<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 28, 1994
REGISTRATION NO. 33-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------------
NORTH FORK BANCORPORATION, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
DELAWARE 36-3154608
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
</TABLE>
9025 MAIN ROAD
MATTITUCK, NEW YORK 11952
(516) 298-5000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
JOHN ADAM KANAS, PRESIDENT
NORTH FORK BANCORPORATION, INC.
9025 MAIN ROAD
MATTITUCK, NEW YORK 11952
(516) 298-5000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
COPIES OF ALL CORRESPONDENCE TO:
<TABLE>
<S> <C>
WILLIAM S. RUBENSTEIN JOSEPH G. PASSAIC
SKADDEN, ARPS, SLATE, MEAGHER & FLOM MULDOON, MURPHY & FAUCETTE
919 THIRD AVENUE 5101 WISCONSIN AVENUE, NW, SUITE 508
NEW YORK, NEW YORK 10022 WASHINGTON, D.C. 20016
(212) 735-3000 (202) 362-0840
</TABLE>
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: As soon as
practicable after Registration Statement becomes effective.
If any of 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. / /
CALCULATION OF REGISTRATION FEE
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<TABLE>
<S> <C> <C> <C> <C>
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PROPOSED
PROPOSED MAXIMUM
AMOUNT MAXIMUM AGGREGATE AMOUNT OF
TITLE OF EACH CLASS OF TO BE OFFERING PRICE OFFERING REGISTRATION
SECURITIES BEING REGISTERED(1) REGISTERED PER SHARE(2) PRICE(2) FEE(2)
- -------------------------------------------------------------------------------------------------------------------
Common Stock, par value $2.50 per share........ 13,000,000 $11.55 $150,154,532 $28,618.42
- -------------------------------------------------------------------------------------------------------------------
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</TABLE>
(1) Also includes associated Rights to purchase shares of the Registrant's
Series A Junior Participating Preferred Stock, which Rights (a) are not
currently separable from the shares of Common Stock and (b) are not
currently exercisable. See "DESCRIPTION OF NORTH FORK CAPITAL STOCK" and
"COMPARISON OF STOCKHOLDER RIGHTS."
(2) The registration fee has been computed pursuant to Rule 457(f)(l) under the
Securities Act of 1933, as amended, based on the average of the high and low
prices for shares of Common Stock of Metro Bancshares Inc. ("Metro")
reported on the National Association of Securities Dealers Automated
Quotation/National Market System on September 22, 1994, ($25.50) and the
maximum number of such shares (5,588,413) that may be exchanged for the
securities being registered. The proposed maximum offering price per share
has been determined by dividing the portion of the proposed maximum
aggregate offering price by the number of shares being registered. Pursuant
to Rule 457(b), the registration fee has been reduced by the $23,159 paid on
July 29, 1994 upon the filing under the Securities Exchange Act of 1934, as
amended, of North Fork's and Metro's proxy materials included herein
relating to the Merger. Accordingly, the registration fee payable upon the
filing of this Registration Statement is $28,618.42.
-----------------------------
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 THE 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 SECTION 8(A), MAY
DETERMINE.
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<PAGE> 2
NORTH FORK BANCORPORATION, INC.
CROSS-REFERENCE SHEET BETWEEN ITEMS IN FORM S-4 AND PROSPECTUS
PURSUANT TO ITEM 501(B) OF REGULATION S-K
<TABLE>
<CAPTION>
ITEM NO. FORM S-4 CAPTION HEADING IN PROSPECTUS
-------- ---------------------------------------- -------------------------------------
<S> <C> <C>
A. INFORMATION ABOUT THE TRANSACTION
Item 1. Forepart of Registration Statement and
Outside Front Cover Page of
Prospectus.............................. Cover Page of Registration Statement;
Cross Reference Sheet; Outside Front
Cover Page of Prospectus
Item 2. Inside Front and Outside Back Cover
Pages of Prospectus..................... Inside Front Cover Page of
Prospectus; Table of Contents;
Available Information; Incorporation
of Certain Documents by Reference
Item 3. Risk Factors, Ratio of Earnings to Fixed
Charges and Other Information........... Summary; The Meetings; The Merger
Item 4. Terms of the Transaction................ Summary; The Merger; Certain Related
Transactions; Description of North
Fork Capital Stock; Comparison of
Stockholder Rights
Item 5. Pro Forma Financial Information......... Summary; Unaudited Pro Forma Combined
Selected Financial Data; Unaudited
Pro Forma Condensed Combined
Financial Statements
Item 6. Material Contacts with the Company Being
Acquired................................ Summary; The Merger; Certain Related
Transactions
Item 7. Additional Information Required for
Reoffering by Persons and Parties Deemed
to be Underwriters...................... *
Item 8. Interests of Named Experts and
Counsel................................. *
Item 9. Disclosure of Commission Position of
Indemnification for Securities Act
Liabilities............................. *
B. INFORMATION ABOUT THE REGISTRANT
Item 10. Information with Respect to S-3
Registrants............................. Available Information; Incorporation
of Certain Documents by Reference;
Summary; The Merger; Unaudited Pro
Forma Combined Selected Financial
Data; Unaudited Pro Forma Condensed
Combined Financial Information
Item 11. Incorporation of Certain Information by
Reference............................... Incorporation of Certain Documents by
Reference
Item 12. Information with Respect to S-2 or S-3
Registrants............................. *
Item 13. Incorporation of Certain Information by
Reference............................... *
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
ITEM NO. FORM S-4 CAPTION HEADING IN PROSPECTUS
-------- ---------------------------------------- -------------------------------------
<S> <C> <C>
Item 14. Information with Respect to Registrants
Other than S-2 or S-3 Registrants....... *
C. INFORMATION ABOUT THE COMPANY BEING
ACQUIRED
Item 15. Information with Respect to S-3
Companies............................... Available Information; Incorporation
of Certain Documents by Reference;
Summary
Item 16. Information with Respect to S-2 or S-3
Companies............................... *
Item 17. Information with Respect to Companies
Other than S-2 or S-3 Companies......... *
D. VOTING AND MANAGEMENT INFORMATION
Item 18. Information if Proxies, Consents or
Authorizations Are to be Solicited...... Summary; The Meetings; The Merger
Item 19. Information if Proxies, Consents or
Authorizations Are Not to be Solicited
in an Exchange Offer.................... *
</TABLE>
- ---------------
* Omitted because inapplicable or answer is in the negative.
<PAGE> 4
[METRO LETTERHEAD]
October 3, 1994
Dear Stockholder:
You are cordially invited to attend a Special Meeting of Stockholders (the
"Special Meeting") of Metro Bancshares Inc. ("Metro") which will be held on
Thursday, November 10, 1994 at 10:00 a.m., local time, at the LaGuardia Marriott
Hotel, 102-05 Ditmars Boulevard, East Elmhurst, New York 11369.
At the Special Meeting, you will be asked to consider and vote upon a
proposal to approve an Agreement and Plan of Merger (the "Merger Agreement")
pursuant to which Metro will be merged (the "Merger") with and into North Fork
Bancorporation, Inc. ("North Fork"). It is intended that immediately following
the Merger, Bayside Federal Savings Bank ("Bayside Federal"), a federally
chartered stock savings bank and a wholly owned subsidiary of Metro, will merge
(the "Subsidiary Bank Merger") with and into North Fork Bank, a New York
chartered stock commercial bank and a wholly owned subsidiary of North Fork.
Upon consummation of the Merger, each share of the common stock of Metro ("Metro
Common Stock") will be converted into and exchangeable for the number of shares
(the "Exchange Ratio") of the common stock, par value $2.50 per share, of North
Fork ("North Fork Common Stock"), determined by dividing $25.50 by the Average
Closing Price (as defined below); provided, however, that (I) if the Average
Closing Price is equal to or greater than $15.50, the Exchange Ratio will be
1.645 and (II) subject to certain provisions of the Merger Agreement, if the
Average Closing Price is equal to or less than $14.50, the Exchange Ratio will
be 1.759. If the Average Closing Price is less than $12.50, Metro may terminate
the Merger Agreement unless North Fork increases the Exchange Ratio so that the
shares of North Fork Common Stock issued in exchange for each share of Metro
Common Stock have a value (valued at the Average Closing Price) of $21.99. The
term "Average Closing Price" means the average closing sales price per share of
North Fork Common Stock on the New York Stock Exchange ("NYSE") (as reported by
The Wall Street Journal or, if not reported thereby, another authoritative
source), for the 20 consecutive NYSE trading days ending on the fifth business
day prior to the date on which the last of all regulatory approvals required to
consummate the transactions contemplated by the Merger Agreement (including the
Merger and the Subsidiary Bank Merger) are obtained, without regard to any
requisite waiting periods in respect thereof.
The proposed Merger has been unanimously approved by the Board of Directors
of both Metro and North Fork. Your Board of Directors has determined that the
Merger is in the best interests of Metro and its stockholders and recommends
that you vote FOR approval of the Merger Agreement. The investment banking firm
of Keefe, Bruyette & Woods, Inc. has issued its written opinion to your Board of
Directors, dated as of the date of the accompanying Joint Proxy
Statement/Prospectus, to the effect that, as of such date, the Exchange Ratio
was fair, from a financial point of view, to Metro's stockholders. The written
opinion of Keefe, Bruyette & Woods, Inc. is reproduced in full as Annex C to the
accompanying Joint Proxy Statement/Prospectus, and Metro's stockholders are
urged to read such opinion carefully in its entirety.
Consummation of the Merger is subject to certain conditions, including, but
not limited to, approvals by the requisite vote of the stockholders of both
Metro and North Fork and the approval of the Merger and the Subsidiary Bank
Merger by various regulatory agencies.
The enclosed Notice of Special Meeting and Joint Proxy Statement/Prospectus
describe the Merger and provide specific information regarding the Special
Meeting. Please read these materials carefully.
It is very important that your shares of Metro Common Stock be represented
at the Special Meeting, whether or not you plan to attend in person. The
affirmative vote of the holders of a majority of the votes that may be cast by
all Metro stockholders entitled to vote at the Special Meeting is required for
approval of the
<PAGE> 5
Merger Agreement. A failure to vote for approval of the Merger Agreement will
have the same effect as a vote against the Merger Agreement. Therefore, I urge
you to execute, date and return the enclosed proxy card in the enclosed
postage-paid envelope as soon as possible to ensure that your shares will be
voted at the Special Meeting. If you attend the Special Meeting, you may revoke
the proxy given on such form and vote in person if you wish, even if you have
previously returned your form of proxy. YOU SHOULD NOT SEND IN ANY STOCK
CERTIFICATES AT THIS TIME.
On behalf of the Board of Directors, I thank you for your support and urge
you to vote FOR approval of the Merger Agreement.
Sincerely,
David G. Herold
Chairman, President and Chief
Executive Officer
<PAGE> 6
METRO BANCSHARES INC.
100 JERICHO QUADRANGLE
JERICHO, NEW YORK 11753
(516) 933-8000
------------------------
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON NOVEMBER 10, 1994
------------------------
NOTICE IS HEREBY GIVEN that a Special Meeting of Stockholders of Metro
Bancshares Inc. will be held on November 10, 1994, at 10:00 a.m., local time, at
the LaGuardia Marriott Hotel, 102-05 Ditmars Boulevard, East Elmhurst, New York
11369.
The Special Meeting is for the purpose of considering and voting upon the
following matters:
1. Voting upon a proposal to approve and adopt the Agreement and Plan
of Merger, dated as of June 27, 1994 (the "Merger Agreement"), by and
between North Fork Bancorporation, Inc. ("North Fork") and Metro Bancshares
Inc. ("Metro") and the transactions contemplated thereby, including the
merger (the "Merger") of Metro with and into North Fork.
2. Transacting such other business as may properly come before the
Special Meeting or any adjournments or postponements thereof including,
without limitation, a motion to adjourn or postpone the Special Meeting to
another time and/or place for the purpose of soliciting additional proxies
in order to approve the Merger Agreement and the consummation of the
transactions contemplated thereby or otherwise.
Pursuant to the Bylaws of Metro, the Board of Directors has fixed September
30, 1994, as the record date for the determination of stockholders entitled to
notice of and to vote at the Special Meeting and at any adjournments or
postponements thereof. Only stockholders of record at the close of business on
that date will be entitled to notice of and to vote at the Special Meeting or
any adjournments or postponements thereof. A list of Metro stockholders entitled
to vote at the Special Meeting will be available for examination for any purpose
germane to the Special Meeting, during ordinary business hours, at the principal
executive offices of Metro, located at 100 Jericho Quadrangle, Jericho, New York
11753, for 20 days prior to the Special Meeting as well as at the Special
Meeting. In the event there are not sufficient shares represented for a quorum
or votes to approve the Merger Agreement or otherwise at the time of the Special
Meeting, the Special Meeting may be adjourned in order to permit further
solicitation of proxies by Metro.
The affirmative vote of the holders of not less than a majority of the
outstanding shares of Metro common stock entitled to vote is required for
approval of the Merger Agreement and the consummation of the transactions
contemplated thereby. The common stock, par value $0.01 per share, of Metro is
the only security whose holders are entitled to vote upon the proposal to be
presented at the Special Meeting.
EACH STOCKHOLDER, WHETHER HE OR SHE PLANS TO ATTEND THE SPECIAL MEETING, IS
REQUESTED TO COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD WITHOUT
DELAY IN THE ENCLOSED POSTAGE-PAID ENVELOPE. ANY PROXY GIVEN BY THE STOCKHOLDER
MAY BE REVOKED AT ANY TIME BEFORE IT IS EXERCISED. A PROXY MAY BE REVOKED BY
FILING WITH THE SECRETARY OF METRO A WRITTEN REVOCATION OR A DULY EXECUTED PROXY
BEARING A LATER DATE. ANY STOCKHOLDER PRESENT AT THE SPECIAL MEETING MAY REVOKE
HIS OR HER PROXY AND VOTE PERSONALLY ON EACH MATTER BROUGHT BEFORE THE SPECIAL
MEETING.
By Order of the Board of Directors
William De Cicco
Secretary
Jericho, New York
October 3, 1994
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
THAT YOU VOTE FOR THE PROPOSAL
TO APPROVE AND ADOPT THE MERGER AGREEMENT
PLEASE COMPLETE, DATE AND SIGN THE ENCLOSED PROXY
AND MAIL IT PROMPTLY IN THE ENCLOSED
POSTAGE-PAID RETURN ENVELOPE
<PAGE> 7
[NORTH FORK LETTERHEAD]
October 3, 1994
Dear North Fork Stockholder:
You are cordially invited to attend a Special Meeting of Stockholders of
North Fork Bancorporation, Inc. ("North Fork") which will be held on Thursday,
November 10, 1994 at 10:00 a.m., local time, at the Radisson Hotel, Islandia,
Hauppage, New York (the "Special Meeting"). At this meeting, you will be asked
to consider and vote upon a proposal to approve an Agreement and Plan of Merger
(the "Merger Agreement") pursuant to which Metro Bancshares Inc. ("Metro") will
be merged with and into North Fork and the stockholders of Metro will become
stockholders of North Fork.
Your shares of North Fork Common Stock will be unaffected by the merger.
Upon consummation of the merger, Metro's former stockholders will own
approximately % of North Fork's outstanding common stock.
The proposed merger has been unanimously approved by the Board of Directors
of each company. Your Board of Directors believes that the merger will provide
significant value to North Fork's stockholders by extending the markets served
by North Fork and allowing North Fork to provide a broader array of services to
Metro's customers. Your Board has determined that the merger is in the best
interests of North Fork and its stockholders and unanimously recommends that you
vote FOR approval of the Merger Agreement. The investment banking firm of M.A.
Schapiro & Co., Inc. has issued a written opinion to your Board of Directors
that, as of the date of such opinion, the aggregate consideration to be paid by
North Fork in the merger was fair to North Fork and its stockholders from a
financial point of view. The written opinion of M.A. Schapiro & Co., Inc. is
reproduced in full as Annex D to the accompanying Joint Proxy
Statement/Prospectus, and North Fork's stockholders are urged to read carefully
such opinion in its entirety.
Consummation of the merger is subject to certain conditions, including the
approval of the Merger Agreement by the holders of a majority of the shares of
each of North Fork's and Metro's common stock and the approval of the merger by
various regulatory agencies.
Specific information regarding the Special Meeting is contained in the
enclosed Notice of Special Meeting and Joint Proxy Statement/Prospectus. Please
read these materials carefully.
It is very important that your shares are represented at the Special
Meeting, whether or not you plan to attend in person. A failure to vote for
approval of the Merger Agreement will have the same effect as a vote against the
Merger Agreement. Therefore, I urge you to execute, date and return the enclosed
proxy card in the enclosed postage-paid envelope as soon as possible to assure
that your shares will be voted at the Special Meeting.
On behalf of the Board of Directors, I thank you for your support and urge
you to vote FOR approval of the Merger Agreement.
Sincerely,
John Adam Kanas
Chairman, President and Chief
Executive Officer
THE BOARD OF DIRECTORS RECOMMENDS THAT
YOU VOTE FOR THE PROPOSAL
TO APPROVE AND ADOPT THE MERGER AGREEMENT
PLEASE COMPLETE, DATE AND SIGN THE ENCLOSED PROXY
AND MAIL IT PROMPTLY IN THE ENCLOSED
POSTAGE-PAID RETURN ENVELOPE
<PAGE> 8
NORTH FORK BANCORPORATION, INC.
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON NOVEMBER 10, 1994
To the Stockholders of
North Fork Bancorporation, Inc.:
NOTICE IS HEREBY GIVEN that a Special Meeting of Stockholders of North Fork
Bancorporation, Inc. ("North Fork") will be held at the Radisson Hotel,
Islandia, Hauppage, New York on Thursday, November 10, 1994, at 10:00 a.m. local
time (the "Special Meeting"), for the following purposes, all of which are more
fully described in the accompanying Joint Proxy Statement/Prospectus:
1. To consider and vote upon a proposal to approve and adopt the
Agreement and Plan of Merger, dated as of June 27, 1994 (the "Merger
Agreement"), between North Fork and Metro Bancshares Inc. ("Metro"), and
the consummation of the transactions contemplated thereby, including the
merger of Metro with and into North Fork and the issuance of North Fork
common stock to the holders of Metro common stock. A copy of the Merger
Agreement is attached as Annex A to this Joint Proxy Statement/Prospectus.
2. To transact such other business as may properly come before the
Special Meeting or any adjournments or postponements thereof.
The North Fork Board of Directors has fixed the close of business on
September 30, 1994 as the record date for the determination of stockholders
entitled to notice of and to vote at the Special Meeting and any adjournments or
postponements thereof. Only stockholders of record at the close of business on
such date are entitled to notice of and to vote at the Special Meeting. A list
of North Fork stockholders entitled to vote at the Special Meeting will be
available for examination for any purpose germane to the Special Meeting, during
ordinary business hours, at the principal executive offices of North Fork,
located at 9025 Route 25, Mattituck, New York, for 10 days prior to the Special
Meeting.
The common stock, par value $2.50 per share, of North Fork is the only
security of North Fork whose holders are entitled to vote upon the proposal to
be presented at the Special Meeting.
YOUR VOTE IS IMPORTANT REGARDLESS OF THE NUMBER OF SHARES YOU OWN. EACH
STOCKHOLDER, EVEN THOUGH HE OR SHE NOW PLANS TO ATTEND THE SPECIAL MEETING, IS
REQUESTED TO SIGN, DATE AND RETURN THE ENCLOSED PROXY WITHOUT DELAY IN THE
ENCLOSED POSTAGE-PAID ENVELOPE. YOU MAY REVOKE YOUR PROXY AT ANY TIME PRIOR TO
ITS EXERCISE. ANY STOCKHOLDER PRESENT AT THE SPECIAL MEETING OR AT ANY
ADJOURNMENTS OR POSTPONEMENTS THEREOF MAY REVOKE HIS OR HER PROXY AND VOTE
PERSONALLY ON EACH MATTER BROUGHT BEFORE THE SPECIAL MEETING.
By Order of the Board of Directors,
Anthony J. Abate
Secretary
October 3, 1994
THE BOARD OF DIRECTORS RECOMMENDS THAT
YOU VOTE FOR THE PROPOSAL
TO APPROVE AND ADOPT THE MERGER AGREEMENT
PLEASE COMPLETE, DATE AND SIGN THE ENCLOSED PROXY
AND MAIL IT PROMPTLY IN THE ENCLOSED
POSTAGE-PAID RETURN ENVELOPE
<PAGE> 9
NORTH FORK BANCORPORATION, INC.
METRO BANCSHARES INC.
JOINT PROXY STATEMENT
------------------------
NORTH FORK BANCORPORATION, INC.
PROSPECTUS
------------------------
13,000,000 SHARES OF COMMON STOCK
This Joint Proxy Statement/Prospectus (the "Joint Proxy
Statement/Prospectus") is being furnished to stockholders of Metro Bancshares
Inc. ("Metro") in connection with the solicitation of proxies by the Board of
Directors of Metro for use at a special meeting of stockholders of Metro
(including any adjournments or postponements thereof) to be held on November 10,
1994 (the "Metro Meeting"). At the Metro Meeting, Metro's stockholders will
consider and vote upon a proposal to approve and adopt the Agreement and Plan of
Merger, dated as of June 27, 1994 (the "Merger Agreement"), between North Fork
Bancorporation, Inc. ("North Fork") and Metro, and the consummation of the
transactions contemplated thereby. Pursuant to the Merger Agreement, North Fork
will acquire Metro by means of a merger (the "Merger") of Metro with and into
North Fork.
This Joint Proxy Statement/Prospectus is also being furnished to
stockholders of North Fork in connection with the solicitation of proxies by
North Fork's Board of Directors for use at a special meeting of stockholders of
North Fork (including any adjournments or postponements thereof) to be held on
November 10, 1994 (the "North Fork Meeting," and together with the Metro
Meeting, the "Special Meetings"). At the North Fork Meeting, North Fork's
stockholders will consider and vote upon a proposal to approve and adopt the
Merger Agreement and the consummation of the transactions contemplated thereby.
The Merger Agreement is attached as Annex A hereto and is incorporated
herein by reference.
This Joint Proxy Statement/Prospectus also constitutes a prospectus of
North Fork with respect to up to 13,000,000 shares of common stock, par value
$2.50 per share, of North Fork ("North Fork Common Stock") issuable to
approximately 1,000 holders of common stock, par value $.01 per share, of Metro
("Metro Common Stock") in the Merger. Upon consummation of the Merger, each
outstanding share of Metro Common Stock will, with certain exceptions, be
converted into and exchangeable for a number of shares (the "Exchange Ratio") of
North Fork Common Stock determined by dividing $25.50 by the Average Closing
Price (as defined below), provided, however, that (I) if the Average Closing
Price is equal to or greater than $15.50, the Exchange Ratio will be 1.645 and
(II) except as described in the next sentence, if the Average Closing Price is
equal to or less than $14.50, the Exchange Ratio will be 1.759. If the Average
Closing Price is less than $12.50, Metro may terminate the Merger Agreement
unless North Fork increases the Exchange Ratio so that the shares of North Fork
Common Stock issued in exchange for each share of Metro Common Stock have a
value (valued at the Average Closing Price) of $21.99. The Average Closing Price
is defined as the average closing sales price of the North Fork Common Stock on
the New York Stock Exchange for the 20 consecutive trading days ending on the
fifth business day prior to the date on which the last required regulatory
approval for the Merger and the other transactions contemplated by the Merger
Agreement is obtained, without regard to any requisite waiting periods in
respect thereof. Under the terms of the Merger Agreement, cash will be paid in
lieu of the issuance of fractional shares of North Fork Common Stock. In
addition, each share of North Fork Common Stock issued in the Merger will
include the corresponding number of rights attached thereto pursuant to North
Fork's Rights Agreement (as defined below).
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 SHARES OF NORTH FORK COMMON STOCK 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, THE BANK INSURANCE
FUND OR ANY OTHER GOVERNMENT AGENCY.
------------------------
This Joint Proxy Statement/Prospectus and the accompanying forms of proxy
are first being mailed to stockholders of North Fork and Metro on or about
October 3, 1994.
The date of this Joint Proxy Statement/Prospectus is September 28, 1994
<PAGE> 10
No persons have been authorized to give any information or to make any
representations other than those contained in this Joint Proxy
Statement/Prospectus or incorporated by reference herein in connection with the
solicitation of proxies or the offering of securities made hereby and, if given
or made, such information or representations must not be relied upon as having
been authorized by North Fork or Metro. This Joint Proxy Statement/Prospectus
does not constitute an offer to sell, or a solicitation of an offer to buy, any
securities, or the solicitation of a proxy, in any jurisdiction to or from any
person to whom it is not lawful to make any such offer or solicitation in such
jurisdiction. Neither the delivery of this Joint Proxy Statement/Prospectus nor
any distribution of securities made hereunder shall, under any circumstances,
create an implication that there has been no change in the affairs of North Fork
or Metro since the date of this Joint Proxy Statement/Prospectus or that the
information herein or the documents or reports incorporated by reference herein
is correct as of any time subsequent to such date. All information contained in
this Joint Proxy Statement/Prospectus relating to North Fork and its
subsidiaries has been supplied by North Fork and all information contained in
this Joint Proxy Statement/Prospectus relating to Metro and its subsidiaries has
been supplied by Metro.
<PAGE> 11
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
AVAILABLE INFORMATION................................................................ 1
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE...................................... 2
SUMMARY.............................................................................. 3
MARKET PRICES AND DIVIDEND INFORMATION............................................... 11
UNAUDITED SELECTED FINANCIAL DATA.................................................... 12
UNAUDITED PRO FORMA COMBINED SELECTED FINANCIAL DATA................................. 15
THE MEETINGS......................................................................... 20
Metro Meeting...................................................................... 20
North Fork Meeting................................................................. 21
THE MERGER........................................................................... 24
General............................................................................ 24
Exchange Ratio..................................................................... 24
Background of the Merger........................................................... 26
Recommendations of the Boards of Directors; Reasons for the Merger................. 28
Opinions of Financial Advisors..................................................... 30
Interests of Certain Persons in the Merger......................................... 40
Employee Matters................................................................... 42
Effective Time..................................................................... 42
Conversion of Shares; Procedures for Exchange of Certificates; Fractional Shares... 42
Conditions to the Merger........................................................... 43
Regulatory Approvals Required for the Merger....................................... 45
Conduct of Business Pending the Merger............................................. 47
Waiver and Amendment; Termination.................................................. 48
No Solicitation of Transactions.................................................... 49
Resales of North Fork Common Stock Received in the Merger.......................... 49
Stock Exchange Listing............................................................. 50
Anticipated Accounting Treatment................................................... 50
Certain Federal Income Tax Consequences of the Merger.............................. 51
No Appraisal Rights................................................................ 52
Consolidation of Operations; Projected Cost Savings................................ 52
Merger and Restructuring Charges................................................... 53
CERTAIN RELATED TRANSACTIONS......................................................... 53
Stock Option Agreement; Termination Fee............................................ 53
Subsidiary Bank Merger Agreement................................................... 56
CERTAIN REGULATORY CONSIDERATIONS.................................................... 57
General............................................................................ 57
Payment of Dividends............................................................... 57
Holding Company Liability.......................................................... 58
Capital Adequacy and Prompt Corrective Action...................................... 58
Transactions with Affiliates....................................................... 60
FDIC Insurance Assessments......................................................... 60
Conservatorship and Receivership Powers of Federal Banking Agencies................ 60
DESCRIPTION OF NORTH FORK CAPITAL STOCK.............................................. 60
General............................................................................ 60
Common Stock....................................................................... 61
Rights Plan........................................................................ 61
</TABLE>
i
<PAGE> 12
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
COMPARISON OF STOCKHOLDER RIGHTS..................................................... 63
Action by Written Consent.......................................................... 64
Stockholder Nominations and Proposals for Business................................. 64
Certain Business Combinations...................................................... 65
Removal of Directors............................................................... 66
Amendment of Bylaws................................................................ 66
Amendment of Certificate........................................................... 66
Limit on Stockholder Voting........................................................ 66
Consideration of Other Constituencies.............................................. 67
Personal Liability of Directors.................................................... 67
Rights Plans....................................................................... 67
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS.......................... 68
LEGAL MATTERS........................................................................ 76
EXPERTS.............................................................................. 76
STOCKHOLDER PROPOSALS................................................................ 76
ANNEX A AGREEMENT AND PLAN OF MERGER................................................ A-1
ANNEX B STOCK OPTION AGREEMENT...................................................... B-1
ANNEX C OPINION OF KEEFE, BRUYETTE & WOODS, INC..................................... C-1
ANNEX D OPINION OF M.A. SCHAPIRO & CO, INC.......................................... D-1
</TABLE>
ii
<PAGE> 13
AVAILABLE INFORMATION
North Fork and Metro are subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith file reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). The reports, proxy
statements and other information filed by North Fork and Metro with the
Commission can be inspected and copied at the public reference facilities
maintained by the Commission at Room 1024, 450 Fifth Street, N.W., Washington,
D.C. 20549, and at the Commission's Regional Offices at 7 World Trade Center,
New York, New York 10048 and Northwestern Atrium Center, 500 West Madison, Suite
1400, Chicago, Illinois 60661. Copies of such material also can be obtained from
the Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates. In addition, material filed by
North Fork can be inspected at the offices of the New York Stock Exchange, Inc.,
20 Broad Street, New York, New York 10005 and material filed by Metro can be
inspected at the offices of the American Stock Exchange, 86 Trinity Place, New
York, New York 10006.
North Fork has filed with the Commission a Registration Statement on Form
S-4 (together with any amendments thereof, the "Registration Statement") under
the Securities Act of 1933, as amended (the "Securities Act"), with respect to
the shares of North Fork Common Stock to be issued pursuant to the Merger
Agreement. This Joint Proxy Statement/Prospectus does not contain all the
information set forth in the Registration Statement and the exhibits thereto.
Such additional information may be inspected and copied as set forth above.
Statements contained in this Joint Proxy Statement/Prospectus or in any document
incorporated by reference in this Joint Proxy Statement/Prospectus as to the
contents of any contract or other document referred to herein or therein are not
necessarily complete, and in each instance reference is made to the copy of such
contract or other document filed as an exhibit to the Registration Statement or
such other document, each such statement being qualified in all respects by such
reference.
<PAGE> 14
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission by North Fork (File No.
0-10280) and Metro (File No. 1-11364) are incorporated by reference in this
Joint Proxy Statement/Prospectus:
1. North Fork's Annual Report on Form 10-K for the fiscal year ended
December 31, 1993 (the "1993 North Fork Form 10-K").
2. North Fork's Quarterly Reports on Form 10-Q for the quarters ended March
31, 1994 and June 30, 1994.
3. North Fork's Current Reports on Form 8-K, dated February 10, 1994;
February 22, 1994; February 28, 1994; March 22, 1994; March 30, 1994; April 20,
1994; June 27, 1994 and July 20, 1994.
4. The description of North Fork Common Stock and North Fork Series A
Junior Participating Preferred Stock and Preferred Stock Purchase Rights set
forth in North Fork's Registration Statements filed on Form 8-A, dated March 1,
1989 and February 9, 1990, and any amendments or updates thereto.
5. The portions of North Fork's Proxy Statement for the Annual Meeting of
Stockholders held on April 26, 1994 that have been incorporated by reference in
the 1993 North Fork Form 10-K.
6. Metro's Annual Report on Form 10-K for the fiscal year ended September
30, 1993 (the "1993 Metro Form 10-K").
7. Metro's Quarterly Reports on Form 10-Q for the quarters ended December
31, 1993, March 31, 1994 and June 30, 1994.
8. Metro's Current Report on Form 8-K dated June 27, 1994.
9. The description of Metro Common Stock set forth in Metro's Registration
Statement filed on Form 8-A, dated October 7, 1988, and any amendments or
updates thereto.
10. The portions of Metro's Proxy Statement for the Annual Meeting of
Stockholders held on January 26, 1994 that have been incorporated by reference
in the 1993 Metro Form 10-K.
All documents and reports filed by North Fork or Metro pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this Joint Proxy
Statement/Prospectus and prior to the date of the Special Meetings shall be
deemed to be incorporated by reference in this Joint Proxy Statement/Prospectus
and to be a part hereof from the dates of filing of such documents or reports.
Any statement contained in a document or report incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Joint Proxy Statement/Prospectus to the extent that a
statement contained herein, or in any other subsequently filed document or
report which also is deemed to be 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
Joint Proxy Statement/Prospectus.
THIS JOINT PROXY STATEMENT/PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE
WHICH ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. SUCH DOCUMENTS (OTHER THAN
EXHIBITS TO SUCH DOCUMENTS UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED BY
REFERENCE) ARE AVAILABLE, WITHOUT CHARGE, TO ANY PERSON, INCLUDING ANY
BENEFICIAL OWNER, TO WHOM THIS JOINT PROXY STATEMENT/PROSPECTUS IS DELIVERED, ON
WRITTEN OR ORAL REQUEST, IN THE CASE OF DOCUMENTS RELATING TO NORTH FORK, TO
NORTH FORK BANCORPORATION, INC., 9025 ROUTE 25, MATTITUCK, NY 11952, ATTENTION:
ANTHONY ABATE, SECRETARY, TELEPHONE NUMBER (516) 298-5000, AND IN THE CASE OF
DOCUMENTS RELATING TO METRO, TO METRO BANCSHARES INC., 100 JERICHO QUADRANGLE,
JERICHO, NEW YORK 11753, ATTENTION: WILLIAM DE CICCO, SECRETARY, TELEPHONE
NUMBER (516) 933-8000. IN ORDER TO ENSURE TIMELY DELIVERY OF THE DOCUMENTS,
REQUESTS SHOULD BE RECEIVED BY NOVEMBER 2, 1994.
2
<PAGE> 15
SUMMARY
The following is a summary of certain information contained elsewhere in
this Joint Proxy Statement/Prospectus. As this summary is necessarily
incomplete, reference is made to, and this summary is qualified in its entirety
by, the more detailed information contained or incorporated by reference in this
Joint Proxy Statement/Prospectus and the Annexes hereto. North Fork and Metro
stockholders are urged to read this Joint Proxy Statement/Prospectus and the
Annexes hereto in their entirety. Certain capitalized terms which are used but
not defined in this summary are defined elsewhere in this Joint Proxy
Statement/Prospectus.
PARTIES TO THE MERGER
Metro. Metro is a Delaware corporation incorporated in July 1988 which
acquired all of the stock of Bayside Federal Savings Bank ("Bayside Federal")
upon Bayside Federal's conversion from a federally chartered mutual savings bank
to a federally chartered stock savings bank. The conversion was completed on
November 10, 1988.
Bayside Federal was organized in 1921 as a New York State chartered mutual
savings and loan association. It converted in 1934 to a federally chartered
mutual savings and loan association and converted to a federally chartered
mutual savings bank in 1988.
The principal business of Bayside Federal is attracting retail deposits
from the general public and investing those funds primarily in adjustable rate
mortgage loans on one-to four-family homes, apartment buildings and, to a lesser
extent, cooperative residential buildings and commercial real estate properties.
Bayside Federal's revenues are derived principally from interest and fees on
mortgage loans, interest and dividends on investment securities, mortgage-backed
securities and short term investments, and other fees and service charges.
Bayside Federal's primary sources of funds are deposits, amortization and
prepayments of loan principal, maturities of short term investments, Federal
Home Loan Bank of New York advances, other borrowings, and funds provided from
operations.
On September 10, 1982, Bayside purchased Union Federal Savings and Loan
Association, New York City, with assets of $144.3 million, in a merger
transaction in which the Federal Savings and Loan Insurance Corporation provided
financial assistance. As a result of the merger, Bayside expanded its retail
branch offices into Manhattan, Ridgewood in Queens and Great Neck and Glen Cove
in Nassau County. Prior to September 27, 1991, Bayside Federal had ten
branches -- seven located in Queens County, two in Nassau County and one in
Manhattan (which was closed in July of 1992). On September 27, 1991, Bayside
Federal acquired certain assets and assumed certain liabilities of Eastern
Federal Savings and Loan Association from the Resolution Trust Corporation. This
acquisition added four retail banking offices (all in southern Suffolk County)
to its existing branch network. Bayside Federal considers its primary lending
area to include New York City and Nassau, Suffolk and Westchester counties.
Bayside Federal has two wholly owned subsidiaries, CPS Service Corp.
("CPS") and Unifed Management Corp. CPS, incorporated in 1993, is an operating
subsidiary whose sole purpose is to dispose of real estate owned acquired by
Bayside Federal and transferred to CPS. As of June 30, 1994, CPS had $2.8
million net in real estate owned that has been reflected as such in Metro's
consolidated financial statements. Unifed Management Corp. is the parent
corporation for three additional subsidiaries, BFS Service Corp., Bay
Advertising, Inc. and Bay Abstract, Inc. BFS Service Corp., incorporated in
1971, makes real estate investments primarily in raw land. This subsidiary has
had no active projects since July 19, 1993. Bay Advertising, Inc., incorporated
in 1984, designs and places advertising for Bayside Federal. Bay Abstract, Inc.,
incorporated in 1978, is an inactive corporate entity. Bayside Federal's total
investment in all of its subsidiaries was $3.3 million at June 30, 1994.
At June 30, 1994, Metro had assets of $1 billion, deposits of $893 million
and stockholders' equity of $82.6 million. The principal executive offices of
Metro are located at 100 Jericho Quadrangle, Jericho, New York 11753 and its
telephone number is (516) 933-8000.
3
<PAGE> 16
For more information about Metro, reference is made to the 1993 Metro Form
10-K and to Metro's Quarterly Report on Form 10-Q for the quarter ended June 30,
1994 which are incorporated herein by reference. See "AVAILABLE INFORMATION" and
"INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE."
North Fork. North Fork, located in Mattituck, New York, is a commercial
bank holding company incorporated under the laws of Delaware and registered
under the Bank Holding Company Act of 1956, as amended. North Fork's primary
subsidiary, North Fork Bank ("North Fork Bank"), is the result of the October 1,
1992 merger of North Fork's banking subsidiaries, The North Fork Bank & Trust
Company ("Bank & Trust") and Southold Savings Bank ("Southold"). Bank & Trust
was merged into Southold, which then converted its charter from that of a state
savings bank to a state commercial bank and changed its name to North Fork Bank.
North Fork Bank provides a wide range of commercial banking services through 35
branch locations throughout Suffolk, Nassau, Westchester and Rockland Counties,
New York.
North Fork was organized in 1980 and in 1981 acquired Bank & Trust, a
commercial bank operating primarily on eastern Long Island, New York. Bank &
Trust was chartered on April 26, 1905 under the name Mattituck Bank and in 1950
changed its name to The North Fork Bank & Trust Company. During the 1950's,
three other banks located on the north fork of eastern Long Island were merged
into Bank & Trust. Since then, Bank & Trust had expanded its branch network to
other areas of Long Island primarily through de novo branching.
Prior to 1988, North Fork's principal asset was Bank & Trust and its
business consisted primarily of the ownership and operation of Bank & Trust. On
August 1, 1988, North Fork completed the acquisition of Southold, a New York
state chartered savings bank under the regulation of the New York State Banking
Department and the Federal Deposit Insurance Corporation. Southold, established
in 1858, was Suffolk County's oldest savings institution. Its focus had
traditionally been to develop a stable core deposit base and invest those funds
in residential real estate loans. Southold expanded its branch network through
the June 28, 1991 acquisition of Eastchester Financial Corporation,
("Eastchester"). Eastchester's primary asset was Eastchester Savings Bank, then
a $500.8 million savings bank which operated through seven branch locations
throughout Westchester and Rockland Counties, New York. Immediately upon
consummation of the acquisition, Eastchester was dissolved and its operations
consolidated into those of Southold.
At June 30, 1994, North Fork had assets of $2.0 billion, deposits of $1.4
billion and stockholders' equity of $162.4 million. The principal executive
offices of North Fork are located at 9025 Route 25, Mattituck, New York 11952
and its telephone number is (516) 298-5000.
For more information about North Fork, reference is made to the 1993 North
Fork Form 10-K and to North Fork's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1994 which are incorporated herein by reference. See "AVAILABLE
INFORMATION" and "INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE."
THE MEETINGS
Metro. The Metro Meeting will be held at 10:00 a.m. on November 10, 1994
at The La Guardia Marriott Hotel, 102-05 Ditmars Boulevard, East Elmhurst, New
York. The purpose of the Metro Meeting is to consider and vote upon (i) a
proposal to approve the Merger Agreement and the consummation of the
transactions contemplated thereby, and (ii) such other matters as may properly
be brought before the meeting and any adjournments or postponements thereof.
Only holders of record of Metro Common Stock at the close of business on
September 30, 1994 (the "Metro Record Date") will be entitled to vote at the
Metro Meeting. The affirmative vote of a majority of the outstanding shares of
Metro Common Stock entitled to vote on such date is required to approve the
Merger Agreement. As of the Metro Record Date, there were shares of
Metro Common Stock outstanding and entitled to be voted at the Metro Meeting.
The directors and executive officers of Metro and their affiliates
beneficially owned, as of , 1994, shares, or approximately
% of the outstanding shares, of Metro Common Stock entitled to vote at the
Metro Meeting and all such persons have indicated a present intent to vote their
shares in favor of the Merger. As of the Metro Record Date, neither North Fork
and its subsidiaries, nor the directors and
4
<PAGE> 17
executive officers of North Fork, beneficially owned any outstanding shares of
Metro Common Stock. See "THE MEETINGS -- Metro Meeting -- General."
North Fork. The North Fork Meeting will be held at 10:00 a.m. on Thursday,
November 10, 1994 at the Radisson Hotel, Islandia, Hauppauge, New York. The
purpose of the North Fork Meeting is to consider and vote upon (i) a proposal to
approve the Merger Agreement and the consummation of the transactions
contemplated thereby, and (ii) such other matters as may properly be brought
before the meeting and any adjournments or postponements thereof.
Only holders of record of North Fork Common Stock at the close of business
on September 30, 1994 (the "North Fork Record Date") will be entitled to vote at
the North Fork Meeting. The affirmative vote of the holders of a majority of the
outstanding shares of North Fork Common Stock entitled to vote on such date is
required to approve the Merger Agreement. As of the North Fork Record Date,
there were shares of North Fork Common Stock outstanding and entitled
to be voted at the North Fork Meeting.
The directors and executive officers of North Fork and their affiliates
beneficially owned, as of , 1994, shares, or approximately
% of the outstanding shares, of North Fork Common Stock entitled to vote at
the North Fork Meeting and all such persons have indicated a present intent to
vote their shares in favor of the Merger. As of the North Fork Record Date,
neither Metro nor its subsidiaries, nor the directors and executive officers of
Metro, beneficially owned any shares of North Fork Common Stock. See "THE
MEETINGS -- North Fork Meeting -- General."
RECOMMENDATIONS OF BOARDS OF DIRECTORS
Metro. The Metro Board of Directors (the "Metro Board") has unanimously
approved the Merger Agreement and has determined that the Merger is fair to, and
in the best interests of, Metro and its stockholders. The Metro Board therefore
unanimously recommends that Metro's stockholders vote FOR approval of the Merger
Agreement. See "THE MEETINGS -- Metro Meeting -- Recommendation of the Board of
Directors" and "THE MERGER -- Background of the Merger" and "-- Recommendation
of the Boards of Directors; Reasons for the Merger."
North Fork. The North Fork Board of Directors (the "North Fork Board") has
unanimously approved the Merger Agreement and has determined that the Merger is
fair to, and in the best interests of, North Fork and its stockholders. The
North Fork Board therefore unanimously recommends that North Fork's stockholders
vote FOR approval of the Merger Agreement. See "THE MEETINGS -- North Fork
Meeting -- Recommendation of the Board of Directors" and "THE
MERGER -- Background of the Merger" and "-- Recommendation of the Boards of
Directors; Reasons for the Merger."
EFFECT OF THE MERGER AND THE SUBSIDIARY BANK MERGER
Pursuant to the Merger Agreement, at the Effective Time (as defined below),
Metro will be merged with and into North Fork, and Metro stockholders will
become stockholders of North Fork. See "THE MERGER -- General."
Immediately following the consummation of the Merger, Bayside Federal will
merge with and into North Fork Bank (the "Subsidiary Bank Merger"). North Fork
Bank will continue as a New York chartered commercial bank and a wholly owned
subsidiary of North Fork. See "THE MERGER -- General" and "CERTAIN RELATED
TRANSACTIONS -- Subsidiary Bank Merger Agreement."
EFFECTIVE TIME
The Merger will become effective upon the filing of a certificate of merger
with the Secretary of State of the State of Delaware in accordance with
applicable law or on such later date as the certificate may specify (the
"Effective Time"). The certificate will be filed on the first day which is (i)
the last business day of a month and (ii) at least two business days after
satisfaction or waiver of the latest to occur of certain conditions to the
Merger specified in the Merger Agreement, unless another date is agreed to by
North Fork and Metro. See "THE MERGER -- Effective Time."
5
<PAGE> 18
EXCHANGE RATIO
At the Effective Time, each issued and outstanding share of Metro Common
Stock, except for shares held directly or indirectly by North Fork or Metro
(other than Trust Account Shares and DPC Shares), will be converted into and
exchangeable for the number of shares of North Fork Common Stock (the "Exchange
Ratio") determined by dividing $25.50 by the Average Closing Price, provided,
however, that (I) if the Average Closing Price is equal to or greater than
$15.50, the Exchange Ratio will be 1.645 and (II) except as described in the
next sentence, if the Average Closing Price is equal to or less than $14.50, the
Exchange Ratio will be 1.759. If the Average Closing Price is less than $12.50,
Metro may terminate the Merger Agreement unless North Fork increases the
Exchange Ratio such that the shares of North Fork Common Stock issued in
exchange for each share of Metro Common Stock have a value (valued at the
Average Closing Price) of $21.99. The Average Closing Price is defined as the
average closing sales price per share of the North Fork Common Stock on the New
York Stock Exchange for the 20 consecutive trading days ending on the 5th
business day (the "Valuation Date") prior to the date on which the last required
regulatory approval for the Merger, the Subsidiary Bank Merger and the other
transactions contemplated by the Merger Agreement is obtained, without regard to
any requisite waiting periods in respect thereof.
The formula for determining the Exchange Ratio was arrived at through
arms-length negotiations between Metro and North Fork.
If the Valuation Date had been September , 1994, the Exchange Ratio would
have been . For further information concerning the market prices of
North Fork Common Stock and Metro Common Stock, see "MARKET PRICES AND DIVIDEND
INFORMATION."
If the Average Closing Price is less than $12.50 and, in response to an
election by Metro to terminate the Merger Agreement, North Fork elects to
increase the Exchange Ratio, the Exchange Ratio will be equal to the quotient
obtained by dividing (i) $21.99 by (ii) the Average Closing Price. Assuming the
Merger is approved by Metro stockholders, the Metro Board may elect not to
terminate the Merger Agreement and to consummate the Merger without resoliciting
Metro stockholders if the Average Closing Price is less than $12.50, even
though, as a result of the application of the Exchange Ratio, the value of the
shares of North Fork Common Stock (valued at the Average Closing Price) issued
in exchange for each share of Metro Common Stock would be less than $21.99. In
such a situation, in considering whether to consummate the Merger without the
resolicitation of Metro stockholders, the Metro Board will take into account,
consistent with its fiduciary duties, all relevant facts and circumstances that
exist at such time including, without limitation, its evaluation of the
then-existing economic conditions and trends, its evaluation of the respective
business, financial condition, results of operations and prospects of each of
Metro and North Fork, its evaluation of the overall condition of the thrift and
commercial banking industries and the advice of its financial advisor and legal
counsel.
Assuming the Merger is approved by the holders of North Fork Common Stock
and the Average Closing Price is less than $12.50, the North Fork Board may
elect to increase the Exchange Ratio and to consummate the Merger without
resoliciting North Fork stockholders even though, a result of such adjustment,
the number of shares of North Fork Common Stock to be issued in the Merger would
increase. In such a situation, in considering whether to increase the Exchange
Ratio and consummate the Merger without the resolicitation of North Fork
stockholders, the North Fork Board will take into account, consistent with its
fiduciary duties, all relevant facts and circumstances that exist at such time,
including, without limitation, the advice of its financial advisor and legal
counsel. Such relevant facts and circumstances would include the North Fork
Board's evaluation of the dilutive impact of a higher Exchange Ratio to North
Fork's stockholders, its evaluation of the strategic importance to North Fork of
the acquisition of Metro relative to any such dilutive impact and the accretive
prospects of the acquisition, its evaluation of the synergies of Metro's
business relative to North Fork, Metro's financial condition, operating
performance and prospects, and the advice of North Fork's financial advisor as
to the fairness of such higher Exchange Ratio to North Fork stockholders from a
financial point of view. See "THE MERGER -- Exchange Ratio" and "-- Waiver and
Amendment; Termination."
6
<PAGE> 19
OPINION OF FINANCIAL ADVISORS
Keefe, Bruyette & Woods, Inc. ("KBW") has rendered a written opinion to the
Metro Board, dated as of the date of this Joint Proxy Statement/Prospectus, to
the effect that, as of such date, the Exchange Ratio was fair, from a financial
point of view, to the holders of Metro Common Stock. As discussed in "THE
MERGER -- Recommendation of the Boards of Directors; Reasons for the Merger,"
KBW's opinion and presentation to the Metro Board, together with a review by the
Metro Board of the assumptions used by KBW, were among the factors considered by
the Metro Board in reaching its determination to approve the Merger. The opinion
of KBW is attached as Annex C to this Joint Proxy Statement/Prospectus.
Stockholders are urged to read such opinion in its entirety for a description of
the procedures followed, assumptions made, matters considered and qualifications
on the review undertaken by KBW in connection therewith. See "THE
MERGER -- Opinions of Financial Advisors -- Metro."
M.A. Schapiro & Co., Inc. ("M.A. Schapiro") has rendered a written opinion
to the North Fork Board, dated as of the date of this Joint Proxy
Statement/Prospectus, to the effect that, as of such date, the aggregate
consideration to be paid by North Fork in the Merger was fair to North Fork's
stockholders from a financial point of view. As discussed in "THE
MERGER -- Recommendation of the Boards of Directors; Reasons for the Merger,"
M.A. Schapiro's opinion and presentation to the North Fork Board, together with
a review by the North Fork Board of the assumptions used by M.A. Schapiro, were
among the factors considered by the North Fork Board in reaching its
determination to approve the Merger. The opinion of M.A. Schapiro is attached as
Annex D to this Joint Proxy Statement/Prospectus. Stockholders are urged to read
such opinion in its entirety for a description of the procedures followed,
assumptions made, matters considered and qualifications on the review undertaken
by M.A. Schapiro in connection therewith. See "THE MERGER -- Opinions of
Financial Advisors -- North Fork."
INTERESTS OF CERTAIN PERSONS IN THE MERGER
Certain members of Metro's management and the Metro Board have interests in
the Merger in addition to their interests as stockholders of Metro generally.
These include, among other things, provisions in the Merger Agreement relating
to indemnification, the continuation of certain employment and severance
agreements, the appointment to the North Fork Board of a member of the Metro
Board and the acceleration of benefits under certain employee benefit plans. The
Metro Board was aware of these interests and considered them, among other
matters, in unanimously approving the Merger Agreement and the transactions
contemplated thereby. See "THE MERGER -- Interests of Certain Persons in the
Merger."
EMPLOYEE MATTERS
The Merger Agreement provides for Metro employees to participate in certain
benefit plans maintained by North Fork and provides, in certain instances, more
specific provisions with respect to such participation and the treatment of
Metro benefit plans following the Merger. See "THE MERGER -- Employee Matters."
CONDITIONS; REGULATORY APPROVALS
Consummation of the Merger is subject to various mutual conditions,
including, among others, receipt of the stockholder approvals solicited hereby,
receipt of necessary regulatory approvals, receipt of opinions of counsel
regarding certain federal income tax consequences of the Merger, and the
satisfaction of other customary closing conditions. North Fork's obligation to
consummate the Merger is also subject to receipt of a letter from North Fork's
independent accountants that the Merger qualifies for pooling of interests
accounting treatment unless such firm advises North Fork that it is unable to
issue a letter to such effect solely by reason of North Fork having exercised
its rights to purchase Metro Common Stock pursuant to the Stock Option
Agreement. See "THE MERGER -- Conditions to the Merger."
Consummation of the Merger and the transactions contemplated thereby
(including the Subsidiary Bank Merger) are subject to the prior approval of
Federal Reserve Board, the FDIC, the OTS and the New York State Banking
Department. Applications have been filed with each of the aforementioned
agencies.
7
<PAGE> 20
TERMINATION OF THE MERGER AGREEMENT
The Merger Agreement may be terminated at any time prior to the Effective
Time by the mutual consent of Metro and North Fork and by either of them
individually under certain specified circumstances, including if the Merger has
not been consummated by June 30, 1995. In addition, the Merger Agreement
provides that Metro may elect to terminate the Merger Agreement if the Average
Closing Price is less than $12.50 unless North Fork agrees to increase the
Exchange Ratio to an amount equal to $21.99 divided by the Average Closing
Price. See "THE MERGER -- Exchange Ratio" and "-- Waiver and Amendment;
Termination."
NO SOLICITATION
Metro has agreed in the Merger Agreement that neither it nor any of its
subsidiaries will solicit, initiate or encourage inquiries or proposals with
respect to, or, subject to the fiduciary duties of the Metro Board, participate
in any negotiations or discussions concerning any acquisition or purchase of all
or a substantial portion of its assets, or of a substantial equity interest in
it or any of its subsidiaries, or any merger or other business combination with
it or any of its subsidiaries, other than as contemplated by the Merger
Agreement, except that Metro may communicate information about any such proposal
to its stockholders if and to the extent that the fiduciary duties of the Metro
Board require it to do so (as advised by its counsel); Metro also agreed in the
Merger Agreement that it would immediately cease and cause to be terminated any
existing activities, discussions or negotiations previously conducted with any
parties other than North Fork with respect to the foregoing; it will notify
North Fork immediately if any such inquiries or proposals are received by, any
such information is requested from, or any such negotiations or discussions are
sought to be initiated with it or any of its subsidiaries and will promptly
inform North Fork in writing of the relevant details with respect to the
foregoing; and it will instruct its officers, directors, agents, advisors and
affiliates to comply with the same restrictions. See "THE MERGER -- No
Solicitation of Transactions."
STOCK EXCHANGE LISTING
The North Fork Common Stock is listed on the NYSE. North Fork has agreed to
cause the shares of North Fork Common Stock to be issued in the Merger to be
approved for listing on the NYSE. The obligation of each of Metro and North Fork
to consummate the Merger is subject to approval for listing by the NYSE of such
shares. See "THE MERGER -- Conditions to the Merger."
ANTICIPATED ACCOUNTING TREATMENT
The Merger is expected to qualify as a pooling of interests for accounting
and financial reporting purposes. The issuance of shares of Metro Common Stock
pursuant to the Stock Option Agreement, however, may prevent the Merger from
qualifying as a pooling of interests for accounting and financial reporting
purposes. It is a condition to North Fork's obligation to consummate the Merger
that it receives a letter from its independent accountants to the effect that
the Merger qualifies for pooling of interests accounting treatment unless such
firm advises North Fork that it is unable to issue a letter to such effect
solely by reason of North Fork having exercised its right to purchase Metro
Common Stock pursuant to the Stock Option Agreement. See "THE
MERGER -- Conditions to the Merger" and "-- Anticipated Accounting Treatment."
CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
It is a condition to the obligation of North Fork to consummate the Merger
that North Fork shall have received an opinion of its counsel, that the Merger
and the Subsidiary Bank Merger will each be treated as reorganizations within
the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended
(the "Code"), and, accordingly, for federal income tax purposes no gain or loss
will be recognized by North Fork, Metro, North Fork Bank or Bayside Federal as a
result of the Merger or the Subsidiary Bank Merger except to the extent North
Fork Bank or Bayside Federal may be required to recognize taxable income due to
the recapture of bad debt reserves as a result of the Subsidiary Bank Merger. It
is a condition to the obligation of Metro to consummate the Merger that Metro
shall have received an opinion of its counsel that the Merger
8
<PAGE> 21
and the Subsidiary Bank Merger will each be treated as reorganizations within
the meaning of Section 368(a) of the Code and, accordingly, for federal income
tax purposes that (i) no gain or loss will be recognized by Metro as a result of
the Merger; (ii) no gain or loss will be recognized by Bayside Federal as a
result of the Subsidiary Bank Merger except to the extent North Fork Bank or
Bayside Federal may be required to recognize income due to the recapture of bad
debt reserves as a result of the Subsidiary Bank Merger, (iii) no gain or loss
will be recognized by the stockholders of Metro who exchange all of their Metro
Common Stock solely for North Fork Common Stock pursuant to the Merger (except
with respect to cash received in lieu of a fractional share interest in North
Fork Common Stock) and (iv) the aggregate tax basis of North Fork Common Stock
received by stockholders who exchange all of their Metro Common Stock solely for
North Fork Common Stock pursuant to the Merger will be the same as the aggregate
tax basis of the Metro Common Stock surrendered in exchange therefor (reduced by
any amount allocable to a fractional share interest for which cash is received).
Each of these conditions is waivable at the option of the party entitled to
receive the requisite opinion.
The holding period of the North Fork Common Stock received by Metro
stockholders pursuant to the Merger will include the period during which the
Metro Common Stock surrendered therefor was held, provided the Metro Common
Stock was held as a capital asset on the date of the Merger. Metro stockholders
are urged to consult their tax advisors with respect to their personal tax
situation and the specific tax consequences to them of the Merger, including the
applicability and effect of various state, local and foreign tax laws. See "THE
MERGER -- Certain Federal Income Tax Consequences of the Merger" and
"-- Conditions to the Merger."
NO APPRAISAL RIGHTS
No stockholders of Metro or North Fork are entitled to appraisal rights in
connection with, or as a result of, the Merger. See "THE MERGER -- No Appraisal
Rights."
CONSOLIDATION OF OPERATIONS, PROJECTED COST SAVINGS
North Fork expects to achieve significant cost savings subsequent to the
Merger. The cost savings will be derived from reductions in personnel,
elimination of three branch locations located in communities in which both North
Fork and Bayside branches are located, the integration of Metro's data
processing operations with those of North Fork, reduced credit costs and other
facility and back office operations. Further, the separate corporate existence
of Metro will cease with the consummation of the Merger. Consequently, operating
costs associated with requirements imposed on Metro as a publicly held entity
will also be eliminated. The aggregate annual cost savings are estimated to
range between $8 million to $11 million on a pre-tax basis. Management of North
Fork believes that realization of these cost savings will occur by June 30,
1995. There can be no assurance as to when, or whether, cost savings will be
realized. However, such realization will depend, among other things, upon the
regulatory and economic environment that exists following the Merger, business
changes implemented by North Fork management and other factors, many of which
are beyond the control of North Fork.
Following the Subsidiary Bank Merger, North Fork will convert the former
operations of Bayside Federal to a full service commercial bank. As such, North
Fork believes that revenue enhancement opportunities exist with the offering of
commercial bank products to Bayside Federal's customers and the communities
Bayside Federal serves. These products include, but are not limited to, a
variety of demand deposit accounts, discount brokerage, trust and investment
management services, cash management, annuity and mutual fund products and
commercial and installment loans to small and midsize businesses. No estimates
of revenue enhancements have been made for the combined business. The amounts
and realization of any additional revenues will depend upon factors including,
but not limited to, competition, the regulatory and economic environment that
exists following the Merger, business changes implemented by North Fork
management and other factors, many of which are beyond the control of North
Fork. See "THE MERGER -- Consolidation of Operations, Projected Costs Savings."
9
<PAGE> 22
MERGER AND RESTRUCTURING CHARGES
A non-recurring merger and restructuring charge estimated in the range of
$11 to $13 million, net of tax, will be made upon consummation of the Merger. It
is expected that this charge will be made in the fourth quarter of 1994. Merger
expenses ranging from $2.0 to $2.7 million for investment banking and
professional fees are included in such estimated restructuring charge. The
restructuring charge also includes severance and employee related expenses,
facility and system conversion costs and recapture of tax bad debt reserves of
Bayside Federal resulting from the Subsidiary Bank Merger. See "THE
MERGER -- Merger and Restructuring Charges" and "-- Certain Federal Income Tax
Consequences of the Merger" and "UNAUDITED PRO FORMA CONDENSED COMBINED
FINANCIAL STATEMENTS."
STOCK OPTION AGREEMENT; TERMINATION FEE
Execution of the Stock Option Agreement and the inclusion of the provisions
in the Merger Agreement relating to the Termination Fee were conditions to North
Fork's merger proposal. Pursuant to the Stock Option Agreement, Metro granted
North Fork an option to purchase 557,795 shares of Metro Common Stock,
representing approximately 9.9% of the issued and outstanding shares of such
common stock after taking into account the shares issuable upon exercise of such
option, at an exercise price of $21.00, subject to the terms and conditions set
forth therein. The provisions of the Merger Agreement relating to the
Termination Fee provide that upon the termination of the Merger Agreement, Metro
will pay North Fork $2,000,000, subject to the terms and conditions set forth
therein. The Option may only be exercised, and the Termination Fee is only
payable, upon the occurrence of certain events (none of which has occurred). The
aggregate value which North Fork may potentially realize upon exercise of the
Option and payment of the Termination Fee is limited within certain parameters.
The Merger Agreement (which includes the provisions providing for the
Termination Fee) and the Stock Option Agreement are attached as Annex A and
Annex B, respectively, to this Joint Proxy Statement/Prospectus. See "CERTAIN
RELATED TRANSACTIONS -- Stock Option Agreement; Termination Fee."
The Stock Option Agreement and the Termination Fee are intended to increase
the likelihood that the Merger will be consummated in accordance with the terms
of the Merger Agreement. Consequently, certain aspects of the Stock Option
Agreement and the Termination Fee may have the effect of discouraging persons
who might now or prior to the Effective Time be interested in acquiring all or a
significant interest in Metro from considering or proposing such an acquisition,
even if such persons were prepared to pay a higher price per share for Metro
Common Stock than the price per share implicit in the Exchange Ratio.
COMPARISON OF STOCKHOLDER RIGHTS
At the Effective Time, Metro stockholders automatically will become
stockholders of North Fork and their rights as stockholders of North Fork will
be governed by the Delaware General Corporation Law and by North Fork's
Certificate of Incorporation and Bylaws. The rights of stockholders of North
Fork differ from the rights of the stockholders of Metro with respect to certain
important matters, including, among others, with respect to the ability of
stockholders to act by written consent, the procedures governing stockholder
nominations of directors and proposals for business, the vote required for
certain business combinations, the establishment of a stockholder rights plan,
amendments to the Certificate of Incorporation and Bylaws, limitations on
stockholder voting, limitations on personal liability of directors,
consideration of constituencies other than stockholders and the removal of
directors. For a summary of these differences, see "COMPARISON OF STOCKHOLDER
RIGHTS."
10
<PAGE> 23
MARKET PRICES AND DIVIDEND INFORMATION
North Fork Common Stock is listed and traded principally on the NYSE under
the symbol "NFB". Metro Common Stock is listed and traded principally on the
AMEX under the symbol "MTO".
The following table sets forth, for the periods indicated, the high and low
sale prices per share for the North Fork Common Stock as reported on the NYSE,
the high and low sale prices per share of the Metro Common Stock as reported on
the AMEX, and the quarterly cash dividends declared by each of North Fork and
Metro, for the periods indicated.
<TABLE>
<CAPTION>
NORTH FORK METRO
COMMON STOCK COMMON STOCK(1)
--------------------------- ---------------------------
HIGH LOW DIVIDENDS HIGH LOW DIVIDENDS
------ ------ --------- ------ ------ ---------
<S> <C> <C> <C> <C> <C> <C>
1992
Quarter ended March 31................. $ 7.13 $ 4.63 $.000 $ 8.00 $ 5.09 $.067
Quarter ended June 30.................. 6.38 4.63 .000 7.78 7.56 .100
Quarter ended September 30............. 9.50 4.63 .000 10.25 7.44 .100
Quarter ended December 31.............. 8.25 6.88 .000 10.84 9.75 .117
1993
Quarter ended March 31................. 12.13 7.63 .000 13.41 10.66 .117
Quarter ended June 30.................. 13.25 9.75 .000 14.00 11.91 .133
Quarter ended September 30............. 12.38 11.00 .000 18.25 13.75 .133
Quarter ended December 31.............. 13.38 10.75 .000 18.75 15.88 .160
1994
Quarter ended March 31................. 15.25 12.50 .075 18.50 15.63 .160
Quarter ended June 30.................. 16.00 13.13 .075 23.13 16.13 .180
Third Quarter (through ,
1994)...............................
</TABLE>
- ---------------
(1) Restated for each period to give effect for the 3 for 2 stock split declared
on July 8, 1992 and the 3 for 2 stock split declared on August 5, 1993.
The following table sets forth the last reported sale price per share of
North Fork Common Stock and Metro Common Stock and the equivalent per share
price for Metro Common Stock giving effect to the Merger on (i) June 24, 1994,
the last business day preceding public announcement of the signing of the Merger
Agreement; and (ii) , 1994, the last practicable date prior to the
mailing of this Joint Proxy Statement/Prospectus:
<TABLE>
<CAPTION>
EQUIVALENT
NORTH FORK METRO PRICE PER
COMMON STOCK COMMON STOCK METRO SHARE(1)
------------ ------------ --------------
<S> <C> <C> <C>
June 24, 1994................................ $14.00 $22.38 $24.63
, 1994...........................
</TABLE>
- ---------------
(1) The equivalent price per share of Metro Common Stock at each specified date
was determined by multiplying the last reported sale price of a share of
North Fork Common Stock on such date by the Exchange Ratio. For purposes of
determining the Exchange Ratio, the Average Closing Price was assumed to be
equal to the last reported sale price of North Fork Common Stock at each
specified date (resulting in an Exchange Rate of 1.759 on June 24, 1994 and
on , 1994). The actual Exchange Ratio will be
determined based on the Average Closing Price on the Valuation Date.
Metro and North Fork stockholders are advised to obtain current market
quotations for Metro Common Stock and North Fork Common Stock. The market price
of North Fork Common Stock will fluctuate between the date of this Joint Proxy
Statement/Prospectus and the Valuation Date, and between the Valuation Date and
the Effective Time. Although the Merger Agreement provides that the Exchange
Ratio will adjust to absorb fluctuations in the market price of North Fork
Common Stock within certain ranges prior to the Valuation Date, fluctuations in
such market price prior to the Effective Time could result in an increase or
decrease in the market price as of the Effective Time of the shares of North
Fork Common Stock to be received by Metro stockholders in the Merger. No
assurance can be given concerning the market price of North Fork Common Stock
before or after the Effective Time.
11
<PAGE> 24
UNAUDITED SELECTED FINANCIAL DATA
The following tables set forth selected historical consolidated financial
data for North Fork for the five years ended December 31, 1993 and the six
months ended June 30, 1994 and 1993, and for Metro for the five years ended
September 30, 1993 and the six months ended June 30, 1994 and 1993. Because
Metro's fiscal year ends on September 30 and North Fork's fiscal year ends on
December 31, the financial data for Metro for the six months ended June 30 has
been presented to coincide with the fiscal reporting period for North Fork.
Following the Merger, the combined company's fiscal year, like that of North
Fork, will end on December 31. The tables have been derived from, and should be
read in conjunction with, the historical financial statements of North Fork and
Metro, including related notes thereto, incorporated by reference in this Joint
Proxy Statement/Prospectus. See "INCORPORATION OF CERTAIN DOCUMENTS BY
REFERENCE." The financial data for the six months ended June 30, 1994 and 1993
for North Fork and Metro reflect, in the opinions of the management of North
Fork and Metro, respectively, all adjustments necessary for a fair presentation
of such data. Results for these interim periods are not necessarily indicative
of the results which may be expected for any other interim period or for the
year as a whole.
12
<PAGE> 25
NORTH FORK BANCORPORATION, INC. AND SUBSIDIARIES
UNAUDITED SELECTED FINANCIAL DATA
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, YEARS ENDED DECEMBER 31,
----------------------- --------------------------------------------------------------
1994 1993 1993 1992 1991 1990 1989
---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED SUMMARY OF OPERATIONS
Interest income.................. $ 62,858 $ 58,549 $ 118,489 $ 130,740 $ 152,368 $ 175,447 $ 172,958
Interest expense................. 20,966 20,590 41,136 59,578 88,209 112,710 107,982
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net interest income.............. 41,892 37,959 77,353 71,162 64,159 62,737 64,976
Provision for loan losses........ 1,750 4,500 6,000 21,000 64,800 31,282 3,550
Other noninterest income......... 8,326 8,597 16,510 14,647 11,305 7,798 7,187
Net security gains (losses)...... (54) 1,391 1,457 9,408 8,942 3,080 1,863
Other real estate owned
expense........................ 3,739 6,401 14,307 15,998 10,340 5,220 325
Other noninterest expense........ 26,604 26,100 52,396 54,299 47,833 45,548 41,326
---------- ---------- ---------- ---------- ---------- ---------- ----------
Income (loss) before income
taxes.......................... 18,071 10,946 22,617 3,920 (38,567) (8,435) 28,825
Provision for (recovery of)
income taxes................... 6,484 3,835 7,520 2,190 (4,941) (4,958) 7,959
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net income (loss)................ $ 11,587 $ 7,111 $ 15,097 $ 1,730 $ (33,626) $ (3,477) $ 20,866
========= ========= ========= ========= ========= ========= =========
Weighted average shares of North
Fork Common Stock.............. 14,904 14,016 14,382 11,025 9,999 9,020 9,292
Actual North Fork Common Stock
Outstanding at period end...... 14,248 14,031 14,109 11,842 10,781 9,096 9,030
CONSOLIDATED PER SHARE DATA
APPLICABLE TO NORTH FORK COMMON
STOCK
Net income (loss)................ $ 0.78 $ 0.51 $ 1.05 $ 0.16 $ (3.36) $ (0.39) $ 2.25
Cash dividends declared(1)....... 0.15 0.00 0.00 0.00 0.34 0.64 0.81
Stated Book value at
period-end..................... 11.39 10.39 10.95 10.12 10.18 14.45 15.79
Tangible Book value at
period-end..................... 10.77 9.70 10.29 9.27 9.19 13.20 14.47
CONSOLIDATED BALANCE SHEET DATA AT
PERIOD END
Securities Held to Maturity...... $ 649,280 $ 501,126 $ 548,497 $ 319,286 $ 25,714 $ 321,255 $ 338,756
Securities Available for
Sale(2)........................ 206,310 172,679 200,219 122,642 290,943 0 0
Loans, net of unearned income.... 1,011,086 993,281 1,017,084 1,045,183 1,218,829 1,194,031 1,293,033
Allowance for loan losses........ 44,353 55,538 46,625 58,497 54,164 28,501 9,734
Excess of cost over fair value of
assets acquired................ 8,939 9,642 9,291 9,994 10,718 11,296 11,917
Total assets..................... 2,020,338 1,835,169 1,883,881 1,700,857 1,778,182 1,657,179 1,790,304
Deposits......................... 1,443,521 1,457,159 1,442,270 1,499,935 1,612,352 1,335,379 1,445,788
Borrowings....................... 354,285 173,440 255,643 28,200 366 132,705 131,615
Senior Debt...................... 25,000 20,000 20,000 40,000 40,000 40,000 40,000
Total stockholders' equity....... 162,351 145,807 154,472 119,823 109,791 131,386 142,577
</TABLE>
- ---------------
(1) On March 22, 1994, North Fork reinstated its quarterly cash dividends and
declared a cash dividend of 7 1/2 cents per share of North Fork Common Stock
in the quarters ended March 31 and June 30, 1994.
(2) Effective January 1, 1994, North Fork adopted SFAS #115 designating certain
securities as Available for Sale. At June 30, 1994, these securities were
carried at fair market value resulting in a $4.7 million unrealized market
loss. Stockholders' equity has been reduced by the net tax effect of this
unrealized loss of $2.7 million. Prior to 1994, these securities were
included in the Held for Sale category and carried at the lower of cost or
market with unrealized losses or gains included in net income.
13
<PAGE> 26
METRO BANCSHARES INC. AND SUBSIDIARY
UNAUDITED SELECTED FINANCIAL DATA
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
JUNE 30, YEARS ENDED SEPTEMBER 30,
----------------------- --------------------------------------------------------
1994(1) 1993(1) 1993 1992 1991 1990 1989
---------- ---------- ---------- -------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED SUMMARY OF OPERATIONS
Interest income......................... $ 36,190 $ 36,047 $ 72,718 $ 79,784 $ 73,487 $ 77,674 $ 73,844
Interest expense........................ 14,221 15,889 32,033 46,136 48,255 54,104 52,180
---------- ---------- ---------- -------- ---------- -------- --------
Net interest income..................... 21,969 20,158 40,685 33,648 25,232 23,570 21,664
Provision for loan losses............... 1,150 2,300 4,300 2,775 1,825 4,642 846
Other noninterest income................ 1,669 1,366 2,969 2,496 2,094 2,574 2,474
Net security gains (losses)............. (18) 0 0 139 110 0 1,480
Other real estate owned expense
(income).............................. 108 (451) (336) 276 323 0 (46)
Other noninterest expense............... 10,113 9,798 19,684 19,116 14,830 14,310 14,152
---------- ---------- ---------- -------- ---------- -------- --------
Income before income taxes.............. 12,249 9,877 20,006 14,116 10,458 7,192 10,666
Provision for income taxes.............. 5,574 4,594 9,456 6,419 4,777 3,638 4,806
---------- ---------- ---------- -------- ---------- -------- --------
Net income.............................. $ 6,675 $ 5,283 $ 10,550 $ 7,697 $ 5,681 $ 3,554 $ 5,860
========= ========= ========= ======== ========= ======== ========
Weighted average shares of Metro Common
Stock assuming full dilution(2)....... 5,442 5,395 5,421 5,344 5,162 5,313 5,288
Actual Metro Common Stock Outstanding at
period end(2)......................... 5,077 5,068 5,068 5,063 5,049 5,313 5,313
CONSOLIDATED PER SHARE DATA APPLICABLE TO
METRO COMMON STOCK(2)
Net income.............................. $ 1.23 $ 0.98 $ 1.95 $ 1.44 $ 1.10 $ 0.67 $ 1.00(3)
Cash dividends declared................. 0.34 0.25 0.50 0.33 0.24 0.19 0.05
Stated Book value at period end......... 16.28 13.72 14.18 12.51 11.23 9.94 9.37
Tangible Book value at period end....... 13.52 10.34 10.83 8.98 7.52 6.25 5.51
CONSOLIDATED BALANCE SHEET DATA AT PERIOD
END Investment and mortgage-backed
securities.............................. $ 149,233 $ 242,404 $ 223,151 $216,200 $ 124,332 $ 68,040 $ 48,376
Loans, net of unearned income........... 758,376 704,455 708,805 708,649 710,346 609,709 667,605
Allowance for loan losses............... 10,676 9,714 9,931 11,086 9,558 5,550 898
Excess of cost over fair value of assets
acquired.............................. 14,004 17,171 16,948 17,840 18,732 19,624 20,516
Total assets............................ 1,006,667 1,002,756 1,001,817 990,154 1,076,694 798,745 802,562
Deposits................................ 880,527 893,394 888,766 887,433 891,309 652,944 634,945
Borrowings.............................. 10,308 13,514 13,462 13,668 27,874 73,079 91,285
Total stockholders' equity.............. 82,644 69,546 71,838 63,324 56,684 52,824 49,801
</TABLE>
- ---------------
(1) Metro's operating results for the six-months ended June 30, 1994 and 1993
are presented to conform with the reporting period of North Fork. Metro's
operating results for the three month periods ended December 31, 1993 and
1992 have not been included in the foregoing and are presented in the
following table.
<TABLE>
<CAPTION>
UNAUDITED
THREE MONTHS ENDED
DECEMBER 31,
--------------------
1993 1992
-------- -------
<S> <C> <C>
Net Interest Income.............................................. $ 10,745 $ 9,806
Net Income before cumulative effect of accounting change......... $ 3,137 $ 2,375
Net Income per share before cumulative effect of accounting
change(2)...................................................... $ 0.58 $ 0.44
</TABLE>
The results for the three month period ended December 31, 1993 exclude
the effect of the adoption of SFAS #109 Accounting for Income Taxes
which added $3.7 million or $0.68 cents per share effective as of
October 1, 1993.
(2) Restated to reflect Metro's 3 for 2 stock split declared on July 8, 1992 and
the 3 for 2 stock split declared on August 5, 1993.
(3) Computed based on the net income from the conversion date, November 10,
1988, through September 30, 1989.
14
<PAGE> 27
UNAUDITED PRO FORMA COMBINED SELECTED FINANCIAL DATA
The following tables set forth certain selected condensed financial data
for North Fork and Metro on an unaudited pro forma combined basis giving effect
to the Merger as if the Merger had become effective on June 30, 1994, in the
case of the balance sheet data presented, and if the Merger had become effective
at the beginning of the periods indicated, in the case of the income statement
data presented. The pro forma data in the tables assumes that the Merger is
accounted for using the pooling of interests method of accounting. See "THE
MERGER -- Anticipated Accounting Treatment." The unaudited pro forma combined
condensed selected year-end balance sheet data reflects North Fork and Metro at
their respective year-end reporting periods of December 31 and September 30 and
for the periods then ended for the income statement data. Because Metro's fiscal
year ends on September 30 and North Fork's fiscal year ends on December 31,
financial data for the six months ended June 30, 1994 and 1993 combine North
Fork and Metro with interim results presented to coincide with the reporting
period for North Fork. Following the Merger, the combined company's fiscal year,
like that of North Fork, will end on December 31. These tables should be read in
conjunction with, and are qualified in their entirety by, the historical
financial statements, including the notes thereto, of North Fork and Metro
incorporated by reference herein and the more detailed pro forma financial
information, including the notes thereto, appearing elsewhere in this Joint
Proxy Statement/Prospectus. Certain Metro financial information has been
restated to conform with North Fork. See "INCORPORATION OF CERTAIN DOCUMENTS BY
REFERENCE" and "UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS."
The pro forma data and ratios set forth in the following tables do not
reflect merger expenses and restructuring charges anticipated to be incurred by
North Fork and Metro, the expected cost savings and revenue enhancement
opportunities that could result from the Merger or any other items of income or
expense which may result from the Merger. The unaudited pro forma combined
selected financial data is presented for informational purposes only and is not
necessarily indicative of the combined financial position or results of
operations that would have occurred if the Merger had been consummated on June
30, 1994 or at the beginning of the periods indicated or which may be obtained
in the future.
15
<PAGE> 28
NORTH FORK BANCORPORATION, INC. AND SUBSIDIARIES AND
METRO BANCSHARES INC. AND SUBSIDIARY
UNAUDITED PRO FORMA COMBINED SELECTED FINANCIAL DATA
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
YEARS ENDED
SIX MONTHS ENDED DECEMBER 31 (NORTH FORK)
JUNE 30, AND SEPTEMBER 30 (METRO),
------------------------- ----------------------------------------
1994 1993 1993 1992 1991
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
CONSOLIDATED SUMMARY OF OPERATIONS
Interest income...................... $ 99,048 $ 94,596 $ 191,207 $ 210,524 $ 225,855
Interest expense..................... 35,187 36,479 73,169 105,714 136,464
---------- ---------- ---------- ---------- ----------
Net interest income.................. 63,861 58,117 118,038 104,810 89,391
Provision for loan losses............ 2,900 6,800 10,300 23,775 66,625
Other noninterest income............. 9,995 9,963 19,479 17,143 13,399
Net security gains (losses).......... (72) 1,391 1,457 9,547 9,052
Other real estate owned expense...... 3,847 5,950 13,971 16,274 10,663
Other noninterest expense............ 36,717 35,898 72,080 73,415 62,663
---------- ---------- ---------- ---------- ----------
Income (loss) before income taxes.... 30,320 20,823 42,623 18,036 (28,109)
Provision for (recovery of) income
taxes.............................. 12,058 8,429 16,976 8,609 (164)
---------- ---------- ---------- ---------- ----------
Net income (loss).................... $ 18,262 $ 12,394 $ 25,647 $ 9,427 $ (27,945)
========== ========== ========== ========== ==========
Weighted average shares of North Fork
Common Stock outstanding:
at Exchange Ratio of 1.759......... 24,476 23,506 23,918 20,425 19,079
at Exchange Ratio of 1.645......... 23,856 22,891 23,300 19,816 18,490
Pro Forma Actual North Fork Common
Stock Outstanding:
at Exchange Ratio of 1.759......... 23,177 22,945 23,023 20,749 19,661
at Exchange Ratio of 1.645......... 22,599 22,368 22,446 20,171 19,086
CONSOLIDATED PER SHARE DATA APPLICABLE
TO NORTH FORK COMMON STOCK AT
EXCHANGE RATIO OF 1.759:
Net income (loss).................... $ 0.75 $ 0.53 $ 1.07 $ 0.46 $ (1.46)
Cash dividends declared(1)........... 0.15 0.00 0.00 0.00 0.34
Stated Book value at period-end...... 10.57 9.39 9.83 8.83 8.47
Tangible Book value at period-end.... 9.58 8.22 8.69 7.49 6.97
CONSOLIDATED PER SHARE DATA APPLICABLE
TO NORTH FORK COMMON STOCK AT
EXCHANGE RATIO OF 1.645:
Net income (loss).................... $ 0.77 $ 0.54 $ 1.10 $ 0.48 $ (1.51)
Cash dividends declared(1)........... 0.15 0.00 0.00 0.00 0.34
Stated Book value at period-end...... 10.84 9.63 10.08 9.08 8.72
Tangible Book value at period-end.... 9.83 8.43 8.91 7.70 7.18
CONSOLIDATED BALANCE SHEET DATA AT
PERIOD END
Securities Held to maturity.......... $ 798,513 $ 743,530 $ 771,648 $ 535,486 $ 150,046
Securities Available for Sale........ 206,310 172,679 200,219 122,642 290,943
Loans, net of unearned income........ 1,769,462 1,697,736 1,725,889 1,753,832 1,929,175
Allowance for loan losses............ 55,029 65,252 56,556 69,583 63,722
Excess of cost over fair value of
assets acquired.................... 22,943 26,813 26,239 27,834 29,450
Total assets......................... 3,027,005 2,837,925 2,885,698 2,691,011 2,854,876
Deposits............................. 2,324,048 2,350,553 2,331,036 2,387,368 2,503,661
Borrowings........................... 364,593 186,954 269,105 41,868 28,240
Senior Debt.......................... 25,000 20,000 20,000 40,000 40,000
Total Stockholders' Equity........... 244,995 215,353 226,310 183,147 166,475
</TABLE>
- ---------------
(1) Represents cash dividends declared on North Fork common stock.
See "UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS."
16
<PAGE> 29
UNAUDITED SELECTED FINANCIAL RATIOS
<TABLE>
<CAPTION>
SIX MONTHS
ENDED(1)
JUNE 30, YEARS ENDED(2)
------------------ ----------------------------
1994 1993 1993 1992 1991
------- ------- ------- ------ -------
<S> <C> <C> <C> <C> <C>
PERFORMANCE RATIOS
Return on Average Total Assets:
North Fork................................................... 1.19% 0.83% 0.83% 0.10% (1.91)%
Metro........................................................ 1.33% 1.06% 1.05% 0.76% 0.73%
North Fork Pro Forma......................................... 1.24% 0.92% 0.91% 0.34% (1.10)%
Return on Average Total Stockholders' Equity:
North Fork................................................... 14.72% 10.52% 10.59% 1.54% (24.46)%
Metro........................................................ 16.95% 15.73% 15.57% 12.98% 10.47%
North Fork Pro Forma......................................... 15.47% 12.25% 12.19% 5.57% (14.58)%
Net Interest Margin(3):
North Fork................................................... 4.68% 4.88% 4.70% 4.52% 4.08%
Metro........................................................ 4.60% 4.24% 4.23% 3.46% 3.37%
North Fork Pro Forma......................................... 4.65% 4.64% 4.53% 4.12% 3.86%
Total Stockholders' Equity to Total Assets (end of period):....
North Fork................................................... 8.04% 7.95% 8.20% 7.04% 6.17%
Metro........................................................ 8.21% 6.94% 7.17% 6.40% 5.26%
North Fork Pro Forma......................................... 8.09% 7.59% 7.84% 6.81% 5.83%
CAPITAL RATIOS
Tier 1 Risk-Based Capital(4):
North Fork................................................... 14.21% 12.77% 13.59% 10.09% 7.76%
Metro(7)..................................................... 12.44% 9.09% 9.32% 7.76% 6.45%
North Fork Pro Forma......................................... 13.62% 11.48% 12.07% 9.28% 7.34%
Regulatory Minimum Requirement............................... 4.00% 4.00% 4.00% 4.00% 3.63%
Total Risk-Based Capital(5):
North Fork................................................... 15.49% 14.07% 14.88% 11.39% 9.26%
Metro(7)..................................................... 13.69% 10.34% 10.57% 9.26% 7.95%
North Fork Pro Forma......................................... 14.90% 12.76% 13.35% 10.65% 8.84%
Regulatory Minimum Requirement............................... 8.00% 8.00% 8.00% 8.00% 7.25%
Leverage Ratio:
North Fork................................................... 7.89% 7.69% 7.55% 6.50% 5.61%
Metro(7)..................................................... 6.91% 5.31% 5.57% 4.68% 3.59%
North Fork Pro Forma......................................... 7.56% 6.84% 6.88% 5.83% 4.85%
ASSET QUALITY DATA:
Allowance for Loan Losses to Net Loans (end of period):
North Fork................................................... 4.39% 5.59% 4.58% 5.60% 4.44%
Metro........................................................ 1.41% 1.38% 1.40% 1.56% 1.35%
North Fork Pro Forma......................................... 3.11% 3.84% 3.28% 3.97% 3.30%
Allowance for Loan Losses to Nonperforming Loans (end of
period):
North Fork................................................... 136.04% 114.72% 132.10% 89.86% 69.41%
Metro........................................................ 183.47% 110.37% 114.08% 97.69% 125.15%
North Fork Pro Forma......................................... 143.22% 114.05% 128.54% 91.03% 74.38%
Net Charge-Offs to Average Net Loans:
North Fork................................................... 0.80% 1.48% 1.78% 1.46% 4.26%
Metro........................................................ 0.20% 0.47% 0.78% 0.18% 0.09%
North Fork Pro Forma......................................... 0.54% 1.07% 1.37% 0.97% 2.92%
Nonperforming assets to Total Assets(6):
North Fork................................................... 2.31% 5.29% 3.04% 7.44% 8.66%
Metro........................................................ 0.93% 1.08% 1.30% 1.32% 0.97%
North Fork Pro Forma......................................... 1.85% 3.80% 2.43% 5.19% 5.76%
</TABLE>
- ---------------
(1) Ratios for the periods ended June 30, 1994 and 1993 represent annualized
amounts.
(2) Ratios for the three years ended represent North Fork at December 31, 1993
and Metro at September 30, 1993. North Fork pro forma combines North Fork
and Metro at their respective year end periods. Ratios for the six month
periods ended June 30, 1993 and 1994 include Metro for the six month periods
to conform with that of North Fork.
(3) Net interest margin represents net interest income, stated on an estimated
fully taxable equivalent basis, divided by average earning assets.
(4) Equal to stockholders' equity less intangibles divided by total risk
weighted assets.
(5)Equal to stockholders' equity less intangibles plus the allowable portion of
the allowance for loan losses divided by total risk weighted assets.
(6)Nonperforming assets include loans 90 days or more past due and still
accruing, nonaccrual loans, other real estate owned and in-substance
foreclosures.
(7)Metro's capital ratios have been recalculated to conform with North Fork's
regulatory computational guidelines.
17
<PAGE> 30
UNAUDITED COMPARATIVE PER SHARE DATA
AT EXCHANGE RATIO OF 1.759
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, YEARS ENDED(5)
----------------- ----------------------------
1994 1993 1993 1992 1991
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Fully Diluted Income (Loss) Per Share(1)
North Fork.................................. $ 0.78 $ 0.51 $ 1.05 $ 0.16 $(3.36)
Metro(4).................................... 1.23 0.98 1.95 1.44 1.10
North Fork Pro Forma........................ 0.75 0.53 1.07 0.46 (1.46)
Metro Pro Forma Equivalent.................. 1.32 0.93 1.88 0.81 (2.57)
Dividends Declared Per Share(2)
North Fork.................................. $ 0.15 $ 0.00 $ 0.00 $ 0.00 $ 0.34
Metro(4).................................... 0.34 0.25 0.50 0.33 0.24
North Fork Pro Forma........................ 0.15 0.00 0.00 0.00 0.34
Metro Pro Forma Equivalent.................. 0.26 0.00 0.00 0.00 0.60
Stated Book Value Per Share at Period End(3)
North Fork.................................. $11.39 $10.39 $10.95 $10.12 $10.18
Metro(4).................................... 16.28 13.72 14.18 12.51 11.23
North Fork Pro Forma........................ 10.57 9.39 9.83 8.83 8.47
Metro Pro Forma Equivalent.................. 18.59 16.52 17.29 15.53 14.90
Tangible Book Value Per Share at Period End
(3)
North Fork.................................. $10.77 $ 9.70 $10.29 $ 9.27 $ 9.19
Metro (4)................................... 13.52 10.34 10.83 8.98 7.52
North Fork Pro Forma........................ 9.58 8.22 8.69 7.49 6.97
Metro Pro Forma Equivalent.................. 16.85 14.46 15.29 13.17 12.26
</TABLE>
- ---------------
(1) Pro forma income (loss) per share data is calculated using historical
income information for North Fork and Metro divided by the average pro
forma shares of the combined entity. The average pro forma shares of the
combined entity have been calculated by combining North Fork's historical
average shares with the historical average shares of Metro as adjusted by
an assumed Exchange Ratio of 1.759. The actual Exchange Ratio will be based
upon the actual Average Closing Price and there can be no assurance as to
whether the actual Exchange Ratio will be equal to or greater or less than
the assumed ratio used in this table. See "THE MERGER -- Exchange Ratio."
The Metro pro forma equivalent income per share amounts are computed by
multiplying the North Fork pro forma amounts by the assumed Exchange Ratio.
(2) North Fork's pro forma dividends per share represent historical dividends
paid by North Fork and assumes no changes in cash dividends per share.
North Fork reinstated its cash dividend in the first quarter of 1994. Metro
pro forma equivalent dividends per share represent such amounts multiplied
by an assumed Exchange Ratio of 1.759. See "THE MERGER -- Exchange Ratio."
(3) North Fork pro forma stated and tangible book value per share amounts are
based on the historical total stockholders' equity of the combined entity
divided by the total pro forma common shares of the combined entity
assuming an Exchange Ratio of 1.759. See "THE MERGER -- Exchange Ratio" The
Metro pro forma equivalent stated book value and tangible book value per
share amounts are computed by multiplying the North Fork pro forma amounts
by an assumed Exchange Ratio of 1.759.
(4) Restated to reflect Metro's 3 for 2 stock split declared on July 8, 1992
and the 3 for 2 stock split declared on August 5, 1993.
(5) Represents year end reporting periods for North Fork at December 31 and for
Metro at September 30.
18
<PAGE> 31
UNAUDITED COMPARATIVE PER SHARE DATA
AT EXCHANGE RATIO OF 1.645
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, YEARS ENDED(5)
----------------- ----------------------------
1994 1993 1993 1992 1991
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Fully Diluted Income (Loss) Per Share(1)
North Fork.................................. $ 0.78 $ 0.51 $ 1.05 $ 0.16 $(3.36)
Metro(4).................................... 1.23 0.98 1.95 1.44 1.10
North Fork Pro Forma........................ 0.77 0.54 1.10 0.48 (1.51)
Metro Pro Forma Equivalent.................. 1.27 0.89 1.81 0.79 (2.48)
Dividends Declared Per Share(2)
North Fork.................................. $ 0.15 $ 0.00 $ 0.00 $ 0.00 $ 0.34
Metro(4).................................... 0.34 0.25 0.50 0.33 0.24
North Fork Pro Forma........................ 0.15 0.00 0.00 0.00 0.34
Metro Pro Forma Equivalent.................. 0.25 0.00 0.00 0.00 0.56
Stated Book Value Per Share at Period End(3)
North Fork.................................. $11.39 $10.39 $10.95 $10.12 $10.18
Metro(4).................................... 16.28 13.72 14.18 12.51 11.23
North Fork Pro Forma........................ 10.84 9.63 10.08 9.08 8.72
Metro Pro Forma Equivalent.................. 17.83 15.84 16.58 14.94 14.34
Tangible Book Value Per Share at Period End(3)
North Fork.................................. $10.77 $ 9.70 $10.29 $ 9.27 $ 9.19
Metro(4).................................... 13.52 10.34 10.83 8.98 7.52
North Fork Pro Forma........................ 9.83 8.43 8.91 7.70 7.18
Metro Pro Forma Equivalent.................. 16.17 13.87 14.66 12.67 11.81
</TABLE>
- ---------------
(1) Pro forma income (loss) per share data is calculated using historical
income information for North Fork and Metro divided by the average pro
forma shares of the combined entity. The average pro forma shares of the
combined entity have been calculated by combining North Fork's historical
average shares with the historical average shares of Metro as adjusted by
an assumed Exchange Ratio of 1.645. The actual Exchange Ratio will be based
upon the actual Average Closing Price and there can be no assurance as to
whether the actual Exchange Ratio will be equal to or greater than the
assumed ratio used in this table. See "THE MERGER -- Exchange Ratio." The
Metro pro forma equivalent income per share amounts are computed by
multiplying the North Fork pro forma amounts by an Exchange Ratio of 1.645.
(2) North Fork's pro forma dividends per share represent historical dividends
paid by North Fork and assumes no changes in cash dividends per share.
North Fork reinstated its cash dividend in the first quarter of 1994. Metro
pro forma equivalent dividends per share represent such amounts multiplied
by an Exchange Ratio of 1.645. See "THE MERGER -- Exchange Ratio."
(3) North Fork pro forma stated and tangible book value per share amounts are
based on the historical total stockholders' equity of the combined entity
divided by the total pro forma common shares of the combined entity
assuming an Exchange Ratio of 1.645. See "THE MERGER -- Exchange Ratio."
The Metro pro forma equivalent stated book value and tangible book value
per share amounts are computed by multiplying the North Fork pro forma
amounts by an Exchange Ratio of 1.645.
(4) Restated to reflect Metro's 3 for 2 stock split declared on July 8, 1992
and the 3 for 2 stock split declared on August 5, 1993.
(5) Represents year end reporting periods for North Fork at December 31 and for
Metro at September 30.
19
<PAGE> 32
THE MEETINGS
METRO MEETING
General. This Joint Proxy Statement/Prospectus is being furnished to
stockholders of Metro Bancshares Inc. ("Metro") in connection with the
solicitation of proxies by the Board of Directors of Metro (the "Metro Board")
for use at the special meeting of stockholders of Metro and at any adjournments
or postponements thereof (the "Metro Meeting") to be held at the LaGuardia
Marriott Hotel, 102-05 Ditmars Boulevard, East Elmhurst, New York 11369 on
Thursday, November 10, 1994 at 10:00 a.m. local time. At the Metro Meeting, the
stockholders of Metro will be asked to: (i) approve and adopt the Agreement and
Plan of Merger, dated as of June 27, 1994 (the "Merger Agreement"), between
North Fork Bancorporation, Inc. ("North Fork") and Metro and the consummation of
the transactions contemplated thereby, which are more fully described herein;
and (ii) act upon such other matters as may properly be brought before the Metro
Meeting and at any adjournments or postponements thereof. A copy of the Merger
Agreement is attached as Annex A hereto. The Merger Agreement provides for the
acquisition of Metro by North Fork by means of the merger of Metro with and into
North Fork (the "Merger"). Upon consummation of the Merger, each share of the
common stock, par value $0.01 per share ("Metro Common Stock"), of Metro
outstanding on the date of the Merger (except for certain specified shares
described below) will be converted into and exchangeable for the number of
shares of the common stock, par value $2.50 per share, of North Fork ("North
Fork Common Stock"), equal to the Exchange Ratio (as defined below). See "THE
MERGER -- Exchange Ratio."
This Joint Proxy Statement/Prospectus constitutes a prospectus of North
Fork with respect to the shares of North Fork Common Stock to be issued in
connection with the Merger. The information in this Joint Proxy
Statement/Prospectus concerning North Fork and Metro has been furnished by each
of such entities, respectively.
HOLDERS OF METRO COMMON STOCK ARE REQUESTED TO PROMPTLY COMPLETE, SIGN AND
DATE THE ACCOMPANYING PROXY CARD AND RETURN IT PROMPTLY TO METRO IN THE ENCLOSED
POSTAGE-PAID ADDRESSED ENVELOPE.
METRO STOCKHOLDERS SHOULD NOT FORWARD ANY STOCK CERTIFICATES WITH THEIR
PROXY CARDS.
Recommendation of the Board of Directors. The Metro Board has unanimously
approved the Merger Agreement and has determined that the Merger is fair to, and
in the best interests of, Metro and its stockholders. The Metro Board therefore
unanimously recommends that Metro's stockholders vote FOR approval of the Merger
Agreement. See "THE MERGER -- Background of the Merger" and "-- Recommendation
of the Boards of Directors; Reasons for the Merger -- Metro."
Record Date; Voting; Solicitation and Revocation of Proxies. The Metro
Board has fixed September 30, 1994 as the record date (the "Metro Record Date")
for the determination of those Metro stockholders entitled to notice of and to
vote at the Metro Meeting. Only holders of record of Metro Common Stock at the
close of business on the Metro Record Date will be entitled to notice of and to
vote at the Metro Meeting. As of the Metro Record Date, there were shares of
Metro Common Stock outstanding, entitled to vote and held by approximately
holders of record. Each holder of record of shares of Metro Common Stock on
the Metro Record Date is entitled to cast one vote per share on the proposal to
approve and adopt the Merger Agreement, and on any other matter properly
submitted for the vote of the Metro stockholders at the Metro Meeting. The
presence, either in person or by properly executed proxy, of the holders of a
majority of the outstanding shares of Metro Common Stock entitled to vote at the
Metro Meeting is necessary to constitute a quorum at the Metro Meeting.
Abstentions will be counted as present for purposes of determining the presence
or absence of a quorum at the Metro Meeting.
The approval and adoption of the Merger Agreement by Metro stockholders
will require the affirmative vote of the holders of a majority of the
outstanding shares of Metro Common Stock entitled to vote thereon. As described
in "THE MERGER -- Conditions to the Merger," such stockholder approval is a
condition to consummation of the Merger. Under applicable Delaware law, in
determining whether the Merger proposal
20
<PAGE> 33
has received the requisite number of affirmative votes, abstentions and broker
non-votes will be counted and will have the same effect as a vote against the
proposal to approve and adopt the Merger Agreement.
As of the Metro Record Date, directors and executive officers of Metro and
their affiliates may be deemed to be beneficial owners of shares, or
approximately % of the shares, of Metro Common Stock outstanding as of the
Record Date. Such persons have informed Metro that they intend to vote or direct
the vote of all such shares of Metro Common Stock FOR approval and adoption of
the Merger Agreement and the transactions contemplated thereby. As of the Metro
Record Date, neither North Fork and its subsidiaries, nor the directors and
executive officers of North Fork, beneficially owned any outstanding shares of
Metro Common Stock.
All shares of Metro Common Stock which are entitled to be voted and are
represented at the Metro Meeting by properly executed proxies received prior to
or at the meeting, and not revoked, will be voted at such meeting, and any
adjournments or postponements thereof, in accordance with the instructions
indicated on such proxies. If no instructions are indicated, such proxies will
be voted FOR: (i) approval and adoption of the Merger Agreement, and (ii)
otherwise in the discretion of the proxy holders as to any other matter which
may come before the Metro Meeting or any adjournment or postponement thereof,
including, among other things, a motion to adjourn or postpone the Metro Meeting
to another time and/or place, for the purpose of soliciting additional proxies
or otherwise; provided, however, that no proxy which is voted against the
proposal to approve and adopt the Merger Agreement will be voted in favor of any
such adjournment or postponement.
If any other matters are properly presented at the Metro Meeting for
consideration, the persons named in the form of proxy enclosed herewith and
acting thereunder will have discretionary authority to vote on such matters in
accordance with their best judgment; provided, however, that such discretionary
authority will only be exercised to the extent possible under applicable federal
and state securities and corporation laws. Metro does not have any knowledge of
any matters to be presented at the Metro Meeting other than the matters set
forth above under "-- General."
Any proxy given by a Metro stockholder pursuant to this solicitation may be
revoked by the person giving it at any time before it is voted. Proxies may be
revoked by (i) filing with the Secretary of Metro, at or before the taking of
the vote at the Metro Meeting, a written notice of revocation bearing a later
date than the proxy, (ii) duly executing a later-dated proxy relating to the
same shares and delivering it to the Secretary of Metro before the taking of the
vote at the Metro Meeting, or (iii) attending the Metro Meeting and voting in
person (although attendance at the meeting will not in and of itself constitute
a revocation of a proxy). Any written notice of revocation or subsequently
executed proxy should be sent so as to be delivered to Metro Bancshares Inc.,
100 Jericho Quadrangle, Jericho, New York 11753, Attention: William De Cicco,
Secretary, or hand delivered to Mr. De Cicco at or before the taking of the vote
at the Metro Meeting.
Metro will bear all expenses of this solicitation of proxies from the
holders of Metro Common Stock, except that the cost of preparing and mailing
this Joint Proxy Statement/Prospectus will be borne equally by Metro and North
Fork. In addition to solicitation by use of the mails, proxies may be solicited
by directors, officers and employees of Metro in person or by telephone,
telegram or other means of communication. Such directors, officers and employees
will not be additionally compensated, but may be reimbursed for reasonable
out-of-pocket expenses in connection with such solicitation. Metro has retained
Registrar and Transfer Company, a proxy soliciting firm, to assist in such
solicitation. The fee to be paid to such firm is not expected to exceed $2,500
plus reasonable out-of-pocket costs and expenses. In addition, Metro will make
arrangements with brokerage firms and other custodians, nominees and fiduciaries
to send proxy materials to their principals and will reimburse such parties for
their expenses in doing so.
NORTH FORK MEETING
General. This Joint Proxy Statement/Prospectus is being furnished to
stockholders of North Fork in connection with the solicitation of proxies by the
Board of Directors of North Fork (the "North Fork Board") for use at the special
meeting of stockholders of North Fork and at any adjournments or postponements
thereof (the "North Fork Meeting", and together with the Metro Meeting, the
"Special Meetings") to be held at the Radisson Hotel, Islandia, Hauppauge, New
York, on Thursday, November 10, 1994 at 10:00 a.m.
21
<PAGE> 34
local time. At the North Fork Meeting, the stockholders of North Fork will be
asked to: (i) approve and adopt the Merger Agreement and the consummation of the
transactions contemplated thereby, which are more fully described herein; and
(ii) act upon such other matters as may properly be brought before the North
Fork Meeting and at any adjournments or postponements thereof. A copy of the
Merger Agreement is attached as Annex A hereto.
HOLDERS OF NORTH FORK COMMON STOCK ARE REQUESTED TO PROMPTLY COMPLETE, SIGN
AND DATE THE ACCOMPANYING PROXY CARD AND RETURN IT PROMPTLY TO NORTH FORK IN THE
ENCLOSED POSTAGE-PAID ADDRESSED ENVELOPE.
NORTH FORK STOCKHOLDERS SHOULD NOT FORWARD ANY STOCK CERTIFICATES WITH
THEIR PROXY CARDS.
Recommendation of the Board of Directors. The North Fork Board has
unanimously approved the Merger Agreement and has determined that the Merger is
fair to, and in the best interests of, North Fork and its stockholders. The
North Fork Board therefore unanimously recommends that North Fork's stockholders
vote FOR approval of the Merger Agreement. See "THE MERGER -- Background of the
Merger" and "-- Recommendation of the Boards of Directors; Reasons for the
Merger -- North Fork."
Record Date; Voting; Solicitation and Revocation of Proxies. The North
Fork Board has fixed September 30, 1994 as the record date (the "North Fork
Record Date") for the determination of those North Fork stockholders entitled to
notice of and to vote at the North Fork Meeting. Only holders of record of North
Fork Common Stock at the close of business on the North Fork Record Date will be
entitled to notice of and to vote at the North Fork Meeting. As of the North
Fork Record Date, there were shares of North Fork Common Stock
outstanding, entitled to vote and held by approximately holders of record.
Each holder of record of shares of North Fork Common Stock on the North Fork
Record Date is entitled to cast one vote per share on the proposal to approve
and adopt the Merger Agreement, and on any other matter properly submitted for
the vote of the North Fork stockholders at the North Fork Meeting. The presence,
either in person or by properly executed proxy, of the holders of a majority of
the outstanding shares of North Fork Common Stock entitled to vote at the North
Fork Meeting is necessary to constitute a quorum at the North Fork Meeting.
Abstentions will be counted as present for purposes of determining the presence
or absence of a quorum at the North Fork Meeting.
The approval and adoption of the Merger Agreement by North Fork
stockholders will require the affirmative vote of the holders of a majority of
the outstanding shares of North Fork Common Stock entitled to vote thereon. As
described in "THE MERGER -- Conditions to the Merger," such stockholder approval
is a condition to consummation of the Merger. Under applicable Delaware law, in
determining whether the Merger proposal has received the requisite number of
affirmative votes, abstentions and broker non-votes will be counted and will
have the same effect as a vote against the proposal to approve and adopt the
Merger Agreement.
As of the North Fork Record Date, directors and executive officers of North
Fork and their affiliates may be deemed to be beneficial owners of
shares of North Fork Common Stock, or approximately % of the shares of
North Fork Common Stock outstanding as of the Record Date. Such persons have
informed North Fork that they intend to vote or direct the vote of all such
shares of North Fork Common Stock FOR approval and adoption of the Merger
Agreement and the transactions contemplated thereby. As of the North Fork Record
Date, neither Metro nor its subsidiaries, nor the directors and executive
officers of Metro, beneficially owned any shares of North Fork Common Stock.
All shares of North Fork Common Stock which are entitled to be voted and
are represented at the North Fork Meeting by properly executed proxies received
prior to or at the meeting, and not revoked, will be voted at such meeting, and
any adjournments or postponements thereof, in accordance with the instructions
indicated on such proxies. If no instructions are indicated, such proxies will
be voted FOR: (i) approval and adoption of the Merger Agreement and (ii)
otherwise in the discretion of the proxy holders as to any other matter which
may come before the North Fork Meeting or any adjournment or postponement
thereof, including, among other things, a motion to adjourn or postpone the
North Fork Meeting to another time and/or place, for the purpose of soliciting
additional proxies or otherwise; provided, however, that no proxy
22
<PAGE> 35
which is voted against the proposal to approve and adopt the Merger Agreement
will be voted in favor of any such adjournment or postponement.
If any other matters are properly presented at the North Fork Meeting for
consideration, the persons named in the form of proxy enclosed herewith and
acting thereunder will have discretionary authority to vote on such matters in
accordance with their best judgment; provided, however, that such discretionary
authority will only be exercised to the extent possible under applicable federal
and state securities and corporation laws. North Fork does not have any
knowledge of any matters to be presented at the North Fork Meeting other than
the matters set forth above under "-- General."
Any proxy given by a North Fork stockholder pursuant to this solicitation
may be revoked by the person giving it at any time before it is voted. Proxies
may be revoked by (i) filing with the Secretary of North Fork, at or before the
taking of the vote at the North Fork Meeting, a written notice of revocation
bearing a later date than the proxy, (ii) duly executing a later dated proxy
relating to the same shares and delivering it to the Secretary of North Fork
before the taking of the vote at the North Fork Meeting, or (iii) attending the
North Fork Meeting and voting in person (although attendance at the meeting will
not in and of itself constitute a revocation of a proxy). Any written notice of
revocation or subsequently executed proxy should be sent so as to be delivered
to North Fork Bancorporation, Inc., 9025 Route 25, Mattituck, New York, 11952,
Attention: Anthony Abate, Secretary, or hand delivered to Mr. Abate at such
address at or before the taking of the vote at the North Fork Meeting.
North Fork will bear all expenses of this solicitation of proxies from the
holders of North Fork Common Stock, except that the cost of preparing and
mailing this Joint Proxy Statement/Prospectus will be borne equally by Metro and
North Fork. In addition to solicitation by use of the mails, proxies may be
solicited by directors, officers and employees of North Fork in person or by
telephone, telegram or other means of communication. Such directors, officers
and employees will not be additionally compensated, but may be reimbursed for
reasonable out-of-pocket expenses in connection with such solicitation. North
Fork has retained D.F. King & Co. Inc., a proxy soliciting firm, to assist in
such solicitation. The fee to be paid to such firm is not expected to exceed
$5,500 plus reasonable out-of-pocket costs and expenses. In addition, North Fork
will make arrangements with brokerage firms and other custodians, nominees and
fiduciaries to send proxy materials to their principals and will reimburse such
parties for their expenses in doing so.
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THE MERGER
The following information concerning the Merger, insofar as it relates to
matters contained in the Merger Agreement, describes the material aspects of the
Merger but does not purport to be a complete description and is qualified in its
entirety by reference to the Merger Agreement which is incorporated herein by
reference and attached hereto as Annex A. North Fork and Metro stockholders are
urged to read carefully the Merger Agreement.
GENERAL
Pursuant to the terms of the Merger Agreement, subject to the satisfaction
or waiver (where permissible) of certain conditions, including, among other
things, the receipt of all necessary regulatory approvals, the expiration of all
waiting periods in respect thereof, and the approval of the Merger Agreement by
the requisite vote of the stockholders of North Fork and Metro, Metro will be
merged with and into North Fork. North Fork shall be the surviving corporation
in the Merger, and shall continue its corporate existence under the laws of the
State of Delaware. Upon consummation of the Merger, the separate corporate
existence of Metro shall terminate.
Immediately after the consummation of the Merger, Bayside Federal Savings
Bank, a federally chartered stock savings bank and a wholly owned subsidiary of
Metro ("Bayside Federal"), will merge (the "Subsidiary Bank Merger") with and
into North Fork Bank, a New York-chartered stock commercial bank and a wholly
owned subsidiary of North Fork. See "CERTAIN RELATED TRANSACTIONS -- Subsidiary
Bank Merger Agreement."
EXCHANGE RATIO
At the Effective Time (as defined below), each issued and outstanding share
of Metro Common Stock, except for shares held directly or indirectly by Metro or
North Fork (other than shares held by North Fork or Metro in a fiduciary
capacity ("Trust Account Shares") or in respect of a debt previously contracted
("DPC Shares")), will be converted into and exchangeable for the number of
shares (the "Exchange Ratio") of North Fork Common Stock determined by dividing
$25.50 by the Average Closing Price (as defined below), provided, however, that
(I) if the Average Closing Price is equal to or greater than $15.50, the
Exchange Ratio will be 1.645 and (II) except as described in the next sentence,
if the Average Closing Price is equal to or less than $14.50, the Exchange Ratio
will be 1.759. If the Average Closing Price is less than $12.50, Metro may
terminate the Merger Agreement unless North Fork increases the Exchange Ratio
such that the shares of North Fork Common Stock issued in exchange for each
share of Metro Common Stock have a value (valued at the Average Closing Price)
of $21.99. The Average Closing Price is defined as the average closing sales
price per share of the North Fork Common Stock on the New York Stock Exchange
(the "NYSE") for the 20 consecutive trading days ending on the 5th business day
(the "Valuation Date") prior to the date on which the last required regulatory
approval for the Merger, the Subsidiary Bank Merger and the other transactions
contemplated by the Merger Agreement is obtained, without regard to any
requisite waiting periods in respect thereof. Each share of North Fork Common
Stock issued in the Merger will include the corresponding number of rights
attached thereto pursuant to North Fork's Rights Agreement (as defined below)
(see "DESCRIPTION OF NORTH FORK CAPITAL STOCK -- Rights Plan").
If the Average Closing Price is less than $12.50 and, in response to an
election by Metro to terminate the Merger Agreement, North Fork elects to
increase the Exchange Ratio, the Exchange Ratio will be equal to the quotient
obtained by dividing (i) $21.99 by (ii) the Average Closing Price. See
"-- Waiver and Amendment; Termination" below. Assuming the Merger is approved by
the holders of Metro Common Stock, the Metro Board may elect not to terminate
the Merger Agreement and to consummate the Merger without resoliciting Metro
stockholders if the Average Closing Price is less than $12.50, even though, as a
result of the application of the Exchange Ratio, the value of the shares of
North Fork Common Stock (valued at the Average Closing Price) issued in exchange
for each share of Metro Common Stock would be less than $21.99. In such a
situation, in considering whether to consummate the Merger without the
resolicitation of Metro stockholders, the Metro Board will take into account,
consistent with its fiduciary duties, all relevant facts and
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circumstances that exist at such time, including, without limitation, its
evaluation of the then-existing economic conditions and trends, its evaluation
of the respective business, financial condition, results of operations and
prospects of each of Metro and North Fork, its evaluation of the overall
condition of the thrift and commercial banking industries and the advice of its
financial advisor and legal counsel. Metro stockholders will have no vote in the
decision of the Metro Board to either terminate the Merger Agreement or elect to
consummate the Merger in the event that the Average Closing Price is less than
$12.50. See "-- Waiver and Amendment; Termination" below.
Assuming the Merger is approved by the holders of North Fork Common Stock
and the Average Closing Price is less than $12.50, the North Fork Board may
elect to increase the Exchange Ratio and to consummate the Merger without
resoliciting North Fork stockholders even though, as a result of such
adjustment, the number of shares of North Fork Common Stock to be issued in the
Merger would increase. In such a situation, in considering whether to increase
the Exchange Ratio and consummate the Merger without the resolicitation of North
Fork stockholders, the North Fork Board will take into account, consistent with
its fiduciary duties, all relevant facts and circumstances that exist at such
time, including, without limitation, the advice of its financial advisor and
legal counsel. Such relevant facts and circumstances would include the North
Fork Board's evaluation of the dilutive impact of a higher Exchange Ratio to
North Fork's stockholders, its evaluation of the strategic importance to North
Fork of the acquisition of Metro relative to any such dilutive impact and the
accretive prospects of the acquisition, its evaluation of the synergies of
Metro's business relative to North Fork, Metro's financial condition, operating
performance, and prospects, and the advice of North Fork's financial advisor as
to the fairness of such higher Exchange Ratio to North Fork stockholders from a
financial point of view. North Fork stockholders will have no vote in the
decision of the North Fork Board to either permit Metro to terminate the Merger
Agreement or elect to increase the Exchange Ratio in the event that the Average
Closing Price is less than $12.50. See "-- Waiver and Amendment; Termination"
below.
The formula for determining the Exchange Ratio was arrived at through
arms-length negotiations between Metro and North Fork. If North Fork effects a
stock dividend, split-up or combination, or other distribution in North Fork
Common Stock, an appropriate adjustment to the Exchange Ratio will be made.
Under the terms of the Merger Agreement, the Exchange Ratio will be
determined by reference to the Average Closing Price of North Fork Common Stock
as of the Valuation Date. Due to the requirements of applicable law, among other
reasons, it is possible that the Valuation Date will occur 30 days or more prior
to the Effective Time. The market price of North Fork Common Stock will
fluctuate between the date of this Joint Proxy Statement/Prospectus and the
Valuation Date, and between the Valuation Date and the Effective Time. Although
the Merger Agreement provides that the Exchange Ratio will adjust to absorb
fluctuations in the market price of North Fork Common Stock within certain
ranges prior to the Valuation Date, fluctuations in such market price prior to
the Effective Time could result in an increase or decrease in the market price
as of the Effective Time of the shares of North Fork Common Stock to be received
by Metro stockholders in the Merger. If the Valuation Date had been September
, 1994, the Exchange Ratio would have been . For further information
concerning the market prices of North Fork Common Stock and Metro Common Stock,
see "MARKET PRICES AND DIVIDEND INFORMATION." No assurance can be given
concerning the market price of North Fork Common Stock before or after the
Effective Time.
No fractional shares of North Fork Common Stock will be issued in
connection with the Merger. In lieu of the issuance of fractional shares, North
Fork will make a cash payment to each Metro stockholder who otherwise would be
entitled to receive a fractional share equal to the product of (i) the
fractional interest which a Metro stockholder would otherwise receive and (ii)
the average of the closing sale prices of North Fork Common Stock on the NYSE
for the five trading days immediately preceding the Effective Time.
Upon consummation of the Merger, any shares of Metro Common Stock that were
owned by Metro as treasury stock or that were held directly or indirectly by
North Fork other than in a fiduciary capacity or in respect of a debt previously
contracted will be canceled and retired and no payment will be made with respect
thereto.
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Based on the capitalization of North Fork and Metro as of June 30, 1994,
upon consummation of the Merger, the stockholders of Metro will own North Fork
Common Stock representing approximately % of the outstanding North Fork Common
Stock following the Merger assuming an Exchange Ratio of 1.645 or approximately
% of the outstanding North Fork Common Stock following the Merger assuming an
Exchange Ratio of 1.759. As more fully described above, the Exchange Ratio could
be as low as 1.645 and there is no limit as to how high the Exchange Ratio could
be if the Average Closing Price is less than $12.50 (assuming that North Fork
elects to increase the Exchange Ratio in response to a decision by Metro to
terminate the Merger Agreement). Such percentages would range from % to %,
depending on whether the shares of Metro Common Stock and North Fork Common
Stock issuable upon exercise of outstanding Metro stock options and North Fork
stock options and warrants (vested and unvested) are issued. For purposes of
these calculations, except as set forth above, it is assumed that no other
shares of North Fork Common Stock and Metro Common Stock are issued.
If the Merger had been consummated on December 31, 1993, North Fork and
Metro would have accounted for 62.0% and 38.0%, respectively, of the revenue of
the combined entity. Further, North Fork and Metro would have represented 65.3%
and 34.7%, respectively, of the total assets and 68.3% and 31.7%, respectively,
of the stockholders' equity of the combined company. Such amounts exclude
consideration of merger and restructuring charges expected to be made in
connection with the Merger.
In addition, at the Effective Time, each outstanding and unexercised option
to purchase shares of Metro Common Stock (a "Metro Option") will be assumed by
North Fork. After the Effective Time, each Metro Option will be deemed to
constitute an option to acquire, on the same terms and conditions as were
applicable under such Metro Option immediately prior to the Effective Time (with
the exception of a limited rights feature contained in certain Metro Options
which has been eliminated in order to ensure that the Merger qualifies for
pooling of interests accounting treatment), the number of shares of North Fork
Common Stock equal to the product, rounded down to the nearest share, of the
number of shares of Metro Common Stock subject to the Metro Option and the
Exchange Ratio, at a price per share equal to the exercise price per share of
Metro Common Stock otherwise purchasable pursuant to such Metro Option divided
by the Exchange Ratio, rounded up to the nearest cent.
The Merger Agreement also provides that each holder of a Metro Option,
whether or not then vested, will have the right at the Effective Time to elect
to convert all or a portion of his or her Metro Options which have not expired
prior to the Effective Time into the right (which right must be exercised at
least 5 days prior to the Closing Date by written notice to North Fork) to
receive such number of shares (rounded to the nearest whole share) of North Fork
Common Stock as are equal in value (determined by valuing each share of North
Fork Common Stock at the Average Closing Price) to the excess of (i) the number
of shares of Metro Common Stock subject to such option multiplied by the
Exchange Ratio multiplied by the Average Closing Price of the North Fork Common
Stock over (ii) the aggregate exercise price of such option, except that no such
election shall be made if such right is inconsistent with any of the conditions
to consummation of the Merger contained in the Merger Agreement.
BACKGROUND OF THE MERGER
Bayside Federal Savings Bank converted to the stock form of organization in
November of 1988. The period subsequent to the conversion has been one of
continued and substantial change in the banking industry, characterized by
heightened regulatory scrutiny, intensifying competition and consolidation.
During such time, the effects of the downturn in the local economy and real
estate market as well as significant changes in the regulatory environment, as
evidenced by the enactment of the Financial Institutions Reform, Recovery and
Enforcement Act of 1989, helped, in part, to depress the market value of the
Metro Common Stock (which value reached a low (as adjusted for certain stock
splits) of $1.83 on October 26, 1990), as well as the price of the common stock
of many other financial institutions based in or around Metro's market area.
Metro's management and the Metro Board focused on these changes and sought
to best position Metro and its stockholders. It was during this period that
Metro first engaged an investment banking firm to render general financial
advisory services as well as merger and acquisition services to Metro. In
September of 1992,
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that firm was replaced by Keefe, Bruyette & Woods, Inc. ("KBW"). Although Metro
was not actively soliciting offers to sell Metro, the investment advisors were
instructed to present any indications of interest to senior management in order
for the Metro Board and senior management to evaluate all methods of enhancing
stockholder value.
From 1990 through 1994, Metro received several unsolicited preliminary
indications of interest from other entities as well as private investors
concerning possible interests in pursuing a merger with or acquisition of Metro.
Other than with respect to those matters discussed below, these indications of
interest were informal in nature and no formal offers resulted therefrom. On
four occasions, Metro entered into confidentiality agreements with parties who
expressed an interest in acquiring Metro. All indications of interest were
analyzed by Metro's financial advisor and were presented by the senior
management of Metro to the Metro Board for review and analysis. Each of these
indications of interest was rejected by Metro for a variety of reasons,
including the proposed range of consideration being discussed, the timing of the
offer, the pre-existing economic and market conditions, and the proposed
structure of the transaction.
One such indication of interest came from North Fork in April of 1993. At
that time, Metro's Chief Executive Officer, David G. Herold, was approached by
North Fork's Chief Executive Officer, John Adam Kanas, concerning North Fork's
interest in pursuing a possible business combination with Metro. On April 23,
1993, the Metro Board discussed North Fork's indication of interest and voted to
enter into a confidentiality agreement with North Fork, which was signed on May
5, 1993. Subsequent to entering into this agreement, North Fork conducted a due
diligence examination of Metro. Shortly thereafter, Mr. Kanas contacted Mr.
Herold and indicated that North Fork had an interest in acquiring Metro in a
stock-for-stock merger and discussed a possible exchange ratio for the
transaction. The Metro Board, with the assistance of KBW, analyzed the possible
exchange ratio proposed by North Fork, and thereafter determined to inform North
Fork that Metro was not interested in pursuing the merger on the terms proposed
by North Fork.
In September of 1993, Mr. Herold was contacted by a savings and loan
holding company which indicated an interest in exploring the possibility of
acquiring Metro. Similarly, in November of 1993, Mr. Herold was contacted by
another savings and loan holding company, which had explored the possibility of
a merger with Metro approximately one year earlier, indicating a renewed
interest in exploring a merger. Metro provided both of these companies with
confidential information concerning Metro. While neither of these interested
parties made a formal offer to acquire Metro, each did provide a preliminary
indication of interest, consisting primarily of preliminary ranges of values
placed on Metro Common Stock (neither of which offered a premium to the
then-existing market price of Metro Common Stock) and proposed transaction
structures, including a "merger of equals" structure. Thereafter, Metro, through
its senior management, the Metro Board and KBW, conducted more detailed
discussions with these interested parties. KBW assisted Metro's senior
management and the Metro Board in the financial analysis of these indications of
interest. Metro determined that neither indication of interest would be an
appropriate method to significantly enhance stockholder value. This
determination was based in part on the lack of a premium to the market price of
the Metro Common Stock and the inconsistent earnings stream and lack of a
dividend payment by one of the interested parties. The determination was also
based in part on the "merger of equals" structure contemplated by the
transaction proposed by the other interested party, which would have afforded no
premium to the then-existing market price of Metro Common Stock.
At a June 1, 1994, meeting of the Bayside Executive Committee, several
alternative strategies for Metro were evaluated, including the possibilities of
merging, being acquired or remaining an independent company. On June 9, 1994,
Mr. Kanas once again approached Mr. Herold concerning North Fork's interest in
pursuing a possible business combination with Metro. On June 16, 1994, the North
Fork Board met with the management of North Fork to discuss the merits of an
acquisition of Metro. On June 17, 1994, the North Fork Board again met to
receive a presentation from North Fork's management and legal and financial
advisors concerning the advisability of making a proposal to acquire Metro, and
the North Fork Board determined to make such a proposal. On the same day, North
Fork submitted to Mr. Herold a preliminary proposal to acquire Metro.
Thereafter, North Fork updated its due diligence investigation of Metro. On June
22, 1994, the Metro Board met (the "June 22nd Meeting") to consider the
preliminary proposal made by North Fork. At the June 22nd Meeting, KBW made a
presentation to the Metro Board which included a discussion of the financial
terms of the North Fork proposal, a description of the historical market prices
for both Metro
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Common Stock and North Fork Common Stock, a comparison of the financial and
market performance of Metro to that of a group of savings institutions in the
New York area, a comparison of the financial and market performance of North
Fork to that of a group of banking institutions in the Middle Atlantic and New
England regions, a comparison of the North Fork proposal to numerous recent
transactions involving the purchase of thrift institutions, an analysis of North
Fork's financial ability to acquire Metro relative to certain other banking
institutions and an analysis of the range of potential values, based on a
discounted cash flow analysis, of Metro Common Stock. See "-- Opinions of
Financial Advisors" below. Legal counsel also attended this meeting. At the
meeting, the Metro Board unanimously voted to authorize Mr. Herold to enter into
negotiations with North Fork concerning the terms of a merger agreement,
including the proposed exchange ratio, and to periodically report to the Metro
Board with respect to the results of such negotiations. During the next several
days, Metro conducted a due diligence examination of North Fork, which was to be
supplemented by further due diligence if a merger agreement were executed. In
the interim, Metro and North Fork conducted nearly continual arms-length
negotiations with respect to the Merger Agreement. Each financial advisor
advised the respective management and Board of Directors throughout the
negotiations as to both strategies to be utilized in the negotiations and as to
its preliminary views of the fairness of the exchange ratio then being
discussed.
On June 27, 1994, the Metro Board considered and approved, by unanimous
vote, the Merger, the Merger Agreement, the Stock Option Agreement and the
related transactions. Presentations were made by both KBW and Metro's legal
counsel. At the special meeting, members of Metro's senior management, together
with its legal and financial advisors, reviewed with the Metro Board, among
other things, the background of the proposed transaction, the potential benefits
of the transaction, including the strategic rationale for the transaction, a
summary of their due diligence findings, financial and valuation analyses of the
transaction and the terms of the proposed agreements. The KBW presentation
included its updated analysis of the North Fork proposal and the other financial
analyses (except the historical market analysis) which were presented at the
June 22nd Meeting. Additionally, KBW delivered to the Metro Board its oral
opinion to the effect that, as of such date, the Exchange Ratio was fair, from a
financial point of view, to Metro stockholders.
On June 27, 1994, the North Fork Board considered and approved, by
unanimous vote, the Merger, the Merger Agreement, the Stock Option Agreement and
the related transactions. Presentations were made by both M.A. Schapiro and
North Fork's legal counsel. At the special meeting, members of North Fork's
senior management, together with its legal and financial advisors, reviewed with
the North Fork Board, among other things, the background of the proposed
transaction, the potential benefits of the transaction, including the strategic
rationale for the transaction, a summary of their due diligence findings,
financial and valuation analyses of the transaction and the terms of the
proposed agreements. In addition, M.A. Schapiro delivered to the North Fork
Board its oral opinion to the effect that, as of such date, the aggregate
consideration to be paid by North Fork in the Merger was fair to North Fork's
stockholders from a financial point of view.
RECOMMENDATION OF THE BOARDS OF DIRECTORS; REASONS FOR THE MERGER
Metro. The Metro Board believes that the Merger is fair to, and in the
best interests of, Metro and its stockholders. Accordingly, the Metro Board has
unanimously approved the Merger Agreement and recommends that Metro's
stockholders vote FOR the approval and adoption of the Merger Agreement and
consummation of the transactions contemplated thereby. See "-- Background of the
Merger" above and "-- Opinions of Financial Advisors -- Metro" below.
In reaching its decision to approve the Merger Agreement, the Metro Board
consulted with its legal advisors regarding the legal terms of the transaction
and the Metro Board's obligations in its consideration of the proposed
transaction, its financial advisors regarding the financial aspects of the
proposed transaction and the fairness of the Exchange Ratio, as well as with
management of Metro, and, without assigning any relative
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or specific weights, considered a number of factors, both from a short-term and
a longer-term perspective, including the following:
(i) the Metro Board's familiarity with and review of Metro's business,
financial condition, results of operations and prospects, including, but
not limited to, its potential growth, development, productivity and
profitability and the business risks associated therewith;
(ii) the current and prospective environment in which Metro operates,
including national and local economic conditions, the competitive
environment for financial institutions generally, the increased regulatory
burden on financial institutions generally and the trend toward
consolidation in the financial services industry, particularly in Metro's
market area;
(iii) information concerning the business, financial condition,
results of operations, asset quality and prospects of North Fork, including
the long-term growth potential of North Fork Common Stock, the future
growth prospects of North Fork and Metro following the proposed Merger and
the potential synergies expected from the Merger and the business risks
associated therewith;
(iv) the oral and written presentations and the oral opinion of
Metro's financial advisor, KBW, that the Exchange Ratio was fair to the
holders of Metro Common Stock from a financial point of view;
(v) the financial and other significant terms of the proposed Merger
with North Fork including the terms and conditions of the Merger Agreement
and the Stock Option Agreement;
(vi) the benefits of a business combination with a bank holding
company such as North Fork;
(vii) the compatibility of the respective businesses of North Fork and
Metro and North Fork's commitment to the communities it serves;
(viii) the broader range of products and services, as well as greater
convenience, which will be afforded Metro customers as a result of the
merger;
(ix) the anticipated tax-free nature of the Merger to Metro
stockholders (except for the portion of the consideration paid in cash for
fractional shares). See " -- Certain Federal Income Tax Consequences"
below; and
(x) the alternative strategic courses available to Metro, including
remaining independent or exploring other indications of interest from other
potential acquirors.
North Fork. The North Fork Board believes that the Merger is fair to, and
in the best interests of, North Fork and its stockholders. Accordingly, the
North Fork Board has unanimously approved the Merger Agreement and recommends
that North Fork's stockholders vote FOR the approval and adoption of the Merger
Agreement and consummation of the transactions contemplated thereby.
In reaching its decision to approve the Merger Agreement, the North Fork
Board consulted with its legal advisors regarding the legal terms of the
transaction and the North Fork Board's obligations in its consideration of the
proposed transaction, its financial advisors regarding the financial aspects and
fairness of the proposed transaction, as well as with management of North Fork,
and, without assigning any relative or specific weights, considered a number of
factors, both from a short-term and a longer-term perspective, including the
following:
(i) the North Fork Board's familiarity with and review of North Fork's
business, operations, financial condition, earnings and prospects,
including, but not limited to, its potential growth, development,
productivity and profitability and the business risks associated therewith;
(ii) the North Fork Board's review, based in part on a presentation by
North Fork management regarding its due diligence on Metro, of the
business, operations, earnings and financial condition of Metro on an
historical, prospective and pro forma basis, and the enhanced opportunities
for growth that the Merger makes possible;
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(iii) a variety of factors affecting and relating to the overall
strategic focus of North Fork including, without limitation, opportunities
for growth in deposits, assets and earnings, and opportunities available to
North Fork in the market areas where Metro conducts business;
(iv) the current and prospective economic, competitive and regulatory
environment facing financial institutions, including North Fork;
(v) the terms of the Merger Agreement, the Stock Option Agreement and
the other documents executed in connection with the Merger;
(vi) the anticipated revenue enhancement, cost savings and
efficiencies available from the Merger; and
(vii) the financial advice rendered by M.A. Schapiro and the opinion
of M.A. Schapiro as to the fairness to North Fork's stockholders from a
financial point of view of the aggregate consideration to be paid by North
Fork in the Merger.
OPINIONS OF FINANCIAL ADVISORS
Metro. Pursuant to an engagement letter dated as of June 20, 1994 (the
"Engagement Letter"), Metro retained KBW on an exclusive basis to render
financial advisory and investment banking services to Metro in connection with a
possible business combination between Metro and North Fork. KBW had been
providing general advisory and investment banking services to Metro since
September 1992.
KBW is a nationally recognized investment banking firm and, as part of its
investment banking business, is continually engaged in the valuation of bank,
bank holding company and thrift institution securities in connection with
acquisitions, negotiated underwritings, secondary distributions of listed and
unlisted securities, private placements and valuations for various other
purposes. As specialists in the securities of banking companies, KBW has
experience in, and knowledge of, the valuation of banking enterprises. KBW was
selected by Metro on the basis of its familiarity with Metro, its
qualifications, its previous experience in similar transactions and its
reputation in the banking and investment communities. KBW has acted exclusively
for the Metro Board in rendering its fairness opinion and will receive a fee
from Metro for its services.
In the ordinary course of its business as a broker-dealer, KBW may, from
time to time, purchase securities from, and sell securities to, Metro and North
Fork, and, as a market maker in securities, KBW may from time to time have a
long or short position in, and buy or sell, equity securities of Metro and North
Fork for its own account and for the accounts of its customers. To the extent
that KBW has any such position as of the date of the fairness opinion attached
as Annex C hereto, it has been disclosed to Metro.
At the June 27, 1994 special meeting of the Metro Board, KBW rendered its
oral opinion to the Metro Board to the effect that, as of such date, the
Exchange Ratio was fair to the stockholders of Metro from a financial point of
view. KBW has also delivered a written opinion to the Metro Board dated as of
the date of this Joint Proxy Statement/Prospectus to the effect that, as of such
date, the Exchange Ratio was fair to the stockholders of Metro from a financial
point of view.
THE FULL TEXT OF KBW'S OPINION IS ATTACHED AS ANNEX C TO THIS JOINT PROXY
STATEMENT/PROSPECTUS AND IS INCORPORATED HEREIN BY REFERENCE. THE DESCRIPTION OF
THE OPINION SET FORTH HEREIN IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO ANNEX
C. METRO STOCKHOLDERS ARE URGED TO READ THE OPINION IN ITS ENTIRETY FOR A
DESCRIPTION OF THE PROCEDURES FOLLOWED, ASSUMPTIONS MADE, MATTERS CONSIDERED AND
QUALIFICATIONS AND LIMITATIONS ON THE REVIEW UNDERTAKEN BY KBW IN CONNECTION
THEREWITH.
KBW's opinion is directed only to the Exchange Ratio and does not
constitute a recommendation to any Metro stockholder as to how such stockholder
should vote at the Special Meeting.
In connection with its opinion, KBW reviewed, analyzed and relied upon the
following material relating to the financial and operating condition of Metro
and North Fork: (i) the Merger Agreement; (ii) Annual
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Reports to Stockholders and Annual Reports on Form 10-K for the four years ended
December 31, 1993 for North Fork and September 30, 1993 for Metro; (iii) certain
interim reports to stockholders of Metro and North Fork and Quarterly Reports on
Form 10-Q of Metro and North Fork and certain other communications from Metro
and North Fork to their respective stockholders; (iv) other financial
information concerning the businesses and operations of Metro and North Fork
furnished to KBW by Metro and North Fork for the purpose of KBW's analysis,
including certain internal financial analyses and forecasts for Metro and North
Fork prepared by senior management of Metro and North Fork; (v) certain publicly
available information concerning the trading of, and the trading market for, the
common stock of Metro and North Fork; and (vi) certain publicly available
information with respect to banking companies and the nature and terms of
certain other transactions that KBW considered relevant to its inquiry.
Additionally, in connection with its written opinion attached as Annex C to this
Joint Proxy Statement/Prospectus, KBW reviewed a draft of this Joint Proxy
Statement/Prospectus in substantially the form hereof. KBW also held discussions
with senior management of Metro and North Fork concerning their past and current
operations, financial condition and prospects, as well as the results of
regulatory examinations. KBW also considered such financial and other factors as
it deemed appropriate under the circumstances and took into account its
assessment of general economic, market and financial conditions and its
experience in similar transactions, as well as its experience in securities
valuation and its knowledge of banks, bank holding companies and thrift
institutions generally. KBW's opinion was necessarily based upon conditions as
they existed and could be evaluated on the date thereof and the information made
available to KBW through the date thereof.
In conducting its review and arriving at its opinion, KBW relied upon and
assumed the accuracy and completeness of all of the financial and other
information provided to it or publicly available, and KBW did not attempt to
verify such information independently. KBW relied upon the managements of Metro
and North Fork as to the reasonableness and achievability of the financial and
operating forecasts (and the assumptions and bases therefor) provided to KBW and
assumed that such forecasts reflected the best available estimates and judgments
of such managements and that such forecasts will be realized in the amounts and
in the time periods estimated by such managements. KBW also assumed, without
independent verification, that the aggregate allowances for loan losses for
Metro and North Fork are adequate to cover such losses. KBW did not make or
obtain any evaluations or appraisals of the property of Metro or North Fork, nor
did KBW examine any individual loan credit files. KBW was informed by Metro, and
assumed for purposes of its opinion, that the Merger will be accounted for as a
pooling-of-interests under generally accepted accounting principles.
Prior to rendering the written opinion attached as Annex C to this Joint
Proxy Statement/Prospectus, KBW reviewed with the Metro Board on June 22, 1994
certain financial aspects of the proposed Merger and rendered an oral opinion as
to the fairness of the Exchange Ratio to the Metro Board on June 27, 1994. Set
forth below is a summary of the material factors considered by and valuation
methodologies presented by KBW to the Metro Board on June 22, 1994 and June 27,
1994 and utilized by KBW in connection with rendering its opinion as to the
fairness, from a financial point of view, of the Exchange Ratio to Metro's
Stockholders.
Analysis of the North Fork Offer. KBW reviewed certain historical
financial information for Metro and North Fork and calculated the imputed value
of the North Fork offer to holders of Metro Common Stock. KBW calculated the
multiple which the Exchange Ratio represents, based on an assumed per share
purchase price of $25.50, when compared to Metro's March 31, 1994 stated book
value per share of $15.88, its estimated fully diluted book value per share of
$14.93, its estimated fully diluted tangible book value per share of $12.39, its
estimated fully diluted tangible book value per share, adjusted for the
recapture of Metro's bad debt reserve, of $11.73 per share, and its trailing
twelve months earnings (excluding the effects of an accounting change) of $2.21
per share. The price to stated book value multiple was 1.61 times, the price to
fully diluted book value multiple was 1.71 times, the price to fully diluted
tangible book value multiple was 2.06 times, the price to fully diluted tangible
book value adjusted for the recapture of the bad debt reserve multiple was 2.17
times and the price to trailing twelve months earnings per share multiple was
11.54 times. KBW also described the financial effect of the feature of the
Exchange Ratio that generally would enable each share of Metro to be exchanged
for no more than 1.759 and no less than 1.645 shares of North Fork Common Stock.
KBW also noted that, based on the closing price of North Fork's Common Stock on
June 24, 1994
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<PAGE> 44
($14.00 per share) and assuming that the Average Closing Price was equal to such
closing price, the Exchange Ratio under the North Fork proposal would be 1.759
and Metro's stockholders would receive North Fork Common Stock with a value
(valued at such closing price) of $24.63.
Selected Group Analysis. KBW compared the financial performance and market
performance of North Fork based on various financial measures of earnings
performance, operating efficiency, capital adequacy and asset quality and
various measures of market performance, including market/book values, price to
earnings and dividend yields to those of two groups of northeastern bank holding
companies. For purposes of such analysis, the financial information used by KBW
was as of and for the three months ended March 31, 1994 and the market price
information was as of June 24, 1994. The companies in the first group ("Group
A") had total assets ranging from approximately $3.4 billion to approximately
$6.1 billion, and included OnBancorp, Dauphin Deposit Corp., Summit Bancorp,
Keystone Financial Inc., and Valley National Bancorp. The companies in the
second group ("Group B") had total assets ranging from approximately $0.6
billion to approximately $2.0 billion, including UST Corp., Trustco Bank Corp.
of New York, Susquehanna Bancshares, Central Jersey Bancorp, Banknorth Group,
Inc., and Suffolk Bancorp.
KBW's analysis showed the following concerning North Fork's financial
performance: that its return on equity on an annualized basis was 14.22%
compared with an average of 15.27% for Group A and 10.07% for Group B; that its
return on assets on an annualized basis was 1.15% compared with an average of
1.34% for Group A and 0.86% for Group B; that its net interest margin on an
annualized basis was 4.57% compared with an average of 4.15% for Group A and
4.66% for Group B; that its efficiency ratio on an annualized basis was 51.66%
compared with an average of 53.87% for Group A and 63.89% for Group B; that its
equity to assets ratio was 8.07% compared to an average of 8.94% for Group A and
8.46% for Group B; that its ratio of nonperforming assets to total loans and
other real estate owned was 6.35% compared to an average of 1.66% for Group A
and 2.72% for Group B; that its ratio of loan loss reserves to nonperforming
loans was 97.01% compared to an average of 165.42% for Group A and 106.10% for
Group B; and that its ratio of nonperforming assets to equity plus loan loss
reserves was 33.79% compared to an average of 9.48% for Group A and 17.56% for
Group B.
KBW's analysis further showed the following concerning North Fork's market
performance: that North Fork's price to earnings multiple based on 1994
estimated earnings was 9.33 times compared to an average of 10.83 times for
Group A and 11.48 times for Group B; that its price to earnings multiple based
on 1995 estimated earnings was 8.48 times compared to an average of 9.82 times
for Group A and 10.55 times for Group B; that its dividend yield was 2.14%
compared to an average of 3.58% for Group A and 2.88% for Group B; and that its
price to book value multiple was 1.26 times compared to an average of 1.76 times
for Group A and 1.56 times for Group B. For purposes of the above calculations,
all earnings estimates are based upon the published estimates of KBW's equity
research department. The comparison group averages exclude North Fork.
KBW compared the financial performance and market performance of Metro
based on various financial measures of earnings performance, expense ratio,
capital adequacy and asset quality and various measures of market performance
including price to earnings and market to book values to those of a group of
thrift institutions with assets ranging from approximately $0.5 billion to
approximately $9.4 billion, which included Dime Savings Bank of New York, Anchor
Bancorp Inc., GP Financial Corp., Brooklyn Bancorp, Astoria Financial Corp.,
Long Island Bancorp, The Greater New York Savings Bank, TR Financial Corp.,
Fidelity New York, FSB, New York Bancorp, JSB Financial, Inc., North Side
Savings Bank, Haven Bancorp, Queens County Bancorp, Reliance Bancorp, Hamilton
Bancorp, Sunrise Bancorp and Bay Ridge Bancorp. For purposes of such analysis,
the financial information used by KBW was as of and for the three months ended
March 31, 1994 (except with respect to Long Island Bancorp, JSB Financial, Inc.,
Haven Bancorp and Bay Ridge Bancorp which was based on financial data as of and
for the three months ended December 31, 1993) and the market price data was as
of June 24, 1994 (except for Metro which was based on the closing price of Metro
Common Stock on June 21, 1994).
KBW's analysis showed the following concerning Metro's financial
performance: that its return on assets on an annualized basis was 1.29% compared
with an average of 0.99% for the group; that its return on equity
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<PAGE> 45
on an annualized basis was 16.46% compared with an average of 11.53% for the
group; that its net interest margin on an annualized basis was 4.44% compared
with an average of 3.66% for the group; that its expense ratio on an annualized
basis was 1.97% compared with an average of 1.94% for the group; that its equity
to assets ratio was 7.97% compared to an average of 10.89% for the group; that
its net chargeoffs to average total loans ratio was 0.42% compared to an average
of 0.44% for the group; that its loan loss reserves to nonperforming loans ratio
was 173% compared to an average of 60.99% for the group; that its ratio of
nonperforming assets to total assets was 1.05% compared to an average of 3.69%
for the group; and that its ratio of nonperforming assets to equity plus loan
loss reserves was 10.25% compared to an average of 32.18% for the group.
KBW's analysis further showed the following concerning Metro's market
performance: that its price to earnings multiple based on 1994 estimated
earnings was 9.10 times compared to an average of 11.13 times for the group;
that its price to earnings multiple based on 1995 estimated earnings was 8.60
times compared to an average of 9.29 times for the group; and that its price to
book value multiple was 1.35 times compared to an average of 0.96 times for the
group. For the purposes of the above calculations, all earnings estimates are
based on the published estimates of KBW's equity research department. The peer
group averages exclude Metro.
Relative Stock Price Performance. KBW examined the history of trading
prices for both Metro Common Stock and North Fork Common Stock for the periods
from January 1989 to June 1994 and from January 1992 to June 1994. KBW also
examined the relationship between movements of the market prices for Metro
Common Stock and North Fork Common Stock to movements in the Keefe Bank Index of
24 banking companies and the S&P 500 Index over these two periods. This analysis
showed that, while the price of North Fork Common Stock had improved since
mid-1992, Metro Common Stock outperformed North Fork Common Stock over both the
period from January 1989 to June 1994 and January 1992 to June 1994.
Additionally, the analysis showed that the rate of increase in the market price
of North Fork Common Stock over the period from January 1992 to December 1992
generally did not vary significantly from the Keefe Bank Index and the S&P 500
Index but that it had substantially outperformed these two indices over the
period from December 1992 through June 1994.
Analysis of Selected Merger Transactions. KBW reviewed certain financial
data related to 30 bank holding company acquisitions of thrifts. The selected
acquisitions included the following transactions which were the most recently
announced of the 30 transactions analyzed (identified by acquiror/acquiree):
First of America/F&C Bancshares Inc.; Shawmut National Corporation/Northeast
Federal Corporation; First Union Corporation/Home Federal Savings Bank; UJB
Financial/Palisade Savings Bank; Allied Bankshares/First Savings Bank; Fleet
Financial Group/NBB Bancorp, Inc.; Huntington Bancshares/FirstFed Northern
Kentucky; Susquehanna Bancshares/Atlanfed Bancorp; Susquehanna
Bancshares/Fairfax Financial; and NBD Bancorp/AmeriFed Financial Corporation.
KBW calculated averages for the premium to the target's market price,
earnings (either trailing 12 month earnings or nine month earnings annualized),
stated book value and tangible book value and separate averages for those
transactions analyzed which were treated as pooling of interest transactions.
The calculations yielded, as of the date of announcement of these transactions,
the following average multiples: (i) price offered as a multiple of market price
of the target's shares of 1.27 times (1.24 times for pooling transactions),
compared with a multiple of 1.14 times (measured as of June 22, 1994) associated
with the North Fork proposal; (ii) price offered as a multiple of earnings of
15.65 times (15.02 times for pooling transactions), compared with 11.54 times
associated with the North Fork proposal; and (iii) price offered as a multiple
of book value of 1.59 times (1.58 times for pooling transactions), compared with
a multiple of 1.61 times associated with the North Fork proposal.
No company or transaction used as a comparison in the above analysis is
identical to Metro, North Fork or the Merger. Accordingly, an analysis of the
results of the foregoing is not mathematical; rather, it involves complex
considerations and judgments concerning differences in financial and operating
characteristics of the companies and other factors that could affect the public
trading value of the companies to which they are being compared.
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<PAGE> 46
Affordability Analysis. KBW compared the financial ability of North Fork
to acquire Metro relative to a selected group of other regional banks, including
KeyCorp, First Fidelity Bancorp, First Empire State Corp., Anchor Bancorp Inc.,
Astoria Financial Corporation, New York Bancorp, and Queens County Savings Bank
as measured by earnings per share ("EPS") dilution and incremental EPS dilution
(i.e., EPS dilution on the shares issued). The analysis was based on 1995
earnings estimates, market price data as of June 24, 1994 (except for Metro,
which was based on June 21, 1994 market data) and financial data as of March 31,
1994. Using a range of per share bid prices of $22.00 to $30.00, KBW calculated
pro forma EPS dilution and pro forma incremental EPS dilution. KBW's analysis
showed that, at an assumed bid price of $25.50 per share (without accounting,
for the purpose of this comparative analysis, for the provisions in the Merger
Agreement which provide for an adjustment to the Exchange Ratio within certain
parameters), the EPS dilution incurred by North Fork would be 8.00% and the
earnings or cost savings required to eliminate such dilution would be $3.32
million as compared to an estimated range of EPS dilution that would be incurred
by the comparison group of institutions of between 0.47% and 6.70% and a range
of earnings or cost savings required to eliminate such dilution of between $1.28
million and $4.85 million. Additionally, KBW's analysis showed that the
incremental EPS dilution incurred by North Fork would be 19.75% compared to an
estimated range of incremental EPS dilution that would be incurred by the
comparison group of institutions of between 8.67% and 26.47%.
KBW also illustrated the earnings dilution that would be incurred by North
Fork taking into account the proposed provisions in the Merger Agreement which
provide for an adjustment to the Exchange Ratio within certain parameters. The
analysis showed that, based upon estimated 1995 earnings, North Fork would incur
approximately 4.13% to 6.72% of EPS dilution. This analysis also showed that the
earnings or cost savings required to eliminate such dilution would range between
approximately $1.6 million and $2.8 million, net of tax.
Contribution Analysis. KBW analyzed the relative contribution of each of
Metro and North Fork to certain balance sheet and income statement items,
including assets, deposits, stockholders' equity and estimated earnings. KBW
then compared the relative contribution of such balance sheet and income
statement items, with ownership percentages of between approximately 38% and 40%
for Metro stockholders based on an Exchange Ratio that could range between 1.645
and 1.759. The contribution analysis showed that under the North Fork proposal,
Metro would contribute approximately 34% of the combined assets, 38% of the
combined deposits, 34% of the combined stockholders' equity and 35% of the
estimated 1995 earnings of the two companies (before cost savings).
Pro forma EPS, Book Value and Dividends per Share. KBW analyzed the pro
forma EPS, book value and dividends per share of Metro assuming a range for the
Exchange Ratio of 1.645 shares to 1.759 shares of North Fork Common Stock for
each share of Metro Common Stock. Based on twelve months trailing earnings per
share of $2.21 for Metro and a 1994 EPS estimate of $1.52 for North Fork,
Metro's pro forma 1994 EPS would range from $2.40 to $2.57, reflecting an 8.6%
and 16.3% increase, respectively. Metro's pro forma March 31, 1994 stated book
value per share would range from $17.21 to $18.40, an 8.4% and 15.9% increase,
respectively, from Metro's stated book value per share of $15.88. Metro's pro
forma March 31, 1994 tangible book value per share would range from $15.51 to
$16.59, an 18.6% and 26.8% increase, respectively, over Metro's tangible book
value per share of $13.08. Metro's pro forma annualized dividends per share
would range from $.66 to $.70, an 8.6% and 2.2% decrease, respectively, from
Metro's annualized dividend per share of $0.72.
Discounted Cash Flow Analysis. KBW estimated the present value of future
streams of after-tax cash flows that Metro could produce through 1996. The
analysis was based on several assumptions, including a $0.79 dividend per share
in 1996, and an earnings per share of $2.61 in 1996. A terminal value was
calculated for 1996 by multiplying Metro's projected 1996 earnings by a
price/earnings multiple of 9.00 times. This terminal valuation and the annual
dividend payments were discounted at 12.0%, producing a present value of $18.53.
In addition, KBW provided a sensitivity analysis based on two different
scenarios. The first scenario was based on the assumption that Metro remains
independent until year end 1996, at which time all Metro stockholders
simultaneously sell their Metro shares into the open market ("Scenario I").
Using Scenario I, KBW showed a range of discounted values that would result if
discount rates ranging from 10% to 15% were
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<PAGE> 47
utilized and terminal price to earning multiples of 7.00 times to 10.00 times
were applied. This analysis showed a range of values of $13.73 to $21.48 per
share for Scenario I. The second scenario was based on the assumption that Metro
remains independent until year end 1996, at which time all shares of Metro
Common Stock are sold in a merger or acquisition ("Scenario II"). Using Scenario
II, KBW showed a range of discounted values that would result if discount rates
ranging from 10% to 15% were utilized and terminal price to earning multiples of
10.85 times to 12.50 times were applied. This analysis showed a range of values
of $20.34 to $26.39 per share for Scenario II. KBW compared these values to the
potential value provided to Metro shareholders in the Merger.
This analysis was based upon varying assumptions concerning earnings growth
rates, dividend rates and exit multiples, which assumptions are themselves based
upon many factors and assumptions many of which are beyond the control of Metro
and North Fork. As indicated below, this analysis is not necessarily indicative
of actual values or actual future results and does not purport to reflect the
prices at which any security may trade at the present time or any time in the
future.
The summary contained herein provides a summary description of the material
analyses prepared by KBW in connection with the rendering of its opinion. The
summary set forth above does not purport to be a complete description of the
analyses performed by KBW in connection with the rendering of its opinion. The
preparation of a fairness opinion is not necessarily susceptible to partial
analysis or summary description. KBW believes that its analyses and the summary
set forth above must be considered as a whole and that selecting portions of its
analyses without considering all analyses, or selecting part of the above
summary, without considering all factors and analyses, would create an
incomplete view of the processes underlying the analyses set forth in KBW's
presentations and opinion. The ranges of valuations resulting from any
particular analysis described above should not be taken to be KBW's view of the
actual value of Metro or North Fork. The fact that any specific analysis has
been referred to in the summary above is not meant to indicate that such
analysis was given greater weight than any other analyses.
In performing its analyses, KBW made numerous assumptions with respect to
industry performance, general business and economic conditions and other
matters, many of which are beyond the control of Metro and North Fork. The
analyses performed by KBW are not necessarily indicative of actual values or
actual future results which may be significantly more or less favorable than
suggested by such analyses. Such analyses were prepared solely as part of KBW's
analysis of the fairness, from a financial point of view, of the Exchange Ratio
and were provided to the Metro Board in connection with the delivery of KBW's
opinion. The analyses do not purport to be appraisals or to reflect the prices
at which a company actually might be sold or the prices at which any securities
may trade at the present time or at any time in the future. In addition, as
described above, KBW's opinion, along with its presentation to the Metro Board,
was just one of many factors taken into consideration by the Metro Board in
unanimously approving the Merger Agreement. See "-- Recommendation of the Boards
of Directors; Reasons for the Merger -- Metro" above.
Pursuant to the Engagement Letter, Metro has agreed to pay KBW a cash fee
of 0.70% of the total consideration paid to Metro's stockholders pursuant to the
Merger which fee will total approximately $1,000,000 (assuming that the shares
of North Fork Common Stock to be received in exchange for each share of Metro
Common Stock surrendered pursuant to the Merger have an aggregate market value
of $25.50 on the Closing Date). Such fee is payable as follows: $150,000 was
paid upon the signing of the Merger Agreement; $150,000 will be paid upon the
mailing of this Joint Proxy Statement/Prospectus and the remainder is contingent
upon and will be paid at the closing of the Merger. Metro also has agreed to
indemnify KBW against certain liabilities, including liabilities under the
federal securities laws, and to reimburse KBW for certain out-of-pocket
expenses. KBW has also provided general advisory and investment banking services
to Metro since September 1992 and, pursuant to an engagement letter, dated
January 21, 1993, KBW is entitled to be paid an annual retainer fee of $40,000
for such services. Through the date hereof, KBW has received fees totalling
$40,000 pursuant to such general retainer letter.
Prior to its retention by Metro in connection with the Merger, KBW provided
professional services to North Fork as exclusive agent for a private placement
of 1,040,000 shares of North Fork Common Stock in March of 1993. In connection
therewith, North Fork paid KBW a fee of $348,400 plus KBW's out-of-pocket
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<PAGE> 48
expenses. KBW has not been engaged by North Fork to render investment banking
services and has not received any fees from North Fork since that time.
North Fork. M.A. Schapiro has delivered its written opinions to the North
Fork Board that, as of June 27, 1994 and as of the date of this Joint Proxy
Statement/Prospectus, the aggregate consideration to be paid by North Fork in
the Merger was fair, from a financial point of view, to the stockholders of
North Fork. No limitations were imposed by the North Fork Board upon M.A.
Schapiro with respect to the investigations made or procedures followed by M.A.
Schapiro in rendering its opinions.
THE FULL TEXT OF THE OPINION OF M.A. SCHAPIRO DATED THE DATE OF THIS JOINT
PROXY STATEMENT/PROSPECTUS, WHICH SETS FORTH ASSUMPTIONS MADE, MATTERS
CONSIDERED AND LIMITS ON THE REVIEW UNDERTAKEN BY M.A. SCHAPIRO, IS ATTACHED
HERETO AS ANNEX D. NORTH FORK STOCKHOLDERS ARE URGED TO READ THIS OPINION IN ITS
ENTIRETY. M.A. SCHAPIRO'S OPINIONS ARE DIRECTED ONLY TO THE AGGREGATE
CONSIDERATION TO BE PAID BY NORTH FORK IN THE MERGER AND DO NOT CONSTITUTE A
RECOMMENDATION TO ANY NORTH FORK STOCKHOLDER AS TO HOW SUCH STOCKHOLDER SHOULD
VOTE AT THE NORTH FORK MEETING. THE SUMMARY OF THE OPINIONS OF M.A. SCHAPIRO SET
FORTH IN THIS JOINT PROXY STATEMENT/PROSPECTUS IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO THE FULL TEXT OF SUCH OPINIONS. THE JUNE 27, 1994 OPINION IS
SUBSTANTIALLY IDENTICAL TO THE OPINION ATTACHED HERETO.
In connection with its opinion dated the date hereof, M.A. Schapiro
reviewed, among other things: (a) the Merger Agreement and the Stock Option
Agreement; (b) this Joint Proxy Statement/Prospectus; (c) publicly available
reports filed with the Commission by North Fork and Metro; (d) certain other
publicly available financial and other information concerning North Fork and
Metro; (e) certain other internal information, including financial forecasts,
relating to North Fork and Metro, prepared by the managements of North Fork and
Metro and furnished to M.A. Schapiro for purposes of its analysis; and (f)
publicly available information concerning certain other banks, bank holding
companies, savings banks, and 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. M.A. Schapiro
also met with certain officers and representatives of North Fork and Metro to
discuss the foregoing as well as other matters relevant to its inquiry,
including the past and current business operations, results of regulatory
examinations, financial condition, current loan quality and trends, and future
prospects of North Fork and Metro, both separately and on a combined basis. In
addition, M.A. Schapiro reviewed the reported price and trading activity for
North Fork and Metro Common Stock, compared certain financial and stock market
information for North Fork and Metro 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 specifically and other industries generally and performed such
other studies and analyses as it considered appropriate. M.A. Schapiro 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 valuation and its knowledge of the banking industry generally. M.A.
Schapiro's opinions were necessarily based upon conditions as they existed and
could be evaluated on the respective dates thereof and the information made
available to M.A. Schapiro through the dates thereof.
In conducting its review and in arriving at its opinion, M.A. Schapiro
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. M.A. Schapiro relied upon the accuracy of the
representations made by Metro and North Fork in the Merger Agreement and assumed
that North Fork did not exercise its right to increase the Exchange Ratio above
1.759 shares. M.A. Schapiro relied upon the managements of North Fork and Metro
as to the reasonableness and achievability of the financial forecasts (and the
assumptions and bases therefor) provided to M.A. Schapiro, and assumed that such
financial forecasts reflected the best currently available estimates and
judgments of such managements and that such financial forecasts would be
realized in the amounts and in the time periods estimated by such managements.
M.A. Schapiro also assumed, without independent verification, that the aggregate
allowances for loan losses
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<PAGE> 49
for North Fork and Metro were adequate to cover such losses. M.A. Schapiro did
not make or obtain any evaluations or appraisals of the property of North Fork
or Metro. M.A. Schapiro assumed for purposes of its opinion that the Merger will
be accounted for as a pooling of interests under generally accepted accounting
principles. M.A. Schapiro was retained by the North Fork Board to express an
opinion as to the fairness, from a financial point of view, to the North Fork
stockholders of the aggregate consideration to be paid by North Fork in the
Merger. M.A. Schapiro did not address any issue other than the fairness of the
payment of such aggregate consideration, from a financial point of view, to
North Fork stockholders and did not address North Fork's underlying business
decision to proceed with the Merger.
In connection with rendering its opinions to the North Fork Board, M.A.
Schapiro performed a variety of financial analyses which are summarized below.
M.A. Schapiro 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 the processes underlying M.A.
Schapiro's opinion. 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, M.A. Schapiro made numerous
assumptions with respect to industry performance, business and economic
conditions, and other matters, many of which are beyond the control of North
Fork and Metro. Any estimates contained in M.A. Schapiro's analyses are not
necessarily indicative of future results or values, which may be significantly
more or less favorable than such estimates. Estimates of values of companies do
not purport to be appraisals or necessarily reflect the price at which companies
or their securities actually may be sold. None of the analyses performed by M.A.
Schapiro was assigned a greater significance by M.A. Schapiro than any other.
The following is a brief summary of the material analyses performed by M.A.
Schapiro in connection with its opinions:
(a) Summary. M.A. Schapiro summarized the terms of the Merger, including
the conversion of each share of Metro Common Stock into the right to receive no
less than 1.645 shares nor more than 1.759 shares of North Fork Common Stock.
M.A. Schapiro also analyzed competitive and economic factors in New York as they
affect financial institutions, earnings sensitivity, pricing comparability and
earnings per share estimates for the pro forma company.
(b) Analysis of Other Merger Transactions. M.A. Schapiro analyzed certain
other thrift merger and acquisition transactions in the Northeast (including the
states of CT, ME, MA, NH, NJ, NY, PA, RI and VT), announced during the period
from January 1, 1993 to June 27,1994, in which the total consideration was over
$25 million. M.A. Schapiro compared price/earnings, price/fully diluted book
value and price/fully diluted tangible book value multiples of the Merger to the
median multiples for the transactions analyzed. Set forth below are the median
deal multiples presented to the North Fork Board:
<TABLE>
<CAPTION>
MEDIAN OF
SELECTED
NORTHEAST
NORTH FORK/ THRIFT
METRO(1) ACQUISITIONS
----------- ------------------
<S> <C> <C>
Price/Earnings.................... 11.5x 16.3x
Price/Book Value.................. 164.9% 162.8%
Price/Tangible Book Value......... 198.7 168.0
</TABLE>
- ---------------
(1) Multiples based upon North Fork's closing price of $14.00 on June 24, 1994.
M.A. Schapiro's analysis showed that the range of implied valuations of
Metro, applying the median deal multiplies described above to Metro's earnings,
book value and tangible book value, was $20.81 to $34.87 per share. The results
produced in this analysis do not purport to be indicative of actual values or
expected values of Metro or the shares of Metro Common Stock.
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<PAGE> 50
The selected thrift acquisition transactions for the Northeast included in
calculating the above median multiples are:
<TABLE>
<CAPTION>
STATE STATE
OF OF
BUYER TARGET BUYER TARGET
- ----- ------ --------------------------------------- ---------------------------------------
<S> <C> <C> <C>
CT CT Shawmut National Corporation Northeast Federal Corp.
RI MA Citizens Financial Group Quincy Savings Bank
PA NJ Sovereign Bancorp Charter FSB Bancorp, Inc.
NJ NJ UJB Financial Corp. Palisade Savings Bank
RI MA Fleet Financial Group, Inc. NBB Bancorp, Inc.
NY NY First Empire State Corporation Ithaca Bancorp, Inc.
PA PA First Commonwealth Financial Corp. Reliable Financial Corp.
PA NJ Sovereign Bancorp Shadow Lawn Savings Bank, FSB
CT MA Shawmut National Corporation West Newton Savings Bank
PA PA CoreStates Financial Corp. Germantown Savings Bank
NY NY Anchor Bancorp, Inc. Lincorp Holdings
MA MA Bank of Boston Corporation Pioneer Financial Co-op Bank
NJ NJ The Summit Bancorporation Crestmont Financial Corp.
NJ NY First Fidelity Bancorporation First-Inter Bancorp Inc.
PA PA Fulton Financial Corporation Central Pennsylvania Financial Corp.
NJ NJ UJB Financial Corp. VSB Bancorp, Inc.
PA PA USBANCORP, Inc. Johnstown Savings Bank
NJ NJ Hubco, Inc. Washington Bancorp
CT CT Shawmut National Corporation Gateway Financial Corporation
RI MA Citizens Financial Group Neworld Bancorp
PA PA Penn First Bancorp, Inc. ESB Bancorp
RI MA Fleet Financial Group, Inc. Sterling Bancshares Corporation
MA MA Bank of Boston Corporation BankWorcester Corporation
CT MA Shawmut National Corporation Peoples Bancorp of Worcester, Inc.
NJ CT First Fidelity Bancorporation Greenwich Financial
PA PA Keystone Financial, Inc. Elmwood Bancorp
PA PA PNC Bank Corp. United Federal Bancorp
PA PA Sovereign Bancorp Valley Federal S&LA
NJ NY First Fidelity Bancorporation Peoples Westchester
RI MA Citizens Financial Group Boston Five Bancorp
NJ NY First Fidelity Bancorporation Village Financial Services
</TABLE>
(c) Discounted Cash Flow. M.A. Schapiro used two scenarios in performing
discounted cash flow analyses of Metro. The first scenario assumed annual
earnings appreciation of Metro of 5%, discount rates of 12% to 16%, different
terminal price multiples ranging from 10x to 14x to apply to 1998 estimated
earnings and a 30% dividend payout. This first scenario showed a range of
present values per share of Metro Common Stock from $16.46 to $26.04. The second
scenario used the same assumptions as the first scenario, with the exception
that assumed annual earnings appreciation for Metro was 10%. This second
scenario showed a range of present values per share of Metro Common Stock from
$19.54 to $31.05. M.A. Schapiro utilized the discounted cash flow analysis
because it is a widely used valuation methodology, but the analysis is based on
numerous assumptions that are subject to change. As such, the results produced
in this analysis do not purport to be indicative of the actual values or
expected values of Metro or the shares of Metro Common Stock.
(d) Analysis of the Combined Company. M.A. Schapiro analyzed certain
balance sheet and income statement data for North Fork and Metro on a pro forma
combined basis. Such analysis reviewed the profitability, capital, credit
quality, and market niches of North Fork and Metro. The analysis showed, among
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other things, that the combined company would have nearly $3 billion in assets
and stockholder's equity in excess of $225 million after one-time restructuring
charges to be taken in connection with the Merger. Profitability was analyzed
assuming no expense savings and the impact of realizing approximately $10
million per year in expense savings.
(e) Exchange Ratio Analysis. M.A. Schapiro considered the effect of the
limitations on the Exchange Ratio contained in the Merger Agreement. The effect
of such limitations is that the stockholders of Metro could receive North Fork
Common Stock valued (at the Average Closing Price) at more or less than $25.50
per share of Metro Common Stock if the Average Closing Price is above $15.50 per
share or below $14.50 per share.
(f) Analysis of Comparable Companies. M.A. Schapiro analyzed the relative
performance and outlook for Metro by comparing certain financial information of
Metro with a group of selected publicly traded thrift institutions located in
New York. The group of twenty-two companies included Anchor Bancorp, Inc.,
ALBANK Financial Corporation, Astoria Financial Corporation, BSB Bancorp, Inc.,
Dime Bancorp, Incorporated, Fidelity New York, FSB, GP Financial Corporation,
The Greater New York Savings Bank, Haven Bancorp, Inc., JSB Financial, Inc.,
Long Island Bancorp, North Side Savings Bank, New York Bancorp Inc., Queens
County Bancorp, Inc., Rochester Community Savings Bank, TR Financial Corp.,
First Inter-Bancorp Inc., Hamilton Bancorp, Inc., Poughkeepsie Savings Bank,
FSB, Progressive Bank, Inc., Reliance Bancorp, Inc., and Sunrise Bancorp, Inc.
M.A. Schapiro compared Metro with the comparable thrifts based upon
selected operating statistics, including capitalization, profitability and
credit quality, using data at or for the twelve months ended March 31, 1994. The
median capitalization levels for the comparable thrifts was 8.45% common equity
to assets, 8.45% tangible common equity to assets, and 14.62% core capital
ratio. Metro's ratios for these measures were 7.97%, 6.66%, and 12.18%,
respectively. The median return on average assets was 0.92% for the comparable
thrifts and 1.29% for Metro. For return on average equity, the median for
comparable thrifts was 10.14% and 16.43% for Metro. The median net interest
margin was 3.50% and 4.38% for Metro. The median ratio of nonperforming assets
to loans and other real estate owned was 4.21% for the comparable thrifts and
4.99% for Metro. The median ratio of reserves to nonperforming assets was 36.63%
for the comparable thrifts and 27.85% for Metro, while reserves to total loans
was 1.63% for the comparable thrifts and 1.40% for Metro.
M.A. Schapiro also analyzed the relative operating performance of North
Fork and the pro forma combined operating performance of North Fork and Metro by
comparing certain financial information with a group of selected publicly traded
commercial banks and bank holding companies located in New York. The group of
nineteen companies included Arrow Financial Corporation, CNB Financial Corp.,
Commercial Bank of New York, Community Bancorp, Inc., Community Bank System,
Inc., Evergreen Bancorp, Inc., First Empire State Corporation, The First of Long
Island Corp., FNB Rochester Corp, Gateway Bancorp, Inc., Merchants New York
Bancorp, Inc., NBT Bancorp, Inc., ONBANCorp, Inc., State Bancorp, Inc., Sterling
Bancorp, Suffolk Bancorp, Tompkins County Trust Company, TrustCo Bank Corp NY,
and U.S. Trust Corporation.
M.A. Schapiro compared North Fork's current operating performance and its
pro forma operating performance with the comparable companies based upon
selected operating statistics, including capitalization, profitability and
credit quality, using data at or for the twelve months ended March 31, 1994. The
median capitalization levels for the comparable companies was 7.59% common
equity to assets, 7.07% tangible common equity to assets, and 14.08% Tier 1
capital ratio. North Fork's ratios for these measures were 8.07%, 7.62%, and
13.81%. On a pro forma basis, including one-time restructuring charges, these
ratios would have been 7.77%, 7.03% and 12.74%, respectively. The median return
on average assets was 1.07% for the comparable companies, 1.13% for North Fork,
1.18% for the combined company and 1.38% pro forma with $10 million in expense
savings. For return on average equity, the median level was 14.08%, 14.03% for
North Fork, 14.83% for the combined company and 17.23% with expense savings. The
median net interest margin was 4.87%, 4.51% for North Fork and 4.45% for the
combined company. The median ratio of nonperforming assets to loans and other
real estate owned was 1.67% for the comparable companies, 6.48% for North Fork
and 5.86% for the combined company. The median ratio of reserves to
nonperforming assets was 94.16% for
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the comparable companies, 68.36% for North Fork and 53.98% for the combined
company, while reserves to total loans was 2.10% for the comparable companies,
4.51% for North Fork and 3.20% for the combined company.
In connection with its opinion dated the date of this Joint Proxy
Statement/Prospectus, M.A. Schapiro also confirmed the appropriateness of its
reliance on the analysis used to render its June 27,1994 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.
M.A. Schapiro is a nationally recognized investment banking firm that
specializes in the commercial banking and thrift industries. M.A. Schapiro is
continually engaged in the valuation of businesses and securities in connection
with mergers and acquisitions, negotiated underwritings, private placements,
recapitalizations, competitive biddings, secondary distributions of listed and
unlisted securities and valuations for estate, corporate and other purposes.
North Fork selected M.A. Schapiro as its financial advisor because of its
reputation and because M.A. Schapiro has substantial experience in transactions
such as the Merger. In the ordinary course of its business, M.A. Schapiro may
from time to time have long or short positions in, and buy or sell, debt and
equity securities or options on securities of North Fork and Metro. M.A.
Schapiro has, during the past two years, provided financial advisory services to
North Fork and has received fees for the rendering of these services.
North Fork and M.A. Schapiro have entered into a letter agreement, dated
June 16, 1994 (the "M.A. Schapiro Engagement Letter"), relating to the services
to be provided by M.A. Schapiro in connection with the Merger. North Fork has
agreed to pay M.A. Schapiro an initial fee (the "Initial Fee") of $25,000 upon
execution of the M.A. Schapiro Engagement Letter and a fee (the "Fee") for its
services of $225,000. The Fee, which will be paid in cash, will be paid
according to the following schedule: one third of the Fee was paid upon the
execution of the Merger Agreement; one third was paid upon the delivery of the
Fairness Opinion attached hereto; and the remaining one third will be paid on
the Closing Date. All such payments are non-refundable. In the M.A. Schapiro
Engagement Letter, North Fork also has agreed to reimburse M.A. Schapiro for its
reasonable and necessary out-of-pocket expenses and to indemnify against certain
liabilities, including liabilities under the federal securities laws.
M.A. Schapiro's opinion does not constitute a recommendation to any North
Fork stockholder as to how such stockholder should vote on the Merger proposal.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
Employment Agreements. Bayside Federal and Metro maintain employment
agreements with Mr. Herold. Mr. Herold's employment agreements with Bayside
Federal and Metro were executed in 1988 and amended in 1989 and 1992. In
addition, Mr. Herold's agreement with Metro was also amended in 1993. Each
agreement provides for a five year term commencing on September 25, 1992. On the
third anniversary date of the agreements and on each anniversary date
thereafter, the Metro Board must review the agreements and may extend the
agreements for an additional year so that the remaining term is three years.
Each of the agreements has been so extended. The current base salary under the
agreements, which may be increased at the discretion of the Metro Board, is
$380,000. In addition to the base salary, each agreement provides, among other
things, for participation in stock option plans and other fringe benefits
applicable to executive personnel of Metro.
Each agreement provides for termination of Mr. Herold by Bayside Federal
and Metro for "cause," as defined in the agreements, at any time. Each agreement
provides for severance payments in the event Bayside Federal and Metro choose to
terminate Mr. Herold's employment for reasons other than for cause. The
agreements also provide severance payments in the event of, among other things,
the termination of Mr. Herold's employment under specified circumstances
following a change in control, as defined in the agreements. The agreements
provide that upon the occurrence of such an event, Mr. Herold or, in the event
of death, his beneficiary, would be entitled to a severance payment equal to the
greater of (i) three times his average annual base salary and average incentive
compensation paid to him under the agreements or (ii) the base salary due for
the remaining term of the agreements. Bayside Federal and Metro would also
continue his
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life, health and disability coverage for the remaining term of the agreement or,
if earlier, until he secures substantially identical coverage through employment
by another employer. The consummation of the transactions contemplated by the
Merger Agreement will constitute a change in control for purposes of the
employment agreements. Following the Merger, because amounts payable under these
agreements are limited to those amounts that would be deductible by reason of
Section 280G of the Internal Revenue Code of 1986, as amended, Mr. Herold will
receive a cash payment of approximately $1,140,000 if his employment was
terminated under circumstances entitling him to payments under the agreements.
Special Termination Agreements. Bayside Federal and Metro also maintain
special termination agreements with Messrs. Danler, De Cicco, Wilson and Walsh,
the executive officers of Bayside Federal and Metro. The Agreements with Messrs.
Danler, De Cicco and Wilson were amended in 1992. The agreement with Mr. Walsh
was entered into in 1993. Commencing in September 1993 and on each anniversary
date thereafter, the Metro Board reviews each of the agreements, and may extend
the agreements for an additional year so that the remaining term is three years.
Each of the agreements has been so extended. Each agreement provides that if the
officer terminates employment with Metro under certain specified circumstances
at any time following a change in control, as defined in the agreements, of
Metro, the officer would be entitled to receive a payment in an amount equal to
three times his average annual base salary and average incentive compensation
paid to him for the three previous years of his employment with Bayside Federal.
Certain insurance coverage maintained by Bayside Federal and Metro at the time
of any such termination, as defined in the agreements, would be continued until
the earlier of 12 months or until the time such executive secures substantially
identical coverage through employment by another employer. The consummation of
the transactions contemplated by the Merger Agreement will constitute a change
in control for purposes of these agreements. Should each of the four executive
officers be terminated following the Merger under circumstances entitling such
officer to payments under the agreements, based upon current compensation,
because amounts payable under these agreements are limited to those amounts that
would be deductible by reason of Section 280G of the Internal Revenue Code of
1986, as amended, they would receive severance payments in the aggregate of
approximately $1,972,500.
Certain Other Benefits. Pursuant to the terms of the Merger Agreement,
North Fork will provide benefits under the terms of Metro's post-retirement
benefit plan to Mr. Herold and his spouse. In addition, under the terms of the
Merger Agreement, North Fork must provide each of the executive officers who are
parties to the special termination agreements described above the opportunity to
continue medical/dental insurance coverage, at the employee's expense, for an
additional four years following the termination of benefits provided pursuant to
the special termination agreements.
Metro Board. Pursuant to the terms of the Merger Agreement, North Fork
will cause its Board of Directors to expand by one member and North Fork will
select and appoint one of the current directors of Metro to be the nominee to
fill the newly created directorship.
Indemnification; Insurance. The Merger Agreement provides that, in the
event of any threatened or actual claim, proceeding or investigation in which
any person who is or has been a director, officer or employee of Metro is, or is
threatened to be, made a party based in whole or in part on, or pertaining to
(i) the fact that such person was a director, officer or employee of Metro, or
(ii) the Merger Agreement or the transactions contemplated thereby, North Fork
will, subject to the conditions set forth in the Merger Agreement, indemnify
such person to the fullest extent permitted by Metro's Certificate of
Incorporation and Bylaws against any liability or expense incurred in connection
with any such claim or proceeding. In addition, pursuant to the Merger
Agreement, North Fork will be required to obtain directors' and officers'
liability insurance for the benefit of persons serving as officers and directors
of Metro immediately prior to the Effective Time for a period of four (4) years
following the Effective Time with respect to acts or omissions occurring prior
to the Effective Time which were committed by such officers and directors in
their capacity as such and such policy shall be in the amount of at least
$3,000,000.
Option Plans, Stock Appreciation Rights and Recognition and Retention
Plans. Metro maintains certain incentive stock option plans, director stock
option plans, a stock appreciation rights plan and a management recognition and
retention plan. Such plans provide for an immediate acceleration of the vesting
period for
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benefits payable under the plans upon a change in control. The Merger will
constitute a change in control under such plans. All available shares under the
Recognition and Retention Plan were allocated and vested as of November 1993.
For treatment of Metro Options granted under such plans under the Merger, see
"-- Exchange Ratio" above.
EMPLOYEE MATTERS
Pursuant to the terms of the Merger Agreement, employees of Metro shall
become entitled to participate in certain benefit plans maintained by North Fork
on the same terms and conditions as applicable to comparable employees of North
Fork and shall be granted credit for service with Metro for certain purposes
under certain of such plans. Pursuant to the terms of the Merger Agreement,
North Fork has agreed to honor in accordance with their terms, certain
employment, severance and other compensation agreements and arrangements between
Metro and certain of its directors, officers and employees. North Fork will
assume, terminate and make distributions to employees pursuant to the terms of
certain tax-qualified plans of Metro. North Fork and Metro will cause the loan
to the Metro ESOP to be repaid with Metro stock held under the ESOP and will
cause the remainder of such stock to be allocated to the accounts of ESOP
participants.
EFFECTIVE TIME
The Merger will become effective upon the filing of a certificate of merger
with the Secretary of State of the State of Delaware in accordance with
applicable law or such later time as is specified in such certificate (the
"Effective Time"). The filing with respect to the Merger will occur on the first
day (the "Closing Date") which is (i) the last business day of a month and (ii)
at least two business days after satisfaction or waiver of the latest to occur
of certain conditions to the Merger specified in the Merger Agreement, unless
another date is agreed to in writing by North Fork and Metro. See "-- Conditions
to the Merger" below. It is expected that a period of time will elapse between
the Special Meetings and the Effective Time while the parties seek to obtain the
regulatory approvals required to consummate the Merger. There can be no
assurance that such regulatory approvals will be obtained, and if obtained,
there can be no assurance as to the date of any such approval. There can also be
no assurance that any such approvals will not contain a Burdensome Condition (as
defined below) which causes such approvals to fail to satisfy the conditions set
forth in the Merger Agreement and described below under "-- Conditions to the
Merger." There can likewise be no assurance that the United States Department of
Justice or the New York Attorney General will not challenge the Merger or, if
such a challenge is made, as to the result thereof. See "-- Regulatory Approvals
Required for the Merger" below. The Merger Agreement may be terminated by either
party if, among other reasons, the Merger has not been consummated on or before
June 30, 1995. See "-- Waiver and Amendment; Termination" below.
CONVERSION OF SHARES; PROCEDURES FOR EXCHANGE OF CERTIFICATES; FRACTIONAL SHARES
Metro. As promptly as practicable after the Effective Time, and in no
event more than three business days thereafter, a bank or trust company selected
by North Fork and reasonably satisfactory to Metro, acting in the capacity of
exchange agent (the "Exchange Agent"), will mail to each former holder of record
of Metro Common Stock a form of letter of transmittal, together with
instructions for the exchange of such holder's certificates representing shares
of Metro Common Stock for certificates representing shares of North Fork Common
Stock and cash in lieu of fractional shares.
HOLDERS OF METRO COMMON STOCK SHOULD NOT SEND IN THEIR CERTIFICATES UNTIL
THEY RECEIVE THE LETTER OF TRANSMITTAL FORM AND INSTRUCTIONS FROM THE EXCHANGE
AGENT, AND SHOULD NOT RETURN SUCH STOCK CERTIFICATES WITH THE ENCLOSED PROXY.
Upon surrender to the Exchange Agent of one or more certificates
representing shares of Metro Common Stock, together with a properly completed
letter of transmittal, there will be issued and mailed to the holder of Metro
Common Stock surrendering such items a certificate or certificates representing
the number of shares of North Fork Common Stock to which such holder is
entitled, if any, and, where applicable, a check for the
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amount representing any fractional share determined in the manner described
below, without interest. The Metro certificate or certificates so surrendered
will be cancelled.
No dividend or other distribution declared after the Effective Time with
respect to North Fork Common Stock will be paid to the holder of any
unsurrendered Metro certificate until the holder surrenders such certificate, at
which time the holder will be entitled to receive all previously withheld
dividends and distributions, without interest. No holder of an unsurrendered
Metro certificate will be entitled, until the surrender of such certificate, to
vote the shares of North Fork Common Stock into which his or her shares of Metro
Common Stock have been converted.
After the Effective Time, there will be no transfers on the stock transfer
books of Metro of shares of Metro Common Stock issued and outstanding
immediately prior to the Effective Time. If certificates representing shares of
Metro Common Stock are presented for transfer after the Effective Time, they
will be cancelled and exchanged for certificates representing shares of North
Fork Common Stock.
None of the Exchange Agent, North Fork or Metro, or any other person, will
be liable to any former holder of Metro Common Stock for any amount properly
delivered to a public official pursuant to applicable abandoned property,
escheat or similar laws.
If a certificate for Metro Common Stock has been lost, stolen or destroyed,
the Exchange Agent will issue the consideration properly payable in accordance
with the Merger Agreement upon receipt of appropriate evidence as to such loss,
theft or destruction, appropriate evidence as to the ownership of such
certificate by the claimant, and appropriate and customary indemnification.
No fractional shares of North Fork Common Stock will be issued in the
Merger. Instead, the Merger Agreement provides that each holder of shares of
Metro Common Stock exchanged pursuant to the Merger who would otherwise have
been entitled to receive a fraction of a share of North Fork Common Stock will
receive, in lieu thereof, cash in an amount equal to such fractional part of a
share of North Fork Common Stock multiplied by the average of the closing sale
prices of North Fork Common Stock on the NYSE for the five trading days
immediately preceding the Effective Time. No such holder will be entitled to
dividends, voting rights or any other rights as a stockholder in respect of any
fractional share to which such holder would otherwise have been entitled to
receive.
North Fork. Shares of North Fork capital stock (including North Fork
Common Stock) issued and outstanding immediately prior to the Effective Time
will remain issued and outstanding and be unaffected by the Merger, and holders
of such stock will not be required to exchange the certificates representing
such stock or take any other action by reason of the consummation of the Merger.
CONDITIONS TO THE MERGER
The respective obligations of North Fork and Metro to effect the Merger are
subject to the satisfaction of the following conditions at or prior to the
Effective Time: (i) approval of the Merger Agreement by the affirmative vote of
the holders of at least a majority of the outstanding shares of Metro Common
Stock entitled to vote thereon and by the affirmative vote of the holders of at
least a majority of the outstanding shares of North Fork Common Stock entitled
to vote thereon; (ii) the shares of North Fork Common Stock issuable to holders
of Metro Common Stock pursuant to the Merger shall have been authorized for
listing on the NYSE, subject to official notice of issuance; (iii) approval of
the Merger Agreement and the transactions contemplated thereby (including the
Merger and the Subsidiary Bank Merger by the appropriate governmental
authorities (all such governmental authorities being referred to as the
"Governmental Entities"), and the expiration of any statutory waiting periods in
respect thereof (collectively, the "Requisite Regulatory Approvals") (see
"-- Regulatory Approvals Required for the Merger" below); (iv) receipt of all
necessary state securities laws and "blue sky" permits and other authorizations
required in connection with the issuance of North Fork Common Stock in the
Merger; (v) the Registration Statement of which this Joint Proxy
Statement/Prospectus forms a part will have become effective under the
Securities Act of 1933, as amended (the "Securities Act") and no stop order
suspending the effectiveness of the Registration Statement will have been issued
and no proceedings for that purpose will have been initiated or threatened by
the Commission;
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(vi) no order, injunction or decree issued by any court or agency of competent
jurisdiction or other legal restraint or prohibition (an "Injunction") which
prohibits the consummation of the Merger, the Subsidiary Bank Merger or any of
the other transactions contemplated by the Merger Agreement or the Subsidiary
Bank Merger Agreement (as defined below) will be in effect and (vii) no statute,
rule, regulation, order, injunction or decree will have been enacted, entered,
promulgated or enforced by any Governmental Entity which prohibits, restricts or
makes illegal consummation of the Merger or the Subsidiary Bank Merger.
The obligations of North Fork to effect the Merger are further subject to
the satisfaction, or waiver by North Fork, of the following conditions: (i)(x)
the representations and warranties of Metro contained in the Merger Agreement
shall be true and correct in all material respects as of the date of the Merger
Agreement and (except to the extent that such representations and warranties
relate to an earlier date) as of the Effective Time as though made at and as of
the Effective Time and (y) the representations and warranties of Metro contained
in the Merger Agreement shall be true and correct in all material respects as of
the date of the Merger Agreement and (except to the extent that such
representations and warranties relate to an earlier date) as of the Effective
Time as though made at and as of the Effective Time, provided, that for purposes
of determining the satisfaction of the condition described in this clause
(i)(y), no effect shall be given to any exception in such representations and
warranties relating to materiality or a Material Adverse Effect (as defined
below), and provided further, that the representations and warranties of Metro
will be deemed true and correct in all material respects unless the failure or
failures of such representations and warranties to be so true and correct, in
the aggregate, represent a material adverse change from the business, assets,
financial condition or results of operations of Metro and its subsidiaries taken
individually whole as represented in the Merger Agreement; (ii) Metro shall have
duly performed in all material respects all obligations required to be performed
by it under the Merger Agreement at or prior to the Effective Time; (iii) none
of the Requisite Regulatory Approvals shall impose any term, condition or
restriction upon North Fork, Metro, North Fork Bank or Bayside Federal or any of
their respective subsidiaries that North Fork or Metro, in good faith,
reasonably determines would so materially adversely affect the economic or
business benefits of the transactions contemplated by the Merger Agreement to
North Fork or Metro as to render inadvisable the consummation of the Merger ("a
Burdensome Condition"); (iv) the consent, approval or waiver of each person
(other than the Governmental Entities) whose consent or approval shall be
required in order to permit the succession by the surviving corporation in the
Merger or the surviving bank in the Subsidiary Bank Merger to any obligation,
right or interest of Metro or any subsidiary of Metro under any agreement shall
have been obtained, except where the failure to obtain such consent, approval or
waiver would not so materially adversely affect the economic or business
benefits of the transactions contemplated by the Merger Agreement to North Fork
as to render inadvisable, in the reasonable good faith judgment of North Fork,
the consummation of the Merger; (v) no proceeding initiated by a Governmental
Entity seeking an Injunction shall be pending; (vi) North Fork shall have
received an opinion of its counsel, substantially to the effect that, on the
basis of facts, representations and assumptions set forth in such opinion, which
are consistent with the state of facts existing at the Effective Time, the
Merger and the Subsidiary Bank Merger will each be treated as reorganizations
within the meaning of Section 368(a) of the Code (see "-- Certain Federal Income
Tax Consequences of the Merger" below); (vi) North Fork shall have received a
customary legal opinion from counsel to Metro; (vii) North Fork shall have
received a letter addressed to North Fork, dated as of the Effective Time, from
North Fork's independent public accountants to the effect that the Merger will
qualify for pooling of interests accounting treatment unless such firm advises
North Fork that it is unable to issue a letter to such effect solely by reason
of North Fork having exercised its right to purchase Metro Common Stock pursuant
to the Stock Option Agreement; (viii) North Fork shall have received from
Metro's independent public accountants certain customary letters with respect to
certain financial information of Metro; and (ix) nothing shall have come to the
attention of North Fork which would preclude consummation of the Subsidiary Bank
Merger.
The Merger Agreement defines a "Material Adverse Effect," when applied to a
party to the Merger Agreement, as a material adverse effect on the business,
properties, assets, liabilities, results of operations or financial condition of
such party and its subsidiaries taken as a whole, other than any such effect
attributable to or resulting from general, political or economic conditions or a
change in law, rule, regulation, generally accepted accounting principles, or
regulatory accounting principles, which in each case affects banking
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institutions or their holding companies generally, except to the extent any such
condition or change affects the referenced party to a materially greater extent
then banking institutions or their holding companies generally.
The obligations of Metro to effect the Merger are further subject to the
satisfaction, or waiver by Metro, of the following conditions: (i)(x) the
representations and warranties of North Fork contained in the Merger Agreement
shall be true and correct in all material respects as of the date of the Merger
Agreement and (except to the extent that such representations and warranties
relate to an earlier date) as of the Effective Time as though made at and as of
the Effective Time and (y) the representations and warranties of North Fork set
forth in the Merger Agreement shall be true and correct in all material respects
as of the date of the Merger Agreement and (except to the extent such
representations and warranties speak as of an earlier date) as of the Effective
Time as though made at and as of the Effective Time, provided, that for purposes
of determining the satisfaction of the condition described in this clause
(i)(y), no effect shall be given to any exception in such representations and
warranties relating to materiality or a Material Adverse Effect, and provided
further, that such representations and warranties will be deemed true and
correct in all material respects unless the failure or failures of such
representations and warranties to be so true and correct, individually or in the
aggregate, represent a material adverse change from the business, assets,
financial condition or results of operations of North Fork and its subsidiaries
taken as a whole as represented in the Merger Agreement; (ii) North Fork shall
have performed in all material respects all obligations required to be performed
by it under the Merger Agreement at or prior to the Effective Time; (iii) the
consent or approval of each person (other than the Governmental Entities) whose
consent or approval shall be required in connection with the transactions
contemplated thereby under any agreement to which North Fork or any of its
subsidiaries is a party or is otherwise bound, except those for which the
failure to obtain such consents and approvals would not, individually or in the
aggregate, have a material adverse effect on the business, operations or
financial condition of North Fork and its subsidiaries taken as a whole (after
giving effect to the transactions contemplated by the Merger Agreement), shall
have been obtained; (iv) no proceeding initiated by any Governmental Entity
seeking an Injunction shall be pending; (v) Metro shall have received from its
counsel an opinion dated as of the Effective Time, substantially to the effect
that for Federal income tax purposes the Merger and the Subsidiary Bank Merger
each be treated as reorganizations within the meaning of Section 368(a) of the
Code (see "-- Certain Federal Income Tax Consequences of the Merger" below);
(vi) Metro shall have received a customary legal opinion from counsel to North
Fork.
No assurance can be provided as to when, or whether, the regulatory
consents and approvals necessary to consummate the Merger and the Subsidiary
Bank Merger will be obtained or whether all of the other conditions precedent to
the Merger will be satisfied or waived by the party permitted to do so. See
"-- Regulatory Approvals Required for the Merger" below. If the Merger is not
effected on or before June 30, 1995, the Merger Agreement may be terminated by a
vote of a majority of the Board of Directors of either North Fork or Metro,
unless the failure to effect the Merger by such date is due to the breach of the
Merger Agreement by the party seeking to terminate the Merger Agreement.
REGULATORY APPROVALS REQUIRED FOR THE MERGER
Consummation of each of the Merger and the Subsidiary Bank Merger is
subject to a number of regulatory approvals and consents.
The Subsidiary Bank Merger is subject to the prior approval of the Federal
Deposit Insurance Corporation (the "FDIC"), under the Bank Merger Act. In
reviewing applications under the Bank Merger Act, the FDIC must consider, among
other factors, the financial and managerial resources and future prospects of
the existing and proposed institutions, and the convenience and needs of the
communities to be served. In addition, the FDIC may not approve a transaction
that will result in a monopoly or 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 if its effect in any section of the country
may be substantially to lessen competition or to tend to create a monopoly, or
if it would in any other manner be a restraint of trade, unless the FDIC finds
that the anticompetitive effects of the transaction are clearly outweighed by
the public interests and the probable effect of the transaction on meeting the
convenience and needs of the communities to be served. Any transaction approved
by the FDIC may not be consummated prior to 30 days from the date
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of the FDIC's approval of the application, during which time the United States
Department of Justice (the "DOJ") may challenge the transaction on antitrust
grounds. Under provisions of a new legislation the Riegle Community Development
and Regulatory Improvement Act of 1994 that was recently enacted, the post
approval waiting period may be reduced by the FDIC, with the concurrence of the
DOJ, to a minimum of 15 days. The commencement of an antitrust action during the
waiting period would stay the effectiveness of such approval unless a court
specifically orders otherwise.
The Subsidiary Bank Merger is also subject to the prior approval of the
FDIC, under the so-called Oakar Amendment (the "Oakar Amendment") to the Federal
Deposit Insurance Act ("FDIA"). In reviewing applications under the Oakar
Amendment, the FDIC, must consider the same factors it considers under the Bank
Merger Act. In addition, the FDIC must determine that the acquiring depository
institution will meet all applicable capital requirements upon consummation of
the transaction.
The Merger is also subject to the prior approval of the Board of Governors
of the Federal Reserve System ("the Federal Reserve Board"), or the appropriate
regional Federal Reserve Bank, acting pursuant to delegated authority, which, in
the case of the Merger, would be the Federal Reserve Bank of New York (the
"Reserve Bank"), under the Bank Holding Company Act of 1956, as amended (the
"BHC Act") and regulations of the Federal Reserve Board. In reviewing
applications under the BHC Act, the Federal Reserve Bank will consider whether
the Merger can reasonably be expected to produce benefits to the public that
outweigh possible adverse effects, and will evaluate the financial and
managerial resources of North Fork, including its subsidiaries, and any company
to be acquired, and the effect of the Merger on those resources.
The Subsidiary Bank Merger is subject to the prior approval of the OTS
under regulations of the OTS governing asset and liability transfers by a
savings association. The Merger is also subject to the prior approval of the OTS
under the Savings and Loan Holding Company Act and OTS regulations, which
prohibit the acquisition of control of savings association by a company without
prior OTS approval. In reviewing applications for the Subsidiary Bank Merger and
the Merger, the OTS must take into consideration, among other things, the same
factors the FDIC considers under the Bank Merger Act, namely, the financial and
managerial resources and future prospects of the resulting institution and the
convenience and needs of the communities to be served. The OTS will review the
fairness and disclosure of the Subsidiary Bank Merger according to specific
criteria provided in the OTS regulations. In addition, under the statutes and
OTS regulations, the OTS must not approve either the Merger or the Subsidiary
Bank Merger if either would result in the anticompetitive effects described in
preceding paragraphs. Under recent amendments to the regulations of the OTS,
which will become effective while the OTS application is pending, the Subsidiary
Bank Merger will no longer be subject to the prior approval of the OTS, but
instead, will require only notice to the OTS (which notice has been provided).
The Merger continues to be subject to the prior approval of the OTS.
The Subsidiary Bank Merger is subject to the prior approval of the
Superintendent of Banks of the New York State Banking Department under the New
York banking law. The Banking Board of the New York Banking Department does not
typically exercise its jurisdiction to require the prior approval of the Board
under the bank holding company provisions of state law in transactions such as
this, where the Subsidiary Bank Merger is expected to immediately follow the
Merger.
North Fork is not aware of any other regulatory approvals that would be
required for consummation of the Merger or the Subsidiary Bank Merger, except as
described above. Should any other approvals be required, it is presently
contemplated that such approvals would be sought. There can be no assurance that
any other approvals, if required, will be obtained.
Applications have been submitted seeking the approvals of the Federal
Reserve Board, the New York State Banking Department, the FDIC and the OTS as
described above. The Merger cannot proceed in the absence of the requisite
regulatory approvals. See "-- Conditions to the Merger" and "-- Waiver and
Amendment; Termination." There can be no assurance that such regulatory
approvals will be obtained, and if obtained, there can be no assurance as to the
date of any such approval. There can also be no assurance that any such
approvals will not contain a Burdensome Condition which causes such approvals to
fail to satisfy the conditions set forth in the Merger Agreement and described
above under "-- Conditions to the Merger."
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There can likewise be no assurance that the DOJ or the New York State Attorney
General will not challenge the Merger or, if such a challenge is made, as to the
result thereof.
CONDUCT OF BUSINESS PENDING THE MERGER
Pursuant to the Merger Agreement, Metro has agreed that until the Effective
Time, except as provided in the Merger Agreement, the Subsidiary Bank Merger
Agreement, the Stock Option Agreement or with the prior consent of North Fork,
Metro and its subsidiaries will carry on their respective businesses in the
ordinary course consistent with past practice and consistent with prudent
banking practices. Metro has agreed to use its best efforts to (x) preserve its
business organization and that of its subsidiaries' intact, (y) keep available
to itself and North Fork the present services of its and its subsidiaries'
employees and (z) preserve for itself and North Fork the goodwill of its and its
subsidiaries' customers and others with whom business relationships exist.
The Merger Agreement also contains certain restrictions on the conduct of
Metro's business pending consummation of the Merger. In particular, the Merger
Agreement provides that, except as provided in the Merger Agreement or with the
prior written consent of North Fork, Metro and its subsidiaries may not, among
other things, (i) solely in the case of Metro, declare or pay any dividends on,
or make other distributions in respect of, any of its capital stock, other than
normal quarterly dividends in an amount of no more than $0.18 per share of Metro
Common Stock; (ii)(a) split, combine or reclassify any shares of its capital
stock or (b) repurchase, redeem or otherwise acquire (except for the acquisition
of Trust Account Shares and DPC Shares) any shares of the capital stock of Metro
or any of its subsidiaries or securities convertible into or exchangeable
therefor, (iii) subject to certain exceptions, issue, deliver or sell, or
authorize or propose the issuance, delivery or sale of, any shares of its
capital stock or securities convertible into or exchangeable therefor, (iv)
amend its Certificate of Incorporation or Bylaws, (v) make any capital
expenditures other than in the ordinary course of business or as necessary to
maintain existing assets in good repair, and in any event which are in an amount
of no more than $50,000 individually and $50,000 in the aggregate, (vi) enter
into any new line of business, (vii) subject to certain exceptions, acquire or
agree to acquire any business or entity or otherwise acquire any assets which
would be material to Metro, (viii) take any action that is intended or may
reasonably be expected to result in any of its representations and warranties
set forth in the Merger Agreement being or becoming untrue in any material
respect, or in any of the conditions to the Merger not being satisfied, or in a
violation of any provision of the Merger Agreement or the Subsidiary Bank Merger
Agreement, except as may be required by applicable law, (ix) change its methods
of accounting in effect at March 31, 1994, subject to certain exceptions, (x)
(a) adopt, amend, renew or terminate (except as may be required by law) any
employee benefit plan or agreement, arrangement, plan or policy between Metro or
any of its subsidiaries and any of its current or former directors, officers and
employees, (b) except for normal increases in the ordinary course of business
consistent with past practice or except as required by applicable law, increase
in any manner the compensation or fringe benefits of any director, officer or
employee; (xi) take or cause to be taken any action that would cause the Merger
to fail to qualify (a) for pooling of interests accounting treatment or (b) as a
tax-free reorganization under Section 368(a) of the Code, except that nothing
contained in the Merger Agreement will limit the ability of North Fork to
exercise its rights under the Stock Option Agreement, (xii) dispose or agree to
dispose of its material assets, properties or other rights or agreements, (xiii)
incur any indebtedness for borrowed money, or assume, guarantee, endorse or
otherwise become responsible for the obligations of any other entity, (xiv) file
any application to relocate or terminate the operations of any of Metro's or its
subsidiaries' banking offices, (xv) breach any regulatory agreement or material
contract or license to which Metro or any of its subsidiaries is a party or by
which any of them or their respective properties is bound, (xvi) subject to
certain exceptions, invest or commit to invest in real estate or any real estate
development project, (xvii) create, renew, amend or terminate or give notice to
do the same to any material contract, agreement or lease for goods, services or
office space to which Metro or any of its subsidiaries is a party or by which
Metro or any of its subsidiaries or their respective property is bound, or
(xviii) take any action which would cause the termination or cancellation by the
FDIC of insurance in respect of Metro's deposits; or (xix) agree to do any of
the foregoing.
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Pursuant to the Merger Agreement, North Fork has also agreed that until the
Effective Time, except as provided in the Merger Agreement, the Subsidiary Bank
Merger Agreement, the Option Agreement or with the prior written consent of
Metro, North Fork and its subsidiaries will carry on their respective businesses
in the ordinary course consistent with prudent banking practices and shall use
all reasonable efforts to preserve intact their present business organizations
and relationships. The Merger Agreement also provides, among other things, that
North Fork will not (i) declare, pay or make any extraordinary or special
dividends or distributions in respect of its capital stock, except that nothing
contained in the Merger Agreement will prohibit North Fork from increasing the
quarterly cash dividend on the North Fork Common Stock, (ii) take any action
that is intended or may reasonably be expected to result in any of its
representations and warranties set forth in the Merger Agreement being or
becoming untrue in any material respect, or in any of the conditions to the
Merger not being satisfied, or in a violation of any provision of the Merger
Agreement or the Subsidiary Bank Merger Agreement, except as may be required by
applicable law, (iii) change its methods of accounting in effect at March 31,
1994, subject to certain exceptions, (iv) take or cause to be taken any action
that would cause the Merger to fail to qualify (a) for pooling of interests
accounting treatment or (b) as a tax-free reorganization under Section 368 of
the Code, except that nothing contained in the Merger Agreement will limit the
ability of North Fork to exercise its rights under the Stock Option Agreement,
or (v) agree to do any of the foregoing.
WAIVER AND AMENDMENT; TERMINATION
Prior to the Effective Time, any provision of the Merger Agreement may be
waived by the party benefitted by the provision or, subject to applicable law,
amended or modified (including the structure of the transaction) by an agreement
in writing approved by the Boards of Directors of North Fork and Metro, provided
that, after the vote of the stockholders of Metro, the Merger Agreement may not
be amended, without further approval of such stockholders, to reduce the amount
or change the form of the consideration to be received by Metro stockholders
other than as contemplated by the Merger Agreement.
The Merger Agreement may be terminated at any time prior to the Effective
Time, either before or after approval of the matters presented in connection
with the Merger by the stockholders of both Metro and North Fork, as follows:
(i) by the mutual consent of North Fork and Metro if the Boards of Directors of
each so determines; (ii) by either North Fork or Metro upon written notice to
the other (a) 60 days after the date on which any request or application for a
Requisite Regulatory Approval is denied or withdrawn at the request of the
Governmental Entity which must grant such approval, unless within such 60-day
period a petition for rehearing or an amended application has been filed with
the applicable Governmental Entity (or unless the failure to obtain the
necessary regulatory approval is due to the failure of the party seeking to
terminate the Merger Agreement to perform or observe its covenants and
agreements set forth in the Merger Agreement) or (b) if any Governmental Entity
of competent jurisdiction issues a final nonappealable order enjoining or
otherwise prohibiting the consummation of any of the transactions contemplated
by the Merger Agreement; (iii) by either North Fork or Metro if its Board of
Directors so determines, in the event that the Merger has not been consummated
by June 30, 1995, unless the failure to consummate the Merger is due to a breach
of the Merger Agreement by the party seeking to terminate the Merger Agreement;
(iv) by either North Fork or Metro (provided that the terminating party is not
in breach of its obligations in the Merger Agreement with respect to the meeting
of its stockholders to approve the Merger Agreement), if any approval of the
stockholders of either of North Fork or Metro required for consummation of the
Merger Agreement shall not have been obtained; (v) by either North Fork or Metro
in the event of (a) a material breach by the other of any of its representations
or warranties contained in the Merger Agreement which is not cured within 30
days after written notice of such breach is given to the breaching party or
which breach, by its nature, cannot be cured prior to the Effective Time or (b)
a material breach of any of the covenants or agreements contained in the Merger
Agreement by the other which is not cured within 30 days after written notice of
such breach is given to the breaching party; (vi) by Metro, by action of its
Board of Directors, by giving written notice of such election to North Fork
within two NYSE trading days after the Valuation Date, in the event the Average
Closing Price is less than $12.50, provided that no right of termination will
arise under this provision if North Fork elects within five business days of
receipt of such written notice to increase the Exchange Ratio such that the
value of the North Fork Common Stock (valued at the Average Closing Price) to be
paid in respect of
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each share of Metro Common Stock is $21.99 (see "-- Exchange Ratio" above); or
(vii) by North Fork if the Board of Directors of Metro does not publicly
recommend in the Joint Proxy Statement/Prospectus that Metro's stockholders
approve and adopt this agreement or if after recommending in the Joint Proxy
Statement/Prospectus that stockholders approve and adopt this agreement, the
Metro Board shall have withdrawn, modified or amended such recommendation.
In the event of the termination of the Merger Agreement by either North
Fork or Metro, neither North Fork nor Metro will have any further obligations
under the Merger Agreement except (i) for certain specified provisions of the
Merger Agreement relating to confidentiality and expenses and (ii) that no party
will be relieved or released from any liabilities or damages arising out of its
willful breach of any provisions of the Merger Agreement. In addition, if the
Merger Agreement is terminated subsequent to the occurrence of a Purchase Event
(as defined below) or is terminated by North Fork for a breach of covenant by
Metro, and within 12 months following such termination a Purchase Event occurs,
then in addition to any other amounts payable or stock issuable by Metro
pursuant to the Merger Agreement or the Stock Option Agreement, as the case may
be, Metro must pay North Fork a termination fee of $2,000,000. Within certain
parameters, the aggregate value which North Fork could potentially realize as a
result of the exercise of the Option (as defined below) and the payment of the
Termination Fee is $4,500,000. See "CERTAIN RELATED TRANSACTIONS -- Stock Option
Agreement; Termination Fee."
NO SOLICITATION OF TRANSACTIONS
Metro has agreed in the Merger Agreement that neither it nor any of its
subsidiaries will authorize or permit any of its officers, directors, employees
or agents to directly or indirectly solicit, initiate or encourage any inquiries
relating to, or the making of any proposal which constitutes, a "takeover
proposal" (as defined below), or, except to the extent legally required for the
discharge of the fiduciary duties of the Metro Board, recommend or endorse any
takeover proposal, or participate in any discussions or negotiations, or provide
third parties with any non-public information, relating to any such inquiry or
proposal or otherwise facilitate any effort or attempt to make or implement a
takeover proposal, provided that Metro may communicate information about any
such takeover proposal to its stockholders if, in the judgment of the Metro
Board, based upon the advice of outside counsel, such communication is required
under applicable law; Metro has agreed to cease any activities, discussions or
negotiations previously conducted with any parties other than North Fork with
respect to any of the foregoing; it will notify North Fork immediately if any
such inquiries or proposals are received by, any such information is requested
from, or any such negotiations or discussions are sought to be initiated or
continued with, it, and will promptly inform North Fork in writing of the
relevant details with respect to the foregoing. As used in the Merger Agreement,
"takeover proposal" means any tender or exchange offer, proposal for a merger,
consolidation or other business combination involving Metro or any subsidiary of
Metro or any proposal or offer to acquire in any manner a substantial equity
interest in, or a substantial portion of the assets of, Metro or any subsidiary
of Metro other than the transactions contemplated or permitted by the Merger
Agreement, the Subsidiary Bank Merger Agreement and the Stock Option Agreement.
RESALES OF NORTH FORK COMMON STOCK RECEIVED IN THE MERGER
The shares of North Fork Common Stock to be issued in the Merger will be
registered under the Securities Act and will be freely transferable under the
Securities Act, except for shares issued to any Metro stockholder who may be
deemed to be an "affiliate" of Metro for purposes of Rule 145 under the
Securities Act. Affiliates may not sell their shares of North Fork Common Stock
acquired in connection with the Merger except pursuant to an effective
registration statement under the Securities Act covering such shares or in
compliance with Rule 145 or another applicable exemption from the registration
requirements of the Securities Act. This Joint Proxy Statement/Prospectus does
not cover any resales of North Fork Common Stock received in the Merger by
persons who may deemed to be affiliates of Metro. Persons who may be deemed to
be affiliates of Metro generally include individuals or entities that control,
are controlled by or are under common control with Metro, and may include
certain officers and directors as well as principal stockholders of Metro.
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Commission guidelines regarding qualifying for the pooling of interests
method of accounting also limit sales by affiliates of the acquiring and
acquired company in a business combination. Commission guidelines indicate
further that the pooling of interests method of accounting will generally not be
challenged on the basis of sales by affiliates of the acquiring or acquired
company if they do not dispose of any of the shares of the corporation they own
or shares of a corporation they receive in connection with a merger during the
period beginning 30 days before the effective date of the merger and ending when
financial results covering at least 30 days of post-merger operations of the
combined entity have been published.
North Fork and Metro have each agreed in the Merger Agreement to use their
best efforts to cause each person who is an affiliate (for purposes of Rule 145
of the Securities Act and for purposes of qualifying the Merger for pooling of
interests accounting treatment) of such party to deliver to the other party a
written agreement intended to ensure compliance with the Securities Act and
preserve the ability to treat the Merger as a pooling of interests.
STOCK EXCHANGE LISTING
The North Fork Common Stock is listed on the NYSE. North Fork has agreed to
cause the shares of North Fork Common Stock to be issued in the Merger to be
approved for listing on the NYSE, subject to official notice of issuance, prior
to or at the Effective Time. The obligations of the parties to consummate the
Merger are subject to approval for listing by the NYSE of such shares. See
"-- Conditions to the Merger" above.
ANTICIPATED ACCOUNTING TREATMENT
The Merger is expected to qualify as a pooling of interests for accounting
and financial reporting purposes. Under this method of accounting, the recorded
amount of assets and liabilities of North Fork and Metro will be combined at the
Effective Time and carried forward at their previously recorded amounts and the
stockholders' equity accounts of North Fork and Metro will be combined on North
Fork's consolidated balance sheet. Income and other financial statements of
North Fork issued after the Effective Time will be restated retroactively to
reflect the consolidated operations of North Fork and Metro as if North Fork and
Metro have always been combined.
The Merger Agreement provides that a condition to North Fork's obligation
to consummate the Merger is the receipt of a letter from North Fork's
independent accountants to the effect that the Merger qualifies for pooling of
interests accounting treatment unless such firm advises North Fork that it is
unable to issue a letter to such effect solely by reason of North Fork having
exercised its right to purchase Metro Common Stock pursuant to the Stock Option
Agreement. See "-- Conditions to the Merger" above.
The issuance of shares of Metro Common Stock pursuant to the Stock Option
Agreement may prevent the Merger from qualifying as a pooling of interests for
accounting and financial reporting purposes. See "CERTAIN RELATED
TRANSACTIONS -- Stock Option Agreement; Termination Fee."
For information concerning certain restrictions to be imposed on the
transferability of North Fork Common Stock to be received by affiliates in
order, among other things, to ensure the availability of pooling of interests
accounting treatment, see "-- Resales of North Fork Common Stock Received in the
Merger" above.
The unaudited pro forma condensed combined financial information contained
in this Joint Proxy Statement/Prospectus has been prepared using the pooling of
interests accounting method to account for the Merger. See "UNAUDITED PRO FORMA
CONDENSED COMBINED FINANCIAL DATA."
CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
The following is a discussion of the material federal income tax
consequences of the Merger and the Subsidiary Bank Merger to North Fork, Metro
and holders of Metro Common Stock. The discussion is based upon the Code,
Treasury regulations, Internal Revenue Service (the "Service") rulings, and
judicial and administrative decisions in effect as of the date hereof, all of
which are subject to change at any time, possibly
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with retroactive effect. This discussion assumes that the Metro Common Stock is
held as a "capital asset" within the meaning of Section 1221 of the Code (i.e.,
property generally held for investment). In addition, this discussion does not
address all of the tax consequences that may be relevant to a holder of Metro
Common Stock in light of his or her particular circumstances or to holders
subject to special rules, such as foreign persons, financial institutions,
tax-exempt organizations or insurance companies. The opinions of such counsel
referred to in this section will be based on facts existing at the Effective
Time, and in rendering such opinions, such counsel will require and rely upon
representations contained in certificates of officers of North Fork, Metro and
others.
HOLDERS OF METRO COMMON STOCK SHOULD CONSULT THEIR TAX ADVISORS AS TO THE
PARTICULAR TAX CONSEQUENCES TO THEM OF THE MERGER, INCLUDING THE APPLICABILITY
AND EFFECT OF ANY FEDERAL, STATE, LOCAL AND FOREIGN INCOME AND OTHER TAX LAWS.
It is a condition to the obligation of North Fork to consummate the Merger
that North Fork shall have received an opinion from Skadden, Arps, Slate,
Meagher & Flom, counsel to North Fork, that the Merger and the Subsidiary Bank
Merger will each be treated as reorganizations within the meaning of Section
368(a) of the Code and, accordingly, for federal income tax purposes, no gain or
loss will be recognized by North Fork, Metro, North Fork Bank or Bayside Federal
as a result of the Merger and the Subsidiary Bank Merger except, with respect to
the Subsidiary Bank Merger, to the extent North Fork Bank or Bayside Federal is
required to recognize taxable income due to the recapture of Bayside Federal's
bad debt reserves. It is a condition to the obligation of Metro to consummate
the Merger that Metro shall have received an opinion of Muldoon, Murphy &
Faucette, counsel to Metro, that the Merger and the Subsidiary Bank Merger will
each be treated as reorganizations within the meaning of Section 368(a) of the
Code and, accordingly, for federal income tax purposes, that:
i) no gain or loss will be recognized by Metro as a result of the
Merger;
ii) no gain or loss will be recognized by Bayside Federal as a result
of the Subsidiary Bank Merger except to the extent income is required to be
recognized due to the recapture of Bayside Federal's bad debt reserves;
iii) no gain or loss will be recognized by the stockholders of Metro
who exchange all of their Metro Common Stock solely for North Fork Common
Stock pursuant to the Merger (except with respect to cash received in lieu
of a fractional share interest in North Fork Common Stock); and
iv) the aggregate tax basis of the North Fork Common Stock received by
a holder of Metro Common Stock in the Merger will be the same as the
aggregate tax basis of the Metro Common Stock surrendered in exchange
therefor (reduced by any amount allocable to a fractional share interest in
North Fork Common Stock for which cash is received).
The holding period of the North Fork Common Stock received by Metro
Stockholders pursuant to the Merger will include the period during which the
Metro Common Stock was held as a capital asset on the date of the Merger. Based
upon the current ruling position of the Service, cash received by a holder of
Metro Common Stock in lieu of a fractional share interest in North Fork Common
Stock will be treated as received in exchange for such fractional share
interest, and gain or loss will be recognized for federal income tax purposes
measured by the difference between the amount of cash received and the portion
of the basis of the share of Metro Common Stock allocable to such fractional
share interest. Such gain or loss should be long-term capital gain or loss if
such share of Metro Common Stock has been held for more than one year at the
Effective Time.
Pursuant to the Subsidiary Bank Merger Agreement, Bayside Federal will be
merged with and into North Fork Bank and, consequently, will no longer be
entitled to use the reserve method for computing and deducting its losses for
bad debts. In addition, as a result of the Subsidiary Bank Merger, the entire
amount of Bayside Federal's bad debt reserve, which is currently approximately
$8.4 million, will be required to be included in income currently, or possibly
spread over a period of years.
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NO APPRAISAL RIGHTS
Pursuant to Section 262(b) of the Delaware General Corporation law, the
stockholders of a constituent corporation in a merger generally are not entitled
to appraisal rights if the shares of stock they own are, as of the record date
fixed to determine stockholders entitled to notice of and to vote at the meeting
to act upon the agreement providing for such merger, 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. (a "NASDAQ/NMS Security"), or held of record by more than 2,000
stockholders. However, stockholders that would otherwise not have appraisal
rights pursuant to the provisions described in the previous sentence are
entitled to appraisal rights if such stockholders are required by the terms of
the merger to accept for their stock anything except (i) shares of the
corporation surviving the merger, (ii) shares of stock which are either listed
on a national securities exchange or designated as a NASDAQ/NMS Security or held
of record by more than 2,000 stockholders, or (iii) cash in lieu of fractional
shares of stock described in (i) and (ii) above or any combination thereof.
Metro stockholders are not entitled to appraisal rights generally because the
shares of Metro Common Stock are listed on the AMEX, and such stockholders are
not entitled to appraisal rights in connection with the Merger because the
shares of North Fork Common Stock to be issued in the Merger are shares of the
surviving corporation in the Merger and will be listed on the NYSE at the
Effective Time, subject to official notice of issuance. In addition, there are
more than 2,000 holders of record of North Fork Common Stock.
CONSOLIDATION OF OPERATIONS; PROJECTED COST SAVINGS
North Fork expects to achieve significant cost savings subsequent to the
Merger. The cost savings will be derived from reductions in personnel,
elimination of three branch locations located in communities in which both North
Fork and Bayside branches are located, the integration of Metro's data
processing operations with those of North Fork, reduced credit costs and other
facility and back office operations. Further, the separate corporate existence
of Metro will cease with the consummation of the Merger. Consequently, operating
costs associated with requirements imposed on Metro as a publicly held entity
will also be eliminated. The aggregate annual pre-tax cost savings are estimated
to range between $8 million to $11 million. Management of North Fork believes
that realization of these cost savings will occur by June 30, 1995. There can be
no assurance as to when, or whether, the cost savings will be realized. However,
such realization will depend upon, among other things, the regulatory and
economic environment, business changes implemented by North Fork management and
other factors, many of which are beyond the control of North Fork. A summary and
expected range of cost savings follows:
<TABLE>
<CAPTION>
EXPECTED RANGE OF
SAVINGS
-----------------
($ IN MILLIONS)
<S> <C>
Salaries and Benefits........................................ $3.5 to $ 4.2
Occupancy & Equipment........................................ 1.0 to 1.5
Other Operating.............................................. 2.0 to 3.0
Credit Costs................................................. 1.5 to 2.0
-----------------
Total Savings.............................................. $8.0 to $10.7
</TABLE>
A merger integration task force headed by Daniel M. Healy, Executive Vice
President and Chief Financial Officer, and consisting of senior management
members of North Fork and Metro, is in the process of refining the cost
estimates and establishing a definitive plan, including a timetable, to achieve
the cost reductions.
Following the Subsidiary Bank Merger, North Fork will convert the former
operations of Bayside Federal to a full service commercial bank. As such, North
Fork believes that revenue enhancement opportunities exist with the offering of
commercial bank products to Bayside Federal customers and the communities
Bayside Federal serves. These products include but are not limited to a variety
of demand deposit accounts, discount brokerage, trust and investment management
services, cash management, annuity and mutual fund products and commercial and
installment loans to small and midsize businesses. No estimates of revenue
enhancements have been made for the combined business. The amounts and
realization of any additional revenues will
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depend upon factors including, but not limited to, competition, the economic
environment and regulatory requirements, many of which are beyond the control of
North Fork.
MERGER AND RESTRUCTURING CHARGES
A non-recurring merger and restructuring charge estimated in the range of
$11 to $13 million, net of tax, will be made upon consummation of the Merger. It
is expected that this charge will be made in the fourth quarter of 1994. Merger
expenses ranging from $2.0 to $2.7 million for investment banking and
professional fees are included in such estimated restructuring charge. The
restructuring charge also includes severance and employee related expenses,
facility and system conversion costs and the recapture of tax bad debt reserves
of Bayside Federal resulting from the Subsidiary Bank Merger. See "THE
MERGER -- Certain Federal Income Tax Consequences of the Merger." A summary of
the estimated merger and restructuring charges follow:
<TABLE>
<CAPTION>
EXPECTED RANGE
OF COST
TYPE OF COST ----------------------
------------------------------------------------------------------ ($ IN MILLIONS)
<S> <C>
Merger expense.................................................... $ 2.0 to $ 2.7
Restructuring charges:
Severance and Other Employee Expense............................ 5.6 to 6.8
Facility and System Costs....................................... 2.7 to 3.5
----------------------
Total pre-tax merger and restructuring charges.................. 10.3 to 13.0
Less: Tax effect................................................ 3.5 to 4.3
Tax Bad Debt Recapture.......................................... 3.8 to 4.2
----------------------
Total after tax merger and restructuring charges................ $10.6 to $12.9
----------------------
</TABLE>
Refinements to the foregoing estimates may occur as the merger and
integration task force formed by North Fork and Metro complete their work. It is
expected that merger costs of approximately $600,000 and $350,000 will be
incurred by North Fork and Metro, respectively, through September 30, 1994.
These costs will be expensed as incurred. The restructuring charges include only
the costs associated with the Merger and the discontinuation of certain
operations, and do not include costs such as employee training, additional
systems, advertising or signage. Except for the bad debt recapture liability
that will be paid in equal annual installments commencing in 1995, all other
charges and expenses will be paid within one year from consummation of the
Merger.
CERTAIN RELATED TRANSACTIONS
STOCK OPTION AGREEMENT; TERMINATION FEE
The following is a summary of the material provisions of the Stock Option
Agreement, dated as of June 27, 1994 (the "Stock Option Agreement"), by and
between Metro and North Fork, which is attached hereto as Annex B, as well as a
summary of certain provisions of the Merger Agreement (which is attached hereto
as Annex A) which provide for the payment by Metro to North Fork of a $2,000,000
fee (the "Termination Fee") in certain circumstances. The following summary is
qualified in its entirety by reference to the Stock Option Agreement and the
relevant provisions of the Merger Agreement.
Execution of the Stock Option Agreement, and the inclusion in the Merger
Agreement of the provisions relating to the Termination Fee, were conditions to
North Fork's merger proposal. Pursuant to the Stock Option Agreement, Metro
granted to North Fork an option (the "Option") to purchase up to 557,795 shares
(the "Option Shares") of Metro Common Stock (representing approximately 9.9% of
the issued and outstanding shares of such Metro Common Stock after taking into
account the shares that may be issued upon exercise of such option) at an
exercise price of $21.00 per share (the "Exercise Price"), subject to the terms
and conditions set forth therein. The Option may only be exercised, and the
Termination Fee is only payable, upon the occurrence of certain "Purchase
Events" which are described below (none of which has occurred).
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Purchase Events. The Option is exercisable, and the Termination Fee
payable, only upon the occurrence of one of the following events (each a
"Purchase Event"):
(a) Metro fails to publicly oppose a Tender Offer or an Exchange Offer
(as defined below), or authorizes, recommends, publicly proposes, fails to
publicly oppose or enters into an agreement with any person (other than
North Fork or any of its subsidiaries) to (i) effect a merger,
consolidation or similar transaction involving Metro or any of its
subsidiaries (other than internal mergers, reorganizations, consolidations
or dissolutions involving only existing subsidiaries), (ii) sell, lease,
exchange or otherwise dispose of assets of Metro or any of its subsidiaries
representing 20% or more of the consolidated assets of Metro and its
subsidiaries, or (iii) issue, sell or otherwise dispose of (including by
merger, consolidation, share exchange or similar transaction) securities
representing 20% or more of the voting power of Metro or any of its
subsidiaries (any of the foregoing, an "Acquisition Transaction");
(b) any person (other than North Fork or its subsidiaries) shall have
acquired Beneficial Ownership (as defined in Rule 13d-3 promulgated under
the Exchange Act) of, or the right to acquire Beneficial Ownership of, or
any Group (as defined in the Exchange Act) shall have been formed which has
acquired Beneficial Ownership of, or has the right to acquire Beneficial
Ownership of, 20% or more of the then outstanding shares of Metro Common
Stock;
(c) any person (other than North Fork or any subsidiary of North Fork)
shall have (i) commenced (as such term is defined in Rule 14d-2 under the
Exchange Act) or shall have filed a registration statement under the
Securities Act with respect to a Tender Offer or Exchange Offer to purchase
any shares of Metro Common Stock such that, upon consummation of such
offer, such person would own or control 20% or more of the then-outstanding
shares of Metro Common Stock (such an offer being referred to herein as a
"Tender Offer" or an "Exchange Offer," respectively);
(d) the stockholders of Metro shall not have approved the Merger
Agreement at the meeting of such stockholders held for the purpose of
voting on the Merger Agreement, or such meeting shall not have been held or
shall have been cancelled prior to termination of the Merger Agreement, in
each case after it shall have been publicly announced that any person
(other than North Fork or any subsidiary of North Fork) shall have made, or
disclosed an intention to make, a proposal to engage in an Acquisition
Transaction; or
(e) Metro's Board of Directors shall not have recommended to Metro's
stockholders that such stockholders vote in favor of the approval of the
Merger Agreement and the transactions contemplated thereby or shall have
withdrawn or modified such recommendation in a manner adverse to North
Fork.
The Stock Option Agreement. The Option expires upon the earliest to occur
of (i) the Effective Time, (ii) 12 months after the first occurrence of a
Purchase Event, (iii) termination of the Merger Agreement in accordance with the
terms thereof prior to the occurrence of a Purchase Event (other than a
termination resulting from a breach of any of Metro's covenants under the Merger
Agreement) or (iv) 12 months after the termination of the Merger Agreement by
North Fork if such termination results from a breach by Metro of any of its
covenants contained in the Merger Agreement (except that if within 12 months
after such termination of the Merger Agreement a Purchase Event occurs, then the
Option will terminate 12 months after the first occurrence of such event). The
closing of a purchase of shares pursuant to the Stock Option Agreement is
subject to the obtaining of all necessary governmental approvals including,
without limitation, any approvals required under the BHC Act, provided, however,
that if the Option cannot be exercised because of an injunction, order or
similar restraint issued by a court of competent jurisdiction, the option shall
expire no earlier than on the 10th business day after such injunction, order or
restraint shall have been dissolved or shall have become permanent and no longer
subject to appeal, as the case may be.
The number and type of securities subject to the Option and the purchase
price of shares will be adjusted for (i) any change in the Metro Common Stock by
reason of a stock dividend, stock split, split-up, recapitalization,
combination, exchange of shares or similar transaction or (ii) the effect of any
of the rights or similar securities that may be issued pursuant to any
stockholder rights, poison pill or similar plan of Metro becoming exercisable,
such that North Fork will receive (upon exercise of the Option) the same number
and
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type of securities as if the Option had been exercised immediately prior to the
occurrence of such event (or the record date therefore). The number of shares of
Metro Common Stock subject to the Option will also be adjusted in the event
Metro issues additional shares of Metro Common Stock such that the number of
shares of Metro Common Stock subject to the option, together with shares
previously purchased pursuant thereto, represents 9.9% of the Metro Common Stock
then issued and outstanding, without giving effect to shares subject to or
issuable pursuant to the Option.
In the event Metro enters into any agreement (i) to merge into or
consolidate with any person other than North Fork or one of its subsidiaries
such that Metro is not the surviving corporation, (ii) to permit any person,
other than North Fork or one of its subsidiaries, to merge into Metro and Metro
is the surviving corporation, but, in connection with such merger, the then
outstanding shares of Metro Common Stock are changed into or exchanged for stock
or other securities of Metro or any other person or cash or any other property
or the outstanding shares of Metro Common Stock prior to such merger shall after
such merger represent less than 50% of the outstanding shares and share
equivalents of the merged company, or (iii) to sell or otherwise transfer all or
substantially all of its assets to any person other than North Fork or one of
its subsidiaries, then, and in each such case, the agreement governing the
transaction must provide that, upon consummation of the transaction, the Option
will be converted into or exchanged for an option to purchase securities of
either the acquiring person, any person that controls the acquiring person or
Metro (if Metro is the surviving entity), in all cases at the election of North
Fork.
Metro has granted North Fork certain registration rights with respect to
shares of Metro Common Stock acquired by North Fork upon exercise of the Option.
These rights include requiring Metro to file up to two registration statements
under the Securities Act if requested by North Fork within three years of the
date the Option first becomes exercisable (the "Registration Period") provided
such registration is necessary in order to permit the sale or other disposition
of the shares acquired by North Fork. Any such registration statement, and any
sale covered thereby, will be at Metro's expense other than underwriting
discounts or commissions, brokers' fees and the fees and disbursements of North
Fork's counsel related thereto. In addition, in the event that during the
Registration Period Metro effects a registration under the Securities Act of
Metro Common Stock (other than on Form S-4 or Form S-8 or any form with respect
to a dividend reinvestment or similar plan), Metro will allow North Fork to
participate in such registration, subject to certain limitations. In connection
with any registration described above, Metro and North Fork will provide to each
other and any underwriter of the offering customary representations, warranties,
covenants, indemnifications and contributions.
Certain rights and obligations of North Fork and Metro under the Stock
Option Agreement are subject to receipt of required regulatory approvals. The
approval of the Federal Reserve Board is required for the acquisition by North
Fork of more than 5% of the outstanding shares of Metro Common Stock.
Termination Fee; Increase in Exercise Price. The Merger Agreement provides
that in addition to the rights granted to North Fork under the Stock Option
Agreement, in the event the Merger Agreement (i) is terminated subsequent to the
occurrence of a Purchase Event or (ii) is terminated by North Fork as a result
of a breach by Metro of its covenants under the Merger Agreement, and within 12
months after such termination by North Fork a Purchase Event shall occur, then
Metro must pay to North Fork the Termination Fee of $2,000,000.
The Stock Option Agreement provides that in addition to any other amounts
payable by North Fork to Metro upon the exercise of the option, upon the first
such exercise, North Fork will pay to Metro an amount, if any, by which (i)
$2,000,000 plus the product of (A) the total number of Option Shares and (B) the
difference between the Market/Tender Offer Price (as defined below) and the
Purchase Price exceeds (ii) $4,500,000, provided, however, that in no event will
the amount payable pursuant to this sentence exceed $2,000,000. The
"Market/Tender Offer Price" means the higher of the highest per share at which a
Tender Offer or Exchange Offer has been made by any person other than North Fork
or any affiliate of North Fork or person acting in concert in any respect with
North Fork for at least 20% of the shares of Metro Common Stock then outstanding
or the highest closing sales price per share of Metro Common Stock quoted on the
AMEX (or if Metro Common Stock is not quoted on the AMEX, the highest bid price
per share as quoted on the
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principal trading market or securities exchange on which such shares are traded
as reported by a recognized source) within the six month period immediately
preceding the execution of the Stock Option Agreement.
The provisions described in the preceding paragraph were intended to limit,
within certain parameters, the aggregate value (the "Aggregate Value") which
North Fork could potentially realize as a result of the exercise of the Option
and the payment of the Termination Fee to $4,500,000. In the event that a
Purchase Event occurs and the Market/Tender Offer Price is equal to or greater
than $25.50 and equal to or less than $29.09, (A) the Termination Fee payable by
Metro, plus (B) the difference between the aggregate value of the Option Shares
(valued at the Market/Tender Offer Price) and the aggregate exercise price for
the Option Shares, less (C) the amount payable by North Fork to Metro pursuant
to the preceding paragraph, will equal $4,500,000. If the Market/Tender Offer
price exceeds $29.09, the Aggregate Value will exceed $4,500,000 by an amount
equal to the amount of such excess multiplied by the number of Option Shares.
Effect of Stock Option Agreement and Termination Fee. The Stock Option
Agreement and the Termination Fee are intended to increase the likelihood that
the Merger will be consummated in accordance with the terms of the Merger
Agreement. Consequently, certain aspects of the Stock Option Agreement and the
Termination Fee may have the effect of discouraging persons who might now or
prior to the Effective Time be interested in acquiring all of or a significant
interest in Metro from considering or proposing such an acquisition, even if
such persons were prepared to pay a higher price per share for Metro Common
Stock than the price per share implicit in the Exchange Ratio. The acquisition
of Metro or an interest in Metro, or an agreement to do either, could cause the
Option to become exercisable and the Termination Fee to become payable. The
existence of the Option and the Termination Fee could significantly increase the
cost to a potential acquiror of acquiring Metro compared to its cost had the
Stock Option Agreement and the Merger Agreement not been entered into. Such
increased cost might discourage a potential acquiror from considering or
proposing an acquisition or might result in a potential acquiror proposing to
pay a lower per share price to acquire Metro than it might otherwise have
proposed to pay. Moreover, following consultation with North Fork's independent
accountants, the management of North Fork believes that the exercise of the
Option is likely to prohibit any acquiror of Metro from accounting for any
acquisition of Metro using the pooling of interests accounting method for a
period of two years. Accordingly, the existence of the Stock Option Agreement
may deter significantly, or completely preclude, an acquisition of Metro by
certain other banking organizations. The Metro Board took this factor into
account before approving the Stock Option Agreement. See "THE
MERGER -- Recommendation of the Boards of Directors; Reasons for the
Merger -- Metro."
SUBSIDIARY BANK MERGER AGREEMENT
In connection with the Merger, North Fork Bank and Bayside Federal have
entered into the Subsidiary Bank Merger Agreement (the "Subsidiary Bank Merger
Agreement") pursuant to which Bayside Federal will be merged with and into North
Fork Bank, which will continue as a wholly owned subsidiary of North Fork. The
Subsidiary Bank Merger Agreement may be terminated by mutual consent of the
parties at any time and will be terminated automatically in the event the Merger
Agreement is terminated.
THE FOREGOING SUMMARIES OF THE STOCK OPTION AGREEMENT, THE SUBSIDIARY BANK
MERGER AGREEMENT AND THE PROVISIONS OF THE MERGER AGREEMENT RELATING TO THE
TERMINATION FEE ARE QUALIFIED IN THEIR ENTIRETY BY REFERENCE TO SUCH AGREEMENTS.
THE MERGER AGREEMENT IS ATTACHED HERETO AS ANNEX A AND STOCK OPTION AGREEMENT IS
ATTACHED HERETO AS ANNEX B. SEE "INCORPORATION OF CERTAIN DOCUMENTS BY
REFERENCE."
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CERTAIN REGULATORY CONSIDERATIONS
GENERAL
North Fork, as a bank holding company, is registered and regulated under
the BHC Act, and is subject to the supervision of the Federal Reserve Board.
Generally, the Act limits the business of bank holding companies to banking,
managing, or controlling banks, performing certain servicing activities for
subsidiaries, and engaging in such other activities as the Federal Reserve Board
may determine to be closely related to banking.
The Federal Reserve Board has broad enforcement powers over bank holding
companies, including the power to impose substantial fines and other civil and
criminal penalties. In addition, the activities and operations of North Fork are
subject to extensive federal supervision and regulation which, among other
things, limit non-banking activities, impose minimum capital requirements,
require approval to acquire 5% of any class of voting shares or substantially
all of the assets of a bank or other company, and generally prohibit a bank
holding company from controlling banks in more than one state except where
expressly permitted by state law.
North Fork Bank, as a New York State chartered FDIC insured depository
institution, is subject to the supervision, regulation, and examination of the
New York State Banking Department (the "Banking Department") and the FDIC. The
FDIC has broad enforcement authority over federally-insured depository
institutions, including the power to terminate deposit insurance, to appoint a
conservator or receiver if any of a number of conditions are met, and to impose
substantial fines and other civil and criminal penalties. Almost every aspect of
the operations and financial condition of North Fork Bank is subject to
extensive regulation and supervision and to various requirements and
restrictions under federal and state law, including requirements governing
capital adequacy, liquidity, earnings, dividends, reserves against deposits,
management practices, branching, loans, investments, and the provision of
services. Various consumer protection laws and regulations also affect the
operations of North Fork Bank. The deposits of North Fork Bank are insured up to
applicable limits by the FDIC.
In addition to the impact of federal and state regulation, banks and bank
holding companies may be significantly affected by legislation, which can change
banking statutes in substantial and unpredictable ways, and by the monetary and
fiscal actions of the Federal Reserve Board as it attempts to control the money
supply and credit availability in order to influence the economy.
Federal legislation that has affected the competitive environment for North
Fork and North Fork Bank includes the Financial Institutions Reform, Recovery
and Enforcement Act of 1989 ("FIRREA") which, among other things, provides for
the acquisition of thrift institutions by bank holding companies, broadens the
enforcement power of federal bank regulatory agencies, and provides that any
FDIC insured depository institution may be liable for any loss incurred by the
FDIC, or any loss which the FDIC reasonably anticipates incurring, in connection
with the default of any commonly controlled FDIC insured depository institution
or any assistance provided by the FDIC to any such institution in danger of
default. In addition, the Federal Deposit Insurance Corporation Improvement Act
of 1991 ("FDICIA") substantially revised the depository institution regulatory
and funding provisions of the Federal Deposit Insurance Act and made significant
revisions to several other federal banking statutes.
PAYMENT OF DIVIDENDS
North Fork is a legal entity separate and distinct from North Fork Bank.
The principle source of the North Fork's cash revenues is dividends from North
Fork Bank, and there are various legal and regulatory limitations under federal
and state law on the extent to which North Fork Bank can finance or otherwise
supply funds to North Fork.
Under federal law, a depository institution is prohibited from paying a
dividend if the depository institution would thereafter be "undercapitalized" as
determined by the federal bank regulatory agencies.
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Among other things, dividends from North Fork Bank to North Fork are
limited by the regulations of the Banking Department to an amount equal to North
Fork Bank's current year's earnings plus its prior two years' retained net
profits. Under this regulation, North Fork Bank's dividend capability at June
30, 1994 is $36.9 million, which included its 1994 earnings through June 30 of
$13.3 million plus approximately $23.6 million in retained net profits from
prior years.
The relevant federal and state regulatory agencies also have authority to
prohibit a bank or bank holding company from engaging in what, in the opinion of
such regulatory body, constitutes an unsafe or unsound practice in conducting
its business. The payment of dividends could, depending upon the financial
condition of North Fork Bank, be deemed to constitute such an unsafe or unsound
practice.
In addition, pursuant to the provisions of the Note Purchase Agreement,
dated as of April 20, 1994, between North Fork and Allstate Life Insurance
Company, North Fork may not declare or pay dividends on its capital stock if an
Event of Default (as defined therein) would occur or is existing at either the
time of the declaration or the payment of any such dividend or if, after giving
effect to such dividend, the aggregate amount of all dividends, made during the
period from and after December 31, 1993 to and including the date of the making
of the dividend in question (the "Test Period"), would exceed the sum of (i) 30%
(or minus 100% in case of a net deficit) of the cumulative Consolidated Net
Income (as defined therein) for the Test Period, plus (ii) the net cash proceeds
to North Fork from the issuance of any common stock issued after April 20, 1994,
plus (iii) $5,000,000 minus (iv) a specified percentage of the purchase price of
certain Restricted Assets (as defined therein). At June 30, 1994, North Fork had
no Restricted Assets. Under this provision, North Fork's dividend capability at
June 30, 1994 was $14.5 million.
HOLDING COMPANY LIABILITY
Federal Reserve Board policy requires bank holding companies to serve as a
source of financial strength to their subsidiary banks by standing ready to use
available resources to provide adequate capital funds to subsidiary banks during
periods of financial stress or adversity. A bank holding company also could be
liable under certain provisions of banking law for the capital deficiencies of
an undercapitalized bank subsidiary. In the event of a bank holding company's
bankruptcy under Chapter 11 of the U.S. Bankruptcy Code, the trustee will be
deemed to have assumed and is required to cure immediately any deficit under any
commitment by the bank holding company to any of the federal banking agencies to
maintain the capital of an insured depository institution, and any claim for a
subsequent breach of such obligation will be entitled to a priority of payment.
CAPITAL ADEQUACY AND PROMPT CORRECTIVE ACTION
The Federal Reserve Board has formal capital guidelines which bank holding
companies are required to meet. Under these guidelines, assets and off-balance
sheet items are assigned to broad risk categories each with appropriate weights.
The resulting risk-based capital ratios represent capital as a percentage of
total risk-weighted assets and off-balance sheet items.
The Federal Reserve Board's guidelines currently require all bank holding
companies to maintain a minimum "risk-based" capital ratio of total capital to
risk-weighted assets of 8.00%, including a minimum ratio of Tier 1 capital,
defined below, to risk-weighted assets of 4.00%. As of June 30, 1994, North
Fork's total risk-based capital ratio was 15.49%, including 14.21% of Tier 1
capital. The minimum required "leverage" capital ratio of Tier 1 capital to
average total assets is 3% for banking organizations that meet certain specified
criteria (including having the highest regulatory rating) and at least 4% to 5%
for all other banking organizations. As of June 30, 1994, North Fork's leverage
capital ratio was 7.89%.
The FDIC has formal capital guidelines which state non-member banks are
required to meet that are the same as those imposed by the Federal Reserve Board
on bank holding companies. As of June 30, 1994, North Fork Bank's total
risk-based capital ratio was 16.64%, including 15.35% of Tier 1 capital; as of
June 30, 1994, North Fork Bank's leverage capital ratio was 8.48%.
Tier 1 capital consists of common equity, qualifying perpetual preferred
equity, and minority interests in the equity accounts of consolidated
subsidiaries, less goodwill and other non-qualifying intangibles. Elements
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of supplementary capital, which is limited overall to 100% of Tier 1 capital,
include perpetual preferred equity not qualifying for Tier 1, mandatory
convertible and subordinated debt, and other qualifying securities. The
allowance for loan losses qualifies only as supplementary capital and then only
to the extent of 1.25% of total risk-weighted assets.
Among other things, FDICIA requires the federal banking regulators to take
"prompt corrective action" to resolve the problems of insured depository
institutions that do not meet certain capital requirements. FDICIA establishes
five capital categories: "well capitalized," "adequately capitalized,"
"undercapitalized," "significantly undercapitalized," and "critically
undercapitalized."
Under regulations promulgated by the federal bank regulatory agencies, a
"well capitalized" institution has a total risk-based capital ratio of at least
10 percent, a Tier 1 risk-based capital ratio of at least 6 percent, a leverage
ratio of at least 5 percent and is not subject to any written order, agreement,
or directive; an "adequately capitalized" institution has a total risk-based
capital ratio of at least 8 percent, a Tier 1 risk-based capital ratio of at
least 4 percent, and a leverage ratio of at least 4 percent (3 percent if the
institution is given the highest regulatory rating and is not experiencing or
anticipating significant growth), but does not qualify as "well capitalized." An
"undercapitalized" institution has a total risk-based capital ratio of less than
8 percent, a Tier 1 risk-based capital ratio of less than 4 percent, or a
leverage ratio of less than 4 percent (3 percent if the institution is given the
highest regulatory rating and is not experiencing or anticipating significant
growth). A "significantly undercapitalized" institution has a total risk-based
capital ratio of less than 6 percent, a Tier 1 risk-based capital ratio of less
than 3 percent, or a leverage ratio of less than 3 percent. A "critically
undercapitalized" institution has a ratio of tangible equity to total assets
that is 2 percent or less. Under certain circumstances, a "well capitalized,"
"adequately capitalized," or "undercapitalized" institution may be required to
comply with supervisory actions as if the institution were in the next lowest
capital category.
FDICIA generally prohibits a depository institution from making any capital
distribution (including payment of a dividend) or paying any management fee to
its holding company if the depository institution would thereafter be
undercapitalized. Undercapitalized depository institutions are subject to
restrictions on borrowing from the Federal Reserve System. In addition,
undercapitalized depository institutions are subject to growth and activity
limitations and are required to submit "acceptable" capital restoration plans.
Such a plan will not be accepted unless, among other things, the depository
institution's holding company guarantees the capital plan, up to an amount equal
to the lesser of five percent of the depository institution's assets at the time
it becomes undercapitalized or the amount of the capital deficiency as of the
time the institution fails to comply with the plan. The federal banking agencies
may not accept a capital plan without determining, among other things, that the
plan is based on realistic assumptions and is likely to succeed in restoring the
depository institution's capital. If a depository institution fails to submit an
acceptable plan, it is treated as if it is significantly undercapitalized.
A significantly undercapitalized depository institution may be subject to a
number of requirements and restrictions, including orders to sell sufficient
voting stock to become adequately capitalized, more stringent requirements to
reduce total assets, cessation of receipt of deposits from correspondent banks,
further prohibitions on paying dividends to its holding company, and
requirements that the institution divest itself of certain subsidiaries or that
its holding company divest itself of the institution or of any non-depository
institution affiliate, in certain instances. Subject to certain exceptions,
critically undercapitalized depository institutions must have a conservator or
receiver appointed for them within 90 days after becoming critically
undercapitalized.
Certain FDIC regulations adopted under FDICIA prohibit a bank from
accepting, renewing or rolling-over brokered deposits unless (i) it is well
capitalized, or (ii) it is adequately capitalized and receives a waiver from the
FDIC. For purposes of these regulations, a bank is defined to be well
capitalized if it maintains a leverage ratio of at least 5 percent, a
risk-adjusted Tier 1 capital ratio of at least 6 percent, and a risk-adjusted
total capital ratio of at least 10 percent and is not otherwise in a "troubled
condition" as specified by its appropriate federal regulatory agency. A bank
that is adequately capitalized and has been granted an FDIC waiver to accept,
renew, or roll-over brokered deposits may not pay an interest rate on any such
deposits in excess of 75 basis points over prevailing market rates on comparable
deposits in specified market areas. There
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are no such restrictions on a bank that is well capitalized. North Fork
anticipates that these regulations will not have a material adverse effect on
its operations.
TRANSACTIONS WITH AFFILIATES
North Fork Bank is subject to restriction under federal law which limit a
bank's extensions of credit to, and certain other transactions with, affiliates.
Such transactions by North Fork Bank with any one affiliate are limited in
amount to 10 percent of a bank's capital and surplus, and with all affiliates to
20 percent of the bank's capital and surplus. Furthermore, such loans and
extensions of credit, as well as certain other transactions, are required to be
secured in accordance with specific statutory requirements. The purchase of low
quality assets from affiliates is generally prohibited. Federal law also
provides that certain transactions with affiliates, including loans and asset
purchases, must be on terms and under circumstances, including credit standards,
that are substantially the same, or at least as favorable to the institution, as
those prevailing at the time for comparable transactions involving other
non-affiliated companies or, in the absence of comparable transactions, on terms
and under circumstances, including credit standards, that in good faith would be
offered, or would apply, to non-affiliated companies.
FDIC INSURANCE ASSESSMENTS
North Fork Bank is subject to FDIC deposit insurance assessments. Pursuant
to FDICIA, the FDIC has adopted a risk-based system for determining deposit
insurance assessment. Under the risk-based system, an insured institution will
be assessed at rates in the range of .23 percent to .31 percent of deposits
depending on its capital and supervisory classifications, as assigned by its
primary federal regulator. The insurance assessment rate for North Fork Bank in
1993 was .26 percent. Commencing July 1, 1994, the insurance assessment rate for
North Fork was .23 percent. The FDIC has the authority to raise or lower
assessment rates on insured deposits in order to achieve certain designated
ratios in the federal deposit insurance funds, and to impose special additional
assessments.
CONSERVATORSHIP AND RECEIVERSHIP POWERS OF FEDERAL BANKING AGENCIES
FDICIA significantly expanded the authority of the federal banking
regulators to place depository institutions into conservatorship or receivership
to include, among other things, appointment of the FDIC as conservator or
receiver of an undercapitalized institution under certain circumstances. In the
event a bank is placed into conservatorship or receivership, the FDIC is
required, subject to certain exceptions, to choose the method for resolving the
institution that is least costly to the bank insurance fund of the FDIC, such as
liquidation.
The FDIC may provide federal assistance to a "troubled institution" without
placing the institution into conservatorship or receivership. In such cases,
pre-existing debtholders and stockholders may be required to make substantial
concessions and, insofar as practical, the FDIC will succeed to their interests
in proportion to the amount of federal assistance provided.
DESCRIPTION OF NORTH FORK CAPITAL STOCK
GENERAL
The authorized capital stock of North Fork consists of 50,000,000 shares of
North Fork Common Stock, par value $2.50 per share, and 10,000,000 shares of
preferred stock, par value $1.00 per share ("North Fork Preferred Stock"),
issuable in one or more series with such terms and at such times and for such
consideration as the North Fork Board of Directors determines. As of June 27,
1994, 14,249,286 shares of North Fork Common Stock (including 487 shares of
treasury stock) and no shares of North Fork Preferred Stock had been issued.
As of June 27, 1994, approximately 580,139 shares of North Fork Common
Stock had been reserved for issuance upon the exercise of outstanding stock
options under various employee incentive and purchase plans,
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657,820 shares of North Fork Common Stock were reserved for issuance pursuant to
North Fork's dividend reinvestment and stock purchase plans, and 1,100,474
shares of North Fork Common Stock were reserved for issuance upon the exercise
of outstanding warrants under various warrant agreements. In addition, 500,000
shares of a series of North Fork Preferred Stock designated as Series A Junior
Participating Preferred Stock, par value $1.00 per share (the "Series A
Preferred"), were reserved for issuance as provided in the North Fork Rights
Agreement described below.
The following description contains a summary of all the material features
of the capital stock of North Fork but does not purport to be complete and is
subject in all respects to the applicable provisions of the Delaware General
Corporate Law (the "DGCL") and is qualified in its entirety by reference to the
Certificate of Incorporation of North Fork (the "North Fork Certificate"),
including the terms of the Rights Agreement (the "North Fork Rights Agreement"),
between North Fork and North Fork Bank, as Rights Agent, dated as of February
28, 1989, described below.
COMMON STOCK
The outstanding shares of North Fork Common Stock are fully paid and
nonassessable. Holders of North Fork Common Stock are entitled to one vote for
each share held of record on all matters submitted to a vote of the stockholders
and have no preemptive rights. Holders of North Fork Common Stock are not
entitled to cumulative voting rights with respect to the election of directors.
The North Fork Common Stock is neither redeemable nor convertible into other
securities, and there are no sinking fund provisions.
Subject to the preferences applicable to any shares of North Fork Preferred
Stock outstanding at the time, holders of North Fork Common Stock are entitled
to dividends when and as declared by the North Fork Board of Directors from
funds legally available therefor and are entitled, in the event of liquidation,
to share ratably in all assets remaining after payment of liabilities.
North Fork's Certificate of Incorporation and Bylaws provide that the North
Fork Board of Directors is to be divided into three classes which shall be as
nearly equal in number as possible. Directors are elected by classes to three
year terms, so that approximately one-third of the directors of North Fork are
elected at each annual meeting of the stockholders. In addition, North Fork's
Bylaws provide that the power to fill vacancies is vested in the Board of
Directors of North Fork. The overall effect of such provisions may be to prevent
a person or entity from seeking to acquire control of North Fork through an
increase in the number of directors on the North Fork Board and the election of
designated nominees to fill such newly created vacancies.
RIGHTS PLAN
On February 28, 1989, the North Fork Board of Directors declared a dividend
distribution of one right (a "Right") for each outstanding share of North Fork
Common Stock to stockholders of record at the close of business on March 13,
1989. Each Right entitles the registered holder to purchase from North Fork a
unit consisting of one one-hundredth of a share (a "Unit") of Series A Preferred
at a Purchase Price of $70 per Unit, subject to adjustment. The description and
terms of the Rights are set forth in the Rights Agreement. Unless otherwise
defined herein, all capitalized terms used herein shall have the meanings set
forth in the Rights Agreement.
Initially, the Rights will be attached to all North Fork Common Stock
certificates representing shares then outstanding, and no separate Rights
Certificates will be distributed. The Rights will separate from the North Fork
Common Stock and a "Distribution Date" will occur upon the earlier of (i) 10
days following a public announcement that a person or group of affiliated or
associated persons (an "Acquiring Person") has acquired, or obtained the right
to acquire, beneficial ownership of 20% or more of the outstanding shares of
North Fork Common Stock (the "Stock Acquisition Date"), (ii) 10 business days
following the commencement of a tender offer or exchange offer that would result
in a person or group beneficially owning 20% or more of such outstanding shares
of North Fork Common Stock or (iii) 10 days after the North Fork Board of
Directors determines that any person, alone or together with its affiliates and
associates, has become the Beneficial Owner of an amount of North Fork Common
Stock which such directors determine to be substantial (which amount shall in no
event be less than 10% of the share of North Fork Common Stock
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outstanding) and such directors, after reasonable inquiry and investigation,
including consultation with such persons as such directors shall seem
appropriate, shall determine that (a) such beneficial ownership by such person
is intended to cause North Fork to repurchase the North Fork Common Stock
beneficially owned by such person or to cause pressure on North Fork to take
action or enter into a transaction or series of transactions intended to provide
such person with financial gain under circumstances where the North Fork Board
of Directors determines that the best interests of North Fork and its
stockholders would not be served by taking such action or entering into such
transactions or series of transactions at that time or (b) such beneficial
ownership is causing or reasonably likely to cause a material adverse impact
(including, but not limited to, impairment of relationships with customers or
impairment of North Fork's ability to maintain its competitive position) on the
business or prospects of North Fork (any such person being referred to herein
and in the Rights Agreement as an "Adverse Person"). Pursuant to the Rights
Agreement, North Fork reserves the right to require prior to the occurrence of a
Triggering Event (as defined below) that, upon any exercise of Rights, a number
of Rights be exercised so that only whole shares of Preferred Stock will be
issued.
The Rights are not exercisable until the Distribution Date and will expire
at the close of business on March 13, 1999, unless earlier redeemed by North
Fork as described below.
In the event that (i) a person becomes the beneficial owner of 20% or more
of the then outstanding shares of North Fork Common Stock (except pursuant to an
offer for all outstanding shares of North Fork Common Stock which the
independent directors determine to be fair to and otherwise in the best
interests of North Fork and its stockholders) or (ii) the North Fork Board of
Directors determines that a person is an Adverse Person (each of such events
being referred to herein as a "Flip-in Event"), each holder of a Right will
thereafter have the right to receive, upon exercise, North Fork Common Stock
(or, in certain circumstances, cash, property or other securities of North Fork)
having a value equal to two times the exercise price of the Right.
Notwithstanding any of the foregoing, following the occurrence of a Flip-in
Event, all Rights that are, or (under certain circumstances specified in the
Rights Agreement) were, beneficially owned by any Acquiring Person or Adverse
Person will be null and void. However, Rights are not exercisable following the
occurrence of the event set forth above until such time as the Rights are no
longer redeemable by North Fork as set forth below.
In the event that, at any time following the Stock Acquisition Date or the
date on which the North Fork Board of Directors determines that a person is an
Adverse Person, (i) North Fork is acquired in a merger or other business
combination transaction in which North Fork is not the surviving corporation
(other than a merger which follows an offer described in the parenthetical part
of clause (i) of the preceding paragraph), or (ii) 50% or more of North Fork's
assets or earning power is sold or transferred, each holder of a Right (except
Rights which previously have been voided as set forth above) shall thereafter
have the right to receive, upon exercise, common stock of the acquiring company
having a value equal to two times the exercise price of the Right. The event set
forth in this paragraph and in the preceding paragraph are referred to as the
"Triggering Events."
The Purchase Price payable, and the number of Units of Series A Preferred
or other securities or property issuable, upon exercise of the Rights are
subject to adjustment from time to time to prevent dilution (i) in the event of
a stock dividend on, or a subdivision, combination or reclassification of, the
Series A Preferred, (ii) if holders of the Series A Preferred are granted
certain rights or warrants to subscribe for Series A Preferred or convertible
securities at less than the current market price of the Series A Preferred, or
(iii) upon the distribution to holders of the Series A Preferred of evidences of
indebtedness or assets (excluding regular quarterly cash dividends) or of
subscription rights or warrants (other than those referred to above).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments amount to at least 1% of the Purchase
Price. No fractional Units will be issued and, in lieu thereof, an adjustment in
cash will be made based on the market price of the Series A Preferred on the
last trading date prior to the date of exercise.
In general, at any time until ten days following the Stock Acquisition
Date, North Fork may redeem the Rights in whole, but not in part, at a price of
$.01 per Right (payable in cash, North Fork Common Stock or other consideration
deemed appropriate by the North Fork Board of Directors). Under certain
circumstances
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set forth in the Rights Agreement, the decision to redeem shall require the
concurrence of a majority of the Continuing Directors. North Fork may not redeem
the Rights if the North Fork Board of Directors has previously declared a person
to be an Adverse Person. Immediately upon the action of the North Fork Board of
Directors ordering redemption of the Rights, with, where required, the
concurrence of the Continuing Directors, the Rights will terminate and the only
right of the holders of Rights will be to receive the $.01 redemption price.
The term "Continuing Directors" means any member of the Board of Directors
of North Fork who was a member of the North Fork Board prior to the date of the
Rights Agreement, and any person who is subsequently elected to the North Fork
Board if such person is recommended or approved by a majority of the Continuing
Directors, but shall not include an Acquiring Person, an Adverse Person, or an
affiliate or associate of an Acquiring Person or an Adverse Person, or any
representative of the foregoing entities.
At any time after the occurrence of a Flip-in Event, the North Fork Board
may exchange the Rights (other than Rights owned by an Acquiring Person or an
Adverse Person, which have become void), in whole or in part, at any exchange
ratio of one Common Share per Rights, subject to adjustment.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of North Fork, including, without limitation, the right
to vote or to receive dividends. While the distribution of the Rights will not
be taxable to stockholders of North Fork or to North Fork, stockholders of North
Fork may, depending upon the circumstances, recognize taxable income in the
event that the Rights become exercisable for North Fork Common Stock (or other
consideration) of North Fork or for common stock of the acquiring company as set
forth above, or are exchanged as provided in the preceding paragraph.
Other than those provisions relating to the principal economic terms of the
Rights, any of the provisions of the Rights Agreement may be amended by the
North Fork Board of Directors prior to the Distribution Date. After the
Distribution Date, the provisions of the Rights Agreement may be amended by the
North Fork Board (in certain circumstances, with the concurrence of the
Continuing Directors) in order to cure any ambiguity, to make changes which do
not adversely affect the interests of holders of Rights (excluding the interests
of any Acquiring Person or Adverse Person), or to shorten or lengthen any time
period under the Rights Agreement; provided, however, that no amendment to
adjust the time period governing redemption shall be made at such time as the
Rights are not redeemable.
The Rights have certain anti-takeover effects. The Rights will cause
substantial dilution to a person or group that attempts to acquire North Fork in
a manner which causes the Rights to become discount Rights unless the offer is
conditional on a substantial number of Rights being acquired. The Rights,
however, should not affect any prospective offeror willing to make an offer at a
fair price and otherwise in the best interests of North Fork and its
stockholders as determined by the North Fork Board of Directors or willing to
negotiate with the North Fork Board of Directors. The Rights should not
interfere with any merger or other business combination approved by the North
Fork Board of Directors since the North Fork Board of Directors may, at its
option, at any time until ten days following the Stock Acquisition Date (unless
the Board has previously declared a person to be an Adverse Person), redeem all
but not less than all the then outstanding Rights at the Redemption Price.
COMPARISON OF STOCKHOLDER RIGHTS
Upon the consummation of the transactions contemplated in the Merger
Agreement, the stockholders of Metro will become stockholders of North Fork.
Since both North Fork and Metro are Delaware corporations, Metro stockholders
who receive North Fork Common Stock will continue to be subject to the
privileges and restrictions provided in the DGCL. However, the rights presently
enjoyed by Metro's stockholders under the relevant provisions of the Certificate
of Incorporation (the "Metro Certificate") and the Bylaws (the "Metro Bylaws")
of Metro differ in some respects from the rights they would have as stockholders
of North Fork under the relevant provisions of the North Fork Certificate and
North Fork's Bylaws (the "North Fork Bylaws"). This summary contains a list of
the material differences but is not meant to be relied upon as an exhaustive
list or a detailed description of the provisions discussed and is qualified in
its entirety by reference
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to the North Fork Certificate, the North Fork Bylaws, the Metro Certificate, the
Metro Bylaws, the DGCL, and the North Fork Rights Agreement.
ACTION BY WRITTEN CONSENT
North Fork. The North Fork Bylaws provide that any action required to be
taken at an annual or special meeting of stockholders may be taken without a
meeting, without prior notice and without a vote, if a consent in writing,
setting forth the action so taken, is signed by the holders of outstanding North
Fork Common Stock, having not less than the minimum number of votes that would
be necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted.
Metro. The Metro Certificate provides that stockholders may not act by
written consent. Accordingly, all action by Metro stockholders must be taken at
a duly called annual or special meeting of stockholders.
STOCKHOLDER NOMINATIONS AND PROPOSALS FOR BUSINESS
North Fork. The North Fork Bylaws establish procedures that must be
followed for stockholders to nominate individuals to the North Fork Board or to
propose business at an annual meeting of stockholders.
In order to nominate individuals to the North Fork Board, a stockholder
must provide timely notice of such nomination in writing to the Secretary of
North Fork. A stockholder's notice must set forth (a) as to each person whom the
stockholder proposed to nominate for election as a director (i) the name, age,
business address and residence address of each person, (ii) the principal
occupation or employment of the person, (iii) the class or series and number of
shares held by the person and (iv) any other information relating to the person
that is required to be made in connection with solicitations of proxies for
election of directors pursuant to Section 14 of the Exchange Act, and the rules
and regulations promulgated thereunder; (b) as to the stockholder giving such
notice (i) the name and record address of such stockholder, (ii) the class or
series and number of shares of capital stock of North Fork which are owned
beneficially or of record by such stockholder, (iii) a description of all
arrangements or understandings between such stockholder and each proposed
nominee and any other person or persons (including their names) pursuant to
which the nomination(s) are to be made by such stockholder, (iv) a
representation that such stockholder intends to appear in person or by proxy at
the annual meeting to nominate the persons named in its notice, and (v) any
other information relating to such stockholder that would be required to be
disclosed in a proxy statement or other filings required to be made in
connection with solicitations or proxies for election of directors pursuant to
Section 14 of the Exchange Act and the rules and regulations promulgated
thereunder. Such notice must be accompanied by a written consent of each
proposed nominee to being named as nominee and to serve as a director if
elected.
In order to properly propose that an item of business come before the
annual meeting of stockholders, a stockholder must provide timely notice in
writing to the Secretary of North Fork, which notice must include (i) a brief
description of the business desired to be brought before the annual meeting and
the reasons for conducting such business at the annual meeting, (ii) the name,
record address, class and number of shares of North Fork capital stock
beneficially owned by the stockholder giving such notice, (iii) a description of
all arrangements or understandings between such stockholder and any other person
or persons (including their names) in connection with the proposal of such
business by such stockholder and any material interest of such stockholder in
such business, and (iv) a representation that such stockholder intends to appear
in person or by proxy at the annual meeting to bring such business before the
meeting.
To be timely, a stockholder's notice of a nominee or proposed item of
business to the Secretary must be delivered to or mailed and received at the
principal executive offices of the North Fork not less than sixty (60) days nor
more than ninety (90) days prior to the anniversary date of the immediately
preceding annual meeting of stockholders; provided, however, that in the event
that the annual meeting is called for a date that is not within thirty (30) days
before or after such anniversary date, notice by the stockholder in order to be
timely must be so received not later than the close of business on the tenth
(10) day following the day on which such notice of the date of the annual
meeting was mailed or such public disclosure of the date of the annual meeting
was made, whichever first occurs.
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Metro. The Metro Bylaws establish similar procedures that must be followed
for stockholders to nominate individuals to the Metro Board or to propose
business at the annual meeting of stockholders. The requirement to furnish
certain information contained in the Metro Bylaws in order to advance
nominations to the Metro Board and items of business are not materially
different from those of North Fork; however, the time requirements are
substantially different. Under the Metro Bylaws, in order to be timely, notice
must be delivered to Metro not less than 90 days prior to the meeting at which
directors are to be elected or the proposed business is to be conducted, or, if
Metro gives less than 100 days' notice of the meeting, then notice by the
stockholder must be received by the close of business on the 10th day following
the date on which notice of the meeting was mailed to stockholders or such
public disclosure was made.
CERTAIN BUSINESS COMBINATIONS
North Fork. The North Fork Certificate does not contain any restrictions
on North Fork's ability to consummate certain business combinations which are in
addition to those imposed by the DGCL.
Metro. The Metro Certificate provides that any "Business Combination"
involving Metro and any Metro Related Person (defined to include any beneficial
owner of more than 10% of the outstanding Metro capital stock entitled to vote
in the election of directors ("Metro Voting Stock")) must be approved by the
holders of at least 80% of the voting power of the outstanding Metro Voting
Stock (the "80% Voting Requirement"). In the case of any Business Combination
that does not involve any cash or other consideration being received by the
stockholders of Metro solely in their capacity as stockholders of Metro which
has been approved by a majority of the Disinterested Directors (defined
generally to include any director on the Metro Board who is unaffiliated with,
and not a representative of, the Metro Related Person and who either was a
director immediately prior to the time the Metro Related Person became such a
person or was recommended or elected to succeed such a Disinterested Director by
a majority of the Metro Disinterested Directors), the affirmative vote of only a
majority of the Metro Voting Stock will be required to approve the Business
Combination. If the Business Combination does include any cash or other
consideration being received by the stockholders of Metro solely in their
capacity as stockholders of Metro, in addition to the approval of a majority of
the Disinterested Directors, certain "fair price" (defined generally to mean
that the consideration to be received by stockholders in such Business
Combination shall be at least equal to the higher of, and in the same form as,
the consideration paid by the Metro Related Person for such person's acquisition
of Metro capital stock within the two year period immediately prior to the first
public announcement of the proposal of the Business Combination or in the
transaction in which such person became a Metro Related Person) and other
criteria must be met in order for any such Business Combination to be
consummated without the satisfaction of the 80% Voting Requirement. In the event
that the Metro 80% Voting Requirement is not required, the Business Combination
only requires an affirmative vote of the majority of the Voting Stock.
As defined in the Metro Certificate, a Business Combination includes, among
other things, (i) the merger or consolidation of Metro or any subsidiary with
any Metro Related Person or any other corporation which is or after such merger
or consolidation would be, an affiliate of a Metro Related Person, (ii) the sale
or other disposition by Metro of assets having a value of more than 25% of the
total combined assets of Metro and its subsidiaries ("Substantial Assets") to a
Metro Related Person or any associate or affiliate thereof, (iii) the issuance
or transfer by Metro or any subsidiary of any securities of Metro or any
subsidiary to any Metro Related Person in exchange for cash, securities, or
other property having an aggregate fair market value equaling or exceeding 25%
of the combined assets of Metro and its subsidiaries, (iv) the adoption of any
plan or proposal for the liquidation or dissolution of Metro proposed by or on
behalf of a Metro Related Person, or (v) any transaction that has the effect of
increasing the proportionate amount of the outstanding shares of any class of
equity or convertible securities of Metro or any subsidiary that is beneficially
owned by a Metro Related Person.
As defined in the Metro Certificate, a Metro Related Person is generally
defined as any person (other than Metro or subsidiary thereof) who or which: (1)
is the beneficial owner of more than 10% of the outstanding Voting Stock, (2) is
an affiliate of Metro and at any time within the two year period immediately
prior to the date in question was the beneficial owner of 10% or more of the
outstanding Voting Stock, or (3) is an assignee of or has otherwise succeeded to
any shares of Voting Stock which were at any time within
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the two year period immediately prior to the date in question beneficially owned
by any Metro Related Person, if such assignment or succession shall have
occurred in the course of a transaction not involving a public offering as
defined by the Securities Act.
REMOVAL OF DIRECTORS
North Fork. The DGCL provides that unless the certificate of incorporation
provides otherwise, in the case of a corporation whose board of directors is
classified (as is North Fork's), stockholders may remove a director only with
cause by a vote of the majority of the then outstanding shares of the
corporation entitled to vote thereon. The North Fork Certificate does not
contain any provisions concerning the removal of directors.
Metro. The Metro Board, like that of North Fork, has been classified. The
Metro Certificate provides that any director of Metro, or the entire Metro
Board, may be removed from office only for cause and only by the affirmative
vote of the holders of at least 80% of the voting power of all of the then
outstanding shares of capital stock of Metro entitled to vote generally in the
election of directors, voting together as a single class.
AMENDMENT OF BYLAWS
North Fork. The DGCL provides that the stockholders have the power to
adopt, amend, or repeal the Bylaws of a corporation, subject to any limitations
provided in the Certificate of Incorporation. There are no such limitations in
the North Fork Certificate, and accordingly, the North Fork ByLaws may be
amended by a majority of the then-outstanding shares of North Fork capital stock
entitled to vote thereon.
Metro. The Metro Certificate provides that any action by Metro's
stockholders to adopt, amend or repeal any provision of the Metro Bylaws
requires the affirmative vote of the holders of at least 80% of the voting power
of all of the then-outstanding shares of Metro Common Stock entitled to vote in
the election of Directors.
AMENDMENT OF CERTIFICATE
North Fork. The DGCL provides that amendments to a corporation's
certificate of incorporation generally require a resolution by the corporation's
board of directors setting forth the amendment proposed and declaring its
advisability and the affirmative vote of the holders of a majority of the
corporation's outstanding stock entitled to vote thereon. The North Fork
Certificate contains no further provisions concerning the amendment of the North
Fork Certificate.
Metro. The Metro Certificate provides that, in addition to the
requirements imposed by the DGCL and discussed above, the affirmative vote of
the holders of at least 80% of the voting power of all of the then-outstanding
shares of the capital stock of Metro entitled to vote in an election of
directors, voting together as a single class, shall be required to amend or
repeal certain provisions of the Metro Certificate relating to (1) the amendment
or repeal of any provision contained in the Metro ByLaws, (2) the limitation of
the right of stockholders to act by written consent, (3) the ability to call
special meetings of stockholders, (4) the classification of the Metro Board, (5)
the Metro Business Combination provision, or (6) indemnification of Metro's
directors and officers.
LIMIT ON STOCKHOLDER VOTING
North Fork. The North Fork certificate has no provision specifically
limiting stockholder voting rights.
Metro. The Metro Certificate contains a provision limiting the voting
rights of any person owning more than 10% of the outstanding shares of Metro
Common Stock. Any person who beneficially owns more than 10% of the
then-outstanding shares of Metro Common Stock (the "Limit") shall not be
entitled, or permitted to any vote in respect of the shares held in excess of
the Limit. The number of votes which may be cast by any record owner of Metro
Common Stock in excess of the Limit shall be a number equal to the total number
of votes which a single record owner of all Metro Common Stock owned by such
person would be entitled to cast, multiplied by a fraction, the numerator of
which is the number of shares of such class or series beneficially owned by such
person and owned of record by such record owner and the denominator of which is
the total
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number of shares of Metro Common Stock beneficially owned by such person owning
shares in excess of the Limit.
CONSIDERATION OF OTHER CONSTITUENCIES
North Fork. The North Fork Certificate does not contain any provision
specifically relating to the ability of the North Fork Board of Directors to
consider the interests of any constituencies of North Fork other than its
stockholders in considering whether to approve or oppose any corporate action,
including without limitation any proposal to acquire North Fork by means of a
merger, tender offer or similar business combination. However, pursuant to
existing case law interpreting the provisions of the DGCL, the board of
directors of a Delaware corporation such as North Fork generally may consider
the impact of such a proposal on North Fork's other constituencies, provided
that doing so bears some reasonable relationship to general stockholder
interests.
Metro. The Metro Certificate provides that when evaluating any Business
Combination, the Metro may give due consideration to all relevant factors,
including, without limitation, the social and economic effect of the offer on
Metro's current and future customers and employees, on the communities in which
Metro or its subsidiaries operate, and on the ability of Metro to fulfill its
objectives as a savings and loan holding company.
PERSONAL LIABILITY OF DIRECTORS
North Fork. The North Fork Certificate provides that the personal
liability of each of its directors to North Fork or its stockholders for
monetary damages for breach of his fiduciary duty as a director is limited to
$25,000, except to the extent such person's action or failure to take action (1)
constituted a breach of the duty of loyalty to North Fork or its stockholders;
(2) was not in good faith or which involved intentional misconduct or knowing
violations of law; (3) resulted in liability under Section 174 of the DGCL
relating to certain unlawful dividends and stock repurchases; or (4) constituted
a transaction from which the director derived an improper personal benefit.
Metro. The Metro Certificate provides that a director shall not be
personally liable to Metro or Metro Stockholders for monetary damages, for a
breach of fiduciary duty as a director except for liability (i) for a breach of
the director's duty of loyalty, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of the law, (iii)
under section 174 of the DGCL, or (iv) for any transaction from which the
director derived an improper personal benefit. The Metro Certificate further
provides liability of a director of Metro shall be limited to the fullest extent
permitted by DGCL.
RIGHTS PLANS
North Fork. On February 28, 1989, the North Fork Board of Directors
declared a dividend distribution of one Right for each outstanding share of
North Fork Common Stock to stockholders of record at the close of business on
March 13, 1989. For a description of the Rights and the related North Fork
Rights Agreement, see "DESCRIPTION OF NORTH FORK CAPITAL STOCK -- Rights Plans."
Metro. The Metro Board has not adopted a Stockholder Rights Plan.
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UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
The following tables set forth certain selected condensed financial data
for North Fork and Metro on an unaudited pro forma combined basis giving effect
to the Merger as if the Merger had become effective on June 30 1994, in the case
of the balance sheet data presented, and if the Merger had become effective at
the beginning of the periods indicated, in the case of the income statement data
presented. The pro forma data in the tables assumes that the Merger is accounted
for using the pooling of interests method of accounting. See "THE
MERGER -- Anticipated Accounting Treatment." Financial data for the six months
ended June 30, 1994 and 1993 combine North Fork and Metro with Metro's interim
results presented to coincide with the reporting period for North Fork. These
tables should be read in conjunction with, and are qualified in their entirety
by, the historical financial statements, including the notes thereto, of North
Fork and Metro incorporated by reference herein and the more detailed pro forma
financial information, including the notes thereto, appearing elsewhere in this
Joint Proxy Statement/Prospectus. See "INCORPORATION OF CERTAIN DOCUMENTS BY
REFERENCE" and "UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS."
The pro forma data and ratios set forth in the following tables do not
reflect merger expenses and restructuring charges anticipated to be incurred by
North Fork and Metro, the expected cost savings and revenue enhancement
opportunities that could result from the Merger or any other items of income or
expense which may result from the Merger. The unaudited pro forma combined
selected financial data is presented for informational purposes only and is not
necessarily indicative of the combined financial position or results of
operations that would have occurred if the Merger had been consummated on June
30, 1994 or at the beginning of the periods indicated or which may be obtained
in the future.
68
<PAGE> 81
NORTH FORK BANCORPORATION, INC. -- METRO BANCSHARES INC.
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
JUNE 30, 1994
(Dollars in thousands)
<TABLE>
<CAPTION>
PRO FORMA NORTH FORK
NORTH FORK METRO ADJUSTMENTS PRO FORMA
---------- ---------- ------------ ----------
<S> <C> <C> <C> <C>
ASSETS
Cash and Due from Banks................ $ 71,241 $ 17,272 $ 88,513
Money market investments............... 40,512 52,700 93,212
Securities Held to Maturity............ 649,280 149,233 798,513
Securities Available for Sale.......... 206,310 0 206,310
Loans, net of unearned discounts....... 1,011,086 758,376 1,769,462
Allowance for Loan Losses............ (44,353) (10,676) (55,029)
---------- ---------- ----------
Net Loans......................... 966,733 747,700 1,714,433
Premises and Equipment, net............ 32,299 7,345 39,644
Other Real Estate Owned................ 14,039 3,498 17,537
Excess of cost over fair value of
assets acquired...................... 8,939 14,004 22,943
Other Assets........................... 30,985 14,915 45,900
---------- ---------- ----------
Total Assets...................... $2,020,338 $1,006,667 $3,027,005
========= ========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits............................... $1,443,521 $ 893,424 $2,336,945
Federal Funds Purchased and Securities
Sold with Agreements to Repurchase... 354,285 0 354,285
Borrowed Funds......................... 25,000 10,308 35,308
Other Liabilities...................... 35,181 20,291 55,472
---------- ---------- ----------
Total Liabilities................. 1,857,987 924,023 2,782,010
Stockholders' Equity:
Preferred Stock...................... 0 0
Common Stock......................... 35,622 53 22,271(2) 57,946
Additional Paid-in Capital........... 95,259 18,910 (23,126)(2) 91,043
Retained Earnings.................... 34,594 64,844 99,438
Less: Unrealized depreciation on
certain marketable securities net of
tax.................................. (2,715) 0 (2,715)
Less: Restricted Stock Awards.......... (402) 0 (402)
Less: Unallocated common stock held by
ESOP................................. 0 (308) (308)
Less: Treasury Stock................... (7) (855) 855(2) (7)
Total Stockholders' Equity........ 162,351 82,644 244,995
========= ========= ========== =========
Total Liabilities and
Stockholders' Equity............ $2,020,338 $1,006,667 $3,027,005
---------- ---------- ----------
</TABLE>
See "NOTES TO UNAUDITED PRO FORMA CONDENSED
COMBINED FINANCIAL STATEMENTS."
69
<PAGE> 82
NORTH FORK BANCORPORATION, INC. -- METRO BANCSHARES INC.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
FOR THE SIX MONTHS ENDED JUNE 30, 1994
(in thousands, except for per share data)
<TABLE>
<CAPTION>
NORTH FORK METRO PRO FORMA
---------- ------- ---------
<S> <C> <C> <C>
Interest Income............................................. $ 62,858 $36,190 $99,048
Interest Expense............................................ 20,966 14,221 35,187
---------- ------- ---------
Net Interest Income....................................... 41,892 21,969 63,861
Provision for Loan Losses................................... 1,750 1,150 2,900
---------- ------- ---------
Net Interest Income after Provision for Loan Losses....... 40,142 20,819 60,961
Other Noninterest Income.................................... 8,326 1,669 9,995
Net Securities Gains (Losses)............................... (54) (18) (72)
Other Real Estate Owned Related Expense..................... 3,739 108 3,847
Other Noninterest Expense................................... 26,604 10,113 36,717
---------- ------- ---------
Income before Income Taxes................................ 18,071 12,249 30,320
Provision for Income Taxes.................................. 6,484 5,574 12,058
---------- ------- ---------
Net Income................................................ $ 11,587 $ 6,675 $18,262
======== ======= ========
Pro Forma Weighted average equivalent common shares
outstanding:
at the Exchange Ratio of 1.759............................ 14,904 5,442 24,476
at the Exchange Ratio of 1.645............................ 14,904 5,442 23,856
Pro Forma Net Income per share:
at the Exchange Ratio of 1.759............................ $ 0.78 $ 1.23 $ 0.75
at the Exchange Ratio of 1.645............................ $ 0.78 $ 1.23 $ 0.77
</TABLE>
See "NOTES TO UNAUDITED PRO FORMA CONDENSED
COMBINED FINANCIAL STATEMENTS."
70
<PAGE> 83
NORTH FORK BANCORPORATION, INC. -- METRO BANCSHARES INC.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1993 FOR NORTH FORK AND SEPTEMBER 30, 1993 FOR
METRO
(in thousands, except for per share data)
<TABLE>
<CAPTION>
NORTH FORK
NORTH FORK METRO PRO FORMA
---------- -------- ----------
<S> <C> <C> <C>
Total Interest Income...................................... $118,489 $72,718 $191,207
Total Interest Expense..................................... 41,136 32,033 73,169
---------- -------- ----------
Net Interest Income...................................... 77,353 40,685 118,038
Provision for Loan Losses.................................. 6,000 4,300 10,300
---------- -------- ----------
Net Interest Income after Provision for Loan Losses...... 71,353 36,385 107,738
Other Noninterest Income................................... 16,510 2,969 19,479
Net Securities Gains....................................... 1,457 0 1,457
Other Real Estate Owned Related Expense (Income)........... 14,307 (336) 13,971
Other Noninterest Expense.................................. 52,396 19,684 72,080
---------- -------- ----------
Income before Income Taxes............................... 22,617 20,006 42,623
Provision for Income Taxes................................. 7,520 9,456 16,976
---------- -------- ----------
Net Income............................................... $ 15,097 $10,550 $ 25,647
======== ======= ========
Pro Forma Weighted average equivalent common shares
outstanding:
at the Exchange Ratio of 1.759........................... 14,382 5,421 23,918
at the Exchange Ratio of 1.645........................... 14,382 5,421 23,300
Pro Forma Net Income per share:
at the Exchange Ratio of 1.759........................... $ 1.05 $1.95 $ 1.07
at the Exchange Ratio of 1.645........................... $ 1.05 $1.95 $ 1.10
</TABLE>
See "NOTES TO UNAUDITED PRO FORMA CONDENSED
COMBINED FINANCIAL STATEMENTS."
71
<PAGE> 84
NORTH FORK BANCORPORATION, INC. -- METRO BANCSHARES INC.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1992 FOR NORTH FORK AND SEPTEMBER 30, 1992 FOR
METRO
(in thousands, except for per share data)
<TABLE>
<CAPTION>
NORTH FORK
NORTH FORK METRO PRO FORMA
---------- -------- ----------
<S> <C> <C> <C>
Total Interest Income...................................... $130,740 $ 79,784 $210,524
Total Interest Expense..................................... 59,578 46,136 105,714
---------- -------- ----------
Net Interest Income...................................... 71,162 33,648 104,810
Provision for Loan Losses.................................. 21,000 2,775 23,775
---------- -------- ----------
Net Interest Income after Provision for Loan Losses...... 50,162 30,873 81,035
Other Noninterest Income................................... 14,647 2,496 17,143
Net Securities Gains....................................... 9,408 139 9,547
Other Real Estate Owned Related Expense.................... 15,998 276 16,274
Other Noninterest Expense.................................. 54,299 19,116 73,415
---------- -------- ----------
Income before Income Taxes............................... 3,920 14,116 18,036
Provision for Income Taxes................................. 2,190 6,419 8,609
---------- -------- ----------
Net Income............................................... $ 1,730 $ 7,697 $ 9,427
======== ======= ========
Pro Forma Weighted average equivalent common shares
outstanding:
at the Exchange Ratio of 1.759........................... 11,025 5,344 20,425
at the Exchange Ratio of 1.645........................... 11,025 5,344 19,816
Pro Forma Net Income per share:
at the Exchange Ratio of 1.759........................... $ 0.16 $ 1.44 $ 0.46
at the Exchange Ratio of 1.645........................... $ 0.16 $ 1.44 $ 0.48
</TABLE>
See "NOTES TO UNAUDITED PRO FORMA CONDENSED
COMBINED FINANCIAL STATEMENTS."
72
<PAGE> 85
NORTH FORK BANCORPORATION, INC. -- METRO BANCSHARES INC.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1991 FOR NORTH FORK AND SEPTEMBER 30, 1991 FOR
METRO
(in thousands, except for per share data)
<TABLE>
<CAPTION>
NORTH FORK
NORTH FORK METRO PRO FORMA
---------- ------- ----------
<S> <C> <C> <C>
Total Interest Income...................................... $152,368 $73,487 $225,855
Total Interest Expense..................................... 88,209 48,255 136,464
---------- ------- ----------
Net Interest Income...................................... 64,159 25,232 89,391
Provision for Loan Losses.................................. 64,800 1,825 66,625
---------- ------- ----------
Net Interest Income (Expense) after Provision for
Loan Losses........................................... (641) 23,407 22,766
Other Noninterest Income................................... 11,305 2,094 13,399
Net Securities Gains....................................... 8,942 110 9,052
Other Real Estate Owned Related Expense.................... 10,340 323 10,663
Other Noninterest Expense.................................. 47,833 14,830 62,663
---------- ------- ----------
Income (loss) before Income Taxes........................ (38,567) 10,458 (28,109)
Provision for (recovery) Income Taxes...................... (4,941) 4,777 (164)
---------- ------- ----------
Net Income (loss)........................................ ($33,626) $ 5,681 ($27,945)
======== ======= ========
Pro Forma Weighted average equivalent common shares
outstanding:
at the Exchange Ratio of 1.759........................... 9,999 5,162 19,079
at the Exchange Ratio of 1.645........................... 9,999 5,162 18,490
Pro Forma Net Income (loss) per share:
at the Exchange Ratio of 1.759........................... ($ 3.36) $ 1.10 ($ 1.46)
at the Exchange Ratio of 1.645........................... ($ 3.36) $ 1.10 ($ 1.51)
</TABLE>
See "NOTES TO UNAUDITED PRO FORMA CONDENSED
COMBINED FINANCIAL STATEMENTS."
73
<PAGE> 86
NORTH FORK BANCORPORATION AND SUBSIDIARIES AND
METRO BANCSHARES AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA
CONDENSED COMBINED FINANCIAL STATEMENTS
(1) The unaudited pro forma condensed combined balance sheet at June 30,
1994 represents the historical book values for North Fork and Metro and reflect
the Merger accounted for as a pooling of interests. Under generally accepted
accounting principals ("GAAP") the assets and liabilities of Metro will be
combined with those of North Fork. Additionally, the statements of income for
Metro will be combined with North Fork on a retroactive basis. North Fork
utilizes a fiscal year which ends on December 31 for reporting purposes, whereas
Metro uses a fiscal year which ends on September 30 for such purposes. The
unaudited condensed combined statements of income for 1993, 1992 and 1991
combine North Fork and Metro at their respective year end periods. The unaudited
condensed combined statement of income for the six month periods ended June 30,
1994 and 1993 include Metro for the six months then ended to conform with the
reporting periods of North Fork. Summary unaudited operating results for Metro
in the three month periods ended December 31, 1993 and 1992 not included in the
unaudited pro forma condensed combined financial statements, are as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
DECEMBER 31,
------------------
1993 1992
------- ------
(UNAUDITED)
<S> <C> <C>
Net interest income....................................... $10,745 $9,806
Income before cumulative effect for accounting
for income taxes........................................ 3,137 2,375
Income per share before cumulative effect................. $ 0.58 $ 0.44
Cumulative effect of adoption of SFAS #109 accounting for
income taxes............................................ 3,700 0
Net income................................................ 6,837 2,375
Net income per share...................................... $ 1.26 $ 0.44
</TABLE>
(2) Pro forma adjustments to common shares and capital surplus, at June 30,
1994, reflect the Merger accounted for as a pooling of interests, through: (a)
the exchange of 8,929,570 shares of $2.50 par value North Fork Common Stock for
5,076,504 actual outstanding shares actual of Metro at an Exchange Ratio of
1.759. The actual Exchange Ratio will depend upon the actual Average Closing
Price per share of North Fork Common Stock on the Valuation Date.
(3) The pro forma weighted average shares outstanding for the six months
ended June 30, 1994 and 1993, and for each of the combined three year periods,
reflect exchange ratios of 1.759 and 1.645 shares of North Fork Common Stock for
each share of Metro Common Stock. The actual Exchange Ratio will depend upon the
actual Average Closing Price per share of North Fork Common Stock on the
Valuation Date.
(4) The pro forma condensed combined financial statements do not reflect
one-time merger expenses and restructuring charges which currently are estimated
to be in the range of $11 to $13 million after taxes. It is expected that merger
costs of approximately $600,000 and $350,000 will be incurred and expensed by
North Fork and Metro, respectively through September 30, 1994. The remaining
merger and restructuring costs will
74
<PAGE> 87
NORTH FORK BANCORPORATION AND SUBSIDIARIES AND
METRO BANCSHARES AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA
CONDENSED COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
be recognized upon consummation of the Merger which is expected to occur in the
fourth quarter of 1994. The following provides details of the estimated charges
by type of cost:
<TABLE>
<CAPTION>
EXPECTED RANGE
OF COST
TYPE OF COST --------------
---------------------------------------------------------------------- ($ IN
MILLIONS)
<S> <C>
Merger expense........................................................ $2.0 to $ 2.7
Restructuring charges:
Severance and Other Employee Expense................................ 5.6 to 6.8
Facility and System Costs........................................... 2.7 to 3.5
--------------
Total pre-tax merger and restructuring charges...................... 10.3 to 13.0
Less: Tax effect.................................................... 3.5 to 4.3
Tax Bad Debt Recapture.............................................. 3.8 to 4.2
--------------
Total after tax merger and restructuring charges.................... $10.6 to $12.9
--------------
</TABLE>
Although no assurance can be given, North Fork expects that cost savings
will be achieved at an annual rate of $8 to $11 million, pre-tax, by the end of
the second quarter of 1995 as a result of steps to be taken to integrate their
operations and to achieve efficiencies in certain combined lines of business.
These anticipated merger cost savings were determined based upon preliminary
estimates provided by the management of both North Fork and Metro. A merger
integration task force, consisting of representatives of both companies, is in
the process of validating these preliminary estimates and executing cost
reduction initiatives. The pro forma financial data does not give effect to
these expected cost savings, nor does it include any estimates of revenue
enhancements that could be realized with the Merger and conversion of Metro's
subsidiary, Bayside Federal Savings Bank, to a commercial bank operation.
(5) SFAS No. 114, "Accounting by Creditors for Impairment of a Loan," was
issued in May 1993, and is required to be adopted for fiscal years beginning
after December 15, 1994 with earlier application permitted. Each of North Fork
and Metro are currently assessing the final implications of the implementation
of SFAS No. 114 and believe that it will not have a material adverse effect on
its financial condition or operating results.
(6) North Fork adopted Statement of Financial Accounting Standards No. 115
"Accounting for Certain Investments in Debt and Equity Securities" (SFAS #115)
as of January 1, 1994. Metro was not yet required to adopt SFAS #115, as the
statement is effective for fiscal years beginning after December 15, 1993.
Management of Metro has determined, for purposes of the Unaudited Pro Forma
Condensed Combined Balance Sheet, all investment and mortgage-backed securities
historically classified as "held for investment" will be classified as "held to
maturity" under SFAS #115. No impact on the combined financial condition or
results of operations is expected from conforming this method of accounting.
(7) There was no material adverse effect to the financial condition or
results of operations of Metro resulting from conforming the method of
accounting for postemployment benefits to that of North Fork, which is in
accordance with Statement of Financial Accounting Standards No. 112 "Employers'
Accounting for Postemployment Benefits," for purposes of the Unaudited Pro Forma
Condensed Combined Financial Statement.
(8) Certain Metro financial information has been reclassified to conform
with North Fork.
(9) Share data for Metro has been restated to reflect Metro's 3 for 2 stock
splits declared on July 8, 1992 and August 5, 1993.
75
<PAGE> 88
LEGAL MATTERS
The validity of the shares of North Fork Common Stock which will be issued
in the Merger will be passed upon for North Fork by Skadden, Arps, Slate,
Meagher & Flom.
Legal matters in connection with the Merger will be passed upon for Metro
by Muldoon, Murphy & Faucette.
EXPERTS
The consolidated financial statements of North Fork Bancorporation, Inc.
and subsidiaries as of December 31, 1993 and 1992 and for each of the years in
the three year period ended December 31, 1993, included in North Fork's 1993
Form 10-K incorporated by reference into this Joint Proxy Statement/Prospectus,
have been incorporated by reference herein and in the Registration Statement of
which this Joint Proxy Statement/Prospectus is a part in reliance upon the
report of KPMG Peat Marwick, independent auditors, included in North Fork's 1993
Form 10-K and incorporated by reference herein, and upon the authority of said
firm as experts in accounting and auditing. The report of KPMG Peat Marwick
includes an explanatory paragraph referring to changes in accounting principles.
The consolidated financial statements of Metro Bancshares Inc. and
subsidiaries as of September 30, 1993 and 1992 and for each of the years in the
three-year period ended September 30, 1993, included in Metro's 1993 Form 10-K
incorporated by reference into this Joint Proxy Statement/Prospectus have been
incorporated by reference herein and in the Registration Statement of which the
Joint Proxy Statement/Prospectus is a part in reliance upon the report of KPMG
Peat Marwick, independent auditors, included in Metro's 1993 Form 10-K and
incorporated by reference herein, and upon the authority of said firm as experts
in accounting and auditing.
Representatives of KPMG Peat Marwick are expected to be present at the
North Fork Meeting and the Metro Meeting, and are expected to be available to
respond to appropriate questions.
STOCKHOLDER PROPOSALS
Proposals of stockholders intended to be presented at the 1995 Annual
Meeting of Stockholders of North Fork must be received by North Fork no later
than November 18, 1994 for inclusion in North Fork's Proxy Statement and Form of
Proxy relating to that meeting.
It is possible that Metro's next Annual Meeting of Stockholders will be
held prior to consummation of the Merger. Any stockholder who wishes to submit a
proposal for presentation to such annual meeting, and for inclusion, if
appropriate, in Metro's proxy statement and the form of proxy relating to such
annual meeting, must comply with the rules and regulations of the Commission
then in effect and must submit such proposal to the Secretary of Metro. In the
event that Metro's Annual Meeting of Stockholders is held on or before February
27, 1995, any stockholder proposal must have been received by Metro not later
than September 28, 1994. In the event that Metro's Annual Meeting of
Stockholders is held after February 27, 1995, any stockholder proposal must be
received by Metro a reasonable time before the solicitation of proxies for such
annual meeting is made.
76
<PAGE> 89
ANNEX A
AGREEMENT AND PLAN OF MERGER
BY
AND
BETWEEN
NORTH FORK BANCORPORATION, INC.
AND
METRO BANCSHARES INC.
JUNE 27, 1994
A-1
<PAGE> 90
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE I
THE MERGER............................................................................. 1
1.1. The Merger.................................................................... 1
1.2. Effective Time................................................................ 1
1.3. Effects of the Merger......................................................... 1
1.4. Conversion of Company Common Stock............................................ 1
1.5. Stock Options................................................................. 2
1.6. Buyer Common Stock............................................................ 3
1.7. Certificate of Incorporation.................................................. 3
1.8. By-Laws....................................................................... 3
1.9. Directors and Officers........................................................ 3
1.10. Tax Consequences.............................................................. 3
ARTICLE II
EXCHANGE OF SHARES..................................................................... 3
2.1. Buyer to Make Shares Available................................................ 3
2.2. Exchange of Shares............................................................ 4
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY.......................................... 5
3.1. Corporate Organization........................................................ 5
3.2. Capitalization................................................................ 6
3.3. Authority; No Violation....................................................... 6
3.4. Consents and Approvals........................................................ 7
3.5. Reports....................................................................... 8
3.6. Financial Statements.......................................................... 9
3.7. Broker's Fees................................................................. 9
3.8. Absence of Certain Changes or Events.......................................... 9
3.9. Legal Proceedings............................................................. 9
3.10. Taxes......................................................................... 9
3.11. Employees..................................................................... 10
3.12. SEC Reports................................................................... 11
3.13. Company Information........................................................... 11
3.14. Compliance with Applicable Law................................................ 11
3.15. Certain Contracts............................................................. 11
3.16. Agreements with Regulatory Agencies........................................... 12
3.17. Investment Securities......................................................... 12
3.18. Intellectual Property......................................................... 12
3.19. Undisclosed Liabilities....................................................... 13
3.20. State Takeover Laws........................................................... 13
3.21. Administration of Fiduciary Accounts.......................................... 13
3.22. Environmental Matters......................................................... 13
3.23. Derivative Transactions....................................................... 14
3.24. Opinion....................................................................... 14
3.25. Assistance Agreements......................................................... 14
</TABLE>
A-2
<PAGE> 91
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
3.26. Approvals..................................................................... 14
3.27. Loan Portfolio................................................................ 14
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER................................................ 15
4.1. Corporate Organization........................................................ 15
4.2. Capitalization................................................................ 15
4.3. Authority; No Violation....................................................... 16
4.4. Consents and Approvals........................................................ 17
4.5. Financial Statements.......................................................... 17
4.6. Broker's Fees................................................................. 18
4.7. Absence of Certain Changes or Events.......................................... 18
4.8. Legal Proceedings............................................................. 18
4.9. Compliance with Applicable Law................................................ 18
4.10. SEC Reports................................................................... 18
4.11. Buyer Information............................................................. 18
4.12. Ownership of Company Common Stock; Affiliates and Associates.................. 19
4.13. Taxes......................................................................... 19
4.14. Employees..................................................................... 19
4.15. Agreements with Regulatory Agencies........................................... 20
4.16. Undisclosed Liabilities....................................................... 20
4.17. Administration of Fiduciary Accounts.......................................... 20
4.18. Approvals..................................................................... 20
4.19. Reports....................................................................... 21
4.20. Environmental Matters......................................................... 21
4.21. Derivative Transactions....................................................... 21
4.22. Loan Portfolio................................................................ 22
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS.............................................. 22
5.1. Covenants of the Company...................................................... 22
5.2. Covenants of Buyer............................................................ 24
ARTICLE VI
ADDITIONAL AGREEMENTS.................................................................. 25
6.1. Regulatory Matters............................................................ 25
6.2. Access to Information......................................................... 26
6.3. Stockholder Meetings.......................................................... 26
6.4. Legal Conditions to Merger.................................................... 27
6.5. Affiliates.................................................................... 27
6.6. Stock Exchange Listing........................................................ 27
6.7. Employee Benefit Plans; Existing Agreements................................... 27
6.8. Indemnification............................................................... 29
6.9. Subsequent Interim and Annual Financial Statements............................ 30
6.10. Additional Agreements......................................................... 30
6.11. Advice of Changes............................................................. 30
6.12. Current Information........................................................... 30
</TABLE>
A-3
<PAGE> 92
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
6.13. Execution and Authorization of Bank Merger Agreement.......................... 30
6.14. Directorships................................................................. 31
ARTICLE VII
CONDITIONS PRECEDENT................................................................... 31
7.1. Conditions to Each Party's Obligation To Effect the Merger.................... 31
7.2. Conditions to Obligations of Buyer............................................ 31
7.3. Conditions to Obligations of the Company...................................... 33
ARTICLE VIII
TERMINATION AND AMENDMENT.............................................................. 34
8.1. Termination................................................................... 34
8.2. Effect of Termination; Expenses............................................... 35
8.3. Amendment..................................................................... 36
8.4. Extension; Waiver............................................................. 36
ARTICLE IX
GENERAL PROVISIONS..................................................................... 36
9.1. Closing....................................................................... 36
9.2. Alternative Structure......................................................... 36
9.3. Nonsurvival of Representations, Warranties and Agreements..................... 36
9.4. Expenses...................................................................... 36
9.5. Notices....................................................................... 37
9.6. Interpretation................................................................ 37
9.7. Counterparts.................................................................. 37
9.8. Entire Agreement.............................................................. 37
9.9. Governing Law................................................................. 37
9.10. Enforcement of Agreement...................................................... 38
9.11. Severability.................................................................. 38
9.12. Publicity..................................................................... 38
9.13. Assignment; No Third Party Beneficiaries...................................... 38
</TABLE>
A-4
<PAGE> 93
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of June 27, 1994, by and among North
Fork Bancorporation, Inc., a Delaware corporation ("Buyer") and Metro Bancshares
Inc., a Delaware corporation (the "Company"). (Buyer and the Company are herein
sometimes collectively referred to herein as the "Constituent Corporations".)
WHEREAS, the Boards of Directors of Buyer and the Company have determined
that it is in the best interests of their respective companies and their
shareholders to consummate the business combination transaction provided for
herein in which the Company will, subject to the terms and conditions set forth
herein, merge (the "Merger") with and into Buyer; and
WHEREAS, as soon as practicable after the execution and delivery of this
Agreement, North Fork Bank, a New York chartered stock commercial bank and a
wholly owned subsidiary of Buyer ("New York Bank", and sometimes referred to
herein as the "Surviving Bank"), and Bayside Federal Savings Bank, a federally
chartered stock savings bank and a wholly owned subsidiary of the Company (the
"Company Bank"), will enter into a Subsidiary Agreement and Plan of Merger (the
"Bank Merger Agreement") providing for the merger (the "Subsidiary Merger") of
the Company Bank with and into New York Bank, and it is intended that the
Subsidiary Merger be consummated immediately following the consummation of the
Merger; and
WHEREAS, the parties desire to make certain representations, warranties and
agreements in connection with the Merger and also to prescribe certain
conditions to the Merger.
NOW, THEREFORE, in consideration of the mutual covenants, representations,
warranties and agreements contained herein, and intending to be legally bound
hereby, the parties agree as follows:
ARTICLE I
THE MERGER
1.1. The Merger. Subject to the terms and conditions of this Agreement, in
accordance with the Delaware General Corporation Law (the "DGCL"), at the
Effective Time (as defined in Section 1.2 hereof), the Company shall merge with
and into Buyer. Buyer shall be the surviving corporation (hereinafter sometimes
called the "Surviving Corporation") in the Merger, and shall continue its
corporate existence under the laws of the State of Delaware. The name of the
Surviving Corporation shall continue to be North Fork Bancorporation, Inc. Upon
consummation of the Merger, the separate corporate existence of the Company
shall terminate.
1.2. Effective Time. The Merger shall become effective as set forth in the
certificate of merger (the "Certificate of Merger") which shall be filed with
the Secretary of State of the State of Delaware (the "Secretary") on the Closing
Date (as defined in Section 9.1 hereof). The term "Effective Time" shall be the
date and time when the Merger becomes effective, as set forth in the Certificate
of Merger.
1.3. Effects of the Merger. At and after the Effective Time, the Merger
shall have the effects set forth in Sections 259 and 261 of the DGCL.
1.4. Conversion of Company Common Stock.
(a) At the Effective Time, subject to Section 2.2(e) hereof, each share of
the common stock, par value $0.01 per share, of the Company (the "Company Common
Stock") issued and outstanding immediately prior to the Effective Time (other
than shares of Company Common Stock held (x) in the Company's treasury or (y)
directly or indirectly by Buyer or the Company or any of their respective
Subsidiaries (as defined below) (except for Trust Account Shares and DPC shares,
as such terms are defined in Section 1.4(b) hereof)) shall, by virtue of this
Agreement and without any action on the part of the holder thereof, be converted
into and exchangeable for the number of shares (the "Exchange Ratio") of the
common stock, par value $2.50 per share, of Buyer ("Buyer Common Stock")
(together with the number of Buyer Rights (as defined in Section 4.2 hereof)
associated therewith), determined by dividing $25.50 by the Average Closing
Price (as defined below); provided, however, that (I) if the Average Closing
Price is equal to or greater than $15.50, the
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Exchange Ratio shall be 1.645 (the "Minimum Exchange Ratio") and (II) subject to
the provisions of Section 8.1(g) hereof, if the Average Closing Price is equal
to or less than $14.50, the Exchange Ratio shall be 1.759 (the "Maximum Exchange
Ratio"). As used herein, the term "Average Closing Price" means the average
closing sales price per share of Buyer Common Stock on the New York Stock
Exchange ("NYSE") (as reported by The Wall Street Journal or, if not reported
thereby, another authoritative source), for the 20 consecutive NYSE trading days
(the "Valuation Period") ending on the fifth business day prior to the date on
which the last of all regulatory approvals required to consummate the
transactions contemplated hereby (including the Merger and the Subsidiary
Merger) are obtained, without regard to any requisite waiting periods in respect
thereof. All of the shares of Company Common Stock converted into Buyer Common
Stock pursuant to this Article I shall no longer be outstanding and shall
automatically be cancelled and shall cease to exist, and each certificate (each
a "Certificate") previously representing any such shares of Company Common Stock
shall thereafter only represent the right to receive (i) the number of whole
shares of Buyer Common Stock and (ii) the cash in lieu of fractional shares into
which the shares of Company Common Stock represented by such Certificate have
been converted pursuant to this Section 1.4(a) and Section 2.2(e) hereof.
Certificates previously representing shares of Company Common Stock shall be
exchanged for certificates representing whole shares of Buyer Common Stock and
cash in lieu of fractional shares issued in consideration therefor upon the
surrender of such Certificates in accordance with Section 2.2 hereof, without
any interest thereon. If prior to the Effective Time Buyer should split or
combine its common stock, or pay a dividend or other distribution in such common
stock, then the Exchange Ratio, Minimum Exchange Ratio and Maximum Exchange
Ratio shall be appropriately adjusted to reflect such split, combination,
dividend or distribution.
(b) At the Effective Time, all shares of Company Common Stock that are
owned by the Company as treasury stock and all shares of Company Common Stock
that are owned directly or indirectly by Buyer or the Company or any of their
respective Subsidiaries (other than shares of Company Common Stock (x) held
directly or indirectly in trust accounts, managed accounts and the like or
otherwise held in a fiduciary capacity that are beneficially owned by third
parties (any such shares, and shares of Buyer Common Stock which are similarly
held, whether held directly or indirectly by Buyer or the Company, as the case
may be, being referred to herein as "Trust Account Shares") and (y) shares of
Company Common Stock held by Buyer or the Company or any of their respective
Subsidiaries in respect of a debt previously contracted (any such shares of
Company Common Stock, and shares of Buyer Common Stock which are similarly held,
whether held directly or indirectly by Buyer or the Company being referred to
herein as "DPC Shares")) shall be cancelled and shall cease to exist and no
stock of Buyer or other consideration shall be delivered in exchange therefor.
All shares of Buyer Common Stock that are owned by the Company or any of its
Subsidiaries (other than Trust Account Shares and DPC Shares) shall become
treasury stock of Buyer.
1.5. Stock Options. (a) At the Effective Time, each option granted by the
Company (a "Company Option") to purchase shares of Company Common Stock which is
outstanding and unexercised immediately prior thereto shall, except as otherwise
provided in Section 1.5(b) hereof, be converted automatically into an option to
purchase shares of Buyer Common Stock in an amount and at an exercise price
determined as provided below (and otherwise subject to the terms (including
those terms, if any, providing for accelerated vesting) of the Company's 1988
Incentive Stock Option Plan (the "1988 Incentive Plan"), the Company's 1988
Stock Option Plan for Outside Directors (the "1988 Option Plan"), the Company's
1993 Incentive Stock Option Plan (the "Incentive Plan") and the Company's 1993
Stock Option Plan for Outside Directors (the "Option Plan" and together with the
1988 Incentive Plan, the 1988 Option Plan and the Incentive Plan, the "Company
Plans"):
(1) The number of shares of Buyer Common Stock to be subject to the
new option shall be equal to the product of the number of shares of Company
Common Stock subject to the original option and the Exchange Ratio,
provided that any fractional shares of Buyer Common Stock resulting from
such multiplication shall be rounded down to the nearest share; and
(2) The exercise price per share of Buyer Common Stock under the new
option shall be equal to the exercise price per share of Company Common
Stock under the original option divided by the Exchange Ratio, provided
that such exercise price shall be rounded up to the nearest cent.
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The adjustment provided herein with respect to any options which are "incentive
stock options" (as defined in Section 422 of the Internal Revenue Code of 1986,
as amended (the "Code")) shall be and is intended to be effected in a manner
which is consistent with Section 424(a) of the Code. The duration and other
terms of the new option shall be the same as the original option, except that
all references to the Company shall be deemed to be references to Buyer.
Notwithstanding anything to the contrary contained herein, all Limited Rights
(as such term is defined in the 1988 Incentive Plan or the Incentive Plan, as
the case may be) granted under the 1988 Incentive Plan or the Incentive Plan
shall terminate and be of no further force or effect upon receipt of consent to
such termination from the grantees of such Limited Rights. The Company will use
its best efforts to obtain such consents from all holders of Limited Rights.
(b) Without limiting the foregoing, and provided that the right contained
in this paragraph (b) is not inconsistent with any of the conditions contained
in Article VII hereof, each holder of a Company Option shall have the right
(which right shall be exercised at least 5 days prior to the Closing Date by
written notice to Buyer) to elect, in lieu of the provisions of Section 1.5(a),
to convert, at the Effective Time, all or a portion of his or her Company
Options which have not expired prior to the Effective Time into the right to
receive such number of shares (rounded to the nearest whole share) of Buyer
Common Stock as are equal in value (determined by valuing each share of Buyer
Common Stock at the Average Closing Price (as defined in Section 1.4)) to the
excess of (i) the product of the number of shares of Company Common Stock
subject to such option, the Exchange Ratio and the Average Closing Price of the
Buyer Common Stock over (ii) the aggregate exercise price of such option.
1.6. Buyer Common Stock. Except for shares of Buyer Common Stock owned by
the Company or any of its Subsidiaries (other than Trust Account Shares and DPC
Shares), which shall be converted into treasury stock of Buyer as contemplated
by Section 1.4 hereof, the shares of Buyer Common Stock issued and outstanding
immediately prior to the Effective Time shall be unaffected by the Merger and at
the Effective Time, such shares shall remain issued and outstanding.
1.7. Certificate of Incorporation. At the Effective Time, the Certificate
of Incorporation of Buyer, as in effect at the Effective Time, shall be the
Certificate of Incorporation of the Surviving Corporation.
1.8. By-Laws. At the Effective Time, the By-Laws of Buyer, as in effect
immediately prior to the Effective Time, shall be the By-Laws of the Surviving
Corporation until thereafter amended in accordance with applicable law.
1.9. Directors and Officers. Except as provided in Section 6.14 hereof,
the directors and officers of Buyer immediately prior to the Effective Time
shall be the directors and officers of the Surviving Corporation, each to hold
office in accordance with the Certificate of Incorporation and By-Laws of the
Surviving Corporation until their respective successors are duly elected or
appointed and qualified.
1.10. Tax Consequences. It is intended that the Merger and the Subsidiary
Merger each constitute a reorganization within the meaning of Section 368(a) of
the Code, and that this Agreement shall constitute a "plan of reorganization"
for the purposes of Section 368 of the Code.
ARTICLE II
EXCHANGE OF SHARES
2.1. Buyer to Make Shares Available. At or prior to the Effective Time,
Buyer shall deposit, or shall cause to be deposited, with a bank or trust
company (which may be a Subsidiary of Buyer) (the "Exchange Agent"), selected by
Buyer and reasonably satisfactory to the Company, for the benefit of the holders
of Certificates, for exchange in accordance with this Article II, certificates
representing the shares of Buyer Common Stock and the cash in lieu of fractional
shares (such cash and certificates for shares of Buyer Common Stock, together
with any dividends or distributions with respect thereto, being hereinafter
referred to as the "Exchange Fund") to be issued pursuant to Section 1.4 and
paid pursuant to Section 2.2(a) in exchange for outstanding shares of Company
Common Stock.
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2.2. Exchange of Shares. (a) As soon as practicable after the Effective
Time, and in no event more than three business days thereafter, the Exchange
Agent shall mail to each holder of record of a Certificate or Certificates a
form letter of transmittal (which shall specify that delivery shall be effected,
and risk of loss and title to the Certificates shall pass, only upon delivery of
the Certificates to the Exchange Agent) and instructions for use in effecting
the surrender of the Certificates in exchange for certificates representing the
shares of Buyer Common Stock and the cash in lieu of fractional shares into
which the shares of Company Common Stock represented by such Certificate or
Certificates shall have been converted pursuant to this Agreement. The Company
shall have the right to review both the letter of transmittal and the
instructions prior to the Effective Time and provide reasonable comments
thereon. Upon surrender of a Certificate for exchange and cancellation to the
Exchange Agent, together with such letter of transmittal, duly executed, the
holder of such Certificate shall be entitled to receive in exchange therefor (x)
a certificate representing that number of whole shares of Buyer Common Stock to
which such holder of Company Common Stock shall have become entitled pursuant to
the provisions of Article I hereof and (y) a check representing the amount of
cash in lieu of fractional shares, if any, which such holder has the right to
receive in respect of the Certificate surrendered pursuant to the provisions of
this Article II, and the Certificate so surrendered shall forthwith be
cancelled. No interest will be paid or accrued on the cash in lieu of fractional
shares and unpaid dividends and distributions, if any, payable to holders of
Certificates.
(b) No dividends or other distributions declared after the Effective Time
with respect to Buyer Common Stock and payable to the holders of record thereof
shall be paid to the holder of any unsurrendered Certificate until the holder
thereof shall surrender such Certificate in accordance with this Article II.
After the surrender of a Certificate in accordance with this Article II, the
record holder thereof shall be entitled to receive any such dividends or other
distributions, without any interest thereon, which theretofore had become
payable with respect to shares of Buyer Common Stock represented by such
Certificate. No holder of an unsurrendered Certificate shall be entitled, until
the surrender of such Certificate, to vote the shares of Buyer Common Stock into
which his Company Common Stock shall have been converted.
(c) If any certificate representing shares of Buyer Common Stock is to be
issued in a name other than that in which the Certificate surrendered in
exchange therefor is registered, it shall be a condition of the issuance thereof
that the Certificate so surrendered shall be properly endorsed (or accompanied
by an appropriate instrument of transfer) and otherwise in proper form for
transfer, and that the person requesting such exchange shall pay to the Exchange
Agent in advance any transfer or other taxes required by reason of the issuance
of a certificate representing shares of Buyer Common Stock in any name other
than that of the registered holder of the Certificate surrendered, or required
for any other reason, or shall establish to the satisfaction of the Exchange
Agent that such tax has been paid or is not payable.
(d) After the Effective Time, there shall be no transfers on the stock
transfer books of the Company of the shares of Company Common Stock which were
issued and outstanding immediately prior to the Effective Time. If, after the
Effective Time, Certificates representing such shares are presented for transfer
to the Exchange Agent, they shall be cancelled and exchanged for certificates
representing shares of Buyer Common Stock as provided in this Article II.
(e) Notwithstanding anything to the contrary contained herein, no
certificates or scrip representing fractional shares of Buyer Common Stock shall
be issued upon the surrender for exchange of Certificates, no dividend or
distribution with respect to Buyer Common Stock shall be payable on or with
respect to any fractional share, and such fractional share interests shall not
entitle the owner thereof to vote or to any other rights of a shareholder of
Buyer. In lieu of the issuance of any such fractional share, Buyer shall pay to
each former stockholder of the Company who otherwise would be entitled to
receive a fractional share of Buyer Common Stock an amount in cash determined by
multiplying (i) the average of the closing sale prices of Buyer Common Stock on
the New York Stock Exchange as reported by The Wall Street Journal for the five
trading days immediately preceding the date on which the Effective Time shall
occur by (ii) the fraction of a share of Buyer Common Stock to which such holder
would otherwise be entitled to receive pursuant to Section 1.4 hereof.
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(f) Any portion of the Exchange Fund that remains unclaimed by the
stockholders of the Company for six months after the Effective Time shall be
paid to Buyer. Any stockholders of the Company who have not theretofore complied
with this Article II shall thereafter look only to Buyer for payment of their
shares of Buyer Common Stock, cash in lieu of fractional shares and unpaid
dividends and distributions on the Buyer Common Stock deliverable in respect of
each share of Company Common Stock such stockholder holds as determined pursuant
to this Agreement, in each case, without any interest thereon. Notwithstanding
the foregoing, none of Buyer, the Company, the Exchange Agent or any other
person shall be liable to any former holder of shares of Company Common Stock
for any amount properly delivered to a public official pursuant to applicable
abandoned property, escheat or similar laws.
(g) In the event any Certificate shall have been lost, stolen or destroyed,
upon the making of an affidavit of that fact by the person claiming such
Certificate to be lost, stolen or destroyed and, if required by Buyer, the
posting by such person of a bond in such amount as Buyer may direct as indemnity
against any claim that may be made against it with respect to such Certificate,
the Exchange Agent will issue in exchange for such lost, stolen or destroyed
Certificate the shares of Buyer Common Stock and cash in lieu of fractional
shares deliverable in respect thereof pursuant to this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Buyer as follows:
3.1. Corporate Organization. (a) The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. The Company has the corporate power and authority to own or lease all
of its properties and assets and to carry on its business as it is now being
conducted, and is duly licensed or qualified to do business in each jurisdiction
in which the nature of the business conducted by it or the character or location
of the properties and assets owned or leased by it makes such licensing or
qualification necessary, except where the failure to be so licensed or qualified
would not have a Material Adverse Effect (as defined below) on the Company. The
Company is duly registered as a unitary savings and loan holding company under
the Home Owners' Loan Act of 1933, as amended. The Certificate of Incorporation
and By-laws of the Company, copies of which have previously been delivered to
Buyer, are true, complete and correct copies of such documents as in effect as
of the date of this Agreement. As used in this Agreement, the term "Material
Adverse Effect" means, with respect to Buyer, the Company or the Surviving
Corporation, as the case may be, a material adverse effect on the business,
properties, assets, liabilities, results of operations or financial condition of
such party and its Subsidiaries taken as a whole, other than any such effect
attributable to or resulting from general political or economic conditions or a
change in law, rule, regulation, GAAP (as defined below) or regulatory
accounting principles, which in each case affects banking institutions or their
holding companies generally, except to the extent any such condition or change
affects the referenced party to a materially greater extent than banking
institutions or their holding companies generally. As used in this Agreement,
the word "Subsidiary" when used with respect to any party means any corporation,
partnership or other organization, whether incorporated or unincorporated, which
is consolidated with such party for financial reporting purposes.
(b) The Company Bank is a savings bank duly organized, validly existing and
in good standing under the laws of the United States of America. The deposit
accounts of the Company Bank are insured by the Federal Deposit Insurance
Corporation (the "FDIC") through the Savings Association Insurance Fund to the
fullest extent permitted by law, and all premiums and assessments required to be
paid in connection therewith have been paid when due by the Company Bank. Each
of the Company's other Subsidiaries is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation or organization. Each of the Company's Subsidiaries has the
corporate power and authority to own or lease all of its properties and assets
and to carry on its business as it is now being conducted and is duly licensed
or qualified to do business in each jurisdiction in which the nature of the
business conducted by it or the character or the location of the properties and
assets owned or leased by it makes such licensing or qualification necessary,
except where the failure to be so licensed or qualified would not have a
Material
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Adverse Effect on the Company. The articles of incorporation, by-laws and
similar governing documents of each Subsidiary of the Company, copies of which
have previously been delivered to Buyer, are true, complete and correct copies
of such documents as in effect as of the date of this Agreement.
(c) The minute books of the Company and each of its Subsidiaries contain
true, complete and accurate records in all material respects of all meetings and
other corporate actions held or taken since December 31, 1991 of their
respective stockholders and Boards of Directors (including committees of their
respective Boards of Directors).
3.2. Capitalization. (a) The authorized capital stock of the Company
consists of 8,900,000 shares of Company Common Stock and 5,000,000 shares of
preferred stock, par value $.01 per share (the "Company Preferred Stock"). As of
the date of this Agreement, there are (x) 5,076,504 shares of Company Common
Stock issued and outstanding and 236,474 shares of Company Common Stock held in
the Company's treasury, (y) no shares of Company Common Stock reserved for
issuance upon exercise of outstanding stock options or otherwise except for (i)
511,909 shares of Company Common Stock reserved for issuance pursuant to the
Company Option Plans and described in Section 3.2(a) of the Disclosure Schedule
which is being delivered to Buyer concurrently herewith (the "Company Disclosure
Schedule") and (ii) 557,795 shares of Company Common Stock reserved for issuance
upon exercise of the option issued to Buyer pursuant to the Stock Option
Agreement, dated June 27, 1994, between Buyer and the Company (the "Option
Agreement") and (z) no shares of Company Preferred Stock issued or outstanding,
held in the Company's treasury or reserved for issuance upon exercise of
outstanding stock options or otherwise. All of the issued and outstanding shares
of Company Common Stock have been duly authorized and validly issued and are
fully paid, nonassessable and free of preemptive rights, with no personal
liability attaching to the ownership thereof. Except as referred to above or
reflected in Section 3.2(a) of the Company Disclosure Schedule, and except for
the Option Agreement, the Company does not have and is not bound by any
outstanding subscriptions, options, warrants, calls, commitments or agreements
of any character calling for the purchase or issuance of any shares of Company
Common Stock or Company Preferred Stock or any other equity security of the
Company or any securities representing the right to purchase or otherwise
receive any shares of Company Common Stock or any other equity security of the
Company. The names of the optionees, the date of each option to purchase Company
Common Stock granted, the number of shares subject to each such option, the
number of Limited Rights attached to such number of shares, the expiration date
of each such option, and the price at which each such option may be exercised
under the Option Plan, the Incentive Plan, the 1988 Option Plan or the 1988
Incentive Plan, as applicable, are set forth in Section 3.2(a) of the Company
Disclosure Schedule.
(b) Section 3.2(b) of the Company Disclosure Schedule sets forth a true and
correct list of all of the Subsidiaries of the Company as of the date of this
Agreement. Except as set forth in Section 3.2(b) of the Company Disclosure
Schedule, the Company owns, directly or indirectly, all of the issued and
outstanding shares of the capital stock of each of such Subsidiaries, free and
clear of all liens, charges, encumbrances and security interests whatsoever, and
all of such shares are duly authorized and validly issued and are fully paid,
nonassessable and free of preemptive rights, with no personal liability
attaching to the ownership thereof. No Subsidiary of the Company has or is bound
by any outstanding subscriptions, options, warrants, calls, commitments or
agreements of any character calling for the purchase or issuance of any shares
of capital stock or any other equity security of such Subsidiary or any
securities representing the right to purchase or otherwise receive any shares of
capital stock or any other equity security of such Subsidiary. Assuming
compliance by Buyer with Section 1.5 hereof, at the Effective Time, there will
not be any outstanding subscriptions, options, warrants, calls, commitments or
agreements of any character by which the Company or any of its Subsidiaries will
be bound calling for the purchase or issuance of any shares of the capital stock
of the Company or any of its Subsidiaries.
3.3. Authority; No Violation. (a) The Company has full corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly and
validly approved by the Board of Directors of the Company. The Board of
Directors of the Company has directed that this Agreement and the transactions
contemplated hereby be submitted to the Company's stockholders for approval at a
meeting of such stockholders and, except for the adoption of this Agreement by
the requisite vote
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of the Company's stockholders, no other corporate proceedings on the part of the
Company are necessary to approve this Agreement and to consummate the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by the Company and (assuming due authorization, execution
and delivery by Buyer) constitutes a valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms, except as
enforcement may be limited by general principles of equity whether applied in a
court of law or a court of equity and by bankruptcy, insolvency and similar laws
affecting creditors' rights and remedies generally.
(b) The Company Bank has full corporate power and authority to execute and
deliver the Bank Merger Agreement and to consummate the transactions
contemplated thereby. The execution and delivery of the Bank Merger Agreement
and the consummation of the transactions contemplated thereby will be duly and
validly approved by the Board of Directors of the Company Bank. Upon the due and
valid approval of the Bank Merger Agreement by the Company as the sole
stockholder of the Company Bank and by the Board of Directors of the Company
Bank, no other corporate proceedings on the part of the Company Bank will be
necessary to consummate the transactions contemplated thereby. The Bank Merger
Agreement, upon execution and delivery by the Company Bank, will be duly and
validly executed and delivered by the Company Bank and will (assuming due
authorization, execution and delivery by New York Bank) constitute a valid and
binding obligation of the Company Bank, enforceable against the Company Bank in
accordance with its terms, except as enforcement may be limited by general
principles of equity whether applied in a court of law or a court of equity and
by bankruptcy, insolvency and similar laws affecting creditors' rights and
remedies generally.
(c) Except as set forth in Section 3.3(c) of the Company Disclosure
Schedule, neither the execution and delivery of this Agreement by the Company or
the Bank Merger Agreement by the Company Bank, nor the consummation by the
Company or the Company Bank, as the case may be, of the transactions
contemplated hereby or thereby, nor compliance by the Company or the Company
Bank, as the case may be, with any of the terms or provisions hereof or thereof,
will (i) violate any provision of the Certificate of Incorporation or By-Laws of
the Company or the certificate of incorporation, by-laws or similar governing
documents of any of its Subsidiaries, or (ii) assuming that the consents and
approvals referred to in Section 3.4 hereof are duly obtained, (x) violate any
statute, code, ordinance, rule, regulation, judgment, order, writ, decree or
injunction applicable to the Company or any of its Subsidiaries, or any of their
respective properties or assets, or (y) violate, conflict with, result in a
breach of any provision of or the loss of any benefit under, constitute a
default (or an event which, with notice or lapse of time, or both, would
constitute a default) under, result in the termination of or a right of
termination or cancellation under, accelerate the performance required by, or
result in the creation of any lien, pledge, security interest, charge or other
encumbrance upon any of the respective properties or assets of the Company or
any of its Subsidiaries under, any of the terms, conditions or provisions of any
note, bond, mortgage, indenture, deed of trust, license, lease, agreement or
other instrument or obligation to which the Company or any of its Subsidiaries
is a party, or by which they or any of their respective properties or assets may
be bound or affected, except (in the case of clause (y) above) for such
violations, conflicts, breaches or defaults which, either individually or in the
aggregate, would not have or be reasonably likely to have a Material Adverse
Effect on the Company.
3.4. Consents and Approvals. Except for (a) the filing of applications and
notices, as applicable, with the Board of Governors of the Federal Reserve
System (the "Federal Reserve Board") under the Oakar Amendment to the Federal
Deposit Insurance Act and the Bank Holding Company Act of 1956, as amended (the
"BHC Act") and approval of such applications and notices, (b) the filing of
applications with the FDIC under the Bank Merger Act and approval of such
applications, (c) the filing of applications with the Office of Thrift
Supervision (the "OTS") and approval of such applications, (d) the filing of an
application with the New York State Banking Department (the "Banking
Department"), which filing shall include, if Buyer so requests pursuant to
Section 6.13 hereof, an application for conversion of the Company Bank from a
federally chartered stock savings bank to a New York chartered stock savings
bank (the "State Banking Approval"), (e) the filing with the Securities and
Exchange Commission (the "SEC") of a joint proxy statement in definitive form
relating to the meetings of the Company's stockholders and Buyer's stockholders
to be held in connection with this Agreement and the transactions contemplated
hereby (the "Proxy Statement"), (f) the
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approval of this Agreement by the requisite vote of the stockholders of the
Company, (g) the filing of the Certificate of Merger with the Secretary pursuant
to the DGCL, (h) the filings required by the Bank Merger Agreement, (i) the
approval of the Bank Merger Agreement by the Company as the sole stockholder of
the Company Bank and (j) such filings, authorizations or approvals as may be set
forth in Section 3.4 of the Company Disclosure Schedule, no consents or
approvals of or filings or registrations with any court, administrative agency
or commission or other governmental authority or instrumentality (each a
"Governmental Entity") or with any third party are necessary in connection with
(1) the execution and delivery by the Company of this Agreement, (2) the
consummation by the Company of the Merger and the other transactions
contemplated hereby, (3) the execution and delivery by the Company Bank of the
Bank Merger Agreement, and (4) the consummation by the Company Bank of the
Subsidiary Merger and the transactions contemplated thereby.
3.5. Reports. The Company and each of its Subsidiaries have timely filed
all material reports, registrations and statements, together with any amendments
required to be made with respect thereto, that they were required to file since
December 31, 1991 with (i) the OTS, (ii) the FDIC, (iii) any state banking
commissions or any other state regulatory authority (each a "State Regulator")
and (iv) any other self-regulatory organization ("SRO") (collectively with the
Federal Reserve Board, the "Regulatory Agencies"), and all other material
reports and statements required to be filed by them since December 31, 1991,
including, without limitation, any report or statement required to be filed
pursuant to the laws, rules or regulations of the United States, the OTS, the
FDIC, any State Regulator or any SRO, and have paid all fees and assessments due
and payable in connection therewith. Except for normal examinations conducted by
a Regulatory Agency in the regular course of the business of the Company and its
Subsidiaries, except as set forth in Section 3.5 of the Company Disclosure
Schedule, no Regulatory Agency has initiated any proceeding or, to the best
knowledge of the Company, investigation into the business or operations of the
Company or any of its Subsidiaries since December 31, 1991. There is no
unresolved material violation, criticism, or exception by any Regulatory Agency
with respect to any report or statement relating to any examinations of the
Company or any of its Subsidiaries.
3.6. Financial Statements. The Company has previously delivered to Buyer
copies of (a) the consolidated balance sheets of the Company and its
Subsidiaries as of September 30 for the fiscal years 1992 and 1993, and the
related consolidated statements of income, changes in stockholders' equity and
cash flows for the fiscal years 1991 through 1993, inclusive, as reported in the
Company's Annual Report on Form 10-K for the fiscal year ended September 30,
1993 filed with the SEC under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), in each case accompanied by the audit report of KPMG Peat
Marwick, independent public accountants with respect to the Company, and (b) the
unaudited consolidated balance sheets of the Company and its Subsidiaries as of
March 31, 1994 and March 31, 1993 and the related unaudited consolidated
statements of income, cash flows and changes in stockholders' equity for the six
month periods then ended as reported in the Company's Quarterly Report on Form
10-Q for the period ended March 31, 1994 filed with the SEC under the Exchange
Act. The September 30, 1993 consolidated balance sheet of the Company (including
the related notes, where applicable) fairly presents the consolidated financial
position of the Company and its Subsidiaries as of the date thereof, and the
other financial statements referred to in this Section 3.6 (including the
related notes, where applicable) fairly present, and the financial statements
referred to in Section 6.9 hereof will fairly present (subject, in the case of
the unaudited statements, to recurring audit adjustments normal in nature and
amount), the results of the consolidated operations and consolidated financial
position of the Company and its Subsidiaries for the respective fiscal periods
or as of the respective dates therein set forth; each of such statements
(including the related notes, where applicable) comply, and the financial
statements referred to in Section 6.9 hereof will comply, in all material
respects with applicable accounting requirements and with the published rules
and regulations of the SEC with respect thereto; and each of such statements
(including the related notes, where applicable) has been, and the financial
statements referred to in Section 6.9 hereof will be, prepared in accordance
with generally accepted accounting principles ("GAAP") consistently applied
during the periods involved, except as indicated in the notes thereto or, in the
case of unaudited statements, as permitted by Form 10-Q. The books and records
of the Company and its Subsidiaries have been, and are being, maintained in all
material
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respects in accordance with GAAP and any other applicable legal and accounting
requirements and reflect only actual transactions.
3.7. Broker's Fees. Neither the Company nor any Subsidiary of the Company
nor any of their respective officers or directors has employed any broker or
finder or incurred any liability for any broker's fees, commissions or finder's
fees in connection with any of the transactions contemplated by this Agreement,
the Bank Merger Agreement or the Option Agreement, except that the Company has
engaged, and will pay a fee or commission to, Keefe, Bruyette & Woods, Inc.
("Keefe, Bruyette") in accordance with the terms of a letter agreement between
Keefe, Bruyette and the Company, a true, complete and correct copy of which has
been previously delivered by the Company to Buyer.
3.8. Absence of Certain Changes or Events. (a) Except as may be set forth
in Section 3.8(a) of the Company Disclosure Schedule or as disclosed in the
Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1994 (a
true, complete and correct copy of which has previously been delivered to
Buyer), since September 30, 1993, (i) neither the Company nor any of its
Subsidiaries has incurred any material liability, except in the ordinary course
of their business consistent with their past practices, and (ii) no event has
occurred which has caused, or is reasonably likely to cause, individually or in
the aggregate, a Material Adverse Effect on the Company.
(b) Except as set forth in Section 3.8(b) of the Company Disclosure
Schedule, since March 31, 1994, the Company and its Subsidiaries have carried on
their respective businesses in the ordinary course consistent with their past
practices.
(c) Except as set forth in Section 3.8(c) of the Company Disclosure
Schedule, since March 31, 1994, neither the Company nor any of its Subsidiaries
has (i) increased the wages, salaries, compensation, pension, or other fringe
benefits or perquisites payable to any executive officer, employee, or director
from the amount thereof in effect as of March 31, 1994 (which amounts have been
previously disclosed to Buyer), granted any severance or termination pay,
entered into any contract to make or grant any severance or termination pay, or
paid any bonus other than year-end bonuses for fiscal 1993 as listed in Section
3.8 of the Company Disclosure Schedule or (ii) suffered any strike, work
stoppage, slow-down, or other labor disturbance.
3.9. Legal Proceedings. (a) Except as set forth in Section 3.9 of the
Company Disclosure Schedule, neither the Company nor any of its Subsidiaries is
a party to any, and there are no pending or, to the best of the Company's
knowledge, threatened, legal, administrative, arbitral or other proceedings,
claims, actions or governmental or regulatory investigations of any nature
against the Company or any of its Subsidiaries or challenging the validity or
propriety of the transactions contemplated by this Agreement, the Bank Merger
Agreement or the Option Agreement as to which there is a reasonable probability
of an adverse determination and which, if adversely determined, would,
individually or in the aggregate, have or be reasonably likely to have a
Material Adverse Effect on the Company.
(b) There is no injunction, order, judgment, decree, or regulatory
restriction imposed upon the Company, any of its Subsidiaries or the assets of
the Company or any of its Subsidiaries which has had, or could reasonably be
expected to have, a Material Adverse Effect on the Company.
3.10. Taxes. (a) Except as set forth in Section 3.10(a) of the Company
Disclosure Schedule, each of the Company and its Subsidiaries has (i) duly and
timely filed or will duly and timely file (including applicable extensions
granted without penalty) all Tax Returns (as hereinafter defined) required to be
filed at or prior to the Effective Time, and such Tax Returns which have
heretofore been filed are, and those to be hereinafter filed will be, true,
correct and complete and (ii) paid in full or have made adequate provision for
on the financial statements of the Company (in accordance with GAAP) all Taxes
(as hereinafter defined) and will pay in full or make adequate provision for all
Taxes. There are no material liens for Taxes upon the assets of either the
Company or its Subsidiaries except for statutory liens for current Taxes not yet
due. Except as set forth in Section 3.10(a) of the Company Disclosure Schedule,
neither the Company nor any of its Subsidiaries has requested any extension of
time within which to file any Tax Returns in respect of any fiscal year which
have not since been filed and no request for waivers of the time to assess any
Taxes are pending or outstanding. The federal and state income Tax Returns of
the Company and its Subsidiaries have been audited
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by the Internal Revenue Service or appropriate state tax authorities with
respect to those periods and jurisdictions set forth on Section 3.10(a) of the
Company Disclosure Schedule. Except as set forth in Section 3.10(a) of the
Company Disclosure Schedule, neither the Company nor any of its Subsidiaries (i)
is a party to any agreement providing for the allocation or sharing of Taxes
(other than the allocation of federal income taxes as provided by Regulation
1.1552-1(a)(1) under the Code; (ii) is required to include in income any
adjustment pursuant to Section 481(a) of the Code, by reason of the voluntary
change in accounting method (nor has any taxing authority proposed in writing
any such adjustment or change of accounting method); or (iii) has filed a
consent pursuant to Section 341(f) of the Code.
(b) Except as set forth in Section 3.10(b) of the Company Disclosure
Schedule, neither the Company nor any of its Subsidiaries owns, directly or
indirectly (including, without limitation, through partnerships, corporations,
trusts or other entities), interests in real property ("Real Property
Interests") situated in (A) New York State, which by reason of the Merger or
Subsidiary Merger would be subject to either (i) the New York State Real
Property Gains Tax, (ii) the New York State Real Property Transfer Tax, or (iii)
the New York City Real Property Transfer Tax (collectively, the "New York
Transfer Taxes"), or (B) any state other than New York State which by reason of
the Merger or Subsidiary Merger would be subject to any tax similar to the New
York Transfer Taxes. For purposes of this Section 3.10(b), Real Property
Interests include, without limitation, titles in fee, leasehold interests,
beneficial interests, encumbrances, developments rights or any other interests
with the right to use or occupy real property or the right to receive rents,
profits or other income derived therefrom, or any options or contracts to
purchase real property.
For the purposes of this Agreement, "Taxes" shall mean all taxes, charges,
fees, levies, penalties or other assessments imposed by any United States
federal, state, local or foreign taxing authority, including, but not limited to
income, excise, property, sales, transfer, franchise, payroll, withholding,
social security or other taxes, including any interest, penalties or additions
attributable thereto.
For purposes of this Agreement, "Tax Return" shall mean any return, report,
information return or other document (including any related or supporting
information) with respect to Taxes.
3.11. Employees. (a) Section 3.11(a) of the Company Disclosure Schedule
sets forth a true and complete list of each employee benefit plan, arrangement
or agreement that is maintained or contributed to or required to be contributed
to as of the date of this Agreement (the "Plans") by the Company, any of its
Subsidiaries or by any trade or business, whether or not incorporated (an "ERISA
Affiliate"), all of which together with the Company would be deemed a "single
employer" within the meaning of Section 4001 of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), for the benefit of any employee or
former employee of the Company, any Subsidiary or any ERISA Affiliate.
(b) The Company has heretofore delivered to Buyer true and complete copies
of each of the Plans and all related documents, including but not limited to (i)
the actuarial report for such Plan (if applicable) for each of the last two
years, and (ii) the most recent determination letter from the Internal Revenue
Service (if applicable) for such Plan.
(c) Except as set forth in Section 3.11(c) of the Company Disclosure
Schedule, (i) each of the Plans has been operated and administered in all
material respects in accordance with its terms and applicable law, including but
not limited to ERISA and the Code, (ii) each of the Plans intended to be
"qualified" within the meaning of Section 401(a) of the Code either (1) has
received a favorable determination letter from the IRS, or (2) is or will be the
subject of an application for a favorable determination letter, and the Company
is not aware of any circumstances likely to result in the revocation or denial
of any such favorable determination letter, (iii) with respect to each Plan
which is subject to Title IV of ERISA, the present value of accrued benefits
under such Plan, based upon the actuarial assumptions used for funding purposes
in the most recent actuarial report prepared by such Plan's actuary with respect
to such Plan, did not, as of its latest valuation date, exceed the then current
value of the assets of such Plan allocable to such accrued benefits, (iv) no
Plan provides benefits, including without limitation death or medical benefits
(whether or not insured), with respect to current or former employees of the
Company, its Subsidiaries or any ERISA Affiliate beyond their retirement or
other termination of service, other than (w) coverage mandated by applicable
law, (x) death benefits or retirement benefits under any "employee pension
plan," as that term is defined in Section 3(2) of
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ERISA, (y) deferred compensation benefits accrued as liabilities on the books of
the Company, its Subsidiaries or the ERISA Affiliates or (z) benefits the full
cost of which is borne by the current or former employee (or his beneficiary),
(v) no liability under Title IV of ERISA has been incurred by the Company, its
Subsidiaries or any ERISA Affiliate that has not been satisfied in full, and no
condition exists that presents a material risk to the Company, its Subsidiaries
or an ERISA Affiliate of incurring a material liability thereunder, (vi) no Plan
is a "multiemployer pension plan," as such term is defined in Section 3(37) of
ERISA, (vii) all contributions or other amounts payable by the Company, its
Subsidiaries or any ERISA Affiliates as of the Effective Time with respect to
each Plan in respect of current or prior plan years have been paid or accrued in
accordance with generally accepted accounting practices and Section 412 of the
Code, (viii) neither the Company, its Subsidiaries nor any ERISA Affiliate has
engaged in a transaction in connection with which the Company, its Subsidiaries
or any ERISA Affiliate could be subject to either a civil penalty assessed
pursuant to Section 409 or 502(i) of ERISA or a tax imposed pursuant to Section
4975 or 4976 of the Code, (ix) there are no pending, or, to the best knowledge
of the Company, threatened or anticipated claims (other than routine claims for
benefits) by, on behalf of or against any of the Plans or any trusts related
thereto and (x) the consummation of the transactions contemplated by this
Agreement will not (y) entitle any current or former employee or officer of the
Company or any ERISA Affiliate to severance pay, termination pay or any other
payment, except as expressly provided in this Agreement or (z) accelerate the
time of payment or vesting or increase the amount of compensation due any such
employee or officer.
3.12. SEC Reports. The Company has previously made available to Buyer an
accurate and complete copy of each (a) final registration statement, prospectus,
report, schedule and definitive proxy statement filed since January 1, 1990 by
the Company with the SEC pursuant to the Securities Act of 1933, as amended (the
"Securities Act") or the Exchange Act (the "Company Reports") and (b)
communication mailed by the Company to its stockholders since January 1, 1990,
and no such registration statement, prospectus, report, schedule, proxy
statement or communication contained any untrue statement of a material fact or
omitted to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances in which
they were made, not misleading, except that information as of a later date shall
be deemed to modify information as of an earlier date. The Company has timely
filed all Company Reports and other documents required to be filed by it under
the Securities Act and the Exchange Act, and, as of their respective dates, all
Company Reports complied in all material respects with the published rules and
regulations of the SEC with respect thereto.
3.13. Company Information. The information relating to the Company and its
Subsidiaries to be contained in the Proxy Statement and the registration
statement on Form S-4 (the "S-4") of which the Proxy Statement will be included
as a prospectus, or in any other document filed with any other regulatory agency
in connection herewith, will not contain any untrue statement of a material fact
or omit to state a material fact necessary to make the statements therein, in
light of the circumstances in which they are made, not misleading. The Proxy
Statement (except for such portions thereof that relate only to Buyer or any of
its Subsidiaries) will comply in all material respects with the provisions of
the Exchange Act and the rules and regulations thereunder.
3.14. Compliance with Applicable Law. The Company and each of its
Subsidiaries hold, and have at all times held, all material licenses,
franchises, permits and authorizations necessary for the lawful conduct of their
respective businesses under and pursuant to all, and have complied with and are
not in default in any respect under any, applicable law, statute, order, rule,
regulation, policy and/or guideline of any Governmental Entity relating to the
Company or any of its Subsidiaries, except where the failure to hold such
license, franchise, permit or authorization or such noncompliance or default
would not, individually or in the aggregate, have or be reasonably likely to
have a Material Adverse Effect on the Company, and neither the Company nor any
of its Subsidiaries knows of, or has received notice of, any material violations
of any of the above.
3.15. Certain Contracts. (a) Except as set forth in Section 3.15(a) of the
Company Disclosure Schedule, neither the Company nor any of its Subsidiaries is
a party to or bound by any contract, arrangement, commitment or understanding
(whether written or oral) (i) with respect to the employment of any directors,
officers, employees or consultants, (ii) which, upon the consummation of the
transactions contemplated by
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this Agreement or the Bank Merger Agreement will (either alone or upon the
occurrence of any additional acts or events) result in any payment (whether of
severance pay or otherwise) becoming due from Buyer, the Company, the Surviving
Corporation, the Surviving Bank or any of their respective Subsidiaries to any
officer or employee thereof, (iii) which is a material contract (as defined in
Item 601(b)(10) of Regulation S-K of the SEC) to be performed after the date of
this Agreement that has not been filed or incorporated by reference in the
Company Reports, (iv) which is a consulting agreement (including data
processing, software programming and licensing contracts) not terminable on 60
days or less notice involving the payment of more than $100,000 per annum, in
the case of any such agreement with an individual, or $500,000 per annum, in the
case of any other such agreement, (v) which materially restricts the conduct of
any line of business by the Company or any of its Subsidiaries, (vi) with or to
a labor union or guild (including any collective bargaining agreement) or (vii)
(including any stock option plan, stock appreciation rights plan, restricted
stock plan or stock purchase plan) any of the benefits of which will be
increased, or the vesting of the benefits of which will be accelerated, by the
occurrence of any of the transactions contemplated by this Agreement or the Bank
Merger Agreement, or the value of any of the benefits of which will be
calculated on the basis of any of the transactions contemplated by this
Agreement or the Bank Merger Agreement. Each contract, arrangement, commitment
or understanding of the type described in this Section 3.15(a), whether or not
set forth in Section 3.15(a) of the Company Disclosure Schedule, is referred to
herein as a "Company Contract". The Company has previously delivered to Buyer
true and correct copies of each Company Contract.
(b) Except as set forth in Section 3.15(b) of the Company Disclosure
Schedule, (i) each Company Contract is valid and binding and in full force and
effect, (ii) the Company and each of its Subsidiaries have in all material
respects performed all obligations required to be performed by it to date under
each Company Contract, except where such noncompliance, individually or in the
aggregate, would not have or be reasonably likely to have a Material Adverse
Effect on the Company, (iii) no event or condition exists which constitutes or,
after notice or lapse of time or both, would constitute, a material default on
the part of the Company or any of its Subsidiaries under any such Company
Contract, except where such default, individually or in the aggregate, would not
have or be reasonably likely to have a Material Adverse Effect on the Company
and (iv) no other party to such Company Contract is, to the best knowledge of
the Company, in default in any respect thereunder.
3.16. Agreements with Regulatory Agencies. Except as set forth in Section
3.16 of the Company Disclosure Schedule, neither the Company nor any of its
Subsidiaries is subject to any cease-and-desist or other order issued by, or is
a party to any written agreement, consent agreement or memorandum of
understanding with, or is a party to any commitment letter or similar
undertaking to, or is subject to any order or directive by, or is a recipient of
any extraordinary supervisory letter from, or has adopted any board resolutions
at the request of (each, whether or not set forth on Section 3.16 of the Company
Disclosure Schedule, a "Regulatory Agreement"), any Regulatory Agency or other
Governmental Entity that restricts the conduct of its business or that in any
manner relates to its capital adequacy, its credit policies, its management or
its business, nor has the Company or any of its Subsidiaries been advised by any
Regulatory Agency or other Governmental Entity that it is considering issuing or
requesting any Regulatory Agreement.
3.17. Investment Securities. Section 3.17 of the Company Disclosure
Schedule sets forth the book and market value as of March 31, 1994 of the
investment securities, mortgage backed securities and securities held for sale
of the Company and its Subsidiaries. Section 3.17 of the Company Disclosure
Schedule sets forth an investment securities report which includes, security
descriptions, CUSIP numbers, pool face values, book values, coupon rates and
current market values.
3.18. Intellectual Property. Except where there would be no Material
Adverse Effect on the Company, the Company and each of its Subsidiaries owns or
possesses valid and binding licenses and other rights to use without payment all
material patents, copyrights, trade secrets, trade names, servicemarks and
trademarks used in its businesses; and neither the Company nor any of its
Subsidiaries has received any notice of conflict with respect thereto that
asserts the right of others. The Company and each of its Subsidiaries have in
all material respects performed all the obligations required to be performed by
them and are not in default in any material respect under any contract,
agreement, arrangement or commitment relating to any of the foregoing,
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except where such non-performance or default would not, individually or in the
aggregate, have or be reasonably likely to have a Material Adverse Effect on the
Company.
3.19. Undisclosed Liabilities. Except (a) as set forth in Section 3.19 of
the Company Disclosure Schedule, (b) for those liabilities that are fully
reflected or reserved against on the consolidated balance sheet of the Company
as of March 31, 1994 included in its Form 10-Q for the period ended March 31,
1994 and (c) for liabilities incurred in the ordinary course of business
consistent with past practice since March 31, 1994 that, either alone or when
combined with all similar liabilities, have not had, and could not reasonably be
expected to have, a Material Adverse Effect on the Company, neither the Company
nor any of its Subsidiaries has incurred any liability of any nature whatsoever
(whether absolute, accrued, contingent or otherwise and whether due or to become
due).
3.20. State Takeover Laws. The provisions of Section 203 of the DGCL and
Section 8 of the Company's Certificate of Incorporation will not, assuming the
accuracy of the representations contained in Section 4.12 hereof, apply to the
Agreement, the Bank Merger Agreement or the Option Agreement or any of the
transactions contemplated hereby or thereby.
3.21. Administration of Fiduciary Accounts. The Company and each of its
Subsidiaries has properly administered in all material respects all accounts for
which it acts as a fiduciary, including but not limited to accounts for which it
serves as a trustee, agent, custodian, personal representative, guardian,
conservator or investment advisor, in accordance with the terms of the governing
documents and applicable state and federal law and regulation and common law.
Neither the Company nor any of its Subsidiaries nor any of their respective
directors, officers or employees has committed any breach of trust with respect
to any such fiduciary account which has had or could reasonably be expected to
have a Material Adverse Effect on the Company, and the accountings for each such
fiduciary account are true and correct in all material respects and accurately
reflect the assets of such fiduciary account.
3.22. Environmental Matters. Except as set forth in Section 3.22 of the
Company Disclosure Schedule:
(a) Each of the Company, its Subsidiaries, the Participation Facilities and
the Loan Properties (each as hereinafter defined) are, and have been, in
compliance with all applicable federal, state and local laws including common
law, regulations and ordinances and with all applicable decrees, orders and
contractual obligations relating to pollution the discharge of, or exposure to
materials in the environment or workplace ("Environmental Laws"), except for
violations which, either individually or in the aggregate, have not had and
cannot reasonably be expected to have a Material Adverse Effect on the Company;
(b) There is no suit, claim, action or proceeding, pending or threatened,
before any Governmental Entity or other forum in which the Company, any of its
Subsidiaries, any Participation Facility or any Loan Property, has been or, with
respect to threatened proceedings, may be, named as a defendant (x) for alleged
noncompliance (including by any predecessor), with any Environmental Laws, or
(y) relating to the release, threatened release or exposure to any material
whether or not occurring at or on a site owned, leased or operated by the
Company or any of its Subsidiaries, any Participation Facility or any Loan
Property, except where such noncompliance or release has not resulted, and
cannot be reasonably expected to result, either individually or in the
aggregate, a Material Adverse Effect on the Company;
(c) During the period of (x) the Company's or any of its Subsidiaries'
ownership or operation of any of their respective current properties, (y) the
Company's or any of its Subsidiaries' participation in the management of any
Participation Facility, or (z) the Company's or any of its Subsidiaries' holding
of a security interest in a Loan Property, there has been no release of
materials in, on, under or affecting any such property, except where such
release has not had and cannot reasonably be expected to result in, either
individually or in the aggregate, a Material Adverse Effect on the Company.
Prior to the period of (x) the Company's or any of its Subsidiaries' ownership
or operation of any of their respective current properties, (y) the Company's or
any of its Subsidiaries' participation in the management of any Participation
Facility, or (z) the Company's or any of its Subsidiaries' holding of a security
interest in a Loan Property, there was no release or threatened release of
materials in, on, under or affecting any such property, Participation Facility
or
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Loan Property, except where such release has not had and cannot be reasonably
expected to have, either individually or in the aggregate, a Material Adverse
Effect on the Company; and
(d) The following definitions apply for purposes of this Section 3.22: (x)
"Loan Property" means any property in which the Company or any of its
Subsidiaries holds a security interest, and, where required by the context, said
term means the owner or operator of such property; and (y) "Participation
Facility" means any facility in which the Company or any of its Subsidiaries
participates in the management and, where required by the context, said term
means the owner or operator of such property.
3.23. Derivative Transactions. Except as set forth in Section 3.23 of the
Company Disclosure Schedule, since September 30, 1993, neither Company nor any
of its Subsidiaries has engaged in transactions in or involving forwards,
futures, options on futures, swaps or other derivative instruments except (i) as
agent on the order and for the account of others, or (ii) as principal for
purposes of hedging interest rate risk on U.S. dollar-denominated securities and
other financial instruments. None of the counterparties to any contract or
agreement with respect to any such instrument is in default with respect to such
contract or agreement and no such contract or agreement, were it to be a Loan
(as defined below) held by the Company or any of its Subsidiaries, would be
classified as "Other Loans Specially Mentioned", "Special Mention",
"Substandard", "Doubtful", "Loss", "Classified", "Criticized", "Credit Risk
Assets", "Concerned Loans" or words of similar import. The financial position of
the Company and its Subsidiaries on a consolidated basis under or with respect
to each such instrument has been reflected in the books and records of the
Company and such Subsidiaries in accordance with GAAP consistently applied, and
no open exposure of the Company or any of its Subsidiaries with respect to any
such instrument (or with respect to multiple instruments with respect to any
single counterparty) exceeds $500,000.
3.24. Opinion. The Company has received a written opinion, dated the date
hereof, from Keefe, Bruyette to the effect that, subject to the terms,
conditions and qualifications set forth therein, as of the date thereof the
consideration to be received by the stockholders of the Company pursuant to this
Agreement is fair to such stockholders from a financial point of view. Such
opinion has not been amended or rescinded as of the date of this Agreement.
3.25. Assistance Agreements. Except as set forth in Section 3.25 of the
Company Disclosure Schedule, neither the Company nor any of its Subsidiaries is
a party to any agreement or arrangement entered into in connection with the
consummation of a federally assisted acquisition of a depository institution
pursuant to which the Company or any of its Subsidiaries is entitled to receive
financial assistance or indemnification from any governmental agency.
3.26. Approvals. As of the date of this Agreement, the Company knows of no
reason why all regulatory approvals required for the consummation of the
transactions contemplated hereby (including, without limitation, the Merger and
the Subsidiary Merger) should not be obtained without the imposition of a
Burdensome Condition (as defined below).
3.27. Loan Portfolio. Except as set forth in Section 3.27 of the Company
Disclosure Schedule, neither the Company nor any of its Subsidiaries is a party
to any written or oral (i) loan agreement, note or borrowing arrangement
(including, without limitation, leases, credit enhancements, commitments,
guarantees and interest-bearing assets) (collectively, "Loans"), other than
Loans the unpaid principal balance of which does not exceed $50,000, under the
terms of which the obligor is, as of the date of this Agreement, over 90 days
delinquent in payment of principal or interest or in default of any other
provision, or (ii) Loan with any director, executive officer or ten percent
stockholder of the Company or any of its Subsidiaries, or to the best knowledge
of the Company, any person, corporation or enterprise controlling, controlled by
or under common control with any of the foregoing. Section 3.27 of the Company
Disclosure Schedule sets forth (i) all of the Loans in original principal amount
in excess of $50,000 of the Company or any of its Subsidiaries that as of the
date of this Agreement are classified by any bank examiner (whether regulatory
or internal) as "Other Loans Specially Mentioned", "Special Mention",
"Substandard", "Doubtful", "Loss", "Classified", "Criticized", "Credit Risk
Assets", "Concerned Loans", "Watch List" or words of similar import, together
with the principal amount of and accrued and unpaid interest on each such Loan
and the identity of the borrower thereunder, and (ii) by category of Loan (i.e.,
commercial, consumer, etc.), all of the other Loans of the
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Company and its Subsidiaries that as of the date of this Agreement are
classified as such, together with the aggregate principal amount of and accrued
and unpaid interest on such Loans by category. The Company shall promptly inform
Buyer in writing of any Loan that becomes classified in the manner described in
the previous sentence, or any Loan the classification of which is changed, at
any time after the date of this Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to the Company as follows:
4.1. Corporate Organization. (a) Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
Buyer has the corporate power and authority to own or lease all of its
properties and assets and to carry on its business as it is now being conducted,
and is duly licensed or qualified to do business in each jurisdiction in which
the nature of the business conducted by it or the character or location of the
properties and assets owned or leased by it makes such licensing or
qualification necessary, except where the failure to be so licensed or qualified
would not have a Material Adverse Effect on Buyer. Buyer is duly registered as a
bank holding company under the BHC Act. The Certificate of Incorporation and
By-laws of Buyer, copies of which have previously been made available to the
Company, are true, complete and correct copies of such documents as in effect as
of the date of this Agreement.
(b) New York Bank is a bank duly organized, validly existing and in good
standing under the laws of the State of New York. The deposit accounts of New
York Bank are insured by the FDIC through the Bank Insurance Fund to the fullest
extent permitted by law, and all premiums and assessments required in connection
therewith have been paid by New York Bank. Each of Buyer's other Subsidiaries is
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation. Each Subsidiary of Buyer has the corporate
power and authority to own or lease all of its properties and assets and to
carry on its business as it is now being conducted, and is duly licensed or
qualified to do business in each jurisdiction in which the nature of the
business conducted by it or the character or location of the properties and
assets owned or leased by it makes such licensing or qualification necessary,
except where the failure to be so licensed or qualified would not have a
Material Adverse Effect on Buyer. The articles of organization and by-laws of
New York Bank, copies of which have previously been made available to the
Company, are true, complete and correct copies of such documents as in effect as
of the date of this Agreement.
(c) The minute books of Buyer and each of its Subsidiaries contain true,
complete and accurate records in all material respects of all meetings and other
corporate actions held or taken since December 31, 1991 of their respective
stockholders and Boards of Directors (including committees of their respective
Boards of Directors).
4.2. Capitalization. (a) As of the date of this Agreement, the authorized
capital stock of Buyer consists of 50,000,000 shares of Buyer Common Stock and
10,000,000 shares of preferred stock, par value $1.00 per share ("Buyer
Preferred Stock"). As of June 20, 1994, there were 14,248,799 shares of Buyer
Common Stock and no shares of Buyer Preferred Stock issued and outstanding, and
487 shares of Buyer Common Stock held in Buyer's treasury. As of the date of
this Agreement, no shares of Buyer Common Stock or Buyer Preferred Stock were
reserved for issuance, except that 657,820 shares of Buyer Common Stock were
reserved for issuance pursuant to the Buyer's dividend reinvestment and stock
purchase plans and described in Section 4.2(a) of the Disclosure Schedule which
is being delivered by Buyer to the Company herewith (the "Buyer Disclosure
Schedule"), 580,139 shares of Buyer Common Stock were reserved for issuance upon
the exercise of stock options pursuant to the Buyer 1982 Incentive Stock Option
Plan, the Buyer 1985 Incentive Stock Option Plan and the Buyer 1987 Long Term
Incentive Plan; the Buyer's 1989 Executive Stock Option Plan and the Buyer's
1994 Key Employee Stock Plan (collectively, the "Buyer Stock Plans"), 1,100,474
shares of Buyer Common Stock were reserved for issuance upon exercise of
warrants under the warrant agreements listed on Section 4.2(a) of the Buyer
Disclosure Schedule, and 500,000 shares of Buyer Series A Junior Participating
Preferred Stock were reserved for issuance upon exercise of the rights (the
"Buyer Rights") distributed to holders of Buyer Common Stock pursuant to the
Shareholder Rights Agreement,
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dated as of February 28, 1989, between Buyer and The North Fork Bank, as Rights
Agent (the "Buyer Shareholder Rights Agreement"). All of the issued and
outstanding shares of Buyer Common Stock and Buyer Preferred Stock have been
duly authorized and validly issued and are fully paid, nonassessable and free of
preemptive rights, with no personal liability attaching to the ownership
thereof. As of the date of this Agreement, except as referred to above or
reflected in Section 4.2(a) of the Buyer Disclosure Schedule and the Buyer
Shareholder Rights Agreement, Buyer does not have and is not bound by any
outstanding subscriptions, options, warrants, calls, commitments or agreements
of any character calling for the purchase or issuance of any shares of Buyer
Common Stock or Buyer Preferred Stock or any other equity securities of Buyer or
any securities representing the right to purchase or otherwise receive any
shares of Buyer Common Stock or Buyer Preferred Stock. The shares of Buyer
Common Stock to be issued pursuant to the Merger will be duly authorized and
validly issued and, at the Effective Time, all such shares will be fully paid,
nonassessable and free of preemptive rights, with no personal liability
attaching to the ownership thereof.
(b) Section 4.2(b) of the Buyer Disclosure Schedule sets forth a true and
correct list of all of the Buyer Subsidiaries as of the date of this Agreement.
Except as set forth in Section 4.2(b) of the Buyer Disclosure Schedule, Buyer
owns, directly or indirectly, all of the issued and outstanding shares of
capital stock of each of the Subsidiaries of the Buyer, free and clear of all
liens, charges, encumbrances and security interests whatsoever, and all of such
shares are duly authorized and validly issued and are fully paid, nonassessable
and free of preemptive rights, with no personal liability attaching to the
ownership thereof. As of the date of this Agreement, no Subsidiary of the Buyer
has or is bound by any outstanding subscriptions, options, warrants, calls,
commitments or agreements of any character with any party that is not a direct
or indirect Subsidiary of Buyer calling for the purchase or issuance of any
shares of capital stock or any other equity security of such Subsidiary or any
securities representing the right to purchase or otherwise receive any shares of
capital stock or any other equity security of such Subsidiary.
4.3. Authority; No Violation. (a) Buyer has full corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly and
validly approved by the Board of Directors of Buyer. The Board of Directors of
Buyer has directed that this Agreement and the transactions contemplated hereby
be submitted to Buyer's stockholders for approval at a meeting of such
stockholders and, except for the adoption of this Agreement by the requisite
vote of Buyer's stockholders, no other corporate proceedings on the part of
Buyer are necessary to consummate the transactions contemplated hereby. This
Agreement has been duly and validly executed and delivered by Buyer and
(assuming due authorization, execution and delivery by the Company) constitutes
a valid and binding obligation of Buyer, enforceable against Buyer in accordance
with its terms, except as enforcement may be limited by general principles of
equity whether applied in a court of law or a court of equity and by bankruptcy,
insolvency and similar laws affecting creditors' rights and remedies generally.
(b) New York Bank has full corporate power and authority to execute and
deliver the Bank Merger Agreement and to consummate the transactions
contemplated thereby. The execution and delivery of the Bank Merger Agreement
and the consummation of the transactions contemplated thereby will be duly and
validly approved by the Board of Directors of New York Bank. Upon the due and
valid approval of the Bank Merger Agreement by Buyer as the sole stockholder of
New York Bank, and by the Board of Directors of New York Bank, no other
corporate proceedings on the part of New York Bank will be necessary to
consummate the transactions contemplated thereby. The Bank Merger Agreement,
upon execution and delivery by New York Bank, will be duly and validly executed
and delivered by New York Bank and will (assuming due authorization, execution
and delivery by the Company Bank) constitute a valid and binding obligation of
New York Bank, enforceable against New York Bank in accordance with its terms,
except as enforcement may be limited by general principles of equity whether
applied in a court of law or a court of equity and by bankruptcy, insolvency and
similar laws affecting creditors' rights and remedies generally.
(c) Except as set forth in Section 4.3(c) of the Buyer Disclosure Schedule,
neither the execution and delivery of this Agreement by Buyer or the Bank Merger
Agreement by New York Bank, nor the consummation by Buyer or New York Bank, as
the case may be, of the transactions contemplated hereby or thereby, nor
compliance by Buyer or New York Bank, as the case may be, with any of the terms
or provisions
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hereof or thereof, will (i) violate any provision of the Certificate of
Incorporation or By-Laws of Buyer, or the articles of incorporation or by-laws
or similar governing documents of any of its Subsidiaries or (ii) assuming that
the consents and approvals referred to in Section 4.4 are duly obtained, (x)
violate any statute, code, ordinance, rule, regulation, judgment, order, writ,
decree or injunction applicable to Buyer or any of its Subsidiaries or any of
their respective properties or assets, or (y) violate, conflict with, result in
a breach of any provision of or the loss of any benefit under, constitute a
default (or an event which, with notice or lapse of time, or both, would
constitute a default) under, result in the termination of or a right of
termination or cancellation under, accelerate the performance required by, or
result in the creation of any lien, pledge, security interest, charge or other
encumbrance upon any of the respective properties or assets of Buyer or any of
its Subsidiaries under, any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, deed of trust, license, lease, agreement or other
instrument or obligation to which Buyer or any of its Subsidiaries is a party,
or by which they or any of their respective properties or assets may be bound or
affected, except (in the case of clause (y) above) for such violations,
conflicts, breaches or defaults which either individually or in the aggregate
will not have or be reasonably likely to have a Material Adverse Effect on
Buyer.
4.4. Consents and Approvals. Except for (a) the filing of applications and
notices, as applicable, with the Federal Reserve Board under the Oakar Amendment
to the Federal Deposit Insurance Act and the BHC Act, and approval of such
applications and notices, (b) the filing of applications with the FDIC under the
Bank Merger Act and approval of such applications, (c) the filing of
applications with the OTS and approval of such applications, (d) the State
Banking Approvals, (e) the filing with the SEC of the Proxy Statement and the
S-4, (f) the approval of this Agreement by the requisite vote of the
stockholders of Buyer, (g) the filing of the Certificate of Merger with the
Secretary, (h) such filings and approvals as are required to be made or obtained
under the securities or "Blue Sky" laws of various states in connection with the
issuance of the shares of Buyer Common Stock pursuant to this Agreement, (i)
filings required by the Bank Merger Agreement, (j) the approval of the Bank
Merger Agreement by the stockholder of New York Bank, and (k) such filings,
authorizations or approvals as may be set forth in Section 4.4 of the Buyer
Disclosure Schedule, no consents or approvals of or filings or registrations
with any Governmental Entity or with any third party are necessary in connection
with (1) the execution and delivery by Buyer of this Agreement, (2) the
consummation by Buyer of the Merger and the other transactions contemplated
hereby, (3) the execution and delivery by New York Bank of the Bank Merger
Agreement, and (4) the consummation of New York Bank of the transactions
contemplated by the Bank Merger Agreement.
4.5. Financial Statements. Buyer has previously delivered to the Company
copies of (a) the consolidated balance sheets of Buyer and its Subsidiaries as
of December 31 for the fiscal years 1992 and 1993 and the related consolidated
statements of income, changes in shareholders' equity and cash flows for the
fiscal years 1991 through 1993, inclusive, as reported in Buyer's Annual Report
on Form 10-K for the fiscal year ended December 31, 1993 filed with the SEC
under the Exchange Act, in each case accompanied by the audit report of KPMG
Peat Marwick, independent public accountants with respect to Buyer, and (b) the
unaudited consolidated balance sheet of Buyer and its Subsidiaries as of March
31, 1994 and March 31, 1993 and the related unaudited consolidated statements of
income, changes in shareholders' equity and cash flows for the three-month
periods then ended as reported in Buyer's Quarterly Report on Form 10-Q for the
period ended March 31, 1994 filed with the SEC under the Exchange Act. The
December 31, 1993 consolidated balance sheet of Buyer (including the related
notes, where applicable) fairly presents the consolidated financial position of
Buyer and its Subsidiaries as of the date thereof, and the other financial
statements referred to in this Section 4.5 (including the related notes, where
applicable) fairly present and the financial statements referred to in Section
6.9 hereof will fairly present (subject, in the case of the unaudited
statements, to recurring audit adjustments normal in nature and amount), the
results of the consolidated operations and changes in shareholders' equity and
consolidated financial position of Buyer and its Subsidiaries for the respective
fiscal periods or as of the respective dates therein set forth; each of such
statements (including the related notes, where applicable) comply, and the
financial statements referred to in Section 6.9 hereof will comply, in all
material respects with applicable accounting requirements and with the published
rules and regulations of the SEC with respect thereto; and each of such
statements (including the related notes, where applicable) has been, and the
financial statements referred to in Section 6.9 hereof will be, prepared in
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accordance with GAAP consistently applied during the periods involved, except as
indicated in the notes thereto or, in the case of unaudited statements, as
permitted by Form 10-Q. The books and records of Buyer and its Subsidiaries have
been, and are being, maintained in all material respects in accordance with GAAP
and any other applicable legal and accounting requirements and reflect only
actual transactions.
4.6. Broker's Fees. Neither Buyer nor any Subsidiary of Buyer, nor any of
their respective officers or directors, has employed any broker or finder or
incurred any liability for any broker's fees, commissions or finder's fees in
connection with any of the transactions contemplated by this Agreement, the Bank
Merger Agreement or the Option Agreement, except that Buyer has engaged, and
will pay a fee or commission to M.A. Schapiro & Co.
4.7. Absence of Certain Changes or Events. Except as may be set forth in
Section 4.7 of the Buyer Disclosure Schedule, or as disclosed in Buyer's
Quarterly Report on Form 10-Q for the quarter ended March 31, 1994 (a true,
complete and correct copy of which has previously been delivered to the
Company), since December 31, 1993, (i) neither Buyer nor any of its Subsidiaries
has incurred any material liability, except in the ordinary course of their
business consistent with their past practices, and (ii) no event has occurred
which has caused, or is reasonably likely to cause, individually or in the
aggregate, a Material Adverse Effect on Buyer.
4.8. Legal Proceedings. (a) Except as set forth in Section 4.8 of the
Buyer Disclosure Schedule or in Buyer's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1994, neither Buyer nor any of its Subsidiaries is a
party to any and there are no pending or, to the best of Buyer's knowledge,
threatened, material legal, administrative, arbitral or other proceedings,
claims, actions or governmental or regulatory investigations of any nature
against Buyer or any of its Subsidiaries or challenging the validity or
propriety of the transactions contemplated by this Agreement, the Bank Merger
Agreement or the Option Agreement as to which there is a reasonable probability
of an adverse determination and which, if adversely determined, would have or be
reasonably likely to have a Material Adverse Effect on Buyer.
(b) There is no injunction, order, judgment, decree, or regulatory
restriction imposed upon Buyer, any of its Subsidiaries or the assets of Buyer
or any of its Subsidiaries which has had, or could reasonably be expected to
have, a Material Adverse Effect on Buyer.
4.9. Compliance with Applicable Law. Buyer and each of its Subsidiaries
holds, and has at all times held, all material licenses, franchises, permits and
authorizations necessary for the lawful conduct of their respective businesses
under and pursuant to all, and have complied with and are not in default in any
respect under any, applicable law, statute, order, rule, regulation, policy
and/or guideline of any Governmental Entity relating to Buyer or any of its
Subsidiaries, except where the failure to hold such license, franchise, permit
or authorization or such non-compliance or default would not, individually or in
the aggregate, have, or be reasonably likely to have, a Material Adverse Effect
on Buyer, and neither Buyer nor any of its Subsidiaries knows of, or has
received notice of violation of, any material violations of any of the above.
4.10. SEC Reports. Buyer has previously made available to the Company an
accurate and complete copy of each (a) final registration statement, prospectus,
report, schedule and definitive proxy statement filed since January 1, 1990 by
Buyer with the SEC pursuant to the Securities Act or the Exchange Act (the
"Buyer Reports") and (b) communication mailed by Buyer to its shareholders since
January 1, 1990, and no such registration statement, prospectus, report,
schedule, proxy statement or communication contained any untrue statement of a
material fact or omitted to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances in which they were made, not misleading, except that information
as of a later date shall be deemed to modify information as of an earlier date.
Buyer has timely filed all Buyer Reports and other documents required to be
filed by it under the Securities Act and the Exchange Act, and, as of their
respective dates, all Buyer Reports complied in all material respects with the
published rules and regulations of the SEC with respect thereto.
4.11. Buyer Information. The information relating to Buyer and its
Subsidiaries to be contained in the Proxy Statement and the S-4, or in any other
document filed with any other regulatory agency in connection herewith, will not
contain any untrue statement of a material fact or omit to state a material fact
necessary to
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make the statements therein, in light of the circumstances in which they are
made, not misleading. The S-4 (except for such portions thereof that relate only
to the Company or any of its Subsidiaries) will comply in all material respects
with the provisions of the Exchange Act and the rules and regulations
thereunder.
4.12. Ownership of Company Common Stock; Affiliates and Associates. (a)
Except for the Stock Option Agreement, neither Buyer nor any of its affiliates
or associates (as such terms are defined under the Exchange Act), (i)
beneficially own, directly or indirectly, or (ii) is a party to any agreement,
arrangement or understanding for the purpose of acquiring, holding, voting or
disposing of, in each case, any shares of capital stock of the Company (other
than Trust Account Shares and DPC Shares); and
(b) Neither Buyer nor any of its Subsidiaries is an "affiliate" (as such
term is defined in DGCL sec. 203(c)(1)), an "associate" (as such term is defined
in DGCL sec. 203(c)(2)) of the Company or an "Interested Stockholder" (as such
term is defined in Section 8 of the Company's Certificate of Incorporation).
4.13. Taxes. Except as set forth in Section 4.13 of the Buyer Disclosure
Schedule, each of Buyer and its Subsidiaries has (i) duly and timely filed or
will duly and timely file (including applicable extensions granted without
penalty) all Tax Returns required to be filed at or prior to the Effective Time,
and such Tax Returns which have heretofore been filed are, and those to be
hereinafter filed will be, true, correct and complete, and (ii) paid in full or
have made adequate provision for on the financial statements of Buyer (in
accordance with GAAP) all Taxes and will pay in full or make adequate provision
for all Taxes. There are no material liens for Taxes upon the assets of either
Buyer or its Subsidiaries except for statutory liens for current Taxes not yet
due. Except as set forth in Section 4.13 of the Buyer Disclosure Schedule,
neither Buyer nor any of its Subsidiaries has requested any extension of time
within which to file any Tax Returns in respect of any fiscal year which have
not since been filed and no request for waivers of the time to assess any Taxes
are pending or outstanding. The federal and state income Tax Returns of Buyer
and its Subsidiaries have been audited by the Internal Revenue Service or
appropriate state tax authorities with respect to those periods and
jurisdictions set forth on Section 4.13 of the Buyer Disclosure Schedule. Except
as set forth in Section 4.13 of the Buyer Disclosure Schedule, neither Buyer nor
any of its Subsidiaries (i) is a party to any agreement providing for the
allocation or sharing of Taxes (other than the allocation of federal income
taxes as provided by Regulation 1.1552-1(a)(1) under the Code); (ii) is required
to include in income any adjustment pursuant to Section 481(a) of the Code, by
reason of the voluntary change in accounting method (nor has any taxing
authority proposed in writing any such adjustment or change of accounting
method); or (iii) has filed a consent pursuant to Section 341(f) of the Code.
4.14. Employees. (a) Section 4.14(a) of the Buyer Disclosure Schedule sets
forth a true and complete list of each employee benefit plan, arrangement or
agreement that is maintained or contributed to or required to be contributed to
as of the date of this Agreement (the "Buyer Plans") by Buyer, any of its
Subsidiaries or by any trade or business, whether or not incorporated (a "Buyer
ERISA Affiliate"), all of which together with Buyer would be deemed a "single
employer" within the meaning of Section 4001 of ERISA, for the benefit of any
employee or former employee of Buyer, any Subsidiary or any ERISA Affiliate.
(b) Except as set forth in Section 4.14(b) of the Buyer Disclosure
Schedule, (i) each of the Buyer Plans has been operated and administered in all
material respects in accordance with its terms and applicable law, including but
not limited to ERISA and the Code, (ii) each of the Buyer Plans intended to be
"qualified" within the meaning of Section 401(a) of the Code has either (1)
received a favorable determination letter from the IRS, or (2) is or will be the
subject of an application for a favorable determination letter, and Buyer is not
aware of any circumstances likely to result in the revocation or denial of any
such favorable determination letter, (iii) with respect to each Buyer Plan which
is subject to Title IV of ERISA, the present value of accrued benefits under
such Buyer Plan, based upon the actuarial assumptions used for funding purposes
in the most recent actuarial report prepared by such Buyer Plan's actuary with
respect to such Buyer Plan, did not, as of its latest valuation date, exceed the
then current value of the assets of such Buyer Plan allocable to such accrued
benefits, (iv) no Plan provides benefits, including without limitation death or
medical benefits (whether or not insured), with respect to current or former
employees of Buyer, its Subsidiaries or any ERISA Affiliate beyond their
retirement or other termination of service, other than
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(w) coverage mandated by applicable law, (x) death benefits or retirement
benefits under any "employee pension plan," as that term is defined in Section
3(2) of ERISA, (y) deferred compensation benefits accrued as liabilities on the
books of Buyer, its Subsidiaries or the ERISA Affiliates or (z) benefits the
full cost of which is borne by the current or former employee (or his
beneficiary), (v) no liability under Title IV of ERISA has been incurred by
Buyer, its Subsidiaries or any Buyer ERISA Affiliate that has not been satisfied
in full, (vi) no Buyer Plan is a "multiemployer pension plan," as such term is
defined in Section 3(37) of ERISA, (vii) all contributions or other amounts
payable by Buyer, its Subsidiaries or any ERISA Affiliate as of the Effective
Time with respect to each Plan in respect of current or prior plan years have
been paid or accrued in accordance with generally accepted accounting practices
and Section 412 of the Code, (viii) neither Buyer, its Subsidiaries nor any
ERISA Affiliate has engaged in a transaction in connection with which Buyer, its
Subsidiaries or any ERISA Affiliate could be subject to either a civil penalty
assessed pursuant to Section 409 or 502(i) of ERISA or a tax imposed pursuant to
Section 4975 or 4976 of the Code, (ix) there are no pending, or, to the best
knowledge of Buyer, threatened or anticipated claims (other than routine claims
for benefits) by, on behalf of or against any of the Buyer Plans or any trusts
related thereto and (x) the consummation of the transactions contemplated by
this Agreement will not (y) entitle any current or former employee or officer of
Buyer or any ERISA Affiliate to severance pay, termination pay or any other
payment, except as expressly provided in this Agreement or (z) accelerate the
time of payment or vesting or increase in the amount of compensation due any
such employee or officer.
4.15. Agreements with Regulatory Agencies. Except as set forth in Section
4.15 of the Buyer Disclosure Schedule or as disclosed in Buyer's Annual Report
on Form 10-K for the year ended December 31, 1993, neither Buyer nor any of its
Subsidiaries is subject to any cease-and-desist or other order issued by, or is
a party to any written agreement, consent agreement or memorandum of
understanding with, or is a party to any commitment letter or similar
undertaking to, or is subject to any order or directive by, or is a recipient of
any extraordinary supervisory letter from, or has adopted any board resolutions
at the request of (each, whether or not set forth in Section 4.15 of the Buyer
Disclosure Schedule, a "Buyer Regulatory Agreement"), any Regulatory Agency or
other Governmental Entity that restricts the conduct of its business or that in
any manner relates to its capital adequacy, its credit policies, its management
or its business, nor has Buyer or any of its Subsidiaries been advised by any
Regulatory Agency or other Governmental Entity that it is considering issuing or
requesting any Regulatory Agreement.
4.16. Undisclosed Liabilities. Except (a) as set forth in Section 4.16 of
the Buyer Disclosure Schedule, (b) for those liabilities that are fully
reflected or reserved against on the consolidated balance sheet of Buyer
included in its Form 10-Q for the period ended March 31, 1994 and (c) for
liabilities incurred in the ordinary course of business consistent with past
practice since March 31, 1994 that, either alone or when combined with all
similar liabilities, have not had, and could not reasonably be expected to have,
a Material Adverse Effect on Buyer, neither Buyer nor any of its Subsidiaries
has incurred any liability of any nature whatsoever (whether absolute, accrued,
contingent or otherwise and whether due or to become due).
4.17. Administration of Fiduciary Accounts. Buyer and each of its
Subsidiaries has properly administered in all material respects all accounts for
which it acts as a fiduciary, including but not limited to accounts for which it
serves as a trustee, agent, custodian, personal representative, guardian,
conservator or investment advisor, in accordance with the terms of the governing
documents and applicable state and federal law and regulation and common law.
Neither Buyer nor any of its Subsidiaries nor any of their respective directors,
officers or employees has committed any breach of trust with respect to any such
fiduciary account which has had or could reasonably be expected to have a
Material Adverse Effect on Buyer, and the accountings for each such fiduciary
account are true and correct in all material respects and accurately reflect the
assets of such fiduciary account.
4.18. Approvals. As of the date of this Agreement, Buyer knows of no
reason why all regulatory approvals required for the consummation of the
transactions contemplated hereby (including, without limitation, the Merger and
the Subsidiary Merger) should not be obtained without the imposition of a
Burdensome Condition.
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4.19. Reports. Buyer and each of its Subsidiaries have timely filed all
material reports, registrations and statements, together with any amendments
required to be made with respect thereto, that they were required to file since
December 31, 1991 with any Regulatory Agency, and all other material reports and
statements required to be filed by them since December 31, 1991, including,
without limitation, any report or statement required to be filed pursuant to the
laws, rules or regulations of the United States, the Federal Reserve Board, the
FDIC, any State Regulator or any SRO, and have paid all fees and assessments due
and payable in connection therewith. Except for normal examinations conducted by
a Regulatory Agency in the regular course of the business of Buyer and its
Subsidiaries, except as set forth in Section 4.19 of Buyer Disclosure Schedule,
no Regulatory Agency has initiated any proceeding or, to the best knowledge of
Buyer, investigation into the business or operations of Buyer or any of its
Subsidiaries since December 31, 1991. There is no unresolved material violation,
criticism, or exception by any Regulatory Agency with respect to any report or
statement relating to any examinations of Buyer or any of its Subsidiaries.
4.20. Environmental Matters. Except as set forth in Section 4.20 of the
Buyer Disclosure Schedule:
(a) Each of Buyer, its Subsidiaries, the Participation Facilities and the
Loan Properties (each as hereinafter defined) are, and have been, in compliance
with Environmental Laws, except for violations which, either individually or in
the aggregate, have not had and cannot reasonably be expected to have a Material
Adverse Effect on Buyer;
(b) There is no suit, claim, action or proceeding, pending or threatened,
before any Governmental Entity or other forum in which Buyer, any of its
Subsidiaries, any Participation Facility or any Loan Property, has been or, with
respect to threatened proceedings, may be, named as a defendant (x) for alleged
noncompliance (including by any predecessor), with any Environmental Laws, or
(y) relating to the release, threatened release or exposure to any material
whether or not occurring at or on a site owned, leased or operated by Buyer or
any of its Subsidiaries, any Participation Facility or any Loan Property, except
where such noncompliance or release has not resulted, and cannot be reasonably
expected to result, either individually or in the aggregate, a Material Adverse
Effect on Buyer;
(c) During the period of (x) Buyer's or any of its Subsidiaries' ownership
or operation of any of their respective current properties, (y) Buyer's or any
of its Subsidiaries' participation in the management of any Participation
Facility, or (z) Buyer's or any of its Subsidiaries' holding of a security
interest in a Loan Property, there has been no release of materials in, on,
under or affecting any such property, except where such release has not had and
cannot reasonably be expected to result in, either individually or in the
aggregate, a Material Adverse Effect on Buyer. Prior to the period of (x)
Buyer's or any of its Subsidiaries' ownership or operation of any of their
respective current properties, (y) Buyer's or any of its Subsidiaries'
participation in the management of any Participation Facility, or (z) Buyer's or
any of its Subsidiaries' holding of a security interest in a Loan Property,
there was no release or threatened release of materials in, on, under or
affecting any such property, Participation Facility or Loan Property, except
where such release has not had and cannot be reasonably expected to have, either
individually or in the aggregate, a Material Adverse Effect on Buyer; and
(d) The following definitions apply for purposes of this Section 4.20: (x)
"Loan Property" means any property in which Buyer or any of its Subsidiaries
holds a security interest, and, where required by the context, said term means
the owner or operator of such property; and (y) "Participation Facility" means
any facility in which Buyer or any of its Subsidiaries participates in the
management and, where required by the context, said term means the owner or
operator of such property.
4.21. Derivative Transactions. Except as set forth in Section 4.21 of the
Buyer Disclosure Schedule, since December 31, 1993, neither Buyer nor any of its
Subsidiaries has engaged in transactions in or involving forwards, futures,
options on futures, swaps or other derivative instruments except (i) as agent on
the order and for the account of others, or (ii) as principal for purposes of
hedging interest rate risk on U.S. dollar-denominated securities and other
financial instruments. None of the counterparties to any contract or agreement
with respect to any such instrument is in default with respect to such contract
or agreement and no such contract or agreement, were it to be a Loan held by
Buyer or any of its Subsidiaries, would be classified as "Other Loans Specially
Mentioned", "Special Mention", "Substandard", "Doubtful", "Loss", "Classi-
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fied", "Criticized", "Credit Risk Assets", "Concerned Loans" or words of similar
import. The financial position of Buyer and its Subsidiaries on a consolidated
basis under or with respect to each such instrument has been reflected in the
books and records of Buyer and such Subsidiaries in accordance with GAAP
consistently applied, and no open exposure of Buyer or any of its Subsidiaries
with respect to any such instrument (or with respect to multiple instruments
with respect to any single counterparty) exceeds $500,000.
4.22. Loan Portfolio. Except as set forth in Section 4.22 of the Buyer
Disclosure Schedule, neither Buyer nor any of its Subsidiaries is a party to any
written or oral (i) Loan, other than Loans the unpaid principal balance of which
does not exceed $50,000, under the terms of which the obligor is, as of the date
of this Agreement, over 90 days delinquent in payment of principal or interest
or in default of any other provision, or (ii) Loan as of the date of this
Agreement with any director, executive officer or ten percent stockholder of
Buyer or any of its Subsidiaries, or to the best knowledge of Buyer, any person,
corporation or enterprise controlling, controlled by or under common control
with any of the foregoing. Section 4.22 of the Buyer Disclosure Schedule sets
forth (i) all of the Loans in original principal amount in excess of $50,000 of
Buyer or any of its Subsidiaries that as of the date of this Agreement are
classified by any bank examiner (whether regulatory or internal) as "Other Loans
Specially Mentioned", "Special Mention", "Substandard", "Doubtful", "Loss",
"Classified", "Criticized", "Credit Risk Assets", "Concerned Loans", "Watch
List" or words of similar import, together with the principal amount of and
accrued and unpaid interest on each such Loan and the identity of the borrower
thereunder, and (ii) by category of Loan (i.e., commercial, consumer, etc.), all
of the other Loans of Buyer and its Subsidiaries that as of the date of this
Agreement are classified as such, together with the aggregate principal amount
of and accrued and unpaid interest on such Loans by category. Buyer shall
promptly inform the Company in writing of any Loan that becomes classified in
the manner described in the previous sentence, or any Loan the classification of
which is changed, at any time after the date of this Agreement.
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
5.1. Covenants of the Company. During the period from the date of this
Agreement and continuing until the Effective Time, except as expressly
contemplated or permitted by this Agreement, the Bank Merger Agreement or the
Option Agreement or with the prior written consent of Buyer, the Company and its
Subsidiaries shall carry on their respective businesses in the ordinary course
consistent with past practice and consistent with prudent banking practice. The
Company will use its best efforts to (x) preserve its business organization and
that of its Subsidiaries intact, (y) keep available to itself and Buyer the
present services of the employees of the Company and its Subsidiaries and (z)
preserve for itself and Buyer the goodwill of the customers of the Company and
its Subsidiaries and others with whom business relationships exist. Without
limiting the generality of the foregoing, and except as set forth on Section 5.1
of the Company Disclosure Schedule or as otherwise contemplated by this
Agreement or consented to in writing by Buyer, the Company shall not, and shall
not permit any of its Subsidiaries to:
(a) solely in the case of the Company, declare or pay any dividends on, or
make other distributions in respect of, any of its capital stock, other than
normal quarterly dividends in an amount of no more than $0.18 per share of
Company Common Stock;
(b) (i) split, combine or reclassify any shares of its capital stock or
issue or authorize or propose the issuance of any other securities in respect
of, in lieu of or in substitution for shares of its capital stock except upon
the exercise or fulfillment of rights or options issued or existing pursuant to
employee benefit plans, programs or arrangements, all to the extent outstanding
and in existence on the date of this Agreement and in accordance with their
present terms, and except pursuant to the Option Agreement, or (ii) repurchase,
redeem or otherwise acquire (except for the acquisition of Trust Account Shares
and DPC Shares, as such terms are defined in Section 1.4(b) hereof) any shares
of the capital stock of the Company or any Subsidiary of the Company, or any
securities convertible into or exercisable for any shares of the capital stock
of the Company or any Subsidiary of the Company;
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(c) issue, deliver or sell, or authorize or propose the issuance, delivery
or sale of, any shares of its capital stock or any securities convertible into
or exercisable for, or any rights, warrants or options to acquire, any such
shares, or enter into any agreement with respect to any of the foregoing, other
than (i) the issuance of Company Common Stock pursuant to stock options or
similar rights to acquire Company Common Stock granted pursuant to the Company
Stock Plans and outstanding prior to the date of this Agreement, in each case in
accordance with their present terms and (ii) pursuant to the Option Agreement;
(d) amend its Certificate of Incorporation, By-laws or other similar
governing documents;
(e) authorize or permit any of its officers, directors, employees or agents
to directly or indirectly solicit, initiate or encourage any inquiries relating
to, or the making of any proposal which constitutes, a "takeover proposal" (as
defined below), or, except to the extent legally required for the discharge of
the fiduciary duties of the Board of Directors of the Company, recommend or
endorse any takeover proposal, or participate in any discussions or
negotiations, or provide third parties with any nonpublic information, relating
to any such inquiry or proposal or otherwise facilitate any effort or attempt to
make or implement a takeover proposal; provided, however, that the Company may
communicate information about any such takeover proposal to its stockholders if,
in the judgment of the Company's Board of Directors, based upon the advice of
outside counsel, such communication is required under applicable law. The
Company will immediately cease and cause to be terminated any existing
activities, discussions or negotiations previously conducted with any parties
other than Buyer with respect to any of the foregoing. The Company will take all
actions necessary or advisable to inform the appropriate individuals or entities
referred to in the first sentence hereof of the obligations undertaken in this
Section 5.1(e). The Company will notify Buyer immediately if any such inquiries
or takeover proposals are received by, any such information is requested from,
or any such negotiations or discussions are sought to be initiated or continued
with, the Company, and the Company will promptly inform Buyer in writing of all
of the relevant details with respect to the foregoing. As used in this
Agreement, "takeover proposal" shall mean any tender or exchange offer, proposal
for a merger, consolidation or other business combination involving the Company
or any Subsidiary of the Company or any proposal or offer to acquire in any
manner a substantial equity interest in, or a substantial portion of the assets
of, the Company or any Subsidiary of the Company other than the transactions
contemplated or permitted by this Agreement, the Bank Merger Agreement and the
Option Agreement;
(f) make any capital expenditures other than the expenses which are set
forth in Section 5.1(f) of the Company Disclosure Schedule and expenses which
(i) are made in the ordinary course of business or are necessary to maintain
existing assets in good repair and (ii) in any event are in an amount of no more
than $50,000 individually and $50,000 in the aggregate;
(g) enter into any new line of business;
(h) acquire or agree to acquire, by merging or consolidating with, or by
purchasing a substantial equity interest in or a substantial portion of the
assets of, or by any other manner, any business or any corporation, partnership,
association or other business organization or division thereof or otherwise
acquire any assets, which would be material, individually or in the aggregate,
to the Company, other than in connection with foreclosures, settlements in lieu
of foreclosure or troubled loan or debt restructurings in the ordinary course of
business consistent with prudent banking practices;
(i) take any action that is intended or may reasonably be expected to
result in any of its representations and warranties set forth in this Agreement
being or becoming untrue in any material respect, or in any of the conditions to
the Merger set forth in Article VII not being satisfied, or in a violation of
any provision of this Agreement or the Bank Merger Agreement, except, in every
case, as may be required by applicable law;
(j) change its methods of accounting in effect at March 31, 1994, except as
required by changes in GAAP or regulatory accounting principles as concurred to
by the Company's independent auditors;
(k) (i) except as required by applicable law or to maintain qualification
pursuant to the Code, adopt, amend, renew or terminate any Plan or any
agreement, arrangement, plan or policy between the Company or any Subsidiary of
the Company and one or more of its current or former directors, officers or
employees or (ii) except for normal increases in the ordinary course of business
consistent with past practice or except as
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required by applicable law, increase in any manner the compensation or fringe
benefits of any director, officer or employee or pay any benefit not required by
any plan or agreement as in effect as of the date hereof (including, without
limitation, the granting of stock options, stock appreciation rights, restricted
stock, restricted stock units or performance units or shares);
(l) take or cause to be taken any action which would disqualify the Merger
as a "pooling of interests" for accounting purposes or a tax free reorganization
under Section 368 of the Code, provided, however, that nothing contained herein
shall limit the ability of Buyer to exercise its rights under the Option
Agreement;
(m) except as set forth in Section 5.1(m) of the Company Disclosure
Schedule, other than activities in the ordinary course of business consistent
with prior practice, sell, lease, encumber, assign or otherwise dispose of, or
agree to sell, lease, encumber, assign or otherwise dispose of, any of its
material assets, properties or other rights or agreements;
(n) other than in the ordinary course of business consistent with past
practice, incur any indebtedness for borrowed money, assume, guarantee, endorse
or otherwise as an accommodation become responsible for the obligations of any
other individual, corporation or other entity;
(o) file any application to relocate or terminate the operations of any
banking office of it or any of its Subsidiaries;
(p) commit any act or omission which constitutes a material breach or
default by the Company or any of its Subsidiaries under any Regulatory Agreement
or under any material contract or material license to which the Company or any
of its Subsidiaries is a party or by which any of them or their respective
properties is bound;
(q) make any equity investment or commitment to make such an investment in
real estate or in any real estate development project, other than in connection
with foreclosures, settlements in lieu of foreclosure or troubled loan or debt
restructurings in the ordinary course of business consistent with prudent
banking practices;
(r) create, renew, amend or terminate or give notice of a proposed renewal,
amendment or termination of, any material contract, agreement or lease for
goods, services or office space to which the Company or any of its Subsidiaries
is a party or by which the Company or any of its Subsidiaries or their
respective properties is bound;
(s) take any action which would cause the termination or cancellation by
the FDIC of insurance in respect of the Company's deposits; or
(t) agree to do any of the foregoing.
5.2. Covenants of Buyer. During the period from the date of this Agreement
and continuing until the Effective Time, except as expressly contemplated or
permitted by this Agreement, the Bank Merger Agreement or the Option Agreement
or with the prior written consent of the Company, Buyer and its Subsidiaries
shall carry on their respective businesses in the ordinary course consistent
with past practice and consistent with prudent banking practice. Buyer will use
its best efforts to (x) preserve its business organization and that of its
Subsidiaries intact and (y) preserve for itself and the Company the goodwill of
the customers of Buyer and its Subsidiaries and others with whom business
relationships exist. Without limiting the generality of the foregoing and except
as set forth on Section 5.2 of the Buyer Disclosure Schedule or as otherwise
contemplated by this Agreement or consented to in writing by the Company, Buyer
shall not, and shall not permit any of its Subsidiaries to:
(a) solely in the case of Buyer, declare or pay any extraordinary or
special dividends on or make any other extraordinary or special distributions in
respect of any of its capital stock; provided, however, that nothing contained
herein shall prohibit Buyer from increasing the quarterly cash dividend on the
Buyer Common Stock;
(b) take any action that is intended or may reasonably be expected to
result in any of its representations and warranties set forth in this Agreement
being or becoming untrue in any material respect, or in any of the
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conditions to the Merger set forth in Article VII not being satisfied or in a
violation of any provision of this Agreement or the Bank Merger Agreement,
except, in every case, as may be required by applicable law;
(c) change its methods of accounting in effect at March 31, 1994, except in
accordance with changes in GAAP or regulatory accounting principles as concurred
to by Buyer's independent auditors;
(d) take or cause to be taken any action which would disqualify the Merger
as a "pooling of interests" for accounting purposes or a tax free reorganization
under Section 368 of the Code, provided, however, that nothing contained herein
shall limit the ability of Buyer to exercise its rights under the Option
Agreement; or
(e) agree to do any of the foregoing.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1. Regulatory Matters. (a) The Company shall promptly prepare and file
with the SEC the Proxy Statement and Buyer shall promptly prepare and file with
the SEC the S-4, in which the Proxy Statement will be included as a prospectus.
Each of the Company and Buyer shall use all reasonable efforts to have the S-4
declared effective under the Securities Act as promptly as practicable after
such filing, and each of the Company and Buyer shall thereafter mail the Proxy
Statement to each of its respective stockholders. Buyer shall also use all
reasonable efforts to obtain all necessary state securities law or "Blue Sky"
permits and approvals required to carry out the transactions contemplated by
this Agreement and the Bank Merger Agreement, and the Company shall furnish all
information concerning the Company and the holders of Company Common Stock as
may be reasonably requested in connection with any such action.
(b) The parties hereto shall cooperate with each other and use their best
efforts to promptly prepare and file all necessary documentation, to effect all
applications, notices, petitions and filings, and to obtain as promptly as
practicable all permits, consents, approvals and authorizations of all third
parties and Governmental Entities which are necessary or advisable to consummate
the transactions contemplated by this Agreement (including without limitation
the Merger and the Subsidiary Merger) (it being understood that any amendments
to the S-4 or a resolicitation of proxies as consequence of a subsequent
proposed merger, stock purchase or similar acquisition by Buyer or any of its
Subsidiaries shall not violate this covenant). The Company and Buyer shall have
the right to review in advance, and to the extent practicable each will consult
the other on, in each case subject to applicable laws relating to the exchange
of information, all the information relating to the Company or Buyer, as the
case may be, and any of their respective Subsidiaries, which appear in any
filing made with, or written materials submitted to, any third party or any
Governmental Entity in connection with the transactions contemplated by this
Agreement. In exercising the foregoing right, each of the parties hereto shall
act reasonably and as promptly as practicable. The parties hereto agree that
they will consult with each other with respect to the obtaining of all permits,
consents, approvals and authorizations of all third parties and Governmental
Entities necessary or advisable to consummate the transactions contemplated by
this Agreement and each party will keep the other apprised of the status of
matters relating to completion of the transactions contemplated herein.
(c) Buyer and the Company shall, upon request, furnish each other with all
information concerning themselves, their Subsidiaries, directors, officers and
stockholders and such other matters as may be reasonably necessary or advisable
in connection with the Proxy Statement, the S-4 or any other statement, filing,
notice or application made by or on behalf of Buyer, the Company or any of their
respective Subsidiaries to any Governmental Entity in connection with the Merger
and the other transactions contemplated by this Agreement.
(d) Buyer and the Company shall promptly furnish each other with copies of
written communications received by Buyer or the Company, as the case may be, or
any of their respective Subsidiaries, Affiliates or Associates (as such terms
are defined in Rule 12b-2 under the Exchange Act as in effect on the date of
this Agreement) from, or delivered by any of the foregoing to, any Governmental
Entity in respect of the transactions contemplated hereby.
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6.2. Access to Information. (a) Upon reasonable notice and subject to
applicable laws relating to the exchange of information, the Company shall, and
shall cause each of its Subsidiaries to, afford to the officers, employees,
accountants, counsel and other representatives of Buyer, access, during normal
business hours during the period prior to the Effective Time, to all its
properties, books, contracts, commitments, records, officers, employees,
accountants, counsel and other representatives and, during such period, the
Company shall, and shall cause its Subsidiaries to, make available to Buyer (i)
a copy of each report, schedule, registration statement and other document filed
or received by it during such period pursuant to the requirements of Federal
securities laws or Federal or state banking laws (other than reports or
documents which the Company is not permitted to disclose under applicable law)
and (ii) all other information concerning its business, properties and personnel
as Buyer may reasonably request. Neither the Company nor any of its Subsidiaries
shall be required to provide access to or to disclose information where such
access or disclosure would violate or prejudice the rights of the Company's
customers, jeopardize any attorney-client privilege or contravene any law, rule,
regulation, order, judgment, decree, fiduciary duty or binding agreement entered
into prior to the date of this Agreement. The parties hereto will make
appropriate substitute disclosure arrangements under circumstances in which the
restrictions of the preceding sentence apply. Buyer will hold all such
information in confidence to the extent required by, and in accordance with, the
provisions of the confidentiality agreement, dated May 5, 1993, between Buyer
and the Company (the "Confidentiality Agreement").
(b) Upon reasonable notice and subject to applicable laws relating to the
exchange of information, Buyer shall, and shall cause its Subsidiaries to,
afford to the officers, employees, accountants, counsel and other
representatives of the Company, access, during normal business hours during the
period prior to the Effective Time, to such information regarding Buyer and its
Subsidiaries as shall be reasonably necessary for the Company to fulfill its
obligations pursuant to this Agreement to prepare the Proxy Statement or which
may be reasonably necessary for the Company to confirm that the representations
and warranties of Buyer contained herein are true and correct and that the
covenants of Buyer contained herein have been performed in all material
respects. Neither Buyer nor any of its Subsidiaries shall be required to provide
access to or to disclose information where such access or disclosure would
violate or prejudice the rights of Buyer's customers, jeopardize any
attorney-client privilege or contravene any law, rule, regulation, order,
judgment, decree, fiduciary duty or binding agreement entered into prior to the
date of this Agreement. The parties hereto will make appropriate substitute
disclosure arrangements under circumstances in which the restrictions of the
preceding sentence apply.
(c) All information furnished by Buyer to the Company or its
representatives pursuant hereto shall be treated as the sole property of Buyer
and, if the Merger shall not occur, the Company and its representatives shall
return to Buyer all of such written information and all documents, notes,
summaries or other materials containing, reflecting or referring to, or derived
from, such information. The Company shall, and shall use its best efforts to
cause its representatives to, keep confidential all such information, and shall
not directly or indirectly use such information for any competitive or other
commercial purpose. The obligation to keep such information confidential shall
continue for five years from the date the proposed Merger is abandoned and shall
not apply to (i) any information which (x) was already in the Company's
possession prior to the disclosure thereof by Buyer; (y) was then generally
known to the public; or (z) was disclosed to the Company by a third party not
bound by an obligation of confidentiality or (ii) disclosures made as required
by law. It is further agreed that, if in the absence of a protective order or
the receipt of a waiver hereunder the Company is nonetheless, in the opinion of
its counsel, compelled to disclose information concerning Buyer to any tribunal
or governmental body or agency or else stand liable for contempt or suffer other
censure or penalty, the Company may disclose such information to such tribunal
or governmental body or agency without liability hereunder.
(d) No investigation by either of the parties or their respective
representatives shall affect the representations, warranties, covenants or
agreements of the other set forth herein.
6.3. Stockholder Meetings. The Company and Buyer each shall take all steps
necessary to duly call, give notice of, convene and hold a meeting of its
respective stockholders to be held as soon as is reasonably practicable after
the date on which the S-4 becomes effective for the purpose of voting upon the
approval of
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this Agreement and the consummation of the transactions contemplated hereby. The
Company and Buyer each will, through its respective Board of Directors, except
to the extent legally required for the discharge of the fiduciary duties of such
board, recommend to its respective stockholders approval of this Agreement and
the transactions contemplated hereby and such other matters as may be submitted
to its stockholders in connection with this Agreement. The Company and Buyer
shall coordinate and cooperate with respect to the foregoing matters, with a
view towards, among other things, holding the respective meetings of each
party's stockholders on the same day.
6.4. Legal Conditions to Merger. Each of Buyer and the Company shall, and
shall cause its Subsidiaries to, use their best efforts (a) to take, or cause to
be taken, all actions necessary, proper or advisable to comply promptly with all
legal requirements which may be imposed on such party or its Subsidiaries with
respect to the Merger or the Subsidiary Merger and, subject to the conditions
set forth in Article VII hereof, to consummate the transactions contemplated by
this Agreement and (b) to obtain (and to cooperate with the other party to
obtain) any consent, authorization, order or approval of, or any exemption by,
any Governmental Entity and any other third party which is required to be
obtained by the Company or Buyer or any of their respective Subsidiaries in
connection with the Merger and the Subsidiary Merger and the other transactions
contemplated by this Agreement, and to comply with the terms and conditions of
such consent, authorization, order or approval; provided, however, that neither
Buyer nor the Company shall be obligated to take any action pursuant to the
foregoing if the taking of such action or such compliance or the obtaining of
such consent, authorization, order or approval is likely, in the good faith
reasonable opinion of Buyer or the Company, to result in the imposition of a
Burdensome Condition.
6.5. Affiliates. Each of Buyer and the Company shall use its best efforts
to cause each director, executive officer and other person who is an "affiliate"
(for purposes of Rule 145 under the Securities Act and for purposes of
qualifying the Merger for "pooling-of-interests" accounting treatment) of such
party to deliver to the other party hereto, as soon as practicable after the
date of this Agreement, and in any event prior to the earlier of the date of the
stockholders meeting called by the Company to approve this Agreement and the
date of the stockholders meeting called by Buyer to approve this Agreement, a
written agreement, in the form of Exhibit 6.5(a) hereto (in the case of
affiliates of Buyer) or 6.5(b) hereto (in the case of affiliates of the
Company), providing that such person will not sell, pledge, transfer or
otherwise dispose of any shares of Buyer Common Stock or Company Common Stock
held by such "affiliate" and, in the case of the "affiliates" of the Company,
the shares of Buyer Common Stock to be received by such "affiliate" in the
Merger: (1) in the case of shares of Buyer Common Stock to be received by
"affiliates" of the Company in the Merger, except in compliance with the
applicable provisions of the Securities Act and the rules and regulations
thereunder; and (2) during the period commencing 30 days prior to the Merger and
ending at the time of the publication of financial results covering at least 30
days of combined operations of Buyer and the Company.
6.6. Stock Exchange Listing. Buyer shall cause the shares of Buyer Common
Stock to be issued in the Merger to be approved for listing on the New York
Stock Exchange, Inc. (the "NYSE"), subject to official notice of issuance, as of
the Effective Time.
6.7. Employee Benefit Plans; Existing Agreements. (a) The employees of the
Company (the "Company Employees") shall be entitled to participate in Buyer's
employee benefit plans in which similarly situated employees of Buyer
participate, to the same extent as comparable employees of Buyer. As of the
Effective Time, Buyer shall permit the Company Employees to participate in
Buyer's group hospitalization, medical, life and disability insurance plans on
the same terms and conditions as applicable to comparable employees of Buyer and
its Subsidiaries. As of the next entry date immediately following the Effective
Time, Buyer shall permit the Company Employees to participate in Buyer's defined
benefit pension plan, thrift plan, severance, and similar plans on the same
terms and conditions as employees of Buyer and its Subsidiaries, giving effect
(solely for purposes of Buyer's defined benefit pension plan and thrift plan) to
years of service with the Company and its Subsidiaries (to the extent the
Company gave effect) as if such service were with Buyer, for purposes of
eligibility and vesting, but not for benefit accrual purposes.
(b) Following the Effective Time, Buyer shall honor and shall cause the
Surviving Bank to honor in accordance with their terms all employment, severance
and other compensation agreements and arrange-
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ments, including, but not limited to, severance benefit plans listed in Section
6.7(b) of the Company Disclosure Schedule, existing prior to the execution of
this Agreement which are between the Company and any director, officer or
employee thereof and which have been disclosed in the Company Disclosure
Schedule and previously have been delivered to Buyer and agrees to make the
payments and provide the benefits pursuant thereto described in Section 6.7(b)
of the Company Disclosure Schedule.
(c) As of the Effective Time, Buyer will assume, or will cause New York
Bank to assume, the tax qualified plans of the Company Bank as listed in Section
3.11(a) of the Company Disclosure Schedule. Neither Buyer nor New York Bank
shall be required to make further contributions to such plans. As of the
Effective Time, all accrued benefits under the plans shall be fully vested and
nonforfeitable. As soon as practicable after the Effective Time, Buyer shall
terminate or shall cause New York Bank to terminate the tax qualified plans of
the Company Bank assumed by Buyer, or New York Bank, pursuant to this Section
6.7(c), and distribution of the accounts of active participants immediately
prior to the Effective Time under the plans shall be made to the participants
and beneficiaries in accordance with the terms of such plans.
(d) From and after the date of this Agreement until the Effective Time, in
anticipation of such termination and distribution, the Company and the Company
Bank shall use their best efforts, and after the Effective Time, Buyer and New
York Bank shall use their best efforts to take all necessary and appropriate
action to cause unallocated Company Common Stock pledged as collateral for the
loan made to the Company Bank Employee Stock Ownership Plan ("ESOP") to be
applied to repay the outstanding securities acquisition loan, to allocate the
amount of such stock with a value in excess of the balance of such loan to the
accounts of the ESOP participants in proportion to their account balances at the
Effective Time and to maintain the status of the ESOP as a plan qualified under
Sections 401(a) and 4975 of the of the Code. In the event that prior to the
Effective Time, the Company or the Company Bank, or after the Effective Time,
Buyer or New York Bank, determines that the loan may not be so repaid or that
such amounts may not be so allocated without causing the ESOP to fail to be a
tax qualified plan under Sections 401(a) and 4975 of the Code, the Company or
the Company Bank before the Effective Time, and Buyer or New York Bank after the
Effective Time, shall take such action as each may determine with respect to the
ESOP, provided that the assets of the ESOP shall be held or paid for the
exclusive benefit of the ESOP participants and beneficiaries, and provided
further, in no event shall any portion of the amounts held in trust by the ESOP
revert directly or indirectly to the Company, the Company Bank, Buyer or New
York Bank or any affiliate thereof.
(e) Following the Effective Time, Buyer shall honor and shall cause any
successor corporation and its affiliates to honor in accordance with its terms,
the Company Bank post retirement medical plan as listed in Section 6.7(e) of the
Company Disclosure Schedule with respect to benefits being paid thereunder at
the Effective Time, and benefits thereunder to those who would be eligible for
such benefits at retirement as of the Effective Time.
(f) Notwithstanding anything contained in an employment agreement or other
compensation arrangement, or in this Agreement to the contrary, the Buyer shall
provide benefits under the terms of the Company Bank post retirement medical
plan to those employees listed in Section 6.7(f) of the Company Disclosure
Schedule who terminate employment with the Company Bank after the Effective
Time, provided that such benefits shall be continued for the lifetime of such
employees' spouse in the event that any such employee predeceases the spouse.
(g) Notwithstanding anything contained in this Agreement to the contrary,
Buyer shall provide each employee listed in Section 6.7(g) of the Company
Disclosure Schedule with the opportunity to continue medical/dental coverage
under the Buyer's group policy upon payment by such employee of the cost of the
premiums for such individual under the group policy for the remainder of the
employee's life or the employee first obtains comparable benefits from another
employer, whichever is earlier.
(h) Following the Effective Time, Buyer shall provide continued
medical/dental and life insurance benefits for each employee listed in Section
6.7(h) of the Company Disclosure Schedule, for a one year period following such
individual's termination of employment with the Company Bank as provided in the
Special Termination Agreements listed in Schedule 3.11(a). In addition, Buyer
shall provide each such individual with the opportunity to continue
medical/dental insurance coverage upon payment by such employee of the
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cost of the premium for such individual under the group coverage of Buyer for a
period of four years commencing on the first anniversary of the date of such
individual's termination of employment, or, if sooner, the time the individual
obtains comparable benefits through another employer.
6.8. Indemnification. (a) In the event of any threatened or actual claim,
action, suit, proceeding or investigation, whether civil, criminal or
administrative, including, without limitation, any such claim, action, suit,
proceeding or investigation in which any person who is now, or has been at any
time prior to the date of this Agreement, or who becomes prior to the Effective
Time, a director or officer or employee of the Company or any of its
Subsidiaries (the "Indemnified Parties") is, or is threatened to be, made a
party based in whole or in part on, or arising in whole or in part out of, or
pertaining to (i) the fact that he is or was a director, officer or employee of
the Company, any of the Subsidiaries of the Company or any of their respective
predecessors or (ii) this Agreement or any of the transactions contemplated
hereby, whether in any case asserted or arising before or after the Effective
Time, the parties hereto agree to cooperate and use their best efforts to defend
against and respond thereto. It is understood and agreed that after the
Effective Time, Buyer shall indemnify and hold harmless, as and to the extent
permitted by Delaware law, each such Indemnified Party against any losses,
claims, damages, liabilities, costs, expenses (including reasonable attorney's
fees and expenses in advance of the final disposition of any claim, suit,
proceeding or investigation to each Indemnified Party to the fullest extent
permitted by law upon receipt of any undertaking required by applicable law),
judgments, fines and amounts paid in settlement in connection with any such
threatened or actual claim, action, suit, proceeding or investigation, and in
the event of any such threatened or actual claim, action, suit, proceeding or
investigation (whether asserted or arising before or after the Effective Time),
the Indemnified Parties may retain counsel reasonably satisfactory to them after
consultation with Buyer; provided, however, that (1) Buyer shall have the right
to assume the defense thereof and upon such assumption Buyer shall not be liable
to any Indemnified Party for any legal expenses of other counsel or any other
expenses subsequently incurred by any Indemnified Party in connection with the
defense thereof, except that if Buyer elects not to assume such defense or
counsel for the Indemnified Parties reasonably advises that there are issues
which raise conflicts of interest between Buyer and the Indemnified Parties, the
Indemnified Parties may retain counsel reasonably satisfactory to them after
consultation with Buyer, and Buyer shall pay the reasonable fees and expenses of
such counsel for the Indemnified Parties, (2) Buyer shall in all cases be
obligated pursuant to this paragraph to pay for only one firm of counsel for all
Indemnified Parties, (3) Buyer shall not be liable for any settlement effected
without its prior written consent (which consent shall not be unreasonably
withheld) and (4) Buyer shall have no obligation hereunder to any Indemnified
Party when and if a court of competent jurisdiction shall ultimately determine,
and such determination shall have become final and nonappealable, that
indemnification of such Indemnified Party in the manner contemplated hereby is
prohibited by applicable law. Any Indemnified Party wishing to claim
Indemnification under this Section 6.8, upon learning of any such claim, action,
suit, proceeding or investigation, shall notify promptly Buyer thereof, provided
that the failure to so notify shall not affect the obligations of Buyer under
this Section 6.8 except to the extent such failure to notify prejudices Buyer.
Buyer's obligations under this Section 6.8 continue in full force and effect for
a period of six (6) years from the Effective Time; provided, however, that all
rights to indemnification in respect of any claim (a "Claim") asserted or made
within such period shall continue until the final disposition of such Claim.
Notwithstanding anything to the contrary contained in this Section 6.8(a), in no
event shall Buyer's obligations under this Section 6.8(a) with respect to
indemnification or the advancement of expenses be greater than the obligations
of the Company and its Subsidiaries with respect thereto set forth as of the
date of this Agreement in the Certificate of Incorporation, By-laws or similar
governing documents of the Company and its Subsidiaries.
(b) Buyer shall cause the persons serving as officers and directors of the
Company immediately prior to the Effective Time to be covered for a period of
four years from the Effective Time by the directors' and officers' liability
insurance policy maintained by the Company (provided that Buyer may substitute
therefor policies of at least the same coverage and amounts containing terms and
conditions which are not less advantageous than such policy) with respect to
acts or omissions occurring prior to the Effective Time which were committed by
such officers and directors in their capacity as such; provided, however, that
such policy shall be increased to an amount of at least $3,000,000.
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(c) In the event Buyer or the Surviving Corporation or any of its
successors or assigns (i) consolidates with or merges into any other person and
shall not be the continuing or surviving corporation or entity of such
consolidation or merger, or (ii) transfers or conveys all or substantially all
of its properties and assets to any person, then, and in each such case, to the
extent necessary, proper provision shall be made so that the successors and
assigns of Buyer or the Surviving Corporation, as the case may be, assume the
obligations set forth in this section.
(d) The provisions of this Section 6.8 are intended to be for the benefit
of, and shall be enforceable by, each Indemnified Party and his or her heirs and
representatives.
6.9. Subsequent Interim and Annual Financial Statements. As soon as
reasonably available, but in no event later than March 31, 1995 or, in the case
of the Company, December 31, 1994, Buyer will deliver to the Company and the
Company will deliver to Buyer their respective Annual Reports on Form 10-K for,
in the case of Buyer, the fiscal year ended December 31, 1994 and, in the case
of the Company, the fiscal year ended September 30, 1994, as filed with the SEC
under the Exchange Act. As soon as reasonably available, but in no event more
than 45 days after the end of each fiscal quarter ending after the date of this
Agreement, Buyer will deliver to the Company and the Company will deliver to
Buyer their respective Quarterly Reports on Form 10-Q, as filed with the SEC
under the Exchange Act.
6.10. Additional Agreements. In case at any time after the Effective Time
any further action is necessary or desirable to carry out the purposes of this
Agreement, or the Bank Merger Agreement, or to vest the Surviving Corporation or
the Surviving Bank with full title to all properties, assets, rights, approvals,
immunities and franchises of any of the parties to the Merger or the Subsidiary
Merger, the proper officers and directors of each party to this Agreement and
their respective Subsidiaries shall take all such necessary action as may be
reasonably requested by Buyer.
6.11. Advice of Changes. Buyer and the Company shall promptly advise the
other party of any change or event having a Material Adverse Effect on it or
which it believes would or would be reasonably likely to cause or constitute a
material breach of any of its representations, warranties or covenants contained
herein. From time to time prior to the Effective Time (and on the date prior to
the Closing Date), each party will promptly supplement or amend the Disclosure
Schedules delivered in connection with the execution of this Agreement to
reflect any matter which, if existing, occurring or known at the date of this
Agreement, would have been required to be set forth or described in such
Disclosure Schedules or which is necessary to correct any information in such
Disclosure Schedules which has been rendered inaccurate thereby. No supplement
or amendment to such Disclosure Schedules shall have any effect for the purpose
of determining satisfaction of the conditions set forth in Sections 7.2(a) or
7.3(a) hereof, as the case may be, or the compliance by the Company or Buyer, as
the case may be, with the respective covenants and agreements of such parties
contained herein.
6.12. Current Information. During the period from the date of this
Agreement to the Effective Time, the Company will cause one or more of its
designated representatives to confer on a regular and frequent basis (not less
than monthly) with representatives of Buyer and to report (i) the general status
of the ongoing operations of the Company and its Subsidiaries and (ii) the
status of, and the action proposed to be taken with respect to, those Loans held
by the Company or any Subsidiary of the Company which, individually or in
combination with one or more other Loans to the same borrower thereunder, have
an original principal amount of $250,000 or more and are non-performing assets.
The Company will promptly notify Buyer of any material change in the normal
course of business or in the operation of the properties of the Company or any
of its Subsidiaries and of any governmental complaints, investigations or
hearings (or communications indicating that the same may be contemplated), or
the institution or the threat of significant litigation involving the Company or
any of its Subsidiaries, and will keep Buyer fully informed of such events.
6.13. Execution and Authorization of Bank Merger Agreement. As soon as
reasonably practicable after the date of this Agreement, (a) Buyer shall (i)
cause the Board of Directors of New York Bank to approve the Bank Merger
Agreement, (ii) cause New York Bank to execute and deliver the Bank Merger
Agreement, and (iii) approve the Bank Merger Agreement as the sole stockholder
of New York Bank, and (b) the Company shall (i) cause the Board of Directors of
the Company Bank to approve the Bank Merger
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Agreement, (ii) cause the Company Bank to execute and deliver the Bank Merger
Agreement, and (iii) approve the Bank Merger Agreement as the sole stockholder
of the Company Bank. The Bank Merger Agreement shall contain terms that are
normal and customary in light of the transactions contemplated hereby and such
additional terms as are necessary to carry out the purposes of this Agreement.
If Buyer, upon the advice of its counsel, determines that there is a reasonable
possibility that the Subsidiary Merger is not legally permissible under the laws
of the State of New York or will not be approved by the Banking Department as a
result of Company's status as a federal savings bank, Buyer shall notify the
Company accordingly and the Company shall, subject to the requirements of
applicable law, use its best efforts to cause the Company Bank to be converted
to a New York chartered savings bank (the "Conversion") as soon as practicable
after the Company's receipt of such notice from Buyer (but in no event prior to
the day immediately prior to the Effective Time), and, subject to the terms and
conditions hereof, both Buyer and the Company shall use their best efforts to
cause such New York chartered savings bank to be merged with and into New York
Bank with New York Bank surviving such merger, as soon as practicable after the
Effective Time.
6.14. Directorships. Buyer shall cause its Board of Directors to be
expanded by one member and shall appoint one of the current directors of the
Company selected by Buyer as a nominee to fill the vacancy on Buyer's Board of
Directors created by such increase as of the Effective Time.
ARTICLE VII
CONDITIONS PRECEDENT
7.1. Conditions to Each Party's Obligation To Effect the Merger. The
respective obligation of each party to effect the Merger shall be subject to the
satisfaction at or prior to the Effective Time of the following conditions:
(a) Stockholder Approval. This Agreement shall have been approved and
adopted by the affirmative vote of the holders of at least a majority of the
outstanding shares of Company Common Stock entitled to vote thereon and by the
affirmative vote of the holders of at least a majority of the outstanding shares
of Buyer Common Stock entitled to vote thereon.
(b) NYSE Listing. The shares of Buyer Common Stock which shall be issued
to the stockholders of the Company upon consummation of the Merger shall have
been authorized for listing on the NYSE, subject to official notice of issuance.
(c) Other Approvals. All regulatory approvals required to consummate the
transactions contemplated hereby (including the Merger, the Subsidiary Merger
and, if necessary to consummate the Subsidiary Merger, the Conversion) shall
have been obtained and shall remain in full force and effect and all statutory
waiting periods in respect thereof shall have expired (all such approvals and
the expiration of all such waiting periods being referred to herein as the
"Requisite Regulatory Approvals").
(d) S-4. The S-4 shall have become effective under the Securities Act and
no stop order suspending the effectiveness of the S-4 shall have been issued and
no proceedings for that purpose shall have been initiated or threatened by the
SEC.
(e) No Injunctions or Restraints; Illegality. No order, injunction or
decree issued by any court or agency of competent jurisdiction or other legal
restraint or prohibition (an "Injunction") preventing the consummation of the
Merger, the Subsidiary Merger or any of the other transactions contemplated by
this Agreement or the Bank Merger Agreement shall be in effect. No statute,
rule, regulation, order, injunction or decree shall have been enacted, entered,
promulgated or enforced by any Governmental Entity which prohibits, restricts or
makes illegal consummation of the Merger or the Subsidiary Merger.
7.2. Conditions to Obligations of Buyer. The obligation of Buyer to effect
the Merger is also subject to the satisfaction or waiver by Buyer at or prior to
the Effective Time of the following conditions:
(a) Representations and Warranties. (I) The representations and warranties
of the Company set forth in this Agreement shall be true and correct in all
material respects as of the date of this Agreement and
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(except to the extent such representations and warranties speak as of an earlier
date) as of the Closing Date as though made on and as of the Closing Date; and
(II) the representations and warranties of the Company set forth in this
Agreement shall be true and correct in all material respects as of the date of
this Agreement and (except to the extent such representations and warranties
speak as of an earlier date) as of the Closing Date as though made on and as of
the Closing Date; provided, however, that for purposes of determining the
satisfaction of the condition contained in this clause (II), no effect shall be
given to any exception in such representations and warranties relating to
materiality or a Material Adverse Effect, and provided, further, however, that,
for purposes of this clause (II), such representations and warranties shall be
deemed to be true and correct in all material respects unless the failure or
failures of such representations and warranties to be so true and correct,
individually or in the aggregate, represent a material adverse change from the
business, assets, financial condition or results of operations of the Company
and its Subsidiaries taken as a whole as represented herein. Buyer shall have
received a certificate signed on behalf of the Company by the Chief Executive
Officer and the Chief Financial Officer of the Company to the foregoing effect.
(b) Performance of Obligations of the Company. The Company shall have
performed in all material respects all obligations required to be performed by
it under this Agreement at or prior to the Closing Date, and Buyer shall have
received a certificate signed on behalf of the Company by the Chief Executive
Officer and the Chief Financial Officer of the Company to such effect.
(c) No Burdensome Condition. None of the Requisite Regulatory Approvals
shall impose any term, condition or restriction upon Buyer, the Company, the
Company Bank, the Surviving Corporation, the Surviving Bank or any of their
respective Subsidiaries that Buyer or the Company, in good faith, reasonably
determines would so materially adversely affect the economic or business
benefits of the transactions contemplated by this Agreement to Buyer or the
Company as to render inadvisable in the reasonable good faith judgment of Buyer
or the Company, the consummation of the Merger (a "Burdensome Condition").
(d) Consents Under Agreements. The consent, approval or waiver of each
person (other than the Governmental Entities referred to in Section 7.1(c))
whose consent or approval shall be required in order to permit the succession by
the Surviving Corporation or the Surviving Bank pursuant to the Merger or the
Subsidiary Merger, as the case may be, to any obligation, right or interest of
the Company or any Subsidiary of the Company under any loan or credit agreement,
note, mortgage, indenture, lease, license or other agreement or instrument shall
have been obtained, except where the failure to obtain such consent, approval or
waiver would not so materially adversely affect the economic or business
benefits of the transactions contemplated by this Agreement to Buyer as to
render inadvisable, in the reasonable good faith judgment of Buyer, the
consummation of the Merger.
(e) No Pending Governmental Actions. No proceeding initiated by any
Governmental Entity seeking an Injunction shall be pending.
(f) Federal Tax Opinion. Buyer shall have received an opinion of Skadden,
Arps, Slate, Meagher & Flom, counsel to Buyer ("Buyer's Counsel"), in form and
substance reasonably satisfactory to Buyer, substantially to the effect that, on
the basis of facts, representations and assumptions set forth in such opinion
which are consistent with the state of facts existing at the Effective Time, the
Merger and Subsidiary Merger will be treated as reorganizations within the
meaning of Section 368(a) of the Code and that, accordingly, for federal income
tax purposes no gain or loss will be recognized by Buyer, the Company, New York
Bank or the Company Bank as a result of the Merger and Subsidiary Merger except
to the extent the Company Bank or New York Bank may be required to recognize
income due to the recapture of bad debt reserves as a result of the Subsidiary
Merger. In rendering such opinion, Buyer's Counsel may require and rely upon
representations and covenants contained in certificates of officers of Buyer,
the Company and others.
(g) Legal Opinion. Buyer shall have received the opinion of Muldoon,
Murphy & Faucette, counsel to the Company (the "Company's Counsel"), dated the
Closing Date, substantially in the form attached hereto as Exhibit 7.2(g). As to
any matter in such opinion which involves matters of fact or matters relating to
laws other than Federal securities or Delaware corporate law, such counsel may
rely upon the certificates of officers and directors of the Company and of
public officials and opinions of local counsel, reasonably acceptable to Buyer,
provided a copy of such reliance opinion shall be attached as an exhibit to the
opinion of such counsel.
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(h) Pooling of Interests. Buyer shall have received a letter from KPMG
Peat Marwick addressed to Buyer, to the effect that the Merger will qualify for
"pooling of interests" accounting treatment, unless such firm advises Buyer that
it is unable to issue a letter to such effect solely by reason of Buyer having
exercised its right to purchase Company Common Stock pursuant to the Option
Agreement.
(i) Accountant's Letter. The Company shall have caused to be delivered to
Buyer letters from KPMG Peat Marwick, independent public accountants with
respect to the Company, dated the date on which the Registration Statement or
last amendment thereto shall become effective, and dated the date of the
Closing, and addressed to Buyer, with respect to the Company's consolidated
financial position and results of operations, which letters shall be based upon
agreed upon procedures to be specified by Buyer, which procedures shall be
consistent with applicable professional standards for letters delivered by
independent accountants in connection with comparable transactions.
(j) Subsidiary Merger. Nothing shall have come to the attention of Buyer
which would preclude consummation of the Subsidiary Merger immediately following
consummation of the Merger.
7.3. Conditions to Obligations of the Company. The obligation of the
Company to effect the Merger is also subject to the satisfaction or waiver by
the Company at or prior to the Effective Time of the following conditions:
(a) Representations and Warranties. (I) The representations and warranties
of Buyer set forth in this Agreement shall be true and correct in all material
respects as of the date of this Agreement and (except to the extent such
representations and warranties speak as of an earlier date) as of the Closing
Date as though made on and as of the Closing Date; and (II) the representations
and warranties of Buyer set forth in this Agreement shall be true and correct in
all material respects as of the date of this Agreement and (except to the extent
such representations and warranties speak as of an earlier date) as of the
Closing Date as though made on and as of the Closing Date; provided, however,
that for purposes of determining the satisfaction of the condition contained in
this clause (II), no effect shall be given to any exception in such
representations and warranties relating to materiality or a Material Adverse
Effect, and provided, further, however, that, for purposes of this clause (II),
such representations and warranties shall be deemed to be true and correct in
all material respects unless the failure or failures of such representations and
warranties to be so true and correct, individually or in the aggregate,
represent a material adverse change from the business, assets, financial
condition or results of operations of Buyer and its Subsidiaries taken as a
whole as represented herein. The Company shall have received a certificate
signed on behalf of Buyer by the Chief Executive Officer and the Chief Financial
Officer of Buyer to the foregoing effect.
(b) Performance of Obligations of Buyer. Buyer shall have performed in all
material respects all obligations required to be performed by it under this
Agreement at or prior to the Closing Date, and the Company shall have received a
certificate signed on behalf of Buyer by the Chief Executive Officer and the
Chief Financial Officer of Buyer to such effect.
(c) Consents Under Agreements. The consent, approval or waiver of each
person (other than the Governmental Entities referred to in Section 7.1(c))
whose consent or approval shall be required in connection with the transactions
contemplated hereby under any loan or credit agreement, note, mortgage,
indenture, lease, license or other agreement or instrument to which Buyer or any
of its Subsidiaries is a party or is otherwise bound, except those for which
failure to obtain such consents and approvals would not, individually or in the
aggregate, have a material adverse effect on the business, operations or
financial condition of Buyer and its Subsidiaries taken as a whole (after giving
effect to the transactions contemplated hereby), shall have been obtained.
(d) No Pending Governmental Actions. No proceeding initiated by any
Governmental Entity seeking an Injunction shall be pending.
(e) Federal Tax Opinion. The Company shall have received an opinion of the
Company's Counsel, in form and substance reasonably satisfactory to the Company,
dated as of the Effective Time, substantially to the effect that, on the basis
of facts, representations and assumptions set forth in such opinion which are
consistent with the state of facts existing at the Effective Time, the Merger
and the Subsidiary Merger will be
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treated as reorganizations within the meaning of Section 368(a) of the Code and
that accordingly for federal income tax purposes:
(i) No gain or loss will be recognized by the Company as a result of
the Merger;
(ii) No gain or loss will be recognized by the Company Bank as a
result of the Subsidiary Merger except to the extent the Company Bank or
New York Bank may be required to recognize income due to the recapture of
bad debt reserves as a result of the Subsidiary Merger;
(iii) No gain or loss will be recognized by the shareholders of the
Company who exchange all of their Company Common Stock solely for Buyer
Common Stock pursuant to the Merger (except with respect to cash received
in lieu of a fractional share interest in Buyer Common Stock);
(iv) The aggregate tax basis of the Buyer Common Stock received by
shareholders who exchange all of their Company Common Stock solely for
Common Stock pursuant to the Merger will be the same as the aggregate tax
basis of the Company Common Stock surrendered in exchange therefor (reduced
by any amount allocable to a fractional share interest for which cash is
received).
In rendering such opinion, the Company's Counsel may require and rely upon
representations and covenants contained in certificates of officers of Buyer,
the Company and others, including certain shareholders of the Company.
(f) Legal Opinion. The Company shall have received the opinion of Buyer's
Counsel, dated the Closing Date, substantially in the form attached hereto as
Exhibit 7.3(f). As to any matter in such opinion which involves matters of fact
or matters relating to laws other than Federal securities law or Delaware
corporate law, such counsel may rely upon the certificates of officers and
directors of Buyer and of public officials and opinions of local counsel,
reasonably acceptable to the Company, provided a copy of such reliance opinions
shall be attached as an exhibit to the opinion of such counsel.
ARTICLE VIII
TERMINATION AND AMENDMENT
8.1. Termination. This Agreement may be terminated at any time prior to
the Effective Time, whether before or after approval of the matters presented in
connection with the Merger by the stockholders of both the Company and Buyer:
(a) by mutual consent of the Company and Buyer in a written instrument, if
the Board of Directors of each so determines by a vote of a majority of the
members of its entire Board;
(b) by either Buyer or the Company upon written notice to the other party
(i) 60 days after the date on which any request or application for a Requisite
Regulatory Approval shall have been denied or withdrawn at the request or
recommendation of the Governmental Entity which must grant such Requisite
Regulatory Approval, unless within the 60-day period following such denial or
withdrawal a petition for rehearing or an amended application has been filed
with the applicable Governmental Entity, provided, however, that no party shall
have the right to terminate this Agreement pursuant to this Section 8.1(b)(i) if
such denial or request or recommendation for withdrawal shall be due to the
failure of the party seeking to terminate this Agreement to perform or observe
the covenants and agreements of such party set forth herein or (ii) if any
Governmental Entity of competent jurisdiction shall have issued a final
nonappealable order enjoining or otherwise prohibiting the consummation of any
of the transactions contemplated by this Agreement;
(c) by either Buyer or the Company if the Merger shall not have been
consummated on or before June 30, 1995, unless the failure of the Closing to
occur by such date shall be due to the failure of the party seeking to terminate
this Agreement to perform or observe the covenants and agreements of such party
set forth herein;
(d) by either Buyer or the Company (provided that the terminating party
shall not be in material breach of any of its obligations under Section 6.3) if
any approval of the stockholders of either of the Company or
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Buyer required for the consummation of the Merger shall not have been obtained
by reason of the failure to obtain the required vote at a duly held meeting of
such stockholders or at any adjournment or postponement thereof;
(e) by either Buyer or the Company (provided that the terminating party is
not then in material breach of any representation, warranty, covenant or other
agreement contained herein) if there shall have been a material breach of any of
the representations or warranties set forth in this Agreement on the part of the
other party, which breach is not cured within thirty days following written
notice to the party committing such breach, or which breach, by its nature,
cannot be cured prior to the Closing; provided, however, that neither party
shall have the right to terminate this Agreement pursuant to this Section 8.1(e)
unless the breach of representation or warranty, together with all other such
breaches, would entitle the party receiving such representation not to
consummate the transactions contemplated hereby under Section 7.2(a) (in the
case of a breach of representation or warranty by the Company) or Section 7.3(a)
(in the case of a breach of representation or warranty by Buyer);
(f) by either Buyer or the Company (provided that the terminating party is
not then in material breach of any representation, warranty, covenant or other
agreement contained herein) if there shall have been a material breach of any of
the covenants or agreements set forth in this Agreement on the part of the other
party, which breach shall not have been cured within thirty days following
receipt by the breaching party of written notice of such breach from the other
party hereto;
(g) by the Company, by action of its Board of Directors, whether before or
after approval of the Merger by the Company's stockholders, by giving written
notice of such election to Buyer within two NYSE trading days after the
Valuation Period in the event the Average Closing Price is less than $12.50 per
share; provided, however, that no right of termination shall arise under this
Section 8.1(g) if Buyer elects within 5 business days of receipt of such written
notice to notify the Company in writing that it has waived its right to utilize
the Maximum Exchange Ratio and has increased the Exchange Ratio such that the
value of the consideration (valued at the Average Closing Price) to be paid in
respect of each share of Company Common Stock to be converted into Buyer Common
Stock and cash in lieu of fractional shares upon consummation of the Merger is
$21.99 per share;
(h) by Buyer, if the Board of Directors of the Company does not publicly
recommend in the Proxy Statement that the Company's stockholders approve and
adopt this Agreement or if, after recommending in the Proxy Statement that
stockholders approve and adopt this Agreement, the Board of Directors of the
Company shall have withdrawn, modified or amended such recommendation in any
respect materially adverse to Buyer;
(i) By the Company, if on or prior to the close of business on the 30th day
following the execution of this Agreement, the Company reasonably determines in
good faith that the business or financial condition of Buyer and its
Subsidiaries taken as a whole has materially and adversely changed from that
described in Buyer's Annual Report on Form 10-K for the fiscal year ended on
December 31, 1993; or
(j) by Buyer, after the thirtieth and prior to the close of business on the
sixtieth day following the date of this Agreement, if within thirty days after
the date of this Agreement, the Company shall not have obtained all of the
consents referred to in Section 1.5 hereof.
8.2. Effect of Termination; Expenses. In the event of termination of this
Agreement by either Buyer or the Company as provided in Section 8.1, this
Agreement shall forthwith become void and have no effect except (i) the last
sentence of Section 6.2(a), and Sections 6.2(c), 8.2 and 9.4, shall survive any
termination of this Agreement, (ii) that notwithstanding anything to the
contrary contained in this Agreement, no party shall be relieved or released
from any liabilities or damages arising out of its willful breach of any
provision of this Agreement, and (iii) in the event this Agreement (x) is
terminated subsequent to the occurrence of a Purchase Event (as such term is
defined in the Option Agreement) or (y) is terminated by Buyer pursuant to
Section 8.1(f) hereof, and within 12 months after such termination by Buyer
pursuant to Section 8.1(f) hereof a Purchase Event shall occur, then in addition
to any other amounts payable or stock issuable by the
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Company pursuant to this Agreement or the Option Agreement, as the case may be,
the Company shall pay to Buyer a termination fee of $2,000,000.
8.3. Amendment. Subject to compliance with applicable law, this Agreement
may be amended by the parties hereto, by action taken or authorized by their
respective Boards of Directors, at any time before or after approval of the
matters presented in connection with the Merger by the stockholders of either
the Company or Buyer; provided, however, that after any approval of the
transactions contemplated by this Agreement by the Company's stockholders, there
may not be, without further approval of such stockholders, any amendment of this
Agreement which reduces the amount or changes the form of the consideration to
be delivered to the Company stockholders hereunder other than as contemplated by
this Agreement. This Agreement may not be amended except by an instrument in
writing signed on behalf of each of the parties hereto.
8.4. Extension; Waiver. At any time prior to the Effective Time, the
parties hereto, by action taken or authorized by their respective Board of
Directors, may, to the extent legally allowed, (a) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(b) waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto and (c) waive compliance
with any of the agreements or conditions contained herein. Any agreement on the
part of a party hereto to any such extension or waiver shall be valid only if
set forth in a written instrument signed on behalf of such party, but such
extension or waiver or failure to insist on strict compliance with an
obligation, covenant, agreement or condition shall not operate as a waiver of,
or estoppel with respect to, any subsequent or other failure.
ARTICLE IX
GENERAL PROVISIONS
9.1. Closing. Subject to the terms and conditions of this Agreement and
the Bank Merger Agreement, the closing of the Merger (the "Closing") will take
place at 10:00 a.m. on a date to be specified by the parties, which shall be the
first day which is (a) the last business day of a month and (b) at least two
business days after the satisfaction or waiver (subject to applicable law) of
the latest to occur of the conditions set forth in Article VII hereof (the
"Closing Date"), at the offices of Buyer's Counsel unless another time, date or
place is agreed to in writing by the parties hereto.
9.2. Alternative Structure. Notwithstanding anything to the contrary
contained in this Agreement, subject to the Company's consent, which consent
shall not be unreasonably withheld, prior to the Effective Time, Buyer shall be
entitled to revise the structure of the Merger and/or the Subsidiary Merger and
related transactions provided that each of the transactions comprising such
revised structure shall (i) fully qualify as, or fully be treated as part of,
one or more tax-free reorganizations within the meaning of Section 368(a) of the
Code, and not subject any of the stockholders of the Company to adverse tax
consequences or change the amount of consideration to be received by such
stockholders, (ii) be properly treated for financial reporting purposes as a
pooling of interests, (iii) be capable of consummation in as timely a manner as
the structure contemplated herein and (iv) not otherwise be prejudicial to the
interests of the stockholders of the Company. This Agreement and any related
documents shall be appropriately amended in order to reflect any such revised
structure.
9.3. Nonsurvival of Representations, Warranties and Agreements. None of
the representations, warranties, covenants and agreements in this Agreement or
in any instrument delivered pursuant to this Agreement (other than pursuant to
the Option Agreement, which shall terminate in accordance with its terms) shall
survive the Effective Time, except for those covenants and agreements contained
herein and therein which by their terms apply in whole or in part after the
Effective Time.
9.4. Expenses. All costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such expense, provided, however, that the costs and expenses of
printing and mailing the Proxy Statement to the stockholders of the Company and
Buyer, and all filing and other fees paid to the SEC or any other Governmental
Entity in connection with the Merger, the Subsidiary Merger and the other
transactions contemplated hereby, shall be borne equally by Buyer and the
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Company, provided, further, however, that nothing contained herein shall limit
either party's rights to recover any liabilities or damages arising out of the
other party's willful breach of any provision of this Agreement.
9.5. Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally, telecopied (with
confirmation), mailed by registered or certified mail (return receipt requested)
or delivered by an express courier (with confirmation) to the parties at the
following addresses (or at such other address for a party as shall be specified
by like notice):
(a) if to Buyer, to:
North Fork Bancorporation, Inc.
9025 Route 25
Mattituck, N.Y. 11952
Attention: Chief Executive Officer
with a copy to:
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, New York 10022
Attn: Fred B. White, III, Esq.
and
(b) if to the Company, to:
Metro Bancshares Inc.
100 Jericho Quadrangle
Jericho, N.Y. 11753
Attention: Chief Executive Officer
with a copy to:
Muldoon, Murphy & Faucette
501 Wisconsin Avenue NW
Suite 508
Washington, D.C. 20016
Attn: Joe Passaic, Esq.
9.6. Interpretation. When a reference is made in this Agreement to
Sections, Exhibits or Schedules, such reference shall be to a Section of or
Exhibit or Schedule to this Agreement unless otherwise indicated. The table of
contents and headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement. Whenever the words "include", "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation". The phrases "the date of this Agreement", "the date hereof " and
terms of similar import, unless the context otherwise requires, shall be deemed
to refer to June 27, 1994.
9.7. Counterparts. This Agreement may be executed in counterparts, all of
which shall be considered one and the same agreement and shall become effective
when counterparts have been signed by each of the parties and delivered to the
other parties, it being understood that all parties need not sign the same
counterpart.
9.8. Entire Agreement. This Agreement (including the documents and the
instruments referred to herein) constitutes the entire agreement and supersedes
all prior agreements and understandings, both written and oral, among the
parties with respect to the subject matter hereof, other than the
Confidentiality Agreement, the Bank Merger Agreement and the Option Agreement.
9.9. Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of Delaware, without regard to any
applicable conflicts of law.
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9.10. Enforcement of Agreement. The parties hereto agree that irreparable
damage would occur in the event that the provisions contained in the last
sentence of Section 6.2(a) and in Section 6.2(c) of this Agreement were not
performed in accordance with its specific terms or was otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of the last sentence of Section 6.2(a) and
Section 6.2(c) of this Agreement and to enforce specifically the terms and
provisions thereof in any court of the United States or any state having
jurisdiction, this being in addition to any other remedy to which they are
entitled at law or in equity.
9.11. Severability. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
9.12. Publicity. Except as otherwise required by law or the rules of the
NYSE or the American Stock Exchange, so long as this Agreement is in effect,
neither Buyer nor the Company shall, or shall permit any of its Subsidiaries to,
issue or cause the publication of any press release or other public announcement
with respect to, or otherwise make any public statement concerning, the
transactions contemplated by this Agreement without the consent of the other
party, which consent shall not be unreasonably withheld.
9.13. Assignment; No Third Party Beneficiaries. Neither this Agreement nor
any of the rights, interests or obligations hereunder shall be assigned by any
of the parties hereto (whether by operation of law or otherwise) without the
prior written consent of the other parties. Subject to the preceding sentence,
this Agreement will be binding upon, inure to the benefit of and be enforceable
by the parties and their respective successors and assigns. Except as otherwise
expressly provided herein, this Agreement (including the documents and
instruments referred to herein) is not intended to confer upon any person other
than the parties hereto any rights or remedies hereunder.
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IN WITNESS WHEREOF, Buyer and the Company have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the date
first above written.
NORTH FORK BANCORPORATION, INC.
By /s/ JOHN ADAM KANAS
------------------------------------
Name: John Adam Kanas
Title: Chairman, President &
Chief Executive Officer
Attest:
/s/ ANTHONY J. ABATE
- ---------------------------------------------------------
Name: Anthony J. Abate
Vice President & Secretary
METRO BANCSHARES INC.
By /s/ DAVID G. HEROLD
------------------------------------
Name: David G. Herold
Title: Chairman and Chief
Executive Officer
Attest:
/s/ STEPHEN G. WILSON
- ---------------------------------------------------------
Name: Stephen G. Wilson
Chief Financial Officer
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ANNEX B
THE TRANSFER OF THIS AGREEMENT IS
SUBJECT TO CERTAIN PROVISIONS CONTAINED
HEREIN AND TO RESALE RESTRICTIONS UNDER
THE SECURITIES ACT OF 1933, AS AMENDED
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of June 27, 1994 (the "Agreement"), by and
between Metro Bancshares Inc., a Delaware corporation ("Issuer"), and North Fork
Bancorporation, Inc., a Delaware corporation ("Grantee").
WHEREAS, Grantee and Issuer have entered into an Agreement and Plan of
Merger (the "Merger Agreement"), of even date herewith, providing for, among
other things, the merger of Issuer with and into Grantee; and
WHEREAS, as a condition and inducement to Grantee's execution of the Merger
Agreement, Grantee has requested that Issuer agree, and Issuer has agreed, to
grant Grantee the Option (as defined below);
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein and in
the Merger Agreement, and intending to be legally bound hereby, Issuer and
Grantee agree as follows:
1. Defined Terms. Capitalized terms which are used but not defined herein
shall have the meanings ascribed to such terms in the Merger Agreement.
2. Grant of Option. Subject to the terms and conditions set forth herein,
Issuer hereby grants to Grantee an irrevocable option (the "Option") to purchase
up to 557,795 shares (subject to adjustment as set forth herein) (the "Option
Shares") of common stock, par value $0.01 per share, of Issuer ("Issuer Common
Stock") at a purchase price (subject to adjustment as set forth herein) of
$21.00 per Option Share (the "Purchase Price").
3. Exercise of Option. (a) Grantee may exercise the Option, in whole or in
part, at any time and from time to time following the occurrence of a Purchase
Event (as defined below); provided, however, that the Option, to the extent not
previously exercised, shall terminate and be of no further force and effect upon
the earliest to occur of (i) the Effective Time, (ii) 12 months after the first
occurrence of a Purchase Event (as defined below), (iii) termination of the
Merger Agreement in accordance with the terms thereof prior to the occurrence of
a Purchase Event (other than a termination of the Merger Agreement by Grantee
pursuant to Section 8.1(f) thereof) or (iv) 12 months after the termination of
the Merger Agreement by Grantee pursuant to Section 8.1(f) thereof, provided,
however, that if within 12 months after a termination of the Merger Agreement by
Grantee pursuant to Section 8.1(f) thereof a Purchase Event shall occur, then
notwithstanding anything to the contrary contained herein, this Option shall
terminate 12 months after the first occurrence of such Purchase Event; and
provided further, however, that any purchase of shares upon exercise of the
Option shall be subject to compliance with applicable law, including, without
limitation, the Bank Holding Company Act of 1956, as amended (the "BHC Act");
and provided further, however, that if the Option cannot be exercised on any day
because of any injunction, order or similar restraint issued by a court of
competent jurisdiction, the period during which the Option may be exercised
shall be extended so that the Option shall expire no earlier than on the 10th
business day after such injunction, order or restraint shall have been dissolved
or when such injunction, order or restraint shall have become permanent and no
longer subject to appeal, as the case may be.
(b) As used herein, a "Purchase Event" means any of the following events:
(i) Issuer shall have authorized, recommended, publicly proposed or
entered into an agreement with any person (other than Grantee or any
affiliate of Grantee or any person acting in concert in any
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respect with Grantee) to effect an Acquisition Transaction (as defined
below), shall have failed to publicly oppose any such Acquisition
Transaction or shall have failed to publicly oppose a Tender Offer or an
Exchange Offer (as defined below). As used herein, the term Acquisition
Transaction shall mean (A) a merger, consolidation or similar transaction
involving Issuer or any of its Subsidiaries (other than internal mergers,
reorganizations, consolidations or dissolutions involving only existing
Subsidiaries), (B) the disposition, by sale, lease, exchange or otherwise,
of assets of Issuer or any of its Subsidiaries representing 20% or more of
the consolidated assets of Issuer and its Subsidiaries or (C) the issuance,
sale or other disposition of (including by way of merger, consolidation,
share exchange or any similar transaction) securities representing 20% or
more of the voting power of Issuer or any of its Subsidiaries;
(ii) any person (other than Grantee or any affiliate of Grantee or any
person acting in concert in any respect with Grantee) shall have acquired
Beneficial Ownership (as such term is defined in Rule 13d-3 promulgated
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"))
of, or the right to acquire Beneficial Ownership of, or any Group (as such
term is defined under the Exchange Act) shall have been formed which shall
have acquired Beneficial Ownership of, or the right to acquire Beneficial
Ownership of, 20% or more of the then outstanding shares of Issuer Common
Stock;
(iii) any person (other than Grantee or any affiliate of Grantee or
any person acting in concert in any respect with Grantee) shall have
commenced (as such term is defined in Rule 14d-2 under the Exchange Act) or
shall have filed a registration statement under the Securities Act of 1933,
as amended (the "Securities Act") with respect to, a tender offer or
exchange offer to purchase any shares of Issuer Common Stock such that,
upon consummation of such offer, such person would own or control 20% or
more of the then outstanding shares of Issuer Common Stock (such an offer
being referred to herein as a "Tender Offer" or an "Exchange Offer,"
respectively);
(iv) the holders of Issuer Common Stock shall not have approved the
Merger Agreement and the transactions contemplated thereby, at the meeting
of such stockholders held for the purpose of voting on such agreement, or
such meeting shall not have been held or shall have been cancelled prior to
termination of the Merger Agreement, in each case after it shall have been
publicly announced that any person (other than Grantee or any affiliate of
Grantee or any person acting in concert in any respect with Grantee) shall
have made, or disclosed an intention to make, a proposal to engage in an
Acquisition Transaction; or
(v) Issuer's Board of Directors shall not have recommended to the
stockholders of Issuer that such stockholders vote in favor of the approval
of the Merger Agreement and the transactions contemplated thereby or shall
have withdrawn or modified such recommendation in a manner adverse to
Grantee.
As used in this Agreement, "person" shall have the meaning specified in Sections
3(a)(9) and 13(d)(3) of the Exchange Act.
(c) In the event Grantee wishes to exercise the Option, it shall send to
Issuer a written notice (the date of which being herein referred to as the
"Notice Date") specifying (i) the total number of Option Shares it intends to
purchase pursuant to such exercise and (ii) a place and date not earlier than
three business days nor later than 30 business days from the Notice Date for the
closing (the "Closing") of such purchase (the "Closing Date"). If prior
notification to or approval of the Board of Governors of the Federal Reserve
System (the "Federal Reserve Board") or any other regulatory authority is
required in connection with such purchase, Issuer shall cooperate in good faith
with Grantee in the filing of the required notice or application for approval
and the obtaining of any such approval and the period of time that otherwise
would run pursuant to the preceding sentence shall run instead from the date on
which, as the case may be (i) any required notification period has expired or
been terminated or (ii) such approval has been obtained, and in either event,
any requisite waiting period shall have passed.
(d) Notwithstanding anything to the contrary in this Agreement, Grantee
shall not exercise this Agreement if it is in material breach of the Merger
Agreement.
4. Payment and Delivery of Certificates. (a) On each Closing Date, Grantee
shall (i) pay to Issuer, in immediately available funds by wire transfer to a
bank account designated by Issuer, an amount equal to the
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Purchase Price multiplied by the number of Option Shares to be purchased on such
Closing Date and (ii) present and surrender this Agreement to the Issuer at the
address of the Issuer specified in Section 12(f) hereof. In addition to any
other amounts payable pursuant to this Section 4(a), upon the first exercise of
the Option, Grantee shall pay an amount, if any, by which (i) $2,000,000 plus
the product of (A) the total number of Option Shares and (B) the difference
between the Market/Tender Offer Price (as defined below) and the Purchase Price
exceeds (ii) $4,500,000 provided, however, that in no event shall the amount
payable pursuant to this sentence exceed $2,000,000. As used herein, the
"Market/Tender Offer Price" shall mean the higher of the highest per share at
which a Tender Offer or Exchange Offer has been made by any person other than
Grantee or any affiliate of Grantee or person acting in concert in any respect
with Grantee for at least 20% of the shares of Issuer Common Stock then
outstanding or the highest closing sales price per share of Issuer Common Stock
quoted on the American Stock Exchange ("AMEX") (or if Issuer Common Stock is not
quoted on the AMEX, the highest bid price per share as quoted on the principal
trading market or securities exchange on which such shares are traded as
reported by a recognized source) within the six-month period immediately
preceding this Agreement.
(b) At each Closing, simultaneously with the delivery of immediately
available funds and surrender of this Agreement as provided in Section 4(a)
hereof, Issuer shall deliver to Grantee (A) a certificate or certificates
representing the Option Shares to be purchased at such Closing, which Option
Shares shall be free and clear of all liens, claims, charges and encumbrances of
any kind whatsoever, other than any such lien or encumbrance created by Grantee
and (B) if the Option is exercised in part only, an executed new agreement with
the same terms as this Agreement evidencing the right to purchase the balance of
the shares of Issuer Common Stock purchasable hereunder. If Issuer shall have
issued rights or any similar securities ("Rights") pursuant to any shareholder
rights, poison pill or similar plan (a "Shareholder Rights Plan") prior or
subsequent to the date of this Agreement and such Rights remain outstanding at
the time of the issuance of any Option Shares pursuant to an exercise of all or
part of the Option hereunder, then each Option Share issued pursuant to such
exercise shall also represent the number of Rights issued per share of Issuer
Common Stock with terms substantially the same as and at least as favorable to
Grantee as are provided under the Shareholder Rights Plan as then in effect.
(c) Certificates for the Option Shares delivered at each Closing shall be
endorsed with a restrictive legend which shall read substantially as follows:
THE TRANSFER OF THE STOCK REPRESENTED BY THIS CERTIFICATE MAY BE SUBJECT
TO RESTRICTIONS ARISING UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
AND PURSUANT TO THE TERMS OF A STOCK OPTION AGREEMENT DATED AS OF JUNE
27, 1994. A COPY OF SUCH AGREEMENT WILL BE PROVIDED TO THE HOLDER HEREOF
WITHOUT CHARGE UPON RECEIPT BY THE ISSUER OF A WRITTEN REQUEST THEREFOR.
It is understood and agreed that the above legend shall be removed by delivery
of substitute certificate(s) without such legend if Grantee shall have delivered
to Issuer a copy of a letter from the staff of the Securities and Exchange
Commission (the "SEC"), or an opinion of outside counsel reasonably satisfactory
to Issuer in form and substance reasonably satisfactory to Issuer and its
counsel, to the effect that such legend is not required for purposes of the
Securities Act.
5. Representations and Warranties of Issuer. Issuer hereby represents and
warrants to Grantee as follows:
(a) Due Authorization. Issuer has full corporate power and authority to
enter into this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Issuer. This Agreement has been duly and validly
executed and delivered by Issuer.
(b) No Violation. Neither the execution and delivery of this Agreement,
nor the consummation of the transactions contemplated hereby, nor compliance by
Issuer with any of the terms or provisions hereof, will (i) violate any
provision of the Certificate of Incorporation (the "Certificate of
Incorporation") or By-Laws of
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Issuer or the certificates of incorporation, by-laws or similar governing
documents of any of its Subsidiaries or (ii) (x) assuming that all of the
consents and approvals required under applicable law for the purchase of shares
upon the exercise of the Option are duly obtained, violate any statute, code,
ordinance, rule, regulation, judgment, order, writ, decree or injunction
applicable to Issuer or any of its Subsidiaries, or any of their respective
properties or assets, or (y) violate, conflict with, result in a breach of any
provisions of or the loss of any benefit under, constitute a default (or an
event which, with notice or lapse of time, or both, would constitute a default)
under, result in the termination of or a right of termination or cancellation
under, accelerate the performance required by, or result in the creation of any
lien, pledge, security interest, charge or other encumbrance upon any of the
respective properties or assets of Issuer or any of its Subsidiaries under, any
of the terms, conditions or provisions of any note, bond, mortgage, indenture,
deed of trust, license, lease, agreement or other instrument or obligation to
which Issuer or any of its Subsidiaries is a party, or by which they or any of
their respective properties or assets may be bound or affected.
(c) Authorized Stock. Issuer has taken all necessary corporate and other
action to authorize and reserve and to permit it to issue, and, at all times
from the date of this Agreement until the obligation to deliver Issuer Common
Stock upon the exercise of the Option terminates, will have reserved for
issuance, upon exercise of the Option, shares of Issuer Common Stock necessary
for Grantee to exercise the Option, and Issuer will take all necessary corporate
action to authorize and reserve for issuance all additional shares of Issuer
Common Stock (together with any Rights which may have been issued with respect
thereto) or other securities which may be issued pursuant to Section 7 upon
exercise of the Option. The shares of Issuer Common Stock to be issued upon due
exercise of the Option, including all additional shares of Issuer Common Stock
(together with any Rights which may have been issued with respect thereto) or
other securities which may be issuable pursuant to Section 7, upon issuance
pursuant hereto, shall be duly and validly issued, fully paid and nonassessable,
and shall be delivered free and clear of all liens, claims, charges and
encumbrances of any kind or nature whatsoever (except any such lien or
encumbrance created by Grantee), including any preemptive rights of any
stockholder of Issuer.
(d) Board Action. By action of the Board of Directors of Issuer prior to
the execution of this Agreement, resolutions were duly adopted approving the
execution, delivery and performance of this Agreement, any purchase or other
transaction respecting Issuer Common Stock provided for herein, and the other
transactions contemplated hereby. Accordingly, the provisions of Section 203 of
the Delaware General Corporation Law as they relate to Issuer and Section 8 of
Issuer's Certificate of Incorporation do not and will not apply to this
Agreement or any of the other transactions contemplated hereby.
6. Representations and Warranties of Grantee. Grantee hereby represents
and warrants to Issuer that:
(a) Due Authorization. Grantee has corporate power and authority to enter
into this Agreement and, subject to any approvals or consents referred to
herein, to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby have been duly authorized by all necessary corporate action on the part
of Grantee. This Agreement has been duly executed and delivered by Grantee.
(b) Purchase Not for Distribution. This Option is not being acquired with
a view to the public distribution thereof and neither this Option nor any Option
Shares will be transferred or otherwise disposed of except in a transaction
registered or exempt from registration under the Securities Act.
7. Adjustment upon Changes in Capitalization, etc. (a) In the event (i) of
any change in Issuer Common Stock by reason of a stock dividend, stock split,
split-up, recapitalization, combination, exchange of shares or similar
transaction or (ii) that any Rights issued by Issuer shall become exercisable,
the type and number of shares or securities subject to the Option, and the
Purchase Price therefor, shall be adjusted appropriately, and, in the case of
any of the transactions described in clause (i) above, proper provision shall be
made in the agreements governing such transaction so that Grantee shall receive,
upon exercise of the Option, the number and class of shares or other securities
or property that Grantee would have received in respect of Issuer Common Stock
if the Option had been exercised immediately prior to such event, or the record
date therefor, as applicable. If any additional shares of Issuer Common Stock
are issued after the date of this Agreement (other than pursuant to an event
described in the first sentence of this Section 7(a)), the
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number of shares of Issuer Common Stock subject to the Option shall be adjusted
so that, after such issuance, the Option, together with any shares of Issuer
Common Stock previously issued pursuant hereto, equals 9.9% of the number of
shares of Issuer Common Stock then issued and outstanding, without giving effect
to any shares subject or previously issued pursuant to the Option.
(b) In the event that Issuer shall enter into an agreement (i) to
consolidate with or merge into any person, other than Grantee or one of its
Subsidiaries, and shall not be the continuing or surviving corporation of such
consolidation or merger, (ii) to permit any person, other than Grantee or one of
its Subsidiaries, to merge into Issuer and Issuer shall be the continuing or
surviving corporation, but, in connection with such merger, the then outstanding
shares of Issuer Common Stock shall be changed into or exchanged for stock or
other securities of Issuer or any other person or cash or any other property or
the outstanding shares of Issuer Common Stock immediately prior to such merger
shall after such merger represent less than 50% of the outstanding shares and
share equivalents of the merged company, or (iii) to sell or otherwise transfer
all or substantially all of its assets to any person, other than Grantee or one
of its Subsidiaries, then, and in each such case, the agreement governing such
transaction shall make proper provisions so that the Option shall, upon the
consummation of any such transaction and upon the terms and conditions set forth
herein, be converted into, or exchanged for, an option (the "Substitute
Option"), at the election of Grantee, of either (I) the Acquiring Corporation
(as defined below), (II) any person that controls the Acquiring Corporation, or
(III) in the case of a merger described in clause (ii), the Issuer (such person
being referred to as the "Substitute Option Issuer").
(c) The Substitute Option shall have the same terms as the Option,
provided, that if the terms of the Substitute Option cannot, for legal reasons,
be the same as the Option, such terms shall be as similar as possible and in no
event less advantageous to Grantee. The Substitute Option Issuer shall also
enter into an agreement with the then holder or holders of the Substitute Option
in substantially the same form as this Agreement, which shall be applicable to
the Substitute Option.
(d) The Substitute Option shall be exercisable for such number of shares of
the Substitute Common Stock (as hereinafter defined) as is equal to the Assigned
Value (as hereinafter defined) multiplied by the number of shares of Issuer
Common Stock for which the Option was theretofore exercisable, divided by the
Average Price (as hereinafter defined). The exercise price of the Substitute
Option per share of the Substitute Common Stock (the "Substitute Purchase
Price") shall then be equal to the Purchase Price multiplied by a fraction in
which the numerator is the number of shares of the Issuer Common Stock for which
the Option was theretofore exercisable and the denominator is the number of
shares of the Substitute Common Stock for which the Substitute Option is
exercisable.
(e) The following terms have the meanings indicated:
(I) "Acquiring Corporation" shall mean (i) the continuing or surviving
corporation of a consolidation or merger with Issuer (if other than
Issuer), (ii) Issuer in a merger in which Issuer is the continuing or
surviving person, and (iii) the transferee of all or substantially all of
the Issuer's assets (or the assets of its Subsidiaries).
(II) "Substitute Common Stock" shall mean the common stock issued by
the Substitute Option Issuer upon exercise of the Substitute Option.
(III) "Assigned Value" shall mean the highest of (i) the price per
share of Issuer Common Stock at which a tender offer or exchange offer
therefor has been made by any person (other than Grantee), (ii) the price
per share of Issuer Common Stock to be paid by any person (other than the
Grantee) pursuant to an agreement with Issuer, and (iii) the highest
closing sales price per share of Issuer Common Stock quoted on the AMEX (or
if Issuer Common Stock is not quoted on the AMEX, the highest bid price per
share as quoted on the principal trading market or securities exchange on
which such shares are traded as reported by a recognized source) within the
six-month period immediately preceding the agreement; provided, however,
that in the event of a sale of less than all of Issuer's assets, the
Assigned Value shall be the sum of the price paid in such sale for such
assets and the current market value of the remaining assets of Issuer as
determined by a nationally recognized investment banking firm
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selected by Grantee or by a Grantee Majority, divided by the number of
shares of Issuer Common Stock outstanding at the time of such sale. In the
event that an exchange offer is made for the Issuer Common Stock or an
agreement is entered into for a merger or consolidation involving
consideration other than cash, the value of the securities or other
property issuable or deliverable in exchange for the Issuer Common Stock
shall be determined by a nationally recognized investment banking firm
mutually selected by Grantee and Issuer (or if applicable, Acquiring
Corporation), provided that if a mutual selection cannot be made as to such
investment banking firm, it shall be selected by Grantee (or a majority of
interest of the Grantees if there shall be more than one Grantee (a
"Grantee Majority")).
(IV) "Average Price" shall mean the average closing price of a share
of the Substitute Common Stock for the one year immediately preceding the
consolidation, merger or sale in question, but in no event higher than the
closing price of the shares of the Substitute Common Stock on the day
preceding such consolidation, merger or sale; provided that if Issuer is
the issuer of the Substitute Option, the Average Price shall be computed
with respect to a share of common stock issued by Issuer, the person
merging into Issuer or by any company which controls or is controlled by
such merging person, as Grantee may elect.
(f) In no event, pursuant to any of the foregoing paragraphs, shall the
Substitute Option be exercisable for more than 9.9% of the aggregate of the
shares of the Substitute Common Stock outstanding prior to exercise of the
Substitute Option. In the event that the Substitute Option would be exercisable
for more than 9.9% of the aggregate of the shares of Substitute Common Stock but
for this clause (f), the Substitute Option Issuer shall make a cash payment to
Grantee equal to the excess of (i) the value of the Substitute Option without
giving effect to the limitation in this clause (f) over (ii) the value of the
Substitute Option after giving effect to the limitation in this clause (f). This
difference in value shall be determined by a nationally recognized investment
banking firm selected by Grantee (or a Grantee Majority).
(g) Issuer shall not enter into any transaction described in subsection (b)
of this Section 7 unless the Acquiring Corporation and any person that controls
the Acquiring Corporation assume in writing all the obligations of Issuer
hereunder and take all other actions that may be necessary so that the
provisions of this Section 7 are given full force and effect (including, without
limitation, any action that may be necessary so that the shares of Substitute
Common Stock are in no way distinguishable from or have lesser economic value
than other shares of common stock issued by the Substitute Option Issuer).
(h) The provisions of Sections 8 and 9 shall apply to any securities for
which the Option becomes exercisable pursuant to this Section 7 and as
applicable, references in such sections to "Issuer", "Option", "Purchase Price"
and "Issuer Common Stock" shall be deemed to be references to "Substitute Option
Issuer", "Substitute Option", "Substitute Purchase Price" and "Substitute Common
Stock", respectively.
8. Registration Rights. Issuer shall, if requested by Grantee (or if
applicable, a Grantee Majority) at any time and from time to time within three
years of the date on which the Option first becomes exercisable, as
expeditiously as possible prepare and file up to two registration statements
under the Securities Act if such registration is necessary in order to permit
the sale or other disposition of any or all shares of Issuer Common Stock or
other securities that have been acquired by or are issuable to Grantee upon
exercise of the Option in accordance with the intended method of sale or other
disposition stated by Grantee, including a "shelf " registration statement under
Rule 415 under the Securities Act or any successor provision, and Issuer shall
use its best efforts to qualify such shares or other securities under any
applicable state securities laws. Issuer shall use its best efforts to cause
each such registration statement to become effective, to obtain all consents or
waivers of other parties which are required therefor and to keep such
registration statement effective for such period not in excess of 180 days from
the day such registration statement first becomes effective as may be reasonably
necessary to effect such sale or other disposition. Any registration statement
prepared and filed under this Section 8, and any sale covered thereby, shall be
at Issuer's expense except for underwriting discounts or commissions, brokers'
fees and the fees and disbursements of Grantee's counsel related thereto.
Grantee shall provide all information reasonably requested by Issuer for
inclusion in any registration statement to be filed hereunder. If during the
time periods referred to in the first sentence of this Section 8 Issuer effects
a registration under the Securities Act of Issuer Common Stock for its own
account or for any other
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stockholders of Issuer (other than on Form S-4 or Form S-8, or any successor
forms or any form with respect to a dividend reinvestment or similar plan), it
shall allow Grantee the right to participate in such registration, and such
participation shall not affect the obligation of Issuer to effect two
registration statements for Grantee under this Section 8; provided, however,
that, if the managing underwriters of such offering advise Issuer in writing
that in their opinion the number of shares of Issuer Common Stock requested by
Grantee to be included in such registration, together with the shares of Issuer
Common Stock proposed to be included in such registration, exceeds the number
which can be sold in such offering, Issuer shall include the shares requested to
be included therein by Grantee pro rata with the shares intended to be included
therein by Issuer. In connection with any registration pursuant to this Section
8, Issuer and Grantee shall provide each other and any underwriter of the
offering with customary representations, warranties, covenants, indemnification
and contribution in connection with such registration. Notwithstanding anything
to the contrary contained herein, in no event shall Issuer be obligated to
effect more than two registrations pursuant to the first sentence of this
Section 8 by reason of the fact that there shall be more than one Grantee as a
result of any assignment of this Agreement or division of this Agreement
pursuant to Section 10 hereof.
9. Listing. If Issuer Common Stock or any other securities to be acquired
upon exercise of the Option are then authorized for quotation on the AMEX or any
securities exchange, Issuer, upon the request of Grantee, will promptly file an
application to authorize for quotation the shares of Issuer Common Stock or
other securities to be acquired upon exercise of the Option on the AMEX or such
other securities exchange and will use its best efforts to obtain approval of
such listing as soon as practicable.
10. Division of Option. This Agreement (and the Option granted hereby) are
exchangeable, without expense, at the option of Grantee, upon presentation and
surrender of this Agreement at the principal office of Issuer for other
Agreements providing for Options of different denominations entitling the holder
thereof to purchase in the aggregate the same number of shares of Issuer Common
Stock purchasable hereunder. The terms "Agreement" and "Option" as used herein
include any other Agreements and related Options for which this Agreement (and
the Option granted hereby) may be exchanged. Upon receipt by Issuer of evidence
reasonably satisfactory to it of the loss, theft, destruction or mutilation of
this Agreement, and (in the case of loss, theft or destruction) of reasonably
satisfactory indemnification, and upon surrender and cancellation of this
Agreement, if mutilated, Issuer will execute and deliver a new Agreement of like
tenor and date. Any such new Agreement executed and delivered shall constitute
an additional contractual obligation on the part of Issuer, whether or not the
Agreement so lost, stolen, destroyed or mutilated shall at any time be
enforceable by anyone.
11. Rights Agreement. Issuer shall not approve or adopt, or propose the
approval and adoption of, any Shareholder Rights Plan unless such Shareholder
Rights Plan contains terms which provide, to the reasonable satisfaction of
Grantee, that (a) the Rights issued pursuant thereto will not become exercisable
by virtue of the fact that (i) Grantee is the Beneficial Owner of shares of
Issuer Common Stock (x) acquired or acquirable pursuant to the grant or exercise
of this Option and (y) held by Grantee or any of its Subsidiaries as Trust
Account Shares or DPC Shares or (ii) while Grantee is the Beneficial Owner of
the shares of Issuer Common Stock described in clause (a)(i), an Acquisition
Transaction involving Issuer or any of its Subsidiaries, on the one hand, and
Grantee, any of its Subsidiaries, on the other hand, is proposed, agreed to or
consummated and (b) no restrictions or limitations with respect to the exercise
of any Rights acquired or acquirable by Grantee will result or be imposed by
virtue of the fact that Grantee is the Beneficial Owner of the shares of Issuer
Common Stock described in clause (a)(i) of this Section 11.
12. Miscellaneous. (a) Expenses. Except as otherwise provided in Section 8
hereof, each of the parties hereto shall bear and pay all costs and expenses
incurred by it or on its behalf in connection with the transactions contemplated
hereunder, including fees and expenses of its own financial consultants,
investment bankers, accountants and counsel.
(b) Waiver and Amendment. Any provision of this Agreement may be waived at
any time by the party that is entitled to the benefits of such provision. This
Agreement may not be modified, amended, altered or supplemented except upon the
execution and delivery of a written agreement executed by the parties hereto.
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(c) Entire Agreement; No Third-Party Beneficiary; Severability. This
Agreement, together with the Merger Agreement and the other agreements and
instruments referred to herein and therein, (a) constitutes the entire agreement
and supersedes all prior agreements and understandings, both written and oral,
between the parties with respect to the subject matter hereof and (b) is not
intended to confer upon any person other than the parties hereto any rights or
remedies hereunder. Notwithstanding anything to the contrary contained in this
Agreement or the Merger Agreement, this Agreement shall be deemed to amend the
confidentiality agreement between Issuer and Grantee so as to permit Grantee to
enter into this Agreement and exercise all of its rights hereunder, including
its right to acquire Issuer Common Stock upon exercise of the Option. If any
term, provision, covenant or restriction of this Agreement is held by a court of
competent jurisdiction or a federal or state regulatory agency to be invalid,
void or unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated. If for any reason such court or
regulatory agency determines that the Option does not permit Grantee to acquire
the full number of shares of Issuer Common Stock as provided in Section 3 hereof
(as adjusted pursuant to Section 7 hereof), it is the express intention of
Issuer to allow Grantee to acquire such lesser number of shares as may be
permissible without any amendment or modification hereof.
(d) Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of Delaware without regard to any
applicable conflicts of law rules.
(e) Descriptive Headings. The descriptive headings contained herein are
for convenience of reference only and shall not affect in any way the meaning or
interpretation of this Agreement.
(f) Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally, telecopied (with
confirmation) or mailed by registered or certified mail (return receipt
requested) to the parties at the following addresses (or at such other address
for a party as shall be specified by like notice):
If to Issuer to:
Metro Bancshares Inc.
100 Jericho Quadrangle
Jericho, N.Y. 11753
Attention: David G. Herold
with a copy to:
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, New York 10022
Attention: Fred B. White, III
If to Grantee to:
North Fork Bancorporation, Inc.
9025 Route 25
Mattituck, N.Y. 11952
Attention: Daniel M. Healy
with a copy to:
Muldoon, Murphy & Faucette
5101 Wisconsin Avenue, NW
Suite 508
Washington, D.C. 20016
Attention: Joe Passaic, Esq.
(g) Counterparts. This Agreement and any amendments hereto may be executed
in two counterparts, each of which shall be considered one and the same
agreement and shall become effective when both counterparts have been signed, it
being understood that both parties need not sign the same counterpart.
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(h) Assignment. Neither this Agreement nor any of the rights, interests or
obligations hereunder or under the Option shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other party, except that Grantee may assign this
Agreement to a wholly owned subsidiary of Grantee and after the occurrence of a
Purchase Event Grantee may assign its rights under this Agreement to one or more
third parties, provided, however, that Grantee may not assign this Agreement,
without the written consent of Issuer, to any third party who, to Grantee's
knowledge, would, upon exercise of the Option, own in excess of 6% of Issuer's
then issued and outstanding common stock. Subject to the preceding sentence,
this Agreement shall be binding upon, inure to the benefit of and be enforceable
by the parties and their respective successors and assigns. As used in this
Agreement, Grantee shall include any person to whom this Agreement or the Option
shall be assigned by a previous Grantee in accordance with the terms hereof.
(i) Further Assurances. In the event of any exercise of the Option by
Grantee, Issuer and Grantee shall execute and deliver all other documents and
instruments and take all other action that may be reasonably necessary in order
to consummate the transactions provided for by such exercise.
(j) Specific Performance. The parties hereto agree that this Agreement may
be enforced by either party through specific performance, injunctive relief and
other equitable relief. Both parties further agree to waive any requirement for
the securing or posting of any bond in connection with the obtaining of any such
equitable relief and that this provision is without prejudice to any other
rights that the parties hereto may have for any failure to perform this
Agreement.
IN WITNESS WHEREOF, Issuer and Grantee have caused this Stock Option
Agreement to be signed by their respective officers thereunto duly authorized,
all as of the day and year first written above.
METRO BANCSHARES INC.
By /s/ DAVID G. HEROLD
Name: David G. Herold
___________________________________________
Title: Chairman and Chief Executive Officer
NORTH FORK BANCORPORATION, INC.
By /s/ JOHN ADAM KANAS
__________________________________________
Name: John Adam Kanas
Title: Chairman, President &
Chief Executive Officer
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<PAGE> 141
ANNEX C
September 28, 1994
The Board of Directors
Metro Bancshares Inc.
100 Jericho Quadrangle
Suite 320
Jericho, NY 11753
Members of the Board:
You have requested our opinion as investment bankers as to the fairness,
from a financial point of view, to the stockholders of Metro Bancshares Inc.
("Metro") of the exchange ratio in the proposed merger (the "Merger") of Metro
with and into North Fork Bancorporation, Inc. ("North Fork"), pursuant to the
Agreement and Plan of Merger, dated June 27, 1994, by and between North Fork and
Metro (the "Agreement"). Under the terms of the Agreement, each outstanding
share of common stock, $0.01 par value, of Metro (the "Common Shares") will be
converted into shares of common stock, $2.50 par value, of North Fork based upon
an exchange ratio defined therein (the "Exchange Ratio").
Keefe, Bruyette & Woods, Inc., as part of its investment banking business,
is continually engaged in the valuation of bank and thrift company securities in
connection with acquisitions, negotiated underwritings, secondary distributions
of listed and unlisted securities, private placements and valuations for various
other purposes. As specialists in the securities of banking companies, we have
experience in, and knowledge of, the valuation of banking enterprises. In the
ordinary course of our business as a broker-dealer, we may, from time to time,
purchase securities from, and sell securities to, Metro and North Fork and as a
market maker in securities we may from time to time have a long or short
position in, and buy or sell, equity securities of Metro and North Fork for our
own account and for the accounts of our customers. To the extent we have any
such position as of the date of this opinion it has been disclosed to Metro. We
have acted exclusively for the Board of Directors of Metro in rendering this
fairness opinion and will receive a fee from Metro for our services, a
significant portion of which is contingent upon the consummation of the Merger.
Prior to our retention by Metro in connection with the Merger, we provided
professional services to North Fork as exclusive agent for a private placement
of North Fork Common Stock in March 1993 and received a fee from North Fork for
our services. We have not, however, been engaged to render any investment
banking services and have not received any fees from North Fork since that time.
In arriving at our opinion, we have reviewed, analyzed and relied upon
material bearing upon the financial and operating condition of Metro and North
Fork, including, among other things, the following: (i) the Agreement; (ii)
Annual Reports to Stockholders and Annual Reports on Form 10-K for the four
years ended December 31, 1993 for North Fork and September 30, 1993 for Metro;
(iii) certain interim reports to stockholders of Metro and North Fork and
Quarterly Reports on Form 10-Q of Metro and North Fork and certain other
communications from Metro and North Fork to their respective stockholders; (iv)
other financial information concerning the businesses and operations of Metro
and North Fork furnished to us by Metro and North Fork for purposes of our
analysis, including certain internal financial analyses and forecasts for Metro
and North Fork prepared by the senior management of Metro and North Fork; (v)
certain publicly available information concerning trading of, and the trading
market for, the Common Stock of Metro and North Fork; and (vi) certain publicly
available information with respect to banking companies and the nature and terms
of certain other transactions that we consider relevant to our inquiry.
Additionally, we have held discussions with senior management at Metro and North
Fork concerning their past and current operations, financial conditions and
prospects, as well as the results of regulatory examinations.
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<PAGE> 142
Board of Directors
Metro Bancshares, Inc.
September 28, 1994
Page 2
We have considered such financial and other factors as we have deemed
appropriate under the circumstances, including among others the following: (i)
the historical and current financial position, results of operations and assets
and liabilities of Metro and North Fork; and (ii) the nature and terms of
certain other merger transactions involving banks, bank holding companies and
thrift institutions. We have also taken into account our assessment of general
economic, market and financial conditions and our experience in other
transactions, as well as our experience in securities valuation and our
knowledge of banks, bank holding companies and thrift institutions generally.
Our opinion is necessarily based upon conditions as they exist and can be
evaluated on the date hereof and the information made available to us through
the date hereof.
In conducting our review and arriving at our opinion, we have relied upon
and assumed the accuracy and completeness of all of the financial and other
information provided to us or publicly available and we have not attempted
independently to verify such information. We have relied upon the managements of
Metro and North Fork as to the reasonableness and achievability of the financial
and operating forecasts (and the assumptions and bases therefor) provided to us,
and we have assumed that such forecasts reflect the best currently available
estimates and judgments of such managements and that such forecasts, will be
realized in the amounts and in the time periods currently estimated by such
managements. We have also assumed, without independent verification, that the
aggregate allowances for loan losses for Metro and North Fork are adequate to
cover such losses. We have not made or obtained any evaluations or appraisals of
the property of Metro and North Fork, nor have we examined any individual loan
credit files. We have been informed by Metro, and have assumed for purposes of
our opinion, that the Merger will be accounted for as a pooling-of-interests
under generally accepted accounting principles.
Based upon and subject to the foregoing, we are of the opinion that, as of
the date hereof, the Exchange Ratio in the Merger is fair, from a financial
point of view, to the holders of the Common Shares.
Very truly yours,
/s/ KEEFE, BRUYETTE & WOODS, INC.
__________________________________
Keefe, Bruyette & Woods, Inc.
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<PAGE> 143
ANNEX D
September 28, 1994
Board of Directors
North Fork Bancorporation, Inc.
9025 Main Road
Mattituck, NY 11952
Dear Sirs:
You have asked us to advise you with respect to the fairness to the
stockholders of North Fork Bancorporation, Inc. (the "Company"), from a
financial point of view, of the Aggregate Consideration (as defined below) to be
paid by the Company pursuant to the Agreement and Plan of Merger, dated as of
June 27, 1994, (the "Agreement"), by and between the Company and Metro
Bancshares Inc. ("Metro"). It is our understanding that pursuant to the
Agreement, Metro will be merged with and into the Company with the Company
continuing as the surviving corporation (the "Merger"). Each outstanding share
of common stock, par value $0.01 per share, of Metro will be converted into the
right to receive that number of shares of the Company's common stock, par value
$2.50 per share (the "Common Stock"), equal to the quotient of $25.50 divided by
the market value of the Common Stock during the determination period defined in
the Agreement (the "Exchange Ratio"), provided that the Exchange Ratio will be
no less than 1.645 nor more than 1.759 shares of the Common Stock as set forth
in the Agreement. The terms and conditions of the Merger are more fully set
forth in the Agreement. Assuming the accuracy of the representations and
warranties set forth in the Agreement, the Exchange Ratio will result in the
issuance by the Company of no less than 9,193,841 and no more than 9,827,899
shares of Common Stock (the "Aggregate Consideration") in the Merger.
In arriving at our opinion, we have reviewed certain publicly available
business and financial information relating to the Company and Metro. We have
also reviewed certain other information, including financial forecasts, provided
to us by the Company and Metro and have met with the management and
representatives of Metro to discuss the business and prospects of Metro.
We have also considered certain financial and stock market data of the
Company and Metro and we have compared that data with similar data for other
publicly held companies in businesses similar to that of the Company and Metro,
and we have considered the financial terms of certain other business
combinations which have recently been effected. We also considered such other
information, financial studies, analyses and investigations and financial,
economic and market criteria which we deemed relevant.
In connection with our review, we have not independently verified any of
the foregoing information and have relied on it being complete and accurate in
all material respects. With respect to the financial forecasts, we have assumed
(and have not independently verified) that they have been reasonably prepared on
bases reflecting the best currently available estimates and judgments of the
Company's and Metro's management and representatives as to the future financial
performance of the Company and Metro. In addition, we have not made an
independent evaluation or appraisal of the assets and liabilities of the Company
or Metro, nor have we been furnished with any such evaluations or appraisals.
Further, we have assumed that the Merger will be treated as a pooling of
interests transaction for accounting purposes. Our opinion herein is based upon
circumstances existing and disclosed to us as of the date hereof.
M.A. Schapiro & Co., Inc., as part of its investment banking business, is
continually engaged in the valuation of businesses and their securities in
connection with mergers and acquisitions, negotiated underwritings, competitive
biddings, secondary distributions of listed and unlisted securities, private
placements and valuations for estate, corporate and other purposes. We have
acted as financial advisor to the Board of
D-1
<PAGE> 144
North Fork Bancorporation, Inc.
Page 2
Directors of the Company in connection with the Merger and will receive a fee
for our services. In the past, we have provided financial advisory services for
the Company.
It is understood that this letter is for the information of the Board of
Directors only and is not to be quoted or referred to, in whole or in part, in
any registration statement, prospectus, or proxy statement, or in any other
written document used in connection with the offering or sale of securities nor
shall this letter be used for any other purposes, without M.A. Schapiro's prior
written consent. The opinion expressed herein is not intended to confer rights
or remedies upon the Company, any stockholder of the Company, or any other
person.
Based upon the foregoing and subject to various assumptions and limitations
set forth herein, it is our opinion that, as of the date hereof, the Aggregate
Consideration is fair from a financial point of view to the Company and its
stockholders.
Very truly yours,
/S/ M.A. SCHAPIRO & CO., INC.
--------------------------------------
M.A. SCHAPIRO & CO., INC.
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<PAGE> 145
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law provides that a
corporation may indemnify directors and officers as well as other employees and
individuals against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement in connection with specified actions, suits or
proceedings, whether civil, criminal, administrative or investigative (other
than an action by or in the right of the corporation -- a "derivative action"),
if they acted in good faith and in a manner they 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 their conduct
was unlawful. A similar standard is applicable in the case of derivative
actions, except that indemnification only extends to expenses (including
attorneys' fees) incurred in connection with the defense or settlement of such
action, and the statute requires court approval before there can be any
indemnification where the person seeking indemnification has been found liable
to the corporation. The statute provides that it is not exclusive of other
indemnification that may be granted by a corporation's charter, by-laws,
disinterested director vote, stockholder vote, agreement or otherwise. Article 8
of the Registrant's Bylaws provides for indemnification of directors, officers,
employees and agents of the Registrant for expenses (including attorney's fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
in connection with the defense or settlement of any threatened, pending or
completed action or suit to the fullest extent permitted by Delaware General
Corporation Law.
Article 10 of the Registrant's Certificate of Incorporation provides that
directors shall not be liable for monetary damages in excess of $25,000 per
occurrence resulting from a breach of their fiduciary duties, except for
liability for any of the following for which the foregoing limitation does not
apply: (i) any breach of the duty of loyalty to the Registrant and its
stockholders, (ii) acts or omissions not in good faith, intentional misconduct
or a knowing violation of law, (iii) as provided under Section 174 of the
General Corporation Law of the State of Delaware (which provides that directors
are personally liable for unlawful dividends or unlawful stock repurchases or
redemptions), or (iv) any transaction from which a director personally derived
any improper personal benefit.
The Registrant maintains a director and officer liability insurance policy
providing for the insurance on behalf of any person who is or was a director or
officer of the Registrant and subsidiary companies against any liability
incurred by him in any such capacity or arising out of his status as such. The
insurer's limit of liability under the policy is $7,500,000 in the aggregate for
all insured losses per year. The policy contains various reporting requirements
and exclusions.
Section 8(k) of the Federal Deposit Insurance Act (the "FDI Act") provides
that the Federal Deposit Insurance Corporation (the "FDIC") may prohibit or
limit, by regulation or order, payments by any insured depository institution or
its holding company for the benefit of directors and officers of the insured
depository institution, or others who are or were "institution-affiliated
parties," as defined under the FDI Act, in order to pay or reimburse such person
for any liability or legal expense sustained with regard to any administrative
or civil enforcement action which results in a final order against the person.
In October 1991, the FDIC issued for public comment a proposed regulation that
would prohibit all such payments, except in certain enumerated circumstances. As
of the date of this Registration Statement, the FDIC has not enacted this
regulation.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
<TABLE>
<CAPTION>
EXHIBIT
INDEX
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<S> <C> <C>
2(a) -- Agreement and Plan of Merger, dated as of June 27, 1994, by and between North Fork
Bancorporation, Inc. and Metro Bancshares Inc., is included as Annex A to the
Joint Proxy Statement/Prospectus which is part of this Registration Statement.
</TABLE>
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<TABLE>
<CAPTION>
EXHIBIT
INDEX
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<S> <C> <C>
3(a) -- Articles of Incorporation, previously filed and incorporated by reference to North
Fork Bancorporation, Inc.'s Registration Statement on Form S-3 (File No. 33-42294)
filed August 16, 1991.
3(b) -- By-laws, previously filed and incorporated by reference to North Fork
Bancorporation, Inc.'s Annual Report on Form 10-K for the year ended December 31,
1993.
4(a) -- Rights Agreement, previously filed and incorporated by reference to North Fork
Bancorporation Inc.'s Registration Statement on Form 8-A filed March 21, 1989.
5 -- Opinion of Skadden, Arps, Slate, Meagher & Flom.
8(a) -- Opinion of Skadden, Arps, Slate, Meagher & Flom.
8(b) -- Opinion of Muldoon, Murphy & Faucette.
10(a) -- Stock Option Agreement, dated as of June 27, 1994, by and between Metro Bancshares
Inc. and North Fork Bancorporation, Inc., is included as Annex B to the Joint
Proxy Statement/ Prospectus which is part of this Registration Statement.
10(b) -- North Fork Bancorporation, Inc. 1985 Incentive Stock Option Plan, previously filed
and incorporated by reference to North Fork Bancorporation, Inc.'s Registration
Statement on Form S-8 (File No. 2-99984) filed August 29, 1985.
10(c) -- North Fork Bancorporation, Inc. 1989 Executive Management Compensation Plan,
previously filed and incorporated by reference to North Fork Bancorporation,
Inc.'s Registration Statement on Form S-8 (File No. 33-34372) filed on April 17,
1990.
10(d) -- North Fork Bancorporation, Inc. 1994 Key Employee Stock Option Plan, previously
filed and incorporated by reference to North Fork Bancorporation, Inc.'s
Registration Statement on Form S-8 (File No. 33-53467) filed on May 4, 1994.
23(a) -- Consent of KPMG Peat Marwick LLP, Jericho, New York.
23(b) -- Consent of KPMG Peat Marwick LLP, Jericho, New York.
23(c) -- Consent of Keefe, Bruyette & Woods, Inc., New York, New York.
23(d) -- Consent of M.A. Schapiro & Co., Inc., New York, New York.
23(e) -- Consent of Skadden, Arps, Slate, Meagher & Flom (included in Exhibit 5).
23(f) -- Consent of Skadden, Arps, Slate, Meagher & Flom (included in Exhibit 8).
23(g) -- Consent of Muldoon, Murphy & Faucette (included in Exhibit 8).
24 -- Powers of Attorney (see the signature page to this Form S-4 Registration
Statement).
99(a) -- Opinion of Keefe, Bruyette & Woods, Inc. is included as Annex C to the Joint Proxy
Statement/ Prospectus which is part of this Registration Statement.
99(b) -- Opinion of M.A. Schapiro & Co., Inc. is included as Annex D to the Joint Proxy
Statement/ Prospectus which is part of this Registration Statement.
</TABLE>
ITEM 22. UNDERTAKINGS
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of this registration statement (or the most recent
post-effective amendment hereof) which, individually or
II-2
<PAGE> 147
in the aggregate, represent a fundamental change in the information set
forth in this registration statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in this registration statement
or any material change to such information in this registration
statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if
the registration statement is on Form S-3 or Form S-8, and the information
required to be included in a post-effective amendment by those paragraphs
is contained in periodic reports filed by the registrant pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement.
(2) That, for the purpose 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.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) 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 this
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.
(c) 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 offering 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.
(d) The undersigned Registrant undertakes that every prospectus (i) that is
filed pursuant to paragraph (c) 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.
(e) 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 foregoing provisions, 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
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 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.
II-3
<PAGE> 148
(f) 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 statements through
the date of responding to the request.
(g) 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-4
<PAGE> 149
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-4 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized in the County of Suffolk, State of New York, on September 28, 1994.
NORTH FORK BANCORPORATION, INC.
By: /s/ DANIEL M. HEALY
---------------------------------
Daniel M. Healy
Executive Vice President and
Chief Financial Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the September 28, 1994.
We, the undersigned officers and directors of Northfork Bancorporation,
Inc. hereby severally and individually constitute and appoint Daniel M. Healy,
the true and lawful attorney and agent (with full power of substitution and
resubstitution in each case) of each of us to execute in the name, place and
stead of each of us (individually and in any capacity stated below) any and all
amendments to this Registration Statement on Form S-4 and all instruments
necessary or advisable in connection therewith and to file the same with the
Securities and Exchange Commission, said attorney and agent to have power to act
and to have full power and authority to do and perform in the name and on behalf
of each of the undersigned every act whatsoever necessary or advisable to be
done in the premises as fully and to all intents and purposes as any of the
undersigned might or could do in person and we hereby ratify and confirm our
signatures as they may be signed by our said attorney and agent to any and all
such amendments and instruments.
<TABLE>
<CAPTION>
NAME TITLE
- ---------------------------------------- --------------------------------
<S> <C>
/s/ JOHN A. KANAS President and Chairman
- ---------------------------------------- of the Board
John A. Kanas
/s/ DANIEL M. HEALY Executive Vice President
- ---------------------------------------- and Chief Financial Officer
Daniel M. Healy (Principal Financial and
Accounting Officer)
/s/ JOHN BOHLSEN Director
- ----------------------------------------
John Bohlsen
/s/ MALCOLM J. DELANEY Director
- ----------------------------------------
Malcolm J. Delaney
/c/ ALLAN C. DICKERSON Director
- ----------------------------------------
Allan C. Dickerson
/c/ LLOYD A. GERARD Director
- ----------------------------------------
Lloyd A. Gerard
/s/ JAMES F. REEVE Director
- ----------------------------------------
James F. Reeve
</TABLE>
<PAGE> 150
<TABLE>
<CAPTION>
NAME TITLE
---- -----
<S> <C>
/s/ JAMES H. RICH, JR. Director
- ----------------------------------------
James H. Rich, Jr.
/s/ GEORGE H. ROWSOM Director
- ----------------------------------------
George H. Rowsom
/s/ RAYMOND W. TERRY, JR. Director
- ----------------------------------------
Raymond W. Terry, Jr.
</TABLE>
II-6
<PAGE> 151
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NO. DESCRIPTION PAGES
- ------ ----------- ------------
<S> <C> <C> <C>
2(a) -- Agreement and Plan of Merger, dated as of June 27, 1994, by and between
North Fork Bancorporation, Inc. and Metro Bancshares Inc., is included
as Annex A to the Joint Proxy Statement/Prospectus which is part of this
Registration Statement.
3(a) -- Articles of Incorporation, previously filed and incorporated by
reference to North Fork Bancorporation, Inc.'s Registration Statement on
Form S-3 (File No. 33-42294) filed August 16, 1991.
3(b) -- By-laws, previously filed and incorporated by reference to North Fork
Bancorporation, Inc.'s Annual Report on Form 10-K for the year ended
December 31, 1993.
4(a) -- Rights Agreement, previously filed and incorporated by reference to
North Fork Bancorporation Inc.'s Registration Statement on Form 8-A
filed March 21, 1989.
5 -- Opinion of Skadden, Arps, Slate, Meagher & Flom.
8(a) -- Opinion of Skadden, Arps, Slate, Meagher & Flom.
8(b) -- Opinion of Muldoon, Murphy & Faucette.
10(a) -- Stock Option Agreement, dated as of June 27, 1994, by and between Metro
Bancshares Inc. and North Fork Bancorporation, Inc., is included as
Annex B to the Joint Proxy Statement/Prospectus which is part of this
Registration Statement.
10(b) -- North Fork Bancorporation, Inc. 1985 Incentive Stock Option Plan,
previously filed and incorporated by reference to North Fork
Bancorporation, Inc.'s Registration Statement on Form S-8 (File No.
2-99984) filed August 29, 1985.
10(c) -- North Fork Bancorporation, Inc. 1989 Executive Management Compensation
Plan, previously filed and incorporated by reference to North Fork
Bancorporation, Inc.'s Registration Statement on Form S-8 (File No.
33-34372) filed on April 17, 1990.
10(d) -- North Fork Bancorporation, Inc. 1994 Key Employee Stock Option Plan,
previously filed and incorporated by reference to North Fork
Bancorporation, Inc.'s Registration Statement on Form S-8 (File No.
33-53467) filed on May 4, 1994.
23(a) -- Consent of KPMG Peat Marwick LLP, Jericho, New York.
23(b) -- Consent of KPMG Peat Marwick LLP, Jericho, New York.
23(c) -- Consent of Keefe, Bruyette & Woods, Inc., New York, New York.
23(d) -- Consent of M.A. Schapiro & Co., Inc., New York, New York.
23(e) -- Consent of Skadden, Arps, Slate, Meagher & Flom (included in Exhibit 5).
23(f) -- Consent of Skadden, Arps, Slate, Meagher & Flom (included in Exhibit 8).
23(g) -- Consent of Muldoon, Murphy & Faucette (included in Exhibit 8).
24 -- Powers of Attorney (see the signature page to this Form S-4 Registration
Statement).
99(a) -- Opinion of Keefe, Bruyette & Woods, Inc. is included as Annex C to the
Joint Proxy Statement/Prospectus which is part of this Registration
Statement.
99(b) -- Opinion of M.A. Schapiro & Co., Inc. is included as Annex D to the Joint
Proxy Statement/Prospectus which is part of this Registration Statement.
</TABLE>
<PAGE> 1
EXHIBIT 5
September 28, 1994
Board of Directors
North Fork Bancorporation, Inc.
9025 Route 25
Mattituck, NY 11952
Re: North Fork Bancorporation Inc.
Registration Statement on Form S-4
Gentlemen:
We have acted as special counsel to North Fork Bancorporation, Inc., a
Delaware corporation (the "Company"), in connection with the issuance and sale
by the Company of an aggregate of up to 13,000,000 shares (the "Shares") of
common stock, par value $2.50 per share (the "Common Stock"), together with an
equal number of rights to purchase units of Series A Junior Participating
Preferred Stock associated therewith (the "Rights"), of the Company pursuant to
an Agreement and Plan of Merger, dated as of June 27, 1994 (the "Merger
Agreement"), by and between the Company and Metro Bancshares Inc., a Delaware
corporation.
This opinion is delivered in accordance with the requirements of Item
601(b)(5) of Regulation S-K under the Securities Act of 1933, as amended.
In connection with this opinion, we have examined and are familiar with
originals or copies, certified or otherwise identified to our satisfaction, of
(i) the Registration Statement of the Company on Form S-4 filed with the
Securities and Exchange Commission (the "Commission") on the date hereof (the
"Registration Statement"); (ii) the form of certificates to be used to represent
the Shares (and the Rights), (iii) the Certificate of Incorporation and By-Laws
of the Company, as amended to date; (iv) resolutions adopted by the Board of
Directors of the Company relating to the Merger Agreement and the issuance of
the Shares and Rights pursuant thereto; (v) the Rights Agreement, dated as of
February 28, 1989 (the "Rights Agreement"), between the Company and The North
Fork Bank, as Rights Agent; and (vi) such other documents as we have deemed
necessary or appropriate as a basis for the opinion set forth below.
In our examination, we have assumed the genuineness of all signatures, the
legal capacity of all natural persons, the authenticity of all documents
submitted to us as originals, the conformity to original documents of all
documents submitted to us as certified, conformed or photostatic copies, and the
authenticity of originals of such copies. As to any other facts material to this
opinion which we did not independently establish or verify, we have relied upon
statements or representations of officers and other representatives of the
Company and others.
In rendering this opinion, we have assumed that, if the Company issues in
excess 9,830,019 shares of Common Stock (and associated Rights) pursuant to the
Merger Agreement, the Board of Directors of the Company, including any
appropriate committee appointed thereby, and appropriate officers of the Company
will have taken all necessary corporate action to approve the issuance of such
additional shares of Common Stock and Rights and related matters.
Members of this firm are admitted to the bar in the State of Delaware, and
we express no opinion as to the laws of any other jurisdiction.
Based upon the foregoing and assuming the due execution and delivery of
certificates representing the Shares in the form examined by us, we are of the
opinion that (i) the Shares to be issued by the Company pursuant to the Merger
Agreement, when issued in accordance with the terms of the Merger Agreement,
will
<PAGE> 2
be duly authorized, validly issued, fully paid and nonassessable and (ii) the
Rights, when issued as described in the Registration Statement and in accordance
with the Rights Agreement, will be duly authorized and validly issued.
We hereby consent to the filing of this opinion with the Commission as
Exhibit 5 to the Registration Statement. We also consent to the reference to our
firm under the caption "Legal Opinions" in the Registration Statement. In giving
such consent we do not thereby admit that we are in the category of persons
whose consent is required under Section 7 of the Act.
Very truly yours,
SKADDEN, ARPS, SLATE,
MEAGHER & FLOM
<PAGE> 1
EXHIBIT 8(A)
September 28, 1994
North Fork Bancorporation, Inc.
9025 Route 25
Mattituck, New York 11952
Ladies and Gentlemen:
We have acted as your counsel in connection with the Registration Statement
on Form S-4 (the "Registration Statement") filed on the date hereof with the
Securities and Exchange Commission under the Securities Act of 1933, as amended
(the "Securities Act"). The Registration Statement relates to the proposed
mergers of (i) Metro Bancshares Inc. with and into North Fork Bancorporation,
Inc. and (ii) Bayside Federal Savings Bank with and into North Fork Bank. This
opinion is delivered in accordance with the requirements of Item 601(b)(8) of
Regulation S-K under the Securities Act.
In connection with this opinion, we have examined and are familiar with
originals or copies, certified or otherwise identified to our satisfaction, of
the Registration Statement, the Joint Proxy Statement/Prospectus included
therein (the "Joint Proxy Statement/Prospectus") and such other documents as we
have deemed necessary or appropriate.
We hereby confirm that the discussions in the Joint Proxy
Statement/Prospectus under the captions "SUMMARY -- Certain Federal Income Tax
Consequences of the Merger" and "THE MERGER -- Certain Federal Income Tax
Consequences of the Merger" are fair and accurate summaries of the matters
addressed therein, based upon current law and the assumptions stated or referred
to therein. There can be no assurance that contrary positions may not be taken
by the Internal Revenue Service.
We hereby consent to the filing of this opinion as Exhibit 8 to the
Registration Statement and to the use of our name under the caption "THE
MERGER -- Certain Federal Income Tax Consequences of the Merger" in the Joint
Proxy Statement/Prospectus. In giving such consent, we do not thereby admit that
we are in the category of persons whose consent is required under Section 7 of
the Securities Act.
Very truly yours,
Skadden, Arps, Slate,
Meagher & Flom
<PAGE> 1
EXHIBIT 8(B)
September 28, 1994
Metro Bancshares Inc.
100 Jericho Quadrangle, Suite 320
Jericho, New York 11753
Ladies and Gentlemen:
We have acted as your counsel in connection with the Registration Statement
on Form S-4 (the "Registration Statement") filed on the date hereof with the
Securities and Exchange Commission under the Securities Act of 1933, as amended
(the "Securities Act"). The Registration Statement relates to the proposed
mergers of (i) Metro Bancshares Inc. with and into North Fork Bancorporation,
Inc. and (ii) Bayside Federal Savings Bank with and into North Fork Bank. This
opinion is delivered in accordance with the requirements of Item 601(b)(8) of
Regulation S-K under the Securities Act.
In connection with this opinion, we have examined and are familiar with
originals or copies, certified or otherwise identified to our satisfaction, of
the Registration Statement, the Joint Proxy Statement/Prospectus included
therein (the "Joint Proxy Statement/Prospectus") and such other documents as we
have deemed necessary or appropriate.
We hereby confirm that the discussions in the Joint Proxy
Statement/Prospectus under the captions "SUMMARY -- Certain Federal Income Tax
Consequences of the Merger" and "THE MERGER -- Certain Federal Income Tax
Consequences of the Merger" are a fair and accurate summary of the matters
addressed therein, based upon current law and the assumptions stated or referred
to therein. There can be no assurance that contrary positions may not be taken
by the Internal Revenue Service.
We hereby consent to the filing of this opinion as Exhibit 8 to the to the
Registration Statement and to the use of our name under the caption "THE
MERGER -- Certain Federal Income Tax Consequences of the Merger" in the Joint
Proxy Statement/Prospectus. In giving such consent, we do not thereby admit that
we are in the category of persons whose consent is required under Section 7 of
the Securities Act.
Very truly yours,
/s/ MULDOON, MURPHY & FAUCETTE
--------------------------------------
Muldoon, Murphy & Faucette
<PAGE> 1
EXHIBIT 23(A)
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors and Shareholders
Metro Bancshares Inc.:
We consent to the incorporation by reference in the registration statement on
Form S-4 of North Fork Bancorporation, Inc. of our report dated October 20,
1993, relating to the consolidated statements of financial condition of Metro
Bancshares Inc. and subsidiary as of September 30, 1993 and 1992, and the
related consolidated statements of income, stockholders' equity, and cash flows
for each of the years in the three-year period ended September 30, 1993, which
report is incorporated by reference in the 1993 Annual Report on Form 10-K of
Metro Bancshares Inc., and to the reference to our firm under the heading
"Experts" in the registration statement.
KPMG PEAT MARWICK LLP
Jericho, New York
September 28, 1994
<PAGE> 1
EXHIBIT 23(B)
CONSENT OF INDEPENDENT AUDITORS
The Stockholders and Board of Directors
North Fork Bancorporation, Inc.
We consent to the incorporation by reference in the registration statement on
Form S-4 of our report dated January 17, 1994, relating to the consolidated
balance sheets of North Fork Bancorporation, Inc. and subsidiaries as of
December 31, 1993 and 1992, and the related consolidated statements of
operations, changes in stockholders' equity, and cash flows for each of the
years in the three-year period ended December 31, 1993, which report is
incorporated by reference into the 1993 Annual Report on Form 10-K, and to the
reference to our firm under the heading "Experts" in the registration statement.
Our report refers to a change in the methods of accounting for income taxes and
postretirement benefits other than pensions.
KPMG PEAT MARWICK LLP
Jericho, New York
September 28, 1994
<PAGE> 1
EXHIBIT 23(C)
CONSENT OF
KEEFE, BRUYETTE & WOODS, INC.
We hereby consent to the use in this Registration Statement on Form S-4 of
our letter to the Board of Directors of Metro Bancshares, Inc. included on Annex
C to the Joint Proxy Statement/Prospectus forming a part of this Registration
Statement on Form S-4 and to all references to our firm in such Joint Proxy
Statement/Prospectus. In giving such consent, we do not hereby admit that we
come within the category of persons whose consent is required under Section 7 of
the Securities Act of 1933 or the rules and regulations of the Securities and
Exchange Commission thereunder.
KEEFE, BRUYETTE & WOODS, INC.
By: /s/ JOHN G. DUFFY
------------------------------------
Name: John G. Duffy
Title: Executive Vice President
Dated: September 27, 1994
<PAGE> 1
EXHIBIT 23(D)
FINANCIAL ADVISOR'S CONSENT
The Board of Directors and
Stockholders of
North Fork Bancorporation, Inc.
We hereby consent to the use of our opinion dated September 28, 1994
contained in the Joint Proxy Statement and Prospectus, relating to the fairness,
from a financial point of view, of the Aggregate Consideration to the
stockholders of North Fork Bancorporation, Inc. In giving such consent, we do
not thereby admit that we are in the category of persons whose consent is
required under Section 7 of the Securities Act of 1933, as amended.
Sincerely,
M.A. SCHAPIRO & CO., INC.
/s/ RICHARD J. KELLY
--------------------------------------
Richard J. Kelly
Director of Investment Banking
September 28, 1994
