As filed with the Securities and Exchange Commission on October 1, 1996
Registration No. 333-______
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
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)
Delaware 6712 36-3154608
(State or Other Jurisdiction (Primary Standard (I.R.S. Employer
of Incorporation or Organization) Industrial Classification Identification
Code Number) Number)
275 Broad Hollow Road
Melville, New York 11747
(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.
275 Broad Hollow Road
Melville, New York 11747
(516) 298-5000
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent For Service)
---------------------------
Copies to:
William S. Rubenstein, Esq. Gerard Hawkins, Esq.
Skadden, Arps, Slate, Elias, Matz, Tiernan & Herrick, L.L.P.
Meagher & Flom 734 15th Street, N.W.
919 Third Avenue 12th floor
New York, New York 10022 Washington, D.C. 20005
(212) 735-3000 (202) 488-6900
---------------------------
Approximate date of commencement of proposed sale to the public:
As soon as practicable after the effectiveness of this Registration
Statement and the satisfaction or waiver of all other conditions to the
Merger described in the Joint Proxy Statement/Prospectus.
---------------------------
If the securities being registered on this form are to be 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
=============================================================================
Title of Each Proposed Proposed
Class of Maximum Maximum
Securities Amount Offering Aggregate Amount of
Being To Be Price Offering Registration
Registered(1) Registered Per Share Price(2) Fee(2)
- ------------------------------------------------------------------------------
Common Stock, par
value $2.50 per 8,135,293 N/A $248,019,236.40 $39,472.69
share ("Common
Stock")
==============================================================================
(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)(1) under the Securities Act of 1933, as
amended, based on the average of the high and low
prices for shares of Common Stock of North Side
Savings Bank ("North Side") reported on the National
Association of Securities Dealers Automated
Quotation/National Market System on September 24,
1996, ($47.4375) and the maximum number of such
shares (5,228,337) that may be exchanged for the
securities being registered. Pursuant to Rule 457(b), the
registration fee has been reduced by the $46,051.19
paid on August 14, 1996 upon the filing under the
Securities Exchange Act of 1934, as amended, of
North Fork's proxy materials included herein
relating to the Merger. Accordingly, the
registration fee payable upon the filing of this
Registration Statement is $39,472.69.
---------------------------
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 that specifically states that
this Registration Statement shall thereafter become effective in accordance
with Section 8(a) of the Securities Act of 1933, as amended, or until the
Registration Statement shall become effective on such date as the
Securities and Exchange Commission, acting pursuant to said Section 8(a),
may determine.
<TABLE>
<CAPTION>
CROSS REFERENCE SHEET
Pursuant to Item 501(b) of Regulation S-K
Showing the Location in the Joint Proxy Statement/Prospectus
of the Information Required by the Items of Form S-4
<S> <C>
S-4 ITEM NUMBER AND CAPTION LOCATION IN PROXY STATEMENT/PROSPECTUS
1. Forepart of Registration Statement and Cover Page of Registration Statement; Cross
Outside Front Cover Page of Prospectus Reference Sheet; Outside Front Cover Page
2. Inside Front and Outside Back Cover Pages of Inside Front Cover Page; Available Information;
Prospectus Table of Contents.
3. Risk Factors, Ratio of Earnings to Fixed Charges, Summary; The Special Meetings, The Merger;
and Other Information Pro Forma Combined Selected Historical
Financial Information (Unaudited);
4. Terms of the Transaction Summary; The Merger;
Description of North Fork Capital
Stock; Comparison of Stockholder Rights
5. Pro Forma Financial Information Pro Forma Condensed Combined Financial Statements
(Unaudited)
6. Material Contacts with the Company Being Acquired Summary; The Merger
7. Additional Information Required for Reoffering by *
Persons and Parties Deemed to be Underwriters
8. Interests of Named Experts and Counsel Legal Matters
9. Disclosure of Commission Position on Indemni- *
fication for Securities Act Liabilities
10. Information with Respect to S-3 Registrants Available Information; Incorporation of Certain
Documents by Reference; Summary; The Merger; Pro
Forma Condensed Combined Financial Statements
(Unaudited); The Companies--North Fork
11. Incorporation of Certain Information by Reference Incorporation of Certain Documents by Reference
12. Information with Respect to S-2 or S-3 Registrants *
13. Incorporation of Certain Information by Reference *
14. Information with Respect to Registrants Other Than *
S-3 or S-2 Registrants
15. Information with Respect to S-3 Companies Available Information, Incorporation of Certain
Documents By Reference; Summary; The
Companies--North Side
16. Information with Respect to S-2 or S-3 Companies *
17. Information with Respect to Companies Other Than S-2 *
or S-3 Companies
18. Information if Proxies, Consents or Authorizations Summary; The Special Meetings; The Merger
are to be Solicited
19. Information if Proxies, Consents or Authorizations *
are not to be Solicited, or in an Exchange Offer
- ------------
* Omitted because inapplicable or answer is negative.
</TABLE>
[ NORTH SIDE LETTERHEAD ]
To North Side Stockholders:
You are cordially invited to attend the Special Meeting
of Stockholders of North Side Savings Bank ("North Side") to
be held at the ______________________, _____________,
_______________, New York __________ on November 18, 1996 at
10:00 a..m. local time.
At the Special Meeting, you will be asked to consider
and vote on the Agreement and Plan of Merger, dated as of
July 15, 1996, as amended (the "Merger Agreement"), by and
among North Side, North Fork Bancorporation, Inc. and North
Fork Bank, pursuant to which North Side will merge with and
into North Fork Bank, and stockholders of North Side will
receive 1.556 shares (the "Exchange Ratio") of the common
stock of North Fork Bancorporation, Inc. for each share of
North Side common stock, plus cash in lieu of fractional
shares, all as more fully described in the enclosed Joint
Proxy Statement/Prospectus.
Your Board of Directors has retained the investment
banking firm of Sandler O'Neill & Partners, L.P. to act as
its financial advisor in connection with the Merger. As
discussed in the accompanying Joint Proxy
Statement/Prospectus, Sandler O'Neill & Partners, L.P. has
delivered to the Board of Directors its written opinion that,
as of this date, the financial terms of the proposed Merger
are fair, from a financial point of view, to our
stockholders. The written opinion of Sandler O'Neill &
Partners, L.P. is included as Annex C to the accompanying
Joint Proxy Statement/Prospectus. You are urged to read
these materials carefully.
The exchange of common stock of North Fork
Bancorporation, Inc. for common stock of North Side will be a
tax-free transaction for federal income tax purposes;
however, any exchange of cash in lieu of fractional shares
will be taxable. Approval of the transaction requires, among
other things, the affirmative vote of at least two-thirds of
the outstanding shares of the common stock of North Side.
Your Board of Directors unanimously approved the Merger
and believes that it is in the best interests of North Side
and our stockholders. Accordingly, the Board of Directors
unanimously recommends that you vote TO APPROVE the Merger
Agreement and the Merger provided for therein.
Whether or not you plan to attend, please complete, sign
and date the enclosed proxy card and return it promptly in
the enclosed envelope. Your vote is important regardless of
the number of shares you own.
Sincerely,
Thomas M. O'Brien
Chairman, President and Chief
Executive Officer
NORTH SIDE SAVINGS BANK
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON NOVEMBER 18, 1996
NOTICE IS HEREBY GIVEN that a Special Meeting of
Stockholders of North Side Savings Bank, Floral Park, New York
("North Side") will be held at __________________,
________________, ___________, New York on Monday November 18,
1996 at 10:00 a..m., Eastern Time, for the following purposes,
all of which are more completely set forth in the accompanying
Joint Proxy Statement/Prospectus:
1. To consider and vote upon an Agreement and
Plan of Merger, dated as of July 15, 1996, as
amended, by and among North Side, North Fork
Bancorporation, Inc. ("North Fork") and North
Fork Bank pursuant to which, among other things,
North Side will be merged with and into North
Fork's wholly owned bank subsidiary, North Fork
Bank (the "Merger"), and each share of North
Side common stock outstanding immediately prior
to the Merger (other than any dissenting shares
under New York law and certain shares held
by North Fork) will be converted into the right
to receive 1.556 shares of North Fork Common Stock,
subject to possible adjustment under certain cir-
cumstances, plus cash in lieu of any fractional
share interest.
2. To transact such other business as may
properly come before the meeting or any
adjournment thereof.
Stockholders of the Bank of record at the close of business
on October 3, 1996 are entitled to notice of and to vote at the
Special Meeting and at any adjournment thereof.
It is important that your shares be represented and voted at
the Special Meeting regardless of whether you plan to attend.
Accordingly, please sign, date and return the enclosed proxy at
your earliest convenience.
Under New York law, holders of common stock of North Side
are eligible to exercise dissenters' rights in connection with
the proposed merger, as described more fully in the accompanying
Joint Proxy Statement/Prospectus.
BY ORDER OF THE BOARD OF
DIRECTORS
Judith A. MacGregor
Corporate Secretary
Floral Park, New York
__________ ___, 1996
[NORTH FORK LETTERHEAD]
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 Monday, November 18, 1996 at 10:00 a.m.,
local time, at the Marriott Windwatch Hotel, 717 Vanderbilt Motor
Parkway, Hauppauge, New York (the "Special Meeting"). At this
meeting, you will be asked to consider and vote upon a proposal
to approve the issuance of shares (the "Merger Shares") of North
Fork common stock to stockholders of North Side Savings Bank
("North Side") pursuant to an Agreement and Plan of Merger (the
"Merger Agreement"). Pursuant to the Merger Agreement, North
Side will be merged (the "Merger") with and into North Fork Bank
and the stockholders of North Side will receive 1.556 shares (the
"Exchange Ratio") of North Fork common stock for each share of
North Side common stock. Approval of the issuance of the Merger
Shares by the stockholders of North Fork is required by the rules
of the New York Stock Exchange because the Merger Shares will
exceed 20% of the issued and outstanding shares of North Fork.
The proposed merger has been unanimously approved by the
Board of Directors of each company. Your Board believes that the
Merger will provide significant value to North Fork's
stockholders by increasing the efficiency of the combined
operations of North Fork and North Side and by allowing North
Fork to provide a broader array of services to North Side'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 issuance of the
Merger Shares pursuant to the Merger Agreement. The investment
banking firm of Keefe, Bruyette & Woods, Inc. ("KBW") has issued
a written opinion to your Board of Directors that, as of the date
of such opinion, the Exchange Ratio was fair to North Fork's
stockholders from a financial point of view. The written opinion
of KBW 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
the North Side common stock, the approval of the issuance of the
Merger Shares by the holders of the North Fork 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. I
urge you to execute, date and return the enclosed proxy 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 issuance of the
Merger Shares pursuant to 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 THE ISSUANCE OF THE MERGER SHARES
PURSUANT TO THE MERGER AGREEMENT
PLEASE COMPLETE, DATE AND SIGN THE ENCLOSED PROXY
AND MAIL IT PROMPTLY IN THE ENCLOSED
POSTAGE-PAID RETURN ENVELOPE
NORTH FORK BANCORPORATION, INC.
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON NOVEMBER 18, 1996
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 Marriott Windwatch Hotel, 1717 Vanderbilt
Motor Parkway, Hauppauge, New York on November 18, 1996, 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 the
issuance of shares of North Fork common stock (the
"Merger Shares") pursuant to the Agreement and Plan of
Merger, dated as of July 15, 1996, as amended (the
"Merger Agreement"), among North Fork, North Fork Bank
and North Side Savings Bank ("North Side"). 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 October 3, 1996 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 275 Broad Hollow Road, Melville, New York, for 10 days prior
to the Special Meeting.
The common stock 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 CARD 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
_______________, 1996
THE BOARD OF DIRECTORS RECOMMENDS THAT
YOU VOTE FOR THE PROPOSAL
TO APPROVE THE ISSUANCE OF THE MERGER SHARES
PURSUANT TO THE MERGER AGREEMENT
PLEASE COMPLETE, DATE AND SIGN THE ENCLOSED PROXY
AND MAIL IT PROMPTLY IN THE ENCLOSED
POSTAGE-PAID RETURN ENVELOPE
NORTH FORK BANCORPORATION, INC.
NORTH SIDE SAVINGS BANK
JOINT PROXY STATEMENT
____________________
NORTH FORK BANCORPORATION, INC.
PROSPECTUS
____________________
8,135,293 SHARES OF COMMON STOCK
This Joint Proxy Statement/Prospectus (the "Joint
Proxy Statement/Prospectus") is being furnished to
stockholders of North Side Savings Bank ("North Side") in
connection with the solicitation of proxies by the Board of
Directors of North Side for use at a special meeting of
stockholders of North Side (including any adjournments or
postponements thereof) to be held on November 18, 1996 (the
"North Side Meeting"). At the North Side Meeting, North
Side's stockholders will consider and vote upon a proposal
to approve and adopt the Agreement and Plan of Merger, dated
as of July 15, 1996, as amended (the "Merger Agreement"),
among North Fork Bancorporation, Inc. ("North Fork"), North
Fork Bank, a wholly owned subsidiary of North Fork ("North
Fork Bank"), and North Side, and the consummation of the
transactions contemplated thereby. Pursuant to the Merger
Agreement, North Side will be merged with and into North
Fork Bank (the "Merger") with North Fork Bank continuing to
exist as a wholly owned subsidiary of 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 18, 1996 (the "North Fork
Meeting," and together with the North Side Meeting, the
"Special Meetings"). At the North Fork Meeting, North
Fork's stockholders will consider and vote upon a proposal
to approve the issuance of shares (the "Merger Shares") of
common stock, par value $2.50 per share, of North Fork (the
"North Fork Common Stock") to the stockholders of North Side
pursuant to the Merger Agreement.
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
8,135,293 shares of North Fork Common Stock issuable to
holders of common stock, par value $1.00 per share, of North
Side ("North Side Common Stock") in the Merger. Upon
consummation of the Merger, each outstanding share of North
Side Common Stock will, with certain exceptions, be
converted into and exchangeable for 1.556 shares (the
"Exchange Ratio") of North Fork Common Stock. If the
Average Closing Price (as defined below) is less than
$24.00, North Side 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 North Side Common Stock have a value (valued at the
Average Closing Price) of $37.34. The Average Closing Price
is the average closing sales price of the North Fork Common
Stock on the New York Stock Exchange (the "NYSE") for the 10
consecutive trading days ending on the fifth business day
prior to the date on which the approval by the Federal
Deposit Insurance Corporation (the "FDIC") of the Merger and
the other transactions contemplated by the Merger Agreement
is obtained, without regard to any requisite waiting period
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 the North Fork Rights Agreement (as
defined below).
Because the market price of North Fork Common
Stock is subject to fluctuation, the value of the shares of
North Fork Common Stock that holders of North Side Common
Stock would receive in the Merger may increase or decrease
prior to and after the Merger. See "SUMMARY -- Market
Prices and Dividend Information."
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION, ANY STATE SECURITIES
COMMISSION OR THE FEDERAL DEPOSIT INSURANCE CORPORA-
TION NOR HAS THE SECURITIES AND EXCHANGE COMMIS-
SION, ANY STATE SECURITIES COMMISSION OR THE
FEDERAL DEPOSIT INSURANCE CORPORATION
PASSED UPON THE ACCURACY OR ADEQUA-
CY OF THIS JOINT 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 NOR ARE THEY GUARANTEED BY ANY
BANK OR BANK HOLDING COMPANY.
_______________________
This Joint Proxy Statement/Prospectus and the
accompanying forms of proxy are first being mailed to
stockholders of North Fork and North Side on or about
________ __, 1996.
The date of this Joint Proxy Statement/Prospectus is
, 1996
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 North Side. 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 North Side 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 North Side and its
subsidiaries has been supplied by North Side.
TABLE OF CONTENTS
Page #
AVAILABLE INFORMATION . . . . . . . . . . . . . . . . . . 1
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE . . . . . 2
SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . 5
THE COMPANIES . . . . . . . . . . . . . . . . . . . . . . 27
North Fork . . . . . . . . . . . . . . . . . . . . . . 27
North Side . . . . . . . . . . . . . . . . . . . . . . 28
THE SPECIAL MEETINGS . . . . . . . . . . . . . . . . . . 29
North Side Meeting . . . . . . . . . . . . . . . . . . 29
North Fork Meeting . . . . . . . . . . . . . . . . . . 31
THE MERGER . . . . . . . . . . . . . . . . . . . . . . . 35
Effects of the Merger . . . . . . . . . . . . . . . . 35
Exchange Ratio . . . . . . . . . . . . . . . . . . . . 35
Effective Time . . . . . . . . . . . . . . . . . . . . 38
Background of the Merger . . . . . . . . . . . . . . . 38
Recommendation of the Boards of Directors; Reasons for
the Merger . . . . . . . . . . . . . . . . . . . . . 42
Opinions of Financial Advisors . . . . . . . . . . . . 44
Interests of Certain Persons in the Merger . . . . . . 56
Employee Matters . . . . . . . . . . . . . . . . . . . 59
Conversion of Shares; Procedures for Exchange of
Certificates; Fractional Shares . . . . . . . . . . 59
Conditions to the Merger . . . . . . . . . . . . . . . 61
Regulatory Approvals Required for the Merger . . . . . 64
Conduct of Business Pending the Merger . . . . . . . . 65
Waiver and Amendment; Termination . . . . . . . . . . 68
Resales of North Fork Common Stock Received in the
Merger . . . . . . . . . . . . . . . . . . . . . . . 69
Stock Exchange Listing . . . . . . . . . . . . . . . . 70
Anticipated Accounting Treatment . . . . . . . . . . . 70
Certain Federal Income Tax Consequences of the Merger 71
Dissenters' Rights . . . . . . . . . . . . . . . . . . 73
Stock Option Agreement . . . . . . . . . . . . . . . . 75
Amendment to Rights Agreement . . . . . . . . . . . . 81
Expenses . . . . . . . . . . . . . . . . . . . . . . . 81
MANAGEMENT AND OPERATIONS FOLLOWING THE MERGER . . . . . 81
Board of Directors and Management following the Merger 81
Consolidation of Operations; Projected Cost Savings and
Revenue Enhancements; Projected Earnings Per Share 81
Merger and Restructuring Charges . . . . . . . . . . . 83
INVOLVEMENT IN LEGAL PROCEEDINGS . . . . . . . . . . . . 85
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS OF NORTH
FORK AND NORTH SIDE . . . . . . . . . . . . . . . . . 86
CERTAIN REGULATORY CONSIDERATIONS . . . . . . . . . . . . 91
General . . . . . . . . . . . . . . . . . . . . . . . 91
Payment of Dividends . . . . . . . . . . . . . . . . . 92
Transactions with Affiliates . . . . . . . . . . . . . 93
Holding Company Liability . . . . . . . . . . . . . . 93
Prompt Corrective Action . . . . . . . . . . . . . . . 93
Capital Adequacy . . . . . . . . . . . . . . . . . . . 94
Enforcement Powers of the Federal Banking Agencies . . 95
FDIC Insurance Assessments . . . . . . . . . . . . . . 96
Control Acquisitions . . . . . . . . . . . . . . . . . 96
Future Legislation . . . . . . . . . . . . . . . . . . 97
DESCRIPTION OF NORTH FORK CAPITAL STOCK . . . . . . . . . 97
General . . . . . . . . . . . . . . . . . . . . . . . 97
Common Stock . . . . . . . . . . . . . . . . . . . . . 98
Rights Plan . . . . . . . . . . . . . . . . . . . . . 98
COMPARISON OF STOCKHOLDER RIGHTS . . . . . . . . . . . . 102
Special Meeting of Stockholders . . . . . . . . . . . 102
Stockholder Action by Written Consent . . . . . . . . 103
Stockholder Nominations and Proposals for Business . . 103
Certain Business Combinations (Not Involving an
Interested Stockholder) . . . . . . . . . . . . . . 104
Business Combinations Involving Interested
Stockholders . . . . . . . . . . . . . . . . . . . . 104
Removal of Directors . . . . . . . . . . . . . . . . . 106
Consideration of Other Constituencies . . . . . . . . 106
Personal Liability of Directors . . . . . . . . . . . 107
Indemnification of Officers and Directors . . . . . . 107
Rights Plans . . . . . . . . . . . . . . . . . . . . . 107
Appraisal Rights . . . . . . . . . . . . . . . . . . . 108
PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
(Unaudited) . . . . . . . . . . . . . . . . . . . . . 109
LEGAL MATTERS . . . . . . . . . . . . . . . . . . . . . . 119
EXPERTS . . . . . . . . . . . . . . . . . . . . . . . . . 119
STOCKHOLDER PROPOSALS . . . . . . . . . . . . . . . . . . 119
ANNEX A AGREEMENT AND PLAN OF MERGER . . . . . . . . . . A-1
ANNEX B STOCK OPTION AGREEMENT . . . . . . . . . . . . . B-1
ANNEX C OPINION OF SANDLER O'NEILL & PARTNERS, L.P. . . . C-1
ANNEX D OPINION OF KEEFE, BRUYETTE & WOODS, INC. . . . . D-1
ANNEX E SECTION 6022 OF THE NEW YORK BANKING LAW . . . . E-1
AVAILABLE INFORMATION
North Fork and North Side 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"), in the case of North Fork, and the FDIC, in
the case of North Side. The reports, proxy statements and
other information filed by North Fork 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 or from
the Web Site maintained by the Commission at
"http://www.sec.gov.". The reports, proxy statements and
other information filed by North Side with the FDIC can be
inspected and copied at the public reference facilities
maintained by the FDIC at the FDIC Registration and
Disclosure Section, 550 17th Street, N.W., Room F-643,
Washington, D.C. 20429. 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 North Side can be inspected at
the offices of The Nasdaq National Market, 1735 K Street,
N.W., Washington, D.C. 20006.
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.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission by
North Fork (File No. 0-10280) 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, 1995 (the "1995 North Fork
Form 10-K").
2. North Fork's Quarterly Reports on Form 10-Q for
the quarters ended March 31, 1996 and June 30, 1996.
3. North Fork's Current Reports on Form 8-K, dated
March 15, 1996 (as amended by a Form 8-K/A), July 15, 1996
and September 12, 1996.
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 by North Fork pursuant to
Section 12 of the Exchange Act including any amendment or
report filed for purposes of updating any such description.
5. The portions of North Fork's Proxy Statement for
the Annual Meeting of Stockholders held on April 23, 1996
that have been incorporated by reference in the 1995 North
Fork Form 10-K.
The following documents filed with the FDIC by North
Side have been filed as exhibits to North Fork's Current
Report on Form 8-K, dated September 12, 1996, and are
incorporated by reference in this Joint Proxy
Statement/Prospectus:
1. North Side's Annual Report on Form F-2 for the
fiscal year ended September 30, 1995 (the "1995 North Side
Form F-2").
2. North Side's Quarterly Reports on Form F-4 for the
quarters ended December 31, 1995, March 31, 1996 and June
30, 1996.
3. North Side's Current Reports on Form F-3 for the
months of January 1996, March 1996, April 1996 and July
1996.
4. The description of North Side Common Stock and
North Side Series A Junior Participating Preferred Stock and
Preferred Stock Purchase Rights set forth in North Side's
Registration Statement filed by North Side pursuant to
Section 12 of the Exchange Act including any amendment or
report filed for purposes of updating any such description.
5. The portions of North Side's Proxy Statement for
the Annual Meeting of Stockholders held on January 22, 1996
that have been incorporated by reference in the 1995 North
Side Form F-2.
All documents and reports filed by North Fork
(including any documents or reports of North Side filed as
exhibits to any such filing by North Fork) 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., 275 BROAD HOLLOW
ROAD, MELVILLE, NEW YORK 11747, ATTENTION: ANTHONY ABATE,
SECRETARY, TELEPHONE NUMBER (516) 844-1004, AND IN THE CASE
OF DOCUMENTS RELATING TO NORTH SIDE, TO NORTH SIDE SAVINGS
BANK, 170 TULIP AVENUE, FLORAL PARK, NEW YORK 11001,
ATTENTION: JUDITH A. MACGREGOR, CORPORATE SECRETARY,
TELEPHONE NUMBER (516) 488-6900. IN ORDER TO ENSURE TIMELY
DELIVERY OF THE DOCUMENTS, REQUESTS SHOULD BE RECEIVED BY
NOVEMBER 9, 1996.
THIS JOINT PROXY STATEMENT/PROSPECTUS CONTAINS CERTAIN
FORWARD LOOKING STATEMENTS WITH RESPECT TO THE FINANCIAL
CONDITION, RESULTS OF OPERATIONS AND BUSINESS OF NORTH FORK
FOLLOWING THE CONSUMMATION OF THE MERGER, INCLUDING
STATEMENTS RELATING TO: (A) THE COST SAVINGS AND REVENUE
ENHANCEMENTS THAT ARE EXPECTED TO BE REALIZED FROM THE
MERGER AND (B) PROJECTED 1997 EARNINGS PER SHARE. SEE
"SUMMARY", "MANAGEMENT AND OPERATIONS FOLLOWING THE MERGER
-- CONSOLIDATION OF OPERATIONS; PROJECTED COST SAVINGS AND
REVENUE ENHANCEMENTS; PROJECTED EARNINGS PER SHARE" AND "PRO
FORMA CONDENSED COMBINED FINANCIAL STATEMENTS (UNAUDITED)."
FACTORS THAT MAY CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY
FROM THOSE CONTEMPLATED BY SUCH FORWARD LOOKING STATEMENTS
INCLUDE, AMONG OTHERS, THE FOLLOWING POSSIBILITIES: (1)
EXPECTED COST SAVINGS OR REVENUE ENHANCEMENTS FROM THE
MERGER CANNOT BE FULLY REALIZED; (2) DEPOSIT ATTRITION,
CUSTOMER LOSS OR REVENUE LOSS FOLLOWING THE MERGER IS
GREATER THAN EXPECTED; (3) COMPETITIVE PRESSURE IN THE
BANKING AND FINANCIAL SERVICES INDUSTRY INCREASES
SIGNIFICANTLY; (4) CHANGES IN THE INTEREST RATE ENVIRONMENT
REDUCE MARGINS; AND (5) GENERAL ECONOMIC CONDITIONS, EITHER
NATIONALLY OR IN THE STATE OF NEW YORK, ARE LESS FAVORABLE
THAN EXPECTED.
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
North Side 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
North Fork. North Fork, with its executive
headquarters located in Melville, New York, is a bank
holding company organized under the laws of the State of
Delaware in 1980 and registered under the Bank Holding
Company Act of 1956, as amended. North Fork's primary
subsidiary, North Fork Bank, operates 65 retail banking
facilities throughout Suffolk, Nassau, New York, Queens,
Westchester and Rockland Counties, of New York.
At June 30, 1996, North Fork had assets of $4.1
billion, deposits of $3.3 billion and stockholders' equity
of $300 million. The principal executive offices of North
Fork are located at 275 Broad Hollow Road, Melville, New
York 11747 and its telephone number is (516) 844-1004.
For more information about North Fork, reference is
made to "THE COMPANIES -- North Fork" and to the 1995 North
Fork Form 10-K which is incorporated herein by reference.
See "AVAILABLE INFORMATION" and "INCORPORATION OF CERTAIN
DOCUMENTS BY REFERENCE."
North Side. North Side is a New York-chartered, FDIC-
insured, stock-form savings bank which was originally
chartered in 1905 as a mutual savings bank and converted to
a stock-form savings bank in 1986. North Side conducts
business from 17 full-service banking offices and one public
accommodation office in the Bronx, Queens, Nassau and
Suffolk Counties, New York.
At June 30, 1996, North Side had total assets of $1.65
billion, deposits of $1.23 billion and stockholders' equity
of $123.5 million. The principal executive offices of North
Side are located at 170 Tulip Avenue, Floral Park, New York
11001 and its telephone number is (516) 488-6900.
For more information about North Side, reference is
made to "THE COMPANIES -- North Side" and to the 1995 North
Side Form F-2 which is incorporated herein by reference.
See "AVAILABLE INFORMATION" and "INCORPORATION OF CERTAIN
DOCUMENTS BY REFERENCE."
THE SPECIAL MEETINGS
North Side. The North Side Meeting will be held at
10:00 a.m. on November 18, 1996 at ____________. The
purpose of the North Side Meeting is to consider and vote
upon a proposal to approve and adopt the Merger Agreement,
which is attached as Annex A to this Joint Proxy
Statement/Prospectus, and the consummation of the
transactions contemplated thereby, and such other matters as
may properly be brought before the meeting and any
adjournments or postponements thereof.
Only holders of record of North Side Common Stock at
the close of business on October 3, 1996 (the "North Side
Record Date") will be entitled to vote at the North Side
Meeting. The affirmative vote of two-thirds of the
outstanding shares of North Side Common Stock entitled to
vote on such date is required to approve and adopt the
Merger Agreement. As of the North Side Record Date, there
were _______ shares of North Side Common Stock outstanding
and entitled to be voted at the North Side Meeting.
The directors and executive officers of North Side and
their affiliates beneficially owned, as of the North Side
Record Date, _______ shares, or approximately ____% of the
outstanding shares, of North Side Common Stock entitled to
vote at the North Side Meeting and all such persons have
indicated a present intent to vote their shares in favor of
the Merger. As of the North Side Record Date, neither North
Fork and its subsidiaries, nor the directors and executive
officers of North Fork, beneficially owned any outstanding
shares of North Side Common Stock, except for 241,000 shares
of North Side Common Stock held by North Fork and an
aggregate of [846] shares beneficially owned by certain
directors of North Fork. North Fork and such directors have
indicated a present intent to vote such shares in favor of
the Merger. See "THE SPECIAL MEETINGS -- North Side
Meeting."
North Fork. The North Fork Meeting will be held at
10:00 a.m. on November 18, 1996 at the Marriott Windwatch
Hotel, 1717 Vanderbilt Motor Parkway, Hauppauge, New York.
The purpose of the North Fork Meeting is to consider and
vote upon a proposal to approve the issuance of shares (the
"Merger Shares") of North Fork Common Stock to stockholders
of North Side pursuant to the Merger Agreement, and 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 October 3, 1996 (the "North Fork
Record Date") will be entitled to vote at the North Fork
Meeting. Under the rules of the New York Stock Exchange
(the "NYSE"), the issuance of the Merger Shares will require
the affirmative vote of the holders of a majority of the
shares of North Fork Common Stock voting on the issuance of
the Merger Shares where the total number of votes cast
represents over 50% of all outstanding shares of North Fork
Common Stock on the North Fork Record Date. 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 the North Fork
Record Date, _______ 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 issuance of the Merger Shares. [As of the North Fork
Record Date, neither North Side nor its subsidiaries, nor
the directors and executive officers of North Side,
beneficially owned any shares of North Fork Common Stock.]
See "THE SPECIAL MEETINGS -- North Fork Meeting -- General."
EFFECTS OF THE MERGER
Pursuant to the Merger Agreement, at the Effective Time
(as defined below), North Side will be merged with and into
North Fork Bank, and North Side stockholders will become
stockholders of North Fork. See "THE MERGER -- Effects of
the Merger."
EXCHANGE RATIO
At the Effective Time, each issued and outstanding
share of North Side Common Stock, except for shares held
directly or indirectly by North Fork or North Side (other
than shares held by North Fork or North Side in a fiduciary
capacity ("Trust Account Shares") or in respect of a debt
previously contracted ("DPC Shares")) and shares of North
Side Common Stock as to which the holder thereof shall have
exercised dissenter's rights, will be converted into and
exchangeable for 1.556 shares of North Fork Common Stock
(the "Exchange Ratio"). If the Average Closing Price (as
defined below) is less than $24.00, North Side 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 North Side Common
Stock have a value (valued at the Average Closing Price) of
$37.34. The Average Closing Price is the average closing
sales price per share of North Fork Common Stock on the NYSE
for the 10 consecutive trading days ending on the 5th
business day (the "Valuation Period") prior to the date on
which the approval by the FDIC of the Merger and the other
transactions contemplated by the Merger Agreement is
obtained, without regard to any requisite waiting period in
respect thereof.
If the Average Closing Price is less than $24.00 and,
in response to an election by North Side 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) $37.34 by (ii) the Average Closing
Price. Assuming the Merger is approved by North Side
stockholders, the North Side Board may elect not to
terminate the Merger Agreement and to consummate the Merger
without resoliciting North Side stockholders if the Average
Closing Price is less than $24.00, 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 North
Side Common Stock would be less than $37.34. In such a
situation, in considering whether to consummate the Merger
without the resolicitation of North Side stockholders, the
North Side 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. See "THE MERGER
-- Exchange Ratio" and "-- Waiver and Amendment;
Termination."
EFFECTIVE TIME
The Merger will become effective at the date and time
set forth in the certificate which will be filed by the
Superintendent of Banking of the State of New York
Department of Banking (the "Banking Department") in
accordance with applicable law (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 the 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 North Side. See "THE MERGER -- Effective Time."
BACKGROUND OF THE MERGER
For a discussion of the background of the Merger. See
"THE MERGER -- Background of the Merger."
RECOMMENDATIONS OF BOARDS OF DIRECTORS; REASONS FOR THE
MERGER
North Side. THE NORTH SIDE BOARD OF DIRECTORS (THE
"NORTH SIDE BOARD") HAS UNANIMOUSLY APPROVED THE MERGER
AGREEMENT AND HAS DETERMINED THAT THE MERGER IS FAIR TO, AND
IN THE BEST INTERESTS OF, NORTH SIDE AND ITS STOCKHOLDERS.
THE NORTH SIDE BOARD THEREFORE UNANIMOUSLY RECOMMENDS THAT
NORTH SIDE'S STOCKHOLDERS VOTE FOR APPROVAL OF THE MERGER
AGREEMENT.
For a discussion of the factors considered by the North
Side Board in approving the Merger Agreement, see "THE
MERGER -- Recommendation of the Boards of Directors; Reasons
for the Merger -- North Side."
North Fork. THE NORTH FORK BOARD OF DIRECTORS (THE
"NORTH FORK BOARD") HAS UNANIMOUSLY APPROVED THE MERGER
AGREEMENT AND HAS DETERMINED THAT THE MERGER AND THE
ISSUANCE OF THE MERGER SHARES 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 ISSUANCE OF THE
MERGER SHARES.
For a discussion of the factors considered by the North
Fork Board in approving the Merger Agreement, see "THE
MERGER -- Recommendation of the Boards of Directors; Reasons
for the Merger -- North Fork."
OPINIONS OF FINANCIAL ADVISORS
Sandler O'Neill & Partners, L.P. ("Sandler O'Neill")
has rendered a written opinion to the North Side 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 North Side Common Stock. As discussed in
"THE MERGER -- Recommendation of the Boards of Directors;
Reasons for the Merger -- North Side," Sandler O'Neill's
opinion and presentation to the North Side Board, together
with a review by the North Side Board of the assumptions
used by Sandler O'Neill, were among the factors considered
by the North Side Board in reaching its determination to
approve the Merger. The opinion of Sandler O'Neill 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 Sandler O'Neill in connection therewith. See "THE MERGER --
Opinions of Financial Advisors -- North Side."
Keefe, Bruyette & Woods, Inc. ("KBW") 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 Exchange Ratio 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 -- North Fork," KBW's
opinion and presentation to the North Fork Board, together
with a review by the North Fork Board of the assumptions
used by KBW, were among the factors considered by the North
Fork Board in reaching its determination to approve the
Merger. The opinion of KBW 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 KBW in
connection therewith. See "THE MERGER -- Opinions of
Financial Advisors -- North Fork."
INTERESTS OF CERTAIN PERSONS IN THE MERGER
Certain members of North Side's management and the
North Side Board have interests in the Merger in addition to
their interests as stockholders of North Side 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 Mr. O'Brien and another member of
the North Side Board, the provision by North Fork of new
employment and severance agreements for Mr. O'Brien should
he elect to enter into such agreements, the creation of an
advisory committee and the acceleration of benefits under
certain employee benefit plans. The North Side 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 North Side employees
to participate in benefit plans maintained by North Fork
following the Merger to the same extent as comparable
employees of North Fork Bank. 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, receipt of a letter from North Fork's independent
accountants that the Merger qualifies for pooling of
interests accounting treatment and the satisfaction of other
customary closing conditions. See "THE MERGER -- Conditions
to the Merger."
Consummation of the Merger and the transactions
contemplated thereby are subject to the prior approval of
the FDIC and the Banking Department. See "THE MERGER --
Regulatory Approvals Required for the Merger."
TERMINATION OF THE MERGER AGREEMENT
The Merger Agreement may be terminated at any time
prior to the Effective Time by the mutual consent of North
Side and North Fork and by either of them individually under
certain specified circumstances, including if the Merger has
not been consummated by June 30, 1997. In addition, the
Merger Agreement provides that North Side may elect to
terminate the Merger Agreement if the Average Closing Price
is less than $24.00 unless North Fork agrees to increase the
Exchange Ratio to an amount equal to $37.34 divided by the
Average Closing Price. See "THE MERGER -- Exchange Ratio"
and "-- Waiver and Amendment; Termination."
STOCK EXCHANGE LISTING
The North Fork Common Stock is listed on the NYSE.
North Fork has agreed to use reasonable efforts to cause the
shares of North Fork Common Stock to be issued in the Merger
to be approved for listing on the NYSE. See "THE MERGER --
Stock Exchange Listing." The obligation of each of North
Side 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 North Side Common Stock pursuant
to the Stock Option Agreement (as defined below), however,
may prevent the Merger from qualifying as a pooling of
interests for accounting and financial reporting purposes.
Further, pursuant to the Merger Agreement, North Fork must
reissue approximately 600,000 shares of North Fork Common
Stock currently held by North Fork as treasury stock (the
"North Fork Treasury Stock") in a public or private offering
prior to consummation of the Merger in order that the Merger
will not fail to qualify for pooling of interests accounting
treatment by virtue of the number of shares of North Fork
Treasury Stock. It is currently expected that the offering
would occur subsequent to the Valuation Period and prior to
the Effective Time. It is a condition to each of North
Fork's and North Side's obligation to consummate the Merger
that North Fork receives a letter from its independent
accountants to the effect that the Merger qualifies for
pooling of interests accounting treatment. 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, dated as of the Effective Time, in
form and substance reasonably satisfactory to North Fork, to
the effect that the Merger will be treated as a
reorganization within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code"), and
that, accordingly, for federal income tax purposes no gain
or loss will be recognized by North Fork, North Fork Bank or
North Side as a result of the Merger except to the extent
North Fork Bank or North Side may be required to recognize
any income due to the recapture of bad debt reserves. It is
a condition to the obligation of North Side to consummate
the Merger that North Side shall have received an opinion of
its counsel, dated as of the Effective Time, in form and
substance reasonably satisfactory to North Side, to the
effect that the Merger will be treated as a reorganization
within the meaning of Section 368(a) of the Code and that,
accordingly, for federal income tax purposes that (i) no
gain or loss will be recognized by North Side as a result of
the Merger except to the extent North Side or North Fork
Bank may be required to recognize any income due to the
recapture of bad debt reserves, (ii) no gain or loss will be
recognized by the stockholders of North Side who exchange
all of their North Side 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 (iii) the aggregate tax basis
of North Fork Common Stock received by stockholders of North
Side who exchange all of their North Side Common Stock
solely for North Fork Common Stock pursuant to the Merger
will be the same as the aggregate tax basis of the North
Side Common Stock surrendered in exchange therefor. Each of
these conditions is waivable at the option of the party
entitled to receive the requisite opinion. North Side
stockholders are urged to consult their tax advisors
concerning 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."
DISSENTERS' RIGHTS
Holders of North Side Common Stock who deliver a
written objection to the Merger to the Secretary of North
Side before the vote on the adoption of the Merger Agreement
at the North Side Meeting and otherwise comply with the
additional requirements of Section 6022 of the New York
Banking Law (the "NYBL") will be entitled to dissenters'
rights in connection with the Merger. A copy of Section
6022 is attached to this Joint Proxy Statement/Prospectus as
Annex E. No stockholder of North Fork is entitled to
dissenters' rights in connection with or as a result of the
Merger. See "THE MERGER -- Dissenters' Rights."
STOCK OPTION AGREEMENT
Execution of the Stock Option Agreement, dated as of
July 15, 1996 (the "Stock Option Agreement"), by and between
North Side and North Fork, was a condition to North Fork's
merger proposal. Pursuant to the Stock Option Agreement,
North Side granted North Fork an option (the "Option") to
purchase 961,965 shares of North Side Common Stock,
representing approximately 19.9% of the issued and
outstanding shares of such common stock without giving
effect to the shares issuable upon exercise of such option,
at an exercise price of $34.75, subject to the terms and
conditions set forth therein. The Option may only be
exercised upon the occurrence of certain events (none of
which has occurred). The Stock Option Agreement is attached
as Annex B to this Joint Proxy Statement/Prospectus. See
"THE MERGER -- Stock Option Agreement."
The Stock Option Agreement is 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 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 North Side from considering or
proposing such an acquisition, even if such persons were
prepared to pay a higher price per share for North Side
Common Stock than the price per share implicit in the
Exchange Ratio.
BOARD OF DIRECTORS AND MANAGEMENT FOLLOWING THE MERGER
Pursuant to the terms of the Merger Agreement, at the
Effective Time, North Fork will cause the North Fork Board
to be expanded by two members and Mr. O'Brien and one other
member of the North Side Board selected by North Side and
approved by North Fork (which approval will not be
unreasonably withheld) will be appointed to fill the
vacancies. In addition, it is expected that Mr. O'Brien
will also serve as a Vice Chairman of the North Fork Board.
See "MANAGEMENT AND OPERATIONS FOLLOWING THE MERGER -- Board
of Directors and Management Following the Merger" and "THE
MERGER -- Interests of Certain Persons in the Merger."
CONSOLIDATION OF OPERATIONS, PROJECTED COST SAVINGS AND
REVENUE ENHANCEMENTS; PROJECTED EARNINGS PER SHARE
North Fork expects to achieve significant cost savings
subsequent to the Merger. The cost savings are expected to
be derived from reductions in personnel, elimination of one
branch location located in a community in which both North
Fork and North Side branches are located, the integration of
North Side's data processing operations with those of North
Fork, and the integration of other facilities and back
office operations. Further, because North Side will be
merged with and into North Fork Bank, North Side's costs
associated with operating as a publicly held entity will
also be eliminated. The aggregate annual pre-tax cost
savings are estimated to range between $8 million and $11
million. Management of North Fork believes that realization
of these cost savings will occur by the end of the first
quarter following consummation of the Merger. There can be
no assurance that all of the potential cost savings will be
realized or that they will be realized in the time frame
currently estimated or thereafter. Such realization will
depend, among other things, upon the existing regulatory and
economic environment, business changes implemented by North
Fork management and other factors, certain of which are
beyond the control of North Fork.
In addition, North Fork believes, based on its previous
experience in acquiring savings banks and branches of
savings banks, that revenue enhancement opportunities exist
with the offering of commercial bank products to North
Side's customers and the communities North Side serves.
These products include but are not limited to a variety of
demand deposit accounts, discount brokerage, investment
management and trust services, cash management, annuity and
mutual fund products and commercial and installment loans to
small and midsize businesses. Management of North Fork
estimates that revenue enhancements resulting from the
Merger could approximate an annual amount of $11 million, on
a pre-tax basis. The amounts and realization of any
additional revenues will depend upon a number of factors
including, but not limited to, competition, the economic
environment and regulatory requirements, which are all
beyond the control of North Fork.
Based on the above-described estimated cost savings and
revenue enhancements projected to be realized in connection
with the Merger, North Fork believes that the Merger will be
accretive to earnings per share in 1997 by approximately
$.28 per share relative to consensus Wall Street analyst
estimates (made prior to announcement of the Merger) as
compiled by Zacks Investment Research, a public supplier of
such information, of $2.96 per share, exclusive of the one-
time merger and restructuring charge expected to be incurred
in connection with the Merger. SEE "MANAGEMENT AND
OPERATIONS FOLLOWING THE MERGER -- Consolidation of
Operations; Projected Cost Savings and Revenue Enhancements;
Projected Earnings Per Share" and "-- Merger and
Restructuring Charges."
For additional factors that could cause actual results
to differ materially from the estimates described above, see
"INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE."
MERGER AND RESTRUCTURING CHARGES
A non-recurring merger and restructuring charge ranging
from $11.8 million to $15.2 million, net of tax, will be
incurred upon consummation of the Merger. The restructuring
charge includes severance and employee related expenses,
facility and system conversion costs and credit costs
resulting from the Merger. See "MANAGEMENT AND OPERATIONS
FOLLOWING THE MERGER -- Merger and Restructuring Charges."
INVOLVEMENT IN LEGAL PROCEEDINGS
Two alleged stockholders of North Side have filed
purported class action lawsuits in connection with the
Merger. For a description of the lawsuits, see "INVOLVEMENT
IN LEGAL PROCEEDINGS."
COMPARISON OF STOCKHOLDER RIGHTS
At the Effective Time, North Side 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 By-laws. The rights of
stockholders of North Fork differ from the rights of the
stockholders of North Side with respect to certain important
matters, including, among others, the ability of stockholders
to call a special meeting of stockholders, 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 pro-
visions of the stockholder rights plans, 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."
SELECTED HISTORICAL FINANCIAL INFORMATION
(UNAUDITED)
The following tables set forth selected historical
consolidated financial information (unaudited) for North
Fork for the five years ended December 31, 1995 and the six
month periods ended June 30, 1996 and 1995, and for North
Side for the five years ended September 30, 1995 and the six
month periods ended June 30, 1996 and 1995. The financial
information for North Side for the six month periods ended
June 30, 1996 and 1995 has been 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. The tables have been derived from,
and should be read in conjunction with, the historical
financial statements of North Fork and North Side, including
the related notes thereto incorporated by reference in this
Joint Proxy Statement/Prospectus. See "INCORPORATION OF
CERTAIN DOCUMENTS BY REFERENCE". The financial information
for the six month periods ended June 30, 1996 and 1995 for
North Fork and North Side reflect, in the opinions of the
management of North Fork and North Side, all adjustments
necessary for a fair presentation of such information.
Results for these interim periods are not necessarily
indicative of the results which may be expected for the full
year or any other interim period.
<TABLE>
<CAPTION>
NORTH FORK BANCORPORATION, INC.
SELECTED HISTORICAL FINANCIAL INFORMATION
(UNAUDITED)
(in thousands, except ratios and per share amounts)
SIX MONTHS
ENDED
JUNE 30, YEARS ENDED DECEMBER 31,
------------------------ ----------------------------------------------------------
1996 (1) 1995 1995 1994 1993 1992 1991
------------------------ ----------------------------------------------------------
CONSOLIDATED SUMMARY OF OPERATIONS:
<S> <C> <C> <C> <C> <C> <C> <C>
Interest income.......................... $139,444 $107,072 $226,398 $203,733 $191,630 $210,780 $225,855
Interest expense......................... 55,377 38,665 85,162 71,227 73,169 105,714 136,464
------------------------ -----------------------------------------------------------
Net interest income...................... 84,067 68,407 141,236 132,506 118,461 105,066 89,391
------------------------ -----------------------------------------------------------
Provision for loan losses................ 3,000 4,000 9,000 3,275 10,300 23,775 66,625
Non-interest income...................... 13,435 10,308 20,942 19,020 18,938 16,860 13,399
Net security gains/(losses).............. 996 148 6,379 (9,211) 1,457 9,547 9,052
Other real estate expense................ 932 311 255 3,651 13,971 16,358 10,663
Merger & related restructure charges..... - - - 14,338 - 1,200 -
Non-interest expense..................... 41,587 33,727 68,588 74,453 71,962 72,104 62,663
------------------------ -----------------------------------------------------------
Income/(loss) before income taxes........ 52,979 40,825 90,714 46,598 42,623 18,036 (28,109)
Provision/(benefit) for income taxes..... 21,417 17,095 38,479 16,926 16,976 8,609 (164)
------------------------ -----------------------------------------------------------
Net income/(loss)........................ $31,562 $23,730 $52,235 $29,672 $25,647 $9,427 ($27,945)
------------------------ -----------------------------------------------------------
------------------------ -----------------------------------------------------------
Weighted average common shares
outstanding (2).......................... 24,939 24,168 24,554 23,763 23,242 19,689 18,490
Common shares outstanding at period end.. 24,118 24,662 24,843 23,047 22,446 20,171 19,086
CONSOLIDATED PER SHARE DATA:
Earnings/(loss) per share (2)............ $1.27 $0.98 $2.13 $1.25 $1.10 $0.48 ($1.51)
Cash dividends declared.................. $.40 $.25 $.55 $.35 - - $.34
Dividend payout ratio.................... 32% 25% 26% 28% - - -
Stated Book value at period-end.......... $12.43 $11.59 $12.47 $11.06 $10.08 $9.08 $8.71
Tangible Book value at period-end........ $8.91 $10.72 $11.40 $10.10 $8.91 $7.70 $7.18
CONSOLIDATED BALANCE SHEET DATA AT
PERIOD END:
Securities Available-for-Sale (3)........ $1,121,843 $271,978 $814,485 $141,805 $200,219 $338,841 $415,276
Securities Held-to-Maturity.............. 377,883 547,316 342,143 631,492 771,648 319,286 25,714
Loans, net of unearned income & fees..... 2,300,578 1,870,367 1,966,440 1,814,037 1,740,778 1,807,119 1,987,560
Allowance for loan losses................ 50,384 52,003 50,210 50,069 56,556 69,583 63,722
Intangibles.............................. 84,755 21,529 26,633 22,208 26,239 27,834 29,450
Total assets............................. 4,138,261 2,858,883 3,303,311 2,717,776 2,884,375 2,691,011 2,854,876
Deposits................................. 3,256,230 2,424,890 2,535,460 2,342,887 2,348,545 2,387,368 2,503,661
Borrowings............................... 507,739 57,625 401,369 70,000 268,643 41,200 27,366
Senior notes payable..................... 25,000 25,000 25,000 25,000 20,000 40,000 40,000
Stockholders' equity..................... $299,688 $285,865 $309,845 $254,923 $226,310 $183,147 $166,475
CONSOLIDATED AVERAGE BALANCE SHEET DATA:
Securities............................... $1,352,485 $765,161 $857,302 $968,908 $869,792 $544,966 $450,831
Loans, net of unearned income & fees..... 2,130,539 1,852,497 1,893,654 1,773,088 1,735,122 1,906,438 1,884,440
Total assets............................. 3,765,261 2,783,707 2,928,773 2,933,943 2,820,491 2,782,480 2,542,179
Deposits................................. 3,002,971 2,410,090 2,464,776 2,363,965 2,363,652 2,467,494 2,172,622
Total borrowings......................... 394,633 71,060 137,893 293,732 213,078 112,758 146,797
Stockholders' equity..................... $307,700 $269,351 $283,024 $244,759 $210,345 $169,155 $191,749
</TABLE>
(1) In March 1996, North Fork completed its purchase of the
domestic commercial banking business of Extebank, and the ten
Long Island banking branches of First Nationwide Bank. As a
result of these acquisitions, North Fork added approximately $200
million in net loans, $920 million in deposit liabilities and $30
million in capital. The intangibles created in the
aforementioned transactions aggregated approximately $59 million.
(2) North Fork's historical earnings per share for the six
months ended June 30, 1996 and 1995 and for the five years ended
December 31, 1995, were based on weighted average common shares
outstanding as dilution from potentially dilutive common stock
equivalents was less than 3% for each period.
(3) Effective January 1, 1994, North Fork adopted Statement of
Financial Accounting Standards No. 115, "Accounting for Certain
Investments in Debt and Equity Securities". The Statement
requires that securities available-for-sale be reported at fair
value, with unrealized gains and losses reflected as a separate
component of stockholders' equity. 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.
(4) See accompanying "Selected Financial Ratios" on Page 22 for
additional information.
<TABLE>
<CAPTION>
NORTH SIDE SAVINGS BANK
SELECTED HISTORICAL FINANCIAL INFORMATION
(UNAUDITED)
(in thousands, except ratios and per share amounts)
SIX MONTHS
ENDED
JUNE 30, YEARS ENDED SEPTEMBER 30,
------------------------ -------------------------------------------------------
1996 (1) 1995 (1) 1995 1994 1993 1992 1991
------------------------ -------------------------------------------------------
CONSOLIDATED SUMMARY OF OPERATIONS:
<S> <C> <C> <C> <C> <C> <C> <C>
Interest income............................... $54,686 $52,330 $105,775 $90,931 $97,415 $118,874 $112,200
Interest expense.............................. 29,457 27,213 55,230 41,349 43,984 70,223 76,305
---------------------- --------------------------------------------------------
Net interest income........................... 25,229 25,117 50,545 49,582 53,431 48,651 35,895
---------------------- --------------------------------------------------------
Provision for loan losses..................... 400 1,600 2,825 3,550 16,308 10,837 6,162
Non-interest income........................... 1,025 1,356 2,461 2,928 2,930 3,301 3,252
Net security gains/(losses)................... 510 311 355 - (136) 564 -
Other real estate expense..................... (224) 77 1,000 1,278 11,275 1,338 1,063
Net loss on disposition of assets............. - - - - 11,063 - -
Non-interest expense.......................... 11,073 11,922 23,058 24,739 37,320 29,501 22,967
---------------------- --------------------------------------------------------
Income/(loss) before income taxes............. 15,515 13,185 26,478 22,943 (19,741) 10,840 8,955
Provision/(benefit) for income taxes.......... 6,519 5,655 11,371 9,576 (3,961) 5,769 4,288
Income/(loss) before cumulative effect of --------------------- --------------------------------------------------------
accounting changes......................... 8,996 7,530 15,107 13,367 (15,780) 5,071 4,667
Cumulative effect of accounting changes:
Postretirement benefit cost................. - - - - (2,300) - -
Income tax benefit.......................... - - - - 5,329 - -
---------------------- --------------------------------------------------------
Net income/(loss)............................. $8,996 $7,530 $15,107 $13,367 ($12,751) $5,071 $4,667
---------------------- --------------------------------------------------------
---------------------- --------------------------------------------------------
Weighted average common shares outstanding (2).. 4,820 4,787 4,785 4,751 4,705 4,691 4,689
Common shares outstanding at period end......... 4,834 4,793 4,798 4,768 4,721 4,693 4,690
CONSOLIDATED PER SHARE DATA:
(Loss) per share before cumulative
effect of accounting changes (2)............ - - - - ($3.35) - -
Earnings/(loss) per share (2)................. $1.86 $1.57 $3.15 $2.82 ($2.71) $1.08 $1.00
Cash dividends declared....................... $ .50 $ .35 $ .675 $.125 $ .20 $ .40 $ .40
Dividend payout ratio......................... 27% 22% 21% 4% - 37% 40%
Stated Book value at period-end............... $25.55 $23.41 $24.24 $21.18 $18.63 $21.25 $20.39
Tangible Book value at period-end............. $25.32 $23.41 $23.97 $21.18 $18.63 $19.09 $18.02
CONSOLIDATED BALANCE SHEET DATA AT
PERIOD END:
Securities Available-for-Sale (3)............ $363,426 $336,536 $335,972 $ - $ - $ - $ -
Securities Held-to-Maturity.................. 678,212 788,928 744,454 994,672 810,404 796,108 637,416
Loans, net of unearned income & fees......... 561,269 445,325 432,180 489,883 388,030 611,988 652,144
Allowance for loan losses.................... 5,604 6,008 6,417 11,178 11,114 15,012 12,600
Intangibles.................................. 1,124 - 1,260 - - 10,192 11,111
Total assets................................. 1,654,624 1,631,359 1,588,003 1,541,051 1,383,659 1,487,218 1,508,072
Deposits..................................... 1,228,211 1,164,813 1,203,684 1,195,881 1,285,074 1,348,686 1,370,858
Borrowings................................... 286,000 339,000 251,000 226,875 - 22,276 25,646
Stockholders' equity......................... $123,531 $112,224 $116,284 $100,998 $87,953 $99,739 $95,628
CONSOLIDATED AVERAGE BALANCE SHEET DATA:
Securities...................................$1,055,846 $999,496 $1,018,629 $863,958 $805,791 $697,180 $607,286
Loans, net of unearned income & fees......... 428,622 468,210 463,548 532,477 553,590 675,109 629,980
Total assets................................. 1,591,954 1,523,919 1,543,826 1,487,555 1,495,348 1,578,036 1,326,774
Deposits..................................... 1,230,842 1,168,775 1,169,319 1,236,660 1,307,684 1,429,560 1,173,821
Total borrowings............................. 221,268 230,367 248,897 133,509 43,601 25,223 34,442
Stockholders' equity......................... $121,716 $105,831 $106,071 $94,067 $93,763 $98,084 $95,073
</TABLE>
(1) North Side's operating results for the six-months ended June
30, 1996 and 1995 are presented to conform with the reporting
period of North Fork. North Side's operating results for the
three-month periods ended December 31, 1995 and 1994 have not
been included in the foregoing and are presented in the following
table:
Three Months
Ended
December 31,
(Unaudited)
----------------------
1995 1994
----------------------
Interest income $27,600 $25,234
Interest expense 15,105 12,366
Net interest income 12,495 12,868
Net income 5,834 3,594
Earnings per share $ 1.22 $ .75
(2) North Side's historical earnings per share for the six
months ended June 30, 1996 and 1995 and for the five years ended
September 30, 1995, were based on weighted average common shares
outstanding as dilution from potentially dilutive common stock
equivalents was less than 3% for each period.
(3) Effective October 1, 1994, North Side adopted Statement of
Financial Accounting Standards No. 115, "Accounting for Certain
Investments in Debt and Equity Securities". The Statement
requires that securities available-for-sale be reported at fair
value, with unrealized gains and losses reflected as a separate
component of shareholders' equity. For periods presented prior
to 1995, North Side's investment securities have been classified
as securities held-to-maturity.
(4) See accompanying "Selected Financial Ratios " on Page 22 for
additional information.
PRO FORMA COMBINED SELECTED HISTORICAL
FINANCIAL INFORMATION
(UNAUDITED)
The following tables set forth certain selected condensed
financial information for North Fork and North Side on an
unaudited pro forma combined basis as if the Merger had become
effective June 30, 1996 in the case of the balance sheet
information presented, and if the Merger had become effective at
the beginning of the periods indicated, in the case of the income
statement information presented. The pro forma information 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 information
reflects North Fork and North Side at their respective year-end
reporting periods of December 31 and September 30 and for the
periods then ended for the income statement information.
Financial information for the six-months ended June 30, 1996 and
1995 combine North Fork and North Side 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 North Side incorporated by reference
herein and the more detailed pro forma financial information,
including the notes thereto, which include certain pro forma
assumptions not included herein, appearing elsewhere in this
Joint Proxy Statement/Prospectus. Certain North Side financial
information has been reclassified to conform with North Fork.
See "INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE" and "PRO
FORMA CONDENSED COMBINED FINANCIAL STATEMENTS ( UNAUDITED)".
The pro forma financial information set forth in the following
tables do not reflect merger expenses and restructuring charges
anticipated to be incurred by North Fork and North Side, 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 information 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, 1996, or at the beginning of the periods indicated or which
may be obtained in the future.
<TABLE>
<CAPTION>
NORTH FORK BANCORPORATION, INC. AND NORTH SIDE SAVINGS BANK
PRO FORMA COMBINED SELECTED HISTORICAL FINANCIAL INFORMATION
(UNAUDITED)
(in thousands, except ratios and per share amounts)
SIX MONTHS
ENDED
JUNE 30, YEARS ENDED
---------------------------- ---------------------------------------
1996 1995 1995 1994 1993
---------------------------- ---------------------------------------
CONSOLIDATED SUMMARY OF OPERATIONS:
<S> <C> <C> <C> <C> <C>
Interest income............................................ $194,130 $159,402 $332,173 $294,664 $289,045
Interest expense........................................... 84,834 65,878 140,392 112,576 117,153
---------------------------- ---------------------------------------
Net interest income........................................ 109,296 93,524 191,781 182,088 171,892
---------------------------- ---------------------------------------
Provision for loan losses.................................. 3,400 5,600 11,825 6,825 26,608
Non-interest income........................................ 14,460 11,664 23,403 21,948 21,868
Net security gains/(losses)................................ 1,506 459 6,734 (9,211) 1,321
Other real estate expense.................................. 708 388 1,255 4,929 25,246
Merger & related restructure charges....................... - - - 14,338 -
Net loss on disposition of assets.......................... - - - - 11,063
Non-interest expense....................................... 52,660 45,649 91,646 99,192 109,282
---------------------------- ---------------------------------------
Income before income taxes................................. 68,494 54,010 117,192 69,541 22,882
Provision for income taxes................................. 27,936 22,750 49,850 26,502 13,015
---------------------------- ---------------------------------------
Income before cumulative effect of
accounting changes...................................... 40,558 31,260 67,342 43,039 9,867
Cumulative effect of accounting changes:...................
Postretirement benefit cost.............................. - - - - (2,300)
Income tax benefit....................................... - - - - 5,329
---------------------------- ---------------------------------------
Net income................................................. $40,558 $31,260 $67,342 $43,039 $12,896
---------------------------- ---------------------------------------
Weighted average common shares of North Fork outstanding... 32,439 31,617 31,999 31,156 30,563
Common shares of North Fork outstanding at period end...... 31,640 32,120 32,309 30,466 29,792
CONSOLIDATED PER SHARE DATA APPLICABLE
TO NORTH FORK COMMON STOCK:
Earnings per share before cumulative
effect of accounting changes............................. $ - $ - $ - $ - $0.32
Earnings per share......................................... $1.25 $0.99 $2.10 $1.38 $0.42
Cash dividends declared (1)................................ 0.40 0.25 0.55 0.35 -
Stated Book value at period-end............................ 13.38 12.39 13.19 11.68 10.55
Tangible Book value at period-end.......................... $10.66 $11.72 $12.33 $10.95 $9.67
CONSOLIDATED BALANCE SHEET DATA AT
PERIOD END:
Securities Available-for-Sale............................. $1,485,269 $608,514 $1,150,457 $141,805 $200,219
Securities Held-to-Maturity............................... 1,056,095 1,336,244 1,086,597 1,626,164 1,582,052
Loans, net of unearned income & fees...................... 2,861,847 2,315,692 2,398,620 2,303,920 2,128,808
Allowance for loan losses................................. 55,988 58,011 56,627 61,247 67,670
Intangibles............................................... 85,879 21,529 27,893 22,208 26,239
Total assets.............................................. 5,792,885 4,490,242 4,891,314 4,258,827 4,268,034
Deposits.................................................. 4,484,441 3,589,703 3,739,144 3,538,768 3,633,619
Borrowings................................................ 793,739 396,625 652,369 296,875 268,643
Senior note payable....................................... 25,000 25,000 25,000 25,000 20,000
Stockholders' equity...................................... $423,219 $398,089 $426,129 $355,921 $314,263
CONSOLIDATED AVERAGE BALANCE SHEET DATA:
Securities................................................ $2,408,331 $1,764,657 $1,875,931 $1,832,866 $1,675,583
Loans, net of unearned income & fees...................... 2,559,161 2,320,707 2,357,202 2,305,565 2,288,712
Total assets.............................................. 5,357,215 4,307,626 4,472,599 4,421,498 4,315,839
Deposits.................................................. 4,233,813 3,578,865 3,634,095 3,600,625 3,671,336
Total borrowings.......................................... 615,901 301,427 386,790 427,241 256,679
Stockholders' equity...................................... $429,416 $375,182 $389,095 $338,826 $304,108
(1) Represents cash dividends declared on North Fork Common Stock.
See "PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS (UNAUDITED")
</TABLE>
SELECTED FINANCIAL RATIOS
(UNAUDITED)
Six Months
Ended Fiscal
June, 30 (1) Years Ended
------------- -------------------
1996 1995 1995 1994 1993
------------- -------------------
PERFORMANCE RATIOS:
Return on Average Total Assets:
North Fork . . . . . . . . . 1.69% 1.72% 1.78% 1.01% 0.91%
North Side . . . . . . . . . 1.14% 1.00% 0.98% 0.90% (0.85%)
North Fork Pro Forma . . . . 1.52% 1.46% 1.51% 0.97% 0.30%
Return on Average Total Stockholders'
Equity:
North Fork . . . . . . . . . 20.63% 17.77% 18.46% 12.12% 12.19%
North Side . . . . . . . . . 14.86% 14.35% 14.24% 14.21%(13.60%)
North Fork Pro Forma . . . . 18.99% 16.80% 17.31% 12.70% 4.24%
Net Interest Margin (2):
North Fork . . . . . . . . . 4.90% 5.31% 5.18% 4.81% 4.48%
North Side . . . . . . . . . 3.27% 3.46% 3.39% 3.51% 3.85%
North Fork Pro Forma . . . . 4.40% 4.65% 4.55% 4.37% 4.26%
Total Stockholders' Equity to Total
Assets (end of period):
North Fork . . . . . . . . . 7.24% 10.00% 9.38% 9.38% 7.85%
North Side . . . . . . . . . 7.47% 6.88% 7.32% 6.55% 6.36%
North Fork Pro Forma . . . . 7.31% 8.87% 8.71% 8.36% 7.36%
CAPITAL RATIOS:
Tier 1 Risk-Based Capital:
North Fork . . . . . . . . . 9.93% 16.15% 15.50% 14.94% 12.06%
North Side . . . . . . . . . 17.29% 15.32% 15.98% 13.39% 12.67%
North Fork Pro Forma . . . . 11.71% 15.89% 15.64% 14.44% 12.25%
Regulatory Minimum Require-
ment . . . . . . . . . . 4.00% 4.00% 4.00% 4.00% 4.00%
Total Risk-Based Capital:
North Fork . . . . . . . . 11.19% 17.42% 16.77% 16.22% 13.34%
North Side . . . . . . . . 18.07% 16.15% 16.89% 14.64% 13.93%
North Fork Pro Forma . . . 12.85% 17.03% 16.80% 15.71% 13.52%
Regulatory Minimum
Requirement . . . . . . . 8.00% 8.00% 8.00% 8.00% 8.00%
Leverage Ratio:
North Fork . . . . . . . . 5.73% 9.34% 8.86% 8.40% 6.88%
North Side . . . . . . . . 7.74% 7.33% 7.02% 6.52% 5.90%
North Fork Pro Forma . . . 6.31% 8.64% 8.25% 7.73% 6.56%
ASSET QUALITY DATA:
Allowance for Loan Losses to
Net Loans (end of period):
North Fork . . . . . . . . 2.19% 2.78% 2.55% 2.76% 3.25%
North Side . . . . . . . . 1.00% 1.35% 1.48% 2.28% 2.86%
North Fork Pro Forma . . . 1.96% 2.51% 2.36% 2.66% 3.18%
Allowance for Loan Losses to
Nonperforming Loans
(end of period):
North Fork . . . . . . . . 185% 140% 154% 119% 96%
North Side . . . . . . . . 183% 115% 131% 81% 64%
North Fork Pro Forma . . . 185% 137% 151% 109% 89%
Net Charge-Offs to Average Net Loans:
North Fork . . . . . . . . 0.56% 0.23% 0.49% 0.57% 1.34%
North Side . . . . . . . . 0.66% 3.04% 1.64% 0.65% 3.65%
North Fork Pro Forma . . . 0.58% 0.79% 0.72% 0.59% 1.90%
Nonperforming Assets to Total Assets:
North Fork . . . . . . . . 0.82% 1.44% 1.13% 1.73% 2.43%
North Side . . . . . . . . 0.32% 0.69% 0.47% 1.44% 1.89%
North Fork Pro Forma . . . 0.67% 1.17% 0.92% 1.62% 2.26%
(1) Ratios for the years reflect the respective fiscal year-
end of each of North Fork at December 31 and North Side at
September 30. North Fork pro forma combines North Fork and North
Side at their respective year end periods. Ratios for the six
months ended June 30, 1996 and 1995 include North Side for the six
month period to conform with that of North Fork.
(2) Net interest margin represents net interest income,
stated on an estimated fully taxable equivalent basis, divided by
average earning assets.
COMPARATIVE PER SHARE DATA
(UNAUDITED)
Six Months
Ended
June 30, Years Ended
------------- --------------------
1996 1995 1995 1994 1993
NET INCOME/(LOSS) PER SHARE (1):
North Fork . . . . . . . . . . . . $1.27 $0.98 $2.13 $1.25 $1.10
North Side . . . . . . . . . . . . 1.86 1.57 3.15 2.82 (3.35)
North Fork Pro Forma . . . . . . . 1.25 0.99 2.10 1.38 0.32
North Side Pro Forma Equivalent . 1.95 1.54 3.27 2.15 0.50
CASH DIVIDENDS DECLARED PER SHARE (2):
North Fork . . . . . . . . . . . . .40 .25 .55 .35 -
North Side . . . . . . . . . . . . .50 .35 .675 .125 .20
North Fork Pro Forma . . . . . . . .40 .25 .55 .35 -
North Side Pro Forma Equivalent . .62 .39 .86 .54 -
BOOK VALUE PER SHARE AT PERIOD END (3):
Stated:
North Fork . . . . . . . . . . . . 12.43 11.59 12.47 11.06 10.08
North Side . . . . . . . . . . . . 25.55 23.41 24.24 21.18 18.63
North Fork Pro Forma . . . . . . . 13.38 12.39 13.19 11.68 10.55
North Side Pro Forma Equivalent . 20.81 19.28 20.52 18.18 16.41
Tangible:
North Fork . . . . . . . . . . . . 8.91 10.72 11.40 10.10 8.91
North Side . . . . . . . . . . . . 25.32 23.41 23.97 21.18 18.63
North Fork Pro Forma . . . . . . . 10.66 11.72 12.33 10.95 9.67
North Side Pro Forma Equivalent . 16.59 18.24 19.18 17.04 15.04
(1) North Fork pro forma net income per share data is calculated
using historical income information for North Fork and North Side
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 North Side as adjusted by
the Exchange Ratio of 1.556. The North Side pro forma equivalent
income per share amounts are computed by multiplying the North
Fork pro forma amounts by the Exchange Ratio of 1.556 (see "THE
MERGER - Exchange Ratio"). For the period ended 1993, North
Side's net loss is based on losses before cumulative effect of a
change in accounting principle.
(2) North Fork pro forma cash dividends per share represent
historical cash dividends declared by North Fork and assumes no
changes in cash dividends declared per share. North Side pro
forma equivalent cash dividends per share represent such amounts
multiplied by the Exchange Ratio of 1.556.
(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 based on the Exchange Ratio of 1.556. The
North Side pro forma equivalent stated book value and tangible
book value per share amounts are computed by multiplying the North
Fork pro forma amounts by the Exchange Ratio of 1.556.
MARKET PRICES AND DIVIDEND INFORMATION
North Fork Common Stock is listed on the NYSE under the symbol
"NFB". North Side Common Stock is listed and traded principally
on the NASDAQ stock market under the symbol "NSBK".
The following table sets forth, for the calendar 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 North Side Common Stock as reported on the
NASDAQ stock market, and the quarterly cash dividends declared by
each of North Fork and North Side, for the periods indicated.
<TABLE>
<CAPTION>
North Fork North Side
Common Stock Common Stock
----------------------------------------------------
High Low Dividends High Low Dividends
----------------------------------------------------
1994
<S> <C> <C> <C> <C> <C> <C>
Quarter ended March 31 . . . $15.13 $12.75 $ .075 $20.00 $16.75 -
Quarter ended June 30 . . . . 15.88 13.25 .075 21.50 17.00 -
Quarter ended September 30 . 16.63 13.50 .100 24.75 20.75 .125
Quarter ended December 31 . . 16.00 13.50 .100 22.38 16.00 .125
1995
Quarter ended March 31 . . . $16.50 $13.63 $ .125 $22.13 $17.13 $.150
Quarter ended June 30 . . . . 18.38 16.00 .125 24.75 20.50 .200
Quarter ended September 30 . 20.75 17.75 .150 31.50 23.00 .200
Quarter ended December 31 . . 25.25 20.75 .150 30.75 29.00 .250
1996
Quarter ended March 31 . . . $25.88 $23.25 $ .200 $35.50 $29.00 $.250
Quarter ended June 30 . . . . 26.13 22.88 .200 36.25 32.38 .250
Quarter ended September 30 . xx.xx xx.xx xx.xx xx.xx xx.xx xx.xx
Fourth Quarter (through
October xx, 1996) . . . . . . . xx.xx xx.xx xx.xx xx.xx xx.xx xx.xx
</TABLE>
The following table sets forth the closing sales price per share
of North Fork Common Stock and North Side Common Stock and the
equivalent per share price for North Side Common Stock giving
effect to the Merger on (i) July 12, 1996, the last business day
preceding public announcement of the proposed Merger; and (ii)
October xx, 1996, the last practicable trading day prior to the
printing of this Joint Proxy Statement/Prospectus:
North Equivalent
North Fork Side Price Per
Common Common North Side
Stock Stock Share (1)
July 12, 1996 . . . . . . . . . . $27.50 $35.25 $42.79
October xx, 1996. . . . . . . . . xx.xx xx.xx xx.xx
(1) The equivalent price per share of North Side Common Stock at
each specified date was determined by multiplying the last
reported closing sales price of North Fork Common Stock on each
specified date by the Exchange Ratio of 1.556 (see "The Merger -
Exchange Ratio").
NORTH SIDE AND NORTH FORK STOCKHOLDERS ARE ADVISED TO
OBTAIN CURRENT MARKET QUOTATIONS FOR NORTH SIDE COMMON STOCK AND
NORTH FORK COMMON STOCK. It is expected that the market price of
North Fork Common Stock will fluctuate between the date of this
Joint Proxy Statement/Prospectus and the date on which the Merger
is consummated and thereafter. Because the number of shares of
North Fork Common Stock to be received by North Side stockholders
in the Merger is fixed (subject to possible increase in certain
limited circumstances) and because the market price of the North
Fork Common Stock is subject to fluctuation, the value of the
shares of North Fork Common Stock that holders of North Side
Common Stock would receive in the Merger may increase or decrease
prior to the Merger. In addition, it is expected that North Fork
will issue approximately 600,000 shares of North Fork Treasury
Stock in a public or private offering subsequent to the Valuation
Period and prior to consummation of the Merger in order that the
Merger will not fail to qualify for pooling of interests
accounting treatment by virtue of the number of shares of North
Fork Treasury Stock. See "THE MERGER -- Anticipated Accounting
Treatment." The price at which the North Fork Treasury Stock will
be issued cannot be determined at the date hereof. The number of
shares of North Fork Treasury Stock issued, and the price at which
such shares are issued, will affect the book value of North Fork
Common Stock as of the Effective Time, as adjusted to give effect
to the issuance of such shares and the Merger, and may also affect
the market price of North Fork Common Stock at the Effective Time
or thereafter. No assurance can be given concerning the market
price of North Fork Common Stock before or after the Effective
Time. See "THE MERGER -- Exchange Ratio" and " -- Waiver and
Amendment; Termination."
THE COMPANIES
North Fork. North Fork, with its executive
headquarters located in Melville, New York, is a bank
holding company organized under the laws of the State of
Delaware in 1980 and registered under the Bank Holding
Company Act of 1956, as amended (the "BHC Act"). North
Fork's primary subsidiary, North Fork Bank, a New York-
chartered, FDIC-insured, commercial bank, operates 65
retail banking facilities throughout Suffolk, Nassau,
New York, Queens, Westchester and Rockland Counties,
of New York.
During the first quarter of 1996, North Fork Bank
consummated the acquisition of the domestic commercial
banking business of Extebank, which at closing had
approximately $387 million in assets and $348 million in
deposits, for $47 million in cash. During such quarter,
North Fork Bank also consummated the acquisition of ten Long
Island branches of First Nationwide Bank, with approximately
$572 million in deposits, at a deposit premium of 6.35%.
On July 3, 1995, North Fork consummated its
purchase of Great Neck Bancorp, the parent company of Bank
of Great Neck, a Long Island based commercial bank ("Great
Neck"). Great Neck, with net assets of $91 million,
including $49.4 million in net loans, and $90.3 million in
deposits, was merged into North Fork Bank.
On November 30, 1994, Metro Bancshares Inc.
("Metro"), the parent company of Bayside Federal Savings
Bank ("Bayside"), was merged with and into North Fork.
Simultaneously, Bayside (with approximately $1.0 billion in
assets, $.9 billion in deposits and $83.5 million in
stockholders' equity, operating through 13 branch locations
in Queens, Nassau and Suffolk Counties, New York) was merged
with and into North Fork Bank. The merger was accounted for
as a pooling of interests.
North Fork, through North Fork Bank, provides a
variety of banking and financial services to middle market
and small business organizations, local governmental units,
and retail customers in the metropolitan New York area.
From time to time, North Fork investigates and
holds discussions and negotiations in connection with
possible transactions with other banks. As of the date of
this Joint Proxy Statement/Prospectus, North Fork has not
entered into any agreements or understandings with respect
to any significant transactions of the type referred to
above except for the transactions described herein and in
documents incorporated herein by reference. See "AVAILABLE
INFORMATION" and "INCORPORATION OF CERTAIN DOCUMENTS BY
REFERENCE." Any such transaction would be subject to
stockholder approval only if required under applicable law
or the rules of the NYSE.
At June 30, 1996, North Fork had assets of $4.1
billion, deposits of $3.3 billion and stockholders' equity
of $300 million. The principal executive offices of North
Fork are located at 275 Broad Hollow Road, Melville, New
York 11747 and its telephone number is (516) 844-1004.
For more information about North Fork, reference
is made to the 1995 North Fork Form 10-K which is
incorporated herein by reference. See "AVAILABLE
INFORMATION" and "INCORPORATION OF CERTAIN DOCUMENTS BY
REFERENCE."
North Side. North Side is a New York-chartered,
FDIC-insured, stock-form savings bank which was originally
chartered in 1905 as a mutual savings bank and converted to
a stock-form savings bank in 1986. North Side conducts
business from 17 full-service banking offices and one public
accommodation office in the Bronx, Queens, Nassau and
Suffolk Counties, New York. At June 30, 1996, North Side
had total assets of $1.65 billion, deposits of $1.23 billion
and stockholders' equity of $123.5 million. The principal
executive offices of North Side are located at 170 Tulip
Avenue, Floral Park, New York 11001 and its telephone number
is (516) 488-6900.
North Side's principal business consists of
attracting deposits from the general public and using these
deposits, together with other funds, to originate real
estate and other loans and to invest in investment and other
securities. North Side's loan portfolio is principally
comprised of loans secured by one- to four-family
residential units and, to a lesser extent, loans secured by
multi-family (over four units) residential and non-
residential commercial properties. At June 30, 1996, $416.8
million or 74.3% of North Side's loans in portfolio were
secured by one- to four-family residential real estate
loans, $61.6 million or 11.0% were secured by multi-family
residential properties and $75.4 million or 13.4% were
secured by commercial real estate. North Side also
originates consumer and other loans, which amounted to $7.5
million or 1.3% of the loan portfolio at June 30, 1996. At
June 30, 1996, $1.0 billion or 60.6% of North Side's assets
were comprised of mortgage-backed securities, including
$348.6 million of mortgage-backed securities available for
sale, and $29.4 million or 1.1% of North Side's total assets
at such date consisted of investment securities, including
$5.1 million of securities available for sale.
North Side is subject to examination and
comprehensive regulation by the Banking Department, which is
its primary regulator, and by the FDIC, which insures the
deposits of its depositors. North Side is subject to
further regulation of the Board of Governors of the Federal
Reserve System (the "Federal Reserve Board") with respect to
reserves required to be maintained against deposits and
certain other matters.
For more information about North Side, reference
is made to the 1995 North Side Form F-2 which is
incorporated herein by reference. See "AVAILABLE
INFORMATION" and "INCORPORATION OF CERTAIN DOCUMENTS BY
REFERENCE."
THE SPECIAL MEETINGS
NORTH SIDE MEETING
General. This Joint Proxy Statement/Prospectus is
being furnished to stockholders of North Side Savings Bank
("North Side") in connection with the solicitation of
proxies by the Board of Directors of North Side (the "North
Side Board") for use at the special meeting of stockholders
of North Side and at any adjournments or postponements
thereof (the "North Side Meeting") to be held at __________,
__________, __________ New York _____ on Monday, November
18, 1996 at 10:00 a.m. local time. At the North Side
Meeting, the stockholders of North Side will be asked to:
(i) approve and adopt the Agreement and Plan of Merger,
dated as of July 15, 1996, as amended (the "Merger
Agreement"), among North Fork Bancorporation, Inc. ("North
Fork"), North Fork Bank and North Side 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 Side Meeting and
at any adjournments or postponements thereof. A copy of the
Merger Agreement is attached as Annex A hereto.
THE NORTH SIDE BOARD HAS UNANIMOUSLY APPROVED THE
MERGER AGREEMENT AND HAS DETERMINED THAT THE MERGER IS FAIR
TO, AND IN THE BEST INTERESTS OF, NORTH SIDE AND ITS
STOCKHOLDERS. THE NORTH SIDE BOARD THEREFORE UNANIMOUSLY
RECOMMENDS THAT NORTH SIDE'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 SIDE."
Record Date; Voting; Solicitation and Revocation
of Proxies. The North Side Board has fixed October 3, 1996
as the record date (the "North Side Record Date") for the
determination of those North Side stockholders entitled to
notice of and to vote at the North Side Meeting. Only
holders of record of common stock, par value $1.00 per
share, of North Side Common Stock ("North Side Common
Stock") at the close of business on the North Side Record
Date will be entitled to notice of and to vote at the North
Side Meeting. As of the North Side Record Date, there were
__________ shares of North Side Common Stock outstanding,
entitled to vote and held by approximately ____ holders of
record. Each holder of record of shares of North Side
Common Stock on the North Side 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 Side stockholders at the
North Side Meeting. The presence, either in person or by
properly executed proxy, of the holders of a majority of the
outstanding shares of North Side Common Stock entitled to
vote at the North Side Meeting is necessary to constitute a
quorum at the North Side Meeting. Abstentions will be
counted as present for purposes of determining the presence
or absence of a quorum at the North Side Meeting.
The approval and adoption of the Merger Agreement
by North Side stockholders will require the affirmative vote
of at least two-thirds of the outstanding shares of North
Side 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. 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 Side Record Date, directors and
executive officers of North Side and their affiliates may be
deemed to be beneficial owners of __________ shares of North
Side Common Stock (exclusive of shares held by Marine
Midland as trustee for the North Side Savings Bank
Retirement Plan Trust), or approximately ___% of the shares
of North Side Common Stock outstanding as of the Record
Date. Such persons have informed North Side that they
intend to vote or direct the vote of all such shares of
North Side Common Stock for approval and adoption of the
Merger Agreement and the transactions contemplated thereby.
As of the North Side Record Date, North Fork and its
subsidiaries beneficially owned 241,000 shares of North Side
Common Stock, or approximately 4.9% of the shares of North
Side Common Stock outstanding as of the Record Date, and
North Fork's directors and executive officers may be deemed
to be beneficial owners of [846] shares of North Side Common
Stock, a total of less than 1% of North Side Common Stock
outstanding as of the Record Date. North Fork and such
directors have indicated a present intent to vote such
shares for approval and adoption of the Merger Agreement and
the transactions contemplated thereby.
All shares of North Side Common Stock which are
entitled to be voted and are represented at the North Side
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 Side Meeting or
any adjournment or postponement thereof, including, among
other things, a motion to adjourn or postpone the North Side
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
North Side 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 banking laws. North Side does not have any
knowledge of any matters to be presented at the North Side
Meeting other than the matters set forth above under "--
General."
The presence of a stockholder at the North Side
Meeting will not automatically revoke such stockholder's
proxy. However, any proxy given by a North Side stockholder
pursuant to this solicitation may be revoked by the person
giving it at any time before it is exercised by (i)
delivering to the Secretary of North Side a written notice
of revocation bearing a later date than the proxy; (ii)
delivering to the Secretary of North Side a duly executed
proxy bearing a later date; or (iii) attending the North
Side Meeting and voting in person. Any written notice of
revocation or subsequently executed proxy should be sent so
as to be delivered to North Side Savings Bank, 170 Tulip
Avenue, Floral Park, New York 11001, Attention: Judith A.
MacGregor, Corporate Secretary, or hand delivered to North
Side's Corporate Secretary at or before the taking of the
vote at the North Side Meeting.
North Side will bear all expenses of this
solicitation of proxies from the holders of North Side
Common Stock, except that the cost of preparing and mailing
this Joint Proxy Statement/Prospectus will be borne equally
by North Side and North Fork. In addition to solicitation
by use of the mails, proxies may be solicited by directors,
officers and employees of North Side 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
Side has retained Morrow & Co., Inc. a proxy soliciting firm,
to assist in such solicitation. The fee to be paid to such
firm is not expected to exceed $25,000 plus reasonable out-
of-pocket costs and expenses. In addition, North Side 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 North Side Meeting, the
"Special Meetings") to be held at the Marriott Windwatch
Hotel, 1717 Vanderbilt Motor Parkway, Hauppauge, New York,
on Monday, November 18, 1996 at 10:00 a.m. local time. At
the North Fork Meeting, the stockholders of North Fork will
be asked to: (i) approve the issuance of shares of North
Fork Common Stock (the "Merger Shares") pursuant to the
Merger Agreement; 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.
THE NORTH FORK BOARD HAS UNANIMOUSLY APPROVED THE
MERGER AGREEMENT AND HAS DETERMINED THAT THE MERGER AND THE
ISSUANCE OF THE MERGER SHARES 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 ISSUANCE OF THE
MERGER SHARES. 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 October 3, 1996
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 the issuance of the Merger Shares,
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.
Under the rules of NYSE, the issuance of the
Merger Shares will require the affirmative vote of the
holders of a majority of the shares of North Fork Common
Stock voting on the issuance of the Merger Shares where the
total number of votes cast represents 50% of all outstanding
shares of North Fork Common Stock on the North Fork Record
Date. As described in "THE MERGER -- Conditions to the
Merger," such stockholder approval is a condition to
consummation of the Merger. In determining whether the
proposal to approve the issuance of the Merger Shares has
received the requisite number of affirmative votes,
abstentions will have the same effect as votes cast against
such proposal but broker non-votes, if any, will be
disregarded and will have no effect on the outcome of the
vote concerning the Merger Shares.
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 of the issuance of the Merger
Shares. [As of the North Fork Record Date, neither North
Side nor its subsidiaries, nor any of the directors and
executive officers of North Side, 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 of the issuance of the Merger Shares, 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 which is voted against the proposal
to approve the issuance of the Merger Shares 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."
The presence of a stockholder at the North Fork
Meeting will not automatically revoke such stockholder's
proxy. However, 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 exercised by (i)
delivering to the Secretary of North Fork a written notice
of revocation bearing a later date than the proxy; (ii)
delivering to the Secretary of North Fork a duly executed
proxy bearing a later date; or (iii) attending the North
Fork Meeting and voting in person. Any written notice of
revocation or subsequently executed proxy should be sent so
as to be delivered to North Fork Bancorporation, Inc., 275
Broad Hollow Road, Melville, New York 11747, Attention:
Anthony J. Abate, Secretary, or hand delivered to North
Fork's Secretary 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 North Side 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., 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.
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 North Side
stockholders are urged to read carefully the Merger
Agreement.
EFFECTS OF THE MERGER
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, the
approval of the Merger Agreement by the requisite vote of
the stockholders of North Side and the approval of the
issuance of the Merger Shares by the requisite vote of the
stockholders of North Fork, North Side will be merged with
and into North Fork Bank and North Side stockholders will
become stockholders of North Fork. North Fork Bank shall be
the surviving corporation in the Merger, and shall continue
its corporate existence as a wholly owned subsidiary of
North Fork under the laws of the State of New York. Upon
consummation of the Merger, the separate corporate existence
of North Side shall terminate.
Each outstanding share of North Fork Common Stock
at the Effective Time will remain outstanding and unchanged
as a result of the Merger.
EXCHANGE RATIO
At the Effective Time (as defined below), each
issued and outstanding share of North Side Common Stock,
except for shares held directly or indirectly by North Side
or North Fork (other than shares held by North Fork or North
Side in a fiduciary capacity ("Trust Account Shares") or in
respect of a debt previously contracted ("DPC Shares")) and
shares of North Side Common Stock as to which the holder
thereof shall have exercised dissenter's rights, will be
converted into and exchangeable for 1.556 shares (the
"Exchange Ratio") of North Fork Common Stock. If the
Average Closing Price (as defined below) is less than
$24.00, North Side 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 North Side Common Stock have a value (valued at the
Average Closing Price) of $37.34. The Average Closing Price
is the average closing sales price per share of the North
Fork Common Stock on the New York Stock Exchange (the
"NYSE") for the 10 consecutive trading days ending on the
5th business day (the "Valuation Period") prior to the date
on which the approval by the FDIC of the Merger and the
other transactions contemplated by the Merger Agreement is
obtained, without regard to any requisite waiting period 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 Right
Agreement (see "DESCRIPTION OF NORTH FORK CAPITAL STOCK --
Rights Plans").
If the Average Closing Price is less than $24.00
and, in response to an election by North Side 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) $37.34 by (ii) the Average
Closing Price. See "-- Waiver and Amendment; Termination"
below. Assuming the Merger is approved by the holders of
North Side Common Stock, the North Side Board may elect not
to terminate the Merger Agreement and to consummate the
Merger without resoliciting North Side stockholders if the
Average Closing Price is less than $24.00, 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
North Side Common Stock would be less than $37.34. In such
a situation, in considering whether to consummate the Merger
without the resolicitation of North Side stockholders, the
North Side 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. North
Side stockholders will have no vote in the decision of the
North Side Board to either terminate the Merger Agreement or
elect to consummate the Merger in the event that the Average
Closing Price is less than $24.00.
North Fork is under no obligation to increase the
Exchange Ratio, and there can be no assurance that North
Fork would elect to increase the Exchange Ratio if the North
Side Board were to exercise its right to terminate the
Merger Agreement as set forth above. Any such decision
would be made by the North Fork Board in light of all
relevant facts and circumstances existing at such time,
including, without limitation, the advice of its financial
advisor and legal counsel. If North Fork elects to increase
the Exchange Ratio as set forth in the Merger Agreement and
as illustrated above, it must give North Side prompt notice
of that election and such increased Exchange Ratio, in which
case no termination of the Merger Agreement would occur as a
result of the Average Closing Price being less than $24.00.
Although North Fork has the right in limited
circumstances described above to increase the Exchange
Ratio, under no circumstances may the Exchange Ratio be
decreased. The formula for determining the Exchange Ratio
was arrived at through arm's-length negotiations between
North Side and North Fork. If North Fork effects a
reclassification, recapitalization, split-up, combination,
exchange of shares or readjustment of or to the North Fork
Common Stock or declares a stock dividend on such stock, an
appropriate adjustment to the Exchange Ratio will be made.
It is expected that the market price of North Fork
Common Stock will fluctuate between the date of this Joint
Proxy Statement/Prospectus and the date on which the Merger
is consummated and thereafter. Because the number of shares
of North Fork Common Stock to be received by North Side
stockholders in the Merger is fixed (subject to possible
increase in the limited circumstances described above) and
because the market price of the North Fork Common Stock is
subject to fluctuation, the value of the shares of North
Fork Common Stock that holders of North Side Common Stock
would receive in the Merger may increase or decrease prior
to the Merger. In addition, in order to qualify the Merger
for pooling of interests accounting treatment, it is
expected that North Fork will issue approximately 600,000
shares of North Fork Treasury Stock in a public or private
offering subsequent to the Valuation Period and prior to
consummation of the Merger. See " -- Anticipated Accounting
Treatment." The price at which the North Fork Treasury
Stock will be issued cannot be determined at the date
hereof. The number of shares of North Fork Treasury Stock
issued, and the price at which such shares are issued, will
affect the book value of North Fork Common Stock as of the
Effective Time, as adjusted to give effect to the issuance
of such shares and the Merger, and may also affect the
market price of North Fork Common Stock at the Effective
Time or thereafter. 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 North Side stockholder who otherwise
would be entitled to receive a fractional share equal to the
product of (i) the fractional interest which a North Side
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
North Side Common Stock that were owned by North Side as
treasury stock or that were held directly or indirectly by
North Fork other than Trust Account Shares and DPC Shares
will be canceled and retired and no payment will be made
with respect thereto.
In addition, at the Effective Time, each
outstanding and unexercised option to purchase shares of
North Side Common Stock (a "North Side Option") will be
assumed by North Fork. After the Effective Time, each North
Side Option will be deemed to constitute an option to
acquire, on the same terms and conditions as were applicable
under such North Side Option immediately prior to the
Effective Time, 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 North Side Common Stock
subject to the North Side Option and the Exchange Ratio, at
a price per share equal to the exercise price per share of
North Side Common Stock otherwise purchasable pursuant to
such North Side Option divided by the Exchange Ratio,
rounded up to the nearest cent.
The Merger Agreement also provides that each
holder of a North Side Option, whether or not then vested,
shall have the right at the Effective Time to elect to
convert all or a portion of his or her North Side 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 (as defined below) 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 North Side 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.
EFFECTIVE TIME
The Merger will become effective at the date and
time set forth in the certificate which will be filed by the
Banking Department in accordance with applicable law (the
"Effective Time"). The certificate will be filed 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 North Side. 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 con-
summate the Merger. There can be no assurance that such regula-
tory approvals will be obtained, and if obtained, there can be no
assurance as to the date of any such approval. 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, 1997.
See "-- Waiver and Amendment; Termination" below.
BACKGROUND OF THE MERGER
Since the time of North Side's mutual-to-stock
conversion in April 1986, the financial services industry in
general has been subject to continuous and substantial
changes, both as a result of changes in laws and regulations
and in general economic conditions. During its course as a
stock-form institution, the North Side Board has regularly
considered and analyzed North Side's strategic options,
including prospects for North Side continuing as an
independent entity and possible business combination
transactions with other financial institutions of various
sizes and the potential effects of such transactions on
North Side and its stockholders, employees, customers and
the communities it serves. In addition, in recent years,
North Side retained Sandler O'Neill & Partners, L.P.
("Sandler O'Neill") in order to assist North Side in its
analysis of the various strategic alternatives available to
it.
North Side reviewed its strategic options in early
1996 with the assistance of Sandler O'Neill, a review that
intensified in March 1996 when it received notice that New
York Bancorp Inc. ("New York Bancorp") had acquired 7.84% of
the North Side Common Stock and was considering the
possibility of seeking to obtain control of North Side,
including through the acquisition of additional shares of
North Side Common Stock. In an effort to allow the North
Side Board to have greater bargaining power and a better
ability to analyze and evaluate the best course of action
for North Side, on April 18, 1996, North Side adopted a
Shareholder Rights Plan. See "COMPARISON OF STOCKHOLDERS
RIGHTS -- Rights Plans."
Shortly after New York Bancorp announced its
acquisition of shares of North Side Common Stock, Thomas M.
O'Brien, Chairman, President and Chief Executive Officer of
North Side, received a telephone call from John Adam Kanas,
Chairman, President and Chief Executive Officer of North
Fork. Although Mr. Kanas expressed a general interest in
discussing an acquisition transaction with North Side, Mr.
Kanas indicated that North Fork was not prepared at that
point in time to enter into any substantive discussions.
In mid-April 1996, Mr. O'Brien received an
unsolicited inquiry from the chief executive officer of
another New York-based financial institution (the "Other
Financial Institution") expressing such institution's
interest in a stock-for-stock transaction, although material
terms, including price, were generally unspecified at such
point in time. In early May 1996, Mr. O'Brien, met with the
chief executive officer of the Other Financial Institution
and engaged in a general discussion regarding the possible
structure of an acquisition transaction with such
institution, although the price and other material terms
remained unspecified. Several weeks later, the chief
executive officer of the Other Financial Institution called
Mr. O'Brien and indicated that the Other Financial
Institution had changed its position and that it was
interested in doing a cash acquisition of North Side rather
than a stock-for-stock merger. While the chief executive
officer of the Other Financial Institution did not make any
formal offer, he did indicate a preliminary range of value
in excess of $40 but less than $45 cash per share of North
Side Common Stock, subject to a due diligence review of
North Side.
In mid-June 1996, Mr. O'Brien met with Mr. Kanas,
at the request of Mr. Kanas. At such meeting, Mr. Kanas
indicated that North Fork was interested in exploring a
stock-for-stock merger transaction with North Side. Prior
to such meeting, Sandler O'Neill updated its analysis of
various potential strategic options available to North Side,
including a merger with North Fork, a business combination
with the Other Financial Institution and remaining
independent.
Informal discussions continued between Mr.
O'Brien and Mr. Kanas during the latter part of June but
no agreement was reached as to the material terms of a
transaction. During the last week of June 1996, Mr.
O'Brien also met again with the chief executive officer of
the Other Financial Institution who reiterated such
institution's interest in pursuing a cash acquisition of
North Side at a price within the range of $43 to $44
per share of North Side Common Stock, subject to due
diligence of North Side. On June 26, 1996, North Fork
purchased in an arms-length transaction 145,000 shares of
North Side Common Stock from New York Bancorp.
During the first week of July 1996, North Side and
North Fork entered into a Confidentiality Agreement and
exchanged certain non-public information. On July 5, 1996,
North Side and North Fork agreed to conduct on-site due
diligence reviews of each other, which due diligence reviews
were conducted during the week of July 8, 1996. In
addition, during the week of July 8, 1996, drafts of the
proposed Merger Agreement and related documents (including
the Stock Option Agreement) were prepared, circulated and
discussed among North Side, North Fork and their respective
legal and financial advisors. During the first week of July
1996, the Other Financial Institution sent North Side a
suggested form of Confidentiality Agreement together with a
list of North Side documents requested by the Other
Financial Institution. On July 10, 1996, North Side entered
into a Confidentiality Agreement with the Other Financial
Institution and forwarded certain materials to it.
On July 10, 1996, the North Fork Board held a
telephonic meeting with the senior management of North Fork
to discuss the status of the potential transaction with
North Side and, on the basis of such discussions, determined
to proceed with the transaction.
At a special meeting held on July 11, 1996, the
North Side Board discussed at length North Side's strategic
options, including the proposed Merger with North Fork, the
possible cash acquisition of North Side by the Other
Financial Institution, remaining independent and potential
transactions with other financial institutions. At the July
11th meeting, representatives of Sandler O'Neill, North
Side's financial advisor, reviewed in detail with the North
Side Board a number of matters relating to the North Side
Board's analysis of the strategic alternatives available to
North Side, including (i) the general status of the
financial services industry, including those entities
operating in North Side's region; (ii) valuation analyses of
North Side and North Fork, on a stand alone and combined
basis; (iii) historic and current bank and thrift
institution stock price levels and terms of recent financial
institution mergers; (iv) consolidation trends in the
financial services industry and in New York specifically;
(v) the outlook for price appreciation of North Side Common
Stock; (vi) the prospects for North Side continuing as an
independent entity, including its prospects of acquiring
smaller institutions in the region or expanding its current
business to further increase size and earnings as an
independent entity; and (vii) a comparison of the proposed
Merger with North Fork, the proposed cash acquisition of
North Side by the Other Financial Institution and remaining
independent. Following the Sandler O'Neill presentation,
the North Side Board considered at length North Side's
strategic alternatives, including the continuing
consolidation of the financial services industry, the
consideration that North Side might be at a competitive
disadvantage as an independent entity in a more consolidated
environment and North Side's prospects of further improving
its earnings and increasing its franchise value as an
independent entity. The discussion also focused on the
effects that a business combination transaction
would have on North Side's stockholders, employees,
customers and on the communities served by North Side and on
the timing of a potential transaction.
At the conclusion of the July 11th meeting of the
North Side Board, senior management of North Side was
advised to continue its negotiations with North Fork. The
North Side Board concluded that a strategic merger with a
growing commercial bank, such as North Fork, could provide
North Side's stockholders with immediate enhanced value and
the opportunity to participate in the future appreciation of
the resulting organization's common stock as such
organization continued to grow or sought a merger with a
larger institution. In addition, the North Side Board
determined not to pursue a potential cash acquisition of
North Side.
On July 12, 1996, Sandler O'Neill, on behalf of
North Side, informed the Other Financial Institution through
its financial advisors that the North Side Board was not
inclined to pursue its proposed cash acquisition. The Other
Financial Institution was invited to reconsider its position
and was informed that time was of the essence. The Other
Financial Institution did not contact North Side further
with respect to a possible transaction. During the period
of July 12 through July 14, 1996, North Side and North Fork
and their respective advisors and counsel continued their
negotiations and finalized the terms of the Merger Agreement
and all related agreements. The North Side Board met again
on July 14, 1996, at which time the terms of the Merger
Agreement and the related agreements, including the Stock
Option Agreement, were discussed in detail. In addition,
the North Side Board again reviewed its various strategic
alternatives, the status of conversations with the Other
Financial Institution and the opinion of Sandler O'Neill
that the consideration to be received by the stockholders
under the terms of the Merger Agreement was fair to North
Side's stockholders from a financial point of view. The
North Side Board unanimously approved the Merger Agreement
and the Stock Option Agreement on July 14, 1996.
On July 15, 1996, 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 KBW and North
Fork's legal counsel. At the special meeting, members of
North Fork's senior management, together with North Fork's
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 senior management's due diligence findings,
financial and valuation analyses of the transaction and the
terms of the proposed agreements. In addition, KBW
delivered to the North Fork Board its oral opinion to the
effect that, as of such date, the Exchange Ratio was fair to
North Fork's stockholders from a financial point of view.
Following the meeting of the North Fork Board,
North Side and North Fork entered into the Merger Agreement
and the Stock Option Agreement.
RECOMMENDATION OF THE BOARDS OF DIRECTORS; REASONS FOR THE
MERGER
North Side. The North Side Board, with the
assistance of its financial and legal advisors, has
evaluated the financial, legal and market considerations
bearing on the decision to recommend the Merger. The terms
of the Merger, including the Exchange Ratio, are a result of
arms-length negotiations between representatives of North
Side and North Fork. In reaching its determination that the
Merger Agreement is fair to, and in the best interest of,
North Side and holders of North Side Common Stock, the North
Side Board considered a number of factors, both from a
short-term and a long-term perspective. The factors which
the North Side Board considered, without assigning any
relative or specific weights, included, without limitation,
the following: (1) the North Side Board's review of North
Side's business, financial condition, results of operations,
management and prospects, including, but not limited to, its
potential growth, development, productivity and
profitability; (2) the current and prospective environment
in which North Side operates, including regional economic
conditions, the competitive environment for savings and
other financial institutions generally and the trend toward
consolidation in the financial services industry; (3)
information concerning the business, financial condition,
results of operations and prospects of North Fork, including
recent acquisitions of North Fork, the recent performance of
North Fork Common Stock, historical data of North Fork,
customary statistical measurements of North Fork's financial
performance, analysts' estimates of earnings of North Fork,
North Fork's expectations of future business prospects and
earnings based upon discussions with representatives of
North Fork and Sandler O'Neill's estimates of discounted
future cash flows and dividend streams for North Fork, based
on its discussions with North Fork's management, under
various circumstances and using various assumptions; (4) the
value to be received by holders of North Side Common Stock
pursuant to the Merger in relation to the historical trading
prices and book value of North Side Common Stock; (5) the
information presented to the North Side Board by Sandler
O'Neill with respect to the Merger and the opinion of
Sandler O'Neill that, as of the date of such opinion, the
consideration to be received by the holders of North Side
Common Stock is fair, from a financial point of view (See "
-- Opinions of Financial Advisors -- North Side"); (6) the
financial and other significant terms of the North Fork
offer; (7) the review by the North Side Board with its legal
and financial advisors of the provisions of the proposed
Merger Agreement and Stock Option Agreement; (8) the North
Side Board's belief that the receipt of North Fork Common
Stock generally would permit North Side stockholders to
defer any tax liability associated with the increase in the
value of their stock as a result of the Merger and to become
stockholders in North Fork, an institution with strong
operations, management, earnings performance and earnings
potential; (9) the future growth prospects of North Side and
North Fork following the Merger and the potential synergies
expected from the Merger, including potential expense
reductions and increases in efficiency; (10) the expectation
that North Fork will continue to provide quality service to
the community and customers served by North Side; (11) the
compatibility of the respective business and management
philosophies of North Side and North Fork, and the prospect
that Mr. O'Brien will be afforded the opportunity to have a
significant management position after the Merger, thereby
providing a degree of continuity and oversight in the
interests of the former stockholders of North Side; and (12)
the alternative strategic courses available to North Side,
including remaining independent and exploring other
potential acquisition transactions, such as the proposal by
the Other Financial Institution.
After considering the factors described above, the
North Side Board determined that the Merger and the
consideration to be received by North Side's stockholders in
connection with the Merger was fair and, consequently,
unanimously approved the Merger Agreement as being in the
best interests of North Side and its stockholders.
ACCORDINGLY, THE NORTH SIDE BOARD UNANIMOUSLY RECOMMENDS
THAT STOCKHOLDERS OF NORTH SIDE VOTE FOR APPROVAL OF THE
MERGER AGREEMENT.
North Fork. 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, 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 North Side,
of the business, operations, earnings and financial
condition of North Side on an historical, prospective and
pro forma basis, and the enhanced opportunities for growth
that the Merger makes possible; (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 North Side
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 (see "MANAGEMENT AND
OPERATIONS FOLLOWING THE MERGER -- Consolidation of
Operations; Projected Cost Savings and Revenue Enhancements;
Projected Earnings Per Share"); (vii) the expectation that
the Merger would be treated as a tax-free reorganization and
accounted for as a pooling of interests; and (viii) the
financial advice rendered by KBW and the opinion of KBW as
to the fairness to North Fork's stockholders from a
financial point of view of the Exchange Ratio.
The North Fork Board believes that the Merger and
the issuance of the Merger Shares 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 OF THE ISSUANCE OF THE
MERGER SHARES.
OPINIONS OF FINANCIAL ADVISORS
North Side. Over the years North Side has
retained Sandler O'Neill to, among other things, assist
North Side in its analysis of the various strategic
alternatives available to it. Pursuant to a letter
agreement dated as of September 30, 1995 (the "Sandler
O'Neill Agreement"), North Side retained Sandler O'Neill as
an independent financial advisor in connection with
strategic planning and merger and acquisition transactions.
Sandler O'Neill is a nationally recognized investment
banking firm whose principal business specialty is banks and
savings institutions and, in that connection, is regularly
engaged in the valuation of such businesses and their
securities in connection with mergers and acquisitions and
other corporate transactions.
Pursuant to the terms of the Sandler O'Neill
Agreement, Sandler O'Neill acted as financial advisor to
North Side in connection with the Merger. In connection
therewith, at the July 14, 1996 meeting at which the North
Side Board approved and adopted the Merger Agreement,
Sandler O'Neill delivered a written opinion to the North
Side Board that, as of July 14, 1996, the consideration to
be received by the holders of shares of North Side Common
Stock pursuant to the Merger Agreement was fair, from a
financial point of view, to such stockholders. Sandler
O'Neill also delivered to the North Side Board a written
opinion (the "Sander O'Neill Fairness Opinion") dated the
date of this Joint Proxy Statement/Prospectus which is
substantially identical to the July 14, 1996 opinion. THE
FULL TEXT OF THE SANDLER O'NEILL FAIRNESS OPINION, WHICH
SETS FORTH THE PROCEDURES FOLLOWED, ASSUMPTIONS MADE,
MATTERS CONSIDERED AND QUALIFICATIONS AND LIMITATIONS ON THE
REVIEW UNDERTAKEN, IS ATTACHED AS ANNEX C TO THIS PROXY
STATEMENT AND IS INCORPORATED HEREIN BY REFERENCE. THE
DESCRIPTION OF SUCH OPINION SET FORTH HEREIN IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO ANNEX C. HOLDERS OF NORTH SIDE
COMMON STOCK ARE URGED TO READ THE SANDLER O'NEILL FAIRNESS
OPINION IN ITS ENTIRETY IN CONNECTION WITH THEIR
CONSIDERATION OF THE PROPOSED MERGER. THE SANDLER O'NEILL
FAIRNESS OPINION SHOULD NOT BE CONSTRUED BY THE HOLDERS OF
SHARES OF NORTH SIDE COMMON STOCK AS A RECOMMENDATION AS TO
HOW THEY SHOULD VOTE AT THE NORTH SIDE SPECIAL MEETING.
In connection with rendering its opinion dated
July 14, 1996, Sandler O'Neill performed a variety of
financial analyses. The following is a summary of such
analyses, but does not purport to be a complete description
of Sandler O'Neill's analyses. The preparation of a fairness
opinion is a complex process involving subjective judgements
and is not necessarily susceptible to a partial analysis or
summary description. Sandler O'Neill believes that its
analyses 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 processes
underlying the Sandler O Neill Fairness Opinion. In
performing its analyses, Sandler O'Neill made numerous
assumptions with respect to industry performance, business
and economic conditions and various other matters, many of
which cannot be predicted and are beyond the control of
North Fork, North Side and Sandler O'Neill. Any estimates
contained in Sandler O'Neill's analyses are not necessarily
indicative of future results or values, which may be
significantly more or less favorable than such estimates.
Estimates on the values of companies do not purport to be
appraisals or necessarily reflect the prices at which
companies or their securities may actually be sold. Because
such estimates are inherently subject to uncertainty, none
of North Side, North Fork or Sandler O'Neill assumes
responsibility for their accuracy.
Stock Trading History. Sandler O'Neill examined
the history of the trading prices and the volume of the
North Side Common Stock and the North Fork Common Stock, and
the relationship between the movements in the prices of the
North Side and the North Fork Common Stock, respectively, to
movements in certain stock indices, including the Standard &
Poor's 500 Index, the NASDAQ Banking Index and a composite
group of publicly traded savings institutions (in the case
of North Side) and publicly traded commercial banks (in the
case of North Fork) in geographic proximity and of similar
asset size.
Analysis of Selected Publicly Traded Companies. In
preparing its presentation, Sandler O'Neill used publicly
available information to compare selected financial and
market trading information, including book value, tangible
book value, earnings, asset quality ratios, loan loss
reserve levels, profitability and capital adequacy, of North
Side and two different groups of selected institutions. The
first group consisted of the following ten (10) publicly-
traded savings institutions (the "Regional Thrift Group")
which operate in the same general geographic region as North
Side and are of comparable size: Albank Financial
Corporation, TR Financial Corp., Greater New York Savings
Bank, Bankers Corp., MLF Bancorp, Inc., Reliance Bancorp,
Inc., JSB Financial, Inc., Haven Bancorp, Inc., Queen s
County Bancorp, Inc., and WSFS Financial Corporation.
Sandler O Neill also compared North Side to a group of nine
(9) publicly-traded savings institutions of comparable size
which were considered to be highly-valued (the "Highly-
Valued Group") by investors. The Highly-Valued Group was
comprised of: Peoples Heritage Financial Corp., Westcorp,
New York Bancorp, Inc., First Indiana Corporation, Eagle
Financial Corp., InterWest Bancorp, Inc., American Federal
Bank, Magna Bancorp, Inc., and WSFS Financial Corporation.
The analysis compared publicly available year-end financial
information as of and for the years ending December 31, 1991
through March 31, 1996. The following comparisons are based
upon the March 31, 1996 financial information. The data
described below with respect to the Regional Thrift Group
and the Highly-Valued Group consists of the median data for
such groups.
The total assets of North Side were approximately
$1.6 billion, compared to approximately $1.7 billion for the
Regional Thrift Group and approximately $1.5 billion for the
Highly-Valued Group. The annual growth rate of assets for
North Side was positive 5.27%, compared to a positive growth
rate of approximately 8% for the Regional Thrift Group and
approximately 5% for the Highly-Valued Group. The total
equity of North Side was approximately $122 million,
compared to approximately $187 million for the Regional
Thrift Group and approximately $124 million for the Highly-
Valued Group. The tangible equity to total assets ratio was
7.66% for North Side, compared to 7.69% for the Regional
Thrift Group and 7.39% for the Highly-Valued Group. The net
loans to assets ratio for North Side was approximately 26%,
compared to approximately 50% for the Regional Thrift Group
and approximately 60% for the Highly-Valued Group. The cash
and securities to total assets ratio was approximately 72%
for North Side, compared to approximately 48% for the
Regional Thrift Group and approximately 35% for the Highly-
Valued Group. Total deposits were approximately $1.2 billion
for North Side, compared to approximately $1.2 billion for
the Regional Thrift Group and approximately $1.1 billion for
the Highly-Valued Group. North Side had a gross loans to
total deposits ratio of approximately 34%, compared to
approximately 72% for the Regional Thrift Group and
approximately 96% for the Highly-Valued Group. The total
borrowings to total asset ratio for North Side was
approximately 14%, compared to approximately 14% for the
Regional Thrift Group and approximately 16% for the Highly-
Valued Group. The ratio of non-performing loans to total
assets for North Side was 0.36%, compared to 0.64% for the
Regional Thrift Group and 1.00% for the Highly-Valued Group.
The ratio of non-performing assets to total assets for North
Side was 0.51%, compared to 0.85% for the Regional Thrift
Group and 1.22% for the Highly-Valued Group. The ratio of
loan loss reserves to non-performing loans for North Side
was 121.82%, compared to approximately 83% for the Regional
Thrift Group and approximately 105% for the Highly-Valued
Group. The net interest margin of North Side was 3.29%,
compared to 3.3% for the Regional Thrift Group and 3.6% for
the Highly-Valued Group. The ratio of non-interest income to
average assets for North Side was 0.37%, compared to 0.35%
for the Regional Thrift Group and 1.04% for the Highly-
Valued Group. The ratio of non-interest expense to average
assets was 1.50% for North Side, compared to 1.82% for the
Regional Thrift Group and 2.65% for the Highly-Valued Group.
The efficiency ratio of North Side was 43.19%, compared to
approximately 52% for the Regional Thrift Group and
approximately 57% for the Highly-Valued Group. The overhead
ratio of North Side was 40.85%, compared to approximately
49% for the Regional Thrift Group and approximately 45% for
the Highly-Valued Group. The return on average assets for
North Side was 1.15%, compared to 0.98% for the Regional
Thrift Group and 1.22% for the Highly-Valued Group. The
return on average equity for North Side was 15.75%, compared
to approximately 10% for the Regional Thrift Group and
approximately 16% for the Highly-Valued Group. The price to
tangible book value for North Side was 139.1%, compared to
approximately 125% for the Regional Thrift Group and
approximately 150% for the Highly-Valued Group. The price to
earnings per share multiple for North Side was 9.62x,
compared to approximately 13x for the Regional Thrift Group
and 10x for the Highly-Valued Group.
Sandler O'Neill also used publicly available
information to perform a similar comparison of selected
financial and market trading information for North Fork and
two different groups of selected institutions. The first
group consisted of the following eleven (11) publicly-traded
commercial banks (the "Regional Bank Group") which operate
in the same general geographic region: Dauphin Deposit
Corporation, ONBANCorp, Inc., Keystone Financial, Inc.,
Valley National Bancorp, Fulton Financial Corporation,
Susquehanna Bancshares, Inc., U.S. Trust Corporation, Trust
Company of New Jersey, Commerce Bancorp, Inc., First
Commonwealth Financial, and TrustCo Bank Corp. Sandler
O'Neill also compared North Fork to a group of fifteen (15)
publicly-traded commercial banks of comparable size which
were considered to be highly-valued (the "Highly-Valued Bank
Group") by investors. The Highly-Valued Bank Group was
comprised of: Valley National Bancorp, BOV Financial
Corporation, United Carolina Bancshares, Colonial BancGroup,
Inc., City National Corporation, Associated Banc-Corp
National Commerce Bancorp, Mark Twain Bancshares, Inc.,
Westamerica Bancorporation, Commerce Bancorp, Inc.,
FirstBanks Puerto Rico, Community First Bancshares, TrustCo
Bank Corp, and Corus Bankshares, Inc. The analysis compared
publicly available year end financial information as of and
for the years ending December 31, 1990 through December 31,
1995. The following comparisons are based upon the December
31, 1995 financial information. The data described below
with respect to the Regional Bank Group and the Highly-
Valued Bank Group consists of the median data for such
groups.
The total assets of North Fork were approximately
$4.1 billion, compared to $3.3 billion for the Regional Bank
Group and $3.4 billion for the Highly-Valued Bank Group.
The annual growth rate of assets for North Fork was positive
48.54%, compared to a positive growth rate of approximately
8% for the Regional Bank Group and approximately 13% for the
Highly-Valued Bank Group. The total equity of North Fork
was approximately $308 million, compared to approximately
$294 million for the Regional Bank Group and approximately
$271 million for the Highly-Valued Bank Group. The tangible
equity to total assets ratio was 5.49% for North Fork,
compared to approximately 7.4% for the Regional Bank Group
and approximately 7.6% for the Highly-Valued Bank Group.
The net loans to total assets ratio for North Fork was
approximately 53%, compared to approximately 55% for the
Regional Bank Group and approximately 63% for the Highly-
Valued Bank Group. The cash and securities to total assets
ratio was approximately 42% for North Fork, compared to
approximately 38% for the Regional Bank Group and
approximately 33% for the Highly-Valued Bank Group. Total
deposits were approximately $3.4 billion for North Fork,
compared to approximately $2.7 billion for the Regional Bank
Group and approximately $2.6 billion for the Highly-Valued
Bank Group. North Fork had a gross loans to total deposits
ratio of approximately 65%, compared to approximately 71%
for the Regional Bank Group and approximately 77% for the
Highly-Valued Bank Group. The total borrowings to total
assets ratio for North Fork was approximately 7%, compared
to approximately 6% for the Regional Bank Group and
approximately 8% for the Highly-Valued Bank Group. The
total non-performing loans to total assets ratio for North
Fork was 1.53%, compared to 0.42% for the Regional Thrift
Group and 0.37% for the Highly-Valued Bank Group. The non-
performing assets to total assets ratio for North Fork was
1.70%, compared to 0.64% for the Regional Thrift Group and
0.57% for the Highly-Valued Bank Group. The ratio of loan
loss reserves to non-performing loans for North Fork was
82%, compared to approximately 193% for the Regional Bank
Group and approximately 290% for the Highly-Valued Bank
Group. The ratio of loan loss reserves to non-performing
assets for North Fork was approximately 74%, compared to
approximately 144% for the Regional Bank Group and
approximately 230% for the Highly-Valued Bank Group. The
net interest margin of North Fork was 5.04%, compared to
4.29% for the Regional Bank Group and 4.71% for the Highly-
Valued Bank Group. The ratio of non-interest income to
average assets for North Fork was 0.69%, compared to 0.69%
for the Regional Bank Group and 1.03% for the Highly-Valued
Bank Group. The ratio of non-interest expense to average
assets was 2.25% for North Fork, compared to 2.87% for the
Regional Bank Group and 3.17% for the Highly-Valued Bank
Group. The efficiency ratio of North Fork was 40.03%,
compared to approximately 47% for the Regional Bank Group
and approximately 58% for the Highly-Valued Bank Group. The
overhead ratio of North Fork was 31.24%, compared to
approximately 47% for the Regional Bank Group and
approximately 38% for the Highly-Valued Bank Group. The
return on average assets for North Fork was 1.77%, compared
to 1.19% for the Regional Bank Group and 1.36% for the
Highly-Valued Bank Group. The return on average equity for
North Fork was 18.69%, compared to approximately 13% for the
Regional Bank Group and approximately 17% for the Highly-
Valued Bank Group. The price to tangible book value for
North Fork was 301.44%, compared to approximately 180% for
the Regional Bank Group and approximately 219% for the
Highly-Valued Bank Group. The price to earnings per share
multiple for North Fork was 12.27x, compared to 13x for the
Regional Bank Group and 12x for the Highly-Valued Bank
Group.
Analysis of Selected Merger Transactions. Sandler
O'Neill reviewed 88 transactions announced from January 1,
1995 to July 12, 1996 involving public savings institutions
nationwide as targets with transaction values over $15
million ("All Transactions"), 11 transactions announced
from January 1, 1995 to July 12, 1996 involving public
savings institutions in New York ("Regional Transactions"),
and 11 transactions announced from January 1, 1995 to
July 12, 1996 involving public savings institutions nation-
wide as targets with a return on average equity of 13% or
greater ("High ROAE Transactions"). Sandler O'Neill reviewed
the ratios of price to earnings, price to book value, price
to tangible book value, price to deposits, price to assets,
and deposit premium paid in each such transaction and computed
high, low, mean, and median ratios and premiums for the
respective groups of transactions. Based upon the median
multiples for All Transactions, Sandler O'Neill derived an
imputed range of values per share of the North Side Common
Stock of $36.84 to $55.75. Based upon the median multiples for
Regional Transactions, Sandler O'Neill derived an imputed
range of values per share of the North Side Common Stock of
$34.81 to $51.58. Based upon the median multiples for High
ROAE Transactions, Sandler O'Neill derived an imputed range of
values per share of the North Side Common Stock of $38.23 to
$44.37.
Discounted Dividend Stream and Terminal Value
Analysis. Sandler O'Neill also performed an analysis which
estimated the future stream of after-tax dividend flows of
North Side through 2001 under various circumstances,
assuming North Side performed in accordance with the
earnings forecasts of its management and certain variations
thereof (including variation with respect to the growth rate
of assets, net interest spread, non-interest income, non-
interest expense and dividend payout ratio). To approximate
the terminal value of the North Side Common Stock at the end
of the five-year period, Sandler O'Neill applied price to
earnings multiples ranging from 8x to 17x and applied
multiples of book value ranging from 80.0% to 170.0%. The
dividend income streams and terminal values were then
discounted to present values using different discount rates
(ranging from 10% to 16.0%) chosen to reflect different
assumptions regarding required rates of return of holders of
prospective buyers of the North Side Common Stock. This
analysis, assuming the current dividend payout ratio,
indicated an imputed range of values per share of the North
Side Common Stock between $19.72 and $47.29 when applying
the price to earnings multiples, and an imputed range of
values per share of the North Side Common Stock between
$23.29 and $57.46 when applying multiples of book value. In
connection with its analysis, Sandler O'Neill extensively
used sensitivity analyses to illustrate the effects changes
in the underlying assumptions would have on the resulting
present value, and discussed these changes with the North
Side Board.
In addition, Sandler O'Neill performed an analysis
which estimated the future stream of after-tax dividend
flows of North Fork on a pro-forma basis, assuming
consummation of the Merger (the "Combined Company") through
2001 under various circumstances, assuming (i) the
operations of the Combined Company attributable to North
Side performed in accordance with the earnings forecasts of
North Side's management and certain variations thereof, as
described in the previous paragraph; (ii) the operations of
the Combined Company attributable to North Fork performed in
accordance with the earnings forecasts of North Fork's
management and certain variations thereof (including
variation with respect to the growth rate of assets, net
interest spread, non-interest income, non-interest expense
and dividend payout ratio); and (iii) the Combined Company
realized cost savings equal to 33.5% of North Side's
projected non-interest expenses (other than the expense of
deposit insurance). To approximate the terminal value of
the Combined Company's Common Stock at the end of the five-
year period, Sandler O'Neill applied a range of price to
earnings multiples and book value multiples. The dividend
income streams and terminal values were then discounted to
present values using different discount rates (ranging from
9.0% to 13.5%) chosen to reflect different assumptions
regarding required rates of return of holders of prospective
buyers of the Combined Company's Common Stock. This
analysis, assuming the current dividend payout ratio,
indicated that the imputed range of values of the 1.556
shares of North Fork Common Stock to be received in the
Merger for each share of North Side Common Stock was
significantly in excess of the imputed range of the values
of the shares of North Side Common Stock. In connection
with its analysis, Sandler O'Neill extensively used
sensitivity analyses to illustrate the effects changes in
the underlying assumptions would have on the resulting
present value, and discussed these changes with the North
Side Board.
In connection with rendering its opinion dated
July 14, 1996, Sandler O'Neill reviewed, among other things:
(i) the Merger Agreement and exhibits thereto; (ii) the
Stock Option Agreement; (iii) North Fork's audited
consolidated financial statements and management's
discussion and analysis of the condition and results of
operations contained in its annual report to shareholders
for the year ended December 31, 1995; (iv) North Side's
audited consolidated financial statements and management's
discussion and analysis of the financial condition and
results of operations contained in its annual report to
shareholders for the fiscal year ended September 30, 1995;
(v) North Fork's unaudited consolidated financial statements
and management's discussion and analysis of the financial
condition and results of operations contained in its
Quarterly Report on Form 10-Q for the quarter ended March
31, 1996; (vi) North Side's unaudited consolidated financial
statements and management's discussion and analysis of the
financial condition and results of operations contained in
its Quarterly Reports on Form F-4 for the quarters ended
December 31, 1995 and March 31, 1996, respectively; (vii)
North Fork's press release dated July 11, 1996 containing
financial statement highlights for North Fork for the
quarter ended June 30, 1996; (viii) preliminary financial
information prepared by the senior management of North Side
concerning North Side's financial condition and results of
operations for the quarter ended June 30, 1996; (ix) certain
financial analyses and forecasts of North Side prepared by
and reviewed with management of North Side and the views of
senior management of North Side regarding North Side's past
and current business operations, results thereof, financial
condition and future prospects; (x) certain financial
analyses and forecasts of North Fork prepared by and
reviewed with management of North Fork and the views of
senior management of North Fork regarding North Fork's past
and current business operations, results thereof, financial
condition and future prospects; (xi) the pro forma impact of
the Merger on North Fork; (xii) the historical reported
price and trading activity for the North Fork Common Stock
and the North Side Common Stock, including a comparison of
certain financial and stock market information for North
Fork and North Side with similar information for certain
other companies the securities of which are publicly traded;
(xiii) the financial terms of recent business combinations
in the savings institution and banking industries; (xiv) the
current market environment generally and the banking
environment in particular; and (xv) such other information,
financial studies, analyses and investigations and
financial, economic and market criteria as Sandler O'Neill
considered relevant. Sandler O'Neill was not asked to, and
did not, solicit indications of interest in a potential
transaction from other third parties.
In connection with rendering the Sandler O'Neill
Fairness Opinion, Sandler O'Neill confirmed the
appropriateness of its reliance on the analyses used to
render its July 14, 1996 opinion by performing procedures to
update certain of such analyses and by reviewing the
assumptions upon which such analyses were based and the
factors considered in connection therewith.
In performing its reviews, Sandler O'Neill assumed
and relied upon, without independent verification, the
accuracy and completeness of all the financial information,
analyses and other information reviewed by and discussed
with it, and Sandler O'Neill did not make an independent
evaluation or appraisal of the specific assets, the
collateral securing assets or the liabilities of North Fork
or North Side or any of their subsidiaries, or the
collectibility of any such assets (relying, where relevant,
on the analyses and estimates of North Fork and North Side).
With respect to the financial projections reviewed with each
company's management, Sandler O'Neill assumed that they have
been reasonably prepared on bases reflecting the best
currently available estimates and judgments of the
respective managements of the respective future financial
performances of North Fork and North Side and that such
performances will be achieved. Sandler O'Neill also assumed
that there has been no material change in North Fork's or
North Side's assets, financial condition, results of
operations, business or prospects since the date of the last
financial statements noted above. Sandler O'Neill assumed
that the Merger will qualify for pooling of interests
accounting treatment and has further assumed that North Fork
will remain as a going concern for all periods relevant to
its analyses and that the conditions precedent in the
Agreement are not waived.
Under the Sandler O'Neill Agreement, North Side
will pay Sandler O'Neill a transaction fee in connection
with the Merger, a substantial portion of which is
contingent upon the consummation of the Merger. Under the
terms of the Agreement, North Side will pay Sandler O'Neill
a transaction fee equal to 1.0% of the aggregate purchase
price paid in the transaction, or approximately $2.2
million, of which 25% was paid upon execution of the Merger
Agreement and 75% will be paid if the Merger is consummated.
North Side has also paid Sandler O'Neill a fee of $50,000
for rendering the Sandler O'Neill Fairness Opinion, all of
which amount will be credited towards the fee payable to
Sandler O'Neill upon consummation of the Merger. North Side
has also agreed to reimburse Sandler O'Neill for its
reasonable out-of-pocket expenses incurred in connection
with its engagement and to indemnify Sandler O'Neill and its
affiliates and their respective partners, directors,
officers, employees, agents, and controlling persons against
certain expenses and liabilities, including liabilities
under securities laws.
North Fork. Pursuant to an Engagement Letter
dated as of July 9, 1996, Keefe, Bruyette & Woods, Inc.
("KBW") has acted as financial advisor to North Fork in
connection with the Merger. KBW is a nationally recognized
investment banking firm and, as part of its investment
banking business, is continually engaged in the valuation of
banking businesses and their 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 North Fork based on KBW's
experience in similar transactions, expertise, and its
business and reputation in the banking and investment
communities.
In the ordinary course of its business as a broker-
dealer, KBW may, from time to time, purchase securities
from, and sell securities to, North Fork and North Side,
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 North Fork and North Side for its own
account and for the accounts of its customers. To the
extent that KBW had any such position as of the date of the
fairness opinion attached as Annex C hereto, KBW has
disclosed such to North Fork.
In connection with KBW's engagement, North Fork
requested that KBW evaluate the fairness of the Exchange
Ratio, from a financial point of view, to the stockholders
of North Fork. At a meeting of the North Fork Board held on
July 15, 1996, KBW rendered its oral opinion to the effect
that as of such date and subject to certain matters stated
in the opinion, the Exchange Ratio, from a financial point
of view, was fair to the North Fork stockholders. KBW
subsequently confirmed this oral opinion by delivery of a
written opinion dated the date of this Joint Proxy
Statement/Prospectus. In connection with its written
opinion, KBW updated certain of its analyses, as necessary,
and reviewed the assumptions on which such analyses were
based and the factors considered in connection therewith.
No limitations were imposed by the North Fork Board on KBW
with respect to the investigations made or procedures
followed in rendering its opinion.
The full text of KBW's written opinion dated the date
of this Joint Proxy Statement/Prospectus, which sets forth
the assumptions made, matters considered and limitations of
review by KBW, is attached hereto as Annex C and is
incorporated herein by reference. Holders of North Fork
Common Stock are urged to read this opinion carefully in its
entirety. KBW's opinions are directed only to the fairness
of the Exchange Ratio from a financial point of view to the
stockholders of North Fork, do not address any other aspect
of the proposed Merger or any related transaction and do not
constitute a recommendation to any stockholder as to how
such stockholder should vote at the North Fork Meeting. The
summary of the opinion of KBW set forth in this Joint Proxy
Statement/Prospectus is qualified in its entirety by
reference to the full text of the opinion.
In connection with its opinion dated the date hereof,
KBW reviewed, among other things, (a) the Merger Agreement
and Stock Option Agreement, (b) the Registration Statement
on Form S-4, including this Joint Proxy
Statement/Prospectus, (c) the Annual Report to Stockholders
of North Fork and the Annual Report on Form 10-K of North
Fork for the year ended December 31, 1995, (d) the Annual
Report on Form F-2 of North Side for the year ended
September 30, 1995, (e) certain interim reports to
stockholders and Quarterly Reports on Form 10-Q of North
Fork, (f) certain interim reports to shareholders and
Quarterly Reports on Form F-4 of North Side, and (g) certain
internal financial analyses and forecasts for North Fork and
North Side prepared by the respective managements of North
Fork and North Side and furnished to KBW for purposes of its
analysis. KBW also held discussions with members of the
senior managements of North Side and North Fork regarding
the past and current business operations, regulatory
relations, financial condition and future prospects of their
respective companies and such other matters as KBW deemed
relevant to its inquiry In addition, KBW compared certain
financial and stock market information for North Fork and
North Side 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 banking industry and performed such
other studies and analyses as KBW considered appropriate.
In rendering its opinion, KBW considered such financial
and other factors as it deemed appropriate under the
circumstances, including, among others, the following: (a)
the respective historical and current financial position and
results of operations of North Fork and North Side; (b) the
respective assets and liabilities of North Fork and North
Side; and (c) the nature and terms of certain other merger
transactions involving banks and bank holding companies and
thrifts and thrift holding companies. In rendering its
opinion, KBW 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. KBW's opinion is necessarily based upon
conditions as they existed and could be evaluated as of the
date of its opinion and the information made available to
KBW through the date of its opinion.
In conducting its review and arriving at its opinion,
KBW relied upon and assumed the accuracy and completeness of
the financial and other information provided to it or
publicly available, and KBW did not assume any
responsibility for independently verifying any of such
information. KBW relied upon the management of North Fork
and North Side as to the reasonableness and achievability of
the financial and operating forecasts and projections (and
the assumptions and bases therefor) provided to it, and KBW
assumed that such forecasts and projections reflected the
best currently available estimates and judgments of North
Fork and that such forecasts and projections will be
realized in the amounts and in the time periods currently
estimated by such management. KBW also assumed that the
aggregate allowances for loan losses for North Fork and
North Side are adequate to cover such losses. In rendering
its opinions, KBW has not made or obtained any evaluations
or appraisals of the property of North Fork or North Side,
nor has it examined any individual credit files.
The summary of KBW's analyses set forth below does not
purport to be a complete description of the analyses
underlying its opinion. The preparation of a fairness
opinion is a complex analytic process, involving various
determinations as to the most appropriate and relevant
methods of financial analyses and the application of those
methods to the particular circumstances and therefore, such
an opinion is not readily susceptible to summary
description. In arriving at its opinion, KBW made
qualitative judgments as to the significance and relevance
of each analysis and factor considered by it. Accordingly,
KBW believes that its analyses must be considered as a whole
and that selecting portions of its analyses and factors,
without considering all analyses and factors, could create a
misleading or incomplete view of the processes underlying
such analyses and its opinion. In its analyses, KBW made
numerous assumptions with respect to North Fork and North
Side, industry performance, regulatory, general business,
economic, market and financial conditions and other matters,
many of which are beyond the control of North Fork and North
Side. No company, transaction or business used in such
analyses as a comparison is identical to North Fork, North
Side or the Merger, nor is an evaluation of the results of
such analyses entirely mathematical; rather, it involves
complex considerations and judgments concerning financial
and operating characteristics and other factors that could
affect the acquisition, public trading or other values of
the companies, business segments or transactions being
analyzed. The estimates contained in such analyses and the
valuations resulting from any particular analysis are not
necessarily indicative of actual values or predictive of
future results or values, which may be significantly more or
less favorable than those suggested by such analyses. In
addition, analyses relating to the value of businesses and
securities do not purport to be appraisals or to reflect the
prices at which businesses or securities actually may be
sold. Accordingly, because such estimates are inherently
subject to substantial uncertainty, none of North Fork,
North Side, KBW or any other person assumes responsibility
for their accuracy.
The following is a summary of the material analyses
performed by KBW in connection with its opinion and
financial presentation made to the North Fork Board on July
15, 1996:
(a) Transaction Summary. KBW calculated the
consideration to be received pursuant to the Exchange
Ratio as a multiple of North Side's book value,
tangible book value as of June 30, 1996, earnings per
share and current market price of North Side Common
Stock. This computation assumed a price per share of
North Fork Common Stock and North Side Common Stock,
respectively, of $27.50 and $35.25 (the respective
closing prices of such Common Stock on July 12, 1996)
and an Exchange Ratio of 1.556 shares of North Fork
Common Stock for each share of North Side Common Stock
and was based on North Side's reported earnings for the
four most recently completed quarters and on analysts'
estimates of North Side's 1996 and 1997 earnings per
share. Based on such assumptions, this analysis
indicated North Side's stockholders would receive
shares of North Fork Common Stock worth $42.79 for each
share of North Side Common Stock held, and that such
amount would represent a multiple of 1.67x book value
per share, 1.69x tangible book value per share, 11.32x
earnings per share for the four most recently completed
quarters, 11.26x estimated 1996 earnings per share,
11.35x estimated 1997 earnings per share and 1.21x the
then-current price for shares of North Side Common
Stock.
(b) Pro Forma Merger Analysis. KBW performed pro
forma merger analyses that combined projected income
statement and balance sheet information. Assumptions
regarding the accounting treatment, acquisition
adjustments, cost savings, revenue enhancements and
treatment of North Side employee stock options were
used to calculate the financial impact that the
acquisition would have on certain projected financial
results of North Fork. This analysis indicated that
the Merger is expected to increase North Fork's
projected 1997 earnings per share (excluding the effect
of a non-recurring merger and restructuring charge to
be incurred in connection with the Merger), book value,
tangible book value and leverage ratio. This analysis
was based on analyst estimates of North Fork's and
North Side's 1997 earnings per share and on North
Fork's management's estimates of expected cost savings,
revenue enhancements and a non-recurring merger and
restructuring charge to be realized or incurred by
North Fork in connection with the Merger. These
projections were discussed with the management of each
of North Fork and North Side. The actual results
achieved by the combined company will vary from the
projected results, and the variations may be material.
See "MANAGEMENT AND OPERATIONS FOLLOWING THE MERGER --
Consolidation of Operations; Projected Cost Savings and
Revenue Enhancements; Projected Earnings Per Share" and
"-- Merger and Restructuring Charges."
(c) Contribution Analysis. KBW analyzed the
relative contribution of each of North Fork and North
Side to certain balance sheet and income statement
items of the combined company, including assets, common
equity, market capitalization, deposits and estimated
1997 net income (with and without estimated cost
savings). KBW then compared the relative contribution
of such balance sheet and income statement items with
the estimated pro forma ownership of 24% for North Side
stockholders based on an Exchange Ratio of 1.556. The
contribution analysis showed that North Side would
contribute approximately 28% of the combined assets,
35% of the combined common equity, 26% of the combined
deposits, 22% of the combined estimated 1997 net income
and 25% of the combined estimated 1997 net income
including estimated cost savings resulting from the
Merger.
(d) Selected Transaction Analysis. KBW analyzed
certain merger and acquisition transactions for
financial institutions based upon the acquisition price
(at announcement) relative to stated book value, stated
tangible book value and latest twelve months' earnings.
The information analyzed was compiled by KBW from both
internal sources and a data firm that monitors and
publishes transaction summaries and descriptions of
mergers and acquisitions in the financial services
industry. The analysis included a review and
comparison of the average book value multiples and
earnings multiples represented by a sample of recently
completed or announced transactions, as segmented into
the three categories described below.
The first category was comprised of selected
transactions announced between January 1993 and July
1996 in which the acquired institution was a thrift
with assets greater than $500 million, a return on
assets greater than 1%, a return on equity greater than
14% and a tangible equity-to-asset ratio less than 10%.
The second category was comprised of selected
transactions (excluding mergers of equals) announced
between January 1993 and July 1996 in which the
transaction value was greater than $100 million and the
acquired institutions was a thrift. The third category
was comprised of selected transactions announced
between January 1993 and July 1996 in which the seller
was a thrift located in the Metropolitan New York City
area and the acquiror was New York-based (or, in one
instance, New Jersey-based).
KBW's analyses of these acquisitions
indicated that (a) among the acquisition of thrifts in
the first category, the consideration paid to the
acquired institution's stockholders averaged 189% of
book value per share, 194% of tangible book value per
share and had a median of 11.6x latest twelve months'
earnings per share; (b) among the acquisition of
thrifts in the second category, the consideration paid
to the acquired institution's stockholders averaged
160% of book value per share, 170% of tangible book
value per share and had a median of 14.7x latest twelve
months' earnings per share; (c) among the acquisition
of thrifts in the third category, the consideration
paid to the acquired institution's stockholders
averaged 146% of book value per share, 153% of tangible
book value per share and had a median of 15.1x latest
twelve months' earnings per share. Assuming an
Exchange Ratio of 1.556 shares of North Fork Common
Stock for each share of North Side Common Stock, and a
price per share of North Fork Common Stock of $27.50,
the consideration to be received by North Side
stockholders in the Merger would represent 167% of book
value per share, 169% of tangible book value per share
and 11.3x North Side's latest twelve months' earnings
per share.
(e) Other Analyses. KBW also reviewed the
relative financial and market performance of North Side
to a variety of relevant industry peer groups and
indices. KBW also reviewed deposit market share data
for the combined company, balance sheet composition for
North Fork and North Side, historical stock performance
for North Fork and North Side and other financial data
for North Side.
Pursuant to the terms of KBW's engagement, North Fork
has agreed to pay a financial advisory fee to KBW for its
services in connection with the Merger. Specifically,
North Fork has agreed to pay KBW (a) an initial fee of
$25,000, following execution of the engagement letter, (b) a
fee of $100,000 upon the mailing of this Joint Proxy
Statement/Prospectus, and (c) a contingent fee of $125,000
upon the closing of the Merger. North Fork has also agreed
to reimburse KBW for its reasonable out-of-pocket expenses,
including the fees and expenses of legal counsel and any
other advisor retained by KBW. North Fork has also agreed
to indemnify KBW, its affiliates, and their respective
partners, directors, officers, agents, consultants,
employees and controlling persons against certain
liabilities, including liabilities under the Federal
securities laws. It is expected that KBW will act as
underwriter in connection with the offering of the
North Fork Treasury Stock and, in connection therewith,
will receive customary underwriting discounts and com-
missions and will be indemnified by North Fork against
certain liabilities.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
Certain members of North Side's management and the
North Side Board may be deemed to have certain interests in
the Merger that are in addition to their interests as
stockholders of North Side generally. The North Side Board
was aware of these interests and considered them, among
other matters, in approving the Merger Agreement and the
transactions contemplated thereby.
North Fork has agreed to honor all existing North
Side employment, severance and other compensation agreements
and arrangements. As a result of the transactions
contemplated by the Merger Agreement, Mr. O'Brien, Chairman,
President and Chief Executive Officer of North Side, will be
entitled to certain severance benefits under the terms of
his existing Employment Agreement with North Side including
a lump sum severance payment equal to three times the sum of
(a) Mr. O'Brien's base salary as in effect immediately prior
to consummation of the Merger, and (b) the highest annual
bonus earned by Mr. O'Brien during any of the three years
prior to the Merger. In addition to his severance payment,
in the event that Mr. O'Brien does not serve as Vice
Chairman of North Fork and North Fork Bank as discussed
below, Mr. O'Brien also will be entitled, under the terms of
his current employment contract, to the continuation of his
benefits under the group hospitalization, health care,
dental, life or other insurance or death benefit plans
maintained by North Side for three years or until he obtains
employment providing substantially similar benefits and to
suitable outplacement services for a period of up to three
years or his acceptance of other employment. As discussed
below, Mr. O'Brien also will become fully vested in his
benefits under North Side's existing Long-Term Incentive and
Capital Accumulation Plan ("North Side Stock Option Plan")
and Management Development and Recognition Plan ("MDR
Plan"). To the extent that payments received by Mr. O'Brien
constitute "excess parachute payments" subject to the excise
tax imposed under Section 4999 of the Internal Revenue Code
of 1986, as amended ("Code"), Mr. O'Brien shall be entitled
to an additional payment sufficient to restore Mr. O'Brien
to the same after-tax position he would have had if the
excise tax had not been imposed. Based upon Mr. O'Brien's
current base salary and bonus payments during the three
prior years, Mr. O'Brien will be entitled to receive a lump
sum cash severance payment of approximately $________ upon
consummation of the Merger. North Fork and North Side have
agreed that such lump sum severance payment will be made on
the date that the Merger is consummated.
North Side also has entered into Change in Control
Severance Agreements ("Severance Agreements") with five of
its current officers, including Donald C. Fleming, the
Executive Vice President and Chief Financial Officer, Alissa
E. Ballot, the General Counsel and Marie Alleva, a Senior
Vice President. Pursuant to the terms of the Severance
Agreements, which were entered into April, 1996, and the
Merger Agreement, the five officers who have executed
Severance Agreements will be entitled to lump sum severance
payments equal to two times the sum of (a) the officer's
base salary as in effect immediately prior to the Merger,
plus (b) the highest annual bonus during any of the three
years prior to the Merger. North Fork and North Side have
agreed that such lump sum severance payments will be made to
the affected officers on the date that the Merger is
consummated. If employment is terminated, such officers
also will be entitled to the continuation of benefits under
the group hospitalization, health care, dental, life or
other insurance or death benefit plans maintained by North
Side for two years or until other employment is accepted.
Such officers will also be entitled to certain outplacement
benefits. The payments payable under each Severance
Agreement are limited to those amounts that would be
deductible by reason of Section 280G of the Code. Based
upon their current levels of base salary and bonus payments
during the three prior years, Mr. Fleming, Ms. Ballot and
Ms. Alleva will be entitled to receive lump sum severance
payments of $_____, $_____ and $_____, respectively.
Pursuant to the terms of the Merger Agreement, at
the Effective Time North Fork will cause the North Fork
Board to be expanded by two members and Mr. O'Brien and one
other member of the North Side Board selected by North Side
and approved by North Fork (which approval will not be
unreasonably withheld) will be appointed to fill the
vacancies. At the Effective Time, the North Side directors
who are not appointed to the North Fork Board will be
appointed to an advisory committee to North Fork for an
advisory term of not less than three years and an annual fee
of $35,000.
The Merger Agreement provides that, in the event
of any threatened or actual claim, action, suit, proceeding
or investigation in which any person who is or has been a
director, officer or employee of North Side 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 North Side, 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 law 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 maintain directors' and officers'
liability insurance for the benefit of persons serving as
officers and directors of North Side immediately prior to
the Effective Time for a period of three (3) 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,
provided that in no event shall North Fork be required to
expend on an annual basis more than 200% of the amount which
North Side currently expends for such insurance.
In addition to the above referenced benefits, all
options and awards outstanding under the North Side Stock
Option Plan and the MDR Plan will become vested as a result
of the consummation of the Merger.
North Fork has offered Mr. O'Brien the position of
Vice Chairman of North Fork and North Fork Bank after the
Merger. In connection therewith, the parties have
negotiated forms of employment and change-in-control
agreements which Mr. O'Brien may enter into within 20
business days after the Effective Time of the Merger. Mr.
O'Brien has indicated to North Fork that he currently
anticipates entering into such agreements. The proposed
employment agreement with Mr. O'Brien provides for a three-
year term at an annual base salary of $300,000, which may be
increased by the North Fork Board provided that, in any
event, such annual base salary shall be substantially
equivalent to the annual base salary of any other Vice
Chairman of North Fork and shall be no less than 50% of the
annual base salary of the Chief Executive Officer of North
Fork. Under the terms of the proposed Employment Agreement,
Mr. O'Brien also shall be eligible for annual bonuses,
commencing for North Fork's 1997 fiscal year, which bonuses
shall be substantially equivalent to the annual bonus, if
any, paid to any other Vice Chairman of North Fork or, if
there is no other Vice Chairman of North Fork, in an amount
consistent with North Fork's recent past practice for Vice
Chairman in proportion to the Chief Executive Officer of
North Fork. The proposed Employment Agreement also provides
for Mr. O'Brien's participation in all of the employee
benefit plans maintained by North Fork including any
pension, medical insurance, life insurance and all stock
option, restricted stock, appreciation rights, phantom
stock, stock unit or other stock-based plans. In the event
that North Fork were to terminate the proposed Employment
Agreement other than for "cause," as defined, or Mr. O'Brien
were to terminate the proposed Employment Agreement in the
event of any material breach of the Agreement by North Fork
which breach had not been cured, then Mr. O'Brien would be
entitled to a lump sum payment equal to the aggregate amount
of his base salary for the otherwise remaining term of the
Employment Agreement multiplied by 130%. In the event of
termination of employment for any reason other than by North
Fork for cause, as defined, North Fork will be required to
furnish Mr. O'Brien and his family with continued group
health, major medical and hospitalization insurance coverage
through the third anniversary of his date of employment with
North Fork. The proposed Employment Agreement also provides
for the payment of certain benefits upon the death or
disability of Mr. O'Brien. The proposed Change-In-Control
Agreement with Mr. O'Brien is substantially similar to the
existing Change-In-Control Agreement which North Fork has
previously entered into with certain of its executive
officers. Such agreement provides that Mr. O'Brien will be
entitled to receive from North Fork a lump sum payment equal
to 299 percent of his "base amount" as defined in Section
280G of the Code if, within 24 months after a change in
control of North Fork (as defined in the agreement), his
employment is terminated by North Fork (other than for
cause) or by Mr. O'Brien voluntarily. The proposed Change-
In-Control Agreement is a rolling three-year agreement and
will continue in effect until the normal expiration date of
Mr. O'Brien's employment under the proposed Employment
Agreement or until Mr. O'Brien is no longer an employee of
North Fork, provided that the term of the proposed Change-
In-Control Agreement will be extended in the event of a
change in control, as defined, of North Fork prior to the
termination of employment. The agreement provides, in
effect, that if any payments thereunder would be treated as
excess parachute payments under Section 280G of the Code,
the aggregate amount of those payments is to be reduced to
the extent necessary to avoid that treatment, except that
any payment to Mr. O'Brien under the North Fork Performance
Plan or any acceleration of the vesting of any stock-based
awards will not trigger such a reduction.
Other than as set forth above, no director or
executive officer of North Side has any direct or indirect
material interest in the Merger, except insofar as ownership
of North Side Common Stock and existing options to purchase
such stock might be deemed such an interest.
EMPLOYEE MATTERS
Pursuant to the terms of the Merger Agreement,
employees of North Side shall become entitled, as soon as
practicable following the Merger, to participate in the
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 North Side
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 North Side and certain of its directors, officers
and employees. North Fork intends to continue each of the
existing North Side employee benefit plans to which there
exists a corresponding North Fork employee benefit plan
until the date on which the inclusion of North Side
employees in North Fork's corresponding plan occurs.
CONVERSION OF SHARES; PROCEDURES FOR EXCHANGE OF
CERTIFICATES; FRACTIONAL SHARES
North Side. 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 North Side, acting in
the capacity of exchange agent (the "Exchange Agent"), will
mail to each former holder of record of North Side Common
Stock a form of letter of transmittal, together with
instructions for the exchange of such holder's certificates
representing shares of North Side Common Stock for
certificates representing shares of North Fork Common Stock
and cash in lieu of fractional shares.
HOLDERS OF NORTH SIDE 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 North Side Common
Stock, together with a properly completed letter of
transmittal, there will be issued and mailed to the holder
of North Side 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
amount representing any fractional share determined in the
manner described below, without interest. The North Side
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 North Side
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.
After the Effective Time, there will be no
transfers on the stock transfer books of North Side of
shares of North Side Common Stock issued and outstanding
immediately prior to the Effective Time. If certificates
representing shares of North Side 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, North Fork
Bank or North Side, or any other person, will be liable to
any former holder of North Side Common Stock for any amount
properly delivered to a public official pursuant to
applicable abandoned property, escheat or similar laws.
If a certificate for North Side 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 North Side 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 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 North
Side 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 two-thirds of the outstanding
shares of North Side Common Stock entitled to vote thereon
and approval of the issuance of the Merger Shares by the
affirmative vote of the holders of a majority of the shares
of North Fork Common Stock voting thereon where the total
votes cast by the holders of North Fork Common Stock on such
matter exceed 50% of the outstanding shares of North Fork
Common Stock; (ii) the shares of North Fork Common Stock
issuable to holders of North Side 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) 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; (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 or any of the other transactions
contemplated by the Merger Agreement 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.
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) certain
representations and warranties of North Side 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 Closing Date
as though made on and as of the Closing Date; (y) the
representations and warranties of North Side contained in
the Merger Agreement (including, without limitation, the
representation (the "North Side Material Adverse Change
Representation") that since March 31, 1996 no event has
occurred which has caused, or is reasonably likely to cause,
individually or in the aggregate, a Material Adverse Effect
(as defined below) on North Side) shall be true and correct
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 Closing Date as though made on and
as of the Closing Date; provided, however, that for purposes
of determining the satisfaction of the condition described
in this clause (i)(y), such representations and warranties
shall be deemed to be true and correct 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 Effect on North Side; and (z)
the representations and warranties of North Side contained
in the Merger Agreement (including without limitation the
North Side Material Adverse Change Representation) shall be
true and correct 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 Closing Date
as though made at and as of the Closing Date provided,
however, that for purposes of determining the satisfaction
of the condition described in this clause (i)(z), 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, however,
that the representations and warranties of North Side 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 Effect; (ii) North
Side 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 Closing Date; (iii) 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 to any obligation, right or
interest of North Side or any subsidiary of North Side under
any agreement shall have been obtained, except where the
failure to obtain such consents or approvals would not have
a Material Adverse Effect on North Fork; (iv) no proceeding
initiated by a Governmental Entity seeking an Injunction
shall be pending; (v) North Fork shall have received an
opinion of its counsel, in form and substance reasonably
satisfactory to North Fork, dated as of the Effective Time,
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 will be treated as a reorganization within
the meaning of Section 368(a) of the Code (see "-- Certain
Federal Income Tax Consequences of the Merger" below); and
(vi) 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.
The Merger Agreement defines a "Material Adverse
Effect," when applied to a party to the Merger Agreement, as
any effect that (i) is material and adverse to the business,
assets, liabilities, results of operations or financial
condition of such party and its subsidiaries taken as whole,
or (ii) materially impairs the ability of such party to
consummate the transactions contemplated by the Merger
Agreement; provided, however, that Material Adverse Effect
shall not be deemed to include the impact of (a) changes in
laws and regulations or interpretations thereof that are
generally applicable to the banking or savings industries,
(b) changes in generally accepted accounting principles that
are generally applicable to the banking or savings
industries, (c) expenses incurred in connection with the
transactions contemplated by the Merger Agreement and (d)
changes attributable to or resulting from changes in general
economic conditions, including changes in the prevailing
level of interest rates.
The obligations of North Side to effect the Merger
are further subject to the satisfaction, or waiver by North
Side of the following conditions: (i)(x) the certain
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 Closing Date
as though made on and as of the Effective Time; (y) the
representations and warranties of North Fork contained in
the Merger Agreement (including, without limitation, the
representation (the "North Fork Material Adverse Change
Representation") that since March 31, 1996 no event has
occurred which has caused, or is reasonably likely to cause,
individually or in the aggregate, a Material Adverse Effect
on North Fork) 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 Closing Date as though made on
and as of the Closing Date; provided, however, that for
purposes of determining the satisfaction of the condition
described in this clause (i)(y), such representations and
warranties shall be deemed to be true and correct 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 Effect on North Fork; and (z)
the representations and warranties of North Fork set forth
in the Merger Agreement (including without limitation the
North Fork Material Adverse Change Representation) 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 Closing Date as though made on and as of the
Closing Date provided, however, that for purposes of
determining the satisfaction of the condition described in
this clause (i)(z), 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 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 Effect on North Fork
(after giving effect to the transactions contemplated by 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 by the Merger Agreement 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 North Fork (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) North Side shall have received from its counsel an
opinion, dated as of the Effective Time, to the effect that
for Federal income tax purposes the Merger will be treated
as a reorganization within the meaning of Section 368(a) of
the Code and that, accordingly, for federal income tax
purposes (A) no gain or loss will be recognized by North
Side as a result of the Merger; (B) no gain or loss will be
recognized by the stockholders of North Side who exchange
all of their North Side 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 (C) the aggregate tax basis of
the North Fork Common Stock received by stockholders who
exchange all of their North Side Common Stock solely for
North Fork Common Stock pursuant to the Merger will be the
same as the aggregate tax basis of the North Side Common
Stock surrendered in exchange therefor (see "-- Certain
Federal Income Tax Consequences of the Merger" below); and
(vi) 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.
No assurance can be provided as to when, or
whether, the regulatory consents and approvals necessary to
consummate the 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, 1997, the
Merger Agreement may be terminated by a vote of a majority
of the Board of Directors of either North Fork or North Side
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 the Merger is subject to a number
of regulatory approvals and consents.
The Merger is subject to the prior approval of 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 until 30 days after such
approval, during which time the Department of Justice may
challenge such transaction on antitrust grounds and seek the
divestiture of certain assets and liabilities. With the
approval of the FDIC and the Department of Justice, the
waiting period may be reduced to no less than 15 days.
In addition, the Merger is subject to the prior
approval of the Banking Department under certain provisions
of the New York Banking Law (the "NYBL"). In determining
whether to approve the application for the merger of North
Side with and into North Fork Bank, the Banking Department
will consider, among other factors, whether the Merger would
be consistent with adequate or sound banking and would not
result in concentration of assets beyond limits consistent
with effective competition, and whether the Merger would
result in such a lessening of competition as to be injurious
to the interest of the public or tend toward monopoly. The
Banking Department will also consider the public interest
and the needs and convenience thereof. Further, it is the
policy of the State of New York to insure the safe and sound
conduct of banking organizations, to conserve assets of
banking organizations, to prevent hoarding of money, to
eliminate unsound and destructive competition among banking
organizations, and to maintain public confidence in the
business of banking and protect the public interest and the
interests of depositors, creditors, and stockholders, and
such factors will be considered by the Banking Department in
connection with North Fork's application.
Under the Community Reinvestment Act of 1977, as
amended (the "CRA") and the comparable provisions of the
NYBL, the FDIC and the Banking Department must also take
into account the record of performance of each of North Fork
Bank and North Side in meeting the credit needs of the
entire community, including low and moderate income
neighborhoods, served by each institution. As part of the
review process, the banking agencies frequently receive
comments and protests from community groups and others.
North Fork is not aware of any other regulatory
approvals that would be required for consummation of the
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.
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 likewise be no
assurance that the Department of Justice 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, North Side has
agreed that until the Effective Time, except as provided in
the Merger Agreement, the Stock Option Agreement (as defined
below) or with the prior consent of North Fork, North Side
and its subsidiaries will carry on their respective
businesses in the ordinary course consistent with past
practice. North Side has agreed to use its reasonable 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 North Side'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,
North Side and its subsidiaries may not, among other things,
(i) 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
the most recently quarterly dividend paid in respect of each
share of North Side Common Stock, which dividends shall have
the same record and payment dates relating to dividends on
the North Fork Common Stock (such that North Side
stockholders shall receive dividends for a given quarter on
either the North Side Common Stock or the North Fork Common
Stock but not both); (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 North Side or any of its subsidiaries or securities
convertible into or exercisable 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 Restated Organization Certificate,
Amended and Restated By-laws or other similar governing
documents, (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 are in an
amount of no more than $25,000 individually and $200,000 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 North Side, (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, except as may be required
by applicable law, (ix) change its methods of accounting in
effect at September 30, 1995, 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 North Side or any of its
subsidiaries and any of its current or former directors,
officers and employees, or (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 or pay any benefit not
required by any plan or agreement as in effect as of the
date of the Merger Agreement (including, without limitation,
the granting of stock options, stock appreciation rights,
restricted stock, restricted stock units or performance
units or shares); (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,
provided, however, that nothing contained in the Merger
Agreement will prevent North Side taking any action required
by the Stock Option Agreement, (xii) other than in the
ordinary course of business consistent with past practice,
dispose or agree to dispose of its material assets,
properties or other rights or agreements, (xiii) other than
in the ordinary course of business consistent with past
practice, 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 North Side's banking offices, (xv) subject to certain
exceptions, invest or commit to invest in real estate or any
real estate development project, (xvi) 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 North Side or any of its subsidiaries is a
party or by which North Side or any of its subsidiaries or
their respective property is bound, (xvii) take any action
which would cause the termination or cancellation by the
FDIC of insurance in respect of North Side's deposits,
(xviii) make or commit to any loan or extension of credit to
any director or officer of North Side or any of its
subsidiaries without giving North Fork 5 days' notice in
advance of North Side or its respective subsidiary's
approval of such loan or extension of credit or commitment
relating thereto, or (xix) agree to do any of the foregoing.
North Side also 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 North Side
Board, (i) recommend or endorse any takeover proposal, (ii)
participate in any discussions or negotiations, or (iii)
provide third parties with any non-public information,
relating to any such inquiry or proposal, provided that
North Side may communicate information about any such
takeover proposal to its stockholders if, in the judgment of
the North Side Board, based upon the advice of outside
counsel, such communication is required under applicable
law. North Side 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 North Side or any
subsidiary of North Side or any proposal or offer to acquire
in any manner a substantial equity interest in, or a
substantial portion of the assets of, North Side or any
subsidiary of North Side other than the transactions
contemplated or permitted by the Merger Agreement and the
Stock Option Agreement.
Pursuant to the Merger Agreement, North Fork has
also agreed that until the Effective Time, except as
provided in the Merger Agreement or with the prior written
consent of North Side, neither North Fork nor any of its
subsidiaries will (i) solely in the case of North Fork,
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, except as may be required by applicable law,
(iii) 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, (iv) amend its Certificate of Incorporation or
By-laws or other governing instrument in a manner which
would adversely affect in any manner the terms of the North
Fork Common Stock or the ability of North Fork to consummate
the transactions contemplated by the Merger Agreement, (v)
make any acquisition that, individually or in the aggregate,
can reasonably be expected to materially adversely affect
the ability of North Fork to consummate the transactions
contemplated by the Merger Agreement in a reasonably timely
manner, or enter into any agreement providing for, or
otherwise participate in, any merger, consolidation or other
transaction in which North Fork or any surviving corporation
may be required not to consummate the Merger or any of the
other transactions contemplated by the Merger Agreement in
accordance with the terms of such Agreement, or (vi) 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 North Side provided that, after the vote of
the stockholders of North Fork and/or North Side, 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 North Side
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 North Side and North Fork, as
follows: (i) by the mutual consent of North Fork and North
Side if the Boards of Directors of each so determines; (ii)
by either North Fork or North Side upon written notice to
the other (a) 30 days after the date on which any request or
application for a regulatory approval required for
consummation of the transactions contemplated by the Merger
Agreement is denied or withdrawn at the request of the
Governmental Entity which must grant such approval, unless
within such 30-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 North Side in the event that
the Merger has not been consummated by June 30, 1997, 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 North Side
(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
or the issuance of the Merger Shares, as the case may be) if
any approval of the stockholders of either of North Fork or
North Side required for consummation of the Merger Agreement
shall not have been obtained; (v) by either North Fork or
North Side 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 Closing 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 North Side by action of the North
Side Board, by giving written notice of such election to
North Fork within two business days after the Valuation
Period, in the event the Average Closing Price is less than
$24.00, 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 each share of North Side Common Stock is
not less than $37.34 (see "-- Exchange Ratio" above); (vii)
by North Fork if the North Side Board shall have withdrawn,
modified or amended in any respect materially adverse to
North Fork its recommendation to the stockholders of North
Side that they approve and adopt the Merger Agreement; or
(viii) by North Side, if the North Fork Board shall have
withdrawn, modified or amended its recommendation to the
stockholders of North Fork that they approve the issuance of
the Merger Shares in any respect materially adverse to North
Side.
In the event of the termination of the Merger
Agreement by either North Fork or North Side, neither North
Fork nor North Side 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.
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 North Side stockholder who
may be deemed to be an "affiliate" of North Side 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 North Side. Persons who may be
deemed to be affiliates of North Side generally include
individuals or entities that control, are controlled by or
are under common control with North Side, and may include
certain officers and directors as well as principal
stockholders of North Side.
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 North Side 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 use reasonable efforts 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 North Side will be
combined at the Effective Time and carried forward at their
previously recorded amounts and the stockholders' equity
accounts of North Fork and North Side 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 North Side as if
North Fork and North Side have always been combined.
The Merger Agreement provides that a condition to
each of North Fork's and North Side'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.
See "-- Conditions to the Merger" above.
Pursuant to the Merger Agreement, North Fork must
reissue approximately 600,000 shares of North Fork Treasury
Stock in a public or private offering prior to consummation
of the Merger in order that the Merger will not fail to
qualify for pooling of interest accounting treatment by
virtue of the number of shares of North Fork Treasury Stock.
It is currently expected that North Fork will issue the
North Fork Treasury Stock after the Valuation Period and
prior to the Effective Time.
The issuance of shares of North Side 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 "-- Stock
Option Agreement" below.
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 and
has assumed that the approximately 600,000 shares of the
North Fork Treasury Stock to be reissued prior to
consummation of the Merger were outstanding for the entire
periods presented therein. See "PRO FORMA CONDENSED
COMBINED FINANCIAL STATEMENTS (UNAUDITED)."
CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
The Merger. The following is a discussion of
certain federal income tax consequences of the Merger to North
Fork, North Side and holders of North Side 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
with retroactive effect. This discussion assumes that the
North Side 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 North Side 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, North Side and
others.
HOLDERS OF NORTH SIDE 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 of Skadden, Arps, Slate, Meagher & Flom, counsel
to North Fork, dated as of the Effective Time, in form and
substance reasonably satisfactory to North Fork, to the
effect that the Merger will be treated as a reorganization
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 North Fork, North Side or North
Fork Bank as a result of the Merger except to the extent
North Fork Bank or North Side may be required to recognize
any income due to the recapture of North Side's bad debt
reserves. It is a condition to the obligation of North Side
to consummate the Merger that North Side shall have received
an opinion of Elias, Matz, Tiernan & Herrick L.L.P., counsel
to North Side, dated as of the Effective Time, in form and
substance reasonably satisfactory to North Side, to the
effect that the Merger will be treated as a reorganization
within the meaning of Section 368(a) of the Code and that,
accordingly, for federal income tax purposes, that:
i) no gain or loss will be recognized by North
Side as a result of the Merger except to the extent
North Side or North Fork Bank may be required to
recognize any income due to the recapture of North
Side's bad debt reserves;
ii) no gain or loss will be recognized by the
stockholders of North Side who exchange all of their
North Side 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
iii) the aggregate tax basis of the North Fork
Common Stock received by a stockholders of North Side
who exchange all of their North Side Common Stock
solely for North Fork Common Stock pursuant to in the
Merger will be the same as the aggregate tax basis of
the North Side Common Stock surrendered in exchange
therefor.
Based upon the current ruling position of the
Service, cash received by a holder of North Side 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 North Side Common Stock
allocable to such fractional share interest. Such gain or
loss should be long-term capital gain or loss if such share
of North Side Common Stock has been held for more than one
year at the Effective Time.
Bad Debt Reserve Recapture. Under prior law, North
Side accounted for bad debts using the reserve method under
Section 593 of the Code. Recent amendments to the Code
(the "Amendments") eliminated the reserve method under
Section 593 effective for taxable years beginning after
December 31, 1995. The Amendments require thrift institutions
that are treated as large banks, such as North Side, to
recapture their post-1987 bad debt reserves ratably over the
six taxable year period beginning after 1995. The Amendments
will be effective for North Side's taxable year beginning
October 1, 1996. North Side has accrued a deferred tax
liability of approximately $825,000, which is North Side
management's current estimate of the amount of the tax
liability arising out of its post-1987 bad debt reserve to
be recaptured. The Amendments do not generally require the
recapture of pre-1988 bad debt reserves other than under
Section 593(e) of the Code in the case of certain excess
distributions to, and redemptions of, shareholders.
Prior to the Amendments, the entire amount of
North Side's bad debt reserve would have been recaptured as
a result of the Merger. Under the Amendments, however,
recapture rules applicable to transactions such as the
Merger have been left to be specified in Treasury
regulations. Under the legislative history to the
Amendments, such regulations are to provide that "if an
institution with a pre-1988 reserve is merged or liquidated
tax-free into a bank, the pre-1988 reserve should not be
restored to income by reason of the merger or liquidation."
Although there can be no assurance as to the content or the
operation of such Treasury regulations nor as to when such
regulations might be issued, based on the legislative
history to the Amendments it appears that the Merger should
not trigger the recapture of North Side's pre-1988 reserves
and that, instead, North Fork Bank will succeed to such
reserves. Nevertheless, such reserves could be subject to
future recapture, including under Section 593(e) of the
Code.
DISSENTERS' RIGHTS
Holders of shares of North Side Common Stock who
follow the procedures in Section 6022 of the NYBL will be
entitled to have their shares appraised by a New York court
and to receive payment of the "fair value" of such shares as
determined by such court. The following summary of the
current provisions of Section 6022 is not intended to be a
complete statement of such provisions and is qualified in
its entirety by reference thereto, the full text of which is
set forth as Annex E hereto.
A holder of shares of North Side Common Stock
electing to exercise appraisal rights (1) must file with
North Side, before the taking of the vote on the Merger
Agreement, a written objection to the Merger, including a
notice of his intention to demand appraisal for his shares
if the Merger is consummated and (2) must not vote in favor
of adoption of the Merger Agreement. Neither a vote against
the Merger Agreement nor a proxy directing such vote nor an
abstention will satisfy the requirement that a written
demand for appraisal be delivered to North Side before the
vote on the Merger Agreement. A holder may not dissent as
to less than all of the shares, as to which he has a right
to dissent, held by him of record, that he owns
beneficially. A nominee or fiduciary may not dissent on
behalf of any beneficial owner as to less than all of the
shares of such owner held of record by such nominee or
fiduciary.
Only a holder of record of shares of North Side
Common Stock is entitled to assert dissenter's rights for
shares registered in that holder's name. The objection
should be executed by or for the holder of record, fully and
correctly, as the holder's name appears on the holder's
stock certificates.
Within 10 days after the date on which the Merger
Agreement is adopted by stockholders of North Side, North
Side must give written notice of the adoption of the Merger
Agreement by registered mail to each holder who has properly
filed a written objection and who did not vote in favor of
the Merger Agreement.
Upon consummation of the Merger, a dissenting
stockholder will cease to have any of the rights of a
stockholder except the right to be paid the fair value of
his shares and any of the other rights under Section 6022 of
the NYBL. A notice of election to dissent may be withdrawn
by a stockholder upon the written consent of North Side.
At the time of filing the written objection to the
Merger, or within one month thereafter, objecting
stockholders must submit the certificates representing their
shares to North Side, Attention: Corporate Secretary or to
North Side's transfer agent, American Stock Transfer and
Trust Company, which shall note conspicuously thereon that a
notice of election to dissent has been filed and shall
return the certificates to the holder or other person who
submitted them on the holder's behalf. Any stockholder who
fails to submit his certificates for such notation shall, at
the option of North Side, exercised by written notice to him
within 45 days from the date of filing of such notice of
election to dissent, lose his dissenter's rights, unless a
court, for good cause shown, shall otherwise direct.
Within seven days after expiration of the period
within which stockholders may file written objections to the
Merger, or seven days after the consummation of the Merger,
whichever is later, North Side must make a written offer by
registered mail to each holder who has filed such notice of
election to dissent to pay for his shares at a specified
price which North Side considers to be their fair value.
Such offer shall be made at the same price per share to all
dissenting stockholders and shall be accompanied by a
balance sheet of North Side as of the latest available date,
which shall not be earlier than twelve months before the
making of such offer, and a profit and loss statement or
statements for not less than a twelve month period ended on
the date of such balance sheet. If within 30 days after the
making of such offer, North Side and any stockholder agree
upon the price to be paid for his shares, payment therefor
shall be made within 60 days after the making of such offer
upon the surrender of the certificates representing such
shares. If the stockholders and North Side cannot agree on
the value of the shares within certain time periods
prescribed by the NYBL, or if North Side does not make a
timely offer for such shares, North Side, or in the absence
of timely action by North Side, a dissenting holder, may
institute appraisal proceedings in the Supreme Court, New
York County to determine the fair value of his shares. The
fair value so determined could be more or less than the
consideration to be exchanged in the Merger. Any judicial
determination of the fair value could be based upon
considerations other than or in addition to the market value
of shares of North Side Common Stock, including, among other
things, asset values and earning capacity.
Each party in the appraisal proceeding shall bear
his own costs and expenses, including counsel and expert
fees. The court may, however, in its discretion, assess any
of the costs, fees, and expenses incurred by North Side
against dissenting holders who are parties to the proceeding
if the court finds that their refusal to accept North Side's
offer of payment was arbitrary, vexatious or otherwise not
in good faith. Similarly, the costs, fees and expenses
incurred by a holder may be assessed by the court, in its
discretion, against North Side if the fair value of the
shares as determined by the court materially exceeds the
amount which North Side offered to pay or under certain
other circumstances, including a failure by North Side
to follow the provisions of Section 6022 of the NYBL.
If any holder who demands appraisal of his shares
of North Side Common Stock under Section 6022 of the NYBL
effectively withdraws or loses his right to appraisal, the
shares of such holder will be converted into a right to
receive payment in accordance with the terms of the Merger
Agreement. Failure by a stockholder to comply with the
provisions of Section 6022 of the NYBL for perfecting
appraisal rights may result in the loss of such rights.
Under the Delaware General Corporation Law (the
"DGCL") stockholders of North Fork are not entitled to
dissenters' rights in connection with the issuance of the
Merger Shares.
STOCK OPTION AGREEMENT
The following is a summary of the material
provisions of the Stock Option Agreement, dated as of July
15, 1996 (the "Stock Option Agreement"), by and between
North Side and North Fork, which is attached hereto as Annex
B. The following summary is qualified in its entirety by
reference to the Stock Option Agreement.
Execution of the Stock Option Agreement was a
condition to North Fork's merger proposal. Pursuant to the
Stock Option Agreement, North Side granted to North Fork an
option (the "Option") to purchase up to 961,965 shares (the
"Option Shares") of North Side Common Stock (representing
approximately 19.9% of the issued and outstanding shares of
such North Side Common Stock without giving effect to the
shares that may be issued upon exercise of such option) at
an exercise price of $34.75 per share (the "Exercise
Price"), subject to the terms and conditions set forth
therein.
The Stock Option Agreement provides that North
Fork may exercise the Option, in whole or in part, subject
to regulatory approval, if both an Initial Triggering Event
(as defined below) and a Subsequent Triggering Event (as
defined below) shall have occurred prior to the occurrence
of an Exercise Termination Event (as defined below);
provided that North Fork shall have sent to North Side
written notice of such exercise within 90 days following
such Subsequent Triggering Event (subject to extension as
provided in the Stock Option Agreement). The terms Initial
Triggering Event and Subsequent Triggering Event generally
relate to attempts by one or more third parties to acquire a
significant interest in North Side. Any exercise of the
Stock Option will be deemed to occur on the date such notice
is sent.
For purposes of the Stock Option Agreement:
(a) The term "Initial Triggering Event" means the
occurrence of any of the following events or
transactions after July 15, 1996: (i) North Side or
any subsidiary of North Side, without North Fork's
prior written consent, shall have entered into an
agreement to engage in, or the North Side Board
authorizes, recommends or proposes (or publicly
announces its intention to take any of the foregoing
actions) an Acquisition Transaction (as defined below)
with any person or group (other than as contemplated by
the Merger Agreement); (ii) any person, other than
North Fork or any subsidiary of North Fork, acquires
beneficial ownership, or the right to acquire
beneficial ownership, of 10% of more of the outstanding
shares of the North Side Common Stock or any person
other than North Fork or any subsidiary of North Fork
shall have commenced (as such term is defined under the
rules and regulations of FDIC), or shall have filed or
publicly disseminated a registration statement or
similar disclosure statement with respect to, a tender
offer or exchange offer to purchase any shares of North
Side Common Stock such that, upon consummation of such
offer, such person would own or control 10% or more of
the then outstanding shares of North Side Common Stock
(such an offer being referred to herein as a "Tender
Offer" or an "Exchange Offer," respectively); (iii)(A)
the holders of North Side 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, (B) such meeting shall not have been held or
shall have been cancelled prior to termination of the
Merger Agreement, or (C) the North Side Board shall
have publicly withdrawn or modified, or publicly
announced its interest to withdraw or modify, in any
manner adverse to North Fork, its recommendation that
the stockholders of North Side approve the transactions
contemplated by 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 (x) made, or disclosed an intention to
make, a proposal to engage in an Acquisition
Transaction, (y) commenced a Tender Offer, or filed or
publicly disseminated a registration statement or
similar disclosure statement with respect to an
Exchange Offer, or (z) filed an application (or given a
notice), whether in draft or final form, under any
federal or state banking laws seeking regulatory
approval to engage in an Acquisition Transaction; or
(iv) North Side shall have breached any covenant or
obligation contained in the Merger Agreement and such
breach would entitle North Fork to terminate the Merger
Agreement in accordance with the terms thereof (without
regard to any cure periods provided for in the Merger
Agreement unless such cure is promptly effected without
jeopardizing the consummation of the Merger in
accordance with the terms of the Merger Agreement)
after (A) a bona fide proposal is made by any person
other than North Fork or any subsidiary of North Fork
to North Side or its stockholders to engage in an
Acquisition Transaction, (B) any person other than
North Fork or any subsidiary of North Fork states its
intention to North Side or its stockholders to make a
proposal to engage in an Acquisition Transaction if the
Merger Agreement terminates, or (C) any person other
than North Fork or any subsidiary of North Fork shall
have filed an application or notice, whether in draft
or final form, with any Governmental Entity to engage
in an Acquisition Transaction;
(b) The term "Acquisition Transaction" means (w)
a merger or consolidation, or any similar transaction,
involving North Side or any of its subsidiaries (other
than internal mergers, reorganizations, consolidations
or dissolutions involving only existing subsidiaries),
(x) a purchase, lease or other acquisition of all or a
substantial portion of the consolidated assets of North
Side and its subsidiaries, or (y) a purchase or other
acquisition (including by way of merger, consolidation,
Tender Offer or Exchange Offer (as such terms are
hereinafter defined), share exchange or otherwise) of
securities representing 10% or more of the voting power
of North Side or any of its subsidiaries; and
(c) The term "Subsequent Triggering Event" means
the occurrence of either of the following events or
transactions after July 15, 1996: (i) the acquisition
by any person of beneficial ownership of 25% or more of
the then outstanding shares of North Side Common Stock;
or (ii) the occurrence of the Initial Triggering Event
described above in clause (a)(i), except that the
percentage referred to in subclause (y) of the
definition of "Acquisition Transaction" set forth above
shall be 25%.
The Option will expire upon the occurrence of an
"Exercise Termination Event," defined as: (i) the Effective
Time of the Merger; (ii) termination of the Merger Agreement
in accordance with the provisions thereof if such
termination occurs prior to the occurrence of an Initial
Triggering Event; or (iii) twelve months after the
termination of the Merger Agreement if such termination
occurs after the occurrence of an Initial Triggering Event
(provided that if an Initial Triggering Event continues or
occurs beyond such termination of the Merger Agreement and
prior to the passage of such 12-month period, the Option
will terminate 12 months from the expiration of the last
Initial Triggering Event to expire, but in no event more
than 15 months after such termination of the Merger
Agreement.)
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.
As of the date of this Joint Proxy/Statement
Prospectus, to the best knowledge of North Fork and North
Side, no Initial Triggering Event or Subsequent Triggering
Event has occurred.
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 North Side 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 North Side becoming
exercisable, such that North Fork will receive (upon
exercise of the Option) the same number and 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 North Side Common Stock
subject to the Option will also be adjusted in the event
North Side issues additional shares of North Side Common
Stock such that the number of shares of North Side Common
Stock subject to the option, together with shares previously
purchased pursuant thereto, represents 19.9% of the North
Side Common Stock then issued and outstanding, without
giving effect to shares subject to or issuable pursuant to
the Option. In no event will the number of Option Shares
for which the Option is exercisable exceed 19.9% of North
Side Common Stock then issued and outstanding, without
giving effect to the shares subject to or issuable pursuant
to the Option.
In the event North Side enters into any agreement
(i) to merge into or consolidate with any person other than
North Fork or one of its subsidiaries such that North Side
is not the surviving corporation, (ii) to permit any person,
other than North Fork or one of its subsidiaries, to merge
into North Side and North Side is the surviving corporation,
but, in connection with such merger, the then outstanding
shares of North Side Common Stock are changed into or
exchanged for stock or other securities of North Side or any
other person or cash or any other property or the
outstanding shares of North Side 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 North Side (if
North Side is the surviving entity), in all cases at the
election of North Fork.
North Fork has the right to require North Side to
repurchase (i) the Option and (ii) any Option shares
acquired pursuant to exercise of the Option of which North
Fork has beneficial ownership, upon the occurrence of any of
the following circumstances (each a "Repurchase Event").
(a) the acquisition by any person or Group (other
than North Fork or any of its subsidiaries) of
Beneficial Ownership of 50% or more of the then
outstanding shares of North Side Common Stock; or
(b) the consummation of any of the transactions
described in clauses (i) - (iii) of the preceding
paragraph.
Such repurchase will be at an aggregate price
equal to the sum of: (i) the aggregate exercise price paid
by North Fork for any shares of North Side Common Stock
acquired pursuant to the option with respect to which North
Fork then has beneficial ownership; (ii) the excess, if any,
of (x) the Applicable Price (as defined below) for each
share of North Side Common Stock over (y) the exercise price
of the option, multiplied by the number of shares of North
Side Common Stock with respect to which the option has not
been exercised; and (iii) the excess, if any, of the
Applicable Price over the exercise price of the option paid
by North Fork for each share of North Side Common Stock with
respect to which the option has been exercised and with
respect to which North Fork then has beneficial ownership,
multiplied by the number of such shares. North Fork's right
to require such repurchase generally expires 12 months after
the first occurrence of a Repurchase Event. The aggregate
amount that North Side may pay to North Fork upon exercise
of the repurchase right described herein is capped by the
Stock Option Agreement at $10,000,000.
For purposes of the Stock Option Agreement,
"Applicable Price" means the highest of (i) the highest
price per share of North Side Common Stock paid for any such
share by any person or group described in subsection (a) of
the second preceding paragraph, (ii) the price per share of
North Side Common Stock received by the holders of such
common stock in connection with any merger or other business
combination referred to in subsection (b) of the second
preceding paragraph and (iii) the highest closing sales
price per share of North Side Common Stock quoted on NASDAQ
(or, if the North Side Common Stock is not quoted on the
NASDAQ, 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)
during the 60 business days prior to North Fork's exercise
of its right to require North Side to repurchase the option
or the shares acquired upon exercise thereof, except that in
the event of a sale of less than all of North Side's assets,
the Applicable Price shall be the sum of the price paid in
such sale for such assets and the current market value of
the remaining assets of North Side as determined by a
nationally recognized investment banking firm selected by
North Fork, divided by the number of shares of North Side
Common Stock outstanding at the time of such sale.
North Side has granted North Fork certain
registration rights with respect to shares of North Side
Common Stock acquired by North Fork upon exercise of the
Option. These rights include requiring North Side to file
up to two registration statements under the Securities Act
or equivalent statements under the applicable rules and
regulations of the FDIC 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
or equivalent statement, and any sale covered thereby, will
be at North Side'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 North Side
effects a registration under the Securities Act of North
Side Common Stock (other than on Form S-4 or Form S-8 or any
form with respect to a dividend reinvestment or similar plan
and other than on the equivalent forms of the FDIC), North
Side will allow North Fork to participate in such
registration, subject to certain limitations. In connection
with any registration described above, North Side 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
North Side 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
North Side Common Stock.
Effect of Stock Option Agreement. The Stock
Option Agreement is 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 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 North Side from considering or proposing such an
acquisition, even if such persons were prepared to pay a
higher price per share for North Side Common Stock than the
price per share implicit in the Exchange Ratio. The
acquisition of North Side or an interest in North Side, or
an agreement to do either, could cause the Option to become
exercisable. The existence of the Option could
significantly increase the cost to a potential acquiror of
acquiring North Side 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 North Side than it might
otherwise have proposed to pay. Moreover, following
consultation with North Side's independent accountants, the
management of North Side believes that the exercise of the
Option is likely to prohibit any acquiror of North Side from
accounting for any acquisition of North Side 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 North Side by certain other banking
organizations. The North Side Board took this factor into
account before approving the Stock Option Agreement. See "
-- Recommendation of the Board of Directors; Reasons for the
Merger -- North Side."
AMENDMENT TO RIGHTS AGREEMENT
North Side has amended its shareholder rights
agreement (the "North Side Rights Agreement") to provide
that the rights issued thereunder will not become
exercisable as a result of North Fork's beneficial ownership
of shares of North Side Common Stock that North Fork (i)
beneficially owned as of July 15, 1996, (ii) may acquire
upon exercise of the Option, and (iii) beneficially owns as
Trust Account Shares or DPC Shares. See "COMPARISON OF
STOCKHOLDER RIGHTS -- Rights Plans -- North Side".
EXPENSES
All costs and expenses incurred in connection with
the Merger Agreement, the Stock Option Agreement and the
transactions contemplated thereby shall be paid by the party
incurring such expense, except that North Fork and North
Side shall share equally in the expenses incurred in
connection with printing and mailing this Joint Proxy
Statement/Prospectus
MANAGEMENT AND OPERATIONS FOLLOWING THE MERGER
BOARD OF DIRECTORS AND MANAGEMENT FOLLOWING THE MERGER
Pursuant to the terms of the Merger Agreement, at
the Effective Time, North Fork will cause the North Fork
Board to be expanded by two members and Mr. O'Brien and one
other member of the North Side Board selected by North Side
and approved by North Fork (which approval will not be
unreasonably withheld) will be appointed to fill the
vacancies. In addition, it is expected that Mr. O'Brien
will also serve as a Vice Chairman of the North Fork Board.
At the Effective Time, North Fork will create an
advisory committee comprised of those members of the North
Side Board immediately prior to Effective Time who have not
been appointed to the North Fork Board. See "THE MERGER --
Interests of Certain Persons in the Merger."
CONSOLIDATION OF OPERATIONS; PROJECTED COST SAVINGS AND
REVENUE ENHANCEMENTS; PROJECTED EARNINGS PER SHARE
North Fork expects to achieve significant cost
savings subsequent to the Merger. The cost savings are
expected to be derived from reductions in personnel,
elimination of one branch location located in a community in
which both North Fork and North Side branches are located,
the integration of North Side's data processing operations
with those of North Fork, and the integration of other
facilities and back office operations. Further, because
North Side will be merged with and into North Fork Bank, the
costs associated with operating as a publicly held entity
will also be eliminated. The aggregate annual pre-tax cost
savings are estimated to range between $8 million and $11
million. Management of North Fork believes that
realization of these cost savings will occur by the end of
the first quarter following consummation of the Merger.
There can be no assurance that all of the potential cost
savings will be realized or that they will be realized in
the time frame currently estimated or thereafter. Such
realization will depend upon, among other things, the
regulatory and economic environment, business changes
implemented by North Fork management and other factors,
certain of which are beyond the control of North Fork. A
summary and expected range of cost savings follows:
($ in millions) Expected Range of
Savings
-----------------------------------------
Compensation $4.5 to $6.0
Occupancy & $0.9 to $1.5
Equipment
Other Operating
Expense $2.6 to $3.5
--------------
Total Savings $8.0 to $11.0
A merger integration task force headed by Daniel M. Healy,
Executive Vice President and Chief Financial Officer of
North Fork, and consisting of senior management members of
North Fork and North Side, is in the process of refining the
cost estimates and establishing a definitive plan, including
a timetable, to achieve the cost reductions.
In addition, North Fork believes, based on its
previous experience in acquiring savings banks and branches
of savings banks, that revenue enhancement opportunities
exist with the offering of commercial bank products to North
Side's customers and the communities North Side serves.
These products include but are not limited to a variety of
demand deposit accounts, discount brokerage, investment
management and trust services, cash management, annuity and
mutual fund products and commercial and installment loans to
small and midsize businesses. Management of North Fork
estimates that revenue enhancements resulting from the
Merger could approximate $11 million, on a pre-tax basis.
The amounts and realization of any additional revenues will
depend upon a number of factors including, but not limited
to, competition, the economic environment and regulatory
requirements, which are all beyond the control of North
Fork.
Based on the above-described estimated cost
savings and revenue enhancements projected to be realized in
connection with the Merger, North Fork believes that the
Merger will be accretive to earnings per share in 1997 by
approximately $.28 per share relative to consensus Wall
Street estimates (made prior to announcement of the proposed
Merger) as compiled by Zacks Investment Research, a public
supplier of such information, of $2.96 per share, exclusive
of the one-time merger and restructuring charge expected to
be incurred in connection with the Merger. The table set
forth below sets forth in more detail North Fork's estimated
1997 earnings per share.
(in thousands except earnings per AFTER TAX OUTSTANDING
share amounts) EARNINGS* SHARES EPS
North Fork $ 72,100 24,314 $2.96
North Side $ 20,100 ---- ---
Pro Forma Combined $ 92,200 32,358 $2.85
Estimated Cost Savings $ 5,900
Pro Forma Combined with Cost
Savings $ 98,100 32,358 $3.03
Estimated Revenue Enhancements
---------------------------------------------------------------------
Increase in Non-Interest
Income $ 1,730 $0.05
Demand Deposit Generation $ 1,270 $0.04
Additional Margin for Loan
Growth (average of $300
million) $ 3,600 $0.12
Pro Forma with Revenue Growth $ 104,700 32,358 $3.24
* Assumes an effective tax rate of 40%
THIS JOINT PROXY STATEMENT/PROSPECTUS CONTAINS
CERTAIN FORWARD LOOKING STATEMENTS WITH RESPECT TO THE
FINANCIAL CONDITION, RESULTS OF OPERATIONS AND BUSINESS OF
NORTH FORK FOLLOWING THE CONSUMMATION OF THE MERGER,
INCLUDING STATEMENTS RELATING TO: (A) THE COST SAVINGS AND
REVENUE ENHANCEMENTS THAT ARE EXPECTED TO BE REALIZED FROM
THE MERGER AND (B) PROJECTED 1997 EARNINGS PER SHARE.
FACTORS THAT MAY CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY
FROM THOSE CONTEMPLATED BY SUCH FORWARD LOOKING STATEMENTS
INCLUDE, AMONG OTHERS, THE FOLLOWING POSSIBILITIES: (1)
EXPECTED COST SAVINGS OR REVENUE ENHANCEMENTS FROM THE
MERGER CANNOT BE FULLY REALIZED; (2) DEPOSIT ATTRITION,
CUSTOMER LOSS OR REVENUE LOSS FOLLOWING THE MERGER IS
GREATER THAN EXPECTED; (3) COMPETITIVE PRESSURE IN THE
BANKING AND FINANCIAL SERVICES INDUSTRY INCREASES
SIGNIFICANTLY; (4) CHANGES IN THE INTEREST RATE ENVIRONMENT
REDUCE MARGINS; AND (5) GENERAL ECONOMIC CONDITIONS, EITHER
NATIONALLY OR IN THE STATE OF NEW YORK, ARE LESS FAVORABLE
THAN EXPECTED.
MERGER AND RESTRUCTURING CHARGES
A non-recurring merger and restructuring charge
ranging from $11.8 million to $15.2 million, net of tax,
will be incurred upon consummation of the Merger. The
restructuring charge includes severance and employee related
expenses, facility and system conversion costs and credit
costs resulting from the Merger. A summary of the
estimated merger and restructuring charges follows:
Type of cost Expected range of cost
------------ ----------------------------
Merger expense . . . . . . . $ 4.0 to $ 5.0 million
Restructuring charges:
Severance and Other Employee
Expense . . . . . . . . . 6.0 to 8.0 million
Facility and System Costs . . 5.0 to 6.0 million
Credit Costs and Other . . . 2.0 to 3.0 million
Total Pre-Tax Merger and
Restructuring Charge 17.0 to 22.0 million
Less: Tax Effect . . . . . . 5.2 to 6.8 million
Total After - Tax Merger
and Restructuring Charge $11.8 to $15.2 million
Refinements to the foregoing estimates may occur
as the merger and integration task force formed by North
Fork and North Side complete their work.
INVOLVEMENT IN LEGAL PROCEEDINGS
Shortly following the announcement on July 15,
1996 that North Fork and North Side had executed the Merger
Agreement, two alleged stockholders of North Side filed
purported class action lawsuits in the Supreme Court of the
State of New York County of New York (the "Court") against
North Side, the members of the North Side Board and North
Fork. The plaintiffs allege, among other things, that the
members of the North Side Board have engaged in a plan and
scheme to enrich themselves at the expense of North Side's
public stockholders, that the defendants have wrongfully
failed and refused to seek a purchase of North Side that
would maximize shareholder value and have sought to chill
potential offers for North Side, that the defendants members
of the North Side Board have breached the fiduciary duties
owed by them to the plaintiffs and the members of the
purported class, and that North Fork has aided and abetted
breaches of fiduciary duty by the members of the North Side
Board in connection with the proposed Merger. The
plaintiffs seek, among other things, an order enjoining the
proposed Merger, an order requiring the members of the North
Side Board to cooperate with any entity having a bona fide
interest in proposing a transaction designed to maximize
stockholder value and to take all appropriate steps to
evaluate and enhance North Side's value and to create an
auction of North Side and an order requiring the defendants
to compensate plaintiffs and the members of the class for
all losses and damages suffered and to be suffered by them
as a result of the acts and transactions complained of in
the complaints and account for any profits realized as a
result of such acts and transgressions. The plaintiffs also
seek the award of the costs and disbursements of the action,
including reasonable attorneys' and experts' fees. The
defendants believe the allegations contained in the
complaints are baseless, entirely without merit and intend
to contest them vigorously. The defendants have moved to
dismiss plaintiffs' complaints on the grounds that, among
other reasons, the complaints fail to state a cause of
action. Although there can be no assurances, North Fork and
North Side do not presently believe that the pendency of
these actions will affect the timing of the Merger.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS OF NORTH
FORK AND NORTH SIDE
Set forth below is certain information concerning
beneficial ownership of North Fork Common Stock, as of the
North Fork Record Date (except as otherwise indicated),
by (i) each director of North Fork, and (ii) each executive
officer of North Fork, (iii) all executive officers and
directors of North Fork as a group. As of the North Fork
Record Date there was no person known by the North Fork Board
to be the beneficial owner of more than 5 percent of the out-
standing shares of North Fork Common Stock.
BENEFICIAL OWNERSHIP OF SHARES OF NORTH FORK COMMON STOCK
Number of Percentage
Name Shares(1) Beneficially Owned
John Adam Kanas (2) . . 593,698 2.5%
Daniel M. Healy (3) . . 136,736 *
John Bohlsen (4) . . . 191,610 *
Allan C. Dickerson (5) 15,480 *
Lloyd A. Gerard (6) . . 54,925 *
James F. Reeve (7) . . 53,204 *
James H. Rich, Jr. (8) 11,276 *
George H. Rowsom (9) . 7,645 *
Kurt R. Schmeller (10) 32,730 *
Raymond W. Terry,
Jr. (11) . . . . . . 36,000 *
All executive officers
and directors as a group
(10 persons)(12) . . . 1,133,354 4.7%
_______________
* Less than 1%
(1) Beneficial ownership of shares, as determined in
accordance with applicable Securities and Exchange
Commission Rules, includes shares as to which a person
directly or indirectly has or shares voting power
and/or investment power (which includes the power to
dispose) and all shares which the person has a right to
acquire within 60 days of the reporting date. With
respect to Messrs. Kanas, Bohlsen and Healy, the number
of shares beneficially owned includes shares of
restricted stock awarded by the North Fork's
Compensation Committee on January 16, 1996, pursuant to
initial year-end determinations regarding executive
compensation. Further, with respect to Messrs. Kanas,
Bohlsen and Healy, the number of shares beneficially
owned includes shares held in North Fork's 401(k) plan
as of December 31, 1995.
(2) Includes 83,333 shares of restricted stock and options
to purchase 350,880 shares previously granted to Mr.
Kanas under the North Fork's compensatory stock plans,
100 shares held by him in joint tenancy with his wife,
20,941 shares held by his wife, and 4,700 shares held
by his dependent children.
(3) Includes 8,000 shares of restricted stock and options
to purchase 95,184 shares previously granted to Mr.
Healy under the North Fork's compensatory stock plans,
3,000 shares held by his wife and 2,000 shares held in
his name as custodian for a daughter.
(4) Includes 15,000 shares of restricted stock and options
to purchase 86,760 shares previously granted to Mr.
Bohlsen under the North Fork's compensatory stock
plans, 9,505 shares held by his wife, and 9,993 shares
held by his dependent children.
(5) Includes 7,557 shares held by Mr. Dickerson's wife.
(6) Includes 1,846 held by Mr. Gerard in joint tenancy with
his daughter, 1,000 shares held by his wife and 100
shares held by his wife in her capacity as custodian
for a granddaughter.
(7) Includes 16,944 shares held by Mr. Reeve's wife.
(8) Includes 6,189 shares held by Mr. Rich in joint tenancy
with his wife, and 150 shares held by his wife.
(9) Includes 1,000 shares held by Mr. Rowsom in joint
tenancy with his wife, 155 shares held by his wife, and
3,000 shares held by the S.T. Preston & Sons, Inc.
Profit Sharing Trust, in which Mr. Rowsom shares voting
power with two others.
(10) Includes options to purchase 13,748 shares of the North
Fork Common Stock, received by Dr. Schmeller in
exchange for his options to purchase Metro Bancshares,
Inc. stock in connection with the merger of Metro into
North Fork on December 1, 1994.
(11) Includes 30,205 shares held by Mr. Terry in joint
tenancy with his wife.
(12) Includes 106,333 shares of restricted stock and options
to purchase an aggregate of 546,572 shares previously
granted to such persons under the Company's
compensatory stock plans.
BENEFICIAL OWNERSHIP OF SHARES OF NORTH SIDE COMMON STOCK
The following table sets forth the only stockholders
known by North Side to own beneficially or of record more
than 5% of North Side Common Stock and the nature of their
stockholdings. This information has been obtained from
reports filed pursuant to Sections 13(d) and 13(g) of the
Exchange Act and regulations promulgated by the FDIC. Unless
otherwise indicated, each stockholder listed in the table
has sole voting and dispositive powers as of the North Side
Record Date with respect to the shares owned beneficially or
of record by such person.
Amount and Nature Percent
Name and Address of Beneficial of
of Beneficial Owner Ownership Class
------------------- ----------------- -------
FMR Corp. 466,440(1) 9.64%
82 Devonshire Street
Boston, Massachusetts 02109
(1) Information obtained from Amendment No. 2 to Form F-11A
dated February 10, 1995, as adjusted to reflect North
Side's 5% stock dividend paid March 1, 1995. FMR Corp.
("FMR") is the parent holding company of Fidelity
Management & Research Company ("Fidelity"), an
investment adviser. Fidelity is the beneficial owner
of 434,832 of such shares as a result of acting as an
investment adviser to several investment companies.
One investment company, Fidelity Select Home Finance
Portfolio, owns 428,812 of such shares. Edward C.
Johnson 3rd, FMR and certain mutual funds (the "Funds")
each have sole dispositive power over these 434,832
shares, but no voting power. Voting power resides in
the Funds' Board of Trustees. Fidelity Management
Trust Company ("FMT"), a bank which serves as
investment manager of certain institutional accounts
and is a subsidiary of FMR, is the beneficial owner of
31,608 shares as a result of such service as investment
manager. FMR and Edward C. Johnson 3rd, through
control of FMT, has sole voting and dispositive power
over 31,608 shares held in such accounts. Edward C.
Johnson 3rd and Abigail P. Johnson, together with
various trusts for the benefit of Johnson family
members, form a controlling group with respect to FMR.
North Side understands that, subsequent to Amendment
No. 2 to Form F-11A, there may have been changes in the
ownership structure of FMR and Fidelity.
The following table sets forth certain information with
respect to the beneficial ownership of North Side Common
Stock of the directors of North Side, certain executive
officers and the directors and current executive officers of
North Side as a group. Unless indicated otherwise,
ownership figures are as of the North Side Record Date, and
each indicated person has sole voting and dispositive power
over the shares owned beneficially by such person.
Percentage
Number Beneficially
Name of Shares(1) Owned
---- ------------ -------------
Thomas M. O'Brien(2) . . . . 215,561.843 4.34%
Irvin L. Cherashore . . . . . 13,497 *
Greg L. Collins(3) . . . . . 44,025 *
Donald C. Fleming(4) . . . . 55,497 1.14
Richard D. Gidron(5) . . . . 43,397 *
Margaret M. Healy(5) . . . . 31,478 *
Ralph J. Marino . . . . . . . 1,000 *
John J. Murphy(5) . . . . . . 32,936 *
Stephen J. Schildwachter . . 2,692.038 *
Alissa E. Ballot(6) . . . . . 14,959 *
Marie Alleva(7) . . . . . . . 11,772 *
All directors and executive
officers (18 persons) as a
group(8) . . . . . . . . . . 443,334,929 8.11%
* Less than 1%
(1) Based on information provided by the respective
directors and executive officers and filings with the
FDIC.
(2) Includes 6,300 restricted shares awarded to Mr. O'Brien
under the MDR Plan which are held by the MDR Trust-
ees and as to which Mr. O'Brien has sole voting
power, 57,931 shares which are held jointly with Mr.
O'Brien's wife, with whom Mr. O'Brien has shared voting
and dispositive power, 254 shares in the name of Mr.
O'Brien's wife and 279.654 shares which are held by Mr.
O'Brien as custodian for his sons Christopher and
Stephen, with whom Mr. O'Brien has shared voting and
dispositive power. Also includes a 3.19% beneficial
interest in 74,207 shares (as of August 14, 1996) held
in trust under North Side's 401(k) Savings Plan as to
which Mr. O'Brien shares voting power and options
exercisable within 60 days after the North Side Record
Date to purchase 132,690 shares of North Side Common
Stock. Does not include options which by their terms
vest more than 60 days after the North Side Record
Date, although the vesting of such options will
accelerate in connection with the Merger. Does not
include 108,384 shares of North Side Common Stock held
by Marine Midland Bank as Trustee for the North Side
Savings Bank Retirement Trust II as to which Mr.
O'Brien, through his membership on the North Side's
Employee Benefits Committee, generally shares voting
power. Mr. O'Brien disclaims beneficial ownership of
such shares.
(3) Includes 33,000 shares held individually and 11,025
shares held by Incline Capital group in a SEP-IRA
account for the benefit of Mr. Collins and for which
Mr. Collins has voting authority.
(4) Includes 3,360 restricted shares awarded to Mr. Fleming
under the MDR Plan which are held by the MDR Trustees
and as to which Mr. Fleming has sole voting power. Also
includes a 5.37% beneficial interest in 74,207 shares
(as of August 14, 1996) held in trust under North
Side's 401(k) Savings Plan as to which Mr. Fleming
shares voting power and options exercisable within 60
days after the North Side Record Date to purchase
32,843 shares of North Side Common Stock. Does not
include options which by their terms vest more than 60
days after the North Side Record Date, although the
vesting of such options will accelerate in connection
with the Merger. Does not include 108,384 shares of
North Side Common Stock held by Marine Midland Bank as
Trustee for the North Side Savings Bank Retirement Plan
Trust II as to which Mr. Fleming, through his membership
on North Side's Employee Benefits Committee, generally
shares voting power. Mr. Fleming disclaims beneficial
ownership of such shares.
(5) Includes 30,664 shares held by the MDR Plan of which Mr.
Gidron, Ms. Healy and Mr. Murphy are Trustees. Mr.
Gidron, Ms. Healy and Mr. Murphy have sole dispositive
power but no voting power over such shares. Mr.
Gidron, Ms. Healy and Mr. Murphy disclaim beneficial
ownership of such shares.
(6) Includes 2,520 restricted shares awarded to Ms. Ballot
under the MDR Plan which are held by the MDR Trustees
and as to which Ms. Ballot has sole voting power. Also
includes a 2.44% beneficial interest in 74,207 shares
(as of August 14, 1996) held in trust under North
Side's 401(k) Savings Plan as to which Ms. Ballot
shares voting power and options exercisable within 60
days after the North Side Record Date to purchase 3,478
shares of North Side Common Stock. Does not include
options which by their terms vest more than 60 days
after the North Side Record Date, although the vesting
of such options will accelerate in connection with the
Merger.
(7) Includes 2,520 restricted shares awarded to Ms. Alleva
under the MDR Plan which are held by the MDR Trustees
and as to which Ms. Alleva has sole voting power. Also
includes a 1.14% beneficial interest in 74,207 shares
(as of August 14, 1996) held in trust under North
Side's 401(k) Savings Plan as to which Ms. Alleva
shares voting power and options exercisable within 60
days after the North Side Record Date to purchase 8,407
shares of North Side Common Stock. Does not include
options which by their terms vest more than 60 days
after the North Side Record Date, although the vesting
of such options will accelerate in connection with the
Merger.
(8) Includes 30,664 shares of North Side Common Stock held
by the MDR Trust which have been granted to certain of
North Side's officers and as to which such officers
have sole voting power. All of such shares of North
Side Common Stock currently held by the MDR Trustees
have been awarded, and will vest at the rate of 25% per
year for four years beginning on January 1, 1997.
Employees who are awarded North Side Common Stock are
entitled to all voting and other stockholder rights,
except that the shares, while restricted, may not be
sold, pledged or otherwise disposed of and are required
to be held by the MDR Trustees. Shares of North Side
Common Stock which have been awarded are voted by the
MDR Trustees as directed by the employee to whom such
shares have been granted. Also includes options to
purchase 195,780 shares of North Side Common Stock
which are exercisable within 60 days after the North
Side Record Date. Does not include options which by
their terms vest more than 60 days after the North Side
Record Date, although the vesting of such options will
accelerate in connection with the Merger. The
percentage is computed by including executive officers'
holdings of options exercisable within sixty (60) days
after the North Side Record Date as outstanding North
Side Common Stock. Such figures also include an
aggregate 26.68% undivided beneficial interest of
executive officers who are members of the group in an
aggregate of 74,207 shares of North Side Common Stock
held by the trust established in connection with the
401(k) Savings Plan of North Side Savings Bank (the
"Savings Plan Trust") as of August 14, 1996, as to
which shares the respective account holders have shared
voting power and no investment power except for such
aggregate 26.68% of such shares which may be liquidated
and reinvested in alternate investments. Does not
include 108,384 shares of North Side Common Stock held
by Marine Midland Bank as Trustee for North Side
Savings Bank Retirement Plan Trust II as to which
certain executive officers, through their membership on
North Side's Employee Benefits Committee, generally
share voting power. Such executive officers disclaim
beneficial ownership of such shares.
CERTAIN REGULATORY CONSIDERATIONS
GENERAL
North Fork is a bank holding company subject to
supervision and regulation by the Federal Reserve Board
under the BHC Act. As a bank holding company, North Fork's
activities and those of its banking and nonbanking
subsidiaries are limited to the business of banking and
activities closely related or incidental to banking, and
North Fork may not directly or indirectly acquire the
ownership or control of more than five percent of any class
of voting shares or substantially all of the assets of any
company, including a bank, without the prior approval of the
Federal Reserve Board. Because the Merger is subject to the
prior approval of the FDIC under the Bank Merger Act, the
Merger does not require approval of the Federal Reserve
Board.
North Fork Bank, as a New York-chartered FDIC
insured depository institution, is subject to the
supervision, regulation, and examination of the Banking
Department and the FDIC. North Side, as a New York-
chartered stock-form savings bank, is also subject to the
supervision, regulation, and examination of 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 penalties. Almost every aspect of the
operations and financial condition of North Fork Bank and
North Side 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 and North Side. The deposits
of North Fork Bank and North Side are insured up to
applicable limits by the FDIC.
Supervision and regulation of bank holding
companies and their subsidiaries is intended primarily for
the protection of depositors, the deposit insurance funds of
the FDIC and the banking system as a whole, not for the
protection of bank holding company stockholders or
creditors.
The following description summarizes some of the
laws to which North Fork, North Fork Bank, and North Side
are subject. To the extent statutory or regulatory
provisions or proposals are described, the description is
qualified in its entirety by reference to the particular
statutory or regulatory provisions or proposals.
PAYMENT OF DIVIDENDS
North Fork is a legal entity separate and distinct
from its subsidiaries. The principle source of North Fork's
cash revenues is dividends from North Fork Bank and, subject
to the receipt of the requisite regulatory approvals and
consummation of the Merger, North Side, and there are
various legal and regulatory limitations under federal and
state law on the extent to which banking subsidiaries can
finance or otherwise supply funds to their holding company.
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.
Among other things, dividends from a New York-
chartered bank, such as North Fork Bank or North Side, are
limited by the regulations of the Banking Department to an
amount equal to the bank's net profits for the current year
plus its prior two years' retained net profits, less any
required transfer to surplus or a fund for the retirement of
any preferred stock. In addition, Federal Reserve Board
policy provides that, as a matter of prudent banking, a bank
holding company generally should not maintain a rate of cash
dividends unless its net income available to common
stockholders has been sufficient to fully fund the
dividends, and the prospective rate of earnings retention
appears to be consistent with the holding company's capital
needs, asset quality and overall financial condition.
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, North
Fork Bank and North Side, be deemed to constitute such an
unsafe or unsound practice.
In addition, the provisions of the Note Purchase
Agreement, between North Fork and Allstate Life Insurance
Company (the "Note Purchase Agreement"), impose certain
limitations on the payment of dividends by North Fork. As
of June 30, 1996 (after giving effect to the dividend
declared on the North Fork Common Stock on June 25, 1996 of
$.20 per share), North Fork's dividend capability under the
Note Purchase Agreement was $2,221,284. North Fork's
dividend capability under the Note Purchase Agreement will
increase by an amount equal to the sum of 30% of the
cumulative Consolidated Net Income (as defined therein) for
North Fork plus the net cash proceeds to North Fork from the
issuance of any common stock, and will decrease by, among
other things, an amount equal to a specified percentage of
the purchase price of certain Restricted Assets (as defined
therein). North Fork's dividend payout ratio for the year
ended December 31, 1995 and for the six-month period ended
June 30, 1996 was 26% and 32%, respectively. While
there can be no assurance as to the future payment of
dividends on the North Fork Common Stock, North Fork does
not currently expect the provisions of the Note Purchase
Agreement to impede North Fork's ability to pay future
dividends in accordance with past practice.
TRANSACTIONS WITH AFFILIATES
North Fork Bank is subject to restrictions under
federal law which limit certain transactions with North Fork
and its nonbanking subsidiaries; including loans, other
extensions of credit, investments or asset purchases. Such
transactions by a banking subsidiary with any one affiliate
are limited in amount to ten percent of a bank's capital and
surplus and, with all affiliates together, to an aggregate
of twenty percent of such bank's capital and surplus.
Furthermore, such loans and extensions of credit, as well as
certain other transactions, are required to be secured in
specified amounts. These and certain other transactions,
including any payment of money to North Fork, must be on
terms and conditions that are or in good faith would be
offered to nonaffiliated companies.
HOLDING COMPANY LIABILITY
Under Federal Reserve Board policy, a bank holding
company is expected to act as a source of financial strength
to each of its banking subsidiaries and commit resources to
their support. Such support may be required at times when,
absent this Federal Reserve Board policy, a holding company
may not be inclined to provide it. As discussed below under
"Prompt Corrective Action," a bank holding company in
certain circumstances could be required to guarantee the
capital plan of an undercapitalized banking 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
debtor holding company to any of the federal banking
agencies to maintain the capital of an insured depository
institution, and any claim for breach of such obligation
will generally have priority over most other unsecured
claims.
PROMPT CORRECTIVE ACTION
Under the Federal Deposit Insurance Corporation
Improvement Act of 1991 ("FDICIA"), the federal banking
agencies must take prompt supervisory and regulatory actions
against undercapitalized depository institutions.
Depository institutions are assigned one of five capital
categories: "well capitalized," "adequately capitalized,"
"undercapitalized," "significantly undercapitalized," and
"critically undercapitalized," and subjected to differential
regulation corresponding to the capital category within
which the institution falls. Under certain circumstances, a
well capitalized, adequately capitalized or undercapitalized
institution may be treated as if the institution were in the
next lower capital category. A depository institution is
generally prohibited from making capital distributions
(including paying dividends) or paying management fees to a
holding company if the institution would thereafter be
undercapitalized. Adequately capitalized institutions
cannot accept, renew or roll over brokered deposits except
with a waiver from the FDIC, and are subject to restrictions
on the interest rates that can be paid on such deposits.
Undercapitalized institutions may not accept, renew, or roll
over brokered deposits.
The banking regulatory agencies are permitted or,
in certain cases, required to take certain actions with
respect to institutions falling within one of the three
undercapitalized categories. Depending on the level of an
institution's capital, the agency's corrective powers
include, among other things: prohibiting the payment of
principal and interest on subordinated debt; prohibiting the
holding company from making distributions without prior
regulatory approval; placing limits on asset growth and
restrictions on activities; placing additional restrictions
on transactions with affiliates; restricting the interest
rate the institution may pay on deposits; prohibiting the
institution from accepting deposits from correspondent
banks; and in the most severe cases, appointing a
conservator or receiver for the institution. A banking
institution that is undercapitalized is required to submit a
capital restoration plan, and such a plan will not be
accepted unless, among other things, the banking
institution's holding company guarantees the plan up to a
certain specified amount. Any such guarantee from a
depository institution's holding company is entitled to a
priority of payment in bankruptcy. As of June 30, 1996,
both North Fork Bank and North Side exceeded the required
capital ratios for classification as "well capitalized."
See " -- Capital Adequacy."
CAPITAL ADEQUACY
RISK-BASED CAPITAL AND LEVERAGE RATIOS
Risk-Based Ratios
-----------------
Tier I Total Leverage
As of June 30, 1996 Capital Capital Ratio
------------------- ------- ------- --------
North Fork 9.93% 11.19% 5.73%
North Fork Bank 9.68 10.95 5.54
North Side 17.29 18.07 7.74
MINIMUM REQUIRED RATIO 4.0% 8.0% 3.0%*
"WELL CAPITALIZED" 6.0% 10.0% 5.0%
MINIMUM RATIO
* For all but the most highly-rated bank holding
companies and banks, the leverage ratio is 3 percent
plus an additional percentage of at least 100 to 200
basis points.
The Federal Reserve Board has adopted risk-based
capital guidelines for bank holding companies. The minimum
ratio of total capital to risk-weighted assets (which are
the credit risk equivalents of balance sheet assets and
certain off balance sheet items such as standby letters of
credit) is 8.00 percent. At least half of the total capital
must be composed of common stockholders' equity (including
retained earnings), qualifying non-cumulative perpetual
preferred stock (and, for bank holding companies only, a
limited amount of qualifying cumulative perpetual preferred
stock), and minority interests in the equity accounts of
consolidated subsidiaries, less goodwill, other disallowed
intangibles and disallowed deferred tax assets, among other
items ("Tier 1 capital"). The remainder may consist of a
limited amount of subordinated debt, other perpetual
preferred stock, hybrid capital instruments, mandatory
convertible debt securities that meet certain requirements,
as well as a limited amount of reserves for loan losses
("Tier 2 capital"). The Federal Reserve has also adopted a
minimum leverage ratio for bank holding companies, requiring
Tier 1 capital of at least 3.00 percent of average total
consolidated assets.
The FDIC has also established risk-based and
leverage capital guidelines which state non-members banks
are required to meet. These regulations are generally
similar to those established by the Federal Reserve Board
for bank holding companies. The capital ratios for North
Fork, North Fork Bank, and North Side are provided in the
chart above.
The federal banking agencies' risk-based and
leverage ratios are minimum supervisory ratios generally
applicable to banking organizations that meet certain
specified criteria, assuming that they have the highest
regulatory rating. Banking organizations not meeting these
criteria are expected to operate with capital positions well
above the minimum ratios. The federal bank regulatory
agencies may set capital requirements for a particular
banking organization that are higher than the minimum ratios
when circumstances warrant. Federal Reserve Board
guidelines also provide that banking organizations
experiencing internal growth or making acquisitions will be
expected to maintain strong capital positions substantially
above the minimum supervisory levels, without significant
reliance on intangible assets. In addition, the regulations
of the Federal Reserve Board provide that concentration of
credit risk and certain risks arising from nontraditional
activities, as well as an institution's ability to manage
these risks, are important factors to be taken into account
by regulatory agencies in assessing an organization's
overall capital adequacy.
The federal banking agencies recently adopted
amendments to their risk-based capital regulations to
provide for the consideration of interest rate risk in the
agencies' determination of a banking institution's capital
adequacy. The amendments require such institutions to
effectively measure and monitor their interest rate risk and
to maintain capital adequate for that risk.
As discussed below under "Enforcement Powers of
the Federal Banking Agencies," failure to meet the minimum
regulatory capital requirements could subject a banking
institution to a variety of enforcement remedies available
to federal regulatory authorities, including, in the most
severe cases, the termination of deposit insurance by the
FDIC and placing the institution into conservatorship or
receivership.
ENFORCEMENT POWERS OF THE FEDERAL BANKING AGENCIES
The federal banking agencies have broad
enforcement powers, including the power to terminate deposit
insurance, impose substantial fines and other civil and
criminal penalties and appoint a conservator or receiver.
Failure to comply with applicable laws, regulations and
supervisory agreements could subject North Fork, North Fork
Bank, North Side, as well as officers, directors and other
institution-affiliated parties of these organizations, to
administrative sanctions and potentially substantial civil
money penalties. In addition to the grounds discussed under
"Prompt Corrective Action," the appropriate federal banking
agency may appoint the FDIC as conservator or receiver for a
banking institution (or the FDIC may appoint itself, under
certain circumstances) if any one or more of a number of
circumstances exist, including, without limitation, the fact
that the banking institution is undercapitalized and has no
reasonable prospect of becoming adequately capitalized;
fails to become adequately capitalized when required to do
so; fails to submit a timely and acceptable capital
restoration plan; or materially fails to implement an
accepted capital restoration plan.
FDIC INSURANCE ASSESSMENTS
The deposits of North Fork Bank and North Side are
primarily insured by the Bank Insurance Fund (the "BIF") of
the FDIC to the extent provided by law. In addition,
certain deposits of North Fork Bank that are related to the
bank's prior acquisitions of a savings association and
branches of a federal savings bank are insured by the FDIC's
Savings Association Insurance Fund (the "SAIF").
The FDIC has adopted a risk-based assessment
system under which the assessment rate for an insured
depository institution varies according to the level of risk
involved in its activities. Under this risk based insurance
system, BIF-insured deposits are assessed at a rate of
between 0 to 27 cents per $100 of eligible deposits, subject
to a minimum assessment of $2,000 per institution per year .
Assessment rates for SAIF-insured deposits
currently range between 23 to 31 cents per $100 of deposits.
(The SAIF-insured deposits of North Fork Bank that were
acquired from the savings association and branches of a
federal savings bank are subject to this higher premium.)
In response to concerns that the insurance premium
disparity between BIF- and SAIF-insured deposits would have
a negative effect on SAIF-insured institutions and the SAIF,
Congress recently passed legislation that was signed by the
President on September 30, 1996 that, among other things,
is intended to eliminate the deposit insurance premium
disparity and will utilize BIF assessments to help fund debt
service on certain Financing Corporation (FICO) bonds, which
is likely to result in higher insurance premiums for BIF-
insured institutions. In addition, each institution with
SAIF-insured deposits, such as North Fork Bank, will be
subject to a one-time special assessment on its SAIF-
assessable deposits. The FDIC is expected to establish the
rate of this special assessment at a level designed to cause
the SAIF, which is presently undercapitalized, to meet the
designated reserve ratio provided by statute.
CONTROL ACQUISITIONS
The Change in Bank Control Act (the "CBCA")
prohibits a person or group of persons from acquiring
"control" of a bank holding company unless the Federal
Reserve Board has been notified and has not objected to the
transaction. Under a rebuttable presumption established by
the Federal Reserve, the acquisition of 10% or more of a
class of voting stock of a bank holding company with a class
of securities registered under Section 12 of the Exchange
Act, such as North Fork, would, under the circumstances set
forth in the presumption, constitute acquisition of control
of North Fork.
In addition, any company is required to obtain the
approval of the Federal Reserve under the BHC Act before
acquiring 25% (5% in the case of an acquiror that is a bank
holding company) or more of the outstanding Common Stock of
North Fork, or otherwise obtaining control or a "controlling
influence" over North Fork.
The Riegle-Neal Interstate Banking and Branching
Efficiency Act of 1994 permits an adequately capitalized and
adequately managed bank holding company, with Federal
Reserve Board approval, to acquire banking institutions
located in states other than the bank holding company's home
state without regard to whether the transaction is
prohibited under state law. In addition, effective June 1,
1997, national banks and state banks with different home
states will be permitted to merge across state lines, with
the approval of the appropriate federal banking agency,
unless the home state of a participating banking institution
passes legislation prior to that date that expressly
prohibits interstate mergers. Such interstate mergers may
be effected prior to June 1, 1997 so long as the home state
of each participating banking institution has passed
qualifying legislation that expressly permits such
transactions.
FUTURE LEGISLATION
Various legislation, including proposals to
overhaul the bank regulatory system, expand the powers of
banking institutions and bank holding companies and limit
the investments that a depository institution may make with
insured funds, is from time to time introduced in Congress.
Such legislation may change banking statutes and the
operating environment of North Fork and its subsidiaries in
substantial and unpredictable ways. North Fork cannot
determine the ultimate effect that potential legislation, if
enacted, or implementing regulations, would have upon the
financial condition or results of operations of North Fork
or its subsidiaries.
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 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 determines. As of
June 30, 1996, 25,042,752 shares of North Fork Common Stock
(including 924,437 shares of treasury stock) and no shares
of North Fork Preferred Stock had been issued.
As of June 30, 1996, approximately 928,115 shares
of North Fork Common Stock had been reserved for issuance
upon the exercise of outstanding stock options under various
employee stock option plans and 513,715 shares of North Fork
Common Stock were reserved for issuance pursuant to North
Fork's dividend reinvestment and stock purchase plans and
401(K) plan. 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 Rights Plan 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"), and 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 from
funds legally available therefor and are entitled, in the
event of liquidation, to share ratably in all assets
remaining after payment of liabilities.
The North Fork Certificate and North Fork's Bylaws
provide that the North Fork Board 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 North Fork
Board. 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
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 North Fork Rights
Agreement. Unless otherwise defined herein, all capitalized
terms used herein shall have the meanings set forth in the
North Fork 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 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 shares of North Fork Common Stock 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 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 North Fork Rights Agreement as an "Adverse
Person"). Pursuant to the North Fork 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 determines that a
person is an Adverse Person (any 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 either of the events set forth
in this paragraph, 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
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 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 events 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).
Under certain circumstances set forth in the North Fork
Rights Agreement, the decision to redeem shall require the
concurrence of a majority of the Continuing Directors (as
defined below). North Fork may not redeem the Rights if the
North Fork Board has previously declared a person to be an
Adverse Person. Immediately upon the action of the North
Fork Board 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 North Fork Board who was a member of the North Fork
Board prior to the date of the North Fork 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 share of North Fork Common Stock per
Right, 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 North Fork Rights Agreement may be amended
by the North Fork Board prior to the Distribution Date.
After the Distribution Date, the provisions of the North
Fork 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 North Fork 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 or
willing to negotiate with the North Fork Board. The Rights
should not interfere with any merger or other business
combination approved by the North Fork Board since the North
Fork Board may, at its option, at any time until ten days
following the Stock Acquisition Date (unless the North Fork
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
North Fork is incorporated under the laws of the
State of Delaware and North Side is a New York-chartered
stock form savings bank governed under the NYBL. If the
merger is consummated, the holders of North Side Common
Stock, whose rights as stockholders are currently governed
by the NYBL, the North Side Restated Organization Certificate
(the "North Side Certificate") and the Amended and Restated
Bylaws of North Side (the "North Side Bylaws") will, upon
the exchange of their North Side Common Stock pursuant to
the Merger Agreement, become holders of shares of North Fork
Common Stock and their rights as such will be governed by the
DGCL, the North Fork Certificate and the bylaws of North Fork
(the "North Fork Bylaws"). The material differences between
the rights of holders of North Side Common Stock and the rights
of holders of North Fork Common Stock, resulting from the
differences in their governing documents and the application
of the NYBL or the DGCL thereto, are summarized below.
The following summary does not purport to be a
complete statement of the rights of holders of North Fork
Common Stock under applicable Delaware law, the North Fork
Certificate and the North Fork Bylaws or a comprehensive
comparison with the rights of the holders of North Side
Common Stock under applicable New York banking law, the
North Side Certificate and the North Side Bylaws, or a
complete description of the specific provisions referred to
herein. 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 qualified in its entirety by reference to the
DGCL and the governing corporate instruments of North Fork
(including the North Fork Rights Agreement) and to the NYBL
and the governing corporate instruments of North Side
(including the North Side Rights Agreement) to which the
holders of North Side Common Stock are referred. Copies
of such governing corporate instruments of North Fork and
North Side are available, without charge, to any person,
including any beneficial owner to whom this Joint Proxy
Statement/Prospectus is delivered by following the
instructions listed under "INCORPORATION OF CERTAIN
DOCUMENTS BY REFERENCE."
SPECIAL MEETING OF STOCKHOLDERS
North Fork. Under the DGCL, special stockholder
meetings of a corporation may be called by its board of
directors and by any person or persons authorized to do so
by its certificate of incorporation or bylaws. Under the
North Fork Bylaws, special meetings of North Fork
stockholders may be called by the North Fork Board, by the
Chairman or by the President.
North Side. Under the NYBL, a special meeting of
stockholders may be called by the board of directors or by
such person or persons as may be so authorized by the
certificate of incorporation and bylaws. The North Side
Certificate provides that a special meeting of stockholders,
for any purpose or purposes, may be called at any time by
the chairman of the board, the president or a majority of
the board of directors and shall be called by the chairman
of the board, the president or the secretary upon the
written request of the holders of not less than 50% of the
issued and outstanding capital stock of North Side entitled
to vote at the meeting, voting together as a class.
STOCKHOLDER ACTION BY WRITTEN CONSENT
North Fork. Under the DGCL, unless otherwise
provided in the certificate of incorporation, any action
which may be taken at an annual or special meeting of
stockholders may be taken without a meeting and without
prior notice, if a consent in writing, setting forth the
action so taken, is signed by the holders of outstanding
shares, having not less than the minimum number of votes
that would be necessary to authorize or take such action at
a meeting at which all shares entitled to vote thereon were
present and voted. The North Fork Certificate does not
contain any provision to the contrary.
North Side. Under the NYBL, the stockholders may
act without a meeting only by unanimous written consent,
unless the certificate of incorporation otherwise provides.
The North Side Certificate does not provide otherwise.
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 of North Fork 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; and (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 of 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 a 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 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.
North Side. The North Side Bylaws establish
similar procedures that must be followed for stockholders to
nominate individuals to the North Side Board or to propose
business at the annual meeting of stockholders. The
requirement to furnish certain information contained in the
North Side Bylaws in order to advance nominations to the
North Side Board and items of business is not materially
different from those of North Fork; however, the time
requirements are substantially different. Under the North
Side Bylaws, in order to be timely, notice must be delivered
to North Side not less than 15 days prior to the anniversary
date of the mailing of proxy materials by North Side in
connection with the immediately preceding annual meeting of
stockholders.
CERTAIN BUSINESS COMBINATIONS (NOT INVOLVING AN INTERESTED
STOCKHOLDER)
North Fork. The DGCL generally requires approval
of any merger, consolidation or sale of substantially all
the assets of a corporation at a meeting of stockholders by
vote of the holders of a majority of all outstanding shares
entitled to vote thereon. The certificate of incorporation
of a Delaware corporation may provide for a greater vote.
Except as set forth below in "-- Business Combinations
Involving Interested Stockholders," the North Fork
Certificate does not contain such a provision.
North Side. The NYBL generally requires that
mergers, consolidations, sales, leases, exchanges or other
distributions of all or substantially all of the assets of a
bank be approved by vote of holders of not less than two-
thirds (2/3) of all outstanding shares entitled to vote on
such transactions. The organization certificate of a New
York bank may provide for a greater vote. Except as set
forth below in "-- Business Combinations Involving
Interested Stockholders," the North Side Certificate does
not contain such a provision.
BUSINESS COMBINATIONS INVOLVING INTERESTED STOCKHOLDERS
North Fork. The DGCL prohibits a corporation from
engaging in any business combination with an interested
stockholder (defined as a 15% stockholder) for a period of
three years after the date that stockholder became an
interested stockholder unless (i) before that date, the
board of directors of the corporation approved the business
combination or the transaction transforming the stockholder
into an interested stockholder, (ii) upon consummation of
the transaction which resulted in the stockholder becoming
an interested stockholder, that stockholder owned at least
85% of the outstanding voting stock (excluding shares owned
by directors, officers and certain employee stock ownership
plans) or (iii) on or after the date the stockholder became
"interested," the business combination gained the approval
of both the corporation's directors and two-thirds of the
outstanding voting shares not owned by the interested
stockholder voted at a meeting and not by written consent.
A Delaware corporation may negate this provision through an
amendment to the certificate of incorporation or bylaws
adopted by a majority of the outstanding voting shares.
North Fork has not adopted any such amendment.
North Side. Although the NYBL does not contain
any provisions with respect to business combinations with
interest stockholders, the North Side Certificate provides
that, except as set forth below, any "Business Combination"
involving North Side and any North Side Related Person
(defined to include any beneficial owner of more than 10% of
the outstanding North Side capital stock generally entitled
to vote in the election of directors ("North Side Voting
Stock")) must be approved by the holders of at least 75% of
the voting power of the outstanding North Side Voting Stock
and a majority of shares of the outstanding North Side
Voting stock that are not beneficially owned or controlled
by a Related Person. A "Business Combination" will require
only the vote described in "-- Certain Business Combinations
(Not Involving an Interested Stockholder)" if (i) the
Business Combination has been approved by a majority of the
Whole Board (defined as the total number of directors the
board would have if there were no vacancies) at any time
prior to the time the Related Person became a Related Person
or by 75% of the Whole Board of Directors including a
majority of the Continuing Directors (defined as members of
the board of directors who are not affiliated with a Related
Person and who were members of the board of directors
immediately prior to the time the Related Person became a
Related Person) after the person became a Related Person;
(ii) it is a Business Combination with a subsidiary; or
(iii) certain "fair price" and procedural conditions are met
including, among other things, a requirement that the sum of
the aggregate amount of cash and the fair market value, as
of the date of the consummation of the business combination,
of non-cash consideration per share of North Side Common
Stock shall be equal to the higher of (x) the highest per
share price paid by the Related Person for any shares of
North Side Common Stock acquired by it, or (y) the fair
market value of North Side Common Stock (as determined by
the continuing directors of North Side) on the date the
business combination is first proposed.
As defined in the North Side Certificate, a
Business Combination includes, among other things, any of
the following transactions, when entered into by North Side
or a subsidiary of North Side with or on a proposal by a
Related Person: (i) the merger or consolidation of North
Side or any subsidiary of North Side; (ii) the sale or other
disposition by North Side of assets having a value of more
than 10% of the total combined assets of North Side and its
subsidiaries; (iii) the issuance or transfer by North Side
or any subsidiary of any securities of North Side or any
subsidiary in exchange for cash, securities, or other
property having an aggregate fair market value exceeding 10%
of the combined assets of North Side and its subsidiaries;
(iv) the adoption of any plan or proposal for the
liquidation or dissolution of North Side; or (v) any
transaction, whether or not involving a Related Person, that
has the effect of increasing the proportionate amount of the
outstanding shares of any class of equity or convertible
securities of North Side or any subsidiary that is
beneficially owned by a North Side Related Person.
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 the North Fork Board), stockholders may remove a director
only for cause by a vote of the majority of the
then-outstanding shares of the corporation entitled to vote
thereon. Further, stockholders may not remove a director
without cause. The North Fork Certificate does not contain
any provisions concerning the removal of directors.
North Side. The NYBL provides that, any or all of
the directors may be removed for cause by a majority of
votes cast by stockholders at a meeting of stockholders.
The NYBL further provides that the certificate of
incorporation or the specific provisions of a bylaw adopted
by the stockholders may provide that directors may be
removed with cause by action of the Board of Directors or
without cause by vote of the stockholders. The North Side
Certificate provides that, at a meeting of stockholders
called expressly for the purpose, any director of North
Side, or the entire North Side Board, may be removed from
office for cause by a vote of the holders of a majority of
the shares then entitled to vote at an election of
directors, and may be removed from office without cause by a
vote of the holders of 75% of the shares then entitled to
vote at an election of directors. Cause for removal shall
exist only if the director whose removal is proposed has
been convicted of a felony by a court of competent
jurisdiction or has been adjudged by a court of competent
jurisdiction to be liable for gross negligence or misconduct
in the performance of such directors duty to North Side and
such adjudication is no longer subject to direct appeal.
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 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.
North Side. The NYBL specifically entitles
directors, in taking actions, including actions which may
relate to a change or potential change in control of a
corporation, to consider the short-term interests of the
corporation and its stockholders as well as the short-term
and long-term effects of any action upon (i) the
corporation's prospects for future growth, (ii) the
corporation's current employees, (iii) the corporation's
retired employees and other beneficiaries receiving or
entitled to receive retirement, welfare or similar benefits
from or pursuant to any plan sponsored, or agreement entered
into, by the corporation, (iv) the corporation's customers
and creditors, and (v) the ability of the corporation to
provide, as a going concern, goods, services, employment
opportunities and employment benefits and otherwise to
contribute to the communities in which it does business.
The above-described section of the NYBL does not create
duties of any director to any person or entity to consider
or afford any particular weight to any of the foregoing
criteria, nor does it abrogate any duty of the directors,
either statutory or recognized by common law or court
decisions. The North Side Certificate does not contain any
contrary provisions.
PERSONAL LIABILITY OF DIRECTORS
North Fork. The North Fork Certificate provides,
subject only to the express prohibitions on elimination or
limitation of liability of directors set forth in the DGCL,
as it exists or may hereafter be amended, 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 per
occurrence. The DGCL allows a corporation, through its
certificate of incorporation, to limit or eliminate the
personal liability of directors to the corporation and its
stockholders for monetary damages for breach of fiduciary
duty. However, this provision excludes any limitation on
liability (i) for any breach of the director's duty of
loyalty to the corporation or its stockholders, (ii) for
acts or omissions not in good faith or which involve
intentional misconduct or knowing violation of law, (iii)
for willful or negligent violation of the laws governing the
payment of dividends or the purchase or redemption of stock
or (iv) for any transaction from which the director derives
an improper personal benefit.
North Side. Neither the NYBL, nor North Side's
Certificate, provides for the limitation of liability of
directors.
INDEMNIFICATION OF OFFICERS AND DIRECTORS
North Fork and North Side. Both the DGCL and the
NYBL generally provide that directors and officers as well
as other employees and individuals may be indemnified
against expenses (including attorney's fees), judgments,
fines and amounts paid in settlement in connections with
specified actions, suits or proceedings, whether civil,
criminal, administrative or investigative (other than an
action by or in the right of the corporation in 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, suit or proceeding, if they had no
reasonable cause to believe their conduct was unlawful. The
North Fork Bylaws provide that North Fork shall indemnify,
to the fullest extent permitted by law, all persons who may
be indemnified pursuant to the DGCL. The North Side Bylaws
provide that directors and officers and employees of North
Side shall be indemnified for that period in which they
provide service to North Side to the fullest extent under
permissible law.
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."
North Side. North Side has adopted the North Side
Rights Agreement which is substantially similar to the North
Fork Rights Agreement, except, (i) the North Side Rights (as
defined below) become exercisable in the event that a person
becomes the beneficial owner of 10% or more of the then
outstanding shares of North Side Common Stock (except
pursuant to an offer for all outstanding shares of North
Side Common Stock which the independent directors determine
to be fair to and otherwise in the best interests of North
Side and its stockholders) and (ii) the North Side Rights
Agreement does not contain any provisions pursuant to which
the North Side Board may designate a person as an "Adverse
Person" and thereby trigger the exercisability of the North
Side Rights. Each share of North Fork Common Stock issued
in the Merger will have attached thereto one North Fork
Right. Following the Effective Time, the rights of former
holders of North Side Common Stock (which were accompanied
by attached rights to purchase Series A Junior Participating
Preferred Stock of North Side (the "North Side Rights"))
will be determined solely by reference to the North Fork
Rights Agreement.
North Side and the rights agent with respect to
the North Side Rights have executed and delivered an
Amendment, dated as of July 15, 1996 (the "North Side
Amendment"), to the North Side Rights Agreement. The North
Side Amendment provides that neither North Fork, nor any
subsidiary of North Fork shall be deemed to be an Acquiring
Person by virtue of the fact that North Fork is the
beneficial owner solely of Common Stock (i) of which North
Fork or such subsidiary was the beneficial Owner on July 15,
1996, (ii) acquired or acquirable pursuant to the grant or
exercise of the option granted pursuant to the Stock Option
Agreement, (iii) held directly or indirectly in trust
accounts, managed accounts and the like or otherwise held in
a fiduciary capacity for third parties and (iv) held in
respect of a debt previously contracted. By exempting North
Fork from the definition of Acquiring Person, the North Side
Amendment in effect provides that neither the approval,
execution or delivery of the Merger Agreement or the Stock
Option Agreement nor the consummation of any transactions
contemplated by the Merger Agreement or the Stock Option
Agreement shall be deemed to cause the occurrence of a
"Stock Acquisition Date," "Distribution Date," or
"Triggering Event" under the North Side Rights Agreement.
The description of the North Side Rights Agreement
and the North Side Amendment specifying the terms of the
North Side Rights are incorporated herein by reference. See
"INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE".
APPRAISAL RIGHTS
North Fork. Under the DGCL, appraisal rights are
available in connection with a statutory merger or
consolidation in certain specified situations. Appraisal
rights are not available when a corporation is to be the
surviving corporation and no vote of its stockholders is
required to approve the merger under the DGCL. In addition,
unless otherwise provided in the charter, no appraisal
rights are available to holders of shares of any class of
stock which is either: (a) listed on a national securities
exchange or designated as a national market system security
on an inter-dealer quotation system by the National
Association of Securities Dealers, Inc. or (b) held of
record by more than 2,000 stockholders, unless such
stockholders are required by the terms of the merger to
accept anything other than: (i) shares of stock of the
surviving corporation; (ii) shares of stock of another
corporation which are or will be listed on a national
securities exchange or designated as a national market
system security on an interdealer quotation system by the
National Association of Securities Dealers, Inc. or held of
record by more than 2,000 stockholders; (iii) cash in lieu
of fractional shares of such stock; or (iv) any combination
thereof. The North Fork Certificate has no provisions
regarding appraisal rights and North Fork stockholders will
not have appraisal rights in connection with the Merger.
North Side. Under the NYBL, a stockholder
entitled to vote on a merger, consolidation or other
disposition who does not approve such transaction is
generally entitled to appraisal rights.
PRO FORMA CONDENSED COMBINED
FINANCIAL STATEMENTS
(UNAUDITED)
The following statements set forth certain
selected condensed financial information for North Fork and
North Side on an unaudited pro forma combined basis giving
effect to the Merger as if the Merger had become effective
on June 30, 1996, in the case of the balance sheet
information presented, and as if the Merger had become
effective at the beginning of the periods indicated, in the
case of the income statement information presented. The pro
forma information in the statements assumes that the Merger
is accounted for using the pooling of interests method of
accounting. See "THE MERGER - Anticipated Accounting
Treatment". Financial information for the six months ended
June 30, 1996 and 1995 combine North Fork and North Side
with North Side's interim results presented to coincide with
the reporting period of North Fork. These statements 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 North Side incorporated
by reference herein. See "INCORPORATION OF CERTAIN
DOCUMENTS BY REFERENCE."
The pro forma condensed combined financial
statements do not give effect to the anticipated cost
savings and revenue enhancement opportunities that could
result from the Merger (see "Management and Operations
Following the Merger -- Consolidation of Operations;
Projected Cost Savings and Revenue Enhancements; Projected
Earnings Per Share"), and do not purport to be indicative of
the combined financial position or results of operations of
future periods or indicative of the results that would have
occurred had the Merger been consummated on June 30, 1996
or at the beginning of the periods indicated.
<TABLE>
<CAPTION>
NORTH FORK BANCORPORATION, INC. - NORTH SIDE SAVINGS BANK
PRO FORMA CONDENSED COMBINED BALANCE SHEET
(UNAUDITED)
JUNE 30, 1996
(Dollars in thousands)
PRO FORMA NORTH FORK PRO
NORTH FORK NORTH SIDE ADJUSTMENTS FORMA
(in thousands, except per share amounts)
------------------------------------------ --------------
<S> <C> <C> <C> <C>
ASSETS
Cash & Due from Banks...................................... $177,362 $12,530 $189,892
Money Market Investments................................... - 3,648 3,648
Securities:
Available-for-Sale ..................................... 1,121,843 363,426 7,225(2)(3) 1,492,494
Held-to-Maturity....................................... 377,883 678,212 1,056,095
------------------------------------------ --------------
Total Securities..................................... 1,499,726 1,041,638 7,225 2,548,589
------------------------------------------ --------------
Loans, net of Unearned Income & Fees....................... 2,300,578 561,269 2,861,847
Allowance for Loan Losses.............................. 50,384 5,604 55,988
------------------------------------------ --------------
Net Loans............................................. 2,250,194 555,665 - 2,805,859
------------------------------------------ --------------
Premises & Equipment, Net.................................. 53,657 14,859 68,516
Intangibles................................................ 84,755 1,124 85,879
Other Real Estate.......................................... 6,519 2,320 8,839
Other Assets............................................... 66,048 22,840 6,938(2)(5)(6) 95,826
------------------------------------------ --------------
Total Assets.......................................... $4,138,261 $1,654,624 $14,163 $5,807,048
------------------------------------------ --------------
------------------------------------------ --------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Non-Interest Bearing Deposits.............................. $657,516 $38,542 $696,058
Interest Bearing Deposits.................................. 2,598,714 1,189,669 3,788,383
------------------------------------------ --------------
Total Deposits........................................ 3,256,230 1,228,211 - 4,484,441
------------------------------------------ --------------
Other Borrowings........................................... 507,739 286,000 793,739
Senior Note Payable........................................ 25,000 - 25,000
Accrued Expenses & Other Liabilities....................... 49,604 16,882 22,000(5) 88,486
------------------------------------------ --------------
Total Liabilities.................................... 3,838,573 1,531,093 22,000 5,391,666
------------------------------------------ --------------
STOCKHOLDERS' EQUITY
Preferred Stock............................................ -
Common Stock.............................................. 62,607 4,834 13,033(2) 80,474
Additional Paid in Capital................................. 104,952 87,668 (20,590)(2) (3) 172,030
Retained Earnings.......................................... 166,557 33,824 (15,480)(5) (6) 184,901
Unrealized Losses on Securities Available-for-Sale,
net of taxes.... (10,000) (2,329) 63(2) (12,266)
Deferred Compensation...................................... (1,823) (466) 466(6) (1,823)
Treasury Stock............................................. (22,605) - 14,671(3) (7,934)
------------------------------------------ --------------
Total Stockholders' Equity........................... 299,688 123,531 (7,837) 415,382
------------------------------------------ --------------
Total Liabilities and Stockholders' Equity........... $4,138,261 $1,654,624 $14,163 $5,807,048
------------------------------------------ --------------
------------------------------------------ --------------
</TABLE>
SELECTED CAPITAL RATIOS
North Fork
North Fork Pro Forma
---------- ---------
Tier 1 Capital Ratio............... 9.93% 11.41%
Risk Adjusted Capital Ratio........ 11.19% 12.56%
Leverage Ratio..................... 5.73% 6.17%
See "NOTES TO PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
(UNAUDITED)."
<TABLE>
<CAPTION>
NORTH FORK BANCORPORATION, INC. - NORTH SIDE SAVINGS BANK
PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
(UNAUDITED)
FOR THE SIX MONTHS ENDED JUNE 30, 1996
(in thousands, except per share amounts)
NORTH FORK
NORTH FORK(7) NORTH SIDE (1) PRO FORMA
-------------------------------------------------------------
<S> <C> <C> <C>
Interest Income.................................................. $139,444 $54,686 $194,130
Interest Expense................................................. 55,377 29,457 84,834
-------------------------------------------------------------
Net Interest Income............................................ 84,067 25,229 109,296
Provision for Loan Losses........................................ 3,000 400 3,400
-------------------------------------------------------------
Net Interest Income after Provision for Loan Losses............ 81,067 24,829 105,896
Non-Interest Income.............................................. 13,435 1,025 14,460
Net Security Gains .............................................. 996 510 1,506
Other Real Estate Expense........................................ 932 (224) 708
Non-Interest Expense............................................. 41,587 11,073 52,660
-------------------------------------------------------------
Income before Income Taxes..................................... 52,979 15,515 68,494
Provision for Income Taxes....................................... 21,417 6,519 27,936
-------------------------------------------------------------
Net Income .................................................... $31,562 $8,996 $40,558
-------------------------------------------------------------
-------------------------------------------------------------
Pro Forma Weighted Average Shares Outstanding (4)................ 24,984 4,820 32,484
Earnings Per Share............................................... $1.26 $1.86 $1.25
See "NOTES TO PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
(UNAUDITED)."
</TABLE>
<TABLE>
<CAPTION>
NORTH FORK BANCORPORATION, INC. - NORTH SIDE SAVINGS BANK
PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
(UNAUDITED)
FOR THE YEAR ENDED DECEMBER 31, 1995 FOR NORTH FORK AND SEPTEMBER 30, 1995 FOR NORTH SIDE
(in thousands, except per share amounts)
NORTH FORK
NORTH FORK(7) NORTH SIDE PRO FORMA
---------------------------------------------------------
<S> <C> <C> <C>
Interest Income..................................................... $226,398 $105,775 $332,173
Interest Expense.................................................... 85,162 55,230 140,392
---------------------------------------------------------
Net Interest Income............................................... 141,236 50,545 191,781
Provision for Loan Losses........................................... 9,000 2,825 11,825
---------------------------------------------------------
Net Interest Income after Provision for Loan Losses............... 132,236 47,720 179,956
Non-Interest Income................................................. 20,942 2,461 23,403
Net Security Gains.................................................. 6,379 355 6,734
Other Real Estate Expense........................................... 255 1,000 1,255
Non-Interest Expense................................................ 68,588 23,058 91,646
---------------------------------------------------------
Income before Income Taxes........................................ 90,714 26,478 117,192
Provision for Income Taxes.......................................... 38,479 11,371 49,850
---------------------------------------------------------
Net Income ....................................................... $52,235 $15,107 $67,342
---------------------------------------------------------
---------------------------------------------------------
Pro Forma Weighted Average Shares Outstanding (3) (4)............... 24,554 4,785 31,999
Earnings Per Share.................................................. $2.13 $3.15 $2.10
See "NOTES TO PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
(UNAUDITED)."
</TABLE>
<TABLE>
<CAPTION>
NORTH FORK BANCORPORATION, INC. - NORTH SIDE SAVINGS BANK
PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
(UNAUDITED)
FOR THE YEAR ENDED DECEMBER 31, 1994 FOR NORTH FORK AND SEPTEMBER 30, 1994 FOR NORTH SIDE
(in thousands, except per share amounts)
NORTH FORK
NORTH FORK NORTH SIDE PRO FORMA
-------------------------------------------------------------
<S> <C> <C> <C>
Interest Income............................................... $203,733 $90,931 $294,664
Interest Expense.............................................. 71,227 41,349 112,576
-------------------------------------------------------------
Net Interest Income......................................... 132,506 49,582 182,088
Provision for Loan Losses..................................... 3,275 3,550 6,825
-------------------------------------------------------------
Net Interest Income after Provision for Loan Losses......... 129,231 46,032 175,263
Non-Interest Income........................................... 19,020 2,928 21,948
Net Security Losses........................................... (9,211) - (9,211)
Other Real Estate Expense..................................... 3,651 1,278 4,929
Merger & Related Restructure Charges.......................... 14,338 - 14,338
Non-Interest Expense.......................................... 74,453 24,739 99,192
-------------------------------------------------------------
Income before Income Taxes.................................. 46,598 22,943 69,541
Provision for Income Taxes.................................... 16,926 9,576 26,502
-------------------------------------------------------------
Net Income ................................................. $29,672 $13,367 $43,039
-------------------------------------------------------------
Pro Forma Weighted Average Shares Outstanding (4)............. 23,763 4,751 31,156
Earnings Per Share............................................ $1.25 $2.82 $1.38
See "NOTES TO PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
(UNAUDITED)."
</TABLE>
<TABLE>
<CAPTION>
NORTH FORK BANCORPORATION, INC. - NORTH SIDE SAVINGS BANK
PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
(UNAUDITED)
FOR THE YEAR ENDED DECEMBER 31, 1993 FOR NORTH FORK AND SEPTEMBER 30, 1993 FOR NORTH SIDE
(in thousands, except per share amounts)
NORTH FORK
NORTH FORK NORTH SIDE PRO FORMA
-----------------------------------------------------
<S> <C> <C> <C>
Interest Income.......................................................... $191,630 $97,415 $289,045
Interest Expense......................................................... 73,169 43,984 117,153
-----------------------------------------------------
Net Interest Income.................................................... 118,461 53,431 171,892
Provision for Loan Losses................................................ 10,300 16,308 26,608
-----------------------------------------------------
Net Interest Income after Provision for Loan Losses.................... 108,161 37,123 145,284
Non-Interest Income...................................................... 18,938 2,930 21,868
Net Security Gains/(Losses).............................................. 1,457 (136) 1,321
Other Real Estate Expense................................................ 13,971 11,275 25,246
Net Loss on Disposition of Assets........................................ - 11,063 11,063
Non-Interest Expense..................................................... 71,962 37,320 109,282
-----------------------------------------------------
Income/(Loss) before Income Taxes...................................... 42,623 (19,741) 22,882
Provision/(Benefit) for Income Taxes..................................... 16,976 (3,961) 13,015
-----------------------------------------------------
Income/(Loss) before Cumulative Effect of
Accounting Changes.................................................. 25,647 (15,780) 9,867
-----------------------------------------------------
-----------------------------------------------------
Pro Forma Weighted Average Shares Outstanding (4)........................ 23,242 4,705 30,563
Earnings/(Loss) Per Share before Cumulative Effect of
Accounting Changes..................................................... $1.10 ($3.35) $0.32
See "NOTES TO PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
(UNAUDITED)."
</TABLE>
NORTH FORK BANCORPORATION, INC. AND
NORTH SIDE SAVINGS BANK
NOTES TO PRO FORMA CONDENSED COMBINED
FINANCIAL STATEMENTS (UNAUDITED)
(1) The pro forma financial information presented has been
prepared in conformity with generally accepted accounting
principles and prevailing practices within the financial
services industry. Under generally accepted accounting
principals ("GAAP") the assets and liabilities of North Side
will be combined with those of North Fork at book value. In
addition, the statements of income for North Side will be
combined with North Fork as of the earliest period
presented. Certain reclassifications have been included in
the pro forma financial statements to conform to North
Fork's presentation. North Fork utilizes a fiscal year
which ends on December 31 for reporting purposes, whereas
North Side uses a fiscal year which ends on September 30 for
such purposes. The unaudited condensed combined statements
of income for 1995, 1994, and 1993 combine North Fork and
North Side at their respective year-end periods. The
unaudited condensed combined statement of income for the
six-month periods ended June 30, 1996 and 1995 include North
Side for the six months then ended to conform with the
reporting periods of North Fork. Summary unaudited
operating results for North Side in the three-months ended
December 31, 1995 and 1994, have not been included in the
unaudited pro forma condensed combined financial statements
and are presented in the following table.
Three Months
Ended
December 31,
(Unaudited)
----------------
1995 1994
----------------
Interest income . . . . . . . . . . . . . . . . . . $27,600 $25,234
Interest expense . . . . . . . . . . . . . . . . . 15,105 12,366
Net interest income . . . . . . . . . . . . . . . . 12,495 12,868
Net income . . . . . . . . . . . . . . . . . . . . 5,834 3,594
Earnings per share . . . . . . . . . . . . . . . .$ 1.22 $ .75
(2) Pro forma adjustments to common stock and additional
paid-in capital, at June 30, 1996, reflect the Merger
accounted for as a pooling-of-interests, through: (a) the
exchange of 7,146,703 shares of North Fork Common Stock at
June 30, 1996 (using the Exchange Ratio of 1.556) for
4,592,997 actual outstanding shares of North Side (which
excludes 241,000 shares of North Side Common Stock held by
North Fork at an average per share cost of $35.21 as of such
date, which are assumed to be retired at cost for combining
purposes).
(3) Pro forma adjustments to common stock, additional paid-
in-capital and securities available-for-sale reflect the
reissuance of 600,000 shares of North Fork Treasury Stock,
with an average cost basis of $24.45, at $26.00 per share
(which approximated the market price of the North Fork
Common Stock on or about June 30, 1996). See "SUMMARY --
Market Prices And Dividend Information." The transaction
proceeds are assumed to be reinvested in securities
available-for-sale.
(4) The pro forma weighted average shares outstanding for
the six months ended June 30, 1996 and 1995, and for each of
the combined three-year periods, reflects the Exchange Ratio
of 1.556 shares of North Fork Common Stock for each share of
North Side Common Stock.
(5) The pro forma condensed combined balance sheet reflects
a non-recurring merger and restructuring charge of
approximately $15.2 million, net of taxes, which will be
recognized upon consummation of the transaction. Such
charge will reduce earnings per share for the period in
which such charge is recognized by approximately $.47 (based
on pro forma weighted average shares outstanding of
32,484,000 on June 30, 1996). A summary of the estimated
merger and restructuring charges follows:
Expected Range
of Costs
(Dollars in
Millions)
TYPE OF COST
------------
Merger Expense . . . . . . . . . . . . . . . . . .$ 4.0 to $ 5.0
Restructuring Charge:
Severance and Other Employee Expense . . . . . . . 6.0 to 8.0
Facility and System Costs . . . . . . . . . . . . . 5.0 to 6.0
Credit Cost and Other . . . . . . . . . . . . . . . 2.0 to 3.0
Total Pre-Tax Merger and Restructuring Charge . . . 17.0 to 22.0
Less: Tax Effect . . . . . . . . . . . . . . . . . 5.2 to 6.8
Total After-Tax Merger and Restructuring Charge . .$ 11.8 to $ 15.2
The effect of the proposed charge has been reflected in the
pro forma condensed combined balance sheet as of June 30,
1996; however, since this charge is non-recurring, it has
not been reflected in the pro forma combined statements of
income. Although no assurance can be given, North Fork
expects that cost savings will be achieved at an annual rate
of $8 to $11 million, on a pre-tax basis by the end of the
first quarter of 1997 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
North Side. Refinements to the foregoing estimates may
occur as the merger and integration task force formed by
North Fork and North Side complete their work. The pro
forma financial information 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.
(6) The pro forma condensed combined balance sheet reflects
the elimination of the unearned portion of North Side's
incentive compensation plan.
(7) In March 1996, North Fork completed its purchases of
the domestic commercial banking business of Extebank and the
ten Long Island banking branches of First Nationwide Bank.
As a result of these acquisitions, North Fork added
approximately $200 million in net loans, $920 million in
deposit liabilities and $30 million in capital. The
intangibles created in the aforementioned transactions
aggregated approximately $59 million. The results of
operations from these purchases are included in the
historical statements of operations of North Fork for all
periods subsequent to the respective acquisition dates. The
net income and earnings per share assuming these
acquisitions occurred on January 1, 1995 would not be
materially different from the amounts reflected herein.
Reference is made to North Fork's Current Report on Form 8-K
dated March 15, 1996 and Form 10-Q for the Quarter ended
June 30, 1996, previously filed with the SEC and
incorporated by reference in this Joint Proxy
Statement/Prospectus that contain additional information
regarding these transactions.
(8) North Fork is currently reviewing the investment
securities portfolios of North Side to determine the
classification of such securities as either available-for-
sale or held-to-maturity in connection with North Fork's
existing interest-rate risk position. As a result of this
review, certain reclassifications of North Side's investment
securities may result. No adjustments have been made to
either the available-for-sale or the held-to-maturity
portfolios in the accompanying pro forma combined balance
sheet to reflect any such reclassification as management has
not made a final determination with respect to such matters.
Any such reclassification will be accounted for in
accordance with Statement of Financial Accounting Standards
No. 115, "Accounting for Certain Investments in Debt and
Equity Securities", which requires that securities
transferred from held-to-maturity to available-for-sale be
transferred at fair value with any unrealized gain or loss,
net of taxes, at the date of transfer recognized as a
separate component of stockholders' equity.
LEGAL MATTERS
The validity of the shares of North Fork Common
Stock which will be issued in the Merger and certain other
legal matters 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 North Side by Elias, Matz, Tiernan &
Herrick L.L.P.
EXPERTS
The consolidated financial statements of North
Fork Bancorporation, Inc. and subsidiaries as of December
31, 1995 and 1994 and for each of the years in the three
year period ended December 31, 1995, included in North
Fork's 1995 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 LLP, independent
auditors, included in North Fork's 1995 Form 10-K and
incorporated by reference herein, and upon the authority of
said firm as experts in accounting and auditing.
The consolidated financial statements of North
Side Savings Bank and subsidiaries as of September 30, 1995
and 1994 and for each of the years in the three-year period
ended September 30, 1995, included in North Fork's Current
Report on Form 8-K dated September 12, 1996 and 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 LLP, independent auditors, included in
North Fork's Current Report on Form 8-K dated September 12,
1996 and incorporated by reference herein, and upon the
authority of said firm as experts in accounting and
auditing.
STOCKHOLDER PROPOSALS
Proposals of stockholders intended to be presented
at the 1997 Annual Meeting of Stockholders of North Fork
must be received by North Fork no later than November 19,
1996 for inclusion in North Fork's Proxy Statement and Form
of Proxy relating to that meeting.
It is possible that North Side'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 North Side's proxy statement
and the form of proxy relating to such annual meeting, must
comply with the rules and regulations of the FDIC then in
effect and must submit such proposal to the Corporate
Secretary of North Side. In the event that North Side's
Annual Meeting of Stockholders is held on or before
February 21, 1997, any stockholder proposal must have
been received by North Side not later than September 27,
1996. No such stockholder proposals were received by North
Side prior to September 27, 1996. In the event that North
Side's Annual Meeting of Stockholders is held after
February 21, 1997, any stockholder proposal must be
received by North Side a reasonable time before the
solicitation of proxies for such annual meeting is made.
ANNEX A
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
by and among
North Fork Bancorporation, Inc.,
Merger Bank
and
North Side Savings Bank
Dated as of July 15, 1996
TABLE OF CONTENTS
Page
ARTICLE I
THE MERGER
1.1. The Merger . . . . . . . . . . . . . . . 2
1.2. Effective Time . . . . . . . . . . . . . 2
1.3. Effects of the Merger . . . . . . . . . 3
1.4. Conversion of Company Common Stock . . . 3
1.5. Stock Options . . . . . . . . . . . . . 7
1.6. Merger Bank Common Stock . . . . . . . . 9
1.7. Certificate of Incorporation . . . . . . 10
1.8. By-Laws . . . . . . . . . . . . . . . . 10
1.9. Directors and Officers . . . . . . . . . 10
1.10. Tax Consequences . . . . . . . . . . . . 11
ARTICLE II
EXCHANGE OF SHARES
2.1. Parent to Make Shares Available . . . . 11
2.2. Exchange of Shares . . . . . . . . . . . 12
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
3.1. Corporate Organization . . . . . . . . . 17
3.2. Capitalization . . . . . . . . . . . . . 20
3.3. Authority; No Violation . . . . . . . . 23
3.4. Consents and Approvals . . . . . . . . . 26
3.5. Regulatory Reports; Examinations . . . . 27
3.6. Financial Statements . . . . . . . . . . 28
3.7. Broker's Fees . . . . . . . . . . . . . 30
3.8. Absence of Certain Changes or Events . . 31
3.9. Legal Proceedings . . . . . . . . . . . 32
3.10. Taxes . . . . . . . . . . . . . . . . . 33
3.11. Employees . . . . . . . . . . . . . . . 36
3.12. FDIC Reports. . . . . . . . . . . . . . 40
3.13. Company Information. . . . . . . . . . . 41
3.14. Compliance with Applicable Law . . . . . 41
3.15. Certain Contracts. . . . . . . . . . . . 42
3.16. Agreements with Regulatory Agencies . . 44
3.17. Investment Securities . . . . . . . . . 45
3.18. Takeover Provisions. . . . . . . . . . . 45
3.19. Equity and Real Estate Investments . . . 46
3.20. Environmental Matters . . . . . . . . . 46
3.21. Derivative Transactions. . . . . . . . . 48
3.22. Opinion. . . . . . . . . . . . . . . . . 50
3.23. Assistance Agreements. . . . . . . . . . 50
3.24. Loan Portfolio. . . . . . . . . . . . . 51
3.25. Property . . . . . . . . . . . . . . . . 53
3.26. Rights Agreement . . . . . . . . . . . . 54
3.27. Accounting for the Merger;
Reorganization . . . . . . . . . . . . 54
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF PARENT
4.1. Corporate Organization . . . . . . . . . 55
4.2. Capitalization . . . . . . . . . . . . . 57
4.3. Authority; No Violation . . . . . . . . 59
4.4. Consents and Approvals . . . . . . . . . 63
4.5. Financial Statements . . . . . . . . . . 64
4.6. Broker's Fees . . . . . . . . . . . . . 66
4.7. Absence of Certain Changes or Events . . 67
4.8. Legal Proceedings . . . . . . . . . . . 67
4.9. Compliance with Applicable Law . . . . . 68
4.10. SEC Reports . . . . . . . . . . . . . . 69
4.11. Parent Information . . . . . . . . . . . 70
4.12. Ownership of Company Common Stock . . . 70
4.13. Taxes . . . . . . . . . . . . . . . . . 70
4.14. Employees . . . . . . . . . . . . . . . 73
4.15. Agreements with Regulatory Agencies . . 76
4.16. Regulatory Reports; Examinations . . . . 76
4.17. Environmental Matters . . . . . . . . . 77
4.18. Derivative Transactions . . . . . . . . 79
4.19. Loan Portfolio . . . . . . . . . . . . . 80
4.20. Property . . . . . . . . . . . . . . . . 82
4.21. Investment Securities . . . . . . . . . 83
4.22. Accounting for the Merger;
Reorganization . . . . . . . . . . . . 84
4.23. Opinion . . . . . . . . . . . . . . . . 84
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
5.1. Covenants of the Company . . . . . . . . 84
5.2. Covenants of Parent . . . . . . . . . . 92
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1. Regulatory Matters. . . . . . . . . . . 94
6.2. Access to Information . . . . . . . . . 96
6.3. Stockholder Meetings . . . . . . . . . . 99
6.4. Legal Conditions to Merger . . . . . . . 100
6.5. Affiliates . . . . . . . . . . . . . . . 101
6.6. Stock Exchange Listing . . . . . . . . . 101
6.7. Employee Benefit Plans;
Existing Agreements; Employment
Agreement. . . . . . . . . . . . . . . 101
6.8. Indemnification . . . . . . . . . . . . 104
6.9. Subsequent Interim Financial
Statements . . . . . . . . . . . . . . 108
6.10. Additional Agreements . . . . . . . . . 109
6.11. Advice of Changes . . . . . . . . . . . 109
6.12. Current Information . . . . . . . . . . 110
6.13. Merger Bank . . . . . . . . . . . . . . 111
6.14. Directorships; Advisory Committee . . . 111
6.15. Accountants' Letters . . . . . . . . . . 113
6.16. Parent Rights Agreement . . . . . . . . 113
6.17. Plan of Integration . . . . . . . . . . 114
6.18. Issuance of Treasury Shares . . . . . . 114
ARTICLE VII
CONDITIONS PRECEDENT
7.1. Conditions to Each Party's Obligation
To Effect the Merger . . . . . . . . . . 114
7.2. Conditions to Obligations of Parent . 116
7.3. Conditions to Obligations of
the Company . . . . . . . . . . . . . 121
ARTICLE VIII
TERMINATION AND AMENDMENT
8.1. Termination . . . . . . . . . . . . . . 126
8.2. Effect of Termination; Expenses . . . . 131
8.3. Amendment . . . . . . . . . . . . . . . 131
8.4. Extension; Waiver . . . . . . . . . . . 132
ARTICLE IX
GENERAL PROVISIONS
9.1. Closing . . . . . . . . . . . . . . . . 133
9.2. Alternative Structure . . . . . . . . . 133
9.3. Nonsurvival of Representations,
Warranties and Agreements . . . . . . 134
9.4. Expenses . . . . . . . . . . . . . . . . 134
9.5. Notices . . . . . . . . . . . . . . . . 135
9.6. Interpretation . . . . . . . . . . . . . 136
9.7. Counterparts . . . . . . . . . . . . . . 136
9.8. Entire Agreement . . . . . . . . . . . . 136
9.9. Governing Law . . . . . . . . . . . . . 137
9.10. Enforcement of Agreement . . . . . . . . 137
9.11. Severability . . . . . . . . . . . . . . 137
9.12. Publicity . . . . . . . . . . . . . . . 138
9.13. Assignment; No Third Party
Beneficiaries . . . . . . . . . . . . 138
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of July
15, 1996, by and among North Fork Bancorporation, Inc., a
Delaware corporation ("Parent"), a New York-chartered
savings bank to be formed as a direct wholly owned
subsidiary of Parent ("Merger Bank"), and North Side
Savings Bank, a New York-chartered stock form savings
bank (the "Company"). (Merger Bank and the Company are
sometimes collectively referred to herein as the
"Constituent Corporations".)
WHEREAS, the Boards of Directors of Parent 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 Merger Bank
will, subject to the terms and conditions set forth
herein, merge (the "Merger") with and into the Company;
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 New
York Banking Law (the "NYBL"), at the Effective Time (as
defined in Section 1.2 hereof), Merger Bank shall merge
with and into the Company. The Company 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 New York. The name of the Surviving Corporation
shall be North Side Savings Bank. Upon consummation of
the Merger, the separate corporate existence of Merger
Bank shall terminate.
1.2. Effective Time. The Merger shall become
effective at the date and time set forth in the
certificate which shall be filed by the Superintendent of
Banking of the State of New York Department of Banking
(the "Banking Department") on the Closing Date (as
defined in Section 9.1 hereof) pursuant to Section 601-b
of the NYBL. The term "Effective Time" shall be the date
and time when the Merger becomes effective.
1.3. Effects of the Merger. At and after the
Effective Time, the Merger shall have the effects set
forth in Section 602 of the NYBL.
1.4. Conversion of Company Common Stock.
(a) At the Effective Time, subject to
Section 2.2(e) and Section 8.1(g) hereof and the last
sentence of this Section 1.4(a), each share of the common
stock, par value $1.00 per share, of the Company (the
"Company Common Stock") issued and outstanding
immediately prior to the Effective Time (other than (x)
shares of Company Common Stock held (1) in the Company's
treasury or (2) directly or indirectly by Parent 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) and (y) Dissenting Shares (as defined in Section
1.4(c) hereof), if any) shall, by virtue of this
Agreement and without any action on the part of the
holder thereof, be converted into and exchangeable for
1.556 shares (the "Exchange Ratio") of the common stock,
par value $2.50 per share, of Parent ("Parent Common
Stock") (together with the number of Parent Rights (as
defined in Section 4.2 hereof) associated therewith).
All of the shares of Company Common Stock converted into
Parent 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 Parent 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 Parent 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, between the date
hereof and the Effective Time, the shares of Parent
Common Stock shall be changed into a different number or
class of shares by reason of any reclassification,
recapitalization, split-up, combination, exchange of
shares or readjustment, or a stock dividend thereon shall
be declared with a record date within said period, the
Exchange Ratio shall be adjusted accordingly.
(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 Parent 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 Parent Common Stock which are similarly held,
whether held directly or indirectly by Parent or the
Company, as the case may be, being referred to herein as
"Trust Account Shares") and (y) held by Parent 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 Parent Common
Stock which are similarly held, whether held directly or
indirectly by Parent or the Company, being referred to
herein as "DPC Shares")) shall be cancelled and shall
cease to exist and no stock of Parent or other
consideration shall be delivered in exchange therefor.
All shares of Parent 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 Parent.
(c) Notwithstanding anything in this
Agreement to the contrary, if, and to the extent required
by law, dissenters rights are available to holders of
Company Common Stock, then any shares of Company Common
Stock which are outstanding immediately prior to the
Effective Time and which are held by stockholders who
shall not have voted such shares in favor of the Merger
and who shall have filed with the Company a written
objection to the Merger and a demand for appraisal of
such shares in the manner provided in Section 6022 of the
NYBL ("Dissenting Shares") shall not be converted into
the right to receive, or be exchangeable for, the
consideration provided for in Section 1.4(a) hereof, but,
instead, the holders thereof shall be entitled to payment
of the appraised value of such Dissenting Shares in
accordance with the provisions of Section 6022 of the
NYBL. The Company shall (x) give Parent prompt written
notice of the receipt of any notice from a stockholder of
his intent to demand payment for his shares, (y) not
settle or offer to settle any such demands without the
prior written consent of Parent and (z) not, without the
prior written consent of Parent, waive any failure to
timely deliver a written objection to the Merger and a
demand for appraisal of such shares in accordance with
Section 6022 of the NYBL.
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(c)
hereof, be converted automatically into an option to
purchase shares of Parent Common Stock in an amount and
at an exercise price determined as provided below (and
otherwise subject to the terms of the Company's Amended
and Restated Long-Term Incentive and Capital Accumulation
Plan (the "Option Plan")):
(1) The number of shares of Parent
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 Parent
Common Stock resulting from such multiplication
shall be rounded down to the nearest share; and
(2) The exercise price per share of
Parent 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.
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 Parent.
(b) Within ten days after the Effective
Time, Parent shall file with the Securities and Exchange
Commission (the "SEC") a registration statement on an
appropriate form under the Securities Act of 1933, as
amended (the "Securities Act") with respect to the shares
of Parent Common Stock subject to options to acquire
Parent Common Stock issued pursuant to Section 1.5(a)
hereof, and shall use its reasonable best efforts to
maintain the current status of the prospectus contained
therein, as well as comply with applicable state
securities or "blue sky" laws, for so long as such
options remain outstanding.
(c) Without limiting the foregoing, and
provided that the right contained in this paragraph (c)
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 Parent) 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 been
exercised and 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 Parent
Common Stock as are equal in value (determined by valuing
each share of Parent Common Stock at the Average Closing
Price (as defined in Section 8.1(g)) 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 over (ii) the aggregate exercise
price of such option.
1.6. Merger Bank Common Stock. Each of the
shares of common stock of Merger Bank, par value $0.01
per share, issued and outstanding immediately prior to
the Effective Time shall by virtue of the Merger,
automatically and without any action on the part of
Parent, become and be converted into one share of common
stock of the Surviving Corporation, which shall
thereafter constitute all of the issued and outstanding
shares of the capital stock of the Surviving Corporation.
1.7. Certificate of Incorporation. At the
Effective Time, the Restated Organization Certificate of
the Company, as in effect at the Effective Time, shall be
the Organization Certificate of the Surviving
Corporation.
1.8. By-Laws. At the Effective Time, the By-
Laws of Merger Bank, 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 set
forth in Section 6.14 hereof, the directors and officers
of Merger Bank immediately prior to the Effective Time
shall be the directors and officers of the Surviving
Corporation, each to hold office in accordance with the
Organization Certificate 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 constitute a reorganization within the meaning
of Section 368(a) of the Code, and that this Agreement
shall constitute a "plan of reorganization" for purposes
of Section 368 of the Code.
ARTICLE II
EXCHANGE OF SHARES
2.1. Parent to Make Shares Available. At or
prior to the Effective Time, Parent shall deposit, or
shall cause to be deposited, with a bank or trust company
(which may be a Subsidiary of Parent) (the "Exchange
Agent") selected by Parent 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
Parent Common Stock and the cash in lieu of fractional
shares (such cash and certificates for shares of Parent
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.
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 Parent 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. 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
Parent 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
share, 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 Parent
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 Parent Common
Stock represented by such Certificate.
(c) If any certificate representing
shares of Parent 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 Parent
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 Parent Common
Stock as provided in this Article II.
(e) Notwithstanding anything to the
contrary contained herein, no certificates or scrip
representing fractional shares of Parent Common Stock
shall be issued upon the surrender for exchange of
Certificates, no dividend or distribution with respect to
Parent 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 Parent. In lieu
of the issuance of any such fractional share, Parent
shall pay to each former stockholder of the Company who
otherwise would be entitled to receive a fractional share
of Parent Common Stock an amount in cash determined by
multiplying (i) the average of the closing sales prices
of Parent Common Stock on the New York Stock Exchange
(the "NYSE") as reported by The Wall Street Journal (or,
if not reported thereby, another authoritative source)
for the five trading days immediately preceding the date
on which the Effective Time shall occur by (ii) the
fraction of a share of Parent Common Stock to which such
holder would otherwise be entitled to receive pursuant to
Section 1.4 hereof.
(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
Parent. Any stockholders of the Company who have not
theretofore complied with this Article II shall
thereafter look only to Parent for payment of their
shares of Parent Common Stock, cash in lieu of fractional
shares and unpaid dividends and distributions on the
Parent 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 Parent, Merger Bank, 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 Parent, the posting by such person of a bond
in such amount as Parent 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 Parent 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
Parent as follows:
3.1. Corporate Organization. (a) The Company
is a savings bank duly organized, validly existing and in
good standing under the laws of the State of New York.
The deposit accounts of the Company are insured by the
Federal Deposit Insurance Corporation (the "FDIC")
through the Bank 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. 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 Restated Organization
Certificate and Amended and Restated Bylaws of the
Company, copies of which have previously been delivered
to Parent, 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 Parent or the Company, as
the case may be, any effect that (i) is material and
adverse to the business, assets, liabilities, results of
operations or financial condition of Parent and its
Subsidiaries taken as whole or the Company and its
Subsidiaries taken as a whole, respectively, or (ii)
materially impairs the ability of the Company, Parent or
Merger Bank to consummate the transactions contemplated
hereby; provided, however, that Material Adverse Effect
shall not be deemed to include the impact of (a) changes
in laws and regulations or interpretations thereof that
are generally applicable to the banking or savings
industries, (b) changes in generally accepted accounting
principles that are generally applicable to the banking
or savings industries, (c) expenses incurred in
connection with the transactions contemplated hereby and
(d) changes attributable to or resulting from changes in
general economic conditions, including changes in the
prevailing level of interest rates. 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) Each of the Company's 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
Adverse Effect on the Company. The certificate of
incorporation, by-laws or similar governing documents of
each Subsidiary of the Company, copies of which have
previously been delivered to Parent, 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, 1992 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 10,000,000
shares of Company Common Stock and 5,000,000 shares of
preferred stock, par value $1.00 per share (the "Company
Preferred Stock"). As of the date of this Agreement,
there are (x) 4,833,997 shares of Company Common Stock
issued and outstanding and no 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)
394,340 shares of Company Common Stock reserved for
issuance pursuant to the Option Plan and (ii) 961,965
shares of Company Common Stock reserved for issuance upon
exercise of the option issued to Parent pursuant to the
Stock Option Agreement, dated as of the date hereof,
between Parent 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, except for 100,000 shares of Series A
Junior Participating Preferred Stock reserved for
issuance upon exercise of the rights distributed to
holders of the Company Common Stock pursuant to the
Rights Agreement, dated as of April 18, 1996, between the
Company and American Stock Transfer and Trust Company, as
Rights Agent (the "Rights Agreement"). 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 provided in Section 114 of the NYBL. Except as
referred to above or reflected in Section 3.2(a) of the
Disclosure Schedule which is being delivered to Parent
concurrently herewith (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, 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,
Company Preferred Stock or any other equity security of
the Company and none of the options granted under the
Option Plan have related Appreciation Rights (as such
term is defined in the Option Plan). 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 expiration date of each such
option, and the price at which each such option may be
exercised under the Option Plan 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 Parent 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 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 each of Parent and Merger Bank)
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
laws affecting insured depository institutions, 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) Except as set forth in Section 3.3(b)
of the Company Disclosure Schedule, neither the execution
and delivery of this Agreement by the Company, nor the
consummation by the Company of the transactions
contemplated hereby, nor compliance by the Company with
any of the terms or provisions hereof, will (i) violate
any provision of the Restated Organization Certificate or
Amended and Restated 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. (a) Except for
(i) the filing of applications or notices, as applicable,
with the Board of Governors of the Federal Reserve System
(the "Federal Reserve Board") under the Bank Holding
Company Act of 1956, as amended (the "BHC Act") and
approval of such applications or notices, (ii) the filing
of an application with the FDIC under the Bank Merger Act
and approval of such application, (iii) the filing of an
application with the Banking Department and approval of
such application, (iv) the filing with the SEC and the
FDIC of a joint proxy statement in definitive form
relating to the meetings of the Company's stockholders
and Parent's stockholders to be held in connection with
this Agreement and the transactions contemplated hereby
(the "Proxy Statement"), (v) the approval of this
Agreement by the requisite vote of the stockholders of
the Company, (vi) review of this Agreement and the
transactions contemplated hereby by the U.S. Department
of Justice ("DOJ") under federal antitrust laws, and
(vii) 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 or self-regulatory organization, as
defined in Section 3(a)(26) of the Exchange Act (each a
"Governmental Entity"), or with any third party are
necessary on behalf of the Company in connection with (1)
the execution and delivery by the Company of this
Agreement and (2) the consummation by the Company of the
Merger and the other transactions contemplated hereby.
(b) As of the date hereof, the Company is
not aware of any reasons relating to the Company or its
Subsidiaries (including, without limitation, Community
Reinvestment Act compliance) why all consents and
approvals shall not be procured from all regulatory
agencies having jurisdiction over the transactions
contemplated by this Agreement as shall be necessary for
consummation of the transactions contemplated by this
Agreement.
3.5. Regulatory Reports; Examinations. 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 any Governmental Entity and have
paid all fees and assessments due and payable in
connection therewith. Except for normal examinations
conducted by a Governmental Entity in the regular course
of the business of the Company and its Subsidiaries and
except as set forth in Section 3.5 of the Company
Disclosure Schedule, no Governmental Entity 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 Governmental Entity 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 Parent copies of (a) the
consolidated statements of condition of the Company and
its Subsidiaries as of September 30 for the fiscal years
1994 and 1995, and the related consolidated statements of
operations, changes in shareholders' equity and cash
flows for the fiscal years 1993 through 1995, inclusive,
as reported in the Company's Annual Report on Form F-2
for the fiscal year ended September 30, 1995 filed with
the FDIC pursuant to the rules and regulations of the
FDIC, in each case accompanied by the audit report of
KPMG Peat Marwick LLP, independent public accountants
with respect to the Company, and (b) the unaudited
consolidated statements of condition of the Company and
its Subsidiaries as of March 31, 1996 and the related
unaudited consolidated statements of income, cash flows
and changes in shareholders' equity for the six-month
periods then ended as reported in the Company's Quarterly
Report on Form F-4 for the period ended March 31, 1996
filed with the FDIC pursuant to the rules and regulations
of the FDIC. The September 30, 1995 consolidated
statement of condition 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 FDIC 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 F-
4. The books and records of the Company 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.
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 or the
Option Agreement, except that the Company has engaged,
and will pay a fee or commission to, Sandler O'Neill &
Partners, L.P. ("Sandler O'Neill") in accordance with the
terms of a letter agreement between the Company and
Sandler O'Neill, a true, complete and correct copy of
which has been previously delivered by the Company to
Parent.
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, (i) since March 31, 1996,
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 (excluding the incurrence of expenses in
connection with this Agreement and the transactions
contemplated hereby), (ii) since March 31, 1996, 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, and (iii) for the period
from March 31, 1996 up until the date of this Agreement,
the Company and its Subsidiaries have carried on their
respective businesses in the ordinary course consistent
with their past practices (excluding the execution of
this Agreement and related matters).
(b) Except as set forth in Section 3.8(b)
of the Company Disclosure Schedule, since September 30,
1995, 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 September 30, 1995 (which amounts
have been previously disclosed to Parent), 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
1995 as listed in Section 3.8 of the Company Disclosure
Schedule, (ii) suffered any strike, work stoppage, slow-
down or other labor disturbance, (iii) been a party to a
collective bargaining agreement, contract or other
agreement or understanding with a labor union or
organization, or (iv) had any union organizing
activities.
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 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 expected 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 (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 are true, correct and complete in
all material respects, and (ii) paid in full or made
adequate provision in the financial statements of the
Company (in accordance with GAAP) for all Taxes (as
hereinafter defined). No deficiencies for any Taxes have
been proposed, asserted, assessed or, to the best
knowledge of the Company, threatened against or with
respect to the Company or any of its Subsidiaries.
Except as set forth in Section 3.10(a) of the Company
Disclosure Schedule, (i) there are no liens for Taxes
upon the assets of either the Company or its Subsidiaries
except for statutory liens for current Taxes not yet due,
(ii) 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, (iii)
with respect to each taxable period of the Company and
its Subsidiaries, the federal and state income Tax
Returns of the Company and its Subsidiaries have been
audited by the Internal Revenue Service or appropriate
state tax authorities or the time for assessing and
collecting income Tax with respect to such taxable period
has closed and such taxable period is not subject to
review, (iv) neither the Company nor any of its
Subsidiaries has filed or been included in a combined,
consolidated or unitary income Tax Return other than one
in which the Company was the parent of the group filing
such Tax Return, (v) neither the Company nor any of its
Subsidiaries 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), (vi) neither
the Company nor any of its Subsidiaries is required to
include in income any adjustment pursuant to Section
481(a) of the Code (or any similar or corresponding
provision or requirement of state, local or foreign
income Tax law), 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), (vii) neither the Company nor any of its
Subsidiaries has filed a consent pursuant to Section
341(f) of the Code, and (viii) neither the Company nor
any of its Subsidiaries has made any payment or will be
obligated to make any payment (by contract or otherwise)
which will not be deductible by reason of Section 280G 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 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 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,
development 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.
(c) For 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.
(d) 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 (including, without limitation, each
employment, severance and similar 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 director, employee or former employee of
the Company, any Subsidiary or any ERISA Affiliate.
(b) The Company has heretofore delivered
to Parent 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
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. FDIC Reports. The Company has
previously made available to Parent an accurate and
complete copy of each (a) final registration statement,
prospectus, report, schedule and definitive proxy
statement filed since January 1, 1992 by the Company with
the FDIC pursuant to the Securities Exchange Act of 1934,
as amended (the "Exchange Act") or the rules and
regulations of the FDIC (the "Company Reports") and (b)
communication mailed by the Company to its stockholders
since January 1, 1992, and no such Company Report 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 pursuant to the
rules and regulations of the FDIC, and, as of their
respective dates, all Company Reports complied in all
material respects with the published rules and
regulations of the FDIC with respect thereto.
3.13. Company Information. The information
relating to the Company and its Subsidiaries to be
contained in (whether directly or incorporated by
reference) 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 Governmental Entity
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.
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,
plan, 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 this 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 Parent, the Company, the
Surviving Corporation, 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 an agreement, not otherwise described by clause
(iii) hereof, involving the payment by the Company or any
of its Subsidiaries of more than $100,000 per annum, (v)
which materially restricts the conduct of any line of
business by the Company or any of its Subsidiaries, or
(vi) under which any of the benefits will be increased,
or the vesting of the benefits will be accelerated, by
the occurrence of any of the transactions contemplated by
this Agreement, or the value of any of the benefits of
which will be calculated on the basis of any of the
transactions contemplated by this Agreement. Each
contract, arrangement, plan, 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
Parent true, complete and correct copies of each Company
Contract and any amendments or modifications thereof.
(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
expected 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, 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.
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 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 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 June 30, 1996 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 as of June 30, 1996
which includes security descriptions, CUSIP numbers, pool
face values, book values, coupon rates and current market
values.
3.18. Takeover Provisions. The provisions of
Article XI of the Company's Restated Organization
Certificate will not, assuming the accuracy of the
representations contained in Section 4.12 hereof, apply
to this Agreement or the Option Agreement or any of the
transactions contemplated hereby or thereby.
3.19. Equity and Real Estate Investments.
Except as set forth in Section 3.19 of the Disclosure
Schedule, neither the Company nor any of its Subsidiaries
has any (i) equity investments other than investments in
wholly owned Subsidiaries, or (ii) investments in real
estate, other than assets classified as "other real
estate owned" and set forth in Section 3.24 of the
Company Disclosure Schedule, or real estate development
projects.
3.20. Environmental Matters. Except as set
forth in Section 3.20 of the Company Disclosure Schedule:
(a) To the best of the Company's
knowledge, 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 or the discharge of, or
exposure to chemicals, pollutants, contaminants, wastes,
toxic substances, petroleum or other regulated substances
or materials (collectively, "Hazardous 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, to the best of the Company's
knowledge, 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 Hazardous 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 had, and cannot be
reasonably expected to result in, either individually or
in the aggregate, a Material Adverse Effect on the
Company;
(c) To the best knowledge of the Company,
during and 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 has been no release of
Hazardous 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; and
(d) The following definitions apply for
purposes of this Section 3.20: (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.
3.21. Derivative Transactions. Except as set
forth in Section 3.21 of the Company Disclosure Schedule,
since September 30, 1995, neither the 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 to
the extent required by GAAP, 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
$250,000.
3.22. Opinion. The Company has received a
written opinion from Sandler O'Neill 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.
3.23. Assistance Agreements. Except as set
forth in Section 3.23 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 Entity. Each agreement set forth in Section
3.23 of the Company Disclosure Schedule has not been
amended and is valid and binding and in full force and
effect. There have been no conflicts or disputes between
the Company and its Subsidiaries, on the one hand, and
the FDIC, on the other, regarding the interpretation or
performance of the each such agreement and neither the
Company nor any of its Subsidiaries has taken any action
which has prejudiced, compromised, terminated or altered
the rights or remedies of the Company or any of its
Subsidiaries under each such agreement.
3.24. Loan Portfolio. (a) Except as set
forth in Section 3.24 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 $250,000, 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 material provision, or (ii) Loan as of the date of
this Agreement with any director, executive officer or,
to the best of the Company's knowledge, greater than five
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 3.24 of the Company Disclosure
Schedule sets forth (i) all of the Loans in original
principal amount in excess of $250,000 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, (ii) by category of Loan (i.e.,
commercial, consumer, etc.), all of the Loans of the
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 and (iii) each asset
of the Company that as of the date of this Agreement is
classified as "Other Real Estate Owned" and the book
value thereof.
(b) Each Loan in original principal
amount in excess of $250,000 (i) is evidenced by notes,
agreements or other evidences of indebtedness which are
true, genuine and what they purport to be, (ii) to the
extent secured, has been secured by valid liens and
security interests which have been perfected and (iii) is
the legal, valid and binding obligation of the obligor
named therein, enforceable in accordance with its terms,
subject to bankruptcy, insolvency, fraudulent conveyance
and other laws of general applicability relating to or
affecting creditors' rights and to general equity
principles, in each case other than Loans as to which the
failure to satisfy the foregoing standards would not have
a Material Adverse Effect on the Company.
3.25. Property. Each of the Company and its
Subsidiaries has good and marketable title free and clear
of all liens, encumbrances, mortgages, pledges, charges,
defaults or equitable interests to all of the properties
and assets, real and personal, tangible or intangible,
which, individually or in the aggregate, are material,
and which are reflected on the balance sheet of the
Company as of September 30, 1995 or acquired after such
date, except (i) liens for taxes not yet due and payable,
(ii) pledges to secure deposits and other liens incurred
in the ordinary course of banking business, (iii) such
imperfections of title, easements and encumbrances, if
any, as are not material in character, amount or extent
or (iv) for dispositions and encumbrances of, or on, such
properties or assets for adequate consideration in the
ordinary course of business. All leases pursuant to
which the Company or any Subsidiary of the Company, as
lessee, leases real or personal property which,
individually or in the aggregate, are material are valid
and enforceable in accordance with their respective terms
and neither the Company nor any of its Subsidiaries nor,
to the best knowledge of the Company, any other party
thereto is in default in any material respect thereunder.
3.26. Rights Agreement. The amendment to the
Rights Agreement attached hereto as Exhibit 3.26 has been
duly authorized and adopted by the Company and will be
duly executed and effective promptly after the date of
this Agreement. Parent will not become an "Acquiring
Person" and no "Stock Acquisition Date", "Distribution
Date" or "Triggering Event" (as such terms are defined in
the Rights Agreement) will occur as a result of the
approval, execution or delivery of this Agreement or the
Option Agreement by the Company or the consummation of
the transactions contemplated hereby or thereby,
including, without limitation, the acquisition of shares
of Company Common Stock pursuant to the Option Agreement.
3.27. Accounting for the Merger;
Reorganization. As of the date hereof, the Company has
no reason to believe that the Merger will fail to qualify
(i) for pooling-of-interests treatment under GAAP or (ii)
as a reorganization under Section 368(a) of the Code.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF PARENT
Parent hereby represents and warrants to the
Company as follows:
4.1. Corporate Organization. (a) Parent is a
corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware. Parent
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
Parent. Parent is duly registered as a bank holding
company under the BHC Act. The Certificate of
Incorporation and By-laws of Parent, copies of which have
previously been delivered to the Company, are true,
complete and correct copies of such documents as in
effect as of the date of this Agreement.
(b) Upon its formation, Merger Bank will
be a savings bank duly organized, validly existing and in
good standing under the laws of the State of New York.
Each other Subsidiary of Parent is duly organized,
validly existing and in good standing under the laws of
the jurisdiction of its incorporation. Each Subsidiary
of Parent 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 Parent.
(c) The minute books of Parent 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,
1992 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 Parent
consists of 50,000,000 shares of Parent Common Stock and
10,000,000 shares of preferred stock, par value $1.00 per
share ("Parent Preferred Stock"). As of June 30, 1996,
there were 24,118,315 shares of Parent Common Stock and
no shares of Parent Preferred Stock issued and
outstanding, and 924,437 shares of Parent Common Stock
held in Parent's treasury. As of the date of this
Agreement, no shares of Parent Common Stock or Parent
Preferred Stock were reserved for issuance, except that
369,661 shares of Parent Common Stock were reserved for
issuance pursuant to the Parent's dividend reinvestment
and stock purchase plans, 928,115 shares of Parent Common
Stock were reserved for issuance upon the exercise of
stock options pursuant to the Parent 1989 Executive Stock
Option Plan, the Parent 1994 Key Employee Stock Plan and
the Parent Secondary Stock Option Plan (collectively, the
"Parent Stock Plans"), 144,054 shares of Parent Common
Stock were reserved for issuance under Parent's 401(k)
plan, and 500,000 shares of Parent Series A Junior
Participating Preferred Stock were reserved for issuance
upon exercise of the rights (the "Parent Rights")
distributed to holders of Parent Common Stock pursuant to
the Rights Agreement, dated as of February 28, 1989,
between Parent and the Bank, as Rights Agent (the "Parent
Rights Agreement"). All of the issued and outstanding
shares of Parent 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. As of the date of
this Agreement, except as referred to above or reflected
in Section 4.2(a) of the Disclosure Schedule which is
being delivered by Parent to the Company herewith (the
"Parent Disclosure Schedule") and the Parent Rights
Agreement, Parent 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 Parent Common
Stock or Parent Preferred Stock or any other equity
securities of Parent or any securities representing the
right to purchase or otherwise receive any shares of
Parent Common Stock or Parent Preferred Stock. The
shares of Parent 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 Parent
Disclosure Schedule sets forth a true and correct list of
all of the Subsidiaries of Parent as of the date of this
Agreement. Except as set forth in Section 4.2(b) of the
Parent Disclosure Schedule, Parent owns, directly or
indirectly, all of the issued and outstanding shares of
capital stock of each of the Subsidiaries of Parent, 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 Parent
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 Parent 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) Parent 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 Parent. The Board of
Directors of Parent has directed that this Agreement and
the transactions contemplated hereby be submitted to
Parent's stockholders for approval at a meeting of such
stockholders and, except for the adoption of this
Agreement by the requisite vote of Parent's stockholders,
no other corporate proceedings on the part of Parent are
necessary to consummate the transactions contemplated
hereby. This Agreement has been duly and validly
executed and delivered by Parent and (assuming due
authorization, execution and delivery by the Company)
constitutes a valid and binding obligation of Parent,
enforceable against Parent 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) Upon its formation, Merger Bank will
have 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 will be duly and validly approved by
the Board of Directors of Merger Bank and by Parent as
the sole stockholder of Merger Bank, and, upon such
approval, no other corporate proceedings on the part of
Merger Bank will be necessary to consummate the
transactions contemplated hereby. This Agreement will be
duly and validly executed and delivered by Merger Bank
and (assuming due authorization, execution and delivery
by the Company) will constitute a valid and binding
obligation of Merger Bank, enforceable against Merger
Bank in accordance with its terms, except as enforcement
may be limited by laws affecting insured depository
institutions, 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 Parent Disclosure Schedule, neither the execution
and delivery of this Agreement by Parent or Merger Bank,
nor the consummation by Parent or Merger Bank, as the
case may be, of the transactions contemplated hereby, nor
compliance by Parent or Merger Bank, as the case may be,
with any of the terms or provisions hereof, will (i)
violate any provision of the Certificate of Incorporation
or By-Laws of Parent, 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 Parent 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 Parent 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 Parent 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 Parent.
4.4. Consents and Approvals. (a) Except for
(i) the filing of applications or notices, as applicable,
with the Federal Reserve Board under the BHC Act, and
approval of such applications or notices, (ii) the filing
of an application with the FDIC under the Bank Merger Act
and approval of such applications and notices, (iii) the
filing of an application with the Banking Department and
approval of such application, (iv) the filing with the
FDIC and the SEC of the Proxy Statement and with the SEC
of the S-4, (v) the approval of this Agreement by the
requisite vote of the stockholders of Parent, (vi) review
of this Agreement and the transactions contemplated
hereby by the DOJ under federal antitrust laws, (vii) the
filing of an application with the NYSE to list the Parent
Common Stock to be issued in the Merger on the NYSE and
the approval of such application, and (viii) 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 Parent
Common Stock pursuant to this Agreement, and (ix) such
filings, authorizations or approvals as may be set forth
in Section 4.4 of the Parent Disclosure Schedule, no
consents or approvals of or filings or registrations with
any Governmental Entity or with any third party are
necessary on behalf of Parent in connection with (1) the
execution and delivery by Parent and Merger Bank of this
Agreement and (2) the consummation by Parent and Merger
Bank of the Merger and the other transactions
contemplated hereby.
(b) As of the date hereof, Parent is not
aware of any reasons relating to Parent or its
Subsidiaries (including, without limitation, Community
Reinvestment Act compliance) why all consents and
approvals shall not be procured from all regulatory
agencies having jurisdiction over the transactions
contemplated by this Agreement as shall be necessary for
consummation of the transactions contemplated by this
Agreement.
4.5. Financial Statements. Parent has
previously delivered to the Company copies of (a) the
consolidated balance sheets of Parent and its
Subsidiaries as of December 31 for the fiscal years 1994
and 1995 and the related consolidated statements of
income, changes in shareholders' equity and cash flows
for the fiscal years 1993 through 1995, inclusive, as
reported in Parent's Annual Report on Form 10-K for the
fiscal year ended December 31, 1995 filed with the SEC
under the Exchange Act, in each case accompanied by the
audit report of KPMG Peat Marwick LLP, independent public
accountants with respect to Parent, and (b) the unaudited
consolidated balance sheet of Parent and its Subsidiaries
as of March 31, 1995 and March 31, 1996 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 Parent's Quarterly
Report on Form 10-Q for the period ended March 31, 1996
filed with the SEC under the Exchange Act. The December
31, 1995 consolidated balance sheet of Parent (including
the related notes, where applicable) fairly presents the
consolidated financial position of Parent 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 Parent 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 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 Parent 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 Parent nor any
Subsidiary of Parent, 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 or the
Option Agreement, except that Parent has engaged, and
will pay a fee or commission to Keefe, Bruyette & Woods,
Inc. ("KBW") in accordance with the terms of a letter
agreement between Parent and KBW, a true, complete and
correct copy of which has been previously delivered by
Parent to the Company.
4.7. Absence of Certain Changes or Events.
Except as may be set forth in Section 4.7 of the Parent
Disclosure Schedule, since March 31, 1996, (i) neither
Parent nor any of its Subsidiaries has incurred any
material liability, except in the ordinary course of
business consistent with their past practices (excluding
the incurrence of expenses in connection with this
Agreement and the transactions contemplated hereby) and
except in connection with acquisitions permitted by
Section 5.2(e) hereof 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 Parent.
4.8. Legal Proceedings. (a) Except as set
forth in Section 4.8 of the Parent Disclosure Schedule,
neither Parent nor any of its Subsidiaries is a party to
any and there are no pending or, to the best of Parent's
knowledge, threatened, material legal, administrative,
arbitral or other proceedings, claims, actions or
governmental or regulatory investigations of any nature
against Parent or any of its Subsidiaries or challenging
the validity or propriety of the transactions
contemplated by this 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
expected to have a Material Adverse Effect on Parent.
(b) There is no injunction, order,
judgment, decree or regulatory restriction imposed upon
Parent, any of its Subsidiaries or the assets of Parent
or any of its Subsidiaries which has had, or could
reasonably be expected to have, a Material Adverse Effect
on Parent.
4.9. Compliance with Applicable Law. Parent
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 Parent 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
Parent, and neither Parent 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. Parent 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, 1992 by Parent with the SEC pursuant to
the Securities Act of 1933, as amended (the "Securities
Act") or the Exchange Act (the "Parent Reports") and (b)
communication mailed by Parent to its shareholders since
January 1, 1992, and no such Parent Report 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.
Parent has timely filed all Parent 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 Parent Reports complied in all material
respects with the published rules and regulations of the
SEC with respect thereto.
4.11. Parent Information. The information
relating to Parent and its Subsidiaries to be contained
in (whether directly or incorporated by reference) the
Proxy Statement and the S-4, or in any other document
filed with any other Governmental Entity 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.
4.12. Ownership of Company Common Stock.
Except for the Option Agreement and as set forth in
Section 4.12 of the Parent Disclosure Schedule, neither
Parent 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
any shares of capital stock of the Company (other than
Trust Account Shares and DPC Shares).
4.13. Taxes. Except as set forth in Section
4.13 of the Parent Disclosure Schedule, each of Parent
and its Subsidiaries has (i) duly and timely filed
(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 are true, correct and complete in all material
respects, and (ii) paid in full or made adequate
provision in the financial statements of Parent (in
accordance with GAAP) for all Taxes. No deficiencies for
any Taxes have been proposed, asserted, assessed or, to
the best knowledge of Parent, threatened against or with
respect to Parent or any of its Subsidiaries. Except as
set forth in Section 4.13 of the Parent Disclosure
Schedule, (i) there are no liens for Taxes upon the
assets of either Parent or its Subsidiaries except for
statutory liens for current Taxes not yet due, (ii)
neither Parent 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, (iii)
with respect to each taxable period of Parent and its
Subsidiaries, the federal and state income Tax Returns of
Parent and its Subsidiaries have been audited by the
Internal Revenue Service or appropriate state tax
authorities or the time for assessing and collecting
income Tax with respect to such taxable period has closed
and such taxable period is not subject to review, (iv)
neither Parent nor any of its Subsidiaries has filed or
been included in a combined, consolidated or unitary
income Tax Return other than one in which Parent was the
parent of the group filing such Tax Return, (v) neither
Parent nor any of its Subsidiaries 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),
(vi) neither Parent nor any of its Subsidiaries is
required to include in income any adjustment pursuant to
Section 481(a) of the Code (or any similar or
corresponding provision or requirement of state, local or
foreign income Tax law), 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), (vii) neither Parent nor any of its
Subsidiaries has filed a consent pursuant to Section
341(f) of the Code, and (viii) neither Parent nor any of
its Subsidiaries has made any payment or will be
obligated to make any payment (by contract or otherwise)
which will not be deductible by reason of Section 280G of
the Code.
4.14. Employees. (a) Section 4.14(a) of the
Parent Disclosure Schedule sets forth a true and complete
list of each employee benefit plan, arrangement or
agreement (including, without limitation, each
employment, severance and similar agreement) that is
maintained or contributed to or required to be
contributed to as of the date of this Agreement (the
"Parent Plans") by Parent, any of its Subsidiaries or by
any trade or business, whether or not incorporated (a
"Parent ERISA Affiliate"), all of which together with
Parent would be deemed a "single employer" within the
meaning of Section 4001 of ERISA, for the benefit of any
director, employee or former employee of Parent, any
Subsidiary or any ERISA Affiliate.
(b) Except as set forth in Section 4.14(b) of
the Parent Disclosure Schedule, (i) each of the Parent
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 Parent 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
Parent 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 Parent
Plan which is subject to Title IV of ERISA, the present
value of accrued benefits under such Parent Plan, based
upon the actuarial assumptions used for funding purposes
in the most recent actuarial report prepared by such
Parent 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 Parent 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 Parent, 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 ERISA, (y) deferred compensation benefits
accrued as liabilities on the books of Parent, 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 Parent, its
Subsidiaries or any Parent ERISA Affiliate that has not
been satisfied in full, (vi) no Parent 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 Parent, 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 Parent, its Subsidiaries nor any ERISA Affiliate
has engaged in a transaction in connection with which
Parent, 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 Parent, threatened
or anticipated claims (other than routine claims for
benefits) by, on behalf of or against any of the Parent
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 Parent 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 Parent
Disclosure Schedule, neither Parent 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 Parent Disclosure Schedule, a "Parent
Regulatory Agreement"), any 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 Parent
or any of its Subsidiaries been advised by any
Governmental Entity that it is considering issuing or
requesting any Parent Regulatory Agreement.
4.16. Regulatory Reports; Examinations.
Parent 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 Governmental Entity, and have paid all
fees and assessments due and payable in connection
therewith. Except for normal examinations conducted by a
Governmental Entity in the regular course of the business
of Parent and its Subsidiaries, except as set forth in
Section 4.16 of Parent Disclosure Schedule, no
Governmental Entity has initiated any proceeding or, to
the best knowledge of Parent, investigation into the
business or operations of Parent or any of its
Subsidiaries since December 31, 1991. There is no
unresolved material violation, criticism, or exception by
any Governmental Entity with respect to any report or
statement relating to any examinations of Parent or any
of its Subsidiaries.
4.17. Environmental Matters. Except as set
forth in Section 4.17 of the Parent Disclosure Schedule:
(a) To the best of Parent's knowledge,
each of Parent, its Subsidiaries, the Participation
Facilities and the Loan Properties (each as hereinafter
defined) are, and have been, in compliance with all
applicable 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 Parent;
(b) There is no suit, claim, action or
proceeding, pending or, to the best of Parent's
knowledge, threatened, before any Governmental Entity or
other forum in which Parent 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 Hazardous Material whether or not occurring at or on a
site owned, leased or operated by Parent or any of its
Subsidiaries, any Participation Facility or any Loan
Property, except where such noncompliance or release has
not had, and cannot be reasonably expected to result in,
either individually or in the aggregate, a Material
Adverse Effect on Parent;
(c) To the best knowledge of Parent,
during and prior to the period of (x) Parent's or any of
its Subsidiaries' ownership or operation of any of their
respective current properties, (y) Parent's or any of its
Subsidiaries' participation in the management of any
Participation Facility, or (z) Parent's or any of its
Subsidiaries' holding of a security interest in a Loan
Property, there has been no release of Hazardous
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 Parent;
and
(d) The following definitions apply for
purposes of this Section 4.17: (x) "Loan Property" means
any property in which Parent 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 Parent 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.
4.18. Derivative Transactions. Except as set
forth in Section 4.18 of the Parent Disclosure Schedule,
since December 31, 1995, neither Parent 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
Parent 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
Parent and its Subsidiaries on a consolidated basis under
or with respect to each such instrument has been
reflected in the books and records of Parent and such
Subsidiaries to the extent required by GAAP consistently
applied, and no open exposure of Parent or any of its
Subsidiaries with respect to any such instrument (or with
respect to multiple instruments with respect to any
single counterparty) exceeds $250,000.
4.19. Loan Portfolio. (a) Except as set
forth in Section 4.19 of the Parent Disclosure Schedule,
neither Parent 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 $250,000,
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, to the best of
Parent's knowledge, greater than five percent stockholder
of Parent or any of its Subsidiaries, or to the best
knowledge of Parent, any person, corporation or
enterprise controlling, controlled by or under common
control with any of the foregoing. Section 4.19 of the
Parent Disclosure Schedule sets forth (i) all of the
Loans in original principal amount in excess of $250,000
of Parent 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, (ii) by category of
Loan (i.e., commercial, consumer, etc.), all of the other
Loans of Parent 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 and (iii) each asset
of Parent that as of the date of this Agreement is
classified as "Other Real Estate Owned" and the book
value thereof.
(b) Each Loan in original principal
amount in excess of $250,000 (i) is evidenced by notes,
agreements or other evidences of indebtedness which are
true, genuine and what they purport to be, (ii) to the
extent secured, has been secured by valid liens and
security interests which have been perfected and (iii) is
the legal, valid and binding obligation of the obligor
named therein, enforceable in accordance with its terms,
subject to bankruptcy, insolvency, fraudulent conveyance
and other laws of general applicability relating to or
affecting creditors' rights and to general equity
principles, in each case other than Loans as to which the
failure to satisfy the foregoing standards would not have
a Material Adverse Effect on Parent.
4.20. Property. Each of Parent and its
Subsidiaries has good and marketable title free and clear
of all liens, encumbrances, mortgages, pledges, charges,
defaults or equitable interests to all of the properties
and assets, real and personal, tangible or intangible,
which, individually or in the aggregate, are material,
and which are reflected on the balance sheet of Parent as
of December 31, 1995 or acquired after such date, except
(i) liens for taxes not yet due and payable, (ii) pledges
to secure deposits and other liens incurred in the
ordinary course of banking business, (iii) such
imperfections of title, easements and encumbrances, if
any, as are not material in character, amount or extent
or (iv) for dispositions and encumbrances of, or on, such
properties and assets for adequate consideration in the
ordinary course of business. All leases pursuant to
which Parent or any Subsidiary, as lessee, leases real or
personal property which, individually or in the
aggregate, are material are valid and enforceable in
accordance with their respective terms and neither Parent
nor any of its Subsidiaries nor, to the best knowledge of
Parent, any other party thereto is in default in any
material respect thereunder.
4.21. Investment Securities. Section 4.21 of
the Parent Disclosure Schedule sets forth the book and
market value as of June 30, 1996 of the investment
securities, mortgage backed securities and securities
held for sale of Parent and its Subsidiaries. Section
4.21 of the Company Disclosure Schedule sets forth an
investment securities report as of June 30, 1996 which
includes security descriptions, CUSIP numbers, pool face
values, book values, coupon rates and current market
values.
4.22. Accounting for the Merger;
Reorganization. Assuming compliance by Parent with
Section 6.15 hereof, as of the date hereof, Parent has no
reason to believe that the Merger will fail to qualify
(i) for pooling-of-interests treatment under GAAP or (ii)
as a reorganization under Section 368(a) of the Code.
4.23. Opinion. Parent has received an opinion
from KBW to the effect that, subject to the terms,
conditions and qualifications set forth therein, as of
the date thereof, the aggregate consideration to be
issued by Parent pursuant to this Agreement is fair to
Parent and its stockholders from a financial point of
view. Such opinion has not been amended or rescinded as
of 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 or the Option
Agreement or with the prior written consent of Parent,
the Company and its Subsidiaries shall carry on their
respective businesses in the ordinary course consistent
with past practice. The Company will use its reasonable
best efforts to (x) preserve its business organization
and that of its Subsidiaries intact, (y) keep available
to itself and Parent the present services of the
employees of the Company and its Subsidiaries and (z)
preserve for itself and Parent 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 Parent, the Company shall not, and shall
not permit any of its Subsidiaries to:
(a) declare or pay any dividends on, or
make other distributions in respect of, any shares of its
capital stock, other than normal quarterly dividends in
an amount not in excess of the most recent quarterly
dividend paid in respect of each share of the Company
Common Stock, which dividends shall have the same record
and payment dates as the record and payment dates
relating to dividends on the Parent Common Stock, it
being the intention of the parties that the shareholders
of the Company receive dividends for any particular
quarter on either the Company Common Stock or the Parent
Common Stock but not both;
(b) (i) split, combine or reclassify any
shares of its capital stock 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;
(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 Option Plan and outstanding prior
to the date of this Agreement, in each case in accordance
with their present terms, (ii) pursuant to the Option
Agreement, and (iii) pursuant to the Rights Agreement;
(d) amend its Restated Organization
Certificate, Amended and Restated 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, (i) recommend or endorse any
takeover proposal, (ii) participate in any discussions or
negotiations, or (iii) provide third parties with any
nonpublic information, relating to any such inquiry or
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 Parent 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 Parent 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 Parent
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 and the Option Agreement;
(f) make any capital expenditures other
than expenditures 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 $25,000 individually and $200,000
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 except, in
every case, as may be required by applicable law;
(j) change its methods of accounting in
effect at September 30, 1995, 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 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 prevent the
Company from taking any action required by the Option
Agreement;
(m) 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, or 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;
(p) 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;
(q) 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;
(r) take any action which would cause the
termination or cancellation by the FDIC of insurance in
respect of the Company's deposits;
(s) make any loan or other extension of
credit, or commit to make any such loan or extension of
credit, to any director or officer of the Company or any
of its Subsidiaries without giving Parent five days'
notice in advance of the Company's or any of its
Subsidiaries' approval of such loan or extension of
credit or commitment relating thereto; or
(t) agree to do any of the foregoing.
5.2. Covenants of Parent. Except as set forth
in Section 5.2 of the Parent Disclosure Schedule or as
otherwise contemplated by this Agreement or consented to
in writing by the Company, Parent shall not, and shall
not permit any of its Subsidiaries to:
(a) solely in the case of Parent, 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 Parent from
increasing the quarterly cash dividend on the Parent
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 conditions to the Merger set
forth in Article VII not being satisfied, or in a
violation of any provision of this Agreement except, in
every case, as may be required by applicable law;
(c) 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 Parent to exercise its rights under the Option
Agreement; or
(d) amend its Certificate of
Incorporation or By-laws or other governing instrument in
a manner which would adversely affect in any manner the
terms of the Parent Common Stock or the ability of Parent
to consummate the transactions contemplated hereby;
(e) make any acquisition that
individually or in the aggregate can reasonably be
expected to materially adversely affect the ability of
Parent to consummate the transactions contemplated hereby
in a reasonably timely manner, or enter into any
agreement providing for, or otherwise participate in, any
merger, consolidation or other transaction in which
Parent or any surviving corporation may be required not
to consummate the Merger or any of the other transactions
contemplated hereby in accordance with the terms of this
Agreement; or
(f) agree to do any of the foregoing.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1. Regulatory Matters. (a) The parties
shall cooperate with respect to the preparation of the
Proxy Statement and the S-4 and shall promptly file such
documents with the FDIC and the SEC, as applicable. Each
of the Company and Parent shall use all reasonable
efforts to have the S-4 declared effective by the SEC
under the Securities Act and the Proxy Statement
authorized for use by the FDIC under the Exchange Act as
promptly as practicable after the respective filing
thereof, and each of the Company and Parent shall
thereafter mail the Proxy Statement to each of its
respective stockholders. Parent shall 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
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 all reasonable 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)
(it being understood that, subject to the provisions of
Section 5.2(e) hereof, any amendments to the S-4 or a
resolicitation of proxies as a consequence of a
subsequent proposed merger, stock purchase or similar
acquisition by Parent or any of its Subsidiaries shall
not violate this covenant). The Company and Parent 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 Parent, 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. Each party will keep the other apprised of
the status of matters relating to completion of the
transactions contemplated herein.
(c) Parent 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
Parent, 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.
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 Parent, 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 Parent (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 Parent may
reasonably request. Neither Parent 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. Parent will hold all such
information in confidence to the extent required by, and
in accordance with, the provisions of the confidentiality
agreement, dated July 3, 1996, between Parent and the
Company (the "Confidentiality Agreement").
(b) Upon reasonable notice and subject to
applicable laws relating to the exchange of information,
Parent 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 Parent 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 Parent contained herein
are true and correct and that the covenants of Parent
contained herein have been performed in all material
respects. Neither Parent 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 Parent'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.
The Company will hold all such information in confidence
to the extent required by, and in accordance with, the
provisions of the Confidentiality Agreement.
(c) 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
Parent 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 is
declared effective by the SEC and the Proxy Statement is
authorized for use by the FDIC for the purpose of voting
upon the approval of this Agreement and the consummation
of the transactions contemplated hereby. The Company and
Parent 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. The
Company and Parent 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
Parent and the Company shall, and shall cause its
Subsidiaries to, use all reasonable 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 and 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
Parent or any of their respective Subsidiaries in
connection with the Merger and the other transactions
contemplated by this Agreement, and to comply with the
terms and conditions of such consent, authorization,
order or approval.
6.5. Affiliates. Each of Parent 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 Parent to approve this Agreement, a written
agreement, in the form of Exhibit 6.5(a) hereto (in the
case of affiliates of Parent) or 6.5(b) hereto (in the
case of affiliates of the Company).
6.6. Stock Exchange Listing. Parent shall use
all reasonable efforts to cause the shares of Parent
Common Stock to be issued in the Merger to be approved
for listing on the NYSE, subject to official notice of
issuance, as of the Effective Time.
6.7. Employee Benefit Plans; Existing
Agreements; Employment Agreement. (a) As soon as
practicable following the Effective Time, the employees
of the Company (the "Company Employees") shall be
entitled to participate in each of Parent's employee
benefit plans (excluding any agreement between the Parent
and an employee of the Parent or any of its Subsidiaries)
in which similarly situated employees of Parent's wholly
owned banking subsidiary participate, to the same extent
as comparable employees of Parent's wholly owned banking
subsidiary (it being understood that inclusion of Company
Employees in Parent's employee benefit plans may occur at
different times with respect to different plans). Parent
intends to continue, and to cause the Surviving
Corporation to continue, each of the existing Plans with
respect to which there exists a corresponding Parent
employee benefit plan until the date on which the
inclusion of Company Employees in Parent's corresponding
plan occurs.
(b) With respect to each Parent Plan that
is an "employee benefit plan," as defined in Section 3(3)
of ERISA, for purposes of determining eligibility to
participate, vesting, and entitlement to benefits,
including for severance benefits and vacation entitlement
(but not for accrual of pension benefits), service with
the Company shall be treated as service with the Parent;
provided however, that such service shall not be
recognized to the extent that such recognition would
result in a duplication of benefits. Such service also
shall apply for purposes of satisfying any waiting
periods, evidence of insurability requirements, or the
application of any preexisting condition limitations.
Company Employees shall be given credit for amounts paid
under a corresponding benefit plan during the same period
for purposes of applying deductibles, copayments and out-
of-pocket maximums as though such amounts had been paid
in accordance with the terms and conditions of the Parent
Plan.
(c) Following the Effective Time, Parent
shall honor and shall cause the Surviving Corporation to
honor in accordance with their terms all employment,
severance and other compensation agreements and
arrangements, including but not limited to severance
benefit plans, as in effect prior to the execution of
this Agreement and set forth in Section 6.7(c) of the
Company Disclosure Schedule (or as amended to the extent
permitted under Section 5.1(k) hereof). The provisions
of this Section 6.7(c) are intended to be for the benefit
of, and shall be enforceable by, each party to, or
beneficiary of, the foregoing agreements and
arrangements, and his or her heirs and representatives.
(d) Within 20 business days after the
Effective Time, if Thomas M. O'Brien so elects, Parent,
the Surviving Corporation and Mr. O'Brien shall enter
into an employment agreement and change-in-control
agreement in the form attached as Exhibit 6.7(d)(1) and
Exhibit 6.7(d)(2) hereto, respectively. The provisions
of this Section 6.7(d) are intended to be for the benefit
of, and shall be enforceable by, Mr. O'Brien.
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,
Parent 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 Parent;
provided, however, that (1) Parent shall have the right
to assume the defense thereof and upon such assumption
Parent 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
Parent elects not to assume such defense or counsel for
the Indemnified Parties reasonably advises that there are
issues which raise conflicts of interest between Parent
and the Indemnified Parties, the Indemnified Parties may
retain counsel reasonably satisfactory to them after
consultation with Parent, and Parent shall pay the
reasonable fees and expenses of such counsel for the
Indemnified Parties, (2) Parent shall in all cases be
obligated pursuant to this paragraph to pay for only one
firm of counsel for all Indemnified Parties, (3) Parent
shall not be liable for any settlement effected without
its prior written consent (which consent shall not be
unreasonably withheld) and (4) Parent 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 promptly notify Parent thereof,
provided that the failure to so notify shall not affect
the obligations of Parent under this Section 6.8 except
to the extent such failure to notify materially
prejudices Parent. Parent's obligations under this
Section 6.8 shall 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.
(b) Parent shall cause the Company to
maintain the Company's existing directors' and officers'
liability insurance policy (or a policy providing
coverage on substantially the same terms and conditions)
for acts or omissions occurring prior to the Effective
Time by persons who are currently covered by such
insurance policy maintained by the Company for a period
of three years following the Effective Time; provided,
however, that in no event shall Parent be required to
expend on an annual basis more than 200% of the current
amount expended by the Company (the "Insurance Amount")
to maintain or procure insurance coverage, and further
provided that if Parent is unable to maintain or obtain
the insurance called for by this Section 6.8(b) Parent
shall use all reasonable efforts to obtain as much
comparable insurance as available for the Insurance
Amount.
(c) In the event Parent 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, proper
provision shall be made so that the successors and
assigns of Parent 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 Financial Statements.
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 (other than the last
quarter of each fiscal year), Parent will deliver to the
Company Parent's Quarterly Report on Form 10-Q, as filed
with the SEC under the Exchange Act, and the Company will
deliver to Parent the Company's Quarterly Report on Form
F-4, as filed with the FDIC under the Exchange Act, and
as soon as reasonably available, but in no event more
than 90 days after the end of each fiscal year, Parent
will deliver to the Company Parent's Annual Report on
Form 10-K, as filed with the SEC under the Exchange Act,
and the Company will deliver to Parent the Company's
Annual Report on Form F-2, as filed with the FDIC 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 to vest the Surviving Corporation with full
title to all properties, assets, rights, approvals,
immunities and franchises of any of the parties to the
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 Parent.
6.11. Advice of Changes. Parent 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 Parent,
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 Parent
and to report the general status of the ongoing
operations of the Company and its Subsidiaries. Each of
the parties will promptly notify the other of any
material change in the normal course of business or in
the operation of the properties of it 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 it or any
of its Subsidiaries, and will keep the other fully
informed of such events.
6.13. Merger Bank. Parent shall cause Merger
Bank to be duly organized and to execute and deliver this
Agreement and take all necessary action to complete the
transactions contemplated hereby, subject to the terms
and conditions hereof.
6.14. Directorships; Advisory Committee.
(a) Parent shall cause its Board of Directors to be
expanded by two members and shall appoint Thomas M.
O'Brien and one of the current directors of the Company
selected by the Company and approved by Parent (which
approval shall not be unreasonably withheld) as nominees
(such persons, and any substitute person as provided in
the last sentence of this paragraph, the "Nominees") to
fill the vacancies on Parent's Board of Directors created
by such increase as of the Effective Time. In the event
any Nominee shall be nominated and elected to a class of
directors of Parent which provides for less than a three-
year term following the Effective Time, Parent shall
include such person on the list of nominees for director
presented by the Board of Directors of Parent and for
which said Board shall solicit proxies at the annual
meeting of stockholders of Parent following the Effective
Time at which directors of Parent are elected for such
class. In the event that any Nominee is unable to serve
as a director of Parent as a result of illness, death,
resignation or any other reason, Parent shall elect a
member of the Adisory Committee established pursuant to
Section 6.14(c) hereof selected by Parent as a substitute
nominee in accordance with this Section 6.14(a).
(b) The Company shall cause each of its
directors other than the Nominees to deliver to Parent
duly signed resignations which resignations shall be
effective as of the Effective Time.
(c) Parent shall appoint, as of the
Effective Time, those members of the Company's Board of
Directors immediately prior to the Effective Time, other
than the Nominees, as well as the Company's existing
Director Emeritus, in each case who are willing to serve,
as members of a newly formed advisory committee, which
committee shall meet at such times and at such places as
Parent shall determine. Each such committee member shall
receive an annual fee of $35,000, which fee shall be
payable in quarterly installments (with the first
installment to be paid at the end of the month in which
the Effective Time occurs). Parent's obligations under
this Section 6.14 shall continue for a period of three
years following the Effective Time. The provisions of
this Section 6.14(c) are intended to be for the benefit
of, and shall be enforceable by, each committee member.
6.15. Accountants' Letters. Each of Parent
and the Company shall use its reasonable efforts to cause
to be delivered to the other party a letter of its
respective independent public accountants dated (i) the
date on which the S-4 shall become effective and (ii) a
date shortly prior to the Effective Time, and addressed
to such other party, in form and substance customary for
"comfort" letters delivered by independent accountants in
accordance with Statement of Financial Accounting
Standards No. 72.
6.16. Parent Rights Agreement. Parent agrees
that any Parent Rights issued pursuant to the Parent
Rights Agreement shall be issued with respect to each
share of Parent Common Stock issued pursuant to the terms
hereof regardless whether there has occurred a
"Distribution Date" under the terms of such Parent Rights
Agreement prior to the Effective Time, as well as to take
all action necessary or advisable to enable the holder of
each such share of Parent Common Stock to obtain the
benefit of such Parent Rights notwithstanding their prior
distribution, including, without limitation, amendment of
the Parent Rights Agreement.
6.17. Plan of Integration. During the period
from the date of this Agreement to the Effective Time,
the Company and Parent shall cooperate with and assist
each other in formulating a plan of integration for the
Company, Parent and Parent's banking subsidiary.
6.18. Issuance of Treasury Shares. Parent
will use all reasonable efforts to reissue the requisite
number of shares of Parent Common Stock held as treasury
stock as of the date of this Agreement so that the Merger
will not fail to qualify for pooling of interests
accounting treatment by virtue of the number of shares of
Parent Common Stock held in Parent's treasury.
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 two-thirds 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 votes cast thereon by the
holders of the outstanding shares of Parent Common Stock
where the total votes cast by the holders of the Parent
Common Stock on such matter exceed 50% of the outstanding
shares of Parent Common Stock.
(b) NYSE Listing. The shares of Parent
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) 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 Parent shall have
received all state securities laws or "blue sky" permits
and other authorizations or there shall be exemptions
from registration requirements necessary to issue the
Parent Common Stock in connection with the Merger, and
neither the S-4 nor any such permit, authorization or
exemption shall be subject to a stop order or threatened
stop order by the SEC or any state securities authority.
(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 or any of the other
transactions contemplated by this 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.
7.2. Conditions to Obligations of Parent. The
obligation of Parent to effect the Merger is also subject
to the satisfaction or waiver by Parent 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 Section 3.2 and Section 3.3(a) of 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; (II) the representations and warranties
of the Company set forth in this Agreement shall be true
and correct 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), such
representations and warranties shall be deemed to be true
and correct 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 Effect on the Company; and (III) 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
(III), 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 (III), 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 Effect on the Company.
Parent 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 Parent 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) 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
pursuant to the Merger 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 to which the Company or any of its
Subsidiaries is a party or is otherwise bound shall have
been obtained, except those consents or approvals for
which failure to obtain would not, individually or in the
aggregate, have a Material Adverse Effect on Parent
(after giving effect to the transactions contemplated
hereby).
(d) No Pending Governmental Actions. No
proceeding initiated by any Governmental Entity seeking
an Injunction shall be pending.
(e) Federal Tax Opinion. Parent shall
have received an opinion of Skadden, Arps, Slate, Meagher
& Flom, counsel to Parent ("Parent's Counsel"), in form
and substance reasonably satisfactory to Parent, 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
will be treated as a reorganization 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 Parent, the Company or Merger Bank as a
result of the Merger except to the extent the Company or
Merger Bank may be required to recognize any income due
to the recapture of bad debt reserves. In rendering such
opinion, Parent's Counsel may require and rely upon
representations and covenants contained in certificates
of officers of Parent, Merger Bank, the Company and
others.
(f) Pooling of Interests. Parent shall
have received a letter from KPMG Peat Marwick LLP
addressed to Parent, dated as of The Effective Time, to
the effect that, based on a review of this Agreement and
related agreements (including without limitation the
agreements referred to in Section 6.5 hereof) and the
facts and circumstances then known to it (including
without limitation the number of Dissenting Shares, if
any, in relation to the number of outstanding shares of
Company Common Stock immediately prior to the Effective
Time), the Merger shall be accounted for as a pooling-of-
interests under GAAP.
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 Parent set forth in
Section 4.2(b), 4.3(a) and Section 4.3(b) of 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; (II) the representations
and warranties of Parent 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 in this
clause (II), such representations and warranties shall be
deemed to be true and correct 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 Effect on Parent (after
giving effect to the transactions contemplated hereby);
and (III) the representations and warranties of Parent
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
(III), 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 (III), 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 Effect on Parent (after
giving effect to the transactions contemplated hereby).
The Company shall have received a certificate signed on
behalf of Parent by the Chief Executive Officer and the
Chief Financial Officer of Parent to the foregoing
effect.
(b) Performance of Obligations of Parent.
Parent 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 Parent by the Chief Executive Officer and the
Chief Financial Officer of Parent 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 Parent
or any of its Subsidiaries is a party or is otherwise
bound shall have been obtained, except those for which
failure to obtain such consents and approvals would not,
individually or in the aggregate, have a Material Adverse
Effect on Parent (after giving effect to the transactions
contemplated hereby).
(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 will be treated as a
reorganization 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, except to the extent the Company or
Merger Bank may be required to recognize any
income due to the recapture of bad debt
reserves;
(ii) No gain or loss will be
recognized by the shareholders of the Company
who exchange all of their Company Common Stock
solely for Parent Common Stock pursuant to the
Merger (except with respect to cash received in
lieu of a fractional share interest in Parent
Common Stock);
(iii) The aggregate tax basis of the
Parent Common Stock received by shareholders
who exchange all of their Company Common Stock
solely for Parent Common Stock pursuant to the
Merger will be the same as the aggregate tax
basis of the Company Common Stock surrendered
in exchange therefor.
In rendering such opinion, the Company's Counsel may
require and rely upon representations and covenants
contained in certificates of officers of Parent, the
Company and others.
(f) Pooling of Interests. Parent shall
have received a letter from KPMG Peat Marwick LLP
addressed to Parent, dated as of The Effective Time, to
the effect that, based on a review of this Agreement and
related agreements (including without limitation the
agreements referred to in Section 6.5 hereof) and the
facts and circumstances then known to it (including
without limitation the number of Dissenting Shares, if
any, in relation to the number of outstanding shares of
Company Common Stock immediately prior to the Effective
Time), the Merger shall be accounted for as a pooling-of-
interests under GAAP.
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 the
Company and/or Parent:
(a) by mutual consent of the Company and
Parent 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 Parent or the Company upon
written notice to the other party (i) 30 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 30-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 Parent or the Company if
the Merger shall not have been consummated on or before
June 30, 1997, 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 Parent or the Company
(provided that the terminating party shall not be in
material breach of any of its obligations under Section
6.3 and any related obligations hereunder) if any
approval of the stockholders of either of the Company or
Parent 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 Parent 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 30 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 any
representation or warranty, together with all other such
breaches, would entitle the party receiving such
representation or warranty not to consummate the
transactions contemplated hereby under Section 7.2(a) (in
the case of a breach of a representation or warranty by
the Company) or Section 7.3(a) (in the case of a breach
of a representation or warranty by Parent);
(f) by either Parent 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 30 days following receipt by the breaching party
of written notice of such breach from the other party
hereto; or
(g) by the Company, by action of its
Board of Directors by giving written notice of such
election to Parent within two business days after the
Valuation Period (as defined below) in the event the
Average Closing Price (as defined below) is less than
$24.00 per share; provided, however, that no right of
termination shall arise under this Section 8.1(g) if
Parent elects within five business days of receipt of
such written notice to notify the Company in writing that
it has increased the Exchange Ratio such that the value
of the product of such increased Exchange Ratio and the
Average Closing Price is not less than $37.34 per share.
As used herein, the term "Average Closing Price" means
the average closing sales price per share of Parent
Common Stock on the NYSE (as reported by The Wall Street
Journal or, if not reported thereby, another
authoritative source), for the 10 consecutive NYSE
trading days (the "Valuation Period") ending on the fifth
business day prior to the date on which the approval of
the transactions contemplated hereby by the Federal
Reserve Board is obtained, without regard to any
requisite waiting period in respect thereof; provided,
however, that if Parent shall elect to modify the
structure of the Merger pursuant to Section 9.2 hereof,
the Valuation Period shall end on the fifth business day
prior to the date on which the approval of the
transactions contemplated hereby by the FDIC is obtained,
without regard to any requisite waiting period in respect
thereof;
(h) by Parent, 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 Parent; or
(i) by the Company, if the Board of
Directors of Parent does not publicly recommend in the
Proxy Statement that Parent'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 Parent shall have
withdrawn, modified or amended such recommendation in any
respect materially adverse to the Company.
8.2. Effect of Termination; Expenses. In the
event of termination of this Agreement by either Parent
or the Company as provided in Section 8.1, this Agreement
shall forthwith become void and have no effect except
that (i) the last sentence of each of Sections 6.2(a) and
6.2(b), and Sections 8.2 and 9.4, shall survive any
termination of this Agreement and (ii) 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.
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 Parent; provided, however, that after any approval of
this Agreement by Parent's and/or 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, the closing of the Merger
(the "Closing") will take place at 10:00 a.m. on 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 Parent'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,
prior to the Effective Time, Parent shall be entitled to
revise the structure of the Merger such that the Company
shall be merged with and into Parent's wholly owned
banking subsidiary in existence as of the date of this
Agreement; provided, however, that such revised structure
shall (i) qualify as, a tax-free reorganization 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, and (iii) not materially delay the Closing.
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 the Option Agreement, which shall terminate
only as provided therein) 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 Parent
shall be borne equally by Parent and the 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 Parent, to:
North Fork Bancorporation, Inc.
275 Broad Hollow Road
Melville, New York 11747
Attention: Chief Executive Officer
with a copy to:
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, New York 10022
Attn: William S. Rubenstein, Esq.
and
(b) if to the Company, to:
North Side Savings Bank
170 Tulip Avenue
Floral Park, New York 11001
Attention: Thomas M. O'Brien
with a copy to:
Elias, Matz, Tiernan & Herrick, Esq.
734 15th Street N.W.
Washington, D.C. 20005
Attn: Timothy B. Matz, Esq.
Gerard L. Hawkins, 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. 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
July 15, 1996.
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
and the Option Agreement.
9.9. Governing Law. This Agreement shall be
governed and construed in accordance with the laws of the
State of New York, without regard to any applicable
conflicts of law.
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 each of Sections 6.2(a) and 6.2(b) of this Agreement
were not performed in accordance with its specific terms
or were 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 of Section 6.2(b) 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 NASDAQ, so long as
this Agreement is in effect, neither Parent 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.
IN WITNESS WHEREOF, Parent, Merger Bank 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 Adams Kanas
Name: John Adam Kanas
Title: Chairman, President and CEO
Attest:
Name:
Title:
MERGER BANK
By:
Name:
Title:
Attest:
Name:
Title:
NORTH SIDE SAVINGS BANK
By: /s/ Thomas M. O'Brien
Name: Thomas M. O'Brien
Title: President and CEO
Attest:
Name:
Title:
AMENDMENT NO. 1
AMENDMENT, dated as of August 27, 1996, by and
among North Fork Bancorporation, Inc., a Delaware
corporation ("Parent"), North Fork Bank, a New York-
chartered stock commercial bank and a wholly owned
subsidiary of Parent ("North Fork Bank"), and North Side
Savings Bank, a New York-chartered stock form savings
bank (the "Company") to the Agreement and Plan of Merger
(the "Merger Agreement"), dated as of July 15, 1996, by
and among Parent and the Company. Capitalized terms
which are not otherwise defined herein shall have the
meaning set forth in the Merger Agreement.
WHEREAS, in accordance with Section 9.2 of the
Merger Agreement, the parties desire to revise the
structure of the Merger to provide for the merger of the
Company with and into North Fork Bank; and
WHEREAS, the parties hereto desire to amend the
Merger Agreement in certain respects in order to reflect
such revised structure.
NOW, THEREFORE, in consideration of the
foregoing, and intending to be legally bound hereby, the
parties hereto agree as follows:
1. Section 1.1 is hereby amended in its
entirety to read as follows:
"1.1 The Merger. Subject to the terms and
conditions of this Agreement, in accordance with the New
York Banking Law (the "NYBL"), at the Effective Time (as
defined in Section 1.2 hereof), the Company shall merge
with and into North Fork Bank. North Fork Bank 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 New York. The name of the Surviving Corporation
shall be North Fork Bank. Upon consummation of the
Merger, the separate corporate existence of the Company
shall terminate."
2. Section 1.3 is hereby amended by adding
"(a)" prior to the first paragraph thereof and by adding
the following new paragraph (b):
"(b) For the purposes of granting a limited
priority claim to the assets of the Surviving Corporation
in the unlikely event (and only upon such event) of a
complete liquidation of the Surviving Corporation to
persons who continue to maintain savings accounts with
the Surviving Corporation after the Merger and who,
immediately prior to the Merger had a subaccount balance
as defined in Section 86.2(j) of the General Regulations
of the Banking Board of the State of New York, with
respect to the liquidation account of the Company, the
Surviving Corporation shall, at the time of the Merger,
establish a liquidation account in an amount equal to the
liquidation account of the Company immediately prior to
the Merger. If the balance in any savings account to
which a subaccount balance relates at the close of
business on the last day of any fiscal year of the
Surviving Corporation after consummation of the Merger is
less than the balance in such savings account at the
close of business on the last day of any other fiscal
year of the Surviving Corporation after consummation of
the Merger, such subaccount balance shall be reduced in
an amount proportionate to the reduction in such savings
account balance. No subaccount balance shall be
increased, notwithstanding any increase in the balance of
the related savings account. If such related savings
account is closed, such subaccount shall be reduced to
zero upon such closing; provided, however, the subaccount
balance shall be maintained for as long as the
accountholder maintains an account with the same social
security number. In the event of a complete liquidation
of the Surviving Corporation, and only in such event, the
amount distributable to each account holder will be
determined in accordance with the rules and regulations
pertaining to conversions by a thrift from mutual to
stock form of organization set forth in Section 86.4(f)
of the General Regulations of the Banking Board of the
State of New York on the basis of such accountholder's
subaccount balance with the Surviving Corporation at the
time of its liquidation. No merger, consolidation,
purchase of bulk assets with assumption of savings
accounts and other liabilities, or similar transaction,
whether or not the Surviving Corporation is the surviving
institution, will be deemed to be a complete liquidation
for this purpose, and, in any such transaction, the
liquidation account shall be assumed by the surviving
institution."
3. Section 1.6 is hereby amended in its
entirety to read as follows:
"1.6 North Fork Bank Common Stock. The shares of
common stock of North Fork Bank, par value $1.00 per
share, issued and outstanding immediately prior to the
Effective Time shall remain issued, outstanding and
unchanged after the Merger."
4. Section 1.7 is hereby amended in its
entirety to read as follows:
"1.7 Organization Certificate of Incorporation.
At the Effective Time, the Organization Certificate of
North Fork Bank, as in effect immediately prior to the
Effective Time, shall be the Organization Certificate of
the Surviving Corporation."
5. Section 3.4(a) is hereby amended by
deleting the text of clause (i) thereof and replacing it
with the word "Reserved."
6. Section 4.1(b) is hereby amended by
deleting the phrase "Upon its formation, Merger Bank will
be a savings bank" and replacing it in its entirety with
the following:
"North Fork Bank is a commercial bank"
7. Section 4.3(b) is hereby amended by
deleting the phrase "Upon its formation, Merger Bank will
have" and replacing it in its entirety with the
following:
"North Fork Bank has"
8. Section 4.4(a) is hereby amended by
deleting the text of clause (i) thereof and replacing it
with the word "Reserved."
9. Section 6.13 is hereby amended by deleting
the text thereof and replacing such text with the word
"Reserved."
10. Section 6.14(b) is hereby amended by
deleting the text thereof and replacing such text with
the word "Reserved."
11. To the extent not accomplished by the
foregoing amendments, the Merger Agreement is hereby
further amended by replacing each reference to the term
"Merger Bank" with the term "North Fork Bank."
12. All references to "this Agreement" in the
Merger Agreement shall mean the Merger Agreement as
amended hereby.
13. Each of the parties hereto represents to
the others that (i) it has full corporate power and
authority to execute and deliver this Amendment and,
subject to the receipt of all Requisite Regulatory
Approvals, to consummate the transactions contemplated
hereby, (ii) the execution and delivery of this Amendment
by such party have been duly and validly approved by the
Board of Directors of such party and, except for the
approval of this Amendment by the stockholders of each
party, no other corporate proceedings on the part of such
party are necessary in connection with such Amendment and
(iii) this Amendment has been duly and validly executed
and delivered by such party and constitutes a valid and
binding obligation of such party, enforceable against
such party in accordance with its terms.
14. Except as expressly amended by this
Amendment, the Merger Agreement is hereby ratified and
confirmed in all respects.
15. This Amendment 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.
16. This Amendment shall be governed and
construed in accordance with the laws of the State of New
York, without regard to any applicable conflicts of law
provisions.
IN WITNESS WHEREOF, Parent, North Fork Bank and
the Company have caused this Amendment 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
and Chief Executive Officer
NORTH FORK BANK
By: /s/ John Adam Kanas
Name: John Adam Kanas
Title: Chairman, President
and Chief Executive
Officer
NORTH SIDE SAVINGS BANK
By: /s/ Thomas M. O'Brien
Name: Thomas M. O'Brien
Title: President and Chief
Executive Officer
ANNEX B
EXECUTION COPY
THE TRANSFER OF THIS AGREEMENT IS
SUBJECT TO CERTAIN PROVISIONS CONTAINED
HEREIN AND MAY BE SUBJECT TO TRANSFER RESTRICTIONS UNDER
THE FEDERAL SECURITIES LAWS AND
STATE AND FEDERAL BANKING LAWS
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of July 15,
1996 (the "Agreement"), by and between North Side Savings
Bank, a New York-chartered stock form savings bank
("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 a wholly owned subsidiary of
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 961,965 shares (subject to adjustment as set forth
herein) (the "Option Shares") of common stock, par value
$1.00 per share, of Issuer ("Issuer Common Stock") at a
purchase price (subject to adjustment as set forth
herein) of $34.75 per Option Share (the "Purchase
Price"), provided that in no event shall the number of
Option Shares for which the Option is exercisable exceed
19.9% of the issued and outstanding shares of Issuer
Common Stock without giving effect to any shares subject
to or issued pursuant to the Option.
3. Exercise of Option. (a) Provided that (i)
Grantee is not in material breach of the agreements or
covenants contained in the Merger Agreement and (ii) no
preliminary or permanent injunction or other order
against the delivery of Option Shares issued by any court
of competent jurisdiction in the United States shall be
in effect, Grantee may exercise the Option, in whole or
part, and from time to time, if, but only if, both an
Initial Triggering Event (as hereinafter defined) and a
Subsequent Triggering Event (as hereinafter defined)
shall have occurred prior to the occurrence of an
Exercise Termination Event (as hereinafter defined);
provided, however, that Grantee shall have sent the
written notice of such exercise (as provided in
subsection (d) of this Section 3) within 90 days
following such Subsequent Triggering 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 the New York Banking Law; 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. Each of the following shall be an Exercise
Termination Event: (i) the Effective Time; (ii)
termination of the Merger Agreement in accordance with
the provisions thereof if such termination occurs prior
to the occurrence of an Initial Triggering Event; or
(iii) the passage of twelve months after termination of
the Merger Agreement if such termination follows the
occurrence of an Initial Triggering Event; provided,
however, that if an Initial Triggering Event continues or
occurs beyond such termination and prior to the passage
of such twelve-month period, the Exercise Termination
Event shall be twelve months from the expiration of the
Last Triggering Event (as hereinafter defined) but in no
event more than 15 months after such termination of the
Merger Agreement. The "Last Triggering Event" shall mean
the last Initial Triggering Event to expire. The rights
set forth in Section 8 hereof shall terminate at the time
set forth in Section 8.
(b) The term "Initial Triggering Event"
shall mean any of the following events or transactions
occurring after the date hereof:
(i) Issuer or any of its Subsidiaries,
without having received Grantee's prior written
consent, shall have entered into an agreement to
engage in an Acquisition Transaction (as hereinafter
defined) with any person (other than Grantee or any
of its Subsidiaries) or Issuer or any of its
Subsidiaries, without having received Grantee's
prior written consent, shall have authorized,
recommended, proposed, or publicly announced its
intention to authorize, recommend or propose to
engage in, an Acquisition Transaction with any
person other than Grantee or a Subsidiary of
Grantee. For purposes of this Agreement,
"Acquisition Transaction" shall mean (w) a merger or
consolidation, or any similar transaction, involving
Issuer or any of its Subsidiaries (other than
internal mergers, reorganizations, consolidations or
dissolutions involving only existing Subsidiaries),
(x) a purchase, lease or other acquisition of all or
a substantial portion of the consolidated assets of
Issuer and its Subsidiaries, or (y) a purchase or
other acquisition (including by way of merger,
consolidation, Tender Offer or Exchange Offer (as
such terms are hereinafter defined), share exchange
or otherwise) of securities representing 10% or more
of the voting power of Issuer or any of its
Subsidiaries;
(ii) Any person other than Grantee or any
Subsidiary of Grantee shall have acquired beneficial
ownership or the right to acquire beneficial
ownership of 10% or more of the outstanding shares
of Issuer Common Stock (the term "beneficial
ownership" for purposes of this Option Agreement
having the meaning assigned thereto in Section 13(d)
of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and the rules and regulations
thereunder) or any person other than Grantee or any
Subsidiary of Grantee shall have commenced (as such
term is defined under the rules and regulations of
the Federal Deposit Insurance Corporation (the
"FDIC")), or shall have filed or publicly
disseminated a registration statement or similar
disclosure statement 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 10% 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);
(iii)(A) 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, (B) such meeting shall not
have been held or shall have been cancelled prior to
termination of the Merger Agreement, or (C) the
Board of Directors of Issuer shall have publicly
withdrawn or modified, or publicly announced its
interest to withdraw or modify, in any manner
adverse to Grantee, its recommendation that the
stockholders of Issuer approve the transactions
contemplated by the Merger Agreement, in each case
after it shall have been publicly announced that any
person other than Grantee or any Subsidiary of
Grantee shall have (x) made, or disclosed an
intention to make, a proposal to engage in an
Acquisition Transaction, (y) commenced a Tender
Offer, or filed or publicly disseminated a
registration statement or similar disclosure
statement with respect to an Exchange Offer, or (z)
filed an application (or given a notice), whether in
draft or final form, under any federal or state
banking laws seeking regulatory approval to engage
in an Acquisition Transaction; or
(iv) Issuer shall have breached any covenant or
obligation contained in the Merger Agreement and such
breach would entitle Grantee to terminate the Merger
Agreement in accordance with the terms thereof (without
regard to any cure periods provided for in the Merger
Agreement unless such cure is promptly effected without
jeopardizing the consummation of the Merger in accordance
with the terms of the Merger Agreement) after (A) a bona
fide proposal is made by any person other than Grantee or
any Subsidiary of Grantee to Issuer or its stockholders
to engage in an Acquisition Transaction, (B) any person
other than Grantee or any Subsidiary of Grantee states
its intention to Issuer or its stockholders to make a
proposal to engage in an Acquisition Transaction if the
Merger Agreement terminates, or (C) any person other than
Grantee or any Subsidiary of Grantee shall have filed an
application or notice, whether in draft or final form,
with any Governmental Entity to engage in an Acquisition
Transaction.
(c) The term "Subsequent Triggering Event"
shall mean either of the following events or transactions
occurring after the date hereof:
(i) The acquisition by any person of
beneficial ownership of 25% or more of the then
outstanding Issuer Common Stock; or
(ii) The occurrence of the Initial
Triggering Event described in clause (i) of
subsection (b) of this Section 3, except that the
percentage referred to in clause (y) shall be 25%.
As used in this Agreement, "Person" shall have the
meaning specified in Sections 3(a)(9) and 13(d)(3) of the
Exchange Act.
(d) In the event Grantee is entitled to
under the terms of this Agreement and 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 any
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.
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
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 13(f) hereof.
(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 as provided in
Section 114 of the New York Banking Law 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) In addition to any other legend that
is required by applicable law, 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 FEDERAL SECURITIES LAWS AND
STATE AND FEDERAL BANKING LAWS AND PURSUANT TO
THE TERMS OF A STOCK OPTION AGREEMENT DATED AS
OF JULY 15, 1996. 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 (i) 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 of 1933,
as amended (the "Securities Act") and (ii) a letter from
the staff of each of the relevant regulatory authorities,
or an opinion of counsel in form and substance reasonably
satisfactory to Issuer and its counsel, to the effect
that such legend is not required under applicable state
or federal banking laws.
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 Restated Organization
Certificate (the "Organization Certificate") or Amended
and Restated ByLaws of 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 Option 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 and except as
provided in Section 114 of the New York Banking Law.
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 required regulatory
approvals or consents, 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 and applicable
state and federal banking laws.
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 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 19.9% 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 any of (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 National Association of
Securities Dealers, Inc. Automated Quotation/National
Market System ("NASDAQ") (or if Issuer Common Stock is
not quoted on NASDAQ, 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 referred to in
Section 7(c) hereof; provided, however, that in the event
of a sale of all or substantially 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 selected by
Grantee or by a Grantee Majority (as defined below),
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 selected by Grantee (or a majority of
interest of the Grantees if there shall be more than one
Grantee (a "Grantee Majority")) and reasonably acceptable
to Issuer, which determination shall be conclusive for
all purposes of this Agreement.
(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 19.9% 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
19.9% 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 (other than any diminution in value
resulting from the fact that the shares of Substitute
Common Stock may be restricted securities, as defined in
Rule 144 under the Securities Act) than other shares of
common stock issued by the Substitute Option Issuer).
(h) The provisions of Sections 8, 9 and
10 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. Repurchase at the Option of Grantee. (a)
At the request of Grantee at any time commencing upon the
first occurrence of a Repurchase Event (as defined in
Section 8(d) below) and ending 12 months immediately
thereafter, Issuer shall repurchase from Grantee (I) the
Option and (II) all shares of Issuer Common Stock
purchased by Grantee pursuant hereto with respect to
which Grantee then has beneficial ownership. The date on
which Grantee exercises its rights under this Section 8
is referred to as the "Request Date". Such repurchase
shall be at an aggregate price (the "Section 8 Repurchase
Consideration") equal to the sum of:
(i) the aggregate Purchase Price
paid by Grantee for any shares of Issuer Common
Stock acquired pursuant to the Option with
respect to which Grantee then has beneficial
ownership;
(ii) the excess, if any, of (x) the
Applicable Price (as defined below) for each
share of Issuer Common Stock over (y) the
Purchase Price (subject to adjustment pursuant
to Section 7), multiplied by the number of
shares of Issuer Common Stock with respect to
which the Option has not been exercised; and
(iii) the excess, if any, of the
Applicable Price over the Purchase Price
(subject to adjustment pursuant to Section 7)
paid (or, in the case of Option Shares with
respect to which the Option has been exercised
but the Closing Date has not occurred, payable)
by Grantee for each share of Issuer Common
Stock with respect to which the Option has been
exercised and with respect to which Grantee
then has beneficial ownership, multiplied by
the number of such shares.
(b) If Grantee exercises its rights under
this Section 8, Issuer shall, within 10 business days
after the Request Date, pay the Section 8 Repurchase
Consideration to Grantee in immediately available funds
by wire transfer to a bank account designated by Grantee,
and Grantee shall surrender to Issuer the Option and the
certificates evidencing the shares of Issuer Common Stock
purchased thereunder with respect to which Grantee then
has beneficial ownership, and Grantee shall warrant that
it has sole record and beneficial ownership of such
shares and that the same are then free and clear of all
liens, claims, charges and encumbrances of any kind
whatsoever. Notwithstanding the foregoing, to the extent
that prior notification to or approval of any regulatory
authority is required in connection with the payment of
all or any portion of the Section 8 Repurchase
Consideration, Grantee shall have the ongoing option to
revoke its request for repurchase pursuant to Section 8
or to require that Issuer (a) deliver from time to time
that portion of the Section 8 Repurchase Consideration
that it is not then so prohibited from paying and (b)
promptly file the required notice or application for
approval and expeditiously process the same (and each
party shall cooperate with the other in the filing of any
such notice or application and the obtaining of any such
approval). If any regulatory authority disapproves of
any part of Issuer's proposed repurchase pursuant to this
Section 8, Issuer shall promptly give notice of such fact
to Grantee and redeliver to Grantee the Option and/or
Option Shares it is then prohibited from repurchasing,
and Grantee shall have the right (x) to exercise the
Option as to the number of Option Shares for which the
Option was exercisable at the Request Date less the
number of shares covered by the Option in respect of
which payment has been made pursuant to Section 8(a)(ii)
hereof or (y) to revoke its request for repurchase with
respect to any Option Shares in respect of which such
payment has been made and exercise the Option as to the
number of Option Shares for which the Option was
exercisable at the Request Date. Notwithstanding
anything herein to the contrary, (i) all of Grantee's
rights under this Section 8 shall terminate on the date
of termination of this Option pursuant to Section 3(a)
hereof, unless this Option shall have been exercised in
whole or part prior to the date of termination and (ii)
if this Option shall have been exercised in whole or in
part prior to the date of termination described in clause
(i) above, then Grantee's rights under this Section 8
shall terminate 12 months after such date of termination.
(c) For purposes of this Agreement, the
"Applicable Price" means the highest of (i) the highest
price per share of Issuer Common Stock paid for any such
share by the person or groups described in Section
8(d)(i) hereof, (ii) the price per share of Issuer Common
Stock received by holders of Issuer Common Stock in
connection with any merger or other business combination
transaction described in Section 7(b)(i), 7(b)(ii) or
7(b)(iii) hereof or (iii) the highest closing sales price
per share of Issuer Common Stock quoted on NASDAQ (or if
Issuer Common Stock is not quoted on NASDAQ, 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) during the 60
business days preceding the Request Date; provided,
however, that in the event of a sale of less than all of
Issuer's assets, the Applicable Price 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 selected by Grantee, divided by the number
of shares of the Issuer Common Stock outstanding at the
time of such sale. If the consideration to be offered,
paid or received pursuant to either of the foregoing
clauses (i) or (ii) shall be other than in cash, the
value of such consideration shall be determined in good
faith by an independent nationally recognized investment
banking firm selected by Grantee (or a Grantee Majority)
and reasonably acceptable to Issuer, which determination
shall be conclusive for all purposes of this Agreement.
(d) As used herein, a "Repurchase Event"
shall occur if (i) any person (other than Grantee or any
of its Subsidiaries) shall have acquired beneficial
ownership of (as such term is defined in Rule 13d-3 under
the Exchange Act) or the right to acquire beneficial
ownership of, or any "group" (as such term is defined
under the Exchange Act) (other than Grantee or any
Subsidiary of Grantee) shall have been formed which
beneficially owns or has the right to acquire beneficial
ownership of, 50% or more of the then outstanding shares
of Issuer Common Stock or (ii) any of the transactions
described in Section 7(b)(i), 7(b)(ii) or 7(b)(iii)
hereof shall be consummated.
(e) Notwithstanding anything herein to
the contrary, the aggregate amount payable to Grantee
pursuant to this Section 8 shall not exceed $10,000,000.
9. 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, provided that such period of time shall be
extended by the number of days, if any, by which Issuer
shall delay the registration of the Issuer Common Stock
pursuant to the proviso contained at the end of this
sentence, as expeditiously as possible prepare and file
up to two registration statements under the Securities
Act if such registration is necessary, and up to two
registration or equivalent statements under the rules and
regulations of the Federal Deposit Insurance Corporation
(the "FDIC") (or in any event up to two suitable
disclosure statements for federal securities law purposes
if no such registration is required under the Securities
Act or the applicable rules and regulations of the FDIC)
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; provided, however, that
Issuer may delay for a period not to exceed 90 days
filing a registration or equivalent statement if Issuer
shall in good faith determine that (i) any such
registration would adversely affect an offering or
contemplated offering of securities by Issuer or (ii) the
filing of such registration or equivalent statement
would, if not so delayed, materially and adversely affect
a then proposed or pending financial project,
acquisition, merger or corporate reorganization; and
provided further, that nothing contained herein shall
limit or adversely affect in any manner Grantee's rights
contained in the fourth following sentence hereof.
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 or similar
statement prepared and filed under this Section 9, 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 or similar statement to be filed
hereunder. If during the time periods referred to in the
first sentence of this Section 9 Issuer effects a
registration under the Securities Act or the rules and
regulations of the FDIC of Issuer Common Stock for its
own account or for any other stockholder 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, and other than on the equivalent forms of
the FDIC), 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 9;
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 9, 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, Issuer shall not be required to register Option
Shares pursuant to this Section 9(i) prior to the
occurrence of a Purchase Event, (ii) within 90 days after
the effective date of a registration referred to in the
second preceding sentence pursuant to which Grantee was
afforded the opportunity to register Option Shares and
such shares were registered as requested, (iii) unless a
request therefor is made to Issuer by a Grantee or
Grantees which hold at least 25% of the aggregate number
of Option Shares (including shares of Issuer Common Stock
upon exercise of the Option) then outstanding and (iv) on
more than two occasions 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 11 hereof.
10. Listing. If Issuer Common Stock or any
other securities to be acquired upon exercise of the
Option are then authorized for quotation on NASDAQ 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
NASDAQ or such other securities exchange and will use its
best efforts to obtain approval of such listing as soon
as practicable.
11. Division of Option. Upon the occurrence
of a Purchase Event, 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.
12. Rights Agreement. Issuer shall not
approve, adopt or amend, or propose the approval and
adoption or amendment 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 Grantee is the
Beneficial Owner of shares of Issuer Common Stock (x) of
which Grantee was the Beneficial Owner on July 15, 1996,
(y) acquired or acquirable pursuant to the grant or
exercise of this Option and (z) held by Grantee or any of
its Subsidiaries as Trust Account Shares or DPC Shares
and (b) no restrictions or limitations with respect to
the exercise of any Rights acquired or acquirable by
Grantee will result or be imposed to the extent such
Rights relate to the shares of Issuer Common Stock
described in clause (a) of this Section 12. This
covenant shall survive for so long as Grantee is the
Beneficial Owner of the shares of Issuer Common Stock
described in clause (a) of this Section 12.
13. Miscellaneous. (a) Expenses. Except as
otherwise provided herein, each of the parties hereto
shall bear and pay all costs and expenses incurred by it
or on its behalf in connection with the transactions
contemplated hereunder, including fees and expenses of
its own financial consultants, investment bankers,
accountants and counsel.
(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.
(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, dated as of July 3, 1996, 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 New York 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:
North Fork Bancorporation, Inc.
275 Broad Hallow Road
Melville, NY 11747
Attention: Chief Executive Officer
with a copy to:
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, New York 10022
Attention: William S. Rubenstein, Esq.
If to Grantee to:
North Side Savings Bank
170 Tulip Avenue
Floral Park, NY 11001
Attention: Thomas M. O'Brien
with a copy to:
Elias, Matz, Tiernan & Herrick L.L.P.
The Walker Building
734 15th Street, N.W. 12th Floor
Washington, D.C. 20005
Attention: Timothy B. Matz, Esq. and
Gerard L. Hawkins, 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.
(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
Subsequent Triggering Event Grantee may assign its rights
under this Agreement to one or more third parties.
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.
NORTH SIDE SAVINGS BANK
By /s/ Thomas M. O'Brien
Name: Thomas M. O'Brien
Title: President and CEO
NORTH FORK BANCORPORATION, INC.
By /s/ John Adam Kanas
Name: John Adam Kanas
Title: Chairman, President and CEO
ANNEX C
[DRAFT]
October ___, 1996
Board of Directors
North Side Savings Bank
170 Tulip Avenue
Floral Park, New York 11001
Ladies and Gentlemen:
North Side Savings Bank ("North Side") and
North Fork Bancorporation, Inc. ("North Fork") have
entered into an Agreement and Plan of Merger, dated as of
July 15, 1996 (the "Agreement"), pursuant to which a
newly formed wholly owned subsidiary of North Fork will
be merged with and into North Side (the "Merger"). Upon
consummation of the Merger, each outstanding share of
North Side common stock, par value $1.00 per share (the
"North Side Shares"), other than certain North Side
Shares specified in the Agreement, will be converted into
the right to receive 1.556 shares (the "Exchange Ratio")
of common stock, par value $2.50 per share, of North Fork
(the "North Fork Shares"), subject to possible adjustment
as set forth in the Agreement. The terms and conditions
of the Merger are more fully set forth in the Agreement.
You have requested our opinion as to the fairness, from a
financial point of view, of the Exchange Ratio to the
holders of North Side Shares.
Sandler O'Neill Corporate Strategies, a
division of Sandler O'Neill & Partners, L.P., as part of
its investment banking business is regularly engaged in
the valuation of financial institutions and their
securities in connection with mergers and acquisitions
and other corporate transactions.
In connection with this opinion, we have
reviewed, among other things: (i) the Agreement and
exhibits thereto; (ii) the Stock Option Agreement, dated
as of July 15, 1996, by and between North Fork and North
Side; (iii) the Joint Proxy Statement/Prospectus of North
Fork and North Side dated as of the date hereof; (iv)
North Fork's audited consolidated financial statements
and management's discussion and analysis of the financial
condition and results of operations contained in its
annual report to shareholders for the year ended December
31, 1995; (v) North Side's audited consolidated financial
statements and management's discussion and analysis of
the financial condition and results of operations
contained in its annual report to shareholders for the
fiscal year ended September 30, 1995; (vi) North Fork's
unaudited consolidated financial statements and
management's discussion and analysis of the financial
condition and results of operations contained in its
Quarterly Report on Form 10-Q for the quarters ended
March 31, 1996 and June 30, 1996, respectively; (vii)
North Side's unaudited consolidated financial statements
and management's discussion and analysis of the financial
condition and results of operations contained in its
Quarterly Reports on Form F-4 for the quarters ended
December 31, 1995, March 31, 1996 and June 30, 1996,
respectively; (viii) preliminary financial information
prepared by the senior management of North Fork
concerning North Fork's financial condition and results
of operations for the quarter ended September 30, 1996;
(ix) preliminary financial information prepared by the
senior management of North Side concerning North Side's
financial condition and results of operations for the
quarter ended September 30, 1996; (x) certain financial
analyses and forecasts of North Side prepared by and
reviewed with management of North Side and the views of
senior management of North Side regarding North Side's
past and current business operations, results thereof,
financial condition and future prospects; (xi) certain
financial analyses and forecasts of North Fork prepared
by and reviewed with management of North Fork and the
views of senior management of North Fork regarding North
Fork's past and current business operations, results
thereof, financial condition and future prospects; (xii)
the pro forma impact of the Merger on North Fork; (xiii)
the historical reported price and trading activity for
North Fork's and North Side's common stock, including a
comparison of certain financial and stock market
information for North Fork and North Side with similar
information for certain other companies the securities of
which are publicly traded; (xiv) the financial terms of
recent business combinations in the savings institution
and banking industries; (xv) the current market
environment generally and the banking environment in
particular; and (xvi) such other information, financial
studies, analyses and investigations and financial,
economic and market criteria as we considered relevant.
We were not asked to, and did not, solicit indications of
interest in a potential transaction from other third
parties.
In performing our review, we have assumed and
relied upon, without independent verification, the
accuracy and completeness of all the financial
information, analyses and other information reviewed by
and discussed with us, and we did not make an independent
evaluation or appraisal of the specific assets, the
collateral securing assets or the liabilities of North
Fork or North Side or any of their subsidiaries, or the
collectibility of any such assets (relying, where
relevant, on the analyses and estimates of North Fork and
North Side). With respect to the financial projections
reviewed with management, we have assumed that they have
been reasonably prepared on bases reflecting the best
currently available estimates and judgments of the
respective managements of the respective future financial
performances of North Fork and North Side and that such
performances will be achieved. We have also assumed that
there has been no material change in North Fork's or
North Side's assets, financial condition, results of
operations, business or prospects since June 30, 1996,
the date of the last financial statements noted above.
We have assumed that the Merger will qualify for pooling
of interests accounting treatment and have further
assumed that North Fork will remain as a going concern
for all periods relevant to our analyses and that the
conditions precedent in the Agreement are not waived.
Our opinion is necessarily based on economic,
market and other conditions as in effect on, and the
information made available to us as of, the date hereof.
Events occurring after the date hereof could materially
affect the assumptions used in preparing this opinion.
We have not undertaken to reaffirm or revise this opinion
or otherwise comment upon events occurring after the date
hereof.
We have acted as North Side's financial advisor
in connection with the Merger and will receive a fee for
our services, a significant portion of which is
contingent upon consummation of the Merger. We will also
receive a fee for rendering this opinion. We have also
provided and continue to provide general financial
advisory services for the Company and have received and
will continue to receive fees for such services.
In the ordinary course of our business, we may
actively trade the equity securities of North Fork and
North Side for our own account and for the accounts of
our customers and, accordingly, may at any time hold a
long or short position in such securities.
Our opinion is directed to the Board of
Directors of North Side and does not constitute a
recommendation to any stockholder of North Side as to how
such stockholder should vote at the special meeting of
stockholders called to consider and vote upon the Merger.
Our opinion is not to be quoted or referred to, in whole
or in part, in a registration statement, prospectus,
proxy statement or in any other document, nor shall this
opinion be used for any other purposes, without Sandler
O'Neill's prior written consent.
Based upon and subject to the foregoing, it is
our opinion that the Exchange Ratio is fair, from a
financial point of view, to the holders of North Side
Shares.
Very truly yours,
/s/ Sandler O'Neill & Partners, L.P.
Sandler O'Neill & Partners, L.P.
ANNEX D
[DRAFT]
October 4, 1996
Board of Directors
North Fork Bancorporation, Inc.
275 Broad Hollow Road
Melville, NY 11747
Members of the Board:
You have requested our opinion as investment
bankers as to the fairness from a financial point of view
to the shareholders of North Fork Bancorporation, Inc.
("NFB") of the exchange ratio in the proposed merger (the
"Merger") of North Side Savings Bank ("NSBK"), with and
into North Fork Bank, a wholly owned subsidiary of NFB
("North Fork Bank"), pursuant to the Agreement and Plan
of Merger, as amended, dated as of July 15, 1996, among
NFB, North Fork Bank, and NSBK (the "Agreement"). Under
the terms of the Agreement, each share of common stock,
1.00 par value per share, of NSBK (the "NSBK Common
Stock") outstanding immediately prior to the Merger other
than shares of NSBK common stock held by NFB or NSBK
(other than shares held in a fiduciary capacity or in
respect of a debt previously contracted and shares as to
which dissenters rights have been exercised) will be
exchanged for 1.556 shares (the "Exchange Ratio") of
common stock, $2.50 par value per share, of NFB (the "NFB
Common Stock"), plus cash in lieu of any fractional share
interest. It is our understanding that the Merger will
be structured as a pooling of interests transaction under
generally accepted accounting practices.
Keefe, Bruyette & Woods, Inc., as part of its
investment banking business, is continually engaged in
the valuation of banking 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. 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,
NSBK and NFB and as a market maker in securities we may
from time to time have a long or short position in, and
buy or sell, debt or equity securities of NSBK and NFB
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 NFB.
We have acted for the Board of Directors of NFB in
rendering this fairness opinion and will receive a fee
from NFB for our services.
In connection with this opinion, we have
reviewed, among other things, the Agreement (and the
Stock Option Agreement); the Registration Statement on
Form S-4, including the Joint Proxy Statement/Prospectus
relating to the meetings of shareholders of NFB and NSBK
at which such shareholders will be asked to approve the
issuance of shares of NFB Common Stock and the Agreement,
respectively; the Annual Report to Shareholders of NFB
and Annual Report on Form 10-K of NFB for the year ended
December 31, 1995 and the Annual Report on Form F-2 of
NSBK for the year ended September 30, 1995; certain
interim reports to shareholders and Quarterly Reports on
Form 10-Q of NFB; certain interim reports to shareholders
and Quarterly Reports on Form F-4 of NSBK and certain
internal financial analyses and forecasts for NFB and
NSBK furnished to us by NFB and NSBK, respectively for
purposes of our analysis. We have also held discussions
with senior management of each of NSBK and NFB regarding
the past and current business operations, regulatory
relations, financial condition and future prospects of
their respective companies and such other matters as we
have deemed relevant to our inquiry. In addition, we
have compared certain financial and stock market
information for NFB and NSBK 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 banking industry and
performed such other studies and analyses as we
considered appropriate.
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 assumed any responsibility for independently
verifying any of such information. We have relied upon
the management of NFB and NSBK as to the reasonableness
and achievability of the financial and operating
forecasts and projections (and the assumptions and bases
therefor) provided to us, and we have assumed that such
forecasts and projections reflect the best currently
available estimates and judgments of each of NFB and NSBK
and that such forecasts and projections will be realized
in the amounts and in the time periods currently
estimated by such management. We also have assumed that
the aggregate allowances for loan losses for NFB and NSBK
are adequate to cover such losses. In rendering our
opinion, we have not made or obtained any evaluations or
appraisals of the property of NFB and NSBK, nor have we
examined any individual credit files.
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 and results
of operations of each of NFB and NSBK; (ii) the assets
and liabilities of each of NFB and NSBK; and (iii) the
nature and terms of certain other merger transactions
involving banks and bank holding companies and thrifts
and thrift holding companies. We also have 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 the banking industry
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.
Based upon and subject to the foregoing, it is
our 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 NFB Common Stock.
Very truly yours,
/s/ KEEFE, BRUYETTE & WOODS, INC.
KEEFE, BRUYETTE & WOODS, INC.
ANNEX E
SECTION 6022. PROCEDURE TO ENFORCE STOCKHOLDER'S RIGHT TO
RECEIVE PAYMENT FOR SHARES
1. A stockholder intending to enforce his
right under a section of this chapter to receive payment
for his shares if the proposed corporate action referred
to therein is taken shall file with the corporation,
before the meeting of stockholders at which the action is
submitted to a vote, or at such meeting but before the
vote, written objection to the action. The objection
shall include a statement that he intends to demand
payment for his shares if the action is taken. Such
objection is not required from any stockholder to whom
the corporation did not give notice of such meeting in
accordance with this chapter or where the proposed
action is authorized by written consent of stockholders
without a meeting.
2. Within ten days after the stockholders'
authorization date, which term as used in this section
means the date on which the stockholders' vote
authorizing such action was taken, or the date on which
such consent without a meeting was obtained from the
requisite stockholders, the corporation shall give
written notice of such authorization or consent by
registered mail to each stockholder who filed written
objection or from whom written objection was not
required, excepting any who voted for or consented in
writing to the proposed action.
3. Within twenty days after the giving of
notice to him, any stockholder to whom the corporation
was required to give such notice and who elects to
dissent shall file with the corporation a written notice
of such election, stating his name and residence address,
the number and classes of shares as to which he dissents
and a demand for payment of the fair value of his shares.
4. A stockholder may not dissent as to less
than all of the shares, held by him of record, that he
owns beneficially. A nominee or fiduciary may not
dissent on behalf of any beneficial owner as to less than
all of the shares of such owner held of record by such
nominee or fiduciary.
5. Upon filing a notice of election to
dissent, the stockholder shall cease to have any of the
rights of a stockholder except the right to be paid
the fair value of his shares and any other rights under
this section. Withdrawal of a notice of election shall
require the written consent of the corporation. If a
notice of election is withdrawn, or the proposed
corporate action is abandoned or rescinded, or a court
shall determine that the stockholder is not entitled to
receive payment for his shares, or the stockholder shall
otherwise lose his dissenter's rights, he shall not have
the right to receive payment for his shares and he shall
be reinstated to all his rights as a stockholder as of
the filing of his notice of election, including any
intervening preemptive rights and the right to payment
of any intervening dividend or other distribution or, if
any such rights have expired or any such dividend or
distribution other than in cash has been completed, in
lieu thereof, at the election of the corporation, the
fair value thereof in cash as determined by the board as
of the time of such expiration or completion, but without
prejudice otherwise to any corporate proceedings that may
have been taken in the interim.
6. At the time of filing the notice of
election to dissent or within one month thereafter the
stockholder shall submit the certificates representing
his shares to the corporation, or to its transfer agent,
which shall forthwith note conspicuously thereon that a
notice of election has been filed and shall return the
certificates to the stockholder or other person who
submitted them on his behalf. Any stockholder who fails
to submit his certificates for such notation as herein
specified shall, at the option of the corporation
exercised by written notice to him within forty-five days
from the date of filing of such notice of election to
dissent, lose his dissenter's rights unless a court, for
good cause shown, shall otherwise direct. Upon transfer
of a certificate bearing such notation, each new
certificate issued therefor shall bear a similar notation
together with the name of the original dissenting holder
of the shares and a transferee shall acquire no rights in
the corporation except those which the original
dissenting stockholder had after filing his notice of
election.
7. Within seven days after the expiration of
the period within which stockholders may file their
notices of election to dissent, or within seven days
after the proposed corporate action is consummated,
whichever is later, the corporation or, in the case of a
merger, the receiving corporation, shall make a written
offer by registered mail to each stockholder who has
filed such notice of election to pay for his shares at a
specified price which the corporation considers to be
their fair value. Such offer shall be made at the same
price per share to all dissenting stockholders of the
same class, or if divided into series, of the same series
and shall be accompanied by a balance sheet of the
corporation whose shares the dissenting stockholder holds
as of the latest available date, which shall not be
earlier than twelve months before the making of such
offer, and a profit and loss statement or statements for
not less than a twelve month period ended on the date of
such balance sheet or, if the corporation was not in
existence throughout such twelve month period, for the
portion thereof during which it was in existence. If
within thirty days after the making of such offer, the
corporation making the offer and any stockholder agree
upon the price to be paid for his shares, payment
therefor shall be made within sixty days after the making
of such offer upon the surrender of the certificates
representing such shares.
8. The following procedure shall apply if the
corporation fails to make such offer within such period
of seven days, or if it makes the offer and any
dissenting stockholder or stockholders fail to agree with
it within the period of thirty days thereafter upon the
price to be paid for their shares:
(a) The corporation or, in the case of a
merger, the receiving corporation shall, within twenty
days after the expiration of whichever is applicable of
the two periods last mentioned, institute a special
proceeding in the supreme court in the judicial district
in which the office of the corporation is located to
determine the rights of dissenting stockholders and to
fix the fair value of their shares.
(b) If the corporation fails to institute such
proceeding within such period of twenty days, any
dissenting stockholder may institute such proceeding for
the same purpose not later than thirty days after the
expiration of such twenty day period. If such proceeding
is not instituted within such thirty day period, all
dissenter's rights shall be lost unless the supreme
court, for good cause shown, shall otherwise direct.
(c) All dissenting stockholders, excepting
those who, as provided in subdivision seven, have agreed
with the corporation upon the price to be paid for their
shares, shall be made parties to such proceeding, which
shall have the effect of an action quasi in rem against
their shares. The corporation shall serve a copy of the
petition in such proceeding upon each dissenting
stockholder who is a resident of this state in the manner
provided by law for the service of a summons, and upon
each nonresident dissenting stockholder either by
registered mail and publication, or in such other manner
as is permitted by law. The jurisdiction of the court
shall be plenary and exclusive.
(d) The court shall determine whether each
dissenting stockholder, as to whom the corporation
requests the court to make such determination, is
entitled to receive payment for his shares. If the
corporation does not request any such determination or
the court finds that any dissenting stockholder is so
entitled, it shall proceed to fix the value of the
shares, which, for the purposes of this section, shall be
the fair value as of the close of business on the day
prior to the stockholders' authorization date, excluding
any appreciation or depreciation directly or indirectly
induced by such corporate action or its proposal. The
court may, if it so elects, appoint an appraiser to
receive evidence and recommend a decision on the question
of fair value. Such appraiser shall have the power,
authority and duties specified in the order appointing
him, or any amendment thereof.
(e) The final order in the proceeding shall be
entered against the corporation in favor of each
dissenting stockholder who is a party to the proceeding
and is entitled thereto for the value of his shares so
determined.
(f) The final order shall include an allowance
for interest at such rate as the court finds to be
equitable, from the stockholders' authorization date to
the date of payment. If the court finds that the refusal
of any stockholder to accept the corporate offer of
payment for his shares was arbitrary, vexatious or
otherwise not in good faith, no interest shall be allowed
to him.
(g) The costs and expenses of such proceeding
shall be determined by the court and shall be assessed
against the corporation, or, in the case of a merger, the
receiving corporation, except that all or any part of
such costs and expenses may be apportioned and assessed,
as the court may determine, against any or all of the
dissenting stockholders who are parties to the proceeding
if the court finds that their refusal to accept the
corporate offer was arbitrary, vexatious or otherwise not
in good faith. Such expenses shall include reasonable
compensation for and the reasonable expenses of the
appraiser, but shall exclude the fees and expenses of
counsel for and experts employed by any party unless the
court, in its discretion, awards such fees and expenses.
In exercising such discretion, the court shall consider
any of the following: (A) that the fair value of the
shares as determined materially exceeds the amount which
such corporation offered to pay; (B) that no offer was
made by such corporation; and (C) that such corporation
failed to institute the special proceeding within the
period specified therefor.
(h) Within sixty days after final
determination of the proceeding, the corporation or, in
the case of a merger, the receiving corporation shall pay
to each dissenting stockholder the amount found to be due
him, upon surrender of the certificates representing his
shares.
9. Shares acquired by the corporation upon
the payment of the agreed value therefor or of the amount
due under the final order, as provided in this section,
shall be dealt with as provided in section five thousand
fourteen, except that, in the case of a merger, they
shall be disposed of as provided in the plan of merger or
consolidation.
10. The enforcement by a stockholder of his
right to receive payment for his shares in the manner
provided herein shall exclude the enforcement by such
stockholder of any other right to which he might
otherwise be entitled by virtue of share ownership,
except as provided in subdivision five, and except that
this section shall not exclude the right of such
stockholder to bring or maintain an appropriate action to
obtain relief on the ground that such corporate action
will be or is illegal or fraudulent as to him.
11. Except as otherwise expressly provided in
this section, any notice to be given by a corporation to
a stockholder under this section shall be given in the
manner provided in section six thousand five.
Added L.1964, c. 849, SECTION 1, eff. Sept. 1, 1964.
PART II -- Information Not Required in Prospectus
Item 20. Indemnification of Directors and Officers.
Section 145 of the Delaware General Corporate Law (the "DGCL")
generally provides that a corporation may indemnify directors, officers,
employees or agents against liabilities they may incur in such capacities
provided certain standards are met, including good faith and the reasonable
belief that the particular action was in, or not opposed to, the best
interests of the corporation.
Subsection (a) of Section 145 of the DGCL empowers a corporation
to indemnify any person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (other than an
action by or in the right of the corporation), by reason of the fact that
he is or was a director, officer, employee or agent of the corporation or
is or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation or enterprise, against expenses
(including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
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 that his conduct was unlawful.
Subsection (b) of Section 145 of the DGCL empowers a corporation
to indemnify any person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action or suit by or in the
right of the corporation to procure a judgment in its favor, by reason of
the fact that such person acted in any of the capacities set forth above,
against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection with the defense or settlement of such action
or suit if he acted under standards similar to those set forth above,
except that no indemnification may be made in respect of any claim, issue
or matter as to which such person shall have been adjudged to be liable to
the corporation, unless and only to the extent that the Delaware Court of
Chancery or the court in which such action or suit was brought shall
determine that, despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and reasonably
entitled to be indemnified for such expenses which the court shall deem
proper.
Section 145 of the DGCL further provides that, among other things,
to the extent that a director or officer of a corporation has been
successful in the defense of any action, suit or proceeding referred to in
Subsections (a) and (b) of Section 145, or in the defense of any claim,
issue or matter therein, he shall be indemnified against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection therewith; that indemnification provided for by Section 145
shall not be deemed exclusive of any other rights to which the indemnified
party may be entitled; and that a corporation is empowered to purchase and
maintain insurance on behalf of a director or officer of the corporation
against any liability asserted against him and incurred by him in any such
capacity, or arising out of his status as such, whether or not the
corporation would have the power to indemnify against such liability under
Section 145.
Indemnification as described above shall be granted in a specific
case only upon a determination that indemnification is proper under the
circumstances using the applicable standard of conduct which is made by (a)
a majority of directors who were not parties to such proceeding, (b)
independent legal counsel in a written opinion if there are no such
disinterested directors or if such disinterested directors so direct, or
(c) the shareholders.
Article 8.1 of the By-laws of the Registrant provides that the
Registrant shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed
action, suit or proceeding by reason of the fact that he or she is or was a
director or officer of the Registrant against expenses (including
attorneys' fees), judgments, fines and settlement payments actually and
reasonably incurred by him or her to the fullest extent permitted by the
DGCL and any other applicable law, as may be in effect from time to time.
Article 8.2 of the By-laws of the Registrant provides that the
Registrant may indemnify any person who was or is a party or is threatened
to be made a party to any threatened, pending or completed action, suit or
proceeding by reason of the fact that he or she is or was an employee or
agent of the Registrant or is serving at the request of the Registrant as a
director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against expenses (including
attorney's fees), judgments, fines and amounts paid in settlement actually
and reasonably incurred by him or her to the extent permitted by the DGCL,
and any other applicable law as may be in effect from time to time.
Section 102(b)(7) of the DGCL ("Section 102(b)(7)") permits the
certificate of incorporation of a corporation to provide that a director
shall not be personally liable to the corporation or its stockholders for
monetary damages for breach of his or her fiduciary duty as a director,
except for liability (i) for any breach of the director's duty of loyalty
to the corporation or its stockholders, (ii) for acts or omissions not in
good faith or which involve intentional misconduct or a knowing violation
of law, (iii) under Section 174 of the DGCL (dealing with unlawful
dividends or unlawful stock purchases or redemptions), or (iv) for any
transaction from which the director derived an improper personal benefit.
Article 10 of the Registrant's Certificate of Incorporation
provides that, subject only to the express prohibitions on elimination or
limitation of liability of directors set forth in Section 102(b)(7), as it
now exists or may be hereinafter amended, directors shall not be liable for
monetary damages in excess of $25,000 per occurrence resulting from a
breach of their fiduciary duties.
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
$10,000,000, with an additional $5,000,000 excess policy, 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. The FDIC recently
adopted regulations prohibiting, subject to certain exceptions, insured
depository institutions, their subsidiaries and affiliated holding
companies from indemnifying officers, directors or employees for any civil
money penalty or judgment resulting from an administrative or civil
enforcement action commenced by any federal banking agency, or for that
portion of the costs sustained with regard to such an action that results
in a final order or settlement that is adverse to the director, officer or
employee.
Item 21. Exhibits and Financial Statement, Schedules.
(a) Exhibits.
2.1 Agreement and Plan of Merger, dated as of July 15, 1996,
as amended, by and among North Fork Bancorporation, Inc.,
North Fork Bank and North Side Savings Bank, is included
as Annex A to the Joint Proxy Statement/Prospectus which
is part of this Registration Statement.
3.1 Certificate of Incorporation of the Registrant, as
amended , 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.
3.2 By-laws of the Registrant, 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.
4.1 Rights Agreement, previously filed and incorporated by
reference to North Fork Bancorporation, Inc.'s
Registration Statement on Form 8-A filed March 21,
1989.
5.1 Opinion of Skadden, Arps, Slate, Meagher & Flom.
8.1 Opinion of Skadden, Arps, Slate, Meagher & Flom regarding tax
matters.
8.2 Opinion of Elias, Matz, Tiernan & Herrick L.L.P. regarding
tax matters.
10.1 Stock Option Agreement, dated as of July 15, 1996, by and
between North Side Savings Bank and North Fork
Bancorporation, Inc. is included as Annex B to the Joint
Proxy Statement/Prospectus which is part of this
Registration Statement.
23.1 Consent of KPMG Peat Marwick LLP, Jericho, New York.
23.2 Consent of KPMG Peat Marwick LLP, New York, New York.
23.3 Consent of Keefe, Bruyette & Woods, Inc., New York, New
York.
23.4 Consent of Sandler O'Neill & Partners, L.P., New York, New
York
23.5 Consent of Skadden, Arps, Slate, Meagher & Flom (included
in Exhibit 5.1 hereto).
23.6 Consent of Skadden, Arps, Slate, Meagher & Flom (included
in Exhibit 8.1 hereto).
23.7 Consent of Elias, Matz, Tiernan & Herrick L.L.P (included
in Exhibit 8.2 hereto).
24.1 Powers of Attorney (see the signature page to this Form
S-4 Registration Statement).
99.1 Opinion of Sandler O'Neill & Partners, L.P., is included
as Annex C to the Joint Proxy Statement/Prospectus which
is part of this Registration Statement.
99.2 Opinion of Keefe, Bruyette & Woods, Inc., is included as
Annex D to the Joint Proxy Statement/Prospectus which is
part of this Registration Statement.
(b) Financial Statement Schedules.
None.
(c) Item 4(b) Information.
None.
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 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 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) of the Securities Act of 1933, the issuer undertakes that such
reoffering prospectus will contain the information called for by the
applicable registration form with respect to reofferings by persons who may
be deemed underwriters, in addition to the information called for by the
other items of the applicable form.
(c) The undersigned registrant hereby undertakes that every prospectus
(i) that is filed pursuant to the paragraph immediately preceding, or (ii)
that purports to meet the requirements of Section 10(a)(3) of the
Securities Act of 1933 and is used in connection with an offering of
securities subject to Rule 415 of the Securities Act of 1933, will be filed
as a part of an amendment to the registration statement and will not be
used until such amendment is effective, and that, for purposes of
determining any liability under the Securities Act of 1933, each such
post-effective amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof.
(d) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the 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 registrants 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.
(e) The undersigned registrant hereby undertakes to respond to requests
for information that is incorporated by reference into the prospectus
pursuant to Item 4, 10(b), 11, or 13 of this form, within one business day
of receipt of such request, and to send the incorporated documents by first
class mail or other equally prompt means. This includes information
contained in documents filed subsequent to the effective date of the
registration statement through the date of responding to the request.
(f) The undersigned Registrant hereby undertakes 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.
(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.
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant
has duly caused this registration statement to be signed on its behalf by
the undersigned, thereunto duly authorized in the City of Melville, State
of New York, on October 1, 1996.
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 October 1, 1996.
We, the undersigned officers and directors of North Fork
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
0xecute 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 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.
Name Title
/s/ John A. Kanas President, Chief Officer and
John A. Kanas Chairman of the Board
/s/ Daniel M. Healy Executive Vice President and
Daniel M. Healy Chief Financial Officer (Principal
Financial and Accounting Officer)
/s/ John Bohlsen Director
John Bohlsen
Allan C. Dickerson Director
/s/ Lloyd A. Gerard Director
Lloyd A. Gerard
/s/ James F. Reeve Director
James F. Reeve
/s/ James H. Rich, Jr. Director
James H. Rich, Jr.
George H. Rowsom Director
/s/ Raymond W. Terry, Jr. Director
Raymond W. Terry, Jr.
/s/ Kurt R. Schmeller Director
Kurt R. Schmeller
EXHIBIT INDEX
2.1 Agreement and Plan of Merger, dated as of July 15, 1996,
as amended, by and among North Fork Bancorporation, Inc.,
North Fork Bank and North Side Savings Bank, is included
as Annex A to the Joint Proxy Statement/Prospectus which
is part of this Registration Statement.
3.1 Certificate of Incorporation of the Registrant, as
amended , 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.
3.2 By-laws of the Registrant, 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.
4.1 Rights Agreement, previously filed and incorporated by
reference to North Fork Bancorporation, Inc.'s Registra-
tion Statement on Form 8-A filed March 21, 1989.
5.1 Opinion of Skadden, Arps, Slate, Meagher & Flom.
8.1 Opinion of Skadden, Arps, Slate, Meagher & Flom regarding
tax matters.
8.2 Opinion of Elias, Matz, Tiernan & Herrick L.L.P. regarding
tax matters.
10.1 Stock Option Agreement, dated as of July 15, 1996, by and
between North Side Savings Bank and North Fork
Bancorporation, Inc. is included as Annex B to the Joint
Proxy Statement/Prospectus which is part of this
Registration Statement.
23.1 Consent of KPMG Peat Marwick LLP, New York, New York.
23.2 Consent of KPMG Peat Marwick LLP, New York, New York.
23.3 Consent of Keefe, Bruyette & Woods, Inc., New York, New
York.
23.4 Consent of Sandler O'Neill & Partners, L.P., New York, New
York
23.5 Consent of Skadden, Arps, Slate, Meagher & Flom (included
in Exhibit 5.1 hereto).
23.6 Consent of Skadden, Arps, Slate, Meagher & Flom (included
in Exhibit 8.1 hereto).
23.7 Consent of Elias, Matz, Tiernan & Herrick L.L.P (included
in Exhibit 8.2 hereto).
24.1 Powers of Attorney (see the signature page to this Form S-4
Registration Statement).
99.1 Opinion of Sandler O'Neill & Partners, L.P., is included
as Annex C to the Joint Proxy Statement/Prospectus which
is part of this Registration Statement.
99.2 Opinion of Keefe, Bruyette & Woods, Inc., is included as
Annex D to the Joint Proxy Statement/Prospectus which is
part of this Registration Statement.
October 1, 1996
Board of Directors
North Fork Bancorporation, Inc.
275 Broad Hollow Road
Melville, New York 11747
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 8,135,293 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
July 15, 1996, as amended (the "Merger Agreement"), by
and among the Company, North Fork Bank, a New York-
chartered commercial bank and a wholly owned subsidiary
of the Company ("North Fork Bank"), and North Side
Savings Bank, a New York-chartered stock form savings
bank.
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
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 of Common
Stock (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 of Common Stock and Rights
pursuant thereto, (v) the Rights Agreement, dated as of
February 28, 1989 (the "Rights Agreement"), between the
Company and North Fork Bank, as Rights Agent, and (vi)
such other documents as we have deemed necessary or
appropriate as a basis for the opinions 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 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 of 8,135,293 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 our 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 and subject to the foregoing, and
assuming the due execution and delivery of certificates
representing the shares of Common Stock in the form
examined by us, we are of the opinion that (i) the shares
of Common Stock to be issued by the Company pursuant to
the Merger Agreement, when issued in accordance with the
terms of the Merger Agreement, will 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 5.1 to the Registration
Statement. We also consent to the reference to our firm
under the caption "LEGAL MATTERS" 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,
/s/ Skadden Arps, Slate, Meagher
& Flom
October 1, 1996
North Fork Bancorporation, Inc.
275 Broad Hollow Road
Melville, New York 11747
Ladies and Gentlemen:
You have requested our opinion regarding the
discussion of the material U.S. federal income tax
consequences under the captions "SUMMARY--Certain Federal
Income Tax Consequences of the Merger" and "THE
MERGER--Certain Federal Income Tax Consequences of the
Merger--The Merger" in the Joint Proxy Statement-Prospectus
(the "Joint Proxy Statement-Prospectus") which will be
included in the Registration Statement on Form S-4 (the
"Registration Statement") filed on the date hereof with
the Securities and Exchange Commission (the "Commission")
under the Securities Act of 1933, as amended (the
"Securities Act"). The Joint Proxy Statement-Prospectus
relates to the proposed merger of North Side Savings Bank
with and into North Fork Bank, a wholly-owned subsidiary
of North Fork Bancorporation, Inc. This opinion is
delivered in accordance with the requirements of Item
601(b)(8) of Regulation S-K under the Securities Act.
We have reviewed the Joint Proxy Statement-
Prospectus and such other materials as we have deemed
necessary or appropriate as a basis for our opinion
described therein, and have considered the applicable
provisions of the Internal Revenue Code of 1986, as
amended, Treasury regulations, pertinent judicial
authorities, rulings of the Internal Revenue Service, and
such other authorities as we have considered relevant to
such opinion.
Based upon the foregoing, it is our opinion
that the statements made under the captions "SUMMARY--
Certain Federal Income Tax Consequences of the Merger"
and "THE MERGER--Certain Federal Income Tax Consequences
of the Merger" in the Joint Proxy Statement-Prospectus,
to the extent that they constitute matters of law or
legal conclusions, are correct in all material respects.
In accordance with the requirements of Item
601(b)(23) of Regulation S-K under the Securities Act, we
hereby consent 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
and to the filing of this opinion as an Exhibit to the
Registration Statement. In giving this consent, we do
not admit that we come within the category of persons
whose consent is required under Section 7 of the
Securities Act or the rules and regulations of the
Commission thereunder.
Very truly yours,
/s/ Skadden, Arps, Slate, Meagher & Flom
October 1, 1996
North Side Savings Bank
170 Tulip Avenue
Floral Park, New York 11001
Ladies and Gentlemen:
We have acted as your counsel in connection
with the Registration Statement of 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 merger of North Side Savings Bank with and into
North Fork Bank. This opinion is delivered in accordance
with the requirements of Item 601(b) 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--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 an exhibit to the Registration Statement and to the
use of our name under the caption "THE MERGER - Certain
Federal Income Tax Consequences of the Merger--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,
ELIAS, MATZ, TIERNAN & HERRICK, L.L.P.
By: /s/ Timothy B. Matz
Timothy B. Matz, a Partner
Consent of Independent Auditors
The Stockholders and Board of Directors
North Fork Bancorporation, Inc.:
We consent to the incorporation by reference in the
Joint Proxy Statement/Prospectus included in the
Registration Statement filed on October 1 1996 on Form
S-4 of North Fork Bancorporation, Inc., of our report
dated January 16, 1996, relating to the consolidated
balance sheets of North Fork Bancorporation, Inc. and
subsidiaries as of December 31, 1995 and 1994, and the
related consolidated statements of income, changes in
stockholders' equity and cash flows for each of the years
in the three-year period ended December 31, 1995, and to
the reference to our firm under the heading "Experts" in the
Joint Proxy Statement/Prospectus. Our report with respect
to these financial statements, which includes an explanatory
paragraph related to changes in accounting principles, appears
in the Annual Report on Form 10-K of North Fork Bancorp-
oration, Inc. for the fiscal year ended December 31, 1995.
/s/ KPMG Peat Marwick LLP
New York, New York
October 1, 1996
CONSENT OF INDEPENDENT AUDITORS
The Stockholders and Board of Directors
North Side Savings Bank:
We consent to incorporation by reference in the
registration statement on Form S-4 of North Fork
Bancorporation, Inc., of our report dated October 18,
1995, relating to the consolidated statements of
condition of North Side Savings Bank and subsidiaries as
of September 30, 1995 and 1994 and the related
consolidated statements of operations, changes in
shareholders' equity, and cash flows for each of the
years in the three-year period ended September 30, 1995
which is included in the Current Report on Form 8-K of
North Fork Bancorporation, Inc. which is incorporated in
the Form S-4 by reference. We also consent to the
reference to our firm under the heading "Experts" in the
Joint Proxy Statement/Prospectus.
Our report refers to a change in accounting for certain
investment in debt and equity securtiies.
/s/ KPMG Peat Marwick LLP
New York, New York
October 1, 1996
CONSENT OF FINANCIAL ADVISOR
September 30, 1996
We hereby consent to the use in this Registration
Statement on Form S-4 of our letter to the Board of
Directors of North Fork Bancorporation, Inc., included as
Annex D to the Prospectus/Joint Proxy Statement forming a
part of this Registration Statement on Form S-4 and to
all references to our firm in such Prospectus/Joint Proxy
Statement. 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 of the rules and regulations of the Securities
and Exchange Commission thereunder.
KEEFE, BRUYETTE & WOODS, INC.
BY: /s/ Frank S. Cicero
Name: Frank S. Cicero
Title: Vice President
CONSENT OF
SANDLER O'NEILL & PARTNERS, L.P.
We hereby consent to the use in this Registration
Statement on Form S-4 of our letter to the Board of
Directors of North Side Savings Bank 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.
SANDLER O'NEILL & PARTNERS, L.P.
/s/ Sandler O'Neill & Partners, L.P.
Dated: October 1, 1996
