(e) Resulting Company. Upon the consummation of the Reorganization, the
separate existence of Bancorp and Stock Bank shall cease, and Kearny shall
continue as the surviving institution in the Bank Merger. The plan of merger for
the Bank Merger, the Bancorp Merger and the merger of Bancorp into Kearny are
collectively referred to herein as the "Plans of Merger."
1.2 Adoption and Execution and Delivery of Documents providing
for the Reorganization. Promptly following the formation of the Merger Sub
referred to in Section 1.1(a) hereof, Bancorp shall execute and deliver an
Agreement of Merger and Kearny and Merger Sub shall execute and deliver such
Agreement of Merger, as applicable. Promptly upon consummation of the
transactions contemplated by Section 1.1(a) hereof, Kearny and Stock Bank shall
execute and deliver an Agreement of Merger and Bancorp shall adopt such
agreement in its capacity as the sole stockholder of Stock Bank and Bancorp
shall approve the agreement in its capacity as the owner of more than two-thirds
of the outstanding shares of Stock Bank. Promptly upon consummation of the
transactions contemplated in Sections 1.1(a) and (b) hereof, Kearny shall adopt
the Agreement of Merger in its capacity as sole stockholder of Bancorp.
1.3 Effective Time and Closing of the Reorganization. The term
"Effective Time" shall mean the date and time that the Bancorp Merger and Bank
Merger become effective in accordance with applicable laws and regulations.
Kearny will file all applications or notices that are necessary to consummate
the Reorganization with state and Federal regulatory agencies within sixty (60)
days, or as soon thereafter as practicable after the date of this Reorganization
Agreement. Except to the extent otherwise contemplated hereby, a closing of the
Reorganization ("Closing") shall take place at the executive offices of Kearny
within thirty (30) days after the satisfaction or waiver of all conditions
and/or obligations (other than the delivery of certificates, opinions and other
instruments and documents to be delivered at the Closing) contained in Articles
VI, VII and VIII of this Reorganization Agreement, or at such other place, at
such other time or on such date as the Parties may mutually agree upon ("Closing
Date"). At the Closing, there shall be delivered the opinions, certificates and
other documents and instruments required to be delivered under this
Reorganization Agreement.
1.4 Modification of Structure. Notwithstanding any provision of
this Reorganization to the contrary, Kearny may elect, subject to the filing of
all necessary applications and the receipt of all required regulatory approvals,
to modify the structure of the transactions contemplated hereby so long as (i)
there are no material adverse federal income tax consequences to the
stockholders of Bancorp as a result of such modification, (ii) the consideration
to be paid to holders
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of Bancorp Common Stock under this Reorganization is not thereby changed in
kind, or reduced in amount solely because of such modification, and (iii) such
modification will not be likely to materially delay or jeopardize receipt of any
required regulatory approvals or stockholder approval required hereunder.
1.5 Charter, Bylaws, Directors, Officers and Name of the
Resulting Company.
(a) Charter. At and after the Effective Time, the Charter of
Kearny, as in effect immediately prior to the Effective Time, shall continue to
be the Charter of Kearny as the Resulting Company, unless and until amended
thereafter as provided by law and the terms of such Charter.
(b) Bylaws. At and after the Effective Time, the Bylaws of
Kearny, as in effect immediately prior to the Effective Time, shall continue to
be the Bylaws of Kearny as the Resulting Company, unless and until amended or
repealed as provided by law, the Charter of Kearny and such Bylaws.
(c) Directors and Officers. The directors of Kearny in
office immediately prior to the Effective Time of the Bank Merger shall continue
to be the directors and officers of the Resulting Company, to hold office as
provided in the Charter and Bylaws of the Resulting Company, unless and until
their successors shall have been elected or appointed and shall have been
qualified or until they shall have been removed in the manner provided in said
Charter and Bylaws.
(d) Advisory Board. The Resulting Company shall appoint
James W. Mason, Richard R. Masch, Bernard Leung, Robert C. Miller and Kathleen
Fisher to an Advisory Board of Kearny for a period of at least two years. Each
member of the Advisory Board will receive annual board fees of not less than 75%
of the annual retainer in effect as of June 30, 1998 for the members of the
Board of Directors of Bancorp.
(e) Name. The name of the Resulting Company following the
Reorganization shall continue to be: Kearny Federal Savings Bank.
1.6 Availability of Information. Promptly after the execution by
the Parties of this Reorganization Agreement, Bancorp shall provide to Kearny,
its officers, employees, agents, and representatives access, on reasonable
notice and during customary business hours, to the books, records, properties
and facilities of Bancorp and Stock Bank and shall use its best efforts to cause
its officers, employees, agents and representatives to cooperate with any
reasonable request for information.
1.7 Bancorp Stock Options. As of the date of this Reorganization
Agreement, there are 264,050 validly issued, outstanding and currently
exercisable options to purchase shares of Bancorp Common Stock (the "Bancorp
Stock Options"), and no other options, rights, warrants, scrip or similar rights
to purchase shares of Bancorp Common Stock are issued and outstanding. At the
Effective Time, all issued and outstanding Bancorp Stock Options will be
converted to cash in accordance with the terms of this Reorganization Agreement.
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1.8 Employment Agreements and Retention of Officers. It is
acknowledged that Bancorp and Bergen Bank currently have outstanding, three
separate employment agreements with William M. Brickman, Albert E. Gossweiler
and Robert C. Maison ("Employment Agreements"). Prior to the closing of the
transaction, Kearny will offer to enter into employment agreements with William
M. Brickman and Albert E. Gossweiler ("Kearny Employment Agreements") in a form
similar to that detailed at Schedule 1.8, whereby such employees will relinquish
all rights under the Employment Agreements in exchange for the rights under the
Kearny Employment Agreements. Prior to the closing of the transaction, Kearny
will offer to enter into a consulting agreement with Robert C. Maison ("Kearny
Consulting Agreement") in a form similar to that detailed at Schedule 1.8,
whereby such employee will relinquish all rights under his Employment Agreement
with Bancorp and Bergen Bank in exchange for the rights under the Kearny
Consulting Agreement. Further, at the Closing, the Resulting Company intends to
hire Erika Sacher in a position that allows her to maximize contributions to
Kearny and at such employee's salary in effect on the Closing Date. Upon
resignation, subsequent to Closing Date, of employment from Kearny by Vice
President Robert O'Neil, Kearny will use its best efforts to provide continued
health insurance benefits to Mr. O'Neil, with the premiums to be paid by Mr.
O'Neil.
1.9 Employees. Kearny will attempt to retain qualified employees
of Bancorp subject to the needs of its business. Any employee who involuntarily
is terminated without cause after the Effective Time will be provided a
severance payment, to be mutually agreed upon by the Parties. The Parties will
mutually develop a "success" bonus plan, which will pay a cash bonus to certain
key employees who are not covered by an employment agreement for remaining
employed at Stock Bank from the signing of this Reorganization Agreement through
three months after the Closing.
1.10 Management Stock Bonus Plan. All shares currently allocated
to employees or directors under any restricted stock plan or Management Stock
Bonus Plan ("MSBP") will be outstanding and exchanged for the Cash Merger
Consideration. Kearny acknowledges that Bancorp has outstanding 105,720 MSBP
shares allocated and vested as of the Closing Date.
1.11 Employee Stock Ownership Plan (the "ESOP") and Directors
Retirement Plan. Upon the Effective Time, the ESOP will exchange all shares held
by the ESOP Trust to Kearny for the Cash Merger Consideration, pay off any
remaining loan, distribute the proceeds to the employees of Stock Bank in
accordance with the terms of the ESOP and terminate the Plan. Stock Bank agrees
to stop accruing benefits under its Directors' Retirement Plan (the "Retirement
Plan") during the 1998 calendar year and, prior to the Effective Time, make a
lump sum distribution to each non-officer director participating in the
Retirement Plan in an amount approximately equal to the present value of the
payments expected to be made under the Retirement Plan. The total expense of
terminating this Retirement Plan, which is disclosed in Bancorp Schedule 1.11,
will not exceed $317,000.
1.12 Mechanics of Payment of Consideration.
(a) (i) Surrender of Certificates. Within five business days
after the Effective Time, the Exchange Agent shall deliver to each holder of
Bancorp Common Stock on Record Date (the "Bancorp Record Holders") who have not
previously submitted properly completed Election
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Forms, accompanied by all certificates (or other appropriate documentation) in
respect of all shares of Bancorp Common Stock held of record by such Bancorp
Record Holders, such materials and information deemed necessary by the Exchange
Agent to advise the Bancorp Record Holders of the procedures required for proper
surrender of their certificates evidencing and representing shares of the
Bancorp Common Stock in order for the Bancorp Record Holders to receive the Cash
Merger Consideration to which they are entitled as provided herein. Such
materials shall include, without limitation, a letter of transmittal, an
instruction sheet, and a return mailing envelope addressed to the Exchange Agent
(collectively the "Shareholder Materials"). All Shareholder Materials shall be
sent by United States mail to the Bancorp Record Holders at the addresses set
forth on a certified shareholder list to be delivered by Bancorp to Kearny at
the Closing (the "Shareholder List"). Kearny shall also make appropriate
provisions with the Exchange Agent to enable Bancorp Record Holders to obtain
the Shareholder Materials from, and to deliver the certificates formerly
representing shares of Bancorp Common Stock to, the Exchange Agent in person,
commencing on or not later than the second business day following the Closing
Date. Upon receipt of the appropriate Shareholder Materials, together with the
certificates formerly evidencing and representing all of the shares of Bancorp
Common Stock which were validly held of record by such holder, the Exchange
Agent shall take prompt action to process such certificates formerly evidencing
and representing shares of Bancorp Common Stock received by it (including the
prompt return of any defective submissions with instructions as to those actions
which may be necessary to remedy any defects) and to mail to the former Bancorp
Record Holders in exchange for the certificate(s) surrendered by them, the Cash
Merger Consideration to be issued or paid for each such Bancorp Record Holder's
shares pursuant to the terms hereof. After the Effective Time and until properly
surrendered to the Exchange Agent, each outstanding certificate or certificates
which formerly evidenced and represented the shares of Bancorp Common Stock of a
Bancorp Record Holder, subject to the provisions of this Section, shall be
deemed for all corporate purposes to represent and evidence only the right to
receive the Cash Merger Consideration into which such Bancorp Record Holder's
shares of Bancorp Common Stock were converted and aggregated at the Effective
Time. Unless and until the outstanding certificate or certificates, which
immediately prior to the Effective Time evidenced and represented the Bancorp
Record Holder's Bancorp Common Stock shall have been properly surrendered as
provided above, the Cash Merger Consideration issued or payable to the Bancorp
Record Holder(s) of the canceled shares as of any time after the Effective Time
shall not be paid to the Bancorp Record Holder(s) of such certificate(s) until
such certificates shall have been surrendered in the manner required. Each
Bancorp Record Holder will be responsible for all federal, state and local taxes
which may be incurred by him on account of his receipt of the Cash Merger
Consideration to be paid in the Merger. The Bancorp Record Holder(s) of any
certificate(s) which shall have been lost or destroyed may nevertheless, subject
to the provisions of this Article, receive the Cash Merger Consideration to
which each such Bancorp Record Holder is entitled, provided that each such
Bancorp Record Holder shall deliver to Kearny and to the Exchange Agent: (i) a
sworn statement certifying such loss or destruction and specifying the
circumstances thereof and (ii) a lost instrument bond in form satisfactory to
Kearny and the Exchange Agent which has been duly executed by a corporate surety
satisfactory to Kearny and the Exchange Agent, indemnifying the Resulting
Company, Kearny, the Exchange Agent (and their respective successors) to their
satisfaction against any loss or expense which any of them may incur as a result
of such lost or destroyed certificates being thereafter presented. Any costs or
expenses which may arise from such replacement procedure, including the premium
on the lost instrument bond, shall be paid by the Bancorp Record Holder.
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(ii) All exercisable stock options as detailed at Schedule
1.12, shall be converted to a right to receive cash equal to the difference
between the Cash Merger Consideration and the Option Exercise Price.
(b) Stock Transfer Books. At the Effective Time, the stock
transfer books of Bancorp shall be closed and no transfer of shares of Bancorp
Common Stock shall be made thereafter.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF KEARNY FEDERAL SAVINGS BANK
Except as otherwise disclosed in one or more schedules
(collectively the "Kearny Schedules") dated as of the date hereof and delivered
concurrently with this Reorganization Agreement, both as of the date hereof and
as of the Effective Time, Kearny represents and warrants to Bancorp and Stock
Bank as follows:
2.1 Organization and Corporate Authority. Kearny is a corporation
duly organized, validly existing and in good standing under the laws of the
United States, and Kearny (i) has all requisite corporate power and authority to
own, operate and lease its material properties and carry on its businesses as
currently being conducted; (ii) is in good standing and is duly qualified to do
business in each jurisdiction where the character of its properties owned or
held under lease or the nature of its business is such that failure to be so
qualified would have a material adverse effect on Kearny; and (iii) has in
effect all federal, state, local and foreign governmental authorizations,
permits and licenses necessary for them to own or lease their properties and
assets and to carry on their businesses as they are currently being conducted.
The Charter and Bylaws of Kearny is in full force and effect.
2.2 Authorization, Execution and Delivery; Reorganization
Agreement Not in Breach.
(a) Kearny has all requisite corporate power and authority
to execute and deliver this Reorganization Agreement and the Plans of Merger and
to consummate the transactions contemplated hereby. The execution and delivery
of this Reorganization Agreement and the Plans of Merger and the consummation of
the proposed transactions have been duly authorized by at least a two-thirds
majority of the entire Board of Directors of Kearny and no other corporate
proceedings on the part of Kearny is necessary to authorize the execution and
delivery of this Reorganization Agreement and the Plans of Merger and the
consummation of the transactions contemplated hereby and thereby. This
Reorganization Agreement and all other agreements and instruments herein
contemplated to be executed by Kearny have been (or upon execution will have
been) duly executed and delivered by Kearny and constitute (or upon execution
will constitute) legal, valid and enforceable obligations of Kearny, subject, as
to enforceability, to applicable bankruptcy, insolvency, receivership,
conservatorship, reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally and to the application of equitable
principles and judicial discretion.
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(b) The execution and delivery of this Reorganization
Agreement and the Plans of Merger, the consummation of the transactions
contemplated hereby and thereby and the fulfillment of the terms hereof and
thereof will not result in a material violation or breach of any of the terms or
provisions of, or constitute a material default under (or an event which, with
the passage of time or the giving of notice or both, would constitute such a
material default under), or conflict with, or permit the acceleration of any
material obligation under, any material mortgage, lease, covenant, agreement,
indenture or other instrument to which Kearny is a party or by which it or its
property or any of its assets are bound, the Charter and Bylaws of Kearny, or
any material judgment, decree, order, regulatory letter of understanding or
award of any court, governmental body or arbitrator by which Kearny is bound; or
any material permit, concession, grant, franchise, license, law, statute,
ordinance, rule or regulation applicable to Kearny or its properties, or result
in the creation of any material lien, claim, security interest, encumbrance,
charge, restriction or right of any third party of any kind whatsoever upon the
property or assets of Kearny, except that the Government Approvals, as defined
below, shall be required in order for Kearny to consummate the Bank Merger.
2.3 No Legal Bar. Kearny is not a party to, subject to or bound
by any material agreement, judgment, order, regulatory letter of understanding,
writ, prohibition, injunction or decree of any court or other governmental
authority or body of competent jurisdiction or any law which would prevent the
execution of this Reorganization Agreement or the Plans of Merger by Kearny, the
delivery thereof to Bancorp and Stock Bank or the consummation of the
transactions contemplated hereby and thereby and no action or proceeding is
pending against Kearny in which the validity of this Reorganization Agreement,
any of the transactions contemplated hereby or any action which has been taken
by any of the Parties in connection herewith or in connection with any of the
transactions contemplated hereby, is at issue.
2.4 Government Approvals. No consent, approval, order or
authorization of, or registration, declaration or filing with, any federal,
state or local governmental authority is required to be made or obtained by
Kearny in connection with the execution and delivery of this Reorganization
Agreement or the consummation of the transactions contemplated hereby by Kearny
except for the prior approval of the Office of Thrift Supervision ("OTS") under
the Home Owners' Loan Act of 1933, as amended and recodified ("HOLA"), the
Federal Deposit Insurance Corporation ("FDIC") and any other government
approvals that may be necessary (the "Government Approvals"). Kearny is not
aware of any facts, circumstances or reasons why such Government Approvals
should not be forthcoming or which would prevent or hinder such approvals from
being obtained.
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2.5 Kearny Financial Statements. Kearny has delivered or will
deliver to Bancorp copies of the statements of financial condition of Kearny as
of June 30 for the fiscal years 1997 and 1998, and the related statements of
operations, changes in equity and cash flows for the fiscal years 1996 through
1998, inclusive, in each case accompanied by the audit report of Radics & Co.,
LLC. The statements of financial condition of Kearny referred to herein
(including the related notes, where applicable) fairly present the financial
condition of Kearny as of the respective dates set forth therein, and the
related statements of operations, changes in equity and cash flows (including
the related notes, where applicable) fairly present the results of the
operations, changes in equity and cash flows of Kearny for the respective
periods or as of the respective dates set forth therein, in each case in
conformity with generally accepted accounting principles ("GAAP") consistently
applied.
2.6 Litigation. Except as set forth in Schedule 2.6 hereto, there
is no action, suit or proceeding pending against Kearny, or to the best
knowledge of Kearny, threatened against or affecting Kearny, or any of its
assets, before any court or arbitrator or any governmental body, agency or
official that would, if decided against Kearny, have a material adverse impact
on the business, properties, assets, liabilities or condition (financial or
other) of Kearny and that are not reflected in the Kearny Financial Statements.
2.7 Compliance with Laws.
(a) Kearny is in compliance with all laws, rules,
regulations, reporting and licensing requirements, and orders applicable to its
business or employees conducting its business (including, but not limited to,
those relating to consumer disclosure and currency transaction reporting) the
breach or violation of which would reasonably be expected to have a material
adverse effect on the financial condition or operations of Kearny, or which
would reasonably be expected to subject Kearny or any of its directors or
officers to civil money penalties; and
(b) Kearny is not a party to any cease and desist order,
written agreement or memorandum of understanding with, or a party to any
commitment letter or similar undertaking to, or is subject to any order to
directive by, or is a recipient of any extraordinary supervisory letter from, or
has adopted any board resolutions at the request of, federal or state
governmental authorities (the "Regulatory Authorities") charged with the
supervision or regulation of the operations of any of them not has it been
advised by any such government authority that it is contemplating issuing or
requesting (or is considering the appropriateness of issuing or requesting) any
such order, directive, written agreement, memorandum or understanding,
extraordinary supervisory letter, commitment letter, board resolutions or
similar undertaking.
2.8 Material Contract Defaults. Kearny is not in default in any
respect under any material contract, agreement, commitment, arrangement, lease,
insurance policy, or other instrument to which it is a party or by which its
respective assets, business, or operations may be bound or affected or under
which it or its respective assets, business, or operations receives benefits,
and which default would reasonably be expected to have either individually or in
the aggregate a material adverse effect on Kearny 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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2.9 Disclosure. The information concerning, and the
representations or warranties made by Kearny, as set forth in this
Reorganization Agreement, or in any document, statement, certificate or other
writing furnished or to be furnished by Kearny to Bancorp and Stock Bank
pursuant hereto, do not and will not contain any untrue statement of a material
fact or omit and will not omit to state a material fact required to be stated
herein or therein which is necessary to make the statements and facts contained
herein or therein, in light of the circumstances under which they were or are
made, not false or misleading.
2.10 Delays. Kearny is not aware of any matter that could cause a
delay in receiving the approval required by this Reorganization.
2.11 Corporate Approval. At a duly constituted meeting of the
Board of Directors of Kearny directors constituting at least two-thirds of the
Directors granted their prior approval to the Reorganization Agreement and the
transactions contemplated thereby.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF BANCORP AND STOCK BANK
Except as otherwise disclosed in one or more schedules (the "Bancorp
Schedule(s)") dated as of the date hereof and delivered concurrently with this
Reorganization Agreement, both as of the date hereof and as of the Effective
Time, each of Bancorp and Stock Bank represents and warrants to Kearny as
follows:
3.1 Organization and Qualification of Bancorp and Subsidiaries.
Bancorp is a corporation duly organized, validly existing and in good standing
under the laws of the State of New Jersey and (i) has all requisite corporate
power and authority to own, operate and lease its properties and to carry on its
business as it is currently being conducted; (ii) is in good standing and is
duly qualified to do business in each jurisdiction where the character of its
properties owned or held under lease or the nature of its business is such that
a failure to be so qualified would have a material adverse effect on Bancorp and
Stock Bank taken as a whole; and (iii) is registered as a savings and loan
holding company with the OTS. Schedule 3.1 of the Bancorp Schedules contains a
list of all of Bancorp's direct and indirect subsidiaries (the "Bancorp
Subsidiaries"). Stock Bank is a federally chartered stock savings bank, duly
organized, validly existing and in good standing under the laws of the United
States and engages only in activities (and holds properties only of the types)
permitted by the rules and regulations promulgated by the OTS and the FDIC for
insured depository institutions. Stock Bank's deposit accounts are insured by
the Savings Association Insurance Fund (the "SAIF") as administered by the FDIC
to the fullest extent permitted under applicable law.
3.2 Authorization, Execution and Delivery; Reorganization
Agreement Not in Breach.
(a) Bancorp and Stock Bank have all requisite corporate
power and authority to execute and deliver this Reorganization Agreement and the
Plans of Merger and to consummate the transactions contemplated hereby. The
execution and delivery of this Reorganization
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Agreement and the Plans of Merger and the consummation of the proposed
transactions have been duly authorized by at least a majority of the entire
Boards of Directors of both Bancorp and Stock Bank and no other corporate
proceedings on the part of Bancorp and Stock Bank are necessary to authorize the
execution and delivery of this Reorganization Agreement and the Plans of Merger
and the consummation of the transactions contemplated hereby and thereby. This
Reorganization Agreement and all other agreements and instruments herein
contemplated to be executed by Bancorp and Stock Bank have been (or upon
execution will have been) duly executed and delivered by Bancorp and Stock Bank
and constitute (or upon execution will constitute) legal, valid and enforceable
obligations of Bancorp and Stock Bank, subject, as to enforceability, to
applicable bankruptcy, insolvency, receivership, conservatorship,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and to the application of equitable principles and
judicial discretion.
(b) The execution and delivery of this Reorganization
Agreement and the Plans of Merger, the consummation of the transactions
contemplated hereby and thereby, and the fulfillment of the terms hereof and
thereof will not result in a material violation or breach of any of the terms or
provisions of, or constitute a material default under (or an event which, with
the passage of time or the giving of notice, or both, would constitute such a
default under), or conflict with, or permit the acceleration of, any material
obligation under, any material mortgage, lease, covenant, agreement, indenture
or other instrument to which Bancorp or any Bancorp Subsidiary is a party or by
which Bancorp or any Bancorp Subsidiary is bound, the Certificate of
Incorporation and Bylaws of Bancorp or the Charter and Bylaws of Stock Bank; or
any material judgment, decree, order, regulatory letter of understanding or
award of any court, governmental body, authority or arbitrator by which Bancorp
or any Bancorp Subsidiary is bound, or any material permit, concession, grant,
franchise, license, law, statute, ordinance, rule or regulation applicable to
Bancorp or any Bancorp Subsidiary or the properties of any of them; or result in
the creation of any material lien, claim, security interest, encumbrance,
charge, restriction or right of any third party of any kind whatsoever upon the
properties or assets of Bancorp or any Bancorp Subsidiary, except the Government
approvals shall be required for Bancorp and Stock Bank to consummate the Bancorp
Merger and Bank Merger.
3.3 No Legal Bar. Neither Bancorp nor Stock Bank is a party to,
or subject to or bound by, any material agreement, judgment, order, letter of
understanding, writ, prohibition, injunction or decree of any court or other
governmental authority or body of competent jurisdiction, or any law which would
prevent the execution of this Reorganization Agreement or the Plans of Merger by
Bancorp or Stock Bank, the delivery thereof to Kearny or the consummation of the
transactions contemplated hereby and thereby, and no action or proceeding is
pending against Bancorp or Stock Bank in which the validity of this
Reorganization Agreement, any of the transactions contemplated hereby or any
action which has been taken by any of the Parties in connection herewith, or, in
connection with any of the transactions contemplated hereby, is at issue.
3.4 Government and Other Approvals. Except for the Government
Approvals described in Section 2.4, no consent, approval, order or authorization
of, or registration, declaration or filing with, any federal, state or local
governmental authority is required to be made or obtained by Bancorp or Stock
Bank in connection with the execution and delivery of this Reorganization
Agreement or the consummation of the transactions contemplated by this
Reorganization Agreement nor is any consent or approval required from any
landlord, licensor or other non-governmental party
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which has granted rights to Bancorp or Stock Bank in order to avoid forfeiture
or impairment of such rights. Neither Bancorp nor Stock Bank is aware of any
facts, circumstances or reasons why such Government Approvals should not be
forthcoming or which would prevent or hinder such approvals from being obtained.
3.5 Licenses, Franchises and Permits. Bancorp and all Bancorp
Subsidiaries hold all licenses, franchises, permits and authorizations necessary
for the lawful conduct of their respective businesses. Except as disclosed in
Schedule 3.5, the benefits of all of such licenses, franchises, permits and
authorizations are in full force and effect and may continue to be enjoyed by
Bancorp and Stock Bank subsequent to the Closing of the transactions
contemplated herein without any consent or approval. Neither Bancorp nor any
Bancorp Subsidiary has received notice of any proceeding for the suspension or
revocation of any such license, franchise, permit, or authorization and no such
proceeding is pending or, to the best knowledge of Bancorp and the Bancorp
Subsidiaries, has been threatened by any governmental authority.
3.6 Charter Documents. Included in Schedule 3.6 hereto are true
and correct copies of the Certificate of Incorporation and Bylaws of Bancorp and
Charter and Bylaws of Stock Bank.
3.7 Bancorp Financial Statements. Bancorp has delivered or will
deliver to Kearny copies of the consolidated statements of financial condition
of Bancorp as of December 31, for the fiscal years 1996 and 1997, and the
related consolidated statements of income, changes in stockholders' equity and
cash flows for the fiscal years 1995 through 1997, inclusive, as incorporated by
reference in Bancorp's Annual Report to Stockholders in each case accompanied by
the audit report of KPMG Peat Marwick LLP, independent public accountants with
respect to Bancorp (the "Audited Financial Statements"), and the unaudited
consolidated statements of financial condition of Bancorp as of June 30, 1998
and the related unaudited consolidated statements of income, changes in
stockholders' equity and cash flows for the six month periods then ended as
reported in Bancorp's quarterly report to shareholders. The consolidated
statements of financial condition of Bancorp referred to herein (including the
related notes, where applicable) fairly present the consolidated financial
condition of Bancorp as of the respective dates set forth therein, and the
related consolidated statements of income, changes in stockholders' equity and
cash flows (including the related notes, where applicable) fairly present the
results of the consolidated operations, changes in stockholders' equity and cash
flows (including the related notes, where applicable) fairly present the results
of the consolidated operations, changes in stockholders' equity and cash flows
of Bancorp for the respective periods or as of the respective dates set forth
therein, in each case in conformity with generally accepted accounting
principles ("GAAP") consistently applied, it being understood that Bancorp's
interim financial statements are not audited, not prepared with related notes
and are subject to normal year-end adjustments.
3.8 Absence of Certain Changes. Except as disclosed in Schedule
3.8 or as provided for or contemplated in this Reorganization Agreement, since
June 30, 1998 (the "Balance Sheet Date") there has not been:
(a) any material transaction by Bancorp or Stock Bank not in
the ordinary
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course of business and in conformity with past practice;
(b) any material adverse change in the business, property,
assets (including loan portfolios), liabilities (whether absolute, accrued,
contingent or otherwise), operations, liquidity, income, condition or net worth
of Bancorp and Stock Bank taken as a whole;
(c) any damage, destruction or loss, whether or not covered
by insurance, which has had or may have a material adverse effect on any of the
properties or business prospects of Bancorp and Stock Bank taken as a whole or
their future use and operation by Bancorp and Stock Bank taken as a whole;
(d) any acquisition or disposition by Bancorp or Stock Bank
of any property or asset of Bancorp or Stock Bank, whether real or personal,
having a fair market value, singularly or in the aggregate, in an amount greater
than Twenty-Five Thousand Dollars ($25,000) other than acquisitions or
dispositions made in the ordinary course of business;
(e) any mortgage, pledge or subjection to lien, charge or
encumbrance of any kind on any of the respective properties or assets of Bancorp
or Stock Bank, except to secure extensions of credit in the ordinary course of
business and in conformity with past practice (pledges of and liens on assets to
secure Federal Home Loan Bank advances being deemed both in the ordinary course
of business and consistent with past practice);
(f) any amendment, modification or termination of any
contract or agreement in excess of $25,000, relating to Bancorp or Stock Bank,
to which Bancorp or Stock Bank is a party which would have a material adverse
effect upon the financial condition or operations of Bancorp or Stock Bank taken
as a whole;
(g) any increase in, or commitment to increase, the
compensation payable or to become payable to any officer, director, employee or
agent of Bancorp or Stock Bank, or any bonus payment or similar arrangement made
to or with any of such officers, directors, employees or agents, other than
routine increases to non-officer employees made in the ordinary course of
business and consistent with past practice not exceeding the lesser of five
percent (5%) per annum or $5,000 for any of them individually;
(h) any incurring of, assumption of, or taking of, by
Bancorp or Stock Bank, any property subject to, any liability in excess of
$25,000, except for liabilities incurred or assumed or property taken subsequent
to the Balance Sheet Date in the ordinary course of business and in conformity
with past practice; or
(i) any material alteration in the manner of keeping the
books, accounts or Records of Bancorp or Stock Bank, or in the accounting
policies or practices therein reflected, except as required by GAAP and
requirements of Regulatory Authorities.
3.9 Deposits. Except as set forth in Schedule 3.9, none of the
Stock Bank deposits (consisting of certificate of deposit, savings accounts, NOW
accounts and checking account), is a
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brokered deposit.
3.10 Properties. Except as described in Schedule 3.10 hereto or
adequately reserved against in the Audited Financial Statements of Bancorp or
disposed of since the Balance Sheet Date, Bancorp and each Bancorp Subsidiary
has good and, as to real property, marketable title free and clear of all
material liens, encumbrances, charges, defaults, or equities of whatever
character to all of the material properties and assets, reflected in the Audited
Financial Statements of Bancorp as being owned by Bancorp or any Bancorp
Subsidiary as of the dates thereof. All buildings, and all fixtures, equipment,
and other property and assets that are material to the business of Bancorp and
the Bancorp Subsidiaries on a consolidated basis, held under leases or subleases
by Bancorp or any Bancorp Subsidiary, are held under valid instruments
enforceable in accordance with their respective terms (except as enforceability
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium,
or other laws affecting the enforcement of creditors' rights generally, or by
equitable principles).
3.11 Condition of Fixed Assets and Equipment. Except as disclosed
in Schedule 3.11 hereto, each item of Bancorp's or Stock Bank's fixed assets and
equipment having a net book value in excess of Twenty-Five Thousand Dollars
($25,000) included in the Fixed Assets is in good operating condition and
repair, normal wear and tear excepted.
3.12 Tax Matters. Except as described in Schedule 3.12 hereto:
(a) All federal, state and local tax returns required to be
filed by or on behalf of Bancorp and Stock Bank have been timely filed or
requests for extensions have been timely filed, granted and have not expired for
periods ended on or before the date of this Reorganization Agreement, and all
returns filed are, and the information contained therein is, complete and
accurate. All tax obligations reflected in such returns have been paid. As of
the date of this Reorganization Agreement, there is no audit examination,
deficiency, or refund litigation or matter in controversy with respect to any
taxes that might reasonably be expected to result in a determination materially
adverse to Bancorp and Stock Bank taken as a whole except as fully reserved for
in the Audited Financial Statements of Bancorp. All taxes, interest, additions,
and penalties due with respect to completed and settled examinations or
concluded litigation have been paid;
(b) Neither Bancorp nor Stock Bank has executed an extension
or waiver of any statute of limitations on the assessment or collection of any
tax due that is currently in effect;
(c) Adequate provision for any federal, state or local taxes
due or to become due for Bancorp and Stock Bank for all periods through and
including December 31, 1997, has been made and is reflected on the December 31,
1997 financial statements included in the Audited Financial Statements of
Bancorp, and have been and will continue to be made with respect to periods
ending after December 31, 1997;
(d) Deferred taxes of Bancorp and Stock Bank have been and
will be provided for in accordance with GAAP; and
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(e) To the best knowledge of Bancorp and Stock Bank, neither
the Internal Revenue Service (the "IRS") nor any state, local or other taxing
authority is now asserting or threatening to assert against Bancorp or Stock
Bank any deficiency or claim for additional taxes, or interest thereon or
penalties in connection therewith. All material income, payroll, withholding,
property, excise, sales, use, franchise and transfer taxes, and all other taxes,
charges, fees, levies or other assessments, imposed upon Bancorp by the United
States or by any state, municipality, subdivision or instrumentality of the
United States or by any other taxing authority, including all interest,
penalties or additions attributable thereto, which are due and payable by
Bancorp or Stock Bank, either have been paid in full or have been properly
accrued and reflected in the Audited Financial Statements of Bancorp.
3.13 Litigation. Except as set forth in Schedule 3.13 hereto,
there is no action, suit or proceeding pending against Bancorp or Stock Bank, or
to the best knowledge of Bancorp or Stock Bank, threatened against or affecting
Bancorp, Stock Bank or any of their assets, before any court or arbitrator or
any governmental body, agency or official that may, if decided against Bancorp
or Stock Bank, have a material adverse effect on the business, properties,
assets, liabilities, or condition (financial or other) of Bancorp and Stock Bank
taken as a whole and that are not reflected in the Audited Financial Statements
of Bancorp.
3.14 Environmental Materials. Except as set forth in Schedule
3.14 to the knowledge of Bancorp and Stock Bank, the real property owned by
Bancorp associated with its two offices as well as other real property held as
an asset and real property held as real estate owned ("Real Properties") are in
material compliance with all Environmental Laws, as hereinafter defined, and
there are no conditions existing currently which would subject Bancorp to
damages, penalties, injunctive relief or cleanup costs under any Environmental
Laws or assertions thereof, or which require cleanup, removal, remedial action
or other response pursuant to Environmental Laws by Bancorp. Copies of all
environmental studies, reports, notices and the like known to exist with regard
to the Real Properties is contained at Schedule 3.14. Bancorp is not a party to
any litigation or administrative proceeding, nor has Bancorp (either in its own
capacity or as trustee or fiduciary), materially violated Environmental Laws
nor, to its knowledge and except as set forth in Schedule 3.14, is Bancorp
(either in its own capacity or as trustee or fiduciary) required to clean up,
remove or take remedial or other responsive action due to the disposal,
depositing, discharge, leaking or other release of any hazardous substances or
materials. To the knowledge of Bancorp, none of the Real Properties are, nor is
Bancorp, subject to any judgment, decree, order or citation related to or
arising out of any Environmental Laws. To the knowledge of Bancorp, no material
permits, licenses or approvals are required under Environmental Laws relative to
the Real Properties; and, except as disclosed in Schedule 3.14, Bancorp has not
stored, deposited, treated, recycled, used or disposed of any materials
(including, without limitation, asbestos) on, under or at the Real Properties
(or tanks or other facilities thereon containing such materials), which
materials if known to be present on the Real Properties or present in soils or
ground water, would require cleanup, removal or some other remedial action under
the Environmental Laws. The term "Environmental Laws" shall mean all federal,
state and local laws, including statutes, regulations, ordinances, codes, rules
and other governmental restrictions, standards and requirements relating to the
discharge of air pollutants, water pollutants or process waste water or
substances, as now or at any time hereafter in effect, including, but not
limited to, the Federal Solid Waste Disposal Act, the Federal Hazardous
Materials Transportation Act, the Federal Clean Air Act, the Federal
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Clean Water Act, the Federal Resource Conservation and Recovery Act of 1976, the
Federal Comprehensive Environmental Responsibility Cleanup and Liability Act of
1980, as amended ("CERCLA"), regulations of the Environmental Protection Agency,
regulations of the Nuclear Regulatory Agency, regulations of the Occupational
Safety and Health Administration, and any so-called "Superfund" or "Superlien"
Laws.
3.15 Insurance. Schedule 3.15 of the Bancorp Disclosure Schedules
contains a true and complete list of all policies of liability, theft, fidelity,
property damage and other forms of insurance held by Bancorp or any Bancorp
Subsidiary (specifying the insurer, amount of coverage, annual premium, type of
insurance, policy number and any pending material claims thereunder). The
policies listed in such Schedule 3.15 are outstanding and duly in force and all
premiums with respect to such policies are currently paid. Except as set forth
in such Schedule 3.15, neither Bancorp nor any Bancorp Subsidiary has, during
the past three fiscal years, been denied or had revoked or rescinded any policy
of insurance. Bancorp and Stock Bank and all of Bancorp's and Stock Bank's
Realty and other material properties are insured against fire, casualty, theft,
loss, and such other events against which it is customary to insure, all such
insurance policies being in amounts that are adequate and are consistent with
past practices and experience.
3.16 Books and Records. The minute books of Bancorp and Stock
Bank contain, in all material respects, complete and accurate records of and
fairly reflect all actions taken at all meetings and accurately reflect all
other corporate action of the shareholders and the boards of directors and each
committee thereof. The books and records of Bancorp and Stock Bank fairly and
accurately reflect the transactions to which Bancorp and Stock Bank is or has
been a party or by which their properties are subject or bound, and such books
and records have been properly kept and maintained.
3.17 Capitalization of Bancorp. The authorized capital stock of
Bancorp consists of 6,000,000 shares of Common Stock, no par value, 2,000,000
shares of preferred stock, no par value, the "Bancorp Preferred Stock" and no
other class of equity security. As of the date of this Reorganization Agreement,
2,585,243 shares of Bancorp Common Stock were issued and outstanding and no
shares of Bancorp Preferred Stock were issued and outstanding. All of the
outstanding Bancorp Common Stock is validly issued, fully-paid and nonassessable
and has not been issued in violation of any preemptive rights of any Bancorp
Shareholder. Except as described in Section 1.7 of this Reorganization Agreement
as of the date hereof, there are no outstanding securities or other obligations
which are convertible into Bancorp Common Stock or into any other equity or debt
security of Bancorp, and there are no outstanding options, warrants, rights,
scrip, rights to subscribe to, calls or other commitments of any nature which
would entitle the holder, upon exercise thereof, to be issued Bancorp Common
Stock or any other equity or debt security of Bancorp. None of the stock options
will be exercised between the signing of this Reorganization Agreement and the
Effective Time. Accordingly, immediately prior to the Effective Time, there will
be not more than 2,585,243 shares of Bancorp Common Stock issued and outstanding
and 264,050 options outstanding. Bancorp owns and is the beneficial record
holder of, and has good and freely transferable title to, all of the _________
shares of Stock Bank Common Stock issued and outstanding, and recorded on the
books and Records of Stock Bank as being held in its name, free and clear of all
liens, charges or encumbrances, and such stock is not subject to any voting
trusts, agreements or similar arrangements or other claims which
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could affect the ability of Bancorp to freely vote such stock in support of the
transactions contemplated herein.
3.18 Sole Agreement. With the exception of this Reorganization
Agreement, neither Bancorp, nor Stock Bank, nor any Subsidiary of either has
been or is a party to: any letter of intent or agreement to merge, to
consolidate, to sell or purchase assets (other than in the normal course of its
business) or to any other agreement which contemplates the involvement of
Bancorp or Stock Bank or any Subsidiary of either (or any of their assets) in
any business combination of any kind; or any agreement obligating Bancorp or
Stock Bank to issue or sell or authorize the sale or transfer of Bancorp Common
Stock or the capital stock of Stock Bank. There are no (nor will there be at the
Effective Time any) shares of capital stock or other equity securities of
Bancorp outstanding, except for shares of Bancorp Common Stock presently issued
and outstanding (or issuable upon the exercise of outstanding stock options),
and there are no (nor will there be at the Effective Time any) outstanding
options, warrants, scrip, rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities or rights convertible into or
exchangeable for, shares of the capital stock of Bancorp or Stock Bank, or
contracts, commitments, understandings, or arrangements by which Bancorp or
Stock Bank is or may be bound to issue additional shares of their capital stock
or options, warrants, or rights to purchase or acquire any additional shares of
their capital stock. There are no (nor will there be at the Effective Time any)
contracts, commitments, understandings, or arrangements by which Bancorp or
Stock Bank is or may be bound to transfer or issue to any third party any shares
of the capital stock of Stock Bank, and there are no (nor will there be at the
Effective Time any) contracts, agreements, understandings or commitments
relating to the right of Bancorp to vote or to dispose of any such shares.
3.19 Disclosure. The information concerning, and representations
and warranties made by, Bancorp or Stock Bank set forth in this Reorganization
Agreement, or in the Schedule of Bancorp hereto, or in any document, statement,
certificate or other writing furnished or to be furnished by Bancorp or Stock
Bank to Kearny, pursuant hereto, do not and will not contain any untrue
statement of a material fact or omit and will not omit to state a material fact
required to be stated herein or therein which is necessary to make the
statements and facts contained herein or therein, in light of the circumstances
in which they were or are made, not false or misleading. Without limiting the
foregoing, at the time the merger proxy statement of Bancorp to be filed with
the SEC is mailed to Bancorp Record Holders and at all times subsequent to such
mailing, up to and including the Effective Time, such merger proxy statement
(including any amendments and supplements thereto), with respect to all
information relating to Bancorp, Stock Bank and this Reorganization Agreement as
it relates to Bancorp, (i) will comply in all material respects with the
applicable provisions of the Securities Laws and (ii) will not contain any
statement which, at the time and in light of the circumstances under which it is
made, is false or misleading with respect to any material fact or omit to state
any material fact necessary in order to make the statements made therein not
false or misleading, or required to be stated therein or necessary to correct
any statement made in an earlier communication with respect to such matters
which have become false or misleading. Copies of all documents heretofore or
hereafter delivered or made available to Kearny by Bancorp or Stock Bank
pursuant hereto were or will be complete and accurate copies of such documents.
3.20 Absence of Undisclosed Liabilities. Except as described in
Schedule 3.20
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hereto, to their knowledge neither Bancorp nor Stock Bank has any obligation or
liability that is material to the financial condition or operations of Bancorp
or Stock Bank, or that, when combined with all similar obligations or
liabilities, would be material to the financial condition or operations of
Bancorp or Stock Bank (i) except as disclosed in the Audited Financial
Statements of Bancorp delivered to Kearny prior to the date of this
Reorganization Agreement, (ii) except obligations or liabilities incurred in the
ordinary course of its business consistent with past practices or (iii) except
as contemplated under this Reorganization Agreement. Since June 30, 1998,
neither Bancorp nor Stock Bank has incurred or paid any obligation or liability
which would be material to the financial condition or operations of Bancorp or
Stock Bank, except for obligations paid in connection with transactions made by
it in the ordinary course of its business consistent with past practices, laws
and regulations applicable to Bancorp or Stock Bank.
3.21 Allowance for Possible Loan or REO Losses. The allowance for
possible loan losses shown on the Audited Financial Statements of Bancorp is in
the opinion of management of Bancorp adequate in all material respects to
provide for anticipated losses inherent in loans outstanding. Except as
disclosed in Schedule 3.21 hereto, as of the date thereof, neither Bancorp nor
Stock Bank has any loan which has been criticized, designated or classified by
management of Bancorp, or by regulatory examiners representing any Regulatory
Authority or by Bancorp's independent auditors as "Special Mention,"
"Substandard," "Doubtful", "Loss" or as a "Potential Problem Loan."
The allowance for possible losses in real estate owned, if
any, shown on the Audited Financial Statements of Bancorp in the opinion of
management is or will be adequate in all respects to provide for anticipated
losses inherent in REO owned or held by Bancorp or Stock Bank and the net book
value of real estate owned on the Balance Sheet of the Audited Financial
Statements of Bancorp is the fair value of the real estate owned in accordance
with Statement of Position 92-3.
3.22 Loan Portfolio. To the best knowledge of Bancorp or Stock
Bank, with respect to each mortgage loan owned by Bancorp or Stock Bank in whole
or in part (each, a "Mortgage Loan"):
(a) Enforceability. The mortgage note and the related
mortgage are each legal, valid and binding obligations of the maker or obligor
thereof, enforceable against such maker or obligor in accordance with their
terms.
(b) No Modification. Neither Bancorp nor Stock Bank nor any
prior holder of a Mortgage Loan has modified the related documents in any
material respect or satisfied, canceled or subordinated such mortgage or
mortgage note except as otherwise disclosed by documents in the applicable
mortgage file.
(c) Owner. Bancorp or Stock Bank is the sole holder of legal
and beneficial title to each Mortgage Loan (or Stock Bank's applicable
participation interest), as applicable and there has not been any assignment or
pledge of any Mortgage Loan (other than as security for Federal Home Loan Bank
advances as detailed at Schedule 3.22(c)).
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(d) Collateral Documents. The mortgage note, mortgage and
any other collateral documents, copies of which are included in the Mortgage
Loan files, are true and correct copies of the documents they purport to be and
have not been superseded, amended, modified, canceled or otherwise changed
except as otherwise disclosed by documents in the applicable mortgage file.
(e) Litigation. There is no litigation or proceeding pending
or threatened, relating to the mortgaged property which would have a material
adverse effect upon the related Mortgage Loan.
(f) Participation. With respect to each Mortgage Loan held
in the form of a participation, the participation documentation is legal, valid,
binding and enforceable and the interest in such Mortgage Loan of Bancorp or
Stock Bank created by such participation would not be a part of the insolvency
estate of the Mortgage Loan originator or other third party upon the insolvency
thereof.
3.23 Compliance with Laws.
(a) Bancorp and Stock Bank are in compliance with all laws,
rules, regulations, reporting and licensing requirements, and orders applicable
to its business or employees conducting its business (including, but not limited
to, those relating to consumer disclosure and currency transaction reporting)
the breach or violation of which would or could reasonably be expected to have a
material adverse effect on the financial condition or operations of Bancorp and
Stock Bank taken as a whole, or which would or could reasonably be expected to
subject Bancorp or Stock Bank or any of its directors or officers to civil money
penalties; and
(b) Neither Bancorp or Stock Bank has received notification
or communication from any agency or department of federal, state, or local
government or any of the Regulatory Authorities, or the staff thereof (i)
asserting that Bancorp or Stock Bank is not in compliance with any of the
statutes, rules, regulations, or ordinances which such governmental authority or
Regulatory Authority enforces, and which, as a result of such noncompliance,
would or could reasonably be expected to have a material adverse effect on
Bancorp and Stock Bank taken as a whole, (ii) threatening to revoke any license,
franchise, permit, or governmental authorization which is material to the
financial condition or operations of Bancorp and Stock Bank, taken as a whole,
or (iii) requiring Bancorp to enter into a cease and desist order, consent,
agreement or memorandum of understanding.
3.24 Employee Benefit Plans.
(a) Schedule 3.24 to the Bancorp Disclosure Schedule lists (i) each
pension, profit sharing, stock bonus, thrift, savings, employee stock ownership
or other plan, program or arrangement, which constitutes an "employee pension
benefit plan" within the meaning of Section 3(2) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), which is maintained by
Bancorp and/or Stock Bank or to which Bancorp and/or Stock Bank contribute for
the benefit of any current or former employee, officer, director, consultant or
agent; (ii) each plan, program or arrangement for the provision of medical,
surgical, or hospital care or benefits, benefits in the event of sickness,
accident,
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disability, death, unemployment, severance, vacation, apprenticeship, day care,
scholarship, prepaid legal services or other benefits which constitute an
"employee welfare benefit plan" within the meaning of Section 3(1) of ERISA,
which is maintained by Bancorp and/or Stock Bank or to which Bancorp and/or
Stock Bank contribute for the benefit of any current or former employee,
officer, director, consultant or agent; and (iii) every other retirement or
deferred compensation plan, bonus or incentive compensation plan or arrangement,
stock option plan, stock purchase plan, severance or vacation pay arrangement,
or other fringe benefit plan, program or arrangement through which Bancorp
and/or Stock Bank provide benefits for or on behalf of any current or former
employee, officer, director, consultant or agent.
(b) All of the plans, programs and arrangements described in Schedule 3.24
(hereinafter referred to as the "Bancorp Benefit Plans") that are subject to
ERISA are in material compliance with all applicable requirements of ERISA and
all other applicable federal and state laws, including the reporting and
disclosure requirements of Part I of Title I of ERISA. Each of the Bancorp
Benefit Plans that is intended to be a pension, profit sharing, stock bonus,
thrift, savings or employee stock ownership plan that is qualified under Section
401(a) of the Code satisfies the applicable requirements of such provision and
to the best of Bancorp's knowledge there exist no circumstances that would
adversely affect the qualified status of any such plan under that section,
except with respect to any required retroactive amendment for which the remedial
amendment period has not yet expired. Except as set forth in Schedule 3.24,
there is no pending or, to the best knowledge of Bancorp, threatened litigation,
governmental proceeding or investigation against or relating to any Bancorp
Benefit Plan and there is no reasonable basis for any material proceedings,
claims, actions or proceedings against any such Bancorp Benefit Plan. No Bancorp
Benefit Plan (or Bancorp Benefit Plan fiduciary, in his capacity as such) has
engaged in a non-exempt "Prohibited Transaction" (as defined in Section 406 of
ERISA and Section 4975(c) of the Code) since the date on which said sections
became applicable to such plan. There have been no acts or omissions by Bancorp
that have given rise to any fines, penalties, taxes or related charges under
Sections 502(c), 502(i) or 4071 of ERISA or Chapter 43 of the Code, or that may
give rise to any material fines, penalties, taxes or related damages under such
laws for which Bancorp may be liable. All group health plans of Bancorp,
including any plans of current and former Affiliates of Bancorp that must be
taken into account under Section 4980B of the Code or Section 601 of ERISA or
the requirements of any similar state law regarding insurance continuation, have
been operated in material compliance with the group health plan continuation
coverage requirements of Section 4980B of the Code and Section 601 of ERISA to
the extent such requirements are applicable. All payments due from any Bancorp
Benefit Plan (or from Bancorp with respect to any Bancorp Benefit Plan) have
been made, and all amounts properly accrued to date as liabilities of Bancorp
that have not yet been paid have been properly recorded on the books of Bancorp.
Schedule 3.24(b) contains a copy of the IRS Form 5500 filed with respect to the
Bancorp Benefit Plans for the last 3 plan years and a copy of such IRS letter of
determinations received with respect to such plans.
(c) Except as disclosed at Schedule 3.24(c), no payments to be made by
Stock Bank or Bancorp to any employee, officer or director shall result in an
"excess parachute payment" as defined at Section 280G of the Code or exceed the
deductibility limits provided at Section 162(m) of the Code.
(d) Schedule 3.24(d) contains a list of the maximum vacation accrual to be
paid at Closing
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by Bancorp, subject to reductions based upon time taken up to Closing. No
additional compensation shall be paid for any unused sick leave pay.
3.25 Material Contracts. Except as described in Schedule 3.25
hereto, neither Bancorp nor Stock Bank, nor any of their respective assets,
businesses, or operations, is as of the date of this Reorganization Agreement a
party to, or bound or affected by, or receives benefits under, any contract or
agreement or amendment thereto that require annual payments of over $25,000 per
year.
3.26 Material Contract Defaults. Neither Bancorp nor Stock Bank
is in default in any respect under any material contract, agreement, commitment,
arrangement, lease, insurance policy, or other instrument to which it is a party
or by which its respective assets, business, or operations may be bound or
affected or under which it or its respective assets, business, or operations
receives benefits, and which default would reasonably be expected to have either
individually or in the aggregate a material adverse effect on Bancorp and Stock
Bank taken as a whole, 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.
3.27 Reports. Since March 29, 1996, Bancorp and Stock Bank have
filed all reports and statements, together with any amendments required to be
made with respect thereto, that it was required to file with (i) the OTS; (ii)
the SEC, including, but not limited to, Annual Reports on Form 10-KSB, Quarterly
Reports on Form 10-QSB, Current Reports on Form 8-K and proxy statements; and
(iii) any other applicable federal or state securities or banking authorities
(except, in the case of federal or state securities authorities, filings that
are not material). As of their respective dates, each of such reports and
documents, including the financial statements, exhibits, and schedules thereto,
complied in all material respects with all of the requirements of their
respective forms and all of the statutes, rules, and regulations enforced or
promulgated by the Regulatory Authority with which they were filed. All such
reports were true and complete in all material respects and did not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
3.28 Exchange Act and Nasdaq Market
(a) The Bancorp Common Stock is registered with the SEC
pursuant to the Securities and Exchange Act of 1934, as amended ("Exchange Act")
and Bancorp has filed with the SEC all material forms and reports required by
law to be filed by Bancorp with the SEC, which forms and reports, taken as a
whole, are true and correct in all material respects, and do not misstate a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements contained therein, in light of the
circumstances under which they were made, not misleading.
(b) The outstanding shares of Bancorp Common Stock are
listed for trading on the Nasdaq National Market System (under the symbol
"FBER") pursuant to the listing rules of the Nasdaq and Bancorp has filed with
the Nasdaq all material forms and reports required by law to be filed by
Bancorp, which forms and reports, taken as a whole, are true and correct in all
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material respects, and do not misstate a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
contained therein, in light of the circumstances under which they were made, not
misleading.
3.29 Statements True and Correct. None of the information
prepared by, or on behalf of, Bancorp or any Bancorp Subsidiary regarding
Bancorp, Stock Bank or any other Bancorp Subsidiary included or to be included
in the Merger Proxy Statement to be mailed to Bancorp's Shareholders in
connection with the Bancorp Shareholders' Meeting, and any other documents to be
filed with the SEC, or any other Regulatory Authority in connection with the
transactions contemplated herein, will, at the respective times such documents
are filed, and, with respect to the Merger Proxy Statement, when first mailed to
the of Bancorp Shareholders, be false or misleading with respect to any material
fact, or omit to state any material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, or, in the case of the Merger Proxy Statement or any amendment
thereof or supplement thereto, at the time of the Bancorp Shareholders' Meeting,
be false or misleading with respect to any material fact, or omit to state any
material fact necessary to correct any statement in any earlier communication
with respect to the solicitation of any proxy for the Bancorp Shareholders'
Meeting. All documents which Bancorp or any Bancorp Subsidiary is responsible
for filing with the SEC or any other Regulatory Authority in connection with the
transactions contemplated hereby will comply as to form in all material respects
with the provisions of applicable law, including applicable provisions of the
Securities Laws and the rules and regulations promulgated thereunder.
3.30 Investment Securities. Section 1 of Schedule 3.30 sets forth
the book and market value as of June 30, 1998 of the investment securities,
mortgage-backed securities and securities held for sale of Bancorp and Stock
Bank as of such date. Section 2 of Schedule 3.30 sets forth an investment
securities report which includes (to the extent known or reasonably obtainable)
security descriptions, CUSIP or Agency Pool numbers, current pool face values,
book values, coupon rates, market values and book yields in each case as of June
30, 1998.
3.31 Certain Regulatory Matters.
(a) Stock Bank is a qualified thrift lender under Section
10(m) of HOLA and is a member of the Federal Home Loan Bank of New York.
(b) Stock Bank has not paid any dividends to Bancorp or any
affiliate thereof that (i) caused the regulatory capital of Stock Bank to be
less than the amount then required by applicable law or (ii) exceeded any other
limitation on the payment of dividends imposed by law, agreement or regulatory
policy. Other than as reflected on Schedule 3.31 and as required by applicable
law, there are no restrictions on the payment of dividends by Bancorp or Stock
Bank.
(c) Bancorp and Stock Bank have adopted policies and
procedures designed to promote overall compliance with the Bank Secrecy Act (31
U.S.C. Section 5301), the Truth-in-Lending Act (15 U.S.C. Section 1601 et seq.),
the Expedited Funds Availability Act (12 U.S.C. Section 4001) and the
regulations adopted under each such act and have materially complied with the
reporting requirements under the Bank Secrecy Act and the regulations
thereunder.
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3.32 Corporate Approval.
(a) The affirmative vote of a majority of the votes cast by
shareholders of Bancorp entitled to vote at a meeting is required to adopt this
Reorganization Agreement and approve the Merger and the other transactions
contemplated hereby. No other vote of the stockholders of Bancorp is required by
law, the Certificate of Incorporation or Bylaws of Bancorp or otherwise to adopt
this Reorganization Agreement and approve the Reorganization and the other
transactions contemplated hereby.
(b) At a duly constituted meeting of the Board of Directors
of Bancorp, directors constituting at least a majority of the Directors granted
their prior approval to the Reorganization and, accordingly, the provisions of
Article VIII of Bancorp's Certificate of Incorporation do not and will not apply
to this Reorganization Agreement or the consummation of any of the transactions
contemplated hereby or thereby.
(c) The provisions of the New Jersey Shareholders'
Protection Act of the NJBCA will not apply to this Reorganization Agreement, the
Merger or the transactions contemplated hereby and thereby.
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3.33 Broker's and Finder's Fees. Except for payments to FinPro,
Inc. as detailed in Schedule 3.33, which has been engaged by Bancorp as its
financial advisor (pursuant to an agreement, a copy of which has been separately
provided to Kearny), neither Bancorp nor any of its subsidiaries has any
liability to any broker, finder, or similar agent, nor have any of them agreed
to pay any broker's fee, finder's fee or commission, with respect hereto or to
the transactions contemplated hereby.
3.34 Year 2000 Readiness. Bancorp and each of the Bancorp
Subsidiaries have taken all reasonable steps necessary to address the computer
software, accounting and record keeping issues raised in order for the data
processing systems used in the business conducted by Bancorp and the Bancorp
Subsidiaries to be substantially Year 2000 compliant on or before the end of
1999 and, except as set forth in Schedule 3.34, does not expect the future cost
of addressing such issues to be material. Neither Bancorp nor any Bancorp
Subsidiary has received a rating of less than satisfactory from any bank
regulatory agency with respect to Year 2000 compliance.
3.35 Liquidation Account. The Stock Bank has maintained
sufficient records to make the necessary computations of the balance of the
liquidation account and the subaccounts thereunder.
3.36 Derivatives Contracts. None of Bancorp or Bancorp
Subsidiaries is a party to or has agreed to enter into an exchange-traded or
over-the-counter swap, forward, future, option, cap, floor or collar financial
contract or any other contract not included on the balance sheet which is a
derivative contract (including various combinations thereof) (each a
"Derivatives Contract") or owns securities that are referred to as "structured
notes" except for those Derivatives Contracts and structured notes previously
disclosed in Schedule 3.36, including a list, as applicable, of any Bancorp or
Bancorp Subsidiary assets pledged as security for each such Derivatives
Contract.
ARTICLE 4
COVENANTS OF KEARNY
4.1 Regulatory and Other Approvals. Within a reasonable time
after execution of this Reorganization Agreement, Kearny shall file any and all
applications with the appropriate government Regulatory Authorities in order to
obtain the Government Approvals and shall take such other actions as may be
reasonably required to consummate the transactions contemplated in this
Reorganization Agreement and the Plans of Merger with reasonable promptness.
Kearny shall pay all fees and expenses arising in connection with such
applications for regulatory approval. Kearny agrees to use its best efforts to
provide the appropriate Regulatory Authorities with the information required by
such authorities in connection with Kearny's applications for regulatory
approval and to use its best efforts to obtain such regulatory approvals, and
any other approvals and consents as may be required for the Closing, as promptly
as practicable; provided, however, that nothing in this Section shall be
construed to obligate Kearny to take any action to meet any condition required
to obtain prior regulatory approval if Kearny shall, deem such condition to be
unreasonable or to constitute a significant impediment upon its ability to carry
on its business or acquisition programs. Kearny shall
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provide Bancorp the opportunity to review and comment on all required
applications within a reasonable period prior to the filing thereof and provide
Bancorp with copies of all written communications with Regulatory Authorities
regarding the transactions provided for herein and related applications and
proceedings. Subject to the terms and conditions of this Reorganization
Agreement, Kearny agrees to use all reasonable efforts and to take, or to cause
to be taken, all actions, and to do, or to cause to be done, all things
necessary, proper, or advisable under applicable laws and regulations to
consummate and make effective, with reasonable promptness after the date of this
Reorganization Agreement, the transactions contemplated by this Reorganization
Agreement, including, without limitation, using reasonable efforts to lift or
rescind any injunction or restraining or other order adversely affecting the
ability of the Parties to consummate the transaction contemplated by this
Reorganization Agreement. Subject to the provisions of this Section, Kearny
shall use, and shall cause each of its Subsidiaries to use, its best efforts to
obtain consents of all third parties and Regulatory Authorities necessary or
desirable for the consummation of each of the transactions contemplated by this
Reorganization Agreement.
4.2 Preparation of Regulatory Applications. Kearny will use its
best efforts to prepare and file (a) with the FDIC, an application for approval
of the Mergers, if applicable and, (b) with the OTS, an application for approval
of the Plans of Mergers. Kearny, reasonably in advance of making such filings,
will provide Bancorp and its counsel a reasonable opportunity to comment on such
filings and regulatory applications; and Kearny will provide Bancorp and its
counsel with copies of all such filings and applications at the time filed if
such filings and applications are made at any time before the Effective Time.
Kearny covenants and agrees that all information furnished by Kearny for
inclusion in the Bancorp Merger Proxy Statement will comply in all material
respects with the provisions of applicable law, including the Exchange Act and
the rules and regulations of the SEC, and will not contain any untrue statement
of a material fact and will not omit to state any material fact required to be
stated therein or necessary to make the statements contained therein, in light
of the circumstances under which they were made, not misleading, Kearny will
furnish to FinPro, investment bankers advising Bancorp, such information as they
may reasonably request for purposes of the opinion referred to in Section 7.1.
4.3 Employee Benefits. Following the consummation of the
transactions contemplated herein, Kearny shall not be obligated to make further
contributions to any of the Employee Plans or Benefit Arrangements of Bancorp or
Stock Bank and all employees of Bancorp and Stock Bank immediately prior to the
Effective Time who shall continue as employees of Kearny as the Resulting
Company will be afforded the opportunity to participate in any employee benefit
plans maintained by Kearny, including but not limited to any "employee benefit
plan," as that term is defined in ERISA, on an equal basis with employees of
Kearny with comparable positions, compensation, and tenure, subject to the
provisions of this Section. Service with Bancorp or with any Bancorp Subsidiary
prior to the Effective Time by such former Bancorp employees will be deemed
service with Kearny for purposes of determining eligibility for participation
and for crediting of service for vesting purposes in such employee benefit plans
of Kearny; provided, however, that in no event shall any former Bancorp employee
be entitled to or be given credit for past service with such former Bancorp for
purposes of the participation, accrual, calculation, vesting or determination of
benefit amounts under any pension plan maintained by Kearny. The employees of
Bancorp will be treated as new employees for purposes of participation, vesting
and benefits determination value in Kearny's
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qualified pension plans. On or before the Effective Time, Bancorp shall take all
steps necessary to cause the 401(k) plan maintained by Bancorp to be terminated,
subject to applicable limitations under the Internal Revenue Code of 1986, as
amended (the "Code"). Bancorp shall take all steps necessary to cause the
defined benefit plan maintained by Bancorp to be terminated on or prior to
December 31, 1998, (provided, however, if Bancorp stockholders shall not have
approved the Merger by December 30, 1998, then the defined benefit plan shall be
terminated as of such later date as is mutually agreed by the parties on, or
before, the Effective Time and in accordance with applicable law and
regulations) and distributions made thereafter in accordance with the provisions
of the defined benefit plan and the Code. Bancorp will terminate its ESOP as set
forth in Section 1.11 of this Reorganization Agreement.
4.4 Notification. Kearny shall notify Bancorp promptly after
becoming aware of the occurrence of, or the impending or threatened occurrence
of, any event that would constitute a breach on its part of any obligation under
this Reorganization Agreement or the occurrence of any event that would cause
any representation or warranty made by it herein to be false or misleading, or
if it becomes a party or is threatened with becoming a party to any legal or
equitable proceeding or governmental investigation or upon the occurrence of any
event that would result in a change in the circumstances described in the
representations and warranties contained herein. At all times up to and
including, and as of, the Closing, Kearny shall inform Bancorp in writing of any
and all facts necessary to amend or supplement the representations and
warranties made herein and the Kearny Schedules attached hereto as necessary so
that the information contained herein and therein will accurately reflect the
current status of Kearny; provided, however, that any such updates to the Kearny
Schedules shall be required prior to the Closing only with respect to matters
which represent material changes to the Kearny Schedules and the information
contained therein.
4.5 Tax Representations. Kearny has not taken, agreed to take, or
will take any action or has any knowledge of any fact or circumstance that would
prevent the transactions contemplated hereby, including the Bank Merger and
Bancorp Merger, from qualifying as a reorganization within the meaning of
Section 368(a) of the Code.
4.6 Directors and Officers Indemnification and Insurance
Coverage.
(a) From and after the Effective Time through the sixth
anniversary thereof, Kearny agrees to indemnify, defend and hold harmless each
present and former director and officer of Bancorp and Stock Bank as of the
Closing Date (the "Indemnified Parties") against losses, claims, damages, costs,
expenses (including reasonable attorneys' fees and expenses), liabilities,
judgments or amounts paid in settlement (with the approval of Kearny, which
approval shall not be unreasonably withheld) or in connection with any claim,
action, suit, proceeding or investigation arising out of matters existing or
occurring at or prior to the Effective Time (a "Claim") in which an Indemnified
Party is, or is threatened to be made, a party or a witness based in whole or in
part on, or arising in whole or in part out of, the fact that such person is or
was a director or officer, regardless of whether such Claim is asserted or
claimed prior to, at or after the Effective Time, to the fullest extent to which
directors and officers are entitled under Bancorp's Certificate of Incorporation
(as to Stock Bank its Charter) and Bylaws, or other applicable law as in effect
on the date hereof (and Kearny shall pay expenses in advance of the final
disposition of any such action or proceeding to each Indemnified Party to the
extent permissible under law and Stock Bank's Charter and Bylaws as in effect on
the date
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hereof, and as permitted to a federal savings bank under federal law and as to
Bancorp, as permitted under New Jersey law and under Bancorp's Certificate of
Incorporation and Bylaws; provided that the person to whom expenses are advanced
provides an undertaking to repay such expenses if it is determined that such
person is not entitled to indemnification). All rights to indemnification in
respect of a Claim asserted or made within the period described in the preceding
sentence shall continue until the final disposition of such Claim.
Notwithstanding the foregoing, an officer or director of Bancorp and Stock Bank
may not be indemnified by Kearny if such indemnification is prohibited by
applicable law.
(b) Any Indemnified Party wishing to claim indemnification
under this Section, upon learning of any Claim, shall promptly notify Kearny,
but the failure to so notify shall not relieve Kearny of any liability it may
have to such Indemnified Party except to the extent that such failure materially
prejudices Kearny. In the event of any Claim, (1) Kearny shall have the right to
assume the defense thereof (with counsel reasonably satisfactory to the
Indemnified Party) and shall not be liable to such Indemnified Parties for any
legal expenses of other counsel or any other expenses subsequently incurred by
such Indemnified Parties in connection with the defense thereof, except that, if
Kearny elects not to assume such defense or counsel for the Indemnified Parties
advises that there are issues which raise conflicts of interest between Kearny
and the Indemnified Parties, the Indemnified Parties may retain counsel
satisfactory to them, and Kearny shall pay all reasonable fees and expenses for
the Indemnified Parties promptly as statements therefor are received, provided
further that Kearny shall in all cases be obligated pursuant to this paragraph
to pay for only one firm of counsel for each Indemnified Party, (2) the
Indemnified Parties will cooperate in the defense of any such Claim and (3)
Kearny shall not be liable for any settlement effected without its prior written
consent (which consent shall not be unreasonably withheld).
(c) For a period of three (3) year after the Effective Time,
Kearny will use its best efforts to provide to the persons who served as
directors or officers of Bancorp or Stock Bank on or before the Effective Time
insurance against liabilities and claims (and related expenses) made against
them resulting from their service as such prior to the Effective Time
substantially similar in all material respects to the insurance coverage
provided to them in such capacities at the date hereof. In lieu of the
foregoing, Bancorp may renew any existing insurance or purchase any "discovery
period" insurance provided for thereunder at Kearny's request and expense.
4.7 Conduct of Kearny Prior to the Effective Time. Except as
expressly provided in this Reorganization, as agreed to by Bancorp or as
required by applicable law, rules or regulations, during the period from the
date of this Reorganization Agreement to the Effective Time, Kearny shall (i)
take no action which would adversely affect or delay the ability of Bancorp or
Kearny to obtain any necessary approvals, consents or waivers of any
governmental authority required for the transactions contemplated hereby or to
perform its covenants and agreements on a timely basis under this Reorganization
Agreement and, (ii) take no action that could reasonably be expected to have a
material adverse effect on Kearny.
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ARTICLE 5
COVENANTS OF BANCORP AND STOCK BANK
5.1 Preparation of Merger Proxy Statement and Applications for
Required Consents. Bancorp will use its best efforts to prepare and file a
merger proxy statement with the SEC under the Exchange Act that will be used by
Bancorp to solicit shareholders for approval of the Reorganization Agreement
(the "Merger Proxy Statement"). In connection therewith, Bancorp will furnish
all financial or other information, including using best efforts to obtain
customary consents, certificates, opinions of counsel and other items concerning
Bancorp for the filing or preparation for filing under the Exchange Act. Bancorp
covenants and agrees that all information furnished for inclusion in the Merger
Proxy Statement, all applications to appropriate regulatory agencies for
approval of the Reorganization Agreement, and all information furnished by
Bancorp to Kearny pursuant to this Reorganization Agreement, will comply in all
material respects with the provisions of applicable law, and will not contain
any untrue statement of a material fact and will not omit to state any material
fact required to be stated therein or necessary to make the statements contained
therein, in light of the circumstances under which they were made, not
misleading. Bancorp will provide Kearny and its counsel in advance a reasonable
opportunity to comment on the Merger Proxy Statement before filing the Merger
Proxy Statement with the SEC; and Bancorp will provide Kearny and its counsel
with copies of filings made with the SEC at the time filed. Bancorp will furnish
to FinPro such information as FinPro may reasonably request for purposes of the
opinion referred to in Section 6.1(e).
5.2 Conduct of Business -- Affirmative Covenants. Unless the
prior written consent of Kearny shall have been obtained:
(a) Bancorp and Stock Bank shall:
(i) Operate its business only in the usual, regular,
and ordinary course;
(ii) Preserve intact its business organizations and
assets and to maintain its rights and franchises;
(iii) Take no action, unless otherwise required by law,
rules or regulation, that would reasonably be considered to (A) adversely affect
the ability of any of them or Kearny to obtain any necessary approvals of
Regulatory Authorities required to consummate the transactions contemplated by
this Reorganization Agreement, or (B) adversely affect the ability of such Party
to perform its covenants and agreements under this Reorganization Agreement;
(iv) Except as they may terminate in accordance with
their terms, keep in full force and effect, and not default in any of their
obligations under, all material contracts;
(v) Keep in full force and effect insurance coverage
with responsible insurance carriers which is reasonably adequate in coverage and
amount for companies the size of Bancorp and for the businesses and properties
owned by each and in which each is engaged, to the extent that such insurance is
reasonably available;
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(vi) Use its best efforts to retain Stock Bank's
present customer base and to facilitate the retention of such customers by Stock
Bank and its branches after the Effective Time; and
(vii) Maintain, renew, keep in full force and effect,
and preserve its business organization and material rights and franchises,
permits and licenses, and to use its best efforts to maintain positive relations
with its present employees so that such employees will continue to perform
effectively and will be available to Bancorp, Stock Bank or Kearny at and after
the Effective Time, and to use its best efforts to maintain its existing, or
substantially equivalent, credit arrangements with banks and other financial
institutions and to assure the continuance of Stock Bank's customer
relationships.
(b) Bancorp and Stock Bank agree to use their best efforts
to assist Kearny in obtaining the Government Approvals necessary to complete the
transactions contemplated hereby and do not know of any reason that such
Government Approvals can not be obtained, and Bancorp and Stock Bank shall
provide to Kearny or to the appropriate governmental authorities all information
reasonably required to be submitted in connection with obtaining such approvals.
(c) Bancorp and Stock Bank, at their own cost and expense,
shall use their best efforts to secure all necessary consents and all consents
and releases, if any, required of Bancorp, Stock Bank or third parties and shall
comply with all applicable laws, regulations and rulings in connection with this
Reorganization Agreement and the consummation of the transactions contemplated
hereby.
(d) At all times to and including, and as of, the Closing,
Bancorp and Stock Bank shall inform Kearny of any and all facts necessary to
amend or supplement the representations and warranties made herein and the
Bancorp Schedules attached hereto as necessary so that the information contained
herein and therein will accurately reflect the current status of Bancorp and
Stock Bank; provided, however, that any such updates to the Bancorp Schedules
shall be required prior to the Closing only with respect to matters which
represent material changes to the Bancorp Schedules and the information
contained therein.
(e) Subject to the terms and conditions of this
Reorganization Agreement, Bancorp and Stock Bank agree to use all reasonable
efforts and to take, or to cause to be taken, all actions, and to do, or to
cause to be done, all things necessary, proper, or advisable under applicable
laws and regulations to consummate and make effective, with reasonable
promptness after the date of this Reorganization Agreement, the transactions
contemplated by this Reorganization Agreement, including, without limitation,
using reasonable efforts to lift or rescind any injunction or restraining or
other order adversely affecting the ability of the Parties to consummate the
transaction contemplated by this Reorganization Agreement. Bancorp shall use,
and shall cause each of its Subsidiaries to use, its best efforts to obtain
consents of all third parties and Regulatory Authorities necessary or desirable
for the consummation of each of the transactions contemplated by this
Reorganization Agreement.
(f) Bancorp shall notify Kearny promptly after becoming
aware of the occurrence of, or the impending or threatened occurrence of, any
event that would constitute a breach
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on its part of any obligation under this Reorganization or the occurrence of any
event that would cause any representation or warranty made by it herein to be
false or misleading, or if it becomes a party or is threatened with becoming a
party to any legal or equitable proceeding or governmental investigation or upon
the occurrence of any event that would result in a change in the circumstances
described in the representations and warranties contained herein.
(g) On the business day immediately prior to the Effective
Time or on such other day after the satisfaction of all conditions precedent to
the Reorganization as Kearny may require Bancorp shall, at the request of
Kearny, take all legally permissible action necessary to convert to the
accounting policies and practices of Kearny, such actions to include, without
limitation, at Kearny's option, adjustments to loan loss reserves, reserves for
federal income taxes, accounting for post-retirement medical benefits, and
accruals for severance and related costs and accrued vacation and disability
leave. Bancorp's and Stock Bank's representations, warranties and covenants
contained in this Reorganization 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.
5.3 Conduct of Business -- Negative Covenants. From the date of
this Reorganization Agreement until the earlier of the Effective Time or the
termination of this Reorganization Agreement, Bancorp and Stock Bank covenant
and agree that they will neither do, nor agree or commit to do, nor permit any
Bancorp Subsidiary to do or commit or agree to do, any of the following without
requesting Kearny's approval and receiving the prior written consent of the
President of Kearny, which consent will not be unreasonably withheld:
(a) Except as expressly contemplated by this Reorganization
Agreement or the Plans of Merger, amend their Certificate of Incorporation,
Charter or Bylaws; or
(b) Impose on any share of capital stock held by it or by
any of its Subsidiaries of any lien, charge, or encumbrance, or permit any such
lien, charge, or encumbrance to exist; or
(c) Except as provided in accordance with the Stock Option
Agreement between the Parties contained herein at Appendix I: (i) Repurchase,
redeem, or otherwise acquire or exchange, directly or indirectly, any shares of
its capital stock or other equity securities or any securities or instruments
convertible into any shares of its capital stock, or any rights or options to
acquire any shares of its capital stock or other equity securities except as
expressly permitted by this Reorganization Agreement or the Plans of Merger; or
(ii) split or otherwise subdivide its capital stock; or (iii) recapitalize in
any way; or (iv) declare a stock dividend on the Bancorp Common Stock; or (v)
pay or declare a cash dividend or make or declare any other type of distribution
on the Bancorp Common Stock except for any cash dividend already declared prior
to this Reorganization Agreement or regular quarterly cash dividends payable in
the same amount and during the same time periods as past quarterly dividends; or
(d) Except as expressly permitted by this Reorganization
Agreement, acquire direct or indirect control over any corporation, association,
firm, organization or other entity,
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other than in connection with (i) mergers, acquisitions, or other transactions
approved in writing by Kearny, (ii) internal reorganizations or consolidations
involving existing Subsidiaries, (iii) acquisitions of control in its fiduciary
capacity, or (iv) the creation of new subsidiaries organized to conduct or
continue activities otherwise permitted by this Reorganization Agreement;
(e) Except as expressly permitted by this Reorganization
Agreement or the Plans of Merger, to (i) issue, sell, agree to sell, or
otherwise dispose of or otherwise permit to become outstanding any additional
shares of Bancorp Common Stock (not including shares issuable upon the exercise
of validly issued and Bancorp Stock Options outstanding as of the date of this
Reorganization Agreement), or any other capital stock of Bancorp or of any
Bancorp Subsidiary, or any stock appreciation rights, or any option, warrant,
conversion, call, scrip, or other right to acquire any such stock, or any
security convertible into any such stock, unless any such shares of such stock
are directly sold or otherwise directly transferred to Bancorp or any Bancorp
Subsidiary, (ii) sell, agree to sell, or otherwise dispose of any substantial
part of the assets or earning power of Bancorp or of any Bancorp Subsidiary;
(iii) sell, agree to sell, or otherwise dispose of any asset of Bancorp or any
Bancorp Subsidiary other than in the ordinary course of business for reasonable
and adequate consideration or (iv) buy, agree to buy or otherwise acquire a
substantial part of the assets or earning power of any other Person or entity;
(f) Incur, or permit any Bancorp Subsidiary to incur, any
additional debt obligation or other obligation for borrowed money other than (i)
in replacement of existing short-term debt with other short-term debt of an
equal or lesser amount, (ii) financing of banking related activities, or (iii)
indebtedness of Bancorp or any Bancorp Subsidiary to Stock Bank or another
Bancorp Subsidiary in excess of an aggregate of $50,000 (for Bancorp and its
Subsidiaries on a consolidated basis) except in the ordinary course of the
business of Bancorp or such Bancorp Subsidiary (and such ordinary course of
business shall include, but shall not be limited to, creation of deposit
liabilities, entry into repurchase agreements or reverse repurchase agreements,
purchases or sales of federal funds, and sales of certificates of deposit);
(g) Grant any increase in compensation or benefits to any
officer or director or grant any increase in compensation or benefits to any of
its non-officer employees in excess of the lesser of five percent (5%) per annum
or $5,000 for any of them individually upon not less than three (3) business
days notice to Kearny, except in accordance with past practices or as required
by law; pay any bonus except in accordance with past practices or any plan or
arrangement disclosed in Bancorp Schedule 5.3(g); enter into any employment or
severance agreements with any of its officers or employees; grant any material
increase in fees or other increases in new compensation or other benefits to any
director of Bancorp or of any Bancorp Subsidiary; or effect any change in
retirement benefits for any class of its employees or officers, unless such
change is required by applicable law;
(h) Amend any existing employment contract between it and
any person to increase the compensation or benefits payable thereunder; or enter
into any new employment contract with any person that Bancorp or Stock Bank do
not have the unconditional right to terminate without liability (other than
liability for services already rendered), at any time on or after the Effective
Time;
(i) Except as disclosed in Bancorp Schedule 5.3(i), adopt
any new
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employee benefit plan or terminate or make any material change in or to any
existing employee benefit plan other than any change that is required by law or
that, in the opinion of counsel, is necessary or advisable to maintain the
tax-qualified status of any such plan;
(j) Enter into any new service contracts, purchase or sale
agreements or lease agreements in excess of $25,000 that are material to Bancorp
or any Bancorp Subsidiary;
(k) Make any capital expenditure exceeding $25,000;
(l) Knowingly take any action that is intended or may
reasonably be expected to result in any of its representations and warranties
set forth in this Reorganization Agreement being or becoming untrue in any
material respect, or in any of the conditions to the Merger set forth in Article
7 not being satisfied, or in violation of any provision of this Reorganization
Agreement, except, in every case, as may be required by applicable law;
(m) Change its methods of accounting in effect at June 30,
1998, except as required by changes in generally accepted accounting principles
as concurred in, in writing, by Bancorp's independent auditors (a copy of which
shall be provided to Kearny) or regulatory accounting principles;
(n) Except as required by applicable law, knowingly take or
cause to be taken any action that could reasonably be expected to jeopardize or
delay the receipt of any of the required regulatory approvals or which would
reasonably be expected to result in any such required regulatory approval
containing a condition that is determined by Kearny to be unduly burdensome;
(o) Fail to use its best efforts to keep in full force and
effect its insurance and bonds in such amounts as are reasonable to cover such
risks customary in relation to the character and location of its properties and
the nature of its business and in any event at least equal in scope and amount
of coverage of insurance and bonds now carried;
(p) Fail to notify Kearny promptly of its receipt of any
letter, notice or other communication, whether written or oral, from any
governmental entity advising Bancorp that it is contemplating issuing,
requiring, or requesting any agreement, memorandum of understanding, or similar
undertaking, order or directive;
(q) Fail promptly to notify Kearny of (i) the commencement
or threat of any audit, action, or proceeding involving any material amount of
taxes against either Bancorp or (ii) the receipt by Bancorp or any Bancorp
Subsidiary of any deficiency or audit notices or reports in respect of any
material deficiencies asserted by any federal, state, local or other tax
authorities;
(r) Fail to maintain and keep its properties in good repair
and condition, except for depreciation due to ordinary wear and tear;
(s) Engage in any off-balance sheet hedge transactions.
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5.4 Conduct of Business -- Certain Actions.
Except to the extent necessary to consummate the transactions
specifically contemplated by this Reorganization Agreement, Bancorp and Stock
Bank shall not, and shall use their respective best efforts to ensure that their
respective directors, officers, employees, and advisors do not, directly or
indirectly, institute, solicit, or knowingly encourage (including by way of
furnishing any information not legally required to be furnished) any inquiry,
discussion, or proposal, or participate in any discussions or negotiations with,
or provide any confidential or non-public information to, any corporation,
partnership, person or other entity or group (other than to Kearny) concerning
any "Acquisition Proposal" (as defined below), except for actions reasonably
considered by the Board of Directors of Bancorp, based upon the advice of
outside legal counsel, to be required in order to fulfill its fiduciary
obligations. Bancorp shall notify Kearny immediately if any Acquisition Proposal
has been or should hereafter be received by Bancorp or Stock Bank, such notice
to contain, at a minimum, the identity of such persons, and, subject to
disclosure being consistent with the fiduciary obligations of Bancorp's Board of
Directors, a copy of any written inquiry, the terms of any proposal or inquiry,
any information requested or discussions sought to be initiated, and the status
of any reports, negotiations or expressions of interest. For purposes of this
Section, "Acquisition Proposal" means any tender offer, agreement, understanding
or other proposal of any nature pursuant to which any corporation, partnership,
person or other entity or group, other than Kearny, would directly or indirectly
(i) acquire or participate in a merger, share exchange, consolidation or any
other business combination involving Bancorp or Stock Bank; (ii) acquire the
right to vote ten percent (10%) or more of the Bancorp Common Stock or Stock
Bank Common Stock; (iii) acquire a significant portion of the assets or earning
power of Bancorp or of Stock Bank; or (iv) acquire in excess of ten percent
(10%) of the outstanding Bancorp Common Stock or Stock Bank common stock.
5.5 New Jersey Environmental Notice. Bancorp shall, within thirty
(30) days following the date hereof, apply for non-applicability determinations
from the New Jersey Department of Environmental Protection with respect to the
New Jersey Industrial Site Responsibility Act for all real property owned by
Bancorp or any Bancorp Subsidiary.
5.6 Voting Agreement. Each of Bancorp's directors have entered
into a Voting Agreement, a Form of which is attached as Exhibit 5.6 hereto.
5.7 Liquidation Account Computations. Bancorp shall (a) furnish
to Kearny a computation of the Liquidation Account within forty-five (45) days
following the date hereof and (b) recompute the Liquidation Account as of
January 1, 1999 and shall furnish such recomputation to Bancorp prior to
Closing.
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ARTICLE 6
CONDITIONS TO CLOSING
6.1 Conditions to the Obligations of Bancorp. Unless waived in
writing by Bancorp, the obligation of Bancorp to consummate the transaction
contemplated by this Reorganization Agreement is subject to the satisfaction at
or prior to the Closing Date of the following conditions:
(a) Performance. Each of the material acts and undertakings
of Kearny to be performed at or prior to the Closing Date pursuant to this
Reorganization Agreement shall have been duly performed in all material
respects;
(b) Representations and Warranties. The representations and
warranties of Kearny contained in this Reorganization Agreement shall be true
and correct, in all material respects, on and as of the Closing Date with the
same effect as though made on and as of the Effective Time;
(c) Documents. In addition to the other deliveries of Kearny
described elsewhere in this Reorganization Agreement, Bancorp shall have
received the following documents and instruments:
(i) a certificate signed by the Secretary or an
assistant secretary of Kearny dated as of the Closing Date certifying that:
(A) Kearny's Boards of Directors has duly adopted
resolutions (copies of which shall be attached to such certificate) approving
the substantive terms of this Reorganization Agreement (including the Plans of
Merger and Option Agreement) and authorizing the consummation of the
transactions contemplated by this Reorganization Agreement and certifying that
such resolutions have not been amended or modified and remain in full force and
effect;
(B) the persons executing this Reorganization
Agreement on behalf of Kearny are officers of Kearny, holding the offices so
specified with full power and authority to execute this Reorganization Agreement
and any and all other documents in connection with the Merger, and that the
signature of such person set forth on such certificate is his genuine signature;
(C) the organization documents of Kearny attached
to such certificate remain in full force and effect; and
(ii) a certificate signed by duly authorized officers
of Kearny stating that the conditions set forth in Sections 6.1(a), 6.1(b) and
6.1(c) of this Reorganization Agreement have been satisfied;
(d) Opinion of Kearny's Counsel. Bancorp shall have been
furnished with an opinion of counsel to Kearny, dated as of the Closing Date,
addressed to Bancorp, substantially to
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the effect that:
(i) Kearny is incorporated and validly existing as a
corporation in good standing under the laws of the United States and is validly
existing and in good standing as a Federal mutual savings bank chartered by the
OTS.
(ii) Kearny has full corporate power and authority to
enter into the Reorganization Agreement, the Reorganization Agreement has been
duly and validly authorized by all necessary corporate action by Kearny and has
been duly and validly executed and delivered by and on behalf of Kearny and no
approval, authorization, order consent, registration, filing, qualification,
license or permit of or with any court, regulatory, administrative or other
governmental body is required under any federal or New Jersey statute or
regulation for the execution and delivery of the Reorganization Agreement by
Kearny or the consummation of the transactions contemplated by the
Reorganization Agreement, except such as have been obtained and are in full
force and effect;
(iii) Neither the execution and delivery by Kearny of
this Reorganization Agreement nor any of the documents to be executed and
delivered by Kearny in connection herewith violates or conflicts with Kearny's
Charter or Bylaws.
Such opinion may (i) expressly rely upon certificates furnished by appropriate
officers of Kearny or appropriate government officials; (ii) in the case of
matters of law governed by the laws of the states in which they are not
licensed, reasonably rely upon the opinions of legal counsel duly licensed in
such states and may be limited, in any event, to Federal Law and the State of
New Jersey; and (iii) incorporate, be guided by, and be interpreted in
accordance with, the Legal Opinion Accord of the ABA Section of Business Law
(1991); and
(e) Fairness Opinion. Bancorp shall have received a
"fairness opinion" letter from its independent financial adviser, FinPro, dated
the date hereof to the effect that, in the opinion of such adviser the Cash
Merger Consideration to be received by the Bancorp Record Holders is fair to the
Bancorp Record Holders from a financial point of view.
6.2 Conditions to the Obligations of Kearny. Unless waived in
writing by Kearny, the obligation of Kearny to consummate the transactions
contemplated by this Reorganization Agreement is subject to the satisfaction at
or prior to the Closing Date of the following conditions:
(a) Performance. Each of the material acts and undertakings
of Bancorp and Stock Bank to be performed at or before the Closing Date pursuant
to this Reorganization Agreement shall have been duly performed;
(b) Representations and Warranties. The representations and
warranties of Bancorp and Stock Bank contained in Article 3 of this
Reorganization Agreement shall be true and correct, in all material respects, on
and as of the Closing Date with the same effect as though made on and as of the
Closing Date;
(c) Documents. In addition to the documents described
elsewhere in this
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Reorganization Agreement, Kearny shall have received the following documents and
instruments:
(i) a certificate signed by the Secretary or an
assistant secretary of Bancorp and Stock Bank dated as of the Closing Date
certifying that:
(A) Bancorp's and Stock Bank's respective Boards
of Directors and shareholders have duly adopted resolutions (copies of which
shall be attached to such certificate) approving the substantive terms of this
Reorganization Agreement (including the Plans of Merger) and authorizing the
consummation of the transactions contemplated by this Reorganization Agreement
and certifying that such resolutions have not been amended or modified and
remain in full force and effect;
(B) each person executing this Reorganization
Agreement on behalf of Bancorp and Stock Bank is an officer of Bancorp or Stock
Bank, as the case may be, holding the office or offices specified therein, with
full power and authority to execute this Reorganization Agreement and any and
all other documents in connection with the Reorganization, and that the
signature of each person set forth on such certificate is his or her genuine
signature;
(C) the charter documents of Bancorp and Stock
Bank attached to such certificate remain in full force and effect; and
(ii) a certificate signed by the respective President
and Chief Financial Officer of each of Bancorp and Stock Bank stating that the
conditions set forth in Sections 6.2(a), 6.2(b) and 6.2(e) this Reorganization
Agreement have been satisfied.
(d) Inspections Permitted. Between the date of this
Reorganization Agreement and the Closing Date, Bancorp and Stock Bank shall have
afforded Kearny and its authorized agents and representatives reasonable access
during normal business hours to the properties, operations, books, records,
contracts, documents, loan files and other information of or relating to Bancorp
and Stock Bank. Kearny will provide Bancorp and Stock Bank at least 24 hours
notice of any inspection and conduct any inspection in a reasonable manner that
will not interfere with business operations. Bancorp and Stock Bank shall have
caused all Bancorp or Stock Bank personnel to provide reasonable assistance to
Kearny in its investigation of matters relating to Bancorp and Stock Bank.
(e) No Material Adverse Change. No material adverse change
in the business, property, assets (including loan portfolios), liabilities
(whether absolute, contingent or otherwise), operations, liquidity, income, or
financial condition of Bancorp and Stock Bank taken as a whole shall have
occurred since the date of this Reorganization Agreement.
(f) Opinion of Bancorp's Counsel. Kearny shall have been
furnished with an opinion of legal counsel to Bancorp and Stock Bank, dated the
Closing Date, addressed to Kearny, substantially to the effect that:
(i) Bancorp is a corporation validly existing and in
good standing
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under the laws of the State of New Jersey;
(ii) Stock Bank is a Federal stock savings bank,
validly existing, and in good standing under the laws of the United States;
(iii) Bancorp and Stock Bank have full corporate power
and authority to enter into the Reorganization Agreement; the Reorganization
Agreement has been duly and validly authorized by all necessary corporate action
by Bancorp and Stock Bank and has been duly and validly executed and delivered
by and on behalf of Bancorp and Stock Bank; and no approval, authorization,
order, consent, registration, filing, qualification, license or permit of or
with any court, regulatory, administrative or other governmental body is
required under any federal or New Jersey statute or regulation for the execution
and delivery of the Reorganization Agreement by Bancorp and Stock Bank or the
consummation of the transactions contemplated by the Reorganization Agreement,
except such as have been obtained and are in full force and effect; and
Such opinion may (i) expressly rely upon certificates furnished by appropriate
officers of Bancorp or Stock Bank or appropriate government officials; (ii) in
the case of matters of law governed by the laws of the states in which they are
not licensed, reasonably rely upon the opinions of legal counsel duly licensed
in such states and may be limited, in any event, to federal law and the NJBCA
and (iii) incorporate, be guided by, and be interpreted in accordance with, the
Legal Opinion Accord of the ABA Section of Business Law (1991);
(g) Other Business Combinations, Etc. Neither Bancorp nor
Stock Bank shall have entered into any agreement, letter of intent,
understanding or other arrangement pursuant to which Bancorp or Stock Bank would
merge, consolidate with; effect a business combination with, sell any
substantial part of Bancorp's or Stock Bank's assets to, or; acquire a
significant part of the shares or assets of, any other Person or entity
(financial or otherwise); adopt any "poison pill" or other type of anti-takeover
arrangement, any shareholder rights provision, any "golden parachute" or similar
program which would have the effect of materially decreasing the value of
Bancorp or Stock Bank or the benefits of acquiring the Bancorp Common Stock;
(h) Regulatory Approvals. Except for the filing of the
Certificate of Merger with the OTS, all Regulatory Approvals for the
transactions contemplated by this Reorganization Agreement shall have been
obtained without the imposition of any conditions not typically imposed in
similar transactions which Kearny determines in its sole judgment to be
materially burdensome upon the conduct of the business of Kearny or which would
so adversely impact the economic and business benefits of the Merger to Kearny
as to render it inadvisable to proceed with the Merger; such approvals shall be
in effect and no proceedings shall have been instituted or threatened with
respect thereto; all applicable waiting periods with respect to such approvals
shall have expired; and all conditions and requirements prescribed by law or
otherwise imposed in connection with the Regulatory Approvals shall have been
satisfied. Bancorp shall also have obtained non-applicability determinations
from the New Jersey Department of Environmental Protection with respect to the
New Jersey Industrial Site Responsibility Act for all real property owned by
Bancorp or any Bancorp Subsidiary on the date hereof.
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<PAGE>
(i) Bancorp Stockholder Approval. Bancorp shall have
furnished Kearny with a certified copy of resolutions duly adopted by the
holders of a vote of the outstanding shares of Bancorp Common Stock entitled to
vote thereon approving this Reorganization Agreement, the Plans of Merger, and
the transactions contemplated hereby; such resolutions shall be in full force
and effect and shall not have been modified, rescinded or annulled; and
(j) As of the Effective Time, Bancorp's stockholders equity
on a consolidated basis shall not be less than the stockholders equity as of
June 30, 1998, less adjustments detailed at Schedule 6.2(j) as of the date
hereof.
(k) Kearny shall have received an opinion of tax counsel
that the Reorganization shall not result in any taxable income, or gain or loss
for federal tax purposes to Kearny, Bancorp or Stock Bank.
6.3 Conditions to Obligations of All Parties. The obligations of
each party to effect the transactions contemplated hereby shall be subject to
the fulfillment, at or prior to the Closing, of the following conditions:
(a) No Pending or Threatened Claims. No claim, action, suit,
investigation or other proceeding shall be pending or threatened before any
court or governmental agency which presents a substantial risk of the restraint
or prohibition of the transactions contemplated by this Reorganization Agreement
or the obtaining of material damages or other relief in connection therewith;
(b) Governmental Approvals and Acquiescence Obtained. The
Parties hereto shall have received all applicable Governmental Approvals for the
consummation of the transactions contemplated herein and all waiting periods
incidental to such approvals or notices given shall have expired; and
(c) Approval of Stockholders. Approval of this
Reorganization Agreement and the transactions contemplated hereby by the
stockholders of Bancorp, as required by applicable law, the rules of the
National Market System or applicable provisions of Bancorp's Certificate of
Incorporation and Bylaws.
(d) Effectiveness of Merger Proxy Statement. No stop order
preventing the use of the Merger Proxy Statement has been issued and no
proceedings for that purpose have been instituted or are pending or contemplated
by the SEC or any state securities or other regulatory authority.
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<PAGE>
ARTICLE 7
TERMINATION
7.1 Termination. This Reorganization Agreement and the Plans of
Merger may be terminated at any time prior to the Closing, as follows:
(a)(a) By mutual consent in writing of the Parties;
(b) By Kearny or Bancorp in the event the Closing shall not
have occurred by May 31, 1999 (the "Target Date"), unless the failure of the
Closing to occur shall be due to the failure of the Party seeking to terminate
this Reorganization Agreement to perform its obligations hereunder in a timely
manner;
(c) By either Kearny or Bancorp upon written notice to the
other Party, upon (i) denial of any Governmental Approval necessary for the
consummation of the Merger (or should such approval be conditioned upon a
substantial deviation from the transactions contemplated); provided, however,
that either Kearny or Bancorp may, upon written notice to the other, extend the
term of this Reorganization Agreement for only one or more sixty (60) day
periods to prosecute diligently and overturn such denial, provided that such
denial has been appealed within twenty (20) business days of the receipt thereof
or (ii) upon the failure to obtain the approval of the Bancorp shareholders;
(d) By Kearny or Bancorp in the event that there shall have
been a material breach of any obligation or covenant of the other Party
hereunder and such breach shall not have been remedied within sixty (60) days
after receipt by the breaching Party of written notice from the other Party
specifying the nature of such breach and requesting that it be remedied;
(e) By Kearny should either Bancorp or Stock Bank enter into
any formal agreement, letter of understanding, memorandum or other similar
arrangement with any bank regulatory authority establishing a formal capital
plan requiring Bancorp or Stock Bank to raise additional capital or to sell a
substantial portion of its assets.
If a Party should elect to terminate this Reorganization Agreement pursuant to
subsections (b), (c), (d) or (e) of this Section 7.1, it shall give notice to
the other Party, in writing, of its election in the manner prescribed in Article
8 ("Notices") of this Reorganization Agreement.
7.2 Effect of Termination. In the event that this Reorganization
Agreement should be terminated pursuant to this Section, all further obligations
of the Parties under this Reorganization Agreement shall terminate without
further liability of any Party to another; provided, however, that a termination
under this Article shall not relieve any Party of any liability for breach of
this Reorganization Agreement or for any misstatement or misrepresentation made
hereunder prior to such termination, or be deemed to constitute a waiver of any
available remedy for any such breach, misstatement or misrepresentation.
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<PAGE>
ARTICLE 8
GENERAL PROVISIONS
8.1 Notices. Any notice, request, demand and other communication
which either Party hereto may desire or may be required hereunder to give shall
be in writing and shall be deemed to be duly given if delivered personally or
mailed by certified or registered mail (postage prepaid, return receipt
requested), air courier or facsimile transmission, addressed or transmitted to
such other Party as follows:
If to Bancorp:
1st Bergen Bancorp
250 Valley Boulevard
Wood-Ridge, New Jersey 07075
Fax: (201) 507-8642
Attn: William M. Brickman, President
With a copy to:
McCarter & English
Four Gateway Center
100 Mulberry Street
Newark, New Jersey 07102-4096
Fax: (201) 624-7070
Attn: Michael H. Horn
If to Kearny:
Kearny Federal Savings Bank
614 Kearny Avenue
Kearny, New Jersey 07032
Fax: (201) 955-1311
Attn: Matthew T. McClane, President
With a copy to:
Malizia, Spidi, Sloane & Fisch, P.C.
1301 K Street, N.W.
Suite 700 East
Washington, D.C. 20005
Fax: (202) 434-4661
Attn: Samuel J. Malizia, Esq.
or to such other address as any Party hereto may hereafter designate to the
other Parties in writing. Notice shall be deemed to have been given on the date
reflected in the proof or evidence of delivery, or if none, on the date actually
received.
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<PAGE>
8.2 Governing Law. This Reorganization Agreement shall be
governed by, and construed and enforced in accordance with, the internal laws,
and not the laws pertaining to choice or conflicts of laws, of the State of New
Jersey, unless and to the extent that federal law controls. Any dispute arising
between the Parties in connection with the transactions which are the subject of
this Reorganization Agreement shall be heard in a court of competent
jurisdiction located in New Jersey.
8.3 Counterparts. This Reorganization Agreement may be executed
simultaneously in one or more counterparts, each of which shall be deemed an
original, but all of which shall constitute but one and the same instrument.
8.4 Publicity. The Parties hereto will consult with each other
with regard to the terms and substance of any press releases, announcements or
other public statements with respect to the transactions contemplated hereby. To
the extent practicable, each Party shall provide the proposed text of any such
press release, announcement or public statement to the other Party prior to its
publication and shall permit such other Party a reasonable period to provide
comments thereon.
8.5 Entire Agreement. This Reorganization Agreement, together
with the Plans of Merger, Option Agreement, Schedules, Exhibits and certificates
required to be delivered hereunder and any amendments or addenda hereafter
executed and delivered in accordance with this Article constitute the entire
agreement of the Parties hereto pertaining to the transactions contemplated
hereby and supersede all prior written and oral (and all contemporaneous oral)
agreements and understandings of the Parties hereto concerning the subject
matter hereof. The Plans of Merger, Option Agreement, Bancorp Schedules, Kearny
Schedules, Exhibits and certificates attached hereto or furnished pursuant to
this Reorganization Agreement are hereby incorporated as integral parts of this
Reorganization Agreement. Except to the extent otherwise, provided herein, by
specific language and not by mere implication, this Reorganization Agreement is
not intended to confer upon any other person not a Party to this Reorganization
Agreement any rights or remedies hereunder.
8.6 Severability. If any portion or provision of this
Reorganization Agreement should be determined by a court of competent
jurisdiction to be invalid, illegal or unenforceable in any jurisdiction, such
portion or provision shall be ineffective as to that jurisdiction to the extent
of such invalidity, illegality or unenforceability, without affecting in any way
the validity or enforceability of the remaining portions or provisions hereof in
such jurisdiction or rendering that or any other portions or provisions of this
Reorganization Agreement invalid, illegal or unenforceable in any other
jurisdiction.
8.7 Modifications, Amendments and Waivers. At any time prior to
the Closing or termination of this Reorganization Agreement, the Parties may,
solely by written agreement executed by their duly authorized officers:
(a) extend the time for the performance of any of the
obligations or other acts of the other Party hereto;
(b) waive any inaccuracies in the representations and
warranties made by the other Party contained in this Reorganization Agreement or
in the Bancorp Schedules, Kearny
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<PAGE>
Schedules or Exhibits hereto or any other document delivered pursuant to this
Reorganization Agreement;
(c) waive compliance with any of the covenants or agreements
of the other Party contained in this Reorganization Agreement to the extent
permitted by applicable law; and
(d) amend or add to any provision of this Reorganization
Agreement or the Plans of Merger; provided, however, that no provision of this
Reorganization Agreement may be amended or added to except by an agreement in
writing signed by the Parties hereto or their respective successors in interest
and expressly stating that it is an amendment to this Reorganization Agreement.
8.8 Interpretation. The headings contained in this Reorganization
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Reorganization Agreement.
8.9 Payment of Expenses. Except as set forth herein, Kearny and
Bancorp shall each pay its own fees and expenses (including, without limitation,
legal fees and expenses) incurred by it in connection with the transactions
contemplated hereunder.
8.10 Attorneys' Fees. If any Party hereto shall bring an action
at law or in equity to enforce its rights under this Reorganization Agreement
(including an action based upon a misrepresentation or the breach of any
warranty, covenant, agreement or obligation contained herein), the prevailing
Party in such action shall be entitled to recover from the other Party its
reasonable costs and expenses necessarily incurred in connection with such
action (including fees, disbursements and expenses of attorneys and costs of
investigation).
8.11 No Survival of Representations and Warranties. Except for
the agreements of the Parties in Sections 1.5(d), 1.8, 1.9, 4.3, 4.6 and 8.14,
which shall survive the Closing, none of the representations, warranties and
conditions of the Parties contained in this Reorganization Agreement or in any
instrument of transfer or other document delivered in connection with the
transactions contemplated by this Reorganization Agreement shall survive the
Closing or other termination of this Reorganization Agreement. The agreements of
the parties in Sections 1.5(d), 1.8, and 4.6 shall be enforceable directly by
each person benefitted or intended to be benefitted by such sections.
8.12 No Waiver. No failure, delay or omission of or by any Party
in exercising any right, power or remedy upon any breach or default of any other
Party shall impair any such rights, powers or remedies of the Party not in
breach or default, nor shall it be construed to be a waiver of any such right,
power or remedy, or an acquiescence in any similar breach or default; nor shall
any waiver of any single breach or default be deemed a waiver of any other
breach or default theretofore or thereafter occurring. Any waiver, permit,
consent or approval of any kind or character on the part of any Party of any
provisions of this Reorganization Agreement must be in writing and must be
executed by the Parties to this Reorganization Agreement and shall be effective
only to the extent specifically set forth in such writing.
8.13 Remedies Cumulative. All remedies provided in this
Reorganization
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<PAGE>
Agreement, by law or equity, shall be cumulative and not alternative.
8.14 Confidentiality. Any non-public or confidential information
disclosed by either Bancorp or Kearny to the other Parties pursuant to this
Reorganization Agreement or as a result of the discussions and negotiations
leading to this Reorganization Agreement, or otherwise disclosed, or to which
any other party has acquired or may acquire access, and indicated (either
expressly, in writing or orally, or by the context of the disclosure or access)
by the disclosing Party to be non-public or confidential, or which by the
content thereof reasonably appears to be non-public or confidential, shall be
kept strictly confidential and shall not be used in any manner by the recipient
except in connection with the transactions contemplated by this Reorganization
Agreement. To that end, the Parties hereto will each, to the maximum extent
practicable, restrict knowledge of and access to non-public or confidential
information of the other Party to its officers, directors, employees and
professional advisors who are directly involved in the transactions contemplated
hereby and reasonably need to know such information. Further to that end, all
non-public or confidential documents (including all copies thereof) obtained
hereunder by any Party shall be returned as soon as practicable after any
termination of this Reorganization Agreement.
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<PAGE>
IN WITNESS WHEREOF, each of the Parties hereto has duly executed and
delivered this Reorganization Agreement or has caused this Reorganization
Agreement to be executed and delivered in its name and on its behalf by its
representative thereunto duly authorized, all as of the date first written
above.
1ST BERGEN BANCORP
By: /s/ William M. Brickman
--------------------------------
William M. Brickman
President and Chief Executive
Officer
ATTEST:
/s/ Robert Maison
- -----------------------------
Robert Maison, Secretary
SOUTH BERGEN SAVINGS BANK
By: /s/ William M. Brickman
--------------------------------
William M. Brickman
President
ATTEST:
/s/ Kimberly Manfredo
- -----------------------------
Kimberly Manfredo, Secretary
KEARNY FEDERAL SAVINGS BANK
By: /s/ Matthew T. McClane
--------------------------------
Matthew T. McClane
President and Chief Executive
Office
ATTEST:
/s/ Sharon Jones
- -----------------------------
Sharon Jones, Secretary
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EXHIBIT 2.2
APPENDIX I
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of October 14, 1998, between Kearny
Federal Savings Bank, a federal mutual savings bank ("Grantee" or "Kearny"), and
1st Bergen Bancorp, a New Jersey savings and loan holding company ("Issuer").
WITNESSETH:
WHEREAS, Grantee and Issuer have entered into an Agreement and Plan of
Reorganization (the "Reorganization Agreement");
WHEREAS, as an inducement to the willingness of Grantee to continue to
pursue the transactions contemplated by the Reorganization 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 Reorganization Agreement prior to the date hereof;
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements set forth herein and in the Reorganization 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 514,463 fully paid and nonassessable shares of no par common stock
of Issuer ("Common Stock") at $17.50 per share; 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 prior to the
date hereof) at a price less than such 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 19.9% of the issued and outstanding shares of Common Stock. The number of
shares of Common Stock that may be received upon the exercise of the Option and
the Option Price are subject to adjustment as 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 19.9%
of the number of shares of Common Stock then issued and outstanding without
giving effect to any shares subject or issued pursuant to the Option. Nothing
contained in this Section 1(b) or elsewhere in this agreement shall be deemed to
authorize Issuer to issue shares in breach of any provision of the
Reorganization Agreement.
2. (a) The Holder (as hereinafter defined) may exercise the Option, in
whole or part, if, but only if, both an Initial Triggering Event (as hereinafter
defined) and a Subsequent Triggering Event (as hereinafter defined) shall have
occurred prior to the occurrence of an Exercise Termination Event (as
hereinafter defined), provided that the Holder shall have sent the written
notice of such exercise (as provided in subsection (e) of this Section 2) within
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 Bank Merger and Bancorp Merger;
(ii) termination of the
<PAGE>
Reorganization 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 8.1(d) due to a breach of Bancorp's
covenants in the Reorganization Agreement (but only if the breach giving rise to
the termination was willful) (each, a "Listed Termination"); or (iii) the
passage of eighteen (18) months (or such longer period as provided in Section
10) after termination of the Reorganization Agreement if such termination
follows the occurrence of an Initial Triggering Event or is a Listed
Termination. 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 Reorganization Agreement such that
Issuer shall be entitled to terminate the Reorganization Agreement as a result
of a material breach.
(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
shareholders of Issuer approve or accept any Acquisition Transaction other than
as contemplated by the Reorganization Agreement. 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 involving solely Issuer and/or
one or more wholly-owned (except for directors' qualifying 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 Reorganization
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 shareholders of Issuer shall have voted and failed to adopt
the Reorganization 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 in violation of the Reorganization Agreement or shall have been canceled
prior to termination of the Reorganization Agreement if, prior to such meeting
(or if such meeting shall not have been held or shall have been canceled, prior
to such termination), it shall have been publicly announced that any person
(other than 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) 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 shareholders of Issuer approve
the transactions contemplated by the Reorganization Agreement, or Issuer or any
Issuer Subsidiary shall have authorized, recommended, proposed (or publicly
announced its intention to authorize, recommend or propose) an agreement to
engage in an Acquisition Transaction with
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any person other than Grantee or a Grantee Subsidiary;
(v) Any person other than Grantee or any Grantee Subsidiary shall have
filed with the SEC a registration statement or tender offer materials with
respect to a potential exchange or tender offer that would constitute an
Acquisition Transaction (or filed a preliminary proxy statement with the SEC
with respect to a potential vote by its shareholders to approve the issuance of
shares to be offered in such an exchange offer);
(vi) Issuer shall have willfully breached any covenant or obligation
contained in the Reorganization Agreement in anticipation of engaging in an
Acquisition Transaction, and following such breach Grantee would be entitled to
terminate the Reorganization Agreement (whether immediately or after the giving
of notice or passage of time or both); or
(vii) Any person other than Grantee or any Grantee Subsidiary shall have
filed an application or notice with the Office of Thrift Supervision (the "OTS")
or other federal or state bank 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 OTS or any
other regulatory or antitrust agency is required in connection with such
purchase, the Holder shall promptly file the required notice or application for
approval, shall promptly notify Issuer of such filing, and shall expeditiously
process the same and the period of time that otherwise would run pursuant to
this sentence shall run instead from the date on which any required notification
periods have expired or been terminated or such approvals have been obtained and
any requisite waiting period or periods shall have passed. Any exercise of the
Option shall be deemed to occur on the Notice Date relating thereto.
(f) At the closing referred to in 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
3
<PAGE>
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 the Reorganization Agreement, dated as
of October 14, 1998, 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.
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 amendment of its certificate of incorporation 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 Savings and
Loan Holding Company Act ("SLHCA"), or the Change in Bank Control Act of 1978,
as amended, or any state or other federal banking law, prior approval
4
<PAGE>
of or notice to the OTS or to any state or other federal regulatory authority is
necessary before the Option may be exercised, cooperating fully with the Holder
in preparing such applications or notices and providing such information to the
OTS or such state or other federal regulatory authority as they may require) in
order to permit the Holder to exercise the Option and Issuer duly and
effectively to issue shares of Common Stock pursuant hereto; and (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) is(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 as a result of any such change (other
than pursuant to an exercise of the Option), the number of shares of Common
Stock that remain subject to the Option shall be increased so that, after such
issuance and together with shares of Common Stock previously issued pursuant to
the exercise of the Option (as adjusted on account of any of the foregoing
changes in the Common Stock), it equals 19.9% of the number of shares of Common
Stock then issued and outstanding.
(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
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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 is 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. 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
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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 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
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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%.
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 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.
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(d) The Substitute Option shall be exercisable for such number of shares
of Substitute Common Stock as is equal to the Assigned Value multiplied by the
number of shares of Common Stock for which the Option was exercisable
immediately prior to the event described in the first sentence of Section 8(a),
divided by the Average Price. The exercise price of the Substitute Option per
share of Substitute Common Stock shall then be equal to the Option Price
multiplied by a fraction, the numerator of which shall be the number of shares
of Common Stock for which the Option was exercisable immediately prior to the
event described in the first sentence of Section 8 (a) and the denominator of
which shall be the number of shares of Substitute Common Stock for which the
Substitute Option is exercisable.
(e) In no event, pursuant to any of the foregoing paragraphs, shall the
Substitute Option be exercisable for more than 19.9% of the shares of Substitute
Common Stock outstanding prior to exercise of the Substitute Option. In the
event that the Substitute Option would be exercisable for more than 19.9% of the
shares of Substitute Common Stock outstanding prior to exercise but for this
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.
(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
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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 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 14 shall be
extended: (i) to the extent necessary to obtain all regulatory and member
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
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and validly executed and delivered by Issuer.
(b) Issuer has taken all necessary corporate action to authorize and
reserve and to permit it to issue, and at all times from the date hereof through
the termination of this agreement in accordance with its terms will have
reserved for issuance upon the exercise of the Option, that number of shares of
Common Stock equal to the maximum number of shares of Common Stock at any time
and from time to time issuable hereunder, and all such shares, upon issuance
pursuant 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 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 OTS has approved an
application by Grantee to acquire the shares of Common Stock subject to the
Option, Grantee may not assign its rights under the Option except in (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 OTS.
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
OTS under the SLHCA for approval to acquire the shares issuable hereunder, but
Grantee shall not be obligated to apply to applicable 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) 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 14 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 $3.0 million (i) plus, if applicable, Grantee's
purchase price with respect to any Option Shares and (ii) minus, if applicable,
the excess of (B) 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 14 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 14 and (ii) 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
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<PAGE>
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 14 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 Date shall be extended to a
date six months from the date on which the Exercise Termination Date would have
occurred if not for the provisions of this Section 14(c) (during which period
Grantee may exercise any of its rights hereunder, including any and all rights
pursuant to this Section 14).
15. The parties hereto acknowledge that damages would be an inadequate
remedy for a breach of this agreement by either party hereto and that the
obligations of the parties hereto shall be enforceable by either party hereto
through injunctive or other equitable relief. In connection therewith both
parties waive the posting of any bond or similar requirement.
16. 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.
17. 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
Reorganization Agreement.
18. This agreement shall be governed by and construed in accordance with
the laws of the State of New Jersey, without regard to the conflict of law
principles thereof (except to the extent that mandatory provisions of Federal
law are applicable).
19. This agreement may be executed in two or more counterparts, each of
which shall be deemed to be an original, but all of which shall constitute one
and the same agreement.
20. 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.
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21. Except as otherwise expressly provided herein or in the
Reorganization 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 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.
22. Capitalized terms used in this agreement and not defined herein
shall have the meanings assigned thereto in the Reorganization Agreement.
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IN WITNESS WHEREOF, each of the parties has caused this agreement to be
executed on its behalf by its officers thereunto duly authorized, all as of the
date first above written.
KEARNY FEDERAL SAVINGS BANK 1ST BERGEN BANCORP
By: /s/ Matthew T. McClane By: /s/ William M. Brickman
-------------------------- -----------------------------
Name: Matthew T. McClane Name: William M. Brickman
Title: President & CEO Title: President & CEO
ATTEST: ATTEST:
/s/ Sharon Jones /s/ Kimberly Manfredo
- -------------------------------- ----------------------------------
Sharon Jones, Secretary Kimberly Manfredo, Secretary
14
EXHIBIT 99.1
FOR IMMEDIATE RELEASE CONTACT: MATTHEW T. MCCLANE, PRESIDENT
KEARNY FEDERAL SAVINGS BANK
(201) 991-4100
WILLIAM M. BRICKMAN, PRESIDENT
1ST BERGEN BANCORP
(201) 939-3400
1ST BERGEN BANCORP AND KEARNY FEDERAL SAVINGS BANK AGREE TO MERGE
COMBINATION CREATES A MAJOR FINANCIAL INSTITUTION IN NEW JERSEY
WITH APPROXIMATELY $1.1 BILLION IN ASSETS
WOOD-RIDGE, NEW JERSEY (OCTOBER 15, 1998) . . . . 1st Bergen Bancorp
(NASDAQ:FBER), the parent corporation of South Bergen Savings Bank, and Kearny
Federal Savings Bank ("Kearny"), a mutual savings bank, announced today that
their respective Boards of Directors have approved a definitive agreement
whereby 1st Bergen Bancorp would be acquired by Kearny, and South Bergen Savings
Bank would be merged with and into Kearny. The agreement is subject to certain
contingencies, including regulatory approval and the approval of the
shareholders of 1st Bergen.
The transaction will create a nine-branch network covering four counties
in northern New Jersey, with total combined assets of approximately $1.1
billion.
Shares of 1st Bergen Bancorp issued and outstanding at the time the
merger becomes effective will be converted into the right to receive $24.00 in
cash.
William M. Brickman, President of 1st Bergen Bancorp, said, "We are
pleased to affiliate with Kearny Federal Savings Bank, a bank with a long and
successful history. This is a huge plus for our shareholders, employees,
depositors, loan customers and the communities we serve."
Matthew T. McClane, President of Kearny, said, "We are excited about the
merger. Kearny has grown and prospered as a community financial institution
since 1884, and we will now be able to provide services and products at more
offices over an expanded geographical area to our existing and new customers."
1st Bergen Bancorp has granted to Kearny an option to purchase
approximately 20% of the voting stock of 1st Bergen Bancorp at $17.50 per share,
exercisable under certain circumstances.
1st Bergen Bancorp, headquartered in Wood-Ridge, New Jersey, is a
savings and loan holding company and the parent of South Bergen Savings Bank.
South Bergen Savings Bank is a federally-chartered savings bank, having its
principal place of business in Wood-Ridge, New Jersey. At June 30, 1998, 1st
Bergen Bancorp had total assets of $300.75 million and total stockholders'
equity of $34.88 million. South Bergen Savings Bank operates four banking
offices, located in Wood-Ridge, East Rutherford, Wanaque and Montville, New
Jersey.
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Kearny Federal Savings Bank is a federal mutual savings bank, having its
principal place of business in Kearny, New Jersey. At June 30, 1998, Kearny
Federal Savings Bank had total assets of $793.58 million and total equity
capital of $177.83 million. Kearny Federal Savings Bank operates five banking
offices, located in Kearny, Harrison, Lyndhurst, North Arlington and Rutherford,
New Jersey.
Statements contained in this news release which are not historical facts
are forward-looking statements, as that term is defined in the Private
Securities Litigation Reform Act of 1995. Such forward-looking statements are
subject to risks and uncertainties which could cause actual results to differ
materially from those currently anticipated due to a number of factors, which
include, but are not limited to, factors discussed in documents filed by the
Company with the Securities and Exchange Commission from time to time.
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