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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) of
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report:
(Date of earliest event reported)
May 19, 1994
UJB FINANCIAL CORP.
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(Exact name of registrant as specified in its charter)
NEW JERSEY 1-6451 22-1903313
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(State or other juris- (commission (IRS Employer
diction of incorporation File No.) Identification No.)
or organization)
301 Carnegie Center, P.O. Box 2066,
Princeton, New Jersey 08543-2066
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(Address of principal executive offices)
Registrant's telephone number, including area code (609) 987-3200
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Item 5. Other Information.
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Registrant hereby voluntarily files this Current Report on Form 8-K for
the purpose of reporting the following information:
On May 19, 1994, Registrant, with assets of approximately $14.2 billion,
and Palisade Savings Bank, FSB, a federally chartered stock savings association
with assets of approximately $304 million ("PSB"), entered into an Agreement
and Plan of Merger (the "Agreement") providing for the merger of PSB with and
into an interim, federally-chartered stock savings association subsidiary of
Registrant and the payment of $42,100,000 to U.S. Thrift Opportunity Partners,
LP, the sole stockholder of PSB ("USTOP"), upon the satisfaction of the terms
and conditions set forth in the Agreement, including the receipt of approvals
from the Board of Governors of the Federal Reserve System, the Office of Thrift
Supervision and USTOP.
Item 7. Financial Statements and Exhibits.
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(c) Exhibits
Exhibit No. Description
- - ---------- -----------
(2)B. Agreement and Plan of Merger, dated May 19, 1994, by and among
Palisade Savings Bank, FSB, PSB Interim Bank, FSB and UJB
Financial Corp.
(28)A. Press release dated May 19, 1994
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SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange Act of
1934, the Registrant has duly caused this Current Report on Form 8-K to be
signed on its behalf by the undersigned, thereto duly authorized.
Date: June 1, 1994 UJB FINANCIAL CORP.
By: /s/ Dennis A. Williams
-----------------------
Dennis A. Williams
Vice President
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EXHIBIT INDEX
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EX. No. Description
- - ------- -----------
(2)B. Agreement and Plan of Merger, dated May 19, 1994, by and
among Palisade Savings Bank, FSB, PSB Interim Bank, FSB and
UJB Financial Corp.
(28)A. Press release dated May 19, 1994
<PAGE>
EXHIBIT (2)B.
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
PALISADE SAVINGS BANK, FSB
PSB INTERIM BANK, FSB
AND
UJB FINANCIAL CORP.
May 19, 1994
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "Agreement") is entered into as
of the 19th day of May, 1994, by and among UJB Financial Corp., a New Jersey
corporation ("Purchaser"), PSB Interim Bank, FSB, a to be formed federally-
chartered interim stock savings association subsidiary of Purchaser
("Subsidiary"), and Palisade Savings Bank, FSB, a federally chartered stock
savings bank ("PSB"). Subsidiary and PSB are sometimes referred to herein as
the "Constituent Corporations."
W I T N E S S E T H:
WHEREAS, the parties desire that PSB be acquired by Purchaser through
the merger of Subsidiary with and into PSB (the "Merger") upon the terms and
conditions contained herein and in accordance with all applicable laws. The
Board of Directors of PSB deems the Merger advisable and in the best interests
of PSB and its stockholder and has adopted a resolution approving this Agreement
and directing that this Agreement be submitted for consideration at a meeting of
PSB's stockholder. The Board of Directors of Purchaser has adopted resolutions
approving this Agreement, and, as provided herein, Purchaser as the sole
stockholder of Subsidiary after its formation, will approve this Agreement.
NOW, THEREFORE, for and in consideration of the premises and the
mutual agreements, representations, warranties and covenants herein contained
and for the purpose of prescribing the terms and conditions of the Merger, the
mode of carrying the Merger into effect, the manner of converting the shares of
Subsidiary into shares of the Resulting Bank and the shares of PSB Common into
cash, and such other details and provisions as are deemed desirable in
connection with the Merger, the parties, intending to be bound, hereby agree as
follows:
DEFINITIONS
As used herein, the following terms shall have the meanings hereinafter set
forth:
The term "Acquisition Event" is defined in Section 7(b)(xii).
The term "Agreement" is defined in the Preamble.
The term "Articles of Combination" is defined in Section 1(b).
The term "Benefit Plans" is defined in Section 6(n)(i).
The term "By-laws" is defined in Section 2(c).
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The term "CERCLA" is defined in Section 6(p)(i).
The term "Change in Control Benefit" is defined in Section 6(n)(i).
The term "Charter" is defined in Section 2(c).
The term "Closing" is defined in Section 1(b).
The term "Closing Date" is defined in Section 1(b).
The term "Code" is defined in Section 6(e).
The term "Effective Date" is defined in Section 1(b).
The term "Environmental Laws" is defined in Section 6(p)(i).
The term "Environmental Permits" is defined in Section 6(p)(i).
The term "ERISA" is defined in Section 6(n)(i).
The term "Federal Reserve Board" is defined in Section 5(b).
The term "Former Property" is defined in Section 6(p)(iii).
The term "GAAP" is defined in Section 6(d).
The term "Hazardous Substances" is defined in Section 6(p)(iii).
The term "HOLA" is defined in Section 1(a).
The term "Incorporation Document" is defined in Section 6(b).
The term "IRS" is defined in Section 6(e).
The term "Joint Venture" is defined in Section 6(c).
The term "Loan Property" is defined in Section 6(p)(iii).
The term "Material Contract" is defined in Section 6(f).
The term "Merger" is defined in the Preamble.
The term "Merger Consideration" is defined in Section 3(a).
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The term "OTS" is defined in Section 1(b).
The term "Participation Facility" is defined in Section 6(p)(iii).
The term "PBGC" is defined in Section 6(n)(v).
The term "Post-Signing Disclosure List" is defined in Section 8(a).
The term "Present Property" is defined in Section 6(p)(iii).
The term "PSB" is defined in the Preamble.
The term "PSB Certificates" is defined in Section 3(c).
The term "PSB Common" is defined in Section 3(a).
The term "PSB Employees" is defined in Section 8(e)(ii).
The term "PSB Financial Statements" is defined in Section 6(d).
The term "PSB Managers and Affiliates" is defined in Section 6(w).
The term "PSB Pension Plan" is defined in Section 6(n)(iv).
The term "PSB Reports" is defined in Section 6(l).
The term "PSB Subsidiary" is defined in Section 6(c).
The term "Purchaser" is defined in the Preamble.
The term "Purchaser Plans" is defined in Section 8(e)(ii).
The term "Purchaser Subsidiary" is defined in Section 8(e)(ii).
The term "REO" is defined in Section 6(p).
The term "Required Consents" is defined in Section 5(b).
The term "Resulting Bank" is defined in Section 1(a).
The term "Returns" is defined in Section 6(e).
The term "Sole Stockholder" is defined in Section 3(a).
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The term "Subsidiary" is defined in the Preamble.
The term "Taxes" is defined in Section 6(e).
The term "Termination Fee" is defined in Section 7(b)(xii).
The term "Transaction" is defined in Section 7(b)(xii).
1. The Transaction.
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(a) Merger. Upon the terms and subject to the conditions contained
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in this Agreement, at the Effective Date Subsidiary will be merged with and into
PSB pursuant to and in accordance with the provisions of, and with the effect
provided in, the Home Owners' Loan Act, as amended ("HOLA"). (PSB as the
resulting savings association being hereinafter sometimes referred to as the
"Resulting Bank").
(b) Closing; Closing Date; Effective Date. The closing of the Merger
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(the "Closing" shall take place at the offices of Vedder, Price, Kaufman &
Kammholz, 222 North LaSalle Street, Chicago, Illinois (unless a different place
shall be agreed to by the parties hereto), at such time as shall be fixed by
mutual agreement of Purchaser and PSB as promptly as practicable, but in no
event later than the fifth business day, following the latest of: (i) the date
of receipt of the last of the Required Consents and the expiration of any
waiting period required by statute or incorporated into such Required Consents;
(ii) the date of approval of the Merger of the Sole Stockholder; and (iii) if
the transactions contemplated by this Agreement are being contested in any
material, valid legal proceeding by a third party, the date that such proceeding
has been brought to a conclusion favorable, in the reasonable judgment of
Purchaser and PSB, to the consummation of the transactions contemplated herein
or such prior date as Purchaser and PSB shall elect, whether or not such
proceeding has been brought to a conclusion. (Such date of the Closing is
sometimes referred to herein as the "Closing Date"). At the Closing, the
parties will exchange the schedules, certificates, opinions and other documents
called for by this Agreement for the purpose of determining whether the
conditions precedent to the obligations of the parties set forth in Sections 11,
12 and 13 herein have been satisfied or waived. After all such conditions have
been satisfied or waived, the Constituent Corporations shall execute,
acknowledge and file on the Closing Date in accordance with applicable
regulations of the Office of Thrift Supervision of the Department of the
Treasury (the "OTS"), the articles of combination in a form which complies with
Applicable Laws and this Agreement (the "Articles of Combination"). The date on
which the Merger becomes effective shall be the close of business on the date
specified in the endorsement of the Articles of Combination by the Secretary of
the OTS and shall be referred to herein as the "Effective Date". The parties
hereto agree to use their respective best efforts to cause the Effective Date
and the Closing Date to occur on the same calendar day.
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2. Effect of the Merger.
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(a) Transfer of Assets and Liabilities. On the Effective Date,
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Subsidiary and PSB shall become a single federally-chartered savings association
by the merging of Subsidiary with and into PSB. Upon the consummation of the
Merger, the separate corporate existence of Subsidiary shall cease as a
consequence of being merged into and continued in PSB as the Resulting Bank, and
the charter and by-laws of Subsidiary shall be deemed cancelled. On and after
the Effective Date, the Resulting Bank, operating under the charter and by-laws
of PSB, shall have, without transfer, all the property (whether real, personal
or mixed), rights, powers and other assets (whether tangible or intangible) of
Subsidiary, and shall be subject to and liable for all debts, liabilities,
duties and other obligations of Subsidiary in the same manner as if the
Resulting Bank had itself incurred them. All the rights, franchises and
interests of Subsidiary in and to every species of property (real, personal and
mixed) and chooses in action thereunto belonging shall be deemed to be
transferred to and vested in the Resulting Bank without any deed or other
transfer, and the Resulting Bank, without any order or other action on the part
of any court or otherwise, shall hold and enjoy the same and all rights of
property, franchises and interests, including appointments, designations and
nominations and all other rights and interests as trustee, executor,
administrator, registrar or transfer agent of stocks and bonds, guardian,
conservator, assignee and receiver and in every other fiduciary capacity, in the
same manner and to the same extent as were held and enjoyed by Subsidiary
immediately prior to the Merger.
(b) Accountholders' Liquidation Account. Upon the Effective Date,
-----------------------------------
each accountholder of PSB shall receive, without payment, a withdrawable account
or accounts in the Resulting Bank equal in withdrawal value to the account or
accounts held in PSB on such date, featuring the same rate, maturity and other
terms. At the Effective Date, the Resulting Bank shall establish on its books a
liquidation account for the benefit of certain savings accountholders of PSB who
become accountholders of the Resulting Bank as a result of the Merger and
thereafter retain their accounts in the Resulting Bank in accordance with
applicable OTS regulations. Any reference to PSB in any writing, whether
executed or taking effect before or after the Merger, shall be deemed a
reference to the Resulting Bank if not inconsistent with the other provisions of
such writing.
(c) Charter and By-laws. The charter of PSB as in effect immediately
-------------------
prior to the Merger shall be the charter of the Resulting Bank (the "Charter").
The by-laws of PSB in effect immediately prior to the Merger shall be the by-
laws of the Resulting Bank (the "By-laws").
(d) Name and Place of Business. The business of the Resulting Bank
--------------------------
shall be that of a federally-chartered savings association. At the Effective
Date, the main and branch offices of PSB which were in operation immediately
prior to the Effective Date or whose establishment has been approved before the
Effective Date shall be retained and operated or established and operated as
branches of the Resulting Bank.
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(e) Board of Directors. As of the Effective Date, the Board of
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Directors of the Resulting Bank will consist of those directors of PSB
immediately prior to the Effective Date and certain other persons listed on an
exhibit to the Articles of Combination, which persons shall constitute the Board
of Directors of the Resulting Bank until the next annual meeting of its
stockholders or until such time as their respective successors have been elected
or qualified. The directors of the Resulting Bank shall hold office subject to
the provisions of HOLA and the applicable regulations promulgated thereunder,
and the Charter and By-laws.
(f) Officers. As of the Effective Date, the officers of PSB
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immediately prior to the Effective Date and those persons listed on an exhibit
to the Articles of Combination shall constitute the officers of the Resulting
Bank until such time as their respective successors have been elected and
qualified. The officers of the Resulting Bank shall hold office subject to the
Charter and By-laws.
3. Conversion of Shares Upon the Merger.
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(a) Merger Consideration. On the Effective Date, all shares of the
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Common Stock, $.01 par value, of PSB ("PSB Common") held by U.S. Thrift
Opportunity Partners, Limited Partnership, a Delaware limited partnership and
the sole stockholder of PSB (the "Sole Stockholder"), on the date hereof shall,
without further action, cease to be issued and outstanding PSB Common and shall
become and be converted into a right to receive cash in an aggregate amount
equal to the sum of (i) Forty Two Million One Hundred Thousand Dollars
($42,100,000), plus (ii) the product of Eight Thousand Dollars ($8,000) times
----
the number of days, if any, in the period which commences (and includes) October
1, 1994 and ends on (and includes) the Effective Date (the "Merger
Consideration"). At the Effective Date, all other shares of PSB Common, if any,
shall be cancelled and retired and no cash or other consideration shall be paid
or payable or delivered under this Agreement in exchange for such PSB Common.
(b) Conversion of the Stock of Subsidiary. On the Effective Date,
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all shares of common stock, $.01 par value per share, of Subsidiary issued and
outstanding immediately prior to the Effective Date shall be converted into one
hundred (100) validly issued, fully paid and nonassessable shares of common
stock, $.01 par value per share, of the Resulting Bank. The certificate(s)
which formerly represented the outstanding shares of Subsidiary common stock
shall, from and after the Effective Date, represent, and for all purposes be
evidence of ownership of, the number of shares of common stock of the Resulting
Bank set forth above in the immediately preceding sentence.
(c) Effect of Conversion of Shares. From and after the Effective
------------------------------
Date and until surrendered for payment, all outstanding stock certificates held
by the Sole Stockholder, which prior to the Effective Date represented shares of
PSB Common (the "PSB Certificates"), shall be deemed for all purposes to
represent in the aggregate solely the right to receive the Merger Consideration.
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4. Surrender of Certificates and Payment of Merger Consideration. At or
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prior to Closing the Sole Stockholder shall deliver to Purchaser all PSB
Certificates together with any other instruments of transfer that reasonably may
be required by Purchaser or, in lieu of one or more PSB Certificates, an
appropriate affidavit of loss and an indemnity agreement and/or bond as may be
reasonably required in any such case by Purchaser. Provided Purchaser is in
receipt of the PSB Certificates and/or other satisfactory documentation as
provided above at or prior to the Closing Date and a written request containing
all of the necessary information to effectuate a wire transfer no later than one
(1) business day prior to the Closing Date, Purchaser shall make delivery of the
Merger Consideration by wire transfer of immediately available funds on the
Effective Date to the account designated by the Sole Stockholder. Purchaser
shall be under no obligation to deliver the Merger Consideration until the Sole
Stockholder has satisfied the conditions set forth in the immediately preceding
sentence. From and after the date hereof, there shall be no transfers on the
stock transfer books of PSB of any shares of PSB Common. Shares of PSB Common
presented to the Purchaser shall be cancelled in exchange for the aggregate
Merger Consideration payable with respect thereto as provided in Section 3
above.
5. Representations, Warranties and Covenants of Purchaser and Subsidiary.
---------------------------------------------------------------------
Purchaser, with respect to matters regarding Purchaser set forth below, and
Purchaser and Subsidiary, with respect to matters regarding Subsidiary after the
date of its formation, represent and warrant to, and covenant with, PSB that:
(a) Organization, Good Standing, Authorization, No Violation, Et
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Cetera. Purchaser is a corporation duly organized, validly existing and in good
- - ------
standing under the laws of the State of New Jersey. Subsidiary is a federally-
chartered interim stock savings association duly organized, validly existing and
in good standing under the laws of the United States. All of the shares of any
class of capital stock of Subsidiary are owned by Purchaser. Each of Purchaser
and Subsidiary has all necessary corporate power to own its properties and
assets and to carry on its business as now conducted. Except as limited by (i)
bankruptcy, insolvency, moratorium, reorganization, fraudulent conveyance laws
and other similar laws affecting creditors' rights generally, and (ii) general
principles of equity, regardless of whether asserted in a proceeding in equity
or at law, the execution and delivery of (A) this Agreement and the consummation
of the transactions contemplated hereby by Purchaser and Subsidiary and (B) the
Articles of Combination by Subsidiary, have been duly authorized by all
necessary corporate action on the part of Purchaser and Subsidiary, as
applicable, and this Agreement and the Articles of Combination (assuming due
execution of each by PSB) constitute the legal, valid and binding obligations of
Purchaser and Subsidiary, as applicable, enforceable against Purchaser and
Subsidiary in accordance with their respective terms. The execution and delivery
of this Agreement and the Articles of Combination by Purchaser and Subsidiary,
as applicable, and the consummation of the transactions contemplated by this
Agreement, and the Articles of Combination, will not violate the provisions of,
or constitute a breach or default under, the certificate of incorporation or by-
laws of Purchaser or Subsidiary, or any material agreement to which Purchaser or
Subsidiary is a party or is bound, or any material license, law, order, rule,
regulation or judgment applicable to the Purchaser or Subsidiary or to which
Purchaser or Subsidiary is a party.
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(b) Required Consents and Best Efforts. Purchaser will proceed
----------------------------------
diligently and expeditiously after the date hereof to prepare and file (in
"draft" form with respect to item (i) below and in final form with respect to
items (ii) and (iii) below) applications seeking (i) the required approval of
the Merger and related transactions under the Bank Holding Company Act of 1956
by the Board of Governors of the Federal Reserve System (the "Federal Reserve
Board"), (ii) the required approval of the Merger and related transactions by
the OTS and (iii) any and all other governmental or regulatory consents or
approvals or the taking of any other governmental or regulatory action necessary
or, in the reasonable judgment of Purchaser, advisable to consummate the Merger
(the "Required Consents"), and will, no later than six (6) weeks after the date
hereof, submit any necessary applications for Required Consents to the Federal
Reserve Board, the OTS and any other applicable governmental or regulatory
authority. Purchaser further agrees to file an application in final form with
the Federal Reserve Board within two (2) weeks of the date it receives comments
on the "draft" application. Subject to the conditions set forth in Section 11
hereof, Purchaser will undertake or, to the extent such action is not within the
sole power of Purchaser, use its best efforts to cause to be undertaken, each
such action as may be necessary to effectuate the Merger and to carry out the
provisions of this Agreement and the Articles of Combination.
(c) Formation of Subsidiary. Subject to such conditions or
-----------------------
restrictions as may be imposed by the OTS, Purchaser shall take all necessary
corporate and other action to create and form Subsidiary and cause Subsidiary to
enter into, ratify and approve this Agreement and all of the related
transactions as soon as practicable after the filing of the applications
referred to in Section 5(b) above. Subsidiary shall not conduct any business
prior to the Effective Date except as is necessary to consummate the Merger and
the other transactions contemplated by this Agreement.
(d) Indemnification. Following the Effective Date and to the full
---------------
extent permitted by law, Purchaser agrees to assume the obligation for
indemnification now existing in favor of the directors, officers and employees
of PSB under 12 C.F.R. Section 545.121 or under the PSB Charter or By-laws with
respect to acts or omissions occurring prior to the Effective Date. Purchaser
agrees to use its best efforts to maintain or to cause the Resulting Bank to
maintain in effect, for not less than five years from the Effective Date, the
current policies for directors' and officers' liability insurance maintained by
PSB or policies which provide substantially similar coverage.
(e) No Adverse Regulatory Knowledge. Purchaser has no knowledge or
-------------------------------
reason to believe that it will be unable to obtain all Required Consents for the
consummation of the transactions contemplated hereby, including without
limitation by reason of Purchaser's failure to meet its obligations under the
Community Reinvestment Act, as implemented by applicable governmental
authorities.
(f) Broker's and Finder's Fee. Neither Purchaser nor Subsidiary has
-------------------------
incurred any obligation or liability, contingent or otherwise, for any brokers
or finders in respect of the matters provided for in this Agreement and
Purchaser agrees to indemnify and hold PSB and its
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affiliates harmless with respect to any broker's or finder's fees which any
person may claim or assert arising from any express or implied agreement or
engagement of Purchaser or Subsidiary.
(g) Financial Ability. Purchaser presently has, and at the Effective
-----------------
Date will have, sufficient funds and capital resources to carry out its
obligations under this Agreement.
(h) Ability to Perform. Purchaser will not engage in any business or
------------------
other activity or take any action that would cause Purchaser to be unable to
perform its obligations under this Agreement.
(i) True and Complete Information. No representation or warranty
-----------------------------
made by Purchaser or Subsidiary contained in this Agreement and no statement
contained in any certificate, list, exhibit or other instrument specified in
this Agreement, whether heretofore furnished to PSB or hereinafter required to
be furnished to PSB, contains or will contain any untrue statement of a material
fact or omits or will omit to state a material fact necessary to make the
statements contained therein not misleading.
6. Representations, Warranties and Covenants of PSB. PSB represents and
------------------------------------------------
warrants to, and covenants with, Purchaser and Subsidiary that:
(a) (i) Organization, Good Standing. PSB is a stock savings bank
---------------------------
duly organized, validly existing and in good standing under the laws of the
United States. No governmental authority or agency of any jurisdiction has
advised PSB in writing that PSB is required to qualify or register to transact
business as a foreign corporation in any jurisdiction or initiated any
communication respecting the absence of such qualification. PSB is not required
to be qualified to transact business in any jurisdiction except jurisdictions
where the failure to be so qualified would have a material adverse effect upon
PSB. PSB is not qualified to transact business in any jurisdiction. PSB (i) is
an insured bank as defined in the Federal Deposit Insurance Act, and (ii) has
all corporate power and authority and all material licenses, franchises,
certificates, permits and other governmental authorizations which are legally
required to own and lease its properties and assets, to occupy its premises and
to engage in its business and activities as presently engaged in.
(ii) Capital Stock. On the date hereof, PSB has authorized,
-------------
issued and outstanding capital stock as follows:
<TABLE>
<CAPTION>
Class of Par Value Authorized Issued Outstanding Treasury
Stock --------- ---------- ------- ----------- --------
- - ----------
<S> <C> <C> <C> <C> <C>
Common $.01 100,000 10,000 10,000 0
</TABLE>
All of the issued and outstanding shares of PSB Common are duly and validly
authorized and issued, fully paid and nonassessable, are owned of record by the
Sole Stockholder, and have been issued pursuant to an exemption to the
registration requirements of the Securities Act of 1933,
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as amended. None of the issued and outstanding shares of PSB Common have been
issued in violation of any preemptive rights. There are no (nor will there be on
the Effective Date) shares of any class of capital stock or equity securities of
PSB outstanding (other than the PSB Common) and, except for this Agreement,
there are no (nor will there be on the Effective Date) outstanding or existing
subscriptions, options, warrants, rights, convertible securities, preemptive
rights or other agreements, commitments or obligations relating to the issuance
of any shares of any class of capital stock or other equity securities of PSB.
(b) Authorization, No Violation, Et Cetera. Subject only to approval
--------------------------------------
by the Investment Committee of the Sole Stockholder and of the Sole Stockholder
of this Agreement and the Merger, and except as further limited by (i)
bankruptcy, insolvency, moratorium, reorganization, fraudulent conveyance laws
and other similar laws affecting creditors' rights generally, and (ii) general
principles of equity regardless of whether asserted in a proceeding in equity or
at law, the execution and delivery of this Agreement, the Articles of
Combination and the consummation of the transactions contemplated hereby and
thereby have been duly authorized by all necessary corporate action on the part
of PSB, and this Agreement and the Articles of Combination (assuming due
execution thereof by all parties) constitute the legal, valid and binding
obligations of PSB, enforceable against PSB in accordance with their respective
terms. PSB has the corporate power to execute, deliver and perform this
Agreement and the Articles of Combination. The Board of Directors of PSB (i)
has taken all action required by law, the PSB Incorporation Document, the PSB
by-laws or otherwise to authorize the execution, delivery and performance of
this Agreement and the Articles of Combination, and (ii) in authorizing the
execution of this Agreement has determined as of the date hereof to recommend to
the Sole Stockholder the approval of this Agreement, the Merger and all related
transactions. Except as disclosed on Schedule 6(b) of the PSB Disclosure
-------------
Schedules, none of the execution, delivery and performance of this Agreement or
the Articles of Combination by PSB, or the consummation of the transactions
contemplated hereby, including the Merger, by PSB upon the terms provided herein
(assuming receipt of the Required Consents), violate, conflict with, result in
the breach of, constitute a default under, give rise to a claim or right of
termination, cancellation, revocation of, or acceleration under, or result in
the creation or imposition of any lien, charge or encumbrance upon any of the
material rights, permits, licenses, assets or properties of PSB or any PSB
Subsidiary or upon any of the capital stock of PSB or any PSB Subsidiary or
constitute an event which could, with the lapse of time, action or inaction by
PSB or any PSB Subsidiary or a third party, or the giving of notice and failure
to cure, result in any of the foregoing, under any of the terms, conditions or
provisions, as the case may be, of: (A) the certificate of incorporation,
articles of incorporation, articles of association or similar document (an
"Incorporation Document") or the by-laws of PSB or any PSB Subsidiary; (B) any
law, statute, rule, ruling, determination, ordinance or regulation of or
agreement with any governmental or regulatory authority; (C) any judgment,
order, writ, award, injunction or decree of any court or other governmental
authority; or (D) any Material Contract; in each case of clauses (A)-(D) above,
to which PSB or any PSB Subsidiary is a party or by which PSB or any PSB
Subsidiary or any of their assets or properties are bound or committed, the
consequences of which individually or in the aggregate, would have a material
adverse effect on PSB and the PSB
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Subsidiaries, taken as a whole, or enable any person to enjoin the
transactions contemplated hereby.
(c) Subsidiaries; Joint Ventures. Set forth on Schedule 6(c) of the
---------------------------- -------------
PSB Disclosure Schedules is a true and correct list of all entities (including,
without limitation, corporations, partnerships, joint ventures, and inactive
corporations) in which PSB has a 5% or greater direct or indirect equity or
ownership interest (other than shares of stock in the Federal Home Loan Bank of
New York held by PSB, United States government and agency obligations, FNMA,
GNMA and FHLMC mortgage-backed securities held by PSB and equity interests
acquired through foreclosure) (each a "PSB Subsidiary and collectively the "PSB
Subsidiaries"). Schedule 6(c) shows for each of the PSB Subsidiaries the
-------------
following: its date and jurisdiction of incorporation or organization; each
other jurisdiction in which it is qualified or licensed to do business; its
authorized, issued and outstanding capital stock; other equity securities and
other ownership interests; to the knowledge of PSB, the record owners thereof
and the percentages owned by each; and, with respect to each PSB Subsidiary
which constitutes a real estate development joint venture (a "Joint Venture"), a
legal description of the respective real estate parcel or parcels being
developed by such Joint Venture. Each of the PSB Subsidiaries is duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization and has all corporate or
partnership power and authority and all licenses, franchises, certificates,
permits and other governmental authorizations which are legally required to own
and lease its properties and assets, to occupy its premises and to engage in its
business and activities as presently engaged in, except for those the absence of
which would not have a material adverse effect upon PSB and the PSB
Subsidiaries, taken as a whole. Each of the PSB Subsidiaries is duly qualified
to conduct its business and is in good standing under the laws of all
jurisdictions where the failure to be so qualified would have a material adverse
effect upon PSB and such PSB Subsidiary, taken as a whole. To the knowledge of
PSB, no governmental authority or agency of any other jurisdiction has advised
PSB or any PSB Subsidiary in writing that such PSB Subsidiary is required to
qualify or register to transact business as a foreign corporation in such
jurisdiction or initiated any correspondence respecting the absence of
qualification. All of the issued and outstanding shares of capital stock, other
equity securities and other ownership interests of the PSB Subsidiaries owned by
PSB or another PSB Subsidiary are duly and validly authorized and issued, are
fully paid and nonassessable, have been issued pursuant to an effective
registration statement and current prospectus under the Securities Act of 1933,
as amended, or an appropriate exemption from such registration, were not issued
in violation of the preemptive rights of any shareholder and are owned by PSB or
another PSB Subsidiary, free and clear of all liens, security interests,
charges, claims and encumbrances, except as otherwise disclosed on Schedule
--------
6(c). Except as otherwise disclosed on Schedule 6(c), there are no
- - ---- -------------
shares of any other class of capital stock, other equity securities or other
ownership interests of any of the PSB Subsidiaries outstanding and there are no
outstanding or existing subscriptions, options, warrants, rights, convertible
securities, preemptive rights or other agreements, commitments or obligations
relating to the issuance of additional shares of any class of capital stock,
other equity securities or other ownership interests of any of the PSB
Subsidiaries.
11
<PAGE>
(d) Financial Statements. PSB has delivered to Purchaser
--------------------
consolidated statements of condition of PSB and the PSB Subsidiaries and the
related consolidated statements of income, stockholders' equity and cash flows
as of and for the fiscal years ended December 31, 1991, 1992 and 1993 (the "PSB
Financial Statements"). All such PSB Financial Statements have been examined by
KPMG Peat Marwick, independent certified public accountants, whose report
thereon is included with such financial statements, except for such financial
statements for the fiscal year ended December 31, 1991 which have been examined
by Stephen P. Radics & Co., independent certified public accountants, whose
report thereon is included with such financial statements. All such PSB
Financial Statements have been prepared in conformity in all material respects
with generally accepted accounting principles ("GAAP") applied on a consistent
basis (except for changes, if any, required by GAAP and disclosed therein), and
fairly present in all material respects the consolidated financial condition,
results of operations and changes in capital accounts, retained earnings and
financial position of PSB and the PSB Subsidiaries as of their respective dates
and for the periods to which they relate, except for PSB's interim financial
statements which are subject to normal year-end adjustments.
(e) Taxes and Tax Returns. (i) Except as disclosed in Schedule
--------------------- --------
6(e)(i) of the PSB Disclosure Schedule, PSB and each PSB Subsidiary have duly
- - -------
filed all federal, state and local tax information and tax returns, including
returns respecting employee income tax withholding, social security and
unemployment taxes (the "Returns") required to be filed by any of them (all such
returns being accurate and complete in all material respects), and have duly
paid or made provision for the payment of all taxes and other governmental
charges which have been incurred or are shown to be due on said Returns or are
claimed in writing to be due from any of them or imposed on any of them or their
respective properties, assets, income, franchises, licenses, sales or use, by
any federal, state, local or foreign taxing authorities (collectively, the
"Taxes") on or prior to the date hereof other than Taxes which are being
contested in good faith and by appropriate proceedings and as to which PSB and
the PSB Subsidiaries either singly or in the aggregate have set aside on their
respective books adequate reserves, or which may be attributable to the
transactions contemplated hereby. The amounts recorded as reserves for Taxes on
gross or net basis, on the December 31, 1993 financial statements, are
sufficient in the aggregate for the payment by PSB of all unpaid Taxes
(including any interest or penalties thereon) for the period ended December 31,
1993 or for any year or period prior thereto. Except as disclosed in Schedule
--------
6(e)(i), (A) there are no material matters, assessments, notices of deficiency,
- - -------
demands, proceedings, audits or disputes pending or, to PSB's knowledge,
threatened, or material claims asserted, for Taxes upon PSB or any PSB
Subsidiary, (B) neither PSB nor any PSB Subsidiary has been required to give any
currently effective waivers extending the statutory period of limitation
applicable to any federal, state or local Return or for any period or agreements
related to assessment or collection of Taxes, and (C) neither PSB nor any PSB
Subsidiary has in effect any power of attorney or authorization to anyone to
represent it with respect to any Taxes. PSB has not filed any consolidated
federal income tax return with an "affiliated group" (within the meaning of
Section 1504 of the Internal Revenue Code of 1986 (the "Code")), where PSB was
not the common parent of the group. Neither PSB nor any PSB Subsidiary is, or
has been, a party to any tax allocation agreement or arrangement pursuant to
which it has any contingent or outstanding liability to anyone other than PSB or
a PSB
12
<PAGE>
Subsidiary. Neither PSB nor a PSB Subsidiary has filed a consent under Section
341(f) of the Code. PSB has provided to Purchaser or its representatives
complete and correct copies of its federal, state and local income tax returns
filed on or prior to January 1, 1994 and all examination reports, if any,
relating to the audit of such returns by the IRS or other tax authority for each
taxable year beginning on or after January 1, 1989.
(ii) Except as disclosed in Schedule 6(e)(ii) of the PSB
-----------------
Disclosure Schedules, all monies required to be withheld from employees of PSB
and each PSB Subsidiary for income taxes, social security and unemployment
insurance taxes or collected from customers or others as sales, use or other
taxes have been withheld or collected and paid, when due, to the appropriate
governmental authority, or if such payment is not yet due, an adequate reserve
has been established.
(iii) Neither PSB nor any PSB Subsidiary is required to file tax
returns with any state other than the State of New Jersey. To PSB's knowledge,
neither the Internal Revenue Service ("IRS") nor the State of New Jersey has
audited the consolidated federal income tax returns of PSB or the state income
return of PSB, as applicable, for any taxable year since 1989. Neither PSB nor
any PSB Subsidiary is subject to an audit or review of its tax returns by any
state other than the State of New Jersey. To PSB's knowledge, PSB and the PSB
Subsidiaries have complied in all material respects with all requirements
relating to information reporting and withholding (including back-up
withholding) and other requirements relating to the reporting of interest,
dividends and other reportable payments under the Code and state and local tax
laws and the regulations promulgated thereunder.
(f) Material Contracts. Disclosed in Schedule 6(f) of the PSB
------------------ -------------
Disclosure Schedules are all executory leases, licenses, guarantees, contracts,
indentures, commitments (other than loan commitments and agreements issued in
the normal course of business), and other agreements binding PSB or any PSB
Subsidiary or any of their assets involving, or which could reasonably be
expected to result in a payment by PSB or any PSB Subsidiary of, $250,000 or
more in the aggregate (collectively, the "Material Contracts" and each a
"Material Contract"). True copies of such Material Contracts, including all
amendments and supplements thereto, have been delivered to Purchaser. Except as
disclosed in Schedule 6(f), PSB and each of the PSB Subsidiaries have duly
-------------
performed all of their respective material obligations thereunder to the extent
that such obligations to perform have accrued, and no breach or default
thereunder by PSB or any PSB Subsidiary or, to the best knowledge of PSB, any
other party thereto has occurred which will impair the ability of PSB or any PSB
Subsidiary to enforce any material rights thereunder. Except as set forth in
Schedule 6(f), neither PSB nor any PSB Subsidiary (i) is a party to and neither
- - -------------
they nor any of their assets are bound by any written or oral lease or license
with respect to any property, real or personal, as tenant or licensee involving
an annual consideration in excess of $100,000, or (ii) is a party to any
contract material to the business of PSB and the PSB Subsidiaries, taken as a
whole, and not made in the ordinary course of business. Neither PSB nor any of
the PSB Subsidiaries is a party to or otherwise bound by any contract,
agreement, plan, lease, license, commitment or undertaking which, in the
reasonable opinion of
13
<PAGE>
management of PSB, is materially adverse, onerous, or harmful to the business of
PSB and the PSB Subsidiaries, taken as a whole.
(g) Real Estate. PSB and each of the PSB Subsidiaries have good
-----------
title to all of the assets reflected as owned by any of them in the December 31,
1993 consolidated financial statements of PSB, and in the case of real property,
transferable and insurable title in fee simple, and in all cases free and clear
of any material liens or other encumbrances, except as otherwise disclosed in
Schedule 6(g) of the PSB Disclosure Schedules and except for those assets
- - -------------
disposed of in the ordinary course of business of PSB or a PSB Subsidiary since
that date. Except as disclosed on Schedule 6(g), to the best of PSB's
-------------
knowledge, each lease, sublease, installment purchase or similar arrangement for
the use or occupancy of real property of PSB or any PSB Subsidiary is valid and
enforceable in all material respects by PSB or the applicable PSB Subsidiary in
accordance with its terms. PSB and each of the PSB Subsidiaries enjoys peaceful
and undisturbed possession under all material leases under which it or any of
the PSB Subsidiaries is the lessee, where the failure to enjoy such peaceful and
undisturbed possession would have a material adverse effect on PSB and the PSB
Subsidiaries, taken as a whole. As of the date hereof, the real properties,
structures, buildings, material equipment, and the material tangible personal
property owned, operated or leased by PSB or any PSB Subsidiary are (x) to the
best of PSB's knowledge, in operating order and condition, except for depletion,
depreciation and ordinary wear and tear, and are adequate for the business
conducted by PSB or a PSB Subsidiary subject to exceptions which are not, in the
aggregate, material, (y) suitable for their present uses and (z) to the best of
PSB's knowledge, free from any known structural defects. As of the date hereof,
to the best knowledge of PSB, there are no laws, conditions of record or other
impediments which materially interfere with the intended uses by PSB or any PSB
Subsidiary of the real property or tangible personal property owned or leased by
it, except as disclosed in Schedule 6(g).
-------------
(h) No Material Adverse Change. Except as disclosed in Schedule 6(h)
-------------------------- -------------
of the PSB Disclosure Schedules, since December 31, 1993, there has been no
material adverse change in the business, financial condition, properties,
assets, liabilities, results of operation, or capitalization of PSB and the PSB
Subsidiaries, taken as a whole, except for such changes as may occur as a
consequence of the transactions contemplated by this Agreement. Except as
disclosed in Schedule 6(h)(i) of the PSB Disclosure Schedules, neither PSB nor
----------------
any PSB Subsidiary has, since December 31, 1993, (a) declared, set aside or
paid any dividend or other distribution in respect of its capital stock, except
dividends from PSB Subsidiaries to PSB or other PSB Subsidiaries, or, directly
or indirectly, purchased, redeemed or otherwise acquired any shares of such
stock held by persons other than PSB and the PSB Subsidiaries; (b) incurred
current liabilities other than in the ordinary course of business; (c) sold,
exchanged or otherwise disposed of any of their respective assets except in the
ordinary course of business; (d) made any extraordinary officers' salary
increase or wage increase, entered into any employment, consulting, severance or
change of control contract with any present or former director, officer or
salaried employee, or instituted any employee or director welfare, bonus, stock
option, profit-sharing, retirement, severance or other benefit plan or
arrangement or modified any of the foregoing so as to increase its obligations
thereunder in any material respect; (e) suffered any taking by
14
<PAGE>
condemnation or eminent domain or other damage, destruction or loss in
excess of $50,000, whether or not covered by insurance, adversely affecting its
business, property or assets, or waived any rights of value in excess of
$50,000; (f) entered into any transactions which in the aggregate exceeded
$250,000 other than in the ordinary course of business; or (g) acquired the
assets or capital stock of another company, except in a fiduciary capacity or in
the course of securing or collecting loans or leases.
(i) Investigations, Litigation. There is no investigation by any
--------------------------
federal, state or local governmental agency of which PSB is aware, or any
action, suit, proceeding or claim pending or, to the knowledge of PSB, overtly
threatened, against or adversely affecting PSB or any of the PSB Subsidiaries
(including, without limitation, any investigation, action, or proceeding with
respect to taxes), or the assets or business of PSB or any of the PSB
Subsidiaries, which would, if adversely determined, have a material adverse
effect on the business or financial condition of PSB and the PSB Subsidiaries,
taken as a whole, or which may involve a payment by PSB or any PSB Subsidiary of
more than $250,000 in excess of applicable insurance coverage, except as
disclosed in Schedule 6(i) of the PSB Disclosure Schedules. Except as disclosed
-------------
in Schedule 6(i), (i) neither PSB nor any PSB Subsidiary nor any director,
-------------
officer, employee or agent of PSB or any PSB Subsidiary in their respective
capacities as directors, officers, employees or agents, is a party to any, and
there are no pending or, to the best of PSB's knowledge, overtly, threatened,
legal, administrative, arbitral or other proceedings, claims, charges, suits,
actions or governmental investigations of any nature against PSB or any PSB
Subsidiary, or any director, officer, employee or agent of PSB or any PSB
Subsidiary in their respective capacities as directors, officers, employees or
agents, or involving any property or assets of PSB or any PSB Subsidiary and
(ii) there is no outstanding order, writ, injunction or decree of any court,
government, or governmental or self-regulatory agency against or, to the best
knowledge of PSB, affecting PSB or any of the PSB Subsidiaries, or the assets or
business of PSB or any of the PSB Subsidiaries, which in the case of either (i)
or (ii) could reasonably be expected to have a material adverse effect on the
business or financial condition of PSB and the PSB Subsidiaries, taken as a
whole, or which challenges the validity or propriety of the transactions
contemplated by this Agreement.
(j) Insurance. Schedule 6(j) of the PSB Disclosure Schedules lists
--------- -------------
each policy of insurance which PSB and each PSB Subsidiary has in effect
including the amounts, types and risks insured. All policies of fire,
liability, worker's compensation and other similar forms of insurance owned or
held by PSB or any PSB Subsidiary are in full force and effect, all premiums
with respect thereto covering all periods up to and including the date as of
which this representation is being made have been paid (other than retrospective
premiums which may be payable with respect to worker's compensation insurance
policies), and no notice of cancellation or termination has been received with
respect to any such policy. The insurance policies to which PSB and the PSB
Subsidiaries are parties are sufficient for compliance in all material respects
with all requirements of law and of all agreements to which PSB and the PSB
Subsidiaries are parties and provide customary insurance coverage for the assets
and operations of PSB and the PSB Subsidiaries. All material claims thereunder
have been filed in a due and timely fashion. Since December 31, 1988, to PSB's
knowledge, neither PSB nor any of the PSB Subsidiaries has
15
<PAGE>
ever been refused insurance for which it has applied or had any policy of
insurance terminated (other than at its request) except as disclosed in
Schedule 6(j).
- - -------------
(k) Compliance with Laws, Regulations. Except as disclosed in
---------------------------------
Schedule 6(k) of the PSB Disclosure Schedules, PSB and each of the PSB
- - -------------
Subsidiaries have conducted their respective businesses in substantial
compliance with all applicable federal, state and local laws, regulations and
orders including, without limitation, disclosure, usury, equal credit
opportunity, equal employment, fair credit reporting, lender liability,
antitrust, recordkeeping and reporting on monetary instruments transactions and
other laws, regulations and orders, and the forms, procedures, and practices
used by PSB and each of the PSB Subsidiaries are in compliance with such laws,
regulations and orders except to the extent that non-compliance with any such
law, regulation or order would not have a material adverse effect on PSB and the
PSB Subsidiaries, taken as a whole.
(l) PSB Reports. Since January 1, 1992, PSB and each of the PSB
-----------
Subsidiaries have filed all reports, registrations and statements, together with
any amendments required to be made with respect thereto, that were required to
be filed with the Applicable governmental authorities. All such reports,
registrations and statements are collectively referred to as the "PSB Reports."
As of their respective dates, such PSB Reports, to the best of PSB's knowledge,
complied in all material respects with all the statutes, rules and regulations
enforced or promulgated by the applicable governmental authorities with which
they were filed.
(m) Broker's and Finder's Fees. Except as disclosed in Schedule 6(m)
-------------------------- -------------
of the PSB Disclosure Schedules, neither PSB nor any of the PSB Subsidiaries has
incurred any obligation or liability, contingent or otherwise, for any brokers
or finders in respect of the matters provided for in this Agreement and PSB
agrees to indemnify and hold Purchaser and its affiliates harmless with respect
to any broker's or finder's fees not disclosed in Schedule 6(m) which any person
-------------
may claim or assert arising from any express or implied agreement or engagement
of PSB.
(n) Employee Benefit Plans. The representations and warranties set
----------------------
forth in this Section 6(n) are subject to PSB Disclosure Schedules 6(n)(i), (ii)
and (iv).
(i) Schedule 6(n)(i) of the PSB Disclosure Schedules contains a list
----------------
and a true and correct copy, including all amendments thereto, of all bonus,
deferred compensation, profit-sharing, retirement, pension, stock option, stock
award and stock purchase plans and all other employee benefit plans with an
annual cost in excess of $25,000 other than medical, major medical, disability,
life insurance or dental plans covering employees generally, including without
limitation any employee benefit plan, within the meaning of Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), which PSB
or any PSB Subsidiary maintains, to which PSB or any PSB Subsidiary contributes,
or under which any employee or former employee, director or former director of
PSB or any PSB Subsidiary is covered or has benefit rights and pursuant to which
any liability of PSB or any PSB Subsidiary exists or is reasonably likely to
occur (the "Benefit Plans"). Except as set forth on Schedule 6(n)(i), PSB
----------------
neither maintains nor has entered into any Benefit Plan or other document, plan
or
16
<PAGE>
agreement which contains any change in control provisions which would cause
an increase or acceleration of benefits or benefit entitlements to employees or
former employees of PSB or any PSB Subsidiary or its respective beneficiaries,
or other provisions, which would cause an increase in liability of PSB, any PSB
Subsidiary or to Purchaser as a result of the transactions contemplated by this
Agreement or any related action thereafter (a "Change in Control Benefit"). No
Benefit Plan is a multiemployer plan within the meaning of Section 3(37) of
ERISA.
(ii) Except as set forth in Schedule 6(n)(ii) of the PSB
-----------------
Disclosure Schedules, all accrued contributions and other payments to be made by
PSB or any PSB Subsidiary to any Benefit Plan through December 31, 1993 have
been made or reserves adequate for such purposes as of December 31, 1993 have
been set aside therefor and reflected in the December 31, 1993 financial
statements. Neither PSB nor any PSB Subsidiary is in material default in
performing any of its respective contractual obligations under any of the
Benefit Plans or any related trust agreement or insurance contract, and there
are no material outstanding liabilities of any Benefit Plan other than
liabilities for benefits to be paid to participants in such Benefit Plan.
(iii) There is no pending litigation or, to the best knowledge of
PSB, overtly threatened litigation or pending claim (other than benefit claims
made in the ordinary course) by or on behalf of or against any of the Benefit
Plans (or with respect to the administration of any of the Benefit Plans) now or
heretofore maintained by PSB or any PSB Subsidiary which allege violations of
applicable state or federal law which are reasonably likely to result in a
liability on the part of PSB or any PSB Subsidiary or any Benefit Plan.
(iv) Neither PSB nor any of the PSB Subsidiaries maintains an employee
pension benefit plan, within the meaning of Section 3(2) of ERISA, or has made
any contributions to any such employee pension benefit plan except employee
------
pension benefit plans listed in Schedule 6(n)(iv) of the PSB Disclosure
-----------------
Schedules (individually a "PSB Pension Plan" and collectively the "PSB Pension
Plans"). With respect to any such PSB Pension Plan: (A) PSB has received a
favorable determination from the IRS on the qualification upon termination of
each such PSB Pension Plan and its related trust under Sections 401(a) and
501(a) of the Code; (B) PSB has properly completed all of the standard
termination procedures under Section 4041(b)(2) of the Code (except for a final
distribution of assets) with respect to each PSB Pension Plan; and (C) each PSB
Pension Plan has more than sufficient assets, after payment of all
administrative expenses, to fully satisfy in a manner consistent with Title I of
ERISA all of such PSB Pension Plan's benefits liabilities through a purchase of
annuities from an insurance company rated "AA" or better.
(v) The Benefit Plans comply in all material respects with all
applicable requirements, if any, imposed by ERISA, the Code, and all other
applicable federal and state laws and all rules and regulations thereunder. The
Benefit Plans have been administered and communicated to the participants and
beneficiaries in all material respects in accordance with their terms, and, to
PSB's knowledge, no employee or agent of PSB or any of the PSB Subsidiaries has
engaged in any action or failed to act in such manner that, as a result of such
17
<PAGE>
action or failure: (i) the IRS could revoke a favorable determination as to a
Benefit Plan's qualification and any associated trust's exemption or impose any
liability or penalty under the Code; or (ii) a participant or beneficiary or a
nonparticipating employee has been denied benefits properly due or to become due
under the Benefit Plans or has been misled as to his or her rights under the
Benefit Plans. All reports, filings, disclosures and other communications which
have been required to be made to the participants and beneficiaries, other
employees of PSB or any of the PSB Subsidiaries, the Securities and Exchange
Commission, the IRS, the U.S. Department of Labor, the Pension Benefit Guaranty
Corporation ("PBGC"), and any other governmental agency pursuant to the Code,
ERISA, or other applicable statute or regulation have been made in a timely
manner and all such reports and communications were true and correct in all
material respects. No material liability has been incurred on account of
delinquent or incomplete compliance or failure to comply with such requirements.
(o) Labor Arrangements. Hours worked by and payment made to
------------------
employees of PSB and each of the PSB Subsidiaries have complied in all material
respects with the Fair Labor Standards Act or any applicable law dealing with
such matters. All payments due from PSB and each of the PSB Subsidiaries on
account of employee health and welfare insurance have been paid or accrued as a
liability on the books of PSB or its appropriate PSB Subsidiary. No labor
dispute, strike or other work stoppage has occurred and is continuing or, to
PSB's knowledge, is threatened with respect to PSB or any of the PSB
Subsidiaries. To PSB's knowledge, no employee of PSB or any of the PSB
Subsidiaries has been terminated, suspended, disciplined or dismissed under
circumstances that are likely to result in a material, valid claim, suit,
action, complaint or proceeding against PSB or any of the PSB Subsidiaries. No
employees of PSB or any of the PSB Subsidiaries are unionized nor, to PSB's
knowledge, has such union representation been requested by any group of
employees or any other person within the last two years. The provisions of this
Section 6(o) are subject in their entirety to the qualifications and
exceptions listed on Schedule 6(o) of the PSB Disclosure Schedules.
-------------
(p) Environmental Liability. "Properties" as used in this Section
-----------------------
6(p)(i)-(iv) inclusive, shall include all of the following: (x) all real
property owned or leased by PSB and each PSB Subsidiary, and (y) all Real Estate
Owned ("REO") by PSB and each PSB Subsidiary.
(i) Except as disclosed in Schedule 6(p)(i) of the PSB
----------------
Disclosure Schedules, to the best knowledge of PSB, PSB and each PSB Subsidiary
have obtained all material permits, licenses and other authorizations which are
required with respect to the operation of their respective businesses and all
Properties under any Environmental Laws (as hereinafter defined) (such permits,
licenses and authorizations being hereinafter referred to as "Environmental
Permits"), including all federal, state and local laws relating to pollution or
protection of the environment such as the Comprehensive Environmental Response,
Compensation and Liability Act ("CERCLA"), laws relating to emissions,
discharges, releases or threatened releases of hazardous, toxic or other
pollutants, contaminants or chemicals including, but not limited to, ambient
air, surface water, ground water, land surface or subsurface strata, or
otherwise relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of hazardous, toxic or other
pollutants, contaminants, chemicals or industrial
18
<PAGE>
materials, substances or wastes (which laws, together with all regulations,
rules, codes, plans, decrees, judgments, injunctions, notices and demand letters
issued, entered, promulgated or approved thereunder with respect to PSB or any
PSB Subsidiary being herein referred to as "Environmental Laws"). Except as
disclosed in Schedule 6(p)(i) of the PSB Disclosure Schedules, PSB and each PSB
----------------
Subsidiary, to the best knowledge of PSB, are in material compliance with all
terms and conditions of all Environmental Permits required under the
Environmental Laws, and are also in material compliance with all other
limitations, restrictions, conditions, standards, prohibitions, requirements,
obligations, schedules and timetables contained in the Environmental Laws. PSB
has provided Purchaser with complete copies of all notices in the possession of
PSB received by any previous owner or lessee of any Properties or any business
currently owned or leased by PSB or a PSB Subsidiary within the five years
preceding the date of this Agreement and alleging noncompliance with any
Environmental Law.
(ii) There is no civil, criminal or administrative action,
demand, claim, investigation or proceeding pending or, to the best knowledge of
PSB, threatened against PSB or any PSB Subsidiary with regard to any Properties,
under or relating in any way to the Environmental Laws, except as disclosed in
Schedule 6(p)(ii) of the PSB Disclosure Schedules.
- - -----------------
(iii) With regard to any of the Properties, except as disclosed in
Schedule 6(p)(iii) of the PSB Disclosure Schedules, there are, to the best
- - ------------------
knowledge of PSB, no past, present or known or anticipated future events,
conditions, circumstances, or plans which may interfere with or prevent
compliance or continued compliance with the Environmental Laws in any material
respect, or which may give rise to any material common law or other legal
liability, or which otherwise may form the basis of any material claim, action,
demand, proceeding, notice of violation or investigation, based on or related to
the manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling or the emission, discharge, release or threatened release
into the environment, of any pollutant, contaminant, chemical, industrial toxic
or hazardous material, substance or waste. Without in any way limiting the
foregoing, except as disclosed in Schedule 6(p)(iii), to the best knowledge of
------------------
PSB, no Hazardous Substances have been stored, treated, dumped, spilled,
disposed, discharged, released or deposited in material violation of any
Environmental Law at, under or on (1) any property now owned or occupied
("Present Property") by PSB or any of the PSB Subsidiaries, (2) any property
previously owned or occupied ("Former Property") by PSB or any of the PSB
Subsidiaries during the time of such previous ownership or occupancy; or (3) any
Participation Facility during the time that PSB or any of the PSB Subsidiaries
participated in the management of, or may be deemed to be or to have been an
owner or operator of, such Participation Facility in such a manner that would
give rise to a material violation of any Environmental Law. To the best
knowledge of PSB, neither PSB nor any of the PSB Subsidiaries has disposed of,
or arranged for the disposal of, Hazardous Substances from any Present Property,
Former Property or Participation Facility. All real property securing
outstanding loans consummated on or subsequent to June 30, 1992 held by PSB or a
PSB Subsidiary which consists of a multi-family dwelling unit ("Loan Property")
has had a completed Phase I Environmental Site Assessment or similar equivalent
report performed for such Loan Property. Loan files for all Loan Properties
contain a Phase I Environmental Site Assessment or similar equivalent report
performed for such Loan Properties. As used in this
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<PAGE>
Agreement, (i) "Participation Facility" shall mean any property or facility of
which PSB or any of the PSB Subsidiaries or their officers, directors, or
employees in such capacity (A) has at any time participated in the management or
(B) may be deemed to be or to have been an owner or operator and (ii) "Hazardous
Substances" shall mean (A) any flammable substances, explosives, radioactive
materials, hazardous materials, hazardous substances, hazardous wastes, toxic
substances, pollutants, contaminants or any related materials or substances
specified in any applicable Federal or state law or regulation relating to
pollution or protection of human health or the environment (including, without
limitation, ambient or indoor air, surface water, groundwater, land surface or
subsurface strata) and (B) friable asbestos, polychlorinated biphenyls, urea
formaldehyde, and petroleum and petroleum-based products. Except as disclosed in
Schedule 6(p)(iii), to the best knowledge of PSB, none of the Properties include
- - ------------------
any equipment, machinery, device, or other apparatus that contains
polychlorinated biphenyls that is now or ever has been leaking; any asbestos
that is or reasonably may be anticipated to become in a damaged, friable
condition within the next five years; or any underground tank.
(iv) Notwithstanding anything contained in this Section 6(p) to the
contrary, the parties hereby agree that this Section 6(p) shall not be deemed
breached if the total cost for any environmental liability or potential
environmental liability arising out of or a violation of or a misstatement
contained in this Section 6(p) with respect to all of the Properties does not
exceed, in the aggregate, Two Hundred Fifty Thousand and 00/100 Dollars
($250,000.00), which amount shall include, without limitation, all applicable
fees, costs and expenses relating to such items including but not limited to
remediation reports, actual clean-up costs, post-remediation sampling and
attorneys' fees.
(q) Loan Loss Reserves. The reserve for possible loan and lease
------------------
losses shown on the PSB's consolidated balance sheet as of December 31, 1993, to
the best of PSB's knowledge, is adequate in all material respects to provide for
all losses, net of recoveries relating to loans previously charged off, on loans
outstanding as of the date of such statement, and PSB has no reason to believe
that the loan portfolios of PSB and the PSB Subsidiaries at such date will incur
losses materially in excess of such reserves.
(r) Insured Deposits. All eligible deposit accounts issued by PSB
----------------
are insured by the FDIC through the Savings Association Insurance Fund to the
full extent permitted under Applicable Laws.
(s) Regulatory Action. Except as disclosed in Schedule 6(s) of the
----------------- -------------
PSB Disclosure Schedules, neither PSB nor any PSB Subsidiary is a party to any
agreement or memorandum of understanding with, or is a party to any commitment
letter to, or has submitted a board of director resolution or similar
undertaking to, or is subject to any order or directive by, or is a recipient of
any extraordinary supervisory letter from, any governmental or regulatory
authority which restricts the conduct of its business, or in any manner relates
to its capital adequacy, its credit or reserve policies or its management, nor
has PSB or any PSB Subsidiary been advised by any governmental or regulatory
authority that it is contemplating issuing or
20
<PAGE>
requesting (or is considering the appropriateness of issuing or requesting) any
of the foregoing or appointing a manager, conservator or receiver for PSB.
(t) True and Complete Information. No representation or warranty
-----------------------------
made by PSB or any PSB Subsidiary contained in this Agreement and no statement
contained in any certificate, schedule, list, exhibit or other instrument
specified in this Agreement, whether heretofore furnished to Purchaser and
Subsidiary or hereinafter required to be furnished to Purchaser and Subsidiary,
or in any filing made by PSB or any PSB Subsidiary with a regulatory authority,
at the time of such filing, contained, contains or will contain any untrue
statement of a material fact or omitted, omits or will omit to state a material
fact necessary to make the statements contained therein not misleading.
(u) PSB Disclosure Schedules. PSB shall deliver the initial PSB
------------------------
Disclosure Schedules to Purchaser on the date of execution of this Agreement.
Every thirty (30) days thereafter, as soon as practicable after the parties
agree to a Closing Date and on the Closing Date, PSB will promptly supplement or
amend the PSB Disclosure Schedules delivered pursuant hereto with respect to any
matter hereafter arising which, if existing, occurring or known at the date of
this Agreement, would have been required to be set forth or described in such
Schedules or which is necessary to correct any information in such Schedules
which has been rendered materially inaccurate thereby. No supplement or
amendment to the PSB Disclosure Schedules shall affect Purchaser's obligation to
consummate the Merger unless Purchaser exercises its right to terminate this
Agreement pursuant to Section 17(e) hereof. All disclosures by PSB in any
Disclosure Schedule shall constitute disclosure by PSB in every Disclosure
Schedule delivered from time to time by PSB to Purchaser.
(v) PSB's Knowledge. For purposes of this Agreement, the phrase "to
---------------
the best knowledge of PSB" or phrases of similar import means the actual
knowledge of the executive officers of PSB or a PSB Subsidiary.
(w) Interest of Management and Affiliates. Except as disclosed on
-------------------------------------
Schedule 6(w) of the PSB Disclosure Schedules, with respect to present and
- - -------------
former directors and executive officers of PSB and the PSB Subsidiaries, and any
members of their immediate families ("PSB Managers and Affiliates"), (i) all
loans presently on the books of PSB or any of the PSB Subsidiaries to PSB
Managers and Affiliates have been made in the ordinary course of business and on
the same terms and interest rates as those prevailing for comparable
transactions with others and do not involve more than the normal risk of
repayment or present other material unfavorable features; (ii) no PSB Manager or
Affiliate has any interest in any material property, real or personal, tangible
or intangible, used in or pertaining to the business of PSB or any of the PSB
Subsidiaries; (iii) no PSB Manager or Affiliate has a contract or commitment for
the purchase or sale of real or personal property, materials, supplies or
services in excess of $10,000 per annum or for longer than one year whether or
not in the ordinary course of business with PSB or any of the PSB Subsidiaries
except for normal business expense advances and loans or other extensions of
credit of not more than $25,000 in the aggregate; (iv) neither PSB nor any of
the PSB Subsidiaries has any commitment, whether written or oral, to lend any
funds to any
21
<PAGE>
PSB Manager or Affiliate; and (v) neither PSB nor any of the PSB Subsidiaries is
indebted to any PSB Manager or Affiliate except for deposits taken in the
ordinary course of business and amounts due for normal compensation, employee
benefits or reimbursement of expenses incurred in furtherance of the business of
such person's employer and reimbursable according to a policy of PSB or such PSB
Subsidiary, as appropriate, as in effect immediately prior to the date hereof.
Except as disclosed on Schedule 6(w), the consummation of the transactions
-------------
contemplated hereby will not (either alone, or upon the occurrence of any act or
event, the lapse of time, or the giving of notice and failure to cure) result in
any payment (severance or other) becoming due from PSB or any of the PSB
Subsidiaries or any successor or assign thereof to any director, officer or
employee of PSB or any of the PSB Subsidiaries or any successor or assign of the
foregoing.
(x) Fidelity Bonds. Since at least June 5, 1991, PSB and each of the
--------------
PSB Subsidiaries have continuously maintained fidelity bonds insuring them
against acts of dishonesty by each of the respective insured's employees in such
amounts as are customary, usual and prudent for organizations of their
respective size and business. All material claims thereunder have been filed in
a due and timely fashion. Neither PSB nor any of the PSB Subsidiaries has
reason to believe that its respective fidelity coverage will not be renewed by
its carrier on substantially the same terms as the existing coverage, except for
possible premium increases unrelated to PSB's and the PSB Subsidiaries' past
claim experience.
(y) Books and Records. The minute books of PSB and each of the PSB
-----------------
Subsidiaries contain complete and accurate records of and fairly reflect in all
material respects all actions taken at all meetings and accurately reflect in
all material respects all other corporate action of the shareholders and the
boards of directors and each committee thereof.
(z) Concentrations of Credit. Except as disclosed in Schedule 6(z)
------------------------ -------------
of the PSB Disclosure Schedules, as of April 30, 1994, no customer or affiliated
group of customers (i) is owed by PSB or any PSB Subsidiary an aggregate amount
equal to more than 5% of the shareholders' equity of PSB and the PSB
Subsidiaries, taken as a whole (including deposits, other debts and contingent
liabilities) or (ii) owes to PSB or any of the PSB Subsidiaries an aggregate
amount equal to more than 5% of the shareholders' equity of PSB and the PSB
Subsidiaries, taken as a whole (including loans and other debts, guarantees of
debts of third parties, and other contingent liabilities).
(aa) Trademarks and Copyrights. Neither PSB nor any of the PSB
-------------------------
Subsidiaries has received notice or otherwise knows that the manner in which PSB
or any of the PSB Subsidiaries currently uses any material trademark, trade
name, service mark or copyright violates asserted rights of others in any
trademark, trade name, service mark, copyright or other proprietary mark.
(bb) Absence of Undisclosed Liabilities. PSB and the PSB Subsidiaries
----------------------------------
have no liabilities, whether contingent or absolute, direct or indirect, matured
or unmatured (including but not limited to liabilities for federal, state and
local taxes, penalties, assessments, lawsuits or claims against PSB or any of
the PSB Subsidiaries), and no loss contingency (as defined in
22
<PAGE>
Statement of Financial Accounting Standards No. 5), material individually or in
the aggregate to PSB and the PSB Subsidiaries, taken as a whole, other than (a)
those reflected in the PSB Financial Statements or disclosed in the notes
thereto, (b) commitments made by PSB or any of the PSB Subsidiaries in the
ordinary course of its business, (c) liabilities arising in the ordinary course
of business since December 31, 1993 and (d) liabilities disclosed in Schedule
6(bb) of the PSB Disclosure Schedules. Neither PSB nor any of the PSB
Subsidiaries has, since December 31, 1993, become obligated on any debt for
money borrowed and due in more than one year from the date of this Agreement in
excess of $250,000, other than intra-corporate debt and deposits received,
repurchase agreements and borrowings from the Federal Home Loan Bank of New York
entered into in the ordinary course of business.
7. Agreements with Respect to Conduct of PSB and the PSB Subsidiaries
------------------------------------------------------------------
After the Date Hereof. PSB covenants and agrees with Purchaser and Subsidiary
- - ---------------------
that PSB and each of the PSB Subsidiaries will or, to the extent not within its
sole control, will use, except as otherwise provided herein, reasonable efforts
to, from and after the date of this Agreement and until the Closing Date, act as
follows:
(a) Ordinary Course, Insurance, Preservation of Business, Et Cetera.
---------------------------------------------------------------
Each of PSB and the PSB Subsidiaries will do the following, except as otherwise
agreed to in writing by Purchaser:
(i) carry on its business only in the ordinary course and
consistent with the respective policies, procedures and practices of PSB and
each PSB Subsidiary in effect on the date hereof in substantially the same
manner as heretofore conducted;
(ii) except as they may terminate in accordance with their terms
or in accordance with the terms of this Agreement, keep in full force and
effect, and not cause a default of any obligation under any Material Contracts
which may have a materially adverse effect on PSB and the PSB Subsidiaries,
taken as a whole;
(iii) use best efforts to keep in full force and effect the
insurance coverage in effect on the date hereof to the extent that such
insurance continues to be reasonably available;
(iv) use reasonable efforts to maintain, renew, keep in full
force and effect and preserve its business organization and material rights and
franchises, permits and licenses and to retain its present employee force so
that it will be available to Purchaser to the extent contemplated herein on and
after the Effective Date except that PSB or any of the PSB Subsidiaries may
terminate any employee for unsatisfactory performance or other reasonable
business purpose, provided that PSB first notifies and consults with Purchaser
prior to terminating any of the five highest paid employees of PSB, and to
maintain its existing, or substantially equivalent, credit arrangements with
banks and other financial institutions and to use its best efforts to maintain
the continuance of its general customer relationships;
23
<PAGE>
(v) take such action as may be necessary to maintain, preserve,
renew and keep in full force and effect its corporate existence and material
rights and franchises; and duly comply in all material respects with all laws
applicable to it and to the conduct of its business; and
(vi) use best efforts to continue to maintain fidelity bonds
insuring PSB and the PSB Subsidiaries against acts of dishonesty by each of
their employees in such amounts (not less than present coverage) as are
customary, usual and prudent for corporations or banks, as the case may be, of
their size and nature of business.
(b) Prohibited Action Without Approval. Neither PSB nor any of the
----------------------------------
PSB Subsidiaries will do the following, except with the prior written consent of
Purchaser and as otherwise required or permitted by this Agreement:
(i) incur or agree to incur any obligation or liability
(absolute or contingent) other than the taking of deposits and other liabilities
incurred in the ordinary course of business and consistent with prior practice,
and liabilities arising out of, incurred in connection with, or related to the
consummation of this Agreement; make any amendment to any Material Contract
which would materially adversely affect its rights thereunder; acquire (by
merger, consolidation, or acquisition of stock or assets) any corporation,
partnership or other business organization or division or substantial part
thereof; sell or otherwise dispose of any substantial part of its assets; enter
into, dispose or divest itself of any Joint Venture or partnership or cause any
business entity to become a subsidiary or affiliate; sell or otherwise dispose
of any real property owned or operated by PSB or any PSB Subsidiary, except for
the sale of real estate owned in the ordinary course of PSB's or any PSB
Subsidiary's business; enhance, expand, modify, replace or alter any computer or
data processing system owned, leased or licensed by PSB or any PSB Subsidiary
(including any software associated with any such computer or system), except in
the ordinary course of business; make, originate or otherwise acquire one or
more loans, or one or more loan commitments for one or more loans, or one or
more lines of credit, in a manner inconsistent with established policies and,
notwithstanding the prior approval right of Purchaser applicable to the
provisions of this Section 7(b), Purchaser shall be deemed to have consented to
such loan if it has not objected within seven (7) days of written notice
thereof; or enter into any contract, agreement, commitment or arrangement with
respect to any of the foregoing;
(ii) grant any general or uniform increase in the rate of pay of
employees or employee benefits, or grant any material increase in salary or
employee benefits of any officer, employee or agent whose salary exceeds
$50,000, except as otherwise disclosed on Schedule 7(b)(ii) of the PSB
-----------------
Disclosure Schedules;
(iii) except as otherwise currently required by contract as
disclosed on Schedule 7(b)(iii) of the PSB Disclosure Schedules, make any
------------------
material capital expenditure, except for ordinary repairs, renewals and
replacements;
24
<PAGE>
(iv) enter into any material transactions other than in the
ordinary course of business;
(v) compromise or otherwise settle or adjust any assertion or
claim of a deficiency in taxes (or interest thereon or penalties in connection
therewith) in an amount in excess of $50,000 or file any appeal from an asserted
deficiency, except in a form previously approved by Purchaser, which approval
shall not be unreasonably withheld, or without causing PSB any unreasonable
delay, file any federal or state tax return before furnishing a copy to
Purchaser and affording Purchaser an opportunity to consult with the filing
entity;
(vi) open any new office or close any current office of PSB or
any of the PSB Subsidiaries at which business is conducted;
(vii) issue, sell, distribute, redeem or acquire for value, or
agree to do so, any debt securities or any shares of the capital stock or other
equity securities or other ownership interests of PSB or of any PSB Subsidiary
or distribute, issue, sell or grant any stock appreciation rights or options
covering, warrants to purchase or contracts to issue, or enter into any
contracts or other rights entitling anyone to acquire or obligating PSB or any
of the PSB Subsidiaries to issue, any capital stock or securities convertible
into or exchangeable for shares of capital stock, of PSB or any of the PSB
Subsidiaries, or declare, issue or pay any dividend, stock split or other
distribution of assets or property, whether consisting of money, securities,
warrants, rights, other personal property, real property or other things of
value, to its members or other owners, as the case may be, other than (A) cash
dividends payable by any PSB Subsidiary which is wholly owned by PSB to PSB or
another PSB Subsidiary which is wholly owned by PSB, (B) sinking fund or other
mandatory payments required under the terms of any indenture or loan agreement
or repurchases of any outstanding debt securities to be applied against any such
sinking fund payments of which Purchaser has been advised and in amounts which
do not exceed, with respect to any series or class of debt securities, the
sinking fund payments required within the next twelve-month period, (C) the
payment of any debt security upon the maturity thereof, (D) normal dividends or
interest on savings and other accounts in accordance with the respective terms
of said accounts and to the extent permitted by the rules and regulations of
applicable governmental authorities, and (E) as set forth on Schedule 7(b)(vii)
------------------
of the PSB Disclosure Schedules;
(viii) (A) sell or pledge or otherwise encumber any stock owned by
it in any PSB Subsidiary, (B) amend its, or permit the amendment of any PSB
Subsidiary's, Incorporation Document, or (C) enter into any agreement,
commitment or arrangement with respect to any of the foregoing;
(ix) subject or agree to subject any of its properties or assets
to any material lien, claim, charge, option or encumbrance, except in the
ordinary course of business;
(x) except as (A) otherwise permitted by this Agreement, (B)
required by law or (C) disclosed on Schedule 7(b)(x) of the PSB Disclosure
----------------
Schedules, create or modify
25
<PAGE>
or agree to create or modify any employment or severance arrangement or any
pension or profit sharing plan, bonus, deferred compensation, death benefit,
retirement or other employee or director benefit plan of whatsoever nature,
including without limitation the Benefits Plans, or change or agree to change
the level of benefits under any such arrangement or plan, or increase or agree
to increase any severance or termination pay benefit or any other fringe
benefit;
(xi) modify, amend or cancel any of its existing borrowings from
other lenders other than intra-corporate borrowings and borrowings from the
Federal Home Loan Bank of New York; or
(xii) directly or indirectly through any investment banker,
broker, financial or investment advisor or other agent, solicit or initiate, or
encourage any unsolicited inquiry respecting, any proposal or offer for, or
enter into discussions or negotiate for, or authorize or enter into any
agreement or agreement in principle providing for, any merger, consolidation,
sale or other disposition of all or substantially all of the assets or
securities, tender offer, exchange offer or other acquisition of outstanding
securities or other business combination or takeover transaction (collectively,
a "Transaction") (other than the Merger), whether as the proposed surviving,
disappearing or acquired corporation, or (except as may be required by court
order or decree or required by applicable law, statute or regulation) furnish or
cause to be furnished any information, except information previously made public
and any information customarily furnished (or which the Sole Stockholder
customarily furnishes) to the public in the ordinary course of business,
concerning its business or properties, to any person or entity, other than
Purchaser. In addition, PSB will notify Purchaser by telephone to its chief
executive officer or general counsel promptly upon receipt of any inquiry with
respect to a proposed Transaction with another person or receipt of a request
for information from any governmental or regulatory authority with respect to a
proposed Transaction with another party, and will deliver as soon as practicable
by private overnight courier to the Purchaser's officer notified as required
above a copy of any document relating thereto promptly after any such document
is received by PSB. Notwithstanding the foregoing, nothing contained in this
Section 7(b)(xii) or any other provision of this Agreement shall prohibit the
PSB Board of Directors from providing information to, or entering into
discussions or negotiations with, any person or entity that makes any
unsolicited bona fide proposal if the PSB Board of Directors, based on the
advice of independent legal counsel, determines in its sole discretion that such
action is necessary for the PSB Board of Directors to act in a manner consistent
with its fiduciary duty under applicable law. In consideration of the foregoing
and of Purchaser's entering into this Agreement, PSB agrees that if at any time
prior to March 31, 1995, any person, other than Purchaser or a subsidiary or
affiliate of Purchaser or any agency or instrumentality of the United States
Government, shall directly or indirectly, or acting through one or more
intermediaries or affiliates: (A) enter into an agreement or understanding with
PSB or USTOP relating to the acquisition by such person of, or acquire from PSB
or USTOP, the legal or beneficial ownership (as defined by Rule 13d-3 of the
Securities Exchange Act of 1934, as amended) of ten percent (10%) or more of any
class of stock of PSB; or (B) enter into an agreement or understanding with PSB
or USTOP relating to the acquisition of, or acquire, all or substantially all
(i.e., twenty-five percent (25%) or more) of the assets or operations of PSB
- - -----
(the events in clauses (A) and (B) being referred to herein as
26
<PAGE>
"Acquisition Events"), then PSB shall pay to Purchaser on one occasion only the
termination fee of Five Million and 00/100 Dollars ($5,000,000.00) in cash on
demand (the "Termination Fee"). Notwithstanding the preceding sentence, PSB
shall not be obligated to pay to Purchaser such termination fee in the event:
(i) the parties mutually agree to terminate this Agreement pursuant to Section
17(a); (ii) PSB validly terminates this Agreement pursuant to Section 17(b)(ii),
Section 17(c) or Section 17(d); or (iii) Purchaser validly terminates this
Agreement pursuant to Section 17(d) or Section 17(e) hereof. To the extent an
Acquisition Event constitutes a breach of this Section 7(b)(xii) or any other
provision of this Agreement, receipt of the Termination Fee shall constitute
Purchaser's sole and exclusive remedy for such breach.
(c) Best Efforts. PSB will undertake or, to the extent such action
------------
is not within the sole power of PSB, use its best efforts to cause to be
undertaken, each such action as may be necessary to effectuate the Merger and to
carry out the provisions of this Agreement.
(d) No Action to Interfere. Except as otherwise required by law, its
----------------------
Charter or its By-laws, PSB will take no action, and will use its best efforts
to prevent any action from being taken, which would result in the imposition of
special stockholder, Board of Directors or other approval requirements with
respect to the Merger or other transaction contemplated hereby which would
frustrate or interfere with the Merger or any such transaction.
(e) Liabilities. Consistent with past practices, PSB and the PSB
-----------
Subsidiaries shall pay or discharge their current liabilities when the same
become due and payable, except for such liabilities as may be subject to a good
faith dispute or counterclaim.
(f) Goodwill. Neither PSB nor any PSB Subsidiary shall enter into
--------
any transaction which will create goodwill on its books and records under
generally accepted accounting principles.
(g) No Violation. Neither PSB nor any PSB Subsidiary will take any
------------
action which knowingly violates any statute, code, ordinance, rule, regulation
or judgment, order, writ, arbitral award, injunction or decree of any court,
governmental agency or body or arbitrator, domestic or foreign, having
jurisdiction over its properties, where such violation or violations,
individually or in the aggregate, could have a material adverse effect upon PSB
and the PSB Subsidiaries, taken as a whole.
(h) Operating Expenses. Except for fees and expenses incurred in
------------------
connection with the transactions contemplated hereby or in order to comply with
any law, rule or regulation of any Applicable Governmental Authority, PSB and
the PSB Subsidiaries, taken as a whole, shall not increase the level of their
operating expenses in any material respect.
(i) Accounting. PSB and each PSB Subsidiary will maintain its books,
----------
accounts and records in accordance with generally accepted accounting principles
in all material respects. Neither PSB nor any PSB Subsidiary shall make any
change in any method of accounting or accounting practice, or any change in the
method used in allocating income,
27
<PAGE>
charging costs or accounting for income, except as may be required by law,
regulation or generally accepted accounting principles or as approved in writing
by Purchaser. Neither PSB nor any PSB Subsidiary shall change any practice or
policy with respect to the charging off of loans or the maintenance of its
reserve for possible loan losses, except as required by law, regulation or
generally accepted accounting principles or as approved in writing by Purchaser.
8. Additional Agreements of PSB. PSB hereby covenants and agrees with
----------------------------
Purchaser that PSB and each of the PSB Subsidiaries will or, to the extent not
within their sole control, will use their reasonable efforts to, act as follows:
(a) Continuing Access to Information. Purchaser has conducted a due
--------------------------------
diligence investigation of PSB and the PSB Subsidiaries, the results of which
Purchaser deems satisfactory. From the date hereof through the Effective Date,
subject to the provisions of Section 10 hereof, PSB shall permit Purchaser and
its authorized representatives full access upon reasonable notice and during
regular business hours to PSB's properties and those of the PSB Subsidiaries.
PSB shall make its and the PSB Subsidiaries' directors, management and other
employees and agents and authorized representatives (including counsel and
independent public accountants) available to confer with Purchaser and its
authorized representatives at reasonable times and upon reasonable request, and
PSB shall, and shall cause the PSB Subsidiaries to, disclose and make available
to Purchaser, and shall use its best efforts to cause its agents and authorized
representatives to disclose and make available to Purchaser, all books, papers
and records relating to the assets, properties, operations, obligations and
liabilities of PSB and the PSB Subsidiaries, except to the extent prohibited by
applicable law. In furtherance and not in limitation of the foregoing, PSB
shall reasonably promptly, upon reasonable request of Purchaser, furnish to or
make available to Purchaser, to the extent available, all the contracts,
agreements, papers and writings referred to in the PSB Disclosure Schedules (to
the extent the same are not made available in the Appendix Books delivered with
such PSB Disclosure Schedules) or called for by the list or lists provided by
Purchaser to PSB on or prior to the date hereof (the "Post-Signing Disclosure
List").
(b) Management Reports. PSB will provide to Purchaser, on or before
------------------
the 25th day of each calendar month, (i) the report of management of PSB and
each PSB Subsidiary to the Board of Directors of PSB for the prior month, if
any, including delinquency schedules, additions to loan loss reserves, an update
to Schedule 6(z), if necessary, minutes of all meetings of the Board of
-------------
Directors of PSB and each PSB Subsidiary and each committee thereof during the
prior month and the payroll report for the prior month and (ii) monthly
financial statements prepared by PSB for the preceding calendar month, including
a statement of financial condition and an income statement for
PSB and each PSB Subsidiary together with a written certificate of the chief
financial officer of PSB to the effect that such financial statements are true,
correct and complete in all material respects and have been prepared in
accordance with GAAP consistently applied, except for changes, if any, required
by GAAP and as disclosed therein, and with the books and records of PSB, and
present fairly in all material respects the consolidated financial position of
PSB and the PSB Subsidiaries at the date thereof and the results of operations
for the period covered thereby (subject to normal year-end adjustments).
Throughout the period prior
28
<PAGE>
to the Effective Date, PSB will cause one or more of its designated
representatives to confer on a regular and frequent basis with representatives
of Purchaser and to report the general status of the ongoing operations of PSB
and the PSB Subsidiaries, and any governmental approvals related thereto.
(c) Information for Regulatory Filings. PSB will furnish required
----------------------------------
information reasonably requested by Purchaser and otherwise cooperate with
Purchaser in obtaining the Required Consents. PSB represents, warrants and
covenants to Purchaser that all information so furnished shall be true and
correct in all material respects without untrue statements of material fact or
omissions of any material fact required to be stated to make the information
stated therein not misleading.
(d) Stockholder Approval. PSB will take all steps in compliance with
--------------------
all applicable laws and regulations necessary to submit this Agreement and the
transactions contemplated hereby to the Sole Stockholder at a regular or special
meeting thereof for the purpose of acting on this Agreement and the transactions
contemplated hereby within thirty (30) days after the date hereof. PSB will use
its best efforts to obtain the necessary approvals of this Agreement and the
transactions contemplated hereby by the Sole Stockholder.
(e) Benefit Plans. PSB and Purchaser shall cooperate in effecting
-------------
the following treatment of the Benefit Plans:
(i) On the Effective Date, the Resulting Bank shall be
substituted for PSB as the sponsoring employer under those Benefit Plans with
respect to which PSB is a sponsoring employer immediately prior to the Effective
Date, and shall assume and be vested with all of the powers, rights, duties,
obligations and liabilities previously vested in PSB with respect to each such
plan. Except as otherwise provided herein, each such Benefit Plan sponsored by
an PSB Subsidiary shall be continued in effect by the Resulting Bank or any
applicable affiliate after the Effective Date without a termination or
discontinuance thereof as a result of the Merger, subject to the power reserved
without restriction to the Resulting Bank or any applicable affiliate under each
such Plan to subsequently amend or terminate each Plan in accordance with the
terms thereof. PSB, each PSB Subsidiary, the Purchaser and the Resulting Bank
will use all reasonable efforts (a) to effect said substitutions and
assumptions, and such other actions contemplated under this Agreement, and (b)
to amend such plans to the extent necessary to provide for said substitutions
and assumptions, and such other actions contemplated under this Agreement.
(ii) As soon as practicable after the Effective Date, Purchaser shall
provide, or cause an affiliate to provide, to each employee of PSB and any PSB
Subsidiary as of the Effective Date ("PSB Employees") the opportunity to
participate in the employee benefit plans and programs maintained by Purchaser
and Purchaser's subsidiaries (each, a "Purchaser Subsidiary") for similarly-
situated employees (the "Purchaser Plans"). Until such time, each employee of
PSB and any PSB Subsidiary shall be entitled to receive employee benefits at
least equivalent to those maintained by PSB prior to the Effective Date.
Nothing in the preceding
29
<PAGE>
sentence shall obligate Purchaser or Resulting Bank to provide or cause to be
provided any benefits duplicative to those provided under any Benefit Plan
continued pursuant to subparagraph (i) above. Except as otherwise provided in
this Agreement or in accordance with the Benefits Letter, the power of
Purchaser, Resulting Bank or any PSB or Purchaser Subsidiary to amend or
terminate any Benefit Plan shall not be altered or affected. Moreover, this
Agreement shall not confer upon any PSB employee any rights or remedies
hereunder and shall not constitute a contract of employment or create any
rights, to be retained or otherwise, in employment at Purchaser, Resulting Bank,
any PSB Subsidiary or any Purchaser Subsidiary.
(f) Copies of Filings. Without limiting the provisions of Section
-----------------
8(c), PSB will deliver to Purchaser, at least twenty-four hours prior to an
anticipated date of filing, all documents to be filed with any regulatory
authority in connection with the transactions contemplated by this Agreement.
(g) Loans and Leases to Affiliates. All loans and leases hereafter
------------------------------
made by PSB or any of the PSB Subsidiaries to any PSB Managers or Affiliates
shall be made only in the ordinary course of business and on the same terms and
at the same interest rates as those prevailing for comparable transactions with
others and shall not involve more than the normal risk of repayment or present
other unfavorable features.
(h) ERISA. PSB shall maintain and cause each PSB Subsidiary to
-----
maintain Benefits Plan assets that are at least equal in value to Benefits Plan
benefits guaranteed under Title IV of ERISA, and not permit any Prohibited
Transaction within the meaning of Section 406 of ERISA to exist.
9. Additional Agreements of Purchaser. Purchaser hereby covenants and
----------------------------------
agrees with PSB as follows:
(a) Notice of Inability to Fulfill Conditions. Purchaser will
-----------------------------------------
promptly notify PSB in the event that Purchaser determines that (i) it is unable
to fulfill or cause the fulfillment of the conditions to the performance of all
parties set forth in Section 11 hereof or (ii) it is unable to fulfill any of
its conditions to the performance of PSB and the PSB Subsidiaries set forth in
Section 12 hereof.
(b) Corporate Approvals. Purchaser, as the sole stockholder of
-------------------
Subsidiary, agrees to approve this Agreement and the transactions contemplated
hereby in accordance with Section 5(c) of this Agreement.
(c) Employment. With respect to those employees of PSB or a PSB
----------
Subsidiary whose positions are eliminated as a consequence of the Merger,
Purchaser shall, in a manner consistent with its existing personnel policies,
attempt to place as many of such employees as possible in comparable positions
with the Purchaser or a subsidiary thereof. In the event that any officer or
employee of PSB or any PSB Subsidiary is terminated by Purchaser or any
Purchaser Subsidiary, such officer or employee shall be entitled to receive
severance benefits on the date
30
<PAGE>
of such termination as set forth in the Benefits Letter delivered in connection
with and on the date of execution of this Agreement.
(d) Information for Regulatory Filing. Purchaser promptly shall
---------------------------------
furnish PSB with any information relating to Purchaser and Subsidiary which is
required under any applicable laws or regulations for inclusion in any filing or
notice that PSB or the Sole Stockholder is required to make or give with any
regulatory or supervisory authority or, in the case of PSB, to the Sole
Stockholder of PSB to consummate the transactions contemplated by this
Agreement. Purchaser represents, warrants and covenants to PSB that all
information so furnished shall be true and correct in all material respects
without untrue statements of material fact or omissions of any material fact
required to be stated to make the information stated therein not misleading.
(e) No Section 338 Election. Neither Purchaser nor Subsidiary
-----------------------
shall make the election permitted under Section 338(a) of the Code or take any
action or permit any action to be taken that causes Purchaser or Subsidiary to
be treated as having made such an election pursuant to subsection (e) of Section
338 of the Code. Furthermore, Purchaser and Subsidiary shall timely file a
"protective carryover election" pursuant to Temporary Regulation (S)1.338-
4T(f)(6) and shall cause all members of an affiliated group, as such term is
defined in Code Section 338(h)(5), of which Purchaser or Subsidiary is a member
to join in such election.
(f) PSB Access to Information. After the Effective Date and for such
-------------------------
time as is reasonably requested by the Sole Stockholder, Purchaser agrees to
permit the Sole Stockholder and its authorized representatives full access upon
reasonable notice and during regular business hours to its properties for the
limited purpose of reviewing the books and records including, but not limited
to, financial and tax records relating to PSB and any PSB Subsidiary for any
period prior to the Effective Date for the purposes of, among other things,
preparing financial statements for PSB and any PSB Subsidiary and all applicable
tax, securities and regulatory filings required to be filed by or on behalf of
the Sole Stockholder.
10. Confidentiality. The parties hereto agree that all information
---------------
received from another party or any subsidiary thereof in connection with the
transactions contemplated herein shall be confidential. Neither such party nor
any of their respective agents, employees, accountants, attorneys or other
representatives shall divulge any confidential information relating to the
business of Purchaser, Subsidiary, PSB or the PSB Subsidiaries to a third party
or use the same in any manner for the profit or to the benefit of Purchaser,
Subsidiary, PSB or the PSB Subsidiaries, or any such employee, agent or a third
party. In the event this Agreement is terminated, each such party shall return
to the other its confidential information without retaining any notes or
abstracts therefrom, except that any such confidential information or notes or
abstracts therefrom presented to the Board of Directors of Purchaser or any
committee thereof for the purpose of considering this Agreement, the Merger and
the related transactions may be kept and maintained by Purchaser with other
records of Board and Board committee meetings subject to a continuing obligation
of confidentiality. The obligation of the parties to keep information
confidential shall not apply to (i) any information which (A) was already
lawfully in its possession prior to the disclosure thereof by Purchaser,
Subsidiary, PSB or the PSB
31
<PAGE>
Subsidiaries, as the case may be; (B) was then generally known to the public
other than as a result of a breach of this confidentiality obligation; (C)
became known to the public through no fault of the parties or any of their
respective agents or representatives; or (D) was lawfully disclosed to a party
by a third party who was not bound by an obligation of confidentiality to any
other party hereto or (ii) disclosures required to be made to third parties in
accordance with this Agreement, any law, regulation or order of a court or
regulatory agency of competent jurisdiction or authority or information included
in PSB Filings or regulatory or supervisory filings.
11. Conditions Precedent to the Obligations of PSB, Purchaser and
-------------------------------------------------------------
Subsidiary. The obligations of PSB, Purchaser and Subsidiary to consummate the
- - ----------
Merger shall be subject to the fulfillment at the Closing Date of each of the
following conditions (any one or more of which may be waived by PSB, Purchaser
and Subsidiary, but only in writing):
(a) Receipt of Required Consents. Purchaser and PSB shall have
----------------------------
received the Required Consents; the Required Consents shall not contain or be
subject to any terms or conditions that are materially different from terms or
conditions customarily contained in similar approvals or notices issued prior to
the date hereof; the Required Consents and the transactions contemplated hereby
shall not on the Closing Date be contested by any federal or state governmental
authority; and on the Closing Date the Required Consents needed for the Merger
shall have been obtained and shall not have been withdrawn or suspended by the
issuing governmental authority.
(b) No Action to Prevent Consummation. No decision of any federal,
---------------------------------
state or foreign court awarding substantial damages or penalties against any of
the parties hereto or affiliates thereof in connection with the Merger shall
have been rendered, or no action or proceeding before any such court seeking
material damages or penalty or a preliminary or permanent injunction or other
order to prevent the consummation of the Merger shall be pending. No statute,
rule, regulation or policy shall have been proposed, promulgated or enacted by
any governmental or regulatory agency of competent jurisdiction which prevents
or materially restricts the Merger.
12. Conditions Precedent to Obligations of Purchaser and Subsidiary. The
---------------------------------------------------------------
obligations of Purchaser and Subsidiary to effect the Merger shall be subject to
the fulfillment at the Closing Date of each of the following conditions (any one
or more of which may be waived by Purchaser and Subsidiary, but only in
writing):
(a) Status as of Closing Date. At and as of the Closing Date:
-------------------------
(i) the representations and warranties of PSB contained in this
Agreement shall have been true and correct in all material respects on the date
of this Agreement and shall be true and correct in all material respects on the
Closing Date as though made at and as of the Closing Date;
32
<PAGE>
(ii) In all material respects PSB shall have performed and
satisfied or otherwise complied with, or caused such performance and
satisfaction of and compliance with, all covenants, terms and conditions
required by this Agreement to be performed and satisfied or otherwise complied
with by PSB or any PSB Subsidiary on or prior to the Closing Date;
(iii) except as disclosed in Schedule 6(h) of the PSB Disclosure
-------------
Schedules as of the date hereof, during the period from December 31, 1993 to the
Effective Date, there shall not have occurred any material adverse change in the
business, assets, properties, financial condition or results of operations of
PSB and the PSB Subsidiaries, taken as a whole, except for such changes as may
occur as a consequence of the transactions contemplated by this Agreement; and
(iv) there shall be delivered to Purchaser a certificate (dated
the Closing Date and signed by the chief executive officer of PSB) stating on
behalf of PSB that to the best of his knowledge the conditions set forth in
clauses (i) through (iii) above have been satisfied.
(b) Stockholder Approval. The Merger and this Agreement shall have
--------------------
been approved by the Sole Stockholder within the thirty (30) day requirement
provided in Section 8(d) above according to the rules and regulations of the OTS
and any other applicable requirements.
(c) Required Action. All action required to be taken by or on the
---------------
part of PSB to authorize the execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby shall
have been duly and validly taken by the Board of Directors and stockholder of
PSB, and Purchaser shall have received a certificate signed by the Secretary of
PSB and dated the Closing Date, certifying to the satisfaction of the condition
set forth in Section 12(b) herein and to the effectiveness of all resolutions
adopted by the Board of Directors (including committees thereof) and the Sole
Stockholder relating to this Agreement and the Merger and related transactions,
a copy of which resolutions shall be attached to such certificate.
(d) Consents, Waivers, Et Cetera. Except as provided in Section
----------------------------
12(h) below, all consents, approvals, waivers, exemptions, amendments and
authorizations required to be obtained by PSB prior to the Closing Date shall
have been obtained at or prior to the Closing Date, and all filings,
registrations, applications, designations and declarations required on the part
of PSB prior to the Closing Date shall have been made or effected at or prior to
the Closing Date.
(e) Attorney's Opinion. Purchaser shall have received an opinion
------------------
(which may state that it is governed by and is to be interpreted in accordance
with the Legal Opinion Accord of the American Bar Association Section of
Business Law), dated the Effective Date, of Vedder, Price, Kaufman & Kammholz,
special counsel for PSB, in substantially the form attached hereto as Exhibit A;
---------
provided, however, that with respect to matters involving the laws of the State
of Delaware, such special counsel may rely upon an opinion (and the opinion of
special counsel may recite such reliance) of Delaware counsel acceptable to PSB
and its special counsel. With respect
33
<PAGE>
to matters involving the laws of the State of New Jersey, Purchaser shall have
received an opinion (which may state that it is governed by and is to be
interpreted in accordance with the Legal Opinion Accord of the American Bar
Association Section of Business Law), dated the Effective Date, of Mesirov,
Gelman, Jaffe, Cramer & Jamieson, special New Jersey counsel for PSB and the PSB
Subsidiaries, in substantially the form attached hereto as Exhibit B.
---------
(f) Satisfactory Proceedings. All proceedings required to be taken
------------------------
by PSB in connection with the transactions contemplated in this Agreement shall
have been taken, and all documents incidental thereto, and all legal matters
shall be satisfactory in form and substance to Purchaser, which approval shall
not be unreasonably withheld or unreasonably delayed, and Purchaser shall have
received copies of all documents which Purchaser may reasonably request in
connection with said transactions and copies of the records of all corporate
proceedings in connection therewith in form and substance satisfactory to
Purchaser.
(g) Comfort Letter. Purchaser shall have received on or prior to the
--------------
Closing Date a comfort letter from KPMG Peat Marwick, independent certified
public accountants for PSB, dated the Closing Date, addressed to both Purchaser
and PSB, with respect to certain financial information concerning PSB and the
PSB Subsidiaries, which shall be in form customary for such accountants' letters
in transactions such as those contemplated by this Agreement.
(h) Consent to PSB Contracts. All consents, approvals or waivers, in
------------------------
form and substance reasonably satisfactory to Purchaser, required to be obtained
in connection with the Merger from other parties to Material Contracts to which
PSB or any of the PSB Subsidiaries is a party or by which they or any of their
assets or properties may be bound or committed shall have been obtained except
where the failure to so obtain such consents, approvals or waivers will not have
a material adverse effect on the business, operations or financial condition of
PSB and the PSB Subsidiaries, taken as a whole.
(i) FIRPTA Affidavit. PSB shall have delivered to Purchaser an
----------------
affidavit of an executive officer of PSB stating, under penalties of perjury,
that PSB is not and has not been a United States real property holding company
(as defined in Section 897(c)(2) of the Code) during the applicable period
specified in Section 897(c)(1)(A)(ii) of the Code.
13. Conditions Precedent to Obligations of PSB. The obligations of PSB to
------------------------------------------
effect the Merger shall be subject to the fulfillment at the Closing Date of
each of the following conditions (any one or more of which may be waived by PSB,
but only in writing):
(a) True Representations and Warranties. All representations and
-----------------------------------
warranties of Purchaser and Subsidiary contained in this Agreement shall be true
and correct in all material respects at and as of the Closing Date, as though
such representations and warranties were made at and as of the Closing Date, and
Purchaser and Subsidiary shall have performed and satisfied in all material
respects all covenants, conditions and agreements required by this Agreement to
be performed and satisfied on or prior to the Closing Date, and at the Closing
Date there shall
34
<PAGE>
be delivered to PSB certificates (dated the Closing Date and signed by the
Chairman, Vice Chairman, President or Executive Vice President of each of
Purchaser and Subsidiary, and stated to be to the best of their knowledge) to
the foregoing effect.
(b) Stockholder Approval. The Merger shall have been approved by the
--------------------
Sole Stockholder according to the rules and regulations of the OTS and any other
applicable requirements.
(c) Sole Stockholder Investment Committee Approval. The Investment
----------------------------------------------
Committee of the Sole Stockholder shall have approved the transactions
contemplated hereby within fifteen (15) days after the date hereof. For
purposes of this Section 13(c) and Section 18(j) only, the Sole Stockholder
agrees to be a party to this Agreement and to use its best efforts to cause its
Investment Committee to meet for the purpose of considering the transactions
contemplated hereby by such date as is noted in the preceding sentence.
(d) Attorney's Opinion. PSB shall have received an opinion (which
------------------
may state that it is governed by and is to be interpreted in accordance with the
Legal Opinion Accord of the American Bar Association Section of Business Law),
dated the Closing Date, of Richard F. Ober, Jr., General Counsel to Purchaser
and Subsidiary, in substantially the form of Exhibit C attached hereto.
---------
(e) Required Action. All action required to be taken by or on the
---------------
part of Purchaser and Subsidiary to authorize the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby shall have been duly and validly taken by the respective
Boards of Directors and stockholders of Purchaser and Subsidiary.
(f) Consents, Waivers, Et Cetera. All consents, approvals, waivers,
----------------------------
exemptions, amendments and authorizations required to be obtained by Purchaser
and Subsidiary prior to the Closing Date for the consummation of the Merger
shall have been obtained at or prior to the Closing Date, and all filings,
registrations, applications, designations and declarations required on the part
of Purchaser and Subsidiary prior to the Closing Date in connection with the
consummation of the Merger and such transactions shall have been made or
effected at or prior to the Closing Date.
(g) Satisfactory Proceedings. All proceedings required to be taken
------------------------
by Purchaser and Subsidiary in connection with the transactions contemplated in
this Agreement shall have been taken, and all documents incidental thereto shall
be satisfactory in form and substance to PSB, and PSB shall have received copies
of all documents which PSB may reasonably request in connection with said
transactions and copies of the records of all corporate proceedings in
connection therewith in form and substance satisfactory to PSB.
(h) Fairness Opinion. Hovde Financial, Inc. ("Hovde") shall within
----------------
thirty (30) days of the date hereof have delivered to the Board of Directors and
the Sole Stockholder of PSB an opinion to the effect that the Merger
Consideration is fair to the stockholder of PSB from a
35
<PAGE>
financial point of view, which opinion shall be in standard industry form with
respect to transactions of this nature, and which opinion shall not have been
modified or withdrawn in any material respect on or prior to the Closing Date
due to a determination by Hovde that such opinion was no longer valid. No such
modification or withdrawal shall cause the condition precedent to PSB's
obligation to effect the Merger set forth in this Section 13(h) to become
unfulfilled once fulfilled, except a modification or withdrawal occurring after
the occurrence of an Acquisition Event.
14. Further Assurances. Subject to the terms and conditions herein
------------------
provided, each of the parties hereto agrees to use all reasonable efforts to
take, or cause to be taken, all action and to do, or cause to be done, all
things necessary, proper or advisable on the part of such party, to consummate
and make effective the transactions contemplated by this Agreement at the
earliest practicable date, including the obtainment of all required consents,
approvals, waivers, exemptions, amendments and authorizations, give all notices,
and make or effect all filings, registrations, applications, designations and
declarations, including, but not limited to, those described in the lists, and
each party shall cooperate fully with the other (including by providing any
necessary information) with respect to the foregoing. In case at any time any
further action is necessary or desirable to carry out the purposes of this
Agreement, the proper officers and/or directors of Purchaser, Subsidiary or PSB
will take all such necessary action.
15. Payment of Expenses. Each party hereto shall pay its own fees and
-------------------
expenses incident to preparing for, entering into, and carrying out this
Agreement and the transactions contemplated hereby.
16. Publicity and Reports. Purchaser and PSB shall coordinate all
---------------------
publicity relating to the transactions contemplated by this Agreement and,
except as otherwise required by law, or with respect to employee meetings,
neither party shall issue any press release, publicity statement or other public
notice relating to this Agreement or any of the transactions contemplated hereby
without obtaining the prior consent of the other, which consent shall not be
unreasonably withheld. Each party shall, solely with respect to information
furnished by it and except as required by law, obtain the prior consent of the
other party to the form and content of such information in any application or
report made to any regulatory authority, taxing authority or similar agency in
each case which relates to any of the transactions contemplated by this
Agreement.
17. Termination of Agreement. Notwithstanding any provision to the
------------------------
contrary herein, and notwithstanding the fact that the Sole Stockholder may have
previously approved this Agreement, this Agreement may be terminated at any time
on or prior to the Effective Date:
(a) by mutual consent of the respective Boards of Directors of PSB
and Purchaser; or
(b) (i) by the Purchaser or PSB after March 31 1995, or such later
date as may be mutually agreed upon in writing by the parties;
36
<PAGE>
(ii) by the Board of Directors of either PSB or Purchaser if a
material breach of a covenant made by the other shall have occurred (it being
agreed that for purposes of this Section 17(b)(ii), no provision of Section 5 or
6 hereof shall be deemed a covenant except for Sections 5(b), 5(c), 5(f), 5(h),
6(m) and 6(u)) and such breach has not been cured, or is not capable of being
cured, within thirty (30) days after written notice of the existence thereof
shall have been given to the other party;
(c) by the Board of Directors of PSB ten (10) days after any
application or notice required to be filed by Purchaser or Subsidiary for
approval of the transactions contemplated by this Agreement with applicable
governmental authorities including, without limitation, any Required Consent has
been denied and is not subject to further appeal or an appeal is not then being
diligently pursued in good faith;
(d) if either party shall refuse to close because, on the latest date
on which the Closing must be held as determined by Section 1(b), all the
conditions to its obligation to close shall not have been met (other than (i) as
provided in subsections (b)(ii) or (c) above and (ii) a failure of the condition
set forth at Sections 12(b) and 13(b) above due to the circumstances set forth
in Section 7(b)(xii) hereof), the Board of Directors of such party may terminate
this Agreement by giving written notice of such termination to the other party;
or
(e) by the Purchaser, in the event that either (i) any information
supplied to Purchaser pursuant to the Post-Signing Disclosure List or (ii) any
PSB Disclosure Schedule delivered subsequent to the date of this Agreement,
whenever provided pursuant to Section 6(u) of this Agreement, discloses, in the
case of item (i) or (ii) above, matters which Purchaser in good faith believes
to be of such significance as to materially and adversely affect the business,
financial condition or the results of operations of PSB and the PSB Subsidiaries
on a consolidated basis, and, in the case of item (i) above, constitutes a
---
breach in any material respect of any representation and warranty of PSB or any
PSB Subsidiary, by giving written notice of termination to PSB within ten (10)
business days after receipt of such information or the PSB Disclosure Schedules,
as the case may be; provided, however, that such written notice of termination
with respect to any PSB Disclosure Schedule delivered after the parties agree to
a Closing Date or on the Effective Date shall be given on or prior to the
Effective Date. Notwithstanding the foregoing, Purchaser shall have no right to
terminate pursuant to this Section 17(e) as a result of any changes in general
economic conditions or matters which affect thrift institutions generally or any
change as may occur as a consequence of the transactions contemplated by this
Agreement.
In the event of termination under Section 17(a), Section 17(b), Section 17(c),
Section 17(d) or Section 17(e) hereof, neither PSB, Purchaser nor Subsidiary
shall have any further liability or obligation hereunder to the other or to any
stockholder, director, officer or employee, agent or representative of such
other party, except for the confidentiality obligations imposed by Section 10
above, but termination of this Agreement under clause (ii) of Section 17(b)
shall be without prejudice to any rights or remedies any party may have arising
out of any prior willful breach of any material representation, warranty,
covenant or condition in this Agreement. Notwithstanding the foregoing, the
Termination Fee may be due and payable to Purchaser pursuant to Section
7(b)(xii) of this Agreement as the sole and exclusive remedy for violation of
the terms of such section or any other provision of this Agreement.
37
<PAGE>
Notwithstanding any termination of this Agreement, (i) PSB shall indemnify and
hold Purchaser harmless from and against any claim by any broker or finder
asserting a right to brokerage commissions or finders' fees as a result of any
action allegedly taken by or understanding allegedly reached with PSB and (ii)
Purchaser shall indemnify and hold PSB harmless from and against any claim by
any broker or finder asserting a right to brokerage commissions or finders' fees
as alleged reached with Purchaser.
18. Miscellaneous.
-------------
(a) Binding Effect. Neither this Agreement nor any rights, duties or
--------------
obligations hereunder shall be assignable by PSB, Purchaser or Subsidiary, in
whole or in part, and any attempted assignment in violation of this prohibition
shall be null and void. Subject to the foregoing, all of the terms and
provisions hereof shall be binding upon, and inure to the benefit of, the
successors and permitted assigns of the parties hereto.
(b) Law Governing. Except to the extent that the laws of the United
-------------
States of America apply, this Agreement will be governed in all respects,
including validity, interpretation and effect, by the laws of the State of New
Jersey.
(c) Counterparts. This Agreement may be executed in several
------------
counterparts and one or more separate documents, all of which together shall
constitute one and the same instrument with the same force and effect as though
all of the parties had executed the same document.
(d) Amendment and Waiver. No supplement, modification, waiver or
--------------------
termination of this Agreement shall be binding unless executed in writing by the
party to be bound thereby (or in the case of a termination, by the party
exercising a right to terminate this Agreement). No waiver of any of the
provisions of this Agreement shall be deemed or shall constitute a waiver of any
other provision hereof or thereof (whether or not similar), nor shall any waiver
constitute a continuing waiver unless otherwise expressly provided in the
instrument granting such waiver. The parties hereto may amend or modify this
Agreement in such manner as may be agreed upon by a written instrument executed
by the parties, except that, after the meeting described in Section 8(d) hereof,
no such amendment or modification shall reduce the amount of, or change the
forms of consideration to be received by the Sole Stockholder, unless such
modification is submitted to a vote of the Sole Stockholder.
(e) Survival. Except for the agreements contained in Sections 2, 3,
--------
4, 5(d), 9(c), 9(e), 9(f), 10, 15, 16, 17 and 18 hereof, the respective
representations, warranties, covenants and agreements of the parties hereto
shall not survive the Effective Date but shall terminate as of such date and
none of the parties hereto or any of their respective stockholders, officers,
directors, employees or agents shall have any liability with respect thereto.
38
<PAGE>
(f) Notices. Any notice of communication required or permitted
-------
hereunder shall be sufficiently given if in writing and deemed effective when
(a) delivered in person, (b) delivered by recognized overnight courier service,
(c) delivered by facsimile transmission confirmed in writing or (d) mailed by
certified or registered mail, postage prepaid, as follows (except as the
following information may be revised in writing by a party hereto):
If to Purchaser, addressed to:
UJB Financial Corp.
Attn: T. Joseph Semrod
301 Carnegie Center
P.O. Box 2066
Princeton, NJ 08543-2066
Telephone No.: 609-987-3300
Facsimile No.: 609-987-3435
With a copy addressed to:
Richard F. Ober, Jr., Esq.
UJB Financial Corp.
301 Carnegie Center
P.O. Box 2066
Princeton, NJ 08543-2066
Telephone No.: 609-987-3430
Facsimile No.: 609-987-3435
If to PSB, addressed to:
Palisade Savings Bank, FSB
245 Main Street
Ridgefield Park, New Jersey 07660
Telecopy No.: (201) 641-8324
Attn: Joseph S. Paparatto, President
39
<PAGE>
With copies addressed to:
U.S. Thrift Opportunity Partners, Limited Partnership
c/o E.H. Thrift Management Inc.
225 W. Washington Street
Suite 2200
Chicago, Illinois 60606
Telecopy No.: (312) 419-7151
Attn: Edward G. Harshfield, President
and
Vedder, Price, Kaufman & Kammholz
222 North LaSalle Street
Suite 2600
Chicago, Illinois 60601
Telecopy No.: (312) 609-5005
Attn: Dalius F. Vasys, Esq.
(g) Entire Agreement. All schedules, exhibits and lists referred to
----------------
in this Agreement are integral parts hereof, and this Agreement, together with
the agreements contemplated herein, schedules, exhibits and related lists,
constitute the entire agreement among the parties hereto with respect to the
matters contained herein and therein, and supersede all prior agreements and
understandings between the parties with respect thereto.
(h) Headings. The section headings contained in this Agreement are
--------
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(i) Extensions; Waivers and Consents. Either party hereto, by
--------------------------------
written instrument signed by its Chairman, Vice Chairman, President, or Chief
Financial Officer, may extend the time for the performance of any of the
obligations of the other party hereto, and may waive, at any time before or
after approval of this Agreement and the transactions contemplated hereby by the
Sole Stockholder of PSB, subject to Section 18(d) hereof: (i) any inaccuracies
of the other party in the representations and warranties in this Agreement or
any other document delivered pursuant hereto or thereto; (ii) compliance with
any of the covenants or agreements of the other party contained in this
Agreement; (iii) the performance (including performance to the satisfaction of a
party or its counsel) by the other party of any of its obligations hereunder or
thereunder, and (iv) the satisfaction of any conditions to the obligations of
the waiving party hereunder or thereunder. Any consent or approval of a party
hereunder shall be effective only if signed by the Chairman, Vice Chairman,
President or Chief Financial Officer of such party.
40
<PAGE>
Subject to Section 18(d), no such instrument, consent or approval may modify the
form or amount of consideration to be received by the Sole Stockholder of PSB.
(j) Representations, Warranties and Covenants of Sole Stockholder.
-------------------------------------------------------------
The Sole Stockholder represents, warrants and covenants as follows:
(i) It is the sole beneficial owner of 100% of the issued and
outstanding capital stock of PSB (the "PSB Stock") and so owns the PSB Stock
free and clear of all liens, security interests, charges, claims and
encumbrances.
(ii) Except for certain powers granted to its Investment
Committee, it has sole investment and voting powers over the PSB Stock.
(iii) It hereby waives its statutory dissenters rights with
respect to the Merger and related transactions and covenants not to exercise any
dissenters rights with respect to the Merger and related transactions.
(iv) Subject to the obligations of the Sole Stockholder to act in
a manner consistent with its fiduciary duty to its limited partners under
applicable law, it will not sell, transfer, or otherwise dispose of or pledge,
grant a security interest in or otherwise encumber the PSB Stock or any
interest, tangible or intangible, therein or enter into any agreement,
commitment or obligation providing for any of the foregoing or providing for any
subscriptions, options, warrants, rights or exchange privileges with respect to
the PSB Stock.
41
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written, except as to Subsidiary, as noted;
provided, that Subsidiary's failure to execute this Agreement shall not affect
the validity or enforceability hereof.
UJB FINANCIAL CORP.
By: /s/ George J. Soltys, Jr.
--------------------------------------------
Its Senior Vice President
-----------------------------------------
ATTEST:
By: /s/ Dennis A. Williams
-------------------------
Its Assistant Secretary
----------------------
PSB INTERIM BANK, FSB
as of this ____ day of ____________, 1994.
By:
--------------------------------------------
Its
-----------------------------------------
ATTEST:
By:
-------------------------
Its
----------------------
PALISADE SAVINGS BANK, FSB
By: /s/ Joseph S. Paparatto
--------------------------------------------
Its: President and Chief Executive Officer
ATTEST:
By: /s/ Anthony Labozzetta
-------------------------
Its: Senior Vice President
For purposes of Sections 13(c) and 18(j) only.
U.S. THRIFT OPPORTUNITY PARTNERS, LIMITED
PARTNERSHIP, a Delaware limited partnership
By: U.S. Thrift Management Limited Partnership
Its General Partner
By: EH Thrift Management Inc.
Its General Partner
By: /s/ Edward G. Harshfield
--------------------------------------------
Its: President
42
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EXHIBIT (28)A.
[LOGO]
UJB
FINANCIAL
301 Carnegie Center
P.O. Box 2066
Princeton, NJ 08543-2066
609 987-3200
NEWS RELEASE
For Release: Immediate
Contact: Media
C. Scott Rombach, VP
Corporate Communications
(609) 987-3350
Analysts/Investors
Kerry K. Calaiaro, VP
Investor Relations
(609) 987-3326
UJB FINANCIAL TO ACQUIRE PALISADE SAVINGS BANK
Princeton, New Jersey, May 19, 1994...UJB Financial Corp. (NYSE: UJB) and
Palisade Savings Bank, FSB headquartered in Ridgefield Park, New Jersey,
announced today that they have entered into a definitive merger agreement under
which UJB Financial will acquire Palisade for $42.1 million in cash. Palisade
is a wholly owned subsidiary of U.S. Thrift Opportunity Partners, Limited
Partnership.
Palisade Savings Bank has $304 million in assets and operates eight branch
offices - five in Bergen County and three in Hudson County - and has $275
million in deposits in more than 35,000 accounts.
UJB Financial, a Princeton-based $14.2 billion bank holding company, is the
leading commercial bank in Bergen County with 39 branch offices. In the latest
per capital income ranking by county, Bergen County was 9th in the nation. UJB
Financial is also a strong competitor in the Hudson County market with 13
branch offices.
In commenting on the Palisade acquisition UJB Financial Chairman T. Joseph
Semrod said, "Palisade represents a healthy in-market franchise whose strong
retail customer base perfectly complements our existing branch network in this
very desirable part of the state."
Mr. Semrod continued, "UJB Financial will continue to seek opportunities that
will strengthen our franchise as we believe that such actions will increase
revenues and enhance shareholder value."
<PAGE>
President and CEO of Palisade Joseph S. Paparatto responded, "UJB Financial has
a fine reputation in our market area and the resources to bring innovative
products and services to our customers as well as expanded opportunities for our
employees."
The Palisade acquisition will be accounted for as a purchase and is expected to
close in the second half of 1994. The transaction is subject to regulatory and
certain other approvals.
In December 1993, UJB Financial announced that a definitive agreement had been
reached for the company to acquire VSB Bancorp, Inc., a bank holding company
which operates the Valley Savings Bank with six retail offices in Bergen County.
The transaction is expected to close in the third quarter of 1994.
UJB Financial ranks 44th in assets among bank holding companies in the nation
and currently has 255 banking offices in New Jersey and eastern Pennsylvania.
The company offers a wide range of services to individuals, businesses,
not-for-profit organizations, government entities and other financial
institutions.
