<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 11, 2000
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)
<TABLE>
<S> <C> <C>
DELAWARE 6712 36-3154608
(STATE OR OTHER JURISDICTION (PRIMARY STANDARD (I.R.S. EMPLOYER IDENTIFICATION
OF INCORPORATION OR ORGANIZATION) INDUSTRIAL CLASSIFICATION CODE NUMBER)
NUMBER)
</TABLE>
275 BROAD HOLLOW ROAD
MELVILLE, NEW YORK 11747
(631) 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
(631) 298-5000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
------------------------
COPIES TO:
<TABLE>
<S> <C>
WILLIAM S. RUBENSTEIN, ESQ. LAWRENCE M.F. SPACCASI, ESQ.
SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP MULDOON, MURPHY & FAUCETTE LLP
4 TIMES SQUARE 5101 WISCONSIN AVENUE, N.W.
NEW YORK, NEW YORK 10036 WASHINGTON, D.C. 20016
(212) 735-3000 (202) 362-0840
</TABLE>
------------------------
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
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. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
PROPOSED MAXIMUM PROPOSED
TITLE OF EACH CLASS OF AMOUNT TO OFFERING PRICE MAXIMUM AGGREGATE AMOUNT OF
SECURITIES BEING REGISTERED BE REGISTERED(1) PER SHARE OFFERING PRICE REGISTRATION FEE(2)
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value
$2.50 per share ("Common
Stock").................. 19,328,134 N/A N/A $81,004.21
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) This amount is based upon the number of shares of Common Stock anticipated
to be issued upon consummation of the transaction contemplated in the
Amended and Restated Agreement and Plan of Merger, dated as of August 30,
1999, by and between North Fork Bancorporation, Inc. and Reliance Bancorp,
Inc. ("Reliance").
(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 Reliance as reported on the National
Market System of the Nasdaq Stock Exchange on January 5, 2000 ($31.75 per
share) and the maximum number of such shares (9,664,067) that may be
exchanged for the securities being registered. Pursuant to Rule 457(b), the
registration fee has been reduced by the $72,087.85 paid on October 29, 1999
upon the filing under the Securities Exchange Act of 1934, as amended, of
Reliance's proxy materials included herein relating to the merger.
Accordingly, the registration fee payable upon the filing of this
Registration Statement is $8,916.36.
------------------------
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.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
<TABLE>
<S> <C>
[NORTH FORK BANCORPORATION, INC. LOGO] [RELIANCE BANCORP LOGO]
PROSPECTUS OF PROXY STATEMENT OF
NORTH FORK BANCORPORATION, INC. RELIANCE BANCORP, INC.
</TABLE>
MERGER PROPOSED -- YOUR VOTE IS VERY IMPORTANT
The boards of directors of North Fork Bancorporation, Inc. and Reliance
Bancorp, Inc. have approved a merger agreement that provides for the merger of
Reliance into North Fork.
IF WE COMPLETE THE MERGER, YOU WILL RECEIVE, FOR EACH SHARE OF RELIANCE
COMMON STOCK, 2.0 SHARES OF COMMON STOCK OF NORTH FORK. THIS REPRESENTS A VALUE
OF $33.38 BASED ON NORTH FORK'S CLOSING PRICE OF $16.69 ON THE NEW YORK STOCK
EXCHANGE ON JANUARY 10, 2000. WE EXPECT THAT THE CONVERSION OF YOUR SHARES OF
RELIANCE COMMON STOCK GENERALLY WILL NOT BE TAXABLE.
North Fork also has entered into an agreement to acquire JSB Financial,
Inc., a savings and loan holding company. This transaction is described on page
3. After completion of the merger and the JSB merger, we expect that current
North Fork stockholders will own approximately 74% of the combined company,
Reliance stockholders will own approximately 10% of the combined company, and
JSB stockholders will own approximately 16% of the combined company.
YOUR VOTE IS IMPORTANT. To complete the merger, Reliance needs your
approval. This document is being furnished to you in connection with the
solicitation of proxies by Reliance's board of directors for its use at a
special meeting of stockholders, which is being held to vote upon the merger.
The place, date and time of the special meeting is as follows:
February 10, 2000
9:00 a.m., local time
Long Island Marriott Hotel and Conference Center
101 James Doolittle Blvd.
Uniondale, New York
This document gives you detailed information about the special meeting and
the proposed transaction. I encourage you to read this document carefully.
Your board of directors believes that the merger is in your best interests
and unanimously recommends that you vote "FOR" the merger. Reliance's financial
advisor, Sandler O'Neill & Partners, L.P., has issued its opinion to the
Reliance board of directors that the exchange ratio is fair from a financial
point of view to Reliance stockholders.
North Fork's common stock is listed on the New York Stock Exchange under
the symbol "NFB".
NEITHER THE SEC NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR
DISAPPROVED THE SECURITIES TO BE ISSUED UNDER THIS PROXY STATEMENT-PROSPECTUS OR
DETERMINED IF THIS PROXY STATEMENT-PROSPECTUS IS ACCURATE OR ADEQUATE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE SECURITIES NORTH FORK IS OFFERING THROUGH THIS DOCUMENT ARE NOT SAVINGS OR
DEPOSIT ACCOUNTS OR OTHER OBLIGATIONS OF ANY BANK OR SAVINGS ASSOCIATION, AND
THEY ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER
GOVERNMENTAL AGENCY.
This proxy statement-prospectus is dated January 11, 2000 and is being
mailed to stockholders on or about January 12, 2000.
<PAGE> 3
[RELIANCE BANCORP LOGO]
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON FEBRUARY 10, 2000
To the Stockholders
of Reliance Bancorp, Inc.:
We will hold a special meeting of stockholders of Reliance Bancorp, Inc. on
February 10, 2000 at 9:00 a.m., local time, at the Long Island Marriott Hotel
and Conference Center, 101 James Doolittle Blvd., Uniondale, New York, for the
following purposes:
1. To consider and vote upon a proposal to approve and adopt the
Amended and Restated Agreement and Plan of Merger, dated as of August 30,
1999, by and between Reliance and North Fork Bancorporation, Inc., and the
consummation of the transactions contemplated by the merger agreement,
pursuant to which, among other things, Reliance will merge with and into
North Fork upon the terms and subject to the conditions set forth in the
merger agreement, as more fully described in the enclosed proxy
statement-prospectus; and
2. To transact any other business as may properly be brought before
the special meeting.
We have fixed January 7, 2000 as the record date for determining those
Reliance stockholders entitled to vote at the special meeting. Accordingly, only
stockholders of record at the close of business on that date are entitled to
notice of, and to vote at, the special meeting. A list of stockholders entitled
to vote at the special meeting will be available for examination by Reliance
stockholders for any purpose germane to the meeting, during ordinary business
hours, beginning 10 days prior to the date of the special meeting, at Reliance's
principal executive offices at 585 Stewart Avenue, Garden City, New York 11530.
TO ENSURE YOUR REPRESENTATION AT THE SPECIAL MEETING, PLEASE COMPLETE AND
PROMPTLY MAIL YOUR PROXY IN THE RETURN ENVELOPE ENCLOSED. This will not prevent
you from voting in person, but will help to secure a quorum and avoid added
solicitation costs. Your proxy may be revoked at any time before it is voted.
Please review the proxy statement-prospectus accompanying this notice for more
complete information regarding the merger and the special meeting.
By Order of the Board of Directors,
/s/ Joseph F. Lavelle
Joseph F. Lavelle
Secretary
Garden City, New York
January 11, 2000
THE BOARD OF DIRECTORS OF RELIANCE UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR"
APPROVAL AND ADOPTION OF THE MERGER AGREEMENT.
YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING IN
PERSON, PLEASE COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY CARD IN THE
ENCLOSED ENVELOPE. THE ENCLOSED ENVELOPE REQUIRES NO POSTAGE IF MAILED IN THE
UNITED STATES. IF YOU ATTEND THE SPECIAL MEETING, YOU MAY VOTE IN PERSON IF YOU
WISH, EVEN IF YOU HAVE PREVIOUSLY RETURNED YOUR PROXY CARD.
<PAGE> 4
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
QUESTIONS AND ANSWERS ABOUT THE MERGER...................... iv
SUMMARY..................................................... 1
SELECTED HISTORICAL FINANCIAL INFORMATION................... 6
SELECTED PRO FORMA COMBINED FINANCIAL INFORMATION FOR ALL
TRANSACTIONS.............................................. 13
COMPARATIVE PER SHARE DATA.................................. 16
RELIANCE SPECIAL MEETING.................................... 19
Date, Time and Place...................................... 19
Matters to Be Considered.................................. 19
Proxies................................................... 19
Solicitation of Proxies................................... 19
Record Date and Voting Rights; Vote Required.............. 19
Recommendation of Reliance Board.......................... 20
THE MERGER.................................................. 21
Transaction Structure..................................... 21
Background of the Merger.................................. 21
North Fork's Reasons for the Merger....................... 23
Recommendation of the Reliance Board and Reasons for the
Merger................................................. 24
Opinion of Reliance's Financial Advisor................... 26
Conversion of Stock....................................... 34
Treatment of Options...................................... 35
Exchange of Stock Certificates............................ 35
Effective Time............................................ 36
Changing the Method of Effecting the Combination.......... 36
Conditions to the Completion of the Merger................ 36
Representations and Warranties............................ 37
Conduct of Business Pending the Merger.................... 38
No Solicitation by Reliance............................... 39
Regulatory Approvals Required for the Merger.............. 40
Material Federal Income Tax Consequences.................. 41
Termination of the Merger Agreement....................... 43
Extension, Waiver and Amendment of the Merger Agreement... 46
Employee Benefit Plans and Existing Agreements............ 46
Stock Exchange Listing.................................... 47
Expenses.................................................. 47
Dividends................................................. 47
Appraisal Rights.......................................... 47
Accounting Treatment...................................... 47
Interests of Certain Persons in the Merger................ 48
Stock Option Agreement.................................... 50
Restrictions on Resales by Affiliates..................... 52
MANAGEMENT AND OPERATIONS FOLLOWING THE MERGER AND THE JSB
MERGER.................................................... 54
Board of Directors Following the Merger and the JSB
Financial Merger....................................... 54
Consolidation of Operations; Estimated Cost Savings and
Revenue Enhancements; Estimated Earnings Per Share..... 54
</TABLE>
i
<PAGE> 5
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PRICE RANGE OF COMMON STOCK AND DIVIDENDS................... 56
North Fork................................................ 56
Reliance.................................................. 56
North Fork Dividend Policy................................ 57
INFORMATION ABOUT NORTH FORK................................ 57
General................................................... 57
Management and Additional Information..................... 57
Security Ownership........................................ 58
INFORMATION ABOUT RELIANCE.................................. 59
General................................................... 59
Management and Additional Information..................... 59
Security Ownership........................................ 60
REGULATION AND SUPERVISION OF NORTH FORK.................... 61
General................................................... 61
Payment of Dividends...................................... 61
Transactions with Affiliates.............................. 62
Holding Company Liability................................. 62
Prompt Corrective Action.................................. 62
Capital Adequacy.......................................... 63
Enforcement Powers of the Federal Banking Agencies........ 64
Control Acquisitions...................................... 64
Future Legislation........................................ 64
DESCRIPTION OF NORTH FORK CAPITAL STOCK..................... 65
General................................................... 65
Common Stock.............................................. 65
Preferred Stock........................................... 65
Anti-Takeover Provisions.................................. 65
COMPARISON OF STOCKHOLDER RIGHTS............................ 66
Summary of Material Differences Between the Rights of
North Fork Stockholders and the
Rights of Reliance Stockholders........................ 66
LEGAL MATTERS............................................... 71
EXPERTS..................................................... 71
STOCKHOLDER PROPOSALS....................................... 72
OTHER MATTERS............................................... 72
WHERE YOU CAN FIND MORE INFORMATION......................... 72
FORWARD-LOOKING STATEMENTS.................................. 74
PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS........... 76
</TABLE>
<TABLE>
<S> <C>
Appendix A Amended and Restated Agreement and Plan of Merger
Appendix B Stock Option Agreement
Appendix C Opinion of Sandler O'Neill & Partners, L.P.
</TABLE>
ii
<PAGE> 6
This document incorporates important business and financial information
about Reliance and North Fork from documents filed with the SEC that have not
been included in or delivered with this document. You may read and copy these
documents at the SEC's public reference facilities. Please call the SEC at
1-800-SEC-0330 for information about these facilities. This information is also
available at the Internet site the SEC maintains at http://www.sec.gov. Reports
and other information relating to North Fork are also available at the offices
of the New York Stock Exchange, and reports and other information relating to
Reliance are also available at the offices of The National Association of
Securities Dealers. See "Where You Can Find More Information" on page 72.
You also may request copies of these documents from us. North Fork will
provide you with copies of the documents relating to North Fork, without charge,
upon written or oral request to:
North Fork Bancorporation, Inc.
275 Broad Hollow Road
Melville, New York 11747
(631) 844-1004
Attention: Aurelie S. Graf
Reliance will provide you with copies of the documents relating to
Reliance, without charge, upon written or oral request to:
Reliance Bancorp, Inc.
585 Stewart Avenue
Garden City, New York 11530
(516) 222-9300
Attention: Paul D. Hagan
In order to receive timely delivery of the documents in advance of our
special meeting of stockholders, you should make out your requests no later than
February 3.
iii
<PAGE> 7
QUESTIONS AND ANSWERS ABOUT THE MERGER
Q: WHAT DO I NEED TO DO NOW?
A: After you have carefully read this document, just indicate on your proxy card
how you want to vote. Complete, sign, date and mail the proxy card in the
enclosed return envelope as soon as possible so that your shares will be
represented and voted at the special meeting. Your board of directors
unanimously recommends that you vote FOR the merger.
Q: WHAT DO I DO IF I WANT TO CHANGE MY VOTE AFTER I HAVE MAILED MY SIGNED PROXY
CARD?
A: You may change your vote by revoking your proxy in any of the three following
ways:
- by sending a written notice to the corporate secretary prior to the
special meeting stating that you would like to revoke your proxy;
- by completing, signing and dating another proxy card and returning it by
mail prior to the special meeting; or
- by attending the special meeting and voting in person.
Q: SHOULD I SEND IN MY STOCK CERTIFICATES AT THIS TIME?
A: No. After we complete the merger, we will send you written instructions for
exchanging your stock certificates.
Q: IF MY SHARES ARE HELD IN "STREET NAME" BY MY BROKER, WILL MY BROKER VOTE MY
SHARES FOR ME?
A: If you do not provide your broker with instructions on how to vote your
shares held in "street name," your broker will not be permitted to vote your
shares, which will have the effect of a "NO" vote on the proposals presented at
the special meeting. You should therefore provide your broker with instructions
as to how to vote your shares.
Q: WHEN DO YOU EXPECT TO COMPLETE THE MERGER?
A: We presently expect to complete the merger in the first quarter of 2000.
However, we cannot assure you when or if the merger will occur. We must first
obtain the approval of the Reliance stockholders at the special meeting.
Q: WHO CAN I CALL WITH QUESTIONS ABOUT THE SPECIAL MEETING OR THE MERGER?
A: You can contact Paul D. Hagan, Chief Financial Officer of Reliance, at (516)
222-9300.
iv
<PAGE> 8
SUMMARY
This brief summary does not contain all of the information that should be
important to you. You should carefully read this entire document and the other
documents to which this document refers you to fully understand the merger. See
"Where You Can Find More Information" on page 72.
EACH RELIANCE SHARE WILL BE EXCHANGED FOR 2.0 SHARES OF NORTH FORK COMMON STOCK
(PAGE 34)
When the merger is complete, each of your shares of Reliance common stock
will automatically become the right to receive 2.0 shares of common stock of
North Fork.
Because the number of shares of North Fork common stock that you will
receive in the merger is fixed, the value of the shares of North Fork common
stock that you will receive in the merger will change as the price of North Fork
common stock changes.
TRANSACTION GENERALLY TAX-FREE FOR RELIANCE STOCKHOLDERS (PAGE 41)
Each of North Fork and Reliance has received an opinion of its counsel
dated the date of this document that the merger will be treated as a transaction
of a type which is generally tax-free to Reliance stockholders for U.S. federal
income tax purposes. Neither North Fork nor Reliance will be obligated to
complete the merger unless it receives a legal opinion from its counsel, dated
the closing date, that the merger will be treated as a transaction of a type
that is generally tax-free for U.S. federal income tax purposes.
If the merger qualifies as a type that is generally tax-free for U.S.
federal income tax purposes, then the Reliance stockholders generally will not
recognize any gain or loss for U.S. federal income tax purposes as a result of
the exchange of all of their shares of Reliance common stock in the merger,
except in connection with any cash received instead of fractional shares.
In the event that (a) either North Fork or Reliance fails to receive its
tax opinion dated the closing date, (b) such party determines to waive the
related condition to its obligation to complete the merger, and (c) the material
federal income tax consequences of the merger to stockholders of Reliance are
different from those described above, Reliance will resolicit its stockholders
prior to completing the merger.
Even if such legal opinions are rendered to North Fork and Reliance, such
opinions are not binding on the Internal Revenue Service or the courts and,
accordingly, there can be no assurance that the Internal Revenue Service will
not challenge the conclusions reflected in such opinions or that it will not
prevail in any such challenge thereto.
THIS TAX TREATMENT MAY NOT APPLY TO ALL RELIANCE STOCKHOLDERS. DETERMINING
THE ACTUAL TAX CONSEQUENCES OF THE MERGER TO YOU CAN BE COMPLICATED. THEY WILL
DEPEND ON YOUR SPECIFIC SITUATION AND ON VARIABLES NOT WITHIN OUR CONTROL. YOU
SHOULD CONSULT YOUR OWN TAX ADVISOR FOR A FULL UNDERSTANDING OF THE MERGER'S TAX
CONSEQUENCES TO YOU.
COMPARATIVE MARKET PRICE INFORMATION (PAGE 56)
North Fork common stock trades on the NYSE under the symbol "NFB" and
Reliance common stock trades on the National Market System of The Nasdaq Stock
Market under the symbol "RELY."
The following table lists the closing prices of North Fork common stock and
Reliance common stock, and the equivalent per share value of a share of Reliance
common stock, on August 27, 1999, the last trading day before we announced the
merger, and on January 10, 2000. The "equivalent per share value of Reliance
common stock" at the specified dates represents the closing price of a share of
North Fork common stock on that date multiplied by the exchange ratio of 2.0.
<TABLE>
<CAPTION>
EQUIVALENT PER
NORTH FORK RELIANCE SHARE VALUE
COMMON COMMON OF RELIANCE
STOCK STOCK COMMON STOCK
---------- -------- --------------
<S> <C> <C> <C>
August 27, 1999...... $19.06 $33.88 $38.13
January 10, 2000..... $16.69 $32.50 $33.38
</TABLE>
The market price of North Fork common stock will change prior to the
merger, while the exchange ratio is fixed. You should obtain current stock price
quotations for North Fork common stock and Reliance common stock. You can get
these quotations from a newspaper, on the Internet or by calling your broker.
1
<PAGE> 9
DIVIDEND POLICY OF NORTH FORK (PAGE 57)
The holders of North Fork common stock receive dividends if and when
declared by the North Fork board of directors out of legally available funds.
North Fork's past practice has been to pay dividends on its common stock at a
rate of 30% to 40% of earnings. North Fork declared a cash dividend of $0.18 per
common share for the fourth quarter of 1999, and for each of the first three
fiscal quarters of 1999, North Fork paid a cash dividend of $0.15 per common
share. Following completion of the merger and the JSB merger, North Fork expects
to continue paying quarterly cash dividends on a basis consistent with its past
practice. However, the declaration and payment of dividends will depend upon
business conditions, operating results, capital and reserve requirements and the
North Fork board of directors' consideration of other relevant factors.
RELIANCE'S FINANCIAL ADVISOR SAYS THE EXCHANGE RATIO IS FAIR TO RELIANCE
STOCKHOLDERS (PAGE 26)
In deciding to approve the merger, the Reliance board of directors
considered the opinion of its financial advisor, Sandler O'Neill & Partners,
L.P., that, as of August 30, 1999, the exchange ratio was fair to the holders of
Reliance common stock from a financial point of view. Reliance has received an
updated opinion from Sandler O'Neill dated the date of this document. We have
attached the updated opinion to this document as Appendix C. You should read the
opinion completely to understand the assumptions made, matters considered and
limitations of the review undertaken by Sandler O'Neill in providing its
opinion. In connection with the merger, Reliance will pay Sandler O'Neill a
transaction fee of approximately $3.2 million based on North Fork's closing
stock price on January 7, 2000, of which approximately $920,000 has already been
paid, and the balance will be paid upon completion of the merger. Reliance has
also paid Sandler O'Neill a fee of $200,000 in rendering its fairness opinion.
INFORMATION ABOUT NORTH FORK AND RELIANCE (PAGE 57)
NORTH FORK BANCORPORATION, INC.
275 Broad Hollow Road
Melville, New York 11747
(631) 844-1004
North Fork is a bank holding company. North Fork's primary subsidiary,
North Fork Bank, operates 112 retail banking facilities throughout Suffolk and
Nassau Counties on Long Island, New York, as well as in the New York City
boroughs of Manhattan, Queens, Brooklyn and the Bronx and in Westchester and
Rockland Counties north of New York City. At September 30, 1999, North Fork had
total assets of $11.9 billion, deposits of $6.6 billion and stockholders' equity
of $717.6 million.
RELIANCE BANCORP, INC.
585 Stewart Avenue
Garden City, New York 11530
(516) 222-9300
Reliance is a savings and loan holding company. Reliance's primary
subsidiary, Reliance Federal Savings Bank, operates 29 banking offices
throughout Suffolk and Nassau Counties on Long Island, New York, as well as in
the New York City borough of Queens. At September 30, 1999, Reliance had total
assets of $2.5 billion, deposits of $1.6 billion and stockholders' equity of
$171.7 million and served customers from 29 branches throughout Suffolk and
Nassau counties on Long Island, New York, as well as in the New York City
borough of Queens.
RELIANCE WILL MERGE INTO NORTH FORK (PAGE 21)
We propose a merger of Reliance with and into North Fork. The name of the
combined company will be "North Fork Bancorporation, Inc."
We have attached the merger agreement to this document as Appendix A.
Please read the merger agreement carefully. It is the legal document that
governs the merger.
REASONS FOR THE MERGER (PAGE 23)
Our companies are proposing to merge because we believe that:
- - by combining them we can create a stronger company that will provide
significant benefits to both our stockholders and customers.
- - by bringing our customers and banking products together we expect to increase
our combined revenues and earnings more than if we did not merge.
- - the merger will strengthen the combined company's position as a competitor in
the financial
2
<PAGE> 10
services industry, which is rapidly changing and growing more competitive.
NORTH FORK HAS ENTERED INTO AN AGREEMENT TO ACQUIRE JSB FINANCIAL, INC.
On August 16, 1999, North Fork entered into an agreement with JSB
Financial, Inc. providing for the merger of JSB with and into North Fork. At
September 30, 1999, JSB had $1.6 billion in total assets, $1.1 billion in
deposits, $374 million in stockholders' equity and served customers from 13
branches in Suffolk and Nassau counties on Long Island, New York, as well as in
the New York City boroughs of Manhattan and Queens. For more information about
JSB, see "Where You Can Find More Information" on page 72. North Fork expects to
issue approximately 28 million shares of its common stock in the JSB
transaction. Completion of the JSB merger is subject to various conditions,
including the approval of the stockholders of North Fork and JSB and the receipt
of all required regulatory approvals.
North Fork intends to account for the JSB merger using the
pooling-of-interests method of accounting. North Fork will not be able to do so
unless, prior to completion of the JSB merger, it re-issues a sufficient number
of shares of its common stock currently held in its treasury. North Fork intends
to re-issue approximately 17 million treasury shares in exchange for Reliance
shares in the merger. Accordingly, North Fork intends to complete the Reliance
merger before completing the JSB merger so that the JSB merger will qualify for
pooling treatment. The pro forma financial information contained in this
document includes pro forma adjustments reflecting the combination of JSB with
North Fork using the pooling-of-interests accounting method. See "Pro Forma
Condensed Combined Financial Statements (Unaudited)" on page 76.
North Fork expects to complete both the Reliance merger and the JSB merger
in the first quarter of 2000. However, there can be no assurance that North Fork
will complete either the Reliance merger or the JSB merger in the anticipated
time frame or at all. Completion of the Reliance merger is not conditioned upon
completion of the JSB merger, and North Fork intends to complete the Reliance
merger regardless of whether all of the conditions to the completion of the JSB
merger have been satisfied.
RELIANCE STOCKHOLDERS MEETING TO BE HELD ON FEBRUARY 10, 2000 (PAGE 19)
The Reliance special meeting will be held on Thursday, February 10, 2000 at
9:00 a.m., local time, at the Long Island Marriott Hotel and Conference Center,
101 James Doolittle Blvd., Uniondale, New York. At the special meeting, you will
be asked:
1. to approve and adopt the merger agreement; and
2. to act on any other matters that may properly be submitted to a vote at the
special meeting.
RECORD DATE AND VOTE REQUIRED FOR APPROVAL OF THE MERGER (PAGE 19)
You can vote at the special meeting if you owned Reliance common stock at
the close of business on January 7, 2000. On that date, there were 8,889,800
shares of Reliance common stock outstanding and entitled to vote. You can cast
one vote for each share of Reliance common stock you owned on that date. In
order to approve and adopt the merger agreement, the holders of a majority of
the outstanding shares of Reliance common stock entitled to vote must vote in
favor of doing so.
RELIANCE'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT RELIANCE STOCKHOLDERS
APPROVE THE MERGER (PAGE 20)
Reliance's board of directors believes that the merger is fair to you and
in your best interests, and unanimously recommends that you vote "FOR" the
proposal to approve and adopt the merger agreement.
COMPLETION OF THE MERGER IS SUBJECT TO CERTAIN CONDITIONS (PAGE 36)
The completion of the merger is subject to a number of conditions being
met, including approval of the merger agreement by Reliance stockholders and
receipt of all required regulatory approvals.
Where the law permits, a party to the merger agreement could elect to waive
a condition to its obligation to complete the merger, even if that condition has
not been satisfied. We cannot be certain when (or if) the conditions to the
merger will be satisfied or waived or that the merger will be completed.
3
<PAGE> 11
NORTH FORK WILL ACCOUNT FOR THE MERGER USING THE "PURCHASE" METHOD (PAGE 47)
North Fork will account for the merger as a purchase for financial
reporting purposes.
WE MAY NOT COMPLETE THE MERGER WITHOUT ALL REQUIRED REGULATORY APPROVALS (PAGE
40)
We cannot complete the merger unless we receive the prior approval of the
Board of Governors of the Federal Reserve System, the New York State Banking
Department and the Federal Deposit Insurance Corporation. In addition, we must
give prior notice of the merger to the Office of Thrift Supervision. We also
must wait at least 15 days after receiving the Federal Deposit Insurance
Corporation's approval before we can complete the merger.
As of the date of this document, we have received the approval of the New
York State Banking Department, the Federal Deposit Insurance Corporation and the
Board of Governors of the Federal Reserve System. We have also provided prior
notice of the merger to the Office of Thrift Supervision.
TERMINATION OF THE MERGER (PAGE 43)
We can agree at any time not to complete the merger, even if the Reliance
stockholders have approved it. Also, either of us can decide, without the
consent of the other, not to complete the merger in a number of other
situations, including:
- - the final denial of a required regulatory approval,
- - the failure of Reliance to obtain the required vote of its stockholders to
approve the merger agreement,
- - the other party materially breaches its representations, warranties or
obligations under the merger agreement, or
- - the failure to complete the merger by June 30, 2000.
In addition, North Fork may decide not to complete the merger if Reliance's
board of directors changes, in a manner adverse to North Fork, its
recommendation that Reliance stockholders approve the merger.
RELIANCE MAY DECIDE NOT TO COMPLETE THE MERGER IF NORTH FORK'S STOCK PRICE
DECREASES SIGNIFICANTLY (PAGES 34 AND 43)
According to the terms of the merger agreement, Reliance would have had the
right not to complete the merger if both of the following were true: (x) the
average of the closing prices of North Fork's common stock over a specified
twenty-trading-day period prior to the receipt of the last of the required
regulatory approvals was less than $16.20, and (y) the performance of North
Fork's common stock, as measured by comparing the average closing price
described in clause (x) to North Fork's closing price of $19.0625 on August 27,
1999, was more than fifteen percentage points below the performance of a
selected index of bank and thrift stocks over the same period.
The last required regulatory approval was received on January 10, 2000.
Accordingly, North Fork's average closing price as computed in accordance with
the relevant provisions of the merger agreement was $17.33; and, therefore, the
test described above was not satisfied and Reliance will not have the
termination right described above.
WE MAY AMEND THE TERMS OF THE MERGER AND WAIVE RIGHTS UNDER THE MERGER AGREEMENT
(PAGE 46)
We may jointly amend the terms of the merger agreement, and either party
may waive its right to require the other party to adhere to any of those terms,
to the extent legally permissible. However, after the Reliance stockholders
approve the merger agreement, they must approve any amendment or waiver that
reduces or changes the form of the consideration that will be received by them.
RELIANCE HAS GRANTED NORTH FORK AN OPTION TO PURCHASE SHARES OF RELIANCE STOCK
(PAGE 49)
In connection with the merger agreement, Reliance granted to North Fork an
option to purchase up to 1,708,297 shares of Reliance common stock
(approximately 19.9% of Reliance's outstanding common stock) at a price of
$29.00 per share. The option is exercisable upon the occurrence of certain
events generally involving a competing transaction with a third party to acquire
Reliance or a significant amount of its stock or assets. As of the date of this
document, we know of no such event that has occurred. The option could have the
effect of dis-
4
<PAGE> 12
couraging other companies from offering to acquire Reliance.
The stock option agreement limits the aggregate profit North Fork is
permitted to receive as a result of the exercise of any rights under the option
to $17.35 million. We have attached the stock option agreement as Appendix B to
this proxy statement-prospectus.
RELIANCE STOCKHOLDERS DO NOT HAVE APPRAISAL RIGHTS AS A RESULT OF THE MERGER
(PAGE 47)
The stockholders of Reliance do not have any right to an appraisal of the
value of their shares in connection with the merger.
RELIANCE OFFICERS AND DIRECTORS HAVE SOME
INTERESTS IN THE MERGER THAT ARE DIFFERENT FROM OR
IN ADDITION TO THEIR INTERESTS AS STOCKHOLDERS
(PAGE 48)
Reliance directors and officers have interests in the merger in addition to
their interests as stockholders of Reliance. These interests exist because of
employment and/or severance agreements that Reliance officers have entered into
with Reliance and rights that Reliance officers and directors have under certain
benefit and compensation plans maintained by Reliance. These agreements and
plans will provide the officers with severance benefits if their employment with
the combined company is terminated at or after the completion of the merger and
other rights and benefits as a result of the merger.
Following the merger, the combined company will indemnify, and provide
directors' and officers' insurance for, the officers and directors of Reliance
for events occurring before the merger, including events that are related to the
merger. Also, upon completion of the merger, Raymond A. Nielsen, the President
and Chief Executive Officer of Reliance, will become a member of the board of
directors of the combined company. The remaining members of the Reliance board
of directors and Gerald M. Sauvigne will be invited to become members of an
advisory board of North Fork.
The Reliance board of directors knew about these additional interests, and
considered them, when it approved the merger agreement.
FORWARD-LOOKING STATEMENTS MAY PROVE
INACCURATE (PAGE 74)
This proxy statement-prospectus, including information included or
incorporated by reference in this document, contains certain forward-looking
statements with respect to the financial condition, results of operations,
plans, objectives, future performance and business of each of North Fork,
Reliance and JSB, as well as certain information relating to the merger and/or
the JSB merger. Also, statements preceded by, followed by or that include the
words "believes," "expects," "anticipates," "estimates" or similar expressions,
are forward-looking statements. These forward-looking statements involve certain
risks and uncertainties. Actual results may differ materially from those
contemplated by the forward-looking statements due to various factors.
5
<PAGE> 13
SELECTED HISTORICAL FINANCIAL INFORMATION
The following tables show selected historical financial information for
Reliance for the three months ended September 30, 1999 and 1998 and the five
years ended June 30, 1999 and for North Fork and JSB for the five years ended
December 31, 1998 and the nine months ended September 30, 1999 and 1998. This
information is derived from historical financial statements previously filed by
North Fork, Reliance and JSB with the SEC. See "Where You Can Find More
Information" on page 72.
Certain Reliance and JSB financial information has been reclassified to
conform with North Fork's financial information. The financial information for
North Fork for the nine months ended September 30, 1999 and for Reliance for the
three months ended September 30, 1999 reflects, in the opinions of management of
North Fork and Reliance, respectively, all adjustments necessary for a fair
presentation of such information. North Fork has been advised that the financial
information for JSB for the nine months ended September 30, 1999 reflects, in
the opinion of management of JSB, 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.
6
<PAGE> 14
NORTH FORK BANCORPORATION, INC.
SELECTED HISTORICAL FINANCIAL INFORMATION
(UNAUDITED)
(IN THOUSANDS, EXCEPT RATIOS AND PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
NINE MONTHS
ENDED SEPTEMBER 30, YEARS ENDED DECEMBER 31,
------------------------- ----------------------------------------------------------------
1999 1998 1998 1997 1996 1995 1994
----------- ----------- ----------- ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED SUMMARY STATEMENTS OF
INCOME:
Interest Income.................... $ 604,444 $ 560,984 $ 753,100 $ 724,424 $ 613,762 $ 530,239 $ 471,496
Interest Expense................... 267,591 245,888 328,456 326,803 281,107 242,129 192,524
----------- ----------- ----------- ----------- ---------- ---------- ----------
Net Interest Income.............. 336,853 315,096 424,644 397,621 332,655 288,110 278,972
Provision for Loan Losses(2)....... 3,750 14,500 15,500 8,100 8,000 13,525 9,475
Non-Interest Income(3)............. 44,314 41,588 54,885 50,915 38,602 29,695 28,168
Net Securities Gains/(Losses)(2)... 9,900 2,318 9,433 8,407 6,224 5,886 (8,587)
Other Non-Interest Expense(4)(2)... 112,943 111,681 146,607 157,182 172,425 140,983 154,449
Capital Securities Costs........... 12,633 12,633 16,843 9,235 25 -- --
Amortization & Write-down of
Intangible Assets(2)............. 6,267 12,403 14,479 7,292 6,364 1,688 1,543
Merger Related Restructure
Charges(2)....................... -- 52,452 52,452 -- 21,613 19,024 14,338
----------- ----------- ----------- ----------- ---------- ---------- ----------
Income Before Income Taxes....... 255,474 155,333 243,081 275,134 169,054 148,471 118,748
Provision for Income Taxes(5)(2)... 89,416 44,394 75,106 104,613 74,606 69,567 42,557
----------- ----------- ----------- ----------- ---------- ---------- ----------
Net Income....................... $ 166,058 $ 110,939 $ 167,975 $ 170,521 $ 94,448 $ 78,904 $ 76,191
=========== =========== =========== =========== ========== ========== ==========
SHARE DATA:(6)
Weighted Average Shares -- Basic... 137,342 140,547 140,706 136,761 136,504 142,297 136,054
Weighted Average
Shares -- Diluted................ 138,197 141,680 141,766 139,333 138,707 144,227 142,055
Common Shares Outstanding at
Period-End....................... 133,316 143,295 141,072 139,478 136,961 140,262 138,607
CONSOLIDATED PER SHARE DATA:(6)
Net Income -- Basic................ $ 1.21 $ 0.79 $ 1.19 $ 1.24 $ 0.69 $ 0.55 $ 0.56
Net Income -- Diluted(2)........... 1.20 0.78 1.18 1.22 0.68 0.55 0.54
Cash Dividends(7).................. 0.45 0.38 0.65 0.38 0.28 0.18 0.12
Dividend Payout Ratio(2)........... 37% 48% 55% 32% 36% 26% 25%
Stated Book Value at Period-End.... $ 5.38 $ 6.09 $ 5.89 $ 5.53 $ 4.45 $ 4.15 $ 3.80
Tangible Book Value at
Period-End....................... 4.77 5.45 5.29 4.84 3.85 3.95 3.64
CONSOLIDATED BALANCE SHEET DATA AT
PERIOD-END:
Total Assets....................... $11,914,847 $10,224,071 $10,679,556 $10,073,632 $8,691,434 $7,622,458 $6,842,809
Securities:
Available-for-Sale............... 3,598,197 3,188,063 2,980,223 2,156,624 1,301,891 1,425,868 344,316
Held-to-Maturity................. 1,279,978 988,814 1,571,545 1,763,308 1,851,575 1,770,734 2,463,007
Loans.............................. 6,386,042 5,655,875 5,714,293 5,739,131 5,044,073 4,086,497 3,761,979
Allowance for Loan Losses.......... 68,950 73,606 71,759 74,393 73,280 77,899 86,952
Intangible Assets(2)............... 81,052 92,579 84,676 96,398 82,073 27,893 22,208
Demand Deposits.................... 1,461,517 1,113,162 1,263,105 948,458 771,920 520,977 397,539
Interest Bearing Deposits.......... 5,109,381 5,356,111 5,164,517 5,389,481 5,427,940 4,983,498 4,947,761
Federal Funds Purchased &
Securities Sold Under Agreements
to Repurchase.................... 2,676,416 2,435,096 2,955,096 2,104,036 1,075,487 987,229 491,766
Other Borrowings................... 1,494,000 35,000 35,000 449,600 590,088 457,278 409,006
Capital Securities................. 199,308 199,283 199,289 199,264 99,637 -- --
Stockholders' Equity............... 717,576 873,027 831,250 770,889 609,434 582,515 527,212
CONSOLIDATED AVERAGE BALANCE SHEET
DATA:
Total Assets....................... $11,319,022 $10,012,801 $10,107,386 $ 9,557,020 $8,283,418 $7,099,152 $6,880,831
Securities......................... 4,763,573 3,722,703 3,835,761 3,783,276 3,346,563 2,879,863 2,781,830
Loans.............................. 5,991,922 5,744,394 5,729,743 5,357,470 4,531,541 3,919,342 3,724,486
Total Deposits..................... 6,521,679 6,481,241 6,484,243 6,179,024 6,114,852 5,402,606 5,403,927
Federal Funds Purchased &
Securities Sold Under Agreements
to Repurchase.................... 3,042,175 2,114,106 2,236,257 1,944,592 939,365 658,050 611,114
Other Borrowings................... 552,557 234,032 185,783 485,200 533,516 397,830 289,082
Capital Securities................. 199,299 199,274 199,277 105,646 281 -- --
Stockholders' Equity............... 825,414 824,658 837,413 667,211 589,352 558,816 503,491
</TABLE>
7
<PAGE> 15
- ---------------
(1) (A) During the periods presented, the following mergers were accounted for
using the pooling-of-interests method of accounting:
(a) March 1998, New York Bancorp Inc. ("NYB")
(b) December 1996, North Side Savings Bank
(c) January 1995 Hamilton Bancorp, Inc. (merged with NYB)
(d) November 1994, Metro Bancshares Inc.
(B) The following mergers were accounted for using the purchase method of
accounting:
(a) June 1998, Amivest Corporation
(b) December 1997, Superior Savings of New England (formerly Branford
Savings Bank)
(c) March 1996, domestic banking business of Extebank
(d) March 1996, ten Long Island branches of First Nationwide Bank
(e) July 1995, Great Neck Bancorp
North Fork's consolidated results of operations reflect activity of the
acquired businesses specified in 1(B) above subsequent to the
acquisition dates.
(2) Merger related restructure charges and other special items incurred in the
first quarter of 1998 consisted of a $52.5 million merger related
restructure charge, an additional $11.5 million loan loss provision, a $6
million write-down of intangible assets, securities losses of $2.5 million,
and $1.8 million of other operating expenses (net of $20.7 million in tax
benefit). Tax items included a charge of $5 million related to the recapture
of bad debt reserve of NYB's banking subsidiary, Home Federal Savings Bank,
for state and local tax purposes and a benefit of $20 million, which
resulted from a corporate reorganization. Diluted earnings per share and the
dividend payout ratio excluding the merger related restructure charge and
other special items would have been $1.06 and 35%, and $1.46 and 45% for the
periods ended September 30, 1998 and December 31, 1998, respectively.
(3) Includes $4.5 million from interest on a tax settlement received by NYB from
the Internal Revenue Service during 1997.
(4) Includes a $17.8 million Savings Association Insurance Fund ("SAIF")
recapitalization charge incurred during 1996.
(5) Includes a $5.7 million benefit for NYB's cumulative effect of change in
accounting for income taxes during 1994.
(6) Amounts have been restated to give effect for the 3-for-2 common stock split
effective May 15, 1998, the 2-for-1 common stock split effective May 15,
1997, NYB's 4-for-3 common stock split effective July 24, 1997, NYB's
3-for-2 common stock split effective January 23, 1997, and NYB's 10% common
stock dividend effective February 14, 1994.
(7) Cash dividends per share represent North Fork's historical cash dividends.
(8) See accompanying "Selected Financial Ratios" on page 15 for additional
information.
8
<PAGE> 16
RELIANCE BANCORP, INC.
SELECTED HISTORICAL FINANCIAL INFORMATION
(UNAUDITED)
(IN THOUSANDS, EXCEPT RATIOS AND PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
SEPTEMBER 30, YEARS ENDED JUNE 30,
----------------------- ------------------------------------------------------------
1999 1998 1999 1998 1997 1996 1995
---------- ---------- ---------- ---------- ---------- ---------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED SUMMARY
STATEMENTS OF INCOME
Interest Income.......... $ 41,522 $ 42,868 $ 167,780 $ 153,980 $ 133,300 $ 100,379 $ 61,294
Interest Expense......... 22,852 24,635 93,922 86,112 71,653 52,985 28,361
---------- ---------- ---------- ---------- ---------- ---------- --------
Net Interest Income.... 18,670 18,233 73,858 67,868 61,647 47,394 32,933
Provision for Loan
Losses................. -- 150 650 1,650 950 725 400
Non-Interest Income(2)... 1,515 1,173 5,161 5,821 3,229 2,425 1,076
Income from Money
Centers................ 723 632 2,650 1,882 -- -- --
Net Securities
Gains/(Losses)......... -- 66 119 (5) 172 678 147
Other Non-Interest
Expense(3)............. 9,334 9,214 36,400 35,443 39,620 26,175 17,212
Capital Securities
Costs.................. 1,021 1,030 4,084 716 -- -- --
Amortization of
Intangible Assets...... 1,141 1,140 4,563 4,218 3,404 1,928 --
---------- ---------- ---------- ---------- ---------- ---------- --------
Income Before Income
Taxes................ 9,412 8,570 36,091 33,539 21,074 21,669 16,544
Provision for Income
Taxes.................. 4,030 3,799 15,940 14,810 10,138 9,946 6,842
---------- ---------- ---------- ---------- ---------- ---------- --------
Net Income............. $ 5,382 $ 4,771 $ 20,151 $ 18,729 $ 10,936 $ 11,723 $ 9,702
========== ========== ========== ========== ========== ========== ========
SHARE DATA:
Weighted Average
Shares -- Basic........ 8,235 9,001 8,467 8,890 8,299 8,594 9,327
Weighted Average
Shares -- Diluted...... 8,695 9,500 8,914 9,425 8,724 8,863 9,460
Common Shares Outstanding
at Period-End.......... 8,589 8,984 8,586 9,565 8,776 9,129 9,390
CONSOLIDATED PER SHARE
DATA:
Net Income -- Basic...... $ 0.65 $ 0.53 $ 2.38 $ 2.11 $ 1.32 $ 1.36 $ 1.04
Net Income -- Diluted.... 0.62 0.50 2.26 1.99 1.25 1.32 1.03
Cash Dividends........... 0.21 0.18 0.78 0.68 0.60 0.46 0.40
Dividend Payout Ratio.... 34% 36% 35% 34% 48% 35% 39%
Stated Book Value at
Period-End............. $ 19.99 $ 20.65 $ 19.99 $ 20.37 $ 18.54 $ 16.83 $ 16.37
Tangible Book Value at
Period-End............. 13.79 14.22 13.66 14.21 13.36 11.41 16.37
CONSOLIDATED BALANCE
SHEET DATA AT
PERIOD-END:
Total Assets............. $2,478,899 $2,493,186 $2,451,773 $2,485,729 $1,976,764 $1,782,550 $931,436
Securities:
Available-for-Sale..... 1,012,881 1,054,416 1,057,206 1,075,254 748,728 605,011 128,333
Held-to-Maturity....... 309,679 323,287 284,752 289,448 205,382 232,822 437,652
Loans.................... 1,007,594 983,380 983,193 978,738 914,503 822,241 333,809
Allowance for Loan
Losses................. 9,068 9,085 9,120 8,941 5,182 4,495 1,729
Intangible Assets........ 53,232 57,795 54,373 58,936 45,463 49,429 --
Demand Deposits.......... 62,615 53,373 64,430 52,225 20,474 20,360 --
Interest Bearing
Deposits............... 1,505,237 1,618,246 1,491,388 1,585,879 1,424,580 1,334,112 673,785
Federal Funds Purchased &
Securities Sold Under
Agreements to
Repurchase............. 328,334 319,752 313,716 398,070 311,913 263,160 57,035
Other Borrowings......... 333,655 236,700 338,718 182,136 40,000 3,000 40,000
Capital Securities....... 50,000 50,000 50,000 50,000 -- -- --
Stockholders' Equity..... 171,702 185,555 171,667 194,864 162,670 153,619 153,733
CONSOLIDATED AVERAGE
BALANCE SHEET DATA:
Total Assets............. $2,472,963 $2,486,088 $2,475,646 $2,178,262 $1,870,026 $1,410,775 $894,549
Securities............... 1,333,998 1,376,444 1,377,068 1,074,358 918,918 734,551 526,976
Loans.................... 999,414 982,356 974,017 966,320 848,060 598,030 332,580
Total Deposits........... 1,568,367 1,654,079 1,636,607 1,566,625 1,393,655 1,066,693 623,877
Federal Funds Purchased &
Securities Sold Under
Agreements to
Repurchase............. 325,695 347,221 276,748 309,618 288,844 150,173 10,103
Other Borrowings......... 336,633 215,866 309,323 84,920 22,519 29,882 95,554
Capital Securities....... 50,000 50,000 50,024 8,876 -- -- --
Stockholders' Equity..... 168,308 192,446 180,694 183,998 154,030 154,071 157,460
</TABLE>
9
<PAGE> 17
- ---------------
(1) During the periods presented, Reliance completed the following mergers
accounted for in accordance with the purchase method of accounting:
(a) October 1997, Continental Bank
(b) January 1996, Sunrise Bancorp, Inc.
(c) August 1995, Bank of Westbury
Reliance's consolidated results of operations reflect activity of the
acquired businesses subsequent to the acquisition dates.
(2) Includes a $1.5 million condemnation award received in September 1997.
(3) Includes an $8.3 million SAIF recapitalization charge during 1997.
See accompanying "Selected Financial Ratios" on page 15 for additional
information.
10
<PAGE> 18
JSB FINANCIAL, INC.
SELECTED HISTORICAL FINANCIAL INFORMATION
(UNAUDITED)
(IN THOUSANDS, EXCEPT RATIOS AND PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
NINE MONTHS
ENDED SEPTEMBER 30, YEARS ENDED DECEMBER 31,
----------------------- --------------------------------------------------------------
1999 1998 1998 1997 1996 1995 1994
---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED SUMMARY
STATEMENTS OF INCOME:
Interest Income(1)...... $ 84,526 $ 89,466 $ 117,813 $ 109,611 $ 108,345 $ 107,862 $ 103,380
Interest Expense........ 27,981 29,098 38,476 39,874 40,217 40,707 36,619
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net Interest Income... 56,545 60,368 79,337 69,737 68,128 67,155 66,761
Provision/(Recovery) for
Loan Losses(2)........ 13 41 51 648 (1,400) 2,676 608
Non-Interest
Income(1)(3).......... 1,212 4,461 5,134 2,627 2,578 2,634 2,902
Real Estate Operations,
net................... 1,223 287 714 10,442 1,767 1,225 3,497
Net Securities Gains.... -- -- -- 6,991 2 -- --
Other Non-Interest
Expense............... 21,175 20,818 27,458 27,434 27,598 29,561 30,937
---------- ---------- ---------- ---------- ---------- ---------- ----------
Income Before Income
Taxes............... 37,792 44,257 57,676 61,715 46,277 38,777 41,615
Provision for Income
Taxes(4).............. 16,218 10,030 13,288 24,625 19,552 16,603 18,018
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net Income............ $ 21,574 $ 34,227 $ 44,388 $ 37,090 $ 26,725 $ 22,174 $ 23,597
========== ========== ========== ========== ========== ========== ==========
SHARE DATA:
Weighted Average
Shares --Basic........ 9,319 9,864 9,793 9,858 10,062 10,604 11,099
Weighted Average
Shares --Diluted...... 9,520 10,159 10,074 10,190 10,436 11,053 11,588
Common Shares
Outstanding at Period-
End................... 9,290 9,759 9,506 9,920 9,783 10,505 10,682
CONSOLIDATED PER SHARE
DATA:
Net Income -- Basic..... $ 2.32 $ 3.47 $ 4.53 $ 3.76 $ 2.66 $ 2.09 $ 2.13
Net Income -- Diluted... 2.27 3.37 4.41 3.64 2.56 2.01 2.04
Cash Dividends.......... 1.35 1.20 1.60 1.40 1.20 1.00 0.72
Dividend Payout Ratio... 60% 36% 36% 38% 47% 50% 35%
Stated Book Value at
Period-End............ $ 40.28 $ 39.07 $ 40.24 $ 37.05 $ 34.27 $ 32.38 $ 30.67
Tangible Book Value at
Period-End............ 40.28 39.07 40.24 37.05 34.27 32.38 30.67
CONSOLIDATED BALANCE
SHEET DATA AT PERIOD-
END:
Total Assets............ $1,595,770 $1,552,436 $1,621,649 $1,535,031 $1,516,016 $1,548,301 $1,565,095
Securities:
Available-for-Sale.... 90,006 76,207 92,514 69,888 57,880 46,373 33,798
Held-to-Maturity...... 193,540 241,008 208,457 352,967 460,509 592,060 728,630
Loans................... 1,232,745 1,140,857 1,175,583 1,005,625 860,101 772,942 715,380
Allowance for Loan
Losses................ 5,937 5,912 5,924 5,880 5,327 4,697 4,085
Demand Deposits......... 54,925 50,069 58,756 44,067 41,584 55,103 49,224
Interest Bearing
Deposits.............. 1,075,751 1,088,897 1,091,007 1,097,863 1,120,718 1,140,966 1,183,916
Other Borrowings........ 50,000 -- 50,000 -- -- -- --
Stockholders' Equity.... 374,232 381,294 382,476 367,514 335,299 340,107 327,634
CONSOLIDATED AVERAGE
BALANCE SHEET DATA:
Total Assets............ $1,613,500 $1,556,449 $1,561,304 $1,534,578 $1,533,714 $1,539,130 $1,612,931
Securities.............. 242,200 304,327 288,414 464,237 546,982 674,768 802,336
Loans................... 1,188,525 1,074,841 1,096,509 912,407 825,962 735,599 687,426
Total Deposits.......... 1,143,629 1,149,802 1,148,841 1,151,377 1,181,528 1,194,195 1,271,597
Other Borrowings........ 50,000 -- 3,288 -- -- -- 394
Stockholders' Equity.... 374,553 373,066 374,194 348,608 332,045 332,493 328,313
</TABLE>
11
<PAGE> 19
- ---------------
(1) Includes a $3 million recovery of non-accrual interest and late charges and
a $1.3 million recovery of prior period expenses on a non-performing loan in
June 1998.
(2) Includes a $2 million charge relating to the write-down of certain assets
associated with the Nationar seizure by the Superintendent of Banks for the
State of New York during 1995 and the full recovery of that charge during
1996.
(3) Includes a $1 million gain from the sale of two of JSB's subsidiaries during
1998.
(4) Includes a $10.7 million benefit from the realignment of an operating
subsidiary during 1998.
See accompanying "Selected Financial Ratios" on page 15 for additional
information.
12
<PAGE> 20
SELECTED PRO FORMA COMBINED FINANCIAL INFORMATION
FOR ALL TRANSACTIONS
(UNAUDITED)
The following table shows selected financial information for North Fork,
Reliance and JSB on a pro forma combined basis giving effect to:
(a) the merger, accounted for using the purchase method of accounting,
as if the merger had become effective at the end of the periods indicated,
in the case of the balance sheet information presented, and at the
beginning of the periods indicated, in the case of the income statement
information presented.
(b) the JSB merger, accounted for using the pooling-of-interests
method of accounting, as if the JSB merger had become effective at the end
of the periods indicated, in the case of the balance sheet information
presented, and the beginning of the periods indicated, in the case of the
income statement information presented.
The selected pro forma combined year-end balance sheet and income statement
information reflects information for North Fork and JSB as of and for their
annual reporting periods ended December 31 for each of the periods indicated.
Financial information for the nine months ended September 30, 1999 and 1998 and
the year ended December 31, 1998 combine North Fork, Reliance and JSB, with
results of Reliance 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.
Completion of the merger is not conditioned upon completion of the JSB
merger, and North Fork intends to complete the merger regardless of whether all
conditions to completion of the JSB merger have been satisfied. Accordingly, the
pro forma financial statements included elsewhere in this document contain
information reflecting the combination of North Fork and Reliance without JSB.
See "Pro Forma Condensed Combined Financial Statements (Unaudited)" on page 76.
There can be no assurance that North Fork will complete its merger with JSB.
We anticipate that the merger and the JSB merger will provide the combined
company with financial benefits that include reduced operating expenses and
enhanced opportunities to increase revenue. The pro forma information, while
helpful in illustrating the financial characteristics of the combined company
under one set of assumptions, does not reflect these anticipated financial
benefits and, accordingly, does not attempt to predict or suggest future
results.
The selected pro forma combined financial information has been derived from
and should be read with the historical financial statements of North Fork,
Reliance and JSB incorporated by reference into this document and the pro forma
combined financial statements and related notes included in this document. See
"Where You Can Find More Information" on page 72, and "Pro Forma Condensed
Combined Financial Statements (Unaudited)" on page 76.
This information is for illustrative purposes only. The companies would
likely have performed differently had they always been combined. You should not
rely on this information as being indicative of the future results that the
combined company will experience after the merger and the JSB merger.
13
<PAGE> 21
NORTH FORK BANCORPORATION, INC.
SELECTED PRO FORMA COMBINED FINANCIAL INFORMATION
FOR ALL TRANSACTIONS
(UNAUDITED)
(IN THOUSANDS, EXCEPT RATIOS AND PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, YEAR ENDED
-------------------------- DECEMBER 31,
1999 1998 1998
----------- ----------- ------------
<S> <C> <C> <C>
CONSOLIDATED SUMMARY STATEMENTS OF INCOME:
Interest Income............................................. $ 799,839 $ 753,136 $ 1,010,162
Interest Expense............................................ 363,939 343,486 459,204
----------- ----------- -----------
Net Interest Income....................................... 435,900 409,650 550,958
Provision for Loan Losses................................... 3,913 15,141 16,501
Non-Interest Income......................................... 49,729 49,698 64,968
Real Estate Operations, net................................. 1,223 287 714
Income from Money Centers................................... 2,071 1,944 2,614
Net Securities Gains........................................ 10,012 2,376 9,432
Other Non-Interest Expense.................................. 161,862 160,135 210,477
Capital Securities Costs.................................... 15,706 14,379 19,591
Amortization & Write-down of Intangible Assets.............. 16,072 22,207 27,552
Merger Related Restructure Charges.......................... -- 52,452 52,452
----------- ----------- -----------
Income Before Income Taxes................................ 301,382 194,641 302,113
Provision for Income Taxes.................................. 113,146 59,124 95,102
----------- ----------- -----------
Net Income................................................ $ 188,236 $ 140,517 $ 207,011
=========== =========== ===========
SHARE DATA:
Weighted Average Shares -- Basic............................ 169,969 171,539 171,395
Weighted Average Shares -- Diluted.......................... 172,335 174,645 174,332
Common Shares Outstanding at Period-End..................... 171,580 172,733 172,034
CONSOLIDATED PER SHARE DATA:
Net Income -- Basic......................................... $ 1.11 $ 0.82 $ 1.21
Net Income -- Diluted....................................... 1.09 0.80 1.19
Cash Dividends.............................................. 0.45 0.38 0.65
Stated Book Value at Period-End............................. 7.20 8.39 8.14
Tangible Book Value at Period-End........................... 5.21 6.31 6.11
CONSOLIDATED BALANCE SHEET DATA AT PERIOD-END:
Total Assets................................................ $16,051,230 $14,325,050 $14,828,866
Securities:
Available-for-Sale........................................ 4,557,186 4,174,788 3,992,054
Held-to-Maturity.......................................... 1,783,197 1,553,109 2,095,023
Loans....................................................... 8,626,381 7,780,112 7,860,971
Allowance for Loan Losses................................... 83,955 88,603 86,909
Intangible Assets........................................... 342,517 358,607 349,564
Demand Deposits............................................. 1,579,057 1,216,604 1,378,484
Interest Bearing Deposits................................... 7,690,369 8,063,254 7,853,170
Federal Funds Purchased & Securities Sold Under Agreements
to Repurchase............................................. 3,004,750 2,754,848 3,142,283
Other Borrowings............................................ 1,877,655 271,700 446,129
Capital Securities.......................................... 244,308 244,283 244,289
Stockholders' Equity........................................ 1,235,851 1,449,083 1,400,185
CONSOLIDATED AVERAGE BALANCE SHEET DATA:
Total Assets................................................ $15,402,407 $13,903,509 $14,039,639
Securities.................................................. 6,375,985 5,241,272 5,375,295
Loans....................................................... 8,157,285 7,804,457 7,810,913
Total Deposits.............................................. 9,249,486 9,244,478 9,266,978
Federal Funds Purchased & Securities Sold Under Agreements
to Repurchase............................................. 3,320,005 2,428,691 2,535,353
Other Borrowings............................................ 952,204 382,215 377,746
Capital Securities.......................................... 249,299 227,965 233,359
Stockholders' Equity........................................ 1,373,760 1,390,406 1,400,377
</TABLE>
- ---------------
(1) The managements of North Fork, Reliance and JSB may adjust the pro forma
information included in this document as a result of their review of their
classifications and accounting policies. The management of North Fork does
not expect these adjustments to be material.
14
<PAGE> 22
SELECTED FINANCIAL RATIOS
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
SEPTEMBER 30, YEAR ENDED
-------------- DECEMBER 31,
1999 1998 1998
----- ----- ------------
<S> <C> <C> <C>
PERFORMANCE RATIOS:
Return on Average Total Assets:
North Fork................................................ 1.96% 1.48% 1.66%
Reliance.................................................. 0.84 0.79 0.81
North Fork/Reliance Pro Forma............................. 1.62 1.15 1.30
North Fork/Reliance/JSB Pro Forma......................... 1.63 1.35 1.47
Return on Average Total Stockholders' Equity:
North Fork................................................ 26.33% 18.44% 20.50%
Reliance.................................................. 11.56 9.85 10.33
North Fork/Reliance Pro Forma............................. 21.78 14.32 16.20
North Fork/Reliance/JSB Pro Forma......................... 18.54 14.08 15.38
Total Stockholders' Equity to Total Assets (end of period):
North Fork................................................ 6.02% 8.54% 7.78%
Reliance.................................................. 6.93 7.44 7.17
North Fork/Reliance Pro Forma............................. 6.22 8.36 7.71
North Fork/Reliance/JSB Pro Forma......................... 7.70 10.12 9.44
CAPITAL RATIOS:
Tier 1 Risk-Based Capital:
North Fork................................................ 12.76% 16.58% 15.19%
Reliance.................................................. 16.86 15.71 15.80
North Fork/Reliance Pro Forma............................. 10.12 13.14 11.98
North Fork/Reliance/JSB Pro Forma......................... 12.39 15.76 14.63
Regulatory Minimum Requirement............................ 4.00 4.00 4.00
Total Risk-Based Capital:
North Fork................................................ 13.75% 17.83% 16.39%
Reliance.................................................. 17.72 16.58 16.70
North Fork/Reliance Pro Forma............................. 11.10 14.33 13.14
North Fork/Reliance/JSB Pro Forma......................... 13.58 17.20 16.13
Regulatory Minimum Requirement............................ 8.00 8.00 8.00
Leverage Ratio:
North Fork................................................ 7.65% 9.68% 9.09%
Reliance.................................................. 7.34 6.72 6.62
North Fork/Reliance Pro Forma............................. 5.86 7.38 6.86
North Fork/Reliance/JSB Pro Forma......................... 7.46 9.22 8.72
Regulatory Minimum Requirement............................ 4.00 4.00 4.00
ASSET QUALITY DATA:
Allowance for Loan Losses to Net Loans (end of period):
North Fork................................................ 1.08% 1.30% 1.26%
Reliance.................................................. 0.90 0.92 0.95
North Fork/Reliance Pro Forma............................. 1.06 1.25 1.21
North Fork/Reliance/JSB Pro Forma......................... 0.97 1.14 1.11
Allowance for Loan Losses to Non-performing Loans (end of
period):
North Fork................................................ 450% 430% 470%
Reliance.................................................. 119 100 123
North Fork/Reliance Pro Forma............................. 341 316 356
North Fork/Reliance/JSB Pro Forma......................... 362 333 375
Non-performing Assets to Total Assets:
North Fork................................................ 0.13% 0.20% 0.17%
Reliance.................................................. 0.33 0.40 0.33
North Fork/Reliance Pro Forma............................. 0.17 0.24 0.20
North Fork/Reliance/JSB Pro Forma......................... 0.15 0.22 0.18
</TABLE>
15
<PAGE> 23
COMPARATIVE PER SHARE DATA
(UNAUDITED)
The following table shows historical per share information about our basic
and diluted net income, cash dividends and stated and tangible book values, and
similar pro forma information, assuming the merger and the JSB merger had been
consummated at the beginning of the periods presented. We assumed that JSB will
be merged with North Fork using the pooling-of-interests method of accounting,
and that Reliance will be merged with North Fork using the purchase method of
accounting. The pro forma information in the following table has been derived
from and should be read with the pro forma combined financial statements and
related notes included in this document. See "Pro Forma Condensed Combined
Financial Statements (Unaudited)" on page 76.
The information in the following table is based on the historical financial
information that we have presented in our prior SEC filings. We are
incorporating this material into this document by reference. See "Where You Can
Find More Information" on page 72. This information is for illustrative purposes
only. The companies would likely have performed differently had they always been
combined. You should not rely on this information as being indicative of the
future results that the combined company will experience after the merger and
the JSB merger.
The information listed as "Equivalent Pro Forma" was obtained by
multiplying the corresponding pro forma amounts by an exchange ratio of 2.0. We
present this information to reflect the fact that Reliance stockholders will
receive more than one share of North Fork common stock for each share of
Reliance common stock exchanged in the merger.
16
<PAGE> 24
COMPARATIVE PER SHARE DATA
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, YEAR ENDED
------------------ DECEMBER 31,
1999 1998 1998
------- ------- ------------
<S> <C> <C> <C>
NORTH FORK COMMON STOCK:
Net Income per Share:
Basic:
Historical............................................. $ 1.21 $ 0.79 $ 1.19
North Fork/Reliance Pro Forma(1)....................... 1.17 0.75 1.15
North Fork/Reliance/JSB Pro Forma(2)................... 1.11 0.82 1.21
Diluted:
Historical............................................. $ 1.20 $ 0.78 $ 1.18
North Fork/Reliance Pro Forma(1)....................... 1.16 0.74 1.13
North Fork/Reliance/JSB Pro Forma(2)................... 1.09 0.80 1.19
Cash Dividends Declared per Common Share(3):
Historical............................................. $ 0.45 $ 0.38 $ 0.65
North Fork/Reliance Pro Forma.......................... 0.45 0.38 0.65
North Fork/Reliance/JSB Pro Forma...................... 0.45 0.38 0.65
Book Value Per Share at Period End:
Stated:
Historical............................................. $ 5.38 $ 6.09 $ 5.89
North Fork/Reliance Pro Forma(4)....................... 6.25 7.44 7.09
North Fork/Reliance/JSB Pro Forma(5)................... 7.20 8.39 8.14
Tangible:
Historical............................................. $ 4.77 $ 5.45 $ 5.29
North Fork/Reliance Pro Forma(4)....................... 3.87 4.94 4.66
North Fork/Reliance/JSB Pro Forma(5)................... 5.21 6.31 6.11
RELIANCE COMMON STOCK:
Net Income per Share:
Basic:
Historical............................................. $ 1.88 $ 1.52 $ 2.14
North Fork/Reliance Equivalent Pro Forma(6)............ 2.35 1.50 2.29
North Fork/Reliance/JSB Equivalent Pro Forma(7)........ 2.21 1.64 2.42
Diluted:
Historical............................................. $ 1.78 $ 1.44 $ 2.03
North Fork/Reliance Equivalent Pro Forma(6)............ 2.32 1.47 2.26
North Fork/Reliance/JSB Equivalent Pro Forma(7)........ 2.18 1.61 2.37
Cash Dividends Declared per Common Share(3):
Historical............................................. $ 0.63 $ 0.54 $ 0.72
North Fork/Reliance Equivalent Pro Forma............... 0.90 0.75 1.30
North Fork/Reliance/JSB Equivalent Pro Forma........... 0.90 0.75 1.30
Book Value Per Share at Period End:
Stated:
Historical............................................. $19.99 $20.65 $20.36
North Fork/Reliance Equivalent Pro Forma(4)............ 12.50 14.89 14.18
North Fork/Reliance/JSB Equivalent Pro Forma(5)........ 14.41 16.78 16.28
Tangible:
Historical............................................. $13.79 $14.22 $13.85
North Fork/Reliance Equivalent Pro Forma(4)............ 7.74 9.89 9.31
North Fork/Reliance/JSB Equivalent Pro Forma(5)........ 10.41 12.63 12.21
</TABLE>
17
<PAGE> 25
- ---------------
(1) The North Fork/Reliance pro forma net income per share amounts are
calculated by totaling the historical net income of North Fork and net
income of Reliance, conformed to North Fork's calendar year basis, and
dividing the resulting amounts by the average pro forma shares of North Fork
and Reliance giving effect to the merger. The average pro forma shares of
North Fork and Reliance reflect (a) North Fork's historical basic and
diluted average shares, plus (b) basic and diluted average shares of
Reliance, conformed to North Fork's calendar year basis, and adjusted for an
exchange ratio of 2.0 shares of North Fork common stock for each share of
Reliance common stock, less (c) the assumed purchase of North Fork common
stock and Reliance common stock equivalents, necessary to effect the merger.
(2) The North Fork/Reliance/JSB pro forma net income per share amounts are
calculated by (a) totaling the historical net income of North Fork and
Reliance, as described in Note (1), plus JSB's historical net income; and
(b) dividing the resulting amounts by the average pro forma shares of North
Fork, Reliance and JSB combined, giving effect to the merger and the JSB
merger. The average pro forma shares of North Fork, Reliance and JSB
combined equals (a) the historical basic and diluted average shares of North
Fork plus (b) the basic and diluted average shares of Reliance, conformed to
North Fork's calendar year basis and adjusted for the exchange ratio of 2.0
plus (c) the historical basic and diluted average shares of JSB as adjusted
for an exchange ratio of 3.0, less (d) the assumed purchase of North Fork
common stock and Reliance common stock equivalents, necessary to effect the
merger.
(3) The North Fork/Reliance and North Fork/Reliance/JSB pro forma dividends per
share represent North Fork's historical dividends per share.
(4) The North Fork/Reliance pro forma stated and tangible book value per share
amounts are calculated by totaling the historical stated and tangible
stockholders' equity for North Fork and Reliance and dividing the resulting
amounts by the total pro forma common shares of North Fork and Reliance
combined. Stockholders' equity at September 30, 1999 has been adjusted to
reflect the pro forma merger-related restructure charge, net of taxes,
anticipated to be recognized in connection with the merger. Additionally,
stockholders' equity has been adjusted to reflect the net intangible asset
anticipated to be recognized in connection with the merger. The North
Fork/Reliance pro forma common shares reflect North Fork's historical common
shares outstanding, plus Reliance's historical common shares outstanding as
adjusted for an exchange ratio of 2.0, less the assumed purchase of North
Fork common stock and Reliance common stock equivalents, necessary to effect
the merger.
(5) The North Fork/Reliance/JSB pro forma stated and tangible book value per
share amounts are calculated by totaling the historical stated and tangible
stockholders' equity for North Fork, Reliance and JSB and dividing the
resulting amounts by the total North Fork/Reliance/JSB pro forma common
shares outstanding. Stockholders' equity at September 30, 1999 has been
adjusted to reflect the pro forma merger-related restructure charge, net of
taxes, anticipated to be recognized in connection with the merger and the
JSB merger. Additionally, stockholders' equity has been adjusted to reflect
the net intangible asset anticipated to be recognized in connection with the
merger. The North Fork/Reliance/ JSB pro forma common shares outstanding
reflect (a) North Fork's historical common shares outstanding, plus (b)
Reliance's historical common shares outstanding as adjusted for an exchange
ratio of 2.0, plus (c) JSB's historical common shares outstanding as
adjusted for an exchange ratio of 3.0, less (d) the assumed purchase of
North Fork common stock and Reliance common stock equivalents, necessary to
effect the merger.
(6) The North Fork/Reliance equivalent pro forma amounts are calculated by
multiplying the corresponding North Fork/Reliance pro forma amounts by an
exchange ratio of 2.0.
(7) The North Fork/Reliance/JSB equivalent pro forma amounts are calculated by
multiplying the corresponding North Fork/Reliance/JSB pro forma amounts by
an exchange ratio of 2.0.
18
<PAGE> 26
RELIANCE SPECIAL MEETING
DATE, TIME AND PLACE
This proxy statement-prospectus is first being mailed by Reliance to its
stockholders on or about January 12, 2000, and is accompanied by a form of proxy
solicited by the Board of Directors of Reliance for use at the Reliance special
meeting, to be held on Thursday, February 10, 2000 at 9:00 a.m., local time, at
the Long Island Marriott Hotel and Conference Center, 101 James Doolittle Blvd.,
Uniondale, New York, and at any adjournments or postponements of that meeting.
MATTERS TO BE CONSIDERED
At the Reliance special meeting, you will be asked to approve and adopt the
merger agreement and the transactions contemplated by that agreement, including
the merger, and to act on any other matters that may be properly submitted to a
vote at the Reliance special meeting. Reliance stockholders may also be asked to
vote upon a proposal to adjourn or postpone the Reliance special meeting.
Reliance could use any adjournment or postponement of the Reliance special
meeting for the purpose, among others, of allowing additional time for
soliciting additional votes to approve and adopt the merger agreement.
PROXIES
The accompanying form of proxy is for your use at the Reliance special
meeting if you are unable or do not wish to attend in person. You may revoke
your proxy at any time before it is exercised by submitting to Joseph F.
Lavelle, Corporate Secretary of Reliance, written notice of revocation, a
properly executed proxy having a later date, or by attending the Reliance
special meeting and voting in person. Written notices of revocation and other
communications with respect to the revocation of Reliance proxies should be
addressed to Reliance Bancorp, Inc., 585 Stewart Avenue, Garden City, New York
11530, Attention: Joseph F. Lavelle, Corporate Secretary. All shares represented
by valid proxies received pursuant to this solicitation and not revoked before
they are exercised will be voted in the manner specified in those proxies. IF
YOU MAKE NO SPECIFICATION, YOUR PROXY WILL BE VOTED "FOR" APPROVAL AND ADOPTION
OF THE MERGER AGREEMENT.
The Reliance board of directors is unaware of any other matters to be
presented for action at the Reliance special meeting. If other matters do
properly come before the Reliance special meeting, however, the shares
represented by proxies in the accompanying form will be voted, or not voted, at
the discretion of the persons named in the proxies. No proxy that is voted
against approval of the merger agreement will be voted in favor of any
adjournment or postponement of the Reliance special meeting for the purpose of
soliciting additional proxies.
SOLICITATION OF PROXIES
Reliance will bear the entire cost of soliciting proxies from Reliance
stockholders. In addition to the solicitation of proxies by mail, Reliance will
request that banks, brokers and other record holders send proxies and proxy
material to the beneficial owners of stock held by them and secure their voting
instructions, if necessary. Reliance will reimburse those record holders for
their reasonable expenses in so doing. Reliance has also made arrangements with
Kissel-Blake, Inc., a division of Georgeson Shareholder Communications, Inc., to
assist it in soliciting proxies from banks, brokers and nominees, and has agreed
to pay approximately $4,500 plus expenses for those services. If necessary,
Reliance may also use several of its regular employees, who will not be
specially compensated, to solicit proxies from Reliance stockholders, either
personally or by telephone, telegram, facsimile or special delivery letter.
RECORD DATE AND VOTING RIGHTS; VOTE REQUIRED
The Reliance board of directors has fixed January 7, 2000 as the record
date for determining Reliance stockholders entitled to notice of and to vote at
the Reliance special meeting. Accordingly, only Reliance stockholders of record
at the close of business on the Reliance record date will be entitled to notice
of and to vote at the Reliance special meeting. At the close of business on the
Reliance record date, there were
19
<PAGE> 27
8,889,800 shares of Reliance common stock outstanding held by approximately 962
holders of record. Each share of Reliance common stock outstanding on the
Reliance record date entitles its holder to one vote.
The presence, in person or by proxy, of a majority of the shares of
Reliance common stock outstanding and entitled to vote on the record date is
necessary to constitute a quorum at the Reliance special meeting. Shares held by
persons attending the Reliance special meeting but not voting, and shares for
which holders have abstained from voting will be counted as present at the
Reliance special meeting for purposes of determining the presence or absence of
a quorum. Brokers who hold shares in nominee or "street" name for customers who
are the beneficial owners of those shares are prohibited from giving a proxy to
vote shares held for those customers on the matters to be considered and voted
upon at the Reliance special meeting without specific instructions from those
customers. These so-called "broker non-votes" will also be counted for purposes
of determining whether a quorum exists.
UNDER APPLICABLE DELAWARE LAW, APPROVAL AND ADOPTION OF THE MERGER
AGREEMENT REQUIRES THE AFFIRMATIVE VOTE OF THE HOLDERS OF A MAJORITY OF THE
OUTSTANDING SHARES OF RELIANCE COMMON STOCK ENTITLED TO VOTE AT THE RELIANCE
SPECIAL MEETING. ABSTENTIONS AND BROKER NON-VOTES WILL HAVE THE SAME EFFECT AS
VOTES AGAINST APPROVAL OF THE MERGER AGREEMENT. ACCORDINGLY, THE RELIANCE BOARD
OF DIRECTORS URGES RELIANCE STOCKHOLDERS TO COMPLETE, DATE AND SIGN THE
ACCOMPANYING PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED, POSTAGE-PAID
ENVELOPE.
As of the Reliance record date, directors and executive officers of
Reliance owned approximately 1.2 million shares of Reliance common stock,
entitling them to exercise approximately 12.3% of the voting power of the
Reliance common stock entitled to vote at the Reliance special meeting. On the
basis of the unanimous approval of the merger agreement by the Reliance board of
directors, we currently expect that each director and executive officer of
Reliance will vote the shares of Reliance common stock owned by him or her for
approval and adoption of the merger agreement and the transactions contemplated
by the merger agreement.
As of the Reliance record date, North Fork owned a total of 402,500 shares
of Reliance common stock, representing approximately 4.6% of the shares entitled
to vote at the Reliance special meeting. North Fork intends to vote all of these
shares for approval and adoption of the merger agreement.
RECOMMENDATION OF RELIANCE BOARD
The Reliance board of directors has unanimously approved the merger
agreement and the transactions contemplated by the merger agreement. The
Reliance board of directors believes that the merger agreement is in the best
interests of Reliance and Reliance stockholders and recommends that the Reliance
stockholders vote "FOR" approval and adoption of the merger agreement. See "The
Merger -- Recommendation of the Reliance Board and Reasons for the Merger" on
page 24.
20
<PAGE> 28
THE MERGER
The following description of the material information pertaining to the
merger, including the material terms and provisions of the merger agreement and
the related stock option agreement, is qualified in its entirety by reference to
the more detailed Appendices to this proxy statement-prospectus, including the
merger agreement in Appendix A and the stock option agreement in Appendix B. We
urge you to read the Appendices in their entirety.
TRANSACTION STRUCTURE
The North Fork board of directors and the Reliance board of directors each
have unanimously approved the merger agreement, which provides for the merger of
Reliance with and into North Fork. North Fork will be the surviving corporation
in the merger. Following completion of the merger, North Fork intends to cause
Reliance's savings bank subsidiary, Reliance Federal Savings Bank, to be merged
with and into North Fork's principal bank subsidiary, North Fork Bank. We expect
to complete both the merger and the bank merger in the first quarter of 2000.
Each share of North Fork common stock issued and outstanding at the effective
time of the merger will remain issued and outstanding as one share of common
stock of the combined company, and each share of Reliance common stock issued
and outstanding at the effective time of the merger will be converted into 2.0
shares of North Fork common stock. See "-- Termination of the Merger Agreement"
on page 43.
The North Fork certificate of incorporation will be the certificate of
incorporation of the combined company after completion of the merger, and the
North Fork bylaws will be the bylaws of the combined company. Upon completion of
the merger, the board of directors of the combined company will be expanded by
one member, and Raymond A. Nielsen, the President and Chief Executive Officer of
Reliance, will become a member of the board of directors of the combined
company.
BACKGROUND OF THE MERGER
In early 1998, as part of its normal business planning process, senior
management and the board of directors of Reliance began to reassess the
long-term business plan of Reliance and the potential for further acquisitions
and growth opportunities in its market area. It was recognized by the board of
directors at such time that to increase the performance and long term value of
Reliance, it would be necessary to increase its emphasis on higher yielding
non-traditional thrift operations and increase its operational efficiencies
through growth or other measures. The board of directors and management explored
whether the greatest opportunity for accomplishing these goals lay in continuing
to implement Reliance's business plan or in seeking a strategic alliance with
another financial institution which would yield greater operating efficiencies.
It was recognized that a strategic alliance could occur either through a merger
of equals with another institution or through the merger of Reliance into a
larger more diversified institution. At such time, the board of directors and
management determined that, in light of the limited number of potential
acquisition opportunities and the then-current merger market pricing, a viable
strategy would be to pursue a strategic alliance through a merger of equals with
a compatible institution operating in its market area. Based on those
discussions and several financial analyses conducted by its financial advisor,
Sandler O'Neill, in June 1998, the Reliance board of directors authorized senior
management to explore a merger of equals with JSB Financial, Inc. Over the next
two months, the senior managements of Reliance and JSB Financial engaged in
discussions in an attempt to create mutually agreeable consolidation and
operational strategies for the combined company which could best achieve
potential operating efficiencies. Due primarily to differing views on pricing
considerations and differing strategies regarding the manner in which the
combined company could best achieve potential operating performance, Reliance
and JSB Financial terminated these discussions in August 1998. The Reliance
board of directors determined at such time to continue with its long-term
business plan and focus on continuing to improve the operating performance of
Reliance on a stand-alone basis.
In July 1999, senior management of Reliance again analyzed the potential
benefits of entering into a strategic alliance with another financial
institution operating in its market area. Following discussions regarding the
potential strategic alternatives available to Reliance with the board of
directors of Reliance at a
21
<PAGE> 29
board meeting in July 1999, senior management requested and, at a meeting on
July 30, 1999, received from Sandler O'Neill a detailed analysis of the
financial benefits of a merger or acquisition transaction, potential acquisition
targets, the potential values of Reliance in an acquisition transaction,
potentially attractive acquirors of Reliance, and the then-current merger market
pricing and activity. As part of its presentation to management, Sandler O'Neill
reviewed in detail and compared the financial impact and other aspects of
potential combinations of Reliance with various potential merger partners,
including North Fork.
On August 16, 1999, the proposed merger of North Fork and JSB Financial was
publicly announced. On the same day, a representative of North Fork called
Sandler O'Neill to express interest in possibly engaging in a merger with
Reliance in tandem with its proposed merger with JSB Financial. Sandler O'Neill
conveyed this information to Raymond A. Nielsen, President and Chief Executive
Officer of Reliance, who discussed North Fork's interest in a merger with
Reliance with members of the board of directors and senior management of
Reliance. Also on that same day, a representative of JSB Financial called
Raymond L. Nielsen, Chairman of the Board of Directors of Reliance, to solicit
Reliance's interest in a possible transaction with North Fork and to discuss the
potential benefits of a combination of North Fork, JSB Financial and Reliance.
On August 18, 1999, at a regularly scheduled board of directors meeting,
the senior management of Reliance discussed with Reliance's board of the
directors the presentation and analysis given by Sandler O'Neill at the July 30,
1999 meeting and the telephone calls received on August 16. In order to more
thoroughly address all of Reliance's viable strategic alternatives, the board of
directors held a special meeting on August 19, 1999 to specifically address
Reliance's current merger and acquisition opportunities and to review and
discuss information and analyses concerning a possible combination with North
Fork, including the potential performance of North Fork following its
combination with both JSB Financial and Reliance. At the August 19 special
meeting, the board of directors heard a presentation and reviewed an analysis
prepared by Sandler O'Neill regarding the then-current merger market pricing, a
potential valuation range for Reliance both on a stand-alone basis and in a
merger transaction, potential merger partners and the potential performance of
North Fork following a merger with both Reliance and JSB Financial. After such
discussion, the Reliance board of directors authorized the engagement of Sandler
O'Neill to assist in negotiating a possible transaction with North Fork and
authorized Reliance's Chief Executive Officer and representatives of Sandler
O'Neill to initiate discussions with North Fork.
On August 20, 1999, Sandler O'Neill advised John A. Kanas, Chairman and
Chief Executive Officer of North Fork, of Reliance's interest in discussing the
general parameters of a potential merger. Based on the companies' mutual
interest, discussions between the parties continued the following week,
including calculations of potential transaction costs and operating
efficiencies, examination of the strategic fit and negotiations regarding the
potential exchange ratio. During such period, the parties began to exchange
information and conduct limited due diligence and discussed the general terms of
a merger agreement and stock option agreement.
On August 26, 1999, senior officers of Reliance and North Fork and
representatives of Sandler O'Neill met and discussed strategic issues and how
the two companies, as well as JSB Financial, could operate as a combined entity.
On the following day, August 27, 1999, Mr. Kanas and Raymond A. Nielsen met and
discussed the material terms of a proposed transaction and the potential
prospects of the combined entity. Following this meeting and continuing
throughout the next several days, each company conducted due diligence
investigation of the other company and the parties' respective outside counsel
drafted and negotiated the documentation for a potential merger.
On August 30, 1999, the North Fork board of directors held a special
meeting at which senior management of North Fork reviewed its discussions and
negotiations with Reliance regarding the proposed transaction, as well as the
results of its due diligence investigation of Reliance. Senior management of
North Fork and North Fork's financial advisor reviewed with the North Fork board
of directors financial information with respect to Reliance, the proposed merger
and the combination of both JSB and Reliance with North Fork. Also at this
meeting, counsel to North Fork reviewed with the North Fork board of directors
the terms of the merger agreement and the stock option agreement. After
questions by and discussion among the members of the North Fork board of
directors, and after consideration of the factors described under
22
<PAGE> 30
"-- North Fork's Reasons for the Merger," the North Fork board of directors
voted unanimously to approve the merger agreement and the transactions
contemplated by the merger agreement, as well as the stock option agreement.
On August 30, 1999, the board of directors of Reliance held a special
meeting at which senior management, Reliance's outside counsel and
representatives of Sandler O'Neill presented the results of the due diligence
investigation of North Fork and the terms of the proposed merger which had been
negotiated between the parties. Reliance's outside counsel reviewed the
provisions of the merger agreement and the stock option agreement. Counsel also
reviewed with the board of directors their fiduciary duties and responsibilities
with respect to their consideration of the proposed transaction and the related
agreements. Sandler O'Neill presented an overview of Reliance's recent
performance, merger market pricing, potential merger candidates, financial
information with respect to North Fork and JSB Financial and comparative
financial information with respect to a combination involving Reliance and North
Fork, a combination involving North Fork, Reliance and JSB Financial and other
potential merger and acquisition transactions. Sandler O'Neill rendered its
opinion that, as of that date, the proposed exchange ratio was fair to the
stockholders of Reliance from a financial point of view. After extensive
discussion of the information presented, the strategic alternatives available
and the fiduciary duties and obligations of the board of directors, the Reliance
board of directors voted unanimously to approve the merger agreement, the stock
option agreement and the transactions contemplated by such agreements.
Following the completion of the Reliance board of directors meeting on
August 30, 1999, North Fork and Reliance entered into the merger agreement and
the stock option agreement.
NORTH FORK'S REASONS FOR THE MERGER
In reaching its decision to approve the merger agreement, the North Fork
board of directors consulted with management of North Fork, as well as with its
legal and financial advisors, and considered the following material factors:
- The overall strategic focus of North Fork and the opportunities for
growth by North Fork in the market areas where Reliance conducts
business, including the fact that the merger would enhance North Fork's
market penetration in Long Island, with Reliance Federal's 29 branch
banking offices in Queens, Nassau and Suffolk counties, and would improve
North Fork's retail banking franchise by adding 160,000 retail customers
and $1.6 billion in deposits.
- The anticipated financial effects of the merger, including an estimated
$14.86 million in cost savings, $3.45 million in revenue enhancements and
$2.07 million in tax efficiencies, each on an after-tax basis, expected
to result from the merger, and the expectation that the merger and the
JSB merger would be immediately accretive to North Fork's GAAP and cash
earnings per share in 2000 by 5% and 9%, respectively, based on I/B/E/S
International Inc. estimates for North Fork and Reliance and estimates
published by Zacks Investment Research, Inc. for JSB and North Fork
management's estimates for cost savings, revenue enhancements and other
efficiencies to be achieved following the merger and the JSB merger. On a
pro forma basis, giving effect to the merger and the JSB merger as of
June 30, 1999, North Fork would have total assets of $15.5 billion,
deposits of $9.2 billion, shareholders' equity of $1.2 billion, stated
and tangible book value per share of approximately $7.21 and $5.16,
respectively, and a leverage ratio of 7.47%. North Fork management
expects to reduce the number of Reliance employees by 154 full-time and
36 part-time and to close six branch offices, two of which will be merged
with existing JSB branch offices. The North Fork board of directors was
advised in this regard that North Fork expected to incur an after-tax
restructuring charge of approximately $41.44 million in connection with
the completion of the merger. The combined company's ability to achieve
these cost savings, revenue enhancements and other results depends on
various factors, a number of which will be beyond its control, and there
can be no assurance that such results will be achieved. See "Management
and Operations Following the Merger and the JSB Financial Merger" on page
54 and "Forward-Looking Statements" on page 74.
23
<PAGE> 31
- The North Fork board's review, based on a presentation by North Fork's
management, of the business, operations, earnings and financial condition
of Reliance on an historical and prospective basis.
- The complementary strategic and financial aspects of the Reliance
transaction and the JSB Financial transaction, including the fact that
the Reliance transaction would provide North Fork with a means of
utilizing excess capital and reissuing treasury stock in order to allow
its pending acquisition of JSB Financial to qualify for
pooling-of-interests accounting treatment.
- The terms of the merger agreement and the stock option agreement,
including the exchange ratio, which, based on the closing stock price for
North Fork prior to the announcement of the transaction, provided for
price-to-book value per share and price-to-estimated year 2000 earnings
per share multiples of 1.90x and 15.2x, respectively. The North Fork
board of directors was advised in this regard that the exchange ratio was
subject to possible upward adjustment under the circumstances set forth
in the merger agreement. See "-- Termination of the Merger Agreement" on
page 43.
- The current and prospective economic, competitive and regulatory
environment facing financial institutions and their competitors
generally, and North Fork in particular.
- The North Fork board's familiarity with and review of North Fork's
business, operations, financial condition, earnings and prospects,
including its potential growth and profitability and the associated
business risks.
- The expectation that the merger would be treated as a tax-free
reorganization for federal income tax purposes and would be accounted for
as a purchase.
- The financial information with respect to the proposed transaction
reviewed by Donaldson, Lufkin & Jenrette Securities Corporation with the
North Fork board of directors.
- The views of North Fork's management concerning the likelihood of
receiving all regulatory approvals required for the merger.
- The terms of the stock option granted by Reliance to North Fork and the
provisions of the merger agreement restricting Reliance's ability to
solicit competing bids, and the potential effect that these provisions
may have on competing offers for Reliance.
In view of the wide variety of factors considered in connection with its
evaluation of the merger and the complexity of these matters, North Fork's board
of directors did not find it practicable to and did not attempt to quantify,
rank or otherwise assign relative weights to these factors. North Fork's board
of directors considered all of the factors described above together, including
through discussions with and questioning of North Fork's management and North
Fork's legal and financial advisors. In considering the factors described above,
individual members of North Fork's board of directors may have given different
weight to different factors.
RECOMMENDATION OF THE RELIANCE BOARD AND REASONS FOR THE MERGER
THE RELIANCE BOARD OF DIRECTORS BELIEVES THE TERMS OF THE MERGER AGREEMENT,
WHICH ARE THE PRODUCT OF ARM'S-LENGTH NEGOTIATION, ARE FAIR TO AND IN THE BEST
INTERESTS OF RELIANCE AND ITS STOCKHOLDERS. ACCORDINGLY, THE RELIANCE BOARD OF
DIRECTORS HAS UNANIMOUSLY APPROVED THE MERGER AGREEMENT AND UNANIMOUSLY
RECOMMENDS THAT RELIANCE STOCKHOLDERS VOTE "FOR" APPROVAL AND ADOPTION OF THE
MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED BY THE MERGER AGREEMENT,
INCLUDING THE MERGER. In the course of reaching its determination, the Reliance
board of directors consulted with special legal counsel with respect to its
legal duties and the terms of the merger agreement and the stock option
agreement. The Reliance board of directors also consulted with its financial
advisor with respect to the financial aspects and fairness of the transaction
from a financial point of view, and with senior management regarding, among
other things, operational matters.
24
<PAGE> 32
In reaching its determination to approve the merger agreement and the stock
option agreement, the Reliance board of directors considered the following
material factors:
(1) Reliance's past operating strategy, its results of operations, its
competitive position in the regional market for banking and financial
services companies; the competitive environment facing thrifts and
financial institutions nationally and in Reliance's market area; the trend
toward consolidation of the financial services industry; and likely effect
such factors would have on the future growth and profitability of Reliance
as a stand alone entity;
(2) the potential for Reliance to increase its profitability and the
value of its franchise through in-market acquisitions and internal growth,
the availability of attractive acquisition opportunities and merger
partners operating in its market area, and Reliance's prospects for future
geographic growth and product diversification;
(3) the Reliance board's review, based in part on presentations by
Reliance's management and advisors, of North Fork's business, financial
condition, results of operations and management, the performance of North
Fork common stock on both an historical and prospective basis, the overall
strategic fit between Reliance and North Fork, the opportunities for
operating efficiencies that could result from the merger (including an
estimated reduction in general and administrative expenses of 60% and an
estimated pre-tax savings for the year 2000 of $21.5 million) and the
respective financial contributions that Reliance and North Fork would bring
to a combined institution with respect to market capitalization, assets and
liabilities, net income of the parties over the past four quarters and
estimated net income for 1999 and 2000. Based on June 30, 1999 financial
information, Reliance will contribute $2.45 billion in assets, which will
constitute 15.72% of the combined entity, $2.28 billion in liabilities,
which will constitute 16.01% of the combined entity, and $290 million in
market capitalization, which will constitute 8.11% of the combined entity,
and North Fork's pro forma total assets, liabilities and market
capitalization will increase to approximately $15.6 billion, $14.2 billion
and $3.58 billion, respectively;
(4) the Reliance board's review, based in part on presentations by
Reliance's management and advisors, of JSB Financial's business, financial
condition, results of operations, the performance of JSB Financial's common
stock on both an historical and prospective basis, the strategic fit
between North Fork and JSB Financial and the opportunities for operating
efficiencies and more effective deployment of capital that could result
from the merger between North Fork and JSB Financial, and the respective
financial contributions and potential for further operational efficiencies
that Reliance will bring to a combination of North Fork and JSB Financial.
By acquiring JSB, North Fork will gain an additional branch in Nassau
County, New York and, based on June 1999 data, will increase its market
share from 2.9% to 3.79%. The further acquisition of Reliance will add 13
additional branches and 2.3% of market share for a combined 6.09% market
share in Nassau County, based on June 1999 data. Although the acquisition
of JSB will not change its ranking among financial institutions in Nassau
County, based on market share, the acquisition of Reliance will increase
that ranking from number 11 to number 9.
With the acquisition of JSB, North Fork will gain an additional 10
branches in Queens County, New York and based on June 1999 data, will
increase its market share from 5.23% to 7.96%. The further acquisition of
Reliance will add 7 additional branches and 1.56% market share for a
combined market share in Queens County of 9.52% based on June 1999 data.
The acquisition of JSB will increase North Fork's ranking in Queens County,
based on market share, from number 6 to number 4. The acquisition of
Reliance will not change its ranking in Queens County. While the Reliance
board of directors did not consider specific information regarding branch
closings and employee terminations, North Fork anticipates six branch
closings and the termination of 154 full-time and 36 part-time employees;
(5) the Reliance board's review of the historical and prospective
market prices of Reliance common stock compared to the merger
consideration, and the expectation of the Reliance board that the merger
will provide holders of Reliance common stock with the opportunity to
receive a fixed number of shares which represent a premium over the
historical trading prices for their shares and that the receipt of North
Fork common stock by the Reliance stockholders in the merger would be on a
tax-free basis for federal income tax purposes (except with respect to cash
received in lieu of fractional shares). On August 27,
25
<PAGE> 33
1999, Reliance stock closed at $33.88 while North Fork stock closed at
$19.06. The exchange ratio of two shares of North Fork stock for one share
of Reliance stock would result in a value of $38.12 per share of Reliance
stock representing a premium of $4.24 as of that date;
(6) the Reliance board's belief that, among the potential in-market
merger partners identified by Reliance with the assistance of its financial
advisors and management, North Fork has a strong financial and capital
position and that North Fork common stock to be received by Reliance's
stockholders represented an investment with substantial capacity for future
long-term market value growth to such stockholders;
(7) the complementary geographic areas served by North Fork, Reliance
and JSB Financial described in factor (4) and the operating efficiencies
that are anticipated from a merger between all such parties;
(8) the strength of North Fork's management and board of directors,
which the Reliance board of directors recognized would be augmented by
Raymond A. Nielsen, Reliance's President and Chief Executive Officer;
(9) the review by the Reliance board of directors with its legal and
financial advisors of the terms and conditions of the merger agreement,
including the exchange ratio, the ability of Reliance to terminate the
merger agreement under certain circumstances if the value of North Fork
common stock declines significantly (see "-- Termination of the Merger
Agreement" on page 43), the obligation of North Fork to appoint one member
of the Reliance board of directors to the North Fork board of directors and
to create an advisory board for the remaining Reliance board members to
advise North Fork with respect to deposit and lending activities in
Reliance's former market area and to maintain and develop customer
relationships, and the interests of certain other persons in the merger
(see "-- Interests of Certain Persons in the Merger" on page 48);
(10) the written opinion of Sandler O'Neill that, as of August 30,
1999, the exchange ratio pursuant to the merger agreement was fair to
Reliance stockholders from a financial point of view (see "-- Opinion of
Reliance's Financial Advisor" on page 26); and
(11) the likelihood of the merger being approved by the appropriate
regulatory authorities, including factors such as market share analyses,
Community Reinvestment Act ratings and the estimated pro forma financial
impact of the transaction on North Fork.
In reaching its determination to approve and recommend the merger
agreement, the Reliance board of directors did not assign any specific or
relative weights to any of the foregoing factors, and individual directors may
have weighed factors differently.
OPINION OF RELIANCE'S FINANCIAL ADVISOR
By letter agreement dated as of August 19, 1999, Reliance retained Sandler
O'Neill as an independent financial advisor in connection with Reliance's
consideration of a possible business combination with a second party. Sandler
O'Neill is a nationally recognized investment banking firm whose principal
business specialty is financial institutions. In the ordinary course of its
investment banking business, Sandler O'Neill is regularly engaged in the
valuation of financial institutions and their securities in connection with
mergers and acquisitions and other corporate transactions.
Sandler O'Neill acted as financial advisor to Reliance in connection with
the merger and participated in certain of the negotiations leading to the merger
agreement. At the request of the Reliance board of directors, representatives of
Sandler O'Neill attended the August 30, 1999 meeting of the Reliance board of
directors at which the board of directors considered and approved the merger
agreement. At the meeting, Sandler O'Neill delivered to the Reliance board of
directors its oral opinion, subsequently confirmed in writing, that, as of that
date, the exchange ratio was fair to the Reliance stockholders from a financial
point of view. Sandler O'Neill has also delivered to the Reliance board of
directors a written opinion dated the date of this proxy statement-prospectus
which is substantially identical to the August 30, 1999 opinion. THE FULL TEXT
OF SANDLER O'NEILL'S
26
<PAGE> 34
OPINION IS ATTACHED AS APPENDIX C TO THIS PROXY STATEMENT-PROSPECTUS. THE
OPINION OUTLINES THE PROCEDURES FOLLOWED, ASSUMPTIONS MADE, MATTERS CONSIDERED
AND QUALIFICATIONS AND LIMITATIONS ON THE REVIEW UNDERTAKEN BY SANDLER O'NEILL
IN RENDERING THE OPINION. THE OPINION IS INCORPORATED BY REFERENCE INTO THIS
DESCRIPTION AND THIS DESCRIPTION IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
THE OPINION. RELIANCE STOCKHOLDERS ARE URGED TO CAREFULLY READ THE OPINION IN
CONNECTION WITH THEIR CONSIDERATION OF THE PROPOSED MERGER.
SANDLER O'NEILL'S OPINION WAS DIRECTED TO THE RELIANCE BOARD OF DIRECTORS
AND WAS PROVIDED TO THE BOARD OF DIRECTORS FOR ITS INFORMATION IN CONSIDERING
THE MERGER. THE OPINION IS DIRECTED ONLY TO THE FAIRNESS OF THE EXCHANGE RATIO
TO RELIANCE STOCKHOLDERS FROM A FINANCIAL POINT OF VIEW. IT DOES NOT ADDRESS THE
UNDERLYING BUSINESS DECISION OF RELIANCE TO ENGAGE IN THE MERGER OR ANY OTHER
ASPECT OF THE MERGER AND IS NOT A RECOMMENDATION TO ANY RELIANCE STOCKHOLDER AS
TO HOW SUCH STOCKHOLDER SHOULD VOTE AT THE SPECIAL MEETING WITH RESPECT TO THE
MERGER OR ANY OTHER RELATED MATTER.
In rendering its August 30, 1999 opinion, Sandler O'Neill performed a
variety of financial analyses. The following is a summary of the material
analyses performed by Sandler O'Neill, but is not a complete description of all
the analyses underlying Sandler O'Neill's opinion. The preparation of a fairness
opinion is a complex process involving subjective judgments as to the most
appropriate and relevant methods of financial analysis and the application of
those methods to the particular circumstances. The process, therefore, 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 only certain factors and analyses, or attempting to ascribe relative
weights to some or all factors and analyses, could create an incomplete view of
the evaluation process underlying its opinion. Also, no company included in
Sandler O'Neill's comparative analyses described below is identical to Reliance
or North Fork and no transaction is identical to the merger. Accordingly, an
analysis of comparable companies or transactions involves complex considerations
and judgments concerning differences in financial and operating characteristics
of the companies and other factors that could affect the public trading values
or merger transaction values, as the case may be, of North Fork and Reliance and
the companies to which they are being compared.
The earnings projections for Reliance and North Fork relied upon by Sandler
O'Neill in its analyses were reviewed with management and were based upon
internal projections of Reliance and North Fork for the years ending December
31, 1999 and 2000 and, in the case of North Fork, included the pro forma impact
of North Fork's pending acquisition of JSB on a pooling-of-interests accounting
basis. For periods after 2000, Sandler O'Neill assumed, with the consent of the
respective managements of Reliance and North Fork, an annual growth rate on
earning assets of 4% in the case of Reliance and 6% in the case of North Fork.
North Fork also provided to Sandler O'Neill earnings projections for the years
1999 through 2003 which did not give effect to North Fork's pending acquisition
of JSB and which assumed an annual growth rate on earning assets of 7.5%. Under
these projections, earnings per share were forecasted at $1.64 for 1999, $1.76
for 2000, $1.92 for 2001, $2.09 for 2002 and $2.27 for 2003. Although the
projections were reviewed by Sandler O'Neill, they were not utilized in its
analysis because they did not give effect to North Fork's pending acquisition of
JSB. The earnings projections furnished to Sandler O'Neill were prepared by the
senior managements of Reliance and North Fork for internal purposes only and not
with a view towards public disclosure. Those projections were based on numerous
variables and assumptions which are inherently uncertain and, accordingly,
actual results could vary materially from those set forth in such projections.
In performing its analyses, Sandler O'Neill also 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 Reliance, North Fork and Sandler O'Neill. The analyses performed by
Sandler O'Neill are not necessarily indicative of actual values or future
results, which may be significantly more or less favorable than suggested by
such analyses. 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. Such estimates are inherently subject to
uncertainty and actual values may be materially different. Accordingly, Sandler
O'Neill's analyses do not necessarily reflect the value of Reliance common stock
or North Fork common stock or the prices at which Reliance common stock or North
Fork common stock may be sold at any time.
27
<PAGE> 35
Summary of Proposal. Sandler O'Neill reviewed the financial terms of the
proposed transaction. Based on the closing price of North Fork common stock on
August 27, 1999 of $19.0625 and an exchange ratio of 2.0, Sandler O'Neill
calculated an implied transaction value per share of Reliance common stock of
$38.125. The implied aggregate transaction value was approximately $352 million,
based upon 9,241,353 fully diluted shares of Reliance common stock outstanding,
which was determined using the treasury stock method at the implied value of
$38.125. Based upon Reliance's June 30, 1999 financial information, Sandler
O'Neill calculated the following ratios:
<TABLE>
<S> <C>
Implied value/Book value.................................... 1.91x
Implied value/Tangible book value........................... 2.79x
Implied value/Last twelve months' GAAP EPS.................. 16.87x
Implied value/Last twelve months' cash EPS.................. 13.76x
</TABLE>
For purposes of Sandler O'Neill's analyses, earnings per share were based on
fully diluted earnings per share. Sandler O'Neill noted that the implied
transaction value represented a 12.6% premium over the August 27, 1999 closing
price of Reliance common stock of $33.875.
Stock Trading History. Sandler O'Neill reviewed the history of the
reported trading prices and volume of Reliance common stock and North Fork
common stock, and the relationship between the movements in the prices of
Reliance common stock and North Fork common stock, respectively, to movements in
certain stock indices, including the Standard & Poor's 500 Index, the Nasdaq
Bank Index and, in the case of Reliance, the median performance of a composite
group of publicly traded regional savings institutions selected by Sandler
O'Neill and, in the case of North Fork, the median performance of a composite
group of publicly traded regional commercial banks selected by Sandler O'Neill.
During the one year period ended August 27, 1999, the Reliance common stock
outperformed each of the indices to which it was compared and the North Fork
common stock underperformed each of the indices to which it was compared.
<TABLE>
<CAPTION>
BEGINNING INDEX VALUE ENDING INDEX VALUE
AUGUST 27, 1998 AUGUST 27, 1999
--------------------- ------------------
<S> <C> <C>
Reliance........................................ 100.00% 141.88%
Reliance Composite Group........................ 100.00% 106.35%
Nasdaq Bank Index............................... 100.00% 104.32%
S&P 500 Index................................... 100.00% 129.32%
North Fork...................................... 100.00% 89.71%
North Fork Composite Group...................... 100.00% 100.97%
Nasdaq Bank Index............................... 100.00% 104.32%
S&P 500 Index................................... 100.00% 129.32%
</TABLE>
Comparable Company Analysis. Sandler O'Neill used publicly available
information to compare selected financial and market trading information for
Reliance and two groups of savings institutions selected by Sandler O'Neill. The
"regional group" consisted of Reliance and the following 10 publicly traded
regional savings institutions:
<TABLE>
<S> <C>
Commonwealth Bancorp, Inc. Dime Community Bancshares, Inc.
First Sentinel Bancorp, Inc. Haven Bancorp, Inc.
Independence Community Bank Corp. Queens County Bancorp, Inc.
Richmond County Financial Corp. Roslyn Bancorp, Inc.
Staten Island Bancorp, Inc. WSFS Financial Corp.
</TABLE>
28
<PAGE> 36
The "highly valued group" consisted of the following 10 publicly traded savings
institutions that had a return on average equity (based on last twelve months'
earnings) of greater than 14% and a price to tangible book value of greater than
160%:
<TABLE>
<S> <C>
Andover Bancorp, Inc. First Federal Capital Corp.
First Financial Holdings, Inc. Flagstar Bancorp, Inc.
InterWest Bancorp, Inc. MAF Bancorp, Inc.
Queens County Bancorp, Inc. Washington Federal, Inc.
Webster Financial Corp. WSFS Financial Corp.
</TABLE>
The analysis compared publicly available financial information for Reliance for
each of the fiscal years ended June 30, 1994 through 1999 and the median data
for each of the regional and highly valued groups as of and for each of the
years ended December 31, 1994 through 1998 and as of and for the twelve months
ended June 30, 1999. The table below sets forth the comparative data as of and
for the twelve months ended June 30, 1999.
<TABLE>
<CAPTION>
HIGHLY
RELIANCE REGIONAL GROUP VALUED GROUP
---------- -------------- ------------
<S> <C> <C> <C>
Total assets........................................ $2,451,773 $2,451,773 $2,240,264
Annual growth rate of total assets.................. (1.37)% 23.45% 7.66%
Tangible equity/total assets........................ 4.78% 7.71% 6.39%
Intangible assets/total equity...................... 31.67% 4.81% 3.98%
Net loans/total assets.............................. 39.73% 48.68% 74.09%
Cash & securities/total assets...................... 56.09% 38.90% 23.28%
Gross loans/total deposits.......................... 63.46% 88.35% 121.95%
Total borrowings/total assets....................... 26.61% 27.46% 27.81%
Non-performing assets/total assets.................. .26% .26% .54%
Loan loss reserve/gross loans....................... .93% 1.05% .75%
Net interest margin................................. 2.95% 3.35% 3.12%
Loan loss provision/average assets.................. .03% .05% .04%
Non-interest income/average assets.................. .33% .33% .77%
Non-interest expense/average assets................. 1.65% 1.85% 2.15%
Efficiency ratio.................................... 46.77% 45.96% 53.31%
Return on average assets............................ .81% 1.02% 1.20%
Return on average equity............................ 11.15% 8.30% 16.45%
Price/tangible book value per share................. 248% 176% 198%
Price/earnings per share............................ 14.99x 17.23x 11.89x
Dividend yield...................................... 2.30% 1.96% 2.13%
Dividend payout ratio............................... 34.51% 30.36% 28.44%
</TABLE>
Similarly, Sandler O'Neill used publicly available information to compare
selected financial and market trading information for North Fork and two groups
of commercial banks selected by Sandler O'Neill. The "regional group" consisted
of North Fork and the following 10 publicly traded regional commercial banks:
<TABLE>
<S> <C>
Commerce Bancorp, Inc. Fulton Financial Corp.
Hudson United Bancorp Keystone Financial, Inc.
Mercantile Bankshares Corp. M&T Bank Corp.
Riggs National Corp. Summit Bancorp
Valley National Bancorp Wilmington Trust Corp.
</TABLE>
29
<PAGE> 37
The "highly valued group" consisted of North Fork and the following 11 publicly
traded regional commercial banks that had a return on average equity (based on
last twelve months' earnings) of greater than 18% and a price to tangible book
value of greater than 280%:
<TABLE>
<S> <C>
AmSouth Bancorp CCB Financial Corp.
City National Corp. Commerce Bancorp, Inc.
Cullen/Frost Bankers, Inc. First Tennessee National Corp.
National Commerce Bancorp Old Kent Financial Corp.
Synovus Financial Corp. TCF Financial Corp.
Wilmington Trust Corp.
</TABLE>
The analysis compared publicly available financial information for North Fork
and the median data for each of the regional and highly valued groups as of and
for each of the years ended December 31, 1994 through 1998 and as of and for the
twelve months ended June 30, 1999. The table below sets forth the comparative
data as of and for the twelve months ended June 30, 1999. North Fork balance
sheet items for the June 30, 1999 period have been adjusted to reflect the pro
forma impact of its pending acquisition of JSB on a pooling-of-interests
accounting basis.
<TABLE>
<CAPTION>
HIGHLY
NORTH FORK REGIONAL GROUP VALUED GROUP
----------- -------------- ------------
<S> <C> <C> <C>
Total assets....................................... $13,142,306 $6,838,456 $9,042,018
Annual growth rate of total assets................. 32.52% 5.30% 11.02%
Tangible equity/ total assets...................... 8.35% 6.68% 6.06%
Intangible assets/total equity..................... 6.96% 6.96% 11.12%
Net loans/total assets............................. 54.62% 65.79% 64.48%
Cash & securities/total assets..................... 42.51% 28.82% 27.54%
Gross loans/total deposits......................... 95.45% 91.22% 92.02%
Total borrowings/total assets...................... 29.67% 14.89% 18.79%
Non-performing assets/total assets................. .08% .31% .27%
Loan loss reserve/gross loans...................... 1.04% 1.49% 1.39%
Net interest margin................................ 4.36% 4.31% 4.44%
Loan loss provision/average assets................. .04% .15% .21%
Non-interest income/average assets................. .49% 1.34% 2.07%
Non-interest expense/average assets................ 1.48% 2.76% 3.66%
Efficiency ratio................................... 32.75% 51.49% 56.61%
Return on average assets(1)........................ 2.07% 1.46% 1.60%
Return on average equity(1)........................ 25.79% 17.26% 19.39%
Price/tangible book value per share................ 367% 290% 387%
Price/earnings per share(1)........................ 12.14x 15.61x 15.93x
Dividend yield..................................... 3.67% 3.05% 2.19%
Dividend payout ratio(1)........................... 44.59% 44.59% 39.65%
</TABLE>
- ---------------
(1) Based upon net income normalized to exclude the impact of nonrecurring
expense.
Analysis of Selected Merger Transactions. Sandler O'Neill reviewed certain
other transactions announced from January 1, 1999 to August 29, 1999 involving
publicly traded savings institutions as acquired institutions with transaction
values greater than $15 million. Sandler O'Neill reviewed 32 transactions
announced nationwide and six transactions announced in the Mid-Atlantic region,
comprised of Washington D.C., Delaware, Maryland, New Jersey, New York and
Pennsylvania. Sandler O'Neill reviewed the multiples of transaction value to
last four quarters' earnings, transaction value to book value, transaction value
to tangible book value, tangible book premium to core deposits, transaction
value to total assets and premium to current market price, and computed high,
low, mean and median multiples and premiums for the respective
30
<PAGE> 38
groups of transactions. These multiples were applied to Reliance's financial
information as of and for the twelve months ended June 30, 1999. As illustrated
in the following table, Sandler O'Neill derived an imputed range of values per
share of Reliance common stock of $23.72 to $54.08 based upon the median
multiples for nationwide transactions and $21.73 to $61.66 based upon the median
multiples for Mid-Atlantic transactions. As calculated by Sandler O'Neill, the
implied transaction value per share of Reliance common stock in the merger as of
August 27, 1999 was $38.125, which was within the range of values for the 32
transactions reviewed.
<TABLE>
<CAPTION>
IMPLIED VALUE
RANGE OF MEDIAN BASED ON MEDIAN
NATIONWIDE TRANSACTIONS MULTIPLES MULTIPLE MULTIPLE
- ----------------------- -------------- -------- ---------------
<S> <C> <C> <C>
Deal price/LTM EPS................................. 47.8x - 12.9x 23.9x $54.08
Deal price/Book value.............................. 3.72x - 1.02x 1.74x 34.71
Deal price/tangible book value..................... 3.98x - 1.02x 1.74x 23.72
Tangible book premium/core deposits................ 38.3% - 2.6% 11.8% 31.77
Deal price/total assets............................ 36.8% - 10.9% 19.8% 52.82
Implied transaction value.......................... N/A N/A 38.13
</TABLE>
<TABLE>
<CAPTION>
IMPLIED VALUE
RANGE OF MEDIAN BASED ON MEDIAN
MID-ATLANTIC TRANSACTIONS MULTIPLES MULTIPLE MULTIPLE
- ------------------------- -------------- -------- ---------------
<S> <C> <C> <C>
Deal price/LTM EPS................................. 47.8x - 13.72x 27.3x $61.66
Deal price/Book value.............................. 2.15x - 1.28x 1.58x 31.63
Deal price/tangible book value..................... 2.20x - 1.28x 1.59x 21.73
Tangible book premium/core deposits................ 23.6% - 6.0% 11.5% 31.21
Deal price/total assets............................ 36.8% - 14.9% 16.8% 44.94
Implied transaction value.......................... N/A N/A 38.13
</TABLE>
In considering the results of the above analysis and in discussing the
analysis with Reliance's board of directors, Sandler O'Neill considered the
range of values suggested by its analysis as a whole, noting that the implied
transaction value was within the range of values suggested by the analysis.
Sandler O'Neill noted that the implied transaction value was at the low end of
the range of values suggested by the analysis based upon LTM earnings per share,
but also considered that the implied transaction value was higher than three
other transaction value indicators. Sandler O'Neill also considered and
discussed with the Reliance board the potential earnings per share accretion for
Reliance shareholders that would be expected to result from the transaction. See
"Pro Forma Merger Analysis" below.
Discounted Dividend Stream and Terminal Value Analysis. Sandler O'Neill
also performed an analysis which estimated the future stream of after-tax
dividends of Reliance through June 30, 2004 under various circumstances,
assuming Reliance's current dividend payout ratio and that Reliance performed in
accordance with the earnings forecasts reviewed with management. To approximate
the terminal value of Reliance common stock at June 30, 2004, Sandler O'Neill
applied price/earnings multiples ranging from 10x to 20x and applied multiples
of tangible book value ranging from 100% to 350%. Sandler O'Neill chose the
tangible book multiples taking into consideration transaction multiples of
101.60% to 397.87% for Nationwide Transactions and 160.20% to 476.19% for
Mid-Atlantic transactions. The dividend income streams and terminal values were
then discounted to present values using different discount rates ranging from 9%
to 15% chosen to reflect different assumptions regarding required rates of
return of holders or prospective buyers of Reliance common stock. As illustrated
in the following table, this analysis indicated an imputed range of values per
share of Reliance common stock of $18.66 to $43.95 when applying the
price/earnings multiples and $15.73 to $58.07 when applying multiples of
tangible book value. As calculated by Sandler O'Neill, the implied transaction
value per share of Reliance common stock in the merger as of August 27, 1999 was
$38.125, which was within the range of values as calculated above.
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<PAGE> 39
<TABLE>
<CAPTION>
PRICE/EARNINGS MULTIPLES TANGIBLE BOOK VALUE MULTIPLES
------------------------- -----------------------------
DISCOUNT RATE 10X 20X 1.0X 3.5X
- ------------- ----------- ----------- ------------- -------------
<S> <C> <C> <C> <C>
9% $24.16 $43.95 $20.22 $58.07
11 22.14 40.09 18.58 52.91
13 20.31 36.60 17.08 48.24
15 18.66 33.45 15.73 44.01
</TABLE>
In connection with its analysis, Sandler O'Neill considered and discussed
with the Reliance board of directors how the present value analysis would be
affected by changes in the underlying assumptions, including variations with
respect to the growth rate of assets, net interest spread, non-interest income,
non-interest expenses and dividend payout ratio. Sandler O'Neill noted that the
discounted dividend stream and terminal value analysis is a widely used
valuation methodology, but the results of such methodology are highly dependent
upon the numerous assumptions that must be made, and the results thereof are not
necessarily indicative of actual values or future results.
Pro Forma Merger Analysis. Sandler O'Neill analyzed certain potential pro
forma effects of the merger, based upon the exchange ratio of 2.0, North Fork's
and Reliance's current and projected income statements and balance sheets as
reviewed with management, and assumptions regarding the economic environment,
accounting and tax treatment of the merger, charges associated with the merger,
operating efficiencies and other adjustments discussed with the senior
managements of Reliance and North Fork. As illustrated in the following table,
this analysis indicated that in the first full year following the merger, the
merger would be accretive to North Fork's earnings per share and cash earnings
per share and slightly dilutive to tangible book value per share. The analysis
also indicated that, from a Reliance stockholder's perspective, as compared to
the projected stand-alone performance of Reliance, the merger would be accretive
to Reliance's projected earnings per share and dividends, but dilutive to
Reliance's tangible book value per share for the year ending December 31, 2000.
The actual results achieved by North Fork and Reliance may vary from projected
results and the variations may be material.
<TABLE>
<CAPTION>
NORTH FORK RELIANCE
--------------------------- ---------------------------
YEAR ENDING DECEMBER 31, 2000 STAND-ALONE(1) PRO FORMA STAND-ALONE PRO FORMA(2)
- ----------------------------- -------------- --------- ----------- ------------
<S> <C> <C> <C> <C>
Projected EPS............................ $1.78 $1.79 $ 2.64 $ 3.58
Projected cash EPS....................... 1.83 1.90 NM NM
Projected tangible book value............ 8.62 8.01 17.07 16.03
Projected dividend....................... .72 .72 .96 1.43
Projected leverage capital ratio......... 11.90% 9.76% NM NM
</TABLE>
<TABLE>
<CAPTION>
NORTH FORK RELIANCE
--------------------------- ---------------------------
YEAR ENDING DECEMBER 31, 2001 STAND-ALONE(1) PRO FORMA STAND-ALONE PRO FORMA(2)
- ----------------------------- -------------- --------- ----------- ------------
<S> <C> <C> <C> <C>
Projected EPS............................ $1.94 $1.95 $2.79 $3.90
Projected cash EPS....................... 1.99 2.06 NM NM
Projected tangible book value............ 9.83 9.37 19.50 18.74
Projected dividend....................... 0.78 0.78 1.02 1.56
Projected leverage capital ratio......... 12.47% 10.47% NM NM
</TABLE>
- ---------------
(1) Includes the pro forma impact of North Fork's pending acquisition of JSB on
a pooling-of-interests accounting basis.
(2) Determined by multiplying the North Fork values by the fixed exchange ratio
of 2.0.
32
<PAGE> 40
Contribution Analysis. Sandler O'Neill reviewed the relative contributions
to be made by Reliance and North Fork to the combined institution based on data
at and for the twelve months ended June 30, 1999. This analysis indicated that
the implied contributions to the combined entity were as follows:
<TABLE>
<CAPTION>
RELIANCE NORTH FORK(1)
-------- -------------
<S> <C> <C>
Total assets................................................ 15.7% 84.3%
Total net loans............................................. 12.0 88.0
Goodwill.................................................... 39.8 60.2
Total deposits.............................................. 16.9 83.1
Total borrowings............................................ 14.6 85.4
Tangible equity............................................. 9.7 90.3
Total equity................................................ 12.7 87.3
Normalized GAAP earnings for the quarter ended June 30,
1999...................................................... 7.5 92.5
Normalized cash earnings for the quarter ended June 30,
1999...................................................... 8.7 91.3
Percentage of pro forma shares owned(2)..................... 9.4 90.6
</TABLE>
- ---------------
(1) Includes the pro forma impact of North Fork's pending acquisition of JSB on
a pooling-of-interests accounting basis.
(2) Determined using a fixed exchange ratio of 2.0.
In connection with rendering its August 30, 1999 opinion, Sandler O'Neill
reviewed, among other things: (1) the merger agreement and exhibits thereto; (2)
the stock option agreement, dated August 30, 1999, between Reliance and North
Fork; (3) certain publicly available financial statements of Reliance and other
historical financial information provided by Reliance that they deemed relevant;
(4) certain publicly available financial statements of North Fork and other
historical financial information provided by North Fork that they deemed
relevant; (5) certain publicly available financial statements of JSB that they
deemed relevant; (6) certain internal financial analyses and forecasts of
Reliance prepared by and reviewed with management of Reliance and the views of
senior management of Reliance, based on certain limited discussions with certain
members of senior management, regarding Reliance's past and current business,
financial condition, results of operations and future prospects; (7) certain
internal 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,
based on certain limited discussions with certain members of senior management,
regarding North Fork's past and current business, financial condition, results
of operations and future prospects, including the impact of North Fork's pending
acquisition of JSB; (8) the pro forma impact of the merger; (9) the publicly
reported historical price and trading activity for Reliance's and North Fork's
common stock, including a comparison of certain financial and stock market
information for Reliance and North Fork with similar publicly available
information for certain other companies the securities of which are publicly
traded; (10) the financial terms of recent business combinations in the savings
institution industry, to the extent publicly available; (11) the current market
environment generally and the banking environment in particular; and (12) such
other information, financial studies, analyses and investigations and financial,
economic and market criteria as they considered relevant.
In connection with rendering its updated opinion included as Appendix C to
this proxy statement-prospectus, Sandler O'Neill confirmed the appropriateness
of its reliance on the analyses used to render its August 30, 1999 opinion by
performing procedures to update certain of such analyses and by reviewing the
assumptions upon which such analyses were based and the other factors considered
in rendering its opinion.
In performing its reviews and analyses, Sandler O'Neill assumed and relied
upon the accuracy and completeness of all the financial information, analyses
and other information that was publicly available or otherwise furnished to,
reviewed by or discussed with it, and Sandler O'Neill did not assume any
responsibility or liability for independently verifying the accuracy or
completeness of any of such information. Sandler O'Neill did not make an
independent evaluation or appraisal of the assets, the collateral securing
assets or the liabilities, contingent or otherwise, of Reliance or North Fork or
any of their respective subsidiaries, or the
33
<PAGE> 41
collectibility of any such assets, nor was it furnished with any such
evaluations or appraisals. Sandler O'Neill is not an expert in the evaluation of
allowances for loan losses and it has not made an independent evaluation of the
adequacy of the allowance for loan losses of Reliance or North Fork, nor has it
reviewed any individual credit files relating to Reliance or North Fork. With
Reliance's consent, Sandler O'Neill has assumed that the respective allowances
for loan losses for both Reliance and North Fork are adequate to cover such
losses and will be adequate on a pro forma basis for the combined entity. In
addition, Sandler O'Neill has not conducted any physical inspection of the
properties or facilities of Reliance or North Fork. With respect to all
financial projections reviewed with each company's management and used by
Sandler O'Neill in its analyses, Sandler O'Neill assumed that they reflected the
best currently available estimates and judgments of the respective managements
of the respective future financial performances of Reliance and North Fork and
that such performances will be achieved. Sandler O'Neill expressed no opinion as
to such financial projections or the assumptions on which they were based. With
respect to North Fork's pending acquisition of JSB, Sandler O'Neill, with
Reliance's consent, made no independent investigation of JSB and relied solely
on information and analyses provided by North Fork with respect to JSB and the
merger.
Sandler O'Neill's opinion was necessarily based upon market, economic and
other conditions as they existed on, and could be evaluated as of, the date of
its opinion. Sandler O'Neill assumed, in all respects material to its analysis,
that all of the representations and warranties contained in the merger agreement
and all related agreements are true and correct, that each party to such
agreements will perform all of the covenants required to be performed by such
party under such agreements and that the conditions precedent in the merger
agreement are not waived. Sandler O'Neill also assumed, with Reliance's consent,
that there has been no material change in Reliance's or North Fork's assets,
financial condition, results of operations, business or prospects since the date
of the last publicly filed financial statements available to them, that Reliance
and North Fork will remain as going concerns for all periods relevant to its
analyses, and that the merger will be accounted for using the purchase method of
accounting and will qualify as a tax-free reorganization for federal income tax
purposes.
Reliance has agreed to pay Sandler O'Neill a transaction fee in connection
with the merger, a substantial portion of which is contingent upon the closing
of the merger. Based on the closing price of North Fork common stock on January
7, 2000 (the latest practicable date prior to the date of this proxy statement-
prospectus), Reliance would pay Sandler O'Neill a transaction fee of
approximately $3.2 million, of which approximately $920,000 has been paid and
the balance will be paid when the merger is closed. Reliance has also paid
Sandler O'Neill a fee of $200,000 for rendering its fairness opinion. Reliance
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.
Sandler O'Neill has in the past provided certain other investment banking
services to Reliance and has received compensation for such services. In the
ordinary course of its business as a broker-dealer, Sandler O'Neill may also
purchase securities from and sell securities to Reliance and North Fork and may
actively trade the equity or debt securities of Reliance and North Fork and
their respective affiliates for its own account and for the accounts of
customers and, accordingly, may at any time hold a long or short position in
such securities. Since January 1, 1998, Reliance has paid Sandler O'Neill an
aggregate of approximately $576,000, of which approximately $568,000 is related
to Sandler O'Neill's services as placement agent in connection with Reliance's
issuance of certain trust preferred securities in May 1998.
CONVERSION OF STOCK
At the effective time of the merger, each share of Reliance common stock
outstanding, other than the shares described in the following sentence, will be
converted into the right to receive 2.0 shares of North Fork common stock.
Shares of Reliance common stock held by North Fork or Reliance or any subsidiary
of either company will not be converted into the right to receive North Fork
common stock, except, in both cases, for shares held in a fiduciary capacity for
the benefit of third parties and shares held in respect of a debt previously
contracted.
34
<PAGE> 42
BECAUSE THE EXCHANGE RATIO IS FIXED AND BECAUSE THE MARKET PRICE OF NORTH
FORK COMMON STOCK MAY FLUCTUATE PRIOR TO THE EFFECTIVE TIME, THE VALUE OF THE
SHARES OF NORTH FORK COMMON STOCK THAT HOLDERS OF RELIANCE COMMON STOCK WILL
RECEIVE IN THE MERGER MAY INCREASE OR DECREASE PRIOR TO AND FOLLOWING THE
MERGER.
No fractional shares of North Fork common stock will be issued to any
holder of Reliance common stock upon completion of the merger. For each
fractional share that would otherwise be issued, North Fork will pay cash in an
amount equal to the fraction multiplied by the average of the closing sale
prices of North Fork common stock as reported on the NYSE for the 5 consecutive
trading days immediately preceding the closing date of the merger. No interest
will be paid or accrued on cash payable to holders in lieu of fractional shares.
Each share of North Fork common stock issued and outstanding immediately
prior to the effective time will remain issued and outstanding as one share of
common stock of the combined company immediately after completion of the merger.
For a description of North Fork common stock and a description of the
differences between the rights of the holders of Reliance common stock and
holders of North Fork common stock, see "Description of North Fork Capital
Stock" on page 65 and "Comparison of Stockholder Rights" on page 66.
TREATMENT OF OPTIONS
Each outstanding option to acquire Reliance common stock granted under
Reliance's stock option and incentive plans will be converted automatically at
the effective time of the merger into an option to purchase North Fork common
stock and will continue to be governed by the terms of the Reliance stock plan
and related grant agreements under which it was granted, except that:
- The number of shares of North Fork common stock subject to the new North
Fork stock option will be equal to the product of the number of shares of
Reliance common stock subject to the Reliance stock option and the
exchange ratio, rounded to the nearest whole share, and
- The exercise price per share of North Fork common stock subject to the
new North Fork stock option will be equal to the exercise price per share
of Reliance common stock under the Reliance stock option divided by the
exchange ratio, rounded to the nearest whole cent.
In any event, stock options that are incentive stock options under the Internal
Revenue Code of 1986, as amended, will be adjusted in the manner prescribed by
the Internal Revenue Code.
EXCHANGE OF STOCK CERTIFICATES
At or prior to the completion of the merger, North Fork will deposit with a
bank or trust company certificates representing the shares of North Fork common
stock and the cash in lieu of any fractional shares to be issued in the merger
in exchange for outstanding shares of Reliance common stock. The bank or trust
company will act as the exchange agent for the benefit of the holders of
certificates of Reliance common stock.
As soon as practicable after the completion of the merger, but in no event
later than 3 business days thereafter, a form of transmittal letter will be
mailed by the exchange agent to each Reliance stockholder. This transmittal
letter will contain instructions for the surrender of certificates representing
Reliance common stock in exchange for shares of North Fork common stock and any
cash in lieu of fractional shares.
YOU SHOULD NOT RETURN YOUR RELIANCE COMMON STOCK CERTIFICATES WITH THE
ENCLOSED PROXY AND YOU SHOULD NOT FORWARD THEM TO THE EXCHANGE AGENT UNTIL YOU
RECEIVE A LETTER OF TRANSMITTAL AFTER COMPLETION OF THE MERGER.
Until you surrender your Reliance stock certificates for exchange after
completion of the merger, you will accrue but will not be paid any dividends or
other distributions declared after the effective time with respect to North Fork
common stock into which your shares have been converted. When you surrender your
certificates, the combined company will pay any unpaid dividends or other
distributions, without interest. After the effective time, there will be no
transfers on the stock transfer books of Reliance of any shares of Reliance
common stock. If certificates representing shares of Reliance common stock are
presented for transfer after
35
<PAGE> 43
the completion of the merger, they will be canceled and exchanged for a
certificate representing the applicable number of shares of North Fork common
stock.
If a certificate for Reliance common stock has been lost, stolen or
destroyed, the exchange agent will issue the consideration properly payable
under the merger agreement upon receipt of appropriate evidence as to that loss,
theft or destruction, appropriate evidence as to the ownership of that
certificate by the claimant, and appropriate and customary indemnification.
EFFECTIVE TIME
The effective time of the merger will be the time and date indicated on the
certificate of merger that we will file with the Secretary of State of the State
of Delaware on the day we complete the merger. We will complete the merger on
the first day which is both the last business day of the month and at least two
business days after all the conditions to the merger set forth in the merger
agreement have first been satisfied or waived, unless we agree otherwise.
We anticipate that the merger will be completed during the first quarter of
2000. However, completion of the merger could be delayed if there is a delay in
satisfying any conditions to the merger. There can be no assurances as to
whether, or when, North Fork and Reliance will complete the merger. If the
merger is not completed on or before June 30, 2000, either North Fork or
Reliance may terminate the merger agreement, unless the failure to complete the
merger by that date is due to the failure of the party seeking to terminate the
merger agreement to perform its covenants in the merger agreement. See
"-- Conditions to the Completion of the Merger" on page 36 and "-- Regulatory
Approvals Required for the Merger" on page 40.
CHANGING THE METHOD OF EFFECTING THE COMBINATION
North Fork may, at any time, change the method of effecting the combination
of Reliance and North Fork. However, no change may (a) alter or change the
amount or kind of consideration to be issued to Reliance stockholders as
provided for in the merger agreement, (b) adversely affect the tax treatment of
Reliance stockholders as a result of receiving the merger consideration, or (c)
impede or delay completion of the merger.
CONDITIONS TO THE COMPLETION OF THE MERGER
Completion of the merger is subject to various conditions. While it is
anticipated that all such conditions will be satisfied, there can be no
assurance as to whether or when all of such conditions will be satisfied or,
where permissible, waived.
The respective obligations of North Fork and Reliance to complete the
merger are subject to the following conditions:
(1) approval of the merger agreement by Reliance's stockholders;
(2) receipt of all required regulatory approvals and expiration of all
related statutory waiting periods;
(3) absence of any order, decree or injunction of a court or agency of
competent jurisdiction which prohibits the completion of the merger or the
bank merger;
(4) absence of any statute, rule or regulation which prohibits,
restricts or makes illegal completion of the merger or the bank merger;
(5) effectiveness of the registration statement for the North Fork
shares to be issued in the merger;
(6) approval by the NYSE of listing of the shares of North Fork common
stock to be issued in the merger, subject to official notice of issuance;
(7) accuracy of the other party's representations and warranties
contained in the merger agreement as of the dates specified therein,
except, in the case of most of such representations and warranties, where
36
<PAGE> 44
the failure to be so accurate would not be reasonably likely to have a
"material adverse effect" on the party making such representations and
warranties (see "-- Representations and Warranties" on page 37), and the
performance by the other party of its obligations contained in the merger
agreement in all material respects;
(8) the receipt by such party of an opinion of its counsel
substantially to the effect that the merger will be treated for federal
income tax purposes as a reorganization within the meaning of Section
368(a) of the Internal Revenue Code;
(9) the receipt by the other party of all third-party consents and
approvals required to complete the merger, except where failure to obtain
such consents or approvals would not have a "material adverse effect" on
such party; and
(10) the absence of any pending proceeding by any government entity
seeking an injunction to prevent the merger or the bank merger.
REPRESENTATIONS AND WARRANTIES
Each of Reliance and North Fork has made representations and warranties to
the other in the merger agreement as to, among other things,
- corporate existence, good standing and qualification to conduct business,
- due authorization, execution, delivery and enforceability of the merger
agreement,
- capital structure,
- governmental and third-party consents necessary to complete the merger,
- absence of any violation of agreements or law or regulation as a result
of the merger,
- compliance with laws,
- SEC and regulatory filings,
- financial statements,
- absence of material adverse changes,
- derivative transactions,
- employee benefit matters,
- environmental matters,
- asset quality,
- loan portfolio,
- tax treatment of the merger,
- absence of legal proceedings and regulatory actions,
- fees payable to financial advisors in connection with the merger,
- tax matters, and
- "Year 2000" matters.
North Fork has also made representations and warranties to Reliance with respect
to the validity of the shares of North Fork common stock to be issued in
connection with the merger. Reliance has also made representations and
warranties to North Fork with respect to (i) material contracts, (ii) investment
securities, (iii) inapplicability of state anti-takeover laws, (iv) receipt of a
fairness opinion, (v) changes to Reliance's rights plan to prevent a triggering
of such plan and (vi) equity and real estate investments.
Most of the representations and warranties of the parties will be deemed to
be true and correct unless the totality of any facts, circumstances or events
inconsistent with any such representations or warranties has had or would be
reasonably likely to have a material adverse effect on the business, assets,
liabilities, financial condition or results of operations of the party making
such representations and warranties and its subsidiaries taken as a whole or on
the ability of such party and its subsidiaries to consummate the transactions
contemplated by the merger agreement. In determining whether a material adverse
effect has occurred or is likely, the parties will disregard any effects
resulting from any (i) changes in banking laws, rules or regulations, (ii)
changes in generally accepted accounting principles or regulatory accounting
principles that apply to banks, thrifts or their holding companies generally,
and (iii) changes in interest rates, except in each
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<PAGE> 45
case to the extent that any such changes affect a party to a materially greater
extent than they affect banks, thrifts or their holding companies generally,
and, with respect to clause (iii), except to the extent such changes have had a
material adverse effect on the credit quality of such party's assets.
CONDUCT OF BUSINESS PENDING THE MERGER
Each of the parties has agreed, during the period from the date of the
merger agreement to the completion of the merger (except as expressly provided
in the merger agreement and except to the extent required by law or regulation
or by regulatory authorities), to conduct its business in the ordinary course
consistent with past practice, and Reliance has agreed to use its best efforts
to:
- preserve its business organization and that of its subsidiaries intact,
- keep available to itself and to North Fork the present services of the
employees of Reliance and its subsidiaries, and
- preserve for itself and North Fork the goodwill of its customers and its
subsidiaries' customers and others with whom business relationships
exist.
In addition, each of the parties has agreed that it will not, and will not
permit any of its subsidiaries to, without the prior consent of the other party,
(1) effect any change in its certificate of incorporation or bylaws,
except that North Fork may increase its authorized capital stock and change
the par value of its common stock;
(2) take any action that is intended or may reasonably be expected to
result in any of such parties' representations and warranties being or
becoming untrue in any material respect, or in any conditions to the merger
not being satisfied;
(3) in the case of Reliance, declare or pay any dividend or make any
distribution on its capital stock, other than normal quarterly dividends
not in excess of $.21 per share, and in the case of North Fork, declare or
pay any extraordinary or special dividends or make any extraordinary or
special distributions on its capital stock;
(4) except as required by generally accepted accounting principles,
change its methods of accounting; or
(5) take or cause to be taken any action that would prevent the merger
from qualifying as a reorganization within the meaning of Section 368(a) of
the Internal Revenue Code.
Reliance has agreed to additional covenants that place restrictions on the
conduct of the business of Reliance and its subsidiaries, including specific
covenants providing that Reliance and its subsidiaries will not, without the
prior consent of North Fork,
(1) (i) split, combine or reclassify any share of its capital stock;
(ii) redeem or otherwise acquire any shares of capital stock of Reliance or
any of its subsidiaries; or (iii) issue or sell, or authorize the issuance
or sale of, any shares of Reliance capital stock or any securities
convertible into, or any rights or options to acquire, any such shares,
except for the issuance of Reliance common stock upon the exercise of
outstanding options issued under employee benefit plans, programs or
arrangements in accordance with their present terms;
(2) enter into any new line of business;
(3) other than in the ordinary course of business consistent with
prudent banking practices, incur any indebtedness for borrowed money or
assume or guarantee the obligations of any third party;
(4) acquire or agree to acquire any business or any corporation,
partnership or other business organization or division thereof, or acquire
any assets which would be material to Reliance, other than in connection
with foreclosures, settlements in lieu of foreclosures or troubled loan or
debt restructurings in the ordinary course of business consistent with
prudent banking practices;
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<PAGE> 46
(5) make any capital expenditures, other than in the ordinary course
of business or as necessary to maintain existing assets in good repair and
which do not exceed $500,000 in the aggregate;
(6) make any equity investment or commitment to invest in real estate
or in any real estate development project, other than in connection with
foreclosures, settlements in lieu of foreclosures or troubled loan or debt
restructurings in the ordinary course of business consistent with prudent
banking practices;
(7) except as required by applicable law or as required to maintain
qualification pursuant to the Internal Revenue Code of 1986, as amended,
adopt, amend, renew or terminate any employee benefit plan or any
agreement, arrangement, plan or policy between Reliance or any of its
subsidiaries and any 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 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 in effect as of the date of the merger agreement;
(8) other than in prior consultation with North Fork, restructure or
materially change its investment securities portfolio or the manner in
which the portfolio is classified or reported;
(9) file any application to relocate or terminate the operations of
any banking office of Reliance Federal;
(10) other than in the ordinary course of business consistent with
past 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
(11) 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.
After entering into the merger agreement, Reliance, with the consent of
North Fork, amended the employment agreements and change in control agreements
among Reliance and certain of its executive officers to provide for possible
acceleration of the timing of certain payments under those agreements. See
"-- Interests of Certain Persons in the Merger" on page 48.
NO SOLICITATION BY RELIANCE
Reliance has agreed that it will not authorize its officers, directors or
agents to (i) solicit, initiate or encourage or facilitate any inquiries or the
making of any "takeover proposal," (ii) recommend or endorse any takeover
proposal, or (iii) engage in any negotiations or discussions with, or provide
any confidential information to, any person relating to any takeover proposal.
"TAKEOVER PROPOSAL" means any tender or exchange offer or proposal for a merger
or other business combination involving, or any proposal or offer to acquire in
any manner a substantial portion of the assets of or a substantial equity
interest in, Reliance or any of its subsidiaries, other than transactions
contemplated by the merger agreement or the stock option agreement.
However, under the merger agreement, Reliance is permitted to furnish
information to, and enter into discussions or negotiations with, a third party
making a takeover proposal if:
- Reliance receives from such third party an unsolicited "superior
proposal" of the type described below prior to the approval of the merger
agreement by Reliance stockholders,
- the Reliance board of directors concludes in good faith, after receiving
advice from its outside counsel, that Reliance must do so in order to
comply with its fiduciary duties under applicable law, and
- prior to doing so, Reliance enters into reasonably customary
confidentiality and standstill agreements with such third party.
Reliance is required to notify North Fork immediately if any such
negotiations or discussions are sought to be initiated or continued in respect
of any such takeover proposal, together with all of the relevant details of
39
<PAGE> 47
the negotiations or discussions. Reliance also may communicate information about
any takeover proposal to its stockholders if its board of directors determines,
based on advice of outside counsel, that such communication is required under
applicable law.
"SUPERIOR PROPOSAL" means any bona fide written takeover proposal for all
outstanding shares of Reliance common stock
- on terms that the Reliance board of directors determines in its good
faith judgment (after consultation with a financial advisor of nationally
recognized reputation and taking into account all the terms and
conditions of the takeover proposal deemed relevant by the board,
including the consideration to be paid, any break-up fees, expense
reimbursement provisions, conditions to consummation, and the ability of
the party making such proposal to obtain financing therefor) are more
favorable from a financial point of view to Reliance stockholders than
the merger, and
- that constitutes a transaction that, in the good faith judgment of the
Reliance board of directors, is reasonably likely to be consummated on
its terms, taking into account all legal, financial, regulatory and other
aspects of such proposal.
REGULATORY APPROVALS REQUIRED FOR THE MERGER
Completion of the merger and the bank merger is subject to a number of
regulatory approvals and consents.
The merger is subject to the prior approval of the Federal Reserve Board
under the Bank Holding Company Act of 1956, as amended (the "BHC ACT"), and
regulations of the Federal Reserve Board, which approval was granted on January
10, 2000. In reviewing applications under the BHC Act, the Federal Reserve
Board:
- considers whether the merger can reasonably be expected to produce
benefits to the public that outweigh possible adverse effects, and
- evaluates the financial and managerial resources of North Fork, including
its subsidiaries, and any company to be acquired, and the effect of the
merger on those resources.
The bank merger is subject to the prior approval of the FDIC under the Bank
Merger Act, which approval was granted on December 30, 1999. 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,
- 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 completed 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.
The bank merger also is subject to the notification requirements of the
Office of Thrift Supervision under the Home Owners' Loan Act of 1933, as
amended, and Office of Thrift Supervision regulations governing merger or
conversions by a savings association, because the resulting institution in the
bank merger will not be
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<PAGE> 48
a federal savings bank. The parties provided prior notice of the merger to the
Office of Thrift Supervision on October 12, 1999.
In addition, the bank merger is also subject to the prior approval of the
New York State Banking Department (the "BANKING DEPARTMENT") under certain
provisions of the New York Banking Law (the "NYBL"), which approval was granted
on December 31, 1999. In determining whether to approve the application for the
merger of Reliance Federal Savings Bank with and into North Fork Bank, the
Banking Department considers, among other factors:
- whether the bank 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 bank 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 also considers the public interest and the needs and
convenience thereof. Further, it is the policy of the State of New York to:
- ensure the safe and sound conduct of banking organizations,
- conserve assets of banking organizations,
- prevent hoarding of money,
- eliminate unsound and destructive competition among banking
organizations, and
- maintain public confidence in the business of banking and protect the
public interest and the interests of depositors, creditors, and
stockholders.
Under the Community Reinvestment Act of 1977, as amended, 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
Reliance Federal Savings Bank 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 filed the primary regulatory applications on October 12, 1999.
As of the date of this document, we have received all of these approvals. North
Fork is also filing a change in control application with the Banking Department
in connection with its indirect acquisition of CBMC, Inc., a New York State
licensed casher of checks and a wholly owned subsidiary of Reliance Federal.
North Fork is not aware of any other regulatory approvals that would be required
for completion of the merger or the bank merger, except as described above.
Should any other approvals be required, it is presently contemplated that such
approvals would be sought. There can be no assurance that any other approvals,
if required, will be obtained.
The merger cannot proceed in the absence of the receipt of all requisite
regulatory approvals and the expiration of all related waiting periods. See
"-- Conditions to the Completion of the Merger" on page 36 and "-- Termination
of the Merger Agreement" on page 43. There can 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.
MATERIAL FEDERAL INCOME TAX CONSEQUENCES
The following is a discussion of the federal income tax consequences of the
merger to North Fork, Reliance and holders of Reliance common stock. This
discussion is based upon the Internal Revenue Code of 1986, as amended, the
regulations of the United States Treasury Department, Internal Revenue Service
rulings, and judicial and administrative rulings and decisions in effect on the
date of this proxy statement-prospectus. These authorities may change at any
time, possibly retroactively, and any change could affect the continuing
validity of this discussion. This discussion summarizes the opinions of Skadden,
Arps, Slate Meagher & Flom LLP, counsel to North Fork, and Muldoon, Murphy &
Faucette LLP, counsel to Reliance. This discussion does not address any tax
consequences arising under the laws of any state, locality or foreign
41
<PAGE> 49
jurisdiction, and accordingly, is not a comprehensive description of all of the
tax consequences that may be relevant to any given Reliance stockholder.
This discussion assumes that Reliance stockholders hold their shares of
Reliance common stock as capital assets and does not address the tax
consequences that may be relevant to a particular stockholder receiving special
treatment under some United States federal income tax laws. Stockholders
receiving this special treatment include but are not limited to:
- foreign persons;
- financial institutions;
- tax-exempt organizations;
- insurance companies;
- traders in securities that elect mark-to-market;
- dealers in securities or foreign currencies;
- persons who received their Reliance common stock through the exercise of
employee stock options or otherwise as compensation; and
- persons who hold shares of Reliance common stock as part of a hedge,
straddle or conversion transaction.
In connection with the filing of the registration statement, North Fork has
received an opinion of Skadden, Arps, Slate, Meagher & Flom LLP, and Reliance
has received an opinion of Muldoon, Murphy & Faucette LLP, in each case dated
the date of this document, and rendered on the basis of facts, representations,
covenants and assumptions set forth or referred to in such opinions, which we
have assumed will be consistent with those existing at the time of the merger.
The respective opinions state that the merger will be treated for United States
federal income tax purposes as a reorganization within the meaning of Section
368(a) of the Internal Revenue Code, and, accordingly:
- no gain or loss will be recognized by North Fork or Reliance as a result
of the merger;
- no gain or loss will be recognized by a stockholder of Reliance who
exchanges all of such stockholder's shares of Reliance common stock
solely for shares of common stock of the combined company, except for any
gain recognized with respect to cash received instead of a fractional
share of the combined company's common stock;
- the aggregate tax basis of the shares of the combined company's common
stock received by a Reliance stockholder who exchanges all of the
stockholder's shares of Reliance common stock for shares of common stock
of the combined company in the merger will be the same as the aggregate
tax basis of the shares of Reliance common stock surrendered in exchange
therefor (reduced by any amount allocable to a fractional share of the
combined company's common stock for which cash is received);
- the holding period of the shares of the combined company's common stock
received by a Reliance stockholder will include the holding period of
shares of Reliance common stock surrendered in exchange therefor; and
- a Reliance stockholder who receives cash instead of a fractional share of
the combined company's common stock should recognize capital gain or loss
equal to the difference between the cash amount received and the portion
of the stockholder's tax basis in shares of Reliance common stock
allocable to the fractional share. This gain or loss will be long-term
capital gain or loss for United States federal income tax purposes if the
stockholder's holding period in the shares of Reliance common stock
exchanged for the cash in lieu of a fractional share of the combined
company's common stock is more than one year at the effective time of the
merger.
Neither North Fork nor Reliance will be obligated to complete the merger
unless, in the case of North Fork, it has received a further opinion of Skadden,
Arps, Slate, Meagher & Flom LLP, and, in the case of Reliance, it has received a
further opinion of Muldoon, Murphy & Faucette LLP, at the time of the merger,
each stating that the merger will be treated for United States federal income
tax purposes as a reorganization
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<PAGE> 50
within the meaning of Section 368(a) of the Internal Revenue Code. Such opinions
will be rendered on the basis of facts, representations, covenants and
assumptions set forth or referred to in such opinions.
In the event that (a) either North Fork or Reliance fails to receive on the
closing date of the merger its tax opinion described above, (b) such party
determines to waive the related condition to its obligation to complete the
merger, and (c) the material federal income tax consequences of the merger to
stockholders of Reliance are different from those described above, Reliance will
resolicit the approval of its stockholders prior to completing the merger.
Opinions of counsel are not binding on the Internal Revenue Service or the
courts. Neither North Fork nor Reliance has requested, nor will they request, an
advance ruling from the Internal Revenue Service as to the tax consequences of
the merger. Accordingly, there can be no assurance that the Internal Revenue
Service will not challenge the conclusions reflected in such opinions or that a
court will not sustain such a challenge.
TAX MATTERS ARE VERY COMPLICATED, AND THE TAX CONSEQUENCES OF THE MERGER TO
EACH RELIANCE STOCKHOLDER WILL DEPEND ON THE FACTS OF THAT STOCKHOLDER'S
SITUATION. RELIANCE STOCKHOLDERS ARE ENCOURAGED TO CONSULT THEIR OWN TAX
ADVISORS REGARDING THE SPECIFIC TAX CONSEQUENCES OF THE MERGER, INCLUDING THE
APPLICABILITY AND EFFECT OF ANY FEDERAL, STATE, LOCAL AND FOREIGN INCOME AND
OTHER TAX LAWS.
TERMINATION OF THE MERGER AGREEMENT
General. The merger agreement may be terminated at any time prior to
completion of the merger, whether before or after the approval of the merger by
the stockholders of Reliance, in any of the following ways:
- by mutual consent of North Fork and Reliance;
- by either North Fork or Reliance, 60 days after the date on which any
application for a required regulatory approval is denied or is withdrawn
at the request of the governmental entity which must grant such approval,
unless within the 60-day period a petition for rehearing or an amended
application has been filed with such governmental entity, except that no
party may so terminate the merger agreement if such denial or request for
withdrawal is a result of the failure of such party to perform or observe
its covenants contained in the merger agreement;
- by either North Fork or Reliance, if any governmental entity of competent
jurisdiction has issued a final nonappealable order enjoining or
otherwise prohibiting the merger;
- by either North Fork or Reliance, if the merger is not completed on or
before June 30, 2000, unless the failure of the closing to occur by this
date is due to the failure of the party seeking to terminate the merger
agreement to perform its covenants and agreements contained in the merger
agreement;
- by either North Fork or Reliance, if any approval of the stockholders of
Reliance required for completion of the merger has not been obtained;
- by either North Fork or Reliance, if (i) the terminating party is not
then in material breach of any representation, warranty, covenant or
other agreement contained in the merger agreement and (ii) there has been
a material breach of any of the representations, warranties, covenants or
agreements of the other party in the merger agreement, which breach is
not cured within 30 days following written notice to the party committing
the breach, or which breach, by its nature, cannot be cured prior to the
closing date of the merger, and which breach, individually or together
with all other breaches, would, if occurring or continuing on the closing
date, result in the failure of the condition relating to breaches of
representations, warranties and covenants described under "-- Conditions
to Completion of the Merger";
- by North Fork, if the Reliance board of directors withdraws, modifies or
amends in any manner adverse to North Fork its recommendation that its
stockholders approve the merger; or
- by Reliance, if the price of North Fork common stock declines below
certain levels established by formulas set forth in the merger agreement,
as described in the following paragraphs.
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<PAGE> 51
Price-Based Termination. According to the terms of the merger agreement,
Reliance would have had the right to terminate the merger agreement if both of
the following conditions had been satisfied:
(i) the average closing price of North Fork common stock as reported
on the New York Stock Exchange for the 20 consecutive trading days ending
on the business day prior to the date on which the last of the required
regulatory approvals was received was less than $16.20, and
(ii) the average closing price of North Fork as so computed
represented a decline from North Fork's closing stock price of $19.0625 on
August 27, 1999 that exceeded, by more than fifteen percentage points, the
decline in a selected index of bank and thrift stocks over the same period,
as measured in the manner described below.
In order to exercise this termination right, Reliance would have had to
give prompt written notice to North Fork at any time during the
five-business-day period beginning on the first business day after the date on
which the last of the required regulatory approvals was received, without regard
to any required waiting periods (such date is referred to as the "valuation
date"). During the five-business-day period beginning with its receipt of
Reliance's notice, North Fork would have had the option to avoid termination by
electing to increase the exchange ratio to equal the lesser of
(1) the quotient obtained by dividing $32.4063 by the average closing
price of North Fork described above, or
(2) the product of (x) the index ratio (as defined below) and (y) 2.0,
divided by the North Fork ratio (as defined below).
The last required regulatory approval was received on January 10, 2000.
Accordingly, North Fork's average closing price as computed in accordance with
the relevant provisions of the merger agreement was $17.33; and, therefore, the
test described above was not satisfied and Reliance will not have the
termination right described above.
The term "INDEX RATIO" means the final index price divided by the initial
index price, minus 0.15.
The term "NORTH FORK RATIO" means the quotient obtained by dividing the
North Fork average closing price, calculated as described above, by $19.0625.
The term "FINAL INDEX PRICE" means the sum of the final prices for each
company comprising the index group below.
"FINAL PRICE," with respect to any company belonging to the index group,
means the product of (x) the average of the daily closing sales prices of a
share of common stock of such company (and if there is no closing sales price on
any such day, then the mean between the closing bid and the closing asked prices
on that day), as reported on the consolidated transaction reporting system for
the market or exchange on which such common stock is principally traded, for the
20 consecutive trading days immediately preceding the day prior to the date on
which the last of the required regulatory approvals is received, and (y) the
weighting set forth opposite such company's name below.
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<PAGE> 52
The term "INDEX GROUP" means the 20 financial institution holding companies
listed below, weighted (on the basis of outstanding shares) as follows:
<TABLE>
<CAPTION>
HOLDING COMPANY WEIGHTING
- --------------- ---------
<S> <C>
Astoria Financial Corporation............................... 4.76%
CCB Financial Corporation................................... 3.45%
Charter One Financial, Inc.................................. 14.35%
Chittenden Corporation...................................... 2.45%
Commerce Bancorp, Inc./NJ................................... 2.41%
First Commonwealth Financial Corporation.................... 2.69%
FirstMerit Corporation...................................... 7.86%
Fulton Financial Corporation................................ 6.00%
GreenPoint Financial Corp................................... 9.50%
Independence Community Bank Corp............................ 5.91%
Keystone Financial, Inc..................................... 4.21%
M & T Bank Corporation...................................... 0.68%
Peoples Heritage Financial Group, Inc....................... 9.10%
Queens County Bancorp, Inc.................................. 1.86%
Richmond County Financial Corp.............................. 2.79%
Roslyn Bancorp, Inc......................................... 6.68%
Staten Island Bancorp, Inc.................................. 3.54%
Susquehanna Bancshares, Inc................................. 3.21%
Valley National Bancorp..................................... 5.25%
Webster Financial Corporation............................... 3.31%
------
100.00%
</TABLE>
The term "INITIAL INDEX PRICE" means the sum of the per share closing sales
prices of the common stock of each company comprising the index group multiplied
by the applicable weighting, as such prices are reported on the consolidated
transaction reporting system for the market or exchange on which such common
stock was principally traded on August 27, 1999.
The description in this section of Reliance's right to terminate the merger
agreement because of a decline of North Fork's stock price is not complete and
is qualified in its entirety by reference to the specific provisions of the
merger agreement.
Effect of Termination. If the merger agreement is terminated, it will
thereafter become void and there will be no liability on the part of North Fork
or Reliance or their respective officers or directors, except that:
- any such termination will be without prejudice to the rights of any party
arising out of the willful breach by the other party of any provision of
the merger agreement;
- certain provisions of the merger agreement relating to the payment of
fees and expenses and the confidential treatment of information will
survive the termination; and
- North Fork and Reliance each will bear its own expenses in connection
with the merger agreement and the transactions contemplated thereby,
except as otherwise provided therein.
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<PAGE> 53
EXTENSION, WAIVER AND AMENDMENT OF THE MERGER AGREEMENT
Extension and Waiver. At any time prior to the completion of the merger,
each of North Fork and Reliance may, to the extent legally allowed:
- extend the time for the performance of the obligations under the merger
agreement;
- waive any inaccuracies in the other party's representations and
warranties contained in the merger agreement; and
- waive the other party's compliance with any of its agreements contained
in the merger agreement, or waive compliance with any conditions to its
obligations to complete the merger.
Amendment. Subject to compliance with applicable law, North Fork and
Reliance may amend the merger agreement at any time before or after approval of
the merger agreement by Reliance stockholders. However, after any approval of
the merger agreement by Reliance stockholders, there may not be, without their
further approval, any amendment of the merger agreement that reduces the amount
or changes the form of the consideration to be delivered to the Reliance
stockholders.
EMPLOYEE BENEFIT PLANS AND EXISTING AGREEMENTS
Employee Benefit Plans. Except as described below with respect to the
Reliance employee stock ownership plan, the merger agreement provides that as
soon as practicable following the effective time of the merger, former employees
of Reliance who continue in employment with North Fork will be eligible to
participate in North Fork's employee benefit plans in which similarly-situated
North Fork employees participate. Until that time, North Fork will continue the
comparable plans of Reliance for the benefit of former employees of Reliance.
For purposes of determining an employee's eligibility to participate,
entitlement to benefits (except pension benefits) or vested percentage of
benefits under the North Fork employee benefit plans, North Fork will consider
the service a continuing employee had with Reliance prior to the merger. Former
employees of Reliance will also be given credit for any amounts paid under a
corresponding Reliance employee benefit plan for purposes of applying
deductibles, co-payments, and out-of-pocket maximums as though the employee had
paid the amounts in accordance with the terms and conditions of the applicable
North Fork plan.
Employee Stock Ownership Plan. The merger agreement provides that
Reliance's employee stock ownership plan will terminate as of the effective time
of the merger. Prior to the effective time, Reliance will make contributions to
the plan sufficient to enable the trustee to repay in full the loan originally
used to purchase the shares of Reliance common stock held by the plan. If, as a
result of limitations imposed by the Internal Revenue Code, the trustee cannot
repay in full the loan using contributions made to the plan by Reliance, then
the trustee will sell a number of shares held by the plan but not yet allocated
to the accounts of any participant sufficient to enable it to repay the loan.
Once the trustee repays the loan in full, the trustee will then allocate all
remaining unallocated shares of stock held by the employee stock ownership plan
to the accounts of eligible participants in accordance with the terms of the
plan document.
Existing Agreements. North Fork is obligated under the merger agreement to
honor, in accordance with their terms, all disclosed employment, severance and
other compensation agreements and arrangements between Reliance and its
employees and directors. Reliance has made or will make all applicable payments
under employment and change in control agreements at the closing date of the
merger, regardless of whether the covered individual continues in employment
with North Fork. See "-- Interests of Certain Persons in the Merger" on page 48.
The occurrence of the merger may cause payments under certain compensation
arrangements to be paid prior to the time originally anticipated by Reliance.
Vacation Pay and Pro Rata Bonuses. The merger agreement provides that upon
the closing date of the transactions contemplated by the merger agreement,
employees of Reliance and its subsidiaries be entitled to use or be paid for all
unused vacation as of the closing date of the merger.
In addition, the merger agreement provides that Reliance may pay bonuses to
its executive officers and employees in accordance with its past practices
through December 31, 1999. If the closing date of the merger
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<PAGE> 54
occurs after December 31, 1999, the executive officers and employees of Reliance
will be entitled to a pro rata bonus for the period of time from January 1,
2000, until the closing date of the merger.
STOCK EXCHANGE LISTING
North Fork common stock is listed on the NYSE. North Fork has agreed to use
all reasonable efforts to cause the shares of North Fork common stock to be
issued in the merger to be listed on the NYSE. It is a condition to completion
of the merger that those shares be listed on the NYSE, subject to official
notice of issuance.
EXPENSES
The merger agreement provides that each of North Fork and Reliance will pay
its own expenses in connection with the transactions contemplated by the merger
agreement, except that North Fork and Reliance will share equally the costs and
expenses of printing and mailing this proxy statement-prospectus to the
stockholders of Reliance, and all filing and other fees paid to the SEC or any
other government entity in connection with the merger and the other transactions
contemplated hereby.
DIVIDENDS
The merger agreement provides that, prior to the effective time:
- North Fork may not declare or pay any special dividends or distributions
on North Fork common stock; and
- Reliance may not declare or pay any dividends or distributions on its
capital stock, other than regular quarterly cash dividends on Reliance
common stock not in excess of $0.21 per share.
Prior to completion of the merger, North Fork and Reliance will coordinate
with each other the declaration, record and payment dates for the Reliance
common stock and the North Fork common stock so that Reliance stockholders and
North Fork stockholders will not receive more than one dividend for a single
quarter or fail to receive one dividend for any calendar quarter.
APPRAISAL RIGHTS
Reliance is organized under Delaware law. Under Delaware law, Reliance's
stockholders do not have any right to dissent from the merger and receive the
appraised value of their shares in connection with the merger.
ACCOUNTING TREATMENT
The merger will be accounted for as a "purchase," as such term is used
under GAAP, for accounting and financial reporting purposes. Reliance will be
treated as the acquired corporation for such purposes. Reliance's assets,
liabilities and other items will be adjusted to their estimated fair value on
the closing date of the merger and combined with the historical book values of
the assets and liabilities of North Fork. Applicable income tax effects of such
adjustments will be included as a component of the combined company's deferred
tax asset or liability. The difference between the estimated fair value of the
assets, liabilities and other items (adjusted as discussed above) and the
purchase price will be recorded as an intangible asset and amortized against the
combined company's earnings over a 20-year period following completion of the
merger. For further information concerning the amount of goodwill to be recorded
in connection with the merger and the amortization thereof, see Note 2 of Notes
to the Pro Forma Condensed Combined Financial Statements (Unaudited) on page 81.
The parties have prepared the unaudited pro forma financial information
contained in this proxy statement-prospectus using the purchase accounting
method to account for the merger. See "Pro Forma Condensed Combined Financial
Statements (Unaudited)" on page 76.
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<PAGE> 55
INTERESTS OF CERTAIN PERSONS IN THE MERGER
Certain members of Reliance's management and the Reliance board of
directors may have interests in the merger that are in addition to their
interest as Reliance stockholders generally. Directors of Reliance will serve as
directors or advisory directors of the combined company following the merger. In
addition, the completion of the merger will constitute a change in control of
Reliance and Reliance Federal for purposes of determining the entitlement of
certain executive officers of Reliance and Reliance Federal to severance and
other benefits. The members of the Reliance board of directors were aware of
these interests and considered them, among many other matters, in approving the
merger agreement and the transactions contemplated by the merger agreement. The
directors, officers and principal stockholders of Reliance and their associates
may have had in the past, and expect to have in the future, transactions in the
ordinary course of business with North Fork and its subsidiaries and affiliates.
Those transactions were, and are expected to be, on substantially the same terms
as those prevailing at the time for comparable transactions with others.
Employment, Change in Control, and Consulting Agreements. Reliance is a
party to employment agreements with Raymond L. Nielsen, Raymond A. Nielsen,
Gerald M. Sauvigne, Paul D. Hagan, Joseph F. Lavelle, and John F. Traxler. The
employment agreements with Messrs. Nielsen, Nielsen and Sauvigne provide each of
the executive officers with severance benefits equal to the greater of (i) the
remaining payments due for the remaining term of the agreement or (ii) five
times the executive's average annual compensation (as described in each of the
agreements) for the three preceding taxable years, together with continuation of
certain employee benefits, upon the executive's termination of employment
following a change in control of Reliance or Reliance Federal. The employment
agreements with Messrs. Hagan, Lavelle, and Traxler provide each of the
executive officers with severance benefits equal to the greater of (i) the
remaining payments due for the remaining term of the agreement or (ii) three
times the executive's average annual compensation (as described in each of the
agreements) for the two preceding taxable years, together with continuation of
certain employee benefits, upon the executive's termination of employment
following a change in control of Reliance or Reliance Federal. All of the
employment agreements also indemnify the executives for any excise tax imposed
by operation of Sections 280G and 4999 of the Code, any income, employment or
additional excise taxes imposed with respect to the indemnification of taxes and
any costs arising from any dispute regarding the amount of such taxes payable.
In addition, Reliance is a party to change in control agreements with 14
other executive officers. The change in control agreements provide each of the
executive officers with severance benefits equal to three times the executive's
average annual compensation (as described in each of the agreements) for the two
preceding taxable years, together with continuation of certain employee
benefits, upon the executive's termination of employment following a change in
control of Reliance or Reliance Federal. In certain instances, the severance
payments under the change in control agreements are limited to avoid the
creation of an "excess parachute" payment under Section 280G of the Code. The
agreements also provide for indemnification for any costs to the executive
arising from any dispute regarding any obligation to pay excise taxes.
Completion of the merger will constitute a change in control of Reliance
and Reliance Federal for purposes of these employment and change in control
agreements. Based on certain assumptions described below, the aggregate amounts
which would be payable to the executive officers with employment or change in
control agreements would be approximately $27 million. This estimated amount is
calculated based on estimates of the average annual compensation for each
individual and on the assumptions that the employment of these executives is
terminated in connection with the change in control and in circumstances
entitling them to the maximum benefits under their agreements.
Certain of the employment and change in control agreements were amended on
December 23, 1999, with the approval of North Fork, to provide that if the board
of directors of Reliance, in its sole discretion, determines that an event has
occurred which is reasonably likely to culminate in a change in control within
12 months and if in connection with such event the executive officer covered by
that agreement has received notice that his employment with Reliance will be
terminated effective on or after the effective date of the change in control,
the board of directors may authorize payment of the benefits, or any portion of
the benefits,
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<PAGE> 56
which would be payable under such agreement upon such change in control prior to
the consummation of the change in control.
In accordance with the provisions of the amended agreements, the board of
directors of Reliance determined that circumstances permitting advance payments
under the amended agreements existed and determined to make such advance
payments as described below. As a condition to that determination, North Fork
agreed, subject to certain exceptions, to indemnify Reliance for the full amount
of such payments and all associated costs in the event the merger agreement is
terminated under certain circumstances and Reliance is unable to recover any or
all of the payments from the executives who received such payments. In
accordance with the Reliance board's authorization described above, on December
30, 1999, payments of approximately $14.8 million in the aggregate were made to
10 executives, including Messrs. Raymond A. Nielsen, Gerald M. Sauvigne, Joseph
F. Lavelle, Paul D. Hagan and John F. Traxler. The amount of the payments
otherwise due to these 10 executives under their amended agreements upon
consummation of the merger will be reduced by the amount of such payments.
North Fork has entered into consulting agreements with 5 executive officers
of Reliance. Each agreement is effective at the effective time and is for a term
ranging from 6 months to 2 years. Pursuant to the agreements, the executive
agrees, among other things, to provide consulting services to North Fork and to
refrain from competing against North Fork during the term, and North Fork has
agreed, among other things, to pay to the executive a total consulting fee equal
to an amount ranging from six month's to one year's salary rate in effect for
such officer on the closing date.
Supplemental Retirement Agreements. Reliance Federal is a party to a
supplemental retirement agreement with each of Raymond A. Nielsen and Mr.
Sauvigne. The supplemental retirement agreements supplement the benefits
provided to Messrs. Nielsen and Sauvigne under the Reliance Federal Savings Bank
Supplemental Executive Retirement Plan. The agreements provide a fixed benefit
to each Mr. Nielsen and Mr. Sauvigne at their retirement upon or after attaining
age 65. The supplemental retirement agreements provide that, upon a change in
control of Reliance Federal, the executive may elect to receive the present
value of the normal retirement benefit payable under the agreement. Completion
of the merger will constitute a change in control of Reliance Federal for
purposes of these supplemental retirement agreements. The respective present
values of the retirement benefits anticipated to be payable to Messrs. Nielsen
and Sauvigne upon the change in control equal approximately $1,042,000 and
$378,000, respectively.
Stock-Based Rights. The merger agreement provides that, at the effective
time of the merger, each outstanding and unexercised option to acquire shares of
Reliance common stock granted under the Reliance stock plans will cease to
represent the right to acquire shares of Reliance common stock and will be
converted into and become a right to acquire shares of North Fork common stock,
and the Reliance stock plans will be assumed by North Fork. See "-- Conversion
of Stock" on page 34 and "Treatment of Options" on page 35.
At the effective time of the merger, all previously granted stock options
held by directors, officers and employees of Reliance will become exercisable in
accordance with the terms of the respective grants under the Reliance stock
plans. This includes stock options held by Raymond A. Nielsen and Messrs.
Sauvigne, Hagan, Lavelle and Traxler as follows:
Mr. Nielsen -- 68,448 shares subject to option;
Mr. Sauvigne -- 1,598 shares subject to option;
Mr. Hagan -- 12,428 shares subject to option;
Mr. Lavelle -- 2,756 shares subject to option; and
Mr. Traxler -- 46,157 shares subject to option.
Director Fee Continuation Agreements. Reliance Federal sponsors a
retirement and consultation plan for members of the Reliance Federal board of
directors who are not also employees of Reliance Federal. The directors'
retirement plan provides the covered director with a benefit following his
retirement from service with Reliance Federal upon or after attaining age 70 and
completing 10 years of service with Reliance Federal.
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<PAGE> 57
The directors' retirement plan provides that upon a change in control of
Reliance Federal each covered director will be deemed to have retired from
service and will receive an immediate payment equal to ten times the annual
retainer paid to the director at the time of the change of control. The total
benefits payable to the non-employee directors of Reliance Federal upon a change
of control under the directors' retirement plan equals $1.6 million.
Directorship and Establishment of Advisory Board. The merger agreement
provides that, at the effective time, North Fork will expand the North Fork
board of directors by one member and will appoint Raymond A. Nielsen to fill the
vacancy for a period of time of not less than three years.
In addition, the merger agreement provides that, at the effective time,
North Fork will appoint Mr. Sauvigne and all members of the Reliance board of
directors (other than Raymond A. Nielsen) who are willing to serve to an
advisory board of North Fork. Each of the members of the advisory board will
serve a three-year term and shall receive an annual retainer of $250.
Indemnification; Directors' and Officers' Liability Insurance. The merger
agreement provides that in the event of any threatened or actual claim or
proceeding in which any person who is or has been a director, officer or
employee of Reliance or any of its subsidiaries or predecessors is, or is
threatened to be, made a party based in whole or in part on, or pertaining to,
the fact that the person was a director, officer or employee of Reliance or its
subsidiaries or any of its predecessors, or the merger agreement, the option
agreement or the transactions contemplated by these agreements, North Fork will,
subject to the conditions set forth in the merger agreement, indemnify that
person to the fullest extent permitted by law against any liability or expense
incurred in connection with any of these claims or proceedings. The merger
agreement further provides that North Fork will, subject to the conditions set
forth in the merger agreement, use its best efforts to cause the persons serving
as officers and directors of Reliance immediately prior to the merger to be
covered for a period of at least six years following the effective time by
Reliance's directors' and officers' liability insurance policy, or any
equivalent substitute for that policy.
STOCK OPTION AGREEMENT
General. As a condition to entering into the merger agreement, North Fork
required that Reliance enter into the option agreement, which allows North Fork,
under certain circumstances, to purchase up to 1,708,297 shares of Reliance
common stock or a lesser or greater amount of shares that is 19.9% of the
outstanding Reliance common stock at the time the option is exercised, subject
to certain adjustments. The exercise price of the Reliance option is $29.00 per
share, subject to certain adjustments. The option may only be exercised upon the
occurrence of certain events which are described below.
Effect of Stock Option Agreement. We entered into the option agreement to
increase the likelihood that the merger will be completed in accordance with its
terms. The option agreement may have the effect of discouraging persons who
might be interested in acquiring all of or a significant interest in Reliance,
even if such persons were prepared to pay a higher price per share for Reliance
common stock than the value per share contemplated by the merger agreement. The
acquisition by a third party of Reliance or a significant interest in Reliance
or a significant portion of its consolidated assets, or an agreement to do so,
could cause the option to become exercisable and significantly increase the cost
to a potential acquiror. Such increased costs 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 Reliance
than it might otherwise have proposed to pay. Moreover, the management of
Reliance believes that the exercise of the option is likely to prohibit any
acquiror of Reliance from accounting for any acquisition of Reliance using the
pooling-of-interests accounting method for a period of two years. This could
discourage or preclude an acquisition by certain other banking organizations.
Terms of Stock Option Agreement. The following is a brief summary of
certain provisions of the option agreement, which is attached hereto as Appendix
B. The summary is not intended to be complete and is qualified by reference to
the complete text of the agreement.
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<PAGE> 58
If North Fork is not in material breach of the option agreement or the
merger agreement and if no injunction or other court order against delivery of
the shares covered by the option is in effect, North Fork may exercise the
option, in whole or in part and subject to regulatory approval, only if both an
initial triggering event and a subsequent triggering event occur prior to an
exercise termination event. For purposes of the option agreement:
(i) an "INITIAL TRIGGERING EVENT" means one of the following events:
(a) Reliance enters into an agreement to engage in an "acquisition
transaction," or the Reliance board of directors recommends that
stockholders of Reliance approve or accept an acquisition transaction;
(b) Reliance, without North Fork's prior written consent,
authorizes, recommends, proposes or publicly announces its intention to
authorize, recommend or propose an acquisition transaction, or the
Reliance board of directors publicly withdraws or modifies, or publicly
announces its intent to withdraw or modify, in any manner adverse to
North Fork, its recommendation that Reliance stockholders approve the
merger agreement;
(c) a third party acquires beneficial ownership of 10% or more of
the outstanding shares of Reliance common stock;
(d) a third party makes a bona fide proposal to Reliance or its
stockholders, by public announcement or written communication that
becomes the subject of public disclosure, to engage in an acquisition
transaction;
(e) Reliance breaches any covenant or obligation in the merger
agreement after an overture is made by a third party to engage in an
acquisition transaction, and following that breach North Fork would be
entitled to terminate the merger agreement; or
(f) any person, other than North Fork or any subsidiary of North
Fork, other than in connection with a transaction to which North Fork
has given its prior written consent, files an application or notice with
the Federal Reserve Board, the Office of Thrift Supervision or any other
U.S. federal or state bank regulatory authority for approval to engage
in an acquisition transaction.
(ii) As used above in (i), the term "ACQUISITION TRANSACTION" means:
(a) a merger, consolidation or similar transaction with Reliance or
any of its significant subsidiaries;
(b) an acquisition or assumption of all or substantially all of the
assets or deposits of Reliance or any of its significant subsidiaries;
(c) a purchase or other acquisition of securities representing 10%
or more of the voting power of Reliance; or
(d) any substantially similar transaction.
(iii) A "SUBSEQUENT TRIGGERING EVENT" will occur if either of the
following occurs:
(a) any person acquires beneficial ownership of 20% or more of the
then-outstanding shares of Reliance common stock; or
(b) the initial triggering event described in clause (i)(a) above
occurs, except that, for these purposes, the percentage referred to in
clause (c) of the definition of "acquisition transaction" set forth
above is 20%.
(iv) An "EXERCISE TERMINATION EVENT" means the earliest of:
(a) the effective time of the merger;
(b) termination of the merger agreement in accordance with its
terms if the termination occurs prior to the occurrence of an initial
triggering event, except in the case of the termination of the
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<PAGE> 59
merger agreement by North Fork as a result of a volitional breach by
Reliance of any of its covenants or agreements; or
(c) the date that is 15 months after the termination of the merger
agreement, if such termination follows the occurrence of an initial
triggering event or is a termination by North Fork as a result of a
volitional breach by Reliance of any of its covenants or agreements.
As of the date of this proxy statement-prospectus, to the knowledge of
Reliance and North Fork, no initial triggering event or subsequent triggering
event has occurred.
Repurchase of the Option. The option agreement permits North Fork to
require that Reliance repurchase the option and any shares issued under the
option, for a cash fee equal to the surrender price, if (a) Reliance completes a
merger, consolidation or similar transaction or any sale of substantially all of
its assets, or (b) any third party acquires beneficial ownership of 50% or more
of the outstanding Reliance common stock.
The "SURRENDER PRICE" is
- $13.88 million, plus
- if applicable, the aggregate purchase price previously paid by North Fork
to purchase any shares of any Reliance common stock under the option,
minus
- if applicable, the sum of (A) the excess of (1) the net cash amounts, if
any, received by North Fork pursuant to the arm's-length sale of Reliance
common stock under the option, over (2) the aggregate purchase price
previously paid by North Fork with respect to those Reliance shares, and
(B) the net cash amounts, if any, received by North Fork pursuant to an
arm's-length sale of a portion of the option.
Profit Limitation. The option agreement provides that the maximum
aggregate profit that North Fork may realize from the option is $17,350,000.
Adjustment. The option agreement provides for adjustment to the number of
shares and the exercise price of the option upon the occurrence of certain
changes to the capital structure of Reliance or certain other events or
transactions.
Regulatory Matters. Some rights and obligations of Reliance and North Fork
under the option agreement are subject to receipt of required regulatory
approvals. North Fork must obtain the approvals of the Federal Reserve Board and
the Office of Thrift Supervision to acquire more than 5% of the outstanding
shares of Reliance common stock.
RESTRICTIONS ON RESALES BY AFFILIATES
Shares of North Fork common stock to be issued to Reliance stockholders in
the merger have been registered under the Securities Act of 1933, as amended,
and may be traded freely and without restriction by those stockholders not
deemed to be affiliates (as that term is defined under the Securities Act) of
Reliance. Any subsequent transfer of shares, however, by any person who is an
affiliate of Reliance at the time the merger is submitted for a vote of the
Reliance stockholders will, under existing law, require either:
- the further registration under the Securities Act of the North Fork
common stock to be transferred,
- compliance with Rule 145 promulgated under the Securities Act, which
permits limited sales under certain circumstances, or
- the availability of another exemption from registration.
An "AFFILIATE" of Reliance is a person who directly, or indirectly through
one or more intermediaries, controls, is controlled by, or is under common
control with, Reliance. These restrictions are expected to apply to the
directors and executive officers of Reliance and the holders of 10% or more of
the outstanding Reliance common stock. The same restrictions apply to the
spouses and certain relatives of those persons and any trusts,
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estates, corporations or other entities in which those persons have a 10% or
greater beneficial or equity interest. North Fork will give stop transfer
instructions to the transfer agent with respect to the shares of North Fork
common stock to be received by persons subject to these restrictions, and the
certificates for their shares will be appropriately legended.
Reliance has agreed in the merger agreement to use its reasonable best
efforts to cause each person who is an affiliate of that party for purposes of
Rule 145 under the Securities Act, to deliver to North Fork a written agreement
intended to ensure compliance with the Securities Act.
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MANAGEMENT AND OPERATIONS FOLLOWING THE MERGER
AND THE JSB MERGER
BOARD OF DIRECTORS FOLLOWING THE MERGER AND THE JSB MERGER
Upon completion of the merger, North Fork's board of directors will be
expanded by one member, and Mr. Raymond A. Nielsen, President and Chief
Executive Officer of Reliance, will become a member of the North Fork board of
directors. Upon completion of the JSB merger, Mr. Park T. Adikes, the Chairman
and Chief Executive Officer of JSB, will become a member of the North Fork board
of directors.
CONSOLIDATION OF OPERATIONS; ESTIMATED COST SAVINGS AND REVENUE ENHANCEMENTS;
ESTIMATED EARNINGS PER SHARE
THIS SECTION CONTAINS CERTAIN FORWARD-LOOKING STATEMENTS WITH RESPECT TO
THE FINANCIAL CONDITION, RESULTS OF OPERATIONS, PLANS, OBJECTIVES, FUTURE
PERFORMANCE AND BUSINESS OF NORTH FORK FOLLOWING THE CONSUMMATION OF THE MERGER
AND THE JSB MERGER THAT ARE SUBJECT TO VARIOUS FACTORS WHICH COULD CAUSE ACTUAL
RESULTS TO DIFFER MATERIALLY FROM THE RESULTS CONTEMPLATED. SUCH FACTORS
INCLUDE, BUT ARE NOT LIMITED TO, THE POSSIBILITY THAT THE ANTICIPATED COST
SAVINGS, REVENUE ENHANCEMENTS AND TIMING MIGHT NOT BE REALIZED. SEE "FORWARD-
LOOKING STATEMENTS" ON PAGE 74. IN ADDITION, COMPLETION OF THE RELIANCE MERGER
IS NOT CONDITIONED UPON COMPLETION OF THE JSB MERGER, AND NORTH FORK INTENDS TO
COMPLETE THE RELIANCE MERGER REGARDLESS OF WHETHER ALL OF THE CONDITIONS TO THE
COMPLETION OF THE JSB MERGER HAVE BEEN SATISFIED. THE INFORMATION SET FORTH
BELOW ASSUMES THE COMPLETION OF BOTH THE RELIANCE MERGER AND THE JSB MERGER, AND
IF NORTH FORK COMPLETES THE MERGER WITHOUT COMPLETION OF THE JSB MERGER, THE
ESTIMATED AMOUNTS SET FORTH BELOW WOULD BE DIFFERENT BECAUSE, AMONG OTHER
THINGS, THE ANTICIPATED EFFECTS OF THE JSB MERGER WOULD NO LONGER BE APPLICABLE.
North Fork expects to achieve significant cost savings following the merger
and the JSB merger. The cost savings are expected to be derived from reductions
in personnel, elimination of selected branch offices located in communities in
which North Fork, JSB or Reliance branches are located, the integration of JSB's
and Reliance's data processing operations with those of North Fork, and the
integration of other facilities and back office operations. Also, the separate
corporate existence of JSB, Jamaica Savings Bank, Reliance and Reliance Federal
will cease following completion of the mergers and the bank mergers.
Consequently, the costs associated with operating JSB and Reliance as separate
publicly held entities will also be eliminated.
The aggregate annual after-tax cost savings to be achieved in connection
with the mergers are estimated to be $28 million. Management of North Fork
believes that these cost savings will be fully phased in during calendar year
2000. 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. The amounts and realization of any cost savings will depend upon a
number of factors, including, among others, competition in the financial
services industry, the economic and regulatory environments, and any business
changes implemented by North Fork's management. Some of these factors are beyond
North Fork's control.
Following the bank mergers, North Fork will convert the operations of
Jamaica Savings and Reliance Federal to full service commercial banks. North
Fork believes, based on its previous experience in acquiring savings banks and
branches of savings banks, that revenue enhancement opportunities exist by
offering commercial bank products to the customers of Jamaica Savings and
Reliance Federal. These products include 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 mid-sized businesses. Management of North Fork estimates that revenue
enhancements resulting from the mergers will approximate $8.0 million after tax
for the year 2000. The amounts and realization of any additional revenues will
depend upon a number of factors, including, among others, competition in the
financial services industry, the economic and regulatory environments, and any
business changes implemented by North Fork. Some of these factors are beyond
North Fork's control.
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Based on the synergies anticipated, North Fork believes that the mergers
will result in earnings accretion of approximately $0.11 per share in 2000. The
table below sets forth in more detail North Fork's estimated pro forma earnings
per share.
<TABLE>
<CAPTION>
ESTIMATED ESTIMATED
PRO FORMA PRO FORMA EARNINGS
NET INCOME(1) PER SHARE
-------------- ------------------
(IN THOUSANDS)
<S> <C> <C>
North Fork Net Income and Earnings Per Share(2)............. $237,160 $1.75
Plus: Reliance net income(2)................................ 21,586
Estimated North Fork/Reliance merger benefits:
Cost savings........................................... 14,860
Revenue enhancements................................... 3,250
Tax efficiencies(3).................................... 2,070
Less: Impact of share purchase program(4).............. (8,904)
Incremental intangible asset amortization............ (8,594)
Plus: JSB net income(2)..................................... 32,198
Estimated North Fork/JSB merger benefits:
Cost savings........................................... 13,154
Revenue enhancements................................... 4,680
Tax efficiencies(3).................................... 4,707
Securities portfolio optimization(5)................... 5,655
-------- -----
Estimated North Fork/JSB/Reliance Pro Forma Combined Net
Income and Earnings Per Share(6).......................... $321,822 $1.86
======== =====
</TABLE>
- ---------------
(1) Excludes the effect of the merger and restructuring charge of $36.9 million
to be incurred in the JSB merger. See"Pro Forma Condensed Combined Financial
Statements (Unaudited)" on page 76. All figures for estimated merger
benefits are after-tax.
(2) Based on mean I/B/E/S estimates as of August 30, 1999.
(3) Benefit derived from North Fork's lower effective tax rate (35%).
(4) Foregone earnings on cash used to purchase North Fork shares to be issued in
the Reliance merger.
(5) Yield improvement on JSB's securities portfolio.
(6) Assumes 172,900,000 shares outstanding after the Reliance and JSB mergers.
The Estimated Pro Forma Earnings Per Share assume that North Fork does not
increase the amount of leverage on its balance sheet. If North Fork were to
increase the leverage on its balance sheet, earnings per share would
increase by approximately $0.06 per share for every additional $1 billion in
assets assuming a positive spread on such leverage of assets of 150 basis
points. North Fork has no current plans to increase the amount of leverage
on its balance sheet.
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PRICE RANGE OF COMMON STOCK AND DIVIDENDS
NORTH FORK
North Fork common stock is listed on the NYSE and traded under the symbol
"NFB." The following table sets forth, for the periods indicated, the high and
low reported closing prices per share of North Fork common stock on the NYSE
Composite Transactions reporting system, and the cash dividends declared per
share of North Fork common stock.
<TABLE>
<CAPTION>
PRICE RANGE OF
COMMON STOCK
---------------- DIVIDENDS
HIGH LOW DECLARED
------ ------ ---------
<S> <C> <C> <C>
1997
First Quarter......................................... $14.17 $11.38 $ 0.08
Second Quarter........................................ $15.33 $12.08 $ 0.10
Third Quarter......................................... $19.33 $14.96 $ 0.10
Fourth Quarter........................................ $22.50 $18.71 $ 0.10
1998
First Quarter......................................... $26.33 $20.00 $0.125
Second Quarter........................................ $27.33 $23.79 $0.125
Third Quarter......................................... $27.19 $19.00 $0.125
Fourth Quarter........................................ $23.94 $16.31 $0.275
1999
First Quarter......................................... $23.88 $21.00 $ 0.15
Second Quarter........................................ $23.63 $20.13 $ 0.15
Third Quarter......................................... $21.81 $17.69 $ 0.15
Fourth Quarter........................................ $21.63 $17.13 $ 0.18
2000
First Quarter (through January 10, 2000).............. $16.88 $16.13 --
</TABLE>
- ---------------
(1) North Fork per share amounts for all applicable periods have been restated
to reflect the 3-for-2 common stock split effective May 15, 1998 and the
2-for-1 common stock split effective May 15, 1997.
RELIANCE
Reliance common stock is quoted on the National Market System of the
National Association of Securities Dealers Automated Quotation System and traded
under the symbol "RELY." The following table sets forth, for the periods
indicated, the high and low reported closing prices per share of Reliance common
stock on the NASDAQ/NMS reporting system, and cash dividends declared per share
of Reliance common stock.
<TABLE>
<CAPTION>
PRICE RANGE OF
COMMON STOCK
---------------- DIVIDENDS
HIGH LOW DECLARED
------ ------ ---------
<S> <C> <C> <C>
1997
First Quarter......................................... $25.38 $18.63 $0.16
Second Quarter........................................ $29.75 $21.38 $0.16
Third Quarter......................................... $33.00 $27.38 $0.16
Fourth Quarter........................................ $37.88 $28.25 $0.16
1998
First Quarter......................................... $39.00 $24.50 $0.18
Second Quarter........................................ $42.75 $36.63 $0.18
Third Quarter......................................... $38.63 $23.00 $0.18
Fourth Quarter........................................ $30.50 $19.75 $0.18
1999
First Quarter......................................... $32.00 $27.13 $0.21
Second Quarter........................................ $29.88 $26.00 $0.21
Third Quarter......................................... $38.25 $26.50 $0.21
Fourth Quarter........................................ $41.81 $33.56 $0.21
2000
First Quarter (through January 10, 2000).............. $33.88 $30.63 --
</TABLE>
56
<PAGE> 64
NORTH FORK DIVIDEND POLICY
The holders of North Fork common stock receive dividends if and when
declared by the North Fork board of directors out of funds legally available
therefor. North Fork expects to continue paying quarterly cash dividends on
North Fork common stock. However, North Fork cannot be certain that its dividend
policy will remain unchanged after completion of the merger. The declaration and
payment of dividends after the merger will depend upon business conditions,
operating results, capital and reserve requirements and the North Fork board of
directors' consideration of other relevant factors.
INFORMATION ABOUT NORTH FORK
GENERAL
North Fork is a bank holding company organized under the laws of the State
of Delaware in 1980 and registered under the BHC Act. North Fork's primary
subsidiary, North Fork Bank, a New York state-chartered, FDIC-insured,
stock-form commercial bank, operates 112 retail banking facilities throughout
Suffolk and Nassau Counties on Long Island, New York, as well as in the New York
City boroughs of Manhattan, Queens, Brooklyn and the Bronx and in Westchester
and Rockland Counties north of New York City. At September 30, 1999, North Fork
had assets of $11.9 billion, deposits of $6.6 billion and stockholders' equity
of $717.6 million. 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.
On August 16, 1999, North Fork entered into an agreement with JSB
Financial, Inc. providing for the merger of JSB with and into North Fork. As of
September 30, 1999, JSB had $1.6 billion in total assets, $1.1 billion in
deposits, $374.2 million in stockholders' equity and served customers from 13
branches throughout Suffolk and Nassau counties on Long Island, New York, as
well as in the New York City boroughs of Manhattan and Queens. The pro forma
financial information contained in this document includes pro forma adjustments
reflecting the combination of JSB with North Fork using the pooling-of-interests
accounting method. See "Pro Forma Condensed Combined Financial Statements
(Unaudited)" on page 76. Completion of the JSB merger is subject to various
conditions, including the approval of the stockholders of North Fork and JSB and
the receipt of all required regulatory approvals. Completion of the Reliance
merger is not conditioned upon completion of the JSB merger, and North Fork
intends to complete the Reliance merger regardless of whether all of the
conditions to the completion of the JSB merger have been satisfied.
From time to time, North Fork investigates and holds discussions and
negotiations concerning possible transactions with other financial institutions.
As of the date of this proxy statement-prospectus, North Fork has not entered
into any agreements or understandings with respect to any significant business
combination transactions except for the transactions described herein and in
documents incorporated herein by reference. See "Where You Can Find More
Information" on page 72. Any such transaction would be subject to stockholder
approval only if required under applicable law or the rules of the NYSE.
For more information about North Fork's business, reference is made to
North Fork's Annual Report on Form 10-K for the year ended December 31, 1998,
which is incorporated herein by reference. See "Where You Can Find More
Information" on page 72.
MANAGEMENT AND ADDITIONAL INFORMATION
Certain information relating to the executive compensation, various benefit
plans (including stock option plans), voting securities, including the principal
holders of those securities, certain relationships and related transactions and
other matters as to North Fork is incorporated by reference or set forth in
North Fork's Annual Report on Form 10-K for the year ended December 31, 1998,
which is incorporated herein by reference. Stockholders desiring copies of this
document and other documents may contact North Fork at its address or telephone
number indicated under "Where You Can Find More Information" on page 72.
57
<PAGE> 65
SECURITY OWNERSHIP
Set forth below is certain information concerning beneficial ownership of
North Fork common stock, as of September 30, 1999, by (i) each director of North
Fork, (ii) each executive officer of North Fork, and (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 of directors to be the
beneficial owner of more than 5% of the outstanding shares of North Fork common
stock.
<TABLE>
<CAPTION>
NUMBER OF PERCENTAGE
NAME SHARES(1) BENEFICIALLY OWNED
- ---- --------- ------------------
<S> <C> <C>
John Adam Kanas(2).......................................... 2,091,279 1.55%
John Bohlsen(3)............................................. 887,721 *
Thomas M. O'Brien(4)........................................ 993,190 *
Daniel M. Healy(5).......................................... 649,681 *
Irvin L. Cherashore......................................... 63,204 *
Allan C. Dickerson(6)....................................... 50,151 *
Lloyd A. Gerard(7).......................................... 177,677 *
Patrick E. Malloy, III...................................... 2,581,177 1.91%
James F. Reeve(8)........................................... 167,554 *
George H. Rowsom(9)......................................... 28,358 *
Kurt R. Schmeller........................................... 78,190 *
Raymond W. Terry, Jr.(10)................................... 108,000 *
All executive officers and directors as a group (12
persons)(11).............................................. 7,876,182 5.82%
</TABLE>
- ---------------
* Less than 1%
(1) Beneficial ownership of shares, as determined in accordance with applicable
SEC 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. 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, 1998.
(2) Includes 690,136 shares of restricted stock and options to purchase 413,677
shares previously granted to Mr. Kanas under North Fork's compensatory
stock plans, 55,300 shares held by him in joint tenancy with his wife,
62,823 shares held by his wife, 14,900 shares held by his dependent
children, 400 shares held by his wife in joint tenancy with his son, and
400 shares held by his wife as custodian for their son. Excludes 95,000
shares held by the John A. Kanas and Elaine M. Kanas Family Foundation, a
charitable foundation established by Mr. Kanas that is qualified under
section 501(c)(3) of the Internal Revenue Code, as to which Mr. Kanas
disclaims beneficial ownership.
(3) Includes 239,899 shares of restricted stock and options to purchase 178,371
shares previously granted to Mr. Bohlsen under North Fork's compensatory
stock plans, 2,568 shares held by his wife and 33,416 shares held by his
dependent children. Excludes 40,000 shares held by the John and Linda
Bohlsen Family Foundation, a charitable foundation established by Mr.
Bohlsen that is qualified under section 501(c)(3) of the Internal Revenue
Code, as to which Mr. Bohlsen disclaims beneficial ownership.
(4) Includes 62,500 shares of restricted stock, 268,605 shares held in joint
tenancy with his wife, 648 shares in his name as custodian for his son,
options to purchase 108,583 shares previously granted to Mr. O'Brien under
North Fork's compensatory stock plans and 648 shares held by his dependent
son. Excludes 32,500 shares held by The Galway Bay Foundation, a charitable
foundation established by Mr. O'Brien that is qualified under section
501(c)(3) of the Internal Revenue Code, as to which Mr. O'Brien disclaims
beneficial ownership.
58
<PAGE> 66
(5) Includes 125,985 shares of restricted stock and options to purchase 212,020
shares previously granted to Mr. Healy under North Fork's compensatory
stock options, 9,000 shares held by his wife and 6,000 shares held in his
name as custodian for a daughter.
(6) Includes 24,483 shares held by Mr. Dickerson's wife.
(7) Includes 5,983 shares held by Mr. Gerard in joint tenancy with his
daughter, 3,000 shares held by his wife and 300 shares held by his wife in
her capacity as custodian for a granddaughter.
(8) Includes 55,625 shares held by Mr. Reeve's wife.
(9) Includes 3,000 shares held by Mr. Rowsom in joint tenancy with his wife,
934 shares held by his wife and 9,000 shares held by the S.T. Preston &
Sons, Inc. Profit Sharing Trust, in which Mr. Rowsom shares voting power
with two others.
(10) Includes 45,000 shares held by Mr. Terry in joint tenancy with his wife.
(11) Includes 1,118,520 shares of restricted stock and options to purchase an
aggregate of 912,651 shares previously granted to such persons under North
Fork's compensatory stock plans.
INFORMATION ABOUT RELIANCE
GENERAL
Reliance Bancorp is a savings and loan holding company incorporated in
Delaware and regulated by the Office of Thrift Supervision.
The primary business of Reliance Bancorp is the management of the
operations of its wholly-owned subsidiary, Reliance Federal Savings Bank.
Reliance Federal's principal business is attracting retail deposits from the
general public and investing those deposits, together with funds generated from
operations, principal repayments and borrowings, primarily in mortgage,
multi-family, commercial, consumer, commercial real estate and construction
loans. In addition, during periods in which the demand for loans which meet the
Bank's underwriting, investment and interest rate risk standards is lower than
the amount of funds available for investment, the Bank invests excess funding in
mortgage-backed securities, securities issued by the U.S. Government and its
agencies and other investments permitted by federal laws and regulations.
Reliance Federal's revenues are derived principally from interest on its loan
and mortgage-backed securities portfolios. Reliance Federal's primary sources of
funds are deposits, principal and interest payments on loans and mortgage-backed
and investment securities, FHLB-NY advances and reverse repurchase agreements.
Reliance Federal operates 29 banking offices in the New York counties of Nassau
and Suffolk and the New York City Borough of Queens. Reliance Federal also
operates five money center check cashing operations which generate additional
fee income.
Reliance Federal has been, and continues to be, a community-oriented
savings institution offering a variety of financial services to meet the needs
of the communities it serves. Reliance Federal's deposit gathering area is
primarily concentrated in the communities surrounding its full service banking
offices in the New York City Borough of Queens and the New York State counties
of Nassau and Suffolk. Reliance Federal's primary lending area extends beyond
its deposit gathering area to the New York City boroughs of Brooklyn, Staten
Island, Manhattan and the Bronx and the New York State County of Westchester.
At September 30, 1999, Reliance's consolidated total assets were
approximately $2.5 billion, its total deposits were $1.6 billion, and its
consolidated total stockholders' equity was $171.7 million.
The principal office of Reliance is located at 585 Stewart Avenue, Garden
City, New York 11530, telephone number (516) 222-9300.
MANAGEMENT AND ADDITIONAL INFORMATION
Certain information relating to the executive compensation, various benefit
plans (including stock option plans), voting securities, including the principal
holders of those securities, certain relationships and related transactions and
other matters as to Reliance is incorporated by reference or set forth in
Reliance's Annual Report on Form 10-K for the year ended June 30, 1999, which is
incorporated in this proxy statement-prospectus
59
<PAGE> 67
by reference. Stockholders desiring copies of this document and other documents
may contact Reliance at its address or telephone number indicated under "Where
You Can Find More Information" on page 72.
SECURITY OWNERSHIP
Set forth below is certain information concerning beneficial ownership of
Reliance common stock, as of the record date, January 7, 2000, by (i) each
director of Reliance, (ii) each executive officer of Reliance, and (iii) all
executive officers and directors of Reliance as a group. As of the Reliance
record date there was no person known by the Reliance board of directors to be
the beneficial owner of more than 5% of the outstanding shares of Reliance
common stock.
<TABLE>
<CAPTION>
NUMBER OF PERCENTAGE
NAME SHARES(1) BENEFICIALLY OWNED(2)
- ---- --------- ---------------------
<S> <C> <C>
Thomas G. Davis, Jr.(3)..................................... 80,609 *
Donald LaPasta(3)........................................... 85,719 *
Raymond L. Nielsen(4)....................................... 193,846 2.01%
Conrad J. Gunther, Jr.(3)................................... 32,658 *
J. William Newby(3)......................................... 84,196 *
Raymond A. Nielsen(4)(5)(6)(7).............................. 239,365 2.48%
Douglas G. La Pasta(3)(8)................................... 74,295 *
Peter F. Neumann(3)......................................... 92,651 *
Gerald M. Sauvigne(4)(5)(6)................................. 128,065 1.33%
Joseph F. Lavelle(4)(5)..................................... 30,180 *
Paul D. Hagan(4)(5)......................................... 64,115 *
John F. Traxler(4)(5)....................................... 79,581 *
All executive officers and directors as a group (12
persons).................................................. 1,185,280 12.28%
</TABLE>
- ---------------
* Less than 1%
(1) Each person effectively exercises sole (or shares with spouse or other
immediate family member) voting or dispositive power as to shares reported.
(2) For purposes of calculating the aggregate ownership percentage, all options
exercisable have been added to the amount of outstanding common stock as of
January 7, 2000.
(3) Includes 40,451; 7,848; 40,452; 32,951; 40,451 and 40,452 shares subject to
options held by Messrs. Davis, Gunther, Donald LaPasta, Douglas G. LaPasta,
Neumann, and Newby, respectively, under the Amended and Restated Reliance
Bancorp, Inc. 1994 Stock Option Plan for Outside Directors (the "1994
DIRECTORS' OPTION PLAN") which are currently exercisable. Also includes
22,500 options held by Messrs. Davis, Gunther, Donald LaPasta, Douglas G.
LaPasta, Neumann, and Newby each under the Reliance Bancorp, Inc. 1996
Incentive Stock Option Plan Amended and Restated as of February 19, 1997
(the "1996 STOCK OPTION PLAN") which are currently exercisable.
(4) Includes 42,100; 110,250; 55,890; 17,805; 23,805 and 36,225 shares subject
to options held by Messrs. R.L. Nielsen, R.A. Nielsen, Sauvigne, Lavelle,
Hagan and Traxler, respectively, under the Reliance Bancorp, Inc. 1994
Incentive Stock Option Plan (the "1994 STOCK OPTION PLAN") which are
currently exercisable. Also includes 33,198; 33,198; 33,198; 21,282; 21,282
and 15,132 shares subject to options held by Messrs. R.L. Nielsen, R.A.
Nielsen, Sauvigne, Lavelle, Hagan and Traxler, respectively, under the 1996
Stock Option Plan which are currently exercisable.
(5) Includes 11,226; 11,226; 8,313; 6,714 and 8,699 shares beneficially owned
by Messrs. R.A. Nielsen, Sauvigne, Lavelle, Hagan and Traxler,
respectively, under the ESOP.
(6) Includes 18,515 and 3,251 shares beneficially owned by Messrs. R.A. Nielsen
and Sauvigne, respectively, under the Reliance Federal Savings Bank
Supplemental Executive Retirement Plan (the "SERP").
(7) Raymond A. Nielsen is the son of Raymond L. Nielsen.
(8) Douglas G. LaPasta is the nephew of Donald LaPasta.
60
<PAGE> 68
REGULATION AND SUPERVISION OF NORTH FORK
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 5% 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.
North Fork Bank, as a New York-chartered, FDIC insured depository
institution, is subject to the supervision, regulation, and examination of the
New York State 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 is subject to extensive regulation and supervision and to
various requirements and restrictions under federal and state law, including
requirements governing capital adequacy, liquidity, earnings, dividends,
reserves against deposits, management practices, branching, loans, investments,
and the provision of services. Various consumer protection laws and regulations
also affect the operations of North Fork Bank. The deposits of North Fork Bank
are insured up to applicable limits by the FDIC.
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
and North Fork Bank 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 principal source of funds for North Fork is dividends from North Fork Bank,
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 companies.
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. In addition, among other things, dividends from a
New York-chartered bank, such as North Fork Bank, are limited 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 by the regulations of the Banking Department.
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. The relevant federal
regulatory agencies, and the state regulatory agency, the Banking Department,
also have authority to prohibit a bank or bank holding company from engaging in
what, in the opinion of such regulatory body, constitutes an unsafe or unsound
practice in conducting its business. The payment of dividends could, depending
upon the financial condition of North Fork Bank, be deemed to constitute such an
unsafe or unsound practice.
62
<PAGE> 69
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 10% of the bank's capital and surplus and, with all affiliates
together, to an aggregate of 20% of the bank's capital and surplus. Furthermore,
such loans and extensions of credit, as well as certain other transactions, are
required to be secured in 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,
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 are 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
63
<PAGE> 70
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 September 30, 1999, North Fork Bank exceeded the required
capital ratios for classification as "well capitalized." See "-- Capital
Adequacy" on page 63.
CAPITAL ADEQUACY
RISK-BASED CAPITAL AND LEVERAGE RATIOS
<TABLE>
<CAPTION>
RISK-BASED RATIOS
------------------
TIER I TOTAL LEVERAGE
AS OF SEPTEMBER 30, 1999 CAPITAL CAPITAL RATIO(1)
- ------------------------ ------- ------- --------
<S> <C> <C> <C>
North Fork.................................................. 12.76% 13.75% 7.65%
North Fork Bank............................................. 10.95% 11.96% 6.45%
Reliance(2)................................................. 16.86% 17.72% 7.34%
Reliance Federal Savings Bank............................... 16.34% 17.20% 7.08%
JSB(2)...................................................... 26.14% 28.32% 20.93%
Jamaica Savings Bank........................................ 23.41% 25.44% 18.76%
Minimum required ratio...................................... 4.00% 8.00% 4.00%
"Well capitalized" minimum ratio............................ 6.00% 10.00% 5.00%
</TABLE>
- ---------------
(1) 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.
(2) Each of JSB and Reliance is a unitary thrift holding company and,
accordingly, neither is subject to any minimum required risk-based and
leverage ratios.
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%. 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. 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. The Federal Reserve Board has also adopted a minimum leverage ratio for
bank holding companies, requiring Tier 1 capital of at least 3% of average total
consolidated assets.
The FDIC has also established risk-based and leverage capital guidelines
which state non-member 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, Reliance
and Reliance Federal Bank are provided in the chart above.
The federal bank regulatory 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, interest
rate 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 agencies
63
<PAGE> 71
have also adopted an adjustment to the risk-based capital calculations to cover
market risk in trading accounts of certain institutions.
The federal bank regulatory 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 the placement of 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, Reliance or Reliance Federal Savings Bank, 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.
CONTROL ACQUISITIONS
The Change in Bank Control Act 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 Board, 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 Securities Exchange Act of 1934,
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 Board 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 are
permitted to merge across state lines, with the approval of the appropriate
federal banking agency, unless the home state of a participating banking
institution has passed legislation prior to that date that expressly prohibits
interstate mergers. De novo interstate branching is permitted if the laws of the
host state so authorizes.
FUTURE LEGISLATION
Various legislation is from time to time introduced in Congress, 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. Such legislation may change
banking
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<PAGE> 72
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 200 million shares
of North Fork common stock and 10 million shares of North Fork preferred stock,
par value $1.00 per share. The preferred stock may be issued in one or more
series with such terms and at such times and for such consideration as the North
Fork board of directors determines. Subsequent to the Reliance special meeting,
North Fork will hold a special meeting of its stockholders for the purpose of
approving the JSB merger and a proposal to amend the North Fork certificate of
incorporation to increase the number of authorized shares of common stock to 500
million and to reduce the par value per share of the common stock from $2.50 to
$0.01.
As of the North Fork record date, 128,439,378 shares of North Fork common
stock were outstanding, and no shares of North Fork preferred stock were
outstanding.
As of the North Fork record date, 28,047,000 shares of North Fork common
stock were reserved for issuance in the JSB merger, 2,668,719 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 569,148
shares of North Fork common stock were reserved for issuance pursuant to North
Fork's dividend reinvestment and stock purchase plans.
The following summary of the terms of the capital stock of North Fork is
not intended to be complete and is subject in all respects to the applicable
provisions of the Delaware General Corporate Law (the "DGCL") and is qualified
by reference to the certificate of incorporation and bylaws of North Fork. To
obtain copies of these documents, see "Where You Can Find More Information" on
page 72.
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. Holders of North Fork common stock do not have pre-emptive rights
and are not entitled to cumulative voting rights with respect to the election of
directors. The North Fork common stock is neither redeemable nor convertible
into other securities, and there are no sinking fund provisions.
Subject to the preferences applicable to any shares of North Fork preferred
stock outstanding at the time, holders of North Fork common stock are entitled
to dividends when and as declared by the North Fork board of directors from
funds legally available therefor and are entitled, in the event of liquidation,
to share ratably in all assets remaining after payment of liabilities.
PREFERRED STOCK
No shares of preferred stock are outstanding. The board of directors of
North Fork may, without further action by the stockholders of North Fork, issue
a series of North Fork preferred stock and fix the rights and preferences of
those shares, including the dividend rights, dividend rates, conversion rights,
exchange rights, voting rights, terms of redemption, redemption price or prices,
liquidation preferences, the number of shares constituting any series and the
designation of such series.
ANTI-TAKEOVER PROVISIONS
The North Fork certificate of incorporation and North Fork's bylaws provide
that the North Fork board of directors is to be divided into three classes 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
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<PAGE> 73
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 of directors.
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.
COMPARISON OF STOCKHOLDER RIGHTS
North Fork and Reliance are incorporated under the laws of the State of
Delaware. If the merger is completed, Reliance stockholders, whose rights are
currently governed by the DGCL, the certificate of incorporation of Reliance and
the amended and restated bylaws of Reliance, will, upon completion of the
merger, become stockholders of North Fork, and their rights as such will be
governed by the DGCL, the North Fork certificate of incorporation, as amended,
and the bylaws of North Fork. The material differences between the rights of
holders of Reliance common stock and the rights of holders of North Fork common
stock, resulting from the differences in their governing documents, 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 of incorporation and the North Fork bylaws or the rights
of the holders of Reliance common stock under applicable Delaware law, the
Reliance certificate of incorporation and the Reliance 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 is
qualified in its entirety by reference to the DGCL and the governing corporate
instruments of North Fork and Reliance, to which the holders of Reliance common
stock are referred. Copies of such governing corporate instruments of North Fork
and Reliance are available, without charge, to any person, including any
beneficial owner to whom this proxy statement-prospectus is delivered, by
following the instructions listed under "Where You Can Find More Information."
SUMMARY OF MATERIAL DIFFERENCES BETWEEN THE
RIGHTS OF NORTH FORK STOCKHOLDERS AND THE RIGHTS OF RELIANCE STOCKHOLDERS
<TABLE>
<CAPTION>
NORTH FORK STOCKHOLDER RIGHTS RELIANCE STOCKHOLDER RIGHTS
----------------------------- ---------------------------
<S> <C> <C>
STOCKHOLDER ACTION BY North Fork stockholders may act Reliance stockholders may not
WRITTEN CONSENT: by written consent. act by written consent.
STOCKHOLDER NOMINA- North Fork's by-laws permit Reliance's by-laws permit
TIONS AND PROPOSALS FOR stockholders of record to stockholders of record to
BUSINESS: nominate candidates for election nominate candidates for election
to North Fork's board of to Reliance's board of di-
directors and to introduce other rectors and to introduce other
business that is a proper matter business that is a proper matter
for stockholder action in for stockholder action in
connection with any annual connection with any annual
meeting of stockholders. In meeting of stockholders. In
either case, the stockholder either case, the stockholder
must provide timely notice to must provide timely notice to
the Secretary of North Fork and the Secretary of Reliance, and
the notice must contain specific the notice must contain spe-
information as further cific information as further
delineated in North Fork's by- delineated in Reliance's
laws. by-laws.
To be timely, notice must be To be timely, notice must be
given to North Fork's Secretary delivered to and received by
not less than 60 days in the Reliance not less than 90 days
case of a notice of a nominee prior to the meeting at which
and 45 days in the case of a directors are to be elected or
notice of a proposed item of the proposed business is to be
business, conducted, or, if Reliance gives
less than
</TABLE>
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<PAGE> 74
<TABLE>
<CAPTION>
NORTH FORK STOCKHOLDER RIGHTS RELIANCE STOCKHOLDER RIGHTS
----------------------------- ---------------------------
<S> <C> <C>
nor more than 90 days, in either 100 days' notice or prior public
case, before the anniversary of disclosure of the meeting date,
the date of the prior year's then notice by the stockholder
annual meeting of stockholders must be received by the close of
in the case of a notice of a business on the 10th day
nominee, and the anniversary of following the date on which
the date on which North Fork notice of the meeting was mailed
first mailed its proxy materials to stockholders or public
for the preceding annual disclosure was made, whichever
meeting, in the case of a notice occurs first.
of a proposed item of business.
However, in either case, if the
annual meeting is held on a date
that is not within 30 days
before or after the anniversary
of the date of the prior year's
annual meeting, the notice must
be received no later than the
close of business on the 10th
day following the day on which
notice of the date of the annual
meeting was mailed or public
disclosure of the date of the
annual meeting was made,
whichever first occurs.
BUSINESS COMBINATIONS Delaware law prohibits a Reliance has not opted out of
INVOLVING INTERESTED corporation from engaging in any the interested stockholder
STOCKHOLDERS: business combination with an provisions of Delaware law.
interested stockholder (defined
as a 15% stockholder) for a In addition, Reliance's
period of three years after the certificate of incorporation
date that stockholder became an provides that business
interested stockholder unless combinations involving an
(i) before that date, the board interested stockholder (as
of directors of the corporation defined below) require the
approved the business approval of the holders of at
combination or the transaction least 80% of Reliance's then
transforming the stockholder outstanding shares of voting
into an interested stockholder, stock, except that such business
(ii) upon completion of the combinations shall require only
transaction which resulted in the affirmative vote of a
the stockholder becoming an majority of the outstanding
interested stockholder, that shares of Reliance capital stock
stockholder owned at least 85% entitled to vote if: (i) the
of the outstanding voting stock business combination has been
(excluding shares owned by approved by a majority of the
directors, officers and certain disinterested directors of
employee stock ownership plans) Reliance, or (ii) the business
or (iii) on or after the date combination meets certain
the stockholder became an conditions which are designed to
interested stockholder, the afford the stockholders a fair
business combination received price in consideration for their
the approval of both the cor- shares.
poration's directors and the
holders of two-thirds of the The term "INTERESTED
outstanding voting shares not STOCKHOLDER" is defined in
owned by the interested Reliance's certificate of in-
stockholder voted at a meeting corporation to include any
and not by written consent. A individual, corporation,
Delaware corporation may opt out partnership or other entity
of this provision through an (other than Reliance or a
amendment to its certifi- subsidiary of Reliance) which
(i) beneficially owns, directly
or indirectly, 10% or more of
the outstanding shares of Re-
</TABLE>
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<PAGE> 75
<TABLE>
<CAPTION>
NORTH FORK STOCKHOLDER RIGHTS RELIANCE STOCKHOLDER RIGHTS
----------------------------- ---------------------------
<S> <C> <C>
cate of incorporation or bylaws liance voting stock; (ii) is an
adopted by a majority of the affiliate (as defined in Rule
outstanding voting shares. North 12b-2 of the Rules and
Fork has not adopted any such Regulations under the Exchange
amendment. Act) of Reliance and at any time
within the two-year period
immediately prior to the date in
question was the beneficial
owner, directly or indirectly,
of 10% or more of the outstand-
ing shares of Reliance voting
stock; or (iii) is an assignee
or has otherwise succeeded to
any shares of Reliance voting
stock which were at any time
within the two-year period
immediately prior to the date in
question beneficially owned by
any interested stockholder if
such assignment or succession
did not occur in the course of a
public offering within the
meaning of the Securities Act.
REMOVAL OF DIRECTORS: In accordance with Delaware law, The Reliance certificate
North Fork stockholders may provides that stockholders of
remove a director only for cause Reliance may only remove a
by a vote of the holders of a director for cause and only by
majority of the then- the affirmative vote of at least
outstanding shares entitled to 80% of the outstanding shares
vote thereon. entitled to vote.
CONSIDERATION OF OTHER The North Fork certificate of Reliance is also governed by the
CONSTITUENCIES: incorporation does not contain provisions of Delaware law. In
any provision specifically addition, the Reliance
authorizing or requiring the certificate of incorporation
North Fork board of directors to provides that when evaluating
consider the interests of any any offer by a third party for a
constituencies of North Fork merger or similar transaction,
other than its stockholders in the Reliance board of directors
considering whether to approve may, in connection with the
or oppose any corporate ac- exercise of its judgment in
tion, including a merger or determining what is in the best
similar transaction. Pursuant to interest of Reliance and its
case law interpreting statutory stockholders, give due
provisions of Delaware law, the consideration to all relevant
board of directors of a Delaware factors, including, without
corporation such as North Fork limitation, those factors that
generally may consider the im- directors of any subsidiary of
pact of such a transaction on Reliance may consider in
North Fork's other evaluating any action that may
constituencies, provided that result in a change in control of
doing so bears some reasonable the subsidiary and the social
relationship to general and economic effect of accept-
stockholder interests. ance of such offer on: (i)
Reliance's present and future
customers and employees and
those of its subsidiaries; (ii)
the communities in which Reli-
ance and its subsidiaries
operate or are located; (iii)
the ability of Reliance to
fulfill its corporate objective
as a savings and loan holding
company under
</TABLE>
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<PAGE> 76
<TABLE>
<CAPTION>
NORTH FORK STOCKHOLDER RIGHTS RELIANCE STOCKHOLDER RIGHTS
----------------------------- ---------------------------
<S> <C> <C>
applicable laws and regulations;
and (iv) the ability of Reliance
Federal Savings Bank to fulfill
the objectives of a stock form
savings bank under applicable
statutes and regulations.
PERSONAL LIABILITY OF Subject to Delaware law, the The Reliance certificate of
DIRECTORS: North Fork certificate of incorporation limits the
incorporation limits the personal liability of di-
personal liability of directors rectors of Reliance for monetary
to North Fork or its damages resulting from a breach
stockholders for monetary of fiduciary duty as a director
damages for breach of fidu- to the fullest extent permitted
ciary duty as a director to under Delaware law.
$25,000 per occurrence.
AMENDMENT OF BY-LAWS: North Fork's by-laws may be The Reliance certificate of
amended by affirmative vote of incorporation and by-laws
holders of a majority of the provide that the Reliance board
outstanding shares of North Fork of directors is empowered to
capital stock present and voting adopt, amend or repeal the
at a meeting at which a quorum by-laws, by a vote of the
is present. The North Fork majority of the entire board of
certificate of incorporation directors, and the stockhold-
also authorizes the board of ers may adopt, amend or repeal
directors to adopt, amend or the by-laws by the affirmative
repeal the by-laws. vote of holders of at least 80%
of the voting stock, voting
together as a single class.
AMENDMENT OF The DGCL provides that amend- Reliance's certificate of
CERTIFICATE: ments to a corporation's incorporation requires the
certificate of incorporation affirmative vote of the holders
generally require a resolution of at least 80% of the voting
by the corporation's board of power of all of the
directors setting forth the then-outstanding shares of
amendment proposed and declaring Reliance capital stock enti-
its advisability and the tled to vote generally in the
adoption of such amendment by election of directors, voting
the affirmative vote of holders together as a single class, to
of a majority of the amend or repeal the provisions
corporation's outstanding stock of Reliance's certificate of
entitled to vote thereon. The incorporation regarding: (i) the
North Fork certificate of amendment of Reliance's
incorporation contains no certificate of incorporation;
further provisions concerning (ii) the limitation on voting
the amendment of the North Fork rights of Reliance common stock;
certificate. (iii) the prohibition of stock-
holder action by written
consent; (iv) the calling of
special meetings of
stockholders; (v) the number of
directors and the classification
of the Reliance board of
directors, the filling of
vacancies on the Reliance board
of directors, the removal of
directors and the requirement of
advance notice of stockholder
nominations for the election of
directors; (vi) the amendment of
Reliance's by-laws; (vii) higher
vote requirements for certain
actions; and (viii) director and
officer indemnification.
</TABLE>
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<PAGE> 77
<TABLE>
<CAPTION>
NORTH FORK STOCKHOLDER RIGHTS RELIANCE STOCKHOLDER RIGHTS
----------------------------- ---------------------------
<S> <C> <C>
SPECIAL MEETING OF Special meetings of North Fork Special meetings of Reliance
STOCKHOLDERS: stockholders may be called by stockholders may be called by
the board of directors, the the board of directors pursuant
Chairman or the President. to a resolution adopted by a
majority of the total number of
authorized directors that
Reliance would have if there
were no vacancies. At any
special meeting of stockholders,
only such business as shall have
been brought before the meeting
by or at the direction of the
board of directors may be
conducted.
LIMIT ON STOCKHOLDER The North Fork certificate of The Reliance certificate of
VOTING: incorporation has no provision incorporation provides that
specifically limiting record owners of any outstanding
stockholder voting rights. Reliance common stock which is
beneficially owned by a person
who, as of any record date for
the determination of
stockholders entitled to vote on
any matter, beneficially owns in
excess of 10% of the then
outstanding shares of Reliance
common stock (the "LIMIT"), are
not entitled to any vote with
respect to the shares held in
excess of the limit. Reliance's
certificate of incorporation
authorizes the board of
directors of Reliance to
construe and apply the
provisions regarding the limit
and to make all determinations
necessary or desirable to
implement such provisions.
STOCKHOLDER RIGHTS PLAN: North Fork does not have a Reliance maintains a stockholder
stockholder rights plan. While rights plan which is designed to
North Fork has no present (i) protect stockholders from
intention to adopt a stockholder attempts to acquire control of
rights plan, the North Fork Reliance without the approval of
board or the combined company the Reliance board of directors
board could do so without and (ii) prevent abusive tac-
stockholder approval at any tics from potential acquirors
future time. that do not treat all
stockholders fairly. The rights
issued under the plan are not
currently exercisable or
transferable, and no separate
certificates evidencing such
rights will be distributed,
unless certain events occur.
The Reliance rights agreement
was not intended to prevent a
takeover of Reliance. However,
it may cause substantial
dilution to certain persons or
groups that beneficially acquire
10% or more of Reliance common
stock unless the rights issuable
under the plan
</TABLE>
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<TABLE>
<CAPTION>
NORTH FORK STOCKHOLDER RIGHTS RELIANCE STOCKHOLDER RIGHTS
----------------------------- ---------------------------
<S> <C> <C>
are first redeemed by the
Reliance board of directors.
Accordingly, the rights
agreement may result in Reli-
ance being less attractive to a
potential acquiror and, in the
event that the existence of the
rights issuable under the plan
did deter certain potential
acquirors, the plan could result
in holders of Reliance common
stock receiving less in the
event of a takeover. The plan
will not interfere with any
merger or other business
combination approved by the
Reliance board of directors.
PURSUANT TO THE TERMS OF
THE RELIANCE RIGHTS
AGREEMENT, THE EXECU-
TION OF THE MERGER
AGREEMENT AND THE STOCK
OPTION AGREEMENT WILL
NOT RESULT IN THE
ABILITY OF ANY
INDIVIDUAL TO EXERCISE
ANY RIGHTS UNDER THE
RIGHTS AGREEMENT.
</TABLE>
LEGAL MATTERS
The validity of the North Fork common stock to be issued in connection with
the merger will be passed upon for North Fork by Skadden, Arps, Slate, Meagher &
Flom LLP, New York, New York.
EXPERTS
The consolidated financial statements of North Fork and its subsidiaries
incorporated in this proxy statement-prospectus by reference to North Fork's
Annual Report on Form 10-K for the year ended December 31, 1998 have been so
incorporated by reference in reliance on the report with respect to those
financial statements of KPMG LLP, independent accountants, given upon the
authority of that firm as experts in accounting and auditing.
The consolidated statement of condition of Reliance and subsidiary as of
June 30, 1999 and the related consolidated statements of income, changes in
stockholders' equity, comprehensive income and cash flows for the year then
ended, incorporated in this proxy statement-prospectus by reference to
Reliance's Annual Report on Form 10-K for the year ended June 30, 1999, have
been so incorporated by reference in reliance on the report with respect to
those financial statements of Arthur Andersen LLP, independent accountants,
given upon the authority of that firm as experts in accounting and auditing.
The consolidated statement of condition of Reliance and subsidiary as of
June 30, 1998 and the related consolidated statements of income, changes in
stockholders' equity, comprehensive income and cash flows for each of the years
in the two-year period then ended, incorporated in this proxy
statement-prospectus by reference to Reliance's Annual Report on Form 10-K for
the year ended June 30, 1999, have been so incorporated by reference in reliance
on the report with respect to those financial statements of KPMG LLP,
independent accountants, given upon the authority of that firm as experts in
accounting and auditing.
71
The consolidated financial statements of JSB and its subsidiaries
incorporated in this proxy statement-prospectus by reference to North Fork's
Current Report on Form 8-K filed on December 30, 1999 have been so incorporated
by reference in reliance on the report with respect to those financial
statements of KPMG LLP, independent accountants, given upon the authority of
that firm as experts in accounting and auditing.
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<PAGE> 79
STOCKHOLDER PROPOSALS
Reliance will hold its 1999 Annual Meeting of Stockholders only if the
merger is not consummated. In the event that this meeting is held, Reliance
stockholders may submit proposals to be considered for stockholder action at
Reliance's 1999 annual meeting of stockholders if they do so in accordance with
applicable regulations of the SEC and applicable provisions of Reliance's
by-laws. Any proposals must be received by the Secretary of Reliance within a
reasonable time before Reliance begins to print and mail its proxy materials in
order to be considered for inclusion in Reliance's 1999 Annual Meeting proxy
materials. Any proposals intended to be presented at the 1999 Annual Meeting of
Stockholders but not submitted to Reliance for inclusion Reliance's 1999 Annual
Meeting proxy materials must be received by the Secretary of Reliance no later
than ten days following the date on which notice of such meeting is first
provided to Reliance stockholders.
OTHER MATTERS
As of the date of this proxy statement-prospectus, the Reliance board of
directors knows of no matter that will be presented for consideration at the
Reliance special meeting other than as described in this proxy
statement-prospectus. If any other matters do properly come before the Reliance
special meeting and are voted upon, the enclosed proxy will be deemed to confer
discretionary authority on the individuals named as proxies to vote the shares
represented by such proxy as to any of those other matters. The individuals
named as proxies intend to vote or not to vote in accordance with the
recommendation of management.
WHERE YOU CAN FIND MORE INFORMATION
North Fork has filed with the SEC a registration statement under the
Securities Act that registers the distribution to Reliance stockholders of the
shares of North Fork common stock to be issued in connection with the merger.
The registration statement, including the attached exhibits and schedules,
contains additional relevant information about North Fork and North Fork common
stock. The rules and regulations of the SEC allow us to omit certain information
included in the registration statement from this proxy statement-prospectus.
In addition, North Fork, Reliance and JSB file reports, proxy statements
and other information with the SEC under the Exchange Act. You may read and copy
this information at the following locations of the SEC:
<TABLE>
<S> <C> <C>
Public Reference Room North East Regional Office Midwest Regional Office
450 Fifth Street, N.W. 7 World Trade Center 500 West Madison Street
Room 1024 Suite 1300 Suite 1400
Washington, D.C. 20549 New York, New York 10048 Chicago, Illinois 60661-2511
</TABLE>
You may also obtain copies of this information by mail from the Public
Reference Section of the SEC, 450 Fifth Street, N.W., Room 1024, Washington,
D.C. 20549, at prescribed rates.
The SEC also maintains an Internet world wide web site that contains
reports, proxy statements and other information about issuers, like North Fork
and Reliance, who file electronically with the SEC. The address of that site is
HTTP://WWW.SEC.GOV.
You can also inspect reports, proxy statements and other information about
North Fork and JSB at the offices of the NYSE, 20 Broad Street, New York, New
York 10005, and information about Reliance at the offices of the National
Association of Securities Dealers, Inc., 1735 K Street, N.W., Washington, D.C.
20006.
The SEC allows North Fork and Reliance to "incorporate by reference"
information into this proxy statement-prospectus. This means that the companies
can disclose important information to you by referring you to another document
filed separately with the SEC. The information incorporated by reference is
considered to be a part of this proxy statement-prospectus, except for any
information that is superseded by information that is included directly in this
document.
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<PAGE> 80
This proxy statement-prospectus incorporates by reference the documents
listed below that North Fork and Reliance have previously filed with the SEC.
They contain important information about our companies and their financial
condition.
<TABLE>
<CAPTION>
NORTH FORK SEC FILINGS PERIOD
- ---------------------- ------
<S> <C>
Annual Report on Form 10-K................ Year ended December 31, 1998, as filed on March 29, 1999
Quarterly Report on Form 10-Q............. Quarter ended September 30, 1999, as filed on November
15, 1999
Quarterly Report on Form 10-Q............. Quarter ended June 30, 1999, as filed on August 6, 1999
Quarterly Report on Form 10-Q............. Quarter ended March 31, 1999, as filed on May 14, 1999
The description of North Fork common stock
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.
The portions of North Fork's proxy
statement for the annual meeting of
stockholders held on April 27, 1999 that
have been incorporated by reference in
the 1998 North Fork Form 10-K.
Current Reports on Form 8-K............... Filed on:
- December 30, 1999
- October 25, 1999
- August 31, 1999
- August 16, 1999
</TABLE>
<TABLE>
<CAPTION>
RELIANCE SEC FILINGS PERIOD
- -------------------- ------
<S> <C>
Annual Report on Form 10-K................ Year ended June 30, 1999, as filed on September 28, 1999
Quarterly Report on Form 10-Q............. Quarter ended September 30, 1999, as filed on November
15, 1999
The description of Reliance's common stock
set forth in Reliance's registration
statement on Form 8-A................... Filed on July 27, 1996
Current Reports on Form 8-K............... Filed on:
- October 21, 1999
- August 31, 1999
</TABLE>
North Fork and Reliance incorporate by reference additional documents that
either company may file with the SEC between the date of this proxy
statement-prospectus and the date of the Reliance special meeting. These
documents include periodic reports, such as Annual Reports on Form 10-K,
Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, as well as proxy
statements.
North Fork has supplied all information contained or incorporated by
reference in this proxy statement-prospectus relating to North Fork, as well as
all pro forma financial information, and Reliance has supplied all relevant
information relating to Reliance.
You can obtain any of the documents incorporated by reference in this
document through North Fork or Reliance, as the case may be, or from the SEC
through the SEC's Internet world wide web site at the address described above.
Documents incorporated by reference are available from the companies without
charge, excluding any exhibits to those documents, unless the exhibit is
specifically incorporated by reference as an exhibit in this proxy
statement-prospectus. You can obtain documents incorporated by reference in this
proxy
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<PAGE> 81
statement-prospectus by requesting them in writing or by telephone from the
appropriate company at the following addresses:
<TABLE>
<S> <C>
NORTH FORK BANCORPORATION, INC. RELIANCE BANCORP, INC.
275 Broad Hollow Road 585 Stewart Avenue
Melville, New York 11747 Garden City, New York 11530
(631) 844-1004 (516) 222-9300
Attention: Aurelie S. Graf, Attention: Paul D. Hagan,
Corporate Secretary Chief Financial Officer
</TABLE>
If you would like to request documents, please do so by February 3, 2000 to
receive them before the special meeting. If you request any incorporated
documents from us, we will mail them to you by first class mail, or another
equally prompt means, within one business day after we receive your request.
We have not authorized anyone to give any information or make any
representation about the merger of our companies that is different from, or in
addition to, that contained in this proxy statement-prospectus or in any of the
materials that we have incorporated by reference into this proxy
statement-prospectus. Therefore, if anyone does give you information of this
sort, you should not rely on it. If you are in a jurisdiction where offers to
exchange or sell, or solicitations of offers to exchange or purchase, the
securities offered by this document or the solicitation of proxies is unlawful,
or if you are a person to whom it is unlawful to direct these types of
activities, then the offer presented in this document does not extend to you.
The information contained in this document speaks only as of the date of this
document unless the information specifically indicates that another date
applies.
FORWARD-LOOKING STATEMENTS
This proxy statement-prospectus, including information included or
incorporated by reference in this document, contains certain forward-looking
statements with respect to the financial condition, results of operations,
plans, objectives, future performance and business of each of North Fork,
Reliance and JSB, as well as certain information relating to the merger and/or
the JSB merger, including, without limitation:
-- statements relating to the cost savings and accretion to reported
earnings estimated to result from the merger and the JSB merger,
-- statements relating to revenues of the combined company after the merger
and the JSB merger,
-- statements relating to the restructuring charges estimated to be
incurred in connection with the merger and the JSB merger, and
-- statements preceded by, followed by or that include the words
"believes," "expects," "anticipates," "estimates" or similar
expressions.
These forward-looking statements involve certain risks and uncertainties.
Actual results may differ materially from those contemplated by the
forward-looking statements due to, among others, the following factors:
-- expected cost savings from the merger and the JSB merger may not be
fully realized or realized within the expected time frame,
-- revenues following the merger and the JSB merger may be lower than
expected,
-- competitive pressures among financial services companies may increase
significantly,
-- costs or difficulties related to the integration of the businesses of
North Fork, Reliance and JSB may be greater than expected,
-- changes in the interest rate environment may reduce interest margins,
74
<PAGE> 82
-- general economic conditions, whether internationally, nationally or in
the regional and local market areas in which North Fork, Reliance and/or
JSB are doing business, may be less favorable than expected,
-- legislative or regulatory changes may adversely affect the businesses in
which North Fork, Reliance and JSB are engaged,
-- technological changes, including year 2000 data systems compliance
issues, may be more difficult or expensive than anticipated, and
-- changes may occur in the securities markets.
See "Where You Can Find More Information."
76
<PAGE> 83
PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS (UNAUDITED)
The following pro forma condensed combined financial statements are based
on the historical financial statements of North Fork, Reliance and JSB, under
the assumptions and adjustments set forth in the accompanying notes. The Pro
Forma Condensed Combined Balance Sheets give effect to the merger and the JSB
merger as if such transactions had become effective as of September 30, 1999.
The Pro Forma Condensed Combined Statements of Income give effect to the merger
and the JSB merger as if such transactions had become effective as of the
beginning of each of the periods for which information is presented. The pro
forma information assumes that the merger is accounted for using the purchase
method of accounting and the JSB merger is accounted for under the
pooling-of-interests method of accounting.
Completion of the merger is not conditioned upon completion of the JSB
merger, and North Fork intends to complete the merger regardless of whether all
conditions to completion of the JSB merger have been satisfied. Accordingly, the
pro forma condensed combined financial statements contain information reflecting
the combination of North Fork and Reliance without JSB. There can be no
assurance that North Fork will complete its merger with JSB.
Reliance's annual reporting periods are as of and for the year ended June
30, whereas North Fork and JSB utilize a calendar year reporting period.
Reliance's financial results for the nine months ended September 30, 1999 and
1998 and the twelve months ended December 31, 1998 have been utilized in order
to conform to the calendar year reporting period of North Fork.
The unaudited pro forma condensed combined financial 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, Reliance and
JSB incorporated by reference into this document. See "Where You Can Find More
Information" on page 72. Certain Reliance and JSB financial information has been
reclassified to conform with North Fork's financial information.
The unaudited 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 or the JSB merger. The pro forma information
is not necessarily indicative of the combined financial position or the results
of operations of the companies in the future or of the combined financial
position or the results of operations which would have been realized had the
mergers been completed during the periods or as of the dates for which the pro
forma information is presented.
76
<PAGE> 84
NORTH FORK BANCORPORATION, INC.
COMBINED WITH RELIANCE BANCORP, INC. & JSB FINANCIAL, INC.
PRO FORMA CONDENSED COMBINED BALANCE SHEETS
(UNAUDITED)
SEPTEMBER 30, 1999
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
PRO FORMA
ADJUSTMENTS NORTH FORK/
--------------------- RELIANCE
NORTH FORK RELIANCE DEBITS CREDITS PRO FORMA JSB
----------- ---------- -------- -------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Cash & Due from Banks........... $ 164,416 $ 29,623 $124,731(6) $124,731(3a) $ 170,153 $ 12,753
23,886(3c)
Money Market Investments........ 200,156 -- 200,156 32,500
Securities:
Available-for-Sale............. 3,598,197 1,012,881 412(5) 14,370(3b) 4,467,180 90,006
209(3b)
5,000(5)
124,731(6)
Held-to-Maturity............... 1,279,978 309,679 1,589,657 193,540
----------- ---------- -------- -------- ----------- ----------
Total Securities............... 4,878,175 1,322,560 412 144,310 6,056,837 283,546
----------- ---------- -------- -------- ----------- ----------
Loans, net of Unearned Income... 6,386,042 1,007,594 7,393,636 1,232,745
Allowance for Loan Losses...... 68,950 9,068 78,018 5,937
----------- ---------- -------- -------- ----------- ----------
Net Loans...................... 6,317,092 998,526 -- -- 7,315,618 1,226,808
----------- ---------- -------- -------- ----------- ----------
Premises & Equipment, Net....... 73,600 17,779 91,379 18,310
Accrued Interest Receivable..... 71,989 14,148 86,137 8,840
Intangible Assets............... 81,052 53,232 342,516 --
305,524(3b) 171,702(3d)
14,370(3b)
18,574(3c)
41,466(4)
Other Assets.................... 128,367 43,031 89(3b) 176(5) 186,307 13,013
5,312(3c)
9,684(4)
----------- ---------- -------- -------- ----------- ----------
Total Assets................... $11,914,847 $2,478,899 $520,162 $464,805 $14,449,103 $1,595,770
=========== ========== ======== ======== =========== ==========
LIABILITIES AND STOCKHOLDERS'
EQUITY
Demand Deposits................. $ 1,461,517 $ 62,615 1,524,132 $ 54,925
Savings N.O.W. & Money Market
Deposits....................... 2,893,521 651,252 3,544,773 647,948
Time Deposits................... 2,215,860 853,985 3,069,845 427,803
----------- ---------- -------- -------- ----------- ----------
Total Deposits................. 6,570,898 1,567,852 -- -- 8,138,750 1,130,676
----------- ---------- -------- -------- ----------- ----------
Federal Funds Purchased &
Securities Sold Under
Agreements to Repurchase....... 2,676,416 328,334 3,004,750 --
Other Borrowings................ 1,494,000 333,655 1,827,655 50,000
Accrued Expenses & Other
Liabilities.................... 256,649 27,356 -- 51,150(4) 335,155 40,862
----------- ---------- -------- -------- ----------- ----------
Total Liabilities.............. $10,997,963 $2,257,197 $ -- $ 51,150 $13,306,310 $1,221,538
----------- ---------- -------- -------- ----------- ----------
Capital Securities.............. $ 199,308 $ 50,000 $ 5,000(5) $ -- $ 244,308 $ --
STOCKHOLDERS' EQUITY
Preferred Stock................. $ -- $ -- $ -- $ -- $ -- $ --
Common Stock.................... 362,816 108 108(3d) -- 362,816 160
Additional Paid in Capital...... 34,685 121,309 42,501(3b) -- (7,816) 170,219
121,309(3d)
Retained Earnings............... 646,373 119,607 119,607(3d) -- 646,373 345,616
Accumulated Other Comprehensive
Income -- Unrealized (Losses)/
Gains on Securities
Available-for-Sale, net of
taxes.......................... (51,018) (14,654) 120(3b) 14,654(3d) (50,902) 38,388
236(5)
Deferred Compensation........... (21,944) (4,093) -- 4,093(3d) (21,944) (4,758)
Treasury Stock.................. (253,336) (50,575) 124,731(3a) 348,025(3b) (30,042) (175,393)
50,575(3d)
----------- ---------- -------- -------- ----------- ----------
Total Stockholders' Equity..... $ 717,576 $ 171,702 $408,376 $417,583 $ 898,485 $ 374,232
----------- ---------- -------- -------- ----------- ----------
Total Liabilities and
Stockholders' Equity......... $11,914,847 $2,478,899 $413,376 $468,733 $14,449,103 $1,595,770
=========== ========== ======== ======== =========== ==========
<CAPTION>
PRO FORMA ALL
ADJUSTMENTS COMBINED
--------------------- TRANSACTIONS
DEBITS CREDITS PRO FORMA
-------- -------- ------------
<S> <C> <C> <C>
ASSETS
Cash & Due from Banks........... $ 182,906
Money Market Investments........ 232,656
Securities:
Available-for-Sale............. 4,557,186
Held-to-Maturity............... 1,783,197
-------- -------- -----------
Total Securities............... -- -- 6,340,383
-------- -------- -----------
Loans, net of Unearned Income... 8,626,381
Allowance for Loan Losses...... 83,955
-------- -------- -----------
Net Loans...................... -- -- 8,542,426
-------- -------- -----------
Premises & Equipment, Net....... 109,689
Accrued Interest Receivable..... 94,977
Intangible Assets............... 342,516
Other Assets.................... 6,357(8) -- 205,677
-------- -------- -----------
Total Assets................... $ 6,357 $ -- $16,051,230
======== ======== ===========
LIABILITIES AND STOCKHOLDERS'
EQUITY
Demand Deposits................. $ 1,579,057
Savings N.O.W. & Money Market
Deposits....................... 4,192,721
Time Deposits................... 3,497,648
-------- -------- -----------
Total Deposits................. -- -- 9,269,426
-------- -------- -----------
Federal Funds Purchased &
Securities Sold Under
Agreements to Repurchase....... 3,004,750
Other Borrowings................ 1,877,655
Accrued Expenses & Other
Liabilities.................... -- 43,223(8) 419,240
-------- -------- -----------
Total Liabilities.............. $ -- $ 43,223 $14,571,071
-------- -------- -----------
Capital Securities.............. $ -- $ -- $ 244,308
STOCKHOLDERS' EQUITY
Preferred Stock................. $ -- $ -- $ --
Common Stock.................... 430,760(10) 69,513(7a) 1,729
Additional Paid in Capital...... 69,513(7a) 430,760(10) 343,499
175,393(7b)
4,758(7c)
Retained Earnings............... 36,866(8) 955,123
Accumulated Other Comprehensive
Income -- Unrealized (Losses)/
Gains on Securities
Available-for-Sale, net of
taxes.......................... (12,514)
Deferred Compensation........... -- 4,758(7c) (21,944)
Treasury Stock.................. -- 175,393(7b) (30,042)
-------- -------- -----------
Total Stockholders' Equity..... $717,290 $680,424 $ 1,235,851
-------- -------- -----------
Total Liabilities and
Stockholders' Equity......... $717,290 $723,647 $16,051,230
======== ======== ===========
</TABLE>
<TABLE>
<CAPTION>
NORTH FORK/
RELIANCE
NORTH FORK RELIANCE PRO FORMA JSB
----------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
SELECTED CAPITAL RATIOS:
Tier 1 Capital Ratio............ 12.76% 16.86% 10.12% 26.14%
Risk Adjusted Capital Ratio..... 13.75% 17.72% 11.10% 28.32%
Leverage Ratio.................. 7.65% 7.34% 5.86% 20.93%
<CAPTION>
ALL
COMBINED
TRANSACTIONS
PRO FORMA
------------
<S> <C> <C>
SELECTED CAPITAL RATIOS:
Tier 1 Capital Ratio............ 12.39%
Risk Adjusted Capital Ratio..... 13.58%
Leverage Ratio.................. 7.46%
</TABLE>
See "Notes to the Unaudited Pro Forma Condensed Combined Financial Statements"
77
<PAGE> 85
NORTH FORK BANCORPORATION, INC.
COMBINED WITH RELIANCE BANCORP, INC. & JSB FINANCIAL, INC.
PRO FORMA CONDENSED COMBINED STATEMENTS OF INCOME
(UNAUDITED)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
PRO FORMA ALL
ADJUSTMENTS NORTH FORK/ COMBINED
----------------- RELIANCE TRANSACTIONS
NORTH FORK RELIANCE DEBITS CREDITS PRO FORMA JSB PRO FORMA
---------- -------- ------- ------- ----------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Interest Income.................. $604,444 $124,034 $13,165 (6) $715,313 $84,526 $799,839
Interest Expense................. 267,591 68,367 335,958 27,981 363,939
-------- -------- ------- ------ -------- ------- --------
Net Interest Income............ 336,853 55,667 13,165 379,355 56,545 435,900
Provision for Loan Losses........ 3,750 150 3,900 13 3,913
-------- -------- ------- ------ -------- ------- --------
Net Interest Income after
Provision for Loan Losses.... 333,103 55,517 13,165 375,455 56,532 431,987
Non-Interest Income.............. 44,314 4,203 48,517 1,212 49,729
Real Estate Operations, net...... -- -- -- 1,223 1,223
Income from Money Centers........ -- 2,071 2,071 -- 2,071
Net Securities Gains............. 9,900 112 10,012 -- 10,012
Other Non-Interest Expense....... 112,943 27,744 140,687 21,175 161,862
Capital Securities Costs......... 12,633 3,073 15,706 -- 15,706
Amortization of Intangible
Assets......................... 6,267 3,423 9,805 3,423(2) 16,072 -- 16,072
-------- -------- ------- ------ -------- ------- --------
Income before Income Taxes..... 255,474 27,663 22,970 3,423 263,590 37,792 301,382
Provision for Income Taxes....... 89,416 12,120 -- 4,608(6) 96,928 16,218 113,146
-------- -------- ------- ------ -------- ------- --------
Net Income..................... $166,058 $ 15,543 $22,970 $8,031 $166,662 $21,574 $188,236
======== ======== ======= ====== ======== ======= ========
Earnings Per Share -- Basic...... $ 1.21 $ 1.88 $ 1.17 $ 2.32 $ 1.11
Earnings Per Share -- Diluted.... $ 1.20 $ 1.78 $ 1.16 $ 2.27 $ 1.09
Weighted Average Shares
Outstanding -- Basic........... 137,342 8,261 142,012 9,319 169,969
Weighted Average Shares
Outstanding -- Diluted......... 138,197 8,715 143,775 9,520 172,335
</TABLE>
See "Notes to the Unaudited Pro Forma Condensed Combined Financial Statements"
79
<PAGE> 86
NORTH FORK BANCORPORATION, INC.
COMBINED WITH RELIANCE BANCORP, INC. & JSB FINANCIAL, INC.
PRO FORMA CONDENSED COMBINED STATEMENTS OF INCOME
(UNAUDITED)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
PRO FORMA ALL
ADJUSTMENTS NORTH FORK/ COMBINED
----------------- RELIANCE TRANSACTIONS
NORTH FORK RELIANCE DEBITS CREDITS PRO FORMA JSB PRO FORMA
---------- -------- ------- ------- ----------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Interest Income.................. $560,984 $121,362 $18,676 $ --(6) $663,670 $89,466 $753,136
Interest Expense................. 245,888 68,500 314,388 29,098 343,486
-------- -------- ------- ------ -------- ------- --------
Net Interest Income............ 315,096 52,862 18,676 -- 349,282 60,368 409,650
Provision for Loan Losses........ 14,500 600 15,100 41 15,141
-------- -------- ------- ------ -------- ------- --------
Net Interest Income after
Provision for Loan Losses.... 300,596 52,262 18,676 -- 334,182 60,327 394,509
Non-Interest Income.............. 41,588 3,649 45,237 4,461 49,698
Real Estate Operations, net...... -- -- -- 287 287
Income from Money Centers........ -- 1,944 1,944 -- 1,944
Net Securities Losses............ 2,318 58 2,376 -- 2,376
Other Non-Interest Expense....... 111,681 27,636 139,317 20,818 160,135
Capital Securities Costs......... 12,633 1,746 14,379 -- 14,379
Amortization & Write-down of
Intangible Assets.............. 12,403 3,422 9,804 3,422(2) 22,207 -- 22,207
Merger Related Restructure
Charge......................... 52,452 -- 52,452 -- 52,452
-------- -------- ------- ------ -------- ------- --------
Income before Income Taxes..... 155,333 25,109 28,480 3,422 155,384 44,257 199,641
Provision for Income Taxes....... 44,394 11,237 -- 6,537(6) 49,094 10,030 59,124
-------- -------- ------- ------ -------- ------- --------
Net Income..................... $110,939 $ 13,872 $28,480 $9,959 $106,290 $34,227 $140,517
======== ======== ======= ====== ======== ======= ========
Earnings Per Share -- Basic...... $ 0.79 $ 1.52 $ 0.75 $ 3.47 $ 0.82
Earnings Per Share -- Diluted.... $ 0.78 $ 1.44 $ 0.74 $ 3.37 $ 0.80
Weighted Average Shares
Outstanding -- Basic........... 140,547 9,107 141,947 9,864 171,539
Weighted Average Shares
Outstanding -- Diluted......... 141,680 9,651 144,168 10,159 174,645
</TABLE>
See "Notes to the Pro Forma Condensed Combined Financial Statements"
80
<PAGE> 87
NORTH FORK BANCORPORATION, INC.
COMBINED WITH RELIANCE BANCORP, INC. & JSB FINANCIAL, INC.
PRO FORMA CONDENSED COMBINED STATEMENTS OF INCOME
(UNAUDITED)
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1998
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
PRO FORMA ALL
ADJUSTMENTS NORTH FORK/ COMBINED
----------------- RELIANCE TRANSACTIONS
NORTH FORK RELIANCE DEBITS CREDITS PRO FORMA JSB PRO FORMA
---------- -------- ------- ------- ----------- -------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Interest Income................ $753,100 $163,762 $24,513 $ --(6) $892,349 $117,813 $1,010,162
Interest Expense............... 328,456 92,272 420,728 38,476 459,204
-------- -------- ------- ------- -------- -------- ----------
Net Interest Income.......... 424,644 71,490 24,513 -- 471,621 79,337 550,958
Provision for Loan Losses...... 15,500 950 16,450 51 16,501
-------- -------- ------- ------- -------- -------- ----------
Net Interest Income after
Provision for Loan
Losses..................... 409,144 70,540 24,513 -- 455,171 79,286 534,457
Non-Interest Income............ 54,885 4,949 59,834 5,134 64,968
Real Estate Operations, net.... -- -- -- 714 714
Income from Money Centers...... -- 2,614 2,614 -- 2,614
Net Securities
Gains/(Losses)............... 9,433 (1) 9,432 -- 9,432
Other Non-Interest Expense..... 146,607 36,412 183,019 27,458 210,477
Capital Securities Costs....... 16,843 2,748 19,591 -- 19,591
Amortization & Write-down of
Intangible Assets............ 14,479 4,563 13,073 4,563(2) 27,552 -- 27,552
Merger Related Restructure
Charge....................... 52,452 -- 52,452 -- 52,452
-------- -------- ------- ------- -------- -------- ----------
Income before Income Taxes... 243,081 34,379 37,586 4,563 244,437 57,676 302,113
Provision for Income Taxes..... 75,106 15,288 -- 8,580(6) 81,814 13,288 95,102
-------- -------- ------- ------- -------- -------- ----------
Net Income................... $167,975 $ 19,091 $37,586 $13,143 $162,623 $ 44,388 $ 207,011
======== ======== ======= ======= ======== ======== ==========
Earnings Per Share -- Basic.... $ 1.19 $ 2.14 $ 1.15 $ 4.53 $ 1.21
Earnings Per
Share -- Diluted............. $ 1.18 $ 2.03 $ 1.13 $ 4.41 $ 1.19
Weighted Average Shares
Outstanding -- Basic......... 140,706 8,908 142,016 9,793 171,395
Weighted Average Shares
Outstanding -- Diluted....... 141,766 9,425 144,110 10,074 174,332
</TABLE>
See "Notes to the Pro Forma Condensed Combined Financial Statements"
80
<PAGE> 88
NOTES TO THE UNAUDITED PRO FORMA
CONDENSED COMBINED FINANCIAL STATEMENTS
NOTE (1) BASIS OF PRESENTATION
The pro forma information presented is not necessarily indicative of the
results of operations or the combined financial position or the results of
operations that would have resulted had the merger and the JSB merger become
effective at the beginning of each of the periods indicated. The pro forma
information presented is not necessarily indicative of the results of operations
in future periods or the future financial position of the combined entities. It
is anticipated that the mergers will be completed during the first quarter of
2000, with the merger being completed prior to the JSB merger.
The Reliance merger will be accounted for using the purchase method of
accounting and, as such, the assets and liabilities of Reliance will be recorded
at their estimated fair values. The pro forma financial statements do not
reflect adjustments necessary to allocate a portion of the purchase price paid
for Reliance to the individual assets and liabilities assumed in the merger. For
purposes of the pro forma financial statements, the full amount of the purchase
price has been reflected as an intangible asset. Management is currently
assessing the purchase price allocation to Reliance's assets and liabilities.
However, these adjustments are not expected to materially impact the pro forma
financial statements.
The JSB merger will be accounted for using the pooling-of-interests method
of accounting and, as such, the assets and liabilities of JSB will be combined
with those of North Fork at their historical values. Accordingly, the financial
statements of JSB will be combined with the financial statements of North Fork
as of the earliest period presented.
The Pro Forma Condensed Combined Balance Sheets give effect to the Reliance
and JSB mergers as if such transactions had become effective as of September 30,
1999. The Pro Forma Condensed Combined Statements of Income give effect to the
Reliance and JSB mergers as if such transaction had become effective as of the
beginning of each of the periods for which information is presented.
Reliance's annual reporting periods are as of and for the year ended June
30, whereas North Fork and JSB utilize a calendar year basis. Reliance's
financial results for the nine months ended September 30, 1999 and 1998 and the
twelve months ended December 31, 1998 have been conformed to the calendar year
reporting period of North Fork and JSB. In order to conform Reliance's
Statements of Income for the aforementioned periods, the following adjustments
have been made to Reliance's financial statements: (a) the nine months ended
September 30, 1999 were derived by removing the six months ended December 31,
1998 from the year ended June 30, 1999 and adding the three months ended
September 30, 1999; (b) the nine months ended September 30, 1998 were derived by
removing the six months ended December 31, 1997 from the year ended June 30,
1998 and adding the three months ended September 30, 1998; and (c) the year
ended December 31, 1998 was derived by adding the six months ended December 31,
1998 to the year ended June 30, 1998, and removing the six months ended December
31, 1997.
RELIANCE PRO FORMA ADJUSTMENTS
NOTE (2)
The Reliance purchase transaction creates an increase in the consolidated
intangible asset of $261.5 million. The entries that give rise to the increase
are more fully described in their detailed components in the following notes 3
through 6. The incremental intangible asset will be amortized on a straight-line
basis over a 20 year period.
NOTE (3)
Pro forma adjustments to stockholders' equity at September 30, 1999 reflect
the merger accounted for in accordance with the purchase method of accounting
through:
(a) The assumed purchase of the remaining 6,008,500 shares of North
Fork common stock needed to complete the 8.5 million share purchase program
to be used to fund the merger, at an average cost of $20.76. As of
September 30, 1999, 11,811,004 shares were held by North Fork in treasury
stock.
82
<PAGE> 89
(b) The issuance of 16,403,980 shares of North Fork's treasury stock
(assumed to be held at an average per share cost of $21.22) at $18.625 (the
average market price of North Fork common stock for the period August 26,
1999 through September 1, 1999) in exchange for the 8,201,990 outstanding
common shares of Reliance based on the exchange ratio of 2.0. This excludes
387,500 shares of Reliance common stock held by North Fork in its
available-for-sale portfolio (at an average per share cost of $37.08),
which are assumed to be retired at cost. For purposes of the pro forma
adjustments, the unrealized gain on these securities of $209,000 have been
reversed against other assets and stockholders' equity.
(c) A cash payment of $23.9 million and $5.3 million in related tax
benefits, for the satisfaction of all Reliance stock options outstanding at
September 30, 1999.
(d) The elimination of Reliance's stockholders' equity at September
30, 1999.
NOTE (4)
Transaction costs of approximately $41.5 million, net of $9.7 million in
related tax benefits, will be incurred upon consummation of the merger and
reflected as part of the purchase price for financial reporting purposes. A
summary of the transaction costs, based on North Fork and Reliance's preliminary
estimates, are as follows:
<TABLE>
<CAPTION>
TYPE OF COST EXPECTED COSTS
- ------------ --------------
(IN THOUSANDS)
<S> <C>
Transaction Costs........................................... $ 6,226
Merger Related Compensation and Severance Costs............. 37,360
Facilities and Systems Costs................................ 6,689
Other Merger Related Costs.................................. 875
--------
Total Pre-Tax Transaction Costs............................. 51,150
Less: Related Tax Benefit................................... (11,634)
Add: State and Local Tax Bad Debt Recapture, Net of Federal
Benefit................................................... 1,950
--------
Total Transaction Costs, Net of Taxes....................... $ 41,466
========
</TABLE>
Transaction costs consist primarily of investment banking, legal fees,
other professional fees and expenses associated with stockholder and customer
notifications. Merger related compensation and severance costs consist primarily
of employee severance, compensation arrangements, transitional staffing and
related employee benefit expenses. Facility and system costs consist primarily
of lease termination charges and equipment write-offs resulting from the
consolidation of overlapping branch locations, duplicate headquarters and
operational facilities. Also reflected are the costs associated with the
cancellation of certain data and item processing contracts and the deconversion
of Reliance's computer systems. Other merger related costs arise primarily from
the application of North Fork's accounting practices to the accounts of Reliance
and other expenses associated with the integration of operations. Refinements to
the foregoing estimates may occur subsequent to the completion of the merger.
The effect of the proposed charge has been reflected in the pro forma
condensed combined balance sheet as of September 30, 1999; however, 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 approximately $14.9 million on an after tax basis by the end
of 2000 as a result of steps to be taken to integrate operations and to achieve
efficiencies in certain combined lines of businesses. These anticipated merger
related cost savings were determined based upon preliminary estimates. 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
as a result of the merger. See "Management and Operations Following the Merger
and the JSB Merger."
82
<PAGE> 90
NOTE (5)
Reflects the elimination of $5.0 million in Reliance Capital Securities
owned by North Fork in its securities available-for-sale portfolio. For purposes
of the pro forma adjustments, the unrealized loss on these securities of
$412,000 has been reversed against other assets and stockholders' equity.
NOTE (6)
Treasury shares acquired for purposes of funding the Reliance merger are
assumed to have been acquired and reissued in accordance with the following
assumptions:
A) The Pro Forma Condensed Combined Balance Sheets at September 30,
1999 assumes that the remaining 6,008,500 shares necessary to fund the
transaction were acquired at an average cost of $20.76 (see note (3) for
more detail). The cash proceeds are assumed to have been obtained from the
liquidation of mortgage backed securities held in the available-for-sale
portfolio at their carrying value.
B) The Pro forma Condensed Combined Statements of Income assumes that
the shares necessary to fund the transaction were acquired and reissued in
accordance with the assumptions contained in note (3) above, as of January
1, 1998. The cash proceeds are assumed to have been obtained from the
liquidation of mortgage backed securities held in the available-for-sale
portfolio, totalling $251.4 million, $350.2 million and $356.7 million at
September 30, 1999, December 31, 1998 and September 30, 1998, respectively.
These securities are assumed to be liquidated at their respective book
values and to have a weighted average yield of 7.00% for all periods
indicated. North Fork utilized its effective tax rate of 35%, exclusive of
merger related restructure charge and special items, for all periods
indicated.
JSB FINANCIAL, INC. PRO FORMA ADJUSTMENTS
NOTE (7)
Pro forma adjustments to stockholders' equity, at September 30, 1999,
reflect:
(a) The JSB merger accounted for in accordance with the
pooling-of-interest method of accounting through the exchange of 27,869,379
shares of North Fork common stock (using an exchange ratio of 3.0) for
9,289,793 actual outstanding shares of JSB.
(b) The retirement of JSB treasury stock of $175,393,000 (6,710,207
shares with an average cost of $26.14 per share).
(c) The retirement of JSB's benefit restoration plan of $4,758,000
(196,823 shares with an average cost of $24.17 per share).
Pro forma adjustments do not include any shares of North Fork common stock
to be received upon consummation of the JSB merger by holders of JSB options.
NOTE (8)
The pro forma condensed combined balance sheet reflects a merger and
restructuring charge of $36.9 million, net of taxes, which will be recognized
upon consummation of the JSB merger. Such charge will reduce diluted earnings
per share for the period in which such charge is recognized by approximately
$0.21 (based on pro forma diluted weighted average shares outstanding of
approximately 172,335,000 as of
83
<PAGE> 91
September 30, 1999). A summary of the merger and restructuring charge, based on
North Fork and JSB's best estimates, are as follows:
<TABLE>
<CAPTION>
TYPE OF COST EXPECTED COSTS
- ------------ --------------
(IN THOUSANDS)
<S> <C>
Merger Expenses............................................. $ 4,148
Restructuring Charge:
Merger Related Compensation and Severance Costs............. 32,566
Facilities and Systems Costs................................ 5,635
Other Merger Related Costs.................................. 875
--------
Total Pre-Tax Merger and Restructuring Charge............... 43,224
Less: Related Tax Benefit................................... (13,858)
Add: State and Local Tax Bad Debt Recapture, Net of Federal
Benefit................................................... 7,500
--------
Total Merger and Restructuring Charge, Net of Taxes......... $ 36,866
========
</TABLE>
Merger expenses consist primarily of investment banking, legal and other
professional fees, and expenses associated with stockholder and customer
notifications. Merger related compensation and severance costs consist primarily
of employee severance, compensation arrangements, transitional staffing and the
related employee benefits expenses. Facility and system costs consist primarily
of lease termination charges and equipment write-offs resulting from the
consolidation of overlapping branch locations and duplicate headquarters and
operational facilities. Also reflected are the costs associated with the
cancellation of certain data and item processing contracts and the deconversion
of existing JSB computer systems. Other merger related costs arise primarily
from the application of North Fork's accounting practices to the accounts of JSB
and other expenses associated with the integration of operations. Refinements to
the foregoing estimates may occur subsequent to the completion of the JSB
merger.
The effect of the proposed charge has been reflected in the pro forma
condensed combined balance sheet as of September 30, 1999, however, 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 approximately $13.2 million on an after tax basis by the end
of 2000 as a result of steps to be taken to integrate operations and to achieve
efficiencies in certain combined lines of business. These anticipated cost
savings were determined based upon preliminary estimates. 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 as
a result of the JSB merger. See "Management and Operations Following the Merger
and the JSB Financial Merger."
NOTE (9)
Pro Forma Weighted Average Shares Outstanding
The pro forma weighted average shares outstanding for the nine month
periods ended September 30, 1999 and 1998, and for the year ended December 31,
1998, reflect: (a) an exchange ratio of 2.0 shares of North Fork common stock
for each average share of Reliance common stock outstanding during such periods
(all Reliance options are assumed to have been settled for cash in accordance
with the provisions of the limited rights associated therewith); (b) the assumed
purchase of all additional shares not held by North Fork in treasury needed to
fund the Reliance transaction; and (c) the reissuance by North Fork of treasury
shares necessary to fund the Reliance transaction. The pro forma weighted
average shares outstanding for all periods presented reflect the assumed
issuance of 3.0 shares of North Fork common stock for each average equivalent
share of JSB common stock outstanding during such periods.
NOTE (10)
An adjustment to reflect the assumed reduction in the par value of North
Fork's common stock from $2.50 to $0.01. Pro forma shares outstanding, inclusive
of pro forma shares issued in the JSB merger, total 172,995,901 at September 30,
1999.
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<PAGE> 92
APPENDIX A
AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER
BETWEEN
NORTH FORK BANCORPORATION, INC.
AND
RELIANCE BANCORP, INC.
DATED AS OF AUGUST 30, 1999
<PAGE> 93
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE I
THE MERGER
1.1. The Merger.................................................. A-1
1.2. Effective Time.............................................. A-1
1.3. Effects of the Merger....................................... A-1
1.4. Conversion of Company Common Stock.......................... A-1
1.5. Stock Options............................................... A-2
1.6. Buyer Common Stock.......................................... A-2
1.7. Certificate of Incorporation................................ A-3
1.8. By-Laws..................................................... A-3
1.9. Directors and Officers...................................... A-3
1.10. Tax Consequences............................................ A-3
ARTICLE II
EXCHANGE OF SHARES
2.1. Buyer to Make Shares Available.............................. A-3
2.2. Exchange of Shares.......................................... A-3
ARTICLE III
DISCLOSURE SCHEDULES; STANDARDS
FOR REPRESENTATIONS AND WARRANTIES
3.1. Disclosure Schedules........................................ A-4
3.2. Standards................................................... A-5
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
4.1. Corporate Organization...................................... A-5
4.2. Capitalization.............................................. A-6
4.3. Authority; No Violation..................................... A-7
4.4. Consents and Approvals...................................... A-7
4.5. Reports..................................................... A-8
4.6. Financial Statements........................................ A-8
4.7. Broker's Fees............................................... A-9
4.8. Absence of Certain Changes or Events........................ A-9
4.9. Legal Proceedings........................................... A-9
4.10. Taxes....................................................... A-9
4.11. Employees................................................... A-10
4.12. SEC Reports................................................. A-11
4.13. Company Information......................................... A-11
4.14. Compliance with Applicable Law.............................. A-11
4.15. Certain Contracts........................................... A-12
4.16. Agreements with Regulatory Agencies......................... A-12
4.17. Investment Securities....................................... A-12
4.18. State Takeover Laws; Business Combination Provision......... A-12
4.19. Environmental Matters....................................... A-12
</TABLE>
A-i
<PAGE> 94
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
4.20. Derivative Transactions..................................... A-13
4.21. Opinion..................................................... A-13
4.22. Approvals................................................... A-13
4.23. Loan Portfolio.............................................. A-13
4.24. Property.................................................... A-14
4.25. Reorganization.............................................. A-14
4.26. Company Rights Agreement.................................... A-14
4.27. Equity and Real Estate Investments.......................... A-14
4.28. Year 2000 Matters........................................... A-14
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
5.1. Corporate Organization...................................... A-15
5.2. Capitalization.............................................. A-15
5.3. Authority; No Violation..................................... A-16
5.4. Consents and Approvals...................................... A-16
5.5. Reports..................................................... A-17
5.6. Financial Statements........................................ A-17
5.7. Broker's Fees............................................... A-17
5.8. Absence of Certain Changes or Events........................ A-17
5.9. Legal Proceedings........................................... A-18
5.10. Taxes....................................................... A-18
5.11. Employees................................................... A-18
5.12. SEC Reports................................................. A-19
5.13. Buyer Information........................................... A-19
5.14. Compliance with Applicable Law.............................. A-19
5.15. Ownership of Company Common Stock........................... A-20
5.16. Agreements with Regulatory Agencies......................... A-20
5.17. Approvals................................................... A-20
5.18. Tax Treatment for the Merger; Reorganization................ A-20
5.19. Environmental Matters....................................... A-20
5.20. Loan Portfolio.............................................. A-21
5.21. Property.................................................... A-21
5.22. Derivative Transactions..................................... A-21
5.23. Year 2000 Matters........................................... A-22
5.24. Insurance................................................... A-22
ARTICLE VI
COVENANTS RELATING TO CONDUCT OF BUSINESS
6.1. Covenants of the Company.................................... A-22
6.2. Covenants of Buyer.......................................... A-24
ARTICLE VII
ADDITIONAL AGREEMENTS
7.1. Regulatory Matters.......................................... A-25
7.2. Access to Information....................................... A-25
7.3. Stockholder Meetings........................................ A-26
</TABLE>
A-ii
<PAGE> 95
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
7.4. Legal Conditions to Merger.................................. A-26
7.5. Affiliates.................................................. A-27
7.6. Stock Exchange Listing...................................... A-27
7.7. Employee Benefit Plans; Existing Agreements................. A-27
7.8. Indemnification............................................. A-28
7.9. Additional Agreements....................................... A-29
7.10. Advice of Changes........................................... A-29
7.11. Current Information......................................... A-29
7.12. Execution and Authorization of Bank Merger Agreement........ A-30
7.13. Coordination of Dividends................................... A-30
7.14. Directorship................................................ A-30
7.15. Accountants' Letter......................................... A-30
7.16. Certain Revaluations, Changes and Adjustments............... A-30
7.17. Year 2000................................................... A-30
7.18. JSB Financial Merger........................................ A-30
7.19. Advisory Board.............................................. A-30
ARTICLE VIII
CONDITIONS PRECEDENT
8.1. Conditions to Each Party's Obligation To Effect the A-31
Merger......................................................
8.2. Conditions to Obligations of Buyer.......................... A-31
8.3. Conditions to Obligations of the Company.................... A-32
ARTICLE IX
TERMINATION AND AMENDMENT
9.1. Termination................................................. A-33
9.2. Effect of Termination; Expenses............................. A-35
9.3. Amendment................................................... A-36
9.4. Extension; Waiver........................................... A-36
ARTICLE X
GENERAL PROVISIONS
10.1. Closing..................................................... A-36
10.2. Alternative Structure....................................... A-36
10.3. Nonsurvival of Representations, Warranties and Agreements... A-36
10.4. Expenses.................................................... A-36
10.5. Notices..................................................... A-37
10.6. Interpretation.............................................. A-37
10.7. Counterparts................................................ A-37
10.8. Entire Agreement............................................ A-37
10.9. Governing Law............................................... A-38
10.10. Enforcement of Agreement.................................... A-38
10.11. Severability................................................ A-38
10.12. Publicity................................................... A-38
10.13. Assignment; No Third Party Beneficiaries.................... A-38
</TABLE>
A-iii
<PAGE> 96
AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER
AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER, dated as of August 30,
1999 (this "Agreement"), by and between North Fork Bancorporation, Inc., a
Delaware corporation ("Buyer"), and Reliance Bancorp, Inc., a Delaware
corporation (the "Company"). Buyer and the Company are sometimes collectively
referred to herein as the "Constituent Corporations".
WHEREAS, the Boards of Directors of Buyer and the Company have determined
that it is in the best interests of their respective companies and their
stockholders to consummate the business combination transaction provided for
herein in which the Company will, subject to the terms and conditions set forth
herein, merge (the "Merger") with and into Buyer; and
WHEREAS, the parties desire to make certain representations, warranties and
agreements in connection with the Merger and also to prescribe certain
conditions to the Merger.
NOW, THEREFORE, in consideration of the mutual covenants, representations,
warranties and agreements contained herein, and intending to be legally bound
hereby, the parties agree as follows:
ARTICLE I
THE MERGER
1.1. The Merger. Subject to the terms and conditions of this Agreement, in
accordance with the Delaware General Corporation Law (the "DGCL"), at the
Effective Time (as defined in Section 1.2 hereof), the Company shall merge with
and into Buyer. Buyer shall be the surviving corporation (hereinafter sometimes
called the "Surviving Corporation") in the Merger, and shall continue its
corporate existence under the laws of the State of Delaware. The name of the
Surviving Corporation shall continue to be North Fork Bancorporation, Inc. Upon
consummation of the Merger, the separate corporate existence of the Company
shall terminate.
1.2. Effective Time. The Merger shall become effective as set forth in the
certificate of merger (the "Certificate of Merger") which shall be filed with
the Secretary of State of the State of Delaware (the "Secretary") on the Closing
Date (as defined in Section 10.1 hereof). The term "Effective Time" shall be the
date and time when the Merger becomes effective, as set forth in the Certificate
of Merger.
1.3. Effects of the Merger. At and after the Effective Time, the Merger
shall have the effects set forth in Sections 259 and 261 of the DGCL.
1.4. Conversion of Company Common Stock.
(a) At the Effective Time, subject to Section 2.2(e) and Section 9.1(h)
hereof, each share of the common stock, par value $0.01 per share, of the
Company (the "Company Common Stock") issued and outstanding immediately prior to
the Effective Time (other than (x) shares of Company Common Stock held in the
Company's treasury, (y) shares of Company Common Stock held directly or
indirectly by Buyer or the Company or any of their respective Subsidiaries (as
defined below) (except for Trust Account Shares and DPC shares, as such terms
are defined in Section 1.4(b) hereof), or (z) unallocated shares of Company
Common Stock held in the Company's Recognition and Retention Plans) together
with the related Company Rights issued pursuant to the Company Rights Agreement
(each as defined in Section 4.2(a) hereof) shall, by virtue of this Agreement
and without any action on the part of the holder thereof, be converted into and
exchangeable for 2.0 (two) shares (the "Exchange Ratio") of the common stock,
par value $2.50 per share, of Buyer ("Buyer Common Stock"). All of the shares of
Company Common Stock converted into Buyer Common Stock pursuant to this Article
I shall no longer be outstanding and shall automatically be cancelled and shall
cease to exist, and each certificate (each a "Certificate") previously
representing any such shares of Company Common Stock shall thereafter only
represent the right to receive (i) the number of whole shares of Buyer Common
Stock and (ii) the cash in lieu of fractional shares into which the shares of
Company Common Stock represented by such Certificate have been converted
pursuant to this Section 1.4(a) and
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<PAGE> 97
Section 2.2(e) hereof. Certificates previously representing shares of Company
Common Stock shall be exchanged for certificates representing whole shares of
Buyer Common Stock and cash in lieu of fractional shares issued in consideration
therefor upon the surrender of such Certificates in accordance with Section 2.2
hereof, without any interest thereon. If, between the date of this Agreement and
the Effective Time, the shares of Buyer Common Stock shall be changed into a
different number or class of shares by reason of any reclassification,
recapitalization, spilt-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, all shares of Company Common Stock that
are owned directly or indirectly by Buyer or the Company or any of their
respective Subsidiaries (other than shares of Company Common Stock (x) held
directly or indirectly in trust accounts, managed accounts and the like or
otherwise held in a fiduciary capacity for the benefit of third parties (any
such shares, and shares of Buyer Common Stock which are similarly held, whether
held directly or indirectly by Buyer or the Company, as the case may be, being
referred to herein as "Trust Account Shares") and (y) held by Buyer or the
Company or any of their respective Subsidiaries in respect of a debt previously
contracted (any such shares of Company Common Stock, and shares of Buyer Common
Stock which are similarly held, whether held directly or indirectly by Buyer or
the Company, being referred to herein as "DPC Shares") and all unallocated
shares of Company Common Stock that are held in the Company's Recognition and
Retention Plans) shall be cancelled and shall cease to exist and no stock of
Buyer or other consideration shall be delivered in exchange therefor. All shares
of Buyer Common Stock that are owned by the Company or any of its Subsidiaries
(other than Trust Account Shares and DPC Shares) shall become treasury stock of
Buyer.
1.5. Stock Options. At the Effective Time, each option granted by the
Company to purchase shares of Company Common Stock (a "Company Option") which is
outstanding and unexercised immediately prior thereto shall cease to represent a
right to acquire shares of Company Common Stock and shall be converted
automatically into an option to purchase shares of Buyer Common Stock in an
amount and at an exercise price determined as provided below (and otherwise
subject to the terms of the Company's Amended and Restated 1996 Incentive Stock
Option Plan, 1994 Incentive Stock Option Plan or Amended and Restated 1994 Stock
Option Plan for Outside Directors (collectively, the "Company Option Plans"),
the agreements evidencing grants thereunder, and any other agreements between
the Company and an optionee regarding Company Options):
(1) the number of shares of Buyer Common Stock to be subject to the
new option shall be equal to the product of the number of shares of Company
Common Stock subject to the original option and the Exchange Ratio,
provided that any fractional share of Buyer Common Stock resulting from
such multiplication shall be rounded down to the nearest whole share; and
(2) the exercise price per share of Buyer Common Stock under the new
option shall be equal to the exercise price per share of Company Common
Stock under the original option divided by the Exchange Ratio, provided
that such exercise price shall be rounded up to the nearest cent.
The adjustment provided herein with respect to any options which are intended to
be "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, and to the
extent it is not so consistent, such Section 424(a) shall override such
adjustment. The duration and other terms of the new option shall be the same as
the original option, except that all references to the Company shall be deemed
to be references to Buyer, it being understood that any option that is intended
to be an incentive stock option and which is exercised by the option holder more
than 3 (three) months from the date of the option holder's termination of
employment from the Company or its Subsidiaries or from Buyer or its
Subsidiaries shall be treated as a non-statutory option.
1.6. Buyer Common Stock. Except for shares of Buyer Common Stock owned by
the Company or any of its Subsidiaries (other than Trust Account Shares and DPC
Shares), which shall be converted into treasury stock of Buyer as contemplated
by Section 1.4 hereof, the shares of Buyer Common Stock issued and
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<PAGE> 98
outstanding immediately prior to the Effective Time shall be unaffected by the
Merger and such shares shall remain issued and outstanding.
1.7. Certificate of Incorporation. At the Effective Time, the Restated
Certificate of Incorporation of Buyer, as in effect at the Effective Time, shall
be the Certificate of Incorporation of the Surviving Corporation.
1.8. By-Laws. At the Effective Time, the By-Laws of Buyer, as in effect
immediately prior to the Effective Time, shall be the By-Laws of the Surviving
Corporation until thereafter amended in accordance with applicable law.
1.9. Directors and Officers. Except as provided in Section 7.14 hereof,
the directors and officers of Buyer immediately prior to the Effective Time
shall be the directors and officers of the Surviving Corporation, each to hold
office in accordance with the Certificate of Incorporation and By-Laws of the
Surviving Corporation until their respective successors are duly elected or
appointed and qualified.
1.10. Tax Consequences. It is intended that the Merger shall constitute a
reorganization within the meaning of Section 368(a) of the Code, and that this
Agreement shall constitute a "plan of reorganization" for the purposes of
Section 368 of the Code.
ARTICLE II
EXCHANGE OF SHARES
2.1. Buyer to Make Shares Available. At or prior to the Effective Time,
Buyer shall deposit, or shall cause to be deposited, with a bank or trust
company (which may be a Subsidiary of Buyer) (the "Exchange Agent") selected by
Buyer and reasonably satisfactory to the Company, for the benefit of the holders
of Certificates, for exchange in accordance with this Article II, certificates
representing the shares of Buyer Common Stock and the cash in lieu of fractional
shares (such cash and certificates for shares of Buyer Common Stock, together
with any dividends or distributions with respect thereto, being hereinafter
referred to as the "Exchange Fund") to be issued pursuant to Section 1.4 and
paid pursuant to Section 2.2(a) in exchange for outstanding shares of Company
Common Stock.
2.2. Exchange of Shares. (a) As soon as practicable after the Effective
Time, and in no event more than three business days thereafter, the Exchange
Agent shall mail to each holder of record of a Certificate or Certificates a
form letter of transmittal (which shall specify that delivery shall be effected,
and risk of loss and title to the Certificates shall pass, only upon delivery of
the Certificates to the Exchange Agent) and instructions for use in effecting
the surrender of the Certificates in exchange for certificates representing the
shares of Buyer Common Stock and the cash in lieu of fractional shares into
which the shares of Company Common Stock represented by such Certificate or
Certificates shall have been converted pursuant to this Agreement. Upon
surrender of a Certificate for exchange and cancellation to the Exchange Agent,
together with such letter of transmittal, duly executed, the holder of such
Certificate shall be entitled to receive in exchange therefor (x) a certificate
representing that number of whole shares of Buyer Common Stock to which such
holder of Company Common Stock shall have become entitled pursuant to the
provisions of Article I hereof and (y) a check representing the amount of cash
in lieu of fractional shares, if any, which such holder has the right to receive
in respect of the Certificate surrendered pursuant to the provisions of this
Article II, and the Certificate so surrendered shall forthwith be cancelled. No
interest will be paid or accrued on the cash in lieu of fractional shares and
unpaid dividends and distributions, if any, payable to holders of Certificates.
(b) No dividends or other distributions declared after the Effective Time
with respect to Buyer Common Stock and payable to the holders of record thereof
shall be paid to the holder of any unsurrendered Certificate until the holder
thereof shall surrender such Certificate in accordance with this Article II.
After the surrender of a Certificate in accordance with this Article II, the
record holder thereof shall be entitled to receive any such dividends or other
distributions, without any interest thereon, which theretofore had become
payable with respect to shares of Buyer Common Stock represented by such
Certificate. No holder of an unsurrendered
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<PAGE> 99
Certificate shall be entitled, until the surrender of such Certificate, to vote
the shares of Buyer Common Stock into which his Company Common Stock shall have
been converted.
(c) If any certificate representing shares of Buyer Common Stock is to be
issued in a name other than that in which the Certificate surrendered in
exchange therefor is registered, it shall be a condition of the issuance thereof
that the Certificate so surrendered shall be properly endorsed (or accompanied
by an appropriate instrument of transfer) and otherwise in proper form for
transfer, and that the person requesting such exchange shall pay to the Exchange
Agent in advance any transfer or other taxes required by reason of the issuance
of a certificate representing shares of Buyer Common Stock in any name other
than that of the registered holder of the Certificate surrendered, or required
for any other reason, or shall establish to the satisfaction of the Exchange
Agent that such tax has been paid or is not payable.
(d) After the Effective Time, there shall be no transfers on the stock
transfer books of the Company of the shares of Company Common Stock which were
issued and outstanding immediately prior to the Effective Time. If, after the
Effective Time, Certificates representing such shares are presented for transfer
to the Exchange Agent, they shall be cancelled and exchanged for certificates
representing shares of Buyer Common Stock as provided in this Article II.
(e) Notwithstanding anything to the contrary contained herein, no
certificates or scrip representing fractional shares of Buyer Common Stock shall
be issued upon the surrender for exchange of Certificates, no dividend or
distribution with respect to Buyer Common Stock shall be payable on or with
respect to any fractional share, and such fractional share interests shall not
entitle the owner thereof to vote or to any other rights of a shareholder of
Buyer. In lieu of the issuance of any such fractional share, Buyer shall pay to
each former stockholder of the Company who otherwise would be entitled to
receive a fractional share of Buyer Common Stock an amount in cash determined by
multiplying (i) the average of the closing sale prices of Buyer Common Stock on
the New York Stock Exchange (the "NYSE") as reported by The Wall Street Journal
for the five trading days immediately preceding the date on which the Effective
Time shall occur by (ii) the fraction of a share of Buyer Common Stock to which
such holder would otherwise be entitled to receive pursuant to Section 1.4
hereof.
(f) Any portion of the Exchange Fund that remains unclaimed by the
stockholders of the Company for six months after the Effective Time shall be
paid to Buyer. Any stockholders of the Company who have not theretofore complied
with this Article II shall thereafter look only to Buyer for payment of their
shares of Buyer Common Stock, cash in lieu of fractional shares and unpaid
dividends and distributions on the Buyer Common Stock deliverable in respect of
each share of Company Common Stock such stockholder holds as determined pursuant
to this Agreement, in each case, without any interest thereon. Notwithstanding
the foregoing, none of Buyer, the Company, the Exchange Agent or any other
person shall be liable to any former holder of shares of Company Common Stock
for any amount properly delivered to a public official pursuant to applicable
abandoned property, escheat or similar laws.
(g) In the event any Certificate shall have been lost, stolen or destroyed,
upon the making of an affidavit of that fact by the person claiming such
Certificate to be lost, stolen or destroyed and, if required by Buyer, the
posting by such person of a bond in such amount as Buyer may direct as indemnity
against any claim that may be made against it with respect to such Certificate,
the Exchange Agent will issue in exchange for such lost, stolen or destroyed
Certificate the shares of Buyer Common Stock and cash in lieu of fractional
shares deliverable in respect thereof pursuant to this Agreement.
ARTICLE III
DISCLOSURE SCHEDULES; STANDARDS
FOR REPRESENTATIONS AND WARRANTIES
3.1. Disclosure Schedules. Prior to the execution and delivery of this
Agreement, the Company has delivered to Buyer, and Buyer has delivered to the
Company, a schedule (in the case of the Company, the "Company Disclosure
Schedule," and in the case of Buyer, the "Buyer Disclosure Schedule") setting
forth, among other things, items the disclosure of which is necessary or
appropriate either in response to an express
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disclosure requirement contained in a provision hereof or as an exception to one
or more of such party's representations or warranties contained in Article IV,
in the case of the Company, or Article V, in the case of Buyer, or to one or
more of such party's covenants contained in Article VI; provided, however, that
notwithstanding anything in this Agreement to the contrary (a) no such item is
required to be set forth in the Disclosure Schedule as an exception to a
representation or warranty (other than a representation or warranty contained in
Sections 4.2, 4.3(a), 4.3(b)(i), 4.6, 4.7, 4.8(a)(ii), 4.8(b), 4.11(a), 4.12,
4.15(a), 4.18, 4.21, 4.26 and 4.27, with respect to the Company Disclosure
Schedule, or Sections 5.2, 5.3(a), 5.3(b), 5.3(c)(i), 5.6, 5.7, 5.8(ii), 5.11(a)
5.12 and 5.15, with respect to the Buyer Disclosure Schedule) if its absence
would not result in the related representation or warranty being deemed untrue
or incorrect under the standard established by Section 3.2, and (b) the mere
inclusion of an item in a Disclosure Schedule as an exception to a
representation or warranty shall not be deemed an admission by a party that such
item represents a material exception or material fact, event or circumstance or
that such item has had or is reasonably likely to have a Material Adverse Effect
(as defined herein) with respect to either the Company or Buyer, respectively.
3.2. Standards. (a) No representation or warranty of the Company contained
in Article IV (other than the representations and warranties contained in
Sections 4.2, 4.3(a), 4.3(b)(i), 4.6, 4.7, 4.8(a)(ii), 4.8(b), 4.11(a), 4.12,
4.15(a), 4.18, 4.21, 4.26 and 4.27) or of Buyer contained in Article V (other
than the representations and warranties contained in Sections 5.2, 5.3(a),
5.3(b), 5.3(c)(i), 5.6, 5.7, 5.8(ii), 5.11(a), 5.12 and 5.15) shall be deemed
untrue or incorrect for any purpose under this Agreement, and no party hereto
shall be deemed to have breached any such representation or warranty for any
purpose under this Agreement, in any case as a consequence of the existence or
absence of any fact, circumstance or event unless such fact, circumstance or
event, individually or when taken together with all other facts, circumstances
or events inconsistent with any representations or warranties contained in
Article IV, in the case of the Company, or Article V, in the case of Buyer, has
had or is reasonably likely to have a Material Adverse Effect with respect to
the Company or Buyer, respectively.
(b) As used in this Agreement, the term "Material Adverse Effect" means,
with respect to Buyer or the Company, as the case may be, a material adverse
effect on (i) the business, assets, liabilities, results of operations or
financial condition of such party and its Subsidiaries taken as a whole, other
than any such effect attributable to or resulting from (x) any change in banking
or similar laws, rules or regulations of general applicability or
interpretations thereof by courts or governmental authorities, (y) any change in
GAAP (as defined herein) or regulatory accounting principles, in each case which
affects banks, thrifts or their holding companies generally, except to the
extent any such condition or change affects the referenced party to a materially
greater extent than banks, thrifts or their holding companies generally, or (z)
any change in interest rates, provided, that any such change in interest rates
shall not affect the referenced party to a materially greater extent than banks,
thrifts or their holding companies generally, and provided further, that any
such change shall not have a materially adverse effect on the credit quality of
such party's assets, or (ii) the ability of such party and its Subsidiaries to
consummate the transactions contemplated hereby.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Subject to Article III hereof and except as set forth in the Company
Disclosure Schedule, the Company hereby represents and warrants to Buyer as
follows:
4.1. Corporate Organization. (a) The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. The Company has the corporate power and authority to own or lease all
of its properties and assets and to carry on its business as it is now being
conducted, and is duly licensed or qualified to do business in each jurisdiction
in which the nature of the business conducted by it or the character or location
of the properties and assets owned or leased by it makes such licensing or
qualification necessary. The Company is duly registered as a non-diversified
unitary savings and loan holding company under the Home Owners' Loan Act of
1933, as amended. The Restated Certificate of Incorporation and By-laws of the
Company, copies of which have previously been made available to Buyer, are true
and correct copies of such documents as in effect as of the date of this
Agreement. As used in this Agreement, the
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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) Reliance Federal Savings Bank (the "Company Bank") is a stock savings
bank duly organized, validly existing and in good standing under the laws of the
United States of America. The deposit accounts of the Company Bank are insured
by the Federal Deposit Insurance Corporation (the "FDIC") through the Savings
Association Insurance Fund to the fullest extent permitted by law, and all
premiums and assessments required to be paid in connection therewith have been
paid when due. Each of the Company's other Subsidiaries is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation or organization. Each of the Company's
Subsidiaries has the corporate power and authority to own or lease all of its
properties and assets and to carry on its business as it is now being conducted
and is duly licensed or qualified to do business in each jurisdiction in which
the nature of the business conducted by it or the character or the location of
the properties and assets owned or leased by it makes such licensing or
qualification necessary. The articles of incorporation, by-laws and similar
governing documents of each Subsidiary of the Company, copies of which have
previously been made available to Buyer, are true 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 and correct records of all meetings and other corporate actions held or
taken since December 31, 1996 of their respective stockholders and Boards of
Directors (including committees of their respective Boards of Directors).
4.2. Capitalization. (a) The authorized capital stock of the Company
consists of 20,000,000 shares of Company Common Stock and 4,000,000 shares of
preferred stock, par value $.01 per share (the "Company Preferred Stock"). As of
the date of this Agreement, there are (x) 8,584,410 shares of Company Common
Stock outstanding and 2,166,410 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) 1,080,876
shares of Company Common Stock reserved for issuance pursuant to the Company
Option Plans and described in Section 4.2(a) of the Company Disclosure Schedule,
and (ii) 1,708,297 shares of Company Common Stock reserved for issuance upon
exercise of the option issued to Buyer pursuant to the Stock Option Agreement,
dated August 30, 1999, between Buyer and the Company (the "Option Agreement")
and (z) no shares of Company Preferred Stock issued or outstanding, held in the
Company's treasury or reserved for issuance upon exercise of outstanding stock
options or otherwise, except for 150,000 shares of Company Series A Junior
Participating Preferred Stock reserved for issuance upon exercise of the rights
(the "Company Rights") distributed to holders of Company Common Stock pursuant
to the Stockholder Protection Rights Agreement, dated September 18, 1996 between
the Company and Registrar and Transfer Co., as Rights Agent (the "Company 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 referred to above or reflected in Section 4.2(a) of
the Company Disclosure Schedule, and except for the Option Agreement, the
Company does not have and is not bound by any outstanding subscriptions,
options, warrants, calls, commitments or agreements of any character calling for
the purchase or issuance of any shares of Company Common Stock or Company
Preferred Stock or any other equity security of the Company or any securities
representing the right to purchase or otherwise receive any shares of Company
Common Stock or any other equity security of the Company. The names of the
optionees, the date of each option to purchase Company Common Stock granted, the
number of shares subject to each such option, the expiration date of each such
option, and the price at which each such option may be exercised under the
Company Option Plans are set forth in Section 4.2(a) of the Company Disclosure
Schedule.
(b) Section 4.2(b) of the Company Disclosure Schedule sets forth a true and
correct list of all of the Subsidiaries of the Company. Except as set forth in
Section 4.2(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
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bound by any outstanding subscriptions, options, warrants, calls, commitments or
agreements of any character calling for the purchase or issuance of any shares
of capital stock or any other equity security of such Subsidiary or any
securities representing the right to purchase or otherwise receive any shares of
capital stock or any other equity security of such Subsidiary. Assuming
compliance by Buyer with Section 1.5 hereof, at the Effective Time, there will
not be any outstanding subscriptions, options, warrants, calls, commitments or
agreements of any character by which the Company or any of its Subsidiaries will
be bound calling for the purchase or issuance of any shares of the capital stock
of the Company or any of its Subsidiaries.
4.3. Authority; No Violation. (a) The Company has full corporate power and
authority to execute and deliver this Agreement and the Option Agreement (this
Agreement and the Option Agreement, collectively, the "Company Documents") and
to consummate the transactions contemplated hereby and thereby. The execution
and delivery of each of the Company Documents and the consummation of the
transactions contemplated hereby and thereby 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 approval and adoption of this Agreement by the
affirmative vote of the holders of a majority of the outstanding shares of the
Company Common Stock, no other corporate proceedings on the part of the Company
are necessary to approve the Company Documents and to consummate the
transactions contemplated hereby and thereby. Each of the Company Documents has
been duly and validly executed and delivered by the Company, and (assuming due
authorization, execution and delivery by Buyer) this Agreement constitutes a
valid and binding obligation of the Company, enforceable against the Company in
accordance with its terms, except as enforcement may be limited by general
principles of equity whether applied in a court of law or a court of equity and
by bankruptcy, insolvency and similar laws affecting creditors' rights and
remedies generally.
(b) Except as set forth in Section 4.3(b) of the Company Disclosure
Schedule, neither the execution and delivery of the Company Documents 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 Certificate of Incorporation or
By-Laws of the Company or the certificate of incorporation, by-laws or similar
governing documents of any of its Subsidiaries, or (ii) assuming that the
consents and approvals referred to in Section 4.4 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.
4.4. Consents and Approvals. Except for (a) the filing of an application
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 application, (b) the filing of an application with the FDIC
under the Bank Merger Act and approval of such application, in the event the
parties enter into the Bank Merger Agreement (as defined in Section 7.12) (c)
the filing of applications and notices, as applicable, with the Office of Thrift
Supervision (the "OTS") and approval of such applications and notices, (d) the
filing of an application with the New York State Banking Department (the
"Banking Department") and the approval of such application, (e) the filing with
the Securities and Exchange Commission (the "SEC") of a proxy statement in
definitive form relating to the meeting of the Company's stockholders to be held
in connection with this Agreement and the transactions contemplated hereby (the
"Proxy Statement") and the filing and declaration of effectiveness of the
registration statement on Form S-4 (the "S-4") in which the Proxy Statement will
be included as a prospectus, (f) the approval of this Agreement by the requisite
vote of
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the stockholders of the Company, (g) the filing of the Certificate of Merger
with the Secretary pursuant to the DGCL, (h) such filings and approvals as are
required to be made or obtained under the securities or "Blue Sky" laws of
various states in connection with the issuance of the shares of Buyer Common
Stock pursuant to this Agreement, (i) approval of the listing of the Buyer
Common Stock to be issued in the Merger on the NYSE, and (j) such filings,
authorizations or approvals as may be set forth in Section 4.4 of the Company
Disclosure Schedule, no consents or approvals of or filings or registrations
with any court, administrative agency or commission or other governmental
authority or instrumentality (each a "Governmental Entity") or with any third
party are necessary in connection with the execution and delivery by the Company
of the Company Documents or the consummation by the Company of the Merger and
the other transactions contemplated hereby and thereby.
4.5. Reports. The Company and each of its Subsidiaries have timely filed
all reports, registrations and statements, together with any amendments required
to be made with respect thereto, that they were required to file since December
31, 1996 with (i) the OTS, (ii) the FDIC, (iii) any state banking commissions or
any other state regulatory authority (each a "State Regulator") and (iv) any
other self-regulatory organization ("SRO") (collectively, with the Federal
Reserve Board, the "Regulatory Agencies"), and have paid all fees and
assessments due and payable in connection therewith. Except for normal
examinations conducted by a Regulatory Agency in the regular course of the
business of the Company and its Subsidiaries, and except as set forth in Section
4.5 of the Company Disclosure Schedule, no Regulatory Agency has initiated any
proceeding or, to the knowledge of the Company, investigation into the business
or operations of the Company or any of its Subsidiaries since December 31, 1996.
There is no unresolved violation, criticism, or exception by any Regulatory
Agency with respect to any report or statement relating to any examinations of
the Company or any of its Subsidiaries.
4.6. Financial Statements. The Company has previously made available to
Buyer copies of (a) the consolidated statements of condition of the Company and
its Subsidiaries as of June 30 for the fiscal years 1997 and 1998, and the
related consolidated statements of income, changes in stockholders' equity and
cash flows for the fiscal years 1996 through 1998, inclusive, as reported in the
Company's Annual Report on Form 10-K for the fiscal year ended June 30, 1998
filed with the SEC under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), in each case accompanied by the audit report of KPMG LLP,
independent public accountants with respect to the Company, (b) the unaudited
consolidated statements of condition of the Company and its Subsidiaries as of
March 31, 1998 and March 31, 1999 and the related unaudited consolidated
statements of income, cash flows and changes in stockholders' equity for the
nine-month periods then ended as reported in the Company's Quarterly Report on
Form 10-Q for the period ended March 31, 1999 filed with the SEC under the
Exchange Act, and (c) the consolidated statements of condition of the Company
and its Subsidiaries as of June 30 for the fiscal years 1998 and 1999, and the
related consolidated statements of income, changes in stockholders' equity and
cash flows for the fiscal years 1997 through 1999, inclusive, as reported in the
draft of the Company's Annual Report for the fiscal year ended June 30, 1999 to
be filed with the SEC (the "Draft Financials"). The June 30, 1998 and June 30,
1999 consolidated statements of condition of the Company (including the related
notes, where applicable) fairly present the consolidated financial position of
the Company and its Subsidiaries as of the dates thereof, and the other
financial statements referred to in this Section 4.6 (including the related
notes, where applicable) fairly present, and the financial statements to be
filed by the Company with the SEC after the date of this Agreement 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) complies, and the financial statements to be filed by the Company
with the SEC after the date of this Agreement will comply, 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 to be filed by the
Company with the SEC after the date of this Agreement will be, prepared in
accordance with generally accepted accounting principles ("GAAP") consistently
applied during the periods involved, except as indicated in the notes thereto
or, in the case of unaudited statements, as permitted by Form 10-Q. The books
and records of the Company and its Subsidiaries have been, and are being,
maintained in
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accordance with GAAP and any other applicable legal and accounting requirements
and reflect only actual transactions. Section 4.6 of the Company Disclosure
Schedule sets forth a true and correct description of the Company's "Borrowed
Funds" as reflected in the Draft Financials.
4.7. 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 the Company
Documents, 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 Sandler O'Neill and the Company, a true and
correct copy of which has been previously delivered by the Company to Buyer.
4.8. Absence of Certain Changes or Events. (a) Except as may be set forth
in Section 4.8(a) of the Company Disclosure Schedule or as disclosed in any
Company Report filed with the SEC prior to the date of this Agreement, since
June 30, 1998, (i) neither the Company nor any of its Subsidiaries has incurred
any liability, except in the ordinary course of their business consistent with
their past practices, and (ii) there has been no change or development or
combination of changes or developments which has had, or is reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on the
Company.
(b) Except as set forth in Section 4.8(b) of the Company Disclosure
Schedule or as disclosed in any Company Report filed with the SEC prior to the
date of this Agreement, since June 30, 1998, the Company and its Subsidiaries
have carried on their respective businesses in the ordinary course consistent
with their past practices.
(c) Except as set forth in Section 4.8(c) of the Company Disclosure
Schedule, since June 30, 1999, 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 June 30, 1999 (which amounts have been
previously disclosed to Buyer), granted any severance or termination pay,
entered into any contract to make or grant any severance or termination pay, or
paid any bonus, (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.
4.9. Legal Proceedings. (a) Except as set forth in Section 4.9 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 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 any of the Company Documents.
(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.
4.10. Taxes. (a) Except as set forth in Section 4.10(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 and correct, 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 knowledge of the
Company, threatened against or with respect to the Company or any of its
Subsidiaries. Except as set forth in Section 4.10(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
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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 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 provided any benefit or may be obligated to make any payment or
provide any benefit (by contract or otherwise) which will not be deductible by
reason of Section 280G or Section 162(m) of the Code.
(b) Except as set forth in Section 4.10(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 Transfer Tax, or (ii)
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 4.10(b), Real Property Interests include, without
limitation, titles in fee, leasehold interests, beneficial interests,
encumbrances, developments rights or any other interests with the right to use
or occupy real property or the right to receive rents, profits or other income
derived therefrom, or any options or contracts to purchase real property.
(c) For the purposes of this Agreement, "Taxes" shall mean all taxes,
charges, fees, levies, penalties or other assessments imposed by any United
States federal, state, local or foreign taxing authority, including, but not
limited to income, excise, property, sales, transfer, franchise, payroll,
withholding, social security or other taxes, including any interest, penalties
or additions attributable thereto. For purposes of this Agreement, "Tax Return"
shall mean any return, report, information return or other document (including
any related or supporting information) with respect to Taxes.
4.11. Employees. (a) Section 4.11(a) of the Company Disclosure Schedule
sets forth a true and correct list of each deferred compensation plan, incentive
compensation plan, equity compensation plan, "welfare" plan, fund or program
(within the meaning of Section 3(1) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA")); "pension" plan, fund or program (within the
meaning of Section 3(2) of ERISA); each employment, termination or severance
agreement; and each other employee benefit plan, fund, program, agreement or
arrangement, in each case, that is sponsored, maintained or contributed to or
required to be contributed to (the "Plans") by the Company, any of its
Subsidiaries or by any trade or business, whether or not incorporated (an "ERISA
Affiliate"), all of which together with the Company would be deemed a "single
employer" within the meaning of Section 4001 of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), for the benefit of any employee or
former employee of the Company or any Subsidiary.
(b) The Company has heretofore made available to Buyer true and correct
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 4.11(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
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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 or proceedings (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 or benefit, except as expressly provided in
this Agreement or (z) accelerate the time of payment or vesting or increase the
amount or value of compensation or benefits due any such employee or officer.
4.12. SEC Reports. The Company has previously made available to Buyer a
true and correct copy of each (a) final registration statement, prospectus,
report, schedule and definitive proxy statement filed since January 1, 1997 by
the Company with the SEC pursuant to the Securities Act of 1933, as amended (the
"Securities Act") or the Exchange Act (the "Company Reports") and (b)
communication mailed by the Company to its stockholders since January 1, 1997,
and no such registration statement, prospectus, report, schedule, proxy
statement or communication contained any untrue statement of a material fact or
omitted to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances in which
they were made, not misleading. The Company has timely filed all Company Reports
and other documents required to be filed by it under the Securities Act and the
Exchange Act, and, as of their respective dates, all Company Reports complied
with the published rules and regulations of the SEC with respect thereto.
4.13. Company Information. The information relating to the Company and its
Subsidiaries which is provided to Buyer by the Company or any of its affiliates
or representatives for inclusion in the Proxy Statement and the S-4, or in any
other document filed with any other regulatory agency in connection herewith,
will not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in light of the
circumstances in which they are made, not misleading. The Proxy Statement
(except for such portions thereof that relate only to Buyer or any of its
Subsidiaries) will comply with the provisions of the Exchange Act and the rules
and regulations thereunder.
4.14. Compliance with Applicable Law. The Company and each of its
Subsidiaries hold, and have at all times held, all 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, and neither the Company nor any of its
Subsidiaries knows of, or has received notice of, any violations of any of the
above.
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4.15. Certain Contracts. (a) Except as set forth in Section 4.15(a) of the
Company Disclosure Schedule, neither the Company nor any of its Subsidiaries is
a party to or bound by any contract, arrangement, commitment or understanding
(whether written or oral) (i) with respect to the employment of any directors,
officers, employees or consultants, (ii) which, upon the consummation of the
transactions contemplated by this Agreement, will (either alone or upon the
occurrence of any additional acts or events) result in any payment or benefits
(whether of severance pay or otherwise) becoming due, or any increase in the
amount of or acceleration or vesting of any rights to any payment or benefits,
from Buyer, the Company, the Surviving Corporation or any of their respective
Subsidiaries to any director, officer, employee or consultant thereof, (iii)
which is a material contract (as defined in Item 601(b)(10) of Regulation S-K of
the SEC) to be performed after the date of this Agreement that has not been
filed or incorporated by reference in the Company Reports, (iv) which is a
consulting agreement (including data processing, software programming and
licensing contracts) not terminable on 60 days or less notice involving the
payment of more than $100,000 per annum, or (v) which materially restricts the
conduct of any line of business by the Company or any of its Subsidiaries. Each
contract, arrangement, commitment or understanding of the type described in this
Section 4.15(a), whether or not set forth in Section 4.15(a) of the Company
Disclosure Schedule, is referred to herein as a "Company Contract." The Company
has previously delivered or made available to Buyer true and correct copies of
each Company Contract.
(b) Except as set forth in Section 4.15(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 has performed all
obligations required to be performed by it to date under each Company Contract,
(iii) no event or condition exists which constitutes or, after notice or lapse
of time or both, would constitute, a default on the part of the Company or any
of its Subsidiaries under any Company Contract, and (iv) no other party to such
Company Contract is, to the knowledge of the Company, in default in any respect
thereunder.
4.16. Agreements with Regulatory Agencies. Except as set forth in Section
4.16 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 4.16 of the Company
Disclosure Schedule, a "Regulatory Agreement"), any Regulatory Agency or other
Governmental Entity that restricts the conduct of its business or that in any
manner relates to its capital adequacy, its credit policies, its management or
its business, nor has the Company or any of its Subsidiaries been advised by any
Regulatory Agency or other Governmental Entity that it is considering issuing or
requesting any Regulatory Agreement.
4.17. Investment Securities. Section 4.17 of the Company Disclosure
Schedule sets forth the book and market value as of July 31, 1999 of the
investment securities, mortgage backed securities and securities held for sale
of the Company and its Subsidiaries. Section 4.17 of the Company Disclosure
Schedule sets forth, with respect to such securities, descriptions thereof,
CUSIP numbers, pool face values and coupon rates.
4.18. State Takeover Laws; Business Combination Provision. The Board of
Directors of the Company has approved the transactions contemplated by this
Agreement and the Option Agreement such that the provisions of Section 203 of
the DGCL and Article VIII of the Company's Certificate of Incorporation will
not, assuming the accuracy of the representations contained in Section 5.15
hereof, apply to this Agreement or the Option Agreement or any of the
transactions contemplated hereby or thereby.
4.19. Environmental Matters. Except as set forth in Section 4.19 of the
Company Disclosure Schedule:
(a) Each of the Company and its Subsidiaries and, to the knowledge of
the Company, each of 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
Hazardous Materials (as hereinafter defined) in the environment or
workplace ("Environmental Laws");
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(b) There is no suit, claim, action or proceeding, pending or, to the
knowledge of the Company, threatened, before any Governmental Entity or
other forum in which the Company, any of its Subsidiaries, any
Participation Facility or any Loan Property, has been or, with respect to
threatened proceedings, may be, named as a defendant (x) for alleged
noncompliance (including by any predecessor), with any Environmental Laws,
or (y) relating to the release, threatened release or exposure to any
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;
(c) During the period of (x) the Company's or any of its Subsidiaries'
ownership or operation of any of their respective current or former
properties, (y) the Company's or any of its Subsidiaries' participation in
the management of any Participation Facility, or (z) to the knowledge of
the Company, the Company's or any of its Subsidiaries' interest in a Loan
Property, there has been no release of Hazardous Materials in, on, under or
affecting any such property. To the knowledge of the Company, prior to the
period of (x) the Company's or any of its Subsidiaries' ownership or
operation of any of their respective current or former 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' interest in a Loan Property, there was no release or
threatened release of Hazardous Materials in, on, under or affecting any
such property, Participation Facility or Loan Property; and
(d) The following definitions apply for purposes of this Section 4.19:
(x) "Hazardous Materials" means any chemicals, pollutants, contaminants,
wastes, toxic substances, petroleum or other regulated substances or
materials, (y) "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
(z) "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.
4.20. Derivative Transactions. Except as set forth in Section 4.20 of the
Company Disclosure Schedule, since June 30, 1998, neither Company nor any of its
Subsidiaries has engaged in transactions in or involving forwards, futures,
options on futures, swaps or other derivative instruments except (i) as agent on
the order and for the account of others, or (ii) as principal for purposes of
hedging interest rate risk on U.S. dollar-denominated securities and other
financial instruments. None of the counterparties to any contract or agreement
with respect to any such instrument is in default with respect to such contract
or agreement and no such contract or agreement, were it to be a Loan (as defined
below) held by the Company or any of its Subsidiaries, would be classified as
"Other Loans Specially Mentioned", "Special Mention", "Substandard", "Doubtful",
"Loss", "Classified", "Criticized", "Credit Risk Assets", "Concerned Loans" or
words of similar import. The financial position of the Company and its
Subsidiaries on a consolidated basis under or with respect to each such
instrument has been reflected in the books and records of the Company and such
Subsidiaries in accordance with GAAP consistently applied, and no open exposure
of the Company or any of its Subsidiaries with respect to any such instrument
(or with respect to multiple instruments with respect to any single
counterparty) exceeds $250,000.
4.21. Opinion. Prior to the execution of this Agreement, the Company has
received an opinion from Sandler O'Neill to the effect that as of the date
thereof and based upon and subject to the matters set forth therein, the
Exchange Ratio is fair to the stockholders of the Company from a financial point
of view. Such opinion has not been amended or rescinded as of the date of this
Agreement.
4.22. Approvals. As of the date of this Agreement, the Company knows of no
reason why all regulatory approvals required for the consummation of the
transactions contemplated hereby should not be obtained.
4.23. Loan Portfolio. (a) Except as set forth in Section 4.23 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 any
Loan the unpaid principal balance of which does not exceed $100,000, under the
terms of which the obligor was, as of June 30, 1999, over 90 days delinquent in
payment of principal or interest or in default of any other provision, or (ii)
Loan with any
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director, executive officer or five percent or greater stockholder of the
Company or any of its Subsidiaries, or to the knowledge of the Company, any
person, corporation or enterprise controlling, controlled by or under common
control with any of the foregoing. Section 4.23 of the Company Disclosure
Schedule sets forth (i) all of the Loans in original principal amount in excess
of $100,000 of the Company or any of its Subsidiaries that as of June 30, 1999,
were 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 the Company and its Subsidiaries that as of
June 30, 1999, were 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 June 30, 1999, was classified as "Other
Real Estate Owned" and the book value thereof. The Company shall promptly inform
Buyer in writing of any Loan that becomes classified in the manner described in
the previous sentence, or any Loan the classification of which is changed, at
any time after the date of this Agreement.
(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.
4.24. 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 are reflected on the
consolidated statement of financial condition of the Company as of June 30, 1999
or acquired after such date, except (i) liens for taxes not yet due and payable
or contested in good faith by appropriate proceedings, (ii) pledges to secure
deposits and other liens incurred in the ordinary course of business, (iii) such
imperfections of title, easements and encumbrances, if any, as do not interfere
with the use of the property as such property is used on the date of this
Agreement, (iv) for dispositions and encumbrances of, or on, such properties or
assets in the ordinary course of business or (v) mechanics', materialmen's,
workmen's, repairmen's, warehousemen's, carrier's and other similar liens and
encumbrances arising 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 are valid and enforceable in accordance with their respective
terms and neither the Company nor any of its Subsidiaries nor, to the knowledge
of the Company, any other party thereto is in default thereunder.
4.25. Reorganization. As of the date of this Agreement, the Company has no
reason to believe that the Merger will fail to qualify as a reorganization under
Section 368(a) of the Code.
4.26. Company Rights Agreement. The Company has (a) duly entered into an
appropriate amendment to the Company Rights Agreement and (b) taken all other
action necessary or appropriate, in each case so that the execution of this
Agreement and the Option Agreement and the consummation of the transactions
contemplated hereby and thereby (including, without limitation, the Merger) do
not and will not result in the ability of any person to exercise any rights
under the Company Rights Agreement or enable or require the Company Rights to
separate from the shares of Company Common Stock to which they are attached or
to be triggered or become exercisable.
4.27. Equity and Real Estate Investments. Except as set forth in Section
4.27 of the Company Disclosure Schedule, neither the Company nor any of its
Subsidiaries has (i) equity investments other than investments in wholly owned
Subsidiaries or (ii) investments in real estate or real estate development
projects, other than assets classified as "other real estate owned."
4.28. Year 2000 Matters. Section 4.28 of the Company Disclosure Schedule
contains a true and correct copy of the Company's plan for addressing year 2000
computer issues (the "Year 2000 Plan"). The Company is in material compliance
with the Company's Year 2000 Plan. The Company has been examined by the OTS
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with respect to being "Year 2000 Compliant" and the Company's Year 2000 Plan has
been reviewed by the OTS and the Company has received a "satisfactory" rating in
connection therewith, and neither the Company nor the Company Bank has received
any written communication from the OTS commenting adversely with respect to the
ability of the Company to become Year 2000 compliant.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF BUYER
Subject to Article III hereof and except as set forth in the Buyer
Disclosure Schedule, Buyer hereby represents and warrants to the Company as
follows:
5.1. Corporate Organization. (a) Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
Buyer has the corporate power and authority to own or lease all of its
properties and assets and to carry on its business as it is now being conducted,
and is duly licensed or qualified to do business in each jurisdiction in which
the nature of the business conducted by it or the character or location of the
properties and assets owned or leased by it makes such licensing or
qualification necessary. Buyer is duly registered as a bank holding company
under the BHC Act. The Restated Certificate of Incorporation and By-laws of
Buyer, copies of which have previously been made available to the Company, are
true and correct copies of such documents as in effect as of the date of this
Agreement.
(b) North Fork Bank ("Buyer Bank") is a commercial bank duly organized,
validly existing and in good standing under the laws of the State of New York.
The deposit accounts of Buyer Bank are insured by the FDIC through the Bank
Insurance Fund to the fullest extent permitted by law, and all premiums and
assessments required in connection therewith have been paid when due. Each of
Buyer's other Subsidiaries is a corporation duly organized, validly existing and
in good standing under the laws of the jurisdiction of its incorporation. Each
Subsidiary of Buyer has the corporate power and authority to own or lease all of
its properties and assets and to carry on its business as it is now being
conducted, and is duly licensed or qualified to do business in each jurisdiction
in which the nature of the business conducted by it or the character or location
of the properties and assets owned or leased by it makes such licensing or
qualification necessary. The articles of organization and by-laws of Buyer Bank,
copies of which have previously been made available to the Company, are true and
correct copies of such documents as in effect as of the date of this Agreement.
(c) The minute books of Buyer and each of its Subsidiaries contain true and
correct records of all meetings and other corporate actions held or taken since
December 31, 1996 of their respective stockholders and Boards of Directors
(including committees of their respective Boards of Directors).
5.2. Capitalization. (a) As of the date of this Agreement, the authorized
capital stock of Buyer consists of 200,000,000 shares of Buyer Common Stock and
10,000,000 shares of preferred stock, par value $1.00 per share ("Buyer
Preferred Stock"). As of August 23, 1999, (i) 135,802,670 shares of Buyer Common
Stock were issued and outstanding, (ii) no shares of Buyer Preferred Stock were
issued and outstanding, (iii) no shares of Buyer Common Stock were reserved for
issuance, except that 2,000,000 shares of Buyer Common Stock were reserved for
issuance pursuant to the Buyer Dividend Investment and Stock Purchase Plan,
1,973,140 shares of Buyer Common Stock were reserved for issuance pursuant to
the Buyer 1985 Incentive Stock Option Plan, the Buyer 1987 Long-Term Incentive
Plan, the Buyer 1989 Executive Management and Compensation Plan, the Buyer 1994
Key Employee Stock Plan, the Buyer 1997 Non-Officer Stock Plan and the Buyer
1998 Stock Compensation Plan (the "Buyer Stock Plans"), and 31,000,000 shares of
Buyer Common Stock were reserved for issuance pursuant to the Agreement and Plan
of Merger, dated as of August 16, 1999, between Buyer and JSB Financial, Inc.,
(iv) no shares of Buyer Preferred Stock were reserved for issuance and (v)
9,323,852 shares of Buyer Common Stock were held by Buyer in its treasury or by
Buyer's Subsidiaries. All of the issued and outstanding shares of Buyer 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 5.2(a) of the Buyer Disclosure
Schedule, Buyer does not have and is not bound by any
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outstanding subscriptions, options, warrants, calls, commitments or agreements
of any character calling for the purchase or issuance of any shares of Buyer
Common Stock or Buyer Preferred Stock or any other equity securities of Buyer or
any securities representing the right to purchase or otherwise receive any
shares of Buyer Common Stock or Buyer Preferred Stock or any other equity
security of the Buyer. The shares of Buyer Common Stock to be issued pursuant to
the Merger will be duly authorized and validly issued and, at the Effective
Time, all such shares will be fully paid, nonassessable and free of preemptive
rights, with no personal liability attaching to the ownership thereof.
(b) Section 5.2(b) of the Buyer Disclosure Schedule sets forth a true and
correct list of all of the Subsidiaries of the Buyer as of the date of this
Agreement. Except as set forth in Section 5.2(b) of the Buyer Disclosure
Schedule, as of the date of this Agreement, Buyer owns, directly or indirectly,
all of the issued and outstanding shares of capital stock of each of the
Subsidiaries of Buyer, free and clear of all liens, charges, encumbrances and
security interests whatsoever, and all of such shares are duly authorized and
validly issued and are fully paid, nonassessable and free of preemptive rights,
with no personal liability attaching to the ownership thereof. As of the date of
this Agreement, no Subsidiary of Buyer has or is bound by any out standing
subscriptions, options, warrants, calls, commitments or agreements of any
character with any party that is not a direct or indirect Subsidiary of Buyer
calling for the purchase or issuance of any shares of capital stock or any other
equity security of such Subsidiary or any securities representing the right to
purchase or otherwise receive any shares of capital stock or any other equity
security of such Subsidiary.
5.3. Authority; No Violation. (a) Buyer has full corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly and
validly approved by the Board of Directors of Buyer, and no other corporate
proceedings on the part of Buyer are necessary to approve this Agreement and to
consummate the transactions contemplated hereby. This Agreement has been duly
and validly executed and delivered by Buyer and (assuming due authorization,
execution and delivery by the Company) this Agreement constitutes a valid and
binding obligation of Buyer, enforceable against Buyer in accordance with its
terms, except as enforcement may be limited by general principles of equity
whether applied in a court of law or a court of equity and by bankruptcy,
insolvency and similar laws affecting creditors' rights and remedies generally.
(b) Except as set forth in Section 5.3(b) of the Buyer Disclosure Schedule,
neither the execution and delivery of this Agreement by Buyer nor the
consummation by Buyer of the transactions contemplated hereby, nor compliance by
Buyer with any of the terms or provisions hereof, will (i) violate any provision
of the Restated Certificate of Incorporation or By-Laws of Buyer, or the
articles of incorporation or by-laws or similar governing documents of any of
its Subsidiaries or (ii) assuming that the consents and approvals referred to in
Section 4.4 are duly obtained, (x) violate any statute, code, ordinance, rule,
regulation, judgment, order, writ, decree or injunction applicable to Buyer or
any of its Subsidiaries or any of their respective properties or assets, or (y)
violate, conflict with, result in a breach of any provision of or the loss of
any benefit under, constitute a default (or an event which, with notice or lapse
of time, or both, would constitute a default) under, result in the termination
of or a right of termination or cancellation under, accelerate the performance
required by, or result in the creation of any lien, pledge, security interest,
charge or other encumbrance upon any of the respective properties or assets of
Buyer or any of its Subsidiaries under, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, deed of trust, license,
lease, agreement or other instrument or obligation to which Buyer or any of its
Subsidiaries is a party, or by which they or any of their respective properties
or assets may be bound or affected.
5.4. Consents and Approvals. Except for (a) the filing of an application
with the Federal Reserve Board under the BHC Act, and approval of such
application, (b) the filing of an application with the FDIC under the Bank
Merger Act and approval of such application, in the event the parties enter into
the Bank Merger Agreement (as defined in Section 7.12), (c) the filing of
applications and notices, as applicable, with the OTS and approval of such
applications and notices, (d) the State Banking Approvals, (e) the filing with
the SEC of the Proxy Statement and the filing and declaration of effectiveness
of the S-4, (f) the approval of this Agreement by the requisite vote of the
stockholders of the Company, (g) the filing of the Certificate of Merger with
the Secretary, (h) such filings and approvals as are required to be made or
obtained under the
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securities or "Blue Sky" laws of various states in connection with the issuance
of the shares of Buyer Common Stock pursuant to this Agreement, (i) approval of
the listing of the Buyer Common Stock to be issued in the Merger on the NYSE,
and (j) such filings, authorizations or approvals as may be set forth in Section
5.4 of the Buyer Disclosure Schedule, no consents or approvals of or filings or
registrations with any Governmental Entity or with any third party are necessary
in connection with the execution and delivery by Buyer of this Agreement or the
consummation by Buyer of the Merger and the other transactions contemplated
hereby.
5.5. Reports. Buyer and each of its Subsidiaries have timely filed all
reports, registrations and statements, together with any amendments required to
be made with respect thereto, that they were required to file since December 31,
1996 with any Regulatory Agency, and have paid all fees and assessments due and
payable in connection therewith. Except for normal examinations conducted by a
Regulatory Agency in the regular course of the business of Buyer and its
Subsidiaries, and except as set forth in Section 5.5 of the Buyer Disclosure
Schedule, no Regulatory Agency has initiated any proceeding or, to the knowledge
of Buyer, investigation into the business or operations of Buyer or any of its
Subsidiaries since December 31, 1996. There is no unresolved violation,
criticism, or exception by any Regulatory Agency with respect to any report or
statement relating to any examinations of Buyer or any of its Subsidiaries.
5.6. Financial Statements. Buyer has previously made available to the
Company copies of (a) the consolidated statements of financial condition of
Buyer and its Subsidiaries as of December 31 for the fiscal years 1997 and 1998
and the related consolidated statements of income, changes in stockholders'
equity and cash flows for the fiscal years 1996 through 1998, inclusive, as
reported in Buyer's Annual Report on Form 10-K for the fiscal year ended
December 31, 1998 filed with the SEC under the Exchange Act, in each case
accompanied by the audit report of KPMG LLP, independent public accountants with
respect to Buyer, and (b) the unaudited consolidated statements of financial
condition of Buyer and its Subsidiaries as of March 31, 1998 and March 31, 1999
and the related unaudited consolidated statements of income, changes in
stockholder's equity and cash flows for the three-month periods then ended as
reported in Buyer's Quarterly Report on Form 10-Q for the period ended March 31,
1999 filed with the SEC under the Exchange Act. The December 31, 1998
consolidated statements of financial condition of Buyer (including the related
notes, where applicable) fairly presents the consolidated financial position of
Buyer and its Subsidiaries as of the date thereof, and the other financial
statements referred to in this Section 5.6 (including the related notes, where
applicable) fairly present, and the financial statements to be filed by Buyer
with the SEC after the date of this Agreement 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
stockholders' equity and consolidated financial position of Buyer and its
Subsidiaries for the respective fiscal periods or as of the respective dates
therein set forth; each of such statements (including the related notes, where
applicable) complies, and the financial statements to be filed by Buyer with the
SEC after the date of this Agreement will comply, 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 to be filed by Buyer with the
SEC after the date of this Agreement 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 Buyer and its Subsidiaries have been, and are
being, maintained in accordance with GAAP and any other applicable legal and
accounting requirements and reflect only actual transactions.
5.7. Broker's Fees. Neither Buyer nor any Subsidiary of Buyer, nor any of
their respective officers or directors, has employed any broker or finder or
incurred any liability for any broker's fees, commissions or finder's fees in
connection with any of the transactions contemplated by this Agreement or the
Option Agreement, except that Buyer has engaged, and will pay a fee or
commission to, Donaldson, Lufkin & Jenrette Securities Corporation.
5.8. Absence of Certain Changes or Events. (a) Except as may be set forth
in Section 5.8(a) of the Buyer Disclosure Schedule or as disclosed in any Buyer
Report filed with the SEC prior to the date of this Agreement, since December
31, 1998, (i) neither Buyer nor any of its Subsidiaries has incurred any
liability, except in the ordinary course of their business consistent with their
past practices, and (ii) there has been no
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change or development or combination of changes or developments which has had,
or is reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on Buyer.
(b) Except as disclosed in any Buyer Report filed with the SEC prior to the
date of this Agreement, since December 31, 1998, the Buyer and its Subsidiaries
have carried on their respective businesses in the ordinary course consistent
with prudent banking practices.
(c) Since December 31, 1998, neither the Buyer nor any of its Subsidiaries
has (i)suffered any strike, work stoppage, slow-down, or other labor
disturbance, (ii) been a party to a collective bargaining agreement, contract or
other agreement or understanding with a labor union or organization, or (iii)
had any union organizing activities.
5.9. Legal Proceedings. (a) Except as set forth in Section 5.9 of the
Buyer Disclosure Schedule, neither Buyer nor any of its Subsidiaries is a party
to any and there are no pending or, to Buyer's knowledge, threatened, legal,
administrative, arbitral or other proceedings, claims, actions or governmental
or regulatory investigations of any nature against Buyer or any of its
Subsidiaries or challenging the validity or propriety of the transactions
contemplated by this Agreement.
(b) There is no injunction, order, judgment, decree, or regulatory
restriction imposed upon Buyer, any of its Subsidiaries or the assets of Buyer
or any of its Subsidiaries.
5.10. Taxes. Except as set forth in Section 5.10 of the Buyer Disclosure
Schedule, each of Buyer and its Subsidiaries has (i) duly and timely filed
(including applicable extensions granted without penalty) all Tax Returns
required to be filed at or prior to the Effective Time, and such Tax Returns are
true and correct, and (ii) paid in full or made adequate provision in the
financial statements of Buyer (in accordance with GAAP) for all Taxes. No
deficiencies for any Taxes have been proposed, asserted, assessed or, to the
best knowledge of Buyer, threatened against or with respect to Buyer or any of
its Subsidiaries. Except as set forth in Section 5.10 of the Buyer Disclosure
Schedule, (i) there are no liens for Taxes upon the assets of either Buyer or
its Subsidiaries except for statutory liens for current Taxes not yet due, (ii)
neither Buyer nor any of its Subsidiaries has requested any extension of time
within which to file any Tax Returns in respect of any fiscal year which have
not since been filed and no request for waivers of the time to assess any Taxes
are pending or outstanding, (iii) with respect to each taxable period of Buyer
and its Subsidiaries, the federal and state income Tax Returns of Buyer and its
Subsidiaries have been audited by the Internal Revenue Service or appropriate
state tax authorities 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 Buyer nor any of its Subsidiaries has filed or been
included in a combined, consolidated or unitary income Tax Return other than one
in which Buyer was the parent of the group filing such Tax Return, (v) neither
Buyer 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
Buyer 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), and (vii) neither Buyer nor any of its Subsidiaries has filed a consent
pursuant to Section 341(f) of the Code.
5.11. Employees. (a) Section 5.11(a) of the Buyer Disclosure Schedule sets
forth a true and correct list of each deferred compensation plan, incentive
compensation plan, equity compensation plan, "welfare" plan, fund or program
(within the meaning of section 3(1) of the ERISA); "pension" plan, fund or
program (within the meaning of section 3(2) of ERISA); each employment,
termination or severance agreement; and each other employee benefit plan, fund,
program, agreement or arrangement, in each case, that is sponsored, maintained
or contributed to or required to be contributed to as of the date of this
Agreement (the "Buyer Plans") by Buyer, any of its Subsidiaries or by any trade
or business, whether or not incorporated (a "Buyer ERISA Affiliate"), all of
which together with Buyer would be deemed a "single employer" within the meaning
of Section 4001 of ERISA, for the benefit of any employee or former employee of
Buyer, any Subsidiary or any Buyer ERISA Affiliate.
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(b) Except as set forth in Section 5.11(b) of the Buyer Disclosure
Schedule, (i) each of the Buyer Plans has been operated and administered in
accordance with its terms and applicable law, including but not limited to ERISA
and the Code, (ii) each of the Buyer Plans intended to be "qualified" within the
meaning of Section 401(a) of the Code has either (1) received a favorable
determination letter from the IRS, or (2) is or will be the subject of an
application for a favorable determination letter, and Buyer is not aware of any
circumstances likely to result in the revocation or denial of any such favorable
determination letter, (iii) with respect to each Buyer Plan which is subject to
Title IV of ERISA, the present value of accrued benefits under such Buyer Plan,
based upon the actuarial assumptions used for funding purposes in the most
recent actuarial report prepared by such Buyer Plan's actuary with respect to
such Buyer Plan, did not, as of its latest valuation date, exceed the then
current value of the assets of such Buyer Plan allocable to such accrued
benefits, (iv) no Plan provides benefits, including without limitation death or
medical benefits (whether or not insured), with respect to current or former
employees of Buyer, its Subsidiaries or any Buyer 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 Buyer, its
Subsidiaries or the ERISA Affiliates or (z) benefits the full cost of which is
borne by the current or former employee (or his beneficiary), (v) no liability
under Title IV of ERISA has been incurred by Buyer, its Subsidiaries or any
Buyer ERISA Affiliate that has not been satisfied in full and no condition
exists that presents a material risk to the Buyer, its Subsidiaries or an ERISA
Affiliate of incurring a material liability thereunder, (vi) no Buyer Plan is a
"multiemployer pension plan," as such term is defined in Section 3(37) of ERISA,
(vii) all contributions or other amounts payable by Buyer, its Subsidiaries or
any ERISA Affiliate as of the Effective Time with respect to each Plan in
respect of current or prior plan years have been paid or accrued in accordance
with generally accepted accounting practices and Section 412 of the Code, (viii)
neither Buyer, its Subsidiaries nor any Buyer ERISA Affiliate has engaged in a
transaction in connection with which Buyer, its Subsidiaries or any Buyer ERISA
Affiliate could be subject to either a civil penalty assessed pursuant to
Section 409 or 502(i) of ERISA or a tax imposed pursuant to Section 4975 or 4976
of the Code, (ix) there are no pending, or, to the best knowledge of Buyer,
threatened or anticipated claims or proceedings (other than routine claims for
benefits) by, on behalf of or against any of the Buyer Plans or any trusts
related thereto and (x) the consummation of the transactions contemplated by
this Agreement will not (y) entitle any current or former employee or officer of
Buyer or any Buyer ERISA Affiliate to severance pay, termination pay or any
other payment or benefit, except as expressly provided in this Agreement or (z)
accelerate the time of payment or vesting or increase in the amount or value of
compensation or benefits due any such employee or officer.
5.12. SEC Reports. Buyer has previously made available to the Company a
true and correct copy of each (a) final registration statement, prospectus,
report, schedule and definitive proxy statement filed since January 1, 1997 by
Buyer with the SEC pursuant to the Securities Act or the Exchange Act (the
"Buyer Reports") and (b) communication mailed by Buyer to its stockholders since
January 1, 1997, and no such registration statement, prospectus, report,
schedule, proxy statement or communication contained any untrue statement of a
material fact or omitted to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances in which they were made, not misleading. Buyer has timely filed
all Buyer Reports and other documents required to be filed by it under the
Securities Act and the Exchange Act, and, as of their respective dates, all
Buyer Reports complied with the published rules and regulations of the SEC with
respect thereto.
5.13. Buyer Information. The information relating to Buyer and its
Subsidiaries to be contained in the Proxy Statement and the S-4, or in any other
document filed with any other regulatory agency in connection herewith, will not
contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in light of the circumstances in which
they are made, not misleading. The S-4 will comply with the provisions of the
Securities Act and the rules and regulations thereunder.
5.14. Compliance with Applicable Law. Buyer and each of its Subsidiaries
hold, and have at all times held, all 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,
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applicable law, statute, order, rule, regulation, policy and/or guideline of any
Governmental Entity relating to Buyer or any of its Subsidiaries, and neither
Buyer nor any of its Subsidiaries knows of, or has received notice of violation
of, any violations of any of the above.
5.15. Ownership of Company Common Stock. (a) Except for the Option
Agreement and 55,000 shares of Company Common Stock beneficially owned by Buyer,
neither Buyer nor any of its affiliates or associates (as such terms are defined
under the Exchange Act), (i) beneficially owns, directly or indirectly, or (ii)
is a party to any agreement, arrangement or understanding for the purpose of
acquiring, holding, voting or disposing of, in each case, any shares of capital
stock of the Company (other than Trust Account Shares and DPC Shares).
(b) Neither Buyer nor any of its Subsidiaries is an "affiliate" (as such
term is defined in DGCL sec. 203(c)(1)) or an "associate" (within the meaning of
DGCL sec. 203(c)(2)) of the Company or an "Interested Stockholder" (as such term
is defined in Article VIII of the Company's Certificate of Incorporation).
5.16. Agreements with Regulatory Agencies. Neither Buyer nor any of its
Subsidiaries is subject to any cease-and-desist or other order issued by, or is
a party to any written agreement, consent agreement or memorandum of
understanding with, or is a party to any commitment letter or similar
undertaking to, or is subject to any order or directive by, or is a recipient of
any extraordinary supervisory letter from, or has adopted any board resolutions
at the request of (each, whether or not set forth in Section 5.16 of the Buyer
Disclosure Schedule, a "Buyer Regulatory Agreement"), any Regulatory Agency or
other Governmental Entity that restricts the conduct of its business or that in
any manner relates to its capital adequacy, its credit policies, its management
or its business, nor has Buyer or any of its Subsidiaries been advised by any
Regulatory Agency or other Governmental Entity that it is considering issuing or
requesting any Regulatory Agreement.
5.17. Approvals. As of the date of this Agreement, Buyer knows of no
reason why all regulatory approvals required for the consummation of the
transactions contemplated hereby should not be obtained.
5.18. Tax Treatment for the Merger; Reorganization. As of the date of this
Agreement, Buyer has no reason to believe that the Merger will fail to qualify
as a reorganization under Section 368(a) of the Code.
5.19. Environmental Matters. Except as set forth in Section 5.19 of the
Buyer Disclosure Schedule:
(a) Each of Buyer and its Subsidiaries and, to the knowledge of the
Buyer, each of the Participation Facilities and the Loan Properties (each
as hereinafter defined) are and have been in compliance with all
Environmental Laws;
(b) There is no suit, claim, action or proceeding, pending or, to the
knowledge of Buyer, threatened, before any Governmental Entity or other
forum in which Buyer, any of its Subsidiaries, any Participation Facility
or any Loan Property, has been or, with respect to threatened proceedings,
may be, named as a defendant (x) for alleged noncompliance (including by
any predecessor) with any Environmental Laws, or (y) relating to the
release, threatened release or exposure to any Hazardous Material whether
or not occurring at or on a site owned, leased or operated by Buyer or any
of its Subsidiaries, any Participation Facility or any Loan Property;
(c) During the period of (x) Buyer's or any of its Subsidiaries'
ownership or operation of any of their respective current or former
properties, (y) Buyer's or any of its Subsidiaries' participation in the
management of any Participation Facility, or (z) to the knowledge of the
Buyer, Buyer's or any of its Subsidiaries' interest in a Loan Property,
there has been no release of Hazardous Materials in, on, under or affecting
any such property. To the knowledge of the Buyer, prior to the period of
(x) Buyer's or any of its Subsidiaries' ownership or operation of any of
their respective current or former properties, (y) Buyer's or any of its
Subsidiaries' participation in the management of any Participation
Facility, or (z) Buyer's or any of its Subsidiaries' interest in a Loan
Property, there was no release of Hazardous Materials in, on, under or
affecting any such property, Participation Facility or Loan Property; and
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(d) The following definitions apply for purposes of this Section 5.19:
(x) "Loan Property" means any property in which Buyer or any of its
Subsidiaries holds a security interest, and, where required by the context,
said term means the owner or operator of such property; (y) "Participation
Facility" means any facility in which Buyer or any of its Subsidiaries
participates in the management and, where required by the context, said
term means the owner or operator of such property; and (z) "Hazardous
Materials" means any chemicals, pollutants, contaminants, wastes, toxic
substances, petroleum or other regulated substances or materials.
5.20. Loan Portfolio. Section 5.20 of the Buyer Disclosure Schedule sets
forth, by category, the aggregate book value amount of (i) all of the Loans in
original principal amount in excess of $100,000 of the Buyer or any of its
Subsidiaries that as of July 31, 1999, were classified by any bank examiner
(whether regulatory or internal) as "Other Loans Specially Mentioned", "Special
Mention", "Substandard", "Doubtful", "Loss", "Classified", "Criticized", "Credit
Risk Assets", "Concerned Loans", "Watch List" or words of similar import,
together with the principal amount of and accrued and unpaid interest on each
such Loan and the identity of the borrower thereunder and (ii) all assets of the
Buyer that as of June 30, 1999, were classified as "Other Real Estate Owned".
(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.
5.21. Property. Each of the Buyer 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 are reflected on the
consolidated statement of financial condition of the Buyer as of June 30, 1999
or acquired after such date, except (i) liens for taxes not yet due and payable
or contested in good faith by appropriate proceedings, (ii) pledges to secure
deposits and other liens incurred in the ordinary course of business, (iii) such
imperfections of title, easements and encumbrances, if any, as do not interfere
with the use of the property as such property is used on the date of this
Agreement, (iv) for dispositions and encumbrances of, or on, such properties or
assets in the ordinary course of business or (v) mechanics', materialmen's,
workmen's, repairmen's, warehousemen's, carrier's and other similar liens and
encumbrances arising in the ordinary course of business. All leases pursuant to
which the Buyer or any Subsidiary of the Buyer, as lessee, leases real or
personal property are valid and enforceable in accordance with their respective
terms and neither the Buyer nor any of its Subsidiaries nor, to the knowledge of
the Buyer, any other party thereto is in default thereunder.
5.22. Derivative Transactions. Except as set forth in Section 5.22 of the
Buyer Disclosure Schedule, since December 31, 1998, neither Buyer nor any of its
Subsidiaries has engaged in transactions in or involving forwards, futures,
options on futures, swaps or other derivative instruments except (i) as agent on
the order and for the account of others, or (ii) as principal for purposes of
hedging interest rate risk on U.S. dollar-denominated securities and other
financial instruments. None of the counterparties to any contract or agreement
with respect to any such instrument is in default with respect to such contract
or agreement and no such contract or agreement, were it to be a Loan (as defined
below) held by the Buyer 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 Buyer and its Subsidiaries on
a consolidated basis under or with respect to each such instrument has been
reflected in the books and records of Buyer and such Subsidiaries in accordance
with GAAP consistently applied, and no open exposure of Buyer or any of its
Subsidiaries with respect to any such instrument (or with respect to multiple
instruments with respect to any single counterparty) exceeds $250,000.
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5.23. Year 2000 Matters. Section 5.23 of the Buyer Disclosure Schedule
contains a true and correct copy of the Buyer's plan for addressing year 2000
computer issues (the "Year 2000 Plan"). The Buyer is in material compliance with
the Buyer's Year 2000 Plan.
5.24. Insurance. The Buyer and its Subsidiaries are presently insured, and
since December 31, 1998, have been insured, for reasonable amounts with
financially sound and reputable insurance companies, against such risks as
companies engaged in a similar business would, in accordance with good business
practice, customarily be insured. All of the insurance policies and bonds
maintained by the Buyer and its Subsidiaries are in full force and effect, the
Buyer and its Subsidiaries are not in default thereunder and all material claims
thereunder have been filed in due and timely fashion.
ARTICLE VI
COVENANTS RELATING TO CONDUCT OF BUSINESS
6.1. 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 Buyer, the Company and its Subsidiaries shall carry on
their respective businesses in the ordinary course consistent with past practice
and consistent with prudent banking practice. The Company will use its best
efforts to (x) preserve its business organization and that of its Subsidiaries
intact, (y) keep available to itself and Buyer the present services of the
employees of the Company and its Subsidiaries and (z) preserve for itself and
Buyer the goodwill of the customers of the Company and its Subsidiaries and
others with whom business relationships exist. Without limiting the generality
of the foregoing, and except as set forth in Section 6.1 of the Company
Disclosure Schedule or as otherwise contemplated by this Agreement or consented
to in writing by Buyer, the Company shall not, and shall not permit any of its
Subsidiaries to:
(a) solely in the case of the Company, declare or pay any dividends
on, or make other distributions in respect of, any of its capital stock,
other than normal quarterly dividends not in excess of $0.21 per share of
Company Common Stock;
(b) (i) split, combine or reclassify any shares of its capital stock
or issue or authorize or propose the issuance of any other securities in
respect of, in lieu of or in substitution for shares of its capital stock,
(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; or (iii) 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, except, in the case of
clauses (i) and (iii), for the issuance of Company Common Stock upon the
exercise or fulfillment of rights or options issued or existing pursuant to
employee benefit plans, programs or arrangements, all to the extent
outstanding and in existence on the date of this Agreement and in
accordance with their present terms;
(c) amend its Certificate of Incorporation, By-laws or other similar
governing documents;
(d) authorize any of its officers, directors, 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 recommend or endorse any takeover proposal, or participate in
any discussions or negotiations, or provide third parties with any
nonpublic information, relating to any such inquiry or proposal or
otherwise facilitate any effort or attempt to make or implement a takeover
proposal; provided, however, that the Company may communicate information
about any such takeover proposal to its stockholders if, in the judgment of
the Company's Board of Directors, based upon the advice of outside counsel,
such communication is required under applicable law; provided further,
however, that nothing contained in this Section 6.1(d) shall prohibit the
Company from furnishing information to, or entering into discussions or
negotiations with, any person or entity that makes an unsolicited, bona
fide takeover
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proposal that constitutes a Superior Proposal (as defined below) in each
case if, and only to the extent that (A) such actions occur at a time prior
to approval of the Merger Agreement by the Company's stockholders, (B) the
Board of Directors of the Company concludes in good faith, after
consultation with and based upon the advice of outside counsel, that it is
required to do so in order to comply with its fiduciary duties to the
Company's stockholders under applicable law, and (C) prior to taking such
action, the Company receives from such person or entity an executed
confidentiality agreement and an executed standstill agreement, each in
reasonably customary form (provided that such agreements shall contain
terms that are no less restrictive than the terms of any such agreement
between Buyer and the Company). For purposes of this Agreement, "Superior
Proposal" means any bona fide written takeover proposal for or in respect
of all of the outstanding shares of Company Common Stock, (i) on terms that
the Board of Directors of the Company determines in its good faith judgment
(after consultation with a financial advisor of nationally recognized
reputation and taking into account all the terms and conditions of the
takeover proposal deemed relevant by such Board of Directors, including the
consideration to be paid pursuant thereto, any break-up fees, expense
reimbursement provisions, conditions to consummation, and the ability of
the party making such proposal to obtain financing therefor) are more
favorable from a financial point of view to its stockholders than the
Merger, and (ii) that constitutes a transaction that, in such Board of
Directors' good faith judgment, is reasonably likely to be consummated on
the terms set forth, taking into account all legal, financial, regulatory
and other aspects of such proposal. The Company will immediately cease and
cause to be terminated any existing activities, discussions or negotiations
previously conducted with any parties other than Buyer with respect to any
of the foregoing. The Company will take all actions necessary or advisable
to inform the appropriate individuals or entities referred to in the first
sentence hereof of the obligations undertaken in this Section 6.1(d). The
Company will notify Buyer immediately if any such inquiries or takeover
proposals are received by, any such information is requested from, or any
such negotiations or discussions are sought to be initiated or continued
with, the Company, and the Company will promptly inform Buyer in writing of
all of the relevant details with respect to the foregoing. As used in this
Agreement, "takeover proposal" shall mean any tender or exchange offer,
proposal for a merger, consolidation or other business combination
involving the Company or any Subsidiary of the Company or any proposal or
offer to acquire in any manner a substantial equity interest in, or a
substantial portion of the assets of, the Company or any Subsidiary of the
Company other than the transactions contemplated or permitted by this
Agreement and the Option Agreement;
(e) make any capital expenditures other than those 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 $500,000 in the aggregate;
(f) enter into any new line of business;
(g) 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;
(h) 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 VIII not being satisfied;
(i) change its methods of accounting in effect at June 30, 1998 except
as required by changes in GAAP or regulatory accounting principles as
concurred to by the Company's independent auditors;
(j) (i) except as required by applicable law or as required to
maintain qualification pursuant to the Code, adopt, amend, renew or
terminate any employee benefit plan (including, without limitation, 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
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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);
(k) take or cause to be taken any action which would disqualify the
Merger as a tax free reorganization under Section 368(a) of the Code;
(l) other than activities in the ordinary course of business
consistent with past 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;
(m) 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;
(n) file any application to relocate or terminate the operations of
any banking office of it or any of its Subsidiaries;
(o) 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;
(p) 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 proper ties is bound;
(q) other than in prior consultation with Buyer, restructure or
materially change its investment securities portfolio, through purchases,
sales or otherwise, or the manner in which the portfolio is classified or
reported; or
(r) agree to do any of the foregoing.
6.2. Covenants of Buyer. During the period from the date of this Agreement
and continuing until the Effective Time, except as expressly contemplated or
permitted by this Agreement or the Option Agreement or with the prior written
consent of the Company, Buyer and its Subsidiaries shall carry on their
respective businesses in the ordinary course consistent with prudent banking
practice. Except as set forth in Section 6.2 of the Buyer Disclosure Schedule or
as otherwise contemplated by this Agreement or consented to in writing by the
Company, Buyer shall not, and shall not permit any of its Subsidiaries to:
(a) solely in the case of Buyer, declare or pay any extraordinary or
special dividends on or make any other extraordinary or special
distributions in respect of any of its capital stock; provided, however,
that nothing contained herein shall prohibit Buyer from increasing the
quarterly cash dividend on the Buyer Common Stock;
(b) take any action that is intended or may reasonably be expected to
result in any of its representations and warranties set forth in this
Agreement being or becoming untrue in any material respect, or in any of
the conditions to the Merger set forth in Article VIII not being satisfied;
(c) change its methods of accounting in effect at December 31, 1998,
except in accordance with changes in GAAP or regulatory accounting
principles as concurred to by Buyer's independent auditors;
(d) take or cause to be taken any action which would disqualify the
Merger as a tax free reorganization under Section 368(a) of the Code; or
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(e) change any provisions of the Certificate of Incorporation of the
Buyer, other than as disclosed in Section 6.2(e) of the Buyer Disclosure
Schedule;
(f) agree to do any of the foregoing.
ARTICLE VII
ADDITIONAL AGREEMENTS
7.1. Regulatory Matters. (a) The Company shall promptly prepare and file
with the SEC the Proxy Statement and Buyer shall promptly prepare and file with
the SEC the S-4, in which the Proxy Statement will be included as a prospectus.
Each of the Company and Buyer shall use all reasonable efforts to have the S-4
declared effective under the Securities Act as promptly as practicable after
such filing, and the Company shall thereafter mail the Proxy Statement to its
stockholders. Buyer shall also use all reasonable efforts to obtain all
necessary state securities law or "Blue Sky" permits and approvals required to
carry out the transactions contemplated by this Agreement, and the Company shall
furnish all information concerning the Company and the holders of Company Common
Stock as may be reasonably requested in connection with any such action.
(b) The parties hereto shall cooperate with each other and use their
reasonable best efforts to promptly prepare and file all necessary
documentation, to effect all applications, notices, petitions and filings, and
to obtain as promptly as practicable all permits, consents, approvals and
authorizations of all third parties and Governmental Entities which are
necessary or advisable to consummate the transactions contemplated by this
Agreement. The Company and Buyer shall have the right to review in advance, and
to the extent practicable each will consult the other on, in each case subject
to applicable laws relating to the exchange of information, all the information
relating to the Company or Buyer, as the case may be, and any of their
respective Subsidiaries, which appears in any filing made with, or written
materials submitted to, any third party or any Governmental Entity in connection
with the transactions contemplated by this Agreement. In exercising the
foregoing right, each of the parties hereto shall act reasonably and as promptly
as practicable. The parties hereto agree that they will consult with each other
with respect to the obtaining of all permits, consents, approvals and
authorizations of all third parties and Governmental Entities necessary or
advisable to consummate the transactions contemplated by this Agreement and each
party will keep the other apprised of the status of matters relating to
completion of the transactions contemplated herein.
(c) Buyer and the Company shall, upon request, furnish each other with all
information concerning themselves, their Subsidiaries, directors, officers and
stockholders and such other matters as may be reasonably necessary or advisable
in connection with the Proxy Statement, the S-4 or any other statement, filing,
notice or application made by or on behalf of Buyer, the Company or any of their
respective Subsidiaries to any Governmental Entity in connection with the Merger
and the other transactions contemplated by this Agreement.
(d) Buyer and the Company shall promptly furnish each other with copies of
written communications received by Buyer or the Company, as the case may be, or
any of their respective Subsidiaries, Affiliates or Associates (as such terms
are defined in Rule 12b-2 under the Exchange Act as in effect on the date of
this Agreement) from, or delivered by any of the foregoing to, any Governmental
Entity in respect of the transactions contemplated hereby.
7.2. Access to Information. (a) Upon reason able notice and subject to
applicable laws relating to the exchange of information, the Company shall, and
shall cause each of its Subsidiaries to, afford to the officers, employees,
accountants, counsel and other representatives of Buyer, access, during normal
business hours during the period prior to the Effective Time, to all its
properties, books, contracts, commitments, records, officers, employees,
accountants, counsel and other representatives and, during such period, the
Company shall, and shall cause its Subsidiaries to, make available to Buyer (i)
a copy of each report, schedule, registration statement and other document filed
or received by it during such period pursuant to the requirements of Federal
securities laws or Federal or state banking laws (other than reports or
documents which the Company is not permitted to disclose under applicable law)
and (ii) all other information concerning its business, properties and personnel
as Buyer may reasonably request. Neither the Company nor
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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.
(b) Upon reasonable notice and subject to applicable laws relating to the
exchange of information, Buyer shall, and shall cause its Subsidiaries to,
afford to the officers, employees, accountants, counsel and other
representatives of the Company, access, during normal business hours during the
period prior to the Effective Time, to such information regarding Buyer and its
Subsidiaries as shall be reasonably necessary for the Company to fulfill its
obligations pursuant to this Agreement to assist in the preparation of the Proxy
Statement or which may be reasonably necessary for the Company to confirm that
the representations and warranties of Buyer contained herein are true and
correct and that the covenants of Buyer contained herein have been performed in
all material respects. Neither Buyer nor any of its Subsidiaries shall be
required to provide access to or to disclose information where such access or
disclosure would violate or prejudice the rights of Buyer's customers,
jeopardize any attorney-client privilege or contravene any law, rule,
regulation, order, judgment, decree, fiduciary duty or binding agreement entered
into prior to the date of this Agreement. The parties hereto will make
appropriate substitute disclosure arrangements under circumstances in which the
restrictions of the preceding sentence apply.
(c) All information furnished by either party to the other party or its
representatives pursuant hereto shall be treated as the sole property of the
delivery party and, if the Merger shall not occur, the receiving party and its
representatives shall return to the delivering party all of such written
information and all documents, notes, summaries or other materials containing,
reflecting or referring to, or derived from, such information. The receiving
party shall, and shall use its best efforts to cause its representatives to,
keep confidential all such information, and shall not directly or indirectly use
such information for any competitive or other commercial purpose. The obligation
to keep such information confidential shall continue for ten years from the date
the proposed Merger is abandoned and shall not apply to (i) any information
which (x) was already in the receiving party's possession prior to the
disclosure thereof by the delivering party; (y) was then generally known to the
public; or (z) was disclosed to the receiving party by a third party not bound
by an obligation of confidentiality or (ii) disclosures made as required by law.
It is further agreed that, if in the absence of a protective order or the
receipt of a waiver hereunder the receiving party is nonetheless, in the opinion
of its counsel, compelled to disclose information concerning delivering party to
any tribunal or govern mental body or agency or else stand liable for contempt
or suffer other censure or penalty, the receiving party may disclose such
information to such tribunal or governmental body or agency without liability
hereunder.
(d) No investigation by either of the parties or their respective
representatives shall affect the representations, warranties, covenants or
agreements of the other set forth herein.
7.3. Stockholder Meetings. The Company shall take all steps necessary to
duly call, give notice of, convene and hold a meeting of its stockholders to be
held as soon as is reasonably practicable after the date on which the S-4
becomes effective for the purpose of voting upon the approval of this Agreement
and the consummation of the transactions contemplated hereby. The Company will,
through its Board of Directors, recommend to its stockholders approval of this
Agreement and the transactions contemplated hereby and such other matters as may
be submitted to its stockholders in connection with this Agreement; provided,
however, that nothing shall prohibit the Board of Directors of the Company from
withdrawing or modifying in a manner adverse to Buyer such recommendation to the
Company's stockholders if (a) the Company is not in breach of, and has not
breached, any of the provisions of Section 6.1(d), (b) the Company receives an
unsolicited, bona fide written takeover proposal which constitutes a Superior
Proposal (each as defined in Section 6.1(d)), and (c) the Board of Directors of
the Company determines in good faith that it is required to take such action,
but only after consultation with outside counsel and only if such outside
counsel concludes and advises the Board that the failure to take such action
would result in a violation of its fiduciary duties under applicable law.
7.4. Legal Conditions to Merger. Each of Buyer and the Company shall, and
shall cause its Subsidiaries to, use their reasonable best efforts (a) to take,
or cause to be taken, all actions necessary, proper or advisable
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to comply promptly with all legal requirements which may be imposed on such
party or its Subsidiaries with respect to the Merger and, subject to the
conditions set forth in Article VIII hereof, to consummate the transactions
contemplated by this Agreement and (b) to obtain (and to cooperate with the
other party to obtain) any consent, authorization, order or approval of, or any
exemption by, any Governmental Entity and any other third party which is
required to be obtained by the Company or Buyer or any of their respective
Subsidiaries in connection with the Merger and the other transactions
contemplated by this Agreement, and to comply with the terms and conditions of
such consent, authorization, order or approval.
7.5. Affiliates. The Company shall use its reasonable best efforts to
cause each director, executive officer and other person who is an "affiliate"
(for purposes of Rule 145 under the Securities Act) of the Company to deliver to
Buyer, as soon as practicable after the date of this Agreement, a written
agreement, in the form of Exhibit 7.5 hereto.
7.6. Stock Exchange Listing. Buyer shall use all reasonable efforts to
cause the shares of Buyer 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.
7.7. Employee Benefit Plans; Existing Agreements. (a) As soon as
practicable following the Effective Time, the employees of the Company and its
Subsidiaries (the "Company Employees") shall be eligible to participate in
Buyer's employee benefit plans in which similarly situated employees of Buyer or
Buyer Bank participate, to the same extent as similarly-situated employees of
Buyer or Buyer Bank (it being understood that inclusion of Company Employees in
Buyer's employee benefit plans may occur at different times with respect to
different plans); provided, however, that Buyer shall continue the comparable
plans of Company and its Subsidiaries for the exclusive benefit of Company
Employees until such time as Company Employees become eligible to participate in
the plans of Buyer or Buyer Bank. Company's ESOP shall terminate as of the
Effective Time and prior to such time Company shall make contributions to the
ESOP sufficient to enable the trustee of the plan to repay in full all
outstanding acquisition loans of the plan. If Company cannot make contributions
sufficient to enable the trustee to repay such loans in full by reason of the
operation of Section 415(c) of the Code then, in accordance with the terms of
the ESOP, the trustee shall sell a number of shares sufficient to repay the
remaining portion of the loan. All shares of stock and cash held by the plan as
of the Effective Time shall be allocated to participants of the ESOP in
accordance with its terms.
(b) With respect to each Buyer 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 and its Subsidiaries shall be treated as service with
Buyer; 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 Buyer Plan.
(c) Buyer shall honor and shall cause the appropriate Subsidiaries of Buyer
to honor, and the Company shall pay at the Closing Date, in accordance with
their terms all employment, severance and other compensation agreements and
arrangements existing prior to the execution of this Agreement which are between
the Company or any of its Subsidiaries and any director, officer or employee
thereof and which have been disclosed in the Company Disclosure Schedule and
previously have been delivered to Buyer. All payments under employment and
change in control agreements identified in Section 4.15(a) of the Company
Disclosure Schedule between the Company or its Subsidiaries and individual
officers and employees of the Company or its Subsidiaries shall be paid by the
Company at the Closing Date regardless of whether or not such individual
continues in employment with Buyer or its Subsidiaries. The Company Disclosure
Schedule sets forth the reasonable, good faith estimates of amounts payable
under employment and severance agreements between the Company or its
Subsidiaries and certain individuals and the amounts shown and
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methodology used in preparing such estimates shall be followed in determining
the actual amounts payable under such agreements.
(d) Employees of the Company and its Subsidiaries shall be entitled to
receive payment for accrued but unused vacation days and any accrued but unused
vacation days of employees of the Company or its Subsidiaries as of the Closing
Date shall, at the employee's option, either be paid immediately prior to the
Closing Date or taken as vacation as soon as practicable following the Closing
Date; provided, however, that the Company shall deliver to Buyer, not later than
fifteen (15) business days after the date of this Agreement, a schedule of
employees indicating their accrued but unused vacation days as of the most
recent date practicable.
(e) The Company or its Subsidiaries shall pay bonuses in accordance with
its past practices through December 31, 1999, and the compensation with respect
to which bonuses are paid for any individual shall be for the period of time
that has elapsed since the payment of the last bonus. At the Closing Date each
Company Employee shall be entitled to receive a bonus equal to the bonus
received by such Company Employee for the period ended as of December 31, 1999,
multiplied by a fraction, the numerator of which shall be the number of days
from December 31 through the date on which the Closing Date occurs and the
denominator of which is 366 (in the case of employees who were paid annual
bonuses as of December 31) and 180 days (in the case of employees who received
semi annual bonuses as of both June 30 and December 31), as the case may be.
7.8. 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 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 or officer of the Company, any of the
Subsidiaries of the Company or any of their respective predecessors or (ii) this
Agreement or any of the transactions contemplated hereby, whether in any case
asserted or arising before or after the Effective Time, the parties hereto agree
to cooperate and use their best efforts to defend against and respond thereto.
It is understood and agreed that after the Effective Time, Buyer shall indemnify
and hold harmless, as and to the extent permitted by law, each such Indemnified
Party against any losses, claims, damages, liabilities, costs, expenses
(including reasonable attorney's fees and expenses in advance of the final
disposition of any claim, suit, proceeding or investigation to each Indemnified
Party to the fullest extent permitted by law upon receipt of any undertaking
required by applicable law), judgments, fines and amounts paid in settlement in
connection with any such threatened or actual claim, action, suit, proceeding or
investigation, and in the event of any such threatened or actual claim, action,
suit, proceeding or investigation (whether asserted or arising before or after
the Effective Time), the Indemnified Parties may retain counsel reasonably
satisfactory to them after consultation with Buyer; provided, however, that (1)
Buyer shall have the right to assume the defense thereof with counsel reasonably
acceptable to the Indemnified party and upon such assumption Buyer shall not be
liable to any Indemnified Party for any legal expenses of other counsel or any
other expenses subsequently incurred by any Indemnified Party in connection with
the defense thereof, except that if Buyer elects not to assume such defense or
counsel for the Indemnified Parties reasonably advises that there are issues
which raise conflicts of interest between Buyer and the Indemnified Parties, the
Indemnified Parties may retain counsel reasonably satisfactory to them after
consultation with Buyer, and Buyer shall pay the reason able fees and expenses
of such counsel for the Indemnified Parties, (2) Buyer shall in all cases be
obligated pursuant to this paragraph to pay for only one firm of counsel with
respect to any claim, action or suit for all Indemnified Parties, (3) Buyer
shall not be liable for any settlement effected without its prior written
consent (which consent shall not be unreasonably withheld) and (4) Buyer shall
have no obligation hereunder to any Indemnified Party when and if a court of
competent jurisdiction shall ultimately determine, and such determination shall
have become final and nonappealable, that indemnification of such Indemnified
Party in the manner contemplated hereby is prohibited by applicable law. Any
Indemnified Party wishing to claim Indemnification under this Section 7.8, upon
learning of any such claim, action, suit, proceeding or investigation, shall
notify promptly Buyer thereof, provided that the failure to so
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notify shall not affect the obligations of Buyer under this Section 7.8 except
to the extent such failure to notify prejudices Buyer. Buyer's obligations under
this Section 7.8 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 with in
such period shall continue until the final disposition of such Claim.
(b) Buyer shall cause the persons serving as officers and directors of the
Company immediately prior to the Effective Time to be covered for a period of
six (6) years from the Effective Time by the directors' and officers' liability
insurance policy maintained by the Company (provided that Buyer may substitute
therefor policies of at least the same coverage and amounts containing terms and
conditions which are not less advantageous than such policy) with respect to
acts or omissions occurring prior to the Effective Time which were committed by
such officers and directors in their capacity as such; provided, however, that
in no event shall Buyer be required to expend on an annual basis more than 175%
of the current amount expended by the Company (the "Insurance Amount") to
maintain or procure insurance coverage, and further provided that if Buyer is
unable to maintain or obtain the insurance called for by this Section 7.8(b)
Buyer shall use all reasonable efforts to obtain as much comparable insurance as
is available for the Insurance Amount.
(c) In the event Buyer or any of its successors or assigns (i) consolidates
with or merges into any other person and shall not be the continuing or
surviving corporation or entity of such consolidation or merger, or (ii)
transfers or conveys all or substantially all of its properties and assets to
any person, then, and in each such case, to the extent necessary, proper
provision shall be made so that the successors and assigns of Buyer assume the
obligations set forth in this section.
(d) The provisions of this Section 7.8 are intended to be for the benefit
of, and shall be enforceable by, each Indemnified Party and his or her heirs and
representatives.
7.9. 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 Buyer.
7.10. Advice of Changes. Buyer and the Company shall promptly advise the
other party of any change or event having a Material Adverse Effect on it or
which it believes would or would be reasonably likely to cause or constitute a
material breach of any of its representations, warranties or covenants contained
herein. From time to time prior to the Effective Time (and on the date prior to
the Closing Date), each party will supplement or amend its 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 there by. 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 8.2(a) or
8.3(a) hereof, as the case may be, or the compliance by the Company or Buyer, as
the case may be, with the respective covenants and agreements of such parties
contained herein.
7.11. Current Information. (a) During the period from the date of this
Agreement to the Effective Time, the Company will cause one or more of its
designated representatives to confer on a regular and frequent basis (not less
than monthly) with representatives of Buyer and to report the general status of
the ongoing operations of the Company and its Subsidiaries. The Company will
promptly notify Buyer of any material change in the normal course of business or
in the operation of the properties of the Company or any of its Subsidiaries and
of any governmental complaints, investigations or hearings (or communications
indicating that the same may be contemplated), or the institution or the threat
of significant litigation involving the Company or any of its Subsidiaries, and
will keep Buyer fully informed of such events.
(b) During the period from the date of this Agreement to the Effective
Time, Buyer shall inform the Company of any proposed acquisition or merger
transaction involving Buyer.
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7.12. Execution and Authorization of Bank Merger Agreement. As soon as
reasonably practicable following a request made by Buyer, (a) Buyer shall (i)
cause the Board of Directors of Buyer Bank to approve an Agreement and Plan of
Merger providing for the merger of Company Bank into Buyer Bank (the "Bank
Merger Agreement"), (ii) cause Buyer Bank to execute and deliver the Bank Merger
Agreement, and (iii) approve the Bank Merger Agreement as the sole stockholder
of Buyer Bank, and (b) the Company shall (i) cause the Board of Directors of the
Company Bank to approve the Bank Merger Agreement, (ii) cause the Company Bank
to execute and deliver the Bank Merger Agreement, and (iii) approve the Bank
Merger Agreement as the sole stockholder of the Company Bank. The Bank Merger
Agreement shall contain terms that are normal and customary in light of the
transactions contemplated hereby and such additional terms as are necessary to
carry out the purposes of this Agreement.
7.13. Coordination of Dividends. From the date of this Agreement to the
Effective Time, each of Buyer and the Company shall coordinate with the other
the declaration, record and payment dates with respect to dividends in respect
of the Buyer Common Stock and the Company Common Stock and the record dates and
payments dates relating thereto, it being the intention of the parties that the
holders of Buyer Common Stock or Company Common Stock shall not receive more
than one dividend, or fail to receive one dividend, for any single calendar
quarter with respect to their shares of Buyer Common Stock and/or Company Common
Stock and any shares of Buyer Common Stock any holder of Company Common Stock
receives in exchange therefor in the Merger.
7.14. Directorship. Effective as of the Effective Time, Buyer shall cause
its Board of Directors to be expanded by one member and shall appoint Raymond A.
Nielsen to fill the vacancy on Buyer's Board of Directors created by such
increase as of the Effective Time and shall cause Mr. Nielsen to be nominated
for election to the Board of Directors for a period not less than three (3)
years.
7.15. Accountants' Letter. The Company shall use its reasonable efforts to
cause to be delivered to Buyer a letter of its 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 Buyer, in form and
substance customary for "comfort" letters delivered by independent accountants
in accordance with Statement of Financial Accounting Standards No. 72.
7.16. Certain Revaluations, Changes and Adjustments. At or before the
Effective Time, upon the request of Buyer, the Company shall, consistent with
GAAP, modify and change its loan, litigation and real estate valuation policies
and practices (including loan classifications and levels of reserves) so as to
be applied consistently on a mutually satisfactory basis with those of Buyer and
establish such accruals and reserves as shall be necessary to reflect
Merger-related expenses and costs incurred by the Company, provided, however,
that the Company shall not be required to take such action unless Parent
acknowledges in writing that all conditions to closing set forth in Article VIII
have been satisfied or waived (other than those conditions relating to delivery
of documents on the Closing Date); provided further, however, that no accrual or
reserve made by the Company or any Company Subsidiary pursuant to this Section
7.16 shall constitute or be deemed to be a breach, violation of or failure to
satisfy any representation, warranty, covenant, condition or other provision of
this Agreement or otherwise be considered in determining whether any such
breach, violation or failure to satisfy shall have occurred.
7.17. Year 2000. Each of Buyer and the Company shall use its commercially
reasonable efforts to implement its respective Y2K Plan. At the request of the
other party, each of Buyer and the Company shall periodically update the other
party regarding its process with respect to its Y2K Plan.
7.18. JSB Financial Merger. It is understood by the parties that the
Merger shall be accounted for under the purchase method of accounting.
Accordingly, the parties agree to use all reasonable efforts to cause the
Effective Time to occur prior to the consummation of the merger between Buyer
and JSB Financial, Inc. pursuant to the Agreement and Plan of Merger (as
amended) between such parties dated as of August 16, 1999.
7.19. Advisory Board. Buyer shall, as of the Effective Time, invite Gerald
M. Sauvigne and all of the members of the Company's Board of Directors as of the
date of this Agreement, other than Mr. Nielsen, who
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are willing to serve to be appointed as members of Buyer's advisory board (the
"Advisory Board"). The members of the Advisory Board who are willing to so serve
shall be elected to a term of three (3) years beginning on the Closing Date and
shall receive an annual retainer fee in the amount set forth in Section 7.19 of
the Buyer Disclosure Schedule.
ARTICLE VIII
CONDITIONS PRECEDENT
8.1. Conditions to Each Party's Obligation To Effect the Merger. The
respective obligations 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 requisite vote of the holders of the outstanding shares of
Company Common Stock under applicable law.
(b) NYSE Listing. The shares of Buyer Common Stock which shall be
issued to the stockholders of the Company upon consummation of the Merger
shall have been authorized for listing on the NYSE, subject to official
notice of issuance.
(c) Other Approvals. All regulatory approvals required to consummate
the transactions contemplated hereby (including the Merger) shall have been
obtained and shall remain in full force and effect and all statutory
waiting periods in respect thereof shall have expired (all such approvals
and the expiration of all such waiting periods being referred to herein as
the "Requisite Regulatory Approvals").
(d) S-4. The S-4 shall have become effective under the Securities Act
and no stop order suspending the effectiveness of the S-4 shall have been
issued and no proceedings for that purpose shall have been initiated or
threatened by the SEC.
(e) No Injunctions or Restraints; Illegality. No order, injunction or
decree issued by any court or agency of competent jurisdiction or other
legal restraint or prohibition (an "Injunction") preventing the
consummation of the Merger 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.
8.2. Conditions to Obligations of Buyer. The obligation of Buyer to effect
the Merger is also subject to the satisfaction or waiver by Buyer at or prior to
the Effective Time of the following conditions:
(a) Representations and Warranties. (i) Subject to Section 3.2, the
representations and warranties of the Company set forth in this Agreement
(other than those set forth in Sections 4.2, 4.3(a), 4.3(b)(i), 4.6, 4.7,
4.8(a)(ii), 4.8(b), 4.11(a), 4.12, 4.15(a), 4.18, 4.21, 4.26 and 4.27)
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; and
(ii) the representations and warranties of the Company set forth in
Sections 4.2, 4.3(a), 4.3(b)(i), 4.6, 4.7, 4.8(a)(ii), 4.8(b), 4.11(a),
4.12, 4.15(a), 4.18, 4.21, 4.26 and 4.27 of this Agreement shall be true
and correct in all material respects (without giving effect to Section 3.2
of this Agreement) 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. Buyer
shall have received a certificate signed on behalf of the Company by the
Chief Executive Officer and the Chief Financial Officer of the Company to
the foregoing effect.
(b) Performance of Obligations of the Company. The Company shall have
performed in all material respects all obligations required to be performed
by it under this Agreement at or prior to the Closing Date, and Buyer shall
have received a certificate signed on behalf of the Company by the Chief
Executive Officer and the Chief Financial Officer of the Company to such
effect.
(c) Consents Under Agreements. The consent, approval or waiver of
each person (other than the Governmental Entities referred to in Section
8.1(c)) whose consent or approval shall be required in order
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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 shall
have been obtained, except where the failure to obtain such consent,
approval or waiver would not have a Material Adverse Effect on the Company.
(d) No Pending Governmental Actions. No proceeding initiated by any
Governmental Entity seeking an Injunction shall be pending.
(e) Federal Income Tax Opinion. Buyer shall have received an opinion
of Skadden, Arps, Slate, Meagher & Flom LLP, counsel to Buyer ("Buyer's
Counsel"), dated the Effective Date, in form and substance reasonably
satisfactory to Buyer, substantially to the effect that, on the basis of
facts, representations and assumptions set forth in such opinion which are
consistent with the state of facts existing at the Effective Time, the
Merger will be treated as a reorganization within the meaning of Section
368(a) of the Code. In rendering such opinion, Buyer's Counsel may require
and rely upon representations and covenants, including those contained in
certificates of officers of Buyer, the Company and others reasonably
satisfactory in form and substance to such counsel.
8.3. 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) Subject to Section 3.2, the
representations and warranties of Buyer (other than those set forth in
Sections 5.2, 5.3(a), 5.3(b), 5.3(c)(i), 5.6, 5.7, 5.8(ii), 5.11(a), 5.12
and 5.15) 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; and (ii) the representations and
warranties of Buyer set forth in Sections 5.2, 5.3(a), 5.3(b), 5.3(c)(i),
5.6, 5.7, 5.8(ii), 5.11(a), 5.12 and 5.15 of this Agreement shall be true
and correct in all material respects (without giving effect to Section 3.2
of this Agreement) 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. The
Company shall have received a certificate signed on behalf of Buyer by the
Chief Executive Officer and the Chief Financial Officer of Buyer to the
foregoing effect.
(b) Performance of Obligations of Buyer. Buyer shall have performed
in all material respects all obligations required to be performed by it
under this Agreement at or prior to the Closing Date, and the Company shall
have received a certificate signed on behalf of Buyer by the Chief
Executive Officer and the Chief Financial Officer of Buyer to such effect.
(c) Consents Under Agreements. The consent, approval or waiver of
each person (other than the Governmental Entities referred to in Section
8.1(c)) whose consent or approval shall be required in connection with the
transactions contemplated hereby under any loan or credit agreement, note,
mortgage, indenture, lease, license or other agreement or instrument to
which Buyer or any of its Subsidiaries is a party or is otherwise bound
shall have been obtained, except where failure to obtain such consents and
approvals would not, individually or in the aggregate, have a Material
Adverse Effect on Buyer and its Subsidiaries taken as a whole (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 Income Tax Opinion. The Company shall have received an
opinion of Muldoon, Murphy & Faucette LLP (the "Company's Counsel"), in
form and substance reasonably satisfactory to the Company, dated the
Effective Date, 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. In rendering such opinion, the Company's Counsel may
require and rely
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upon representations and covenants, including those contained in
certificates of officers of Buyer, the Company and others, reasonably
satisfactory in form and substance to such counsel.
ARTICLE IX
TERMINATION AND AMENDMENT
9.1. 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:
(a) by mutual consent of the Company and Buyer in a written
instrument, if the Board of Directors of each so determines by a vote of a
majority of the members of its entire Board;
(b) by either Buyer or the Company upon written notice to the other
party (i) 60 days after the date on which any request or application for a
Requisite Regulatory Approval shall have been denied or withdrawn at the
request or recommendation of the Governmental Entity which must grant such
Requisite Regulatory Approval, unless within the 60-day period following
such denial or withdrawal a petition for rehearing or an amended
application has been filed with the applicable Governmental Entity,
provided, however, that no party shall have the right to terminate this
Agreement pursuant to this Section 9.1(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 Merger;
(c) by either Buyer or the Company if the Merger shall not have been
consummated on or before June 30, 2000, unless the failure of the Closing
to occur by such date shall be due to the failure of the party seeking to
terminate this Agreement to perform or observe the covenants and agreements
of such party set forth herein;
(d) by either Buyer or the Company (provided that the terminating
party shall not be in material breach of any of its obligations under
Section 7.3) if any approval of the stockholders of the Company required
for the consummation of the Merger shall not have been obtained by reason
of the failure to obtain the required vote at a duly held meeting of such
stockholders or at any adjournment or postponement thereof;
(e) by either Buyer or the Company (provided that the terminating
party is not then in material breach of any representation, warranty,
covenant or other agreement contained herein) if there shall have been a
material breach of any of the representations or warranties set forth in
this Agreement on the part of the other party, which breach is not cured
within thirty days following written notice to the party committing such
breach, or which breach, by its nature, cannot be cured prior to the
Closing; provided, however, that neither party shall have the right to
terminate this Agreement pursuant to this Section 9.1(e) unless the breach
of representation or warranty, together with all other such breaches, would
entitle the party receiving such representation not to consummate the
transactions contemplated hereby under Section 8.2(a) (in the case of a
breach of representation or warranty by the Company) or Section 8.3(a) (in
the case of a breach of representation or warranty by Buyer);
(f) by either Buyer or the Company (provided that the terminating
party is not then in material breach of any representation, warranty,
covenant or other agreement contained herein) if there shall have been a
material breach of any of the covenants or agreements set forth in this
Agreement on the part of the other party, which breach shall not have been
cured within thirty days following receipt by the breaching party of
written notice of such breach from the other party hereto, or which breach,
by its nature, cannot be cured prior to the Closing;
(g) by Buyer, if the Board of Directors of the Company does not
publicly recommend in the Proxy Statement that the Company's stockholders
approve and adopt this Agreement or if, after recommending in the Proxy
Statement that stockholders approve and adopt this Agreement, the Board of
Directors of
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the Company shall have withdrawn, modified or amended such recommendation
in any manner adverse to Buyer; or
(h) by the Company at any time during the five business-day period
commencing on the first business day after the Determination Date (as
defined below), if both of the following conditions are satisfied:
(1) the Average Closing Price (as defined below) shall be less than
$16.20 and
(2) (i) the number obtained by dividing the Average Closing Price
by the Starting Price (such number being referred to herein as the
"Buyer Ratio") shall be less than (ii) the number obtained by dividing
the Final Index Price by the Initial Index Price and subtracting 0.15
from such quotient (such number being referred to herein as the "Index
Ratio"),
subject to the following provisions. If the Company elects to exercise its
termination right pursuant to the immediately preceding sentence, it shall
give prompt written notice to Buyer; provided that such notice of election
to terminate may be withdrawn at any time within the aforementioned five
business-day period. During the five business-day period commencing with
its receipt of such notice, Buyer shall have the option of adjusting the
Exchange Ratio to equal the lesser of (i) a number equal to a quotient
(rounded to the nearest one-ten-thousandth), the numerator of which is the
product of 0.85, the Starting Price and the Exchange Ratio (as then in
effect) and the denominator of which is the Average Closing Price, and (ii)
a number equal to a quotient (rounded to the nearest one-ten-thousandth),
the numerator of which is the Index Ratio multiplied by the Exchange Ratio
(as then in effect) and the denominator of which is the Buyer Ratio. If
Buyer makes the election contemplated by the preceding sentence, within
such five business-day period, it shall give prompt written notice to the
Company of such election and the revised Exchange Ratio, whereupon no
termination shall have occurred pursuant to this Section 9.1(h) and this
Agreement shall remain in effect in accordance with its terms (except as
the Exchange Ratio shall have been so modified), and any references in this
Agreement to "Exchange Ratio" shall thereafter be deemed to refer to the
Exchange Ratio as adjusted pursuant to this Section 9.1(h). For purposes of
this Section 9.1(h), the following terms shall have the meanings indicated:
"Average Closing Price" means the average of the last reported sale
prices per share of Buyer Common Stock as reported on NYSE (as reported
in The Wall Street Journal or, if not reported therein, in another
mutually agreed upon authoritative source) for the 20 consecutive
trading days on the NYSE ending at the close of trading on the
Determination Date.
"Determination Date" means the business day prior to the date on
which the last of the Requisite Regulatory Approvals shall have been
received, without regard to any requisite waiting periods in respect
thereof.
"Final Index Price" means the sum of the Final Prices for each
company comprising the Index Group.
"Final Price", with respect to any company belonging to the Index
Group, means the product of (x) the average of the daily closing sales
prices of a share of common stock of such company (and if there is no
closing sales price on any such day, then the mean between the closing
bid and the closing asked prices on that day), as reported on the
consolidated transaction reporting system for the market or exchange on
which such common stock is principally traded, for the 20 consecutive
trading days ending at the close of trading on the Determination Date,
and (y) the weighting set forth opposite such company's name in the
definition of "Index Group" below.
"Index Group" means the group of each of the twenty (20) bank
holding companies listed below, the common stock of each of which shall
be publicly traded and as to which there shall not have been, since the
Starting Date and before the Determination Date, an announcement of a
proposal (i) for such company to be acquired or (ii) for such company to
acquire another company or companies in transactions with a value
exceeding 25% of the acquiror's market capitalization as of the Starting
Date. In the event that, on or prior to the date immediately preceding
the Determination
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Date, the common stock of any such company ceases to be publicly traded
or any such announcement is made with respect to any such company, such
company will be removed from the Index Group, and the weights (which
have been determined based on the number of outstanding shares of common
stock) redistributed proportionately for purposes of determining the
Index Price. The twenty (20) bank holding companies and the weights
attributed to them are as follows:
<TABLE>
<CAPTION>
COMPANY SYMBOL WEIGHTING
- ------- ------ ---------
<S> <C> <C>
Astoria Financial Corporation............................ ASFC 4.76%
CCB Financial Corporation................................ CCB 3.45%
Charter One Financial, Inc. ............................. COFI 14.35%
Chittenden Corporation................................... CHZ 2.45%
Commerce Bancorp, Inc./NJ................................ CBH 2.41%
First Commonwealth Financial Corporation................. FCF 2.69%
FirstMerit Corporation................................... FMER 7.86%
Fulton Financial Corporation............................. FULT 6.00%
GreenPoint Financial Corp. .............................. GPT 9.50%
Independence Community Bank Corp. ....................... ICBC 5.91%
Keystone Financial, Inc. ................................ KSTN 4.21%
M & T Bank Corporation................................... MTB 0.68%
Peoples Heritage Financial Group, Inc. .................. PHBK 9.10%
Queens County Bancorp, Inc. ............................. QCSB 1.86%
Richmond County Financial Corp. ......................... RCBK 2.79%
Roslyn Bancorp, Inc. .................................... RSLN 6.68%
Staten Island Bancorp, Inc. ............................. SIB 3.54%
Susquehanna Bancshares, Inc. ............................ SUSQ 3.21%
Valley National Bancorp.................................. VLY 5.25%
Webster Financial Corporation............................ WBST 3.31%
------
100.00%
</TABLE>
"Initial Index Price" means the sum of the Initial Prices for each
company comprising the Index Group. The "Initial Price," with respect to
any company belonging to the Index Group, means the product of (x) the
per share closing sales price of the common stock of such company, as
such price was reported on the consolidated transaction reporting system
for the market or exchange on which such common stock was principally
traded on August 27, 1999, multiplied by (y) the weighting set forth
opposite such company's name above.
"Starting Date" means August 27, 1999.
"Starting Price" means $19.0625.
If Buyer of any company belonging to the Index Group declares or
effects a stock dividend, reclassification, recapitalization, split-up,
combination, exchange of shares or similar transaction between the Starting
Date and the Determination Date, the weighting and/or the prices for the
common stock of such company or Buyer shall be appropriately adjusted for
the purposes of applying this Section 9.1(h).
9.2. Effect of Termination; Expenses. In the event of termination of this
Agreement by either Buyer or the Company as provided in Section 9.1, this
Agreement shall forthwith become void and have no effect except that (i)
Sections 7.2(c), 9.2 and 10.4 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.
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9.3. 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 the
Company; provided, however, that after any approval of the transactions
contemplated by this Agreement by the Company's stockholders, there may not be,
without further approval of such stockholders, any amendment of this Agreement
which reduces the amount or changes the form of the consideration to be
delivered to the Company stockholders hereunder other than as contemplated by
this Agreement. This Agreement may not be amended except by an instrument in
writing signed on behalf of each of the parties hereto.
9.4. Extension; Waiver. At any time prior to the Effective Time, each of
the parties hereto, by action taken or authorized by its 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 party hereto, (b) waive any
inaccuracies in the representations and warranties of the other party contained
herein or in any document delivered pursuant hereto and (c) waive compliance by
the other party with any of its agreements contained herein, or waive compliance
with any of the conditions to its obligations hereunder. 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 X
GENERAL PROVISIONS
10.1. 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 VIII hereof (other than those
conditions which relate to actions to be taken at the Closing)(the "Closing
Date"), at the offices of Buyer's Counsel unless another time, date or place is
agreed to in writing by the parties hereto.
10.2. Alternative Structure. Notwithstanding anything to the contrary
contained in this Agreement, prior to the Effective Time, Buyer shall be
entitled to revise the structure of the Merger and the related transactions
contemplated hereby (including, without limitation, (x) substituting a
subsidiary of Buyer as a Constituent Corporation in the Merger, (y) providing
that a different entity shall be the Surviving Corporation in the Merger, and
(z) providing for the merger of Company Bank into Buyer Bank in accordance with
a Bank Merger Agreement), provided that each of the transactions comprising such
revised structure shall (i) fully qualify as, or fully be treated as part of,
one or more tax-free reorganizations within the meaning of Section 368(a) of the
Code, (ii) not change the amount of consideration to be received by the
stockholders of the Company, and (iii) be capable of consummation in as timely a
manner as the structure contemplated herein. This Agreement and any related
documents shall be appropriately amended in order to reflect any such revised
structure.
10.3. Nonsurvival of Representations, Warranties and Agreements. None of
the representations, warranties, covenants and agreements in this Agreement or
in any instrument delivered pursuant to this Agreement (other than pursuant to
the Option Agreement which shall terminate in accordance with its terms) shall
survive the Effective Time, except for those covenants and agreements contained
herein and therein which by their terms apply in whole or in part after the
Effective Time.
10.4. Expenses. All costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such expense, provided, however, that the costs and expenses of
printing and mailing the Proxy Statement to the stockholders of the Company and
Buyer, and all filing and other fees paid to the SEC or any other Governmental
Entity in connection with the Merger and the other transactions contemplated
hereby, shall be borne equally by Buyer and the Company, provided further,
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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.
10.5. Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally, telecopied (with
confirmation), mailed by registered or certified mail (return receipt requested)
or delivered by an express courier (with confirmation) to the parties at the
following addresses (or at such other address for a party as shall be specified
by like notice):
(a) if to Buyer, to:
North Fork Bancorporation, Inc.
275 Broad Hollow Road
Melville, New York 11747
Facsimile: (516) 844-1471
Attention: Mr. John Adam Kanas
Chairman, President and Chief Executive Officer
with a copy to:
William S. Rubenstein, Esq.
Skadden, Arps Slate, Meagher & Flom LLP
919 Third Avenue
New York, New York 10022
Facsimile: (212) 735-2000
and
(b) if to the Company, to:
Reliance Bancorp, Inc.
585 Stewart Avenue
Garden City, New York 11530
Facsimile: (516) 222-1805
Attention: Mr. Raymond A. Nielsen
President and Chief Executive Officer
with a copy to:
Lawrence M.F. Spaccasi
Muldoon, Murphy & Faucette
5101 Wisconsin Avenue, N.W.
Washington, D.C. 20016
Facsimile: (202) 966-9409
10.6. Interpretation. When a reference is made in this Agreement to
Sections, Exhibits or Schedules, such reference shall be to a Section of or
Exhibit or Schedule to this Agreement unless otherwise indicated. The table of
contents and headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement. Whenever the words "include", "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation". The phrases "the date of this Agreement", "the date hereof" and
terms of similar import, unless the context otherwise requires, shall be deemed
to refer to August 30, 1999.
10.7. 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.
10.8. Entire Agreement. This Agreement (including the documents and the
instruments referred to herein), together with the Option Agreement, constitutes
the entire agreement and supersedes all prior
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agreements and understandings, both written and oral, among the parties with
respect to the subject matter hereof.
10.9. 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.
10.10. Enforcement of Agreement. The parties hereto agree that irreparable
damage would occur in the event that the provisions contained in and Section
7.2(c) of this Agreement were not performed in accordance with its specific
terms or was otherwise breached. It is accordingly agreed that the parties shall
be entitled to an injunction or injunctions to prevent breaches of Section
7.2(c) of this Agreement and to enforce specifically the terms and provisions
thereof in any court of the United States or any state having jurisdiction, this
being in addition to any other remedy to which they are entitled at law or in
equity.
10.11. 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.
10.12. Publicity. Except as otherwise required by law or by the rules of
the NYSE or The NASDAQ Stock Market, so long as this Agreement is in effect,
neither Buyer nor the Company shall, or shall permit any of its Subsidiaries to,
issue or cause the publication of any press release or other public announcement
with respect to, or otherwise make any public statement concerning, the
transactions contemplated by this Agreement without the consent of the other
party, which consent shall not be unreasonably withheld.
10.13. 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, Buyer and the Company have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the date
first above written.
NORTH FORK BANCORPORATION, INC.
By: /s/ JOHN ADAM KANAS
------------------------------------
John Adam Kanas
Chairman of the Board, President and
Chief Executive Officer
RELIANCE BANCORP, INC.
By: /s/ RAYMOND A. NIELSEN
------------------------------------
Raymond A. Nielsen
President and Chief Executive
Officer
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<PAGE> 134
APPENDIX B
THE TRANSFER OF THIS AGREEMENT IS SUBJECT TO
CERTAIN PROVISIONS CONTAINED HEREIN AND TO
RESALE RESTRICTIONS UNDER THE
SECURITIES ACT OF 1933, AS AMENDED
STOCK OPTION AGREEMENT, dated August 30, 1999, between Reliance Bancorp,
Inc., a Delaware corporation ("Issuer"), and North Fork Bancorporation, Inc., a
Delaware corporation ("Grantee").
W I T N E S S E T H:
WHEREAS, Grantee and Issuer have entered into an Agreement and Plan of
Merger of even date herewith (the "Merger Agreement"), which agreement has been
executed by the parties hereto immediately prior to this Stock Option Agreement
(this "Agreement"); and
WHEREAS, as a condition to Grantee's entering into the Merger Agreement and
in consideration therefor, Issuer has agreed to grant Grantee the Option (as
hereinafter defined);
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements set forth herein and in the Merger Agreement, the parties hereto
agree as follows:
1. (a) Issuer hereby grants to Grantee an unconditional, irrevocable option
(the "Option") to purchase, subject to the terms hereof, up to 1,708,297 fully
paid and nonassessable shares of Issuer's Common Stock, par value $0.01 per
share ("Common Stock"), at a price of $29.00 per share (the "Option Price");
provided, however, that in no event shall the number of shares of Common Stock
for which this Option is exercisable exceed 19.9% of the Issuer's issued and
outstanding shares of Common Stock without giving effect to any shares subject
to or issued pursuant to the Option. The number of shares of Common Stock that
may be received upon the exercise of the Option and the Option Price are subject
to adjustment as herein set forth.
(b) In the event that any additional shares of Common Stock are either (i)
issued or otherwise become outstanding after the date of this Agreement (other
than pursuant to this Agreement) or (ii) redeemed, repurchased, retired or
otherwise cease to be outstanding after the date of this Agreement, the number
of shares of Common Stock subject to the Option shall be increased or decreased,
as appropriate, so that, after such issuance, such number equals 19.9% of the
number of shares of Common Stock then issued and outstanding without giving
effect to any shares subject or issued pursuant to the Option. Nothing contained
in this Section 1(b) or elsewhere in this Agreement shall be deemed to authorize
Issuer or Grantee to breach any provision of the Merger Agreement.
2. (a) The Holder (as hereinafter defined) 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) and the Holder is not in material
beach of the agreements or covenants contained in this Agreement or the Merger
Agreement, provided that the Holder shall have sent the written notice of such
exercise (as provided in subsection (e) of this Section 2) within six months
following such Subsequent Triggering Event (or such longer period as provided in
Section 10), 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 tenth 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 (as
defined in the Merger Agreement) 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 except a termination by
Grantee pursuant to Section 9.1(f) of the Merger Agreement (unless the breach by
Issuer giving rise to such right of termination is non-volitional); or (iii) the
passage of
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15 months after termination of the Merger Agreement if such termination follows
the occurrence of an Initial Triggering Event or is a termination by Grantee
pursuant to Section 9.1(f) of the Merger Agreement (unless the breach by Issuer
giving rise to such right of termination is non-volitional). Notwithstanding any
other provision of this Agreement, in no event shall any of Issuer's obligations
under this Agreement continue six months beyond an Exercise Termination Event.
The term "Holder" shall mean the holder or holders of the Option.
(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 (each an "Issuer Subsidiary"),
without having received Grantee's prior written consent, shall have entered
into an agreement to engage in an Acquisition Transaction (as hereinafter
defined) with any person (the term "person" for purposes of this Agreement
having the meaning assigned thereto in Sections 3(a)(9) and 13(d)(3) of the
Securities Exchange Act of 1934, as amended (the "1934 Act"), and the rules
and regulations thereunder) other than Grantee or any of its Subsidiaries
(each a "Grantee Subsidiary") or the Board of Directors of Issuer shall
have recommended that the stockholders of Issuer approve or accept any
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 Significant Subsidiary (as defined in Rule 1-02 of Regulation
S-X promulgated by the Securities and Exchange Commission (the "SEC")) of
Issuer, (x) a purchase, lease or other acquisition or assumption of all or
a substantial portion of the assets or deposits of Issuer or any
Significant Subsidiary of Issuer, (y) a purchase or other acquisition
(including by way of merger, consolidation, share exchange or otherwise) of
securities representing 10% or more of the voting power of Issuer, or (z)
any substantially similar transaction; provided, however, that in no event
shall any merger, consolidation, purchase or similar transaction involving
only the Issuer and one or more of its Subsidiaries or involving only two
or more of such Subsidiaries, be deemed to be an Acquisition Transaction,
provided that any such transaction is not entered into in violation of the
terms of the Merger Agreement;
(ii) Issuer or any Issuer Subsidiary, without having received
Grantee's prior written consent, shall have authorized, recommended,
proposed or publicly announced its intention to authorize, recommend or
propose, an Acquisition Transaction with any person other than Grantee or a
Grantee Subsidiary, or the Board of Directors of Issuer shall have publicly
withdrawn or modified, or publicly announced its intent 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;
(iii) Any person, other than Grantee, any Grantee Subsidiary or any
Issuer Subsidiary acting in a fiduciary capacity in the ordinary course of
its business, shall have acquired beneficial ownership or the right to
acquire beneficial ownership of 10% or more of the outstanding shares of
Common Stock (the term "beneficial ownership" for purposes of this
Agreement having the meaning assigned thereto in Section 13(d) of the 1934
Act, and the rules and regulations thereunder);
(iv) Any person other than Grantee or any Grantee Subsidiary shall
have made a bona fide proposal to Issuer or its stockholders by public
announcement or written communication that is or becomes the subject of
public disclosure to engage in an Acquisition Transaction;
(v) After a proposal is made by a third party to Issuer or its
stockholders to engage in an Acquisition Transaction, Issuer shall have
breached any covenant or obligation contained in the Merger Agreement and
such breach (x) would entitle Grantee to terminate the Merger Agreement and
(y) shall not have been cured prior to the Notice Date (as defined below);
or
(vi) Any person other than Grantee or any Grantee Subsidiary, other
than in connection with a transaction to which Grantee has given its prior
written consent, shall have filed an application or notice with the Federal
Reserve Board, the Office of Thrift Supervision or any other federal or
state bank regulatory authority for approval to engage in an Acquisition
Transaction.
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(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 20% or
more of the then outstanding shares of Common Stock; or
(ii) The occurrence of the Initial Triggering Event described in
paragraph (i) of subsection (b) of this Section 2, except that the
percentage referred to in clause (y) shall be 20%.
(d) Issuer shall notify Grantee promptly in writing of the occurrence of
any Initial Triggering Event or Subsequent Triggering Event of which it has
notice (together, a "Triggering Event"), it being understood that the giving of
such notice by Issuer shall not be a condition to the right of the Holder to
exercise the Option.
(e) In the event the Holder is entitled to and wishes to exercise the
Option, it shall send to Issuer a written notice (the date of which being herein
referred to as the "Notice Date") specifying (i) the total number of shares it
will purchase pursuant to such exercise and (ii) a place and date not earlier
than three business days nor later than 60 business days from the Notice Date
for the closing of such purchase (the "Closing Date"); provided that if prior
notification to or approval of the Federal Reserve Board, the Office of Thrift
Supervision (the "OTS") or any other regulatory agency is required in connection
with such purchase, the Holder shall promptly file the required notice or
application for approval and shall expeditiously process the same and the period
of time that otherwise would run pursuant to this sentence shall run instead
from the date on which any required notification periods have expired or been
terminated or such approvals have been obtained and any requisite waiting period
or periods shall have passed. Any exercise of the Option shall be deemed to
occur on the Notice Date relating thereto.
(f) At the closing referred to in subsection (e) of this Section 2, the
Holder shall pay to Issuer the aggregate purchase price for the shares of Common
Stock purchased pursuant to the exercise of the Option in immediately available
funds by wire transfer to a bank account designated by Issuer, provided that
failure or refusal of Issuer to designate such a bank account shall not preclude
the Holder from exercising the Option.
(g) At such closing, simultaneously with the delivery of immediately
available funds as provided in subsection (f) of this Section 2, Issuer shall
deliver to the Holder a certificate or certificates representing the number of
shares of Common Stock purchased by the Holder and, if the Option should be
exercised in part only, a new Option evidencing the rights of the Holder thereof
to purchase the balance of the shares purchasable hereunder, and the Holder
shall deliver to Issuer this Agreement and a letter agreeing that the Holder
will not offer to sell or otherwise dispose of such shares in violation of
applicable law or the provisions of this Agreement.
(h) Certificates for Common Stock delivered at a closing hereunder may be
endorsed with a restrictive legend that shall read substantially as follows:
"The transfer of the shares represented by this certificate is subject to
certain provisions of an agreement between the registered holder hereof and
Issuer and to resale restrictions arising under the Securities Act of 1933,
as amended. A copy of such agreement is on file at the principal office of
Issuer and will be provided to the holder hereof without charge upon
receipt by Issuer of a written request therefor."
It is understood and agreed that: (i) the reference to the resale restrictions
of the Securities Act of 1933, as amended (the "1933 Act"), in the above legend
shall be removed by delivery of substitute certificate(s) without such reference
if the Holder shall have delivered to Issuer a copy of a letter from the staff
of the SEC, or an opinion of counsel, in form and substance reasonably
satisfactory to Issuer, to the effect that such legend is not required for
purposes of the 1933 Act; (ii) the reference to the provisions to this Agreement
in the above legend shall be removed by delivery of substitute certificate(s)
without such reference if the shares have been sold or transferred in compliance
with the provisions of this Agreement and under circumstances that do not
require the retention of such reference; and (iii) the legend shall be removed
in its entirety if the conditions in the preceding clauses (i) and (ii) are both
satisfied. In addition, such certificates shall bear any other legend as may be
required by law.
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(i) Upon the giving by the Holder to Issuer of the written notice of
exercise of the Option provided for under subsection (e) of this Section 2 and
the tender of the applicable purchase price in immediately available funds, the
Holder shall be deemed to be the holder of record of the shares of Common Stock
issuable upon such exercise, notwithstanding that the stock transfer books of
Issuer shall then be closed or that certificates representing such shares of
Common Stock shall not then be actually delivered to the Holder. Issuer shall
pay all expenses, and any and all United States federal, state and local taxes
and other charges that may be payable in connection with the preparation, issue
and delivery of stock certificates under this Section 2 in the name of the
Holder or its assignee, transferee or designee.
3. Issuer agrees: (i) that it shall at all times maintain, free from
preemptive rights, sufficient authorized but unissued or treasury shares of
Common Stock so that the Option may be exercised without additional
authorization of Common Stock after giving effect to all other options,
warrants, convertible securities and other rights to purchase Common Stock; (ii)
that it will not, by charter amendment or through reorganization, consolidation,
merger, dissolution or sale of assets, or by any other voluntary act, avoid or
seek to avoid the observance or performance of any of the covenants,
stipulations or conditions to be observed or per formed hereunder by Issuer;
(iii) promptly to take all action as may from time to time be required
(including (x) complying with all premerger notification, reporting and waiting
period requirements specified in 15 U.S.C. sec. 18a and regulations promulgated
thereunder and (y) in the event, under the Bank Holding Company Act of 1956, as
amended, the Change in Bank Control Act of 1978, as amended, or any other
federal or state banking law, prior approval of or notice to the Federal Reserve
Board, the OTS or to any state regulatory authority is necessary before the
Option may be exercised, cooperating fully with the Holder in preparing such
applications or notices and providing such information to the Federal Reserve
Board, the OTS or such state regulatory authority as they may require) in order
to permit the Holder to exercise the Option and Issuer duly and effectively to
issue shares of Common Stock pursuant hereto; and (iv) promptly to take all
action provided herein to protect the rights of the Holder against dilution.
4. This Agreement (and the Option granted hereby) are exchangeable, without
expense, at the option of the Holder, upon presentation and surrender of this
Agreement at the principal office of Issuer, for other Agreements providing for
Options of different denominations entitling the holder thereof to purchase, on
the same terms and subject to the same conditions as are set forth herein, in
the aggregate the same number of shares of Common Stock purchasable hereunder.
The terms "Agreement" and "Option" as used herein include any Stock Option
Agreements and related Options for which this Agreement (and the Option granted
hereby) may be exchanged. Upon receipt by Issuer of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this
Agreement, and (in the case of loss, theft or destruction) of reasonably
satisfactory indemnification, and upon surrender and cancellation of this
Agreement, if mutilated, Issuer will execute and deliver a new Agreement of like
tenor and date. Any such new Agreement executed and delivered shall constitute
an additional contractual obligation on the part of Issuer, whether or not the
Agreement so lost, stolen, destroyed or mutilated shall at any time be
enforceable by anyone.
5. In addition to the adjustment in the number of shares of Common Stock
that are purchasable upon exercise of the Option pursuant to Section 1 of this
Agreement, the number of shares of Common Stock purchasable upon the exercise of
the Option and the Option Price shall be subject to adjustment from time to time
as provided in this Section 5. In the event of any change in, or distributions
in respect of, the Common Stock by reason of stock dividends, split-ups,
mergers, recapitalizations, combinations, subdivisions, conversions, exchanges
of shares, distributions on or in respect of the Common Stock that would be
prohibited under the terms of the Merger Agreement, or the like, the type and
number of shares of Common Stock purchasable upon exercise hereof and the Option
Price shall be appropriately adjusted in such manner as shall fully preserve the
economic benefits provided hereunder and proper provision shall be made in any
agreement governing any such transaction to provide for such proper adjustment
and the full satisfaction of the Issuer's obligations hereunder.
6. Upon the occurrence of a Subsequent Triggering Event that occurs prior
to an Exercise Termination Event, Issuer shall, at the request of Grantee
(whether on its own behalf or on behalf of any subsequent holder of this Option
(or part thereof) or any of the shares of Common Stock issued pursuant hereto)
delivered within six months of such Subsequent Triggering Event (or such longer
period as provided in Section 10),
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promptly prepare, file and keep current a shelf registration statement under the
1933 Act covering this Option and any shares issued and issuable pursuant to
this Option and shall use its reasonable best efforts to cause such registration
statement to become effective and remain current in order to permit the sale or
other disposition of this Option and any shares of Common Stock issued upon
total or partial exercise of this Option ("Option Shares") in accordance with
any plan of disposition requested by Grantee. Issuer will use its reasonable
best efforts to cause such registration statement first to become effective and
then to remain effective for such period not in excess of 180 days from the day
such registration statement first becomes effective or such shorter time as may
be reasonably necessary to effect such sales or other dispositions. Grantee
shall have the right to demand two such registrations. The foregoing
notwithstanding, if, at the time of any request by Grantee for registration of
the Option or Option Shares as provided above, Issuer is in registration with
respect to an underwritten public offering of shares of Common Stock, and if in
the good faith judgment of the managing underwriter or managing underwriters,
or, if none, the sole underwriter or underwriters, of such offering the
inclusion of the Holder's Option or Option Shares would interfere with the
successful marketing of the shares of Common Stock offered by Issuer, the number
of Option Shares otherwise to be covered in the registration statement
contemplated hereby may be reduced; provided, however, that after any such
required reduction the number of Option Shares to be included in such offering
for the account of the Holder shall constitute at least 25% of the total number
of shares to be sold by the Holder and Issuer in the aggregate; and provided
further, however, that if such reduction occurs, then the Issuer shall file a
registration statement for the balance as promptly as practicable and no
reduction shall thereafter occur. Each such Holder shall provide all information
reasonably requested by Issuer for inclusion in any registration statement to be
filed hereunder. If requested by any such Holder in connection with such
registration, Issuer shall become a party to any underwriting agreement relating
to the sale of such shares, but only to the extent of obligating itself in
respect of representations, warranties, indemnities and other agreements
customarily included in secondary offering underwriting agreements for the
Issuer. Upon receiving any request under this Section 6 from any Holder, Issuer
agrees to send a copy thereof to any other person known to Issuer to be entitled
to registration rights under this Section 6, in each case by promptly mailing
the same, postage prepaid, to the address of record of the persons entitled to
receive such copies. Not withstanding anything to the contrary contained herein,
in no event shall Issuer be obligated to effect more than two registrations
pursuant to this Section 6 by reason of the fact that there shall be more than
one Grantee as a result of any assignment or division of this Agreement.
7. (a) Immediately prior to the occurrence of a Repurchase Event (as
defined below) and prior to twelve months thereafter, (i) following a request of
the Holder, delivered prior to an Exercise Termination Event, Issuer (or any
successor thereto) shall repurchase the Option from the Holder at a price (the
"Option Repurchase Price") equal to the amount by which (A) the Market/Offer
Price (as defined below) exceeds (B) the Option Price, multiplied by the number
of shares for which this Option may then be exercised and (ii) at the request of
the owner of Option Shares from time to time (the "Owner"), delivered within 90
days of such occurrence (or such longer period as provided in Section 10),
Issuer shall repurchase such number of the Option Shares from the Owner as the
Owner shall designate at a price (the "Option Share Repurchase Price") equal to
the Market/Offer Price multiplied by the number of Option Shares so designated.
The term "Market/Offer Price" shall mean the highest of (i) the price per share
of Common Stock at which a tender offer or exchange offer therefor has been
made, (ii) the price per share of Common Stock to be paid by any third party
pursuant to an agreement with Issuer, (iii) the highest closing price for shares
of Common Stock within the six-month period immediately preceding the date the
Holder gives notice of the required repurchase of this Option or the Owner gives
notice of the required repurchase of Option Shares, as the case may be, or (iv)
in the event of a sale of all or a substantial portion of Issuer's assets, 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 the Holder or the Owner, as the case may be,
and reasonably acceptable to Issuer, divided by the number of shares of Common
Stock of Issuer outstanding at the time of such sale. In determining the
Market/Offer Price, the value of consideration other than cash shall be
determined by a nationally recognized investment banking firm selected by the
Holder or Owner, as the case may be, and reasonably acceptable to Issuer.
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(b) The Holder and the Owner, as the case may be, may exercise its right to
require Issuer to repurchase the Option and any Option Shares pursuant to this
Section 7 by surrendering for such purpose to Issuer, at its principal office,
this Agreement or certificates for Option Shares, as applicable, accompanied by
a written notice or notices stating that the Holder or the Owner, as the case
may be, elects to require Issuer to repurchase this Option and/or the Option
Shares in accordance with the provisions of this Section 7. Within the latter to
occur of (x) five business days after the surrender of the Option and/or
certificates representing Option Shares and the receipt of such notice or
notices relating thereto and (y) the time that is immediately prior to the
occurrence of a Repurchase Event, Issuer shall deliver or cause to be delivered
to the Holder the Option Repurchase Price and/or to the Owner the Option Share
Repurchase Price therefor or the portion thereof that Issuer is not then
prohibited under applicable law and regulation from so delivering.
(c) To the extent that Issuer is prohibited under applicable law or
regulation from repurchasing the Option and/or the Option Shares in full, Issuer
shall immediately so notify the Holder and/or the Owner and thereafter deliver
or cause to be delivered, from time to time, to the Holder and/or the Owner, as
appropriate, the portion of the Option Repurchase Price and the Option Share
Repurchase Price, respectively, that it is no longer prohibited from delivering,
within five business days after the date on which Issuer is no longer so
prohibited; provided, however, that if Issuer at any time after delivery of a
notice of repurchase pursuant to paragraph (b) of this Section 7 is prohibited
under applicable law or regulation from delivering to the Holder and/or the
Owner, as appropriate, the Option Repurchase Price and the Option Share
Repurchase Price, respectively, in full (and Issuer hereby undertakes to use its
best efforts to obtain all required regulatory and legal approvals and to file
any required notices as promptly as practicable in order to accomplish such
repurchase), the Holder or Owner may revoke its notice of repurchase of the
Option or the Option Shares either in whole or to the extent of the prohibition,
whereupon, in the latter case, Issuer shall promptly (i) deliver to the Holder
and/or the Owner, as appropriate, that portion of the Option Repurchase Price or
the Option Share Repurchase Price that Issuer is not prohibited from delivering;
and (ii) deliver, as appropriate, either (A) to the Holder, a new Stock Option
Agreement evidencing the right of the Holder to purchase that number of shares
of Common Stock obtained by multiplying the number of shares of Common Stock for
which the surrendered Stock Option Agreement was exercisable at the time of
delivery of the notice of repurchase by a fraction, the numerator of which is
the Option Repurchase Price less the portion thereof theretofore delivered to
the Holder and the denominator of which is the Option Repurchase Price, or (B)
to the Owner, a certificate for the Option Shares it is then so prohibited from
repurchasing.
(d) For purposes of this Section 7, a Repurchase Event shall be deemed to
have occurred (i) upon the consummation of any merger, consolidation or similar
transaction involving Issuer or any purchase, lease or other acquisition of all
or a substantial portion of the assets of Issuer, other than any such
transaction which would not constitute an Acquisition Transaction pursuant to
the provisos to Section 2(b)(i) hereof or (ii) upon the acquisition by any
person of beneficial ownership of 50% or more of the then outstanding shares of
Common Stock, provided that no such event shall constitute a Repurchase Event
unless a Subsequent Triggering Event shall have occurred prior to an Exercise
Termination Event. The parties hereto agree that Issuer's obligations to
repurchase the Option or Option Shares under this Section 7 shall not terminate
upon the occurrence of an Exercise Termination Event unless no Subsequent
Triggering Event shall have occurred prior to the occurrence of an Exercise
Termination Event.
8. (a) In the event that prior to an Exercise Termination Event, Issuer
shall enter into an agreement (i) to consolidate with or merge into any person,
other than Grantee or 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 Common Stock shall be changed into
or exchanged for stock or other securities of any other person or cash or any
other property or the then outstanding shares of Common Stock shall after such
merger represent less than 50% of the outstanding voting shares and voting 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 provision so that the Option shall, upon the
consummation of any such transaction and upon the terms and conditions set forth
herein, be converted into,
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or exchanged for, an option (the "Substitute Option"), at the election of the
Holder, of either (x) the Acquiring Corporation (as hereinafter defined) or (y)
any person that controls the Acquiring Corporation.
(b) The following terms have the meanings indicated:
(1) "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
Issuer's assets.
(2) "Substitute Common Stock" shall mean the common stock issued by
the issuer of the Substitute Option upon exercise of the Substitute Option.
(3) "Assigned Value" shall mean the Market/Offer Price, as defined in
Section 7.
(4) "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 Substitute Common Stock on the day preceding
such consolidation, merger or sale; provided that if Issuer is the issuer
of the Substitute Option, the Average Price shall be computed with respect
to a share of common stock issued by the person merging into Issuer or by
any company which controls or is controlled by such person, as the Holder
may elect.
(c) The Substitute Option shall have the same terms as the Option,
provided, that if the terms of the Substitute Option cannot, for legal reasons,
be the same as the Option, such terms shall be as similar as possible and in no
event less advantageous to the Holder. The issuer of the Substitute Option shall
also enter into an agreement with the then Holder or Holders of the Substitute
Option in substantially the same form as this Agreement, which shall be
applicable to the Substitute Option.
(d) The Substitute Option shall be exercisable for such number of shares of
Substitute Common Stock as is equal to the Assigned Value multiplied by the
number of shares of Common Stock for which the Option is then exercisable,
divided by the Average Price. The exercise price of the Substitute Option per
share of Substitute Common Stock shall then be equal to the Option Price
multiplied by a fraction, the numerator of which shall be the number of shares
of Common Stock for which the Option is then exercisable and the denominator of
which shall be the number of shares of Substitute Common Stock for which the
Substitute Option is exercisable.
(e) In no event, pursuant to any of the foregoing paragraphs, shall the
Substitute Option be exercisable for more than 19.9% of the shares of Substitute
Common Stock outstanding prior to exercise of the Substitute Option. In the
event that the Substitute Option would be exercisable for more than 19.9% of the
shares of Substitute Common Stock outstanding prior to exercise but for this
clause (e), the issuer of the Substitute Option (the "Substitute Option Issuer")
shall make a cash payment to Holder equal to the excess of (i) the value of the
Substitute Option without giving effect to the limitation in this clause (e)
over (ii) the value of the Substitute Option after giving effect to the
limitation in this clause (e). This difference in value shall be determined by a
nationally recognized investment banking firm selected by the Holder or the
Owner, as the case may be, and reasonably acceptable to the Acquiring
Corporation.
(f) Issuer shall not enter into any transaction described in subsection (a)
of this Section 8 unless the Acquiring Corporation and any person that controls
the Acquiring Corporation assume in writing all the obligations of Issuer
hereunder.
9. (a) At the request of the holder of the Substitute Option (the
"Substitute Option Holder"), the Substitute Option Issuer shall repurchase the
Substitute Option from the Substitute Option Holder at a price (the "Substitute
Option Repurchase Price") equal to the amount by which (i) the Highest Closing
Price (as hereinafter defined) exceeds (ii) the exercise price of the Substitute
Option, multiplied by the number of shares of Substitute Common Stock for which
the Substitute Option may then be exercised, and at the request of the owner
(the "Substitute Share Owner") of shares of Substitute Common Stock (the
"Substitute Shares"), the Substitute Option Issuer shall repurchase the
Substitute Shares at a price (the "Substitute Share Repurchase Price") equal to
the Highest Closing Price multiplied by the number of Substitute Shares so
designated. The term "Highest Closing Price" shall mean the highest closing
price for shares of Substitute
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Common Stock within the six-month period immediately preceding the date the
Substitute Option Holder gives notice of the required repurchase of the
Substitute Option or the Substitute Share Owner gives notice of the required
repurchase of the Substitute Shares, as applicable.
(b) The Substitute Option Holder and the Substitute Share Owner, as the
case may be, may exercise its respective right to require the Substitute Option
Issuer to repurchase the Substitute Option and the Substitute Shares pursuant to
this Section 9 by surrendering for such purpose to the Substitute Option Issuer,
at its principal office, the agreement for such Substitute Option (or, in the
absence of such an agreement, a copy of this Agreement) and certificates for
Substitute Shares accompanied by a written notice or notices stating that the
Substitute Option Holder or the Substitute Share Owner, as the case may be,
elects to require the Substitute Option Issuer to repurchase the Substitute
Option and/or the Substitute Shares in accordance with the provisions of this
Section 9. As promptly as practicable, and in any event within five business
days after the surrender of the Substitute Option and/or certificates
representing Substitute Shares and the receipt of such notice or notices
relating thereto, the Substitute Option Issuer shall deliver or cause to be
delivered to the Substitute Option Holder the Substitute Option Repurchase Price
and/or to the Substitute Share Owner the Substitute Share Repurchase Price
therefor or, in either case, the portion thereof which the Substitute Option
Issuer is not then prohibited under applicable law and regulation from so
delivering.
(c) To the extent that the Substitute Option Issuer is prohibited under
applicable law or regulation from repurchasing the Substitute Option and/or the
Substitute Shares in part or in full, the Substitute Option Issuer following a
request for repurchase pursuant to this Section 9 shall immediately so notify
the Substitute Option Holder and/or the Substitute Share Owner and thereafter
deliver or cause to be delivered, from time to time, to the Substitute Option
Holder and/or the Substitute Share Owner, as appropriate, the portion of the
Substitute Share Repurchase Price, respectively, which it is no longer
prohibited from delivering, within five business days after the date on which
the Substitute Option Issuer is no longer so prohibited; provided, however, that
if the Substitute Option Issuer is at any time after delivery of a notice of
repurchase pursuant to subsection (b) of this Section 9 prohibited under
applicable law or regulation from delivering to the Substitute Option Holder
and/or the Substitute Share Owner, as appropriate, the Substitute Option
Repurchase Price and the Substitute Share Repurchase Price, respectively, in
full (and the Substitute Option Issuer shall use its best efforts to receive all
required regulatory and legal approvals as promptly as practicable in order to
accomplish such repurchase), the Substitute Option Holder or Substitute Share
Owner may revoke its notice of repurchase of the Substitute Option or the
Substitute Shares either in whole or to the extent of the prohibition,
whereupon, in the latter case, the Substitute Option Issuer shall promptly (i)
deliver to the Substitute Option Holder or Substitute Share Owner, as
appropriate, that portion of the Substitute Option Repurchase Price or the
Substitute Share Repurchase Price that the Substitute Option Issuer is not
prohibited from delivering; and (ii) deliver, as appropriate, either (A) to the
Substitute Option Holder, a new Substitute Option evidencing the right of the
Substitute Option Holder to purchase that number of shares of the Substitute
Common Stock obtained by multiplying the number of shares of the Substitute
Common Stock for which the surrendered Substitute Option was exercisable at the
time of delivery of the notice of repurchase by a fraction, the numerator of
which is the Substitute Option Repurchase Price less the portion thereof
theretofore delivered to the Substitute Option Holder and the denominator of
which is the Substitute Option Repurchase Price, or (B) to the Substitute Share
Owner, a certificate for the Substitute Common Shares it is then so prohibited
from repurchasing.
10. The 90-day or six-month period for exercise of certain rights under
Sections 2, 6, 7 and 14 shall be extended: (i) to the extent necessary to obtain
all regulatory approvals for the exercise of such rights, and for the expiration
of all statutory waiting periods; and (ii) to the extent necessary to avoid
liability under Section 16(b) of the 1934 Act by reason of such exercise.
11. Issuer hereby represents and warrants to Grantee as follows:
(a) Issuer has full corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby have been duly and validly
authorized by the Board of Directors of Issuer and no other corporate
proceedings on the part of Issuer are necessary to
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authorize this Agreement or to consummate the transactions so contemplated.
This Agreement has been duly and validly executed and delivered by Issuer.
(b) Issuer has taken all necessary corporate action to authorize and
reserve and to permit it to issue, and at all times from the date hereof
through the termination of this Agreement in accordance with its terms will
have reserved for issuance upon the exercise of the Option, that number of
shares of Common Stock equal to the maximum number of shares of Common
Stock at any time and from time to time issuable hereunder, and all such
shares, upon issuance pursuant hereto, will be duly authorized, validly
issued, fully paid, nonassessable, and will be delivered free and clear of
all claims, liens, encumbrance and security interests and not subject to
any preemptive rights.
(c) Issuer has taken all action (including if required redeeming all
of the Rights or amending or terminating the Rights Agreement) so that the
entering into of this Option Agreement, the acquisition of shares of Common
Stock hereunder and the other transactions contemplated hereby do not and
will not result in the grant of any rights to any person under the Rights
Agreement or enable or require the Rights to be exercised, distributed or
triggered.
12. Grantee hereby represents and warrants to Issuer that:
(a) Grantee has all requisite corporate power and authority to enter
into this Agreement and, subject to any approvals or consents referred to
herein, to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by all necessary corporate
action on the part of Grantee. This Agreement has been duly executed and
delivered by Grantee.
(b) The Option is not being, and any shares of Common Stock or other
securities acquired by Grantee upon exercise of the Option will not be,
acquired with a view to the public distribution thereof and will not be
transferred or otherwise disposed of except in a transaction registered or
exempt from registration under the 1933 Act.
13. (a) Grantee may, at any time following a Repurchase Event and prior to
the occurrence of an Exercise Termination Event (or such later period as
provided in Section 10), relinquish the Option (together with any Option Shares
issued to and then owned by Grantee) to Issuer in exchange for a cash fee equal
to the Surrender Price (as defined below); provided, however, that Grantee may
not exercise its rights pursuant to this Section 13 if Issuer has repurchased
the Option (or any portion thereof) or any Option Shares pursuant to Section 7.
The "Surrender Price" shall be equal to $13,880,000 (i) plus, if applicable,
Grantee's purchase price with respect to any Option Shares and (ii) minus, if
applicable, the sum of (A) the excess of (1) the net cash amounts, if any,
received by Grantee pursuant to the arms' length sale of Option Shares (or any
other securities into which such Option Shares were converted or exchanged) to
any unaffiliated party, over (2) Grantee's purchase price of such Option Shares
and (B) the net cash amounts, if any, received by Grantee pursuant to an arms'
length sale of a portion of the Option to any unaffiliated party.
(b) Grantee may exercise its right to relinquish the Option and any Option
Shares pursuant to this Section 13 by surrendering to Issuer, at its principal
office, this Agreement together with certificates for Option Shares, if any,
accompanied by a written notice stating (i) that Grantee elects to relinquish
the Option and Option Shares, if any, in accordance with the provisions of this
Section 13 and (ii) the Surrender Price. The Surrender Price shall be payable in
immediately available funds on or before the second business day following
receipt of such notice by Issuer.
(c) To the extent that Issuer is prohibited under applicable law or
regulation, or as a consequence of administrative policy, from paying the
Surrender Price to Grantee in full, Issuer shall immediately so notify Grantee
and thereafter deliver or cause to be delivered, from time to time, to Grantee,
the portion of the Surrender Price that it is no longer prohibited from paying,
within five business days after the date on which Issuer is no longer so
prohibited, provided, however, that if Issuer at any time after delivery of a
notice of surrender pursuant to paragraph (b) of this Section 13 is prohibited
under applicable law or regulation, or as a consequence of administrative
policy, from paying to Grantee the Surrender Price in full, (i) Issuer shall (A)
use its reasonable best efforts to obtain all required regulatory and legal
approvals and to file any required
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notices as promptly as practicable in order to make such payments, (B) within
five days of the submission or receipt of any documents relating to any such
regulatory and legal approvals, provide Grantee with copies of the same, and (c)
keep Grantee advised of both the status of any such request for regulatory and
legal approvals, as well as any discussions with any relevant regulatory or
other third party reasonably related to the same and (ii) Grantee may revoke
such notice of surrender by delivery of a notice of revocation to Issuer and,
upon delivery of such notice of revocation, the Exercise Termination Date shall
be extended to a date six months from the date on which the Exercise Termination
Date would have occurred if not for the provisions of this Section 13(c) (during
which period Grantee may exercise any of its rights hereunder, including any and
all rights pursuant to this Section 13).
14. Neither of the parties hereto may assign any of its rights or
obligations under this Agreement or the Option created hereunder to any other
person, without the express written consent of the other party, except that in
the event a Subsequent Triggering Event shall have occurred prior to an Exercise
Termination Event, Grantee, subject to the express provisions hereof, may assign
in whole or in part its rights and obligations hereunder within 90 days
following such Subsequent Triggering Event (or such longer period as provided in
Section 10); provided, however, that until the date 15 days following the date
on which the Federal Reserve Board or the OTS, as applicable, approves an
application by Grantee to acquire the shares of Common Stock subject to the
Option, Grantee may not assign its rights under the Option except in (i) a
widely dispersed public distribution, (ii) a private placement in which no one
party acquires the right to purchase in excess of 2% of the voting shares of
Issuer, (iii) an assignment to a single party (e.g., a broker or investment
banker) for the purpose of conducting a widely dispersed public distribution on
Grantee's behalf, or (iv) any other manner approved by the Federal Reserve Board
or the OTS, as applicable.
15. Each of Grantee and Issuer will use its best efforts to make all
filings with, and to obtain consents of, all third parties and governmental
authorities necessary to the consummation of the transactions contemplated by
this Agreement, including without limitation making application to list the
shares of Common Stock issuable hereunder on the National Association of
Securities Dealers Automated Quotation/National Market Securities (NASDAQ/NMS)
upon official notice of issuance and applying to the Federal Reserve Board
and/or the OTS, as applicable, for approval to acquire the shares issuable
hereunder, but Grantee shall not be obligated to apply to state banking
authorities for approval to acquire the shares of Common Stock issuable
hereunder until such time, if ever, as it deems appropriate to do so.
16. (a) Notwithstanding any other provision of this Agreement, in no event
shall the Grantee's Total Profit (as hereinafter defined) exceed $17,350,000
and, if it otherwise would exceed such amount, the Grantee, at its sole
election, shall either (i) reduce the number of shares of Common Stock subject
to this Option, (ii) deliver to the Issuer for cancellation Option Shares
previously purchased by Grantee, (iii) pay cash to the Issuer, or (iv) any
combination thereof, so that Grantee's actually realized Total Profit shall not
exceed $17,350,000 after taking into account the foregoing actions.
(b) Notwithstanding any other provision of this Agreement, this Option may
not be exercised for a number of shares as would, as of the date of exercise,
result in a Notional Total Profit (as defined below) of more than $17,350,000;
provided, that nothing in this sentence shall restrict any exercise of the
Option permitted hereby on any subsequent date.
(c) As used herein, the term "Total Profit" shall mean the aggregate amount
(before taxes) of the following: (i) the amount received by Grantee pursuant to
Issuer's repurchase of the Option (or any portion thereof) pursuant to Section 7
of this Agreement, (ii)(x) the amount received by Grantee pursuant to Issuer's
repurchase of Option Shares pursuant to Section 7, less (y) the Grantee's
purchase price for such Option Shares, (iii)(x) the net cash amounts received by
Grantee pursuant to the sale of Option Shares (or any other securities into
which such Option Shares are converted or exchanged) to any unaffiliated party,
less (y) the Grantee's purchase price of such Option Shares, (iv) any amounts
received by Grantee on the transfer of the Option (or any portion thereof) to
any unaffiliated party, and (v) any equivalent amount with respect to the
Substitute Option.
(d) As used herein, the term "Notional Total Profit" with respect to any
number of shares as to which Grantee may propose to exercise this Option shall
be the Total Profit determined as of the date of such
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<PAGE> 144
proposed exercise assuming that this Option were exercised on such date for such
number of shares and assuming that such shares, together with all other Option
Shares held by Grantee and its affiliates as of such date, were sold for cash at
the closing market price for the Common Stock as of the close of business on the
preceding trading day (less customary brokerage commissions).
17. The parties hereto acknowledge that damages would be an inadequate
remedy for a breach of this Agreement by either party hereto and that the
obligations of the parties hereto shall be enforceable by either party hereto
through injunctive or other equitable relief.
18. If any term, provision, covenant or restriction contained in this
Agreement is held by a court or a federal or state regulatory agency of
competent jurisdiction to be invalid, void or unenforceable, the remainder of
the terms, provisions and covenants and restrictions contained in this Agreement
shall remain in full force and effect, and shall in no way be affected, impaired
or invalidated. If for any reason such court or regulatory agency determines
that the Holder is not permitted to acquire, or Issuer is not permitted to
repurchase pursuant to Section 7, the full number of shares of Common Stock
provided in Section 1(a) hereof (as adjusted pursuant to Section 1(b) or 5
hereof), it is the express intention of Issuer to allow the Holder to acquire or
to require Issuer to repurchase such lesser number of shares as may be
permissible, without any amendment or modification hereof.
19. All notices, requests, claims, demands and other communications
hereunder shall be deemed to have been duly given when delivered in person, by
cable, telegram, telecopy or telex, or by registered or certified mail (postage
prepaid, return receipt requested) at the respective addresses of the parties
set forth in the Merger Agreement.
20. This Agreement shall be governed by and construed in accordance with
the laws of the State of Delaware, regardless of the laws that might otherwise
govern under applicable principles of conflicts of laws thereof.
21. This Agreement may be executed in two counterparts, each of which shall
be deemed to be an original, but all of which shall constitute one and the same
agreement.
22. Except as otherwise expressly provided herein, each of the parties
hereto shall bear and pay all costs and expenses incurred by it or on its behalf
in connection with the transactions contemplated hereunder, including fees and
expenses of its own financial consultants, investment bankers, accountants and
counsel.
23. Except as otherwise expressly provided herein or in the Merger
Agreement, this Agreement contains the entire agreement between the parties with
respect to the transactions contemplated hereunder and supersedes all prior
arrangements or understandings with respect thereof, written or oral. The terms
and conditions of this Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective successors and permitted assigns.
Nothing in this Agreement, expressed or implied, is intended to confer upon any
party, other than the parties hereto, and their respective successors and
permitted assigns, any rights, remedies, obligations or liabilities under or by
reason of this Agreement, except as expressly provided herein.
24. Capitalized terms used in this Agreement and not defined herein shall
have the meanings assigned thereto in the Merger Agreement.
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IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its officers thereunto duly authorized, all as of the
date first above written.
RELIANCE BANCORP, INC.
By: /s/ RAYMOND A. NIELSEN
------------------------------------
Raymond A. Nielsen
President and Chief Executive
Officer
NORTH FORK BANCORPORATION, INC.
By: /s/ JOHN ADAM KANAS
------------------------------------
John Adam Kanas
Chairman of the Board, President and
Chief Executive Officer
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APPENDIX C
[SANDLER O'NEILL & PARTNERS, L.P. LETTERHEAD]
January 11, 2000
Board of Directors
Reliance Bancorp, Inc.
585 Stewart Avenue
Garden City, NY 11530
Ladies and Gentlemen:
Reliance Bancorp, Inc. ("Reliance") and North Fork Bancorporation, Inc.
("North Fork") have entered into an Agreement and Plan of Merger, dated as of
August 30, 1999 (the "Agreement"), pursuant to which Reliance will be merged
with and into North Fork (the "Merger"). Upon consummation of the Merger, each
share of Reliance common stock, par value $0.01 per share (together with the
rights attached thereto issued pursuant to the Stockholder Protection Rights
Agreement, dated as of September 18, 1996, between Reliance and Registrar and
Transfer Co., as Rights Agent), issued and outstanding immediately prior to the
Merger (the "Reliance Shares"), other than certain shares specified in the
Agreement, will be converted into the right to receive 2.0 shares (the "Exchange
Ratio") of North Fork common stock, par value $2.50 per share, subject to
increase under certain circumstances 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 Reliance Shares.
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 August 30, 1999, by and between Reliance and North Fork; (iii) certain
publicly available financial statements of Reliance and other historical
financial information provided by Reliance that we deemed relevant; (iv) certain
publicly available financial statements of North Fork and other historical
financial information provided by North Fork that we deemed relevant; (v)
certain publicly available financial statements of JSB Financial, Inc. ("JSB")
that we deemed relevant; (vi) certain internal financial analyses and forecasts
of Reliance prepared by and reviewed with management of Reliance and the views
of senior management of Reliance, based on certain limited discussions with
certain members of senior management, regarding Reliance's past and current
business, financial condition, results of operations and future prospects; (vii)
certain internal 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, based on certain limited discussions with certain members of senior
management, regarding North Fork's past and current business, financial
condition, results of operations and future prospects, including the impact of
North Fork's pending acquisition of JSB; (viii) the pro forma impact of the
Merger; (ix) the publicly reported historical price and trading activity for
Reliance's and North Fork's common stock, including a comparison of certain
financial and stock market information for Reliance and North Fork with similar
publicly available information for certain other companies the securities of
which are publicly traded; (x) the financial terms of recent business
combinations in the savings institution industry, to the extent publicly
available; (xi) the current market environment generally and the banking
environment in particular; and (xii) such other information, financial studies,
analyses and investigations and financial,
[SANDLER O'NEILL & PARTNERS, L.P., IS A LIMITED PARTNERSHIP, THE SOLE GENERAL
PARTNER OF WHICH IS SANDLER O'NEIL & PARTNERS CORP., A NEW YORK CORPORATION.]
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Board of Directors
Reliance Bancorp, Inc.
January 11, 2000
Page 2
[Sandler O'Neill]
economic and market criteria as we considered relevant. In connection with our
engagement, 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 the accuracy and
completeness of all the financial information, analyses and other information
that was publicly available or otherwise furnished to, reviewed by or discussed
with us, and we do not assume any responsibility or liability for independently
verifying the accuracy or completeness thereof. We did not make an independent
evaluation or appraisal of the specific assets, the collateral securing assets
or the liabilities (contingent or otherwise) of Reliance or North Fork or any of
their subsidiaries, or the collectibility of any such assets, nor have we been
furnished with any such evaluations or appraisals. We did not make an
independent evaluation of the adequacy of the allowance for loan losses of
Reliance or North Fork nor have we reviewed any individual credit files relating
to Reliance and North Fork and, with your permission, we have assumed that the
respective allowances for loan losses for both Reliance and North Fork are
adequate to cover such losses and will be adequate on a pro forma basis for the
combined entity. 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 performance of
Reliance and North Fork and that such performances will be achieved, and we
express no opinion as to such financial projections or the assumptions on which
they are based. We have also assumed that there has been no material change in
Reliance's or North Fork's assets, financial condition, results of operations,
business or prospects since the date of the most recent financial statements
made available to us. We have assumed in all respects material to our analysis
that Reliance and North Fork will remain as going concerns for all periods
relevant to our analyses, that all of the representations and warranties
contained in the Agreement and all related agreements are true and correct, that
each party to such agreements will perform all of the covenants required to be
performed by such party under such agreements, that the conditions precedent in
the Agreement are not waived and that the Merger will qualify as a tax-free
reorganization for federal income tax purposes. With respect to North Fork's
pending acquisition of JSB, we have made no independent investigation of JSB and
have relied solely on information and analyses provided to us by North Fork with
respect to JSB and the acquisition.
Our opinion is necessarily based on financial, 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 this
opinion. We have not undertaken to update, revise or reaffirm this opinion or
otherwise comment upon events occurring after the date hereof. We are expressing
no opinion herein as to what the value of North Fork common stock will be when
issued to Reliance's shareholders pursuant to the Agreement or the prices at
which Reliance's or North Fork's common stock will trade at any time.
We have acted as Reliance'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 have also received a fee for
rendering this opinion. In the past, we have also provided certain other
investment banking services for Reliance and have received compensation for such
services.
In the ordinary course of our business as a broker-dealer, we may purchase
securities from and sell securities to Reliance and North Fork. We may also
actively trade the debt and equity securities of Reliance and North Fork 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 Reliance in connection
with its consideration of the Merger and does not constitute a recommendation to
any shareholder of Reliance as to how such shareholder should vote at any
meeting of shareholders 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
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Board of Directors
Reliance Bancorp, Inc.
January 11, 2000
Page 3
[Sandler O'Neill]
other document, nor shall this opinion be used for any other purposes, without
Sandler O'Neill's prior written consent; provided, however, that we hereby
consent to the inclusion of this opinion as an appendix to Reliance's and North
Fork's Proxy Statement/Prospectus dated the date hereof and to the references to
this opinion therein.
Based upon and subject to the foregoing, it is our opinion, as of the date
hereof, that the Exchange Ratio is fair, from a financial point of view, to the
holders of Reliance Shares.
Very truly yours,
/s/ Sandler O'Neill & Partners, L.P.
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<PAGE> 149
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 ("Section 145") 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 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 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 is or was a director or officer of the Registrant
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by him to the fullest extent
permitted by the DGCL and any other applicable law, as may be in effect from
time to time.
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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 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 attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him 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 limit or eliminate a director's personal
liability to the corporation or its stockholders for monetary damages for breach
of his 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 directors' and officers' 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 $25,000,000 in the
aggregate for all insured losses per year. The policy contains various reporting
requirements and exclusions.
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. FDIC regulations prohibit,
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.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <S>
2.1 Amended and Restated Agreement and Plan of Merger, dated as
of August 30, 1999, between North Fork Bancorporation, Inc.
and Reliance Bancorp, Inc. (included as Appendix A to the
Proxy Statement-Prospectus which is part of this
Registration Statement).
3.1 Restated Certificate of Incorporation of the Registrant
(incorporated by reference to Exhibit 3.1 of the
Registrant's Registration Statement on Form S-4, filed on
December 17, 1997).
3.2 By-laws of the Registrant (incorporated by reference to
Exhibit 3.2 of the Registrant's Annual Report on Form 10-K
for the year ended December 31, 1998, filed on March 29,
1999).
5.1 Opinion of Skadden, Arps, Slate, Meagher & Flom LLP.
8.1 Opinion of Skadden, Arps, Slate, Meagher & Flom LLP
regarding tax matters.
</TABLE>
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<PAGE> 151
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <S>
8.2 Opinion of Muldoon, Murphy & Faucette LLP regarding tax
matters.
10.1 Stock Option Agreement, dated as of August 30, 1999, between
North Fork Bancorporation, Inc. and Reliance Bancorp, Inc.
(included as Appendix B to the Proxy Statement-Prospectus
which is part of this Registration Statement).
10.2 Amended and Restated Agreement and Plan of Merger, dated as
of August 16, 1999, between North Fork Bancorporation, Inc.
and JSB Financial, Inc. (incorporated by reference to
Exhibit 2.2 to the Registrant's Current Report on Form 8-K,
filed on December 30, 1999).
10.3 Stock Option Agreement, dated as of August 16, 1999, between
North Fork Bancorporation, Inc. and JSB Financial, Inc.
(incorporated by reference to Exhibit 99.5 to the
Registrant's Current Report on Form 8-K, filed on August 31,
1999).
23.1 Consent of Arthur Andersen LLP, New York, New York.
23.2 Consent of KPMG LLP, Melville, New York.
23.3 Consent of KPMG LLP, New York, New York.
23.4 Consent of KPMG LLP, Melville, New York.
23.5 Consent of Sandler O'Neill & Partners, L.P., New York, New
York.
23.6 Consent of Skadden, Arps, Slate, Meagher & Flom LLP
(included in Exhibit 5.1 hereto).
23.7 Consent of Skadden, Arps, Slate, Meagher & Flom LLP
(included in Exhibit 8.1 hereto).
23.8 Consent of Muldoon, Murphy & Faucette LLP (included in
Exhibit 8.2 hereto).
23.9 Consent of Raymond A. Nielsen.
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. (included as
Appendix C to the Proxy Statement-Prospectus which is part
of this Registration Statement).
99.2 Form of Proxy to be used by Reliance Bancorp, Inc.
</TABLE>
(b) Financial Statement Schedules.
None.
(c) Item 4(b) Information.
None.
ITEM 22. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(A)(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 the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement.
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<PAGE> 152
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information 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) 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 15(d) of the Securities Exchange Act of 1934 (and each filing of
an employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof.
(C) To respond to requests for information that is incorporated by
reference into the Proxy Statement-Prospectus pursuant to Items 4, 10(b),
11, or 13 of this form, within one business day of receipt of such request,
and to send the incorporated documents by first class mail or other equally
prompt means. This includes information contained in documents filed
subsequent to the effective date of the registration statement through the
date of responding to the request.
(D) 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.
(E) That prior to any public reoffering of the securities registered
hereunder through use of a prospectus which is a part of this registration
statement, by any person or party who is deemed to be an underwriter within
the meaning of Rule 145(c), the issuer undertakes that such reoffering
prospectus will contain the information called for by the applicable
registration form with respect to reofferings by persons who may be deemed
underwriters, in addition to the information called for by the other items
of the applicable form.
(F) That every prospectus: (i) that is filed pursuant to paragraph (E)
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, 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.
Insofar as indemnification by the registrant 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 Securities Act and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other than
the payment by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
II-4
<PAGE> 153
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 January 11, 2000.
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 indicated and on January 11, 2000.
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 execute in the name, place and
stead of each of us (individually and in any capacity stated below) any and all
amendments to this registration statement and all instruments necessary or
advisable in connection therewith and to file the same with the Securities and
Exchange Commission, said attorney and agent to have power to act and to have
full power and authority to do and perform in the name and on behalf of each of
the undersigned every act whatsoever necessary or advisable to be done in the
premises as fully and to all intents and purposes as any of the undersigned
might or could do in person and we hereby ratify and confirm our signatures as
they may be signed by our said attorney and agent to any and all such amendments
and instruments.
<TABLE>
<CAPTION>
NAME TITLE
---- -----
<S> <C>
/s/ JOHN A. KANAS
- ----------------------------------------------------- President, Chief Executive Officer and
John A. Kanas Chairman of the Board
/s/ DANIEL M. HEALY Executive Vice President and Chief Financial
- ----------------------------------------------------- Officer (Principal Financial and Accounting
Daniel M. Healy Officer)
/s/ JOHN BOHLSEN
- -----------------------------------------------------
John Bohlsen Director
/s/ IRVIN L. CHERASHORE
- -----------------------------------------------------
Irvin L. Cherashore Director
/s/ ALLAN C. DICKERSON
- -----------------------------------------------------
Allan C. Dickerson Director
/s/ LLOYD A. GERARD
- -----------------------------------------------------
Lloyd A. Gerard Director
/s/ PATRICK E. MALLOY, III
- -----------------------------------------------------
Patrick E. Malloy, III Director
</TABLE>
II-5
<PAGE> 154
<TABLE>
<CAPTION>
NAME TITLE
---- -----
<S> <C>
/s/ THOMAS M. O'BRIEN
- -----------------------------------------------------
Thomas M. O'Brien Director
/s/ JAMES F. REEVE
- -----------------------------------------------------
James F. Reeve Director
/s/ GEORGE H. ROWSOM
- -----------------------------------------------------
George H. Rowsom Director
/s/ KURT R. SCHMELLER
- -----------------------------------------------------
Kurt R. Schmeller Director
/s/ RAYMOND W. TERRY, JR.
- -----------------------------------------------------
Raymond W. Terry, Jr. Director
</TABLE>
II-6
<PAGE> 155
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <S>
2.1 Amended and Restated Agreement and Plan of Merger, dated as
of August 30, 1999, between North Fork Bancorporation, Inc.
and Reliance Bancorp, Inc. (included as Appendix A to the
Proxy Statement-Prospectus which is part of this
Registration Statement).
3.1 Restated Certificate of Incorporation of the Registrant
(incorporated by reference to Exhibit 3.1 of the
Registrant's Registration Statement on Form S-4, filed on
December 17, 1997).
3.2 By-laws of the Registrant (incorporated by reference to
Exhibit 3.2 of the Registrant's Annual Report on Form 10-K
for the year ended December 31, 1998, filed on March 29,
1999).
5.1 Opinion of Skadden, Arps, Slate, Meagher & Flom LLP.
8.1 Opinion of Skadden, Arps, Slate, Meagher & Flom LLP
regarding tax matters.
8.2 Opinion of Muldoon, Murphy & Faucette LLP regarding tax
matters.
10.1 Stock Option Agreement, dated as of August 30, 1999, between
North Fork Bancorporation, Inc. and Reliance Bancorp, Inc.
(included as Appendix B to the Proxy Statement-Prospectus
which is part of this Registration Statement).
10.2 Amended and Restated Agreement and Plan of Merger, dated as
of August 16, 1999, between North Fork Bancorporation, Inc.
and JSB Financial, Inc. (incorporated by reference to
Exhibit 2.2 to the Registrant's Current Report on Form 8-K,
filed on December 30, 1999).
10.3 Stock Option Agreement, dated as of August 16, 1999, between
North Fork Bancorporation, Inc. and JSB Financial, Inc.
(incorporated by reference to Exhibit 99.5 to the
Registrant's Current Report on Form 8-K, filed on August 31,
1999).
23.1 Consent of Arthur Andersen LLP, New York, New York.
23.2 Consent of KPMG LLP, Melville, New York.
23.3 Consent of KPMG LLP, New York, New York.
23.4 Consent of KPMG LLP, Melville, New York.
23.5 Consent of Sandler O'Neill & Partners, L.P., New York, New
York.
23.6 Consent of Skadden, Arps, Slate, Meagher & Flom LLP
(included in Exhibit 5.1 hereto).
23.7 Consent of Skadden, Arps, Slate, Meagher & Flom LLP
(included in Exhibit 8.1 hereto).
23.8 Consent of Muldoon, Murphy & Faucette LLP (included in
Exhibit 8.2 hereto).
23.9 Consent of Raymond A. Nielsen.
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. (included as
Appendix C to the Proxy Statement-Prospectus which is part
of this Registration Statement).
99.2 Form of Proxy to be used by Reliance Bancorp, Inc.
</TABLE>
<PAGE> 1
EXHIBIT 5.1
[LETTERHEAD OF SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP]
January 11, 2000
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 19,328,134 shares of common stock, par
value $2.50 per share (the "Common Stock"), of the Company pursuant to an
Amended and Restated Agreement and Plan of Merger, dated as of August 30, 1999
(the "Merger Agreement"), by and between the Company and Reliance Bancorp, Inc.,
a Delaware corporation.
This opinion is delivered in accordance with the requirements of Item
601(b)(5) of Regulation S-K under the Securities Act of 1933, as amended.
In connection with this opinion, we have examined 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 Merger Agreement, (iii) the form of certificates to be used to
represent the shares of Common Stock, (iv) the Restated Certificate of
Incorporation and By-Laws of the Company, as amended to date, (v) resolutions
adopted by the Board of Directors of the Company with respect to the Amended and
Restated Agreement and Plan of Merger and the issuance of the shares of Common
Stock contemplated thereby, 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.
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 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.
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,
SKADDEN, ARPS, SLATE, MEAGHER & FLOM
LLP
<PAGE> 1
EXHIBIT 8.1
[LETTERHEAD OF SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP]
FORM OF
SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
TAX OPINION
January 11, 2000
North Fork Bancorporation, Inc.
275 Broad Hollow Road
Melville, New York 11747
Ladies and Gentlemen:
We have acted as counsel to North Fork Bancorporation, Inc., a Delaware
corporation ("NFB"), in connection with the contemplated merger (the "Merger")
under the Delaware General Corporation Law of Reliance Bancorp, Inc., a Delaware
corporation ("Reliance") with and into NFB and the subsequent merger
("Subsidiary Bank Merger") under the applicable provisions of the law of the
State of New York of Reliance Federal Savings Bank, a federally chartered stock
savings bank and wholly owned subsidiary of Reliance ("Reliance Federal"), with
and into North Fork Bank, a commercial bank organized under the laws of the
State of New York and wholly owned subsidiary of NFB ("NFB Bank"), pursuant to
the Amended and Restated Agreement and Plan of Merger by and between NFB and
Reliance (the "Agreement") as described in the Registration Statement on Form
S-4 (the "Registration Statement") filed in connection with the Merger with the
Securities and Exchange Commission under the Securities Act of 1933, as amended
(the "Securities Act") and the Subsidiary Agreement and Plan of Merger by and
between NFB Bank and Reliance Federal (the "Subsidiary Merger Agreement").* In
connection with the Registration Statement filed with the Securities and
Exchange Commission under the Securities Act and in accordance with the
requirements of Item 601(b)(8) of Regulation S-K under the Securities Act, we
are rendering our opinion concerning certain federal income tax consequences of
the Merger. The delivery of this opinion, dated as of the Effective Time, is a
condition to the Merger pursuant to Section 8.2(e) of the Agreement.
In rendering our opinion, we have examined and relied upon the accuracy and
completeness of the facts, information, covenants and representations contained
in originals or copies, certified or otherwise identified to our satisfaction,
of the Agreement, the Registration Statement, the Subsidiary Merger Agreement
and such other documents as we have deemed necessary or appropriate as a basis
for the opinion set forth below. In addition, we have relied upon certain
statements, representations and covenants made by NFB, NFB Bank, Reliance,
Reliance Federal and others, including those set forth in letters dated the date
hereof from officers of NFB, NFB Bank, Reliance and Reliance Federal (the
"Representation Letters") and, for purposes of rendering our opinion, have
assumed that such statements, representations and covenants are true without
regard to any qualification as to knowledge and belief. Our opinion is
conditioned on, among other things, the initial and continuing accuracy of the
facts, information, covenants and representations set forth in the documents
referred to above and the statements, representations and covenants made by NFB,
NFB Bank, Reliance and Reliance Federal, including those set forth in the
Representation Letters. Furthermore, we have assumed that the Representation
Letters will be re-executed by appropriate officers of NFB, NFB Bank, Reliance
and Reliance Federal at the Effective Time.
In our examination we have assumed the genuineness of all signatures, the
legal capacity of 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 or photostatic copies and the authenticity of the
originals of such documents. We also have assumed that the transactions related
to the Merger and the Subsidiary Bank
- ---------------
* Unless otherwise indicated, all defined terms used herein shall have the
meanings assigned to them in the Agreement.
<PAGE> 2
Merger or contemplated by the Agreement or the Subsidiary Merger Agreement will
be consummated in accordance with the Agreement, as described in the
Registration Statement, and the Subsidiary Merger Agreement, and that none of
the terms and conditions contained therein will have been waived or modified in
any respect prior to the Effective Time.
In rendering our opinion, we have considered applicable provisions of the
Internal Revenue Code of 1986, as amended (the "Code"), Treasury Regulations
promulgated thereunder (the "Regulations"), pertinent judicial authorities,
rulings of the Internal Revenue Service and such other authorities as we have
considered relevant. It should be noted that such laws, Code, Regulations,
judicial decisions and administrative interpretations are subject to change at
any time and, in some circumstances, with retroactive effect. A change in any of
the authorities upon which our opinion is based could affect our conclusions
herein.
OPINION
Based solely upon the foregoing, and subject to the assumptions and
qualifications set forth in the Registration Statement we are of the opinion
that the Merger will be treated, under current law, as a reorganization within
the meaning of Section 368(a) of the Code and, accordingly:
(1) no gain or loss will be recognized by North Fork or Reliance as a
result of the Merger;
(2) no gain or loss will be recognized by a stockholder of Reliance who
exchanges all of such stockholder's shares of Reliance common stock solely for
shares of common stock of the combined company, except for any gain recognized
with respect to cash received instead of a fractional share of the combined
company's common stock;
(3) the aggregate tax basis of the shares of the combined company's common
stock received by a Reliance stockholder who exchanges all of the stockholder's
shares of Reliance common stock for shares of common stock of the combined
company in the Merger will be the same as the aggregate tax basis of the shares
of Reliance common stock surrendered in exchange therefor (reduced by any amount
allocable to a fractional share of the combined company's common stock for which
cash is received);
(4) the holding period of the shares of the combined company's common stock
received by a Reliance stockholder will include the holding period of shares of
Reliance common stock surrendered in exchange therefor; and
(5) a Reliance stockholder who receives cash instead of a fractional share
of the combined company's common stock should recognize capital gain or loss
equal to the difference between the cash amount received and the portion of the
stockholder's tax basis in shares of Reliance common stock allocable to the
fractional share. This gain or loss will be long-term capital gain or loss for
United States federal income tax purposes if the stockholder's holding period in
the shares of Reliance common stock exchanged for the cash in lieu of a
fractional share of the combined company's common stock is more than one year at
the effective time of the Merger.
Except as set forth above, we express no opinion to any party as to the tax
consequences, whether federal, state, local or foreign, of the Merger, the
Subsidiary Bank Merger, or of any transactions related thereto or contemplated
by the Agreement, as described in the Registration Statement, or the Subsidiary
Merger Agreement. We disclaim any undertaking to advise you of any subsequent
changes of the facts stated or assumed herein or any subsequent changes in
applicable law. We consent to the filing of this opinion as Exhibit 8.1 of 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
Securities Act.
Very truly yours,
SKADDEN, ARPS, SLATE, MEAGHER & FLOM
LLP
<PAGE> 1
EXHIBIT 8.2
FORM OF
MULDOON, MURPHY & FAUCETTE LLP
TAX OPINION
[LETTERHEAD OF MULDOON, MURPHY & FAUCETTE LLP]
January 11, 2000
Reliance Bancorp, Inc.
585 Stewart Avenue
Garden City, New York 11530
Ladies and Gentlemen:
We have acted as counsel to Reliance Bancorp, Inc., a Delaware corporation
("Reliance"), in connection with the contemplated merger (the "Merger") under
the Delaware General Corporation Law of Reliance with and into North Fork
Bancorporation, Inc., a Delaware corporation ("NFB"), pursuant to the Amended
and Restated Agreement and Plan of Merger by and between NFB and Reliance (the
"Agreement") as described in the Registration Statement on Form S-4 (the
"Registration Statement") filed in connection with the Merger with the
Securities and Exchange Commission under the Securities Act of 1933, as amended
(the "Securities Act"). In connection with the Registration Statement filed with
the Securities and Exchange Commission under the Securities Act and in
accordance with the requirements of Item 601(b)(8) of Regulation S-K under the
Securities Act, we are rendering our opinion concerning certain federal income
tax consequences of the Merger. The delivery of this opinion, dated as of the
Effective Time, is also a condition to the Merger pursuant to Section 8.3(e) of
the Agreement.
In rendering our opinion, we have examined and relied upon the accuracy and
completeness of the facts, information, covenants and representations contained
in originals or copies, certified or otherwise identified to our satisfaction,
of the Agreement, the Registration Statement and such other documents as we have
deemed necessary or appropriate as a basis for the opinion set forth below. In
addition, we have relied upon certain statements, representations and covenants
made by NFB, NFB Bank, Reliance, Reliance Federal and others, including those
set forth in letters dated hereof from officers of NFB, NFB Bank, Reliance and
Reliance Federal (the "Representation Letters") and, for purposes of rendering
our opinion, have assumed that such statements, representations and covenants
are true without regard to any qualification as to knowledge and belief. Our
opinion is conditioned on, among other things, the initial and continuing
accuracy of the facts, information, covenants and representations set forth in
the documents referred to above and the statements, representations and
covenants made by NFB, NFB Bank, Reliance and Reliance Federal, including those
set forth in the Representation Letters. Furthermore, we have assumed that
identical Representation Letters will be executed by appropriate officers of
NFB, NFB Bank, Reliance and Reliance Federal at the Effective Time.
In our examination we have assumed the genuineness of all signatures, the
legal capacity of 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 or photostatic copies and the authenticity of the
originals of such documents. We also have assumed that the transactions related
to the Merger or contemplated by the Agreement will be consummated in accordance
with the Agreement, as described in the Registration Statement and that none of
the terms and conditions contained therein will have been waived or modified in
any respect prior to the Effective Time.
In rendering our opinion, we have considered applicable provisions of the
Internal Revenue Code of 1986, as amended (the "Code"), Treasury Regulations
promulgated thereunder (the "Regulations"), pertinent judicial authorities,
rulings of the Internal Revenue Service and such other authorities as we have
considered relevant. It should be noted that such laws, Code, Regulations,
judicial decisions and administrative interpretations are subject to change at
any time and, in some circumstances, with retroactive effect. A change in any of
the authorities upon which our opinion is based could affect our conclusions
herein.
<PAGE> 2
OPINION
Based solely upon the foregoing and subject to the assumptions and
qualifications set forth in the Registration Statement, we are of the opinion
that the Merger will be treated, under current United States federal income tax
law, as a reorganization within the meaning of Section 368(a) of the Code and,
accordingly:
(1) no gain or loss will be recognized by NFB or Reliance as a result of
the Merger;
(2) no gain or loss will be recognized by a stockholder of Reliance who
exchanges all of such stockholder's shares of Reliance common stock solely for
shares of common stock of the combined company, except for any gain recognized
with respect to cash received instead of a fractional share of the combined
company's common stock;
(3) the aggregate tax basis of the shares of the combined company's common
stock received by a Reliance stockholder who exchanges all of the stockholder's
shares of Reliance common stock for shares of common stock of the combined
company in the Merger will be the same as the aggregate tax basis of the shares
of Reliance common stock surrendered in exchange therefor (reduced by any amount
allocable to a fractional share of the combined company's common stock for which
cash is received);
(4) the holding period of the shares of the combined company's common stock
received by a Reliance stockholder will include the holding period of shares of
Reliance common stock surrendered in exchange therefor; and
(5) a Reliance stockholder who receives cash instead of a fractional share
of the combined company's common stock should recognize capital gain or loss
equal to the difference between the cash amount received and the portion of the
stockholder's tax basis in shares of Reliance common stock allocable to the
fractional share. This gain or loss will be long-term capital gain or loss for
United States federal income tax purposes if the stockholder's holding period in
the shares of Reliance common stock exchanged for the cash in lieu of a
fractional share of the combined company's common stock is more than one year at
the effective time of the Merger.
Except as set forth above, we express no opinion to any party as to the tax
consequences, whether federal, state, local or foreign, of the Merger or of any
transactions related thereto or contemplated by the Agreement, as described in
the Registration Statement. We disclaim any undertaking to advise you of any
subsequent changes of the facts stated or assumed herein or any subsequent
changes in applicable law. We consent to the filing of this opinion as Exhibit
8.2 of 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 Securities Act.
Very truly yours,
MULDOON, MURPHY & FAUCETTE LLP
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
by reference in this Registration Statement on Form S-4 of North Fork
Bancorporation, Inc. of our report dated July 21, 1999 included in Reliance
Bancorp Inc.'s Form 10-K for the year ended June 30, 1999 and to all references
to our Firm included in this Registration Statement.
/s/ ARTHUR ANDERSEN LLP
--------------------------------------
Arthur Andersen LLP
New York, New York
January 11, 2000
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
Reliance Bancorp, Inc.:
We consent to the incorporation by reference in the Reliance Bancorp, Inc.
Proxy Statement-Prospectus constituting part of the registration statement on
Form S-4 of North Fork Bancorporation, Inc. dated January 11, 2000 of our report
dated July 23, 1998, relating to the consolidated statement of financial
condition of Reliance Bancorp, Inc. and subsidiary as of June 30, 1998, and the
related consolidated statements of income, changes in stockholders' equity,
comprehensive income and cash flows for each of the years in the two-year period
ended June 30, 1998, which report is included in the June 30, 1999 Annual Report
on Form 10-K of Reliance Bancorp, Inc.
We also consent to the reference to our firm under the heading "Experts" in
the registration statement.
/s/ KPMG LLP
--------------------------------------
KPMG LLP
Melville, New York
January 11, 2000
<PAGE> 1
EXHIBIT 23.3
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
North Fork Bancorporation, Inc.:
We consent to the use of our report, dated January 14, 1999, incorporated
by reference in the Reliance Bancorp, Inc. Proxy Statement-Prospectus
constituting part of the registration statement on Form S-4 of North Fork
Bancorporation, Inc., dated January 11, 2000, related to the consolidated
balance sheets of North Fork Bancorporation, Inc. and subsidiaries as of
December 31, 1998 and 1997, and the related consolidated statements of income,
cash flows, changes in shareholders' equity, and comprehensive income for each
of the years in the three-year period ended December 31, 1998, which report is
included in the 1998 Annual Report to Shareholders of North Fork Bancorporation,
Inc. and has been incorporated by reference in the December 31, 1998 Annual
Report on Form 10-K of North Fork Bancorporation, Inc., and to the reference to
our firm under the heading "Experts" in the registration statement.
/s/ KPMG LLP
--------------------------------------
KPMG LLP
New York, New York
January 11, 2000
<PAGE> 1
EXHIBIT 23.4
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
JSB Financial, Inc.:
We consent to the incorporation by reference in the Reliance Bancorp, Inc.
Proxy Statement-Prospectus constituting part of the registration statement on
Form S-4 of North Fork Bancorporation, Inc., dated January 11, 2000, of our
report dated January 28, 1999, relating to the consolidated statements of
financial condition of JSB Financial, Inc. and subsidiary as of December 31,
1998 and 1997, and the related consolidated statements of operations, changes in
stockholders' equity, and cash flows for each of the years in the three-year
period ended December 31, 1998, which report is incorporated by reference in the
December 31, 1998 annual report on Form 10-K of JSB Financial, Inc. and the
current report on Form 8-K of North Fork Bancorporation, Inc. dated December 29,
1999.
We also consent to the reference to our firm under the heading "Experts" in
the registration statement.
/s/ KPMG LLP
--------------------------------------
KPMG LLP
Melville, New York
January 11, 2000
<PAGE> 1
EXHIBIT 23.5
[LETTERHEAD OF SANDLER O'NEILL & PARTNERS, L.P.]
CONSENT OF SANDLER O'NEILL & PARTNERS, L.P., NEW YORK, NEW YORK
We hereby consent to the inclusion of our opinion letter to the Board of
Directors of Reliance Bancorp, Inc. (the "Company") as an Appendix to the Proxy
Statement-Prospectus relating to the proposed merger of the Company with and
into North Fork Bancorporation, Inc. contained in the Registration Statement on
Form S-4 as filed with the Securities and Exchange Commission on the date
hereof, and to the references to our firm and such opinion in such Proxy
Statement-Prospectus. In giving such consent, we do not admit that we come
within the category of persons whose consent is required under Section 7 of the
Securities Act of 1933, as amended (the "Act"), or the rules and regulations of
the Securities and Exchange Commission thereunder (the "Regulations"), nor do we
admit that we are experts with respect to any part of such Registration
Statement within the meaning of the term "experts" as used in the Act or the
Regulations.
/s/ SANDLER O'NEILL & PARTNERS, L.P.
--------------------------------------
Sandler O'Neill & Partners, L.P.
January 11, 2000
<PAGE> 1
EXHIBIT 23.9
CONSENT OF RAYMOND A. NIELSEN
In accordance with Section 438 of Regulation C, I do hereby consent to
being named in the Registration Statement to be filed with the Securities and
Exchange Commission by North Fork Bancorporation, Inc. as a person who is to
become a director of North Fork Bancorporation, Inc. and the disclosure of that
fact in the Registration Statement.
By: /s/ RAYMOND A. NIELSEN
------------------------------------
Raymond A. Nielsen
Dated this 11th day of
January, 2000
<PAGE> 1
EXHIBIT 99.2
REVOCABLE PROXY
RELIANCE BANCORP, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF RELIANCE BANCORP, INC.
FOR THE SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON FEBRUARY 10, 2000.
The undersigned stockholder of Reliance Bancorp, Inc. (the "Company") hereby
appoints the Official Proxy Committee of the Board of Directors of the Company
as proxies, each of them with full power of substitution, to attend and act as
proxy for the undersigned and to cast all votes which the undersigned
stockholder is entitled to cast at the special meeting of stockholders of the
Company to be held at 9:00 a.m., local time, on February 10, 2000, at the Long
Island Marriott Hotel and Conference Center, 101 James Doolittle Blvd.,
Uniondale, New York, and any and all adjournments and postponements thereof (the
"Special Meeting"), with all powers which the undersigned would possess if
personally present (i) as designated below with respect to the matters set forth
below and described in the accompanying Proxy Statement and (ii) in their
discretion with respect to any other business that may properly come before the
Special Meeting. The undersigned stockholder hereby revokes any proxy or proxies
heretofore given.
This proxy will be voted in the manner directed by the undersigned
stockholder. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED (1) "FOR"
APPROVAL AND ADOPTION OF THE MERGER AGREEMENT (AS DEFINED HEREIN) AND (2) IN THE
DISCRETION OF THE PROXIES AS TO ALL OTHER MATTERS THAT MAY PROPERLY COME BEFORE
THE SPECIAL MEETING.
This proxy card will also be used to provide voting instructions to the
trustee for any shares of common stock of the Company allocated to participants
under the Reliance Federal Savings Bank Employee Stock Ownership Plan.
(continued -- to be signed and dated on reverse side)
<PAGE> 2
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL AND ADOPTION OF THE
MERGER AGREEMENT.
1. Approval and adoption of the Amended and Restated Agreement and Plan of
Merger, dated as of August 30, 1999, by and between North Fork
Bancorporation, Inc. ("NFB") and the Company (the "Merger Agreement")
pursuant to which the Company will merge with and into NFB and each share of
common stock of the Company, par value $.01 per share, will be converted into
the right to receive 2.0 shares of NFB common stock, subject to adjustment,
all on and subject to the terms and conditions contained therein.
<TABLE>
<S> <C> <C>
[ ] FOR [ ] AGAINST [ ] ABSTAIN
</TABLE>
2. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the Special Meeting or any adjournment
or postponement thereof. As of the date of the Special Meeting, management of
the Company is not aware of any such other business.
This proxy may be revoked prior to the time it is voted by delivering to the
Secretary of the Company either a written revocation or a proxy bearing a later
date or by appearing at the Special Meeting and voting in person.
The undersigned hereby acknowledges receipt of the Notice of Special Meeting of
Stockholders and the Proxy Statement, dated January 11, 2000, for the Special
Meeting.
Dated:
--------------------------------
Signature:
--------------------------------
Signature:
--------------------------------
Title:
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(Please date and sign here
exactly as name appears at left.
When signing as attorney,
administrator, trustee or
guardian, give full title as
such; and when stock has been
issued in the name of two or
more persons, all should sign.)
PLEASE ACT PROMPTLY.
COMPLETE, SIGN, DATE AND MAIL YOUR PROXY CARD TODAY.
IF YOU RECEIVE MORE THAN ONE PROXY CARD, PLEASE DATE,
SIGN AND RETURN ALL CARDS IN THE ACCOMPANYING ENVELOPE.
