Filed with the Securities and Exchange Commission on April 26, 1995
Registration No. 33-58111
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
AMENDMENT NO. 2
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
UJB FINANCIAL CORP.
(Exact name of registrant as specified in its charter)
New Jersey 22-1903313
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
6711
(Primary Standard Industrial
Classification Code Number)
301 Carnegie Center
P.O. Box 2066
Princeton, New Jersey 08543-2066
(609) 987-3200
(Address, including ZIP code, and telephone number, including area code,
of registrant's principal executive offices)
----------------
RICHARD F. OBER, JR., ESQ.
Executive Vice President, General Counsel and Secretary
301 Carnegie Center, P.O. Box 2066
Princeton, New Jersey 08543-2066
(609) 987-3430
(Name, address, including ZIP code, and telephone number, including area code,
of agent for service)
----------------
Copies to:
RONALD F. DAITZ, ESQ. HENRY L. JUDY, ESQ.
Weil, Gotshal & Manges Kirkpatrick & Lockhart
767 Fifth Avenue 1800 M Street, N.W.
New York, New York 10153 South Lobby--Suite 900
Washington, D.C. 20036
----------------
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this Registration Statement and upon
consummation of the merger of Bancorp New Jersey, Inc. with and into the
Registrant as described herein.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
----------------
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
================================================================================
<PAGE>
UJB FINANCIAL CORP.
Cross-Reference Sheet
for
Registration Statement on Form S-4 and Prospectus
<TABLE>
<CAPTION>
Item
Number Caption Caption in Prospectus
- ------ ------- ---------------------
A. INFORMATION ABOUT THE
TRANSACTION
<S> <C> <C>
1. Forepart of Registration Statement
and Outside Front Cover Page of
Prospectus ............................... Facing Page of Registration Statement; Cross Reference Sheet;
Outside Front Cover Page of Prospectus
2. Inside Front and Outside Back Cover
Pages of Prospectus ...................... Incorporation of Certain Documents by Reference; Available
Information; Table of Contents
3. Risk Factors, Ratio of Earnings to Fixed
Charges and Other Information ............ Incorporation of Certain Documents by Reference; Summary; Introduction;
Selected Financial Data; Pro Forma Financial Information
4. Terms of the Transaction ................... Summary; Introduction; The Merger; The Merger Agreement;
Description of UJB Capital Stock; Description of Bancorp
Capital Stock
5. Pro Forma Financial Information ............ Selected Financial Data; Pro Forma Financial Information
6. Material Contracts with the Company
Being Acquired ........................... The Merger; The Merger Agreement
7. Additional Information Required for
Re-offering by Persons and Parties
Deemed to be Underwriters ................ Not Applicable
8. Interests of Named Experts and Counsel ..... Legal Matters
9. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities .............................. Not Applicable
B. INFORMATION ABOUT THE
REGISTRANT
10. Information with Respect to S-3
Registrants ............................. Incorporation of Certain Documents by Reference; UJB Financial
Corp.; Description of UJB Capital Stock
11. Incorporation of Certain Information by
Reference ............................... Incorporation of Certain Documents by Reference
12. Information with Respect to S-2 or S-3
Registrants ............................. Not Applicable
13. Incorporation of Certain Information
by Reference ............................ Not Applicable
14. Information with Respect to Registrants
Other Than S-2 or S-3 Registrants ....... Not Applicable
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Item
Number Caption Caption in Prospectus
- ------ ------- ---------------------
C. INFORMATION ABOUT THE COMPANY
BEING ACQUIRED
<S> <C> <C>
15. Information with Respect to S-3
Companies ............................... Not Applicable
16. Information with Respect to S-2 or S-3
Companies ............................... Incorporation of Certain Documents by Reference; Bancorp
New Jersey, Inc.; Description of Bancorp Capital Stock.
17. Information with Respect to Companies
Other Than S-2 or S-3 Companies ......... Not Applicable
D. VOTING AND MANAGEMENT
INFORMATION
18. Information if Proxies, Consents or
Authorizations are to be Solicited ...... Incorporation of Certain Documents by Reference; Summary;
Introduction; Bancorp Annual Meeting; The Merger; UJB
Financial Corp.; Bancorp New Jersey, Inc.; Election of
Bancorp Directors
19. Information if Proxies, Consents or
Authorizations are not to be Solicited
or in an Exchange Offer ................. Not Applicable
</TABLE>
<PAGE>
[LOGO CUT]
BANCORP NEW JERSEY, INC.
10 West High Street
Somerville, New Jersey 08876
(908) 722-0600
April 28, 1995
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders of
Bancorp New Jersey, Inc. ("Bancorp"), to be held at the Bridgewater Manor, 1251
Route 202/206, Bridgewater, New Jersey, at 3:00 p.m.(local time), on Friday, May
26, 1995.
At the Annual Meeting, the shareholders will be asked to approve three
Proposals that have been adopted by Bancorp's Board of Directors. The first
Proposal is for approval of the Agreement and Plan of Merger dated January 19,
1995 between Bancorp and UJB Financial Corp., which provides for the merger of
Bancorp with and into UJB Financial Corp. and the conversion of shares of common
stock of Bancorp into either shares of the common stock of UJB Financial Corp.
or cash, or in certain circumstances a combination of UJB Financial Corp. common
stock and cash, all as more fully described in the accompanying Proxy
Statement-Prospectus. Consummation of the merger is subject to certain
conditions, including the approval of the Agreement and Plan of Merger by
Bancorp's shareholders at this Annual Meeting. The Second Proposal is for the
election of three directors of Bancorp. The third Proposal is for ratification
of the appointment of independent certified accountants for Bancorp.
AFTER CAREFUL CONSIDERATION, YOUR BOARD OF DIRECTORS UNANIMOUSLY HAS
APPROVED THESE THREE PROPOSALS AND RECOMMENDS THAT YOU VOTE FOR THEIR APPROVAL.
Because of the importance of the Proposals, I urge you to read the additional
important information concerning Bancorp, UJB Financial Corp. and the Proposals
contained in the Notice of Annual Meeting of Shareholders, Proxy
Statement-Prospectus and Annual Report to Shareholders that accompany this
letter.
YOUR VOTE IS VERY IMPORTANT, REGARDLESS OF THE NUMBER OF SHARES YOU OWN.
Please sign each proxy card that you receive and return it, as soon as possible,
in the postage-paid return envelope that is provided for your convenience. The
return of your proxy card will not prevent you from voting in person, but will
assure that your vote is counted if you are unable to attend the Annual Meeting.
Kindly forward your proxy card at your earliest convenience.
Sincerely,
[Signature Cut]
Beatrice D'Agostino
Chairman, President and
Chief Executive Officer
<PAGE>
BANCORP NEW JERSEY, INC.
10 West High Street
Somerville, New Jersey 08876
(908) 722-0600
----------------
NOTICE
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 26, 1995
----------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Bancorp
New Jersey, Inc. ("Bancorp") will be held at the Bridgewater Manor, 1251 Route
202/206, Bridgewater, New Jersey, on Friday, May 26, 1995 at 3:00 p.m. (local
time), for the purpose of considering and voting on the following matters:
(1) A proposal to approve the Agreement and Plan of Merger dated
January 19, 1995 between Bancorp and UJB Financial Corp., which agreement
provides for the merger of Bancorp with and into UJB Financial Corp. and
for the conversion of outstanding shares of the common stock, par value
$.01 per share, of Bancorp into either (i) whole shares of the common
stock, par value $1.20 per share, of UJB Financial Corp. and cash in lieu
of fractional shares, based on an exchange ratio to be determined
subsequent to the date of the Annual Meeting and subject to certain
anti-dilution adjustments, (ii) cash, or (iii) in certain circumstances,
depending upon the outcome of an election and allocation process, a
combination of whole shares of UJB Financial Corp. common stock (and cash
in lieu of fractional shares) based on the exchange ratio and cash, all as
more fully described in the accompanying Proxy Statement-Prospectus.
(2) The election of three directors to serve for a term of three years
or until consummation of the merger provided for in the Agreement and Plan
of Merger.
(3) The ratification of the appointment of KPMG Peat Marwick LLP as
independent certified accountants of Bancorp for the year ending
December 31, 1995; and
(4) The transaction of such other business as may properly come before
the Annual Meeting or any adjournments thereof.
Descriptions of the Proposals to be considered are contained in the Proxy
Statement-Prospectus that accompanies this Notice.
Pursuant to the Bylaws of Bancorp, the Board of Directors has fixed March
31, 1995 as the record date for the determination of shareholders entitled to
notice of and to vote at the Annual Meeting and any adjournments thereof. Only
record holders of outstanding Bancorp common stock as of the close of business
on that date will be entitled to notice of and to vote at the Annual Meeting or
any adjournments thereof. A complete alphabetical list of shareholders entitled
to vote at the Annual Meeting shall be open to examination by any shareholder,
for any purpose germane to the meeting, during ordinary business hours, for 10
days prior to the meeting, at the principal office of Bancorp, as set forth
above.
By order of the Board of Directors
[Signature Cut]
Robert H. Hunt, Jr.
Secretary
Somerville, New Jersey
April 28, 1995
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. THEREFORE, WHETHER YOU
PLAN TO BE PRESENT IN PERSON AT THE ANNUAL MEETING OR NOT, PLEASE COMPLETE, SIGN
AND DATE THE ENCLOSED PROXY AND RETURN IT IN THE SELF-ADDRESSED POSTAGE-PAID
ENVELOPE. ANY PROXY MAY BE REVOKED BY YOU IN WRITING, OR IN PERSON, AT ANY TIME
PRIOR TO THE VOTING OF SUCH PROXY.
THE BOARD OF DIRECTORS OF BANCORP UNANIMOUSLY RECOMMENDS THAT ITS SHAREHOLDERS
VOTE TO APPROVE THE AGREEMENT AND PLAN OF MERGER, TO ELECT THE THREE DIRECTOR
NOMINEES NAMED HEREIN AND TO RATIFY THE APPOINTMENT OF KPMG PEAT MARWICK LLP AS
INDEPENDENT ACCOUNTANTS OF BANCORP FOR THE YEAR ENDING DECEMBER 31, 1995.
<PAGE>
[BANCORP LOGO] [UJB LOGO]
PROXY STATEMENT PROSPECTUS
BANCORP NEW JERSEY, INC. UJB FINANCIAL CORP.
10 WEST HIGH STREET 301 CARNEGIE CENTER
SOMERVILLE, NEW JERSEY 08876 PRINCETON, NEW JERSEY 08543-2066
(908) 722-0600 (609) 987-3200
2,678,610 SHARES OF
COMMON STOCK (PAR VALUE $1.20 PER SHARE)
This Proxy Statement-Prospectus is being furnished to the holders of common
stock, par value $.01 per share, of Bancorp New Jersey Inc., a Delaware
corporation and registered bank holding company ("Bancorp"), in connection with
the solicitation of proxies by the Board of Directors of Bancorp ("Bancorp
Board") for use at the Annual Meeting of Bancorp's shareholders to be held at
the Bridgewater Manor, 1251 Route 202/206, Bridgewater, New Jersey, at 3:00 p.m.
(local time) on Friday, May 26, 1995, and at any adjournments thereof ("Annual
Meeting").
This Proxy Statement-Prospectus relates to up to 2,678,610 shares of common
stock, par value $1.20 per share ("UJB Stock"), of UJB Financial Corp, a New
Jersey corporation and registered bank holding company ("UJB"), to be issued
upon the merger ("Merger") of Bancorp with and into UJB, pursuant to an
Agreement and Plan of Merger dated January 19, 1995 ("Merger Agreement"). In the
Merger, each outstanding share of Bancorp's common stock, par value $.01 per
share ("Bancorp Stock"), outstanding at the Effective Time (as defined herein)
will be converted into the right to receive either (1) whole shares of UJB Stock
and cash in lieu of any fractional shares of UJB Stock ("Cash In Lieu Amount"),
based on an exchange ratio to be determined subsequent to the date of the Annual
Meeting ("Exchange Ratio"), adjusted, if necessary, in accordance with certain
anti-dilution provisions (such whole shares of UJB Stock and such Cash In Lieu
Amount determined in accordance with the Exchange Ratio and any necessary
anti-dilution adjustments are referred to collectively herein as the "Stock
Consideration"), (2) $43.10 per share in cash ("Cash Consideration"), or (3)
in certain circumstances, depending upon the outcome of an election and
allocation process, a combination of Stock Consideration and Cash Consideration.
The Stock Consideration and Cash Consideration payable in connection with the
Merger, whether payable individually or in combination as a result of the
election and allocation process, are sometimes collectively referred to herein
as the "Merger Consideration." The Exchange Ratio will be fixed based on the
"Average Price" of UJB Stock over a period ending on the "Determination Date"
(as both terms are defined herein). The Exchange Ratio will not be lower than
1.5441 and will not be higher than 1.8872 except in certain circumstances more
fully described herein. See "THE MERGER AGREEMENT--Determination of Exchange
Ratio" for further discussion of the Exchange Ratio.
This Proxy Statement-Prospectus constitutes (1) the Proxy Statement of
Bancorp relating to the solicitation of proxies by the Bancorp Board for use at
the Annual Meeting to be held for the purpose of considering and voting upon (a)
a proposal to approve the Merger Agreement and the transactions contemplated
thereby, (b) the election of three directors to serve for a term of three years
or until the Effective Time of the Merger, and (c) the ratification of the
appointment of KPMG Peat Marwick LLP as independent accountants of Bancorp for
the year ending December 31, 1995, and (2) the Prospectus of UJB with respect to
the UJB Stock to be issued in the Merger. Consummation of the Merger is subject
to various conditions, including the approvals of the shareholders of Bancorp,
the Board of Governors of the Federal Reserve System ("Federal Reserve Board")
and the Commissioner of Banking of the State of New Jersey ("New Jersey
Commissioner of Banking").
All information contained in this Proxy Statement-Prospectus with respect
to UJB has been supplied by UJB, and all information with respect to Bancorp has
been supplied by Bancorp.
The Proxy Statement-Prospectus is first being mailed to Bancorp
shareholders on or about April 28, 1995.
----------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROXY STATEMENT-PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
----------------
THE SECURITIES OFFERED HEREBY ARE NOT SAVINGS ACCOUNTS, DEPOSITS OR OTHER
OBLIGATIONS OF A BANK OR SAVINGS ASSOCIATION AND ARE NOT INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY.
----------------
The date of this Proxy Statement-Prospectus is April 28, 1995.
<PAGE>
TABLE OF CONTENTS
Page
----
INDEX OF DEFINED TERMS .................................................. (iii)
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE ......................... 1
AVAILABLE INFORMATION.................................................... 1
SUMMARY.................................................................. 3
The Companies.......................................................... 3
Annual Meeting......................................................... 3
Stock Held By Affiliates .............................................. 3
The Merger............................................................. 4
Conversion of Outstanding Bancorp Stock ............................... 5
Conversion of Outstanding Bancorp Stock Options ....................... 5
Recommendation of Bancorp Board ....................................... 6
Opinion of Bancorp's Financial Advisor ................................ 6
Dissenters' Rights .................................................... 6
Accounting Treatment .................................................. 6
Federal Income Tax Consequences........................................ 6
Regulatory Approvals................................................... 6
Conditions of the Merger............................................... 7
Exchange of Certificates............................................... 7
Interests of Certain Persons in the Merger............................. 7
Market Prices and Dividends............................................ 7
INTRODUCTION............................................................. 9
ANNUAL MEETING........................................................... 9
Record Date; Vote Required............................................. 9
Holders of Bancorp Voting Securities................................... 9
Proxies; Revocation; Solicitation...................................... 11
SELECTED FINANCIAL DATA.................................................. 12
PRO FORMA FINANCIAL INFORMATION.......................................... 14
Pro Forma Combined Condensed Balance Sheet............................. 15
Pro Forma Combined Condensed Statements of Income...................... 17
Pro Forma Combined Common Share Data .................................. 19
MARKET PRICE AND DIVIDEND MATTERS........................................ 20
Market Price and Dividend History...................................... 20
Coordination of and Limitations on Dividends Under Merger
Agreement............................................................ 20
Dividend Limitations .................................................. 20
PROPOSAL I--APPROVAL OF THE MERGER AGREEMENT............................. 21
THE MERGER............................................................... 21
Recommendation of the Bancorp Board and Reasons for the Merger......... 21
Background............................................................. 22
Opinion of Bancorp's Financial Advisor................................. 23
Charter and By-Laws of Surviving Corporation........................... 27
Board of Directors and Officers of Surviving Corporation............... 27
Dissenters' Rights..................................................... 27
New York Stock Exchange Listing........................................ 29
Accounting Treatment................................................... 29
Certain Federal Income Tax Consequences................................ 29
Differences in Shareholders' Rights.................................... 31
THE MERGER AGREEMENT..................................................... 37
Effective Time......................................................... 37
Closing of the Merger.................................................. 37
Determination of Exchange Ratio........................................ 38
(i)
<PAGE>
Page
----
Election and Allocation Procedures..................................... 38
Termination Fee........................................................ 41
Amendment.............................................................. 42
Bancorp Stock Option Plans............................................. 42
Interests of Certain Persons in the Merger............................. 43
Covenants.............................................................. 47
Regulatory Approvals................................................... 47
Conditions to the Merger; Termination.................................. 49
Expenses............................................................... 49
UJB FINANCIAL CORP. ..................................................... 49
Description of Business................................................ 49
Recent Developments.................................................... 50
DESCRIPTION OF UJB CAPITAL STOCK......................................... 50
Common Stock........................................................... 50
Series B Preferred Stock............................................... 51
Shareholder Rights Plan................................................ 51
BANCORP NEW JERSEY, INC. ................................................ 52
Description of Business................................................ 52
DESCRIPTION OF BANCORP CAPITAL STOCK..................................... 52
Common Stock........................................................... 52
Preferred Stock........................................................ 52
Shareholder Rights Plan................................................ 53
PROPOSAL II--ELECTION OF DIRECTORS....................................... 53
Information Regarding the Bancorp Board................................ 54
Compensation and Committees of Directors .............................. 55
Executive Compensation and Other Information........................... 56
PROPOSAL III--RATIFICATION OF APPOINTMENT OF INDEPENDENT
CERTIFIED ACCOUNTANTS................................................... 64
OTHER MATTERS THAT MAY PROPERLY COME BEFORE THE ANNUAL MEETING............ 64
ADVANCE NOTICE OF CERTAIN MATTERS TO BE CONDUCTED AT AN ANNUAL
MEETING AND SHAREHOLDER PROPOSALS....................................... 64
LEGAL MATTERS............................................................. 64
EXPERTS................................................................... 65
AGREEMENT AND PLAN OF MERGER (without exhibits) ................... Appendix A
OPINION OF KAPLAN ASSOCIATES, INC. ................................ Appendix B
SECTION 262 OF THE DELAWARE GENERAL CORPORATION LAW ............... Appendix C
PRESS RELEASE OF UJB REGARDING FIRST QUARTER EARNINGS ............. Appendix D
PRESS RELEASE OF BANCORP REGARDING FIRST QUARTER EARNINGS ......... Appendix E
(ii)
<PAGE>
INDEX OF DEFINED TERMS
(Index of Capitalized Terms Defined in this Proxy Statement-Prospectus)
Page in
Defined Term Prospectus
1988 Program ............................... 6
1991 Plan .................................. 5
Acquiring Person ........................... 51
Allocated Cash Consideration ............... 41
Annual Meeting ............................. Cover
ATMs ....................................... 52
Average Price .............................. 5
Bancorp .................................... Cover
Bancorp Acquiring Person ................... 53
Bancorp Board .............................. Cover
Bancorp Certificates ....................... 5
Bancorp Distribution Date .................. 53
Bancorp Preferred Stock .................... 52
Bancorp Rights ............................. 53
Bancorp Rights Plan ........................ 53
Bancorp Shareholders ....................... 9
Bancorp Stock .............................. Cover
BHC Act .................................... 42
Cash Amount ................................ 4
Cash Consideration ......................... Cover
Cash Electee Block(s) ...................... 4
Cash Electees .............................. 4
Cash Excess ................................ 41
Cash In Lieu Amount ........................ Cover
Cash Non-Electees .......................... 41
Closing .................................... 37
Closing Date ............................... 37
Closing Notice ............................. 37
Code ....................................... 6
Commission ................................. 1
Committee .................................. 58
Comparison Group ........................... 59
Corporation Law ............................ 27
Court ...................................... 28
CPI ........................................ 59
Determination Date ......................... 5
Dissenting Shareholder ..................... 29
Dissenting Shares .......................... 4
Distribution Date .......................... 51
DRP ........................................ 11
Effective Time ............................. 5
Election Deadline .......................... 39
Election Form .............................. 38
Election Form Record Date .................. 38
Emeritus Program ........................... 46
ESOSP ...................................... 7
Excess Stock Amount ........................ 4
Exchange Act ............................... 1
Exchange Agent ............................. 38
Exchange Ratio ............................. Cover
FDIC ....................................... 52
Federal Reserve Board ...................... Cover
IRS ........................................ 60
Justice Department ......................... 6
Kaplan ..................................... 6
M&A Committee .............................. 22
Merger ..................................... Cover
Merger Agreement ........................... Cover
Merger Consideration ....................... Cover
Named Executive Officer(s) ................. 56
NASD ....................................... 1
NASDAQ ..................................... 1
New Jersey Commissioner of Banking ......... Cover
New Jersey Savings Bank Act ................ 48
NJ Certificate ............................. 37
NJSB ....................................... 3
NJSB Board ................................. 54
Non-Electees ............................... 4
Notice of Guaranteed Delivery .............. 39
NYSE ....................................... 1
Option Plans ............................... 6
Outstanding Shares ......................... 4
P/B ........................................ 25
P/E ........................................ 25
Record Date ................................ 3
Registration Statement ..................... 1
Rights ..................................... 51
Rights Plan ................................ 51
Securities Act ............................. 1
Series A Preferred Stock ................... 53
Series B Preferred Stock ................... 50
Series R Preferred Stock ................... 51
SERP ....................................... 57
Stock Amount ............................... 4
Stock Consideration ........................ Cover
Stock Electees ............................. 4
Stock Shortfall Amount ..................... 4
Substitute Stock Consideration ............. 41
Surviving Corporation ...................... 21
Tax Counsel ................................ 41
Tax-Free Consideration ..................... 41
Termination Notice ......................... 38
Trust ...................................... 63
UJB ........................................ Cover
UJB Board .................................. 23
UJB Certificates ........................... 5
UJB Preferred Stock ........................ 50
UJB Stock .................................. Cover
(iii)
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
There are hereby incorporated by reference into and made a part of this
Proxy Statement-Prospectus the following documents filed with the Securities and
Exchange Commission ("Commission"): (1) the Annual Report on Form 10-K for the
fiscal year ended December 31, 1994, and the Current Report on Form 8-K
dated January 19, 1995 filed by UJB, (2) the Annual Report on Form 10-K for
the fiscal year ended December 31, 1994, and the Current Report on Form 8-K
dated January 19, 1995 filed by Bancorp and (3) the description of the UJB Stock
contained in UJB's Registration Statement on Form 10 filed pursuant to Section
12(b) of the Securities Exchange Act of 1934, as amended ("Exchange Act"), dated
August 31, 1970, including all amendments thereto and reports filed under the
Exchange Act for the purpose of updating such description. All documents filed
by UJB and Bancorp pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange
Act after the date of this Proxy Statement-Prospectus and prior to the date of
the Annual Meeting shall be deemed to be incorporated by reference into this
Proxy Statement-Prospectus and to be a part hereof from the respective dates of
filing of such documents.
This Proxy Statement-Prospectus is accompanied by Bancorp's 1994 Annual
Report to Shareholders.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Proxy Statement-Prospectus to the extent that a statement
contained herein, or in any other subsequently filed document that is also
incorporated or deemed incorporated by reference herein, modifies or supersedes
such statement. Any such statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of this Proxy
Statement-Prospectus.
This Proxy Statement-Prospectus incorporates documents by reference that
are not presented herein or delivered herewith. UJB and Bancorp each hereby
undertakes, with respect to the documents listed above filed by it with the
Commission, to provide without charge to each person, including any beneficial
owner, to whom this Proxy Statement-Prospectus has been delivered, upon the
written or oral request of such person, a copy of any or all of the documents
referred to above that have been or may be incorporated into this Proxy
Statement-Prospectus and deemed to be part hereof, other than exhibits to such
documents, unless such exhibits are specifically incorporated by reference in
such documents. Requests for documents filed by UJB should be directed to
Richard F. Ober, Jr., Secretary, UJB Financial Corp., 301 Carnegie Center, P.O.
Box 2066, Princeton, New Jersey 08543-2066 (telephone (609) 987-3442). Requests
for documents filed by Bancorp should be directed to Russell G. Muter, Executive
Vice President and Treasurer, Bancorp New Jersey, Inc.,10 West High Street,
Somerville, New Jersey 08876 (telephone (908) 722-0600). In order to ensure
timely delivery of documents prior to the Annual Meeting, any request should be
made by May 12, 1995.
AVAILABLE INFORMATION
Each of UJB and Bancorp is subject to the informational requirements of the
Exchange Act and, in accordance therewith, files reports, proxy statements and
other information with the Commission relating to its businesses, financial
statements and other matters. The Registration Statement discussed below and the
exhibits thereto as well as such reports, proxy statements and other information
filed by UJB and Bancorp may be inspected and copied at the public reference
facilities maintained by the Commission at 450 Fifth Street, N.W., Room 1024,
Washington, D.C. 20549, and at the following regional offices of the Commission:
Chicago Regional Office, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661-2511 and New York Regional Office, 7 World Trade Center, Suite 1300, New
York, New York 10048. Copies of such materials may be obtained from the Public
Reference Section of the Commission, 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates. UJB Stock is listed on the New York Stock Exchange
("NYSE") and reports, proxy statements and other information concerning UJB
are available for inspection at the offices of the NYSE, 20 Broad Street, New
York, New York 10005. Bancorp Stock is listed on the NASDAQ Stock
Market--National Market System ("NASDAQ") and reports, proxy statements and
other information concerning Bancorp are available for inspection at the offices
of the National Association of Securities Dealers, Inc. ("NASD"), 1735 K
Street, N.W., Washington, D.C. 20006.
UJB has filed with the Commission a registration statement on Form S-4
under the Securities Act of 1933, as amended ("Securities Act"), in respect of
the UJB Stock to be issued in the Merger ("Registration Statement"). As
1
<PAGE>
permitted by the rules and regulations of the Commission, this Proxy
Statement-Prospectus omits certain information, exhibits and undertakings
contained in the Registration Statement. For such information, reference is made
to the Registration Statement and the exhibits filed as a part thereof or
incorporated by reference therein.
No person is authorized to give any information or to make any
representation not contained in this Proxy Statement-Prospectus and, if given or
made, such information or representation should not be relied upon as having
been authorized. This Proxy Statement-Prospectus does not constitute an offer to
sell, or a solicitation of an offer to purchase, the securities offered by this
Proxy Statement-Prospectus or the solicitation of a proxy in any jurisdiction in
which, or to any person to whom, it would be unlawful to make such offer or
solicitation of an offer or proxy solicitation. Neither the delivery of this
Proxy Statement-Prospectus nor any distribution of the securities to which this
Proxy Statement-Prospectus relates shall, under any circumstances, create an
implication that there has been no change in the affairs of UJB or Bancorp or in
the information set forth herein since the date of this Proxy
Statement-Prospectus.
2
<PAGE>
SUMMARY
The following constitutes a brief summary, for the convenience of the
shareholders of Bancorp, of the information contained in this Proxy
Statement-Prospectus, relating principally to the proposal to approve the Merger
Agreement, including Appendices A, B and C hereto. The summary is necessarily
selective and is qualified in its entirety by the more extensive discussion
contained elsewhere in this Proxy Statement-Prospectus and the documents
incorporated by reference herein relating to the proposal to approve the Merger
Agreement. Bancorp shareholders are encouraged to read carefully this Proxy
Statement-Prospectus, including Appendices A, B and C.
The Companies
UJB
UJB Financial Corp., a New Jersey corporation and registered bank holding
company with its principal executive offices at 301 Carnegie Center, Princeton,
New Jersey, through its wholly owned subsidiary banks, United Jersey Bank and
First Valley Bank, operated, as of December 31, 1994, 270 banking offices
located in New Jersey and eastern Pennsylvania. The subsidiary banks of UJB are
engaged in a general banking business. They offer demand and interest bearing
deposit accounts, make business, real estate, personal and installment loans,
and provide lease financing and trust and fiduciary services. In addition, UJB
owns nine active nonbank subsidiaries that are engaged primarily in discount
brokerage, venture capital investment, commercial finance lending, lease
financing and reinsuring credit life and disability insurance policies related
to consumer loans made by the bank subsidiaries.
Bancorp
Bancorp New Jersey, Inc., a Delaware corporation and registered bank
holding company with its principal executive offices at 10 West High Street,
Somerville, New Jersey, through its wholly owned subsidiary bank, New Jersey
Savings Bank ("NJSB"), operated, as of January 31, 1995, twelve banking offices
located in Basking Ridge, Bedminster, Branchburg, Bridgewater, Flemington,
Hillsborough, Princeton, Somerville, Somerset and Whitehouse, New Jersey. NJSB's
primary business consists of attracting deposits from the general public and
originating loans that are secured by residential properties, as well as
originating commercial and consumer loans.
Annual Meeting
Time, Date, Place and Purpose
The Annual Meeting will be held on May 26, 1995 at 3:00 p.m. (local time),
at the Bridgewater Manor, 1251 Route 202/206, Bridgewater, New Jersey, to
consider and vote upon (1) a proposal to approve the Merger Agreement and the
transactions contemplated thereby, (2) the election of three directors to serve
for a term of three years or until the Effective Time of the Merger and (3) the
ratification of the appointment of KPMG Peat Marwick LLP as independent
accountants of Bancorp for the year ending December 31, 1995. A copy of the
Merger Agreement is attached hereto as Appendix A.
Record Date; Vote Required
The record date for determining the Bancorp shareholders entitled to notice
of and to vote at the Annual Meeting is March 31, 1995 ("Record Date"). The
presence, in person or by proxy, of at least a majority of the total number of
outstanding shares of Bancorp Stock is necessary to constitute a quorum at the
Annual Meeting. An affirmative vote of a majority of the shares of Bancorp Stock
outstanding and entitled to vote at the Annual Meeting is necessary to approve
the Merger Agreement. The vote of a plurality of the shares of Bancorp Stock
represented, in person or by proxy, at the Annual Meeting is required to elect
the three directors. The third proposal requires the affirmative vote of a
majority of the shares of Bancorp Stock represented, in person or by proxy, at
the Annual Meeting. In the event that there are not sufficient votes to approve
any proposal, the Annual Meeting may, in the sole discretion of the Bancorp
Board, be adjourned in order to permit further solicitation of proxies by
Bancorp.
Stock Held by Affiliates
The directors and executive officers of Bancorp and their affiliates
beneficially owned an aggregate of 23.04% of the shares of Bancorp Stock
outstanding on the Record Date (assuming the exercise of all options to purchase
Bancorp Stock outstanding on such date). The directors and executive officers of
Bancorp and their affiliates owned as of the Record Date 300,836, representing
14.30%, of the issued and outstanding shares of Bancorp Stock. Approval of the
Merger Agreement by Bancorp Shareholders (as defined herein) will require the
affirmative vote of 1,051,636 of the issued and outstanding shares of Bancorp
Stock. The directors and the executive officers of Bancorp have all indicated
that they will vote their shares of Bancorp Stock in favor of the Merger
Agreement. None of the directors or executive officers of Bancorp have yet
indicated whether they will elect Cash Consideration or Stock Consideration in
exchange for their Bancorp Stock or elect to make no election.
3
<PAGE>
The Merger
Election and Allocation of Stock and Cash Consideration
The number of shares of Bancorp Stock to be converted into the right to
receive Stock Consideration in the Merger ("Stock Amount") will equal, as
closely as reasonably possible, 60% of the "Outstanding Shares." The
"Outstanding Shares" is that number arrived at by subtracting from the number of
shares of Bancorp Stock outstanding at the Effective Time the number of shares
of Bancorp Stock, if any, held by UJB or a subsidiary of UJB at the Effective
Time.
The number of shares of Bancorp Stock to be converted into the right to
receive the Cash Consideration ("Cash Amount") will equal, as closely as
reasonably possible, the remaining 40% of the Outstanding Shares, reduced by the
number of shares of Bancorp Stock representing "Dissenting Shares." "Dissenting
Shares" are defined to be the shares of Bancorp Stock with respect to which all
conditions necessary to the exercise of applicable appraisal rights, as more
fully discussed at "THE MERGER-Dissenters' Rights," have been satisfied as of
the Effective Time.
On a date subsequent to the Annual Meeting but prior to the Closing Date
(as defined herein), holders of Bancorp Stock will be requested by the Exchange
Agent (as defined herein) to specify in an election process, subject to the
allocation provisions described below, whether they wish to receive Stock
Consideration ("Stock Electees") or Cash Consideration ("Cash Electees") in the
Merger. Bancorp shareholders entitled to participate in the election process
may, and probably will, be required to elect between Stock Consideration and
Cash Consideration without knowing the Exchange Ratio.
Also as part of the election process, Cash Electees will be permitted to
divide their holdings of Bancorp Stock into blocks of 5,000 shares or more (with
any shares not exactly divisible by the selected block amount added to one of
the blocks). All Bancorp Stock held by Cash Electees, whether held in a single
undivided block or divided into blocks for purposes of the election process, is
sometimes referred to herein in the singular as a "Cash Electee Block" and in
the plural as "Cash Electee Blocks." See "THE MERGER AGREEMENT--Election and
Allocation Procedures."
If, upon the conclusion of the election process, Stock Electees represent a
number of shares of Bancorp Stock that exceeds in the aggregate the Stock Amount
(the amount by which such aggregate number exceeds the Stock Amount being
sometimes referred to herein as the "Excess Stock Amount"):
(1) Stock Electees will receive Stock Consideration only with respect
to a "Pro Rata Amount" of their shares and will receive Cash Consideration
with respect to the remaining balance of their shares. The Pro Rata Amount
for each such Stock Electee will equal, as closely as reasonably possible,
the aggregate number of shares of Bancorp Stock held by such Stock Electee
multiplied by a fraction, the numerator of which is the Stock Amount and
the denominator of which is the sum of the Stock Amount and the Excess
Stock Amount; and
(2) Cash Electees and holders of Bancorp Stock failing to have made
any election ("Non-Electees") will receive Cash Consideration.
If, upon the conclusion of the election process, Stock Electees represent a
number of shares of Bancorp Stock that is in the aggregate less than the Stock
Amount (the amount by which the Stock Amount exceeds this number is sometimes
referred to herein as the "Stock Shortfall Amount"):
(1) all Stock Electees will receive Stock Consideration; and
(2) (a) if the number of shares of Bancorp Stock represented by
Non-Electees is greater than the Stock Shortfall Amount, the Exchange Agent
will select by random selection a sufficient number of Non-Electees such
that the number of shares of Bancorp Stock represented by such Non-Electees
equals, as closely as reasonably possible, the Stock Shortfall Amount, and
(i) the Non-Electees so selected will receive Stock Consideration, and
(ii) the Non-Electees not so selected and all Cash Electees will
receive Cash Consideration; and
(b) if the number of shares of Bancorp Stock represented by
Non-Electees is less than the Stock Shortfall Amount,
(i) all Non-Electees will receive Stock Consideration, and
(ii) the Exchange Agent will select by random selection a sufficient
number of Cash Electee Blocks such that the number of shares of Bancorp
Stock represented by such Cash Electee Blocks, when added to
4
<PAGE>
the shares represented by Non-Electees, equals, as closely as
reasonably possible, the Stock Shortfall Amount and (A) holders of the Cash
Electee Blocks so selected will receive Stock Consideration, while (B) the
holders of Cash Electee Blocks not so selected will receive Cash
Consideration.
If upon conclusion of the allocation process described above the aggregate
Cash Consideration otherwise payable as a result of the allocation process
(considered together with the cash that may be payable to Dissenting
Shareholders (as defined herein)) exceeds, in the opinion of Tax Counsel (as
defined herein) the aggregate Cash Consideration payable to qualify the Merger
as a tax-free reorganization under Section 368(a) of the Code (as defined
herein), thereby rendering Tax Counsel unable to deliver at the Closing Date the
opinions required as a condition to the closing of the Merger, then a sufficient
number of Non-Electees not already receiving Stock Consideration, and, if
necessary, Cash Electee Blocks not already receiving Stock Consideration will,
by a random process conducted by the Exchange Agent, be selected to receive UJB
Stock based on the price of UJB Stock on the business day before the Closing
Date such that Tax Counsel are then able to render the tax opinions.
See "THE MERGER AGREEMENT--Election and Allocation Procedures."
Determination of Exchange Ratio
As just described, the shares of each holder of Bancorp Stock will be
converted in the Merger into the right to receive the Stock Consideration, the
Cash Consideration or a combination of Stock Consideration and Cash
Consideration. The Cash Consideration is fixed by the Merger Agreement at $43.10
per share of Bancorp Stock. However, the number of whole shares of UJB Stock and
the Cash In Lieu Amount constituting the Stock Consideration, and the Exchange
Ratio upon which the determination of the Stock Consideration will be based,
have not been fixed and will not be fixed until a date subsequent to the Annual
Meeting. The Merger Agreement provides that the Exchange Ratio (and thereby the
shares of UJB Stock and Cash In Lieu Amount constituting the Stock
Consideration) will be fixed on the "Determination Date," a date which may be
any date between the Closing Date of the Merger and the date which is ten
business days prior to the Closing Date. The Exchange Ratio will be set by
reference to the "Average Price" of UJB Stock, which will be the price
representing the average of the closing prices of UJB Stock on the NYSE -
Composite Transactions Tape over a ten consecutive trading-day period ending on
the Determination Date, and will be based upon the following criteria:
"Average Price" of UJB Stock on
the "Determination Date" Exchange Ratio
------------------------------- --------------
Greater than $27.9125 ................................ 1.5441
Equal to or greater than $22.8375 and
equal to or less than $27.9125 ................... $43.10 [division sign]
Average Price
Less than $22.8375 and greater than or
equal to $20.90 .................................. 1.8872
Less than $20.90 ................................... Bancorp may terminate
the Merger Agreement
unless UJB agrees to
an Exchange Ratio
equal to $39.44
[division sign]
Average Price
Bancorp shareholders entitled to participate in the election process may,
and probably will, be required to elect between Stock Consideration and Cash
Consideration without knowing the Exchange Ratio.
The Exchange Ratio is also subject to certain anti-dilution adjustments.
See "THE MERGER AGREEMENT--Determination of Exchange Ratio."
Conversion of Outstanding Bancorp Stock
Upon the date and time specified in the Certificate of Merger filed with
the Office of the Secretary of State of the State of New Jersey, or, if filed
later, the date of filing of the Certificate of Merger with the Office of the
Secretary of State of the State of Delaware ("Effective Time"), Bancorp will be
merged with and into UJB. It is presently contemplated that the Effective Time
will occur late in the second quarter or early in the third quarter of 1995 due
to the need to obtain the regulatory approvals described herein. At the
Effective Time, each outstanding share of Bancorp Stock, other than shares of
Bancorp Stock beneficially owned by UJB or a subsidiary of UJB, if any, and
Dissenting Shares (see "THE MERGER--Dissenters' Rights"), if any, will be
converted into and represent the right to receive the Merger Consideration. In
connection with the election process described above, holders of Bancorp Stock
will be asked to tender to the Exchange Agent all certificates representing
their Bancorp Stock ("Bancorp Certificates"). As soon as practicable following
the Effective Time such holders of Bancorp Stock will receive from the Exchange
Agent, in exchange for their Bancorp Certificates: (i) checks representing the
Cash Consideration; (ii) certificates representing the whole shares of UJB Stock
payable as Stock Consideration ("UJB Certificates") and checks representing Cash
In Lieu Amounts; or (iii) a combination of (i) and (ii).
Conversion of Outstanding Bancorp Stock Options
Non-employee directors and certain employees of Bancorp have been granted
options to purchase Bancorp Stock under the Bancorp New Jersey, Inc. 1991 Stock
Incentive Plan ("1991 Plan"), the New Jersey Savings Bank
5
<PAGE>
Stock Incentive Program ("1988 Program") or both the 1991 Plan and the 1988
Program (collectively, the "Option Plans"). Under the terms of the 1991 Plan,
non-employee directors of Bancorp on the date of the Annual Meeting who have
served as a director of Bancorp for at least three years will each be granted
options to purchase 500 shares of Bancorp Stock on such date (with an exercise
price per share equal to the fair market value of a share of Bancorp Stock on
the date of grant).
Limited rights, exercisable only upon a "change in control" of Bancorp (as
that term is defined in the Option Plans), were granted in tandem with all
options granted to employees of Bancorp under the Option Plans. The limited
rights will become exercisable upon consummation of the Merger for a period of
60 days (if granted under 1991 Plan) or 90 days (if granted under the 1988
Program) and will entitle the holder thereof to receive in cash the difference
between the exercise price of the option underlying the limited right and the
"acquisition price" of the Merger (as that term is defined in the Option Plans)
multiplied by the number of shares of UJB Stock with respect to which the
limited right is exercised.
Under the Merger Agreement, options and limited rights relating to Bancorp
Stock outstanding at the Effective Time will be converted into options and
limited rights relating to UJB Stock and be subject to the same terms and
conditions following such conversion as were in effect under the Option Plans,
except that (i) the number of shares and exercise prices thereunder will be
adjusted based on the Exchange Ratio, (ii) non-employee Directors will be
permitted for 90 days following the Effective Time to exercise their options as
limited rights, and (iii) the exercisability of options held by employees will
be extended for three months following any termination of employment, other than
terminations of employment for cause. See "THE MERGER AGREEMENT--Bancorp Stock
Option Plans."
Recommendation of Bancorp Board
The Bancorp Board unanimously recommends that Bancorp shareholders vote to
approve the Merger Agreement.
Opinion of Bancorp's Financial Advisor
Bancorp engaged Kaplan Associates, Inc. ("Kaplan") to render financial
advisory and investment banking services in connection with Bancorp management's
decision to explore various methods to enhance Bancorp shareholder value.
Pursuant to such engagement, Kaplan has evaluated the financial terms of the
Merger. Kaplan has delivered to Bancorp an opinion dated April 26, 1995 stating
that, as of January 19, 1995 and April 26, 1995, based on the review and
assumptions and subject to the limitations described therein, the consideration
to be received for each share of Bancorp Stock in the Merger was fair, from a
financial point of view, to Bancorp's shareholders. A copy of Kaplan's opinion
is attached as Appendix B to this Proxy Statement-Prospectus and should be read
in its entirety. See "THE MERGER--Opinion of Bancorp's Financial Advisor."
Dissenters' Rights
Under certain conditions and by complying with the specific procedures
required by statute and described herein, Bancorp's shareholders will have the
right to dissent from the Merger, in which event, they may be entitled to
receive in cash the judicially determined "fair value" of their shares of
Bancorp Stock. See "THE MERGER--Dissenters' Rights."
Accounting Treatment
It is anticipated that the Merger, when consummated, will be accounted for
as a purchase.
Federal Income Tax Consequences
The Merger is expected to qualify as a "tax-free" reorganization under
Section 368 of the Internal Revenue Code of 1986, as amended ("Code"). Bancorp's
counsel has advised Bancorp that, among other things, no gain or loss will be
recognized for federal income tax purposes to Bancorp's shareholders upon the
conversion of their Bancorp Stock into Merger Consideration, except with respect
to any Cash Consideration or Cash In Lieu Amount paid to a Bancorp shareholder.
See "THE MERGER--Certain Federal Income Tax Consequences."
Regulatory Approvals
Consummation of the Merger requires, and is conditioned upon receipt of,
the approval of the Merger by the Federal Reserve Board and the New Jersey
Commissioner of Banking. The Merger may not be consummated until after the
expiration of a 15-to-30-day statutory waiting period following receipt of
Federal Reserve Board approval without objection to the Merger by the United
States Department of Justice ("Justice Department"). See "THE MERGER
AGREEMENT--Regulatory Approvals."
6
<PAGE>
Conditions of the Merger
Consummation of the Merger is subject, among other things, to the approval
of the Merger Agreement by the requisite vote of Bancorp's shareholders and the
receipt of all requisite regulatory approvals. See "THE MERGER
AGREEMENT--Conditions to the Merger; Termination."
Exchange of Certificates
After the date of the Annual Meeting but prior to the Effective Time,
Bancorp's shareholders will receive in the mail from the Exchange Agent
instructions for electing between receipt of Stock Consideration or Cash
Consideration in the Merger and for exchanging Bancorp Certificates for the
Merger Consideration to which they become entitled. Bancorp's shareholders
should not surrender their Bancorp Certificates until they receive these
instructions. See "THE MERGER AGREEMENT--Election and Allocation Procedures."
In the event a Bancorp Certificate has been, lost, stolen, destroyed or is
not properly registered, the holder of the Bancorp Stock represented thereby is
urged, in order to avoid delays and additional expense, to notify Bancorp's
registrar and transfer agent, Midlantic Bank, N.A., now at (908) 205-4517 of
such fact and begin the process of having replacement certificates issued.
Interests of Certain Persons in the Merger
Directors and executive officers of Bancorp have interests in the Merger
that are in addition to their interests as shareholders of Bancorp. These
interests include: (1) indemnification of directors and officers of Bancorp and
NJSB against certain claims; (2) for certain officers, payments under their
employment agreements in the event their employment is terminated by UJB
following the Merger (see "PROPOSAL II--ELECTION OF DIRECTORS--Executive
Compensation and Other Information--Management Employment Contracts"); (3) the
additional payment to be made to the Supplemental Executive Retirement Trust of
Bancorp's Chief Executive Officer, Beatrice D'Agostino, as a result of the
Merger (see "PROPOSAL II--ELECTION OF DIRECTORS--Executive Compensation and
Other Information--Management Employment Contracts"); (4) in connection with the
Option Plans, (i) the exercisability upon consummation of the Merger, due to the
resulting "change in control" of Bancorp, for 60 or 90 days, of limited rights
previously granted in tandem with employee options, (ii) permitting non-employee
Directors, in lieu of purchasing UJB Stock upon exercise of a converted stock
option, for a 90 day period following the Effective Time, to receive cash equal
to the difference between the exercise price and the Merger acquisition price,
and (iii) the extension for three months of the exercisability period for
employee options following terminations of employment other than for cause (see
"THE MERGER AGREEMENT--Bancorp Stock Option Plans"); (5) Mrs. D'Agostino's
receipt of special payments to compensate her for certain costs incurred by her,
and that may be incurred by her, in connection with the exercise of certain
options in 1994; (6) for certain directors, payments under, and changes to,
Bancorp's Director Emeritus Program in connection with the Merger (see "PROPOSAL
II--ELECTION OF DIRECTORS--Compensation and Committees of Directors"); and (7)
the contemplated termination of the New Jersey Savings Bank Employee Stock
Ownership and Savings Plan ("ESOSP") and distribution of accrued benefits,
including benefits that had not vested prior to the Merger, and all accounts to
participants and their beneficiaries (see "THE MERGER AGREEMENT--Covenants--UJB
Covenants"). The estimated aggregate dollar value of all consideration to the
directors and executive officers of Bancorp if the Merger is consummated is
$2,742,000 to Beatrice D'Agostino (Chairman, President and Chief Executive
Officer), $286,000 to each of directors Irving Schwartz, Norman A. Gathany,
Louis A. Imfeld and Richard E. Schmelz, $255,000 to each of directors Joseph
A. Hoffman and Theodore K. Sargent, $1,774,000 to each of Robert H. Hunt, Jr.
(Senior Executive Vice President and Secretary) and Russell G. Muter (Executive
Vice President and Treasurer), $908,000 to John Vassallo (Senior Vice President,
Mortgage Loan Division, of NJSB), $796,000 to George S. Sirusas (Senior
Vice President, Commercial Loan Division, of NJSB), $420,000 to Robert J.
DiTota (Assistant Secretary and Assistant Treasurer), and $129,000 to Daniel J.
Matyola (Corporate Counsel, Assistant Secretary and Assistant Treasurer), for a
total of $10,197,000 to all of the above persons. These interests and the
underlying assumptions are described in more detail below under "THE MERGER
AGREEMENT--Interests of Certain Persons in the Merger."
Market Prices and Dividends
UJB Stock is listed and traded on the NYSE. Bancorp Stock is listed and
traded on NASDAQ. The following table presents for the periods indicated
(rounded to the nearest cent and adjusted for all stock splits and stock
dividends) the high, low and closing sale prices of a share of UJB Stock, the
high, low and closing sale prices of a share of Bancorp Stock and dividends
declared per share on UJB Stock and Bancorp Stock.
<TABLE>
<CAPTION>
UJB Stock Bancorp Stock
---------------------------------- --------------------------------
Sale Prices Sale Prices
----------------------- Dividends --------------------- Dividends
Year High Low Close Per Share High Low Close Per Share
- ---- ---- --- ----- --------- ---- --- ----- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1992 ............ $ 24.50 $ 14.00 $ 24.25 $ 0.60 $ 15.00 $ 11.25 $ 14.25 $ 0.48
1993 ............ 33.25 21.63 24.00 0.69 21.25 14.25 20.75 0.60
1994 ............ 29.25 22.50 24.13 0.94 33.50 20.00 29.50 0.80
1995 (through
April 25) ..... 28.75 24.13 27.38 0.29 42.13 29.50 41.88 0.20
</TABLE>
7
<PAGE>
The following table presents (rounded to the nearest cent) for January 19,
1995, the last full trading day prior to the public announcement of the
execution of the Merger Agreement, and for April 25, 1995, the last sale price
of a share of UJB Stock, the last sale price of a share of Bancorp Stock and a
hypothetical pro forma equivalent in UJB Stock of a share of Bancorp Stock. The
hypothetical pro forma equivalents set forth below are provided for illustration
purposes only. Neither hypothetical pro forma equivalent is intended to
represent the actual pro forma equivalent that will be applicable to the Merger;
such amount will not be calculable until a date subsequent to the Annual
Meeting.
The hypothetical pro forma equivalents were arrived at by multiplying the
last sale price of UJB Stock on each of the dates specified in the table by a
hypothetical Exchange Ratio that was fixed by assuming, for purposes of the
Exchange Ratio criteria set forth in the Merger Agreement (see "THE MERGER
AGREEMENT--Determination of Exchange Ratio"), that the date set forth in the
first column of the table was the "Determination Date" and that the Average
Price was the last sale price of UJB Stock on the assumed Determination Date.
Pro Forma
Bancorp Exchange
UJB Bancorp Equivalent Ratio (1)
--- ------- ---------- ---------
January 19, 1995.......... $ 24.88 $ 33.00 $ 43.10 1.7327
April 25, 1995............ 27.38 41.88 43.10 1.5741
On the date the Exchange Ratio is fixed and on the date UJB Certificates
are received by Bancorp shareholders entitled thereto, the price of a share of
UJB Stock, the Pro Forma Bancorp Equivalent and the actual Exchange Ratio
applicable to the Merger may differ from those set forth above. Bancorp
shareholders should obtain current price quotations. Bancorp shareholders
receiving exclusively Cash Consideration in the Merger will not be affected by
the determination of the Exchange Ratio. See "MARKET PRICE AND DIVIDEND
MATTERS."
The following table presents, as of April 25, 1995, the current annualized
dividend rate for a share of UJB Stock, for a share of Bancorp Stock, and
(rounded to the nearest cent) for the hypothetical pro forma equivalent in UJB
Stock of a share of Bancorp Stock computed by multiplying the annualized
dividend rate of a share of UJB Stock by certain hypothetical Exchange Ratios
set forth and described below.
Pro Forma
Bancorp Exchange
UJB Bancorp Equivalent Ratio (1)
--- ------- ---------- ---------
April 25, 1995 ........... $1.16 $0.80 $1.79 1.5441
-- -- 1.97 1.6985
-- -- 2.19 1.8872
(1) The listed Exchange Ratios have been furnished for illustration purposes
only. The Exchange Ratio has not been fixed, will not be fixed until a date
subsequent to the scheduled date of the Annual Meeting, and may, when fixed
as provided for in the Merger Agreement, differ from the Exchange Ratios set
forth above. The Exchange Ratios listed above would be applicable in the
following situations:
Average Price of
UJB Stock on Listed
Exchange Ratio Determination Date
-------------- -------------------
1.5441 .......................... Greater than $27.9125
1.6985 .......................... $25.375
1.8872 .......................... less than $22.8375 but greater than
or equal to $20.90
The Merger Agreement provides that, for Average Prices of UJB Stock on the
Determination Date of between $22.8375 and $27.9125, the Exchange Ratio would
vary from 1.5441 to 1.8872 (based on the formula of $43.10 (divided by) Average
Price). The Exchange Ratio of 1.6985 applies only if the Average Price of UJB
Stock on the Determination Date is exactly $25.375, the mid-point between
$22.8375 and $27.9125.
The Exchange Ratio would differ from the hypothetical Exchange Ratios
presented in the table if the Average Price of UJB Stock on the Determination
Date were less than $20.90. In such case, Bancorp could terminate the Merger
Agreement unless UJB agreed to the Exchange Ratio determined by dividing $39.44
by the Average Price. See "THE MERGER AGREEMENT--Determination of Exchange
Ratio."
8
<PAGE>
INTRODUCTION
This Proxy Statement-Prospectus is being furnished to shareholders of
Bancorp who are holders of Bancorp Stock as of the Record Date ("Bancorp
Shareholders") in connection with the solicitation of proxies by the Bancorp
Board for use at the Annual Meeting to be held on May 26, 1995 or any
adjournments thereof, at the Bridgewater Manor, 1251 Route 202/206, Bridgewater,
New Jersey, at 3:00 p.m. (local time). The purpose of the Annual Meeting is to
consider and vote upon (1) a proposal to approve the Merger Agreement and the
transactions contemplated thereby, (2) the election of three directors to serve
for a term of three years or until the Effective Time of the Merger and (3) the
ratification of the appointment of KPMG Peat Marwick LLP as independent
certified accountants of Bancorp for the year ending December 31, 1995.
The Board of Directors of Bancorp has unanimously approved the Merger
Agreement and recommends that Bancorp Shareholders vote FOR its approval. The
Board of Directors of Bancorp also recommends that Bancorp Shareholders vote FOR
the three director nominees named herein and FOR the ratification of the
appointment of KPMG Peat Marwick LLP as Bancorp's independent accountants.
The information contained herein with respect to UJB has been supplied by
UJB and the information contained herein with respect to Bancorp has been
supplied by Bancorp.
ANNUAL MEETING
Record Date; Vote Required
The securities to be voted at the Annual Meeting consist of shares of
Bancorp Stock, with each share entitling its owner to one vote on each Board of
Director position to be filled at the Annual Meeting, each proposal and on all
other matters properly brought before the Annual Meeting. Bancorp had no other
class of voting securities outstanding at the close of business on the Record
Date, March 31, 1995. There were 1,542 record holders of Bancorp Stock and
2,103,270 shares of Bancorp Stock outstanding and eligible to be voted at the
Annual Meeting as of the Record Date. It is anticipated that this Proxy
Statement-Prospectus, together with the enclosed proxy card, will be mailed to
shareholders on or about April 28, 1995.
The presence at the Annual Meeting, in person or by proxy, of the holders
of a majority of the outstanding shares of Bancorp Stock will constitute a
quorum for the transaction of business. Under Delaware law and Bancorp's
Certificate of Incorporation and Bylaws, the approval of the Merger Agreement
requires the affirmative vote of a majority of the shares outstanding and
entitled to vote at the Annual Meeting. Accordingly, abstentions and broker
non-votes (as defined below) have the effect of a vote against the Merger
Agreement. The Annual Meeting may be adjourned from time to time if necessary to
obtain a quorum or to obtain the votes necessary to approve the Merger
Agreement. In connection therewith, however, proxies voting against the Merger
Agreement may not be used by the proxyholders to vote in favor of the
adjournment pursuant to such proxyholders' discretionary voting authority. The
approval of the Merger Agreement by Bancorp Shareholders is a condition to the
consummation of the Merger. See "THE MERGER AGREEMENT--Conditions to the Merger;
Termination."
Assuming the presence of a quorum at the Annual Meeting, the vote of a
plurality of the votes of the shares represented, in person or by proxy, at the
Annual Meeting is required to elect the three directors. The third proposal
requires the affirmative vote of a majority of the shares represented, in person
or by proxy, at the Annual Meeting.
Votes cast "for" and "against" on each proposal and "for" and "withheld" on
each Board of Director position to be filled at the Annual Meeting will be
tallied as indicated. "Broker non-votes" (i.e., shares held by brokers or
nominees as to which instructions have not been received from the beneficial
owners or the persons entitled to vote such shares and the broker or nominee
does not have discretionary voting power under the applicable NYSE rules) are
not counted and will have no effect on whether a proposal (other than the first
proposal) is adopted or a director nominee is elected. Abstentions will be
treated as shares that are present and entitled to vote for purposes of
determining the presence of a quorum and the number of votes necessary to adopt
any proposal or elect any director nominee. The vote of a Bancorp Shareholder
who abstains will have the same effect as a vote "against" a proposal or against
a director nominee.
Holders of Bancorp Voting Securities
Bancorp is not aware of any person or entity, other than the ESOSP and
Beatrice and Anthony D'Agostino, that is a beneficial owner of more than five
percent (5%) of Bancorp Stock. The following table represents information as to
the shares of Bancorp Stock beneficially owned by directors of Bancorp
(including those directors who are also nominees), the executive officers of
Bancorp listed in the "Summary Compensation Table" under the caption "PROPOSAL
II--ELECTION OF DIRECTORS--Executive Compensation and Other Information" below,
and all directors and executive officers as a group, as of the Record Date.
9
<PAGE>
<TABLE>
<CAPTION>
Amount and Nature of
Beneficial Percent of
Name of Beneficial Owner Ownership (1) Class
- ------------------------ -------------------- ----------
<S> <C> <C>
New Jersey Savings Bank ESOSP ........................................ 183,816(2) 8.74%
Beatrice D'Agostino .................................................. 127,561(3) 5.94%
Chairman, President, Chief Executive Officer and Director
Irving Schwartz ...................................................... 33,638(4)(5) 1.60%
Vice Chairman and Director
Bernard Adler ........................................................ 70,470(6) 3.35%
Director
Dr. Norman A. Gathany ................................................ 10,844(5)(7) 0.51%
Director
Joseph A. Hoffman .................................................... 8,572(5) 0.41%
Director
Louis A. Imfeld ...................................................... 25,347(5) 1.20%
Director
Gerald A. Johnson* ................................................... 7,109(8) 0.34%
Director
Theodore K. Sargent* ................................................. 15,395(5)(9) 0.73%
Director
Richard E. Schmelz* .................................................. 10,391(5)(10) 0.49%
Director
Robert H. Hunt, Jr. .................................................. 60,406(11) 2.82%
Senior Executive Vice President and Corporate Secretary
Russell G. Muter ..................................................... 61,530(12) 2.87%
Executive Vice President and Treasurer
Robert J. DiTota ..................................................... 13,028(13) 0.62%
Assistant Treasurer and Assistant Secretary
Daniel J. Matyola .................................................... 4,725(14) 0.22%
Assistant Treasurer and Assistant Secretary
Directors and Executive Officers as a group (16 persons) ............. 518,227(15) 22.34%
</TABLE>
- -------------
* Nominee for Director.
(1) In accordance with Rule 13d-3 under the Exchange Act, a person is deemed to
be the beneficial owner, for the purposes of this table, of any shares of
Bancorp Stock if he or she has or shares voting or investment power with
respect to such security, or has the right to acquire beneficial ownership
at any time within 60 days of the Record Date. Unless otherwise noted, the
persons as to whom the information is provided have sole voting and
investment power over the shares of Bancorp Stock shown as beneficially
owned.
(2) The ESOSP's shares are held in a trust, the trustee of which is First
Fidelity Bank, N.A., New Jersey, 765 Broad Street, Newark, NJ 07102. As of
the Record Date, all 183,816 shares of Bancorp Stock held by the ESOSP were
credited to the accounts of the participants and such credited shares are
included to the extent appropriate in the individual beneficial ownership
holdings listed in the beneficial ownership table.
(3) Includes 13,206 shares held of record by Mrs. D'Agostino's spouse, and 2,276
shares held jointly with Mrs. D'Agostino's spouse. Includes 45,000 shares,
of 50,000 total stock options granted, that may be purchased pursuant to
stock options exercisable as of, or within 60 days of, the Record Date. Mrs.
D'Agostino's address is 10 West High Street, Somerville, New Jersey
08876-0340.
(4) Includes 4,600 shares held by Mr. Schwartz's spouse.
(5) Includes 6,300 shares of 7,500 total stock options granted for each
non-employee director that may be purchased pursuant to stock options
exercisable as of, or within 60 days of, the Record Date.
(6) Includes 63,945 shares held jointly with Mr. Adler's spouse and 6,218 shares
held by 3 trusts for the benefit of Mr. Adler's children.
10
<PAGE>
(7) Includes 2,272 shares held by Dr. Gathany's spouse.
(8) Includes 3,000 shares held jointly with Mr. Johnson's spouse.
(9) Includes 9,095 shares held jointly with Mr. Sargent's spouse.
(10) Includes 4,091 shares held jointly with Mr. Schmelz's spouse.
(11) Includes 4,530 shares held of record by Mr. Hunt's spouse and 42,500
shares, of 45,000 total stock options granted, that may be purchased
pursuant to stock options exercisable as of, or within 60 days of, the
Record Date.
(12) Includes 1,493 shares held of record by Mr. Muter's spouse, 4,545 shares
held jointly with Mr. Muter's spouse, and 783 shares held of record by Mr.
Muter's spouse as custodian for their minor children. Also includes 42,500
shares, of 45,000 total stock options granted, that may be purchased
pursuant to stock options exercisable as of, or within 60 days of, the
Record Date.
(13) Includes 8,625 shares, of 9,875 total stock options granted, that may be
purchased pursuant to stock options exercisable as of, or within 60 days
of, the Record Date.
(14) Includes 68 shares held jointly with Mr. Matyola's spouse, 973 shares held
of record by Mr. Matyola's spouse, and 119 shares held by an adult child of
Mr. Matyola. Includes 1,000 shares, of 1,500 total stock options granted,
that may be purchased pursuant to stock options exercisable as of, or
within 60 days of, the Record Date.
(15) Includes 66,652 shares allocated to the executive officers under the ESOSP.
See footnote (2) to this table. Includes 39,966 shares, of 42,083 total
stock options granted to the three executive officers not listed in this
table, that may be purchased pursuant to stock options exercisable as of,
or within 60 days of, the Record Date.
Proxies; Revocation; Solicitation
If the enclosed form of proxy is properly executed and returned to Bancorp
in time to be voted at the Annual Meeting, the shares represented thereby will
be voted in accordance with the instructions marked thereon. Proxies that are
executed, but as to which no instructions have been marked, will be voted FOR
the approval of the Merger Agreement, FOR election of the management-designated
nominees for director and FOR the ratification of the independent accountants.
Should any other matter come before the Annual Meeting, the persons named as
proxies in the accompanying proxy, acting by a plurality of those proxies
present, will have discretionary authority to vote on such matters in accordance
with their judgment. Although the Annual Meeting may be adjourned, proxies
voting against the Merger Agreement may not be used by the proxyholders to vote
in favor of the adjournment pursuant to such proxyholders' discretionary voting
authority. As of the time of the preparation of this Proxy Statement-
Prospectus, the Bancorp Board does not know of any matters, other than those
referred to in the Notice of Annual Meeting of Shareholders, to be presented for
action at the Annual Meeting.
The cost of soliciting proxies will be borne by Bancorp. In addition to use
of the mails, proxies may be solicited personally or by telephone, telecopier or
telegraph by officers, directors or employees of Bancorp and its subsidiary,
NJSB, who will not be specially compensated for such solicitation activities.
Arrangements will also be made by Bancorp to reimburse brokerage houses and
other custodians, nominees and fiduciaries for their reasonable expenses
incurred in forwarding solicitation materials to the beneficial owners of shares
held of record by such persons. Bancorp has retained Georgeson & Company, a
proxy soliciting firm, to assist in the solicitation of proxies, at a fee of
$6,000 plus fees for direct telephone solicitations, if authorized, and
reimbursement of certain out-of-pocket costs.
A Bancorp Shareholder may revoke a proxy at any time prior to its being
voted by (i) filing with Robert H. Hunt, Jr., Secretary of Bancorp, 10 West High
Street, Somerville, New Jersey 08876, written notice of revocation, (ii)
submitting a duly executed proxy bearing a later date, or (iii) appearing at the
Annual Meeting and giving the Secretary written notice of his or her intention
to vote in person. Unless previously revoked or otherwise instructed thereon,
proxies will be voted at the Annual Meeting on the matters described above. If a
Bancorp Shareholder holding Bancorp Stock in street name wishes to vote such
Bancorp Stock at the Annual Meeting, the Bancorp Shareholder must obtain from
the nominee holding the Bancorp Stock in street name a properly executed "legal
proxy" identifying the individual as a Bancorp Shareholder, authorizing the
Bancorp Shareholder to act on behalf of the nominee at the Annual Meeting and
identifying the number of shares with respect to which the authorization is
granted.
If a Bancorp Shareholder is participating in Bancorp's Dividend
Reinvestment Plan ("DRP"), the Bancorp Shareholder will receive a single proxy
card both for shares held by such Bancorp Shareholder in certificate form and
for shares held by the DRP plan administrator for the Bancorp Shareholder's DRP
account. No Bancorp Stock held by a Bancorp Shareholder, including any shares
held under the DRP, will be voted if a properly executed proxy is not timely
returned.
11
<PAGE>
SELECTED FINANCIAL DATA
(Dollars in thousands, except per share data)
The following tables present selected historical consolidated financial
information for UJB and Bancorp at December 31 for each of the years 1990
through 1994. Such information has been derived from and should be read in
conjunction with the consolidated financial statements of UJB and Bancorp,
including the respective notes thereto, which are incorporated by reference
herein.
<TABLE>
<CAPTION>
UJB--HISTORICAL Year Ended December 31,
- -------------------------------------------------------------------------------------------------------------
1994 1993 1992 1991 1990
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Summary of Operations
Interest income ......................... $ 960,973 $ 907,628 $ 979,008 $ 1,134,624 $ 1,217,082
----------- ----------- ----------- ----------- -----------
Interest expense ........................ 344,869 331,720 429,725 634,432 723,064
Net interest income .................... 616,104 575,908 549,283 500,192 494,018
Provision for loan losses ............... 84,000 95,685 139,555 167,650 251,888
----------- ----------- ----------- ----------- -----------
Net interest income after
provision for loan losses ............. 532,104 480,223 409,728 332,542 242,130
Non-interest operating income ........... 175,447 170,645 159,018 136,206 171,105
Investment securities gains (losses) .... 1,888 8,877 18,485 13,919 (596)
----------- ----------- ----------- ----------- -----------
Total non-interest income ............... 177,335 179,522 177,503 150,125 170,509
Non-interest expenses ................... 505,246 554,190 511,013 454,731 441,221
----------- ----------- ----------- ----------- -----------
Income (loss) before income taxes ...... 204,193 105,555 76,218 27,936 (28,582)
Federal and state income taxes (benefit) 72,312 26,953 19,430 3,684 (17,166)
----------- ----------- ----------- ----------- -----------
Income (loss) before cumulative
effect of a change in
accounting principle .................. 131,881 78,602 56,788 24,252 (11,416)
Cumulative effect of a change in
accounting principle ................... (1,731) 3,816 -- -- --
----------- ----------- ----------- ----------- -----------
Net income (loss) ...................... $ 130,150 $ 82,418 $ 56,788 $ 24,252 $ (11,416)
=========== =========== =========== =========== ============
Common Share Data
Net income (loss) ....................... $ 2.35 $ 1.50 $ 1.09 $ 0.46 $ (0.29)
Cash dividends declared ................. 0.94 0.69 0.60 0.60 1.02
Book value at year end .................. 19.53 18.23 17.38 16.92 17.09
Market value at year end ................ 24.13 24.00 24.25 14.63 7.13
Average common shares outstanding
(in thousands) ......................... 54,697 53,917 50,398 48,279 47,230
Balance Sheet Data
Total assets ............................ $15,429,472 $13,789,641 $14,114,550 $13,727,539 $13,156,273
Investment securities ................... 4,327,716 3,877,473 3,713,506 3,538,905 3,077,065
Total loans ............................ 9,656,574 8,743,708 8,928,580 8,937,873 8,860,622
Allowance for loan losses ............... 214,161 244,154 277,449 292,490 265,148
Total deposits .......................... 12,567,791 11,751,499 12,087,328 11,620,247 10,912,739
Long-term debt .......................... 204,754 208,654 216,945 65,152 72,960
Shareholders' equity .................... 1,104,260 1,019,252 959,492 850,873 845,551
Capital Ratios
Average total equity to average total
assets ................................. 7.19% 7.12% 6.48% 6.30% 6.95%
Tier I capital to average assets
(leverage) ............................. 7.02 7.20 6.79 6.10 6.07
Tier I capital to risk-adjusted assets .. 9.27 9.64 9.18 8.27 8.23
Total capital to risk-adjusted assets ... 12.04 12.67 12.26 9.77 9.83
Operating Ratios
Return on average assets ................ 0.88% 0.59% 0.41% 0.18% (0.09)%
Return on average common equity ......... 12.36 8.32 6.37 2.70 (1.53)
Net interest margin ..................... 4.63 4.62 4.49 4.18 4.29
Loan Quality Ratios
Allowance for loan losses to
year-end loans ......................... 2.22% 2.79% 3.11% 3.27% 2.99%
Net charge offs to average loans ........ 0.86 1.46 1.73 1.58 1.25
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
SELECTED FINANCIAL DATA (continued)
(Dollars in thousands, except per share data)
BANCORP--HISTORICAL Year Ended December 31,
- ------------------------------------------------------------------------------------------------------------
1994 1993 1992 1991 1990
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Summary of Operations
Interest income .......................... $ 31,068 $ 31,594 $ 35,910 $ 38,895 $ 27,202
Interest expense ......................... 12,509 13,683 18,263 24,365 15,941
-------- -------- -------- -------- --------
Net interest income .................... 18,559 17,911 17,647 14,530 11,261
Provision for loan losses ................ 800 1,650 1,800 1,800 1,313
-------- -------- -------- -------- --------
Net interest income after
provision for loan losses ............ 17,759 16,261 15,847 12,730 9,948
Non-interest operating income ............ 1,365 1,573 1,449 1,182 790
Investment securities gains -- 10 -- 105 4
-------- -------- -------- -------- --------
Total non-interest income ................ 1,365 1,583 1,449 1,287 794
Non-interest expenses .................... 12,257 12,169 12,002 11,286 7,075
-------- -------- -------- -------- --------
Income before income taxes and
cumulative effect of a change in
accounting principle ................. 6,867 5,675 5,294 2,731 3,667
Federal and state income taxes ........... 2,551 1,961 2,458 1,569 1,635
-------- -------- -------- -------- --------
Income before cumulative
effect of a change in
accounting principle ................. 4,316 3,714 2,836 1,162 2,032
Cumulative effect of a change
in accounting principle -- 1,150 -- -- --
-------- -------- -------- -------- --------
Net income ............................. $ 4,316 $ 4,864 $ 2,836 $ 1,162 $ 2,032
======== ======== ======== ======== ========
Common Share Data
Net income ............................... $ 1.95 $ 2.20 $ 1.26 $ 0.49 $ 0.80
Cash dividends declared .................. 0.80 0.60 0.48 0.48 0.44
Book value at year end ................... 24.23 23.04 21.16 19.66 19.06
Market value at year end ................. 29.50 20.75 14.25 10.50 7.75
Average common shares outstanding
(in thousands) ......................... 2,212 2,208 2,251 2,341 2,529
Balance Sheet Data
Total assets ............................. $480,371 $471,400 $474,797 $460,285 $287,293
Investment securities .................... 159,844 161,267 190,184 188,944 41,785
Total Loans .............................. 292,797 259,890 241,048 231,150 216,591
Allowance for loan losses ................ 4,652 4,564 3,706 2,143 1,586
Total deposits ........................... 421,993 422,189 428,292 412,820 239,356
Long-term debt ........................... -- 173 495 765 1,060
Shareholders' equity ..................... 50,936 47,838 44,130 44,558 45,394
Capital Ratios
Average total equity to average total
assets ................................. 10.42% 9.84% 9.62% 10.32% 16.70%
Tier I capital to average assets
(leverage) ............................. 10.57 10.08 9.10 9.42 15.80
Tier I capital to risk-adjusted assets ... 21.18 20.86 18.02 21.27 26.40
Total capital to risk-adjusted assets .... 22.44 22.12 19.27 22.34 27.33
Operating Ratios
Return on average assets ................. 0.92% 1.04% 0.61% 0.26% 0.72%
Return on average common equity .......... 8.86 10.53 6.36 2.53 4.31
Net interest margin ...................... 4.15 3.96 3.95 3.39 4.14
Loan Quality Ratios
Allowance for loan losses to
year-end loans ......................... 1.59% 1.75% 1.53% 0.93% 0.73%
Net charge offs to average loans ......... 0.27 0.32 0.10 0.57 0.12
</TABLE>
13
<PAGE>
PRO FORMA FINANCIAL INFORMATION
The following unaudited pro forma financial information combines the
historical audited financial statements of UJB at December 31, 1994, as filed on
Form 10-K for the fiscal year ended December 31, 1994, and of Bancorp at
December 31, 1994, as filed on Form 10-K for the fiscal year ended December 31,
1994, giving effect to the Merger. The Pro Forma Combined Condensed Balance
Sheet reflects the Merger as if it had become effective December 31, 1994, while
the Pro Forma Combined Condensed Statement of Income uses an effective date of
January 1, 1994. The Merger will be accounted for, in accordance with generally
accepted accounting principles, as a purchase of Bancorp by UJB. Under the
purchase method of accounting, all assets and liabilities of Bancorp at December
31, 1994 have been adjusted, net of income tax effects, to their current
estimated fair values and combined with the asset and liability book values of
UJB. The pro forma financial information assumes an Exchange Ratio of 1.8872
shares of UJB Stock for one share of Bancorp Stock and, in accordance with the
allocation required under the Merger Agreement, the conversion of 60% of Bancorp
shares into UJB Stock and the conversion of 40% of Bancorp shares into cash at
the rate of $43.10 per share. The assumed Exchange Ratio is the highest and most
dilutive of the fixed Exchange Ratios specifically provided for in the Merger
Agreement. (The Exchange Ratio would be higher if the Average Price of UJB Stock
on the Determination Date is less than $20.90, Bancorp sends notice terminating
the Merger Agreement, and UJB nullifies such notice by agreeing to an Exchange
Ratio equal to $39.44 divided by the Average Price.) See "THE MERGER
AGREEMENT--Determination of Exchange Ratio."
The unaudited pro forma information presented herein does not give effect
to operating results of UJB or Bancorp subsequent to December 31, 1994. Purchase
accounting adjustments to estimated fair values have been made with respect to
assets and liabilities of Bancorp and the related income and expense accounts
based upon preliminary estimates and evaluations as of December 31, 1994. Such
preliminary estimates and assumptions are subject to change as additional
information is obtained. The pro forma information does not reflect anticipated
cost savings expected to be realized from the Merger. The allocations of
purchase costs are subject to final determination, based upon estimates and
other evaluations of fair value, as of the close of the transaction. Therefore,
the allocations reflected in the unaudited pro forma financial information may
differ from the amounts ultimately determined. The unaudited pro forma
information does not purport to be indicative of the combined financial position
or results of operations of future periods.
14
<PAGE>
PRO FORMA COMBINED CONDENSED BALANCE SHEET
(Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
December 31, 1994
-----------------------------------------------------------
Pro Forma
As Reported Adjustments
-------------------------- Increase Pro Forma
UJB Bancorp(1) (Decrease) Combined
---------- ------------ ------------ ---------
<S> <C> <C> <C> <C>
Assets
Cash and due from banks ................... $ 925,421 $ 12,663 $ (50)(2) $ 938,034
Interest bearing deposits with banks ...... 18,809 -- 18,809
Short-term investment securities .......... 44,875 7,323 (36,248)(4) 15,950
Trading account securities ................ 33,513 -- 33,513
Investment securities available for sale .. 201,215 22,491 223,706
Investment securities ..................... 4,092,988 137,353 (6,313)(3) 4,224,028
Loans ..................................... 9,656,574 292,797 (6,816)(3) 9,942,555
Less: Allowance for loan losses ......... 214,161 4,652 218,813
----------- -------- -------- -----------
Net loans ............................... 9,442,413 288,145 (6,816) 9,723,742
Premises and equipment .................... 167,905 3,933 754 (3) 172,592
Other real estate owned, net .............. 31,449 1,159 32,608
Excess of cost over fair value of assets
acquired, net ........................... 45,822 523 60,047 (4) 105,869
(523)(3)
Other assets .............................. 425,062 6,781 5,264 (3) 437,107
----------- -------- -------- -----------
Total Assets .......................... $15,429,472 $480,371 $ 16,115 $15,925,958
=========== ======== ======== ===========
Liabilities and Shareholders' Equity
Deposits .................................. $12,567,791 $421,993 $ (50)(2) $12,989,287
(447)(3)
Other borrowed funds ...................... 1,333,430 6,000 1,339,430
Other liabilities ......................... 219,237 1,442 11,082 (3) 233,856
2,095 (3)
Long-term debt (12) ....................... 204,754 -- 204,754
----------- -------- -------- -----------
Total liabilities ....................... 14,325,212 429,435 12,680 14,767,327
Shareholders' Equity
Preferred stock ........................... 30,008 -- 30,008
Common stock .............................. 66,006 27 (27)(5) 68,863
2,857 (4)
Surplus ................................... 413,429 28,339 (20,364)(3) 464,943
51,514 (4)
(7,975)(5)
Retained earnings ......................... 604,066 29,528 (29,528)(5) 604,066
Net unrealized loss on investment
securities .............................. (9,249) (339) 339 (5) (9,249)
Treasury stock ............................ -- (6,619) 6,619 (5) --
Total shareholders' equity .............. 1,104,260 50,936 3,435 1,158,631
----------- -------- -------- -----------
Total Liabilities and Shareholders'
Equity ................................. $15,429,472 $480,371 $ 16,115 $15,925,958
=========== ======== ======== ===========
Common shares outstanding at year end
(in thousands) ............................ 55,005 2,103 57,386
====== ====== ======
Book value per common share ................. $19.53 $24.23 $19.67
====== ====== ======
<FN>
- ----------------
(1)-(5): See Notes to Pro Forma Combined Condensed Balance Sheet on the
following pages.
</FN>
</TABLE>
15
<PAGE>
Notes to Pro Forma Combined Condensed Balance Sheet
(1) Certain reclassifications have been made to Bancorp historical amounts to
conform with the method of presentation of UJB. The purchase accounting
adjustments reflected herein are estimates; the actual purchase accounting
adjustments and classifications of accounts will be based on amounts that
exist at the Effective Time.
(2) Represents the elimination of intercompany deposits.
(3) Adjustment to Surplus reflecting the fair value of assets and liabilities
acquired and estimated acquisition costs (in thousands):
Decrease in securities ................................. $(6,313)
Decrease in loans ...................................... (6,816)
Elimination of acquired goodwill and intangibles ....... (523)
Increase in premises and equipment ..................... 754
Decrease in interest-bearing deposits .................. 447
Estimated acquisition costs ............................ (11,082)
Increase in other liabilities--income tax on
recapture of allowance for loan loss ................. (2,095)
Increase in deferred tax assets ........................ 5,264
--------
Surplus adjustments, net ............................... $(20,364)
========
(4) Represents the acquisition of Bancorp Stock (40% in exchange for cash of
$36,248,000 and 60% in exchange for approximately 2,380,784 shares of UJB
Stock at an assumed market value of $22.8375 per share, or $54,371,000),
resulting in an increase in UJB Stock of approximately $2,857,000 and an
increase in Surplus of approximately $51,514,000. Acquisition costs were
estimated at $11,082,000 (consisting of option, contract and lease
buy-outs, employment-related costs and other transaction-related costs),
resulting in a total purchase price of approximately $101,701,000. The
transaction, after giving effect to the fair value adjustments referred to
in Note 3 above, resulted in intangibles of approximately $60,047,000,
$7,792,000 of which was assigned to core deposit intangibles. The
intangibles were derived as follows (in thousands):
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Total purchase price, including acquisition costs .............. $ 101,701
Tangible net assets of Bancorp at book value ............ $ 50,413
Purchase accounting adjustments:
Decrease in securities ....................................... $ (6,313)
Decrease in loans ............................................ (6,816)
Increase in premises and equipment ........................... 754
Decrease in interest-bearing deposits ........................ 447
Increase in other liabilities--income taxes on recapture of
allowance for loan loss .................................... (2,095)
Increase in deferred tax assets ................................ 5,264 (8,759)
--------- ---------
Tangible net assets after purchase accounting adjustments ...... 41,654
---------
Excess of purchase price over value of identifiable tangible net
assets acquired ................................................ $ 60,047
=========
(5) To eliminate the remaining stockholders' equity of Bancorp as follows (in
thousands):
Common stock ............................................................... $ (27)
=========
Surplus .................................................................... $(28,339)
Less: Surplus adjustment, net (Note 3) ................................... (20,364)
Net adjustment ............................................................. $ (7,975)
=========
Retained earnings .......................................................... $ (29,528)
=========
Net unrealized loss on investment securities ............................... $ 339
=========
Treasury stock ............................................................. $ 6,619
=========
</TABLE>
16
<PAGE>
PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME
(Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
Year Ended December 31, 1994
----------------------------------------------
Pro Forma
As Reported Adjustments
----------------- Increase Pro Forma
UJB Bancorp (Decrease) Combined
------- ------- -------------- ---------
<S> <C> <C> <C> <C>
Interest Income
Interest and fees on loans ............................ $706,049 $20,345 $1,136 (1) $727,530
Interest on investment securities ..................... 218,727 8,753 1,263 (2) 228,743
Interest on investment securities available
for sale ............................................ 34,300 1,317 (2,269)(7) 33,348
Interest on Federal funds sold and securities
purchased under agreements to resell ................ 600 653 1,253
Interest on trading accounts securities ............... 668 -- 668
Interest on deposits with banks ....................... 629 -- 629
-------- ------- ------- --------
Total interest income ............................... 960,973 31,068 130 992,171
Interest Expense
Interest on savings and time deposits ................. 239,714 11,981 447 (4) 252,142
Interest on commercial certificates of
deposit $100,000 and over ........................... 13,639 430 14,069
Interest on borrowed funds ............................ 91,516 98 91,614
-------- ------- ------- --------
Total interest income ............................... 344,869 12,509 447 357,825
-------- ------- ------- --------
Net interest income ................................. 616,104 18,559 (317) 634,346
Provision for loan losses ............................. 84,000 800 84,800
-------- ------- ------- --------
Net interest income after provision
for loan losses ................................... 532,104 17,759 (317) 549,546
Non-Interest Income
Service charges on deposit accounts ................... 64,474 839 65,313
Service and loan fee income ........................... 42,008 163 42,171
Trust income .......................................... 21,792 -- 21,792
Investment securities gains ........................... 1,888 -- 1,888
Trading account gains ................................. 670 -- 670
Other ................................................. 46,503 363 46,866
-------- ------- ------- --------
Total non-interest income ........................... 177,335 1,365 -- 178,700
Non-Interest Expenses
Salaries .............................................. 183,339 4,517 187,856
Pension and other employee benefits ................... 53,386 1,183 54,569
Occupancy, net ........................................ 50,749 1,314 52,063
Furniture and equipment ............................... 49,065 641 25 (3) 49,731
FDIC assessment ....................................... 27,933 948 28,881
Other real estate owned ............................... 18,287 32 18,319
Advertising and public relations ...................... 10,843 477 11,320
Other ................................................. 111,644 3,145 (203)(5) 118,675
1,476 (6)
2,613 (9)
-------- ------- ------- --------
Total non-interest expenses ......................... 505,246 12,257 3,911 521,414
-------- ------- ------- --------
Income from continuing operations, before income taxes .. 204,193 6,867 (4,228) 206,832
Federal and state income taxes ........................ 72,312 2,551 (622)(8) 74,201
-------- ------- ------- --------
Income from continuing operations, before cumulative
effect of a change in accounting principle ............ 131,881 4,316 (3,566) 132,631
Per Common Share Data:
Income from continuing operations, before
cumulative effect of a change in
accounting principle ................................ $ 2.38 $ 1.95 $ 2.29(10)
Averaged Common Shares Outstanding (in
thousands) ............................................ 54,697 2,212 57,202(10)
======== ======= ======= ========
Preferred Dividends ..................................... $ 1,835 $ -- $ 1,835
======== ======= ======= ========
<FN>
- ------------
(1)-(10): See Notes to Pro Forma Combined Condensed Statement of Income on the
following page.
</FN>
</TABLE>
17
<PAGE>
NOTES TO PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME
(1) Accretion of $1,136,000 related to the loan discount of $6,816,000,
utilizing a weighted average expected life of 6 years.
(2) Accretion of $1,263,000 related to the securities discount of $6,313,000,
utilizing a weighted average expected life of 5 years.
(3) Depreciation of $25,000 related to the premium on acquired premises of
$754,000, utilizing a useful life of 30 years.
(4) Accretion of $447,000 related to the discount on interest-bearing deposits
acquired of $447,000, utilizing a weighted average expected life of 10
months.
(5) Elimination of amortization expense of $203,000 related to acquired
intangibles.
(6) Amortization of $1,476,000 related to core deposit intangible assets
acquired of $7,792,000, on an accelerated basis over 10 years.
(7) Lost interest on funds paid for 40% of Bancorp shares to effect the Merger.
(8) Income tax benefit of $662,000 on Notes 1 through 7 based upon an assumed
effective tax rate of 41%.
(9) Amortization of $2,613,000 related to goodwill of $52,255,000, using a life
of 20 years.
(10) Using an Exchange Ratio of 1.5441, the lowest and least dilutive of the
fixed Exchange Ratios specifically provided for in the Merger Agreement,
would result in the issuance of approximately 1,947,901 shares of UJB
Stock. Under this scenario income per common share from continuing
operations, before cumulative effect of a change in accounting principle
would be $2.30 and the number of average common shares outstanding would be
approximately 56,746,000.
18
<PAGE>
PRO FORMA COMBINED COMMON SHARE DATA
The following table presents net income per share, cash dividends declared
per share and book value per share for the year ended December 31, 1994 on a
historical basis for UJB and Bancorp, on a pro forma basis giving effect to the
Merger and on a pro forma equivalent per share for Bancorp.
Net income per share (1)
UJB(2) .................................. $2.38
Bancorp ................................. 1.95
Pro forma combined at Exchange Ratio of:
1.5441 ................................ 2.30
1.6985 ................................ 2.30
1.8872 ................................ 2.29
Pro forma Bancorp equivalent at Exchange Ratio of (3):
1.5441 ................................ 3.55
1.6985 ................................ 3.91
1.8872 ................................ 4.32
Dividends per share
UJB ..................................... $0.94
Bancorp ................................. 0.80
Pro forma combined (4): ................. (0.94)
Pro forma Bancorp equivalent at Exchange Ratio of (3):
1.5441 ................................ 1.45
1.6985 ................................ 1.60
1.8872 ................................ 1.77
Book value per share (5)
UJB ..................................... $19.53
Bancorp ................................. 24.23
Pro forma combined at Exchange Ratio of:
1.5441 ................................ 20.24
1.6985 ................................ 19.74
1.8872 ................................ 19.67
Pro forma Bancorp equivalent at Exchange Ratio of (3):
1.5441 ................................ 31.25
1.6985 ................................ 33.53
1.8872 ................................ 37.12
- ------------
(1) Assumes that the Merger became effective on January 1, 1994 and that pro
forma combined net income was the same under each of the Exchange Ratios.
(2) Based on income from continuing operations, before cumulative effect of a
change in accounting principle.
(3) Bancorp pro forma equivalent per share data is computed by multiplying pro
forma combined per share data by the indicated Exchange Ratio.
(4) Pro forma amount assumes that UJB would have declared cash dividends per
share equal to its historical cash dividends declared.
(5) Assumes that the Merger became effective on December 31, 1994.
19
<PAGE>
MARKET PRICE AND DIVIDEND MATTERS
Market Price and Dividend History
UJB Stock is listed and traded on the NYSE and is quoted under the symbol
"UJB." The following table sets forth, for the periods indicated, the high, low
and closing sale prices of a share of UJB Stock, as reported in published
financial sources, and quarterly dividends declared per share.
Bancorp Stock is listed and traded on NASDAQ. Bancorp Stock is quoted under
the symbol "BCNJ." The following table sets forth, for the periods indicated,
the high, low and closing sale prices of a share of Bancorp Stock, as reported
in published financial sources, and quarterly dividends declared per share.
All stock prices shown in the table below and in the paragraph following
the table have been rounded to the nearest cent and all stock prices and
dividends shown below have been adjusted for stock splits and stock dividends.
<TABLE>
<CAPTION>
UJB Stock Bancorp Stock
-------------------------------- --------------------------------
Sale Prices Sale Prices
--------------------- Dividends ---------------------- Dividends
High Low Close Per Share High Low Close Per Share
---- --- ----- --------- ---- --- ----- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1992
First Quarter .................. $18.75 $14.00 $18.38 $0.15 $12.13 $11.25 $12.00 $0.12
Second Quarter ................. 20.38 14.63 19.63 0.15 14.00 12.00 13.25 0.12
Third Quarter .................. 20.75 16.50 17.50 0.15 14.75 13.25 14.00 0.12
Fourth Quarter ................. 24.50 16.13 24.25 0.15 15.00 14.25 14.25 0.12
1993
First Quarter .................. 29.38 22.50 27.13 0.16 19.50 14.25 18.50 0.15
Second Quarter ................. 29.25 21.63 24.50 0.16 21.25 18.50 18.50 0.15
Third Quarter .................. 33.25 24.25 30.00 0.16 20.00 18.50 19.75 0.15
Fourth Quarter ................. 30.25 23.38 24.00 0.21 21.25 19.00 20.75 0.15
1994
First Quarter .................. 28.63 23.50 26.88 0.21 24.25 20.00 23.00 0.20
Second Quarter ................. 29.25 25.50 27.63 0.21 26.00 22.50 26.00 0.20
Third Quarter .................. 29.13 26.13 26.38 0.26 30.00 25.00 29.25 0.20
Fourth Quarter ................. 27.13 22.50 24.13 0.26 33.50 28.50 29.50 0.20
1995
First Quarter .................. 28.75 24.13 27.50 0.29 41.63 29.50 41.50 0.20
Second Quarter
(through April 25) ............ 28.75 27.38 27.38 0.00 42.13 41.63 41.88 0.00
</TABLE>
On January 19, 1995, the last full trading day prior to the public
announcement of the execution of the Merger Agreement, the last sale price of a
share of UJB Stock was $24.88 and the last sale price of a share of Bancorp
Stock was $33.00. On April 25, 1995, the last sale price of a share of UJB Stock
was $27.38 and the last sale price of Bancorp Stock was $41.88. Bancorp
shareholders are urged to obtain current market quotations.
Coordination of and Limitations on Dividends Under Merger Agreement
In order to ensure that Bancorp shareholders would be paid at least one but
no more than one dividend in the calendar quarter in which the Merger is
consummated, Bancorp agreed to coordinate with UJB the declaration of any
dividends and the setting of any record or payment dates. In addition, pending
consummation of the Merger, Bancorp has agreed not to pay (or make a declaration
that creates an obligation to pay) any cash dividend at a quarterly rate in
excess of $0.20.
Dividend Limitations
The bank subsidiaries of UJB and Bancorp are restricted by law in the
amount of dividends they may pay to UJB and Bancorp, respectively. In addition,
UJB is restricted by certain debt agreements in the amount of dividends it may
pay to its shareholders. Assuming the Merger was effective at December 31, 1994,
under the most restrictive of such
20
<PAGE>
agreements, the amount that would have been available on that date for dividend
payments to holders of UJB Stock was approximately $229,154,000.
PROPOSAL I--APPROVAL OF THE MERGER AGREEMENT
THE MERGER
The following information concerning the Merger, insofar as it relates to
matters contained in the Merger Agreement, is qualified in its entirety by
reference to the Merger Agreement, a copy of which is attached hereto as
Appendix A and incorporated herein by reference.
Recommendation of the Bancorp Board and Reasons for the Merger
The Merger Agreement provides for the merger of Bancorp with and into UJB,
with UJB being the surviving corporation ("Surviving Corporation"). Upon
consummation of the Merger each outstanding share of Bancorp Stock, other than
shares of Bancorp Stock beneficially owned by UJB or a subsidiary of UJB, if
any, and Dissenting Shares, if any, will be converted into and represent the
right to receive the Merger Consideration. The Exchange Ratio upon which the
Stock Consideration will be based has not yet been fixed and will not be fixed
until a date subsequent to the Annual Meeting, which date may not more than ten
business days prior to the Closing Date of the Merger. See "THE MERGER
AGREEMENT--Determination of Exchange Ratio." The Merger Agreement also provides
for a conversion of options and limited rights relating to Bancorp Stock granted
under the Option Plans and outstanding at the Effective Time into options and
limited rights relating to UJB Stock based on the Exchange Ratio subject to the
same terms and conditions, except for the grant of certain additional rights,
applicable to the options and limited rights under the Option Plans. See "THE
MERGER AGREEMENT--Bancorp Stock Option Plans." The Exchange Ratio is subject to
appropriate adjustments in the event that, from the date of the Merger Agreement
to the Effective Time, the outstanding shares of UJB Stock are increased or
decreased, changed into or exchanged for a different number or kind of shares or
securities through reorganization, recapitalization, reclassification, stock
dividend, stock split or reverse stock split or other similar changes.
THE MERGER AGREEMENT HAS BEEN APPROVED BY THE BANCORP BOARD. THE BANCORP
BOARD BELIEVES THAT THE MERGER IS IN THE BEST INTERESTS OF BANCORP SHAREHOLDERS.
THE BANCORP BOARD UNANIMOUSLY RECOMMENDS THAT BANCORP SHAREHOLDERS VOTE FOR THE
PROPOSAL TO APPROVE THE MERGER AGREEMENT.
The Bancorp Board has considered the terms of the Merger Agreement and has
concluded that such terms are fair to, and that the Merger is in the best
interests of, Bancorp and its shareholders. In determining to accept the offer
from UJB and enter into the Merger Agreement, the Bancorp Board considered the
following material factors: (i) the financial condition, operating results and
future prospects of UJB and Bancorp; (ii) a comparison of the consideration
being paid in the Merger to consideration paid in comparable thrift mergers,
based, among other things, on multiples of book value and earnings; (iii) the
tax-free nature of the transaction to Bancorp shareholders receiving Stock
Consideration (except to the extent a Bancorp shareholder receives a Cash In
Lieu Amount, see "THE MERGER--Certain Federal Income Tax Consequences"); (iv)
Bancorp's alternatives to the Merger; (v) the provisions of the Merger Agreement
allowing Bancorp to terminate the Merger Agreement if certain conditions,
including a minimum Exchange Ratio, are not met at the closing (see "THE MERGER
AGREEMENT--Conditions to the Merger; Termination"); and (vi) the opinion of
Kaplan that the financial terms of UJB's offer were fair to Bancorp's
shareholders from a financial point of view. The Bancorp Board did not assign
any specific or relative weights to the factors under consideration.
The Bancorp Board concluded that the financial condition, operating results
and future prospects of UJB and Bancorp were both very favorable, and that a
merger between the two institutions would be beneficial to the shareholders of
Bancorp. The Bancorp Board also took into account that Bancorp shareholders
would have the opportunity to participate in the future growth of UJB by
obtaining UJB Stock in the Merger. The Bancorp Board noted that, upon
consummation of the Merger, Bancorp, as part of an interstate bank holding
company of greater size and resources, should be able to provide its customers
with a greater range of services and should become a stronger competitor in its
existing markets. The Bancorp Board believes that the Merger will result in a
stronger and more effective competitor in its market, better able to compete
effectively in the rapidly changing marketplace for banking and financial
services and to take advantage of opportunities that might not be available to
Bancorp on its own. The Bancorp Board believes that the Merger will provide
NJSB's customers with a broader range of products and services, as well as
greater convenience.
The Bancorp Board determined that the consideration offered by UJB to
Bancorp shareholders compared very favorably with the consideration paid in
comparable thrift mergers and that the tax-free nature of the transaction to
Bancorp shareholders receiving Stock Consideration was an additional positive
consideration in approving the Merger. Bancorp's primary alternative to the
Merger was to continue as an independent company and to consider possible
acquisitions of smaller financial institutions in or adjacent to its market
area. While this alternative was attractive and would have increased shareholder
value over time, the alternative involved more risk than the Merger and was not
likely, in the long run, to produce shareholder value in excess of that being
provided by the Merger. The provisions of the Merger Agreement allowing Bancorp
to terminate the Merger Agreement if certain conditions are not met at the
closing help to ensure that the Bancorp Board can protect the interests of
Bancorp's shareholders against certain financial risks inherent in transactions
of this nature, and the opinion of Kaplan that the financial terms of UJB's
offer were fair to Bancorp's shareholders from a financial point of view
substantiated the Bancorp Board's view that the proposed Merger was in the best
interests of Bancorp's shareholders. The Bancorp Board therefore determined that
all of these material factors indicated that the Bancorp Board should accept
UJB's offer and enter into the Merger Agreement.
21
<PAGE>
Background
On August 24, 1994, Bancorp engaged Kaplan to provide financial advisory
services to Bancorp in connection with the desire of Bancorp's management and
Board to enhance shareholder value. Kaplan was selected by Bancorp for its
expertise in such matters, and because of its particular knowledge of and
experience in working with Bancorp as a corporate entity. Kaplan's predecessor
firm had been the independent appraiser for NJSB in 1987, when NJSB was
converted from a mutual savings bank to a capital stock savings bank. Kaplan (or
its predecessor firm) has served as financial advisor to Bancorp since June 28,
1988, and as such has advised Bancorp in connection with long-term planning,
dividend policy, and possible acquisitions of other companies or branches of
other companies. In particular, Kaplan served as financial advisor to Bancorp
and NJSB in 1991, when NJSB doubled its retail network through a series of
branch acquisitions from the Resolution Trust Corporation and from an operating
savings association.
In accordance with Bancorp's long-term plan, Bancorp and Kaplan
concentrated principally on opportunities for expanding NJSB during the period
from 1988 through 1994. Throughout that period, however, in order to ensure that
it was giving proper consideration to every opportunity to enhance shareholder
value, Bancorp managment and Kaplan periodically also evaluated opportunities
for the sale of Bancorp and, under various assumptions, compared estimates of
the benefits of those opportunities to estimates of the benefits to be derived
from further growth of the franchise.
In 1993, at Bancorp's request, Kaplan initiated a process of updating its
previous analyses of these issues and of more intensively studying all the
options available for enhancement of shareholder value. As a result of these
activities, Kaplan presented to the Bancorp Board detailed analyses relating to
three approaches to enhancing shareholder value. The first involved various
means of enhancing earnings. The second involved the leveraging of Bancorp's
capital by the acquisition of another financial institution. The third involved
a preliminary evaluation of Bancorp as a potential acquisition target for a
larger financial institution. From the ongoing review of these analyses by the
Bancorp Board and management, it became progressively clearer that any
significant enhancement of shareholder value would have to be based on one of
two approaches: (1) leveraging Bancorp's capital by acquiring another
institution combined with improving operating efficiency, or (2) selling Bancorp
to a larger institution.
Consistent with its previously announced policy of preferring independent
operation, Bancorp determined to begin with the exploration of the first of
these approaches. Bancorp, in consultation with Kaplan, therefore selected a
particular acquisition target and in a report rendered on May 25, 1994, Kaplan
analyzed in detail the impact that such a proposed acquisition would have on
Bancorp, both alone and in conjunction with other earnings enhancement
strategies. In the following weeks, the costs, risks and benefits of this
proposed acquisition and these earnings enhancement strategies were reviewed in
detail, and compared with a possible sale of Bancorp as a means of enhancing
shareholder value.
On July 12, 1994, Kaplan presented to Bancorp's management and Board a
detailed financial analysis of a possible sale of Bancorp. After a thorough
review of this analysis and the previous analyses of other methods of enhancing
shareholder value, the Bancorp Board determined that, subject to achieving an
adequate level of consideration, the possible sale of Bancorp might be the
approach that was in the best interest of Bancorp and its shareholders.
Accordingly, on August 24, 1994, Bancorp entered into an engagement letter with
Kaplan under which Kaplan would act as financial advisor to Bancorp in the
potential sale.
The Board established a Merger & Acquisition Committee ("M&A Committee")
comprised of directors Joseph A. Hoffman (Chairman), Gerald A. Johnson (Vice
Chairman), Beatrice D'Agostino, Irving Schwartz, Louis A. Imfeld and Bernard
Adler. From August 24, 1994 through the execution of the Merger Agreement on
January 19, 1995, the M&A Committee met with management and Kaplan on numerous
occasions to decide upon and implement the strategy for the proposed sale of
Bancorp.
The M&A Committee, in consultation with Kaplan, developed a list of
twenty-one financial institutions that were considered to be potentially
interested in a possible acquisition of Bancorp and capable of effecting such a
transaction. At the direction of the M&A Committee, Kaplan contacted these
institutions to determine whether they would be interested in considering an
acquisition of Bancorp. Ten institutions executed confidentiality agreements in
order to receive and review confidential information regarding Bancorp through
Kaplan. All of these institutions were then invited to submit a written
preliminary indication of interest, including a proposed acquisition price. Six
preliminary indications of interest were received on November 3 and November 4,
1994. The lowest indication of value set forth a range of $32.00 to $35.00 per
share and the highest indication of value set forth a range of $38.50 to $40.50
per share, based on the value at that time of the consideration being offered.
The companies that submitted satisfactory written indications of interest
were invited to conduct limited due diligence. At the conclusion of this
process, each institution was given an opportunity to submit a revised
indication of interest, and four institutions submitted such revised offers. The
revised offers ranged from a low offer of $34.09 to $35.35 per share to a high
offer of $41.00 per share, based on the value at that time of the consideration
being offered. The Bancorp Board instructed Kaplan to evaluate all four offers,
based primarily on the offer price, and also to examine the fundamental value of
the stock being offered by each institution, since each proposed to offer
Bancorp shareholders stock in the acquiring institution or a combination of cash
and acquiring institution stock. Kaplan presented to the Bancorp Board detailed
information concerning operating data, stock performance, relative financial and
ownership information, potential offer price movement and dividend payment
policy for each institution. Based upon this analysis, Kaplan concluded that the
common stock of each of the four institutions was acceptable consideration, in
whole or in part, for Bancorp Stock. Kaplan also advised the Bancorp Board that,
of the four offers, the offer by UJB, in the amount of $38.50 per share, and the
offer by another institution, in the amount of $41.00 per share, were the best
offers in terms of total value to Bancorp shareholders, based on the value at
that time of the consideration being offered. The Bancorp Board therefore
determined to proceed further in negotiations with the two institutions
submitting the best indications of interest, giving priority to the institution
showing a revised preliminary indication of $41.00 per share, based on the value
at that time of the consideration being offered. The institution submitting the
best revised indication of interest was then permitted to conduct a detailed
on-site due diligence investigation, and Bancorp, with the assistance of
22
<PAGE>
Kaplan and Kirkpatrick & Lockhart, its counsel, conducted an on-site due
diligence investigation of this institution. This institution also submitted
to Bancorp a proposed draft of a definitive agreement to be used in an
acquisition transaction.
At this point, Bancorp advised UJB that Bancorp was proceeding to negotiate
a proposed definitive agreement with another bidder, whose revised preliminary
indication of value was significantly higher than UJB's. Shortly thereafter, UJB
transmitted to Bancorp a revision to its indication of interest which was
substantially more competitive in its terms, including proposed acquisition
price, than previously, based on the value at that time of the consideration
being offered, and based on a purchase method of accounting for the acquisition.
UJB was then permitted to conduct a detailed on-site due diligence investigation
of Bancorp, and Bancorp, with the assistance of Kaplan and Kirkpatrick &
Lockhart, conducted an on-site due diligence investigation of UJB. UJB also
submitted to Bancorp a proposed draft of a definitive agreement to be used in an
acquisition transaction.
After thorough review of the two best offers, the draft definitive
agreements and the results of the reciprocal due diligence, it was determined
that the two offers were extremely close to one another and that, therefore, it
was in the best interests of Bancorp and its shareholders to offer each
institution a final opportunity to revise its offer for the acquisition of
Bancorp. Final offers were received from both on January 13, 1995. The final
offer from UJB was $43.10 per share, payable 60% in stock and 40% in cash, based
on the value at that time of the consideration being offered, and was based on
purchase accounting. After analyzing the two final offers, Kaplan advised the
Bancorp Board that the UJB offer was clearly the better of the two final offers,
based on the price to be paid to Bancorp shareholders. After further
negotiations between the parties, the Bancorp Board determined to accept the
proposal submitted by UJB in reliance upon advice received from Kaplan and
Kirkpatrick & Lockhart. The UJB Board of Directors ("UJB Board") and the Bancorp
Board, at separate meetings held on January 18, 1995, approved the terms of the
Merger Agreement. The Merger Agreement was executed and delivered on January 19,
1995, and immediately announced publicly by the parties after the close of
business on January 19, 1995.
The terms of the Merger Agreement between UJB and Bancorp are the result of
extensive, long, arms-length negotiations between representatives of UJB and
Bancorp. There are no past or present relationships between UJB and Bancorp,
except that NJSB has for many years maintained a correspondent banking
relationship with United Jersey Bank and, at the time of NJSB's conversion from
mutual to stock form in 1987, the ESOSP borrowed $2,003,000 from United Jersey
Bank to acquire Bancorp Stock, which loan was fully repaid in 1994. United
Jersey Bank is also the trustee of the Supplemental Executive Retirement Trust
for the benefit of Bancorp's Chief Executive Officer.
Opinion of Bancorp's Financial Advisor
Pursuant to the terms of an engagement letter, dated August 24, 1994 (as
amended on October 5, 1994), among Bancorp, NJSB and Kaplan, Bancorp engaged
Kaplan as its financial advisor to generally advise the Bancorp Board on
financial and strategic matters relating to the enhancement of shareholder value
and, more specifically, in connection with the possible sale of Bancorp and such
other matters as requested by the Bancorp Board. Bancorp paid Kaplan a general
advisory fee of $50,000 upon the execution of the above-referenced engagement
letter, and a specific advisory fee of $140,000 following the delivery of
Kaplan's financial fairness opinion issued in conjunction with Bancorp's
execution of the Merger Agreement. In addition, on the closing date of the
Merger, Bancorp will pay Kaplan a contingent transaction fee equal to 1.0% of
the gross consideration to be received by the holders of Bancorp Stock less the
aggregate amount of the above-referenced general and specific advisory fees
previously paid to Kaplan by Bancorp, or approximately $800,000, assuming an
Average Price equal to or greater than $22.8375 and equal to or less than
$27.9125. Whether or not the Merger is consummated, Bancorp has also agreed to
reimburse Kaplan for its actual and reasonable out-of-pocket expenses incurred
in connection with the services provided to Bancorp by Kaplan and to indemnify
and hold harmless Kaplan, to the full extent lawful, from and against certain
liabilities, including certain liabilities under the federal securities laws, in
connection with its engagement. In addition, Bancorp and NJSB have paid Kaplan
$58,020 in retainer and other fees and $4,164 as reimbursement of out-of-pocket
expenses during the past two years for services outside of the scope of the
August 24, 1994 engagement letter, as amended. Kaplan (including its predecessor
firm) has been Bancorp and NJSB's financial advisor from time to time since June
28, 1988.
Kaplan is a nationally recognized financial advisory and consulting firm
that specializes in the commercial banking, thrift and mortgage banking
industries. Kaplan is regularly engaged in the independent valuation of
businesses and securities in connection with mergers and acquisitions, initial
public offerings, private placements, recapitalizations and valuations for
estate, corporate and other purposes. The Bancorp Board selected Kaplan to serve
as its financial advisor on the basis of its reputation, experience and
expertise in transactions such as the Merger.
In its capacity as financial advisor to Bancorp, Kaplan participated in the
negotiations with respect to the pricing and other terms and conditions of the
Merger, but the decision whether to accept any offer and the final pricing of
the Merger was ultimately made by the Bancorp Board. Kaplan rendered its oral
opinion to the Bancorp Board on January 18, 1995, which was confirmed in writing
on January 19, 1995, and rendered its written opinion on April 26, 1995 that,
as of January 19, 1995 and April 26, 1995, the financial terms of UJB's offer
were "fair" to Bancorp's shareholders from a financial point of view. No
limitations were imposed by the Bancorp Board upon Kaplan with respect to the
investigations made or procedures followed by it in arriving at its opinion.
The full text of the written opinion of Kaplan dated as of April 26, 1995,
which sets forth assumptions made and matters considered, is attached as
Appendix B to this Proxy Statement-Prospectus. Bancorp's
23
<PAGE>
shareholders are urged to read this opinion in its entirety. Kaplan's opinion is
directed only to the consideration to be received by Bancorp's shareholders in
the Merger and does not constitute a recommendation to any Bancorp shareholder
as to how such shareholder should vote at the Annual Meeting or as to any other
matter. The summary of the opinion of Kaplan set forth in this Proxy
Statement-Prospectus is qualified in its entirety by reference to the full text
of such opinion. Kaplan's oral opinion as of January 18, 1995, and its written
opinion as of January 19, 1995, were to the same effect as the opinion attached
hereto.
In connection with its written opinion dated April 26, 1995, Kaplan
reviewed and analyzed material bearing upon the financial and operating
condition of Bancorp and UJB and material prepared in connection with the
Merger, including, among other things: (a) the Merger Agreement; (b) the Proxy
Statement-Prospectus; (c) publicly available reports filed with the Commission
by Bancorp and by UJB; (d) certain other publicly available financial and other
information concerning Bancorp and UJB and the trading markets for the publicly
traded securities of Bancorp and UJB; (e) certain other internal information,
including projections for Bancorp, relating to Bancorp and UJB prepared by the
managements of Bancorp and UJB and furnished to Kaplan for purposes of its
analysis; and (f) publicly available information concerning certain other banks
and bank holding companies, savings and loan associations, savings and loan
holding companies, the trading markets for their securities and the nature and
terms of certain other merger and acquisition transactions believed relevant to
its inquiry. Kaplan also met with certain officers and representatives of
Bancorp and UJB to discuss the foregoing as well as other matters relevant to
Kaplan's inquiry, including the past and current business operations, financial
condition and future prospects of Bancorp and UJB, both separately and on a
combined basis. In addition, Kaplan reviewed the reported price and trading
activity for Bancorp Stock and UJB Stock, compared certain financial and stock
market information for Bancorp and UJB with similar information for certain
other companies, the securities of which are publicly traded, reviewed the
financial terms of certain recent business combinations in the commercial
banking and thrift industries, and performed such other studies and analyses as
it considered appropriate. Kaplan also took into account its assessment of
general economic, market and financial conditions and its experience in other
transactions, as well as its experience in securities valuations and knowledge
of the commercial banking and thrift industries generally.
In conducting its review and arriving at its opinions, Kaplan relied upon
and assumed the accuracy and completeness of the financial and other information
provided to it or publicly available and did not attempt independently to
verify the same. Kaplan has relied upon the managements of Bancorp and UJB as to
the reasonableness and achievability of the projections (and the assumptions and
bases therefor) provided to Kaplan, and assumed that such projections,
including, without limitation, projected cost savings and operating synergies
resulting from the Merger, reflected the best currently available estimates and
judgments of such Bancorp and UJB management and that such projections would be
realized in the amounts and time periods estimated. Kaplan also assumed, without
independent verification, that the aggregate allowances for loan losses for
Bancorp and UJB were adequate to cover such losses. Kaplan did not conduct
physical inspections of any of the properties or assets of Bancorp or UJB, and
Kaplan did not make or obtain any evaluations or appraisals of any properties,
assets or liabilities of Bancorp or UJB. Kaplan was retained by the Bancorp
Board to express an opinion as to the fairness, from a financial point of view,
to the holders of Bancorp Stock of the consideration to be received by them in
the Merger.
In connection with rendering its opinions to the Bancorp Board, Kaplan
performed a variety of financial analyses that are summarized below. The summary
of the presentations by Kaplan to the Bancorp Board as set forth herein does not
purport to be a complete description of such presentations. Kaplan believes that
its analyses and the summary set forth herein must be considered as a whole and
that selecting portions of such analyses and the factors considered therein,
without considering all factors and analyses, could create an incomplete view of
the analyses and process underlying its opinions. The preparation of a fairness
opinion is a complex process involving subjective judgments and is not
necessarily susceptible to partial analyses or summary description. In its
analyses, Kaplan made numerous assumptions with respect to industry performance,
business and economic conditions, and other matters, many of which are beyond
the control of Bancorp or UJB. Any estimates contained in Kaplan's analyses are
not necessarily indicative of actual future values or results, which may be
significantly more or less favorable than suggested by such estimates. Estimates
of values of companies do not purport to be appraisals or necessarily reflect
the prices at which companies or their securities actually may be sold. No
company or transaction utilized in Kaplan's analyses was identical to Bancorp or
UJB or the Merger. Accordingly, such analyses are not based solely on arithmetic
calculations; rather, they involve complex considerations and judgments
concerning differences in financial and operating characteristics of the
relevant companies, the timing of the relevant transactions, and
24
<PAGE>
prospective buyer interest, as well as other factors that could affect the
public trading values of the company or companies to which they are being
compared. None of the analyses performed by Kaplan was assigned a greater
significance by Kaplan than any other.
The following is a brief summary of all of the analyses performed by Kaplan
in connection with its opinions:
(1) Discounted Cash Flow Analysis. Kaplan prepared a discounted cash
flow analysis that indicated theoretical present values for Bancorp based
on a range of terminal price-to-earnings ("P/E") multiples between 9.0x and
18.0x and a discount rate of 12.0%. The range of values was based upon
future dividend estimates and a range of projected earnings for the next
five years, assuming annual earnings growth rates between 2.5% and 12.5%.
The results of this analysis indicated a range of theoretical values of
Bancorp between $12.25 per share (2.5% earnings growth rate; terminal P/E
multiple of 9.0x) and $31.14 per share (12.5% earnings growth rate;
terminal P/E multiple of 18.0x).
Kaplan also prepared a discounted cash flow analysis based upon a
range of terminal price-to-book ("P/B") ratios between 90.0% and 180.0% and
a discount rate of 12.0%. The range of values was based upon future
dividend estimates and an assumed earnings growth rate between 2.5% and
12.5%. The analysis indicated a range of values for Bancorp between $19.05
per share (2.5% earnings growth rate; terminal P/B ratio of 90.0%) and
$37.41 per share (12.5% earnings growth rate; terminal P/B ratio of
180.0%). The nominal value of the offer from UJB for each share of Bancorp
Stock was $43.10 per share.
Kaplan also prepared discounted cash flow analyses of comparative
theoretical shareholder returns for the following scenarios:
Bancorp's remaining independent, Bancorp's being sold to another third
party and Bancorp's accepting the UJB offer, incorporating Kaplan's
evaluation of the future prospects of Bancorp and UJB on a pro forma
combined basis based on various estimates of pro forma net income for the
twelve month periods ending December 31, 1994 and December 31, 1995.
(2) Contribution Analysis. Kaplan prepared a contribution analysis
showing the percentage of assets, deposits, common equity, tangible common
equity and estimated fiscal 1995 net income contributed to the combined
company on a pro forma basis, and compared these percentages to the pro
forma ownership of UJB. This analysis showed that Bancorp, as of a
projected closing date of June 30, 1995 (a projection made solely by Kaplan
for purposes of this analysis), after taking into account certain
pre-closing adjustments, would contribute 3.0% of pro forma consolidated
total assets, 3.3% of pro forma consolidated deposits, 4.5% of pro forma
consolidated equity and 0.7% of pro forma consolidated net income for the
projected fiscal year ended December 31, 1995.
(3) Merger Consideration Analysis. Pursuant to the Merger Agreement,
the consideration to be received in the Merger will consist of the right to
receive the number of shares of UJB Stock equal to the Exchange Ratio
determined as set forth below or cash equal to $43.10 for each share of
Bancorp Stock, subject to certain adjustments and limitations as set forth
in the Merger Agreement. For purposes of the Merger Agreement, the Exchange
Ratio is determined as follows: (i) if the Average Price (see "THE MERGER
AGREEMENT--Determination of Exchange Ratio") of a share of UJB Stock is
greater than $27.9125, the Exchange Ratio shall be 1.5441; (ii) if the
Average Price of a share of UJB Stock is equal to or greater than $22.8375
and equal to or less than $27.9125, the Exchange Ratio shall be equal to
the quotient obtained by dividing $43.10 by the Average Price; and (iii) if
the Average Price of a share of UJB Stock is less than $22.8375, the
Exchange Ratio shall be 1.8872; provided, however, that, if the Average
Price of a share of UJB Stock is less than $20.90, Bancorp may terminate
the Merger Agreement unless UJB agrees that the Exchange Ratio shall be
equal to the quotient obtained by dividing $39.44 by the Average Price.
Except as otherwise provided in the Merger Agreement, the number of shares
of Bancorp Stock to be converted into rights to receive UJB Stock pursuant
to the Merger shall equal, as closely as reasonably possible, 60% of the
difference between number of outstanding shares of Bancorp Stock minus the
number of shares of Bancorp Stock purchased by UJB or any subsidiary of UJB
on or after the date of the Merger Agreement.
Kaplan performed a review of Bancorp Stock over the period from
December 3, 1993, to January 19, 1995. Bancorp Stock's price ranged from a
low of $20.00 to a high of $33.00. During the same period, the price of UJB
Stock ranged from a low of $23.125 to a high of $29.00. The Kaplan analyses
also compared the weekly trading volume for Bancorp Stock and UJB Stock
from December 3, 1993 to January 19, 1995. During these periods, the weekly
trading volume for Bancorp Stock averaged 18,330 shares, while the weekly
trading volume for the UJB Stock averaged 734,755 shares.
25
<PAGE>
(4) Financial Implications to Bancorp's Shareholders. Kaplan performed
an analysis of the financial implications of the UJB proposal to Bancorp's
shareholders. This analysis illustrated that, for those shareholders that
receive UJB Stock, on a pro forma common share equivalent basis, a
shareholder of Bancorp would achieve, as a result of the proposal, a 198.7%
improvement in projected earnings per share and a 39.5% increase in stated
tangible book value per share. Bancorp shareholders would also receive a
dividend equivalent of $1.77 per share, a 120.8% increase.
(5) Comparable Transaction Analysis. Kaplan performed an analysis of
offer prices and premiums paid in recently completed and pending
acquisition transactions of thrifts headquartered in selected mid-Atlantic
states. Multiples of earnings, book value and tangible book value implied
by the consideration to be received by Bancorp's shareholders in the Merger
were compared with multiples paid in such mid-Atlantic thrift transactions,
which included selected pending and completed acquisitions of thrifts with
total assets greater than $250 million and an equity-to-assets ratio
greater than 7.00%, announced between January 1, 1993 and January 19, 1995.
The average offer price to book value for this group of comparable
transactions was 168.7%. The equivalent offer price to book value for
Bancorp was 179.4% based on the consideration to be received in the Merger
for each outstanding share of Bancorp Stock and Bancorp's shareholders'
equity as of September 30, 1994. The average offer price to tangible book
value was 173.5% for the comparative group, as compared to 181.5% for the
prevailing offer consideration to be received by Bancorp's shareholders.
The average multiple of offer price to latest twelve months earnings was
14.6x for the comparative group, as compared to 24.1x for Bancorp.
The thrift transactions included in the above averages are summarized in
the table below:
<TABLE>
<CAPTION>
State of State of
Buyer Target Acquiror Acquiree
-------- -------- -------- --------
<S> <C> <C> <C>
NY NY New York Bancorp Inc. Hamilton Bancorp, Inc.
PA PA Integra Financial Corporation Lincoln Savings Bank
NY NY North Fork Bancorporation, Inc. Metro Bancshares Inc.
PA NJ Sovereign Bancorp, Inc. Charter FSB Bancorp, Inc.
NJ NJ UJB Financial Corp. Palisade Savings Bank
PA MD Susquehanna Bancshares, Inc. Fairfax Financial Corporation
PA PA CoreStates Financial Corp Germantown Savings Bank
NJ NJ UJB Financial Corp. VSB Bancorp, Inc.
PA PA USBANCORP, Inc. Johnstown Savings Bank
PA PA Keystone Financial, Inc. Elmwood Bancorp, Inc.
PA PA PNC Bank Corp. United Federal Bancorp, Inc.
</TABLE>
(6) Comparable Company Analysis. In performing its comparable company
analysis, Kaplan examined the operating performance of Bancorp in
comparison to publicly traded thrift institutions that Kaplan deemed to be
comparable to Bancorp. This group of companies included eleven publicly
traded thrift institutions. Ten of the institutions were headquartered in
New Jersey and one was headquartered in Pennsylvania. The group included
Bankers Corp., Central Jersey Financial Corporation, Collective Bancorp,
Inc., FMS Financial Corporation, First State Financial Services, Inc.,
First Home Savings Bank, FSB, Lakeland First Financial Group, Inc., Pamrapo
Bancorp, Inc., Pulse Bancorp, Inc., and Raritan Bancorp, Inc., all of which
are headquartered in New Jersey, and Sovereign Bancorp, Inc., which is
headquartered in Pennsylvania.
Kaplan analyzed the relative performance and outlook for Bancorp by
comparing certain financial and trading market information of Bancorp with
the group of comparable thrifts. Kaplan compared Bancorp with the
comparable thrifts based on selected operating fundamentals, including
profitability, capital adequacy and asset quality. Using financial data as
of or for the twelve months ended September 30, 1994, and market price data
as of January 16, 1995, the average market price to latest twelve months
earnings multiple was 8.4x for the comparable thrifts and 17.2x for
Bancorp. The average price to stated book value was 109.3% for the
comparable thrifts and 128.0% for Bancorp. The average price to tangible
book value was 117.3% for the comparable thrifts and 129.5% for Bancorp.
The implied market trading values for Bancorp derived from such comparable
company analysis utilizing the resulting valuation ratio averages ranged
from approximately $15.03 to $27.85 per share. At September 30, 1994, the
average equity to assets ratio was 8.0% for the group of comparable thrifts
and 10.5% for Bancorp. The average tangible equity to assets ratio was 7.6%
for the
26
<PAGE>
comparable thrifts and 10.4% for Bancorp. The average latest twelve months
return on average assets was 1.14% for the comparable thrifts and 0.85% for
Bancorp. The average return on average equity was 14.61% for the comparable
thrifts and 8.24% for Bancorp. Based on the value of the consideration to
be received in the Merger of $43.10 per share, as of September 30, 1994,
the UJB offer price represented 179.4% of Bancorp's book value, 181.5% of
Bancorp's tangible book value, and 24.1x Bancorp's latest twelve months
earnings through September 30, 1994.
In addition, Kaplan compared the market price, price-to-book value and
price-to-earnings multiples of the UJB Stock with the individual market
multiples and averages of ten selected comparable companies deemed to be
reasonably similar to UJB in size, financial character, operating profile,
historical performance and geographical market. This group comprised The
Bank of New York Company, Inc. (New York), CoreStates Financial Corp
(Pennsylvania), First Empire State Corporation (New York), First Fidelity
Bancorporation (New Jersey), HUBCO, Inc. (New Jersey), Integra Financial
Corporation (Pennsylvania), Meridian Bancorp, Inc. (Pennsylvania),
Midlantic Corporation (New Jersey), The Summit Bancorporation (New Jersey)
and Valley National Bancorp (New Jersey).
The analysis also compared returns on average assets and on average
equity of UJB to those of the selected comparable companies and the
averages of the comparable group. Using financial data as of or for the
twelve months ended September 30, 1994, and market price data as of January
16, 1995, the analysis indicated that the UJB Stock traded at a
price-to-earnings multiple of 12.0x trailing twelve months earnings for the
period ending September 30, 1994 as compared to a comparative group average
of 10.3x trailing twelve months earnings. UJB Stock traded at 136.0% of
book value and 142.7% of tangible book value, as compared to 159.4% and
173.9% respectively, for the comparative group. UJB's operating results, as
measured by returns on average assets and average equity, were 0.83% and
11.50%, respectively, as compared to the averages for the selected
comparable companies, which were 1.22% and 15.61%, respectively.
The Kaplan analyses also included summary income statement and balance
sheet data and selected ratio analyses for UJB and various other potential
acquirors of Bancorp. In addition, on January 18, 1995, the senior management of
Bancorp, in conjunction with Kaplan and Bancorp's legal counsel, summarized
certain historical financial information of UJB and reported to the Bancorp
Board regarding the results of a due diligence review of UJB conducted during
the week of January 6, 1995.
In connection with its opinion dated as of April 26, 1995, Kaplan
also confirmed the appropriateness of its reliance on the analyses used to
render its January 19, 1995 opinion by performing procedures to update certain
of such analyses and by reviewing the assumptions on which such analyses were
based and the factors considered in connection therewith.
Kaplan's written opinion dated as of April 26, 1995 was based solely
upon the information available to it and the economic, market and other
circumstances as they existed as of the date of such opinion, including the
market price of UJB Stock. Events occurring after that date, including a
material change in the market price of UJB Stock, could materially affect the
assumptions and conclusions contained in its opinion. Kaplan has not undertaken
to reaffirm or revise its opinion or otherwise comment upon an event occurring
after the date thereof.
The summary set forth above does not purport to be a complete description,
but is a brief summary, of the material analyses and procedures performed in the
course of arriving at its opinions.
Charter and By-Laws of Surviving Corporation
Pursuant to the Merger Agreement, the Restated Certificate of Incorporation
and By-Laws of UJB, as in effect at the Effective Time, will be the Certificate
of Incorporation and By-Laws of the Surviving Corporation in the Merger unless
and until amended.
Board of Directors and Officers of Surviving Corporation
The Merger Agreement provides that the directors and officers of UJB
immediately prior to the Effective Time will continue to be the directors and
officers, respectively, of the Surviving Corporation.
Dissenters' Rights
Any holder of record of Bancorp Stock who follows the procedures specified
in Section 262 of the Delaware General Corporation Law ("Corporation Law") is
entitled to have such shareholder's shares of Bancorp Stock
27
<PAGE>
appraised by the Delaware Court of Chancery ("Court") and to receive the "fair
value" of such shares as of the Effective Time as determined by the Court in
lieu of the Stock Consideration or the Cash Consideration. The following summary
of Section 262 of the Corporation Law is necessarily incomplete and is qualified
in its entirety by reference to Section 262 of the Corporation Law, which is
attached hereto as Appendix C.
Effect of Election and Allocation Process and Determination of Exchange
Ratio. Each share of Bancorp Stock will be converted into the right to receive
(i) the Cash Consideration, which is fixed at $43.10 per share, (ii) the Stock
Consideration, which is not yet fixed and will not be fixed until the Exchange
Ratio is set on a date subsequent to the Annual Meeting, or, (iii) in certain
circumstances discussed below, a combination of Cash Consideration and Stock
Consideration.
The number of shares of Bancorp Stock that will represent the Stock Amount,
(i.e., Bancorp Stock converted into the right to receive Stock Consideration)
will equal 60% of the Outstanding Shares. The number of shares of Bancorp Stock
that will represent the Cash Amount, (i.e., Bancorp Stock converted into the
right to receive Cash Consideration) will equal the remaining 40% of the
Outstanding Shares, reduced by the number of Dissenting Shares, if any.
After an election process (held subsequent to the Annual Meeting but before
the Closing Date) in which holders of Bancorp Stock will be permitted to specify
the consideration they wish to receive in the Merger, Bancorp shareholders will
be deemed Stock Electees if they elected Stock Consideration, Cash Electees if
they elected Cash Consideration and Non-Electees if they failed to make any
election. Bancorp shareholders entitled to participate in the election process
may, and probably will, be required to elect between Stock Consideration and
Cash Consideration without knowing the Exchange Ratio.
Cash Electees will be permitted, as part of the election process, to divide
their holdings of Bancorp Stock into blocks of 5,000 shares or more and all
Bancorp Stock held by Cash Electees will be deemed held in Cash Electee Blocks.
If, upon the conclusion of the election process, there is an Excess Stock
Amount (i.e., Bancorp Stock held by Stock Electees exceeds the Stock Amount),
(i) Stock Electees will receive Stock Consideration only with respect to the Pro
Rata Amount of their shares and will receive Cash Consideration with respect to
the balance of their shares, and (ii) Cash Electees and Non-Electees will
receive Cash Consideration.
If, upon the conclusion of the election process, there is a Stock Shortfall
Amount (i.e., Bancorp Stock held by Stock Electees is less than the Stock
Amount):
(1) all Stock Electees will receive Stock Consideration; and
(2) (a) if the number of shares of Bancorp Stock represented by
Non-Electees is greater than the Stock Shortfall Amount:
(i) Non-Electees chosen by random selection by the Exchange Agent
and representing Bancorp Stock equal in number of shares to the Stock
Shortfall Amount will receive Stock Consideration, and
(ii) the remaining Non-Electees and all Cash Electees will
receive Cash Consideration; and
(b) if the number of shares of Bancorp Stock represented by
Non-Electees is less than the Stock Shortfall Amount:
(i) All Non-Electees will receive Stock Consideration, and
(ii) holders of Cash Electee Blocks chosen by random selection by
the Exchange Agent and representing Bancorp Stock equal in number of
shares, when added to shares of all Non-Electees, to the Stock
Shortfall Amount will receive Stock Consideration, and the remaining
holders of Cash Electee Blocks will receive Cash Consideration.
See "THE MERGER AGREEMENT--Determination of Exchange Ratio" and "THE MERGER
AGREEMENT--Election and Allocation Procedures."
Because the election and allocation process and the determination of the
Exchange Ratio will occur after the Annual Meeting, Bancorp Shareholders will be
required to decide whether or not to file a written objection to the Merger and
to vote against the Merger (prerequisites to the perfection of appraisal rights
under Section 262 of the
28
<PAGE>
Corporation Law) prior to knowing the Exchange Ratio or whether the Merger
Consideration will be paid in full or in part according to their election.
Operation of Section 262 of the Corporation Law. If a Bancorp Shareholder
elects to exercise the right to an appraisal under Section 262 of the
Corporation Law, such Bancorp Shareholder must do ALL of the following:
(1) The Bancorp Shareholder must file with Bancorp a written demand
for appraisal of the Bancorp Stock held before the vote is taken on the
Merger at the Annual Meeting;
(2) The Bancorp Shareholder may not vote in favor of the Merger;
(3) The Bancorp Shareholder must continuously hold such shares of
Bancorp Stock through the Effective Time, and
(4) Within 20 days after of the date of mailing of the notice by UJB
of the Effective Time, the Bancorp Shareholder must make a written demand
on UJB for payment for the "fair value" of such holder's Bancorp Stock,
stating the number and class of shares for which payment is demanded.
A Bancorp Shareholder who fails to comply with Section 262 of the
Corporation Law is bound by the terms of the Merger.
Within 10 days after the Effective Time, UJB will give written notice of
the Effective Time to each Bancorp Shareholder who has satisfied the
requirements of Section 262 of the Corporation Law and has not voted for, or
consented to, the proposal to approve and adopt the Merger Agreement and the
transactions contemplated thereby (a "Dissenting Shareholder"). Within 120 days
after the Effective Time, UJB or any Dissenting Shareholder may file a petition
in the Court demanding a determination of the fair value of the shares of
Bancorp Stock of all Dissenting Shareholders. Since, at this time, UJB has not
decided whether it will file such a petition if appraisal rights are exercised,
any Dissenting Shareholder desiring the filing of such a petition is advised to
file such petition on a timely basis unless such Dissenting Shareholder receives
notice that such a petition has been filed by UJB or another Dissenting
Shareholder.
If a petition for appraisal is timely filed, the Court will determine the
fair value of Bancorp Stock held by Dissenting Shareholders, exclusive of any
element of value arising from the accomplishment or expectation of the Merger,
but together with a fair rate of interest, if any, to be paid on the amount
determined to be fair value. In determining such fair value, the Court shall
take into account all relevant factors. Such fair value may be determined by the
Court to be more than, less than or equal to the consideration that such
Dissenting Shareholder would otherwise be entitled to receive pursuant to the
Merger Agreement. The costs of the appraisal proceeding shall be determined by
the Court and taxed against the parties as the Court determines to be equitable
under the circumstances. If a petition for appraisal is not timely filed, then
the right to an appraisal shall cease.
From and after the Effective Time, no Dissenting Shareholder shall have any
rights of a Bancorp shareholder with respect to such holder's Bancorp Stock for
any purpose, except to receive payment of its fair value and to receive payment
of dividends or other distributions on such holder's Bancorp Stock (payable to
Bancorp shareholders of record as of a date prior to the Effective Time). If a
Dissenting Shareholder delivers to UJB a written withdrawal of the demand for an
appraisal within 60 days after the Effective Time or thereafter with the written
approval of UJB, then the right of such Dissenting Shareholder to an appraisal
will cease and such Dissenting Shareholder will be entitled to receive only Cash
Consideration.
New York Stock Exchange Listing
UJB has agreed in the Merger Agreement to use its best efforts to cause the
shares of UJB Stock to be issued in the Merger to be listed on the NYSE. Listing
of such shares of UJB Stock on the NYSE (subject to official notice of issuance)
is a condition to the consummation of the Merger.
Accounting Treatment
It is anticipated that the Merger, when consummated, will be accounted for
as a purchase.
Certain Federal Income Tax Consequences
The Merger is expected to qualify as a "tax-free" reorganization under
Section 368 of the Code. UJB has received an opinion from its counsel,
Weil, Gotshal & Manges, and Bancorp has received an opinion from its counsel,
29
<PAGE>
Kirkpatrick & Lockhart, both respecting the material federal income tax matters
relating to the Merger set forth below, which were based upon certain
representations of the management of UJB and Bancorp and certain assumptions.
The Weil, Gotshal & Manges opinion covers items (1) and (2) below as to UJB, and
the Kirkpatrick & Lockhart opinion covers items (1) through (8) below as to
Bancorp, in each case for federal income tax purposes:
(1) The Merger will constitute a reorganization within the meaning of
Section 368(a)(1) of the Code;
(2) No gain or loss will be recognized by UJB or Bancorp in the
Merger;
(3) No gain or loss will be recognized by Bancorp shareholders whose
Bancorp Stock is exchanged solely for UJB Stock in the Merger;
(4) In the case of Bancorp shareholders who receive cash in whole or
in part in exchange for their Bancorp Stock, gain, if any, realized
on the exchange shall be recognized, but in an amount not in
excess of the amount of such cash;
(5) In the case of Bancorp shareholders who recognize gain on the
exchange of their Bancorp Stock and in whose hands the stock was a capital
asset on the date of the exchange, the gain shall be treated as capital
gain (long-term or short-term, depending on the shareholders' respective
holding periods for their Bancorp Stock), except in the case of any
shareholder as to which the exchange has the effect of the distribution of
a dividend within the meaning of Section 356(a)(2) of the Code, determined
with the application of the stock attribution rules of Section 318 of the
Code, it being understood that such determination depends on such
shareholders' particular factual circumstances;
(6) The basis of the UJB Stock received by Bancorp shareholders
will be the same as the basis of their Bancorp Stock exchanged therefor,
reduced by the amount of cash received, if any, in the exchange, and
increased by the amount of the gain recognized, if any, in the exchange;
(7) The holding period of the UJB Stock in the hands of Bancorp's
shareholders will include the holding period of the Bancorp Stock
exchanged therefor, provided such stock was held as a capital asset on
the date of the Merger; and
(8) The payment of cash in lieu of fractional shares of UJB Stock will
be treated as if the fractional shares were distributed in exchange for
Bancorp Stock and then were redeemed by UJB.
The receipt of such opinions again as of the date of the closing of the
Merger is a condition to the consummation of the Merger, unless waived by the
party entitled to receive such opinion.
THE DISCUSSION OF THE MATERIAL FEDERAL INCOME TAX CONSEQUENCES SET FORTH
ABOVE PERTAINS ONLY TO UJB, BANCORP AND DOMESTIC UNITED STATES HOLDERS OF THE
BANCORP STOCK REFERRED TO ABOVE. IT DOES NOT PURPORT TO DESCRIBE ALL OF THE TAX
CONSEQUENCES RELATING TO THE MERGER, AND DOES NOT DESCRIBE THE TAX CONSEQUENCES
OF THE EXCHANGE IN THE MERGER OF SHARES OF BANCORP STOCK AWARDED UNDER THE 1991
PLAN OR THE 1988 PROGRAM. THE FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER TO
FOREIGN HOLDERS OF BANCORP STOCK AND HOLDERS OF BANCORP STOCK HAVING SPECIAL
STATUS UNDER THE CODE MAY VARY FROM THOSE SET FORTH ABOVE. ALL BANCORP
SHAREHOLDERS ARE ADVISED TO CONSULT WITH THEIR OWN TAX ADVISORS BOTH AS TO THE
MATTERS DISCUSSED HEREIN AND AS TO ANY ADDITIONAL FEDERAL, OR ANY STATE, LOCAL,
OR FOREIGN TAX CONSEQUENCES THAT COULD RESULT FROM THE MERGER.
30
<PAGE>
Differences in Shareholders' Rights
The rights of Bancorp shareholders, which are determined by the Corporation
Law and the Certificate of Incorporation and Bylaws of Bancorp, differ from the
rights accorded UJB shareholders, which are determined by New Jersey corporation
law and the Restated Certificate of Incorporation and By-Laws of UJB. Some of
the differences in shareholders' rights are attributable to differences between
the corporation law of Delaware, the state of Bancorp's incorporation, and the
corporation law of New Jersey, the state of UJB's incorporation. The remaining
differences in shareholders' rights are attributable to differences between the
Certificate of Incorporation and Bylaws of Bancorp and the Restated Certificate
of Incorporation and By-laws of UJB. Certain of the rights of Bancorp
shareholders described below that are provided by the Corporation Law or
contained in the Certificate of Incorporation or Bylaws of Bancorp, and that are
not provided by New Jersey corporation law or contained in the Restated
Certificate of Incorporation or By-Laws of UJB, are deemed to have an
anti-takeover effect and will not be available to Bancorp shareholders as UJB
shareholders; however, certain rights provided for by New Jersey corporation law
or the Restated Certificate of Incorporation or By-Laws of UJB are also deemed
to have an anti-takeover effect and will be available to Bancorp shareholders
but only after becoming UJB shareholders. The following is a summary explanation
of the material differences between the rights of shareholders of Bancorp and
the rights of shareholders of UJB. This summary is qualified in its entirety by
reference to the corporation laws of Delaware and New Jersey and the governing
documents of Bancorp and UJB referred to above.
Comparison of Certificates of Incorporation and By-laws
Bancorp
Board of Directors. The Bancorp Board is divided into three classes, each
of which contains approximately one-third of the whole number of the members of
the Bancorp Board. Terms are staggered by class, with approximately one-third of
the total number of directors being elected each year. The Certificate of
Incorporation of Bancorp provides that a director may be removed from the
Bancorp Board prior to the expiration of his or her term only for cause and upon
the vote of 80% of shareholders entitled to vote at an election of directors,
which vote may only be taken at a meeting of shareholders called for that
purpose. See "UJB--Classified Board and Related Provisions" for a discussion of
the classified board and related provisions provided for in UJB's Restated
Certificate of Incorporation.
Cumulative Voting and Special Meetings. The Certificate of Incorporation of
Bancorp does not permit cumulative voting for any purpose. Moreover, special
meetings of shareholders of Bancorp may be called only by the Bancorp Board. The
Certificate of Incorporation of Bancorp also provides that any action taken by
the shareholders of Bancorp may be taken only at an annual or special meeting or
by unanimous written consent of the shareholders in lieu of a meeting.
Authorized Shares. The Certificate of Incorporation of Bancorp authorizes
the issuance of 8,000,000 shares of Bancorp Stock and 2,000,000 shares of
preferred stock. The Bancorp Board has sole authority to determine the terms of
any one or more series of preferred stock, including voting rights, conversion
rates, and liquidation preferences.
Fair Price Provision. The Certificate of Incorporation of Bancorp contains
a provision requiring an affirmative vote of the holders of at least 80% of the
voting power of the then outstanding shares of Bancorp Stock entitled to vote,
to approve a "Business Combination" with an "Interested Stockholder" (generally
a 5% or more holder of voting stock or affiliate or associate thereof), unless
the transaction is either (i) approved by a majority of the "Disinterested
Directors" (as defined in Bancorp's Certificate of Incorporation); or (ii) is at
a minimum fair price (as determined in Bancorp's Certificate of Incorporation)
during a specified time period. Business Combinations subject to the above
described approval and fair price provisions include: mergers and consolidations
with an Interested Stockholder or affiliate or associate thereof, the
disposition of assets equaling or exceeding $2,000,000 in fair market value to
an Interested Stockholder or affiliate or associate thereof, the issuance or
transfer of securities of Bancorp or a subsidiary thereof to an Interested
Stockholder or affiliate or associate thereof in exchange for consideration
equal to or exceeding $2,000,000 in fair market value, or any reclassification
of securities, recapitalization, merger, consolidation or other transaction that
would, directly or indirectly, increase the proportionate share of the
outstanding shares of any class of equity or convertible securities directly or
indirectly owned by an Interested Stockholder or affiliate or associate thereof.
Because the terms of the Merger Agreement were approved by the Bancorp Board
(all of whom are "Disinterested Directors"), the fair price provision is not
applicable in the Merger.
31
<PAGE>
While the Restated Certificate of Incorporation of UJB does not contain
such a "fair price" provision, it does contain a provision providing for the
issuance of Series R Preferred Stock that, together with other components of
UJB's Shareholder Rights Plan (discussed under the caption "UJB--Shareholder
Rights Plan") are similar to the Bancorp "fair price" provision and achieve a
"fair price" objective comparable to that of the Bancorp "fair price" provision.
Additionally, New Jersey corporation law requires that transactions between New
Jersey corporations and interested shareholders (holders of 10% or more of the
voting stock of that corporation) receive the approval of two-thirds of the
voting stock of the corporation or meet certain minimum financial terms similar
in objective to the financial terms of the Bancorp "fair price" provision
(discussed under the caption "Comparison of Corporation Laws--Anti-Takeover
Statutes").
Shareholder Rights Plan. Bancorp has currently in effect a shareholder
rights plan pursuant to which holders of shares of Bancorp Stock possess one
preferred stock purchase right ("right") for each share of Bancorp Stock held.
Each right entitles the holder to buy, as of the close of business on the tenth
business day following certain takeover-related events ("effective time"), upon
payment of $35.00 per right ("exercise price"), one-hundredth of a share of
Bancorp Series A Preferred Stock. Each full share of Series A Preferred Stock is
entitled to (1) a quarterly cash dividend equal to the greater of $1.00 or 100
times any dividends paid on a share of Bancorp Stock, (2) a liquidation
preference equal to the greater of $100 or 100 times the payment made on a share
of Bancorp Stock and (3) in the event of a merger or consolidation of Bancorp,
100 times the amount received per share of Bancorp Stock. Upon the occurrence of
certain subsequently occurring events, holders of rights become entitled to
receive, upon payment of the exercise price, that number of shares of common
stock of the acquiring company having a fair market value at the time of the
transaction of twice the exercise price. The Bancorp Board has the power to
redeem these rights at any time, prior to the effective time. After the
effective time, the Bancorp Board may also exchange all or any part of the
outstanding exercisable rights for shares of Bancorp Stock (at an exchange ratio
of one share of Bancorp Stock per right). For a further description of Bancorp's
shareholder rights plan, see "DESCRIPTION OF BANCORP CAPITAL STOCK--Shareholder
Rights Plan." The combination of prohibitive dilution of an acquiring person's
share values and the power of the Bancorp Board to redeem the rights is intended
to encourage potential acquiring persons to negotiate with the Bancorp Board
with respect to the terms of any acquisition or business combination and, to the
extent possible, discourage or defeat partial or two-tiered acquisition
proposals. UJB has also adopted a shareholder rights plan. See "UJB--Shareholder
Rights Plan."
Because the Bancorp Board has approved the terms of the Merger Agreement,
the rights do not become exercisable as a result of the execution of the Merger
Agreement and will not become exercisable as a result of the Merger.
Evaluation of Offers. The Certificate of Incorporation of Bancorp further
provides that the Bancorp Board, when evaluating any offer of another person to
(i) make a tender or exchange offer for any equity security of Bancorp, (ii)
merge or consolidate Bancorp with another association or corporation, or (iii)
purchase or otherwise acquire all or substantially all of the properties and
assets of Bancorp, shall, in connection with the exercise of its judgment in
determining what is the best interests of Bancorp and its shareholders, give due
consideration to all relevant factors, including, without limitation, the social
and economic effects of acceptance of such offer on (a) Bancorp's employees and
on the communities in which Bancorp operates or is located, (b) the account
holders, borrowers and employees of Bancorp's subsidiaries and those communities
in which the subsidiaries operate or are located, and (c) the ability of Bancorp
and its subsidiaries to fulfill the objectives of applicable statutes and
regulations. UJB's Restated Certificate of Incorporation does not contain a
similar provision. However, New Jersey corporation law provides that a director
of a New Jersey corporation, discharging his or her duties to the corporation
and in determining what he or she reasonably believes to be in the best interest
of the corporation, may, in addition to considering the effects of any action on
shareholders, consider any of the following: (a) the effects of the action on
the corporation's employees, suppliers, creditors and customers; (b) the effects
of the action on the community in which the corporation operates; and (c) the
long-term as well as the short-term interests of the corporation and its
shareholders, including the possibility that these interests may best be served
by the continued independence of the corporation. Determinations resulting in
the rejection of a proposal or offer to acquire the corporation are expressly
covered by this provision of New Jersey corporation law.
New Business and Director Nominations. The Certificate of Incorporation of
Bancorp also requires a shareholder who intends to nominate a candidate for
election to the Bancorp Board or to raise new business at a shareholders meeting
to give at least sixty days advance notice to the Secretary of Bancorp. See
"UJB--Nominations
32
<PAGE>
to the UJB Board, Shareholder Proposals and Conduct of Meetings" for a
discussion of comparable provisions in UJB's By-Laws.
Amendment of Certificate of Incorporation and By-laws. An affirmative vote
of at least two-thirds (80% with respect to the Fair Price Provision) of the
outstanding voting stock is required to amend or repeal certain provisions of
Bancorp's Certificate of Incorporation. A vote of two-thirds of the total votes
eligible to be cast at a shareholders meeting, or a vote of two-thirds of the
directors then in office, is necessary to adopt, amend or repeal any provisions
of the By-laws of Bancorp.
UJB
Classified Board and Related Provisions. The Restated Certificate of
Incorporation of UJB divides the UJB Board into three classes, with each class
of directors serving a staggered term of the three years. Each class of
directors must consist, as nearly as possible, of one third of the number of
directors constituting the entire UJB Board. Presently there are four directors
in Class I, five directors in Class II and four directors in Class III.
The Restated Certificate of Incorporation of UJB further requires that
resolutions increasing the number of directors be approved by 80% of, as the
case may be, directors holding office or shares of capital stock of UJB entitled
to vote generally in the election of directors, voting as a single class.
The Restated Certificate of Incorporation of UJB also provides that the
affirmative vote of the holders of 80% or more of the combined voting shares of
UJB, voting as a single class, is required to amend, repeal or take any action
inconsistent with the classified board of directors or the requirement for an
80% affirmative vote to approve any increase in the number of directors.
Meetings and Consents. The Restated Certificate of Incorporation of UJB
requires that all actions by the shareholders of UJB be taken at a duly called
annual or special meeting of UJB's shareholders or by the unanimous, but not
less than unanimous, written consent of the shareholders. An additional
provision in the Restated Certificate of Incorporation of UJB provides that the
affirmative vote of the holders of 80% or more of the combined voting shares of
UJB, voting as a single class, is required to amend, alter, repeal or take any
action inconsistent with this requirement.
Shareholder Rights Plan. UJB has in effect a shareholder rights plan
pursuant to which holders of shares of UJB Stock possess one preferred stock
purchase right for each share of UJB Stock held. Each preferred stock purchase
right entitles the holder to buy, as of the close of business on the tenth day
following the occurrence of certain takeover-related events ("effective time"),
one-hundredth of a share of a new series of Preferred Stock, designated the
Series R Preferred Stock, at $90 per one-hundredth share ("exercise price"),
with full shares having rights per share equal to 100 times the rights of UJB
Stock with respect to voting, dividends and distributions upon liquidation or
merger as well as entitling the holder to an additional preferential dividend.
Upon the occurrence of certain subsequently occurring events, holders of the
preferred stock purchase rights become entitled to purchase either shares of the
Series R Preferred Stock (if not already purchased) or a number of shares of the
"acquiring person" (as defined in the rights plan) equal in market value to
twice the exercise price of the preferred stock purchase right. The UJB Board
has the power to redeem the preferred stock purchase rights at any time but,
after the effective time, it may do so only upon the majority vote of
non-management directors in connection with a business combination it has
approved. For a further description of UJB's shareholder rights plan, see
"DESCRIPTION OF UJB CAPITAL STOCK--Shareholder Rights Plan." The combination of
prohibitive dilution of the acquiring person's share values and the power of the
UJB Board to redeem the preferred stock purchase rights is intended to encourage
potential acquiring persons to negotiate with the UJB Board with respect to the
terms of any acquisition or business combination and, to the extent possible,
discourage or defeat partial or two-tiered acquisition proposals.
Nominations to the UJB Board, Shareholder Proposals and Conduct of
Meetings. The By-Laws of UJB contain provisions that (1) empower the UJB Board
to adopt rules, regulations and procedures governing meetings of UJB
shareholders and empower the chairman of a meeting of UJB shareholders, subject
to the rules and regulations adopted by the UJB Board, to adopt such rules,
regulations and procedures and to take such acts that the chairman deems
necessary, appropriate or convenient for the proper conduct of a shareholder
meeting, and (2) establish rules governing nominations for director and
shareholder proposals made at meetings of shareholders and empower the chairman
of the meeting to disallow nominations and shareholder proposals that are not
made at least 70 days in advance of the particular meeting or that otherwise
fail to comply with the requirements of the By-Laws.
33
<PAGE>
Preferred Stock. The Restated Certificate of Incorporation of UJB
authorizes the issuance of 4,000,000 shares of preferred stock. Currently
600,166 shares of UJB Preferred Stock, Series B are outstanding. The Restated
Certificate of Incorporation of UJB and the New Jersey Business Corporation Act
authorize the UJB Board to amend the Restated Certificate of Incorporation
without shareholder concurrence to divide the authorized shares of preferred
stock into series, to determine the designations and the number of shares of any
such series, and to determine the relative voting, dividend, conversion,
redemption, liquidation and other rights, preferences and limitations of the
authorized shares of preferred stock.
Comparison of Corporation Laws
Appraisal Rights in Merger or Consolidation. Under New Jersey corporation
law, unless a certificate of incorporation otherwise provides, a dissenting
shareholder of a New Jersey corporation that is a party to a consolidation, or
that is not the surviving corporation in a merger, or that is the surviving
corporation in a merger requiring shareholder approval, has appraisal rights
with respect to any shares other than (1) shares listed on a national securities
exchange or held of record by not less than 1,000 holders, and (2) shares in
exchange for which, pursuant to the plan of merger or consolidation, the
shareholder will receive cash and/or securities that will be listed on a
national securities exchange or held of record by not less than 1,000 holders.
UJB's Restated Certificate of Incorporation contains nothing that provides
differently. Under Delaware corporation law, shareholders of a Delaware
corporation have appraisal rights in a merger or consolidation, except for
certain mergers and consolidations not requiring any vote by shareholders of the
corporation, with respect to any shares other than shares listed on a national
securities exchange or designated as a national market system security on an
interdealer quotation system by the NASD or held of record by more than 2,000
holders. However, even with respect to shares so listed or held, appraisal
rights exist if, pursuant to the plan of merger, the shareholder is to receive
in exchange for his or her shares anything other than stock of the surviving
corporation, stock of any corporation listed on a national securities exchange
or designated as a national market system security on an interdealer quotation
system by the NASD or held of record by more than 2,000 holders or cash in lieu
of fractional shares.
Appraisal Rights Relating to Disposition of Assets. Under New Jersey
corporation law, a dissenting shareholder in a New Jersey corporation has
appraisal rights in the case of any sale, lease, exchange or other disposition
of substantially all of the assets of the corporation not in the usual or
regular course of business as conducted by the corporation, except with respect
to (1) shares listed on a national securities exchange or held of record by not
less than 1,000 holders, or (2) a transaction pursuant to a plan of dissolution
of the corporation that provides for the distribution of substantially all of
its net assets to shareholders according to their interests within one year,
where such transaction is wholly for cash and/or securities that will be listed
on a national securities exchange or held of record by not less than 1,000
holders, or (3) a sale pursuant to court order. Delaware corporation law does
not provide for appraisal rights in connection with dispositions of assets
unless the corporation's certificate of incorporation provides otherwise.
Bancorp's Certificate of Incorporation does not provide for appraisal rights in
these circumstances.
Class Voting on Merger or Consolidation. Under New Jersey corporation law,
any class or series of shares shall be entitled to vote as a class if the plan
of merger or consolidation contains any provision that, if contained in a
proposed charter amendment, would entitle the class or series to vote as a class
on the amendment. Delaware corporation law provides that any class of shares
shall be entitled to vote as a class upon a proposed amendment if certain
amendments are proposed which will adversely affect the rights of the shares of
such class.
Source of Dividends. Under New Jersey corporation law, dividends may not be
paid if, after giving effect to the dividend, either (1) the corporation would
be unable to pay its debts as they become due in the usual course of its
business or (2) the corporation's total assets would be less than its total
liabilities. Under Delaware corporation law, dividends may be paid out of
surplus or, in the absence thereof, out or the net profits of the current and/or
next preceding fiscal year, except where capital represented by stock enjoying a
preference upon the distribution of assets thereby would be impaired.
Power to Adopt, Amend or Repeal By-laws. Under New Jersey corporation law,
the power to adopt, amend and repeal by-laws of a corporation is vested in the
board of directors unless such power is reserved to the shareholders in the
certificate of incorporation, but by-laws made by the board of directors may be
amended and repealed and new by-laws adopted by the shareholders and the
shareholders may prescribe in such by-laws that the board may not amend or
repeal by-laws approved by shareholders. Under Delaware corporation law, the
power to adopt, amend or repeal bylaws of a corporation is vested in the
corporation's shareholders, although the corporation's certificate of
incorporation may also vest such power in the corporation's board of directors.
34
<PAGE>
Action by Shareholders by Written Consent in Lieu of a Meeting. Under New
Jersey corporation law, except as otherwise provided in a certificate of
incorporation, any action (other than the election of directors and the approval
of a merger, consolidation or sale of substantially all of the assets of the
corporation) required or permitted to be taken at a meeting of the corporation's
shareholders, may be taken without a meeting upon the written consent of
shareholders who would have been entitled to cast the minimum number of votes
that would have been necessary to take such action at a meeting at which all
shares entitled to vote thereon were present and voted (except that the election
of a director and the approval of a merger, consolidation or sale of
substantially all of the assets of the corporation requires unanimous written
consent of all shareholders). The corporation must give all shareholders advance
notice of such proposed action if the proposed action involves a merger,
consolidation or sale of substantially all of the assets of a corporation. As
discussed earlier, UJB's Restated Certificate of Incorporation permits action by
written consent only where the consent is unanimous. Under Delaware corporation
law, except as otherwise provided in a company's certificate of incorporation,
any action required or permitted to be taken at the meeting of a corporation's
shareholders may be taken without a meeting if a written consent, setting forth
the action so taken, is signed by the holders of outstanding shares having not
less than the minimum number of votes that would have been necessary to take
such action at a meeting at which all shares entitled to vote thereon were
present and voted. As discussed earlier, Bancorp's Certificate of Incorporation
only permits action by written consent in lieu of a meeting if it is unanimous.
Removal of Directors. Under New Jersey corporation law, one or more of all
directors of a corporation may be removed for cause or, unless otherwise
provided in the certificate of incorporation, without cause by shareholders by
the affirmative vote of the majority of the votes cast by the holders of shares
entitled to vote thereon. However, unless otherwise provided in the certificate
of incorporation, shareholders of a corporation whose board of directors is
classified may not remove a director without cause. Under Delaware corporation
law, any director or the entire board of directors may be removed, with or
without cause, by the holders of a majority of the shares then entitled to vote
at an election of directors, except (i) unless the certificate of incorporation
otherwise provides in the case of a corporation whose board is classified,
shareholders may effect such removal only for cause; or (ii) in the case of a
corporation having cumulative voting, if less than the entire board is to be
removed, no director may be removed without cause if the votes cast against his
or her removal would be sufficient to elect him or her if then cumulatively
voted at an election of the entire board of directors, or, if there be classes
of directors, at an election of the class of directors of which he or she is a
part. As discussed earlier, Bancorp's Certificate of Incorporation provides that
a director may be removed from office prior to the end of his or her term only
for cause and upon the vote of 80% of the shareholders entitled to vote at an
election of directors.
Special Meetings of Shareholders. Under New Jersey corporation law, holders
of not less than 10% of a corporation's voting stock may apply to the New Jersey
Superior Court for an order directing a special meeting of shareholders to be
held. Under Delaware corporation law, special meetings of shareholders may be
called by the board of directors or by such person or persons as may be
authorized by a company's certificate of incorporation or bylaws. Bancorp's
Certificate of Incorporation provides that only the Bancorp Board may call a
special meeting of shareholders.
De Facto Merger. Under New Jersey corporation law, shareholders have the
same voting and dissent and appraisal rights as if they were shareholders of a
surviving corporation in a merger, if (1) voting shares outstanding or issuable
after the transaction exceed by more than 40% voting shares outstanding before
the transaction or (2) shares entitled to participate without limitation in
distributions outstanding or issuable after the transaction exceed by more than
40% such shares outstanding before the transaction. Delaware corporation law
does not contain a comparable provision.
Shareholder Approval of Mergers and Consolidations. While shareholder
approval of a merger or consolidation is generally required under both the New
Jersey and the Delaware corporation laws, the New Jersey corporation law
provides that approval of the shareholders of a surviving corporation in a
merger is not required if (i) the plan of merger does not make an amendment of
the certification of incorporation of the surviving corporation that would
otherwise require shareholder approval, (ii) the shares outstanding immediately
before the effectiveness of the merger are not changed by the merger, and (iii)
the number of voting or participating shares outstanding after the merger, after
giving effect to the merger, will not exceed by more than 40% the number of
voting and participating shares, as the case may be, of the surviving
corporation outstanding immediately prior to the merger. The Delaware
corporation law has a similar provision but the percentage threshold is 20%
rather than 40% and is with reference to common stock rather than voting or
participating stock.
Shareholders' Derivative Actions. New Jersey corporation law contains
certain provisions that have the effect of discouraging derivative actions.
Specifically, New Jersey law authorizes the court having jurisdiction over the
action to award reasonable expenses and attorney's fees to the successful
defendants in a derivative action upon a finding that the action was brought
without reasonable cause. In addition, the corporation may require the plaintiff
or plaintiffs to give security for the reasonable expenses, including attorneys'
fees, that may be incurred by the corporation or by other named defendants for
which the corporation may become legally liable if plaintiff or plaintiffs are
holders of less than 5% of the outstanding shares of any class or series of such
corporation (or voting trust certificates therefor) unless the shares or trust
certificates so held have a market value in excess of $25,000. Delaware
corporation law does not contain comparable provisions.
35
<PAGE>
Proxies. Under New Jersey corporation law, a proxy is valid for no longer
than eleven months unless a longer period is specified. In addition, a proxy is
revocable at will unless coupled with an interest. The death or incapacity of a
shareholder does not revoke a proxy and it will continue in force until
revocation by the shareholder's personal representative. Under Delaware
corporation law, a proxy is not valid beyond three years from its date unless it
so provides for a longer period. In addition, for a proxy to be irrevocable it
must so state and be coupled with an interest in the stock itself or in the
corporation generally, sufficient in law to support an irrevocable power.
Inspection of Books and Records. Under New Jersey corporation law, a
shareholder of record for at least 6 months immediately preceding his or her
demand or any holder (or a person authorized on behalf of such holder) of at
least 5% of the outstanding shares of any class or series shall have the right
to examine for any proper purpose the corporation's books and records. Under
Delaware corporation law, any shareholder upon written demand under oath stating
the purpose thereof has the right during usual business hours to inspect for any
proper purpose the stock ledger, list of shareholders and other books and
records, and to make copies or abstracts therefrom.
Anti-Takeover Statutes. New Jersey has adopted a type of anti-takeover
statute known as a "business combination" statute. Subject to numerous
qualifications and exceptions, the statute prohibits an interested stockholder
of a corporation from effecting a business combination with the corporation for
a period of five years unless the corporation's board approved the transaction
prior to the stockholder becoming an interested stockholder, the transaction
receives the approval of two-thirds of the voting stock of the corporation or
the transaction meets certain minimum financial terms. An "interested
stockholder" is defined to include any beneficial owner of 10% or more of the
voting power of the outstanding voting stock of the corporation and any
affiliate or associate of the corporation who within the prior five-year period
has at any time owned 10% or more of the voting power. The term "business
combination" is defined broadly to include, inter alia, (1) merger or
consolidation of the corporation with the interested stockholder or any
corporation that after such merger or consolidation would be an affiliate or
associate of the interested stockholder, (2) sale, lease, exchange, mortgage,
pledge, transfer or other disposition to an interested stockholder or any
affiliate or associate of the interested stockholder of 10% or more of the
corporation's assets or (3) issuance or transfer to an interested stockholder or
any affiliate or associate of the interested stockholder of 5% or more of the
aggregate market value of the stock of the corporation. The effect of the
statute is to protect non-tendering post-acquisition minority shareholders from
mergers in which they will be "frozen out" after the merger by prohibiting
transactions in which an acquiror could favor itself at the expense of minority
shareholders. The New Jersey statute does not apply to New Jersey corporations
that do not have either their principal executive offices or significant
business operations located in New Jersey. Delaware has adopted a business
combination type of anti-takeover statute that operates in a manner similar to
the New Jersey statute. Although there are numerous differences between the
Delaware statute and the New Jersey statute, the most significant include the
following: (i) under the Delaware statute, the moratorium imposed on a business
combination with an interested stockholder is three years, as opposed to five
years under the New Jersey statute; (ii) the Delaware statute defines
"interested stockholder" using a 15% ownership threshold rather than the 10%
threshold under the New Jersey statute; (iii) the Delaware statute permits an
interested stockholder to avoid the moratorium by acquiring 85% of the
corporation's voting power in the same transaction in which that stockholder
becomes an interested stockholder (the New Jersey statute does not contain a
comparable provision); and (iv) the Delaware statute applies to Delaware
corporations regardless of the locations of their offices and business
operations.
Indemnification. Under New Jersey corporation law, a corporation may
indemnify any person who is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, trustee, employee or agent of another corporation,
partnership, joint venture, sole proprietorship, trust or other enterprise,
against his or her reasonable expenses (including counsel fees) in connection
with any pending, threatened or completed proceeding by or in the right of the
corporation to procure a judgment in its favor that involves such person by
reason of his or her corporate agent status, if he or she acted in good faith
and in a manner he or she reasonably believed to be in or not opposed to the
best interests of the corporation. However, no indemnification shall be made in
respect of any claim, issue or matter as to which such person shall have been
adjudged to be liable to the corporation, unless and only to the extent that the
Superior Court of New Jersey or the court in which such proceeding was brought
shall determine that, despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses that the Superior Court of New Jersey or such other
court shall deem proper. In connection with any other proceeding, a corporation
may indemnify any such person against his or her reasonable expenses and
liabilities in connection with any such proceeding if he or she acted in good
faith and in a manner he or she reasonably believed to be in or not
36
<PAGE>
opposed to the best interests of the corporation and, with respect to any
criminal proceeding, he or she had no reasonable cause to believe his or her
conduct was unlawful. New Jersey corporation law requires that a corporation
indemnify any such person against expenses to the extent such person has been
successful on the merits or otherwise in any of the foregoing proceedings or in
the defense of any claim, issue or matter therein, and provides that any such
person may apply to a court for an award of indemnification by the corporation
if the corporation has failed or refused to provide indemnification as provided
under the statute.
New Jersey corporation law also permits a corporation to purchase and
maintain insurance on behalf of any such person against any expenses incurred in
any proceeding and any liabilities asserted against such person by reason of his
or her corporate agent status, whether or not the corporation would have the
power to indemnify such person under the statute.
Similarly, the Delaware corporation law provides that a corporation may
indemnify any person with respect to certain pending or threatened actions
(including a suit by or in the right of the corporation to procure a judgment in
its favor) by reason of the fact that he or she is or was a director, officer,
employee or agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him or her in connection with such action,
suit or proceeding if he or she acted in good faith and in a manner he or she
reasonably believed to be in or not opposed to the best interests of the
corporation and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his or her conduct was unlawful. With respect to
derivative actions, however, no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the corporation unless and only to the extent that the Court of
Chancery of Delaware or the court in which such action or suit was brought shall
determine upon adjudication that, despite the adjudication of liability but in
view of all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses that the Court of Chancery of Delaware
or such other court shall deem proper.
The Delaware corporation law permits a Delaware business corporation to
purchase and maintain insurance on behalf of any person who is or was a
director, officer, employee or agent of the corporation, or is or was serving at
the request of the corporation as a director, officer, employee or agent of
another corporation, partnership joint venture, trust or other enterprise
against any liability asserted against such person and incurred by him or her in
any such capacity, or arising out of his or her status as such, whether or not
the corporation would have the power to indemnify such person.
Limitation of Director and Officer Liability. New Jersey corporation law
provides that directors and members of any committee designated by the board of
directors are not liable to a corporation or its shareholders if, acting in good
faith, in discharging their duties they rely upon (i) the opinion of counsel for
the corporation, (ii) written reports setting forth financial data concerning
the corporation and prepared by an independent public accountant or certified
public accountant or firm of such accountants, (iii) financial statements, books
of account or reports of the corporation represented to them to be correct by
the president, the officer of the corporation having charge of its books of
account, or the person presiding at a meeting of the board, or (iv) written
reports of committees of the board. The Delaware corporation law contains a
similar provision which states that members of a board of directors or any
committee designated by the board of directors are fully protected in the
performance of their duties if they rely in good faith upon the records of the
corporation and upon such information, opinions, reports or statements presented
to the corporation by any of the corporation's officers or employees, or
committees of the board of directors, or by any other person as to matters the
members reasonably believe are within such other person's professional or expert
competence and who has been selected with reasonable care by or on behalf of the
corporation.
The New Jersey corporation law further provides that the certificate of
incorporation of domestic corporations may contain provisions which limit the
personal liability of directors and officers, in whole or in part, to the
corporation or its shareholders for damages for breach of any duty owed to the
corporation or its shareholders except for acts or omissions (i) in breach of
the director's or officer's duty of loyalty to the corporation or its
shareholders, (ii) not in good faith or involving a knowing violation of law or
(iii) resulting in receipt by such person of an improper personal benefit. The
New Jersey corporation law provides that the duty of loyalty is breached by an
act or omission known or believed by a director or officer to be contrary to
the best interests of the corporation or its shareholders in connection with a
matter in which the director or officer has a material conflict of interest. The
Delaware corporation law contains a substantially similar provision but it is
restricted in scope to directors only, does not specifically define what
constitutes a breach of the duty of loyalty and specifically prohibits
provisions which eliminate director liability for unlawful payments of dividends
and unlawful stock purchases and redemptions.
THE MERGER AGREEMENT
The following discussion is a summary of the material provisions of the
Merger Agreement, a copy of which is attached hereto as Appendix A and
incorporated herein by reference, and is qualified in its entirety by reference
to that agreement.
Effective Time
If the Merger Agreement is approved by the requisite vote of Bancorp
Shareholders and the other conditions of the Merger, including receipt of all
requisite regulatory approvals, are satisfied or waived, the Merger will become
effective at the date and time specified in the Certificate of Merger respecting
the Merger filed with the Office of the Secretary of State of the State of New
Jersey ("NJ Certificate"), or, if filed later than the date of the NJ
Certificate, the date of filing of the Certificate of Merger with the Office of
the Secretary of the State of Delaware. It is presently contemplated that the
Effective Time will occur late in the second calendar quarter or early in the
third calendar quarter of 1995 due to the need to obtain regulatory approvals.
The Merger Agreement may be terminated by either party if, among other things,
the Effective Time does not occur on or before October 31, 1995.
Closing of the Merger
The Merger Agreement provides that, unless otherwise agreed, the closing of
the Merger ("Closing") will be held on at least five business days notice
("Closing Notice") given to Bancorp by UJB, on a date ("Closing Date") not
earlier than the last to occur, but (subject to the exception described below)
not later than 45 business days after the last to occur of the following: (1)
the date of approval of the Merger Agreement by the Bancorp Shareholders; (2) if
the transactions contemplated by the Merger Agreement are being contested in any
legal proceedings, the date that all
37
<PAGE>
such proceedings have been brought to a conclusion favorable, in the judgment of
UJB and Bancorp, to the consummation of the transactions contemplated by the
Merger Agreement or such prior date as UJB and Bancorp shall elect, whether or
not such proceedings have been brought to a conclusion; and (3) the date on
which all governmental approvals are received and all required waiting periods
have expired. Notwithstanding the foregoing, the Closing shall take place at
least five business days after the deadline by which Bancorp shareholders must
elect to receive Stock Consideration or Cash Consideration in the Merger. See
"THE MERGER AGREEMENT--Election and Allocation Procedures."
Determination of Exchange Ratio
In the Merger, the shares of each holder of Bancorp Stock will be converted
into and represent either (1) Cash Consideration, i.e., $43.10 per share of
Bancorp Stock in cash, (2) Stock Consideration, which is not yet fixed and will
not be fixed until the Exchange Ratio is set on a date subsequent to the Annual
Meeting, or (3) a combination of (1) and (2). The Merger Agreement provides for
the Exchange Ratio to be fixed on the Determination Date--the date designated by
UJB in the Closing Notice as the Determination Date, which may not be more than
ten business days prior to the Closing Date. The Determination Date is the final
trading day of the ten consecutive trading-day period during which the Average
Price (the average of the closing prices of UJB Stock during this period) is
determined.
The Exchange Ratio will be determined as follows based on the Average
Price:
(1) If the Average Price of a share of UJB Stock is greater than
$27.9125, the Exchange Ratio will be 1.5441.
(2) If the Average Price of a share of UJB Stock is equal to or
greater than $22.8375 and equal to or less than $27.9125, the Exchange
Ratio will be equal to the quotient obtained by dividing $43.10 by the
Average Price.
(3) If the Average Price of a share of UJB Stock is less than $22.8375
and greater than or equal to $20.90, the Exchange Ratio shall be 1.8872.
(4) If the Average Price of a share of UJB Stock is less than $20.90,
Bancorp has the right to terminate the Merger Agreement by sending a notice
of termination ("Termination Notice") to UJB within three business days
following the Determination Date, but UJB has the right to nullify such
termination notice by sending to Bancorp within three business days of its
receipt of the Termination Notice a notice agreeing to an Exchange Ratio
equal to the quotient obtained by dividing $39.44 by the Average Price.
The Exchange Ratio is also subject to appropriate adjustments in the event
that, from the date of the Merger Agreement to the Effective Time, the
outstanding shares of UJB Stock are increased or decreased, changed into or
exchanged for a different number or kind of shares or securities through
reorganization, recapitalization, reclassification, stock dividend, stock split
or reverse stock split or other similar changes.
Election and Allocation Procedures
The number of shares of Bancorp Stock to be converted into the right to
receive Stock Consideration pursuant to the Merger will equal, as closely as
reasonably possible, the Stock Amount--an amount equal to 60% of the Outstanding
Shares. The Outstanding Shares is that number of shares of Bancorp Stock
outstanding at the Effective Time minus the number of shares of Bancorp Stock
held at the Effective Time by UJB or a subsidiary of UJB. The number of shares
of Bancorp Stock to be converted into the right to receive Cash Consideration
will equal, as closely as reasonably possible, the Cash Amount--an amount equal
to 40% of the Outstanding Shares, reduced by the Dissenting Shares--shares of
Bancorp Stock held by Bancorp Shareholders who have filed with Bancorp a written
objection to the Merger before voting on the Merger occurs at the Annual Meeting
and who have not withdrawn their demands for appraisal rights. Shares of Bancorp
Stock beneficially owned by UJB, if any, and shares of Bancorp Stock held in the
treasury of Bancorp, if any, will be canceled and retired by virtue of the
Merger.
Prior to the Effective Time, UJB will appoint First Chicago Trust Company
of New York or another entity reasonably satisfactory to Bancorp as the exchange
agent ("Exchange Agent"). An election form and other appropriate and customary
transmittal materials in such form as UJB and Bancorp shall mutually agree
("Election Form") will be mailed by the Exchange Agent on such date Bancorp and
UJB shall mutually agree to each holder of record of Bancorp Stock as of such
date as Bancorp and UJB shall mutually agree ("Election Form Record Date"). The
Election Form Record Date will be after the date of the Annual Meeting but prior
to the Effective Time.
38
<PAGE>
Each Election Form will permit the holder (or the beneficial owner through
appropriate and customary documentation and instructions) (1) to elect to
receive only Stock Consideration with respect to such holder's Bancorp Stock
(i.e., Stock Electees), (2) to elect to receive only Cash Consideration with
respect to such holder's Bancorp Stock (i.e., Cash Electees) or (3) to indicate
that such holder makes no election (i.e., Non-Electees). Any Bancorp Stock with
respect to which the holder (or the beneficial owner, as the case may be) does
not submit to the Exchange Agent an effective, properly completed Election Form
on or before such time and date as UJB and Bancorp may mutually agree ("Election
Deadline") will also be deemed to be shares held by a Non-Electee. The Election
Deadline shall be after the date of the Annual Meeting but prior to the
Effective Time. Election Forms must be accompanied by Bancorp Certificates,
which will be canceled once the Merger is consummated. Until so surrendered, UJB
may, at its option, refuse to pay to the holders of the Bancorp Certificates who
become entitled to receive Stock Consideration for their Bancorp Stock in whole
or in part at the Effective Time dividends or other distributions, if any,
payable to holders of UJB Stock; provided, however, that, upon surrender and
exchange of the Bancorp Certificates, there will be paid to such holders the
amount, without interest, of dividends and other distributions, if any, that
became payable prior thereto but that were not paid. No transfer of Bancorp
Stock will be effected on the stock transfer books of Bancorp at and after the
Effective Time.
If time will not permit a Bancorp shareholder to cause his or her Bancorp
Certificate(s) to reach the Exchange Agent prior to the Election Deadline, such
Bancorp shareholder may nevertheless submit an Election Form if all of the
following conditions are met:
(1) the Exchange Agent receives, at or prior to the Election Deadline,
a guarantee notice ("Notice of Guaranteed Delivery"), substantially in the
form provided with the Instructions on the Election Form from a member firm
of a registered national securities exchange, a member firm of the NASD, or
a commercial bank or trust company having an office or correspondent in the
United States, each of which must be a member of a Medallion Signature
Program approved by the Securities Transfer Association, Inc., stating (a)
the name of the Bancorp shareholder, (b) the number of shares of Bancorp
Stock represented by the Bancorp Certificate(s) held by the Bancorp
shareholder, and (c) guaranteeing the delivery to the Exchange Agent of the
Bancorp Certificate(s) evidencing those shares of Bancorp Stock within
forty-eight (48) hours following the date of the Notice of Guaranteed
Delivery; and
(2) the properly completed Election Form, with any signatures
guaranteed as required on the Election Form, is received by the Exchange
Agent by the Election Deadline.
Cash Electees may also elect to divide their holdings of Bancorp Stock into
Cash Electee Blocks--blocks of 5,000 shares of Bancorp Stock or more (with any
shares not exactly divisible by the selected block amount being added to one of
the blocks)--for purposes of the allocation procedures, if necessary. Cash
Electees who do not make such election or who hold less than 5,000 shares of
Bancorp Stock will have all of their holdings treated as a single Cash Electee
Block for purposes of the allocation procedures, if necessary.
UJB shall make available one or more Election Forms as may be reasonably
requested by all persons who become holders (or beneficial owners) of Bancorp
Stock between the Election Form Record Date and the close of business on the
business day prior to the Election Deadline.
Bancorp shareholders may, and probably will, be required to elect whether
they wish to receive Stock Consideration or Cash Consideration without
knowing the Exchange Ratio.
Any such election shall have been properly made only if the Exchange Agent
shall have actually received a properly completed Election Form by the Election
Deadline. Any Election Form may be revoked or changed by the person submitting
such Election Form at or prior to the Election Deadline. In the event an
Election Form is revoked prior to the Election Deadline, the shares of Bancorp
Stock represented by such Election Form shall become shares held by a
Non-Electee and UJB shall cause the Bancorp Certificates representing such
Bancorp Stock to be promptly returned without charge to the person submitting
the Election Form upon written request to that effect from such person. Subject
to the terms of the Merger Agreement and of the Election Form, the Exchange
Agent shall have reasonable discretion to determine whether any election,
revocation or change has been properly or timely made and to disregard
immaterial defects in the Election Forms, and any good faith decisions of UJB
regarding such matters as may be referred to it by the Exchange Agent shall be
binding and conclusive. Neither UJB nor the Exchange Agent is under any
obligation to notify any person of any defect in an Election Form.
39
<PAGE>
Within such period after the Election Deadline as UJB and Bancorp shall
mutually agree, the Exchange Agent will, if necessitated by the existence of any
of the circumstances described below, allocate Stock Consideration and Cash
Consideration in accordance with elections made on the Election Forms as
follows:
(1) Stock Elections Exceed Stock Amount. If, upon the conclusion of
the election process, there exists an Excess Stock Amount (i.e., Stock
Electees represent a number of shares of Bancorp Stock that exceeds in the
aggregate the Stock Amount):
(a) Stock Electees will receive Stock Consideration only with
respect to a Pro Rata Amount of their shares. The Pro Rata Amount for
each such Stock Electee will equal, as closely as reasonably possible,
the aggregate number of shares of Bancorp Stock held by such Stock
Electee multiplied by a fraction, the numerator of which is the Stock
Amount and the denominator of which is the sum of the Stock Amount and
the Excess Stock Amount; and
(b) Cash Electees and Non-Electees will receive Cash
Consideration.
(2) Stock Elections Less Than Stock Amount. If, upon the conclusion of
the election process, there exists a Stock Shortfall Amount (i.e., an
amount by which the Stock Amount exceeds the number of shares of Bancorp
Stock represented by Stock Electees):
(a) all Stock Electees will receive Stock Consideration; and
(b) (i) if the number of shares of Bancorp Stock represented by
Non-Electees is greater than the Stock Shortfall Amount, the Exchange
Agent will select by random selection a sufficient number of
Non-Electees such that the number of shares of Bancorp Stock
represented by such Non-Electees equals, as closely as reasonably
possible, the Stock Shortfall Amount, and
(A) the Non-Electees so selected will receive Stock
Consideration, and
(B) the remaining Non-Electees not so selected and all Cash
Electees will receive Cash Consideration; and
(ii) if the number of shares of Bancorp Stock represented by
Non-Electees is less than the Stock Shortfall Amount,
(A) all Non-Electees will receive Stock Consideration, and
(B) the Exchange Agent will select by random selection a
sufficient number of Cash Electee Blocks such that the number of
shares of Bancorp Stock represented by such Cash Electee Blocks,
when added to the number of shares of Bancorp Stock represented
by the Non-Electees, equals, as closely as reasonably possible,
the Stock Shortfall Amount and (y) the holders of Cash Electee
Blocks so selected will receive Stock Consideration, and (z) the
remaining holders of Cash Electee Blocks not so selected will
receive Cash Consideration.
(3) Stock Elections Equal Stock Amount. If, upon the conclusion of the
election process, the number of shares of Bancorp Stock represented by
Stock Electees is equal, or as closely equal as reasonably possible in the
judgment of the Exchange Agent, to the Stock Amount, all Stock Electees
will receive Stock Consideration and all Cash Electees and Non-Electees
will receive Cash Consideration.
(4) Stock Elections and Non-Elections Equal Stock Amount. If, upon the
conclusion of the election process, the number of shares of Bancorp Stock
represented by Stock Electees, together with the number of shares of
Bancorp Stock represented by Non-Electees, is equal, or is as closely equal
as reasonably possible in the judgment of the Exchange Agent, to the Stock
Amount, all Stock Electees and all Non-Electees will receive the Stock
Consideration and all Cash Electees will receive Cash Consideration.
The pro rata allocation process or the random selection process to be used
by the Exchange Agent shall consist of such procedures as shall be mutually
determined by UJB and Bancorp.
Neither certificates for fractions of shares of UJB Stock nor scrip
certificates for such fractions will be issued, and holders of Bancorp
Certificates who would otherwise be entitled to receive fractions of shares of
UJB Stock will have none of the rights with respect to such fractions of shares
(including, without limitation, the right to receive dividends) that a holder of
a full share of UJB Stock would possess in respect of such full share, and will
receive in lieu
40
<PAGE>
thereof cash in an amount equal to such fraction multiplied by the Average
Price. If more than one Bancorp Certificate is surrendered for the same Bancorp
shareholder account, the number of full shares of UJB Stock for which UJB
Certificates will be issued pursuant to the Merger Agreement will be computed on
the basis of the aggregate number of shares of Bancorp Stock represented by the
Bancorp Certificates so surrendered.
If, upon conclusion of the allocation process described above, the
aggregate Cash Consideration otherwise payable as a result of the allocation
process ("Allocated Cash Consideration") (considered together with the cash that
may be payable to Dissenting Shareholders) exceeds, in the opinion of Weil,
Gotshal & Manges and Kirkpatrick & Lockhart ("Tax Counsel"), the aggregate Cash
Consideration payable to qualify the Merger as a tax-free reorganization under
Section 368(a) of the Code ("Tax-Free Cash Consideration") (such excess being
referred to herein as the "Cash Excess"), thereby rendering Tax Counsel unable
to deliver at the Closing Date the opinions required as a condition to Closing
(see "THE MERGER--Certain Federal Income Tax Consequences"), then:
(1) If the number of shares of Bancorp Stock represented by
Non-Electees not already receiving Stock Consideration ("Cash
Non-Electees") is greater than the number of shares of Bancorp Stock
represented by the Cash Excess, the Exchange Agent will select by random
selection a sufficient number of Cash Non-Electees such that the number of
shares of Bancorp Stock represented by such Cash Non-Electees equals, as
closely as reasonably possible, but is not less than, the Cash Excess, and
(a) the Cash Non-Electees so selected will receive Substitute
Stock Consideration (as defined below), and
(b) the Cash Non-Electees not so selected and all Cash Electees
will receive Cash Consideration; and
(2) If the number of shares of Bancorp Stock represented by Cash
Non-Electees is less than the number of shares of Bancorp Stock represented
by the Cash Excess,
(a) all Cash Non-Electees will receive Substitute Stock
Consideration, and
(b) the Exchange Agent will select by random selection a
sufficient number of Cash Electee Blocks such that the number of
shares of Bancorp Stock represented by such Cash Electee Blocks
equals, when added to the number of shares of Bancorp Stock
represented by the Cash Non-Electees, as closely as reasonably
possible, but is not less than, the number of shares of Bancorp Stock
represented by the Cash Excess, and (i) the holders of the Cash
Electee Blocks so selected will receive Substitute Stock
Consideration, and (ii) the holders of Cash Electee Blocks
not so selected will receive Cash Consideration.
The "Substitute Stock Consideration" is the number of shares of UJB Stock
arrived at by dividing (i) the aggregate Allocated Cash Consideration that would
otherwise have been payable to Cash Non-Electees and holders of Cash Electee
Blocks selected to receive Substitute Stock Consideration, by (ii) the closing
price of a share of UJB Stock on the NYSE - Composite Transactions Tape on the
business day before the Closing Date as reported in the Wall Street Journal, or,
if not reported therein, as reported in an authoritative source mutually
agreeable to Bancorp and UJB. The Stock Amount and Cash Amount will be adjusted
to reflect the foregoing selection process, if necessitated.
Bancorp shareholders should not surrender their Bancorp Certificates for
exchange until instructions and other materials are received from the Exchange
Agent. However, Bancorp shareholders are urged to notify Bancorp's registrar and
transfer agent, Midlantic Bank, N.A., now at (908) 205-4517, if their Bancorp
Certificates are lost, stolen, destroyed or not properly registered, in order to
begin the process of issuing replacement Bancorp Certificates.
Termination Fee
Bancorp has agreed to pay UJB a fee of $3,500,000 in the event UJB demands
such fee in writing within 90 days following a "Purchase Event." A "Purchase
Event" is defined as either: (1) the acquisition by any person or group, other
than UJB or a UJB subsidiary, of beneficial ownership of 25% or more of Bancorp
Stock; or (2) Bancorp or any of its subsidiaries, without having received UJB's
prior written consent, shall have entered into an agreement to engage in any
"Acquisition Transaction" or the Bancorp Board shall have recommended that the
Bancorp Shareholders approve or accept an "Acquisition Transaction" with anyone
other than UJB or one of its subsidiaries. An "Acquisition Transaction" is
defined for this purpose to mean (a) a merger, consolidation or any similar
transaction involving Bancorp or any Bancorp subsidiary, (b) a purchase, lease
or other acquisition of all or substantially all of the assets or deposits of
Bancorp or any Bancorp subsidiary, or (c) a purchase or other acquisition
(including by way of merger, consolidation or share exchange) of securities
representing 25% or more of the voting power of Bancorp or any Bancorp
subsidiary.
41
<PAGE>
The right of UJB to receive such fee shall terminate, however, upon the
earliest to occur of: (1) the time immediately prior to the Effective Time; (2)
18 months after (A) the termination of the Merger Agreement following (i) a
"Preliminary Purchase Event," (ii) discussions or negotiations relating to an
acquisition of Bancorp by a person other than UJB or a UJB subsidiary, or (iii)
a determination by the Bancorp Board not to submit the Merger Agreement to the
Bancorp Shareholders or (B) the termination of the Merger Agreement by UJB under
certain provisions thereof (termination for material breach of a warranty,
representation or covenant by Bancorp, failure by Kaplan to deliver its opinion
by May 20, 1995 or failure to consummate the Merger by October 31, 1995); or (3)
the termination of the Merger Agreement pursuant to any other section thereof
prior to a Purchase Event or an event specified in clause (2)(A).
A "Preliminary Purchase Event" is defined as any of the following events:
(1) the Bancorp Board withdraws or modifies, in a manner adverse to UJB, its
approval of, or its recommendation to the Bancorp Shareholders to approve, the
Merger Agreement or the Merger; (2) a "distribution date" occurs under Bancorp's
shareholder rights plan (see "DESCRIPTION OF BANCORP CAPITAL STOCK--Shareholder
Rights Plan"); (3) Bancorp or any of its subsidiaries, without having received
UJB's prior written consent, enters into an agreement to engage in an
"Acquisition Transaction," or the Bancorp Board recommends that the Bancorp
Shareholders approve or accept an "Acquisition Transaction," with anyone other
than UJB or one of its subsidiaries; (4) any person (other than UJB or a UJB
subsidiary) acquires beneficial ownership or the right to acquire beneficial
ownership of 10% or more of the outstanding shares of Bancorp Stock; (5) any
person (other than UJB or a UJB subsidiary) makes a bona fide proposal to
Bancorp or its shareholders to engage in an "Acquisition Transaction" or files a
registration statement with respect to a tender offer or exchange offer to
acquire 10% or more of the outstanding Bancorp Stock; (6) after a proposal is
made by a third party to Bancorp or its shareholders to engage in an
"Acquisition Transaction," or such person states its intention to Bancorp to
make such a proposal if the Merger Agreement terminates, Bancorp breaches any
representation, covenant or obligation contained in the Merger Agreement that
would entitle UJB to terminate the Merger Agreement (without regard to any cure
period); or (7) the Bancorp Shareholders do not approve the Merger Agreement at
the Annual Meeting or the Annual Meeting is not held or is canceled prior to the
termination of the Merger Agreement after any person (other than UJB or a UJB
subsidiary) shall have (a) made or disclosed an intention to make a bona fide
proposal to engage in an "Acquisition Transaction," (b) commenced a tender offer
or filed a registration statement under the Securities Act with respect to an
exchange offer, or (c) filed an application or given a notice under the Bank
Holding Company Act of 1956 as amended (the "BHC Act"), the Bank Merger Act, or
the Change in Bank Control Act of 1978 for approval to engage in an "Acquisition
Transaction." For the purpose of the definition of "Preliminary Purchase Event,"
"Acquisition Transaction" is defined the same as it is for purposes of "Purchase
Events" except 10% rather than 25% is the applicable percentage with respect to
purchases and other acquisitions of voting securities of Bancorp.
Amendment
Bancorp and UJB may jointly amend the Merger Agreement at any time;
provided, however, that, after the Annual Meeting, no amendment may change the
forms of consideration to be received by the Bancorp Shareholders unless such
modification is submitted to a vote of the Bancorp Shareholders.
Bancorp Stock Option Plans
Non-employee directors and certain employees of Bancorp have been granted
options to purchase Bancorp Stock under the 1991 Plan, the 1988 Program or under
both Option Plans. Under the terms of the 1991 Plan, non-employee directors of
Bancorp on the date of the Annual Meeting who have served as a director of
Bancorp for at least three years will each be granted options to purchase 500
shares of Bancorp Stock on such date (with an exercise price per share equal to
the fair market value of a share of Bancorp Stock on the date of grant).
Limited rights, exercisable only upon a "change in control" of Bancorp (as
that term is defined in the Option Plans), were granted in tandem with all
options granted to employees of Bancorp under the Option Plans. The Merger
constitutes a such "change in control" of Bancorp. Consequently, the limited
rights will become exercisable upon consummation of the Merger for a period of
60 days (if granted under 1991 Plan) or 90 days (if granted under the 1988
Program) and will entitle the holder thereof to receive in cash the difference
between the "acquisition price" of the Merger (as that term is defined in the
Option Plans) and the exercise price of the option underlying the limited right,
multiplied by the number of shares of UJB Stock with respect to which the
limited right is exercised. The "acquisition price," as determined
in accordance with the Option Plans, is the greatest of (i) the highest fair
market value per share of Bancorp Stock (prior to the Effective Time) in the
90-day period immediately preceding the date of exercise of the
42
<PAGE>
limited right divided by the Exchange Ratio, (ii) the highest fair market value
per share of UJB Stock (but only at and after the Effective Time) in the 90-day
period immediately preceding the date of exercise of the limited right, (iii)
the Cash Consideration divided by the Exchange Ratio or (iv) the fair market
value of a share of UJB Stock at the Effective Time. Limited rights and options
granted in tandem are each exercisable only to the extent the other has not been
exercised.
Under the Merger Agreement, each option (and to the extent applicable a
related limited right) relating to Bancorp Stock outstanding at the Effective
Time will be converted into an option (and to the extent applicable a related
limited right) relating to the number of shares of UJB Stock, rounded down to
the nearest whole share, that would have been issued to the holder of such
option if such holder had exercised the option prior to the Effective Time and
exchanged the shares of Bancorp Stock purchased thereby for UJB Stock in the
Merger. The exercise price per share of the converted options will be the
exercise price applicable to Bancorp Stock divided by the Exchange Ratio.
The converted options and limited rights will be subject to the same terms
and conditions following such conversion as were applicable to such options and
limited rights under the Option Plans, except that (i) non-employee directors
will be permitted for 90 days following the Effective Time to exercise their
converted options as limited rights and receive in cash the difference between
the "acquisition price" of the Merger and the exercise price of the converted
option, and (ii) the exercisability of options held by employees will be
extended for three months following any termination of their employment with
UJB, other than terminations of employment for cause.
Interests of Certain Persons in the Merger
Directors and executive officers of Bancorp have interests in the Merger
that are in addition to their interests as Bancorp shareholders. These interests
are described in more detail below.
Indemnification
In the Merger Agreement, UJB has agreed to indemnify (for a period of six
years following the Effective Time) the officers and directors of Bancorp and
NJSB against any and all claims, damages, liabilities, losses, costs, charges,
expenses (including reasonable costs of investigation and reasonable fees and
disbursements of legal counsel, other advisors and experts, as incurred),
judgments, fines, penalties and amounts paid in settlement in connection with,
arising out of or relating to: (1) any threatened or pending claim, action, suit
or proceeding (whether civil, criminal, administrative or investigative),
including derivative claims, by any present or former Bancorp Shareholder,
including any claim that is based on, arises out of, or in any way relates to
(a) the Merger, (b) this Proxy Statement-Prospectus, (c) the transactions
contemplated by the Merger Agreement, (d) the person's service as a member of
the Bancorp Board or the NJSB Board, or a committee of either Board, (e) the
events leading up to the execution of the Merger Agreement, (f) any statement,
recommendation or solicitation made in connection therewith or related thereto,
and (g) any breach of duty in connection with any of the foregoing, and (2) the
enforcement of the obligations of UJB to indemnify such person as provided
above, in each case to the full extent permitted under applicable law, but in no
event beyond the extent to which such indemnification would have been available
from Bancorp had the claim been advanced on January 19, 1995. If expenses are
advanced to a person by UJB under such indemnification obligation, such person
must agree to repay UJB in the event it is determined that such person is not
entitled to indemnification.
In the event (following the Merger) UJB merges or consolidates into any
other corporation or entity and is not the surviving corporation, or UJB
transfers all or substantially all of its assets and properties to any
individual, corporation or other entity, and, in connection therewith, UJB or
the surviving corporation purchases directors' and officers' liability insurance
for an additional period, UJB or the surviving corporation is obligated to
purchase directors' and officers' liability insurance for the benefit of
Bancorp's and NJSB's directors and officers for the remainder of the six year
indemnification period unless such insurance is not available at premiums
relatively comparable to those charged for the insurance of directors and
officers of UJB or the surviving corporation.
Management Employment Agreements and Supplemental Executive Retirement Trust
In 1993 and 1994, Bancorp and NJSB entered into employment agreements with
the following officers of Bancorp and NJSB: Beatrice D'Agostino (Chairman,
President and Chief Executive Officer of Bancorp and NJSB), Robert H. Hunt, Jr.
(Senior Executive Vice President and Secretary of Bancorp and NJSB), Russell G.
Muter (Executive Vice President and Treasurer of Bancorp and NJSB), Daniel J.
Matyola (Senior Vice President and
43
<PAGE>
Corporate Counsel of NJSB), Robert J. DiTota (Senior Vice President of NJSB),
John J. Vassallo (Senior Vice President of NJSB) and George S. Sirusas (Senior
Vice President of NJSB). These agreements, among other things, give the
executive certain rights in the event there is a change of control of Bancorp.
The Merger would constitute such a change of control.
Under her employment agreement, Mrs. D'Agostino may terminate her
employment agreement if there is a change of control. In the event she so
terminates her employment, she is entitled to receive a lump sum payment equal
to the present value of 48 months of future base salary payments (calculated at
the highest rate of base salary paid under the agreement). The employment
agreements with Mr. Hunt, Mr. Muter, Mr. Vassallo and Mr. Sirusas provide for a
severance payment (1) in the event the officer terminates his employment within
two years following a change of control, or (2) NJSB or its successor terminates
his employment within two years following a change of control (other than for
cause, death or disability). The lump sum severance payment is equal to the
present value of 36 months of salary payments for Mr. Hunt and Mr. Muter and 24
months of salary payments for Mr. Vassallo and Mr. Sirusas, calculated at the
highest rate of base salary paid under the agreement. All post-resignation or
post-termination payments to Mr. Hunt, Mr. Muter, Mr. Vassallo and Mr. Sirusas
are limited so that they will not constitute "excess parachute payments" as
defined by Section 280G of the Code.
Mr. DiTota's and Mr. Matyola's employment agreements do not permit such
officers to terminate their employment agreements following a change of control
and receive a severance payment. However, their employment agreements do provide
for certain severance payments in the event their employment agreements are
breached, their employment is prematurely terminated, their salaries are reduced
or NJSB's executive offices are relocated outside of Somerset, Hunterdon or
Mercer counties or they are required to work anywhere other than at NJSB's
principal executive offices. In such event, Mr. Matyola and Mr. DiTota are each
entitled to receive a severance payment equal to 12 months of salary payments.
Mrs. D'Agostino's employment agreement requires Bancorp and NJSB to
establish a Supplemental Executive Retirement Trust ("Trust") with a third party
trustee, and to fund the Trust with $97,000, and they did so in 1994. Mrs.
D'Agostino's employment agreement further requires Bancorp and NJSB, in the
event of a change of control of Bancorp (such as the Merger), to deposit an
additional amount in the Trust. The additional amount is the amount that would
then need to be contributed to the Trust so that the Trust holds, in the
aggregate, sufficient funds to enable the Trust to pay an additional retirement
benefit to Mrs. D'Agostino to compensate her for receiving a reduced benefit
under NJSB's defined benefit pension plan if she were to retire before age 65 as
a result of the change of control. Based on actuarial principles used in the
defined benefit pension plan, NJSB has been informed that the additional amount
would range between $125,000 and $225,000, assuming the Merger is consummated at
a hypothetical effective time of the close of business on June 30, 1995. The
actual amount will not be determinable until the Effective Time. The intent of
this provision is to assure that the total retirement benefit that Mrs.
D'Agostino would receive would not be adversely affected if a change of control
were to occur prior to her normal retirement age. In the event of a termination
of Mrs. D'Agostino's employment upon a change of control, the Trust becomes
irrevocable and Mrs. D'Agostino (or her estate) is entitled to receive the
amount then in the Trust in a lump sum. Until paid to Mrs. D'Agostino, the
assets of the Trust are subject to the claims of creditors of Bancorp and NJSB.
For further information regarding the management employment agreements and
the Trust, see "PROPOSAL II--ELECTION OF DIRECTORS--Executive Compensation and
Other Information--Management Employment Contracts."
Options and Limited Rights
Under the Merger Agreement, each option (and to the extent applicable a
related limited right) relating to Bancorp Stock granted to a non-employee
director or employee of Bancorp under the Option Plans and outstanding at the
Effective Time will be converted into an option (and to the extent applicable a
related limited right) relating to the number of shares of UJB Stock, rounded
down to the nearest whole share, that would have been issued to the holder of
such option if such holder had exercised the option prior to the Effective Time
and exchanged the shares of Bancorp Stock purchased thereby for UJB Stock in the
Merger. The exercise price per share of the converted options will be the
exercise price applicable to Bancorp Stock divided by the Exchange Ratio.
Limited rights, exercisable only upon a "change in control" of Bancorp (as
defined in the Option Plans), were granted in tandem only with options granted
to employees of Bancorp, including Mrs. D'Agostino and Messrs. Hunt, Muter,
Matyola, DiTota, Selitto, Vassallo and Sirusas. The Merger constitutes a "change
in control" of Bancorp
44
<PAGE>
under the Option Plans. Consequently, the limited rights held by the foregoing
officers of Bancorp (and all other employees holding limited rights) will first
become exercisable at the Effective Time. If granted under the 1991 Plan, the
limited rights will be exercisable for a period of 60 days following the
Effective Time and if granted under the 1988 Program the limited rights will be
exercisable for 90 days following the Effective Time. The limited rights entitle
the holder thereof to receive in cash the difference between the "acquisition
price" of the Merger (as that term is defined in the Option Plans) and the
exercise price of the option underlying the limited right, multiplied by the
number of shares of UJB Stock with respect to which the limited right is
exercised. The "acquisition price," as determined in accordance with the Option
Plans, is the greatest of (i) the highest fair market value per share of Bancorp
Stock (prior to the Effective Time) in the 90-day period immediately preceding
the date of exercise of the limited right divided by the Exchange Ratio, (ii)
the highest fair market value per share of UJB Stock (but only at and after the
Effective Time) in the 90-day period immediately preceding the date of exercise
of the limited right, (iii) the Cash Consideration divided by the Exchange Ratio
or (iv) the fair market value of a share of UJB Stock at the Effective Time.
Limited rights and options granted in tandem are each exercisable only to the
extent the other has not been exercised.
Options granted to non-employee directors of Bancorp under the Option Plans
were not granted in tandem with limited rights. However, the Merger Agreement
provides that, following the Effective Time, UJB will permit non-employee
directors 90 days following the Effective Time to exercise their converted
options as limited rights and receive in cash the difference between the
"acquisition price" of the Merger and the exercise price of the converted
option.
The Merger Agreement also provides that all options (and related limited
rights) granted to employees of Bancorp, including Mrs. D'Agostino and Messrs.
Hunt, Muter, Matyola, DiTota, Silitto, Vassallo and Sirusas, and converted in
the Merger will remain exercisable for a period of three months following a
termination of employment of the option holder by UJB, other than terminations
of employment effected for cause.
For further information regarding the options and limited rights, see "THE
MERGER AGREEMENT--Bancorp Stock Option Plans."
Special Payments
As noted above, under Mrs. D'Agostino's employment agreement, she may
terminate her employment following a change of control (such as the Merger) and
receive a severance payment. This severance payment is not limited by the
employment agreement to an amount that would avoid having the severance payment
characterized as an "excess parachute payment" as defined by Section 280G of the
Code.
Accordingly, Mrs. D'Agostino, Bancorp, and NJSB were advised that they
could face potential tax liabilities as a result of the application of Sections
280G and 4999 of the Code in connection with the consummation of a transaction,
such as the Merger, if Mrs. D'Agostino terminates her employment voluntarily or
her employment is terminated following such transaction. In fact, if no action
had been taken by Mrs. D'Agostino in 1994 to mitigate the effects of these
sections (and assuming the transaction were consummated in 1995 and Mrs.
D'Agostino received a severance payment), it had been estimated that Mrs.
D'Agostino would pay approximately $163,000 in federal excise tax and a
deduction of approximately $860,000 would not be available to NJSB for federal
income tax purposes and, therefore, NJSB would be expected to pay approximately
$293,000 more in federal income taxes than would otherwise be required.
In order to avoid these potential adverse consequences, Mrs. D'Agostino
exercised, on December 30, 1994, options previously granted to her under the
1988 Program and the 1991 Plan and purchased 40,000 shares of Bancorp Stock.
This caused her to pay $440,000 to Bancorp in aggregate exercise price and to
recognize an additional $740,000 in ordinary income in 1994.
Bancorp and NJSB agreed to provide Mrs. D'Agostino certain assistance in
connection with the exercise of such options because she was required to borrow
money from a third party due to the magnitude of the aggregate exercise price
payment and her income tax liability in connection with the exercise of such
options. In addition, Mrs. D'Agostino may be subject to additional interest
costs should the Merger not take place. In light of the potential benefits that
may be received by Bancorp and NJSB in connection with Mrs. D'Agostino's option
exercise if the Merger is consummated, Bancorp will assist Mrs. D'Agostino as
follows: (1) Bancorp agreed to contribute $2,500 per month toward Mrs.
D'Agostino's carrying costs up to a maximum of six months (or $15,000); and (2)
if the Merger does not take place, Bancorp agreed to contribute $2,500 per month
toward Mrs. D'Agostino's carrying costs up to a
45
<PAGE>
maximum of an additional ten months (or $25,000). These amounts were selected on
the basis of (a) the estimated proportional benefit to Bancorp, NJSB and Mrs.
D'Agostino, (b) an estimate of the length of time that it would take to conclude
the Merger, (c) estimated future borrowing costs and tax rates, and (d)
Bancorp's perception of the appropriate maximum amount that Bancorp and NJSB
should commit to this matter. The provision of this assistance was approved by
the affirmative votes of a majority of the disinterested directors of Bancorp as
required by Section 144 of the Delaware General Corporation Law.
Director Emeritus Program
In 1992, Bancorp adopted a Director Emeritus Program ("Emeritus Program").
Directors who have served the lesser of 3 full terms or 10 years as a director
of Bancorp or NJSB, excluding present or retired employees, are eligible to be
appointed Directors Emeritus by the Bancorp Board. The initial term is 3 years,
except a director with more than 20 years of service is appointed to an initial
term of 5 years. During the term of service, a Director Emeritus receives an
annual fee of between 50% and 80% of the retainer then being paid to active
non-employee directors of Bancorp and NJSB, depending on the length of the
Director Emeritus's active service on the Board. In the event of a transaction,
such as the Merger, a Director Emeritus is entitled to immediate payment of all
fees for the then remaining balance of the current term. The Boards of Directors
of Bancorp and NJSB are presently identical and, as of the date of the Annual
Meeting, all directors of Bancorp and NJSB (other than directors D'Agostino,
Adler and Johnson) will be eligible to be appointed Directors Emeritus of
Bancorp and NJSB. The current annual retainer is $12,500.
Under the Merger Agreement, UJB has agreed to make all payments required
under the Emeritus Program. In addition, UJB and Bancorp have agreed to take
certain actions with respect to the Emeritus Program as follows:
(1) The Bancorp Board will appoint all eligible Bancorp directors as
Directors Emeritus of Bancorp effective at the Effective Time and, if such
person submits his resignation as a Director Emeritus of Bancorp, such
person will receive the full amount due to him as a Director Emeritus of
Bancorp.
(2) The Bancorp Board will appoint all eligible NJSB directors as
Directors Emeritus of NJSB effective upon his completion of service as a
director of NJSB and, if such person submits his resignation as a Director
Emeritus of NJSB, such person will receive the full amount due to him as a
Director Emeritus of NJSB upon his completion of service.
(3) A director may be appointed as a Director Emeritus of NJSB
separately, and at a different service completion date, than his
appointment as a Director Emeritus of Bancorp. The amounts due such
director as a Director Emeritus of NJSB and as a Director Emeritus of
Bancorp will be paid separately. For this purpose, all retainer fees for
service as a director of Bancorp and NJSB will be allocated 40% to service
as a director of Bancorp and 60% to service as a director of NJSB.
For further information regarding the Emeritus Program, see "PROPOSAL
II--ELECTION OF DIRECTORS--Compensation and Committees of Directors."
New Jersey Savings Bank Employee Stock Ownership and Savings Plan and
Other Arrangements
UJB has agreed that, following the Merger, it will terminate the ESOSP and
cause all accrued benefits, including benefits that had not vested prior to the
Merger, in the ESOSP to be distributed to participants or their beneficiaries.
Following the Merger, NJSB employees will be permitted to participate in a
pension plan and a savings plan maintained by UJB.
UJB has agreed that persons employed by Bancorp or NJSB at the Effective
Time shall be entitled to receive a lump sum severance payment equal to the
greater of (i) their weekly salary times the number of full years of service
with Bancorp or NJSB or (ii) twice their weekly salary, upon the happening of
either of the following: (1) the person's employment is terminated without cause
within nine months of the Effective Time or (2) within nine months of the
Effective Time, (a) UJB removes the person from the position the person held at
the Effective Time or his or her position is eliminated by reason of the Merger,
(b) UJB does not offer the person a comparable position within 50 road miles
(for employees making $50,000 or more per year) or 25 road miles (for all other
employees) of Bancorp's executive offices and (c) the person voluntarily
terminates his or her employment. The estimated minimum amount payable to a full
time employee would be $538. This severance policy is not applicable to Bancorp
and NJSB employees who have entered into employment agreements with either
Bancorp, NJSB or both Bancorp and NJSB. See "THE MERGER
AGREEMENT--Covenants--UJB Covenants."
UJB has also agreed to pay up to an aggregate of $75,000 for outplacement
services for executive officers of Bancorp selected to receive the outplacement
services.
Estimated Amounts Payable to Directors and Executive Officers of Bancorp
The following table presents estimated amounts payable to directors and
executive officers of Bancorp as a result of the Merger:
<TABLE>
<CAPTION>
Options and Director
Employment Limited Emeritus Special
Name Agreement(1) Rights(2) Program Payments Total
---- ------------ ----------- -------- --------- ----------
<S> <C> <C> <C> <C> <C>
Beatrice D'Agostino ...... $1,130,000(3) $1,597,000 $15,000 $2,742,000
Irving Schwartz .......... 236,000 $50,000 286,000
Norman A. Gathany ........ 236,000 50,000 286,000
Joseph A. Hoffman ........ 236,000 19,000 255,000
Louis A. Imfeld .......... 236,000 50,000 286,000
Theodore K. Sargent ...... 236,000 19,000 255,000
Richard E. Schmelz ....... 236,000 50,000 286,000
Robert H. Hunt, Jr. ...... 333,000 1,441,000 1,774,000
Russell G. Muter ......... 333,000 1,441,000 1,774,000
John J. Vassallo ......... 210,000 698,000 908,000
George S. Sirusas ........ 166,000 630,000 796,000
Robert J. DiTota ......... 103,000(4) 317,000 420,000
Daniel J. Matyola ........ 85,000(4) 44,000 129,000
- -----------
<FN>
(1) Assumes a discount rate of 7 percent.
(2) Assumes the value of the Bancorp Stock will be $43.10; excludes the 500
options to be granted to certain non-employee directors as of the date of
the Annual Meeting.
(3) Assumes the midpoint of a range of the required contribution into the
Trust.
(4) Assumes a severance payment equal to twelve months of salary payments.
</FN>
</TABLE>
46
<PAGE>
Covenants
Bancorp Covenants
Pursuant to the Merger Agreement, Bancorp has covenanted, among other
things, that, until termination of the Merger Agreement, Bancorp will advise UJB
of any material adverse change in Bancorp's business and certain other
circumstances, and the business of Bancorp and its subsidiaries will be carried
on diligently and substantially in the same manner as prior to the execution of
the Merger Agreement. Furthermore, until termination of the Merger Agreement,
without the prior written consent of UJB, Bancorp will not declare or pay any
cash dividends at a quarterly rate in excess of $.20 and will refrain from
taking certain other actions, including certain actions relating to changes in
its capital stock, the incurrence of liabilities and the issuance of capital
stock.
Bancorp also has agreed that, until termination of the Merger Agreement, it
will not directly or indirectly through any 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 business combination or
takeover transaction (other than the Merger), whether as the proposed surviving,
disappearing, acquiring or acquired corporation, except to the extent any such
action is legally required for the discharge of the fiduciary duties of the
Bancorp Board as advised in writing by such Board's outside counsel. Further,
except as may be required by court order or decree or required by statute or
regulation, Bancorp has also agreed, during this period, that it will not
furnish or cause to be furnished any information, except information previously
made public and any information customarily furnished to the public in the
ordinary course of business, concerning Bancorp's business or properties to any
person or entity making any inquiry or proposing a transaction described in the
previous sentence other than UJB. In addition, Bancorp has agreed to notify UJB
by telephone promptly upon receipt of any inquiry with respect to a proposed
merger, consolidation, business combination, assets acquisition or disposition,
tender offer or other takeover transaction with another person or receipt of a
request for information from any governmental or regulatory authority with
respect to a proposed acquisition of Bancorp or any of its subsidiaries or
assets by another party, and to deliver as soon as possible by facsimile
transmission to UJB a copy of any document relating thereto promptly after any
such document is received by Bancorp.
UJB Covenants
Pursuant to the Merger Agreement, UJB has covenanted, among other things,
that until termination of the Merger Agreement UJB will advise Bancorp of any
material adverse change in UJB's business and certain other circumstances, and
will use its best efforts to preserve its business organization intact and its
relationship with customers and others having business dealings with it.
UJB has also agreed to terminate the ESOSP and distribute all benefits
thereunder and to permit NJSB employees to participate in pension and savings
plans to the extent maintained by UJB. UJB has additionally agreed (i) that
persons employed by Bancorp or NJSB at the Effective Time and not party to an
employment agreement with either Bancorp or NJSB will be entitled to certain
severance benefits and (ii) that UJB will undertake certain actions with respect
to the Emeritus Program. See "THE MERGER AGREEMENT--Interests of Certain Persons
in the Merger."
Regulatory Approvals
The Merger is subject to approval by the Federal Reserve Board under the
BHC Act. The BHC Act provides that the Federal Reserve Board may not approve any
transaction (1) that would result in a monopoly, or that would be in furtherance
of any combination or conspiracy to monopolize or to attempt to monopolize the
business of banking in any part of the United States, or (2) the effect of which
in any section of the country may be substantially to lessen competition, or to
tend to create a monopoly, or that in any other manner would be in restraint of
trade, unless the Federal Reserve Board finds that the anticompetitive effects
of the proposed transaction are clearly outweighed in the public interest by the
probable effect of the transaction in meeting the convenience and needs of the
communities to be served. In conducting its review of any application for
approval, the Federal Reserve Board is required to consider the financial and
managerial resources and future prospects of the company or companies and the
banks concerned, and the convenience and needs of the communities to be served.
Under the BHC Act as interpreted by the Federal Reserve Board and the courts,
the Federal Reserve Board may deny any application if it determines that the
financial or managerial resources of the acquiring bank holding company are
47
<PAGE>
inadequate. The acquisition by UJB of 5% or more of Bancorp's voting stock
is subject to the same approval. The BHC Act provides that a transaction
approved by the Federal Reserve Board may not be consummated for 30 days after
such approval or, if certain conditions are met, a shorter period, but in no
event less than 15 calendar days after the date of approval. During such period,
the Justice Department may commence legal action challenging the transaction
under the antitrust laws. If, however, the Justice Department does not commence
legal action during the specified waiting period, it may not challenge the
transaction thereafter except in an action commenced under Section 2 of the
Sherman Antitrust Act. The BHC Act provides for the publication of notice and
the opportunity for administrative hearings relating to the application for
approval of the Merger and authorizes the Federal Reserve Board to permit
interested parties to intervene in the proceedings. If an interested party is
permitted to intervene, such intervention could substantially delay the
regulatory approval required for consummation of the Merger. Satisfactory
financial condition, particularly with regard to capital adequacy, and
satisfactory Community Reinvestment Act ratings are generally prerequisites to
obtaining Federal Reserve Board approval to make acquisitions. All of UJB's
subsidiary banks are currently rated "satisfactory" or better under the
Community Reinvestment Act.
An application respecting the Merger has been filed by UJB with, and has
been accepted for processing by, the Federal Reserve Board.
The indirect acquisition by UJB of 100% of the capital stock of NJSB by
virtue of UJB's acquisition of 100% of the capital stock of, and merger with,
Bancorp is subject to the approval of the New Jersey Commissioner of Banking
under the New Jersey Savings Bank Holding Companies Act ("New Jersey Savings
Bank Act"). In determining whether to approve the direct or indirect acquisition
of shares of a capital stock savings bank, the New Jersey Commissioner of
Banking is required by the New Jersey Savings Bank Act to consider:
(1) With respect to the acquiror: the financial condition and the
resources of the acquiror; the competence, character, and banking
experience of the acquiror, including the acquiror's record of compliance
with laws and regulations; whether the acquiror has (i) employed any
device, scheme or artifice to defraud; or (ii) obtained or will obtain any
money or property by means of any untrue statement of a material fact or
any omission of a material fact; or (iii) engaged in any act, transaction,
practice or course of business that operates or would operate as a fraud or
deceit upon the capital stock savings bank, the shareholders of the capital
stock savings bank, the depositors thereof, or the public at large; and
(iv) the acquiror's plans and intentions with respect to the operation of
the capital stock savings bank; and
(2) With respect to the capital stock savings bank: (i) the financial
condition and prospects of the capital stock savings bank, which shall
include consideration as to the sufficiency of current or projected capital
positions, as well as the level of indebtedness of the capital stock
savings bank before and after the acquisition; (ii) the convenience and
needs of the depositors and the communities served by the capital stock
savings bank; and (iii) the effect of the proposed acquisition on the
safety and soundness of the capital stock savings bank.
The New Jersey Savings Bank Act provides that the New Jersey Commissioner
of Banking may not approve any acquisition of 25% or more of the capital stock
of a capital stock savings bank if approval of the application would result in a
person owning more shares than permitted by the charter or bylaws of the capital
stock savings bank. The Certificate of Incorporation of NJSB formerly contained
such a provision, which limited ownership of its capital stock by any one person
to a specified percentage. On February 6, 1995, the New Jersey Commissioner of
Banking approved and filed the Certificate of Amendment submitted by NJSB
deleting that provision from its Certificate of Incorporation.
The New Jersey Savings Bank Act provides for the publication of notice and,
at the discretion of the New Jersey Commissioner of Banking, for an
administrative hearing relating to the application for approval. Regulations of
the New Jersey Commissioner of Banking permit objecting parties to file written
objections and present the objections orally at the administrative hearing, if
held. Neither the New Jersey Savings Bank Act nor regulations of the New Jersey
Commissioner of Banking stipulate a period within which the New Jersey
Commissioner of Banking must act upon an acquiror's application.
The acquisition by UJB of 25% or more of Bancorp's capital stock is subject
to the same approval by the New Jersey Commissioner of Banking.
Based on current precedents, the managements of UJB and Bancorp anticipate
that the Merger will be approved by the New Jersey Commissioner of Banking and
by the Federal Reserve Board and believe it is not subject to challenge by the
Justice Department under the antitrust laws. However, there is no assurance that
the New Jersey Commissioner of Banking, the Federal Reserve Board or the Justice
Department will not challenge the Merger or that any approval by the New Jersey
Commissioner of Banking or the Federal Reserve Board will not contain conditions
unacceptable to UJB or Bancorp or both. Bancorp shareholders should be aware
that regulatory approvals of the Merger may be based upon different
considerations than those that would be important to such shareholders in
determining whether or not to approve the Merger. Any such approvals should in
no event be construed by a Bancorp shareholder as a recommendation by any
regulatory agency with respect to the Merger.
An application respecting the Merger has been filed by UJB with the New
Jersey Commissioner of Banking.
48
<PAGE>
Conditions to the Merger; Termination
The obligations of both parties to consummate the Merger are subject to the
satisfaction of certain net worth and other customary conditions described in
the Merger Agreement. Any of such conditions may be waived by the party for
whose benefit the condition was included.
Either party may terminate the Merger Agreement if (1) the Bancorp
Shareholders fail to approve the Merger Agreement by the requisite vote, (2) the
number of shares of Bancorp Stock for which Bancorp has received a written
objection to the Merger, at or before the Annual Meeting, exceeds 30% of the
outstanding shares of Bancorp Stock, (3) the other party materially breaches a
warranty, representation or covenant and such breach is not cured or capable of
being cured within 30 days of the giving of written notice thereof, (4) a
requisite regulatory approval is not received or (5) for any other reason the
Merger has not been closed by October 31, 1995. In addition, the parties may
terminate the Merger Agreement at any time by mutual agreement.
Expenses
In the event that the Merger Agreement is terminated by either party, each
party shall be mutually released and discharged from liability to the other
party or to any third party hereunder, and no party shall be liable to any other
party for any costs or expenses incurred in connection with the Merger
Agreement, except that the expenses incurred in connection with the printing of
this Proxy Statement-Prospectus and the Registration Statement and the filing
fees with the Commission, the New Jersey Department of Banking and the NYSE
shall be borne equally by Bancorp and UJB. Notwithstanding the foregoing, should
either party terminate the Merger Agreement because the other party has
materially breached a warranty, representation or covenant or because the other
party has not met its conditions to Closing, then the first party shall be
reimbursed by the second party for the first party's out-of-pocket expenses
reasonably incurred in connection with the Merger Agreement, including counsel
fees, printing fees and filing fees, but excluding any brokers', finders' or
investment bankers' fees.
UJB FINANCIAL CORP.
Description of Business
UJB commenced operations as a New Jersey corporation on October 1, 1970. As
a bank holding company registered under the BHC Act, UJB owns two bank
subsidiaries and nine active non-bank subsidiaries. At December 31, 1994, UJB
had total consolidated assets of $15.4 billion on the basis of which it ranked
as the third largest New Jersey bank holding company.
The bank subsidiaries engage in a general banking business. United Jersey
Bank is UJB's largest bank subsidiary, accounting for approximately 81.6% of
UJB's total consolidated assets at December 31, 1994. UJB's non-bank
subsidiaries engage primarily in discount brokerage, venture capital investment,
commercial finance lending, lease financing, and reinsuring credit life and
disability insurance policies related to consumer loans made by the bank
subsidiaries.
The bank subsidiaries operated 270 banking offices located in major trade
centers and suburban areas in New Jersey and Pennsylvania as of December 31,
1994. The following table lists, as of December 31, 1994, each bank subsidiary,
the location in New Jersey or Pennsylvania of its principal office, the number
of its banking offices and, in thousands of dollars, its total assets and
deposits.
<TABLE>
<CAPTION>
Location No. of
of Principal Banking Total Total
Offices Offices Assets(1) Deposits(1)
------------ ------- --------- -----------
<S> <C> <C> <C> <C>
United Jersey Bank(2)(4)... Hackensack, NJ 197 $12,582,814 $10,442,607
First Valley Bank(3) ...... Bethlehem, PA 73 2,795,497 2,106,433
<FN>
- ------------
(1) Not adjusted to exclude interbank deposits or other transactions among the
subsidiaries.
(2) State bank, a member of the Federal Reserve System ("state member bank").
(3) State bank, not a member of the Federal Reserve System.
(4) Restated to reflect the merger of Palisade Savings Bank, F.S.B., on February
17, 1995.
</FN>
</TABLE>
UJB is a legal entity separate and distinct from its subsidiaries. There
are various legal limitations on the extent to which a bank subsidiary may
finance or otherwise supply funds to UJB or its non-bank subsidiaries. Under
federal
49
<PAGE>
law, no bank subsidiary may, subject to certain limited exceptions, make loans
or extensions of credit to, or investments in the securities of, UJB or its
non-bank subsidiaries or take their securities as collateral for loans to any
borrower. Each bank subsidiary is also subject to collateral security
requirements for any loans or extensions of credit permitted by such exceptions.
In addition, certain bank regulatory limitations exist on the availability of
subsidiary bank undistributed net assets for the payment of dividends to UJB
without the prior approval of the bank regulatory authorities. The Federal
Reserve Act, which affects UJB's one state member bank, restricts the payment of
dividends in any calendar year to the net profit of the current year combined
with retained net profits of the preceding two years. Both banks, as
state-chartered banks, may each declare a dividend only if, after payment
thereof, its capital would be unimpaired and its remaining surplus would equal
50 percent of its capital (New Jersey) or 100 percent of its capital
(Pennsylvania). At December 31, 1994, the total undistributed net assets of the
subsidiary banks were $1,079,115,000 of which $199,405,000 was available under
the most restrictive limitations for the payment of dividends to UJB.
Recent Developments
UJB completed its restructuring along core lines of business by merging its
three Pennsylvania-headquarted banks into a single bank, First Valley Bank,
during the first quarter of 1994 and by merging its three New Jersey-headquarted
banks also into a single bank, United Jersey Bank, during the third quarter of
1994.
On July 1, 1994, UJB completed its acquisition of VSB Bancorp, Inc., a New
Jersey-headquarted bank holding company, by means of a merger pursuant to
which it issued 2,628,912 shares of UJB Stock and acquired approximately $379
million in assets.
On September 19, 1994, UJB completed its acquisition of Palisade Savings
Bank, F.S.B., a federally chartered stock savings bank, in a stock purchase
transaction pursuant to which it acquired approximately $324 million in assets.
On February 15, 1995, the UJB Board increased the quarterly dividend of UJB
to $.29 a share from $.26 per share, for an annual rate of $1.16 per share,
representing a 81.3% increase in the annual dividend rate since March 1993.
DESCRIPTION OF UJB CAPITAL STOCK
UJB is presently authorized to issue 130,000,000 shares of UJB Stock, par
value $1.20 per share, and 4,000,000 shares of Preferred Stock, without par
value ("UJB Preferred Stock"). As of December 31, 1994, there were 55,005,307
shares of UJB Stock and 600,166 shares of UJB Preferred Stock, Series B ("Series
B Preferred Stock") outstanding. Pursuant to New Jersey law, the UJB Board has
authority to set the terms and conditions of the authorized but unissued UJB
Preferred Stock. UJB may issue any authorized UJB Stock and UJB Preferred Stock
without further shareholder vote, unless required for a particular transaction
by applicable law or stock exchange rules, including rules of the NYSE, on which
the UJB Stock and the Series B Preferred Stock are presently listed. The
issuance of additional UJB Stock or UJB Preferred Stock, including UJB Preferred
Stock that might be convertible into UJB Stock, may, among other things, affect
the earnings per share applicable to existing UJB Stock and the equity and
voting rights of existing holders of UJB Stock.
Common Stock
The rights of holders of UJB Stock are subject to the preferences of
holders of the Series B Preferred Stock described below and the preferences as
to dividends and liquidation rights and other prior rights, if any, of any other
class or series of UJB Preferred Stock that may be issued. The holders of UJB
Stock are entitled to one vote for each share with respect to all matters voted
upon by shareholders, including the election of directors, and are entitled to
receive dividends when, as and if declared by the UJB Board out of funds of UJB
legally available therefor. Shares of UJB Stock do not have cumulative voting
rights; accordingly, at any annual meeting of UJB shareholders (or at any
special meeting of shareholders where an election of directors is conducted) the
holders of 50 percent plus 1 of the shares presented at the annual meeting
(provided a quorum is present) can fill all positions on the UJB Board that are
up for election at such annual meeting if they so choose and, in such event, the
holders of the remaining less than 50 percent of the shares will not be able to
fill any of such positions. UJB has a classified Board of Directors, under which
approximately one-third of the directors are elected each year. In the event of
the liquidation of UJB, holders of UJB Stock are entitled to share pro rata in
the distribution of UJB's assets available for such purpose. All shares of UJB
Stock are fully paid and nonassessable. No preemptive rights attach to the
ownership of UJB Stock and no personal
50
<PAGE>
liability is imposed on the holders thereof by reason of the ownership of such
shares. First Chicago Trust Company of New York is the transfer agent, dividend
disbursing agent and registrar for the UJB Stock. United Jersey Bank is the
co-transfer agent.
Series B Preferred Stock
The Series B Preferred Stock is entitled to cumulative dividends that are
payable quarterly on February 1, May 1, August 1 and November 1 of each year.
For each quarterly period, the dividend rate will be determined in advance of
such period, and will be 1.5 percent less than the highest of the 3-month U.S.
Treasury Bill Rate, the Ten Year Constant Maturity Rate and the Thirty Year
Constant Maturity Rate, which are average yields on certain U.S. Treasury fixed
rate securities, as published by the Federal Reserve Board. However, the
dividend rate for any dividend period will not be less than 6 percent per annum
nor greater than 11 percent per annum. The Series B Preferred Stock is
redeemable at the option of UJB, in whole or in part, on or after May 1, 1992
and prior to May 1, 1995 at a redemption price of $51.50 per share and,
thereafter, at $50 per share, in each case plus accrued and unpaid dividends.
Holders of Series B Preferred Stock have the right to vote as a class on certain
amendments to the Restated Certificate of Incorporation of UJB that may affect
the Series B Preferred Stock and to elect two directors in the event of a
failure to pay full cumulative dividends for six quarters. They have no other
voting rights. The Series B Preferred Stock is not convertible into shares of
UJB Stock and has no preemptive rights. The Series B Preferred Stock is not
subject to any sinking fund or other repurchase or retirement obligation of UJB.
First Chicago Trust Company of New York is the transfer agent, dividend
disbursing agent and registrar for shares of the Series B Preferred Stock.
Shareholder Rights Plan
In August 1989, UJB adopted a shareholder rights plan ("Rights Plan"),
under which preferred stock purchase rights ("Rights") attached to UJB Stock
outstanding as of the close of business on August 28, 1989. Holders of shares of
UJB Stock issued subsequent to that date receive the Rights with their shares.
Except as indicated below, each Right entitles the registered holder to purchase
from UJB one one-hundredth of a share of a new series of UJB Preferred Stock,
designated the Series R Preferred Stock ("Series R Preferred Stock"). The Rights
expire on August 16, 1999, and are subject to redemption and amendment in
certain circumstances. The Rights trade automatically with shares of UJB Stock
and become exercisable only under certain circumstances as described below.
In general, the Rights will become exercisable upon the earlier to occur (a
"Distribution Date") of the following: (1) ten days following a public
announcement that a person or group has acquired beneficial ownership of 15% or
more of the UJB Stock outstanding at that time or voting securities of UJB
representing 15% or more of the total voting power of UJB (such person or group
becoming an "Acquiring Person") or (2) ten business days (or such later date as
the UJB Board may determine) after the commencement of a tender offer or
exchange offer that would result in a person or group beneficially owning 30% or
more of the outstanding UJB Stock or voting securities representing 30% or more
of the total voting power of UJB.
Generally, in the event a Distribution Date occurs by virtue of a person or
group becoming an Acquiring Person (other than pursuant to an offer for all
outstanding shares of UJB Stock and other voting securities that the UJB Board
determines to be fair to shareholders and otherwise in the best interests of
UJB), each Right, other than Rights owned by the Acquiring Person, will
thereafter entitle the holder to receive, upon exercise of the Right, Series R
Preferred Stock having a value equal to two times the exercise price of the
Right.
In the event that a Distribution Date occurs (under either of the
circumstances described above) and UJB is acquired in a merger or other business
combination, or more than 50% of UJB's assets or earning power is sold or
transferred, each Right will thereafter entitle the holder thereof to receive,
upon the exercise of the Right, common stock of the acquiror having a value
equal to two times the exercise price of the Right.
The foregoing description of the Rights Plan does not purport to be
complete and is qualified in its entirety by reference to the terms of the
Rights Plan, which is more fully described in UJB's Registration Statement on
Form 8-A filed August 28, 1989.
51
<PAGE>
BANCORP NEW JERSEY, INC.
Description of Business
Bancorp, a Delaware corporation, is a bank holding company formed on June
30, 1988. Bancorp's principal business activity consists of owning and operating
NJSB. NJSB is a New Jersey-chartered capital stock savings bank, the accounts of
which are insured by the Federal Deposit Insurance Corporation ("FDIC"). NJSB
began operations in 1871 as a mutual savings bank, the "Somerville Dime Savings
Bank." In 1924, it changed its name to the "Somerville Savings Bank" and in 1972
became "New Jersey Savings Bank." On August 4, 1987, NJSB converted from a
mutual to a capital stock savings bank.
NJSB's principal business consists of attracting deposits from the general
public and investing these deposits, together with funds from ongoing
operations, in the origination of mortgage, commercial and consumer loans. NJSB
also maintains a significant portion of its funds in investment securities,
primarily mortgage-backed securities, U.S. Government and agency obligations,
Federal funds sold and short-term securities purchased under agreements to
resell. A significant source of NJSB's income is interest and fee income from
lending activities. NJSB's principal lending activity is the origination of
conventional one-to-four family residential, construction and other real estate
mortgage loans. NJSB also is engaged in general commercial and consumer lending
activities. In addition to interest earned on loans and investments, NJSB
receives fees for deposit services, loan originations, loan commitments,
modifications, late payments and miscellaneous services.
NJSB maintains automated teller machines ("ATMs") at its principal office
in Somerville and at six branch offices and participates in the regional "MAC"
and nationwide "PLUS" ATM networks. NJSB considers its primary market area for
deposit taking to be Somerset, Hunterdon and Mercer counties, and adjacent
portions of Union, Morris, Middlesex and Warren counties. While NJSB's loan
market extends throughout New Jersey, it originates the majority of its loans in
Somerset, Hunterdon and Mercer counties.
At December 31, 1994, Bancorp had total consolidated assets of $480.4
million, total deposits of $420.3 million and total shareholders' equity of
$50.9 million.
DESCRIPTION OF BANCORP CAPITAL STOCK
Bancorp is authorized to issue 8,000,000 shares of Bancorp Stock having a
par value of $.01 per share and 2,000,000 shares of Preferred Stock having a par
value of $.01 per share ("Bancorp Preferred Stock"). The Bancorp Stock is not an
account of an insurable type, and is not insured by the FDIC. As of the Record
Date, Bancorp had 2,103,270 shares of Bancorp Stock outstanding and had no
shares of Bancorp Preferred Stock outstanding.
Common Stock
Dividends. Bancorp is subject to the requirements of Delaware law, which
generally limit dividends to a corporation's surplus or, if there is no surplus,
to its net profits for the current and/or immediately preceding fiscal year. The
holders of Bancorp Stock are entitled to receive and share equally in such
dividends as may be declared by the Bancorp Board out of funds legally available
therefor.
Voting Rights. The holders of Bancorp Stock possess exclusive voting
rights. They elect the Bancorp Board and act on such other matters as are
required to be presented to them under Delaware law or as are otherwise
presented to them by the Bancorp Board. Each holder of Bancorp Stock is entitled
to one vote per share (excepted as noted below), but does not have any right to
cumulate votes in the election of directors. Certain matters require at least a
two-thirds (80% with respect to Bancorp's fair price provision) shareholder
vote. Directors of Bancorp are elected by a plurality of votes cast; the Bancorp
Board is divided into three classes, with approximately one-third of the Bancorp
Board elected at each annual meeting of shareholders.
Preemptive Rights. Holders of Bancorp Stock are not entitled to preemptive
rights with respect to any shares that may be issued.
Preferred Stock
The Bancorp Board is authorized to approve the issuance of series of
Bancorp Preferred Stock without the approval of Bancorp's shareholders. The
rights, qualifications, limitations and restrictions on each such series of
Bancorp Preferred Stock issued may be determined by the Bancorp Board at the
time of issuance and may include,
52
<PAGE>
among other things, redemption rights, stated or participating dividends,
special voting rights and convertibility to Bancorp Stock. Bancorp Preferred
Stock may rank prior to Bancorp Stock as to dividend rights, liquidation
preferences, or both. Such Bancorp Preferred Stock may have voting and
conversion rights that could adversely affect the voting power of the holders of
the Bancorp Stock.
The Bancorp Board has already created one series of Bancorp Preferred
Stock, Series A Preferred Stock. The terms of the Series A Preferred Stock are
described under "THE MERGER--Differences in Shareholders' Rights--Comparison of
Certificates of Incorporation and By-Laws--Bancorp--Shareholder Rights Plan."
Shareholder Rights Plan
In December 1990, Bancorp adopted a shareholder rights plan ("Bancorp
Rights Plan"), under which preferred stock purchase rights ("Bancorp Rights")
attached to Bancorp Stock outstanding as of the close of business on December
31, 1990. Holders of shares of Bancorp Stock issued subsequent to that date
receive the Bancorp Rights with their shares. Except as indicated below, each
Bancorp Right entitles the registered holder to purchase from Bancorp one
one-hundredth of a share of a new series of Bancorp Preferred Stock, designated
the Series A Preferred Stock ("Series A Preferred Stock"). The Bancorp Rights
expire on December 26, 2000, and are subject to redemption and amendment in
certain circumstances. The Bancorp Rights trade automatically with shares of
Bancorp Stock and become exercisable only under certain circumstances as
described below.
In general, the Bancorp Rights will become exercisable upon the earlier to
occur (a "Bancorp Distribution Date") of the following: (1) ten business days
(or such later date as the Bancorp Board may determine) after a person or group
has acquired, obtained the right to acquire, or announced a tender offer or
exchange offer to acquire, beneficial ownership of 15% or more of the total
voting power of Bancorp (such person or group becoming a "Bancorp Acquiring
Person") or (2) ten business days (or such later date as the Bancorp Board may
determine) after a person or group has acquired, or obtained the right to
acquire, beneficial ownership or 10% or more of the total voting power of
Bancorp and the Bancorp Board has determined that such person or group is an
adverse person. Because the Bancorp Board has approved the terms of the Merger
Agreement, no Bancorp Distribution Date has occurred in connection with the
Merger Agreement or will occur in connection with the Merger.
Generally, in the event a Bancorp Distribution Date occurs by virtue of a
person or group becoming a Bancorp Acquiring Person (other than pursuant to an
offer for all outstanding shares of Bancorp Stock and other voting securities
that the Bancorp Board determines to be fair to shareholders and otherwise in
the best interests of Bancorp), each Bancorp Right will thereafter entitle the
holder to receive, upon exercise of the Bancorp Right, Series A Preferred Stock
having a value equal to two times the exercise price of the Bancorp Right.
In the event that a Bancorp Distribution Date occurs (under either of the
circumstances described above) and Bancorp is acquired in a merger or other
business combination, or more than 50% of Bancorp's assets or earning power is
sold or transferred, each Bancorp Right will thereafter entitle the holder
thereof to receive, upon the exercise of the Bancorp Right, common stock of the
acquiror having a value equal to two times the exercise price of the Bancorp
Right.
The foregoing description of the Bancorp Rights Plan does not purport to be
complete and is qualified in its entirety by reference to the terms of the
Bancorp Rights Plan, which is more fully described in Bancorp's Registration
Statement on Form 8-A filed January 7, 1991.
PROPOSAL II--ELECTION OF DIRECTORS
The term of office of directors Gerald A. Johnson, Theodore K. Sargent and
Richard E. Schmelz will expire at the Annual Meeting. The Bancorp Board
unanimously has nominated Messrs. Johnson, Sargent and Schmelz for re-election
as members of the Bancorp Board, each for a term expiring in 1998 or until the
consummation of the Merger. There are no arrangements or understandings between
Bancorp and any person pursuant to which such person has been elected as a
director.
If any nominee becomes unavailable for any reason, shares represented by
proxy will be voted for the person, if any, who is designated by the Bancorp
Board to replace the nominee or to fill any other vacancy on the Bancorp Board.
The Bancorp Board has no reason to believe that any of the nominees will be
unavailable. Each nominee has consented to be named and has indicated his or her
intent to serve if elected. No nominations for directors except those made by
the Bancorp Board will be voted upon at the Annual Meeting unless other
nominations made by shareholders are made in writing and delivered to the
Secretary of Bancorp at least 60 days prior to the date of the Annual Meeting.
53
<PAGE>
THE BANCORP BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THE RE-ELECTION
OF MESSRS. JOHNSON, SARGENT AND SCHMELZ AS DIRECTORS OF BANCORP.
Information Concerning the Bancorp Board
The Bancorp Board is classified into three classes, each of which consists
of three members. The classes are elected on a staggered basis. Each director
serves for a three-year term and until his or her successor is duly elected and
qualified. Information concerning the members of the Bancorp Board appears
below. All directors of Bancorp also serve on the Board of Directors of NJSB
("NJSB Board"). All members of the Bancorp Board have served as directors since
the inception of Bancorp in 1988, except directors Adler and Johnson, who have
served since 1993. Dates indicated include service as a director or manager of
NJSB prior to the formation of Bancorp, where applicable. Unless otherwise
stated, current positions cited in the biographical information have been held
for at least the past five years.
<TABLE>
<CAPTION>
Director Term
Name Position Since Ends
---- -------- -------- ----
<S> <C> <C> <C>
Beatrice D'Agostino ................... Chairman, President, Chief 1976 1996
Executive Officer and Director
Irving Schwartz ....................... Vice Chairman and Director 1959 1996
Bernard Adler ......................... Director 1993 1997
Dr. Norman A. Gathany ................. Director 1973 1996
Joseph A. Hoffman ..................... Director 1986 1997
Louis A. Imfeld ....................... Director 1971 1997
Gerald A. Johnson (1) ................. Director 1993 1995
Theodore K. Sargent (1) ............... Director 1985 1995
Richard E. Schmelz (1) ................ Director 1973 1995
<FN>
- -----------------
(1) Nominee for Director.
</FN>
</TABLE>
Beatrice D'Agostino, 56, is Chairman of the Board of Directors, President
and Chief Executive Officer of Bancorp, positions she has held since 1991. Prior
to that, she was President and Chief Executive Officer since Bancorp's
inception. Mrs. D'Agostino has been affiliated with NJSB since 1962, and has
been its President and Chief Executive Officer since 1976 and its Chairman since
1991. Mrs. D'Agostino also is President, Chief Executive Officer and a director
of New Jersey Affiliated Financial Services, Inc., NJSB's wholly owned
subsidiary, and NJS Realty Corporation, High Acre Realty Corporation and NJS
Advisory Services, Inc., subsidiaries of New Jersey Affiliated Financial
Services, Inc. In 1994, she served as President of the Thrift Institutions
Advisory Council of the Federal Reserve Board, and has been a member of the
Council and of the State of New Jersey Department of Banking Advisory Board for
the past three years.
Irving Schwartz, 84, owned Schwartz Furniture, a retail furniture business
in Somerville, until his retirement in 1980. He became Vice Chairman of Bancorp
and NJSB in 1993; previously, he was Chairman of Bancorp from inception until
1991 and Chairman of NJSB from 1972 through 1991. He also is a director of New
Jersey Affiliated Financial Services, Inc., and of its three subsidiaries, NJS
Realty Corporation, High Acre Realty Corporation, and NJS Advisory Services,
Inc.
Bernard Adler, 57, is a real estate developer involved in the development,
ownership and management of residential, commercial and office properties. He is
a principal in Troy Hills Village, Parsippany, New Jersey, Readington
Associates, JMS Associates and JMSM Limited, each located in South Plainfield,
New Jersey, and B&A Construction Company.
Dr. Norman A. Gathany, 77, an educational consultant, served as
Superintendent of Schools for Hunterdon County from 1966 until 1981, when he
retired from that position.
Joseph A. Hoffman, 61, an attorney, is of counsel to the firm of Mudge,
Rose, Guthrie, Alexander and Ferdon. From 1989 through 1991, he was a partner in
the firm of Hannoch Weisman. Prior thereto, he was Vice President and Assistant
General Counsel of AT&T, a telecommunications service and equipment company.
54
<PAGE>
Louis A. Imfeld, 72, is an attorney, presently of counsel to the firm of
Mauro, Savo, Camerino & Grant. Prior thereto, Mr. Imfeld was of counsel to
Ozzard Wharton and a partner in Wharton, Stewart and Davis, two predecessor
firms. He also is a director of New Jersey Affiliated Financial Services, Inc.,
and of its three subsidiaries, NJS Realty Corporation, High Acre Realty
Corporation and NJS Advisory Services, Inc.
Gerald A. Johnson, 46, a Certified Public Accountant, is Executive Vice
President and Treasurer of Somerset Medical Center, Somerville, New Jersey.
Prior to joining the Medical Center in 1990, Mr. Johnson was an Executive Vice
President and Director of the First National Bank of Central Jersey and Senior
Vice President of Ultra Bancorporation.
Theodore K. Sargent, 66, is President and Chief Executive Officer of the
Sargent Company, a firm engaged in the design and sale of industrial filtration
systems.
Richard E. Schmelz, 69, is Vice President of Tee Vee Moneysaver, an
advertising publication in Somerville. Prior to his retirement in 1972, Mr.
Schmelz was President of Nolan Agency, Inc., an independent insurance agency
located in Somerville. In 1989, he retired from the United States Army after
over 20 years of service.
Compensation and Committees of Directors
Each non-employee director of Bancorp receives an annual retainer of
$5,000, plus $350 per Board meeting attended, $500 for attending planning
conferences, and $200 per Committee meeting attended. One-half of the regular
Board meeting fee is, however, paid for attending routine Board meetings held in
conjunction with NJSB Board meetings. In addition, in 1994, Director Hoffman
received $7,500 for services as Chairman of the Merger & Acquisition Committee
(i.e., M&A Committee), Director Johnson received $6,250 for services as Vice
Chairman of the M&A Committee and Directors Adler, Imfeld and Schwartz received
$5,000 each for services as members of the M&A Committee. Each such person will
receive the same amount in 1995 for service as a Chairman, Vice Chairman or
member of the M&A Committee.
On the date of each annual meeting of shareholders of Bancorp, each
non-employee director of Bancorp who has completed three or more years of
service on the Bancorp Board also receives a non-qualified option to purchase
500 shares of Bancorp Stock, the per share exercise price of which is the fair
market value of Bancorp Stock on the date of grant of the option. If the Merger
is not consummated, directors Adler and Johnson will also receive a
non-qualified option to purchase 6,000 shares of Bancorp Stock on the third
anniversary of the date he became a director of Bancorp. After he receives the
option to purchase 6,000 shares, he is then also eligible to receive the annual
grant of an option to purchase 500 shares. The per share exercise price of these
options is also the fair market value of Bancorp Stock on the date of grant of
the option.
During 1994, the Bancorp Board held 19 meetings. No member of the Bancorp
Board attended fewer than seventy-five percent (75%), in the aggregate, of the
Board meetings and meetings of the committees of the Bancorp Board on which he
or she served during 1994.
During 1994, four committees of the Bancorp Board functioned. The Executive
Committee, which consists of Mr. Schwartz (Chairman), Mrs. D'Agostino and
Messrs. Hoffman, Imfeld and Johnson, exercises the authority of the Bancorp
Board when the Bancorp Board is not in session, subject to Bancorp's bylaws and
to the extent provided by law. This committee met 16 times in 1994.
The Executive Compensation Committee, consisting of Mr. Imfeld (Chairman),
Messrs. Hoffman and Schwartz and Dr. Gathany, meets as required. The committee
met seven times in 1994 to review executive compensation matters.
The Audit Committee of the Board, which consists of Mr. Hoffman (Chairman),
Dr. Gathany (Vice Chairman) and Messrs. Johnson, Sargent and Schmelz, met four
times in 1994 to review and discuss reports prepared by NJSB's internal audit
department and to review reports of examination of Bancorp and NJSB by state and
federal regulatory agencies. The committee also reviews the independent
auditors' scope of audit and accepts the engagement letter.
The M&A Committee, consisting of Mr. Hoffman (Chairman), Mrs. D'Agostino
and Messrs. Adler, Imfeld, Johnson and Schwartz, meets as required. The
committee met seven times during 1994 in connection with Bancorp's plans to
enhance shareholder value.
In addition, each director of Bancorp served as a director of NJSB and on
one or more committees of the NJSB Board. For such service as a director of
NJSB, each non-employee director receives an annual retainer of $7,500 plus $350
per Board meeting attended and $200 per committee meeting attended.
55
<PAGE>
The Bancorp Board does not have a separate Nominating Committee.
Nominations for election of directors are made by the entire Bancorp Board.
In 1992, Bancorp adopted the Emeritus Program. Directors who have served
the lesser of 3 full terms or 10 years as a director of Bancorp or NJSB,
excluding present or retired employees, are eligible to be appointed Directors
Emeritus by the Bancorp Board. The initial term is 3 years, except a director
with more than 20 years of service shall be appointed to an initial term of 5
years. Each Director Emeritus serves in an advisory capacity only, and cannot
vote on any issue before the Bancorp Board or bind or act for Bancorp or NJSB in
any capacity. During the term of service, a Director Emeritus receives an annual
fee of between 50% and 80% of the retainer then being paid to active
non-employee directors of Bancorp and NJSB, depending on the length of the
Director Emeritus's active service on the Board. In the event of a merger,
consolidation or sale of the assets of Bancorp, where Bancorp is not the
surviving entity, a Director Emeritus is entitled to immediate payment of all
fees for the then remaining balance of the current term. Each Director Emeritus
must execute a Confidentiality Agreement and agree to provide advice, counsel
and such other services as the Bancorp Board may reasonably request, consistent
with the status of the position and a time commitment consistent with
retirement. See "THE MERGER AGREEMENT--Interests of Certain Persons in the
Merger" for a description of certain payments UJB has agreed to make to certain
of the directors of Bancorp and NJSB under the Emeritus Program in the event the
Merger is consummated.
Executive Compensation and Other Information
Summary Compensation Table
The following information is furnished with respect to Bancorp's chief
executive officer and the four other most highly paid executive officers of
Bancorp whose annual salary and bonus exceeded $100,000 in 1994 ("Named
Executive Officers"). Except for director's fees and committee fees paid to Mrs.
D'Agostino by Bancorp prior to 1993, all compensation was paid by NJSB.
<TABLE>
<CAPTION>
Long Term
Annual Compensation Compen-
----------------------------------------- sation
Other -------------
Annual Awards All Other
Name and Principal Compen- ------------- Compen-
Position Year Salary($) Bonus($) sation($)(1) Options(#)(2) sation($)
------------------ ---- --------- -------- ------------ ------------- ---------
<S> <C> <C> <C> <C> <C> <C>
Beatrice D'Agostino ......... 1994 244,765 0 -- 0 16,784(3)(4)
Chairman, President and 1993 226,600 15,000 -- 0 17,782(3)
Chief Executive Officer 1992 216,925(5) 0 -- 15,000 68,538(3)(6)
Robert H. Hunt, Jr .......... 1994 122,602 0 -- 0 10,530(3)
Senior Executive Vice 1993 114,000 6,000 -- 0 9,872(3)
President and Secretary 1992 108,575 0 -- 7,500 9,290(3)
Russell G. Muter ............ 1994 123,969 0 -- 0 10,530(3)
Executive Vice President 1993 114,000 6,000 -- 0 9,872(3)
and Treasurer 1992 108,575 0 -- 7,500 9,290(3)
Robert J. DiTota ............ 1994 112,814 0 4,200(7) 0 8,928(3)
Senior Vice President 1993 98,650 5,000 4,200(7) 0 6,964(3)
of NJSB 1992 93,975 0 4,200(7) 3,750 6,537(3)
Daniel J. Matyola ........... 1994 111,399(8) 0 -- 0 7,504(3)
Senior Vice President and 1993 81,060 5,000 -- 0 6,041(3)
Corporate Counsel of NJSB 1992 76,100 0 -- 1,500 5,022(3)
<FN>
- -----------------
(1) The aggregate amount of perquisites and other personal benefits, securities
or property, not properly characterized as salary or bonus, did not exceed,
with respect to any named executive officer, the lesser of $50,000 or 10% of
the total annual salary and bonus reported in the table for that executive
officer.
(2) The exercise price of all options is the fair market value of the underlying
Bancorp Stock on the date of grant.
(3) Includes amounts contributed by NJSB to the officer's accounts in the ESOSP
for each named executive officer.
(4) Includes $2,692 accrued with respect to the Supplemental Executive
Retirement Trust.
(5) Includes $24,925 in retainers and Board and Committee fees paid by Bancorp
and NJSB for services as a director.
56
<PAGE>
(6) Includes $53,228 accrued with respect to the Executive Supplemental
Agreement, dated June 25, 1987 ("SERP"). The SERP was terminated by the
Employment Agreement dated as of January 1, 1993, which is described under
"Management Employment Contracts." The amounts accrued pursuant to the SERP
have been paid over into the Supplemental Executive Retirement Trust, which
was established in connection with the new employment agreement.
(7) Represents cash allowance for use of automobile.
(8) Includes $25,000 in supplemental compensation for the handling of certain
confidential matters for the Bancorp Board. Mr. Matyola will receive an
additional $25,000 in supplemental compensation during the first four months
of 1995.
</FN>
</TABLE>
Grants of Stock Options and Stock Appreciation Rights During Last Fiscal Year
There were no individual grants of stock options or stock appreciation
rights made in the fiscal year ended December 31, 1994 to any of the Named
Executive Officers.
Aggregated Exercises of Stock Options and Stock Appreciation Rights During
Last Fiscal Year and Values of Outstanding Stock Options and Stock
Appreciation Rights at Year End
The following Named Executive Officers exercised the following options
during the fiscal year ended December 31, 1994. The following table sets forth
the value of all unexercised stock options, and associated limited rights, held
by each Named Executive Officer. All options described in the following table
were granted in tandem with an equal number of limited rights, which are stock
appreciation rights that may be exercised only in the event of a change of
control. See "THE MERGER AGREEMENT--Bancorp Stock Option Plans." None of these
officers has been granted stock appreciation rights other than the limited
rights granted in tandem with their options.
Value of
Number of Unexercised
Unexercised In-the-Money
Options/SARs Options/SARs
Shares at 12/31/94(#) at 12/31/94($)
Acquired Value ------------- ----------------
on Exercise Realized Exercisable/ Exercisable/
Name (#) ($) Unexercisable Unexercisable(1)
---- ----------- -------- ------------- ----------------
Beatrice D'Agostino... 40,000 740,000 45,000/5,000 $836,875/80,000
Robert H. Hunt, Jr.... 0 0 42,500/2,500 788,906/40,000
Russell G. Muter ..... 0 0 42,500/2,500 788,906/40,000
Robert J. DiTota ..... 0 0 8,625/1,250 162,703/20,000
Daniel J. Matyola .... 0 0 1,000/500 16,000/8,000
- ------------
(1) Based on the closing sales price of Bancorp Stock of $29.50 at December 31,
1994, as reported by NASDAQ.
Pension Plan Table
NJSB maintains and funds a tax-qualified defined-benefit pension plan for
its employees. The pension plan is subject to the requirements of the Employee
Retirement Income Security Act of 1974, as amended, and the regulations of the
Treasury Department and the Department of Labor thereunder. All full-time
salaried employees age 21 or older who have completed as least one year of
service with NJSB are eligible to participate in the pension plan. The plan is
managed by Retirement System Group Inc.
Amount of Annual Retirement Benefit(1)
with Credited Service of:
Final Average -----------------------------------------
Annual Salary 15 years 20 years 25 years 30 years
- ------------- -------- -------- -------- --------
$100,000...... $ 25,001 $ 33,334 $ 41,668 $ 50,001
125,000...... 31,251 41,668 52,084 62,501
150,000...... 37,501 50,001 62,501 75,002
175,000...... 43,751 58,335 77,918 87,502
200,000...... 50,001 66,668 83,335 100,002
235,840...... 58,961 78,615 98,269 117,922
- ------------
(1) The maximum recognizable compensation under the pension plan in the plan
year ended September 30, 1994 was $235,840, and the maximum recognizable
compensation under the pension plan in the plan year ending
57
<PAGE>
September 30, 1995 is $150,000, subject to future adjustments by the
Secretary of the Treasury based on cost of living factors. Benefits accrued
as of September 30, 1994 are protected under the Code. The maximum annual
benefit payable under the pension plan for the plan year ending September
30, 1995 is $120,000. The amounts shown above assume that the maximum
recognizable compensation is increased by law over the remaining working
lives of the executive officers not presently eligible for retirement.
Benefits shown in the table do not reflect the Social Security offset.
The above table presents benefits under the pension plan assuming
retirement during 1994 at various levels of compensation and years of credited
service. At December 31, 1994, Beatrice D'Agostino, Robert H. Hunt, Jr., Russell
G. Muter, Robert J. DiTota and Daniel J. Matyola have 32 years, 11 months; 25
years, 3 months; 17 years, 2 months; 5 years, 5 months; and 3 years, 8 months of
credited service, respectively.
The pension plan provides for a normal retirement benefit at age 65 equal
to (i) one and two-thirds percent of the employee's average annual earnings,
multiplied by the number of years of service, not to exceed 30 years, reduced by
(ii) one and two-thirds percent of the primary Social Security benefit to which
the employee is entitled, multiplied by the number of years of service, not to
exceed 30 years. "Average Annual Earnings" is defined as average annual base
compensation (excluding overtime, bonus or any other special payments) during
the 36 consecutive calendar months (or such lesser number of months during which
the employee has been employed by NJSB) of highest earnings during the final 120
calendar months of employment (or such lesser number of months of employment).
For purposes of the pension plan, the annual compensation for each of the named
executive officers is as set forth in the salary column of the Summary
Compensation Table.
The pension plan also provides for an early retirement benefit at age 55 if
the employee has completed 20 or more years of service with NJSB. The early
retirement benefit is calculated in the same manner as the normal retirement
benefit except that the primary Social Security benefit is calculated on the
assumption that the employee's rate of basic compensation in effect on the date
of retirement is continued without change until age 65. Certain minimum normal
retirement benefits and early retirement benefits are provided for in the
pension plan. The pension plan further provides for a disability retirement
benefit in the event of disability of an employee prior to age 65. The
disability retirement benefit is calculated in the same manner as an early
retirement benefit commencing from the date of disability retirement.
Participants become fully vested in their accrued benefit upon completion of 5
years of service. In the absence of final regulations, the plan was tested for
nondiscrimination under the proposed IRS regulations, and the nondiscrimination
requirements were satisfied. The plan will continue to be monitored for
nondiscrimination as required.
Compensation Committee Interlocks and Insider Participation
During 1994, the members of the Executive Compensation Committee of the
Board were Louis A. Imfeld (Chairman), Norman A. Gathany, Joseph A. Hoffman and
Irving Schwartz. No member of the Committee was an officer or employee of
Bancorp or any of its subsidiaries during 1994. Mr. Imfeld is of counsel to
Mauro, Savo, Camarino & Grant and was of counsel to Ozzard Wharton, law firms
retained by Bancorp and NJSB during 1994. Bancorp and NJSB have currently
retained Mauro, Savo, Camarino & Grant. Mr. Schwartz served as President of NJSB
on two occasions prior to the inception of Bancorp, during brief vacancies in
the presidency of NJSB, as part of his duties as the then Chairman of the NJSB
Board and without any compensation beyond the normal Board fees and Committee
fees.
NJSB made loans to one director (who is not a member of the Executive
Compensation Committee) and one executive officer prior to the time such persons
became affiliated with NJSB and Bancorp. Each of these loans were made in the
ordinary course of business, were made on substantially the same terms,
including interest rates and collateral, as those prevailing at the time for
comparable transactions with other persons, and do not and did not involve more
than the normal risk of collectibility or present other unfavorable features.
Report of the Executive Compensation Committee on Executive Compensation
During 1994, the Executive Compensation Committee of the Bancorp Board
("Committee") had primary responsibility, subject to overall review and approval
by the full Board, for determining executive compensation policies and practices
and for generally relating the compensation policies of Bancorp to its success.
The Committee is comprised of four non-employee directors.
Executive Compensation Philosophy. The general philosophy of the Committee
is to align total compensation opportunities with Bancorp's and the executive's
performance and to select performance measures that closely relate
58
<PAGE>
compensation to long-term shareholder return, while at the same time providing
competitive levels of compensation opportunity in order to attract and retain
qualified executive personnel for Bancorp and NJSB. This philosophy is reflected
in Bancorp's executive compensation approach, which provides a major portion of
total compensation opportunity in three pay-for-performance programs: (1) merit
salary increases, (2) an annual bonus, and (3) long-term equity incentives.
Bancorp also provides other employee benefits comparable to those provided by
similar institutions.
Implementation. In order to promote the desired pay-for-performance
relationship, the Committee reviews:
(1) the salary, annual bonus and long-term incentive compensation
levels of Bancorp's executive officers;
(2) the levels of similar types of compensation received by executives
who hold comparable positions in a group of publicly-traded savings
institutions of similar asset size in the mid-Atlantic region ("Comparison
Group");
(3) the year-over-year financial performance of Bancorp, as measured
by the following key financial performance indicators: return on average
equity, return on average assets, net income growth, and earnings per share
growth; and
(4) the financial performance of Bancorp relative to the Comparison
Group and the NASDAQ Bank Index, measured with respect to total return to
shareholders.
The Committee based its decisions regarding the setting of 1994 salary,
bonus and long-term incentive award levels on the following three factors:
(1) actual compensation received by executives holding comparable
positions in the Comparison Group;
(2) Bancorp's overall performance, measured by the key financial
factors described above; and
(3) each individual executive officer's performance.
KPMG Peat Marwick LLP assists the Committee with this competitive market
analysis, and also advises the Committee on executive compensation program
design and implementation. The composition of the Comparison Group, which may be
adjusted based on industry developments, is recommended by KPMG Peat Marwick
LLP and approved by the Committee. The NASDAQ Bank Index used in the Stock
Performance Graph represents a national group of commercial banks and savings
institutions or their holding companies, and includes those institutions in the
Comparison Group.
In general, the decisions of the Committee for 1994 regarding adjustments
to the combination of (1) established base salary and (2) the three
pay-for-performance programs reflected competitive market trends as well as
Bancorp's overall financial performance.
Base Salary and Merit Salary Increases. The Committee approved a 4%
increase in base salary for the Chief Executive Officer and increases of less
than 4.5% for the other executive officers. Annual performance appraisals are
conducted for each executive, with emphasis given to the executive's
contribution to the success of Bancorp. Salary increases are based on individual
performance and are specific to each executive. The Chief Executive Officer's
employment contract requires a salary increase at least equal to the percent
increase in the Consumer Price Index ("CPI"). From December 1992 to December
1993, the increase in the CPI was 2.7%. The Committee determined that, given
overall Bancorp performance, individual performance and market trends, a 4%
salary increase for the Chief Executive Officer was appropriate. Therefore, the
contract provision requiring a minimum base salary increase was not a
significant factor in setting her 1994 salary increase.
Annual Incentive Compensation. For fiscal year 1994, the Committee adopted
a formula-based annual incentive plan for executive officers and other eligible
employees. Funding of the annual incentive awards is linked directly to
financial goals approved by the Committee and the Bancorp Board at the beginning
of the fiscal year. The performance measures used to determine actual incentive
payments were return on average assets and return on average equity. The policy
of the Committee requires that corporate earnings be sufficient to fund all
other essential expenditures, including shareholder dividends, prior to the
payment of annual incentive awards for executives. In fiscal year 1994, the
plan's performance goals were either met or exceeded. However, the change in
asset and liability management strategies and the rapid rise in interest rates
did have an effect on Bancorp's earnings capabilities. Payment of executive
bonuses would have reduced corporate earnings to slightly below projected
performance goal levels. Therefore, no bonuses were awarded under the annual
incentive plan to either the Chief Executive Officer or
59
<PAGE>
the other executive officers. One named executive officer did, however, receive
supplemental compensation outside of the annual incentive plan for the handling
of certain confidential matters for the Bancorp Board.
Long-Term Incentive Compensation. The awarding of options to purchase
Bancorp Stock is considered annually by the Committee. The purpose of these
awards is to link executive compensation more directly to long-term shareholder
returns. Options were last granted in 1992. Those options vest over a period of
three years to reinforce the long-term performance aspect of these awards. All
options have been granted at exercise prices equal to the fair market value of
the stock on the dates of grant. The Committee decided that additional options
should not be granted in 1994.
Deductibility of Compensation Paid in Excess of $1 Million. Section 162(m)
of the Code limits the ability of a public company, such as Bancorp, to deduct,
in 1994 and subsequent years, compensation paid to an executive officer who is
named in its "Summary Compensation Table" in excess of $1 million per year
unless certain conditions are met. The requirements vary depending on the type
of compensation paid. Under the transition rules as enumerated in the Treasury
regulations under Section 162(m) regarding stock option plans approved by
shareholders prior to December 20, 1993 in accordance with Commission Rule
16b-3(b), compensation paid pursuant to the 1991 Plan and the 1988 Program meets
the requirements of the Internal Revenue Service ("IRS") for deductibility. In
the event the Merger is not consummated, Bancorp will take steps so that
compensation paid under the 1991 Plan and the 1988 Program continues to comply
with the IRS' requirements for deductibility under Section 162(m).
EXECUTIVE COMPENSATION COMMITTEE
Louis A. Imfeld, Chairman
Norman A. Gathany
Joseph A. Hoffman
Irving Schwartz
60
<PAGE>
Stock Performance Graph
Provided below is a line graph comparing (1) the yearly percentage change
in cumulative total shareholder return on Bancorp Stock with (2) the yearly
cumulative total shareholder return on the stocks comprising the NASDAQ
Composite Index for U.S. Companies and (3) the yearly cumulative total
shareholder return on the stocks comprising the NASDAQ Bank Index. Each of the
cumulative total returns was computed assuming the reinvestment of dividends at
the frequency with which dividends were actually paid during the applicable
years, assuming an initial investment of $100 on December 31, 1989. Bancorp's
cumulative return was computed assuming the reinvestment of dividends as of the
end of the calendar quarter. Both the NASDAQ Composite Index and the NASDAQ Bank
Index contain companies of various sizes in all geographic regions of the United
States.
December 31, 1989-December 31, 1994
--GRAPHICAL REPRESENTATIONS--
<TABLE>
<CAPTION>
12/31/89 12/31/90 12/31/91 12/31/92 12/31/93 12/31/94
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Bancorp Stock ........... $ 100.00 $ 77.62 $ 110.48 $ 155.33 $ 233.33 $ 341.81
NASDAQ Composite Index... 100.00 84.92 136.26 158.58 180.93 176.92
NASDAQ Bank Index ....... 100.00 73.23 120.17 174.87 199.33 198.69
</TABLE>
Management Employment Contracts
Bancorp and NJSB entered into an employment contract, effective January 1,
1993, with Beatrice D'Agostino, Chairman, President and Chief Executive Officer,
which superseded Mrs. D'Agostino's prior Employment Agreement and SERP, both
dated June 25, 1987. Also effective January 1, 1993, NJSB entered into
employment contracts with four other executive officers, including Robert H.
Hunt, Jr., Senior Executive Vice President and Russell G. Muter, Executive Vice
President, which superseded the contracts with these four officers dated July 2,
1987. Effective April 29, 1994, NJSB entered into employment agreements with
Robert J. DiTota and Daniel J. Matyola. All of the new contracts were designed
to ensure the continued service of these executive officers.
61
<PAGE>
The new contract with Mrs. D'Agostino has a term of 36 months, which is
automatically extended each year thereafter for an additional year, unless
terminated as described below. The contract provides for a minimum base salary
of $226,600 and for annual increases in an amount not less than the percentage
increase in the cost of living for the preceding twelve month period, as
measured by the Consumer Price Index. The contracts with Messrs. Hunt and Muter
have terms of 24 months, and the contracts with Messrs. Matyola and DiTota have
terms of 12 months. Each contract (other than those with Messrs. DiTota and
Matyola) is automatically extended each year thereafter for an additional year,
at a minimum base salary of $114,000 for Mr. Hunt and Mr. Muter, unless
terminated as described below. Mr. DiTota's and Mr. Matyola's agreements do not
renew automatically. Mr. DiTota's base salary is $102,690 and Mr. Matyola's base
salary is $84,450. The contracts require Bancorp and NJSB to permit the officers
to continue to participate in all employee benefit programs for which they are
eligible pursuant to the terms of those programs. Mrs. D'Agostino's contract
requires Bancorp and NJSB to provide her with the use of an automobile and to
reimburse her for all initiation fees and dues associated with membership in any
professional, social, civic or service clubs approved by the Bancorp and NJSB
Boards.
The new contracts are terminable at the option of the employing parties or
the officer: (1) except under Mr. DiTota's and Mr. Matyola's contracts, upon one
year's notice that the contract will terminate at the end of the remaining term
of the contract; and (2) in the event of the disability of the officer, which
disability continues for a period of 12 consecutive calendar months, provided
that the officer shall not have resumed his or her duties during the 30-day
notice period for such termination. In the latter event, Mrs. D'Agostino's
contract provides that she will receive a disability benefit equal to 60% of her
base salary at the time of disability, reduced by any amounts paid to her under
any other disability program, other than Social Security, maintained by the
employers.
Mrs. D'Agostino may terminate her employment if she is reassigned by
Bancorp or NJSB, or any successor company, to a position of lesser rank or
status, or required to relocate outside of Somerset, Hunterdon, and Mercer
counties. She also may terminate employment if her base salary is reduced, if
Bancorp or NJSB breaches the contract, or if there is a "change of control," as
defined below. In the event she so terminates her employment, she is entitled to
receive a lump sum payment equal to the present value of 36 months (48 months
following a change of control) of future base salary payments (calculated at the
highest rate of base salary paid under the agreement). The contracts with Mr.
Hunt and Mr. Muter provide for a severance payment in the event (i) the officer
terminates his employment within two years following a "change of control," (ii)
NJSB terminates his employment within two years following a change of control,
(iii) the officer terminates his employment because of NJSB's material breach of
the contract, (iv) the officer's salary is reduced (other than pursuant to an
across-the-board reduction affecting all executives) or (v) the officer is
required to relocate outside of Somerset, Hunterdon and Mercer counties. The
lump sum severance payment is equal to the present value of 24 months of salary
payments for Mr. Hunt and Mr. Muter (36 months for Mr. Hunt and Mr. Muter in the
event of a termination described in clauses (i) or (ii) above), calculated at
the highest rate of base salary paid under the contract. All post-resignation or
post-termination payments to Mr. Hunt or Mr. Muter are limited so that they will
not constitute "excess parachute payments" as defined by Section 280G of the
Code.
Under the contracts, a "change of control" is deemed to have occurred, if
at any time during the period of employment of the executive, directly or
indirectly or in one or more series of transactions: (1) any person or group
(other than the ESOSP and other than Bancorp with respect to NJSB) has acquired:
(a) more than 20% of the outstanding common stock of NJSB or Bancorp, or
equivalent in voting power of any class or classes of outstanding securities of
NJSB or Bancorp ordinarily entitled to vote in elections of directors; (b)
irrevocable proxies representing more than 20% of any class of voting stock of
NJSB or Bancorp; (c) any combination of voting stock and irrevocable proxies
representing more than 20% of any class of voting stock of NJSB or Bancorp; or
(d) the ability to control in any manner the election of a majority of the
directors of NJSB or Bancorp; (2) any merger or consolidation of NJSB or
Bancorp into or with another entity has occurred in which NJSB or Bancorp is not
the surviving entity; (3) any transfer or sale of substantially all the assets
of NJSB or Bancorp has occurred; (4) any election has occurred of persons to the
Bancorp Board that causes a majority of the Bancorp Board to consist of persons
other than (i) persons who were members of the Bancorp Board on January 1, 1993,
and/or (ii) persons who were nominated for election as members of such Board by
the Bancorp Board (or a committee of such Board) at a time when the majority of
such Board (or of such committee) consisted of persons who were members of the
Bancorp Board on January 1, 1993; provided, however, that any persons nominated
for election by the Bancorp Board (or a committee of such Board) a majority of
whom are persons described in clauses (i) and/or (ii), or of persons who were
themselves nominated by such Board (or a committee of such Board), shall for
this purpose be deemed to have been nominated by a Board composed of persons
described in clause (i); or (5) a determination has been made by the FDIC, the
Commission or any similar federal or
62
<PAGE>
state agency having regulatory control over NJSB or Bancorp that a change of
control, as defined in banking or securities laws and regulations then
applicable to NJSB or Bancorp, has occurred. Notwithstanding the foregoing, a
"change of control" does not include any of the above-described events that are
related to or occur in connection with the appointment of a receiver or
conservator for NJSB or Bancorp, provision of assistance under Section 13(c) of
the Federal Deposit Insurance Act, the approval of a supervisory merger, or a
determination that NJSB is in default as defined in Section 3(x)(1) of the
Federal Deposit Insurance Act, insolvent or in an unsafe or unsound condition to
transact business. For purposes of this definition, the terms "person" and
"group" have the meanings given to such terms in Section 13(d) and 14(d) of the
Exchange Act.
Messrs. DiTota and Matyola may each terminate his employment in the event
(i) NJSB materially breaches the contract, (ii) his salary is reduced (other
than pursuant to an across-the-board reduction affecting all executives) or
(iii) NJSB's principal executive offices are relocated outside of Somerset,
Hunterdon and Mercer counties or he is required to work anywhere other than at
NJSB's principal executive offices. In such event, Messrs. DiTota and Matyola
are each entitled to receive a severance payment equal to 12 months of salary
payments.
The contracts entitle Bancorp and NJSB to terminate the officer's
employment at any time for "just cause," as defined therein, in which case the
contract provides for no termination benefits. Each of Mr. DiTota's and Mr.
Matyola's contracts also entitles NJSB to terminate him for poor performance, in
which case the contract provides for no termination benefits. The contracts
provide that, upon retirement or the termination of the officer's employment for
just cause or, under Mrs. D'Agostino's contract, disability or voluntary
termination (other than following a change of control), the officer may not be
employed by, control, manage or otherwise participate in the business of a
"significant competitor," as defined therein, for two years (one year for Mr.
Hunt, Mr. Muter, Mr. Matyola and Mr. DiTota). If the officer (other than Mr.
DiTota or Mr. Matyola) violates this provision, Bancorp and NJSB have the right
to enjoin the former officer's employment by the significant competitor for a
period of two years (one year for Mr. Hunt and Mr. Muter) after such
termination. Such non-compete provisions no longer apply in the event of a
change of control of Bancorp or NJSB.
The agreement with Mrs. D'Agostino provides that Bancorp and NJSB will
establish a Supplemental Executive Retirement Trust ("Trust") with an
unaffiliated third party trustee for the benefit of Mrs. D'Agostino and will
deposit $97,000 into the Trust (which amount had been accrued by Bancorp prior
to 1993 in connection with the SERP). This amount is invested by the trustee.
Mrs. D'Agostino's employment agreement also provides that, in the event of a
change of control (which is defined by reference to her employment contract),
Bancorp and NJSB must contribute to the Trust an amount that, together with all
other assets held by the Trust, is sufficient to pay an additional retirement
benefit to Mrs. D'Agostino equal to the reduction in her retirement benefit
under NJSB's defined benefit pension plan caused by her retirement before age 65
as a result of the change of control. The intent of this provision is to assure
that the total retirement benefit that Mrs. D'Agostino would receive would not
be adversely affected if a change of control were to occur prior to her normal
retirement age. Bancorp and NJSB may, but are not required to, deposit
additional amounts in the Trust other than in the event of a change of control.
The Trust was established in 1993.
In the event of Mrs. D'Agostino's death, retirement or termination of
employment upon a change of control, the Trust will become irrevocable and Mrs.
D'Agostino (or her estate) will be entitled to receive the amount then in the
Trust in a lump sum. Prior to such time, Bancorp and NJSB will only be able to
revoke the Trust in the event her employment is terminated for "just cause."
Until paid to Mrs. D'Agostino, the assets of the Trust will be subject to the
claims of creditors of Bancorp and NJSB.
Mrs. D'Agostino, Mr. Hunt, Mr. Muter, Mr. DiTota and Mr. Matyola have also,
from time to time, been granted options under the 1988 Program and the 1991 Plan
in tandem with limited rights that are only exercisable in the event of a change
in control. Upon exercise of a limited right granted under the 1991 Plan, the
optionee would receive cash equal to (1) the difference between the exercise
price per share and the greater of (a) the highest fair market value per share
during the immediately preceding 90 days or (b) the highest price paid by the
acquiror in the change in control transaction, multiplied by (2) the number of
shares with respect to which the option is exercised. Upon exercise of a limited
right granted under the 1988 Program, the optionee would receive the foregoing
amount in cash, in Bancorp Stock, or in a combination of cash and stock, as
determined by the committee administering such program. The options granted
under the 1991 Plan to these officers also provide that, if certain events occur
within one year following a change of control, their options become immediately
exercisable. See "THE MERGER AGREEMENT--Bancorp Stock Option Plans."
63
<PAGE>
PROPOSAL III--RATIFICATION OF APPOINTMENT OF
INDEPENDENT CERTIFIED ACCOUNTANTS
The third proposal proposes the ratification of the appointment of KPMG
Peat Marwick LLP as independent certified accountants for Bancorp for the year
ending December 31, 1995. If the Merger is consummated prior to December 31,
1995, however, KPMG Peat Marwick LLP will not audit the financial statements of
Bancorp for the year ending December 31, 1995.
KPMG Peat Marwick LLP served as Bancorp's auditors for the year 1994, and
a representative of the firm will attend the Annual Meeting. The representative
will have the opportunity to make a statement if the representative so desires.
The representative will also be available to answer any appropriate questions.
THE BANCORP BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR RATIFICATION OF
THE APPOINTMENT OF INDEPENDENT CERTIFIED ACCOUNTANTS.
OTHER MATTERS THAT MAY PROPERLY COME BEFORE THE ANNUAL MEETING
The Bancorp Board knows of no business that will be presented for
consideration at the Annual Meeting, other than that stated in the Notice of
Annual Meeting of Shareholders and this Proxy Statement--Prospectus. Should any
other matter properly come before the Annual Meeting or any adjournments
thereof, it is intended that proxies will be voted on such matters in accordance
with the judgment of the person or persons exercising the proxies, acting by a
plurality of those present. Although the Annual Meeting may be adjourned,
proxies voting against the Merger Agreement may not be used by the proxyholders
to vote in favor of the adjournment pursuant to such proxyholders' discretionary
voting authority.
ADVANCE NOTICE OF CERTAIN MATTERS TO BE CONDUCTED
AT AN ANNUAL MEETING AND SHAREHOLDER PROPOSALS
The Bylaws of Bancorp provide an advance notice procedure for certain
business, or nominations to the Bancorp Board, to be brought before an annual
meeting. In order for a shareholder to properly bring business before an annual
meeting or to propose a nominee to the Bancorp Board, the shareholder must give
written notice to the Secretary of Bancorp not less than 60 days before the time
fixed for such meeting.
To be eligible for inclusion in Bancorp's proxy material relating to the
next annual meeting of shareholders in the event the Merger is not consummated,
a shareholder must set forth such proposal in writing and file it with the
Secretary of Bancorp on or before December 30, 1995. The Bancorp Board will
review any shareholder proposals that are filed as required and will determine
whether any proposal meets applicable criteria for inclusion in its 1996 proxy
solicitation materials or consideration at Bancorp's 1996 annual meeting.
LEGAL MATTERS
The legality of the UJB Stock offered hereby will be passed upon for UJB by
Richard F. Ober, Jr., Esq., Executive Vice President, General Counsel and
Secretary of UJB. Mr. Ober owns 22,145 shares of UJB Stock and options to
purchase 69,374 shares of UJB Stock at a weighted average exercise price of
$19.15. Certain federal tax matters will be passed upon for UJB by Weil,
Gotshal & Manges, New York, New York (a partnership including professional
corporations), and for Bancorp by Kirkpatrick & Lockhart, Washington, D.C.
64
<PAGE>
EXPERTS
The consolidated financial statements of UJB Financial Corp. and
subsidiaries as of December 31, 1994 and 1993 and for each of the years in the
three-year period ended December 31, 1994, included in UJB's Annual Report on
Form 10-K, incorporated by reference herein and in the Registration Statement,
have been incorporated by reference herein and in the Registration Statement in
reliance upon the report of KPMG Peat Marwick LLP, independent certified public
accountants, incorporated by reference herein, and upon the authority of said
firm as experts in accounting and auditing.
The report of KPMG Peat Marwick LLP with respect to UJB Financial Corp. and
subsidiaries for the year ended December 31, 1994 refers to a change in the
method of accounting for certain investments and postemployment benefits in 1994
and to a change in the method of accounting for income taxes in 1993.
The consolidated financial statements of Bancorp New Jersey, Inc. and
subsidiary as of December 31, 1994 and 1993 and for each of the years in the
three-year period ended December 31, 1994, included in Bancorp's Annual Report
on Form 10-K, incorporated by reference herein and in the Registration Statement
have been incorporated by reference herein and in the Registration Statement in
reliance upon the report of KPMG Peat Marwick LLP, independent certified public
accountants, incorporated by reference herein, and upon the authority of said
firm as experts in accounting and auditing.
The report of KPMG Peat Marwick LLP with respect to Bancorp New Jersey,
Inc. and subsidiary for the year ended December 31, 1994 refers to a change in
the method of accounting for certain investments in debt and equity securities
in 1994 and to a change in the method of accounting for income taxes in 1993.
By Order of the Board of Directors
ROBERT H. HUNT, JR.
-----------------------
Robert H. Hunt, Jr.
Secretary
April 28, 1995
YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING IN PERSON. WHETHER
OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, YOU ARE REQUESTED TO SIGN AND
PROMPTLY RETURN THE ACCOMPANYING WHITE PROXY CARD IN THE ENCLOSED, POSTAGE-PAID
ENVELOPE.
65
<PAGE>
APPENDIX B
April 26, 1995
Board of Directors
Bancorp New Jersey, Inc.
10 West High Street
Somerville, New Jersey 08876
Members of the Board:
You have requested our opinion as to the fairness, from a financial point
of view, to the holders of the issued and outstanding shares of common stock
("BNJ Stock"), par value $0.01 per share, of Bancorp New Jersey, Inc. ("BNJ") of
the merger consideration ("Merger Consideration") to be received for the issued
and outstanding shares of BNJ Stock pursuant to the Agreement and Plan of Merger
(the "Agreement"), dated January 19, 1995, between UJB Financial Corp. ("UJB")
and BNJ providing for the merger of BNJ into UJB (the "Merger").
Pursuant to the Agreement, the Merger Consideration will consist of the
right to receive the number of shares of UJB common stock ("UJB Common Stock")
equal to the exchange ratio (the "Exchange Ratio") determined as set forth below
or cash equal to $43.10 for each share of BNJ Stock, subject to certain
adjustments set forth in the Agreement. For purposes of the Agreement, the
Exchange Ratio shall be determined as follows: (i) if the Average Price (as
defined in the Agreement) of a share of UJB Common Stock is greater than
$27.9125, the Exchange Ratio shall be 1.5441; (ii) if the Average Price of a
share of UJB Common Stock is equal to or greater than $22.8375 and equal to or
less than $27.9125, the Exchange Ratio shall be equal to the quotient obtained
by dividing $43.10 by the Average Price; and, (iii) if the Average Price of a
share of UJB Common Stock is less than $22.8375, the Exchange Ratio shall be
1.8872; provided, however, that if the Average Price of a share of UJB Common
Stock is less than $20.90, BNJ may terminate the Agreement unless UJB agrees
that the Exchange Ratio shall be equal to the quotient obtained by dividing
$39.44 by the Average Price. Except as otherwise provided in the Agreement, the
number of shares of BNJ Stock to be converted into rights to receive UJB Common
Stock pursuant to the Merger shall equal, as closely as reasonably possible, 60
percent of the number of outstanding shares of BNJ Stock minus the number of
shares of BNJ Stock purchased by UJB or any subsidiary of UJB on or after the
date of the Agreement.
Each issued and outstanding option to purchase shares of BNJ Stock (a "BNJ
Option") will be converted into an option to purchase UJB Common Stock, adjusted
appropriately to reflect the Exchange Ratio (subject to adjustment as provided
in the Agreement) and otherwise on the same terms and conditions as provided in
the respective BNJ stock option plans, or will be cancelled for a cash payment.
Kaplan Associates, Inc. ("KAI") is a financial advisory and consulting firm
that specializes in the commercial banking, thrift and mortgage banking
industries. As part of our financial advisory and consulting services, we are
regularly engaged in the independent valuation of securities in connection with
initial public offerings, private placements, merger and acquisition
transactions and recapitalizations. KAI is familiar with BNJ, having acted as
its financial advisor in connection with, and having participated in, the
negotiations leading to the Agreement.
In arriving at the opinion set forth below, we have, among other things:
1. Reviewed BNJ's Annual Reports, Forms 10-K and related financial
information for the five fiscal years ended December 31, 1993 and BNJ's
Forms 10-Q and related unaudited financial information for the first three
quarters of 1993 and 1994;
2. Reviewed UJB's Annual Reports, Forms 10-K and related financial
information for the five fiscal years ended December 31, 1993 and UJB's
Forms 10-Q and related unaudited financial information for the first three
quarters of 1993 and 1994;
3. Conducted discussions with members of senior management of BNJ and
UJB concerning their respective financial conditions, businesses, assets,
financial forecasts and prospects;
5. Reviewed the historical common stock price performance of BNJ and
UJB on a daily, weekly and monthly basis;
6. Reviewed the historical common stock trading volume of BNJ and UJB;
B-1
<PAGE>
7. Compared the results of operations of BNJ and UJB with those of
certain companies that we deemed relevant;
8. Analyzed the relative contribution of BNJ to certain financial
attributes of UJB, including, among other things, its assets, liabilities,
equity and forecasted net income;
9. Reviewed the Agreement and compared the proposed financial terms of
the transaction contemplated by the Agreement with the financial terms of
certain other transactions that we deemed to be relevant;
10. Reviewed and evaluated other solicitations of interest in BNJ; and
11. Reviewed such other financial studies and analyses, performed
such other investigations and took into account such other matters as we
deemed necessary.
In rendering this opinion, we have assumed and relied, without independent
verification, upon the accuracy and completeness, in all material respects, of
the financial and other information and the representations provided to us by
BNJ and UJB. We have also relied upon the management of BNJ as to the
reasonableness and achievability of the financial and operating forecasts (and
the assumptions and bases therefor) provided to us. In that regard, we have
assumed that such forecasts, including without limitation, projections regarding
underperforming and nonperforming assets, net charge-offs and the adequacy of
reserves, reflect the best currently available estimates and judgments of BNJ's
management and that such projections and forecasts will be realized in the
amounts and in the time periods currently estimated by the management of BNJ.
In addition, we have not made an independent evaluation or appraisal of the
assets of BNJ or UJB or any of its subsidiaries, nor have we been furnished with
any such evaluations or appraisals. We have also assumed that there has been no
material change in BNJ's or UJB's assets, financial condition, results of
operations, business or prospects since the date of the last financial
statements made available to us by BNJ and UJB, respectively. We have relied on
advice of counsel to BNJ as to all legal matters with respect to BNJ, BNJ's
Board of Directors, the Merger and the Agreement. This opinion is necessarily
based upon economic, market, monetary and other conditions as they exist and can
be evaluated at this time.
As compensation for the financial advisory services provided to BNJ in
connection with the Merger, including providing this opinion, BNJ agreed to pay
KAI the professional fees and reimburse the expenses set forth in the engagement
letter dated August 24, 1994 between BNJ and KAI. This opinion is furnished
pursuant to such engagement letter.
Based upon and subject to the foregoing, and based upon such other matters
as we considered relevant, we are of the opinion that, as of January 19, 1995
and the date hereof, the Merger Consideration to be paid by UJB pursuant to the
terms of the Agreement is fair to the shareholders of BNJ from a financial point
of view.
Sincerely,
KAPLAN ASSOCIATES, INC.
B-2
<PAGE>
APPENDIX C
SECTION 262 OF THE DELAWARE GENERAL CORPORATION LAW
ss 262 APPRAISAL RIGHTS.--(a) Any stockholder of a corporation of this
State who holds shares of stock on the date of the making of a demand pursuant
to subsection (d) of this section with respect to such shares, who continuously
holds such shares through the effective date of the merger or consolidation, who
has otherwise complied with subsection (d) of this section and who has neither
voted in favor of the merger or consolidation nor consented thereto in writing
pursuant to ss.228 of this title shall be entitled to an appraisal by the Court
of Chancery of the fair value of his shares of stock under the circumstances
described in subsections (b) and (c) of this section. As used in this section,
the word "stockholder" means a holder of record of stock in a stock corporation
and also a member of record of a nonstock corporation; the words "stock" and
"share" mean and include what is ordinarily meant by those words and also
membership or membership interest of a member of a nonstock corporation; and the
words "depository receipt" mean a receipt or other instrument issued by a
depository representing an interest in one or more shares, or fractions thereof,
solely of stock of a corporation, which stock is deposited with the depository.
(b) Appraisal rights shall be available for the shares of any class or
series of stock of a constituent corporation in a merger or consolidation to be
effected pursuant to ss.251, 252, 254, 257, 258, 263 or 264 of this title:
(1) Provided, however, that no appraisal rights under this section
shall be available for the shares of any class or series of stock, which
stock, or depository receipts in respect thereof, at the record date fixed
to determine the stockholders entitled to receive notice of and to vote at
the meeting of stockholders to act upon the agreement of merger or
consolidation, were either (i) listed on a national securities exchange or
designated as a national market system security on an interdealer quotation
system by the National Association of Securities Dealers, Inc. or (ii) held
of record by more than 2,000 holders; and further provided that no
appraisal rights shall be available for any shares of stock of the
constituent corporation surviving a merger if the merger did not require
for its approval the vote of the holders of the surviving corporation as
provided in subsection (f) of ss.251 of this title.
(2) Notwithstanding paragraph (1) of this subsection, appraisal rights
under this section shall be available for the shares of any class or series
of stock of a constituent corporation if the holders thereof are required
by the terms of an agreement of merger or consolidation pursuant to ss.ss.
251, 252, 254, 257, 258, 263 and 264 of this title to accept for such stock
anything except:
a. Shares of stock of the corporation surviving or resulting from
such merger or consolidation, or depository receipts in respect
thereof;
b. Shares of stock of any other corporation, or depository
receipts in respect thereof, which shares of stock or depository
receipts at the effective date of the merger or consolidation will be
either listed on a national securities exchange or designated as a
national market system security on an interdealer quotation system by
the National Association of Securities Dealers, Inc. or held of record
by more than 2,000 holders;
c. Cash in lieu of fractional shares or fractional depository
receipts described in the foregoing subparagraphs a. and b. of this
paragraph; or
d. Any combination of the shares of stock, depository receipts
and cash in lieu of fractional shares or fractional depository
receipts described in the foregoing subparagraphs a., b. and c. of
this paragraph.
(3) In the event all of the stock of a subsidiary Delaware corporation
party to a merger effected under ss.253 of this title is not owned by the
parent corporation immediately prior to the merger, appraisal rights shall
be available for the shares of the subsidiary Delaware corporation.
(c) Any corporation may provide in its certificate of incorporation that
appraisal rights under this section shall be available for the shares of any
class or series of its stock as a result of an amendment to its certificate of
incorporation, any merger or consolidation in which the corporation is a
constituent corporation or the sale of all or substantially all of the assets of
the corporation. If the certificate of incorporation contains such a provision,
the procedures of this section, including those set forth in subsections (d) and
(e) of this section, shall apply as nearly as is practicable.
C-1
<PAGE>
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which appraisal rights
are provided under this section is to be submitted for approval at a
meeting of stockholders, the corporation, not less than 20 days prior to
the meeting, shall notify each of its stockholders who was such on the
record date for such meeting with respect to shares for which appraisal
rights are available pursuant to subsections (b) or (c) hereof that
appraisal rights are available for any or all of the shares of the
constituent corporations, and shall include in such notice a copy of this
section. Each stockholder electing to demand the appraisal of his shares
shall deliver to the corporation, before the taking of the vote on the
merger or consolidation, a written demand for appraisal of his shares. Such
demand will be sufficient if it reasonably informs the corporation of the
identity of the stockholder and that the stockholder intends thereby to
demand the appraisal of his shares. A proxy or vote against the merger or
consolidation shall not constitute such a demand. A stockholder electing to
take such action must do so by a separate written demand as herein
provided. Within 10 days after the effective date of such merger or
consolidation, the surviving or resulting corporation shall notify each
stockholder of each constituent corporation who has complied with this
subsection and has not voted in favor of or consented to the merger or
consolidation of the date that the merger or consolidation has become
effective; or
(2) If the merger or consolidation was approved pursuant to ss.228
or 253 of this title, the surviving or resulting corporation, either before
the effective date of the merger or consolidation or within 10 days
thereafter, shall notify each of the stockholders entitled to appraisal
rights of the effective date of the merger or consolidation and that
appraisal rights are available for any or all of the shares of the
constituent corporation, and shall include in such notice a copy of this
section. The notice shall be sent by certified or registered mail, return
receipt requested, addressed to the stockholder at his address as it
appears on the records of the corporation. Any stockholder entitled to
appraisal rights may, within 20 days after the date of mailing of the
notice, demand in writing from the surviving or resulting corporation the
appraisal of his shares. Such demand will be sufficient if it reasonably
informs the corporation of the identity of the stockholder and that the
stockholder intends thereby to demand the appraisal of his shares.
(e) Within 120 days after the effective date of the merger or
consolidation, the surviving or resulting corporation or any stockholder who has
complied with subsections (a) and (d) hereof and who is otherwise entitled to
appraisal rights, may file a petition in the Court of Chancery demanding a
determination of the value of the stock of all such stockholders.
Notwithstanding the foregoing, at any time within 60 days after the effective
date of the merger or consolidation, any stockholder shall have the right to
withdraw his demand for appraisal and to accept the terms offered upon the
merger or consolidation. Within 120 days after the effective date of the merger
or consolidation, any stockholder who has complied with the requirements of
subsections (a) and (d) hereof, upon written request, shall be entitled to
receive from the corporation surviving the merger or resulting from the
consolidation a statement setting forth the aggregate number of shares not voted
in favor of the merger or consolidation and with respect to which demands for
appraisal have been received and the aggregate number of holders of such shares.
Such written statement shall be mailed to the stockholder within 10 days after
his written request for such a statement is received by the surviving or
resulting corporation or within 10 days after expiration of the period for
delivery of demands for appraisal under subsection (d) hereof, whichever is
later.
(f) Upon the filing of any such petition by a stockholder, service of a
copy thereof shall be made upon the surviving or resulting corporation, which
shall within 20 days after such service file in the office of the Register in
Chancery in which the petition was filed a duly verified list containing the
names and addresses of all stockholders who have demanded payment for their
shares and with whom agreements as to the value of their shares have not been
reached by the surviving or resulting corporation. If the petition shall be
filed by the surviving or resulting corporation, the petition shall be
accompanied by such a duly verified list. The Register in Chancery, if so
ordered by the Court, shall give notice of the time and place fixed for the
hearing of such petition by registered or certified mail to the surviving or
resulting corporation and to the stockholders shown on the list at the addresses
therein stated. Such notice shall also be given by 1 or more publications at
least 1 week before the day of the hearing, in a newspaper of general
circulation published in the City of Wilmington, Delaware or such publication as
the Court deems advisable. The forms of the notices by mail and by publication
shall be approved by the Court, and the costs thereof shall be borne by the
surviving or resulting corporation.
(g) At the hearing on such petition, the Court shall determine the
stockholders who have complied with this section and who have become entitled to
appraisal rights. The Court may require the stockholders who have
C-2
<PAGE>
demanded an appraisal for their shares and who hold stock represented by
certificates to submit their certificates of stock to the Register in Chancery
for notation thereon of the pendency of the appraisal proceedings; and if any
stockholder fails to comply with such direction, the Court may dismiss the
proceedings as to such stockholder.
(h) After determining the stockholders entitled to an appraisal, the Court
shall appraise the shares, determining their fair value exclusive of any element
of value arising from the accomplishment or expectation of the merger or
consolidation, together with a fair rate of interest, if any, to be paid upon
the amount determined to be the fair value. In determining such fair value, the
Court shall take into account all relevant factors. In determining the fair rate
of interest, the Court may consider all relevant factors, including the rate of
interest which the surviving or resulting corporation would have had to pay to
borrow money during the pendency of the proceeding. Upon application by the
surviving or resulting corporation or by any stockholder entitled to participate
in the appraisal proceeding, the Court may, in its discretion, permit discovery
or other pretrial proceedings and may proceed to trial upon the appraisal prior
to the final determination of the stockholder entitled to an appraisal. Any
stockholder whose name appears on the list filed by the surviving or resulting
corporation pursuant to subsection (f) of this section and who has submitted his
certificates of stock to the Register in Chancery, if such is required, may
participate fully in all proceedings until it is finally determined that he is
not entitled to appraisal rights under this section.
(i) The Court shall direct the payment of the fair value of the shares,
together with interest, if any, by the surviving or resulting corporation to the
stockholders entitled thereto. Interest may be simple or compound, as the Court
may direct. Payment shall be so made to each such stockholder, in the case of
holders of uncertified stock forthwith, and the case of holders of shares
represented by certificates upon the surrender to the corporation of the
certificates representing such stock. The Court's decree may be enforced as
other decrees in the Court of Chancery may be enforced, whether such surviving
or resulting corporation be a corporation of this State or of any state.
(j) The costs of the proceeding may be determined by the Court and taxed
upon the parties as the Court deems equitable in the circumstances. Upon
application of a stockholder, the Court may order all or a portion of the
expenses incurred by any stockholder in connection with the appraisal
proceeding, including, without limitation, reasonable attorney's fees and the
fees and expenses of experts, to be charged pro rata against the value of all
the shares entitled to an appraisal.
(k) From and after the effective date of the merger or consolidation, no
stockholder who has demanded his appraisal rights as provided in subsection (d)
of this section shall be entitled to vote such stock for any purpose or to
receive payment of dividends or other distributions on the stock (except
dividends or other distributions payable to stockholders of record at a date
which is prior to the effective date of the merger or consolidation); provided,
however, that if no petition for an appraisal shall be filed within the time
provided in subsection (e) of this section, or if such stockholder shall
deliver to the surviving or resulting corporation a written withdrawal of his
demand for an appraisal and an acceptance of the merger or consolidation, either
within 60 days after the effective date of the merger or consolidation as
provided in subsection (e) of this section or thereafter with written approval
of the corporation, then the right of such stockholder to an appraisal shall
cease. Notwithstanding the foregoing, no appraisal proceeding in the Court of
Chancery shall be dismissed as to any stockholder without the approval of the
Court, and such approval may be conditioned upon such terms as the Court deems
just.
(l) The shares of the surviving or resulting corporation to which the
shares of such objecting stockholders would have been converted had they
assented to the merger or consolidation shall have the status of authorized and
unissued shares of the surviving or resulting corporation.
C-3
<PAGE>
APPENDIX D
UJB FINANCIAL FIRST QUARTER EARNINGS UP 40%
Princeton, New Jersey, April 19, 1995 . . . UJB Financial Corp. (NYSE: UJB)
today reported a 40.0 percent increase in first quarter net income. Net income
for the quarter was $40.0 million, or $.72 per share, compared to $28.6 million,
or $.51 per share, in the same quarter last year.
First quarter return on assets was 1.07 percent compared to .81 percent
last year, and return on common equity was 14.62 percent versus 11.27 percent in
the prior year. The efficiency ratio, excluding other real estate expenses, was
61.5 percent, compared to 62.5 percent in the first quarter of 1994.
T. Joseph Semrod, chairman and chief executive officer said, "Our first
quarter results, when compared to the prior year, can be attributed to loan
growth, and demonstrate continued progress in key financial performance ratios
in a challenging economy."
Total loans at March 31, 1995 were $9.7 billion, up 9.7 percent from last
year. Commercial loans at $4.6 billion rose 4.9 percent compared to last year.
Mortgage loans at $2.9 billion were up 16.9 percent compared to March 31, 1994.
The purchase acquisition of Palisade Savings Bank in September 1994 contributed
$157 million of the mortgage growth. Instalment loans at $2.3 billion rose 11.5
percent over the same period a year ago. Total loans were relatively flat
compared to year-end 1994, with modest growth in mortgage and instalment loans,
partially offset by a decline in commercial loans.
"Although we experienced a first quarter slowdown in loan growth,
especially in commercial loans, the quarter's net interest margin benefited from
an improved asset mix and favorable spreads between loan yields and deposit
costs," Mr. Semrod said.
Net interest income rose 10.7 percent to $160.9 million for the quarter
ended March 31, 1995, compared to $145.3 million for the same period last year.
Net interest margin was 4.80 percent for the first quarter of 1995, compared to
4.61 percent last year, and up from 4.63 percent in the prior quarter.
D-1
<PAGE>
For the first quarter of 1995, non-interest income increased 3.9 percent to
$45.8 million compared to last year. Service and loan fee income rose $1.0
million, primarily in merchant bank card processing. Investment securities gains
amounted to $2.2 million for the first quarter of 1995, compared to $1.3 million
for the same period in 1994. Non-interest income also rose 2.8 percent from
$44.6 million in the fourth quarter of 1994.
Non-interest expenses in the first quarter were $129.7 million, up 4.6
percent over a year ago. This increase reflected higher salaries and benefits.
In addition, operating costs of Palisade Savings Bank were reflected in the
first quarter of 1995. Non-interest expenses rose 2.3 percent from $126.8
million in the fourth quarter of 1994.
The allowance for loan losses at March 31, 1995 was $205.8 million, or 2.12
percent of loans, compared to $241.5 million, or 2.72 percent, last year, and
$214.2 million, or 2.22 percent, at December 31, 1994. The provision for loan
losses for the first quarter was $15.0 million, down from $18.5 million for the
same period a year ago, and $28.5 million in the fourth quarter of 1994. An
additional provision of $10.0 million was recorded in the fourth quarter in
conjunction with anticipated bulk sale transactions.
Net charge offs were $23.4 million for the quarter ended March 31, 1995,
compared to $21.2 million the previous year, or .98 percent of average loans in
each of those periods. This compared to net charge offs of $15.1 million, or .62
percent,in the fourth quarter of 1994, excluding write downs on transfers to
assets held for accelerated disposition for the bulk sales.
Non-performing loans at March 31, 1995 were $169.7 million, a decline of
29.8 percent from the level of a year ago. First quarter non-performing loans as
a percent of total loans were 1.74 percent, down from 2.73 percent in the same
period last year. Non-performing loans at December 31, 1994 were $167.6 million,
or 1.74 percent of total loans. The increase during the first quarter was
attributable to the adoption, effective January 1, 1995, of Statement of
Financial Accounting Standards No. 114, Accounting by Creditors for Impairment
of a Loan, which required in-substance foreclosures to be reclassified as
non-performing loans. This resulted in a transfer of $6.4 million to
non-performing loans from other real estate owned (OREO). OREO, net of a $12.4
million reserve, amounted to $29.1 million at March 31, 1995, a decline of 59.3
percent from $71.5 million a year ago, and was $31.4 million at year-end 1994.
The reduction in non-performing loans and OREO compared to March 31, 1994
reflected ongoing workout efforts, as well as the year-end 1994 transfer of
certain accruing and non-accruing loans and OREO totaling $90.9 million to
assets held for accelerated disposition. This balance declined to $31.8 million
at March 31, 1995, reflecting bulk sales during the quarter.
Total deposits of $12.4 billion increased 5.5 percent over the prior year,
with demand deposits increasing 5.9 percent to $3.0 billion. Total retail time
deposits were $9.0 billion, a 3.3 percent increase compared to a year ago.
D-2
<PAGE>
At March 31, 1995, Tier I and total capital were 9.59 percent and 12.40
percent, respectively, and the leverage ratio was 7.30 percent.
UJB Financial is among the nation's largest bank holding companies with
$15.2 billion in assets and 266 community offices of United Jersey Bank in New
Jersey and First Valley Bank in eastern Pennsylvania. Its major lines of
business include commercial banking, retail banking, mortgage banking and
investment management. These lines of business provide a full array of financial
services to individuals, businesses, not-for-profit organizations, government
entities and other financial institutions.
EARNINGS SUMMARY
<TABLE>
<CAPTION>
For the Quarter Ended March 31,
-------------------------------
1995 1994
------------ ------------
<S> <C> <C>
Income before cumulative effect of a change in
accounting principle ............................................ $39,987,000 $30,291,000
Cumulative effect of a change in accounting principle .............. -- (1,731,000)(1)
----------- -----------
Net income ......................................................... $39,987,000 $28,560,000
=========== ===========
Per Share:
Income before cumulative effect of a change in
accounting principle ............................................ $.72 $.54
Cumulative effect of a change in accounting principle ............. -- (.03)(1)
----------- -----------
Net Income ...................................................... &.72 $.51
=========== ===========
Average common shares outstanding .................................. 55,139,000 54,401,000
Book value per common share ........................................ $19.97 $18.65
- ----------------
<FN>
(1) Effective January 1994, the Company adopted SFAS 112, "Employers'
Accounting for Postemployment Benefits."
</FN>
</TABLE>
D-3
<PAGE>
UJB FINANCIAL CORP.
FINANCIAL HIGHLIGHTS
(dollars in thousands, except per share data)
<TABLE>
<CAPTION>
At March 31,
--------------------------
1995 1994(1) % Change
----------- ----------- --------
<S> <C> <C> <C>
Assets ......................................................... $15,242,442 $14,518,409 5.0
Loans:
Commercial .................................................... 4,603,444 4,386,916 4.9
Mortgage ...................................................... 2,871,491 2,456,815 16.9
Instalment .................................................... 2,250,771 2,019,106 11.5
----------- -----------
Total loans .................................................. 9,725,706 8,862,837 9.7
Allowance for loan losses ...................................... 205,757 241,469 (14.8)
Deposits:
Demand ........................................................ 2,954,035 2,788,291 5.9
Savings and time .............................................. 8,969,874 8,684,091 3.3
Commercial CDs $100,000 and over .............................. 434,370 244,943 77.3
----------- -----------
Total deposits ............................................... 12,358,279 11,717,325 5.5
Long-term debt ................................................. 204,646 208,846 (2.0)
Shareholders' equity ........................................... 1,133,304 1,046,262 8.3
Non-performing loans ........................................... 169,675 241,643 (29.8)
Other real estate owned, net ................................... 29,115 71,479 (59.3)
For the quarter ended March 31 (Note 2)
- ---------------------------------------
Net income:
Dollars ...................................................... $39,987 $28,560 40.0
Per share .................................................... 0.72 0.51 41.2
Net income to:
Average assets ............................................... 1.07% 0.81%
Average common equity ........................................ 14.62 11.27
Average total equity ......................................... 14.40 11.12
Efficiency ratio (excludes OREO expenses) ...................... 61.5 62.5
Selected Ratios
- ---------------
Book value per common share .................................. $19.97 $18.65
Common stock dividend payout ................................. 40.28% 41.18%
Common equity to total assets ................................ 7.24 7.00
Total equity to total assets ................................. 7.44 7.21
Tier 1 capital to average assets (leverage) .................. 7.30 7.20
Tier 1 capital to risk-adjusted assets ....................... 9.59 9.44
Total capital to risk-adjusted assets ........................ 12.40 12.39
Allowance to period-end loans ................................ 2.12 2.72
Net charge offs to average loans ............................. 0.98 0.98
Non-performing loans to period-end loans ..................... 1.74 2.73
</TABLE>
See accompanying notes to consolidated financial statements.
D-4
<PAGE>
UJB FINANCIAL CORP.
CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
<TABLE>
<CAPTION>
March 31,
--------------------------- Percent
1995 1994(1) Change
----------- ----------- --------
<S> <C> <C> <C>
Assets
Cash and due from banks .......................................... $ 921,926 $ 692,904
Federal funds sold and securities purchased under agreements
to resell ....................................................... 3,650 1,300
----------- -----------
Total cash and cash equivalents ............................ 925,576 694,204
Interest bearing deposits with banks ............................. 11,996 37,107
Trading account securities ....................................... 17,954 30,628
Investment securities available for sale ......................... 229,796 1,001,108
Investment securities:
U.S. Government and Federal agencies ........................... 1,903,871 1,686,563
States and political subdivisions .............................. 317,561 298,460
Other securities ............................................... 1,700,005 1,549,454
----------- -----------
Total investment securities ................................ 3,921,437 3,534,477 10.9
Loans (net of unearned discount):
Commercial ..................................................... 4,603,444 4,386,916 4.9
Mortgage ....................................................... 2,871,491 2,456,815 16.9
Instalment ..................................................... 2,250,771 2,019,106 11.5
----------- -----------
Total loans ................................................ 9,725,706 8,862,837 9.7
Less: Allowance for loan losses ................................ 205,757 241,469
----------- -----------
Net loans .................................................. 9,519,949 8,621,368
Premises and equipment ........................................... 165,804 169,444
Assets held for accelerated disposition .......................... 31,795 --
Accrued interest receivable ...................................... 88,234 78,188
Other real estate owned, net ..................................... 29,115 71,479 (59.3)
Due from customers on acceptances ................................ 20,664 16,021
Other assets ..................................................... 280,122 264,385
----------- -----------
Total Assets ............................................... $15,242,442 $14,518,409 5.0
=========== ===========
Liabilities and Shareholders' Equity
Deposits:
Non-interest bearing demand deposits ........................... $ 2,954,035 $ 2,788,291 5.9
Interest bearing deposits:
Savings and time deposits .................................... 8,969,874 8,684,091
Commercial certificates of deposit $100,000 and over ......... 434,370 244,943
----------- -----------
Total deposits ............................................. 12,358,279 11,717,325 5.5
Commercial paper ................................................. 46,951 51,509
Other borrowed funds ............................................. 1,220,644 1,261,139
Long-term debt ................................................... 204,646 208,846
Accrued interest payable ......................................... 46,649 27,642
Bank acceptances outstanding ..................................... 20,664 16,021
Accrued expenses and other liabilities ........................... 211,305 189,665
----------- -----------
Total liabilities .......................................... 14,109,138 13,472,147
Shareholders' equity:
Preferred stock without par value:
Series B: Authorized and outstanding 600,166 in 1995 and
1994, adjustable-rate cumulative, $50 stated value ......... 30,008 30,008
Common stock par value $1.20:
Authorized 130,000,000 shares; issued and outstanding
55,257,127 in 1995 and 54,502,893 in 1994 .................. 66,309 65,403
Surplus ......................................................... 416,098 403,147
Retained earnings ............................................... 627,560 544,202
Net unrealized (loss) gain on investment securities, net of tax . (6,671) 3,502
----------- -----------
Total shareholders' equity ................................. 1,133,304 1,046,262 8.3
----------- -----------
Total Liabilities and Shareholders' Equity ................. $15,242,442 $14,518,409
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
D-5
<PAGE>
UJB FINANCIAL CORP.
CONSOLIDATED STATEMENT OF INCOME
(dollars in thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
------------------------- Percent
1995 1994(1) Change
-------- -------- -------
<S> <C> <C> <C>
Interest Income
Interest and fees on loans ...................................... $202,901 $158,991
Interest on taxable investment securities ....................... 55,190 40,590
Interest on tax-exempt investment securities .................... 5,374 5,441
Interest on investment securities available for sale ............ 3,432 13,656
Interest on Federal funds sold and securities purchased
under agreements to resell .................................... 136 202
Interest on trading account securities .......................... 255 257
Interest on deposits with banks ................................. 229 157
-------- --------
Total interest income ......................................... 267,517 219,294
Interest Expense
Interest on savings and time deposits ........................... 73,814 56,440
Interest on commercial certificates of deposit
$100,000 and over ............................................. 6,387 1,872
Interest on borrowed funds ...................................... 26,425 15,679
-------- --------
Total interest expense ........................................ 106,626 73,991
-------- --------
Net interest income ........................................... 160,891 145,303 10.7
Provision for loan losses ....................................... 15,000 18,500 (18.9)
-------- --------
Net interest income after provision for loan losses ........... 145,891 126,803 15.1
Non-Interest Income
Service charges on deposit accounts ............................. 15,944 15,967
Service and loan fee income ..................................... 10,092 9,114
Trust income .................................................... 5,532 5,807
Trading account gains ........................................... 279 79
Other ........................................................... 11,746 11,836
-------- --------
Total non-interest operating income ........................... 43,593 42,803 1.8
Investment securities gains ..................................... 2,192 1,275
-------- --------
Total non-interest income ..................................... 45,785 44,078 3.9
Non-Interest Expenses
Salaries ........................................................ 48,547 44,397
Pension and other employee benefits ............................. 15,883 13,937
Occupancy, net .................................................. 13,350 13,862
Furniture and equipment ......................................... 12,453 11,787
FDIC assessment ................................................. 6,839 6,915
Other real estate owned expenses ................................ 1,702 4,073
Advertising and public relations ................................ 2,911 2,761
Other ........................................................... 28,014 26,251
-------- --------
Total non-interest expenses ................................... 129,699 123,983 4.6
-------- --------
Income before income taxes ........................................ 61,977 46,898
Federal and state income taxes .................................... 21,990 16,607
-------- --------
Income before cumulative effect of a change in
accounting principle ............................................ 39,987 30,291 32.0
Cumulative effect of a change in accounting
principle (Note 2) .............................................. -- (1,731)
-------- --------
Net Income ........................................................ $ 39,987 $ 28,560 40.0
======== ========
Net Income Per Common Share:
Income before cumulative effect of a change
in accounting principle ....................................... $ 0.72 $ 0.54 33.3
Cumulative effect of a change in accounting
principle (Note 2) ............................................ -- (0.03)
-------- --------
Net Income ........................................................ $ 0.72 $ 0.51 41.2
======== ========
Average Common Share Outstanding (in thousands) ................... 55,139 54,401
======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
D-6
<PAGE>
UJB FINANCIAL CORP.
SUMMARY OF QUARTERLY CONSOLIDATED EARNINGS(1)
(dollars in thousands, except per share data)
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991 1990
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
FIRST QUARTER
Net Income (Notes 2 and 3) ....... $39,987 $ 28,560 $21,304 $10,115 $ 2,304 $25,295
Per Share ........................ 0.72 0.51 0.39 0.20 0.04 0.53
SECOND QUARTER
Net Income ....................... 28,696 23,444 11,025 4,485 6,490
Per Share ........................ 0.52 0.43 0.22 0.08 0.12
THIRD QUARTER
Net Income (Loss) ................ 38,571 13,010(4) 17,067 8,356 (21,601)
Per Share ........................ 0.70 0.23 0.33 0.16 (0.47)
FOURTH QUARTER
Net Income (Loss) ................ 34,323 24,660 18,581 9,107 (21,600)
Per Share ........................ 0.62 0.45 0.34 0.18 (0.47)
FULL YEAR
Net Income (Loss) ................ $39,987 $130,150 $82,418 $56,788 $24,252 ($11,416)
Per Share ........................ 0.72 2.35 1.50 1.09 0.46 (0.29)
</TABLE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) Prior period information has been restated to reflect the effect of the
July 1, 1994 merger of VSB Bancorp, Inc. into UJB Financial Corp. This
transaction was accounted for on the pooling-of-interests method. On
September 16, 1994, Palisade Savings Bank, FSB was acquired by UJB
Financial Corp. The Palisade transaction was accounted for on the purchase
method.
(2) Effective January 1994, the company adopted Statement of Financial
Standards (SFAS) No. 112, Employers' Accounting for Postemployment
Benefits. The cumulative effect of the accounting change had a negative
effect on net income of $1.7 million or $.03 per share in the first
quarter.
(3) Effective January 1993, the company adopted SFAS NO. 109, Accounting for
Income Taxes. The cumulative effect of the accounting change had a
favorable impact on net income of $3.8 million or $.07 per share in the
first quarter.
(4) Third quarter of 1993 includes a restructuring charge of $21.5 million,
$12.7 million after tax, or $.24 per share.
D-7
<PAGE>
APPENDIX E
BANCORP NEW JERSEY, INC. REPORTS
INCREASED QUARTERLY EARNINGS
Somerville, N.J., April 20, 1995 . . . Beatrice D'Agostino, Chairman,
President and Chief Executive Officer of Bancorp New Jersey, Inc. (OTC, NASDAQ:
BCNJ) announced consolidated financial results for the quarter ended March 31,
1995.
Net income for the 1995 first quarter rose more than 20 percent to
$1,111,000, or 48 cents per share, compared with $924,000, or 42 cents per
share, for the first quarter of 1994.
In announcing the results, D'Agostino highlighted the growth in
stockholders' equity to $51.8 million, with a rise in book value per share to
$24.62 at March 31, 1995 from $23.28 at March 31, 1994. Bancorp's consolidated
assets were $508.0 million as of March 31, 1995, compared with $472.6 million a
year ago.
Bancorp continued to improve its non-performing assets position since year
end 1994. "At March 31, 1995, non-performing assets were $6,966,000, or 1.37
percent of total assets. This reflects a 6.4 percent reduction in non-performing
assets since December 1994," stated D'Agostino. "Additionally, the allowance for
loan losses was $4,689,500, or 79 percent of non-performing loans."
At March 31, 1995, the total risk-based capital ratio was 22.67 percent,
with the leverage capital ratio at 10.64 percent. These ratios, both well in
excess of regulatory requirements, have steadily increased since the end of
1991, highlighting the Bank's increasing financial strength.
E-1
<PAGE>
On January 19, 1995, Bancorp New Jersey, Inc. and UJB Financial Corp.
announced that they entered into a definitive merger agreement under which UJB
Financial will acquire Bancorp for a combination of cash and stock. The
transaction is expected to close in the third quarter of 1995 and is subject to
approval by Bancorp's shareholders and regulatory authorities and the market
price of UJB Financial stock at the time the exchange ratio is determined.
Bancorp New Jersey, Inc., headquartered in Somerville, New Jersey, is the
parent company of the 123-year old New Jersey Savings Bank, with twelve retail
banking offices in Somerset, Hunterdon and Mercer counties. New Jersey Savings
Bank is a member of the Federal Deposit Insurance Corporation (FDIC).
BANCORP NEW JERSEY, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS
(dollars in thousands, except per share data)
(unaudited)
<TABLE>
<CAPTION>
Percent
Three months ended March 31, 1995 1994 Change
- ---------------------------- -------- ------- ------
<S> <C> <C> <C>
Net income .......................................... $ 1,111 $ 924 20.2%
Net income per share ................................ 0.48 0.42 14.3
At March 31,
- -----------
Assets .............................................. $507,950 $472,591 7.5
Deposits ............................................ 453,666 422,678 7.3
Loans ............................................... 295,601 255,762 15.6
Stockholders' equity ................................ 51,786 48,023 7.8
Book value per share ................................ 24.62 23.28 5.8
Financial Ratios
At or for the quarter ended March 31,
- -------------------------------------
Return on average equity (annualized) ............... 8.69% 7.70%
Return on average assets (annualized) ............... 0.92 0.79
Capital to assets ................................... 10.20 10.16
Leverage capital to assets .......................... 10.64 10.10
Tier I risk-weighted capital to assets .............. 21.41 21.27
Total risk-weighted capital to assets ............... 22.67 22.53
Net yield on average interest-earnings
assets (annualized) ............................... 3.90 3.99
Allowance for loan losses as a percentage
of total loans .................................... 1.59 1.68
</TABLE>
E-2
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. Indemnification of Directors and Officers.
With respect to the indemnification of directors and officers, Section 5 of
Article IX of the By-Laws of UJB provides:
"Section 5. Indemnification. Each person who was or is a party and each
person who is threatened to be or is made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative,
investigative or arbitrative, by reason of the fact that such person is, or was,
a director, officer or employee of the Corporation, or is or was serving at the
request of the Corporation as a director, officer, trustee, agent, or employee
of another corporation, partnership, joint venture, sole proprietorship, trust
or other enterprise, whether or not for profit, shall be indemnified and
reimbursed by the Corporation for liabilities (including amounts paid or
incurred in satisfaction of settlements, judgments, fines and penalties) and
expenses (including reasonable costs, disbursements and counsel fees) to the
fullest extent permitted by the laws of the State of New Jersey as in effect at
the time of such indemnification. The foregoing right of indemnification shall
inure to the benefit of the heirs, executors, and administrators of each such
person, shall not be exclusive of any other rights or indemnification to which
any director, officer, employee or other person may be entitled in any capacity
as a matter of law or under any by-law, agreement, vote of shareholders or
directors, insurance policy, or otherwise; and shall continue as to each such
person who has ceased to be a director, officer or employee.
This By-Law shall be implemented and construed to provide any director,
officer, employee, or other person described above who is found to have acted in
good faith and in a manner such person reasonably believed to be in or not
opposed to the best interests of the Corporation the maximum indemnification,
advancement of expenses, and reimbursement for liabilities and expenses allowed
by law, provided, however, that advancement of counsel fees will be made only
when the Board of Directors determines that arrangements for counsel are
satisfactory to the Board."
Such provision is consistent with Section 14A:3-5 of the Business
Corporation Act of the State of New Jersey, the state of UJB's incorporation,
which permits the indemnification of officers and directors, under certain
circumstances and subject to specified limitations, against liability which any
officer or director may incur in such capacity.
UJB carries officers' and directors' liability insurance policies which
provide coverage against judgments, settlements and legal costs incurred because
of actual or asserted acts or omissions of such officers and directors of UJB
arising out of their duties as such, subject to certain exceptions, including,
but not limited to, damages based upon illegal personal profits or adjudicated
dishonesty of the person seeking indemnification. The policies provide coverage
of $35,000,000 in the aggregate.
Item 21. Exhibits and Financial Statement Schedules
(a) Exhibits
This Registration Statement includes the following exhibits:
Exhibit No. Description
- ----------- -----------
**2 Agreement and Plan of Merger dated January 19, 1995, between UJB
and Bancorp. (Included without exhibits as Appendix A to the Proxy
Statement-Prospectus included in this Registration Statement; with
exhibits A, B and C incorporated by reference to Exhibit (10)Q. to the
Current Report on Form 8-K of UJB, dated January 19, 1995).
**3(a) Restated Certificate of Incorporation of UJB, as restated
July 1, 1988, as amended through May 19, 1994 (incorporated by
reference to Exhibit (3)A.(i) on Form 10-Q for the quarter ended
September 30, 1994).
** (b) By-Laws of UJB as amended through October 19, 1994 (incorporated by
reference to Exhibit (3)B.(i) on Form 10-Q for the quarter ended
September 30, 1994).
5 Opinion of Richard F. Ober, Jr., Esq. regarding legality of
securities being issued.
8(a) Opinion of Weil, Gotshal & Manges, regarding tax matters.
II-1
<PAGE>
Exhibit No. Description
- ----------- -----------
(b) Opinion of Kirkpatrick & Lockhart, regarding tax matters.
**13 Quarterly Report on Form 10-Q of Bancorp for the quarter ended
September 30, 1994.
23(a) Consent of KPMG Peat Marwick LLP (UJB).
(b) Consent of KPMG Peat Marwick LLP (Bancorp).
(c) Consent of Richard F. Ober, Jr., Esq.--included in his opinion filed
as Exhibit 5 to this Registration Statement.
(d) Consent of Weil, Gotshal & Manges--included in its opinion filed as
Exhibit 8(a) to this Registration Statement.
(e) Consent of Kirkpatrick & Lockhart--included in its opinion filed as
Exhibit 8(b) to this Registration Statement.
**24 Power of Attorney.
99(a) Form of Proxy.
(b) Opinion of Kaplan Associates, Inc.(Included as Appendix B to the
Proxy Statement-Prospectus included in this Registration Statement).
(c) Consent of Kaplan Associates, Inc.
(d) Press Release of UJB dated April 19, 1995 relating to UJB financial
results for the quarter ended March 31, 1995 (Included as Appendix D
to the Proxy Statement--Prospectus included in this Registration
Statement).
(e) Press Release of Bancorp dated April 20, 1995 relating to Bancorp
financial results for the quarter ended March 31, 1995 (Included as
Appendix E to the Proxy Statement-Prospectus included in this
Registration Statement).
- ----------
** Previously filed.
(b) Financial Statement Schedules.
All financial statement schedules either are not required or are included
in the notes to the financial statements incorporated by reference herein.
Item 22. Undertakings.
(a) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(b) The undersigned registrant hereby undertakes as follows: that prior to
any public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this registration statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c), the
issuer undertakes that such reoffering prospectus will contain the information
called for by the applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the information called
for by the other Items of the applicable form.
(c) The registrant undertakes that every prospectus (i) that is filed
pursuant to paragraph (b) immediately preceding, or (ii) that purports to meet
the requirements of section 10(a)(3) of the Act and is used in connection with
an offering of securities subject to Rule 415, will be filed as a part of an
amendment to the registration statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(d) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the provisions set forth in response to Item 20
hereof, or otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being
II-2
<PAGE>
registered, the registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question of whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
(e) The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11 or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
(f) The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the Township of West Windsor, and the
State of New Jersey on the 26th day of April, 1995.
UJB FINANCIAL CORP.
By: *
----------------------------------------------
T. Joseph Semrod,
Chairman of the Board of Directors and President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below on the 26th day of April, 1995 by
the following persons in the capacities indicated.
Signatures Titles
---------- ------
* Chairman of the Board of Directors and
------------------------------- President (Chief Executive Officer)
T. Joseph Semrod
* Senior Executive Vice President-Finance
------------------------------- (Principal Financial Officer)
John R. Haggerty
* Executive Vice President and Comptroller
------------------------------- (Principal Accounting Officer)
William J. Healy
* Director
-------------------------------
Robert L. Boyle
* Director
-------------------------------
John G. Collins
* Director
-------------------------------
T.J. Dermot Dunphy
* Director
-------------------------------
Anne Evans Estabrook
* Director
-------------------------------
Elinor J. Ferdon
* Director
-------------------------------
Fred G. Harvey
II-4
<PAGE>
Signatures Titles
---------- ------
* Director
--------------------------------
John R. Howell
* Director
--------------------------------
Francis J. Mertz
* Director
--------------------------------
George L. Miles, Jr.
* Director
--------------------------------
Henry S. Patterson II
* Director
--------------------------------
Raymond Silverstein
* Director
--------------------------------
Joseph M. Tabak
* RICHARD F. OBER, JR., by signing his name hereto, does sign this document
on behalf of each of the persons indicated above pursuant to powers of
attorney executed by such persons, filed with the Securities and Exchange
Commission.
/S/ RICHARD F. OBER, JR.
--------------------------------
Richard F. Ober, Jr.
II-5
<PAGE>
APPENDIX
(Pursuant to Rule 304 of Regulation S-T)
1. Page 61 contains a description in tabular form of a graph entitled
"Performance Graph" which represents the comparison of the cumulative total
stockholder return on Bancorp Stock against the cumulative total
return of NASDAQ Composite Index and the NASDAQ Bank Index for
the period of five years commencing December 31, 1989 and ending December 31,
1994, which graph is contained in the paper format of this Proxy Statement
being sent to Stockholders.
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
**2 Agreement and Plan of Merger dated January 19, 1995, between UJB
and Bancorp. (Included without exhibits as Appendix A to the Proxy
Statement-Prospectus included in this Registration Statement; with
exhibits A, B and C incorporated by reference to Exhibit (10)Q. to
the Current Report on Form 8-K of UJB, dated January 19, 1995).
**3(a) Restated Certificate of Incorporation of UJB, as restated
July 1, 1988, as amended through May 19, 1994 (incorporated by
reference to Exhibit (3)A.(i) on Form 10-Q for the quarter ended
September 30, 1994).
**(b) By-Laws of UJB as amended through October 19, 1994 (incorporated by
reference to Exhibit (3)B.(i) on Form 10-Q for the quarter ended
September 30, 1994).
5 Opinion of Richard F. Ober, Jr., Esq. regarding legality of
securities being issued.
8(a) Opinion of Weil, Gotshal & Manges, regarding tax matters.
(b) Opinion of Kirkpatrick & Lockhart, regarding tax matters.
**13 Quarterly Report on Form 10-Q of Bancorp for the quarter ended
September 30, 1994.
23(a) Consent of KPMG Peat Marwick LLP (UJB).
(b) Consent of KPMG Peat Marwick LLP (Bancorp).
(c) Consent of Richard F. Ober, Jr., Esq.--included in his opinion filed
as Exhibit 5 to this Registration Statement.
(d) Consent of Weil, Gotshal & Manges--included in its opinion filed as
Exhibit 8(a) to this Registration Statement.
(e) Consent of Kirkpatrick & Lockhart--included in its opinion filed as
Exhibit 8(b) to this Registration Statement.
**24 Power of Attorney.
99(a) Form of Proxy.
(b) Opinion of Kaplan Associates, Inc. (Included as Appendix B to the
Proxy Statement-Prospectus included in this Registration Statement).
(c) Consent of Kaplan Associates, Inc.
(d) Press Release of UJB dated April 19, 1995 relating to UJB financial
results for the quarter ended March 31, 1995 (Included as Appendix D
to the Proxy Statement-Prospectus included in this Registration
Statement).
(e) Press Release of Bancorp dated April 20, 1995 relating to Bancorp
financial results for the quarter ended March 31, 1995 (Included as
Appendix E to the Proxy Statement-Prospectus included in this
Registration Statement).
- --------------
** Previously filed.
[LETTERHEAD OF RICHARD F. OBER, JR.
EXECUTIVE VICE PRESIDENT & GENERAL COUNSEL]
EXHIBIT 5
April 26, 1995
UJB Financial Corp.
301 Carnegie Center
P.O. Box 2066
Princeton, New Jersey 08543
Re: Registration Statement on Form S-4 of UJB Financial
Corp. Relating to Shares of UJB Financial Corp. Common
Stock Issuable in Connection with the Merger of
Bancorp New Jersey, Inc. with and into UJB Financial Corp.
Gentlemen:
This opinion is given in connection with Registration Statemenmt No.
33-58111 on Form S-4 (the "Registration Statement"), filed by UJB Financial
Corp. (the "Company") with the Securities and Exchange Commission under the
Securities Act of 1933, as amended, with respect to an aggregate of up to
2,678,610 shares of the Company's Common Stock, par value $1.20 per share (the
"Shares"), to be issued to shareholders of Bancorp New Jersey, Inc. in
connection with the merger of Bancorp New Jersey, Inc. with and into the
Company, pursuant to an Agreement and Plan of Merger dated January 19, 1995 (the
"Merger Agreement").
I have acted as counsel for the Company in connection with the filing of
the Registration Statement. In so acting, I have made such investigation,
including the examination of originals or copies, certified or otherwise
identified to my satisfaction, of such corporate documents and instruments as I
have deemed relevant and necessary as a basis for the opinion hereinafter set
forth. In connection therewith I have assumed the genuineness of all signatures
and the authenticity of all documents submitted to me as originals and the
conformity to original documents of all documents submitted to me as certified
or photostatic copies. As to questions of fact material to such opinion, I have
relied upon representations of officers or representatives of the Company.
Based upon the foregoing and assuming that (i) the Merger Agreement is duly
approved by the requisite vote of the stockholders of Bancorp New Jersey, Inc.
and (ii) that a Certificate of Merger meeting all applicable requirements of the
New Jersey Business Corporation Act and the Delawere General Corporation Law is
duly executed and filed in accordance with such statutes, I am of the opinion
that the Company's Shares registered under the Registration Statement and to be
issued in accordance with the Merger Agreement upon the effectiveness of the
Merger in exchange for outstanding shares of the Common Stock, par value $.01
per share, of Bancorp New Jersey, Inc. will be validly issued, fully paid and
nonassessable.
I hereby consent to the use of this opinion as an exhibit to the
Registration Statement. I further consent to any and all references to me in the
Prospectus which is part of said Registration Statement.
Very truly yours,
Richard F. Ober, Jr.
Exhibit 8(a)
April 26, 1995
UJB Financial Corporation
301 Carnegie Center
Princeton, NJ 08543-3066
Ladies & Gentlemen:
You have requested our opinion regarding certain federal income tax
consequences of the merger (the "Merger") of Bancorp New Jersey, Inc., a
Delaware business corporation ("BNJ"), with and into UJB Financial Corp., a New
Jersey business corporation ("UJB").
In formulating our opinion, we examined such documents as we deemed
appropriate, including the Agreement and Plan of Merger between BNJ and UJB
dated January 19, 1995 (the "Merger Agreement") and the Registration Statement
on Form S-4, as filed by UJB with the Securities and Exchange Commission (the
"SEC") on March 15, 1995 (with all amendments thereto, the "Registration
Statement"). In addition, we have obtained such additional information as we
have deemed relevant and necessary through consultation with various officers
and representatives of UJB and BNJ.
Our opinion set forth below assumes (1) the accuracy of the statements and
facts concerning the Merger set forth in the Merger Agreement and the
Registration Statement, (2) that the Merger is consummated in the manner
contemplated by, and in accordance with the terms set forth in, the Merger
Agreement and the Registration Statement and (3) the accuracy of (i) the
representations made to us by BNJ, which are set forth in the Officer's
Certificate delivered to us by BNJ, dated the date hereof, (ii) the
representations made to us by UJB, which are set forth in the Officer's
Certificate delivered to us by UJB, dated the date hereof and (iii) the
representations made to us by certain of the shareholders of BNJ, which are set
forth in a certificate delivered to us by such shareholders, dated the date
hereof.
Based upon the facts and statements set forth above, our examination and
review of the documents referred to above and subject to the assumptions set
forth above, we are of the opinion that:
1. The Merger will be treated for federal income tax purposes as a
reorganization within the meaning of Section 36B(a) of the Internal Revenue
Code of 1986, as amended (the "Code").
2. No gain or loss will be recognized by UJB or BNJ, as the case may be,
for federal income tax purposes, as a result of the Merger.
We express no opinion concerning any tax consequences of the Merger other than
those specifically set forth herein.
Our opinion is based on current provisions of the Code, the Treasury
Regulations promulgated thereunder, published pronouncements of the Internal
Revenue Service and case law, any of which may be changed at any time with
retroactive effect. Any change in applicable laws or facts and circumstances
surrounding the Merger or any inaccuracy in the statements, facts, assumptions
and representations on which we have relied, may affect the continuing validity
of the opinions set forth herein. We assume no responsibility to inform you of
any such change or inaccuracy that may occur or come to our attention.
We hereby consent to your filing this opinion as an exhibit to the Registration
Statement and to the reference to our firm therein.
Very truly yours,
Weil, Gotshal & Manges
Exhibit 8(b)
April 26, 1995
Bancorp New Jersey, Inc.
10 West High Street
Somerville, New Jersey 08876
Ladies and Gentlemen:
Bancorp New Jersey, Inc., a Delaware corporation ("Company"), has requested
our opinion as to certain federal income tax consequences of a transaction
("Merger") in which the Company will merge, under the laws of the States of
Delaware and New Jersey, with and into UJB Financial Corp., a New Jersey
corporation ("UJB"), pursuant to an Agreement and Plan of Merger ("Agreement")
between the Company and UJB dated January 19, 1995. All capitalized terms used
herein, unless otherwise specified, have the same meaning as in the Joint Proxy
Statement/Prospectus issued with respect to the Merger ("Proxy
Statement-Prospectus").
In rendering our opinion, we have examined and relied upon the accuracy and
completeness of the contents of the Agreement, the Proxy Statement-Prospectus,
and such other documents as we have deemed necessary. As to various facts, we
have relied, with your consent, on the initial and continuing accuracy of
certificates of officers of the Company and UJB.
Description of the Merger
- -------------------------
The following is a summary of the Merger, the details of which are more
fully described in the Proxy Statement-Prospectus.
The Agreement provides that, subject to the conditions set forth therein,
the Company will merge with and into UJB. In the Merger, each outstanding share
of the Company's common stock ("Company Stock") (other than shares held by UJB
or any of its subsidiaries) will be converted, based on an election and
allocation process, into the right to receive either (i) whole shares of UJB's
common stock ("UJB Stock") and cash in lieu of any fractional shares of UJB
Stock (collectively "Stock
<PAGE>
Bancorp New Jersey, Inc.
April 26, 1995
Page 2
Consideration"), or (ii) $43,10 per share in cash ("Cash Consideration").
The number of shares of Company Stock to be converted into the right to
receive the Stock Consideration will equal as closely as reasonably possible 60%
of the number of shares of Company Stock outstanding at the Effective Time,
reduced by the number of shares of Company Stock, if any, held by UJB or any of
its subsidiaries. It is intended that the remaining consideration in the Merger
will consist of the Cash Consideration and cash distributed to satisfy
dissenters' rights. However, shares of UJB Stock will be delivered to holders
of Company Stock in substitution for a portion of the Cash Consideration, if
such a substitution is necessary in order to receive the tax opinions required
under the Agreement.
Opinion
- -------
Based solely upon the foregoing and assuming that the Merger is consummated
in accordance with the Agreement, our opinion with respect to the Federal income
tax consequences of the Merger is as follows:
(i) The Merger will constitute a reorganization within the meaning of
section 368(a)(1)(A) of the Internal Revenue Code of 1986, as amended
("Code");
(ii) No gain or loss will be recognized by UJB or the Company in the
Merger;
(iii) No gain or loss will be recognized by Company shareholders whose
Company Stock is exchanged solely for UJB Stock in the Merger;
(iv) In the case of Company shareholders who receive cash in whole or
in part in exchange for their Company Stock, gain, if any, realized on the
exchange will by recognized, but in an amount not in excess of the amount
of such cash;
(v) In the case of Company shareholders who recognize gain on the
exchange of their Company Stock and in whose hands the stock was a capital
asset on the date of the exchange, the gain will be treated as a capital
gain (long-term or short-term, depending on the shareholders' respective
holding periods for their Company Stock), except in the case of any
shareholder as to which the exchange has the effect of the distribution of
a dividend within the meaning of section 356(a)(2) of the Code, determined
with the application of the stock attribution rules of section 318 of the
Code;
<PAGE>
Bancorp New Jersey, Inc.
April 26, 1995
Page 3
(vi) The basis of the UJB Stock received by Company shareholders will
be the same as the basis of their Company Stock exchanged therefor, reduced
by the amount of cash received, if any, in the exchange and increased by
the amount of gain recognized, if any, in the exchange;
(vii) The holding period of the UJB Stock in the hands of the
Company's shareholders will include the holding period of the Company Stock
exchanged therefor, provided such stock was held as a capital asset on the
date of the Merger; and
(viii) The payment of cash in lieu of fractional shares of UJB Stock
will be treated as if the fractional shares were distributed in exchange
for Company Stock and then were redeemed by UJB.
Discussion
- ----------
In order to qualify as a reorganization under section 368(a)(1)(A) of the
Code, the Merger must satisfy the judicial and regulatory continuity of interest
requirement. In order for this requirement to be satisfied, a substantial
portion of the consideration in the Merger must consist of UJB Stock. For
purposes of issuing an advance ruling, the Internal Revenue Service ("Service")
requires that the stock of the acquiring corporation received in the
reorganization must be equal in value as of the date of the Merger to at least
50 percent of the value of the outstanding stock of the acquired corporation on
the same date. This advance ruling standard is more restrictive than the
judicial authorities and does not purport to establish the lower limit of stock
consideration required to satisfy the continuity of interest requirement. See,
John A. Nelson v. Helvering, 296 U.S. 374 (1935), in which the Supreme Court
found adequate continuity where the shareholders of the acquired corporation
received 38 percent stock of the acquiring corporation and 62 percent cash in
exchange for their acquired corporate stock. The Company has represented that
there is no plan by shareholders who own five percent or more of the Company
Stock or who are insiders of the Company, and that it knows of no plan of the
remaining shareholders of the Company, to dispose of shares of UJB Stock so as
to reduce the fair market value of UJB Stock held by Company shareholders below
50 percent of the fair market value of the outstanding Company Stock as of the
date of the Merger. UJB has represented that it has no plan or intention to
reacquire any of the UJB Stock issued in the Merger. Accordingly, we believe
that the Merger will satisfy the continuity of interest requirement.
<PAGE>
Bancorp New Jersey, Inc.
April 26, 1995
Page 4
In addition to the continuity of interest requirement, Treasury Regulations
provide that, in order to qualify as a reorganization under section
368(a)(1)(A), a merger must satisfy a continuity of business enterprise test.
Under these regulations, the acquiring corporation must either continue the
historic business of the acquired corporation or use a significant portion of
the acquired corporation's historic business assets in a business after the
reorganization. Rev. Rul. 85-197, 1985-2 C.B. 120, holds that the business of a
holding company, for purposes of the continuity of business enterprise
requirement, is the business of its operating subsidiary. Thus, for these
purposes, the Company's historic business is the business of New Jersey Savings
Bank ("NJSB"), its wholly owned subsidiary bank. Rev. Rul. 85-198, 1985-2 C.B.
120, holds that the acquiring corporation in a merger can carry on indirectly
the historic business of the acquired corporation through a wholly owned
subsidiary. Thus, UJB may carry on the business of the Company through NJSB or a
successor corporation to NJSB. UJB has represented that it has no plan or
intention to dispose of any of the assets of the Company or of any subsidiary of
the Company, except for a transfer to a corporation controlled by UJB within the
meaning of section 368(c) of the Code. UJB also has represented that it will
continue the historic business of the Company or use a significant portion of
the Company's historic business assets in a business. Accordingly, we believe
that the Merger will satisfy the continuity of business enterprise requirement.
The foregoing opinion is based on and is conditioned on the continued
applicability of the provisions of the Code and the regulations thereunder, case
law precedent, and the Service pronouncements in existence at the date hereof.
Except as set forth above, we express no opinion to any party as to the tax
consequences of the Merger or of transactions related thereto.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement on Form S-4 (Registration No. 33-58111) and to the
reference to our firm therein.
Very truly yours,
Kirkpatrick & Lockhart
EXHIBIT 23(a)
INDEPENDENT AUDITOR'S CONSENT
Board of Directors
UJB Financial Corp.
We consent to the use of our report, incorporated herein by reference, and
to the reference to our Firm under the heading "Experts" in the Proxy
Statement/Registration Statement.
The report of KPMG Peat Marwick LLP refers to a change in the method of
accounting for certain investments and postemployment benefits in 1994 and a
change in the method of accounting for income taxes in 1993.
KPMG Peat Marwick LLP
Short Hills, New Jersey
April 26, 1995
EXHIBIT 23(b)
INDEPENDENT AUDITOR'S CONSENT
Board of Directors
Bancorp New Jersey, Inc.
We consent to the use of our report incorporated herein by reference and
to the reference to our Firm under the heading "Experts" in the Proxy
Statement/Prospectus.
The report of KPMG Peat Marwick LLP refers to a change in the method of
accounting for income taxes in 1993 and a change in the method of accounting for
certain investments in debt and equity securities in 1994.
KPMG Peat Marwick LLP
Short Hills, New Jersey
April 26, 1995
EXHIBIT 99(a)
REVOCABLE PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF
BANCORP NEW JERSEY, INC.
The undersigned hereby appoints Bernard Adler, Joseph H. Hoffman and Louis A.
Imfeld, or any of them, each with full power of substitution, as the lawful
proxies of the undersigned, and hereby authorizes them to represent and to vote
as designated below all shares of the common stock of Bancorp New Jersey, Inc.
("Bancorp") that the undersigned would be entitled to vote if personally present
at the Annual Meeting of Bancorp to be held on May 26, 1995 and any adjournment
thereof.
The matters to be considered at the Annual Meeting are:
1. The approval of an Agreement and Plan of Merger ("Merger Agreement") dated
January 19, 1995 between Bancorp and UJB Financial Corp., which provides
for the merger ("Merger") of Bancorp with and into UJB Financial and the
conversion of Bancorp common stock into UJB Financial common stock, cash,
or a combination of UJB Financial common stock and cash;
2. The election of directors for a term of office to expire in 1998 or upon
consummation of the Merger (nominees: Gerald A. Johnson, Theodore K.
Sargent and Richard E. Schmelz); and
3. The appointment of KPMG Peat Marwick LLP as the independent accountants of
Bancorp for the year ending December 31, 1995.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING YOU ARE URGED TO EXECUTE AND
RETURN THIS PROXY, WHICH MAY BE REVOKED AT ANY TIME PRIOR TO ITS USE.
<PAGE>
[x] Please mark your
vote as in this
example.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE
FOR PROPOSALS 1, 2 and 3.
FOR AGAINST ABSTAIN
1. Approval of [ ] [ ] [ ]
Merger
Agreement
FOR WITHHELD ABSTAIN
2. Election of [ ] [ ] [ ]
Directors
(Gerald A. Johnson,
Theodore K. Sargent and
Richard E. Schmelz)
For, except vote withheld from the following nominee(s):
- ----------------------------------------------------------------------
FOR AGAINST ABSTAIN
3. Ratification of [ ] [ ] [ ]
KPMG Peat
Marwick LLP as
independent
accountants
4. In their discretion on
such other business as
may properly come before
the meeting.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER(S). IF NO DIRECTIONS ARE GIVEN, THIS PROXY
WILL BE VOTED FOR PROPOSALS 1, 2 AND 3.
IMPORTANT--PLEASE SIGN
AND DATE
AND RETURN PROMPTLY
NOTE: Please sign your name exactly as it appears hereon. When signing as an
attorney, executor, administrator, trustee or guardian, please give full title
as such. if a corporation, please sign in the corporate name by President or
other authorized officer. If a partnership, please sign in partnership name by
authorized person.
SIGNATURE(S) ________________________________________ DATE_______________, 1995
EXHIBIT 99(C)
April 26, 1995
Bancorp New Jersey, Inc.
10 West High Street
somerville, New Jersey 08876
Re: Consent of Kaplan Associates, Inc.
Gentlemen:
We hereby consent to the filing of our opinion as an appendix to the Proxy
Statement--Prospectus included in this Registration Statement on Form S-4 and to
all references to Kaplan Associates, Inc. contained herein.
Very truly yours,
KAPLAN ASSOCIATES, INC.
By: /s/ JAMES R. CAUSEY
-------------------
James R. Causey
Managing Director
