<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 21, 1995
REGISTRATION NO. 33-62305
=============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C 20549
------
PRE-EFFECTIVE
AMENDMENT
NO. 1 TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------
MERIDIAN BANCORP, INC.
(Exact name of registrant as specified in its charter)
Pennsylvania
(State or other jurisdiction of
incorporation or organization)
6711
(Primary Standard Industrial
Classification Code Number)
23-2237529
(I.R.S. Employer Identification No.)
35 North Sixth Street, Reading, Pennsylvania 19601
(610) 655-2000
(Address, including zip code, and
telephone number, including area code, of
registrant's principal executive offices)
Samuel A. McCullough
Chairman and Chief Executive Officer
Meridian Bancorp, Inc.
35 North Sixth Street
Reading, Pennsylvania 19601
(610) 655-2000
(Name, address, including zip code, and telephone number, including area
code, of agent for service)
------
Copies to:
Joseph M. Harenza, Esquire
David W. Swartz, Esquire
Stevens & Lee
111 North Sixth Street
P.O. Box 679
Reading, Pennsylvania 19603
Ronald H. Janis, Esquire
Michael W. Zelenty, Esquire
Pitney, Hardin, Kipp & Szuch
P.O. Box 1945
Morristown, New Jersey 07962
------
Approximate date of commencement of proposed sale to the public: As soon
as practicable after this Registration Statement becomes effective.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance
with General Instruction G, check the following box: [B]
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until the Registration
Statement shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine.
=============================================================================
<PAGE>
MERIDIAN BANCORP, INC. CROSS-REFERENCE SHEET
PURSUANT TO ITEM 501(B) OF REGULATION S-K SHOWING THE
LOCATION IN THE PROXY STATEMENT/PROSPECTUS OF THE
INFORMATION REQUIRED BY PART I OF FORM S-4
<TABLE>
<CAPTION>
Form S-4 Item No. Location in Proxy
---------------------------------------------------- ---------------------------------------------------------
<S> <C>
A. Information About the Transaction.
1. Forepart of Registration Statement and
Outside Front Cover Page of Prospectus Outside front cover page
Table of Contents;
2. Inside Front and Outside Back Cover Pages of
Prospectus Available Information;
Incorporation of Certain Documents by Reference
3. Risk Factors, Ratio of Earnings to Fixed
Charges and Other Information Summary
4. Terms of the Transaction Introduction; The Special Meeting; The Merger; Interests of
Certain Persons in the Merger; Stock Option Agreement;
Description of Meridian Capital Securities; Comparison of
Shareholder Rights
5. Pro Forma Financial Information Summary; Selected Pro Forma Combined Financial Information
6. Material Contacts with the Company Being
Acquired The Merger; Interests of Certain Persons in the Merger;
Stock Option Agreement
7. Additional Information Required for Reoffering
by Persons and Parties Deemed to be
Underwriters Not Applicable
8. Interests of Named Experts and Counsel Legal Matters
9. Disclosure of Commission Position on
Indemnification for Securities Act Liabilities Not Applicable
B. Information About the Registrant.
10. Information with Respect to S-3 Registrants Summary; Description of Meridian; Meridian Selected Historical
Financial Information
11. Incorporation of Certain Information by
Reference Incorporation of Certain Documents by Reference
12. Information with Respect to S-2 or S-3
Registrants Not Applicable
13. Incorporation of Certain Information by
Reference Not Applicable
14. Information with Respect to Registrants Other
Than S-2 or S-3 Registrants Not Applicable
C. Information About the Company Being Acquired.
15. Information with Respect to S-3 Companies Description of UCB; UCB Selected Historical Financial Data
<PAGE>
Form S-4 Item No. Location in Proxy
---------------------------------------------------- ---------------------------------------------------------
16. Information with Respect to S-2 or S-3
Companies Not Applicable
17. Information with Respect to Companies Other
Than S-2 or S-3 Companies Not Applicable
D. Voting and Management Information.
18. Information if Proxies, Consents or
Authorizations are to be Solicited Incorporation of Certain Documents by Reference; Summary; The
Special Meeting; The Merger
19. Information if Proxies, Consents or
Authorizations are not to be Solicited or in
an Exchange Offer Not Applicable
</TABLE>
<PAGE>
[LETTERHEAD OF UNITED COUNTIES BANCORPORATION]
SEPTEMBER __, 1995
Dear Shareholder:
You are cordially invited to attend a Special Meeting of the stockholders
of United Counties Bancorporation ("UCB") which will be held on Wednesday,
November 1, 1995, at 10:00 a.m., local time, at the Corporate Headquarters of
UCB, Four Commerce Drive, Cranford, New Jersey 07016.
The purpose of the Special Meeting is to consider and vote upon the
Agreement and Plan of Merger dated as of May 23, 1995 (the "Merger
Agreement"), between UCB and Meridian Bancorp, Inc. ("Meridian"), providing
for the merger of UCB with and into Meridian (the "Merger"). Meridian is a
bank holding company headquartered in Reading, Pennsylvania. Through its
wholly owned banking subsidiaries, Meridian currently maintains over 300
banking offices in eastern Pennsylvania, southern New Jersey and the State of
Delaware.
If the Merger is approved and completed, each UCB stockholder will receive
5.00 shares of Meridian Common Stock for each share of UCB Common Stock such
shareholder owns of record. On September ___, 1995, the last sale price for
Meridian common stock, as reported on the NASDAQ Stock Market, was $_____ per
share.
The attached Proxy Statement/Prospectus contains important information
concerning the Merger. We urge you to give it your careful attention.
The Board of Directors of UCB has carefully considered and approved the
Merger Agreement and believes that the Merger is in the best interests of UCB
and its shareholders. ACCORDINGLY, YOUR BOARD OF DIRECTORS UNANIMOUSLY
RECOMMENDS THAT YOU VOTE FOR APPROVAL OF THE MERGER AGREEMENT.
YOUR VOTE IS IMPORTANT. You are urged to sign, date and mail the enclosed
proxy card promptly in the postage-prepaid envelope provided. If you attend
the Special Meeting, you may vote in person even if you have already mailed
your proxy card.
On behalf of the Board of Directors and our employees, I wish to thank you
for your support.
Sincerely yours,
Eugene H. Bauer
Chairman of the Board and
Chief Executive Officer
<PAGE>
UNITED COUNTIES BANCORPORATION
FOUR COMMERCE DRIVE
CRANFORD, NEW JERSEY 07016
------
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON NOVEMBER 1, 1995
------
A Special Meeting of Stockholders of United Counties Bancorporation
("UCB") will be held on Wednesday, November 1, 1995, at 10:00 a.m., local
time, at the Corporate Headquarters of UCB, Four Commerce Drive, Cranford,
New Jersey 07016, to consider the following matters:
1. The approval and adoption of the Agreement and Plan of Merger, dated
as of May 23, 1995 (the "Merger Agreement"), between UCB and Meridian
Bancorp, Inc. ("Meridian"), a copy of which is attached as Annex A to the
accompanying Proxy Statement/Prospectus, providing for the merger of UCB
with and into Meridian (the "Merger"), pursuant to which each share of the
common stock, no par value, $1.00 stated value per share, of UCB
outstanding at the closing of the Merger will be converted into and become
a right to receive 5.00 shares of the common stock, par value $5.00 per
share, of Meridian.
2. Adjournment of the Special Meeting, if necessary, to permit further
solicitation of proxies in the event there are not sufficient votes at the
time of the Special Meeting to constitute a quorum or to approve the
Merger Agreement.
3. Such other matters as may properly be brought before the Special
Meeting or any adjournments thereof.
The Board of Directors of UCB has fixed the close of business on September
15, 1995, as the record date for determining stockholders entitled to notice
of, and to vote at, the Special Meeting and any adjournments thereof.
A Proxy Statement/Prospectus is set forth on the following pages and a
form of proxy is enclosed herewith. To ensure that your vote is counted,
please complete, sign, date and return the proxy in the enclosed return
envelope, whether or not you plan to attend the Special Meeting in person. If
you attend the Special Meeting, you may revoke your proxy in accordance with
the procedures described in the Proxy Statement/Prospectus and vote your
shares in person.
BY ORDER OF THE BOARD OF DIRECTORS
Alice R. Cadby
Corporate Secretary
Cranford, New Jersey
September __, 1995
YOUR VOTE IS IMPORTANT. PLEASE COMPLETE, SIGN, DATE AND RETURN PROMPTLY THE
ENCLOSED PROXY CARD, WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING.
PLEASE DO NOT SEND IN ANY CERTIFICATES FOR YOUR SHARES AT THIS TIME.
<PAGE>
PROXY STATEMENT
FOR
SPECIAL MEETING OF STOCKHOLDERS OF
UNITED COUNTIES BANCORPORATION
TO BE HELD ON NOVEMBER 1, 1995
FOUR COMMERCE DRIVE
CRANFORD, NEW JERSEY 07016
PROSPECTUS OF
MERIDIAN BANCORP, INC.
COMMON STOCK
35 NORTH SIXTH STREET
READING, PENNSYLVANIA 19601
This Proxy Statement/Prospectus is being furnished by United Counties
Bancorporation, a New Jersey corporation ("UCB"), to the holders of UCB
common stock, no par value, $1.00 stated value per share ("UCB Common
Stock"), as a Proxy Statement in connection with the solicitation of proxies
by UCB's Board of Directors for use at a Special Meeting of Stockholders of
UCB to be held at 10:00 a.m., local time, on Wednesday, November 1, 1995, at
Four Commerce Drive, Cranford, New Jersey 07016 (the "Special Meeting"), and
at any adjournment or adjournments thereof. In the event there are not
sufficient shares represented for a quorum or votes to approve the Merger
Agreement at the Special Meeting, the Special Meeting may be adjourned to
permit further solicitation.
This Proxy Statement/Prospectus, the accompanying Notice of Special
Meeting and form of Proxy are first being mailed to the stockholders of
record of UCB on or about September __, 1995.
The purpose of the Special Meeting is to consider and vote upon a proposal
to approve the Agreement and Plan of Merger, dated as of May 23, 1995 (the
"Merger Agreement"), between UCB and Meridian Bancorp, Inc. ("Meridian"),
pursuant to which UCB will merge with and into Meridian (the "Merger"),
subject to the terms and conditions contained therein. See "SUMMARY," "THE
MERGER AGREEMENT," and a copy of the Merger Agreement which is attached as
ANNEX A to this Proxy Statement/Prospectus.
Upon consummation of the Merger each outstanding share of UCB Common Stock
will be converted into and represent the right to receive 5.00 shares (the
"Exchange Ratio") of Meridian's common stock, $5.00 par value per share
("Meridian Common Stock"), subject to certain adjustments. Pursuant to the
terms of the Merger Agreement, cash will be paid in lieu of fractional shares
of Meridian Common Stock. For a more complete description of the Merger
Agreement and the terms of the Merger, see "THE MERGER."
Meridian Common Stock is traded on the NASDAQ Stock Market under the
symbol "MRDN." On May 23, 1995, the last business day prior to public
announcement of the execution of the Merger Agreement, the closing price of
Meridian Common Stock was $33.00 per share. On September __, 1995, such price
was $_____. UCB's Common Stock is listed on the NASDAQ Small-Cap Market under
the symbol "UCTC." On May 23, 1995, the last business day prior to public
announcement of the execution of the Merger Agreement, the last reported sale
price per share of UCB Common Stock on the NASDAQ Small-Cap Market was
$127.50. On September __, 1995, such price was $_____. See "SELECTED
CONSOLIDATED FINANCIAL AND OTHER DATA -- Comparative Per Share Data." UCB
stockholders are urged to obtain current market quotations for Meridian and
UCB Common Stock. Because the Exchange Ratio is fixed, UCB stockholders are
not assured of receiving any specific market value of Meridian Common Stock.
The price of Meridian Common Stock at the effective date of the Merger may be
higher or lower than the market price at the time of entering into the Merger
Agreement, at the time of mailing this Proxy Statement/Prospectus or at the
time of the Special Meeting.
Meridian has filed a Registration Statement pursuant to the Securities Act
of 1933, as amended (the "Securities Act"), covering the shares of Meridian
Common Stock which will be issued in connection with the Merger. In addition
to constituting the UCB Proxy Statement for the Special Meeting, this
document constitutes a Prospectus of Meridian with respect to the Meridian
Common Stock to be issued if the Merger is consummated.
THE SHARES OF MERIDIAN COMMON STOCK OFFERED HEREBY HAVE NOT BEEN APPROVED
OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROXY STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
THE SHARES OF MERIDIAN COMMON STOCK OFFERED HEREBY ARE NOT SAVINGS
ACCOUNTS, DEPOSITS OR OTHER OBLIGATIONS OF A BANK OR SAVINGS ASSOCIATION AND
ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER
GOVERNMENTAL AGENCY.
------
The date of this Proxy Statement/Prospectus is September __, 1995.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
--------
AVAILABLE INFORMATION ............................................................................. 1
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE ................................................... 2
SUMMARY ........................................................................................... 3
The Companies ................................................................................... 3
Meridian ..................................................................................... 3
UCB .......................................................................................... 3
The Special Meeting ............................................................................. 3
The Merger ...................................................................................... 4
Effect of Merger ............................................................................. 4
Recommendation of the Board of Directors and Reasons for the Merger .......................... 4
Opinion of Financial Advisor ................................................................. 4
Representations, Warranties, and Covenants ................................................... 5
Conditions to the Merger ..................................................................... 5
Termination; Effect of Termination ........................................................... 5
Differences in Shareholder Rights ............................................................ 5
Absence of Dissenters' Rights of Appraisal ................................................... 5
Management and Operations after the Merger;
Bank Merger .................................................................................. 5
Stock Option Agreement .......................................................................... 6
No Solicitation of Transactions ................................................................. 6
Interests of Certain Persons in the Merger ...................................................... 7
Meridian Selected Historical Consolidated Financial Data ........................................ 7
UCB Selected Historical Consolidated Financial Data ............................................. 7
Comparative Per Common Share Data ............................................................... 7
Pro Forma Combined Condensed Financial Data ..................................................... 9
Market Value of Securities ...................................................................... 10
Market Price and Dividend Information ........................................................... 10
INTRODUCTION ...................................................................................... 11
DESCRIPTION OF MERIDIAN ........................................................................... 12
General ......................................................................................... 12
Meridian ..................................................................................... 12
Banking ...................................................................................... 12
Financial Services ........................................................................... 12
Other ........................................................................................ 12
Market Price of and Dividends on Meridian Common Stock .......................................... 12
Repurchase of Meridian Common Stock ............................................................. 13
DESCRIPTION OF UCB ................................................................................ 13
General ......................................................................................... 13
UCB .......................................................................................... 13
UCTC ......................................................................................... 13
Market Price of and Dividends on UCB Common Stock and Related Stockholder Matters ............... 14
MERIDIAN SELECTED HISTORICAL FINANCIAL DATA ....................................................... 15
UCB SELECTED HISTORICAL FINANCIAL DATA ............................................................ 18
SELECTED PRO FORMA COMBINED FINANCIAL INFORMATION ................................................. 20
Pro Forma Condensed Consolidated Balance Sheet As of June 30, 1995 .............................. 21
Pro Forma Condensed Consolidated Statements of Income for the Six Months Ended June 30, 1995 and
June 30, 1994 and the Years Ended December 31, 1994, 1993 and 1992 ........................... 22
Pro Forma Consolidated Capital Ratios as of June 30, 1995 ....................................... 27
THE SPECIAL MEETING ............................................................................... 28
Matters to be Considered at the Special Meeting ................................................. 28
i
<PAGE>
Votes Required; Quorum .......................................................................... 28
Voting of Proxies ............................................................................... 28
Revocability of Proxies ......................................................................... 28
Record Date; Stock Entitled to Vote ............................................................. 29
Appraisal Rights ................................................................................ 29
Solicitation of Proxies ......................................................................... 29
THE MERGER ........................................................................................ 30
Background of and Reasons for the Merger; Recommendation of the UCB Board of Director ........... 30
Background of the Merger ..................................................................... 30
Reasons for the Merger ....................................................................... 31
Terms of the Merger ............................................................................. 32
General ...................................................................................... 32
Exchange Ratio ............................................................................... 33
UCB Stock Options ............................................................................ 33
Opinion of Financial Advisor .................................................................... 33
Effective Date of the Merger .................................................................... 35
Exchange of UCB Stock Certificates .............................................................. 35
Conditions to the Merger ........................................................................ 36
Regulatory Approvals ............................................................................ 37
Representations and Warranties .................................................................. 37
Business Pending the Merger ..................................................................... 38
Dividends ....................................................................................... 39
No Solicitation of Transactions ................................................................. 39
Amendment; Waivers .............................................................................. 39
Termination; Effect of Termination .............................................................. 39
Management and Operations after the Merger ...................................................... 40
Subsidiary Bank Merger ....................................................................... 40
Directors and Officers After the Merger ...................................................... 40
Consolidation of Operations: Projected Operating Cost Savings and Revenue Enhancements ....... 41
Post-Merger Dividend Policy .................................................................. 41
Other ........................................................................................ 41
Employee Benefits ............................................................................... 41
Accounting Treatment ............................................................................ 42
Certain Federal Income Tax Consequences ......................................................... 42
Expenses ........................................................................................ 43
Resale of Meridian Common Stock ................................................................. 43
Dividend Reinvestment Plan ...................................................................... 43
INTERESTS OF CERTAIN PERSONS IN THE MERGER ........................................................ 44
Stock Options ................................................................................... 44
Employment Agreements ........................................................................... 44
Directors & Officers Insurance; Indemnification ................................................. 45
STOCK OPTION AGREEMENT ............................................................................ 45
DESCRIPTION OF MERIDIAN CAPITAL SECURITIES ........................................................ 46
Common Stock .................................................................................... 46
Shareholder Rights Plan ......................................................................... 47
Preferred Stock ................................................................................. 47
Capital Notes ................................................................................... 47
Special Charter and Pennsylvania Corporate Law Provisions ....................................... 47
COMPARISON OF SHAREHOLDER RIGHTS .................................................................. 48
General ......................................................................................... 48
Authorized Capital .............................................................................. 48
ii
<PAGE>
Directors ....................................................................................... 48
Removal ......................................................................................... 48
Nomination ...................................................................................... 48
Election of Directors ........................................................................... 49
Cumulative Voting ............................................................................... 49
Limited Liability ............................................................................... 49
Indemnification ................................................................................. 49
Shareholders' Meetings .......................................................................... 49
Shareholder Rights Plan ......................................................................... 50
Antitakeover Provisions ......................................................................... 50
Required Shareholder Vote ....................................................................... 52
General ...................................................................................... 52
Fundamental Changes .......................................................................... 52
Amendment of Articles or Certificate of Incorporation ........................................ 52
Amendment of Bylaws ............................................................................. 52
Mandatory Tender Offer Provision ................................................................ 53
Dissenters' Rights .............................................................................. 53
Dividends ....................................................................................... 53
Voluntary Dissolution ........................................................................... 54
Preemptive Rights ............................................................................... 54
ADJOURNMENT OF SPECIAL MEETING .................................................................... 54
EXPERTS ........................................................................................... 54
LEGAL MATTERS ..................................................................................... 55
STOCKHOLDER PROPOSALS ............................................................................. 55
OTHER MATTERS ...................................................................................... 55
ANNEX A: MERGER AGREEMENT ......................................................................... A-1
ANNEX B: STOCK OPTION AGREEMENT ................................................................... B-1
ANNEX C: OPINION OF GOLDMAN, SACHS & CO ........................................................... C-1
</TABLE>
iii
<PAGE>
No persons have been authorized to give any information or to make any
representations other than those contained in this Proxy Statement/Prospectus
in connection with the solicitation of proxies or the offering of securities
made hereby and, if given or made, such information or representation must
not be relied upon as having been authorized by Meridian or UCB. This Proxy
Statement/Prospectus does not constitute an offer to sell, or a solicitation
of an offer to buy, any securities, or the solicitation of a proxy, in any
jurisdiction to or from any person to whom it is not lawful to make any such
offer or solicitation in such jurisdiction. Neither the delivery of this
Proxy Statement/Prospectus nor any distribution of securities made hereunder
shall, under any circumstances, create an implication that there has been no
change in the affairs of Meridian or UCB since the date hereof or that the
information contained herein is correct as of any time subsequent to its
date.
All information concerning Meridian and its subsidiaries contained herein,
incorporated herein by reference or supplied herewith has been furnished by
Meridian, and all information concerning UCB and its subsidiaries contained
herein, incorporated herein by reference or supplied herewith has been
furnished by UCB. NO ASSURANCES CAN BE GIVEN BY EITHER UCB OR MERIDIAN AS TO
THE FUTURE VALUE OF MERIDIAN COMMON STOCK OR THAT MERIDIAN WILL REALIZE ITS
REVENUE ENHANCEMENT, COST SAVINGS OR OTHER POST-MERGER GOALS. See "THE
MERGER--Management and operations after the Merger; Consolidation of
Operations: Projected Operating Cost Savings and Revenue Enhancement."
AVAILABLE INFORMATION
Meridian and UCB are subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith file reports, proxy statements and other information
with the Securities and Exchange Commission (the "Commission"). The reports,
proxy statements and other information filed by Meridian and UCB with the
Commission can be inspected and copied at the public reference facilities
maintained by the Commission at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and should be available for inspection and copying at
the following regional offices of the Commission: New York Regional Office, 7
World Trade Center, Suite 1300, New York, New York 10048; and the Chicago
Regional Office, Northwestern Atrium Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661-2511. Copies of such material also can be
obtained at prescribed rates from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549.
Meridian has filed with the Commission a Registration Statement on Form
S-4 (together with any amendments thereto, the "Registration Statement")
under the Securities Act with respect to the Meridian Common Stock to be
issued pursuant to the Merger Agreement. This Proxy Statement/Prospectus does
not contain all the information set forth in the Registration Statement and
the exhibits thereto. Such additional information may be obtained from the
Commission's principal office in Washington, D.C. Statements contained in
this Proxy Statement/Prospectus or in any document incorporated in this Proxy
Statement/Prospectus by reference or supplied herewith as to the contents of
any contract or other document referred to herein or therein are not
necessarily complete, and, in each instance, reference is made to the copy of
such contract or other document filed as an exhibit to the Registration
Statement or such other document, each such statement being qualified in all
respects by such reference.
1
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS
BY REFERENCE
The following documents filed with the Commission by Meridian (File No.
0-12364) pursuant to the Exchange Act are incorporated by reference in this
Proxy Statement/Prospectus:
1. Meridian's Annual Report on Form 10-K for the year ended December 31,
1994 (including certain information contained in Meridian's Proxy
Statement dated March 17, 1995 used in connection with Meridian's 1995
Annual Meeting of Shareholders and incorporated by reference in the
Form 10-K).
2. Meridian's Quarterly Reports on Form 10-Q for the quarters ended March
31, 1995 and June 30, 1995.
3. Meridian's Current Reports on Form 8-K dated May 23, 1995 and June 28,
1995.
4. Meridian's Registration Statement on Form 8-A dated August 14, 1989, as
amended on July 25, 1994, with respect to Preferred Stock Purchase
Rights registered pursuant to Section 12(g) of the Exchange Act.
The following documents filed with the Commission by UCB (File No.
0-11282) pursuant to the Exchange Act are incorporated by reference in this
Proxy Statement/Prospectus:
1. UCB's Annual Report on Form 10-K for the year ended December 31, 1994
(including certain information contained in UCB's Proxy Statement dated
March 10, 1995 used in connection with UCB's 1995 Annual Meeting of
Stockholders and incorporated by reference in the Form 10-K).
2. UCB's Quarterly Reports on Form 10-Q for the quarters ended March 31,
1995 and June 30, 1995.
3. UCB's Current Reports on Form 8-K filed on June 8, 1995 and on August
8, 1995.
4. The description of UCB Common Stock set forth in UCB's Registration
Statement filed on Form 8-A filed pursuant to Section 12 of the
Exchange Act, and any amendment or report filed for the purpose of
updating such description.
All documents and reports filed by Meridian and UCB pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this Proxy
Statement/Prospectus and prior to the date of the special meeting of UCB's
stockholders shall be deemed to be incorporated by reference in this Proxy
Statement/Prospectus and to be a part hereof from the dates of filing of such
documents or reports. Any statement contained in a document incorporated or
deemed to be incorporated by reference herein shall be deemed to be modified
or superseded for purposes of this Proxy Statement/Prospectus to the extent
that a statement contained herein or in any other subsequently filed document
which also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of
this Proxy Statement/Prospectus.
THIS PROXY STATEMENT/PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH
ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. SUCH DOCUMENTS (OTHER THAN
EXHIBITS TO SUCH DOCUMENTS UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED
BY REFERENCE) ARE AVAILABLE, WITHOUT CHARGE, TO ANY PERSON, INCLUDING ANY
BENEFICIAL OWNER, TO WHOM THIS PROXY STATEMENT/PROSPECTUS IS DELIVERED, ON
WRITTEN OR ORAL REQUEST. DOCUMENTS RELATING TO MERIDIAN MAY BE REQUESTED FROM
MERIDIAN BANCORP, INC., 35 NORTH SIXTH STREET, READING, PENNSYLVANIA 19601
(TELEPHONE NUMBER (610) 655-2438), ATTENTION: INVESTOR RELATIONS. DOCUMENTS
RELATING TO UCB MAY BE REQUESTED FROM UNITED COUNTIES BANCORPORATION, FOUR
COMMERCE DRIVE, CRANFORD, NEW JERSEY 07016 (TELEPHONE NUMBER (908) 931-6844),
ATTENTION: CORPORATE SECRETARY. IN ORDER TO ENSURE DELIVERY OF THE DOCUMENTS
PRIOR TO THE SPECIAL MEETING, REQUESTS SHOULD BE RECEIVED BY OCTOBER 10,
1995.
2
<PAGE>
SUMMARY
The following is a summary of certain information contained elsewhere in
this Proxy Statement/Prospectus. Reference is made to, and this summary is
qualified in its entirety by, the more detailed information contained or
incorporated by reference in this Proxy Statement/Prospectus and the Annexes
hereto.
THE COMPANIES
Meridian
Meridian Bancorp, Inc. ("Meridian") is a Pennsylvania business corporation
and a multi-bank holding company headquartered in Reading, Pennsylvania. Its
banking subsidiaries consist of Meridian Bank, Delaware Trust Company and
Meridian Bank, New Jersey ("MBNJ"). At June 30, 1995, Meridian and its
subsidiaries had total consolidated assets, deposits and shareholders' equity
of approximately $14.9 billion, $11.5 billion and $1.24 billion,
respectively, and, in terms of both assets and deposits, Meridian was the
fourth largest bank holding company headquartered in Pennsylvania. For
additional information on Meridian and its subsidiaries see "AVAILABLE
INFORMATION," "INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE," "MERIDIAN
SELECTED HISTORICAL FINANCIAL DATA" and "DESCRIPTION OF MERIDIAN."
The principal executive offices of Meridian are located at 35 North Sixth
Street, Reading, Pennsylvania 19601, and its telephone number is (610)
655-2000. See "DESCRIPTION OF MERIDIAN -- General."
UCB
United Counties Bancorporation ("UCB") is a New Jersey corporation and a
single bank holding company headquartered in Cranford, New Jersey. At June
30, 1995, UCB had total consolidated assets, deposits and shareholders'
equity of approximately $1.6 billion, $1.3 billion and $193.5 million,
respectively. UCB's principal operating subsidiary is United Counties Trust
Company ("UCTC"). For additional information concerning UCB, its business,
financial condition, and results of operations, see "AVAILABLE INFORMATION,"
"INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE," "UCB SELECTED HISTORICAL
FINANCIAL DATA" and "DESCRIPTION OF UCB."
The principal executive offices of UCB are located at Four Commerce Drive,
Cranford, New Jersey 07016, and its telephone number is (908) 931-6600. See
"DESCRIPTION OF UCB -- General."
THE SPECIAL MEETING
A special meeting of the stockholders of UCB (the "Special Meeting") will
be held at the Corporate Headquarters of UCB, Four Commerce Drive, Cranford,
New Jersey 07016, on Wednesday, November 1, 1995, at 10:00 a.m., local time.
At the Special Meeting, holders of UCB's common stock, no par value, $1.00
stated value per share (the "UCB Common Stock"), will consider and vote upon
the approval and adoption of the Agreement and Plan of Merger, dated as of
May 23, 1995 (the "Merger Agreement"), between Meridian and UCB, a copy of
which is attached as Annex A to this Proxy Statement/Prospectus, providing
for the merger of UCB with and into Meridian (the "Merger"). In addition to
the Merger Agreement, stockholders will be asked to approve a proposal to
adjourn the Special Meeting, if necessary, to permit further solicitation of
proxies. See "ADJOURNMENT OF SPECIAL MEETING." UCB stockholders will also
consider and vote upon any other matter that may properly come before the
Special Meeting. See "THE SPECIAL MEETING -- Matters to be Considered at the
Meeting."
The Merger will require the approval of the Merger Agreement by the
affirmative vote of 66-2/3% of the outstanding shares of UCB Common Stock.
The directors, certain executive officers and certain affiliates of UCB have
agreed to be present (in person or by proxy) at the Special Meeting, and to
vote all shares of UCB Common Stock which they own for approval and adoption
of the Merger Agreement. At August 29, 1995, such directors, executive
officers and affiliates of UCB owned and had sole voting power with respect
3
<PAGE>
to approximately 483,708 shares of UCB Common Stock, or approximately 22.5% of
the outstanding shares of UCB Common Stock which are entitled to be voted at the
Special Meeting. At August 29, 1995, such directors, executive officers and
affiliates of UCB had shared voting power with respect to approximately 205,847
shares of UCB Common Stock, or approximately 9.6% of the outstanding shares of
UCB Common Stock which are entitled to be voted at the Special Meeting. See "THE
SPECIAL MEETING -- Votes Required; Quorum."
THE MERGER
Effect of Merger
Pursuant to the Merger Agreement, UCB will be merged into Meridian with
Meridian surviving the Merger. At the effective date of the Merger (the
"Effective Date"), each outstanding share of UCB Common Stock will be
automatically converted into and become a right to receive 5.00 shares of
Meridian Common Stock at a fixed exchange ratio (the "Exchange Ratio"). See
"THE MERGER -- Terms of the Merger."
On the Effective Date, options to purchase shares of UCB Common Stock
granted under UCB's existing employee stock option plans prior to the date of
the Merger Agreement ("UCB Options") which remain unexercised will be
converted into options to acquire 5.00 shares of Meridian Common Stock for
each share of UCB Common Stock purchasable under the terms of the existing
UCB Options at an exercise price per share of Meridian Common Stock equal to
the present stated exercise price of such option divided by 5.00. Due to
provisions in UCB's employee stock option plans providing for accelerated
vesting in the event of a "change in control" of UCB, the UCB Options will
automatically become fully vested on the Effective Date of the Merger. See
"THE MERGER -- Terms of the Merger."
The Merger is intended to qualify as a pooling of interests for financial
accounting purposes and is expected to constitute a tax-free reorganization
for federal income tax purposes. See "THE MERGER -- Accounting Treatment" and
"THE MERGER -- Federal Income Tax Consequences."
The Merger Agreement, subject to certain restrictions, permits UCB to pay
a quarterly cash dividend of $1.85 per share of UCB Common Stock outstanding
on each March 1, June 1, September 1 and December 1 prior to the Effective
Date; provided, however, that UCB is not permitted, without Meridian's prior
written consent, to pay a dividend in or for any quarter in which the
Effective Date is or is expected to be on or before Meridian's record date
for payment of its regular quarterly cash dividend. See "THE MERGER --
Dividends."
Recommendation of the Board of Directors anD Reasons for the Merger
The Board of Directors of UCB unanimously recommends that its stockholders
approve and adopt the Merger Agreement. The Board of Directors of UCB
believes that the terms of the Merger are fair and in the best interests of
UCB stockholders and has unanimously approved the Merger Agreement. The Board
of Directors of UCB believes that the Merger will benefit UCB's stockholders
by providing them with a more liquid investment than that represented by UCB
Common Stock. In addition, the UCB Board of Directors believes that UCB will
be in better position to participate in the latest technological
advancements, and UCB's customers will have available a broader range of
products and services. For information on the matters considered by UCB's
Board of Directors in approving and recommending the Merger, see "THE MERGER
-- Background of and Reasons for the Merger; Recommendation of the UCB Board
of Directors."
Opinion of Financial Advisor
Goldman, Sachs & Co. ("Goldman Sachs") has delivered its written opinion
to the Board of Directors of UCB that, as of September 21, 1995, the Exchange
Ratio to be received pursuant to the Merger Agreement is fair to the holders
of UCB Common Stock.
The full text of the written opinion of Goldman Sachs, which sets forth
assumptions made, matters considered and limitations on the review undertaken
in connection with the opinion, is attached hereto as Annex C and is
incorporated herein by reference. Holders of shares of UCB Common Stock are
urged to, and should, read such opinion in its entirety. See "THE MERGER --
Opinion of Financial Advisor."
4
<PAGE>
Representations, Warranties, and Covenants
The Merger Agreement contains representations, warranties, and covenants
customary for transactions similar to the Merger. See "THE MERGER --
Conditions," "-- Representations and Warranties," and "-- Management and
Operations After the Merger."
Conditions to the Merger
The obligations of Meridian and UCB to complete the Merger are subject to
various conditions, including, among others, (i) obtaining required
stockholder approval, (ii) obtaining required approvals from the Board of
Governors of the Federal Reserve System (the "Federal Reserve"), the Federal
Deposit Insurance Corporation (the "FDIC"), and the New Jersey Department of
Banking (the "NJDOB"), (iii) the absence since March 31, 1995 of any material
adverse change in the consolidated assets, business, consolidated financial
condition or consolidated results of operations, taken as a whole, of the
other party and its subsidiaries, (iv) receipt of an opinion of counsel at
the closing of the Merger with respect to certain federal income tax
consequences of the Merger, (v) receipt of a letter from Meridian's
independent accountants to the effect that the Merger qualifies for "pooling
of interests" accounting treatment and (vi) other conditions precedent
customary in transactions such as the Merger. No assurance can be given that
all such conditions will be met. See "THE MERGER -- Conditions to the
Merger."
Termination; Effect of Termination
The Merger Agreement may be terminated at any time prior to the Effective
Date by (a) the mutual written consent of Meridian and UCB or (b) by either
party if (i) the Effective Date has not occurred prior to May 23, 1996,
unless such fact is due to the failure of the party seeking termination to
perform or observe its agreements set forth in the Merger Agreement and
required to be performed or observed prior to the Effective Date, (ii) any
regulatory authority whose approval or consent has been requested has
informed either party in writing that such approval or consent is unlikely to
be granted, unless such fact shall be due to the failure of the party seeking
termination to perform or observe its agreements set forth in the Merger
Agreement and required to be performed or observed prior to the Effective
Date, (iii) the stockholders of UCB have failed to approve the Merger
Agreement, unless the failure of the party seeking termination to perform or
observe its agreements set forth in the Merger Agreement, or (iv) Meridian
and UCB have reasonably agreed that any condition precedent to closing set
forth in the Merger Agreement cannot reasonably be met. See "THE MERGER --
Termination; Effect of Termination."
Differences in Shareholder Rights
Upon completion of the Merger, stockholders of UCB will become
shareholders of Meridian and their rights as such will be governed by
Meridian's Articles of Incorporation and Bylaws and by Pennsylvania law. The
rights of shareholders of Meridian are different in certain respects from the
rights of stockholders of UCB. See "COMPARISON OF SHAREHOLDER RIGHTS."
Absence of Dissenters' Rights of Appraisal
Holders of shares of UCB Common Stock are not entitled to dissenters'
appraisal rights in connection with the Merger under applicable law. See "THE
SPECIAL MEETING -- Appraisal Rights."
Management and Operations after the Merger; Bank Merger
The Board of Directors of Meridian in office immediately prior to
completion of the Merger will remain as Meridian's Board of Directors upon
completion of the Merger, together with two other persons who are designated
by UCB and who are reasonably acceptable to Meridian. The executive officers
of Meridian in office immediately prior to completion of the Merger will
remain as such upon completion of the Merger. See "THE MERGER -- Management
and Operations After the Merger."
5
<PAGE>
In connection with the Merger, MBNJ and UCTC entered into a Plan of Merger
dated as of May 23, 1995 (the "Bank Plan of Merger"), pursuant to which,
concurrently with or as soon as practicable after completion of the Merger,
UCTC will merge with and into MBNJ (the "Bank Merger"). The Bank Plan of
Merger will terminate automatically if the Merger Agreement is terminated.
See "THE MERGER -- Management and Operations After the Merger -- Subsidiary
Bank Merger."
The Board of Directors of MBNJ in office immediately prior to completion
of the Bank Merger will remain as MBNJ's Board of Directors upon completion
of the Bank Merger, together with Albert W. Bossert, Anton J. Campanella,
Edward J. Hobbie, John E. Holobinko, William C. Johnson, Jr., Robert G.
Kenney, Henry G. Largey, Donald S. Nowicki and Maureen E. Staub, each of whom
is a current director of UCTC. The other current directors of UCTC are Edward
A. Kammler, Jr. and William G. Palermo, each of whom has reached Meridian's
mandatory director retirement age, and Eugene H. Bauer, who will become a
consultant to Meridian on a limited basis following the Effective Date. The
officers of MBNJ duly elected and holding office immediately prior to the
completion of the Bank Merger will remain as such upon completion of the Bank
Merger, along with such officers of UCTC as MBNJ appoints as officers of
MBNJ.
Under the terms of the Merger Agreement, Meridian has agreed to cause MBNJ
to relocate its executive offices to the location of UCB's corporate
headquarters in Cranford, New Jersey.
Meridian expects to realize certain revenue enhancements following the
Merger as a result of the expansion of products and services and increased
lending activities. Meridian also expects to achieve certain cost savings
following the Merger principally through the consolidation of certain
operations and the elimination of redundant costs. Because of the
uncertainties associated with merging two institutions located in contiguous
markets, and changes in the regulatory environment and economic conditions,
no assurances can be given as to whether any particular level of revenue
enhancements or cost savings will, in fact, be realized or as to the ultimate
timing of any such revenue enhancements or cost savings. See "THE MERGER --
Management and Operations After the Merger; Consolidation of Operations:
Projected Operating Cost Savings and Revenue Enhancements."
STOCK OPTION AGREEMENT
As a condition to entering into the Merger Agreement, UCB granted Meridian
an option to purchase 375,000 shares of UCB Common Stock pursuant to a stock
option agreement, dated May 23, 1995 (the "Stock Option Agreement"). The
option may be exercised by Meridian upon the occurrence of specified events
which have the potential for a third party to effect an acquisition of
control of UCB prior to the termination of the Merger Agreement and, under
certain circumstances, for a period of one year thereafter. The exercise
price per share to purchase UCB Common Stock under the option is equal to the
lower of $125.00 or the lowest price per share that a person or group, other
than Meridian or an affiliate of Meridian, paid or offers to pay for UCB
Common Stock upon the occurrence of one of the specified events which
triggers exercise of the option. Acquisitions of shares of UCB Common Stock
pursuant to the exercise of the option would be subject to prior regulatory
approval under certain circumstances. See "STOCK OPTION AGREEMENT."
NO SOLICITATION OF TRANSACTIONS
Except as set forth below, UCB has agreed in the Merger Agreement that it
will not solicit or engage in any discussions with or respond to any person
other than Meridian concerning any acquisition of UCB or any of its
subsidiaries except for responses in connection with investor relations or
pursuant to inquiries of government regulatory authorities. Prior to
September , 1995 (the date of effectiveness of the registration statement of
which this Proxy Statement/Prospectus forms a part), the Merger Agreement
permitted UCB to engage in discussions or negotiations with, or respond to
requests for information, inquiries or other communications from, any person
other than Meridian concerning an acquisition of UCB or its subsidiaries to
the extent such engagement or response may have been legally required for the
discharge by UCB's Board of Directors of its fiduciary duty. See "THE MERGER
-- No Solicitation of Transactions." In addition, the directors of UCB,
together with the executive officers of UCB and certain of their affiliates,
have agreed to be present at the Special Meeting (in person or by proxy) and
to vote their shares of UCB Common Stock in favor of the Merger Agreement.
See "THE MEETINGS -- Matters to be Considered at the Meetings."
6
<PAGE>
The Stock Option Agreement and the agreements of UCB and of such
directors, executive officers, and certain affiliates of UCB regarding the
Special Meeting may have the effect of discouraging persons who might now, or
prior to the Effective Date, be interested in acquiring all of or a
significant interest in UCB from considering or proposing such an
acquisition, even if such persons were willing to pay a higher price per
share for UCB Common Stock than the price per share implicit in the Merger
consideration at that time. See "CERTAIN RELATED TRANSACTIONS -- Stock Option
Agreement."
INTERESTS OF CERTAIN PERSONS IN THE MERGER
Certain directors and executive officers of UCB are entitled to
substantial payments pursuant to employment agreements and benefit plans if
they resign or their employment is terminated following execution of the
Merger Agreement. In addition, Mr. Eugene H. Bauer, Chairman of UCB and UCTC,
will resign all positions with UCB and UCTC on the Effective Date of the
Merger and will become a consultant to Meridian on a limited basis after the
Merger. Certain directors and executive officers of UCB are also the holders
of employee stock options to acquire UCB Common Stock which will be converted
into options to acquire Meridian Common Stock. Also, Meridian has agreed to
indemnify and maintain director and officer insurance coverage for a
specified period of time after the Effective Date for persons who served as
directors and officers of UCB. See "INTERESTS OF CERTAIN PERSONS IN THE
MERGER."
MERIDIAN SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA
Selected unaudited historical consolidated financial data with respect to
Meridian is set forth in this Proxy Statement/Prospectus at "MERIDIAN
SELECTED HISTORICAL FINANCIAL DATA."
UCB SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA
Selected unaudited historical consolidated financial data with respect to
UCB is set forth in this Proxy Statement/Prospectus at "UCB SELECTED
HISTORICAL FINANCIAL DATA."
COMPARATIVE PER COMMON SHARE DATA
The following table sets forth certain unaudited comparative per share
data relating to book value per common share, cash dividends declared per
common share, and income from continuing operations per common share, (i) on
an historical basis for Meridian and UCB, (ii) on a pro forma basis per share
of Meridian Common Stock to reflect completion of the Merger, and (iii) on an
equivalent pro forma basis per share of UCB Common Stock to reflect
completion of the Merger. The following equivalent per share data assume the
Exchange Ratio of 5.00 shares of Meridian Common Stock for each share of UCB
Common Stock outstanding.
During the second quarter, 1995, Meridian recorded a restructuring charge
of $32.0 million ($20.8 million after tax). The restructuring charge related
to the implementation of a program intended to reduce Meridian's performance
ratio (non-interest expense as a percentage of income) from its current level
to 59.9% or lower by the end of the first quarter of 1996. The restructuring
charge is reflected in the historical and pro forma data at and for the six
months ended June 30, 1995. The pro forma data at and for the six months
ended June 30, 1995 includes a gain by UCB on exchange of securities for sale
of $12.0 million pre-tax ($7.6 million after-tax). Meridian also expects to
achieve certain operating cost savings and revenue enhancements as a result
of the Merger. Such cost savings and revenue enhancements are not reflected
in the historical or pro forma information set forth below. See "THE MERGER
-- Management and Operations After the Merger." This information should be
read in conjunction with the consolidated financial statements of Meridian
and UCB, including the notes thereto, incorporated by reference in this Proxy
Statement/Prospectus and the other financial data appearing elsewhere in this
Proxy Statement/Prospectus. The information set forth below is not
necessarily indicative of the results of operations of future periods or
future combined financial position. See "INCORPORATION OF CERTAIN DOCUMENTS
BY REFERENCE" and "AVAILABLE INFORMATION."
7
<PAGE>
<TABLE>
<CAPTION>
At or for the
Six Months
Ended June 30, At or for the Year Ended December 31,
--------------------- -----------------------------------------------------
1995 1994 1994 1993 1992 1991 1990
--------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Book Value Per Common Share
Historical:
Meridian ............................ $ 22.12 $ 21.01 $ 21.50 $20.39 $18.75 $17.21 $15.88
UCB ................................. 90.27 81.82 84.55 74.02 66.02 60.95 56.85
Pro Forma:
Pro Forma Per Share of Meridian
Common Stock .................... 21.47 20.29 20.77 19.52 17.86 16.38 15.08
Equivalent Pro Forma Per Share of
UCB Common Stock ................ 107.35 101.45 103.85 97.60 89.30 81.90 75.40
Cash Dividends Declared Per Common
Share:
Historical:
Meridian ............................ .71 .66 1.34 1.26 .90 1.20 1.20
UCB ................................. 1.60 1.40 3.29 2.60 2.85 2.20 2.70
Pro Forma:
Pro Forma Per Share of Meridian
Common Stock(1) ................. .71 .66 1.34 1.26 .90 1.20 1.20
Equivalent Pro Forma Per Share of
UCB Common Stock(1) ............. 3.55 3.30 6.70 6.30 4.50 6.00 6.00
Income from Continuing Operations Per
Common Share(2)
Historical:
Meridian
Primary ............................ 1.19(4) 1.40 2.80 2.61 2.45 2.36 1.22
Fully Diluted ...................... 1.18(4) 1.40 2.80 2.61 2.44 2.35 1.22
UCB
Primary ............................ 9.02(5) 5.50 11.12 11.29 9.96 6.28 9.23
Fully Diluted ...................... 9.02(5) 5.50 11.12 11.29 9.96 6.28 9.23
Pro Forma:
Per Share of Meridian Common Stock(3)
Primary ......................... 1.29(6) 1.35 2.70 2.55 2.38 2.17 1.33
Fully Diluted ................... 1.28(6) 1.35 2.70 2.55 2.38 2.16 1.33
Equivalent Pro Forma Per Share of
UCB Common Stock(3)
Primary ........................... 6.45(6) 6.75 13.50 12.80 11.90 10.85 6.65
Fully Diluted ..................... 6.40(6) 6.75 13.50 12.80 11.90 10.80 6.65
</TABLE>
------
(1) Meridian pro forma dividends per share represent historical dividends
paid by Meridian. UCB pro forma equivalent dividends per share represent
such amounts multiplied by 5.00. Based on Meridian's current quarterly
dividend of $.37 per share, equivalent pro forma quarterly cash dividends
per share of UCB Common Stock would be $1.85 per share as a result of the
Merger, an increase of 131.25% from the $.80 normal quarterly dividend
paid by UCB for the quarter immediately prior to execution of the Merger
Agreement. See "DESCRIPTION OF MERIDIAN -- Market Price of and Dividends
on Meridian Common Stock"; "THE MERGER -- Terms of the Merger --
Management and Operations After the Merger; Post- Merger Dividend
Policy."
(2) The computation of earnings per share does not include the effect of (i)
Meridian Common Stock which may be issued in connection with Meridian's
Floating Rate Subordinated Capital Notes (the "Notes") or (ii) a
repurchase of up to one million shares of Meridian Common Stock
authorized by Meridian provided such repurchase does not adversely affect
the ability of Meridian to account for the Merger as a pooling of
interests. See "DESCRIPTION OF MERIDIAN CAPITAL SECURITIES -- Capital
Notes."
(3) Meridian pro forma income from continuing operations per common share
represents historical net income from continuing operations for Meridian
and UCB combined on the assumption that Meridian and UCB had
8
<PAGE>
been combined for each period presented on a pooling of interests basis,
divided by the number of shares of Meridian Common Stock which will be
issued and outstanding after the Merger. UCB equivalent pro forma income
from continuing operations per common share represents such amounts
multiplied by 5.00.
(4) Includes the effects of a restructuring charge of $32 million ($20.8
million after-tax or $0.37 on both a primary and fully diluted per share
basis) taken by Meridian in the second quarter of 1995. Excluding the
effects of the Meridian restructuring charge, for the six months ended
June 30, 1995 Meridian's historical primary and fully diluted income per
share from continuing operations would have been $1.56 and $1.55,
respectively. See "MERIDIAN SELECTED HISTORICAL FINANCIAL DATA."
(5) Includes a gain by UCB for the first quarter of 1995 on exchange of
securities available for sale of $12.0 million pre-tax ($7.6 million
after-tax, or $3.56 per share of UCB Common Stock). Excluding such gain,
for the six months ended June 30, 1995, historical income from continuing
operations per share of UCB Common Stock would have been $5.46 (primary
and fully diluted). See "UCB SELECTED HISTORICAL FINANCIAL DATA."
(6) Includes the effects of the restructuring charge taken by Meridian in the
second quarter of 1995 and the gain by UCB on exchange of securities
available for sale for the first quarter of 1995. See footnotes 4 and 5.
Excluding the effects of the Meridian restructuring charge and the UCB
gain on exchange of securities available for sale, for the six months
ended June 30, 1995, pro forma income from continuing operations per
share of Meridian Common Stock would have been $1.48 (primary and fully
diluted) and equivalent pro forma income from continuing operations per
share of UCB Common Stock would have been $7.40 (primary and fully
diluted).
PRO FORMA COMBINED CONDENSED FINANCIAL DATA
The following table sets forth certain unaudited pro forma information
which combines certain selected historical unaudited (i) consolidated balance
sheet information of Meridian and UCB on the assumption that the Merger was
completed on June 30, 1995 in a transaction accounted for as a pooling of
interests, and (ii) consolidated earnings data on the assumption that
Meridian and UCB had been combined for each period presented, on a pooling of
interests basis.
<TABLE>
<CAPTION>
At or for the
Six Months
Ended June 30, At or for the Year Ended December 31,
------------------------ -------------------------------------------------------------
1995 1994 1994 1993 1992 1991 1990
---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Earnings Data (in millions)
Net Income from Continuing
Operations ..................... $ 86.5(1) $ 93.0 $ 185.9 $ 174.7 $ 158.3 $ 137.9 $ 83.3
Per Share Data
Net Income from Continuing
Operations (Fully Diluted) ..... 1.28(1) 1.35 2.70 2.55 2.38 2.16 1.33
Book Value ........................ 21.47 20.29 20.77 19.52 17.86 16.38 15.08
Balance Sheet Data (in millions)
Loans ............................. 10,435.1 9,889.4 10,137.9 9,385.8 8,968.7 8,955.2 9,870.9
Assets ............................ 16,527.7 16,846.1 16,733.5 15,771.3 15,925.2 14,747.6 14,757.0
Deposits .......................... 12,840.2 13,058.1 12,734.3 12,739.0 13,147.2 12,283.7 11,695.8
Shareholders' Equity .............. 1,429.6 1,389.5 1,396.7 1,343.6 1,201.4 1,080.6 943.0
</TABLE>
------
(1) Includes the effects of (i) a restructuring charge of $32 million ($20.8
million after tax, or $0.37 per share on both a primary and fully
diluted per share basis) taken by Meridian in the second quarter of 1995
and (ii) a gain by UCB for the first quarter of 1995 on exchange of
securities available for sale of $12.0 million pre-tax ($7.6 million
after-tax, or $3.56 per share of UCB Common Stock). Excluding such
effects, for the six-month period ended June 30, 1995 pro forma net
income from continuing operations would have been $99.7 million and pro
forma net income per share on a fully diluted basis would have been
$1.48. See "MERIDIAN SELECTED HISTORICAL FINANCIAL DATA," "UCB SELECTED
HISTORICAL FINANCIAL DATA" and "SELECTED PRO FORMA COMBINED FINANCIAL
INFORMATION."
9
<PAGE>
The information set forth above is not necessarily indicative of the
results of operations or combined financial position which would have
resulted had the Merger been completed at the beginning of the periods
indicated, nor is it necessarily indicative of the results of operations of
future periods or future combined financial position. See "SELECTED PRO FORMA
COMBINED FINANCIAL INFORMATION."
MARKET VALUE OF SECURITIES
The following table sets forth the market value per share of Meridian
Common Stock and UCB Common Stock and the equivalent market value per share
of UCB Common Stock on May 23, 1995, the last business day preceding public
announcement of the Merger. The equivalent market value per share of UCB
Common Stock shown in the table is based upon the fixed Exchange Ratio of
5.00 shares of Meridian Common Stock for each share of UCB Common Stock
outstanding. The historical market values per share of Meridian Common Stock
and UCB Common Stock and the per share market value of Meridian Common Stock
used to determine the equivalent market value per share of UCB Common Stock
are the last per share sales price on May 23, 1995, as reported on the NASDAQ
Stock Market with respect to Meridian and on the NASDAQ Small-Cap Market with
respect to UCB. See "THE MERGER -- Terms of the Merger."
<TABLE>
<CAPTION>
Equivalent
Meridian UCB Market Value
Historical Historical Per Share
------------ ------------ --------------
<S> <C> <C> <C>
May 23, 1995 ...... $33.00 $127.50 $165.00
</TABLE>
MARKET PRICE AND DIVIDEND INFORMATION
On September , 1995, the last reported sale price of Meridian Common
Stock, as reported on the NASDAQ Stock Market, was $ per share. For
information concerning cash and stock dividends paid by Meridian, see
"DESCRIPTION OF MERIDIAN -- Market Price of and Dividends on Meridian Common
Stock."
10
<PAGE>
INTRODUCTION
This Proxy Statement/Prospectus is being furnished to stockholders of UCB
in connection with the solicitation of proxies by the Board of Directors of
UCB for use at the Special Meeting of Stockholders of UCB (the "Special
Meeting") to be held at the Corporate Headquarters of UCB, Four Commerce
Drive, Cranford, New Jersey 07016, on November 1, 1995, at 10:00 a.m., local
time, and at any adjournments thereof.
At the Special Meeting, stockholders of UCB will be asked to approve the
Merger Agreement, a copy of which is attached as Annex A and incorporated by
reference and more fully described herein, and to act on certain other
matters referred to below. Stockholders of UCB will also be asked to approve
a proposal to adjourn the Special Meeting, if necessary, to permit further
solicitation of proxies in the event there are not sufficient votes at the
time of the Special Meeting to constitute a quorum or to approve the Merger
Agreement. The description of the Merger Agreement set forth herein is
qualified in its entirety by reference to the Merger Agreement, a copy of
which is attached hereto as Annex A.
The approximate date on which this Proxy Statement/Prospectus is first
being sent to stockholders of UCB is September ___, 1995.
11
<PAGE>
DESCRIPTION OF MERIDIAN
GENERAL
Meridian
Meridian is a Pennsylvania multi-bank holding company headquartered in
Reading, Pennsylvania. At June 30, 1995, Meridian and its subsidiaries had
total consolidated assets, deposits, and shareholders' equity of
approximately $14.9 billion, $11.5 billion and $1.24 billion, respectively,
and in terms of both assets and deposits, Meridian was the fourth largest
bank holding company headquartered in Pennsylvania.
The principal executive offices of Meridian are located at 35 North Sixth
Street, Reading, Pennsylvania 19601, and its telephone number is (610)
655-2000.
Meridian is a legal entity separate and distinct from its subsidiary banks
and direct and indirect nonbanking subsidiaries. Accordingly, the right of
Meridian, and consequently the right of creditors and shareholders of
Meridian, to participate in any distribution of the assets or earnings of any
affiliated bank is necessarily subject to the prior claims of creditors of
the affiliated bank, except to the extent that claims of Meridian in its
capacity as a creditor may be recognized. The principal source of Meridian's
revenue and cash flow is dividends from its affiliated banks and other
subsidiaries.
Banking
Meridian's banking subsidiaries consist of Meridian Bank (with total
assets, deposits and shareholders' equity of $12.7 billion, $9.9 billion and
$1.0 billion, respectively, at June 30, 1995), Delaware Trust Company (with
total assets, deposits and stockholders' equity of $1.43 billion, $1.15
billion and $148.4 million, respectively, at June 30, 1995), and MBNJ (with
total assets, deposits and stockholders' equity of $652.4 million, $553.0
million and $81.3 million, respectively, at June 30, 1995). As of June 30,
1995, Meridian's banking subsidiaries operated more than 300 branches in
eastern Pennsylvania, southern New Jersey and the State of Delaware.
Financial Services
Meridian's financial services subsidiaries offer asset management and
securities services. Meridian Asset Management, Inc., a subsidiary of
Meridian, and Delaware Trust Capital Management, Inc., a subsidiary of
Delaware Trust Company, provide corporate trust, asset management, fiduciary
and related services, as well as investment advisory services. Meridian
Capital Markets, Inc., a division of Meridian Bank, securitizes assets, buys
and sells, as principal and agent, mortgages, mortgage related products,
securities and loan servicing and interest rate products, underwrites
municipal obligations and mortgage-backed securities, and engages in various
related activities.
Other
Meridian regularly explores opportunities for possible acquisitions of
financial institutions and related businesses.
At the date hereof, Meridian has not entered into any agreements or
understandings with respect to any significant acquisitions or similar
transactions, except for the Merger and except as described in this Proxy
Statement/Prospectus and/or in documents incorporated herein by reference.
For additional information concerning Meridian, its business, financial
condition and results of operations, reference should be made to the Meridian
documents incorporated herein by reference. See "INCORPORATION OF CERTAIN
DOCUMENTS BY REFERENCE," "AVAILABLE INFORMATION" and "SELECTED PRO FORMA
COMBINED FINANCIAL INFORMATION."
MARKET PRICE OF AND DIVIDENDS ON MERIDIAN COMMON STOCK
The Meridian Common Stock is traded in the over-the-counter market and is
quoted on the NASDAQ Stock Market (formerly the NASDAQ National Market
System), under the symbol MRDN. As of September __, 1995, there were
approximately ________ Meridian shareholders of record, which does not
include the number of persons or entities whose stock is held in street name
through various brokerage firms or banks.
12
<PAGE>
The table below sets forth the quarterly ranges of high and low bid prices
for Meridian Common Stock as reported by the NASDAQ Stock Market and does not
necessarily reflect mark-ups, mark-downs or commissions. The table also
reflects dividends paid during the periods indicated.
<TABLE>
<CAPTION>
Quarterly
Quarter Ended Dividend High Low
--------------------- ----------- -------- --------
<S> <C> <C> <C>
September 30, 1995(1) $.37 $ $
June 30, 1995 ....... .37 34-3/8 30-5/8
March 31, 1995 ...... .34 31-1/4 26-1/4
December 31, 1994 ... .34 29-1/4 25-1/2
September 30, 1994 .. .34 33-1/8 28-3/4
June 30, 1994 ....... .34 33-1/4 27-3/8
March 31, 1994 ...... .32 31-1/8 26-7/8
December 31, 1993 ... .32 33-1/8 27-3/4
September 30, 1993 .. .32 34-5/8 30-1/4
June 30, 1993 ....... .32 34 26-3/4
March 31, 1993 ...... .30 35-3/4 29-3/4
</TABLE>
------
(1) Through September __, 1995
On May 23, 1995, the last business day preceding public announcement of
the Merger, the last sale price for Meridian Common Stock was $33.00 per
share. On September __, 1995, the last sale price for Meridian Common Stock
was $__________ per share.
For the six-month period ended June 30, 1995, the average daily trading
volume in shares of Meridian Common Stock was approximately 190,000. For the
period from July 1, 1995 to September ___, 1995, the average daily trading
volume was approximately ____________.
For certain limitations on the ability of Meridian Bank to pay dividends
to Meridian, see Note 7 to Notes to Consolidated Financial Statements set
forth in Meridian's Annual Report on Form 10-K for the year ended December
31, 1994, which is incorporated herein by reference. See "INCORPORATION OF
CERTAIN DOCUMENTS BY REFERENCE."
REPURCHASE OF MERIDIAN COMMON STOCK
Meridian has authorized a repurchase of up to one million shares of
Meridian Common Stock, provided such repurchase does not adversely affect the
ability of Meridian to account for the Merger as a pooling of interests.
DESCRIPTION OF UCB
GENERAL
UCB
UCB is a New Jersey business corporation and a bank holding company
registered with the Board of Governors of the Federal Reserve System (the
"Federal Reserve"). UCB was organized in 1983, and commenced operations upon
consummation of the acquisition of all of the outstanding stock of UCTC on
October 1, 1983. At June 30, 1995, UCB had total consolidated assets,
deposits and shareholders' equity of approximately $1.6 billion, $1.3 billion
and $193.5 million, respectively.
The principal executive offices of UCB are located at Four Commerce Drive,
Cranford, New Jersey 07016, and its telephone number is (908) 931-6600.
For additional information concerning UCB, its business, financial
condition, and results of operations, see "INCORPORATION OF CERTAIN DOCUMENTS
BY REFERENCE."
UCTC
UCTC is a full-service commercial bank serving central New Jersey. UCTC's
deposits are insured to applicable limits by the Bank Insurance Fund of the
FDIC.
13
<PAGE>
UCTC is headquartered at Four Commerce Drive, Cranford, Union County, New
Jersey 07016. At June 30, 1995, UCTC had 35 branch banking offices in five
central New Jersey counties -- Middlesex, Monmouth, Morris, Somerset and
Union counties. In addition, twenty-four-hour banking services are provided
through 28 automatic teller machines ("ATMs") located throughout UCTC's
service area. UCTC operates its proprietary United ATM System network.
Retail and commercial banking services offered to individuals and
businesses in UCTC's service area include all types of deposit accounts,
business loans, personal loans, commercial and residential mortgages,
education loans, safe deposit and night depository services, and personal and
corporate trust services. UCTC does not obtain any material portion of its
deposits from a single individual, from one particular business or from
local, state or federal governments. UCTC loans are not concentrated within a
single industry, group of related industries, or any individual customer.
However, the majority of its lending activity, as well as its deposits, are
concentrated in central New Jersey.
UCTC's Trust Division provides a wide variety of personal trust services
including the administration of trusts and estates and pension,
profit-sharing, and other employee benefit plans and the provision of
investment advisory services. The Trust Division also acts as corporate
trustee, securities transfer agent, registrar and fiscal and paying agent,
and also acts in other corporate agency capacities. Trust assets under
management by UCTC exceeded $200 million at June 30, 1995.
MARKET PRICE OF AND DIVIDENDS ON UCB COMMON STOCK AND RELATED STOCKHOLDER
MATTERS
The UCB Common Stock is traded in the over-the-counter market, under the
symbol UCTC. As of June 30, 1995, there were 1,080 stockholders of record,
not including the number of persons or entities whose stock is held in street
name through various brokerage firms or banks.
The table below sets forth the quarterly ranges of high and low sales
prices for the periods indicated, as reported by the NASDAQ Small-Cap Market,
and does not necessarily reflect mark-ups, mark-downs or commissions. The
table also shows cash dividends paid during the periods indicated.
<TABLE>
<CAPTION>
Quarterly
Quarter Ended Dividend High Low
--------------------- ----------- ---------- ---------
<S> <C> <C> <C>
September 30, 1995(1) $1.85(2) $ $
June 30, 1995 ....... .80 162 150
March 31, 1995 ...... .80 127-1/2 110
December 31, 1994(2) 1.785 143 100
September 30, 1994 .. .80 154-1/4 98
June 30, 1994 ....... .70 100-1/2 95-1/2
March 31, 1994 ...... .70 98 95
December 31, 1993 ... .70 98 95-1/2
September 30, 1993 .. .60 95-1/2 85
June 30, 1993 ....... .60 89 85
March 31, 1993 ...... .60 89 75-1/2
</TABLE>
------
(1) Through September __, 1995.
(2) This is an equivalent dividend paid in accordance with the terms of the
Merger Agreement.
(3) In December 1994, UCB paid a dividend of $.985 per share in addition to
its regular quarterly dividend of $.80 per share.
On May 23, 1995, the last business day preceding public announcement of
the Merger, the last sale price for UCB Common Stock was $127.50 per share.
On September __, 1995, the last sale price for UCB Common Stock was
$__________ per share.
For the six-month period ended June 30, 1995, the average daily trading
volume in shares of UCB Common Stock was approximately 2,400.
UCB, through the Effective Date of the Merger, is restricted in the
payment of dividends by the terms of the Merger Agreement. See "THE MERGER --
Dividends." See also Note 11 of the Notes to Consolidated Financial
Statements set forth in UCB's 1994 Annual Report to Shareholders, which
financial statements are incorporated herein by reference to UCB's Annual
Report on Form 10-K for the year ended December 31, 1994. See "INCORPORATION
OF CERTAIN DOCUMENTS BY REFERENCE."
14
<PAGE>
MERIDIAN SELECTED HISTORICAL FINANCIAL DATA
The following table sets forth certain selected historical consolidated
summary financial data for Meridian. This data is derived from, and should be
read in conjunction with, the consolidated financial statements of Meridian,
including the notes thereto, incorporated by reference in this Proxy
Statement/Prospectus. See "INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE"
and "AVAILABLE INFORMATION." The data for the years ended December 31, 1994
through December 31, 1990 are derived from Meridian's consolidated financial
statements, which have been audited. Interim unaudited data for the six
months ended June 30, 1995 and 1994 reflect, in the opinion of management of
Meridian, all adjustments (consisting of normal recurring adjustments)
necessary for a fair presentation of such data. During the second quarter,
1995, Meridian recorded a restructuring charge of $32.0 million ($20.8
million after tax). The restructuring charge related to the implementation of
a program intended to reduce Meridian's performance ratio (non-interest
expense as a percentage of income) from its current level to 59.9% or lower
by the end of the first quarter of 1996. The following historical financial
data at and for the six month period ended June 30, 1995 reflect this
restructuring charge. Results for the six months ended June 30, 1995 are not
necessarily indicative of results which may be expected for any other interim
period or for the year as a whole.
15
<PAGE>
MERIDIAN SELECTED HISTORICAL FINANCIAL DATA
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
At or for the Six Months
Ended June 30,
-----------------------------
1995 1994
------------- -------------
<S> <C> <C>
RESULTS OF OPERATIONS FOR THE YEAR
Interest Income ................... $ 556,176 $ 463,709
Interest Expense .................. 252,412 160,937
----------- -----------
Net Interest Income ............... 303,764 302,772
Provision for Possible Loan Losses 18,142 15,524
----------- -----------
Net Interest Income After Provision
for Possible Loan Losses ........ 285,622 287,248
Non-Interest Income ............... 124,866 113,271
Non-Interest Expenses:
Restructuring Charge ........... 32,000 --
All other Expenses ............. 280,941 281,880
----------- -----------
Total Non-Interest Expense ........ 312,941 281,880
Income from Continuing Operations
Before Income Taxes and
Cumulative Effect of Changes in
Accounting Principles .......... 97,547 118,639
Provision for Income Taxes ........ 30,383 37,316
----------- -----------
Income from Continuing Operations
Before Cumulative Effect of
Changes in Accounting
Principles ..................... 67,164 81,323
Loss From Discontinued
Operations, Net of Taxes ....... -- --
----------- -----------
Income Before Cumulative Effect of
Changes in Accounting
Principles ..................... 67,164 81,323
Cumulative After-Tax Effect of
Changes in Accounting
Principles ..................... -- (2,730)
----------- -----------
Net Income ........................ $ 67,164 $ 78,593
=========== ===========
Net Interest Margin (Taxable
Equivalent Basis) .............. 4.59% 4.84%
Return on Average Assets(1) ....... .91% 1.12%
Return on Average Assets Before
Restructuring Charge ........... 1.20% --
Return on Average Common
Shareholders' Equity(1) ........ 11.11% 13.37%
Return on Average Common
Shareholders' Equity Before
Restructuring Charge ........... 14.55% --
Fully Diluted Earnings Per Share:
Income from Continuing Operations
Before Cumulative Effect of
Changes in Accounting
Principles ..................... $ 1.18 $ 1.40
Loss from Discontinued Operations,
Net of Taxes ................... -- --
Income Before Cumulative Effect of
Changes in Accounting
Principles ..................... 1.18 1.40
Cumulative After-Tax Effect of
Changes in Accounting
Principles ..................... -- (.05)
Net Income ........................ 1.18 1.35
Net Income Before Restructuring
Charge ......................... 1.55 --
Dividends Declared Per Common Share .71 .66
Dividends Paid Per Common Share ... .71 .66
Ratio of Dividends Declared to Net
Income ......................... 59% 48%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
At or for the Year Ended December 31,
----------------------------------------------------------------------------
1994 1993 1992 1991 1990
------------ ------------ --------------- ------------- ------------
<S> <C> <C> <C> <C> <C>
RESULTS OF OPERATIONS FOR THE YEAR
Interest Income ................... $ 985,040 $ 961,690 $ 1,016,181 $ 1,123,711 $ 1,246,867
Interest Expense .................. 372,624 344,398 442,998 623,675 775,495
----------- ----------- ----------- ----------- -----------
Net Interest Income ............... 612,416 617,292 573,183 500,036 471,372
Provision for Possible Loan Losses 28,086 58,781 81,096 108,990 141,326
----------- ----------- ----------- ----------- -----------
Net Interest Income After Provision
for Possible Loan Losses ........ 584,330 558,511 492,087 391,046 330,046
Non-Interest Income ............... 228,026 274,623 233,613 253,689 180,420
Non-Interest Expenses:
Restructuring Charge ........... -- -- -- -- --
All other Expenses ............. 579,668 623,526 540,316 476,676 423,993
----------- ----------- ----------- ----------- -----------
Total Non-Interest Expense ........ 579,668 623,526 540,316 476,676 423,993
Income from Continuing Operations
Before Income Taxes and
Cumulative Effect of Changes in
Accounting Principles .......... 232,688 209,608 185,384 168,059 86,473
Provision for Income Taxes ........ 70,600 59,068 48,679 43,873 23,806
----------- ----------- ----------- ----------- -----------
Income from Continuing Operations
Before Cumulative Effect of
Changes in Accounting
Principles ..................... 162,088 150,540 136,705 124,186 62,667
Loss From Discontinued
Operations, Net of Taxes ....... -- -- -- (6,500) (25,983)
----------- ----------- ----------- ----------- -----------
Income Before Cumulative Effect of
Changes in Accounting
Principles ..................... 162,088 150,540 136,705 117,686 36,684
Cumulative After-Tax Effect of
Changes in Accounting
Principles ..................... (2,730) 7,221 -- -- --
----------- ----------- ----------- ----------- -----------
Net Income ........................ $ 159,358 $ 157,761 $ 136,705 $ 117,686 $ 36,684
=========== =========== =========== =========== ===========
Net Interest Margin (Taxable
Equivalent Basis) .............. 4.73% 4.96% 4.77% 4.47% 4.16%
Return on Average Assets(1) ....... 1.10% 1.11% 1.00% .96% .47%
Return on Average Assets Before
Restructuring Charge ........... -- -- -- -- --
Return on Average Common
Shareholders' Equity(1) ........ 13.26% 14.17% 13.63% 14.31% 7.46%
Return on Average Common
Shareholders' Equity Before
Restructuring Charge ........... -- -- -- -- --
Fully Diluted Earnings Per Share:
Income from Continuing Operations
Before Cumulative Effect of
Changes in Accounting
Principles ..................... $ 2.80 $ 2.61 $ 2.44 $ 2.35 $ 1.22
Loss from Discontinued Operations,
Net of Taxes ................... -- -- -- (.12) (.51)
Income Before Cumulative Effect of
Changes in Accounting
Principles ..................... 2.80 2.61 2.44 2.23 .71
Cumulative After-Tax Effect of
Changes in Accounting
Principles ..................... (.05) .13 -- -- --
Net Income ........................ 2.75 2.74 2.44 2.23 .71
Net Income Before Restructuring
Charge ......................... -- -- -- -- --
Dividends Declared Per Common Share 1.34 1.26 .90(2) 1.20 1.20
Dividends Paid Per Common Share ... 1.34 1.26 1.20 1.20 1.20
Ratio of Dividends Declared to Net
Income ......................... 49% 43% 35% 48% 149%
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
At or for the Six Months
Ended June 30,
------------------------------
1995 1994
------------- -------------
FINANCIAL CONDITION AT PERIOD-END
<S> <C> <C>
Securities ........................ $3,034,086 $3,349,579
Loans ............................. 10,056,692 9,520,497
Assets ............................ 14,911,173 15,184,724
Deposits .......................... 11,528,876 11,666,783
Total Shareholders' Equity ........ 1,236,161 1,214,604
Book Value Per Common Share ....... 22.12 21.01
Common Shares Outstanding ......... 55,886,536 57,802,722
Total Shareholders' Equity to
Assets .......................... 8.29% 8.00%
Risk-Based Capital Ratio
(Unaudited) ..................... 12.76% 13.30%
Allowance for Possible Loan Losses $170,684 $172,343
Allowance for Possible Loan Losses
to Loans ........................ 1.70% 1.81%
Allowance for Possible Loan Losses
to Non-Performing Loans ......... 171% 151%
Non-Performing Assets as
Percentage of Loans and Assets
Acquired in Foreclosures ........ 1.17% 1.50%
Non-Performing Assets and Loans
Past Due 90 or more Days as to
Interest or Principal as a
Percentage of Loans and Assets
Acquired in Foreclosures ........ 1.39% 1.87%
</TABLE>
<TABLE>
<CAPTION>
At or for the Year Ended December 31,
----------------------------------------------------------------------------
1994 1993 1992 1991 1990
------------ ------------ ------------- ------------- ------------
FINANCIAL CONDITION AT PERIOD-END
<S> <C> <C> <C> <C> <C>
Securities ........................ $ 3,307,413 $ 3,060,147 $ 3,405,727 $ 2,853,581 $ 2,153,977
Loans ............................. 9,763,523 9,010,187 8,592.427 8,553,402 9,463,148
Assets ............................ 15,052,647 14,084,787 14,290,325 13,205,391 13,444,753
Deposits .......................... 11,379,567 11,346,151 11,774,702 10,948,133 10,573,972
Total Shareholders' Equity ........ 1,215,085 1,185,633 1,059,319 947,733 817,413
Book Value Per Common Share ....... 21.50 20.39 18.75 17.21 15.88
Common Shares Outstanding ......... 56,506,642 58,154,486 56,491,396 55,064,521 51,475,965
Total Shareholders' Equity to
Assets .......................... 8.07% 8.42% 7.41% 7.18% 6.08%
Risk-Based Capital Ratio
(Unaudited) ..................... 12.73% 13.67% 11.61% 10.37% 8.23%
Allowance for Possible Loan Losses $169,402 $175,078 $166,842 $179,747 $157,785
Allowance for Possible Loan Losses
to Loans ........................ 1.74% 1.94% 1.94% 2.10% 1.67%
Allowance for Possible Loan Losses
to Non-Performing Loans ......... 176% 117% 90% 80% 90%
Non-Performing Assets as
Percentage of Loans and Assets
Acquired in Foreclosures ........ 1.24% 2.00% 2.50% 2.88% 1.97%
Non-Performing Assets and Loans
Past Due 90 or more Days as to
Interest or Principal as a
Percentage of Loans and Assets
Acquired in Foreclosures ........ 1.47% 2.27% 2.98% 3.52% 2.56%
</TABLE>
------
(1) Calculation is based upon continuing operations.
(2) Reflects new dividend payment schedule adopted in the first quarter of
1992.
17
<PAGE>
UCB SELECTED HISTORICAL FINANCIAL DATA
The following table sets forth certain selected historical consolidated
financial data for UCB. This data is derived from, and should be read in
conjunction with, the consolidated financial statements of UCB, including the
notes thereto, incorporated by reference into this Proxy
Statement/Prospectus. See "INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE"
and "AVAILABLE INFORMATION." The data for the years ended December 31, 1994
through December 31, 1990 are derived from UCB's consolidated financial
statements, which have been audited. Interim unaudited data for the six
months ended June 30, 1995 and 1994 reflect, in the opinion of the management
of UCB, all adjustments (consisting of normal recurring adjustments)
necessary for a fair presentation of such data. Results for the six months
ended June 30, 1995 are not necessarily indicative of results which may be
expected for any other interim period or for the year as a whole.
18
<PAGE>
UCB SELECTED HISTORICAL FINANCIAL DATA
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
At or for the Six Months
Ended June 30,
-------------------------------
1995 1994
------------ ------------
<S> <C> <C>
Selected Statistics:
Total Assets ......................... $ 1,616,517 $ 1,661,348
Total Deposits ....................... 1,311,301 1,391,274
Total Loans, Net of Unearned
Discounts ......................... 378,369 368,899
Securities Available-for-sale ........ 105,048 110,748
Investment Securities ................ 953,832 970,751
Allowance for Loan Losses ............ 10,790 11,016
Stockholders' Equity ................. 193,470 174,857
Average Balances:
Total Assets ......................... 1,594,307 1,632,544
Stockholders' Equity ................. 187,883 165,333
Summary of Operations:
Interest Income ...................... 51,872 49,576
Interest Expense ..................... 20,199 16,327
----------- -----------
Net Interest Income .................. 31,673 33,249
Provision for Loan Losses ............ (500) (625)
----------- -----------
Net Interest Income After
Provision for Loan Losses ......... 32,173 33,874
Other Operating Income ............... 14,760(1) 3,661
Gain on Sale of MasterCard/Visa
Receivables ....................... -- --
Other Operating Expense .............. 18,051 19,849
----------- -----------
Income Before Income Taxes and
Cumulative Effect of Change in
Accounting Principles ............. 28,882(1) 17,686
Income Taxes ......................... 9,532 5,948
----------- -----------
Income Before Cumulative Effect of
Change in Accounting Principles ... 19,350(1) 11,738
Cumulative Effect of Change in
Accounting Principles ............. -- --
----------- -----------
Net Income ........................... $ 19,350(1) $ 11,738
=========== ===========
Dividends:
Cash Dividends Paid .................. $ 3,432 $ 2,990
Payout Ratio ......................... 18% 25%
Per Share:
Income Before Cumulative Effect of
Change in Accounting Principles ... $ 9.02(1) $ 5.50
Cumulative Effect of Change in
Accounting Principles ............. -- --
----------- -----------
Net Income ........................... $ 9.02(1) $ 5.50
=========== ===========
Cash Dividends Paid .................. $ 1.60 $ 1.40
Book Value (period-end) .............. 90.27 81.82
Outstanding Shares:
Average During Period ................ 2,145 2,135
Period-end ........................... 2,143 2,137
Operating Ratios:
Return on Average Assets ............. 1.95%(1) 1.44%
Return on Average Stockholders'
Equity ............................ 16.54(1) 14.20
Average Stockholders' Equity to
Average Assets .................... 11.78 10.13
Regulatory Capital Ratios (Unaudited):
Leverage ............................. 12.0 % 10.3 %
Tier 1 ............................... 37.5 35.0
Tier 2 ............................... 38.8 36.2
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
At or for the Year Ended December 31,
-------------------------------------------------------------------------
1994 1993 1992 1991 1990
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Selected Statistics: ..................
Total Assets ..................... $1,680,940 $1,686,513 $1,634,908 $1,542,170 $1,312,161
Total Deposits ................... 1,354,738 1,392,837 1,372,463 1,335,641 1,121,793
Total Loans, Net of Unearned
Discounts ...................... 374,375 375,645 376,343 401,766 407,798
Securities Available-for-sale .... 100,070 -- -- -- --
Investment Securities ............ 965,239 1,083,017 1,035,843 948,147 656,186
Allowance for Loan Losses ........ 11,091 11,014 10,930 9,722 7,772
Stockholders' Equity ............. 181,583 157,968 142,139 132,867 125,635
Average Balances: .....................
Total Assets ..................... 1,630,289 1,589,090 1,534,287 1,394,828 1,249,194
Stockholders' Equity ............. 171,444 150,627 134,586 127,937 117,548
Summary of Operations: ................
Interest Income .................. 100,810 101,972 108,053 107,216 106,037
Interest Expense ................. 34,580 33,399 45,498 59,009 58,271
------------ ------------ ------------ ------------ ---------
Net Interest Income .............. 66,230 68,573 62,555 48,207 47,766
Provision for Loan Losses ........ (825) 175 1,527 2,875 1,019
------------ ------------ ------------ ------------ --------
Net Interest Income After
Provision for Loan Losses ...... 67,055 68,398 61,028 45,332 46,747
Other Operating Income ........... 7,108 8,408 9,774 9,654 10,785
Gain on Sale of MasterCard/Visa
Receivables .................... -- -- -- -- 8,442
Other Operating Expense .......... 39,333 40,946 38,953 36,254 38,238
------------ ------------ ------------ ------------ ---------
Income Before Income Taxes and
Cumulative Effect of Change in
Accounting Principles .......... 34,830 35,860 31,849 18,732 27,736
Income Taxes ..................... 11,038 11,667 10,256 4,976 7,123
------------ ------------ ------------ ------------ ---------
Income Before Cumulative Effect of
Change in Accounting Principles 23,792 24,193 21,593 13,756 20,613
Cumulative Effect of Change in
Accounting Principles .......... -- (579) (4,031) -- --
------------ ------------ ------------ ------------ --------
Net Income ....................... $ 23,792 $ 23,614 $ 17,562 $ 13,756 $ 20,613
============ ============ ============ ============ =========
Dividends: ............................
Cash Dividends Paid .............. $ 8,537 $ 5,358 $ 4,881 $ 4,825 $ 6,028
Payout Ratio ..................... 36% 23% 28% 35% 29%
Per Share: ............................
Income Before Cumulative Effect of
Change in Accounting Principles $ 11.12 $ 11.29 $ 9.96 $ 6.28 $ 9.23
Cumulative Effect of Change in
Accounting Principles .......... -- (.27) (1.86) -- --
------------ ------------ ------------ ------------ ---------
Net Income ....................... $ 11.12 $ 11.02 $ 8.10 $ 6.28 $ 9.23
============ ============ ============ ============ =========
Cash Dividends Paid .............. $ 3.99 $ 2.50 $ 2.25 $ 2.20 $ 2.70
Book Value (period-end) .......... 84.55 74.02 66.02 60.95 56.85
Outstanding Shares: ...................
Average During Period ............ 2,139 2,142 2,167 2,191 2,232
Period-end ....................... 2,148 2,134 2,153 2,180 2,210
Operating Ratios: .....................
Return on Average Assets ......... 1.46% 1.49% 1.14% 0.99% 1.65%
Return on Average Stockholders'
Equity ......................... 13.88 15.68 13.05 10.75 17.54
Average Stockholders' Equity to
Average Assets ................. 10.52 9.48 8.77 9.17 9.41
Regulatory Capital Ratios (Unaudited):
Leverage ......................... 10.8% 9.7% 9.0% 9.5% 10.1%
Tier 1 ........................... 35.8 33.3 30.6 25.8 21.3
Tier 2 ........................... 37.0 34.6 31.9 27.3 22.6
</TABLE>
------
(1) Includes gain on exchange of securities available for sale of $12.0
million pre-tax ($7.6 million after tax, or $3.56 per share).
19
<PAGE>
SELECTED PRO FORMA COMBINED FINANCIAL INFORMATION
The following tables set forth selected unaudited pro forma financial data
reflecting the Merger (accounted for using the pooling of interests method of
accounting). The pro forma financial information does not necessarily reflect
what the actual results of Meridian would be following completion of the
Merger.
The pro forma information has been prepared based upon a fixed exchange
ratio of 5.00 shares of Meridian Common Stock for each share of UCB Common
Stock outstanding. See "THE MERGER -- Terms of the Merger." The pro forma
information also has been prepared assuming that options to purchase 47,601
shares of UCB Common Stock are converted into 238,005 shares of Meridian
Common Stock as required by the Merger Agreement.
During the second quarter, 1995, Meridian recorded a restructuring charge
of $32.0 million ($20.8 million after tax). The restructuring charge related
to the implementation of a program intended to reduce Meridian's performance
ratio (non-interest expense as a percentage of income) from its current level
to 59.9% or lower by the end of the first quarter of 1996. The restructuring
charge is reflected in the Meridian historical and the pro forma Meridian and
UCB combined data at and for the period ended June 30, 1995. Meridian also
expects to realize certain revenue enhancements and to achieve certain cost
savings through the consolidation of certain back office and support
functions and through elimination of redundant costs after the Merger.
Meridian also expects to realize certain revenue enhancements following the
Merger as a result of the expansion of products and services and increased
lending activities. No assurance can be given that any such cost savings or
revenue enhancements will be realized. The pro forma information does not
reflect any of these anticipated cost savings or revenue enhancements. See
"THE MERGER -- Management and Operations After the Merger."
20
<PAGE>
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET AS OF JUNE 30, 1995
The following unaudited pro forma combined condensed balance sheet
information combines the historical consolidated balance sheets of Meridian
and UCB as of June 30, 1995. The Merger has been reflected as a pooling of
interests. Such pro forma financial information does not necessarily reflect
what the actual results of Meridian would be following completion of the
Merger. This pro forma information should be read in conjunction with the
historical consolidated financial statements of Meridian and UCB, including
the notes thereto, incorporated by reference in this Proxy
Statement/Prospectus. See "INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE."
PRO FORMA COMBINED BALANCE SHEET
AS OF JUNE 30, 1995
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
PRO FORMA
MERIDIAN AND
UNITED UNITED
MERIDIAN COUNTIES COUNTIES
------------- ------------ --------------
<S> <C> <C> <C>
ASSETS .....................................................
Cash and Due from Banks .................................... $ 643,237 $ 72,118 $ 715,355
Short-Term Investments ..................................... 78,813 68,546 147,359
Trading Account Assets ..................................... 247,867 -- 247,867
Investment Securities and Investment Securities Available
for Sale .................................................. 3,034,086 1,058,880 4,092,966
Loans and Other Assets Held for Sale ....................... 108,043 -- 108,043
Total Loans ................................................ 10,056,692 378,369 10,435,061
Allowance for Possible Loan Losses ......................... (170,684) (10,790) (181,474)
Other Assets ............................................... 913,119 49,394 962,513
------------- ------------ --------------
TOTAL ASSETS ............................................... $14,911,173 $1,616,517 $16,527,690
============= ============ ==============
LIABILITIES ................................................
Total Deposits ............................................. $11,528,876 $1,311,301 $12,840,177
Short-Term Borrowings ...................................... 1,330,594 79,389 1,409,983
Long-Term Debt and Other Borrowings ........................ 512,182 11,176 523,358
Other Liabilities .......................................... 303,360 21,181 324,541
------------- ------------ --------------
TOTAL LIABILITIES .......................................... 13,675,012 1,423,047 15,098,059
------------- ------------ --------------
Common Stock ............................................... 291,683 2,525 345,264
Surplus .................................................... 211,292 23,984 161,988
Retained Earnings .......................................... 797,382 185,885 983,267
Net Unrealized Gains (Losses) on Securities ................ 6,096 3,308 9,404
Treasury Stock ............................................. (15,214) (22,232) (15,214)
Unallocated Shares Held by Employees Stock Ownership Plan
(ESOP) Trust .............................................. (55,078) -- (55,078)
------------- ------------ --------------
TOTAL SHAREHOLDERS' EQUITY ................................. 1,236,161 193,470 1,429,631
------------- ------------ --------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY ................. $14,911,173 $1,616,517 $16,527,690
============= ============ ==============
</TABLE>
------
Note: Reclassifications have been made between Common Stock, Surplus and
Treasury Stock to reflect pooling-of-interests financial accounting
treatment for the transaction.
21
<PAGE>
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF INCOME FOR THE SIX MONTHS
ENDED JUNE 30, 1995 AND
JUNE 30, 1994 AND THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
The following unaudited pro forma condensed consolidated statements of
income for the six-month periods ended June 30, 1995 and 1994 give effect to
the Merger as if it had occurred on January 1, 1995 and 1994, respectively.
The unaudited pro forma condensed consolidated statements of income for the
years ended December 31, 1994, 1993, and 1992 give effect to the Merger as if
it had occurred on January 1, 1994, 1993 and 1992, respectively. See "THE
MERGER -- Accounting Treatment." This pro forma information should be read in
conjunction with the historical consolidated financial statements of Meridian
and UCB, including the notes thereto, incorporated by reference in this Proxy
Statement/Prospectus. See "INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE."
PRO FORMA COMBINED INCOME STATEMENT
FOR SIX MONTHS ENDED JUNE 30, 1995
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
PRO FORMA
MERIDIAN AND
UNITED UNITED
MERIDIAN COUNTIES COUNTIES
------------ ------------ --------------
<S> <C> <C> <C>
Interest Income ................... $556,176 $51,872 $608,048
Interest Expense .................. 252,412 20,199 272,611
---------- ---------- ------------
Net Interest Income ............... 303,764 31,673 335,437
---------- ---------- ------------
Provision for Possible Loan Losses 18,142 (500) 17,642
Non-Interest Income ............... 124,866 14,760(2) 139,626
Non-Interest Expenses ............. 312,941(1) 18,051 330,992
---------- ---------- ------------
Income Before Income Taxes ........ 97,547(1) 28,882(2) 126,429
Provision for Income Taxes ........ 30,383 9,532 39,915
---------- ---------- ------------
Net Income ........................ $ 67,164(1) $19,350(2) $ 86,514(3)
========== ========== ============
PER COMMON SHARE ..................
Net Income ......................
Primary ....................... $ 1.19(1) $ 9.02(2) $ 1.29(3)
Fully Diluted ................. $ 1.18(1) $ 9.02(2) $ 1.28(3)
</TABLE>
------
(1) Includes the effects of a restructuring charge of $32 million ($20.8
million after-tax or $0.37 on both a primary and fully diluted per share
basis) taken by Meridian in the second quarter of 1995.
(2) Includes gain on exchange of securities available for sale of $12 million
pre-tax and $7.6 million after-tax gain, which amounted to $3.56 per
share of UCB Common Stock.
(3) Excluding the effects of the Meridian restructuring charge and the UCB
gain on exchange of securities available for sale, pro forma net income
would have been $99.7 million and pro forma per share net income would
have been $1.48 (primary and fully diluted).
22
<PAGE>
PRO FORMA COMBINED INCOME STATEMENT
FOR SIX MONTHS ENDED JUNE 30, 1994
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
PRO FORMA
MERIDIAN AND
UNITED UNITED
MERIDIAN COUNTIES COUNTIES
---------- ---------- --------------
<S> <C> <C> <C>
Interest Income ...................................... $463,709 $49,576 $513,285
Interest Expense ..................................... 160,937 16,327 177,264
---------- ---------- --------------
Net Interest Income .................................. 302,772 33,249 336,021
---------- ---------- --------------
Provision for Possible Loan Losses ................... 15,524 (625) 14,899
Non-Interest Income .................................. 113,271 3,661 116,932
Non-Interest Expenses ................................ 281,880 19,849 301,729
---------- ---------- --------------
Income Before Income Taxes and Cumulative Effect of
Change in Accounting Principle ...................... 118,639 17,686 136,325
Provision for Income Taxes ........................... 37,316 5,948 43,264
---------- ---------- --------------
Income Before Cumulative Effect of Change in
Accounting Principle ................................ 81,323 11,738 93,061
Cumulative After-Tax Effect On Prior Years of Change
in Method of Accounting for Postemployment Benefits . (2,730) -- (2,730)
---------- ---------- --------------
Net Income ........................................... $ 78,593 $11,738 $ 90,331
========== ========== ==============
PER COMMON SHARE .....................................
Income Before Cumulative Effect of Change in
Accounting Principle ..........................
Primary .................................... $ 1.40 $ 5.50 $ 1.35
Fully Diluted .............................. $ 1.40 $ 5.50 $ 1.35
Cumulative After-Tax Effect on Prior Years of
Change in Accounting Principle ................
Primary .................................... ($ 0.05) -- ($ 0.04)
Fully Diluted .............................. ($ 0.05) -- ($ 0.04)
Net Income ......................................
Primary .................................... $ 1.35 $ 5.50 $ 1.31
Fully Diluted .............................. $ 1.35 $ 5.50 $ 1.31
</TABLE>
23
<PAGE>
PRO FORMA COMBINED INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 1994
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
PRO FORMA
MERIDIAN AND
UNITED UNITED
MERIDIAN COUNTIES COUNTIES
---------- ---------- --------------
<S> <C> <C> <C>
Interest Income ...................................... $985,040 $100,810 $1,085,850
Interest Expense ..................................... 372,624 34,580 407,204
---------- ---------- --------------
Net Interest Income .................................. 612,416 66,230 678,646
---------- ---------- --------------
Provision for Possible Loan Losses ................... 28,086 (825) 27,261
Non-Interest Income .................................. 228,026 7,108 235,134
Non-Interest Expenses ................................ 579,668 39,333 619,001
---------- ---------- --------------
Income Before Income Taxes and Cumulative Effect of
Change in Accounting Principle ...................... 232,688 34,830 267,518
Provision for Income Taxes ........................... 70,600 11,038 81,638
---------- ---------- --------------
Income Before Cumulative Effect of Change in
Accounting Principle ................................ 162,088 23,792 185,880
Cumulative After-Tax Effect On Prior Years Of Change
in Method of Accounting for Postemployment Benefits . (2,730) -- (2,730)
---------- ---------- --------------
Net Income ........................................... $159,358 $ 23,792 $ 183,150
========== ========== ==============
PER COMMON SHARE .....................................
Income Before Cumulative Effect of Change in
Accounting Principle ..........................
Primary .................................... $ 2.80 $ 11.12 $ 2.70
Fully Diluted .............................. $ 2.80 $ 11.12 $ 2.70
Cumulative After-Tax Effect on Prior Years of
Change in Accounting Principle ................
Primary .................................... ($ 0.05) -- ($ 0.04)
Fully Diluted .............................. ($ 0.05) -- ($ 0.04)
Net Income ......................................
Primary .................................... $ 2.75 $ 11.12 $ 2.66
Fully Diluted .............................. $ 2.75 $ 11.12 $ 2.66
</TABLE>
24
<PAGE>
PRO FORMA COMBINED INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 1993
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
PRO FORMA
MERIDIAN AND
UNITED UNITED
MERIDIAN COUNTIES COUNTIES
---------- ---------- --------------
<S> <C> <C> <C>
Interest Income ...................................... $961,690 $101,972 $1,063,662
Interest Expense ..................................... 344,398 33,399 377,797
---------- ---------- --------------
Net Interest Income .................................. 617,292 68,573 685,865
---------- ---------- --------------
Provision for Possible Loan Losses ................... 58,781 175 58,956
Non-Interest Income .................................. 274,623 8,408 283,031
Non-Interest Expenses ................................ 623,526 40,946 664,472
---------- ---------- --------------
Income Before Income Taxes and Cumulative Effect of
Change in Accounting Principle ...................... 209,608 35,860 245,468
Provision for Income Taxes ........................... 59,068 11,667 70,735
---------- ---------- --------------
Income Before Cumulative Effect in Change in
Accounting Principle ................................ 150,540 24,193 174,733
Cumulative After-Tax Effect on Prior Years of Change
in Method of Accounting for Income Taxes ............ 7,221 (579) 6,642
---------- ---------- --------------
Net Income ........................................... $157,761 $ 23,614 $ 181,375
========== ========== ==============
PER COMMON SHARE .....................................
Income Before Cumulative Effect of Change in
Accounting Principle ..........................
Primary .................................... $ 2.61 $ 11.29 $ 2.55
Fully Diluted .............................. $ 2.61 $ 11.29 $ 2.55
Cumulative After-Tax Effect on Prior Years of
Change in Accounting Principle ................
Primary .................................... $ 0.13 ($ 0.27) $ 0.10
Fully Diluted .............................. $ 0.13 ($ 0.27) $ 0.10
Net Income ......................................
Primary .................................... $ 2.74 $ 11.02 $ 2.65
Fully Diluted .............................. $ 2.74 $ 11.02 $ 2.65
</TABLE>
25
<PAGE>
PRO FORMA COMBINED INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 1992
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
PRO FORMA
MERIDIAN AND
UNITED UNITED
MERIDIAN COUNTIES COUNTIES
------------ ---------- --------------
<S> <C> <C> <C>
Interest Income ...................................... $1,016,181 $108,053 $1,124,234
Interest Expense ..................................... 442,998 45,498 488,496
------------ ---------- --------------
Net Interest Income .................................. 573,183 62,555 635,738
------------ ---------- --------------
Provision for Possible Loan Losses ................... 81,096 1,527 82,623
Non-Interest Income .................................. 233,613 9,774 243,387
Non-Interest Expenses ................................ 540,316 38,953 579,269
------------ ---------- --------------
Income Before Income Taxes and Cumulative Effect of
Change in Accounting Principle ...................... 185,384 31,849 217,233
Provision for Income Taxes ........................... 48,679 10,256 58,935
------------ ---------- --------------
Income Before Cumulative Effect of Change in
Accounting Principle ................................ 136,705 21,593 158,298
Cumulative After-Tax Effect on Prior Years of Change
in Method of Accounting for Postretirement Benefits
Other Than Pensions ................................. -- (4,031) (4,031)
------------ ---------- --------------
Net Income ........................................... $ 136,705 $ 17,562 $ 154,267
============ ========== ==============
PER COMMON SHARE .....................................
Income Before Cumulative Effect of Change in
Accounting Principle ..........................
Primary .................................... $ 2.45 $ 9.96 $ 2.38
Fully Diluted .............................. $ 2.44 $ 9.96 $ 2.38
Cumulative After-Tax Effect on Prior Years of
Change in Accounting Principle ................
Primary .................................... -- ($ 1.86) ($ 0.06)
Fully Diluted .............................. -- ($ 1.86) ($ 0.06)
Net Income ......................................
Primary .................................... $ 2.45 $ 8.10 $ 2.32
Fully Diluted .............................. $ 2.44 $ 8.10 $ p 2.32
</TABLE>
26
<PAGE>
PRO FORMA CONSOLIDATED CAPITAL RATIOS AS OF JUNE 30, 1995
Set forth below are certain pro forma consolidated capital ratios for Meridian
at June 30, 1995. The unaudited information should be read in conjunction with
the historical consolidated financial statements of Meridian and UCB, including
the notes thereto, incorporated by reference in this Proxy Statement/Prospectus.
See "INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE."
PRO FORMA CONSOLIDATED CAPITAL RATIOS
AS OF JUNE 30, 1995
<TABLE>
<CAPTION>
PRO FORMA
MERIDIAN AND
UNITED UNITED
Ratio MERIDIAN COUNTIES COUNTIES
---------------------------------------- ---------- ---------- --------------
<S> <C> <C> <C>
Shareholders' Equity to Assets ......... 8.29% 11.97% 8.65%
Tangible Shareholders' Equity to Assets 7.51% 11.96% 7.95%
Risk-Based Capital: ....................
Tier 1 Ratio ...................... 9.31% 37.52% 10.45%
Tier 2 Ratio ...................... 3.45% 1.26% 3.37%
---------- ---------- --------------
Total Risk-Based Capital .......... 12.76% 38.78% 13.82%
Tier 1 Leverage Ratio .................. 7.57% 12.03% 8.00%
</TABLE>
27
<PAGE>
THE SPECIAL MEETING
MATTERS TO BE CONSIDERED AT THE SPECIAL MEETING
At the Special Meeting, stockholders of UCB will consider and vote upon
the approval and adoption of the Merger Agreement. In addition to voting on
the Merger Agreement, stockholders of UCB are being asked to approve a
proposal to adjourn the Special Meeting, if necessary, to permit further
solicitation of proxies in the event there are not sufficient votes at the
time of the Special Meeting to constitute a quorum or to approve the Merger
Agreement. Stockholders will also consider and vote upon such other matters,
if any, as may be properly brought before the Special Meeting.
The directors, certain executive officers and certain other affiliates of
UCB have agreed to be present (in person or by proxy) at the Special Meeting
and to vote all shares of UCB Common Stock owned by them for approval and
adoption of the Merger Agreement.
The Board of Directors of UCB has unanimously approved the Merger
Agreement and unanimously recommends a vote FOR approval and adoption of the
Merger Agreement.
VOTES REQUIRED; QUORUM
The affirmative vote of at least 66-2/3% of the outstanding shares of UCB
Common Stock entitled to be voted thereon, provided a quorum (a majority of
the shares of UCB Common Stock outstanding) is present, is required to
approve the Merger Agreement. To conduct the Special Meeting, a quorum (a
majority of the shares of UCB Common Stock outstanding) must be present in
person or by proxy. The affirmative vote of a majority of the shares of UCB
Common Stock present or represented by proxy at the Special Meeting is required
to adjourn the Special Meeting. Each share of UCB Common Stock is entitled to
one vote. Abstentions and broker nonvotes will be voted for the purpose of
establishing a quorum at the UCB Special Meeting, but will not constitute or be
counted as votes cast for purposes of the Special Meeting. As a result,
abstentions and broker nonvotes will have the practical effect of negative votes
with respect to approval and adoption of the Merger Agreement and the proposal
to adjourn the Special Meeting, if necessary.
The directors, certain executive officers and certain other affiliates of
UCB have agreed to be present (in person or by proxy) at the Special Meeting
and to vote all shares of UCB Common Stock which they own for approval and
adoption of the Merger Agreement. At August 29, 1995, such directors,
executive officers and affiliates of UCB owned and had sole voting power with
respect to approximately 438,708 shares of UCB Common Stock, or approximately
22.5% of the outstanding shares of UCB Common Stock which are entitled to be
voted at the Special Meeting. At August 29, 1995, such directors, executive
officers and affiliates of UCB had shared voting power with respect to
approximately 205,847 shares of UCB Common Stock, or approximately 9.6% of
the outstanding shares of UCB Common Stock which are entitled to be voted at
the Special Meeting. A copy of the form of letter agreement executed by
affiliates of UCB is included as Exhibit 1 to the Merger Agreement attached
hereto as Annex A.
VOTING OF PROXIES
Shares represented by all properly executed proxies received in time for
the Special Meeting will be voted at the Special Meeting in the manner
specified by the holders thereof. Proxies which do not contain voting
instructions will be voted in favor of the Merger Agreement and in favor of
the proposal to adjourn the Special Meeting, if necessary.
It is not expected that any matter other than those referred to herein
will be brought before the Special Meeting. If, however, other matters are
properly presented, the persons named as proxies will vote in accordance with
their judgment with respect to such matters.
REVOCABILITY OF PROXIES
The submission of a proxy on the enclosed UCB form of proxy does not
preclude a stockholder from voting in person. A stockholder may revoke a
proxy at any time prior to its exercise by filing with the Secretary of UCB a
duly executed revocation or a proxy bearing a later date or by voting in
person at the meeting. Attendance at the Special Meeting will not of itself
constitute revocation of a proxy.
28
<PAGE>
RECORD DATE; STOCK ENTITLED TO VOTE
Only stockholders of record of UCB at the close of business on September
15, 1995, will be entitled to receive notice of the Special Meeting, and only
stockholders of record of UCB Common Stock at that time will be entitled to
vote at the Special Meeting. At September 15, 1995, there were ___________
shares of UCB Common Stock outstanding.
APPRAISAL RIGHTS
Record holders of UCB Common Stock will not be entitled to dissenters' or
appraisal rights under applicable law in connection with the Merger.
SOLICITATION OF PROXIES
UCB will bear the cost of the solicitation of proxies from its
stockholders, except that Meridian and UCB will share equally the cost of
printing this Proxy Statement/Prospectus. In addition to solicitations by
mail, certain directors and senior officers of UCB may solicit proxies from
shareholders of UCB by telephone or telegram or in person. None of such
persons will be specially engaged for such purpose or will receive any
compensation for assisting in the solicitation of proxies. Arrangements will
also be made with brokerage houses and other custodians, nominees and
fiduciaries for the forwarding of solicitation material to the beneficial
owners of stock held of record by such persons, and UCB will reimburse such
custodians, nominees and fiduciaries for their reasonable out-of-pocket
expenses in connection therewith.
Under the terms of the Merger Agreement, UCB has agreed to retain a proxy
solicitor for the Special Meeting upon Meridian's request at Meridian's
expense. As of the date of this Proxy Statement/Prospectus, UCB has not
engaged a proxy solicitor in connection with the Special Meeting.
STOCKHOLDERS OF UCB SHOULD NOT SEND STOCK CERTIFICATES WITH THEIR PROXY
CARDS. AS DESCRIBED BELOW UNDER THE CAPTION "THE MERGER -- EXCHANGE OF UCB
STOCK CERTIFICATES," EACH UCB STOCKHOLDER WILL BE PROVIDED WITH MATERIALS FOR
EXCHANGING SHARES OF UCB COMMON STOCK AS PROMPTLY AS PRACTICABLE AFTER THE
EFFECTIVE DATE.
29
<PAGE>
THE MERGER
BACKGROUND OF AND REASONS FOR THE MERGER; RECOMMENDATION OF THE UCB BOARD OF
DIRECTORS
Background of the Merger
In recent years, numerous changes have occurred in the business operations
of firms in the financial services industry and the commercial banking
industry as a part thereof. Among these changes is a shift in the traditional
funding of assets, particularly home mortgage and automobile loans, with
money center banks and non-regulated institutions increasingly packaging and
securitizing these loans for sale into the public market. UCB management
tracked these trends and believes that they contributed to the steady decline
in UCTC's loans outstanding in these areas. This decline was accentuated by
the divestiture of UCTC's credit card receivables portfolio in November 1990.
In 1993, after considering these developments, the existence of regional
interstate banking pacts and the impending prospect of full interstate
banking, the Board of Directors of UCB began to explore strategic
alternatives. UCB considered some of the advantages which might be derived
from a business combination, including greater shareholder liquidity,
additional product offerings, economies of scale and cost efficiencies in the
consolidation of administrative functions.
Goldman Sachs was contacted to assist in this evaluation process. UCB's
engagement of Goldman Sachs was later formalized in a letter agreement in
which Goldman Sachs undertook to act as UCB's financial advisor in connection
with a possible merger, acquisition or sale of UCB, to provide UCB with
financial advice and to assist with any potential merger or sale, and to
render its opinion as to the fairness of the consideration to be received by
UCB stockholders in any such transaction.
In 1993 and 1994, either directly or through Goldman Sachs, UCB initiated
contacts with several large financial institutions with presences or
interests in the New Jersey marketplace. Several of these institutions,
including Meridian, indicated an interest in pursuing a transaction and
suggested prices or exchange ratios at which such a transaction might be
accomplished. UCB negotiated extensively with Meridian during 1994. Both
before and after receipt of Meridian's final offer, UCB directly or through
its financial advisors sought to increase the consideration proposed by other
potential bidders. In August 1994, the market value of the consideration
proposed by Meridian was the highest value consideration offered by any of
the prospective bidders. These matters were reported to the Board of
Directors of UCB in a series of meetings, culminating in an August 30, 1994
meeting at which time, after considering the results of the negotiations and
the advice of UCB's financial and legal advisors, the directors determined
that it was in UCB's interest to enter into a letter of intent with Meridian
reflecting the terms of Meridian's most recent proposal.
On August 30, 1994, a letter of intent (the "Letter of Intent") was
executed by UCB and Meridian. The Letter of Intent provided for a merger in
which each share of UCB Common Stock would be exchanged for 5.25 shares of
Meridian Common Stock.
On the date prior to the signing of the Letter of Intent, Meridian Common
Stock had closed at $33.00 per share. The Letter of Intent specified, among
other items, that the definitive merger agreement would permit UCB to abandon
the transaction if Meridian's average stock price was less than $27.00 per
share during a period of time prior to the proposed closing date. After
entering into the Letter of Intent UCB directly or through its financial
advisors and consultants performed due diligence on Meridian and Meridian
performed due diligence on UCB. As UCB and Meridian were attempting to
negotiate a definitive merger agreement, Meridian's stock price declined
below the $27.00 per share "walkaway" price. On December 9, 1994 Meridian and
UCB jointly announced that "as a result of prevailing equity market
conditions and an inability of the parties to agree on certain terms of the
Plan of Merger," the companies had terminated their Letter of Intent and
merger discussions.
During the first quarter of 1995, Meridian's stock price rebounded and
discussions with Meridian were resumed during April and May 1995. Meridian
insisted that discussions be subject to reduction of the exchange ratio from
5.25 to 5.00 shares of Meridian Common Stock for each share of UCB Common
Stock and certain other changes. Among the changes was elimination of UCB's
right to terminate the Agreement if Meridian's stock price fell below a
specified level.
30
<PAGE>
The results of these discussions were first reported to the UCB Board of
Directors at a meeting on May 11, 1995. Immediately thereafter, at the
direction of the UCB Board of Directors, Goldman Sachs resolicited offers
from institutions which had previously expressed interest in a transaction.
None of these other institutions made a formal offer for UCB nor did any of
them express interest at consideration levels as high as that reflected in
Meridian's restructured offer.
Meridian's restructured offer was considered at a special meeting of the
UCB Board of Directors on May 22, 1995. The terms and conditions proposed by
Meridian, the past and current status of UCB's contacts with Meridian and
with other potential acquirors, and the historical trends and future
prospects for the business of UCB on a stand-alone basis were reviewed.
Representatives of Goldman Sachs presented information on the Meridian
proposal, information on the contacts with other bidders, and a summary of
UCB's strategic options. UCB's legal counsel presented advice on the terms
and conditions contained in the draft merger agreement, the stock option
agreement required by Meridian, and the duties and responsibilities of the
directors.
After review and consideration of these matters, the Board of Directors
authorized UCB's officers, with the assistance of UCB's financial and legal
advisors, to negotiate the definitive merger agreement with Meridian, and to
present such agreement to the Board of Directors for consideration.
Negotiation of the definitive agreement took place immediately thereafter
and a special meeting of the UCB Board of Directors was held on May 23, 1995
to consider and vote upon the Merger Agreement and Stock Option Agreement. At
this meeting, the issues addressed at the May 22, 1995 meeting were again
discussed. Following discussion, the Board of Directors unanimously voted to
approve the Merger Agreement and the Stock Option Agreement. In addition, the
Board (with Eugene H. Bauer abstaining) unanimously voted to approve an
agreement with Mr. Bauer supplementary to his employment agreement, providing
for him to resign all positions with UCB and UCTC on the Effective Date and
to serve thereafter as a consultant on a limited basis to Meridian until
December 31, 2000, and making certain other clarifications and modifications
with respect to Mr. Bauer's status. See "INTERESTS OF CERTAIN PERSONS IN THE
MERGER -- Employment Agreements."
Reasons for the Merger
UCB's Reasons for the Merger. The Board of Directors of UCB believes that
the terms of the Merger are fair and in the best interests of UCB's
stockholders and have unanimously approved the Merger Agreement. The Board of
Directors of UCB unanimously recommends that UCB stockholders approve the
Merger Agreement.
Although UCB has been consistently profitable and recognized as a
well-managed banking institution, the UCB Board of Directors believes
shareholders of UCB would be better served by converting their UCB Common
Stock into Meridian Common Stock at the Exchange Ratio of 5.00 shares of
Meridian Common Stock for each share of UCB Common Stock established under
the terms of the Merger Agreement. The UCB Board of Directors believes that
by becoming part of a larger financial institution, UCB will be in a better
position to succeed in an increasingly competitive environment. In addition,
the UCB Board of Directors expects that the Merger will make available to
UCB's customers a broader range of financial products and services supported
by the latest bank technology in the retail, middle market and business
market segments currently served by UCB. It is also anticipated that the
Merger will provide UCB shareholders with a more liquid investment than
continued ownership of UCB Common Stock due to the greater number of Meridian
shareholders and the higher trading volumes of Meridian stock on the NASDAQ
Stock Market. In approving the Merger, the UCB Board of Directors did not
specifically identify any one factor or group of factors as being more
significant than any other factor in the decision making process, although
individual directors may have given one or more factors more weight than
other factors.
Meridian's Reasons for the Merger. Meridian's acquisition strategy
consists of identifying financial institutions with business philosophies
which are similar to Meridian's, which operate in markets which are
geographically within or contiguous to those of Meridian, and which provide
an ability to enhance earnings per share over an acceptable period after the
acquisition, the goal for which is eighteen months, while providing
acceptable rates of return. Acquisitions are also evaluated in terms of asset
quality, interest rate risk, core deposit base stability, potential operating
efficiencies and management abilities. Meridian has undertaken the Merger as
part of its ongoing acquisition strategy.
In the view of Meridian's Board of Directors, the Merger constitutes an
acquisition which is in line with Meridian's strategy and provides a natural
complement to its existing franchise. Upon completion of the Merger, Meridian
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will have a network in excess of 350 branch banking offices throughout
eastern Pennsylvania, Delaware and New Jersey, and Meridian's New Jersey
franchise area will increase from 24 to 59 branch banking offices. The
Meridian Board of Directors believes that this enhanced branching network
will increase the franchise value of Meridian, particularly in the New Jersey
market, and, thus, enhance shareholder value.
In addition to the perception that the Merger will enhance Meridian's
franchise, in determining to make the offer to acquire UCB and enter into the
Merger Agreement, Meridian's Board of Directors also considered a number of
other material factors at the meetings held on June 16, 1994, October 25,
1994 and May 23, 1995, including the following: (i) the historical financial
condition, operating results, capital levels, asset quality, of Meridian and
UCB and their projected future value and prospects as separate entities and
on a combined basis; (ii) a presentation by management regarding its due
diligence review of UCB; (iii) pro forma financial information on the Merger,
including, among other things, earnings per share, dilution analysis and
ratio impact information and the effects of the fixed Exchange Ratio thereon;
(iv) the sustainability of core earnings and potentials for revenue growth;
(v) a comparison of the price Meridian proposed to offer in the Merger to
other comparable bank holding company mergers, based, among other things, on
multiples of book value and earnings per share; (vi) the tax-free nature of
the transaction to Meridian (see, generally, "Certain Federal Income Tax
Consequences" below); (vii) historical stock price information for both
Meridian and UCB; (viii) the effect of the Merger on trading prices for
Meridian Common Stock; (ix) industry, regulatory, economic and market
conditions; (x) the ability of Meridian to compete in the geographic markets
served by UCB; (xi) the demographics of the markets served by UCB, and
opportunities for product expansion in those markets; (xii) UCB's agreement,
at Meridian's insistence, to grant Meridian an option to acquire 375,000
shares of UCB's Common Stock under certain circumstances; (xiii) the willingness
of Lehman Brothers, Inc., to provide an opinion as to the fairness of the
Exchange Ratio to Meridian; (xiv) a review by management and legal counsel of
the terms of the Merger Agreement and the Stock Option Agreement; and (xv) the
terms of the Merger Agreement compared to the proposed terms of the transaction
upon expiration of the Letter of Intent in December 1994.
In approving the transaction, the Meridian Board of Directors did not
specifically identify any one factor or group of factors as being more
significant than any other factor in the decision making process, although
individual directors may have given one or more factors more weight than
other factors.
The emphasis of the Meridian Board's discussions in considering the
transaction, however, was on the financial aspects of the transaction,
particularly (i) the strategic fit and enhanced franchise value discussed
above, (ii) the fixed Exchange Ratio and the ability of Meridian, by reason
thereof, to fix the number of shares issued in connection with the Merger and
thus the relative amount of earnings per share dilution/accretion (see
"SUMMARY -- Comparative Per Share Data"), (iii) Meridian's ability to recover
such initial dilution through cost savings and certain revenue enhancements
(see "Management and Operations After the Merger -- Consolidation of
Operations: Projected Cost Savings and Revenue Enhancements" below), (iv) the
relative strength of UCB's balance sheet, including its liquidity position
and capital ratios (see "UCB SELECTED HISTORICAL CONSOLIDATED FINANCIAL
DATA"), (v) the relative strength of the combined Meridian and UCB
consolidated pro forma balance sheet and capital ratios (see "SELECTED PRO
FORMA COMBINED FINANCIAL INFORMATION"), (vi) the perception of opportunities
for increased fee income from product expansion and opportunities for retail
loan growth, and (vii) Meridian's ability to obtain an opinion as to the
fairness of the Exchange Ratio to Meridian.
In considering the ability of Meridian to recover any earnings per share
dilution by reducing non-interest expenses or increasing revenues, the
Meridian Board of Directors recognized that, because of the uncertainties
associated with merging two institutions located in contiguous markets, no
assurances could be given that (i) any particular level of cost savings or
improvements to earnings, in fact, would be realized, (ii) such savings or
improvements to earnings would be realized at the times currently
anticipated, or (iii) such savings or improvements to earnings would not be
offset by increases in other expenses, including expenses resulting from
integrating the two companies. (See "Management and Operations After the
Merger -- Consolidation of Operations; Projected Cost Savings and Revenue
Enhancements").
TERMS OF THE MERGER
General
Upon completion of the Merger, the separate existence of UCB will cease.
All property, rights, powers, duties, obligations and liabilities of UCB will
automatically be transferred to Meridian, in accordance with Pennsylvania
law. Meridian, as the surviving corporation, will be governed by the Articles
of Incorporation and Bylaws of Meridian in effect immediately prior to
completion of the Merger. See "COMPARISON OF SHAREHOLDER RIGHTS."
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Exchange Ratio
Upon completion of the Merger, each outstanding share of Meridian Common
Stock will continue to be outstanding as an identical share of Meridian
Common Stock. Under the Merger Agreement, each outstanding share of UCB
Common Stock will be converted automatically into and become a right to
receive 5.00 shares of Meridian Common Stock (including associated stock
purchase rights -- See "DESCRIPTION OF MERIDIAN CAPITAL SECURITIES --
Shareholder Rights Plan"). UCB shareholders will receive cash in lieu of any
fractional shares of Meridian Common Stock which may become issuable under
the Merger Agreement. See "Exchange of UCB Stock Certificates" herein.
If Meridian, at any time before completion of the Merger, pays or effects
a stock dividend, stock split, reverse stock split or reclassification of the
Meridian Common Stock, then the Exchange Ratio will be adjusted so that each
UCB shareholder will be entitled to receive such number of shares of Meridian
Common Stock as he would have been entitled to receive if the Merger had been
completed prior to the happening of such event.
UCB Stock Options
Each option to acquire one share of UCB Common Stock granted before the
date of the Merger Agreement under the UCB Incentive Stock Option Plans, and
outstanding and unexercised on the Effective Date, will, under the terms of
the Merger Agreement, be converted into and become an option to acquire 5.00
shares of Meridian Common Stock. The exercise price for the purchase of each
share pursuant to such converted option will be the present stated exercise
price for the purchase of each share pursuant to such option divided by 5.00.
OPINION OF FINANCIAL ADVISOR
On May 23, 1995, Goldman Sachs delivered its written opinion to the Board
of Directors of UCB that as of the date of such opinion, the Exchange Ratio
pursuant to the Merger Agreement is fair to the holders of shares of UCB
Common Stock. Goldman Sachs subsequently confirmed its earlier opinion by
delivery of its written opinion dated as of September 21, 1995.
The full text of the written opinion of Goldman Sachs dated September 21,
1995, which sets forth assumptions made, matters considered and limitations
on the review undertaken in connection with the opinion, is attached hereto
as Annex C to this Proxy Statement/Prospectus and is incorporated herein by
reference. Stockholders of UCB are urged to, and should, read such opinion in
its entirety.
In connection with its opinions, Goldman Sachs reviewed, among other
things (i) the Merger Agreement; (ii) this Proxy Statement/Prospectus; (iii)
the Annual Reports to Stockholders and Annual Reports on Form 10-K of UCB and
Meridian for the five years ended December 31, 1994; (iv) certain interim
reports to stockholders and Quarterly Reports on Form 10-Q of UCB and
Meridian; (v) certain other communications from UCB and Meridian to their
respective stockholders; (vi) certain internal financial analyses and
forecasts for Meridian prepared by its management and (vii) certain internal
reports (not contemplating the Merger) for UCB prepared by its management.
Goldman Sachs also held discussions with members of the senior management of
UCB and Meridian regarding the past and current business operations,
regulatory relationships, financial conditions, and future prospects of their
respective companies. In addition, Goldman Sachs reviewed the reported price
and trading activity for shares of UCB Common Stock and Meridian Common
Stock, compared certain financial and stock market information for UCB and
Meridian with similar information for certain other companies the securities
of which are publicly traded, reviewed the financial terms of certain recent
business combinations in the banking industry and performed such other
studies and analyses as it considered appropriate.
Goldman Sachs relied without independent verification upon the accuracy
and completeness of all of the financial and other information reviewed by it
for purposes of the opinions. In that regard, Goldman Sachs assumed, with the
consent of UCB, that the financial forecasts, including, without limitation,
cost savings and operating synergies projected to result from the Merger
prepared solely by Meridian, were reasonably prepared on a basis reflecting
the best currently available judgments and estimates of the party preparing
the forecasts and that such forecasts will be realized in the amounts and at
the times contemplated thereby. Goldman Sachs are not experts in the
evaluation of loan portfolios for purposes of assessing the adequacy of the
allowances for losses with respect thereto and assumed, with UCB's consent,
that such allowances for each of UCB and Meridian are adequate to cover all
such losses. In addition, Goldman Sachs has not reviewed individual credit
files nor has it made an independent evaluation or
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appraisal of the assets and liabilities of UCB or Meridian or any of their
respective subsidiaries and it has not been furnished with any such
evaluation or appraisal. Goldman Sachs assumed with UCB's consent that the
Merger will be accounted for as a pooling of interests under generally
accepted accounting principles.
The following is a summary of certain of the financial analyses used by
Goldman Sachs in connection with providing its written opinion to UCB's Board
of Directors on May 23, 1995. Goldman Sachs utilized substantially the same
type of financial analyses in connection with providing the written opinion
attached hereto as Annex C.
(i) Historical Stock Trading Analysis. Goldman Sachs reviewed the
historical trading prices and volumes for the shares of UCB Common Stock
and the relationship between movements of such shares and movements in (i)
the S&P Regional Bank Composite, (ii) the S&P 500, (iii) the Meridian
Common Stock and (iv) certain banks with operations that for purposes of
analysis may be considered similar to UCB (the "Peer Bank Composite
Index"). The Peer Bank Composite Index is composed of the following banks:
Commerce Bancorp, The Summit Bancorporation and Valley National Bancorp.
In addition, Goldman Sachs reviewed the historical trading prices and
volumes for the Meridian Common Stock and the relationship between
movements of the Meridian Common Stock and movements in (i) the S&P 500
and (ii) a composite index of certain mid-size regional banks (the
"Mid-Size Regional Bank Composite Index"). The Mid-Size Regional Bank
Composite Index is composed of the following banks: Amsouth Bancorp,
Boatmens Bancshares, Fifth Third Bancorp, First Hawaiian, First Tennessee,
Huntington Bancshares, Integra Financial, Michigan National, Northern
Trust Corp., Signet Banking, Southtrust Corp., State Street Boston, Union
Bank San Francisco and Star Banc Corp.
(ii) Selected Companies Analysis. Goldman Sachs reviewed and compared
certain financial information relating to UCB to corresponding financial
information, ratios and public market multiples for three publicly traded
corporations: Commerce Bancorp, The Summit Bancorporation and Valley
National Bancorp (the "Selected Companies"). The Selected Companies were
chosen because they are publicly-traded companies with operations that for
purposes of analysis may be considered similar to UCB. Goldman Sachs
calculated and compared various financial multiples and ratios of UCB and
the Selected Companies using market data as of May 19, 1995. The multiples
and ratios for UCB were calculated by Goldman Sachs based on information
provided by UCB's management and the multiples for each of the Selected
Companies were based on the most recent publicly available information.
Earnings figures for the Selected Companies were based on Institutional
Brokers Estimates System median estimates as of May 11, 1995. With respect
to the Selected Companies, Goldman Sachs considered latest twelve months
("LTM") price/earnings ratios, which ranged from 8.9x to 24.5x compared to
10.6x for UCB (after adjustment for a gain on the exchange of securities)
and estimated calendar year 1995 and 1996 price/earnings ratios, which
ranged from 8.5x to 10.7x for estimated calendar year 1995 and 7.5x to
10.7x for estimated calendar year 1996 compared to 11.5x for each of
estimated calendar years 1995 and 1996, for UCB. Goldman Sachs also
considered for the Selected Companies, market price to tangible book value
ratios, which ranged from 1.4x to 2.2x compared to 1.4x for UCB.
(iii) Selected Transactions Analysis. Goldman Sachs analyzed certain
information relating to selected transactions in the bank and thrift
industry since January 11, 1994 (the "Selected Transactions"). Such
analysis indicated that for the Selected Transactions (i) LTM earnings per
share multiples ranged from 6.7x to 67.0x, as compared to 13.9x for UCB,
and (ii) the tangible book value multiple ranged from 1.1x to 2.7x, as
compared to 1.92x for UCB.
(iv) Pro Forma Merger Analysis. Goldman Sachs prepared pro forma
analyses of the financial impact of the Merger. With UCB's consent,
earnings estimates for UCB were based on UCB's management - prepared
budget for 1995, and an assumption that UCB's 1996 earnings would be
consistent with 1995. Using these earnings estimates for UCB and earnings
estimates from Institutional Brokers Estimate System for Meridian as of
May 11, 1995 for 1995 and 1996, Goldman Sachs compared the earnings per
share ("EPS") of the shares of UCB Common Stock, on a standalone basis, to
the EPS of the common stock of the combined companies on a pro forma
basis. Goldman Sachs performed this analysis based on consideration of
$165.00 per share of UCB Common Stock and based on a price of $33.00 per
share (the per share price of Meridian at May 19, 1995) of Meridian Common
Stock and under the following two scenarios: assuming estimated earnings
per share for Meridian in 1995 and 1996 of $3.10 and $3.40, respectively,
and assuming estimated earnings per share for Meridian in 1995 and 1996 of
$3.10 and $3.80, respectively. Based on such analyses, the proposed
transaction would be accretive to UCB's stockholders on an earnings per
share basis in all of the above scenarios in the years 1995 and 1996.
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In addition, based on the current dividend paid on UCB Common Stock and on
the Meridian Common Stock, UCB's stockholders would receive an additional
131% in dividends on a pro forma per share basis.
The preparation of a fairness opinion is a complex process and is not
necessarily susceptible to partial analysis or summary description. Selecting
portions of the analyses or of the summary set forth above, without
considering the analyses as a whole, could create an incomplete view of the
processes underlying Goldman Sachs' opinion. In arriving at its fairness
determination, Goldman Sachs considered the results of all such analyses. No
company or transaction used in the above analyses as a comparison is
identical to UCB or Meridian or the contemplated transaction. The analyses
were prepared solely for the purposes of Goldman Sachs' providing its
opinions to UCB's Board of Directors as to the fairness to the holders of
shares of UCB Common Stock of the Exchange Ratio to be received for each
share pursuant to the Merger Agreement and do not purport to be appraisals or
necessarily reflect the prices at which businesses or securities actually may
be sold. Analyses based upon forecasts of future results are not necessarily
indicative of actual future results, which may be significantly more or less
favorable than suggested by such analyses. Because such analyses are
inherently subject to uncertainty, being based upon numerous factors or
events beyond the control of the parties or their respective advisors, none
of UCB, Meridian, Goldman Sachs or any other person assumes responsibility if
future results are materially different from those forecast. As described
above, Goldman Sachs' opinion to the Board of Directors of UCB was one of
many factors taken into consideration by UCB's Board of Directors in making
its determination to approve the Merger Agreement. The foregoing summary does
not purport to be a complete description of the analysis performed by Goldman
Sachs and is qualified by reference to the written opinion of Goldman Sachs
set forth in Annex C hereto.
Goldman Sachs, as part of its investment banking business, is continually
engaged in the valuation of businesses and their securities in connection
with mergers and acquisitions, negotiated underwritings, competitive
biddings, secondary distributions of listed and unlisted securities, private
placements, and valuations for estate, corporate and other purposes. UCB
selected Goldman Sachs as its financial advisor because it is a nationally
recognized investment banking firm that has substantial experience in
transactions similar to the Merger. Goldman Sachs regularly provides
investment banking and financial advisory services to Meridian and can be
expected to continue to do so.
Pursuant to a letter agreement dated July 27, 1994 and executed by UCB on
August 5, 1994 (the "Engagement Letter"), UCB engaged Goldman Sachs to act as
its financial advisor in connection with the Merger. Pursuant to the terms of
the Engagement Letter, UCB has agreed to pay Goldman Sachs upon consummation
of the Merger a transaction fee of approximately $2.7. UCB has agreed to
reimburse Goldman Sachs for its reasonable out-of-pocket expenses, including
attorney's fees, and to indemnify Goldman Sachs against certain liabilities,
including certain liabilities under the federal securities laws.
EFFECTIVE DATE OF THE MERGER
The Merger will become effective upon the filing of Articles of Merger
between Meridian and UCB with the Pennsylvania Department of State. The
Merger Agreement may be terminated by either party if the Merger has not been
completed before May 23, 1996 and the terminating party is not in breach of
the Merger Agreement. The Merger Agreement may be terminated by Meridian or
UCB under certain limited circumstances. See "THE MERGER -- Termination;
Effect of Termination."
EXCHANGE OF UCB STOCK CERTIFICATES
The conversion of UCB Common Stock into Meridian Common Stock will occur
automatically at the Effective Date.
As soon as practicable after the Effective Date, Meridian, or a bank or
trust company designated by Meridian, in the capacity of exchange agent (the
"Exchange Agent"), will send a transmittal form to each UCB shareholder. The
transmittal form will contain instructions with respect to the surrender of
certificates representing UCB Common Stock to be exchanged for Meridian
Common Stock.
UCB STOCKHOLDERS SHOULD NOT FORWARD UCB STOCK CERTIFICATES TO THE EXCHANGE
AGENT UNTIL THEY HAVE RECEIVED TRANSMITTAL FORMS. UCB STOCKHOLDERS SHOULD NOT
RETURN STOCK CERTIFICATES WITH THE ENCLOSED PROXY CARD.
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Until the certificates representing UCB Common Stock are surrendered for
exchange after completion of the Merger, holders of such certificates will
not receive the Meridian Common Stock payable as consideration in the Merger
and will not be paid dividends on the Meridian Common Stock into which such
shares have been converted. When such certificates are surrendered, any
accrued but unpaid dividends will be paid without interest. For all other
purposes, however, each certificate which represents shares of UCB Common
Stock outstanding at the Effective Date will be deemed to evidence ownership
of the shares of Meridian Common Stock into which those shares have been
converted by virtue of the Merger.
All shares of Meridian Common Stock issued upon conversion of shares of
UCB Common Stock shall be deemed to have been issued in full satisfaction of
all rights pertaining to such shares of UCB Common Stock, subject, however,
to Meridian's obligation to pay any dividends or make any other distributions
with a record date prior to the Effective Date which may have been declared
or made by UCB on such shares of UCB Common Stock in accordance with the
Merger Agreement on or prior to the Effective Date and which remain unpaid at
the Effective Date.
No fractional shares of Meridian Common Stock will be issued to any UCB
stockholder upon completion of the Merger. For each fractional share that
would otherwise be issued, Meridian will pay by check an amount equal to the
product obtained by multiplying the fractional share interest to which such
holder would otherwise be entitled by the value of a share of Meridian Common
Stock, such value being determined as provided in the Merger Agreement.
CONDITIONS TO THE MERGER
The obligations of Meridian and UCB to effect the Merger are subject to
various conditions which include, in addition to other customary closing
conditions, the following:
(i) approval of the Merger Agreement by the holders of UCB Common Stock
(see "THE SPECIAL MEETING -- Votes Required; Quorum");
(ii) receipt of all necessary governmental approvals for the Merger and
expiration or termination of all waiting periods required by law or
imposed by any governmental authority with respect to the Merger (see
"Regulatory Approvals" herein);
(iii) the absence of any order, decree, or injunction of a court of
competent jurisdiction which enjoins or prohibits the completion of the
Merger or the Bank Merger;
(iv) delivery to each of Meridian and UCB an opinion of counsel that,
among other things, 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 of 1986, as amended (see "Certain Federal Income Tax
Consequences" herein);
(v) the absence of any material adverse change in the consolidated
assets, business, consolidated financial condition or consolidated results
of operations, taken as a whole, of the other party and its subsidiaries
since March 31, 1995; and
(vi) receipt by Meridian of a letter from its independent certified
public accountants to the effect that the Merger may be accounted for
under the "pooling of interests" method for financial accounting purposes.
In addition, Meridian's obligation to effect the Merger is subject to,
among other conditions, the absence in any governmental approval for the
Merger of any term or condition that would have a material adverse effect on
Meridian and its subsidiaries, taken as a whole, upon completion of the
Merger.
Except for the requirements of shareholder approval, regulatory approvals
and the absence of any order, decree, or injunction preventing the Merger,
each of the conditions described above may be waived in the manner and to the
extent described in "Amendment; Waivers" herein.
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REGULATORY APPROVALS
The Merger is subject to approval by the Board of Governors of the Federal
Reserve System (the "Federal Reserve") under Sections 3 and 4 of the Bank
Holding Company Act of 1956 (the "BHCA"), but the Federal Reserve's
regulations permit such approval requirement to be waived and for the FDIC to
undertake the approval process. Requests for such waivers were filed by
Meridian with the Federal Reserve on July 27, 1995. By letter dated September
15, 1995, the Federal Reserve granted Meridian's waiver request. Effective
July 6, 1995, mergers such as the Merger are not subject to approval of the
Pennsylvania Department of Banking.
The Bank Merger is subject to approval by the Federal Deposit Insurance
Corporation ("FDIC"). An Application for such approval was filed by MBNJ and
UCTC with the FDIC on July 19, 1995. Under the Bank Merger Act, the FDIC must
withhold approval of the Bank Merger if it finds that the transaction would
result in a monopoly or be in furtherance of any combination or conspiracy to
monopolize or attempt to monopolize the business of banking in any
geographical area. In addition, the FDIC may not approve the Bank Merger if
it finds that the effect thereof may be to substantially lessen competition
or to tend to create a monopoly or would in any other manner be in restraint
of trade, unless it finds that the anti-competitive effects of the Bank
Merger are clearly outweighed in the public interest by the probable effects
of the Bank Merger in meeting the convenience and needs of the communities to
be served. The FDIC will also take into consideration the financial and
managerial resources and future prospects of the resulting bank following the
Bank Merger, as well as the compliance records of MBNJ and UCTC under the
Community Reinvestment Act.
Under the Bank Merger Act, the Bank Merger may not be completed for 15
days from the date of approval by the FDIC, during which time the United
States Department of Justice or others may challenge the Bank Merger on
antitrust grounds.
The Bank Merger is also subject to approval by the New Jersey Department
of Banking (the "NJDOB"). An application for such approval was filed with the
NJDOB on September ___, 1995. The factors that the NJDOB will consider in
determining whether to grant its approval include the competitive effects of
the Merger, the principles of sound banking and the public interest and the
needs of the communities served by Meridian Bank and UCTC.
It is anticipated that the regulatory approvals described above will be
obtained during the third quarter of 1995, but no assurance can be given that
such regulatory approvals will be obtained or that the other conditions to
the Merger will be satisfied or waived so as to permit completion of the
Merger. As described under "The Merger -- Termination; Effect of
Termination," if the Merger is not completed prior to May 23, 1996, Meridian
and UCB will each have the right to terminate the Merger Agreement, provided,
however, that the failure to close is not attributable to a breach by the
party seeking to terminate the Merger Agreement.
REPRESENTATIONS AND WARRANTIES
The Merger Agreement contains customary representations and warranties
relating to, among other things, (a) the corporate organization of Meridian,
UCB and their respective subsidiaries; (b) the capital structures of
Meridian, UCB and UCTC; (c) the due authorization, execution, delivery,
performance and enforceability of the Merger Agreement and the Bank Plan of
Merger; (d) consents or approvals of regulatory authorities or third parties
necessary to complete the Merger and the Bank Merger; (e) the consistency of
financial statements with generally accepted accounting principles; (f) the
absence of any material adverse change in the consolidated financial
condition or consolidated results of operations of Meridian and UCB since
March 31, 1995; (g) the absence of undisclosed material pending or threatened
litigation, claims, actions or governmental investigations; (h) compliance
with applicable laws and regulations; (i) the accuracy of information
supplied by Meridian and UCB in connection with the Registration Statement on
Form S-4 filed with the Commission in connection with the issuance of
Meridian Common Stock in the Merger, this Proxy Statement/Prospectus and all
applications filed with regulatory authorities for approval of the Merger or
the Bank Merger; (j) the filing of documents with the Commission and the
accuracy of information contained therein; (k) the filing of tax returns and
consents and the payment of taxes; (l) retirement, pension and other employee
plans and matters relating to the Employee Retirement Income Security Act of
1974; (m) the absence of material environmental violations, actions or
liabilities; (n) the adequacy of allowance for loan losses in accordance with
generally accepted accounting principles and all applicable regulatory
criteria, and the absence of any request by regulatory authorities to
increase such allowance; (o) the absence of undisclosed brokers' or finders'
fees; (p) certain contracts relating to employment, consulting and benefits
matters or to certain indebtedness of Meridian, UCB and their respective
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subsidiaries; (q) the quality of title to assets and properties; (r) the
maintenance of insurance similar in amount, scope and coverage to its peer
group, and notices and claims under insurance policies; (s) the outstanding
options (and commitments to grant options) or other rights to acquire
Meridian Common Stock and UCB Common Stock; and (t) transactions with
affiliates.
BUSINESS PENDING THE MERGER
Pursuant to the Merger Agreement, Meridian and UCB have each agreed to use
their best efforts to, and UCB has agreed to cause UCTC to use its best
efforts to, preserve their business organizations intact, to maintain good
relationships with employees and to preserve the goodwill of customers and
others with whom business relationships exist. In addition, UCB has agreed
that UCB and each of its subsidiaries will conduct their respective
businesses and will engage in transactions (including extensions of credit
and pricing deposit liabilities) only in the ordinary course of business,
consistent with past practice and policies, except as permitted by the Merger
Agreement. For purposes of the Merger Agreement it is not deemed to be
conduct in the ordinary course of business for UCB to: (i) make any capital
expenditure of more than $1 million in any calendar year, in the aggregate,
without the prior written consent of Meridian; (ii) sell or otherwise dispose
of assets having a book or market value, whichever is greater, of more than
$1 million, with certain exceptions; (iii) enter into any lease, contract or
commitment requiring payments by UCB or any subsidiary of more than $1
million or a payment to an affiliate of UCB or containing a material
financial commitment and extending beyond 12 months; or (iv) implement any
loan marketing programs at other than market rates.
In addition, UCB has agreed that neither it nor any UCB subsidiary may,
without the written consent of Meridian, among other things, (i) change any
provision of its certificate of incorporation or bylaws; (ii) change the
number of authorized or issued shares of its capital stock; (iii) grant
options or similar rights with respect to its capital stock or any securities
convertible into UCB Common Stock; (iv) split, combine or reclassify any
shares of its capital stock; (v) declare, set aside or pay any dividend or
other distribution in respect of its capital stock, except as specifically
permitted by the Merger Agreement (see "Dividends" herein); (vi) grant any
severance pay or increase the compensation of any employee, officer or
director of UCB or any UCB subsidiary, with specified exceptions, or enter
into or amend any employment agreements; (vii) engage in any merger,
acquisition or similar transaction, except as provided in the Merger
Agreement; (viii) permit the revocation or surrender of a certificate of
authority to maintain, or file an application for the relocation of, or file
an application for a certificate of authority to establish, a UCTC branch;
(ix) sell or otherwise dispose of (a) any assets other than in the ordinary
course of business or (b) any assets having an aggregate book or market
value, whichever is greater, of more than $1 million; (x) change any
accounting practices, except for implementation of Statement of Financial
Accounting Standards ("SFAS") No. 112, SFAS No. 114, SFAS No. 115 and any new
SFAS standard; (xi) implement any new employee benefit or welfare plan, or
amend any such plan, with specified exceptions; (xii) compromise, extend or
restructure any loan with an unpaid principal balance exceeding $1 million;
(xiii) purchase any security for its investment portfolio, except pursuant to
policies agreed upon by the parties; (xiv) sell, exchange or otherwise
dispose of any investment securities or loans that are held for sale, prior
to scheduled maturity and other than pursuant to policies agreed upon from
time to time by the parties; (xv) except as set forth in the Merger Agreement
and consistent with prudent banking practice and UCB's current underwriting
standards, make or modify any loan or other credit facility commitment; (xvi)
except as set forth in the Merger Agreement and consistent with past
practice, enter into, renew, extend or modify any transaction with, any of
its affiliates; (xvii) enter into any swap or similar commitment, agreement
or arrangement; (xviii) take any further action (other than continuation of
employment in accordance with past practices) that would give rise to a right
of payment to any individual under any employment agreement or any bonus or
performance award agreement; (xix) take any action that would preclude the
receipt by Meridian of a letter from its independent certified public
accountants to the effect that the Merger may be accounted for under the
"pooling of interests" method for financial accounting treatment (see
"Accounting Treatment" herein); (xx) take any action which would result in
any of the representations and warranties of UCB set forth in the Merger
Agreement becoming untrue as of the Effective Date or in any of the
conditions set forth in the Merger Agreement not being satisfied; (xxi)
waive, release, grant or transfer any rights of value or modify or change, in
any material respect, any existing agreement to which UCB or any of its
subsidiaries is a party, except in the ordinary course of business and
consistent with past practice; (xxii) purchase or sell, exchange or otherwise
dispose of any investment securities which would result in the creation of
undue risk with respect to UCB's investment portfolio or sell or otherwise
dispose of any equity securities included in the investment portfolio; or
(xxiii) agree to do any of the foregoing.
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UCB has also agreed in the Merger Agreement, among other things, (i) to
use and to cause each of its subsidiaries to use commercially reasonable
efforts to maintain and increase deposits (other than certificates of deposit
of $100,000 and over); and (ii) if Meridian requests and agrees to bear the
expense, to retain a proxy solicitor in connection with the solicitation of
UCB stockholder approval of the Merger Agreement.
Meridian and UCB have jointly agreed to: (i) cooperate in the preparation
of filing of all applications for, and to use their best efforts to obtain as
promptly as practicable, all regulatory consents necessary or advisable to
complete the Merger and the Bank Merger; (ii) use their best efforts in good
faith, and to cause their subsidiaries to use their best efforts in good
faith, to take or cause to be taken all actions necessary or desirable to
permit the completion of the Merger and the Bank Merger at the earliest
possible date including, without limitation, obtaining all required consents
or approvals of third parties; (iii) submit the Merger Agreement to their
respective shareholders for approval, if required by law, at a meeting to be
held as soon as practicable and to use their best efforts to cause their
respective Boards of Directors to unanimously recommend approval of the
Merger Agreement to their shareholders; (iv) cooperate with each other and
use their best efforts to identify those persons who may be deemed to be
affiliates of UCB; (v) cooperate with each other in the preparation and
distribution of press releases, announcements and other public disclosures
related to the Merger Agreement, the Merger and the Bank Merger; (vi)
maintain adequate insurance; (vii) maintain accurate books and records;
(viii) file all tax returns and pay all taxes when due; and (ix) deliver to
the other monthly and quarterly unaudited financial statements, securities
documents, and other specified corporate information.
DIVIDENDS
The Merger Agreement permits UCB to pay a regular quarterly cash dividend,
not to exceed $1.85 per share of UCB Common Stock outstanding, on each March
1, June 1, September 1 and December 1 prior to the Effective Date, except
that UCB is not permitted, without Meridian's written consent, to pay a
dividend in or for any quarter in which the Effective Date is or is expected
to be on or before Meridian's record date for payment of its regular
quarterly cash dividend on shares of Meridian Common Stock.
NO SOLICITATION OF TRANSACTIONS
Except as set forth below, UCB has agreed in the Merger Agreement that it
will not solicit or engage in any discussions with or respond to any person
other than Meridian concerning any acquisition of UCB or any of its
subsidiaries except for responses in connection with investor relations or
pursuant to inquiries of government regulatory authorities. Prior to
September ___, 1995 (the date of effectiveness of the registration statement
of which this Proxy Statement/Prospectus forms a part), the Merger Agreement
permitted UCB to engage in discussions or negotiations with, or respond to
requests for information, inquiries or other communications from, any person
other than Meridian concerning an acquisition of UCB or its subsidiaries to
the extent such solicitation, engagement or response may have been legally
required for the discharge by UCB's Board of Directors of its fiduciary duty.
The directors, executive officers and certain other affiliates of UCB have
executed a letter agreement containing provisions similar to those described
above relating to UCB, and such officers and directors have also agreed to be
present at the Special Meeting (in person or by proxy) and to vote shares of
UCB Common Stock owned by them in favor of the Merger. A copy of the form of
letter agreement executed by affiliates of UCB is included as Exhibit 1 to
the Merger Agreement attached hereto as Annex A.
AMENDMENT; WAIVERS
Subject to applicable law, Meridian and UCB may, by written instrument
authorized by the Boards of Directors and signed by duly authorized officers
of Meridian and UCB, (i) amend the Merger Agreement prior to the Effective
Date and (ii) extend the time for performance of any of the obligations or
other acts under the Merger Agreement, waive inaccuracies in any
representations and warranties or waive compliance with any agreements or
conditions contained in the Merger Agreement.
TERMINATION; EFFECT OF TERMINATION
The Merger Agreement may be terminated at any time prior to the Effective
Date by (i) mutual written consent of Meridian and UCB, or (ii) by either
party if (a) the Effective Date shall not have occurred prior to May 23, 1996,
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unless such fact shall be due to the failure of the party seeking to
terminate the Merger Agreement to perform or observe its agreements set forth
in the Merger Agreement and required to be performed or observed prior to the
Effective Date, (b) if either party has been informed in writing by any
regulatory authority the approval or consent of which has been requested that
such approval or consent is unlikely to be granted, unless such fact is due
to the failure of the party seeking to terminate the Merger Agreement to
perform or observe its agreements set forth in the Merger Agreement and
required to be performed or observed prior to the Effective Date, (c) any
required stockholder approval of the Merger Agreement is not obtained, unless
such fact is due to the failure of the party seeking to terminate the Merger
Agreement to perform or observe its agreements set forth in the Merger
Agreement and required to be performed or observed prior to the Effective
Date, or (d) any condition to completion of the Merger set forth in the
Merger Agreement cannot reasonably be met on or before the Effective Date and
both parties reasonably agree that such condition cannot be met.
If the Merger Agreement is terminated pursuant to its terms, it becomes
void. In the event of termination, there is no further liability on the part
of Meridian or UCB to the other, except that the provisions regarding
obligations to keep certain nonpublic information concerning the other party
confidential, each party's obligation not to hire the other's employees for a
period of six months after termination of the Merger Agreement, each party's
obligation to agree on the content of public announcements concerning the
Merger Agreement, and agreements regarding expenses and liability arising out
of any uncured willful breach of any covenant or other agreement contained in
the Merger Agreement or any fraudulent breach of a representation or warranty
shall survive termination of the Merger Agreement.
MANAGEMENT AND OPERATIONS AFTER THE MERGER
Subsidiary Bank Merger
In connection with the Merger, MBNJ and UCTC entered into a Plan of Merger
dated as of May 23, 1995 pursuant to which, concurrently with or as soon as
practicable after completion of the Merger, UCTC will merge with and into
MBNJ, with MBNJ surviving (the "Bank Merger"). Meridian intends to effect the
merger of UCTC and MBNJ simultaneously with or as soon as practicable after
the Effective Date.
Directors and Officers After the Merger
On the Effective Date, the Board of Directors of Meridian will consist of
those persons holding such office immediately prior to the Effective Date
and, as required by the Merger Agreement, two other persons designated by UCB
and reasonably acceptable to Meridian, one of whom will serve as a Class II
director (which class serves until the annual meeting of Meridian
shareholders in 1997) and one of whom will serve as a Class I or Class III
director (which classes serves until the 1996 and 1998 annual meetings,
respectively). The Merger Agreement requires Meridian to cause such persons
to be elected as directors of Meridian effective as of the Effective Date. On
the Effective Date, the officers of Meridian duly elected and holding office
immediately prior to the Effective Date will be the officers of Meridian, as
the surviving corporation in the Merger. Each such director or officer is to
hold office until his or her successor is elected and qualified or otherwise
in accordance with the articles of incorporation and the bylaws of Meridian.
On the effective date of the Bank Merger, the Board of Directors of MBNJ
will consist of those persons holding such office immediately prior to such
effective date and, as required by the Merger Agreement, Albert W. Bossert,
Anton J. Campanella, Edward J. Hobbie, John E. Holobinko, William C. Johnson,
Jr., Robert P. Kenney, Henry G. Largey, Donald S. Nowicki and Maureen E.
Staub, each of whom is a current director of UCTC. The other current
directors of UCTC are Edward A. Kammler, Jr. and William G. Palermo, each of
whom has reached Meridian's mandatory director retirement age, and Eugene H.
Bauer, who will become a consultant to Meridian on a limited basis following
the Effective Date. Mr. Bauer will not continue after the Effective Date as
Chairman of the Board, Director, Chief Executive Officer or in any other
capacity (except as a consultant to Meridian) for UCB, UCTC, their
subsidiaries, or the surviving institutions in the Merger. On the effective
date of the Bank Merger, the officers of MBNJ and UCTC duly elected and
holding office immediately prior to such effective date will be the officers
of MBNJ, as the surviving corporation in the Bank Merger, along with such
officers of UCTC as MBNJ appoints as officers of MBNJ. Each will hold office
until his or her successor is elected and qualified or otherwise in
accordance with the articles of incorporation, bylaws and policies of MBNJ.
Directors Emeriti Robert J. Bauer and Walter W. Gauer will no longer serve
in such capacity after the Effective Date. Meridian will retain the members
of the two existing regional boards of directors of UCTC until at least
December 31, 1996.
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Consolidation of Operations: Projected Operating Cost Savings and Revenue
Enhancements
Meridian expects to achieve certain cost and other savings and to realize
certain revenue enhancements as a result of the Merger. These cost savings
are projected to approximate 25% of UCB's operating expenses and expected to
be substantially realized within the eighteen-month period following the
Merger. Meridian expects that such cost savings will be realized primarily as
the result of the elimination of duplicative functions in the areas of human
resources, data processing and corporate overhead in either UCB's or
Meridian's New Jersey operations. Meridian also expects to increase revenues
during the same period through increased products and services and a
restructuring of the balance sheet of UCB, primarily in the investment
portfolio. Substantially all of these savings and revenue enhancements are
expected to be achieved in various amounts at various times during the
eighteen-month period discussed above and not ratably over, or at the
beginning or the end of, such period.
Because of the uncertainties associated with merging two institutions
located in contiguous markets, changes in the regulatory environment and
changes in economic conditions, no assurances can be given that (i) any
particular level of revenue enhancements or cost savings will be realized,
(ii) such cost savings will be realized over the time period currently
anticipated, and (iii) such cost savings will not be offset to some degree by
increases in other expenses, including expenses resulting from integrating
the two companies.
Post-Merger Dividend Policy
It is the current intention of the Board of Directors of Meridian to
declare dividends on Meridian Common Stock following the merger initially in
the amount of $.37 per quarter or $1.48 per year, in each case, per share.
UCB shareholders should note that the level of future dividends will be
determined by Meridian's Board of Directors in light of the earnings and
financial condition of Meridian at the time, as well as other factors
including applicable governmental regulations and policies. Meridian is a
legal entity separate and distinct from its banking and non-banking
subsidiaries, and the principal sources of Meridian's income are dividends
and interest from such subsidiaries. The payment of dividends by these
subsidiaries is subject to certain restrictions under applicable government
regulations. See "INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE."
Other
Meridian has agreed in the Merger Agreement to relocate the executive
offices of MBNJ to the Corporate Headquarters of UCB, Four Commerce Drive,
Cranford, New Jersey.
EMPLOYEE BENEFITS
The employee benefit plans, arrangements and related policies of UCB, UCTC
and Meridian will initially be unaffected by the Merger, except the UCTC
Profit Sharing Plan which, as required by the Merger Agreement, UCB will
terminate as of the Effective Date. Employees of UCB and its subsidiaries
immediately prior to the Effective Date, who become employees of Meridian or
a subsidiary of Meridian, will receive a total salary, wage, bonus and
benefits package no less favorable, in the aggregate, than that to which they
were entitled immediately prior to the Effective Date. After the Effective
Date, Meridian will review such plans, arrangements and policies with a view
toward consolidating the same to the extent feasible and economical.
UCB and Meridian contemplate that, subject to Internal Revenue Service
("IRS") and Pension Benefit Guaranty Corporation approval, the defined
benefit pension plans of UCTC and Meridian will be merged as soon as
administratively feasible. To the extent former employees of UCB or a UCB
subsidiary become participants in a plan of Meridian, they will be given past
service credit for eligibility, participation, and vesting purposes, but not
for benefit accrual purposes. For purposes of benefit accrual, credited
service under the Meridian plan will commence on the day following the date
of plan merger. When a former UCTC plan participant retires, he or she will
receive a benefit which consists of the sum of (i) the benefit determined
under the UCTC plan as it existed as of the date of plan merger for years of
service based on an employee's original employment date with UCB through the
date of plan merger utilizing actual current compensation earned as of
retirement date and (ii) the benefit calculated under the Meridian plan from
the day following the date of plan merger through retirement date.
UCB will take such steps as may be necessary to cause the UCTC Profit
Sharing Plan to be terminated as of the Effective Date. The employer
contribution, if any, for the year of plan termination will be appropriately
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pro rated to take into account the portion of the plan year transpiring prior to
its termination date. Provision will be made for the distribution of assets to
participants, subject to IRS approval. Meridian will cooperate with the proper
funding and disbursement of funds to UCTC employees entitled to a distribution,
including, where applicable, to IRA rollover accounts.
Meridian will honor and discharge the obligations of UCTC under the
Benefit Equalization Plan which have accrued immediately prior to the
Effective Date and which may thereafter accrue by reason of Meridian's
compliance with the terms of the Merger Agreement. Meridian will honor and
discharge the obligations of UCTC to its retirees under its post-retirement
health care and life insurance plan. Meridian will honor and discharge the
obligations of UCTC, if any, to its employees who are not retired under its
post-retirement health care and life insurance plan to the extent such rights
are not defeasible, either immediately prior to or after the Effective Date.
Employees of UCB and its subsidiaries immediately prior to the Effective
Date, who become employees of Meridian or a subsidiary of Meridian and are
involuntarily terminated within one year thereafter, will receive a severance
benefit equal to one week of pay in effect immediately prior to termination
times the number of whole years of service with UCB, a subsidiary of UCB,
Meridian, and a subsidiary of Meridian, subject to a minimum and a maximum.
Subject to these provisions, Meridian may at any time and from time to
time following the Merger (i) amend, freeze or terminate an employee benefit
plan of Meridian, UCB or any UCB subsidiary, or (ii) adopt a new employee
benefit plan, either to replace a prior plan or otherwise.
ACCOUNTING TREATMENT
The Merger is expected to qualify as a pooling-of-interests for accounting
and financial reporting purposes. Under this method of accounting, the
recorded assets and liabilities of Meridian and UCB will be carried forward
to the combined corporation at their recorded amounts; income of the combined
corporation will include income of both Meridian and UCB for the entire
fiscal year in which the Merger occurs; and the reported income of the
separate corporations for prior periods will be combined and restated as
income of the combined corporation. Expenses incurred in connection with the
Merger will constitute expenses for the accounting periods to which such
expenses relate. The receipt of a letter from Meridian's independent auditors
confirming that the Merger will qualify for pooling of interests accounting
is a condition to Meridian's obligation to complete the Merger.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
Completion of the Merger is conditioned upon there being delivered to both
Meridian and UCB the opinion of Stevens & Lee, counsel to Meridian, that for
federal income tax purposes, under current law, assuming that the Merger and
related transactions will take place as described in the Merger Agreement,
among other things, the Merger will constitute a reorganization within the
meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended
(the "Code"), and Meridian and UCB will each be a party to the reorganization
within the meaning of Section 368(b) of the Code.
In that case, such opinion will also provide, among other things, that:
(i) no gain or loss will be recognized by Meridian or UCB in the
Merger;
(ii) no gain or loss will be recognized by the shareholders of UCB upon
their receipt of Meridian Common Stock in exchange for their UCB Common
Stock, except that shareholders who receive cash proceeds for fractional
interests in Meridian Common Stock will recognize gain or loss equal to
the difference between such proceeds and the tax basis allocated to their
fractional share interests, and such gain or loss will constitute capital
gain or loss if their UCB Common Stock is held as a capital asset at the
Effective Date;
(iii) the tax basis of the shares of Meridian Common Stock (including
fractional share interests) received by the stockholders of UCB will be
the same as the tax basis of their UCB Common Stock exchanged therefor;
and
(iv) the holding period of the Meridian Common Stock in the hands of
the UCB stockholders will include the holding period of their UCB Common
Stock exchanged therefor, provided such UCB Common Stock is held as a
capital asset at the Effective Date.
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Under the Merger Agreement, the condition that Stevens & Lee deliver the
opinion described above can be waived by Meridian and UCB. However, in the
event that the delivery of such opinion of counsel is waived, or such opinion
would otherwise set forth tax consequences materially different to a
shareholder than those described above, Meridian and UCB intend to resolicit
proxies as required in accordance with the rules and regulations of the
Commission.
THE DISCUSSION SET FORTH ABOVE DOES NOT ADDRESS THE STATE, LOCAL OR
FOREIGN TAX ASPECTS OF THE MERGER. THE DISCUSSION IS BASED ON CURRENTLY
EXISTING PROVISIONS OF THE CODE, EXISTING AND PROPOSED TREASURY REGULATIONS
THEREUNDER AND CURRENT ADMINISTRATIVE RULINGS AND COURT DECISIONS. ALL OF THE
FOREGOING ARE SUBJECT TO CHANGE AND ANY SUCH CHANGE COULD AFFECT THE
CONTINUING VALIDITY OF THIS DISCUSSION. EACH UCB SHAREHOLDER SHOULD CONSULT
HIS OR HER OWN TAX ADVISOR WITH RESPECT TO THE SPECIFIC TAX CONSEQUENCES OF
THE MERGER TO HIM OR HER, INCLUDING THE APPLICATION AND EFFECT OF STATE,
LOCAL AND FOREIGN TAX LAWS.
EXPENSES
Meridian and UCB will each pay all costs and expenses incurred by it in
connection with the transactions contemplated hereby, including fees and
expenses of financial consultants, accountants and legal counsel, except
Meridian will pay fees for filings with the Commission and the costs of the
proxy solicitor, if any, engaged in connection with the Special Meeting.
RESALE OF MERIDIAN COMMON STOCK
The Meridian Common Stock issued pursuant to the Merger will be freely
transferable under the Securities Act except for shares issued to any UCB
shareholder who may be deemed to be an "affiliate" of UCB or Meridian for
purposes of Rule 145 under the Securities Act. Each such affiliate has
entered into an agreement with Meridian providing that such affiliate will
not transfer any Meridian Common Stock received in the Merger except in
compliance with the Securities Act and will make no dispositions of any
Meridian Common Stock or UCB Common Stock (or any interest therein), as
applicable, until the date on which financial results covering at least 30
days of combined operations of Meridian and UCB after the Merger have been
published. This Proxy Statement/Prospectus does not cover resales of Meridian
Common Stock received by any person who may be deemed an affiliate of UCB or
Meridian.
DIVIDEND REINVESTMENT PLAN
Meridian currently maintains a Dividend Reinvestment and Stock Purchase
Plan. This plan provides shareholders of Meridian with a method of investing
cash dividends, as well as voluntary cash payments, in additional shares of
Meridian Common Stock, without payment of any brokerage commission or service
charge. It is anticipated that, after the Effective Date, Meridian will
continue to offer this plan and stockholders of UCB who become shareholders
of Meridian will be eligible to participate therein.
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INTERESTS OF CERTAIN PERSONS IN THE MERGER
STOCK OPTIONS
The directors and executive officers of UCB (including certain directors
and officers of UCTC who may be deemed executive officers of UCB for filing
purposes under the Exchange Act) own approximately 162,673 shares of UCB
Common Stock, including options to purchase 29,184 shares of UCB Common
Stock. All options to purchase UCB Common Stock outstanding at the Effective
Date will be converted into options to acquire Meridian Common Stock, as is
set forth under "THE MERGER -- Terms of the Merger."
EMPLOYMENT AGREEMENTS
On September 9, 1993, UCB and UCTC entered into employment agreements with
Eugene H. Bauer; Donald S. Nowicki, Robert W. Dowens, Sr., J. Richard Pierce
and Theodore E. Zuczek and on April 13, 1995 entered into an employment
agreement with Nicholas A. Frungillo, Jr. The employment agreements expire on
December 31, 2001, but may be terminated upon twelve months prior notice
until the occurrence of a change in control. A change in control, as defined
in the employment agreements, has occurred by virtue of the Merger Agreement.
Meridian and MBNJ have agreed in the Merger Agreement to accept and assume
these employment agreements.
The employment agreements require the continuation during the contract
period of the executive's salary, bonus and benefits as such exist now, but
the salary, bonus and benefits may be increased, reduced or modified under
certain circumstances.
After a change in control as defined (which includes the Merger): The term
of the employment agreements may not be shortened, and the executive's
salary, bonus and benefits may not be reduced. In the event of the
executive's death, the executive's spouse will receive the executive's salary
for one year and health benefits for two years, plus a lump sum equal to the
highest combination of base salary plus incentive compensation paid in any
calendar year to the executive after the date of the employment agreement. If
the executive is terminated without cause or resigns for good reason, the
executive will receive a lump sum amount equal to his salary and bonus for
the remaining term of the contract, discounted to present value. In the event
the executive resigns without good reason, he is entitled to receive a lump
sum equal to 75% of such amount. In the event that these and other change in
control payments result in an excise tax ("parachute tax") being imposed upon
the executive under Section 4999 of the Code (which imposes a 20% excise tax
on excess parachute payments), the executive is entitled to receive a gross
up payment to put the executive in the same position he would have been in
but for the imposition of such parachute tax.
For purposes of determining payments which would be received by the
executives upon a post-change in control termination, the salary and
incentive compensation, respectively, payable to the executives for calendar
year 1995 is as follows: Mr. Bauer -- $382,000 and $130,100; Mr. Nowicki --
$198,500 and $53,600; Mr. Dowens -- $126,000 and $51,000; Mr. Pierce --
$103,300 and $33,500; Mr. Zuczek -- $98,600 and $23,500; and Mr. Frungillo --
$90,000 and $20,000. Based upon these figures, an executive who was
terminated without cause or resigned with good reason on December 31, 1995
would receive the following lump sum amounts; Mr. Bauer -- $2,660,939; Mr.
Nowicki -- $1,309,821; Mr. Dowens -- $920,116; Mr. Pierce -- $710,924; Mr.
Zuczek -- $634,298; and Mr. Frungillo -- $571,396.
The employment agreements also provide that if an executive is covered by
UCB's benefit equalization plan ("BEP") at the time of a change in control,
and thereafter the executive is terminated without cause or resigns with or
without good reason, then the executive's benefits under the BEP will be
calculated as if the executive had continued his employment with UCB to the
end of the term of the employment agreement and had received after
termination or resignation annual compensation equal to the highest
compensation received while employed under the agreement. Messrs. Bauer and
Nowicki are the only executives currently covered by the BEP.
The employment agreements contain a non-compete provision restricting the
executive from working for any depository institution in New Jersey during
the shorter of (a) the term of the agreement or (b) a period of two years
after termination of the executive's employment.
On May 23, 1995, UCB and Eugene H. Bauer entered into an agreement (the
"May 23 Agreement") providing for Mr. Bauer to resign all positions with UCB
and UCTC on the Effective Date and to serve thereafter as a consultant
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on a limited basis to Meridian until December 31, 2000. Meridian has
consented to the May 23 Agreement. In his capacity as a consultant, Mr. Bauer
is to receive $12,500 per month, with annual cost of living increases, and
employee welfare benefits such as hospitalization, medical, dental and
disability insurance coverage. The May 23 Agreement provides that Mr. Bauer
is to receive title to the company automobile he currently uses and use of a
private office with secretarial assistance for a five-year period.
The May 23 Agreement also clarifies certain compensation amounts to which
Mr. Bauer is entitled pursuant to his existing employment agreement, his
resignation and the change in control brought about by the Merger. The May 23
Agreement provides that Mr. Bauer is to be paid on the Effective Date of the
Merger the amounts he would be entitled to receive under his employment
agreement based upon a resignation for good reason following a change in
control. Assuming a Closing Date of December 31, 1995, this will result in
Mr. Bauer's receipt of a lump sum payment of $2,660,939 based on his salary
and incentive compensation. The May 23 Agreement also clarifies that Mr.
Bauer's profit sharing benefits and pension benefits under the employment
agreement will be paid in a lump sum, based on specified formulas. Assuming a
Closing Date of December 31, 1995, this will result in Mr. Bauer's receipt of
a lump sum payment of $374,904 representing his "profit sharing equalization
amount" under the BEP and a lump sum in an amount not to exceed $900,000
based on a calculation of his combined pension benefit under the BEP. In
addition, Mr. Bauer is entitled under his employment agreement to receive a
gross up payment to make him whole for the imposition of parachute taxes
which are expected to be imposed on these change in control payments and
other benefits which may be characterized as change in control payments.
DIRECTORS & OFFICERS INSURANCE; INDEMNIFICATION
For a period of six years from and after the Effective Date, Meridian is
obligated to indemnify, and advance expenses in matters which may be subject
to indemnification to, persons who served as directors and officers of UCB or
any UCB subsidiary with respect to liabilities and claims (and related
expenses) made against them resulting from their service as such prior to the
Effective Date in accordance with and subject to the requirements and other
provisions of Meridian's articles of incorporation and bylaws in effect on
the date of the Merger Agreement and applicable provisions of law to the same
extent as Meridian is obliged thereunder to indemnify and advance expenses to
its own directors and officers with respect to liabilities and claims made
against them resulting from their service with Meridian.
Meridian, for a period of six years after the Effective Date, is also
obligated to provide to the persons who served as directors or officers of
UCB or any UCB subsidiary insurance against liabilities and claims (and
related expenses) made against them resulting from their service as such
prior to the Effective Date.
STOCK OPTION AGREEMENT
As a condition to Meridian entering into the Merger Agreement, UCB
executed and delivered to Meridian the Stock Option Agreement dated May 23,
1995. Pursuant to the Stock Option Agreement, Meridian was granted an option
to purchase 375,000 shares of UCB Common Stock, at a price per share equal to
the lower of $125.00 or the lowest price that a person or group, other than
Meridian or an affiliate of Meridian, paid or offers to pay upon the
occurrence of one of the specified events which triggers the option, subject
to the terms and conditions set forth therein. The option may only be
exercised upon the occurrence of certain events, including the acquisition by
a person or group of a significant number of shares of UCB Common Stock, UCB
entering into an agreement to merge, consolidate or sell assets, or a public
announcement by a third party of an intent to acquire control of UCB under
certain circumstances. A copy of the Stock Option Agreement is attached as
Annex B to this Proxy Statement/Prospectus.
The Stock Option Agreement, together with (i) UCB's agreement to not
solicit other transactions relating to the acquisition of UCB by a third
party and (ii) the agreement of Meridian's and UCB's directors and executive
officers to vote their shares in favor of the Merger Agreement, has the
effect of discouraging persons who might now or prior to the Effective Date
be interested in acquiring all of or a significant interest in UCB from
considering or proposing such an acquisition, even if such persons were
prepared to pay a higher price per share for UCB Common Stock than the price
per share implicit resulting from the Exchange Ratio, at that time (see "THE
MERGER -- No Solicitation of Transactions"). Certain attempts to acquire UCB
or an interest in UCB would cause the option to become exercisable as
described above. Such right would significantly increase the cost to a
potential acquiror of acquiring UCB compared to its cost had the Stock Option
Agreement not been entered into by Meridian and UCB. Such increased
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cost might discourage a potential acquiror from considering or proposing an
acquisition or might result in a potential acquiror proposing to pay a lower
per share price to acquire UCB than it might otherwise have proposed to pay.
In addition, the managements of Meridian and UCB believe that the existence
of the Stock Option Agreement is likely to prohibit any acquiror of UCB from
accounting for any acquisition of UCB using the "pooling-of-interests"
accounting method. In addition, exercise of the option would increase the
ability of Meridian to obtain the approval of the shareholders of UCB to
complete the Merger and adversely affect the ability of a third party to
obtain the approval of such shareholders to complete an alternative
transaction. Acquisitions of shares of UCB Common Stock pursuant to exercises
of the option would be subject to prior regulatory approval under certain
circumstances.
DESCRIPTION OF MERIDIAN CAPITAL SECURITIES
The authorized capital stock of Meridian consists of 200,000,000 shares of
common stock, par value $5.00 per share ("Meridian Common Stock"), and
25,000,000 shares of preferred stock, par value $25.00 per share ("Meridian
Preferred Stock"). As of July 31, 1995, there were 58,338,038 shares of
Meridian Common Stock and no shares of Meridian Preferred Stock issued and
outstanding. There are no other shares of capital stock of Meridian
authorized, issued or outstanding. Meridian has no options, warrants, or
other rights authorized, issued or outstanding, other than as described
herein under "Capital Notes" and "Shareholder Rights Plan" and options
granted under the Meridian Bancorp, Inc. Stock Option Plan, except for
500,000 warrants for Meridian Common Stock issued in connection with
Meridian's acquisition of McGlinn Capital Management, Inc. in 1994.
COMMON STOCK
The holders of Meridian Common Stock are entitled to share ratably in
dividends when and if declared by the Meridian Board of Directors from funds
legally available therefor.
Each holder of Meridian Common Stock has one vote for each share held of
record on each matter presented for consideration by Meridian shareholders.
Meridian shareholders are not entitled to cumulate votes in the election of
directors.
The Meridian Board of Directors is divided into three classes, each
serving three-year terms, so that approximately one-third of the directors of
Meridian are elected at each annual meeting of shareholders of Meridian.
Classification of the Meridian Board of Directors has the effect of
decreasing the number of directors that could be elected in a single year by
any person who seeks to elect its designees to a majority of the seats on the
Meridian Board of Directors and thereby could impede a change in control of
Meridian.
The holders of Meridian Common Stock have no preemptive rights to acquire
any additional shares of Meridian.
Meridian's Articles of Incorporation authorize the Meridian Board of
Directors to issue authorized shares of Meridian Common Stock and Meridian
Preferred Stock without shareholder approval. Meridian Common Stock is
included for quotation on the NASDAQ Stock Market. As a result, in order to
maintain such inclusion, approval of Meridian's shareholders is required for
the issuance of additional shares of Meridian Common Stock or securities
convertible into Meridian Common Stock if the issuance of such securities (1)
is in connection with the acquisition of a company, is not in connection with
a public offering for cash, and the securities issued have or will have
voting power equal to or in excess of 20% of the voting power outstanding
before such issuance; (2) is in connection with the acquisition of a company
in which a director, officer or substantial shareholder of Meridian has a 5%
or greater interest and the issuance of the securities could result in an
increase in outstanding common stock or voting power of 5% or more; (3) is in
connection with a transaction other than a public offering at a price less
than the greater of book or market value, and will equal 20% or more of the
common stock or 20% or more of the voting power outstanding before issuance;
or (4) would result in a change in control of Meridian. Under NASDAQ Stock
Market rules, shareholder approval is also required for the establishment of
a stock option or purchase plan in which stock may be acquired by officers
and directors other than a broadly-based plan in which other security holders
of Meridian or employees of Meridian participate. Under applicable NASDAQ
Stock Market rules, approval of Meridian shareholders is not required for
issuance of the shares of Meridian Common Stock issuable to UCB shareholders
in the Merger.
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In the event of liquidation, dissolution or winding-up of Meridian,
whether voluntary or involuntary, holders of Meridian Common Stock will be
entitled to share ratably in any of its assets or funds that are available
for distribution to its shareholders after the satisfaction of its
liabilities (or after adequate provision is made therefor) and after payment
of any liquidation preferences of any outstanding Meridian Preferred Stock.
SHAREHOLDER RIGHTS PLAN
Each share of Meridian Common Stock has attached to it one right (a
"Meridian Right") issued pursuant to a Rights Agreement dated July 25, 1989
(the "Meridian Rights Agreement"). One Meridian Right will be issued with
each share of Meridian Common Stock issued in connection with the Merger.
Each Meridian Right will initially entitle a holder to buy one unit of a
newly authorized series of junior participating preferred stock at an
exercise price of $85.00. The Meridian Rights become exercisable if a person,
group or other entity acquires or announces a tender offer for 19.9% or more
of either the Meridian Common Stock outstanding or voting securities
representing a minimum of 19.9% of Meridian's total voting power. They can
also be exercised if a person or group who has become a beneficial owner of
at least 4.9% (with certain exceptions) of the Meridian Common Stock
outstanding or total voting power is declared by Meridian's Board of
Directors to be an "adverse person" (as defined in the Meridian Rights
Agreement). After the Meridian Rights become exercisable, the Meridian Rights
(other than rights held by a 19.9% beneficial owner or an "adverse person")
will entitle the holders to purchase, under certain circumstances, either
Meridian Common Stock or common stock of the potential acquiror at a
substantially reduced price. Meridian is generally entitled to redeem the
Meridian Rights at $.001 per Meridian Right at any time until the tenth
business day following public announcement that a 19.9% position has been
acquired. The Meridian Rights are not redeemable following an "adverse
person" determination. The Meridian Rights expire on July 25, 1999.
The Meridian Rights Agreement is incorporated herein by reference. See
"INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE." The foregoing description
of the Meridian Rights does not purport to be complete and is qualified in
its entirety by reference to the Meridian Rights Agreement.
PREFERRED STOCK
Meridian Preferred Stock may be issued from time to time as a class,
without series or in one or more series, by resolution of the Meridian Board
of Directors. Each series or class will have such dividend rate, payment
dates and dates from which dividends cumulate, and such general voting,
redemption, liquidation, conversion and sinking fund rights as the Meridian
Board of Directors may determine. All shares of one series must be identical,
and all series will rank equally except with respect to the rights particular
to each series fixed by the Board. Each series is entitled to receive, when
and as declared by the Board of Directors and before any dividends (other
than dividends payable in Meridian Common Stock) are paid on Meridian Common
Stock, dividends at the rate fixed by the Board for such series.
CAPITAL NOTES
In December 1984, Meridian issued $75 million in principal amount of
Floating Rate Subordinated Capital Notes due December 1, 1996 (the "Notes")
pursuant to an indenture dated as of December 1, 1984, between Meridian and
Morgan Guaranty Trust Company of New York, as trustee. The Notes bear
interest at a rate of 1/8 of 1% above the arithmetic mean of the London
interbank offered rate (LIBOR) quotations for three-month Eurodollar
deposits, adjusted quarterly. The Notes mature on December 1, 1996, and are
subordinate and junior in right of payment to senior indebtedness of
Meridian. At maturity, the Notes will be exchanged for capital securities
(including Meridian Common Stock and Meridian Preferred Stock) having a
market value equal to the principal amount of the Notes. Since December 1,
1988, Meridian has had the option to exchange the Notes for such capital
securities or, under certain circumstances, for cash prior to maturity.
Holders of Notes have none of the rights or privileges of shareholders of
Meridian until the Notes are exchanged for capital stock. In December 1993,
Meridian received approval from the Federal Reserve Bank to revoke its
obligation to exchange the notes for capital securities at maturity.
SPECIAL CHARTER AND PENNSYLVANIA CORPORATE LAW PROVISIONS
Meridian's Articles of Incorporation and bylaws contain certain provisions
which may have the effect of deterring or discouraging, among other things, a
nonnegotiated tender or exchange offer for Meridian stock, a proxy contest for
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control of Meridian, the assumption of control of Meridian by a holder of a
large block of Meridian's stock and the removal of Meridian's management.
These provisions: (1) empower the Meridian Board of Directors, without
shareholder approval, to issue Meridian Preferred Stock the terms of which,
including voting power, are set by the Meridian Board; (2) divide the
Meridian Board of Directors into three classes serving staggered three-year
terms; (3) restrict the ability of shareholders to remove directors; (4)
require that shares with at least 80% of total voting power approve mergers
and other similar transactions with a person or entity holding stock with
more than 5% of Meridian's voting power, if the transaction is not approved,
in advance, by the Meridian Board of Directors; (5) prohibit shareholders'
actions without a meeting; (6) require that shares with at least 80%, or in
certain instances two-thirds, of total voting power approve repeal or
amendment of certain provisions of Meridian's articles of incorporation; (7)
require any person who acquires stock of Meridian with voting power of 25% or
more to offer to purchase for cash all remaining shares of Meridian's voting
stock at the highest price paid by such person for shares of Meridian's
voting stock during the preceding year; (8) eliminate cumulative voting in
elections of directors; (9) require that shares with at least two-thirds of
total voting power approve repeal or amendment of Meridian's bylaws; and (10)
require advance notice of nominations for the election of directors and the
presentation of shareholder proposals at meetings of shareholders.
The Pennsylvania Business Corporation Law of 1988 (the "PaBCL") contains
certain provisions applicable to Meridian which may have similar effects. See
"COMPARISON OF SHAREHOLDER RIGHTS."
COMPARISON OF SHAREHOLDER RIGHTS
GENERAL
Meridian is a Pennsylvania corporation subject to the provisions of the
PaBCL. UCB is a New Jersey corporation subject to the provisions of the New
Jersey Business Corporation Act ("NJBCA"). Stockholders of UCB, whose rights
are governed by UCB's Certificate of Incorporation and Bylaws and the NJBCA
will, upon completion of the Merger, become shareholders of Meridian and, on
the Effective Date, their rights as shareholders of Meridian will be
determined by Meridian's Articles of Incorporation, Meridian's Bylaws and the
PaBCL.
The following is a summary of the material differences in the rights of
stockholders of UCB under the UCB's Certificate of Incorporation, Bylaws and
the NJBCA, on the one hand, and the rights of shareholders of Meridian under
Meridian's Articles of Incorporation, Bylaws and the PaBCL, on the other
hand. The following discussion does not purport to be a complete discussion
of, and is qualified in its entirety by reference to, the governing law and
the Articles or Certificate of Incorporation and Bylaws of each corporation.
AUTHORIZED CAPITAL
Meridian's Articles of Incorporation authorize the issuance of 200,000,000
shares of Meridian Common Stock, par value $5.00 per share, and 25,000,000
shares of preferred stock, par value $25.00 per share. As of July 31, 1995,
there were 58,338,038 shares of Meridian Common Stock and no shares of
Meridian Preferred Stock outstanding.
UCB's Certificate of Incorporation authorizes the issuance 6,000,000 of
UCB Common Stock, no par value, $1.00 stated value per share, of which ------
shares were issued and outstanding as of the Record Date, and 3,000,000
shares of preferred stock, no par value (the "UCB Preferred Stock"), none of
which were issued and outstanding as of the Record Date. UCB Preferred Stock
is issuable in series, each having such rights, and preferences as the Board
of Directors of UCB may, by adoption of an amendment of UCB's Certificate of
Incorporation, fix and determine.
DIRECTORS
REMOVAL
Pursuant to Meridian's Articles of Incorporation, Meridian directors may
be removed from office without cause by the affirmative vote of a majority of
outstanding voting shares. UCB's Certificate of Incorporation does not
provide for the removal of directors. However, pursuant to the NJBCA, one or
more UCB directors may be removed without cause by the affirmative vote of
the majority of votes cast by stockholders entitled to vote for the election
of directors.
NOMINATION
Meridian's Bylaws provide that nominations for the election of directors
may be made by the Board of Directors or any shareholder entitled to vote for
the election of directors. Written notice of a shareholder's intent to
nominate a director at the meeting must be given by the shareholder and
received by the Secretary of Meridian not less than 30 days nor more than
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50 days prior to the date of the annual meeting of shareholders. However, if
less than 21 days' notice of the meeting is given to shareholders, written
notice of a shareholder's intent to nominate a director is required to be
delivered to the Secretary of Meridian not later than the seventh day following
the day on which notice of the meeting was first mailed to shareholders. The
notice is required to be in writing and contain or be accompanied by certain
information about such shareholder, as described in Meridian's Bylaws. The
chairman of the meeting may, if the facts warrant, determine and declare to the
meeting that any nomination made at the meeting was not made in accordance with
the foregoing procedures and, in such event, the nomination will be disregarded.
Neither the Certificate of Incorporation or Bylaws of UCB nor the NJBCA
sets forth the procedures pursuant to which UCB shareholders may nominate a
candidate for election as a director.
Election of Directors
Meridian's Articles of Incorporation and Bylaws provide that the Meridian
Board of Directors shall be composed of not less than 12 nor more than 24
directors, the number of which may be determined by the Meridian Board of
Directors. Currently, the Meridian Board of Directors is composed of 24
members. The Meridian Board of Directors is divided into three classes, each
serving three-year terms, so that approximately one-third of the directors of
Meridian are elected at each annual meeting of shareholders of Meridian.
Classification of the Meridian Board of Directors has the effect of
decreasing the number of directors that could be elected in a single year by
any person who seeks to elect its designees to a majority of the seats on the
Meridian Board of Directors and thereby could impede a change in control of
Meridian.
UCB's Bylaws provide that the UCB Board of Directors shall be composed of
not less than 5 nor more than 25 directors, the number of which may be
determined by the UCB Board of Directors. Currently, the UCB Board of
Directors is composed of six members. UCB's Board of Directors is not
classified. All directors of UCB are elected at each annual meeting of
shareholders of UCB. Therefore, any person who seeks to elect its designees
to a majority of the seats on the UCB Board of Directors could do so at any
annual meeting.
Cumulative Voting
Neither Meridian's nor UCB's shareholders are permitted to cumulate votes
in the election of directors.
Limited Liability
As permitted by the PaBCL, Meridian's Bylaws provide that directors of
Meridian are not personally liable for taking or failing to take any action
unless the director breached or failed to perform the duties of his or her
office as set forth under Pennsylvania law and such breach or failure
constitutes self-dealing, willful misconduct or recklessness; provided,
however, that there is no such elimination of liability arising under any
criminal statute or with respect to the payment of taxes pursuant to local,
state or federal law.
As permitted by the NJBCA, UCB's Certificate of Incorporation provides
that directors of UCB are not personally liable for breach of any duty owed
to UCB or its shareholders, unless such breach of duty is the result of an
act or omission (i) in breach of such director's duty of loyalty to UCB or
its shareholders, (ii) not in good faith or involving a knowing violation of
law, or (iii) resulting in receipt by such person of an improper personal
benefit.
Indemnification
As permitted by the PaBCL, Meridian's Bylaws provide for indemnification
of directors, officers and agents for certain litigation-related liabilities
and expenses unless the individual's conduct is determined by a court to have
constituted willful misconduct or reckless conduct.
As permitted by the NJBCA, UCB's Certificate of Incorporation provides for
indemnification of directors, officers, employees and agents of UCB, and any
other person serving in such capacity with any other entity at the request of
UCB, for certain litigation-related liabilities and expenses to the full
extent permitted under the NJBCA.
SHAREHOLDERS' MEETINGS
Meridian's Bylaws provide that the Board of Directors may fix the date and
time of the annual meeting of shareholders, but if no such date is fixed, the
meeting for any calendar year is to be held on the third Tuesday of April in
such year. Notice of the annual meeting of shareholders must be given not
less than 10 days before the date of the meeting. The presence, in person or by
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proxy, of shareholders entitled to cast at least 66 2/3 % of the votes that all
shareholders are entitled to cast constitutes a quorum for the transaction of
business at the meeting. Meridian's Bylaws provide that special meetings of
shareholders may be called at any time by any of the following: (1) the Chief
Executive Officer, Chairman or President of Meridian; (2) the Board of Directors
of Meridian or the Executive Committee thereof; or (3) Meridian shareholders
entitled to cast at least 20% of the votes which all shareholders are entitled
to cast at the meeting. Notice of special meetings of shareholders must be given
not less than 10 days before the date of the meeting.
UCB's Bylaws provide that the Board of Directors may fix the date and time
of the annual meeting of shareholders. Notice of the annual meeting of
shareholders must be given not less than 10 days nor more than 60 days prior
to the date of the meeting. The presence, in person or by proxy, of a
majority of the outstanding voting shares constitute a quorum for the
transaction of business at the meeting. A special meeting of UCB's
shareholders may be called at any time by any of the following: (1) the
Chairman or President of UCB, or (2) a majority of the Board of Directors.
The NJBCA provides that holders of 10% or more of all the shares entitled to
vote may apply to the Superior Court of New Jersey to order that a special
meeting of shareholders be held. Notice of a special meeting of shareholders
must be given not less than 10 nor more than 60 days prior to the date of the
meeting.
Meridian's Bylaws set forth procedures pursuant to which any business,
including the nomination of directors by a shareholder, may be properly
brought by a shareholder before an annual meeting of shareholders. Neither
UCB's Bylaws nor its Certificate of Incorporation set forth similar
procedures.
SHAREHOLDER RIGHTS PLAN
Meridian has adopted a shareholder rights plan pursuant to which holders
of Meridian Common Stock are entitled, under certain circumstances generally
involving an accumulation of Meridian Common Stock, to purchase Meridian
Common Stock or common stock of the potential acquiror at a substantially
reduced price. See "DESCRIPTION OF MERIDIAN CAPITAL SECURITIES -- Shareholder
Rights Plan." UCB has not adopted a shareholder rights plan.
ANTITAKEOVER PROVISIONS
Meridian is subject to some, but not all, of various provisions of the
PaBCL which are triggered, in general, if any person or group acquires, or
discloses an intent to acquire, 20% or more of the voting power of a covered
corporation, other than pursuant to a registered firm commitment underwriting
or, in certain cases, pursuant to the approving vote of the board of
directors. The relevant provisions are contained in Subchapters 25E-H of the
PaBCL.
Subchapter 25E of the PaBCL (relating to control transactions) provides
that if any person or group acquires 20% or more of the voting power of a
covered corporation, the remaining shareholders may demand from such person
or group the fair value of their shares, including a proportionate amount of
any control premium.
Subchapter 25F of the PaBCL (relating to business combinations) delays for
five years and imposes conditions upon "business combinations" between an
"interested shareholder" and the corporation. The term "business combination"
is defined broadly to include various transactions utilizing a corporation's
assets for purchase price amortization or refinancing purposes. For this
purpose, an "interested shareholder" is defined generally as the beneficial
owner of at least 20% of a corporation's voting shares.
Subchapter 25G of the PaBCL (relating to control- share acquisitions)
prevents a person who has acquired 20% or more of the voting power of a
covered corporation from voting such shares unless the "disinterested"
shareholders approve such voting rights. Failure to obtain such approval
exposes the owner to the risk of a forced sale of the shares to the issuer.
Even if shareholder approval is obtained, the corporation is also subject to
Subchapters 25I and J of the PaBCL. Subchapter 25I provides for a minimum
severance payment to certain employees terminated within two years of the
approval. Subchapter 25J prohibits the abrogation of certain labor contracts
prior to their stated date of expiration.
Subchapter 25H of the PaBCL (relating to disgorgement) applies in the
event that (i) any person or group publicly discloses that the person or
group may acquire control of the corporation or (ii) a person or group
acquires (or publicly discloses an offer or intent to acquire) 20% or more
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of the voting power of the corporation and, in either case, sells shares within
18 months thereafter. Any profits from sales of equity securities of the
corporation by the person or group during the 18-month period belong to the
corporation if the securities that were sold were acquired during the 18-month
period or within 24 months prior thereto.
Subchapters 25E-H of the PaBCL contain a wide variety of transactional and
status exemptions, exclusions and safe harbors. As permitted under the PaBCL,
Meridian has opted out of the provisions of Subchapters 25G and H but is
subject to the provisions of Subchapters 25E and F. Such action can be
reversed under certain circumstances.
In addition, the fiduciary duty standards applicable to the Board of
Directors of Meridian under the PaBCL and certain provisions of Meridian's
Articles of Incorporation and Bylaws may have the effect of deterring or
discouraging, among other things, a nonnegotiated tender or exchange offer
for Meridian stock, a proxy contest for control of Meridian, the assumption
of control of Meridian by a holder of a large block of Meridian's stock and
the removal of Meridian's management. See "DESCRIPTION OF MERIDIAN CAPITAL
SECURITIES -- Special Charter and Pennsylvania Corporation Law Provisions."
Under a provision of the Pennsylvania Banking Code of 1965 designed to
protect shareholders of Pennsylvania banking institutions (including Meridian),
subject to certain exceptions, no person may offer to acquire, or acquire,
control of more than 10% of the outstanding shares of a Pennsylvania banking
institution or 5% of the outstanding shares of a Pennsylvania banking
institution if such institution had net operating loss carry forwards in excess
of 20% of its total shareholders' equity as reported in its most recent publicly
available annual financial statements, without the prior written approval of the
Pennsylvania Department of Banking.
The New Jersey Shareholders Protection Act ("NJSPA") provides that no
corporation organized under the laws of New Jersey with its principal
executive offices or significant operations located in New Jersey (a "New
Jersey Resident Domestic Corporation") may engage in any "business
combination" (as defined in the NJSPA, a "Business Combination") with any
interested shareholder (as defined in the NJSPA, an "Interested Stockholder")
of that New Jersey Resident Domestic Corporation for a period of five years
following that Interested Stockholder's stock acquisition unless that
Business Combination is approved by the board of directors of that New Jersey
Resident Domestic Corporation prior to that Interested Stockholder's stock
acquisition. The term Business Combination as defined in the NJSPA includes,
among other things, certain mergers, consolidations, asset transfers, stock
issuances, plans of liquidation and recapitalizations. Interested
Stockholder, as defined in the NJSPA, includes certain holders of 10% or more
of the voting power of the outstanding voting stock of that New Jersey
Resident Domestic Corporation and certain affiliates of the New Jersey
Resident Domestic Corporation that at any time within the five year period
immediately prior to the date in question were the beneficial owners,
directly or indirectly, of 10% or more of the voting power of the then
outstanding stock of the New Jersey Resident Domestic Corporation.
Pursuant to the NJSPA, no New Jersey Resident Domestic Corporation may
engage, at any time, in any Business Combination with any Interested
Stockholder of that New Jersey Resident Domestic Corporation other than: (i)
a Business Combination approved by the board of directors of that New Jersey
Resident Domestic Corporation prior to that Interested Stockholder's stock
acquisition, (ii) a Business Combination approved by the affirmative vote of
the holders of two-thirds of the voting stock not beneficially owned by that
Interested Stockholder at a meeting called for such purpose, or (iii) a
Business Combination where the Interested Stockholder pays a formula price
designed to ensure that all holders (other than the Interested Stockholder)
of stock of the New Jersey Resident Domestic Corporation receive at least the
highest price per share paid by that Interested Stockholder. The NJSPA does
not apply to certain inadvertent acquisitions, provided the shareholder
divests itself or himself of a sufficient number of shares in accordance with
the NJSPA. A New Jersey Resident Domestic Corporation may not opt-out of the
NJSPA.
Under the NJBCA, the director of a New Jersey corporation may consider, in
discharging his or her duties to the corporation and in determining what he
or she reasonably believes to be in the best interest of the corporation, any
of the following (in addition to the effects of any action on shareholders):
(i) the effects of the action on the corporation's employees, suppliers,
creditors and customers, (ii) the effects of the action on the community in
which the corporation operates and (iii) the long-term as well as the
short-term interests of the corporation and its shareholders, including the
possibility that these interests may be best served by the continued
independence of the corporation. If, on the basis of the foregoing factors,
the board of directors determines that any proposal or offer to acquire the
corporation is not in the best interest of the corporation, it may reject
such proposal or offer, in which event the board of directors will have no
duty to remove any obstacles to, or refrain from impeding, such proposal or
offer.
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REQUIRED SHAREHOLDER VOTE
General
Subject to the voting rights of any series of Meridian Preferred Stock
then outstanding, the holders of Meridian Common Stock possess exclusive
voting rights of Meridian. Each holder of Meridian Common Stock is entitled
to one vote for each share owned of record. There are no cumulative voting
rights in the election of directors. For general corporate action of the
shareholders of Meridian, the affirmative vote of a majority of the votes
cast in person or by proxy at a shareholders' meeting is required for
approval.
Subject to the voting rights of any series of UCB Preferred Stock then
outstanding, the holders of UCB Common Stock possess exclusive voting rights
of UCB. Each holder of UCB Common Stock is entitled to one vote for each
share owned of record. There are no cumulative voting rights in the election
of directors. For general corporate action of the shareholders of UCB, the
affirmative vote of the majority of votes cast at any shareholders' meeting
is required for approval.
Fundamental Changes
Meridian's Articles of Incorporation require that a plan of merger,
consolidation, share exchange, division, conversion or asset transfer (in
respect of a sale, lease, exchange or other disposition of all, or
substantially all, the assets of Meridian other than in the usual and regular
course of business) must be approved by the affirmative vote of shareholders
entitled to cast at least a majority of the votes which all shareholders are
entitled to cast. In the absence of prior approval by Meridian's Board of
Directors, Meridian's Articles of Incorporation require a vote of
shareholders with at least 80% of Meridian's total voting power to approve
any merger, consolidation, share exchange, asset transfer (in respect of a
sale, lease, exchange or other disposition of all, or substantially all, the
assets of Meridian) or similar transactions involving a shareholder holding
5% or more of Meridian's voting power.
UCB's Certificate of Incorporation requires a supermajority vote of
shareholders to approve business combinations (including any merger,
consolidation, or any sale, transfer, or other disposition of all or a
substantial part of the assets of UCB). For a business combination (such as
the Merger) which has been recommended by at least 66 2/3 % of UCB's Board of
Directors, the affirmative vote of 66 2/3 % of the shares entitled to vote is
required for approval. For a business combination which has not been
recommended by at least 66 2/3 % of UCB's Board of Directors, the affirmative
vote of 75% of the shares entitled to vote is required for approval.
Amendment of Articles or Certificate of Incorporation
Meridian's Articles of Incorporation contain various provisions that
require a supermajority vote of shareholders to amend or repeal particular
sections of such Articles. Amendment or repeal of the provisions of
Meridian's Articles of Incorporation relating to noncumulative voting, the
classification of directors, the requirement of holding meetings for
shareholder action, the amendment of Bylaws generally, and the consideration
of non-economic factors by Meridian's Board of Directors if evaluating a
tender offer, all require a 66 2/3 % vote of shareholders, absent prior
Meridian Board approval. In the case of certain other provisions, including
the supermajority vote requirement on a merger or similar transaction with a
5% or greater Meridian shareholder, amendment or repeal requires a vote of
shareholders owning 80% of Meridian's outstanding shares or a 66 2/3 % vote
of both Meridian's Board of Directors and its shareholders.
The NJBCA provides that a corporation's articles of incorporation may be
amended upon approval of such corporation's board of directors and the
affirmative vote of a majority of the votes cast by shareholders entitled to
vote, subject to any supermajority requirements set forth in such articles of
incorporation. UCB's Certificate of Incorporation requires the affirmative
vote of 66 2/3 % of the shares entitled to vote to amend any of the
provisions set forth in Article VI of UCB's Certificate of Incorporation
regarding business combinations.
AMENDMENT OF BYLAWS
The authority to amend or repeal Meridian's Bylaws is vested in Meridian's
Board of Directors, subject always to the power of the shareholders of
Meridian to change such action by the affirmative vote of shareholders
holding at least 66 2/3 % of the voting power (except that any amendment to
the indemnification provisions set forth in the Bylaws requires the
affirmative vote of 66 2/3 % of the Board of Directors or shareholders
holding 80% of the voting power).
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UCB's Bylaws may be amended by the Board of Directors of UCB or by the
affirmative vote of the majority of votes cast by shareholders entitled to
vote on such amendment.
MANDATORY TENDER OFFER PROVISION
Meridian's Articles of Incorporation provide that any person or entity
acquiring Meridian capital stock with 25% or more of Meridian's total voting
power is required to offer to purchase, for cash, all shares of Meridian's
voting stock, at a price per share equal to the highest price paid by such
person for each respective class of Meridian's voting stock within the
preceding twelve months. UCB's Certificate of Incorporation contains no
equivalent provision. The Pennsylvania BCL also provides that following any
acquisition by a person or group of more than 20% of a publicly-held
corporation's voting stock, the remaining shareholders have the right to
receive payment, in cash, for their shares from such person or group of an
amount equal to the "fair value" of their shares. The NJBCA contains no
equivalent provision.
DISSENTERS' RIGHTS
Under the PaBCL, a shareholder of a corporation is generally entitled to
receive payment for the fair value of such shareholder's shares if such
shareholder duly exercises its dissenters' rights with respect to a plan of
merger or consolidation, share exchange or asset transfer, to which such
corporation is a party, except if the shares are (i) listed on a national
securities exchange or (ii) held by more than 2,000 shareholders. The
foregoing market exceptions do not apply, and dissenters' rights generally
are available in respect of, (i) shares that are not converted solely into
shares or shares and money in lieu of fractional shares, (ii) shares of any
preferred or special class unless the shareholders of the class are entitled
to vote on the plan and such class vote is required for the adoption of the
plan or to effectuate the transaction and (iii) shares which under the plan
are treated differently from shares of the same class or series and which are
not entitled to vote as a special class under PaBCL Section1906(c). The PaBCL
allows a corporation to provide dissenters' rights notwithstanding the
statutory exceptions but Meridian's Articles of Incorporation and Bylaws do
not require such optional dissenters' rights. Under the PaBCL, if a plan of
merger or consolidation, share exchange, asset transfer, division or
conversion is adopted by the directors only, without any shareholder
approvals required, the shareholders have no statutory dissenters' rights in
respect of the plan other than optional dissenters' rights, if any. In
respect of the Merger, as permitted under the PaBCL, the plan has been
adopted by the Meridian Board of Directors, no action is required by Meridian
shareholders and no optional dissenters' rights have been granted to Meridian
shareholders.
The NJBCA generally provides for dissenters' rights in connection with any
merger or consolidation or any sale, lease, exchange, or other disposition of
all or substantially all of the assets of the corporation not in the usual or
ordinary course of business. However, no such rights exist with respect to
(i) any class or series of shares that is listed on a national securities
exchange or is held of record by not less than 1,000 holders on the record
date fixed to determine the shareholders entitled to vote on the transaction,
or, generally, (ii) any transaction in connection with which the shareholders
of the corporation will receive only (a) cash, (b) securities that, upon
consummation of the transaction, will be listed on a national securities
exchange or held by record by not less than 1,000 holders, or (c) cash and
such securities. A shareholder of a corporation may also dissent from any
acquisition of shares owned by such shareholder in connection with the
acquisition by another New Jersey corporation, in exchange for its shares, of
all the shares of a class or series of securities of such corporation. Any
shareholder that perfects dissenters' rights under the NJBCA is entitled to
receive the "fair value" of such shares as determined either by agreement
between such shareholder and the corporation or by a court of competent
jurisdiction. UCB shareholders have no dissenters' rights with respect to the
Merger.
DIVIDENDS
Under the PaBCL, a corporation may pay dividends unless, after giving
effect thereto, (i) the corporation would be unable to pay its debts as they
come due in the usual course of business or (ii) the total assets of the
corporation would be less than the sum of its total liabilities plus the
amount that would be needed, if the corporation were to be dissolved at the
time as of which the distribution is measured, to satisfy the preferential
rights upon dissolution of shareholders whose preferential rights are
superior to those receiving the distribution.
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Subject to any restrictions contained in a corporation's certificate of
incorporation, the NJBCA provides that a corporation may pay dividends
unless, after giving effect thereto, (i) the corporation would be unable to
pay its debts as they become due in the usual course of its business or (ii)
the corporation's total assets would be less than its total liabilities.
UCB's Certificate of Incorporation provides that no dividends may be paid on
UCB Common Stock if UCB is in default with respect to any dividend due and
payable on, or any sinking fund or redemption requirements with respect to,
any outstanding UCB Preferred Stock.
VOLUNTARY DISSOLUTION
Under the PaBCL, if Meridian's Board of Directors recommends that Meridian
be dissolved and directs that the question be submitted to a vote at a
meeting of shareholders, Meridian may be dissolved upon the affirmative vote
of a majority of the votes cast by all shareholders entitled to vote thereon
and, if any class of shares is entitled to vote thereon as a class, the
affirmative vote of a majority of the votes cast in each class vote. Under
Meridian's Articles of Incorporation if at least 66 2/3 % of Meridian's Board
of Directors has not recommended that Meridian be dissolved, Meridian may be
dissolved upon the affirmative vote of shareholders entitled to cast at least
80% of the votes which all shareholders are entitled to cast.
Under the NJBCA, UCB may be dissolved upon the consent of all its
shareholders entitled to vote thereon or, alternatively, if the UCB Board
recommends that UCB be dissolved and directs that the question be submitted
to a vote at a meeting of shareholders, UCB may be dissolved upon the
affirmative vote of a majority of the votes cast by the shareholders entitled
to vote thereon and, if any class or series of securities of UCB is entitled
to vote on such motion as a class, upon the affirmative vote of a majority of
the votes cast by each such class. If the dissolution is proposed by, on
behalf of or pursuant to any agreement, arrangement or understanding with an
Interested Stockholder, the NJSPA will apply. See "Antitakeover Provisions"
above.
PREEMPTIVE RIGHTS
Neither the holders of Meridian Common Stock nor UCB Common Stock are
entitled to preemptive rights.
ADJOURNMENT OF SPECIAL MEETING
In the event there are not sufficient votes to constitute a quorum or
approve the adoption of the Merger Agreement at the time of the Special
Meeting, such proposal could not be approved unless the Special Meeting were
adjourned in order to permit further solicitation of proxies. In order to
allow proxies that have been received by UCB at the time of the Special
Meeting to be voted for such adjournment, if necessary, UCB has submitted the
question of adjournment under such circumstances to its stockholders as a
separate matter for their consideration. A majority of the shares represented
and voting at the Special Meeting is required in order to approve any such
adjournment. The Board of Directors of UCB recommends that shareholders vote
their proxies in favor of such adjournment so that their proxies may be used
for such purposes in the event it should become necessary. Properly executed
proxies will be voted in favor of any such adjournment unless otherwise
indicated thereon. If it is necessary to adjourn the Special Meeting, no
notice of the time and place of the adjourned meeting is required to be given
to shareholders other than an announcement of such time and place at the
Special Meeting.
EXPERTS
The consolidated financial statements of Meridian and subsidiaries as of
December 31, 1994 and 1993, and for each of the years in the three-year
period ended December 31, 1994, have been incorporated by reference herein
and in the Registration Statement in reliance upon the report of KPMG Peat
Marwick LLP, independent certified public accountants, incorporated by
reference herein, and upon the authority of said firm as experts in
accounting and auditing. The report of KPMG Peat Marwick LLP covering the
aforementioned financial statements contains an explanatory paragraph which
discusses that Meridian adopted the provisions of the Financial Accounting
Standards Board's Statement of Financial Accounting Standards No. 115,
Accounting for Certain Investments in Debt and Equity Securities, and No.
112, Employers' Accounting for Postemployment Benefits, in 1994, and No. 106,
Employers' Accounting for Postretirement Benefits Other Than Pensions, and
No. 109, Accounting for Income Taxes, in 1993.
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The consolidated financial statements of UCB as of December 31, 1994 and
1993 and for each of the years in the three-year period ended December 31,
1994, have been incorporated by reference herein and in the Registration
Statement in reliance upon the report of KPMG Peat Marwick LLP, independent
certified public accountants, incorporated by reference herein, and upon the
authority of said firm as experts in accounting and auditing. The report of
KPMG Peat Marwick LLP covering the aforementioned consolidated financial
statements refers to a change in method of accounting for certain investments
in debt and equity securities in 1994, income taxes in 1993 and
post-retirement benefits other than pensions in 1992.
LEGAL MATTERS
The validity of the Meridian Common Stock to be issued is being passed
upon for Meridian by the law firm of Stevens & Lee, Reading, Pennsylvania,
special counsel to Meridian. Sidney D. Kline, Jr., a director of Meridian, is
a principal of the firm of Stevens & Lee. Certain attorneys at Stevens & Lee
and members of their immediate families own or have investment discretion
with respect to an aggregate of less than 75,000 shares of Meridian Common
Stock.
STOCKHOLDER PROPOSALS
To be eligible for inclusion in UCB's proxy materials relating to UCB's
annual meeting of stockholders to be held in 1996 (if the Merger is not
effected by that date), a stockholder proposal must be received by the
Secretary of UCB on or before November 10, 1995.
OTHER MATTERS
As of the date of this Proxy Statement/Prospectus, the Board of Directors
of UCB knows of no matters which will be presented for consideration at the
Special Meeting other than as set forth in the Notice of Special Meeting
accompanying this Proxy Statement/Prospectus. However, if any other matters
shall come before the meeting or any adjournments thereof and be voted upon,
the enclosed Proxy shall be deemed to confer discretionary authority to the
individuals named as proxies therein to vote the shares represented by such
Proxy as to any such matters.
55
<PAGE>
ANNEX A
AGREEMENT AND PLAN
OF MERGER
BETWEEN
MERIDIAN BANCORP, INC.
AND
UNITED COUNTIES BANCORPORATION
MAY 23, 1995
<PAGE>
AGREEMENT
TABLE OF CONTENTS
PAGE
BACKGROUND .............................................................. A-1
AGREEMENT ............................................................... A-1
ARTICLE I
Section 1.01 Definitions ................................................ A-1
Section 1.02 The Merger ................................................. A-4
Section 1.03 The Bank Merger ............................................ A-7
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF UCB
Section 2.01 Organization ............................................... A-7
Section 2.02 Capitalization ............................................. A-7
Section 2.03 Authority; No Violation .................................... A-8
Section 2.04 Consents; Dissenters' Rights ............................... A-9
Section 2.05 Financial Statements ....................................... A-9
Section 2.06 Taxes ...................................................... A-9
Section 2.07 No Material Adverse Change ................................. A-10
Section 2.08 Contracts .................................................. A-10
Section 2.09 Ownership of Property; Insurance Coverage .................. A-11
Section 2.10 Legal Proceedings .......................................... A-11
Section 2.11 Compliance With Applicable Law ............................. A-11
Section 2.12 ERISA ...................................................... A-12
Section 2.13 Brokers and Finders ........................................ A-13
Section 2.14 Environmental Matters ...................................... A-13
Section 2.15 Loan Portfolio ............................................. A-13
Section 2.16 Information to be Supplie .................................. A-13
Section 2.17 Securities Documents ....................................... A-13
Section 2.18 Related Party Transactions ................................. A-13
Section 2.19 Investment Banking Opinion ................................. A-13
Section 2.20 Antitakeover Provisions Inapplicable ....................... A-13
Section 2.21 Quality of Representations ................................. A-13
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF MERIDIAN
Section 3.01 Organization ............................................... A-14
Section 3.02 Capital Structure .......................................... A-14
Section 3.03 Authority; No Violation .................................... A-15
Section 3.04 Consents ................................................... A-15
Section 3.05 Financial Statements ....................................... A-16
Section 3.07 No Material Adverse Change ................................. A-16
Section 3.08 Contracts .................................................. A-16
Section 3.09 Ownership of Property; Insurance Coverage .................. A-17
Section 3.10 Legal Proceedings .......................................... A-17
Section 3.11 Compliance With Applicable Law ............................. A-17
Section 3.12 ERISA ...................................................... A-18
Section 3.13 Brokers and Finders ........................................ A-18
Section 3.14 Environmental Matters ...................................... A-18
Section 3.15 Loan Portfolio ............................................. A-18
A-i
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Section 3.16 Information to be Supplied .................................. A-19
Section 3.17 Securities Documents ........................................ A-19
Section 3.18 Related Party Transactions .................................. A-19
Section 3.19 Investment Banking Opinion .................................. A-19
Section 3.20 Quality of Representations .................................. A-19
ARTICLE IV
COVENANTS OF THE PARTIES
Section 4.01 Conduct of UCB's Business ................................... A-19
Section 4.02 Access; Confidentiality ..................................... A-21
Section 4.03 Regulatory Matters and Consents ............................. A-22
Section 4.04 Taking of Necessary Action .................................. A-22
Section 4.05 Certain Agreements .......................................... A-23
Section 4.06 No Other Bids and Related Matters ........................... A-23
Section 4.07 Core Deposits ............................................... A-23
Section 4.08 Duty to Advise; Duty to Update UCB's Disclosure Schedule .... A-24
Section 4.09 Conduct of Meridian's Business .............................. A-24
Section 4.10 Board and Committee Minutes and Meetings .................... A-24
Section 4.11 Undertakings by Meridian and UCB ............................ A-24
Section 4.12 Employee Benefits ........................................... A-25
Section 4.13 Employee Relations .......................................... A-26
Section 4.14 Relocation of Corporate Headquarters ........................ A-26
Section 4.15 Post-Closing Board Membership ............................... A-26
ARTICLE V
CONDITIONS
Section 5.01 Conditions to UCB's Obligations under this Agreement ........ A-26
Section 5.02 Conditions to Meridian's Obligations under this Agreement ... A-28
ARTICLE VI
TERMINATION, WAIVER AND AMENDMENT
Section 6.01 Termination ................................................. A-29
Section 6.02 Effect of Termination ....................................... A-29
ARTICLE VII
MISCELLANEOUS
Section 7.01 Expenses A-29
Section 7.02 Survival of Representations, Warranties and Covenants ....... A-29
Section 7.03 Amendment, Extension and Waiver ............................. A-29
Section 7.04 Entire Agreement ............................................ A-30
Section 7.05 No Assignment ............................................... A-30
Section 7.06 Notices ..................................................... A-30
Section 7.07 Captions .................................................... A-31
Section 7.08 Counterparts ................................................ A-31
Section 7.09 Severability ................................................ A-31
Section 7.10 Governing Law ............................................... A-31
Exhibit 1 UCB Affiliate Agreement
Exhibit 2 Stock Option Agreement
Exhibit 3 Bank Plan of Merger
Exhibit 4 Form of Opinion of Meridian's Counsel
Exhibit 5 Form of Tax Opinion of Meridian's Counsel
Exhibit 6 Form of Opinion of UCB's Counsel
A-ii
<PAGE>
AGREEMENT
THIS AGREEMENT AND PLAN OF MERGER, dated as of May 23, 1995, is made by
and between MERIDIAN BANCORP, INC. ("Meridian"), a Pennsylvania corporation,
having its principal place of business at 35 North Sixth Street, Reading,
Pennsylvania 19603, and UNITED COUNTIES BANCORPORATION ("UCB"), a New Jersey
corporation, having its principal place of business at Four Commerce Drive,
Cranford, New Jersey 07016.
BACKGROUND
1. Meridian and UCB desire to cause the merger of UCB with and into
Meridian, with Meridian surviving such merger, in accordance with the
applicable laws of the Commonwealth of Pennsylvania and the State of New
Jersey, and in accordance with the plan of merger set forth herein.
2. After approval by the Board of Directors of UCB and prior to the
execution and delivery of this Agreement, and as a condition and inducement
to Meridian's execution of this Agreement (a) certain directors, officers and
shareholders of UCB executed, in favor of Meridian, a Letter Agreement dated
May 23, 1995, in the form attached hereto as Exhibit 1, and (b) UCB granted
to Meridian an option to acquire, under certain circumstances, UCB's common
stock (the "Meridian Option") pursuant to a Stock Option Agreement between
Meridian and UCB dated May 23, 1995, in the form attached hereto as Exhibit
2.
3. Meridian desires to merge United Counties Trust Company, a New Jersey
banking corporation and a wholly- owned subsidiary of UCB ("UCTC") into and
with Meridian Bank, New Jersey, a New Jersey banking corporation and a
wholly-owned subsidiary of Meridian ("MBNJ"), with MBNJ surviving such merger
in accordance with the Bank Plan of Merger in the form attached hereto as
Exhibit 3.
4. Meridian and UCB desire to provide the terms and conditions governing
the transactions contemplated herein.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants, agreements, representations and warranties herein contained, the
parties hereto, intending to be legally bound, do hereby agree as follows:
ARTICLE I
Section 1.01 Definitions. As used in this Agreement, the following terms
shall have the indicated meanings (such meanings to be equally applicable to
both the singular and plural forms of the terms defined):
Affiliate means, with respect to any Person, any Person who directly, or
indirectly, through one or more intermediaries, controls, or is controlled
by, or is under common control with, such Person and, without limiting the
generality of the foregoing, includes any executive officer, director or 5%
equity owner of such Person.
Agreement means this agreement, and any amendment or supplement hereto,
which constitutes a "plan of merger" between Meridian and UCB.
Applications means the applications for regulatory approval which are
required by the transactions contemplated hereby.
Articles of Merger means the articles of merger to be executed by Meridian
and UCB and to be filed in the PDS and the NJDS, in accordance with the
applicable laws of the Commonwealth of Pennsylvania and the State of New
Jersey.
Bank Merger means the merger of UCTC with and into MBNJ, with MBNJ
surviving such merger, contemplated by Section 1.03 of this Agreement.
Bank Plan of Merger has the meaning given to that term in Section 1.03 of
this Agreement.
Bank Regulatory Authority means any banking agency or department of any
federal or state government, including without limitation the FRB, the FDIC,
the PDB, the NJDB or the respective staffs thereof.
BCL means the Pennsylvania Business Corporation Law of 1988, as amended.
A-1
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BHC Act means the Bank Holding Company Act of 1956, as amended.
Closing Date means the seventh business day after the last condition
precedent pursuant to this Agreement has been fulfilled or waived, or such
other date as Meridian and UCB shall agree.
Compensation and Benefits Package has the meaning given to that term in
Section 4.12 of this Agreement.
Effective Date means the date upon which the Articles of Merger shall be
filed with the PDS and the NJSOS.
Environmental Law means any federal, state, local or foreign law, statute,
ordinance, rule, regulation, code, license, permit, authorization, approval,
consent, order, judgment, decree, injunction or agreement with any
Environmental Regulatory Authority relating to (i) the protection,
preservation or restoration of the environment (including, without
limitation, air, water vapor, surface water, groundwater, drinking water
supply, surface soil, subsurface soil, plant and animal life or any other
natural resource), and/or (ii) the use, storage, recycling, treatment,
generation, transportation, processing, handling, labeling, production,
release or disposal of any substance presently listed, defined, designated or
classified as hazardous, toxic, radioactive or dangerous, or otherwise
regulated, whether by type or by quantity, including any material containing
any such substance as a component.
Environmental Regulatory Authority means, individually and collectively,
any one or more of the United States Environmental Protection Agency, the
Commonwealth of Pennsylvania Department of Environmental Resources, the
NJDERE, the United States Occupational Safety and Health Administration, the
Commonwealth of Pennsylvania Department of Labor and Industry, and United
States Army Corps of Engineers and any other federal, state or local
administration, agency or bureau charged with the establishment of
regulations, or the administration or enforcement of laws and regulations,
pertaining to the use, storage, transport or disposal of hazardous or toxic
substances, protection of wetlands or worker safety, or otherwise pertaining
to the protection of the environment.
ERISA means the Employee Retirement Income Security Act of 1974, as
amended.
Exchange Act means the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated from time to time thereunder.
Exchange Agent has the meaning given to the term in Section 1.02(f)(iii)
of this Agreement.
Exchange Ratio has the meaning given to the term in Section 1.02(e)(ii) of
this Agreement.
FDIC means the Federal Deposit Insurance Corporation.
FRB means the Federal Reserve Board.
GAAP means generally accepted accounting principles as in effect at any
particular time.
IRC means the Internal Revenue Code of 1986, as amended.
IRS means the Internal Revenue Service.
Material Adverse Change shall mean, with respect to Meridian or UCB, any
adverse change in financial condition or results of operations which is
material to such entity on a consolidated basis.
Material Adverse Effect (only when such precise phrase is used) shall
mean, with respect to Meridian or UCB, any adverse effect on assets,
business, financial condition or results of operations which is material to
such entity on a consolidated basis.
Merger means the merger of UCB with and into Meridian, with Meridian
surviving such merger, contemplated by this Agreement.
Meridian Bank means Meridian Bank, a Pennsylvania bank and trust company,
all the outstanding capital stock of which is owned by Meridian.
Meridian Common Stock has the meaning given to that term in Section
3.02(a) of this Agreement.
Meridian Disclosure Schedule means a disclosure schedule delivered by
Meridian to UCB pursuant to Article III of this Agreement.
Meridian ESOP means the Meridian Bancorp, Inc. Employee Stock Ownership
Plan.
A-2
<PAGE>
Meridian Financials means (i) the audited consolidated financial
statements of Meridian contained in Meridian's annual report on Form 10-K for
the year ended December 31, 1994, and (ii) the unaudited interim consolidated
financial statements of Meridian as of each calendar quarter thereafter
included in Securities Documents filed by Meridian prior to the Effective
Date.
Meridian Option means the option granted to Meridian to acquire shares of
UCB Common Stock referenced in the Background Section of this Agreement.
Meridian Regulatory Agreement has the meaning given to that term in
Section 3.11 of this Agreement.
Meridian Regulatory Reports means the Call Reports, consolidated reports
of condition and income, and accompanying schedules, filed by Meridian Bank,
Delaware Trust, MBNJ and other current or prior Meridian banking
subsidiaries, if any, with any Regulatory Authority for each calendar
quarter, beginning with the quarter ended December 31, 1992, through the
Closing Date.
Meridian Rights Agreement means the Rights Agreement dated as of July 25,
1989, as amended, between Meridian and Meridian Bank, as rights agent,
relating to Meridian's Series A Junior Participating Preferred Stock.
Meridian Stock Purchase Rights means Rights to purchase a unit of
Meridian's Series A Junior Participating Preferred Stock in accordance with
the terms of the Meridian Rights Agreement.
Meridian Subsidiaries means any Subsidiary of Meridian.
NASD means the National Association of Securities Dealers, Inc.
NJBCA means the New Jersey Business Corporation Act, as amended.
NJDB means the Department of Banking of the State of New Jersey.
NJDEPE means the New Jersey Department of Environmental Protection and
Energy.
NJSOS means the Office of the Secretary of State of the State of New
Jersey.
PDB means the Department of Banking of the Commonwealth of Pennsylvania.
PDS means the Department of State of the Commonwealth of Pennsylvania.
Person means any individual, corporation, partnership, joint venture,
association, trust, other entity or "group" (as that term is defined under
the Exchange Act).
Prospectus/Proxy Statement means the prospectus/proxy statement, together
with any supplements thereto, to be transmitted to holders of UCB Common
Stock in connection with the transactions contemplated by this Agreement.
Registration Statement means the registration statement on Form S-4,
including any pre-effective or post-effective amendments or supplements
thereto, to be filed with the SEC under the Securities Act with respect to
the Meridian Common Stock and Meridian Stock Purchase Rights to be issued in
connection with the transactions contemplated by this Agreement.
Regulatory Authority means any Bank Regulatory Authority or Environmental
Regulatory Authority.
Rights means warrants, options, rights, convertible securities and other
capital stock equivalents which obligate an entity to issue its securities.
SEC means the Securities and Exchange Commission.
Securities Act means the Securities Act of 1933, as amended, and the rules
and regulations promulgated from time to time thereunder.
Securities Documents means all registration statements, schedules,
statements, forms, reports, proxy material, and other documents required to
be filed under the Securities Laws.
Securities Laws means the Securities Act and the Exchange Act and the
rules and regulations promulgated from time to time thereunder.
A3
<PAGE>
Subsidiary of any Person means any corporation or other entity, 50% or
more of the capital stock or equivalent ownership interest of which is owned,
either directly or indirectly, by such Person, except any corporation or
other entity the stock or equivalent ownership interest of which is held in
the ordinary course of the lending activities of such Person (if such Person
is a bank) or is held in the ordinary course of the lending activities of a
bank Subsidiary of such Person.
UCB Common Stock means the common stock of UCB described in Section
2.02(a).
UCB Disclosure Schedule means a disclosure schedule delivered by UCB to
Meridian pursuant to Article II of this Agreement.
UCB Financials means (i) the audited consolidated financial statements of
UCB contained in UCB's annual report on Form 10-K for the year ended December
31, 1994, and (ii) the unaudited interim consolidated financial statements of
UCB as of each calendar quarter thereafter included in Securities Documents
filed by UCB.
UCB Regulatory Agreement has the meaning given to that term in Section
2.11 of this Agreement.
UCB Regulatory Reports means the Call Reports, consolidated reports of
condition and income, and accompanying schedules, filed by UCTC and other
prior UCB banking subsidiaries, if any, with any Regulatory Authority for
each calendar quarter, beginning with the quarter ended December 31, 1992,
through the Closing Date.
UCB Subsidiaries means any Subsidiary of UCB.
Section 1.02 The Merger.
(a) Closing. The Closing will take place at 10:00 a.m. on the Closing Date
at the offices of counsel to Meridian, unless another time and place are
agreed to by the parties hereto, provided in any case that all conditions to
Closing set forth in Article V have been satisfied or waived at or prior to
Closing. UCB and Meridian shall cause the Articles of Merger to be duly
executed at the Closing and to be filed in the PDS and the NJSOS immediately
after the Closing.
(b) The Merger. Subject to the terms and conditions of this Agreement, on
the Effective Date: UCB shall merge with and into Meridian; the separate
existence of UCB shall cease; Meridian shall be the surviving corporation in
the Merger; and all of the property (real, personal and mixed), rights,
powers and duties and obligations of UCB shall be taken and deemed to be
transferred to and vested in Meridian, as the surviving corporation in the
Merger, without further act or deed; all debts, liabilities and duties of
each of UCB and Meridian shall thereafter be the responsibility of Meridian
as the surviving corporation; all in accordance with the applicable laws of
the Commonwealth of Pennsylvania and the State of New Jersey.
(c) Meridian's Articles of Incorporation and Bylaws. On and after the
Effective Date, the articles of incorporation and the bylaws of Meridian, as
in effect immediately prior to the Effective Date, shall automatically be and
remain the articles of incorporation and bylaws of Meridian, as the surviving
corporation in the Merger, until thereafter altered, amended or repealed.
(d) Board of Directors and Officers of Meridian and MBNJ.
(i) On the Effective Date, the Board of Directors of Meridian, as the
surviving corporation in connection with the Merger, shall consist of
those persons holding such office immediately prior to the Effective Date
(after the changes in the Board made on or before the Closing date in
accordance with Section 5.01(l).
(ii) On the Effective Date, the officers of Meridian duly elected and
holding office immediately prior to the Effective Date shall be the
officers of Meridian, as the surviving corporation in the Merger.
(iii) On the effective date of the Bank Merger, the officers of UCTC
and MBNJ duly elected and holding office immediately prior to such
effective date shall be the officers of MBNJ, as the surviving corporation
in the Bank Merger.
(iv) On the effective date of the Bank Merger, the directors of MBNJ as
the surviving institution in connection with the Bank Merger shall consist
of those persons holding such office immediately prior to the Effective
Date after the appointment of additional directors pursuant to Section
5.01(l).
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(e) Conversion of Shares.
(i) Meridian Common Stock.
(A) Each share of Meridian Common Stock issued and outstanding
immediately prior to the Effective Date shall, on and after the
Effective Date, continue to be issued and outstanding as an identical
share of Meridian Common Stock.
(B) Each share of Meridian Common Stock issued and held in the
treasury of Meridian as of the Effective Date, if any, shall, on and
after the Effective Date, continue to be issued and held in the
treasury of Meridian.
(ii) UCB Common Stock.
(A) Subject to the provisions of subparagraphs (B), (C) and (D) of
this Section 1.02(e)(ii), each share of UCB Common Stock issued and
outstanding immediately prior to the Effective Date (other than shares
of such common stock described in subparagraph (B) or (C) below) shall,
on the Effective Date, by reason of the Merger and without any action
on the part of the holder thereof, be converted into and become a right
to receive, subject to adjustment as provided in Section 1.02(e)(iv),
five (5.00) fully paid and nonassessable shares of Meridian Common
Stock and the corresponding percentage of Meridian Stock Purchase
Rights pursuant to the Meridian Rights Agreement (the "Exchange
Ratio").
(B) Each share of UCB Common Stock owned by Meridian or a Meridian
Subsidiary (other than in a fiduciary capacity) on the Effective Date,
if any, shall be cancelled.
(C) Each share of UCB Common Stock issued and held in the treasury
of UCB or owned by any UCB Subsidiary (other than in a fiduciary
capacity) as of the Effective Date, if any, shall be cancelled, and no
cash, stock or other property shall be delivered in exchange therefor.
(D) No fraction of a whole share of Meridian Common Stock and no
scrip or certificates therefor shall be issued in connection with the
Merger. Any former holder of UCB Common Stock who would otherwise be
entitled to receive a fraction of a share of Meridian Common Stock
shall receive, in lieu thereof, cash in an amount equal to such
fraction of a share multiplied by the market value of Meridian Common
Stock (determined in accordance with the provisions of Section
1.02(e)(iii) hereof).
(E) Each option granted under the UCB's 1984 and 1989 Incentive
Stock Option Plans to acquire a share of UCB Common Stock which is
outstanding and unexercised on the Effective Date, shall, subject to
adjustment as provided in Sections 1.02(e)(iv), be converted into and
become an option to acquire that number of shares of Meridian Common
Stock equal to the Exchange Ratio, at the present stated exercise price
of such option divided by the Exchange Ratio, such shares to be
issuable upon the exercise of such options in accordance with the terms
of the respective plans under which they were issued. Shares of
Meridian Common Stock issuable upon exercise of such options shall be
covered by an effective registration statement on Form S-8.
(iii) Valuation of Meridian Common Stock. For purposes of this
Agreement, the term "Market Value" of a share of Meridian Common Stock
shall mean the average of the closing sale price of a share of Meridian
Common Stock, as reported on the National Association of Securities
Dealers Automated Quotation System (NASDAQ) National Market System, for
the first 20 of the 25 consecutive trading days immediately prior to the
Closing Date.
(iv) Anti-Dilution Provisions. If Meridian shall, at any time before
the Effective Date, (A) issue a dividend in shares of Meridian Common
Stock, (B) combine the outstanding shares of Meridian Common Stock into a
smaller number of shares, (C) subdivide the outstanding shares of Meridian
Common Stock, or (D) reclassify the shares of Meridian Common Stock, then,
in any such or similar event, the Exchange Ratio shall be adjusted so that
each UCB shareholder and optionholder shall be entitled to receive such
number of shares of Meridian Common Stock and such other rights,
privileges and securities as such shareholder or optionholder, as the case
may be, would have been entitled to receive if the Effective Date had
occurred prior to the happening of such event. (By way of illustration, if
Meridian shall declare a stock dividend of 7% payable with respect to a
record date on or prior to the Effective Date, the Exchange Ratio shall be
increased by 7%). All changes in the Exchange Ratio pursuant to this
Section 1.02(e)(iv) shall be cumulative.
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(f) Surrender and Exchange of UCB Stock Certificates.
(i) Exchange of Certificates. Each holder of shares of UCB Common Stock
who surrenders to Meridian the certificate or certificates representing
such shares will be entitled to receive, as soon as practicable after the
Effective Date, in exchange therefor an unlegended certificate or
certificates for the number of whole shares of Meridian Common Stock into
which such holder's shares of UCB Common Stock have been converted by the
Merger, together with a check for cash in lieu of any fractional share in
accordance with Section 1.02(e)(ii)(D) hereof.
(ii) Rights Evidenced by Certificates. Each certificate representing
shares of Meridian Common Stock issued in exchange for certificates
representing UCB Common Stock pursuant to Section 1.02(f)(i) hereof will
be dated the Effective Date and be entitled to dividends and all other
rights and privileges pertaining to such shares of Meridian Common Stock
from the Effective Date. Until surrendered, each certificate theretofore
evidencing shares of UCB Common Stock will, from and after the Effective
Date, evidence solely the right to receive certificates for shares of
Meridian Common Stock pursuant to Section 1.02(f)(i) hereof and a check
for cash in lieu of any fractional share in accordance with Section
1.02(e)(ii)(D) hereof. If certificates for shares of UCB Common Stock are
exchanged for Meridian Common Stock at a date following one or more record
dates for the payment of dividends or of any other distribution on the
shares of Meridian Common Stock, Meridian will pay cash in an amount equal
to dividends theretofore payable on such Meridian Common Stock and pay or
deliver any other distribution to which holders of shares of Meridian
Common Stock have theretofore become entitled. No interest will accrue or
be payable in respect of dividends or cash otherwise payable under this
Section 1.02(f) upon surrender of certificates for shares of UCB Common
Stock. Notwithstanding the foregoing, no party hereto will be liable to
any holder of UCB Common Stock for any amount paid in good faith to a
public official or agency pursuant to any applicable abandoned property,
escheat or similar law. Until such time as certificates for shares of UCB
Common Stock are surrendered by a UCB shareholder to Meridian for
exchange, Meridian shall have the right to withhold dividends or any other
distributions on the shares of Meridian Common Stock issuable to such
shareholder.
(iii) Exchange Procedures. Meridian shall designate Meridian Bank as
exchange agent hereunder (the "Exchange Agent") and shall cause the
Exchange Agent to follow the procedures set forth herein. Each certificate
for shares of UCB Common Stock delivered for exchange under this Section
1.02(f) must be endorsed in blank by the registered holder thereof or be
accompanied by a power of attorney to transfer such shares endorsed in
blank by such holder. Except as set forth in the next sentence, if more
than one certificate is surrendered at one time and in one transmittal
package for the same shareholder account, the number of whole shares of
Meridian Common Stock for which certificates will be issued pursuant to
this Section 1.02(f) will be computed on the basis of the aggregate number
of shares represented by the certificates so surrendered. Upon their
request, former shareholders of UCB (or any of them) shall be entitled to
the number of stock certificates they held representing shares of Meridian
Common Stock as equals the number of stock certificates representing
former shares of UCB Common Stock. If shares of Meridian Common Stock or
payments of cash are to be issued or made to a person other than the one
in whose name the surrendered certificate is registered, the certificate
so surrendered must be properly endorsed in blank, with signature(s)
guaranteed, or otherwise in proper form for transfer, and the person to
whom certificates representing shares of Meridian Common Stock is to be
issued or to whom cash is to be paid shall pay any transfer or other taxes
required by reason of such issuance or payment to a person other than the
registered holder of the certificate representing shares of UCB Common
Stock which are surrendered. As promptly as practicable after the Closing
Date has been established, the Exchange Agent shall send or cause to be
sent to each shareholder of record of UCB Common Stock transmittal
materials, in form and substance satisfactory to Meridian and UCB, for use
in exchanging certificates representing UCB Common Stock for certificates
representing Meridian Common Stock into which the former have been
converted in the Merger. Certificates representing shares of Meridian
Common Stock shall be mailed to former shareholders of UCB (or made
available for pickup, if the former shareholder of UCB so requests) as
soon as reasonably possible but in no event later than seven (7) business
days following the receipt of certificates representing former shares of
UCB Common Stock duly endorsed or accompanied by the materials referenced
herein (but in no event earlier than the second business day following the
Effective Date).
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(iv) Closing of Stock Transfer Books; Cancellation of UCB
Certificates. Upon the Effective Date, the stock transfer books for UCB
Common Stock will be closed and no further transfers of shares of UCB
Common Stock will thereafter be made or recognized. All certificates for
shares of UCB Common Stock surrendered pursuant to this Section 1.02(f)
will be cancelled by Meridian.
(g) Payment Procedures. As soon as practicable after the Effective Date,
Meridian shall make payment of the cash consideration provided for in Section
1.02(e)(ii)(D) to each person entitled thereto.
(h) Meridian Option. Upon the Effective Date, the Meridian option shall be
automatically cancelled and shall be of no further force and effect.
Section 1.03 The Bank Merger. Meridian and UCB shall use their best
efforts to cause UCTC to merge with and into MBNJ, with MBNJ surviving such
merger, simultaneously with or as soon as practicable after the Effective
Date. Concurrently with the execution and delivery of this Agreement,
Meridian shall cause MBNJ, and UCB shall cause UCTC, to execute and deliver
the Bank Plan of Merger attached hereto as Exhibit 3.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF UCB
UCB hereby represents and warrants to Meridian that, except as
specifically set forth herein or in the UCB Disclosure Schedule delivered to
Meridian by UCB on May 23, 1995:
Section 2.01 Organization.
(a) UCB is a corporation duly organized, validly existing and in good
standing under the laws of the State of New Jersey. UCB is a bank holding
company duly registered under the BHC Act. UCB has the corporate power and
authority to carry on its business and operations as now being conducted and
to own and operate the properties and assets now owned and being operated by
it. UCB is not qualified or licensed to do business as a foreign corporation
in any other jurisdiction and is not required to be so qualified or licensed
as the result of the ownership or leasing of property or the conduct of its
business, except in such jurisdictions where failure to be so qualified or
licensed will not have a Material Adverse Effect on UCB.
(b) UCTC is a banking corporation duly organized and validly existing
under the laws of the State of New Jersey. UCTC is not a member of the
Federal Reserve System. UCTC has the corporate power and authority to carry
on its business and operations as now being conducted and to own and operate
the properties and assets now owned and being operated by it. UCTC is not
qualified or licensed to do business as a foreign corporation in any other
jurisdiction and is not required to be so qualified or licensed as the result
of the ownership or leasing of property or the conduct of its business,
except in such jurisdictions where failure to be so qualified or licensed
will not have a material adverse effect on the assets, business, financial
condition or results of operations of UCTC.
(c) UCB has no Subsidiaries other than UCTC, United Capital Corporation,
Unitrust Financial Corporation, United Counties Service Corporation, Scarlett
O'Hara's, Inc. and those identified in the UCB Disclosure Schedule.
(d) UCTC is a commercial bank the deposits of which are insured by the
Bank Insurance Fund of the FDIC to the extent provided in the Federal Deposit
Insurance Act.
(e) The respective minute books of UCB and UCTC and each other UCB
Subsidiary accurately record, in all material respects, all material
corporate actions of their respective shareholders and boards of directors
(including committees) through the date of this Agreement.
(f) UCB has delivered to Meridian, or will deliver within five business
days of the date hereof, true and correct copies of the articles of
incorporation and bylaws of UCB and of UCTC, respectively, as in effect on
the date hereof.
Section 2.02 Capitalization.
(a) As of April 30, 1995, the authorized capital stock of UCB consists of
(a) 6,000,000 shares of common stock, with a stated value of $1.00 ("UCB
Common Stock"), of which: (i) 2,142,738 shares are outstanding, validly
issued, fully paid and nonassessable and free of preemptive rights and (ii)
381,438 shares are held by UCB as treasury stock, and (b) 3,000,000 shares of
no par, no stated value preferred stock, none of which are issued or
outstanding. Except as set forth in the UCB Disclosure Schedule, there has
been no change in the authorized, issued or outstanding shares
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of UCB. Neither UCB nor UCTC nor any other UCB or UCTC Subsidiary has or is
bound by any subscription, option, warrant, call, commitment, agreement, plan
or other Right of any character relating to the purchase, sale or issuance or
voting of, or right to receive dividends or other distributions on any shares
of UCB Common Stock, UCB Preferred Stock or any other security of UCB or any
securities representing the right to vote, purchase or otherwise receive any
shares of UCB Common Stock, UCB Preferred Stock or any other security of UCB,
other than for (i) shares issuable under the Meridian Option and (ii) 64,032
shares which UCB is obligated to issue, at an average exercise price of
approximately $60, under UCB's 1984 Incentive Stock Option Plan and UCB's
1989 Stock Option Plan to its employees and employees of UCB Subsidiaries,
including UCTC.
(b) The authorized capital stock of UCTC consists of 2,425,900 shares of
common stock, par value $5.00 per share ("UCTC Common Stock"), of which
2,425,900 shares are outstanding, validly issued, fully paid, nonassessable,
free of preemptive rights and owned by UCB. Neither UCB nor any other UCB
Subsidiary has or is bound by any subscription, option, warrant, call,
commitment, agreement or other Right of any character relating to the
purchase, sale or issuance or voting of, or right to receive dividends or
other distributions on any shares of the capital stock of any UCB Subsidiary
or any other security of any UCB Subsidiary or any securities representing
the right to vote, purchase or otherwise receive any shares of the capital
stock or any other security of any UCB Subsidiary. Either UCB or UCTC owns
all of the outstanding shares of capital stock of each UCB Subsidiary free
and clear of all liens, security interests, pledges, charges, encumbrances,
agreements and restrictions of any kind or nature. There are no
subscriptions, options, warrants, calls, commitments, agreements or other
Rights outstanding with respect to the capital stock of UCTC or any other UCB
Subsidiary.
(c) Neither (i) UCB nor, (ii) UCTC nor (iii) any other UCB or UCTC
Subsidiary owns any equity interest, directly or indirectly, in any other
company or controls any other company, except for equity interests identified
in Section 2.01(c) hereof, equity interests held in the investment portfolios
of UCB or UCB Subsidiaries, equity interests held by UCB Subsidiaries in a
fiduciary capacity, and equity interests held in connection with the
commercial loan and ancillary real estate activities of UCB Subsidiaries. As
used in this paragraph, "equity interests" include any subscriptions,
options, warrants, calls, commitments, agreements or other Rights.
(d) No Person is known to UCB to be the beneficial owner (as defined in
Section 13(d) of the Exchange Act) of 5% or more of the outstanding shares of
UCB Common Stock, except as disclosed in UCB's proxy statement used in
connection with its 1995 meeting of shareholders, previously delivered to
Meridian.
(e) UCB does not maintain a dividend reinvestment or similar plan
providing for the reinvestment of dividends to purchase additional shares of
UCB Common Stock.
Section 2.03 Authority; No Violation.
(a) UCB has full corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby. UCTC has
full corporate power and authority to execute and deliver the Bank Plan of
Merger and to consummate the Bank Merger. The execution and delivery of this
Agreement by UCB and the completion by UCB of the transactions contemplated
hereby have been duly and validly approved by the Board of Directors of UCB
and, except for approval by the shareholders of UCB as required under the
NJBCA, UCB's articles of incorporation and bylaws and NASDAQ requirements
applicable to it, no other corporate proceedings on the part of UCB are
necessary to complete the transactions contemplated hereby. This Agreement
has been duly and validly executed and delivered by UCB and, subject to
approval of the shareholders of UCB as required under the NJBCA, UCB's
articles of incorporation and bylaws and NASDAQ requirements applicable to it
and receipt of the required approvals of Regulatory Authorities referred to
in Section 3.04 hereof, and constitutes the valid and binding obligation of
UCB, enforceable against UCB in accordance with its terms, subject to
applicable bankruptcy, insolvency and similar laws affecting creditors'
rights generally and subject, as to enforceability, to general principles of
equity. Subject to UCB shareholder approval of this Agreement, the Bank Plan
of Merger, upon its execution and delivery by UCTC concurrently with the
execution and delivery of this Agreement, will constitute the valid and
binding obligation of UCTC, enforceable against UCTC in accordance with its
terms, subject to applicable bankruptcy, insolvency and similar laws
affecting creditors' rights generally and subject, as to enforceability, to
general principles of equity.
(b) (A) The execution and delivery of this Agreement by UCB, (B) the
execution and delivery of the Bank Plan of Merger by UCTC, (C) subject to
receipt of approvals from the Bank Regulatory Authorities referred to in
Section 3.04 hereof and UCB's and Meridian's compliance with any conditions
contained therein, the completion of the transactions contemplated
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hereby, and (D) compliance by UCB or UCTC with any of the terms or provisions
hereof or of the Bank Plan of Merger will not (i) conflict with or result in a
breach of any provision of the certificate of incorporation or bylaws of UCB or
any UCB Subsidiary; (ii) violate any statute, code, ordinance, rule, regulation,
judgment, order, writ, decree or injunction applicable to UCB or any UCB
Subsidiary or any of their respective properties or assets; or (iii) violate,
conflict with, result in a breach of any provisions of, 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, accelerate the performance
required by, or result in a right of termination or acceleration or the creation
of any lien, security interest, charge or other encumbrance upon any of the
properties or assets of UCB or any UCB Subsidiary under, any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, deed of trust,
license, lease, agreement, commitment or other instrument or obligation to which
UCB or any UCB Subsidiary is a party, or by which they or any of their
respective properties or assets may be bound or affected, except for such
violations, conflicts, breaches or defaults under clause (ii) or (iii) hereof
which, either individually or in the aggregate, will not have a Material Adverse
Effect on UCB, or a Material Adverse Effect on the ability of UCB to perform any
of its obligations under this Agreement.
Section 2.04 Consents; Dissenters' Rights. Except for the consents,
approvals, filings and registrations from or with the Bank Regulatory
Authorities referred to in Section 3.04 hereof and compliance with any
conditions contained therein, and the approval of this Agreement by the
shareholders of UCB under the NJBCA, and the approval of the NJDEPE under
ISRA, if necessary, no consents or approvals of, or filings or registrations
with, any public body or authority are necessary, and no consents or
approvals of any third parties are necessary, or will be, in connection with
(a) the execution and delivery of this Agreement by UCB or the Bank Plan of
Merger by UCTC, or (b) the completion by UCB of the transactions contemplated
hereby or by UCTC of the Bank Merger. UCB has no reason to believe that any
required consents or approvals will not be received or will be received with
conditions, limitations or restrictions unacceptable to it or which would
adversely impact UCB's ability to complete the transactions contemplated by
this Agreement. Shareholders of UCB are not entitled to dissenters' rights in
connection with the transactions contemplated hereby under federal or New
Jersey law.
Section 2.05 Financial Statements.
(a) UCB has previously delivered, or will deliver, to Meridian the UCB
Regulatory Reports. The UCB Regulatory Reports have been, or will be,
prepared in accordance with applicable regulatory accounting principles and
practices applied on a consistent basis throughout the periods covered by
such statements, and fairly present, or will fairly present, the financial
position, results of operations and changes in shareholder's equity of UCB as
of and for the periods ended on the dates thereof, in accordance with
applicable regulatory accounting principles applied on a consistent basis.
(b) UCB has previously delivered to Meridian the UCB Financials. The UCB
Financials have been, or will be, prepared in accordance with GAAP applied on
a consistent basis throughout the periods covered by such statements, and
fairly present, or will fairly present, the consolidated financial position,
results of operations and cash flows of UCB as of and for the periods ending
on the dates thereof, in accordance with GAAP applied on a consistent basis.
(c) At the date of each balance sheet included in the UCB Financials or
the UCB Regulatory Reports, neither UCB nor UCTC nor any other prior banking
subsidiary of UCB (as the case may be) had any liabilities, obligations or
loss contingencies of any nature (whether absolute, accrued, contingent or
otherwise) required to be reflected in such UCB Financials or UCB Regulatory
Reports or in the footnotes thereto which are not fully reflected or reserved
against therein or fully disclosed in a footnote thereto, except for
liabilities, obligations and loss contingencies which are not material in the
aggregate and except for liabilities, obligations and loss contingencies
which are within the subject matter of a specific representation and warranty
herein and subject, in the case of any unaudited statements, to normal,
recurring audit adjustments and the absence of footnotes.
Section 2.06 Taxes.
(a) UCB and the UCB Subsidiaries are members of the same affiliated group
within the meaning of IRC Section 1504(a). UCB has duly filed, and will file,
in correct form all federal, state and local tax returns then required to be
filed by or with respect to UCB and all UCB Subsidiaries on or prior to the
Closing Date (all such returns being accurate and correct in all material
respects) and has duly paid or will pay, or made or will make, provisions for
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the payment of all federal, state and local taxes which have been incurred by or
are due or claimed to be due from UCB and any UCB Subsidiary by any taxing
authority or pursuant to any tax sharing agreement or arrangement (written or
oral) on or prior to the Closing Date other than as set forth on the UCB
Disclosure Schedule or taxes which (i) are not delinquent or (ii) are being
contested in good faith.
(b) No consent pursuant to IRC Section 341(f) has been filed (or will be
filed prior to the Closing Date) by or with respect to UCB or any UCB
Subsidiary.
Section 2.07 No Material Adverse Change.
Except as set forth in the UCB Disclosure Schedule, UCB has not sustained
any Material Adverse Change since March 31, 1995.
Section 2.08 Contracts.
(a) Except as described in UCB's proxy statement for its 1995 annual
meeting of shareholders previously delivered to Meridian, in the footnotes to
the audited consolidated financial statements of UCB as of December 31, 1994
and 1993 and for the three years ended December 31, 1994, in the UCB
Disclosure Schedule or in Section 2.08(c) or (d), neither UCB nor any UCB
Subsidiary is a party to or subject to: (i) any employment, consulting or
severance contract or arrangement with any past or present officer, director
or employee of UCB or any UCB Subsidiary, except for "at will" arrangements;
(ii) any plan, arrangement or contract providing for bonuses, pensions,
options, deferred compensation, retirement payments, profit sharing or
similar arrangements for or with any past or present officers, directors or
employees of UCB or any UCB Subsidiary; (iii) any collective bargaining
agreement with any labor union relating to employees of UCB or any UCB
Subsidiary; (iv) any agreement which by its terms limits the payment of
dividends by any UCB Subsidiary; (v) any instrument evidencing or related to
indebtedness for borrowed money whether directly or indirectly, by way of
purchase money obligation, conditional sale, lease purchase, guaranty or
otherwise, in respect of which UCB or any UCB Subsidiary is an obligor to any
person, which instrument evidences or relates to indebtedness other than
deposits, repurchase agreements, bankers acceptances and "treasury tax and
loan" accounts established in the ordinary course of business and
transactions in "federal funds"; (vi) any contract (other than this
Agreement) limiting the freedom of any UCB Subsidiary to engage in any type
of banking or bank-related business permissible under law; or (vii) any
contract, plan or arrangement which provides for payments or benefits in
certain circumstances which, together with other payments or benefits payable
to any participant therein or party thereto, might render any portion of any
such payments or benefits subject to disallowance of deduction therefor as a
result of the application of Section 280G of the Code.
(b) Except as set forth in the UCB Disclosure Schedule, true and correct
copies of agreements, plans, arrangements and instruments referred to in
Section 2.08(a) or described in the UCB proxy statement for its 1995 annual
meeting of shareholders or in a footnote to such audited consolidated
financial statements have been or will be provided to Meridian on or before
the date specified in the preamble to this Article II and are in full force
and effect on the date hereof and neither UCB nor any UCB Subsidiary (nor, to
the knowledge of UCB, any other party to any such contract, plan, arrangement
or instrument) has breached any provision of, or is in default in any respect
under any term of, any such contract, plan, arrangement or instrument, except
where such breach or default is unlikely to have a Material Adverse Effect on
UCB or a material adverse effect on the assets, business, financial condition
or results of operations of UCTC. Except as set forth in the UCB Disclosure
Schedule, no party to any contract, plan, arrangement or instrument material
to UCB that requires annual payments to UCB or any UCB subsidiary in excess
of $250,000 will have the right to terminate any or all of the provisions of
any such contract, plan, arrangement or instrument as a result of the
transactions contemplated by this Agreement. Except as set forth in the UCB
Disclosure Schedule, no employee benefit plan, employment agreement,
termination agreement, or similar agreement or arrangement to which UCB or
any UCB Subsidiary is a party or under which UCB or any UCB Subsidiary may be
liable contains provisions which permit an employee or independent contractor
to terminate it without cause and continue to accrue future benefits
thereunder. Except as set forth in the UCB Disclosure Schedule or the
employment contracts referred to in Section 2.08(c), no such agreement, plan
or arrangement (x) provides for acceleration in the vesting of benefits or
payments due thereunder upon the occurrence of a change in ownership or
control of UCB or any UCB Subsidiary absent the occurrence of a subsequent
event, (y) provides for benefits which may cause the disallowance of a
federal income tax deduction under IRC Section 280G; or (z) requires UCB or
any UCB Subsidiary to provide a benefit in the form of UCB Common Stock or
determined by reference to the value of UCB Common Stock.
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(c) UCB and UCTC are parties to employment contracts only with Eugene H.
Bauer, Nicholas Frungillo, Donald S. Nowicki, Robert W. Dowens, Sr., J.
Richard Pierce, and Theodore E. Zuczek. True and correct copies of such
contracts have been delivered to Meridian prior to the execution of this
Agreement and Meridian acknowledges receipt and acceptance thereof. Such
contracts as delivered have not been amended or modified.
(d) UCTC has negotiated two employment severance contracts, copies of
which contracts have been delivered to Meridian, and real estate contracts as
set forth in the UCB Disclosure Schedule.
(e) Except as set forth in the UCB Disclosure Schedule, since December 31,
1994, UCB has not increased the salary or wages of any employee of UCB or
UCTC by more than 5%.
Section 2.09 Ownership of Property; Insurance Coverage.
(a) UCB and the UCB Subsidiaries have, or will have as to property
acquired after the date hereof, good and, as to real property, marketable
title to all assets and properties owned by UCB or any UCB Subsidiary in the
conduct of their businesses, whether such assets and properties are real or
personal, tangible or intangible, including assets and property reflected in
the balance sheets contained in the UCB Regulatory Reports and in the UCB
Financials or acquired subsequent thereto (except to the extent that such
assets and properties have been disposed of for fair value, in the ordinary
course of business, since the date of such balance sheets), subject to no
encumbrances, liens, mortgages, security interests or pledges, except (i)
those items that secure liabilities that are reflected in such balance sheets
or the notes thereto or that secure liabilities incurred in the ordinary
course of business after the date of the last such balance sheet, (ii)
statutory liens for amounts not yet delinquent or which are being contested
in good faith, (iii) such encumbrances, liens, mortgages, security interests,
pledges and title imperfections that are not in the aggregate material to the
business, operations, assets and financial condition of UCB and its
Subsidiaries taken as a whole, and (iv) items permitted under Article IV. UCB
and the UCB Subsidiaries, as lessee, have the right under valid and
subsisting leases of real and personal properties used by UCB and its
Subsidiaries in the conduct of their businesses to occupy or use all such
properties as presently occupied and used by each of them. A list of such
existing leases and commitments to lease and the lease expense and minimum
rental commitments with respect to such leases and lease commitments are set
forth in the UCB Disclosure Schedule.
(b) UCB and the UCB Subsidiaries currently maintain insurance similar in
amounts, scope and coverage to that maintained by other peer banks and peer
bank holding companies. Except as set forth in the UCB Disclosure Schedule,
neither UCB nor any UCB Subsidiary has received notice from any insurance
carrier that (i) such insurance will be cancelled or that coverage thereunder
will be reduced or eliminated, or (ii) premium costs with respect to such
policies of insurance will be substantially increased. Except as set forth in
the UCB Disclosure Schedule, there are presently no claims pending under such
policies of insurance and no notices have been given by UCB or UCTC under
such policies. All such insurance is valid and enforceable and in full force
and effect, and within the last three years UCB has received each type of
insurance coverage for which it has applied and during such periods has not
been denied indemnification for any material claims submitted under any of
its insurance policies, except as set forth in the UCB Disclosure Schedule.
Section 2.10 Legal Proceedings. Except as set forth in the UCB Disclosure
Schedule, neither UCB nor any UCB Subsidiary is a party to any, and there are
no pending or, to the best of UCB's knowledge, threatened legal,
administrative, arbitration or other proceedings, claims, actions or
governmental investigations or inquiries of any nature (i) against UCB or any
UCB Subsidiary, (ii) to which UCB or any UCB Subsidiary's assets are subject,
(iii) challenging the validity or propriety of any of the transactions
contemplated by this Agreement, or (iv) which could adversely affect the
ability of UCB to perform under this Agreement, except for any proceedings,
claims, actions, investigations or inquiries referred to in clauses (i) or
(ii) which, if adversely determined, individually or in the aggregate, should
not be reasonably expected to materially and adversely affect the assets,
business, financial condition or results of operations of UCB and its
Subsidiaries taken as a whole.
Section 2.11 Compliance With Applicable Law.
(a) UCB and the UCB Subsidiaries hold all licenses, franchises, permits
and authorizations necessary for the lawful conduct of their businesses
under, and have complied in all material respects with, applicable laws,
statutes, orders, rules or regulations of any federal, state or local
governmental authority relating to them, other than where such failure to
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hold or such noncompliance will neither result in a limitation in any material
respect on the conduct of their businesses nor otherwise have a material adverse
effect on the assets, business, financial condition, the results of operations
or prospects of UCB and its Subsidiaries taken as a whole.
(b) Neither UCB nor any UCB Subsidiary has received any notification or
communication from any Bank Regulatory Authority (i) asserting that UCB or
any UCB Subsidiary is not in substantial compliance with any of the statutes,
regulations or ordinances which such Bank Regulatory Authority enforces; (ii)
threatening to revoke any license, franchise, permit or governmental
authorization which is material to UCB or any UCB Subsidiary; (iii) requiring
or threatening to require UCB or any UCB Subsidiary, or indicating that UCB
or any UCB Subsidiary may be required, to enter into a cease and desist
order, agreement or memorandum of understanding or any other agreement
restricting or limiting, or purporting to restrict or limit, in any manner
the operations of UCB or any UCB Subsidiary, including without limitation any
restriction on the payment of dividends; or (iv) directing, restricting or
limiting, or purporting to direct, restrict or limit, in any manner the
operations of UCB or any UCB Subsidiary, including without limitation any
restriction on the payment of dividends (any such notice, communication,
memorandum, agreement or order described in this sentence herein referred to
as a "UCB Regulatory Agreement"). Neither UCB nor any UCB Subsidiary has
consented to or entered into any UCB Regulatory Agreement, except as
heretofore disclosed to Meridian.
Section 2.12 ERISA. UCB has previously delivered, or will deliver, to
Meridian true and complete copies of all employee pension benefit plans
within the meaning of ERISA Section 3(2), profit sharing plans, stock
purchase plans, deferred compensation and supplemental income plans,
supplemental executive retirement plans, employment agreements, annual or
long term incentive plans, settlement plans, policies and agreements, group
insurance plans, and all other employee welfare benefit plans within the
meaning of ERISA Section 3(1) (including vacation pay, sick leave, short-term
disability, long-term disability, and medical plans) and all other employee
benefit plans, policies, agreements and arrangements, all of which are set
forth in the UCB Disclosure Schedule, maintained or contributed to for the
benefit of the employees or former employees (including retired employees)
and any beneficiaries thereof or directors or former directors of UCB or any
UCB Subsidiary, together with (i) the most recent actuarial (if any) and
financial reports relating to those plans which constitute "qualified plans"
under IRC Section 401(a), (ii) the most recent annual reports relating to
such plans filed by them, respectively, with any government agency, and (iii)
all rulings and determination letters which pertain to any such plans. Except
as set forth in the UCB Disclosure Schedule, no such plan, policy, agreement
or arrangement has been amended or adopted since January 1, 1993, except to
the extent required by law. Neither UCB nor any UCB Subsidiary, and no
pension plan maintained by UCB or any UCB Subsidiary, has incurred, directly
or indirectly, any liability under Title IV of ERISA (including to the
Pension Benefit Guaranty Corporation) or to the IRS with respect to any
pension plan qualified under IRC Section 401(a), except liabilities to the
Pension Benefit Guaranty Corporation pursuant to ERISA Section 4007, all of
which have been fully paid, nor has any reportable event under ERISA Section
4043(b) occurred with respect to any such pension plan. With respect to each
of such plans that is subject to Title IV of ERISA, the present value of the
accrued benefits under such plan, based upon the actuarial assumptions used
for funding purposes in the plan's most recent actuarial report, did not, as
of its latest valuation date, exceed the then current value of the assets of
such plan allocable to such accrued benefits. Neither UCB nor any UCB
Subsidiary has incurred or is subject to any liability under ERISA Section
4201 for a complete or partial withdrawal from a multi-employer plan. All
"employee benefit plans," as defined in ERISA Section 3(3), comply and, at
all times in the past, have complied in all material respects with (i)
relevant provisions of ERISA and (ii) in the case of plans intended to
qualify for favorable income tax treatment, provisions of the IRC relevant to
such treatment. Except as disclosed in the UCB Disclosure Schedule, neither
UCB nor any UCB Subsidiary has a material liability under any such plan which
pursuant to GAAP is required to be reflected on or disclosed in (pursuant to
a footnote or otherwise) the UCB Financials and which is not so reflected or
disclosed thereon. To the best knowledge of UCB, except as disclosed in the
UCB Disclosure Schedule, no prohibited transaction, breach of fiduciary duty
or other transaction has occurred with respect to any employee benefit plan
maintained by UCB or any UCB Subsidiary which would result in the imposition,
directly or indirectly, of an excise tax or other penalty under ERISA or the
IRC. UCB and the UCB Subsidiaries provide continuation coverage under group
health plans for separating employees and "qualified beneficiaries" in
accordance with the provisions of IRC Section 4980B(f). Such group health
plans are in compliance with Section 1862(b)(1) of the Social Security Act.
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Section 2.13 Brokers and Finders. Except for UCB's engagement of Goldman,
Sachs & Co., neither UCB nor any UCB Subsidiary, nor any of their respective
officers, directors, employees or agents, has employed any broker, finder or
financial advisor, or except for a commitment to pay Goldman, Sachs & Co.,
incurred any liability or commitment for any fees or commissions to any such
person in connection with the transactions contemplated by this Agreement.
Section 2.14 Environmental Matters. To the knowledge of UCB, except as set
forth in the UCB Disclosure Schedule, neither UCB nor any UCB Subsidiary, nor
any properties owned or operated by UCB or any UCB Subsidiary has been or is
in violation of or liable under any Environmental Law. There are no actions,
suits or proceedings, or demands, claims, notices or investigations
(including without limitation notices, demand letters or requests for
information from any environmental agency) instituted or pending, or to the
knowledge of UCB, threatened relating to the liability of any property owned
or operated by UCB or any UCB Subsidiary under any Environmental Law.
Section 2.15 Loan Portfolio. The allowance for loan losses reflected, or
to be reflected, in the UCB Regulatory Reports, and shown, or to be shown, on
the balance sheets contained in the UCB Financials were, at the dates of such
UCB Regulatory Reports or UCB Financials, adequate, in accordance with the
requirements of GAAP and all applicable regulatory criteria. No Bank
Regulatory Authority has requested UCB or UCTC to increase the allowance for
loan losses during 1991, 1992, 1993 or 1994 beyond the allowance actually set
with respect to such periods.
Section 2.16 Information to be Supplied. The information to be supplied by
UCB and UCTC for inclusion in the Registration Statement (including
information to be incorporated by reference therein) will not, at the time
the Registration Statement is declared effective pursuant to the Securities
Act, contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein not
misleading. The information supplied, or to be supplied, by UCB for inclusion
in the Applications will, at the time such documents are filed with any Bank
Regulatory Authority, be accurate in all material aspects.
Section 2.17 Securities Documents. UCB has delivered, or will deliver, to
Meridian copies of its (i) annual reports on SEC Form 10-K for the years
ended December 31, 1994, 1993 and 1992, (ii) quarterly reports on SEC Form
10-Q for the quarters ended March 31, 1995 and March 31, June 30, and
September 30, 1993 and 1994, and (iii) proxy materials used or for use in
connection with its meetings of shareholders held in 1995, 1994 and 1993. At
the time of their filing with the SEC, such reports and such proxy materials
complied, in all material respects, with the Exchange Act and all applicable
rules and regulations of the SEC and did not contain a misstatement or
omission of a material fact.
Section 2.18 Related Party Transactions. Except as disclosed in the UCB
Disclosure Schedule or in the proxy statement for use in connection with
UCB's 1995 annual meeting of shareholders or in the footnotes to the UCB
Financials, UCB is not a party to any transaction (including any loan or
other credit accommodation) with any director, officer, associate or 5%
shareholder (each, an "Insider") of UCB. All such transactions (a) were made
in the ordinary course of business, (b) were made on substantially the same
terms, including interest rates and collateral, as those prevailing at the
time for comparable transactions with other Persons, and (c) did not involve
more than the normal risk of collectability or present other unfavorable
features. Except as set forth in the UCB Disclosure Schedule, no loan or
credit accommodation to any Insider of UCB is presently in default or, during
the one-year period prior to the date of this Agreement, has been in default
or has been restructured, modified or extended. Neither UCB nor UCTC has any
reason to believe that principal and interest with respect to any such loan
or other credit accommodation will not be paid when due or that the loan
grade classification accorded such loan or credit accommodation by UCTC is
inappropriate.
Section 2.19 Investment Banking Opinion. The Board of Directors of UCB has
received an opinion, dated as of the date of approval of the Merger by the
Board, from Goldman, Sachs & Co., that the Exchange Ratio is fair to the
shareholders of UCB from a financial point of view.
Section 2.20 Antitakeover Provisions Inapplicable. The provisions of
Sections 14A:10A-4 and 14A:10-5 of the NJBCA do not and will not apply to
this agreement or the transactions contemplated hereby.
Section 2.21 Quality of Representations. No representations made by UCB in
this Agreement contain any untrue statement of a material fact or omits to
state a material fact necessary to make the statements made not misleading.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF MERIDIAN
Meridian hereby represents and warrants to UCB that, except as
specifically set forth herein or in the Meridian Disclosure Schedule
delivered to UCB by Meridian on May 23, 1995:
Section 3.01 Organization.
(a) Meridian is a corporation duly organized, validly existing and in good
standing under the laws of the Commonwealth of Pennsylvania. Each Meridian
Subsidiary is duly organized, validly existing, and in good standing under
the laws of the jurisdiction of its incorporation and each possesses full
corporate power and authority to carry on its respective business and to own,
lease and operate its properties as presently conducted. Neither Meridian nor
any Meridian Subsidiary is required by the conduct of its business or the
ownership or leasing of its assets to qualify to do business as a foreign
corporation in any jurisdiction, where the failure to be so qualified would
be material to the assets, business, financial condition or results of
operations of Meridian and its Subsidiaries taken as a whole. Meridian is a
multi-bank holding company duly registered under the BHC Act.
(b) MBNJ is a bank and trust company, duly organized and validly existing
under the laws of the state of New Jersey. MBNJ is not a member of the
Federal Reserve System. MBNJ has the corporate power and authority to carry
on its business and operations as now being conducted and to own and operate
the properties and assets now owned and being operated by it.
(c) There are no Meridian Subsidiaries other than those identified in the
Meridian Disclosure Schedule.
(d) MBNJ is a commercial bank the deposits of which are insured by the
Bank Insurance Fund of the FDIC to the extent provided in the Federal Deposit
Insurance Act.
(e) The respective minute books of Meridian and MBNJ accurately record, in
all material respects, all material corporate actions of their respective
shareholders and boards of directors (including committees) through the date
of this Agreement.
(f) Prior to the execution of this Agreement, Meridian has delivered to
UCB true and correct copies of the articles of incorporation and bylaws of
Meridian and MBNJ.
Section 3.02 Capital Structure.
(a) As of April 30, 1995, Meridian is authorized, by its articles of
incorporation, to issue (a) 200,000,000 shares of common stock, par value
$5.00 per share ("Meridian Common Stock"), of which 2,469,678 shares are
issued and held by Meridian as treasury stock and 55,847,300 shares are
issued and outstanding, and (b) 25,000,000 shares of preferred stock, par
value $25.00 per share, none of which are issued and outstanding. Except as
set forth in the Meridian Disclosure Schedule, there has been no change in
the shares of authorized, issued or outstanding shares of Meridian Common
Stock. All shares of Meridian Common Stock issued and outstanding are fully
paid and nonassessable and none were issued in violation of any preemptive
rights. Meridian has no Rights authorized, issued or outstanding, other than
(i) the Meridian Stock Purchase Rights, (ii) as authorized under the Meridian
ESOP and other employee benefit plans, stock option plan, and dividend
reinvestment plan, and (iii) 500,000 shares of Meridian Common Stock issuable
to former shareholders of McGlinn Capital Management, Inc. Since December 31,
1993, Meridian has repurchased (i) 2,240,738 shares of Meridian Common Stock
for issuance in connection with Meridian's employee benefit plans, stock
option plan and dividend reinvestment plan and (ii) 500,000 shares in
connection with providing for the McGlinn acquisition. As of April 30, 1995,
Meridian had approximately 27,000 shareholders of record. The Meridian
Disclosure Schedule lists the timing and number of purchases of Meridian
Common Stock by the Meridian ESOP and other employee benefit plans, stock
option plan and dividend reinvestment plan between January 1, 1994 and the
date of this Agreement.
(b) No Person is known to Meridian to be the beneficial owner (as defined
in Section 13(d) of the Exchange Act) of 5% or more of the outstanding shares
of Meridian Common Stock, except as disclosed in Meridian's proxy statement
used in connection with its 1995 annual meeting of shareholders, previously
delivered to UCB.
(c) Meridian owns all of the capital stock of Meridian Bank, Delaware
Trust Company, and MBNJ free and clear of any lien or encumbrance. Neither
(i) Meridian nor, (ii) MBNJ nor (iii) any other Meridian Subsidiary owns any
equity interest, directly or indirectly, in any other company, except for
equity interests identified on the Meridian Disclosure Schedule, equity
interests identified pursuant to Section 3.01(c) hereof, equity interests
held in the investment portfolios of Meridian or Meridian Subsidiaries,
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equity interests held by Meridian Subsidiaries in a fiduciary capacity and
equity interests held in connection with the commercial loan and ancillary real
estate activities of Meridian Subsidiaries. As used in this paragraph, "equity
interests" include any subscriptions, options, warrants, calls, commitments,
agreements or other Rights.
(d) The authorized capital stock of MBNJ consists of (a) 6,000,000 shares
of common stock, par value $5.00 per share, of which, no shares are held by
MBNJ as treasury stock and 1,000,000 shares were issued and outstanding and
(b) 25,000,000 shares of preferred stock, par value $25.00 per share, none of
which are issued and outstanding. All shares of capital stock of MBNJ issued
and outstanding are fully paid and nonassessable and owned by Meridian, and
none were issued in violation of any preemptive rights. MBNJ has no Rights
authorized, issued or outstanding.
Section 3.03 Authority; No Violation.
(a) Meridian has full corporate power and authority to execute and deliver
this Agreement and to consummate the transactions contemplated hereby. MBNJ
has full corporate power and authority to execute and deliver the Bank Plan
of Merger and to complete the Bank Merger. The execution and delivery of this
Agreement by Meridian and the completion by Meridian of the transactions
contemplated hereby have been duly and validly approved by the Board of
Directors of Meridian and, except for approval by the shareholders of
Meridian under NASD rules applicable to it, no other corporate proceedings on
the part of Meridian are necessary to complete the transactions contemplated
hereby. The execution and delivery of the Bank Plan of Merger by MBNJ and the
completion by MBNJ of the Bank Merger have been duly and validly approved by
the Board of Directors of MBNJ and by Meridian as sole shareholder of MBNJ,
and no other corporate proceedings on the part of MBNJ are necessary to
consummate the transactions contemplated by the Bank Plan of Merger. This
Agreement has been duly and validly executed and delivered by Meridian and,
subject to approval by the shareholders of Meridian under the rules of the
NASD applicable to it, and receipt of the required approvals of Regulatory
Authorities described in Section 3.04 hereof, constitutes the valid and
binding obligation of Meridian, enforceable against Meridian in accordance
with its terms, subject to applicable bankruptcy, insolvency and similar laws
affecting creditors' rights generally and subject, as to enforceability, to
general principles of equity. The Bank Plan of Merger, upon its execution and
delivery by MBNJ concurrently with the execution and delivery of this
Agreement, will constitute the valid and binding obligation of MBNJ,
enforceable against MBNJ in accordance with its terms, subject to applicable
bankruptcy, insolvency and similar laws affecting creditors' rights generally
and subject, as to enforceability, to general principles of equity.
(b) (A) The execution and delivery of this Agreement by Meridian, (B) the
execution and delivery of the Bank Plan of Merger by MBNJ, (C) subject to
receipt of approvals from the Regulatory Authorities referred to in Section
3.04 hereof and UCB's and Meridian's compliance with any conditions contained
therein, the consummation of the transactions contemplated hereby, and (D)
compliance by Meridian or MBNJ with any of the terms or provisions hereof or
of the Bank Plan of Merger will not (i) conflict with or result in a breach
of any provision of the articles of incorporation or bylaws of Meridian or
MBNJ; (ii) violate any statute, code, ordinance, rule, regulation, judgment,
order, writ, decree or injunction applicable to Meridian or MBNJ or any of
their respective properties or assets; or (iii) violate, conflict with,
result in a breach of any provisions of, 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, accelerate the performance required by,
or result in a right of termination or acceleration or the creation of any
lien, security interest, charge or other encumbrance upon any of the
properties or assets of Meridian or MBNJ under, any of the terms, conditions
or provisions of any note, bond, mortgage, indenture, deed of trust, license,
lease, agreement or other investment or obligation to which Meridian or is a
party, or by which they or any of their respective properties or assets may
be bound or affected, except for such violations, conflicts, breaches or
defaults under clause (ii) or (iii) hereof which, either individually or in
the aggregate, will not have a material adverse effect on Meridian or a
material adverse effect on Meridian's ability to perform hereunder.
Section 3.04 Consents. Except for the consents, approvals, filings and
registrations with the FRB, the FDIC, the NJDB, the PDB, the SEC, and state
"blue sky" authorities and compliance with any conditions contained therein,
and the approval of this Agreement by the shareholders of Meridian under the
rules of the NASD and of the Bank Plan of Merger by Meridian as the sole
shareholder of MBNJ, no consents or approvals of, or filings or registrations
with, any public body or authority are necessary, and no consents or
approvals of any third parties are necessary, or will be, in connection with
(a) the execution and delivery of this Agreement by Meridian or the Bank Plan
of Merger by MBNJ, or (b) the completion by Meridian of the transactions
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contemplated hereby or by MBNJ of the Bank Merger. Meridian has no reason to
believe that any required consents or approvals will not be received or will be
received with conditions, limitations or restrictions unacceptable to it or
which would adversely impact Meridian's ability to complete the transactions
contemplated by this Agreement.
Section 3.05 Financial Statements.
(a) Meridian has previously delivered, or will deliver, to UCB the
Meridian Regulatory Reports. The Meridian Regulatory Reports have been, or
will be, prepared in accordance with applicable regulatory accounting
principles and practices applied on a consistent basis throughout the periods
covered by such statements, and fairly present, or will fairly present, the
financial position, results of operations and changes in shareholders' equity
of Meridian as of and for the periods ended on the dates thereof, in
accordance with applicable regulatory accounting principles applied on a
consistent basis.
(b) Meridian has previously delivered, or will deliver, to UCB the
Meridian Financials. The Meridian Financials have been, or will be, prepared
in accordance with GAAP applied on a consistent basis throughout the periods
covered by such statements, and fairly present, or will fairly present, the
consolidated financial position, results of operations and cash flows of
Meridian as of and for the periods ending on the dates thereof, in accordance
with GAAP applied on a consistent basis.
(c) At the date of any balance sheet included in the Meridian Financials,
Meridian did not have any liabilities or obligations of any nature (whether
absolute, accrued, contingent or otherwise) of a type required to be
reflected in such Meridian Financials or in the footnotes thereto which are
not fully reflected or reserved against therein or disclosed in a footnote
thereto, except for liabilities and obligations which are not material in the
aggregate and which are incurred in the ordinary course of business,
consistent with past practice, and except for liabilities and obligations
which are within the subject matter of a specific representation and warranty
herein and subject, in the case of any unaudited statements, to normal,
recurring adjustments and the absence of footnotes.
Section 3.06 Taxes.
(a) Meridian and the Meridian Subsidiaries are members of the same
affiliated group within the meaning of IRC Section 1504(a). Meridian has duly
filed, and will file, in correct form all federal, state and local tax
returns then required to be filed by or with respect to Meridian and all
Meridian Subsidiaries on or prior to the Closing Date (all such returns being
accurate and correct in all material respects) and has duly paid or will pay,
or made or will make, provisions for the payment of all federal, state and
local taxes which have been incurred by or are due or claimed to be due from
Meridian and any Meridian Subsidiary by any taxing authority or pursuant to
any tax sharing agreement or arrangement (written or oral) on or prior to the
Closing Date other than taxes which (i) are not delinquent or (ii) are being
contested in good faith.
(b) No consent pursuant to IRC Section 341(f) has been filed (or will be
filed prior to the Closing Date) by or with respect to Meridian or any
Meridian Subsidiary.
Section 3.07 No Material Adverse Change. Except as set forth in the
Meridian Disclosure Schedule, Meridian has not suffered any Material Adverse
Change since March 31, 1995.
Section 3.08 Contracts.
(a) Except as described in Meridian's proxy statement for its 1995 annual
meeting of shareholders previously delivered to UCB, in the footnotes to the
audited consolidated financial statements of Meridian as of December 31, 1994
and 1993 and for the three years ended December 31, 1994, in the Meridian
Disclosure Schedule or in Section 3.08(c) or (d), neither Meridian nor any
Meridian Subsidiary is a party to or subject to: (i) any employment,
consulting or severance contract or arrangement with any named executive
officer identified in the Compensation Table included in Meridian's proxy
statement used in connection with its 1995 annual meetings of shareholders,
except for "at will" arrangements; (ii) any plan, arrangement or contract
providing for bonuses, pensions, options, deferred compensation, retirement
payments, profit sharing or similar arrangements for or with any named
executive officer identified in the Compensation Table included in Meridian's
proxy statement used in connection with its 1995 annual meeting of
shareholders; (iii) any collective bargaining agreement with any labor union
relating to employees of Meridian or any Meridian Subsidiary; (iv) any agreement
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which by its terms limits the payment of dividends by any Meridian Subsidiary;
or (v) any contract (other than this Agreement) limiting the freedom of any
Meridian Subsidiary to engage in any type of banking or bank-related business
permissible under law.
(b) The agreements, plans, arrangements and instruments referred to in
Section 3.08(a) or described in Meridian's proxy statement for its 1995
annual meeting of shareholders or in a footnote to Meridian's audited
consolidated financial statements are in full force and effect on the date
hereof and neither Meridian nor any Meridian Subsidiary (nor, to the
knowledge of Meridian, any other party to any such contract, plan,
arrangement or instrument) has breached any provision of, or is in default in
any respect under any term of, any such contract, plan, arrangement or
instrument. Except as set forth in the Meridian Disclosure Schedule or in
Meridian's Proxy Statement for its 1995 meeting of shareholders, no party to
any material contract, plan, arrangement or instrument that requires annual
payments in excess of $250,000 will have the right to terminate any or all of
the provisions of any such contract, plan, arrangement or instrument as a
result of the transactions contemplated by this Agreement and none of the
employees of Meridian or any Meridian Subsidiary possess the right to
terminate their employment as a result of the execution of this Agreement.
Except as set forth in the Meridian Disclosure Schedule or in Meridian's
proxy statement for its 1995 meeting of shareholders, no plan, employment
agreement, termination agreement, or similar agreement or arrangement to
which Meridian or any Meridian Subsidiary is a party or under which Meridian
or any Meridian Subsidiary may be liable contains provisions which permit an
employee or independent contractor to terminate it without cause and continue
to accrue future benefits thereunder.
Section 3.09 Ownership of Property; Insurance Coverage.
(a) Meridian and the Meridian Subsidiaries have, or will have as to
property acquired after the date hereof, good and, as to real property,
marketable title to all assets and properties owned by Meridian or any
Meridian Subsidiary in the conduct of their businesses, whether such assets
and properties are real or personal, tangible or intangible, including assets
and property reflected in the balance sheets contained in the Meridian
Regulatory Reports and in the Meridian Financials or acquired subsequent
thereto (except to the extent that such assets and properties have been
disposed of for fair value, in the ordinary course of business, since the
date of such balance sheets). Meridian and the Meridian Subsidiaries, as
lessee, have the right under valid and subsisting leases of real and personal
properties used by Meridian and its Subsidiaries in the conduct of their
businesses to occupy or use all such properties as presently occupied and
used by each of them.
(b) Meridian and the Meridian Subsidiaries currently maintain insurance
similar in amounts, scope and coverage to that maintained by other peer banks
and peer bank holding companies. All such insurance is valid and enforceable
and in full force and effect, and within the last three years Meridian has
received each type of insurance coverage for which it has applied and during
such periods has not been denied indemnification for any material claims
submitted under any of its insurance policies, except as set forth on the
Meridian Disclosure Schedule.
Section 3.10 Legal Proceedings. Except as disclosed in the Meridian
Disclosure Schedule, neither Meridian nor any Meridian Subsidiary is a party
to any, and there are no pending or, to the best of Meridian's knowledge,
threatened legal, administrative, arbitration or other proceedings, claims,
actions or governmental investigations or inquiries of any nature (i) against
Meridian or any Meridian Subsidiary, (ii) to which Meridian's or any Meridian
Subsidiary's assets are subject, (iii) challenging the validity or propriety
of any of the transactions contemplated by this Agreement, or (iv) which
could adversely affect the ability of Meridian to perform under this
Agreement, except for any proceedings, claims, actions, investigations or
inquiries referred to in clauses (i) or (ii) which, if adversely determined,
individually or in the aggregate, should not be reasonably expected to
materially and adversely affect the assets, business, financial condition or
results of operations of Meridian and its Subsidiaries taken as a whole.
Section 3.11 Compliance With Applicable Law.
(a) Meridian and the Meridian Subsidiaries hold all licenses, franchises,
permits and authorizations necessary for the lawful conduct of their
businesses under, and have complied in all material respects with, applicable
laws, statutes, orders, rules or regulations of any federal, state or local
governmental authority relating to them, other than where such failure to
hold or such noncompliance will neither result in a limitation in any
material respect on the conduct of their businesses nor otherwise have a
material adverse effect on the assets, business, financial condition or
results of operations of Meridian and its Subsidiaries taken as a whole.
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(b) Except as set forth in the Meridian Disclosure Schedule, neither
Meridian nor any Meridian Subsidiary has received any notification or
communication from any Regulatory Authority or the SEC or any state
securities law regulatory authority (i) asserting that Meridian or any
Meridian Subsidiary is not in substantial compliance with any of the
statutes, regulations or ordinances which such Bank Regulatory Authority
enforces; (ii) threatening to revoke any license, franchise, permit or
governmental authorization which is material to Meridian or any Meridian
Subsidiary; (iii) requiring or threatening to require Meridian or any
Meridian Subsidiary, or indicating that Meridian or any Meridian Subsidiary
may be required, to enter into a cease and desist order, agreement or
memorandum of understanding or any other agreement restricting or limiting,
or purporting to restrict or limit, in any manner the operations of Meridian
or any Meridian Subsidiary, including without limitation any restriction on
the payment of dividends; or (iv) directing, restricting or limiting, or
purporting to direct, restrict or limit, in any manner the operations of
Meridian or any Meridian Subsidiary, including without limitation any
restriction on the payment of dividends (any such notice, communication,
memorandum, agreement or order described in this sentence herein referred to
as a "Meridian Regulatory Agreement"). Neither Meridian nor any Meridian
Subsidiary has consented to or entered into any Meridian Regulatory
Agreement, except as heretofore disclosed to UCB.
Section 3.12 ERISA. Neither Meridian nor any Meridian Subsidiary, and no
pension plan maintained by Meridian or any Meridian Subsidiary, has incurred,
directly or indirectly, any liability under Title IV of ERISA (including to
the Pension Benefit Guaranty Corporation) or to the IRS with respect to any
pension plan qualified under IRC Section 401(a), except liabilities to the
Pension Benefit Guaranty Corporation pursuant to ERISA Section 4007, all of
which have been fully paid, nor has any reportable event under ERISA Section
4043(b) occurred with respect to any such pension plan. With respect to each
of such plans that is subject to Title IV of ERISA, the present value of the
accrued benefits under such plan, based upon the actuarial assumptions used
for funding purposes in the plan's most recent actuarial report, did not, as
of its latest valuation date, exceed the then current value of the assets of
such plan allocable to such accrued benefits. Neither Meridian nor any
Meridian Subsidiary has incurred or is subject to any liability under ERISA
Section 4201 for a complete or partial withdrawal from a multi-employer plan.
All "employee benefit plans," as defined in ERISA Section 3(3), comply and,
at all times in the past, have complied in all material respects with (i)
relevant provisions of ERISA and (ii) in the case of plans intended to
qualify for favorable income tax treatment, provisions of the IRC relevant to
such treatment. Except as disclosed in the Meridian Disclosure Schedule,
neither Meridian nor any Meridian Subsidiary has a material liability under
any such plan which pursuant to GAAP is required to be reflected on or
disclosed in (pursuant to a footnote or otherwise) the Meridian Financials
and which is not so reflected or disclosed thereon. To the best knowledge of
Meridian, except as disclosed in the Meridian Disclosure Schedule, no
prohibited transaction, breach of fiduciary duty or other transaction has
occurred with respect to any employee benefit plan maintained by Meridian or
any Meridian Subsidiary which would result in the imposition, directly or
indirectly, of an excise tax or other penalty under ERISA or the IRC.
Meridian and the Meridian Subsidiaries provide continuation coverage under
group health plans for separating employees and "qualified beneficiaries" in
accordance with the provisions of IRC Section 4980B(f). Such group health
plans are in compliance with Section 1862(b)(1) of the Social Security Act.
Section 3.13 Brokers and Finders. Except for Meridian's engagement of
Keefe, Bruyette & Woods, Inc. and Lehman Brothers, Inc., neither Meridian nor
any Meridian Subsidiary, nor any of their respective officers, directors,
employees or agents, has employed any broker, finder or financial advisor, or
except for commitments to pay Keefe, Bruyette & Woods, Inc. and Lehman
Brothers, Inc., incurred any liability or commitment for any fees or
commissions to any such person in connection with the transactions
contemplated by this Agreement.
Section 3.14 Environmental Matters. To the knowledge of Meridian, except
as set forth on the Meridian Disclosure Schedule, neither Meridian nor any
Meridian Subsidiary, nor any properties owned or operated by Meridian or any
Meridian Subsidiary has been or is in violation of or liable under any
Environmental Law. Except as set forth on the Meridian Disclosure Schedule,
there are no actions, suits or proceedings, or demands, claims, notices or
investigations (including without limitation notices, demand letters or
requests for information from any environmental agency) instituted or
pending, or to the knowledge of Meridian, threatened relating to the
liability of any property owned or operated by Meridian or any Meridian
Subsidiary under any Environmental Law.
Section 3.15 Loan Portfolio. The allowance for loan losses reflected, or
to be reflected, in the Meridian Regulatory Reports, and shown, or to be
shown, on the balance sheets contained in the Meridian Financials were, at
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the dates of such Meridian Regulatory Reports or Meridian Financials, adequate,
in accordance with the requirements of GAAP and all applicable regulatory
criteria. No Regulatory Authority has requested Meridian or any Meridian
Subsidiary to increase its allowance for loan losses during 1991, 1992, 1993
or 1994 beyond the allowance actually set with respect to such periods.
Section 3.16 Information to be Supplied. The information to be supplied by
Meridian for inclusion in the Registration Statement (including information
to be incorporated by reference therein) will not, at the time the
Registration Statement is declared effective pursuant to the Securities Act,
contain any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements therein not misleading. The
Registration Statement will comply, in all material respects, as to form with
the requirements of the Securities Act. The information supplied, or to be
supplied, by Meridian for inclusion in the Applications will, at the time
such documents are filed with any Bank Regulatory Authority, be accurate in
all material aspects.
Section 3.17 Securities Documents. Meridian has delivered, or will
deliver, to UCB copies of its (i) annual reports on SEC Form 10-K for the
years ended December 31, 1994, 1993, and 1992, (ii) quarterly reports on SEC
Form 10-Q for the quarters ended March 31, 1995 and March 31, June 30, and
September 30, 1993 and 1994, and (iii) proxy materials used in connection
with its annual meeting of shareholders held in April 1995. At the time of
their filing with the SEC, such reports and such proxy materials complied, in
all material respects, with the Exchange Act and the applicable rules and
regulations of the SEC and did not contain an untrue statement or omission of
a material fact.
Section 3.18 Related Party Transactions. Except as disclosed in the
Meridian Disclosure Schedule or the proxy statement for use in connection
with Meridian's 1995 annual meeting of shareholders or in the footnotes to
the Meridian Financials, Meridian is not a party to any transaction
(including any loan or other credit accommodation) with any director,
officer, associate or 5% shareholder (each an "Insider") of Meridian (except
a Meridian Subsidiary). All such transactions (a) were made in the ordinary
course of business, (b) were made on substantially the same terms, including
interest rates and collateral, as those prevailing at the time for comparable
transactions with other Persons, and (c) did not involve more than the normal
risk of collectability or present other unfavorable features. Except as set
forth on the Meridian Disclosure Schedule, no loan or credit accommodation to
any Insider of Meridian is presently in default or, during the three-year
period prior to the date of this Agreement, has been in default or has been
restructured, modified or extended. Neither Meridian nor any Meridian
Subsidiary has any reason to believe that principal and interest with respect
to any such loan or other credit accommodation will not be paid when due or
that the loan grade classification accorded such loan or credit accommodation
by any Meridian Subsidiary is inappropriate.
Section 3.19 Investment Banking Opinion. Meridian has received an opinion
from Lehman Brothers, Inc. to the effect that the transaction is fair to
Meridian from a financial point of view.
Section 3.20 Quality of Representations. No representation made by
Meridian in this Agreement contains any untrue statement of a material fact
or omits to state a material fact necessary to make the statements made not
misleading.
ARTICLE IV
COVENANTS OF THE PARTIES
Section 4.01 Conduct of UCB's Business.
(a) From the date of this Agreement to the Closing Date, UCB and each UCB
Subsidiary will conduct its business and engage in transactions, including
extensions of credit and pricing deposit liabilities, only in the ordinary
course and consistent with past practice and policies, except as otherwise
required or permitted by this Agreement, as set forth in the UCB Disclosure
Schedule or with the written consent of Meridian. UCB will use its best
efforts, and will cause UCTC to use its best efforts, to (i) preserve its
business organizations intact, (ii) maintain good relationships with
employees, and (iii) preserve for itself the good will of customers of UCB
and UCB Subsidiaries and others with whom business relationships exist. From
the date hereof to the Closing Date, except as otherwise consented to or
approved by Meridian in writing or as permitted or required by this
Agreement, UCB will not, and UCB will not permit any UCB Subsidiary to:
(i) change any provision of its articles of incorporation or bylaws;
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(ii) change the number of authorized or issued shares of its capital
stock or issue or grant any option, warrant, call, commitment,
subscription, Right or agreement of any character relating to its
authorized or issued capital stock or any securities convertible into
shares of such stock, or split, combine or reclassify any shares of
capital stock, or declare, set aside or pay any dividend or other
distribution in respect of capital stock, or redeem or otherwise acquire
any shares of capital stock except that UCB may continue to declare and
pay regular quarterly cash dividends on March 1, June 1, September 1, and
December 1 of each year, not to exceed $1.85 per share of UCB Common Stock
outstanding, provided that each of Meridian and UCB shall have received
from KPMG Peat Marwick a letter reasonably satisfactory to each of them to
that effect that the payment of any such dividend would not prevent
Meridian from accounting for the Merger as a pooling of interests.
Notwithstanding the foregoing, UCB shall not, without the prior written
consent of Meridian, declare or pay any such cash dividend on shares of
UCB Common Stock in or for any calendar quarter in which Meridian
reasonably anticipates that the Effective Date will occur on or prior to
the record date for the payment by Meridian, during such quarter, of a
regular cash dividend on shares of Meridian Common Stock;
(iii) except as set forth on the UCB Disclosure Schedule, grant any
severance or termination pay (other than pursuant to written policies or
written agreements of UCB or UCB Subsidiaries in effect on the date hereof
and provided to Meridian prior to the date hereof) to, or enter into or
amend any employment agreement with, or increase the compensation of, any
employee, officer or director of UCB or any UCB Subsidiary, except for
routine periodic increases, individually and in the aggregate, in
accordance with past practice;
(iv) except as set forth on the UCB Disclosure Schedule, merge or
consolidate UCB or any UCB Subsidiary with any other corporation; sell or
lease all or any substantial portion of the assets or business of UCB or
any UCB Subsidiary; make any acquisition of all or any substantial portion
of the business or assets of any other person, firm, association,
corporation or business organization other than in connection with the
collection of any loan or credit arrangement between any UCB Subsidiary
and any other person; enter into a purchase and assumption transaction
with respect to deposits and liabilities; permit the revocation or
surrender by any UCB Subsidiary of its certificate of authority to
maintain, or file an application for the relocation of, any existing
branch office, or file an application for a certificate of authority to
establish a new branch office;
(v) except as set forth in the UCB Disclosure Schedule, sell or
otherwise dispose of the capital stock of UCTC or sell or otherwise
dispose of any asset of UCB or of any UCB Subsidiary other than in the
ordinary course of business consistent with past practice; subject any
asset of UCB or of any UCB Subsidiary to a lien, pledge, security interest
or other encumbrance (other than in connection with deposits, repurchase
agreements, bankers acceptances, "treasury tax and loan" accounts
established in the ordinary course of business and transactions in
"federal funds" and the satisfaction of legal requirements in the exercise
of trust powers) other than in the ordinary course of business consistent
with past practice; modify in any material manner the manner in which UCB
or any UCB Subsidiary has heretofore conducted its business or enter into
any new line of business; incur any indebtedness for borrowed money (or
guarantee any indebtedness for borrowed money), except in the ordinary
course of business consistent with past practice; provided, however, that
UCTC may undertake the activities listed on the UCB Disclosure Schedule;
(vi) take any action which would result in any of the representations
and warranties of UCB set forth in this Agreement becoming untrue as of
the Closing Date or in any of the conditions set forth in Article V hereof
not being satisfied;
(vii) change any method, practice or principle of accounting except for
implementation of SFAS No. 112, SFAS No. 114 and SFAS No. 115 and any new
SFAS standard;
(viii) waive, release, grant or transfer any rights of value or modify
or change in any material respect any existing agreement to which UCB or
any UCB Subsidiary is a party, other than in the ordinary course of
business, consistent with past practice;
(ix) except as set forth in the UCB Disclosure Schedule, implement any
pension, retirement, profit sharing, bonus, welfare benefit or similar
plan or arrangement that was not in effect on the date of this Agreement,
or amend any existing plan or arrangement except to the extent such
amendments do not result in an increase in cost or are required by law or
are contemplated hereunder;
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(x) compromise, extend or restructure any loan with an unpaid principal
balance exceeding $1 million individually or $10 million in the aggregate,
except as set forth in the UCB Disclosure Schedule;
(xi) except in accordance with UCB policies existing on November 1,
1994 (as the same may be amended with the consent of Meridian), and except
consistent with UCB's practices on November 1, 1994 (as the same may be
changed with the consent of Meridian), sell, exchange or otherwise dispose
of any investment securities or loans that are held for sale, prior to
scheduled maturity;
(xii) except in accordance with UCB policies existing on November 1,
1994 (as the same may be amended with the consent of Meridian), and except
consistent with UCB's practices existing on November 1, 1994 (as the same
may be changed with the consent of Meridian), purchase any security for
its investment portfolio;
(xiii) purchase or sell, exchange or otherwise dispose of any
investment securities which would result in the creation of undue risk
with respect to such portfolio or sell or otherwise dispose of any equity
securities included in the investment portfolio;
(xiv) except as set forth in the UCB Disclosure Schedule and consistent
with prudent banking practice and UCB's current underwriting standards,
make or modify any loan or other credit facility commitment;
(xv) except as set forth in the UCB Disclosure Schedule and consistent
with past practice, enter into, renew, extend or modify any other
transaction with any Affiliate;
(xvi) enter into any swap or similar commitment, agreement or
arrangement;
(xvii) take any further action (other than continuation of employment
in accordance with past practice) that would give rise to a right of
payment to any individual under any employment agreement or any bonus or
performance award arrangement;
(xviii) take any action that UCB knows would preclude satisfaction of
the condition to closing contained in Section 5.02(k) relating to
financial accounting treatment of the Merger;
(xix) amend its articles of incorporation, charter or bylaws or permit
the amendment of the articles of incorporation, charter or bylaws of any
UCB Subsidiary;
(xx) materially change its interest rate composition for purposes of
asset/liability management or manage its interest rate risk otherwise than
consistent with past practice; or
(xxi) agree to do any of the foregoing.
For purposes of this Section 4.01, it shall not be considered in the
ordinary course of business for UCB or any UCB Subsidiary to do any of the
following: (i) make any capital expenditures of more than $1,000,000 in any
calendar year in the aggregate, without the prior written consent of
Meridian; (ii) except as set forth in the UCB Disclosure Schedule, make any
sale, assignment, transfer, pledge, hypothecation or other disposition of any
assets having a book or market value, whichever is greater, in the aggregate,
in excess of $1,000,000, other than a pledge of assets to secure government
deposits, the exercise of trust powers, sale of assets received in
satisfaction of debts previously contracted in the normal course of business,
issuance of loans, or transactions in investment securities by a UCB
Subsidiary or repurchase agreements made, in each case, in the ordinary
course of business; (iii) undertake or enter any lease, contract or other
commitment for its account, other than in the normal course of providing
credit to customers as part of its banking business, involving a payment by
UCB or any UCB Subsidiary in excess of $1,000,000 or a payment to an
affiliate of UCB or containing a material financial commitment and extending
beyond 12 months from the date hereof; or (iv) initiate or implement any loan
marketing programs at other than market rates.
Section 4.02 Access; Confidentiality.
(a) From the date of this Agreement through the Closing Date, UCB shall
afford to, and shall cause each UCB Subsidiary to afford to, Meridian and its
authorized agents and representatives, complete access to its respective
properties, assets, books and records and personnel, at reasonable hours and
after reasonable notice; and the officers of UCB will furnish any person
making such investigation on behalf of Meridian with such financial and
operating data and other information with respect to the businesses,
properties, assets, books and records and personnel as Meridian shall from
time to time reasonably request.
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(b) During the 30 day period immediately prior to the estimated Closing
Date under this Agreement, Meridian shall afford to, and shall cause each
Meridian Subsidiary to afford to, UCB and its authorized agents and
representatives, continuing access to Meridian's properties, assets, books
and records and personnel, at reasonable hours and after reasonable notice.
Such due diligence shall be consistent in scope to the due diligence
conducted by UCB in connection with the execution of this Agreement.
(c) UCB and Meridian each agree to conduct such investigation and
discussions hereunder in a manner so as not to interfere unreasonably with
normal operations and customer and employee relationships of the other party.
(d) If the transactions contemplated by this Agreement shall not be
consummated, UCB and Meridian will each destroy or return all documents and
records obtained from the other party or its representatives, during the
course of its investigation and will cause all information with respect to
the other party obtained pursuant to this Agreement or preliminarily thereto
to be kept confidential, except to the extent such information becomes public
through no fault of the party to whom the information was provided or any of
its representatives or agents and except to the extent disclosure of any such
information is legally required. UCB and Meridian shall each give prompt
notice to the other party of any contemplated disclosure where such
disclosure is so legally required.
(e) UCB and Meridian each agree not to hire the other's employees during
the term of this Agreement, and if this Agreement terminates, for a period of
six months thereafter.
(f) Meridian shall permit for a period of 2 years after Closing access to
the minute books of UCTC and its affiliates for purposes of historical
research.
Section 4.03 Regulatory Matters and Consents.
(a) Meridian will prepare all Applications and make all filings for, and
use their best efforts to obtain as promptly as practicable after the date
hereof, all necessary permits, consents, approvals, waivers and
authorizations of all Bank Regulatory Authorities necessary or advisable to
complete the transactions contemplated by this Agreement.
(b) UCB will furnish Meridian with all information concerning UCB and UCB
Subsidiaries as may be necessary in connection with any Application or filing
made by or on behalf of Meridian to any Regulatory Authority in connection
with the transactions contemplated by this Agreement as promptly as
practicable.
(c) Meridian will promptly furnish UCB with copies of written
communications to, or received by Meridian or any Meridian Subsidiary from,
any Regulatory Authority in respect of the transactions contemplated hereby.
(d) UCB will cooperate with Meridian in the foregoing matters and will
furnish Meridian with all information concerning UCB and UCB Subsidiaries as
may be necessary in connection with any Application or filing (including the
Registration Statement and any report filed with the SEC) made by or on
behalf of Meridian to any Regulatory Authority in connection with the
transactions contemplated by this Agreement, and such information will be
accurate and complete in all material respects. In connection therewith, UCB
will provide certificates and other documents reasonably requested by
Meridian.
Section 4.04 Taking of Necessary Action.
(a) Meridian and UCB shall each use its best efforts in good faith, and
each of them shall cause its Subsidiaries to use their best efforts in good
faith, to (i) furnish such information as may be required in connection with
the preparation of the documents referred to in Section 4.03 of this
Agreement and (ii) take or cause to be taken all action necessary or
desirable on its part so as to permit completion of the Merger and the Bank
Merger at the earliest possible date, including, without limitation, (1)
obtaining the consent or approval of each Person whose consent or approval is
required for consummation of the transactions contemplated hereby, provided
that neither UCB nor any UCB Subsidiary shall agree to make any payments or
modifications to agreements in connection therewith without the prior written
consent of Meridian and (2) requesting the delivery of appropriate opinions,
consents and letters from its counsel and independent auditors. No party
hereto shall take, or cause, or to the best of its ability permit to be
taken, any action that would substantially impair the prospects of completing
the Merger and the Bank Merger pursuant to this Agreement and the Bank Plan
of Merger; provided that nothing herein contained shall preclude Meridian or
UCB or from exercising its rights under this Agreement or the Option
Agreement.
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(b) UCB and Meridian shall prepare a Prospectus/Proxy Statement to be
mailed to shareholders of UCB in connection with the meeting of UCB
shareholders and transactions contemplated hereby and to be filed by Meridian
with the SEC in the Registration Statement, which Prospectus/Proxy statement
shall conform in the reasonable judgment of Meridian and UCB and their
respective counsel to all applicable legal requirements. Meridian shall, as
promptly as practicable following the preparation thereof, in a form
consented to by both Meridian and UCB, file the Registration Statement with
the SEC and UCB and Meridian shall use all reasonable efforts to have the
Registration Statement declared effective under the Securities Act as
promptly as practicable after such filing. Meridian will advise UCB, promptly
after Meridian receives notice thereof, of the time when the Registration
Statement has become effective or any supplement or amendment has been filed,
of the issuance of any stop order or the suspension of the qualification of
the shares of capital stock issuable pursuant to the Registration Statement,
or the initiation or threat of any proceeding for any such purpose, or of any
request by the SEC for the amendment or supplement of the Registration
Statement or for additional information. Meridian shall use its best efforts
to obtain, prior to the effective date of the Registration Statement, all
necessary state securities laws or "Blue Sky" permits and approvals required
to carry out the transactions contemplated by this Agreement.
Section 4.05 Certain Agreements.
(a) Subject to Section 4.13 hereof, as soon as practicable after the
Effective Date, all employees of UCB and UCB Subsidiaries whose employment is
continued shall be employed upon their existing terms and conditions,
provided that this Section 4.05(a) shall not be construed (i) to limit the
ability of Meridian and Meridian Subsidiaries to terminate the employment of
any employee or to review and adjust employee salary levels and employee
benefit programs from time to time and to make such changes as they deem
appropriate, (ii) to require Meridian or any Meridian Subsidiaries to provide
employees or former employees with any specific benefits, or (iii) to
constitute UCB employees or former employees as third party beneficiaries of
this Section 4.05(a).
(b) For a period of six years from and after the Effective Date, Meridian
shall indemnify, and advance expenses in matters that may be subject to
indemnification to, persons who served as directors and officers of UCB or
any UCB Subsidiary on or before the Effective Date with respect to
liabilities and claims (and related expenses) made against them resulting
from their service as such prior to the Effective Date in accordance with and
subject to the requirements and other provisions of Meridian's articles of
incorporation and bylaws in effect on the date of this Agreement and
applicable provisions of law to the same extent as Meridian is obliged
thereunder to indemnify and advance expenses to its own directors and
officers with respect to liabilities and claims made against them resulting
from their service as such for Meridian.
(c) Meridian, from and after the Effective Date, will provide to the
persons who served as directors or officers of UCB or any UCB Subsidiary on
or before the Effective Date insurance against liabilities and claims (and
related expenses) made against them resulting from their service as such
prior to the Effective Date. Such coverage shall be provided by means of an
extended reporting period endorsement to the policy presently issued to UCB
by the present carrier for UCB. Such insurance coverage will be provided for
a policy period of six years after the Effective Date.
Section 4.06 No Other Bids and Related Matters. UCB shall not, nor shall
it permit any UCB Subsidiary or any other Affiliate of UCB or any officer,
director or employee of any of them, or any investment banker, attorney,
accountant or other representative retained by UCB, any UCB Subsidiary or any
other UCB Affiliate to, directly or indirectly, solicit, encourage, initiate
or, except as may be legally required for the discharge by UCB's Board of
Directors of its fiduciary duty but only prior to the effectiveness of the
Registration Statement, engage in discussions or negotiations with, or
respond to requests for information, inquiries, or other communications from,
any person other than Meridian concerning the fact of, or the terms and
conditions of, this Agreement, or concerning any acquisition of UCB, any UCB
Subsidiary, or any assets or business thereof (except that UCB's officers may
respond to inquiries from analysts, Regulatory Authorities and holders of UCB
Common Stock in the ordinary course of business). UCB shall notify Meridian
immediately if any such discussions or negotiations are sought to be
initiated with UCB by any person other than Meridian or if any such requests
for information, inquiries, proposals or communications are received from any
person other than Meridian. In the event of a response or discussions by UCB
in accordance with this Section 4.06, UCB shall keep Meridian advised of all
developments which could reasonably be expected to result in the UCB Board of
Directors withdrawing, modifying or amending its recommendation of the
Merger.
Section 4.07 Core Deposits. UCB shall, and shall cause each UCB Subsidiary
to, use commercially reasonable efforts to maintain and increase core
deposits (other than certificates of deposit of $100,000 and over).
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Section 4.08 Duty to Advise; Duty to Update UCB's Disclosure Schedule. UCB
shall promptly advise Meridian 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 set forth herein. UCB shall update UCB's Disclosure
Schedule as promptly as practicable after the occurrence of an event or fact
which, if such event or fact had occurred prior to the date of this
Agreement, would have been disclosed in such Disclosure Schedule. The
delivery of such updated Disclosure Schedule shall not relieve UCB from any
breach or violation of this Agreement and shall not have any effect for the
purposes of determining the satisfaction of the condition set forth in
Sections 5.02(b) hereof.
Section 4.09 Conduct of Meridian's Business. From the date of this
Agreement to the Closing Date, Meridian will use its best efforts to (x)
preserve its business organizations intact, (y) maintain good relationships
with employees, and (z) preserve for itself the goodwill of customers of
Meridian and Meridian Subsidiaries and others with whom business
relationships exist. In addition, Meridian shall not take any action that
Meridian knows would preclude satisfaction of the condition to closing
contained in Section 5.02(k) relating to financial accounting treatment.
Section 4.10 Board and Committee Minutes and Meetings UCB shall provide to
Meridian, within 15 business days after any meeting of the Board of Directors
of UCB or UCTC, a copy of the minutes of such meeting. UCB shall also provide
to Meridian as soon as available prior to any meeting of the Board of
Directors of UCB, any committee of the Board of Directors of UCB, or any
senior management committee of UCB copies of materials, including the agenda,
distributed to such UCB directors or officers in connection with any such
meeting.
Section 4.11 Undertakings by Meridian and UCB.
(a) UCB shall:
(i) Voting by Directors. Use reasonable efforts to cause all members of
UCB's Board of Directors to vote all shares of UCB's Common Stock over
which they hold sole voting power, and to cause all shares over which they
hold shared voting power to be voted, in favor of this Agreement;
(ii) Approval of Bank Plan of Merger. If all other conditions to UCB's
obligation to complete these transactions have been met or waived, approve
the Bank Plan of Merger as sole shareholder of UCTC and obtain the
approval of, and cause the execution and delivery of, the Bank Plan of
Merger by UCTC; and
(iii) Proxy Solicitor. If Meridian requests and agrees to bear the
expense thereof, retain a proxy solicitor in connection with the
solicitation of UCB shareholder approval of this Agreement; or
(b) Meridian and UCB shall each:
(i) Shareholder Meetings. Submit this Agreement to their respective
shareholders for approval at a meeting to be held as soon as practicable,
and use their respective best efforts to cause their respective Boards of
Directors to unanimously recommend approval of this Agreement to their
respective shareholders, and, if there are not sufficient votes at the
time of such meeting to constitute a quorum or to approve this Agreement,
adjourn such meetings for a period not to exceed 30 days to permit further
solicitation of proxies;
(ii) Filings and Approvals. Cooperate with the other in the prompt
preparation and filing, as soon as practicable, of (A) the Applications,
(B) the Registration Statement and related filings under state securities
laws covering the Meridian Common Stock and related Meridian Stock
Purchase Rights to be issued pursuant to the Merger, (C) all other
documents necessary to obtain any other approvals and consents required to
effect the completion of the Merger and the Bank Merger, and (D) all other
documents contemplated by this Agreement;
(iii) Identification of UCB's Affiliates. Cooperate with the other and
use its best efforts to identify those persons who may be deemed to be
Affiliates of UCB;
(iv) Public Announcements. Meridian and UCB and their respective
officers, directors, employees and agents will cooperate with each other
in good faith, consistent with their respective legal obligations, in the
preparation and distribution of any and all press releases, announcements
and other public disclosures concerning the transactions contemplated
hereby. Neither party will make a public announcement concerning without
first giving the other party reasonable opportunity to review and comment
on such announcement.
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(v) Maintenance of Insurance. Maintain, and cause their respective
Subsidiaries to maintain, insurance in such amounts as are reasonable to
cover such risks as are customary in relation to the character and
location of its properties and the nature of its business;
(vi) Maintenance of Books and Records. Maintain, and cause their
respective Subsidiaries to maintain, books of account and records in
accordance with generally accepted accounting principles applied on a
basis consistent with those principles used in preparing the financial
statements heretofore delivered;
(vii) Delivery of Securities Documents. Deliver to the other, copies
of all Securities Documents immediately after the filing thereof;
(viii) Taxes. File all federal, state, and local tax returns required
to be filed by them or their respective Subsidiaries on or before the date
such returns are due (including any extensions) and pay all taxes shown to
be due on such returns on or before the date such payment is due; or
(ix) Delivery of Interim Financial Statements. Deliver as soon as
practicable after the end of each month and each fiscal quarter prior to
the Effective Date, (but in any event during the 5 business day period
following UCB Board of Director approval thereof) commencing with the
month during which this Agreement is executed, an unaudited consolidated
balance sheet as of such date and related unaudited consolidated
statements of income and cash flows for the period then ended, which
financial statements shall be prepared in accordance with generally
accepted accounting principles consistently applied and shall fairly
reflect its consolidated financial condition and consolidated results of
operations and cash flows for the periods then ended. Monthly financial
statements shall be kept confidential in accordance with Section 4.02.
Section 4.12 Employee Benefits.
(a) Except as provided in Section 4.12(b), the employee benefit plans,
arrangements and related policies of UCB, UCTC and Meridian shall initially
be unaffected by the Merger. Following the Merger, Meridian will review such
plans, arrangements and policies with a view toward consolidating the same to
the extent feasible and economical. In this regard, UCB and Meridian
contemplate that, subject to Internal Revenue Service and Pension Benefit
Guaranty Corporation approval, the defined benefit pension plans of UCTC and
Meridian will be merged as soon as administratively feasible. To the extent
former employees of UCB or a UCB Subsidiary become participants in a plan of
Meridian, they will be given past service credit for eligibility,
participation, and vesting purposes, but not for benefit accrual purposes.
For purposes of benefit accrual, credited service under the Meridian plan
will commence on the day following the date of plan merger. When a former
UCTC plan participant retires, he or she will receive a benefit which
consists of the sum of (i) the benefit determined under the UCTC plan as it
existed as of the date of plan merger for years of service based on an
employee's original employment date with UCB through the date of plan merger
utilizing actual current compensation earned as of retirement date and (ii)
the benefit calculated under the Meridian plan from the day following the
date of plan merger through retirement date.
(b) Employees of UCB and the UCB Subsidiaries immediately prior to the
Effective Date, who become employees of Meridian or a Meridian Subsidiary,
will receive Compensation and Benefit Packages no less favorable, in the
aggregate, than the Compensation and Benefits Packages to which they were
entitled immediately prior to the Effective Date. For purposes of the
preceding sentence, the term "Compensation and Benefit Package" means an
employee's total salary, wage, bonus and benefits, including, without
limitation, benefits under the UCTC Profit Sharing Plan proposed to be
terminated under Section 4.12(c). Neither UCB nor a UCB Subsidiary maintains
a severance policy or arrangement for terminated employees generally.
Employees of UCB and the UCB Subsidiaries immediately prior to the Effective
Date, who become employees of Meridian or a Meridian Subsidiary and are
involuntarily terminated within one year thereafter, will receive a severance
benefit equal to one week of pay in effect immediately prior to termination
times the number of whole years of service with UCB, a UCB Subsidiary,
Meridian, and a Meridian Subsidiary, subject to a minimum of 4 weeks of pay
and maximum of 30 weeks of pay.
(c) Notwithstanding the provisions of Section 4.12(a), UCB will take such
steps as may be necessary to cause the UCTC Profit Sharing Plan to be
terminated as of the Effective Date. The employer contribution (if any) for
the year of plan termination shall be appropriately pro rated to take into
account the portion of the plan year transpiring prior to its termination
date. Provision shall be made for the distribution of assets to participants,
subject to IRS approval. Meridian will cooperate with the proper funding and
disbursement of funds to UCTC employees entitled to a distribution.
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(d) Subject to Section 4.12(a) and (b) and Section 5.01(l), Meridian may
at any time and from time to time following the Merger (i) amend, freeze or
terminate an employee benefit plan of Meridian, UCB or a UCB Subsidiary, or
(ii) adopt a new employee benefit plan, either to replace a prior plan or
otherwise. Nothing in this Section 4.12 shall be deemed to give Meridian the
right to amend or affect in any way the employment agreements referred to in
Section 2.08(c).
(e) Meridian will honor and discharge the obligations of UCTC under the
Benefit Equalization Plan which have accrued immediately prior to the
Effective Date and which may thereafter accrue by reason of Meridian's
compliance with the terms of this Agreement.
(f) Meridian will honor and discharge the obligations of UCTC to its
retirees under its post-retirement health care and life insurance plan.
Meridian will honor and discharge the obligations of UCTC, if any, to its
employees who are not retired under its post-retirement health care and life
insurance plan to the extent such rights are not defeasible, either
immediately prior to or after the Effective Date.
Section 4.13 Employee Relations.
(a) To the extent any employees of UCB may be displaced from their current
positions as a result of the Merger, Meridian shall endeavor to offer
employment to such persons at their then current location or at other
Meridian locations where employment is then available.
(b) The UCTC Profit Sharing Plan shall be terminated as of the Effective
Date. The annual UCB contribution for the calendar year in which the closing
occurs, shall be pro rated to the date of termination according to the
formula set forth in the Plan and paid by UCTC to the Plan as soon as
practicable after the Effective Date. In addition, prior to the termination
of the UCB Profit Sharing Plan, it shall be amended, effective as of the
first day of the plan year in which the Effective Date occurs, to modify the
definition of "Adjusted Net Operating earnings" so as not to include as an
expense the costs incurred by UCB and the UCB Subsidiaries which are directly
attributable to the Merger.
Section 4.14 Relocation of Corporate Headquarters. Meridian shall,
effective as of the Effective Date, cause MBNJ to relocate its corporate
headquarters to the address of UCB's present corporate headquarters in
Cranford, New Jersey and cause the certificate of incorporation of MBNJ to be
amended to reflect such relocation.
Section 4.15 Post-Closing Board Membership.
(a) Meridian shall maintain the existing membership of the two regional
Boards of Directors of UCTC on the date hereof until at least December 31,
1996 at the same fee schedule existing on the date hereof.
(b) In the event that MBNJ is merged out of existence, former UCTC
directors who become directors of MBNJ shall become, at least until December
31, 1996, a regional board of directors at the same fee schedule (including
any retainers paid by UCTC on the date hereof).
ARTICLE V
CONDITIONS
Section 5.01 Conditions to UCB's Obligations under this Agreement. The
obligations of UCB hereunder shall be subject to satisfaction at or prior to
the Closing Date of each of the following conditions, unless waived by UCB
pursuant to Section 7.03 hereof:
(a) Corporate Proceedings. All action required to be taken by, or on the
part of, Meridian and MBNJ to authorize the execution, delivery and
performance of this Agreement and the Bank Plan of Merger, respectively, and
the consummation of the transactions contemplated hereby, shall have been
duly and validly taken by Meridian and MBNJ; and UCB shall have received
certified copies of the resolutions evidencing such authorizations;
(b) Covenants; Representations. The obligations of Meridian required by
this Agreement to be performed by Meridian at or prior to the Closing Date
shall have been duly performed and complied with in all material respects;
and the representations and warranties of Meridian set forth in this
Agreement shall be true and correct in all material respects, as of the date
of this Agreement, and as of the Closing Date as though made on and as of the
Closing Date, provided however that UCB has given Meridian written notice and
a reasonable opportunity to cure, and, in each case, except as to any
representation or warranty (i) where the facts which cause the failure of
such representation or warranty to be true and correct would not, either
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individually or in the aggregate, result in a Material Adverse Effect on the
consolidated assets, financial condition or results of operation of Meridian and
its subsidiaries taken as a whole; or (ii) which specifically relates to a time
other than the Closing Date which was or shall be true in all material respects
at such time or times;
(c) Approvals of Regulatory Authorities. Meridian shall have received all
approvals of Regulatory Authorities of the Merger, including without
limitation the approval of the FDIC, the FRB and NJDOB, and delivered copies
thereof to UCB; and all notice and waiting periods required thereunder shall
have expired or been terminated;
(d) No Injunction. There shall not be in effect any order, decree or
injunction of a court or agency of competent jurisdiction which enjoins or
prohibits consummation of the transactions contemplated hereby;
(e) No Material Adverse Change. Since March 31, 1995, there shall not have
occurred any material adverse change in the consolidated assets, business,
consolidated financial condition or consolidated results of operation, taken
as a whole, of Meridian and its Subsidiaries;
(f) Officer's Certificate. Meridian shall have delivered to UCB a
certificate, dated the Closing Date and signed, without personal liability,
by its chairman or president, to the effect that the conditions set forth in
subsections (a) through (e) of this Section 5.01 have been satisfied, to the
best knowledge of the officer executing the same;
(g) Opinion of Meridian's Counsel. UCB shall have received an opinion of
Stevens & Lee, counsel to Meridian, dated the Closing Date, in form and
substance reasonably satisfactory to UCB and its counsel to the effect set
forth on Exhibit 4 attached hereto;
(h) Registration Statement. The Registration Statement shall be effective
under the Securities Act and no proceedings shall be pending or threatened by
the SEC to suspend the effectiveness of the Registration Statement; and all
required approvals by state securities or "blue sky" authorities with respect
to the transactions contemplated by this Agreement, deemed necessary by
Meridian's counsel, shall have been obtained;
(i) Tax Opinion. UCB shall have received an opinion of Stevens & Lee,
substantially to the effect set forth on Exhibit 5 attached hereto and
reasonably acceptable to counsel to UCB;
(j) Approval of UCB's Shareholders. This Agreement shall have been
approved by the holders of at least 66 % of the shares of UCB's Common Stock
entitled to vote at the meeting at which the Merger is considered;
(k) Employment Contracts. MBNJ and Meridian, jointly and severally, shall
have specifically acknowledged, accepted and assumed the employment contracts
referred to in Section 2.08(c) in a writing delivered to the employees
covered thereby, and UCB shall have received an opinion of Stevens & Lee
substantially to the effect that such employment contracts will constitute
binding obligations of Meridian and MBNJ enforceable in accordance with their
respective terms, except as the same may be limited by insolvency,
reorganization, moratorium, receivership, conservatorship or other laws
affecting creditors' rights generally or as may be limited by the exercise of
judicial discretion in applying principles of equity;
(l) Directors/Officers. (i) Two nominees, designated by UCB and reasonably
acceptable to Meridian shall be duly appointed by the Board of Directors of
Meridian, one to fill a vacancy in the class of Meridian directors which
serves until the Annual Meeting of Meridian shareholders in 1997 and one to
fill a vacancy in the class of Meridian directors which serves until the
Annual Meeting of Meridian shareholders in either 1996 or 1998, respectively;
and (ii) Albert W. Bossert, Anton J. Campanella, Edward J. Hobbie, John E.
Holobinko, William C. Johnson, Jr., Robert G. Kenney, Henry G. Largey, Donald
S. Nowicki and Maureen E. Staub shall be duly appointed as directors of MBNJ,
joining Samuel A. McCullough, David E. Sparks, P. Sue Perrotty, Wayne Huey,
Jr. and Paul W. McGloin. The Board of Directors of MBNJ, with the consent of
Meridian, may also appoint other current officers or directors of UCB and/or
UCTC as officers and/or directors of Meridian and/or MBNJ, in Meridian's
discretion. Meridian presently intends to keep, as officers of MBNJ, as many
officers of UCTC as is practicable;
(m) D&O Insurance. UCB shall have received evidence, reasonably
satisfactory to it, that Meridian shall have obtained the insurance referred
to in Section 4.05(c);
(n) Pooling Letter. UCB shall have received a copy of the letter provided
for in Section 5.02(k);
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(o) NASDAQ Listing. The shares of Common Stock of Meridian issuable in
exchange for shares of UCB Common Stock and for the exercise of options shall
be approved for listing on the Nasdaq Stock Market; and
(p) Defined Benefit Plan Merger Documents. UCB shall have approved the
plan merger documents for the merger of the UCB and Meridian defined benefit
pension plans, which approval shall not be unreasonably withheld.
(q) Investment Banking Opinion. UCB shall have received an updated written
opinion from Goldman, Sachs & Co., dated not earlier than three business days
before the mailing date of the Prospectus/Proxy Statement, to the effect the
Exchange Ratio is fair to the shareholders of UCB.
Section 5.02 Conditions to Meridian's Obligations under this
Agreement. The obligations of Meridian hereunder shall be subject to
satisfaction at or prior to the Closing Date of each of the following
conditions, unless waived by Meridian pursuant to Section 7.03 hereof:
(a) Corporate Proceedings. All action required to be taken by, or on the
part of, UCB and UCTC to authorize the execution, delivery and performance of
this Agreement and the Bank Plan of Merger, respectively, and the
consummation of the transactions contemplated hereby, shall have been duly
and validly taken by UCB and UCTC; and Meridian shall have received certified
copies of the resolutions evidencing such authorizations;
(b) Covenants; Representations. The obligations of UCB, required by this
Agreement to be performed by it at or prior to the Closing Date shall have
been duly performed and complied with in all material respects; and the
representations and warranties of UCB set forth in this Agreement shall be
true and correct in all material respects as of the date of this Agreement,
and as of the Closing Date as though made on and as of the Closing Date,
provided, however, that Meridian has given UCB written notice and a
reasonable opportunity to cure, and, in each case, except as to any
representation or warranty (i) where the facts which cause the failure of
such representation or warranty to be true and correct would not, either
individually or in the aggregate, results in a Material Adverse Effect on the
consolidated assets, financial condition or results of operation of UCB and
its subsidiaries taken as a whole; or (ii) which specifically relates to a
time other than the Closing Date which was or shall be true in all material
respects at such time or times;
(c) Approvals of Regulatory Authorities. Meridian shall have received all
approvals of Regulatory Authorities for the Merger, including without
limitation the approvals of the FRB, the FDIC, the NJDB and the PDB, without
the imposition of any term or condition that would have a material adverse
effect on Meridian and its Subsidiaries, taken as a whole, upon completion of
the Merger; and all notice and waiting periods required thereunder shall have
expired or been terminated;
(d) No Injunction. There shall not be in effect any order, decree or
injunction of a court or agency of competent jurisdiction which enjoins or
prohibits consummation of the transactions contemplated hereby;
(e) No Material Adverse Change. Since March 31, 1995, there shall not have
occurred any material adverse change in the consolidated assets, business,
consolidated financial condition or consolidated results of operation, taken
as a whole, of UCB and the UCB Subsidiaries;
(f) Officer's Certificate. UCB shall have delivered to Meridian a
certificate, dated the Closing Date and signed, without personal liability,
by its chairman of the board or president, to the effect that the conditions
set forth in subsections (a) through (e) of this Section 5.02 have been
satisfied, to the best knowledge of the officer executing the same;
(g) Opinions of UCB's Counsel. Meridian shall have received an opinion of
counsel to UCB dated the Closing Date, in form and substance reasonably
satisfactory to Meridian and its counsel to the effect set forth on Exhibit 6
attached hereto;
(h) Registration Statement. The Registration Statement shall be effective
under the Securities Act and no proceedings shall be pending or threatened by
the SEC to suspend the effectiveness of the Registration Statement; and all
required approvals by state securities or "blue sky" authorities with respect
to the transactions contemplated by this Agreement, deemed necessary by
Meridian's counsel, shall have been obtained;
(i) Tax Opinion. Meridian shall have received an opinion of Stevens & Lee,
its counsel, substantially to the effect set forth on Exhibit 5 attached
hereto;
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(j) Approval of Meridian's Shareholders. This Agreement shall have been
approved by the affirmative vote of at least a majority of the votes cast by
holders of shares of Meridian Common Stock voted at the meeting at which the
Merger is considered; and
(k) Pooling Letter. Meridian shall have received a letter from KPMG Peat
Marwick to the effect that the Merger will be treated as a "pooling of
interests" for financial accounting purposes.
ARTICLE VI
TERMINATION, WAIVER AND AMENDMENT
Section 6.01 Termination. This Agreement may be terminated on or at any
time prior to the Closing Date:
(a) By the mutual written consent of the parties hereto; or
(b) By Meridian or UCB:
(i) if the Closing Date shall not have occurred within one (1) year
from the date of this Agreement, unless the failure of such occurrence
shall be due to the failure of the party seeking to terminate this
Agreement to perform or observe its agreements set forth in this Agreement
required to be performed or observed by such party on or before the
Closing Date; or
(ii) if either party has been informed in writing by a Bank Regulatory
Authority whose approval or consent has been requested that such approval
or consent is unlikely to be granted, unless the failure of such
occurrence shall be due to the failure of the party seeking to terminate
this Agreement to perform or observe its agreements set forth herein
required to be performed or observed by such party on or before the
Closing Date; or
(c) By Meridian or UCB if the respective shareholders of Meridian or UCB
fail to approve this Agreement at the meetings (including any adjournments
thereof) held for such purpose unless in each case the failure of such
occurrence shall be due to the failure of the party seeking to terminate this
Agreement to perform or observe its agreements set forth herein to be
performed or observed by such party at or before the Effective Date
(including in the case of UCB the failure by any of the persons who executed
the letter agreement in the form attached hereto as Exhibit 1 to perform or
observe the agreements set forth therein).
(d) By Meridian or UCB if any condition to Closing specified under Article
V of this Agreement applicable to such party cannot reasonably be met on or
before the Effective Date and both parties reasonably agree that such
condition cannot be met.
Section 6.02 Effect of Termination. If this Agreement is terminated
pursuant to Section 6.01 hereof, this Agreement shall forthwith become void
(other than Section 4.02(d), 4.02(e), Section 4.11(b)(iv) and Section 7.01
hereof, which shall remain in full force and effect), and there shall be no
further liability on the part of Meridian or UCB to the other, except for any
liability of Meridian or UCB under such sections of this Agreement and except
for any liability arising out of any uncured willful breach of any covenant
or other agreement contained in this Agreement or any fraudulent breach of a
representation or warranty.
ARTICLE VII
MISCELLANEOUS
Section 7.01 Expenses. Except for the cost of printing and mailing the
Proxy Statement/Prospectus which shall be shared equally, each party hereto
shall bear and pay all costs and expenses incurred by it in connection with
the transactions contemplated hereby, including fees and expenses of its own
financial consultants, accountants and counsel.
Section 7.02 Survival of Representations, Warranties and Covenants. All
representations, warranties and, except to the extent specifically provided
otherwise herein, agreements and covenants shall terminate on the Closing
Date. The covenants contained in Sections 4.05 and 4.15 shall survive the
Closing Date and the Effective Date.
Section 7.03 Amendment, Extension and Waiver. Subject to applicable law,
at any time prior to the consummation of the transactions contemplated by
this Agreement, the parties may (a) amend this Agreement, (b) extend the time
for the performance of any of the obligations or other acts of either party
hereto, (c) waive any inaccuracies in the representations and warranties
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contained herein or in any document delivered pursuant hereto, or (d) waive
compliance with any of the agreements or conditions contained herein. This
Agreement may not be amended except by an instrument in writing authorized by
the respective Boards of Directors and signed, by duly authorized officers, on
behalf of the parties hereto. Any agreement on the part of a party hereto to any
extension or waiver shall be valid only if set forth in an instrument in writing
signed by a duly authorized officer on behalf of such party, but such waiver or
failure to insist on strict compliance with such obligation, covenant, agreement
or condition shall not operate as a waiver of, or estoppel with respect to, any
subsequent or other failure.
Section 7.04 Entire Agreement. This Agreement, including the documents and
other writings referred to herein or delivered pursuant hereto, contains the
entire agreement and understanding of the parties with respect to its subject
matter. This Agreement supersedes all prior arrangements and understandings
between the parties, both written or oral with respect to its subject matter.
This Agreement shall inure to the benefit of and be binding upon the parties
hereto and their respective successors; provided, however, that nothing in
this Agreement, expressed or implied, is intended to confer upon any party,
other than the parties hereto and their respective successors, any rights,
remedies, obligations or liabilities other than pursuant to Section 4.05(b),
(c) and (d) with respect to indemnification and directors and officers
liability insurance.
Section 7.05 No Assignment. Neither party hereto may assign any of its
rights or obligations hereunder to any other person, without the prior
written consent of the other party hereto.
Section 7.06 Notices. All notices or other communications hereunder shall
be in writing and shall be deemed given if delivered personally, mailed by
prepaid registered or certified mail (return receipt requested), or sent by
telecopy, addressed as follows:
(a) If to Meridian, to:
Meridian Bancorp, Inc.
35 North Sixth Street
Reading, Pennsylvania 19603
Attention: David E. Sparks, Chief
Financial Officer
and
Michael J. Hughes
Senior Vice President,
Corporate Development
Telecopy No.: (610) 665-2428
with a copy to:
Stevens & Lee
111 North Sixth Street
P.O. Box 679
Reading, Pennsylvania 19603
Attention: Joseph M. Harenza, Esquire,
and David W. Swartz, Esquire
Telecopy No.: (610) 376-5610
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(b) If to UCB, to:
United Counties Bancorporation
Four Commerce Drive
Cranford, New Jersey
Attention: Eugene H. Bauer, Chairman
and Chief Executive Officer
and
Alice Cadby,
Corporate Secretary
Telecopy No.: (908) 709-1583
(marked "CONFIDENTIAL")
with a copy to:
Pitney, Hardin, Kipp & Szuch
Mail: P.O. Box 1945
Morristown, New Jersey 07962-1945
Street: 200 Campus Drive
Florham Park, New Jersey 07932-0950
Attention: Ronald Janis, Esquire
Telecopy No.: (201) 966-1550
Section 7.07 Captions. The captions contained in this Agreement are for
reference purposes only and are not part of this Agreement.
Section 7.08 Counterparts. This Agreement may be executed in any number of
counterparts, and each such counterpart shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
agreement.
Section 7.09 Severability. If any provision of this Agreement or the
application thereof to any person or circumstance shall be invalid or
unenforceable to any extent, the remainder of this Agreement and the
application of such provisions to other persons or circumstances shall not be
affected thereby and shall be enforced to the greatest extent permitted by
law.
Section 7.10 Governing Law. This Agreement shall be governed by and
construed in accordance with the domestic internal law (including the law of
conflicts of law) of the Commonwealth of Pennsylvania.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their duly authorized officers as of the day and year first above written.
MERIDIAN BANCORP, INC.
(CORPORATE SEAL) By: /s/ Samuel A. McCullough
------------------------------
Samuel A. McCullough,
Chairman and Chief
Executive Officer
Attest: /s/ William L. Gaunt
----------------------
William L. Gaunt,
Secretary
UNITED COUNTIES BANCORPORATION
(CORPORATE SEAL) By: /s/ Eugene H. Bauer
------------------------------
Eugene H. Bauer
Chairman and Chief
Executive Officer
Attest: /s/ Alice R. Cadby
----------------------
Alice R. Cadby
Corporate Secretary
Exhibits
Exhibit 1 - UCB Affiliate Agreement
Exhibit 2 - Stock Option Agreement
Exhibit 3 - Bank Plan of Merger
Exhibit 4 - Form of Opinion of Meridian's Counsel
Exhibit 5 - Form of Tax Opinion of Meridian's Counsel
Exhibit 6 - Form of Opinion of UCB's Counsel
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<PAGE>
EXHIBIT 1
May 23, 1995
Meridian Bancorp, Inc.
35 North Sixth Street
Reading, Pennsylvania 19601
Ladies and Gentlemen:
Meridian Bancorp, Inc. ("Meridian") and United Counties Bancorporation
("UCB") desire to enter into a business combination pursuant to which (a) UCB
will merge with and into Meridian, with Meridian surviving the merger, and
(b) shareholders of UCB will receive common stock of Meridian in exchange for
common stock of UCB outstanding on the closing date (the foregoing,
collectively, referred to herein as the "Merger"). The undersigned, being
directors and executive officers or significant shareholders of UCB, execute
and deliver to Meridian this Letter Agreement in connection with the Merger.
Each of the undersigned hereby jointly, severally and irrevocably:
(a) Agrees to be present (in person or by proxy) at all meetings of
shareholders of UCB called to vote for approval of the Merger, so that all
shares of common stock or UCB then owned by him will be counted for the
purpose of determining the presence of a quorum at such meetings and to vote
all such shares (i) in favor of approval and adoption of the Merger and (ii)
against approval or adoption of any other merger, business combination,
recapitalization, partial liquidation or similar transaction involving UCB,
provided, however, that this obligation shall terminate concurrently with any
termination of the Merger;
(b) Agrees to use his or her best efforts to cause the Merger to be
completed;
(c) Agrees not to sell, transfer or otherwise dispose of any common stock
of UCB except for family gifts or charitable contributions prior to closing
of the Merger or any shares of Meridian Common Stock after closing of the
Merger until such time as financial results covering at least 30 days of
post-merger combined operating results of Meridian and UCB have been
published as required by applicable securities laws.
(d) If the undersigned is the holder of stock options to acquire UCB
common stock, acknowledges that, in the Merger, options, if any, to acquire
UCB common stock held by him or her will be exchanged for options to acquire
Meridian Common Stock, and agrees to such exchange;
(e) Agrees not to solicit, initiate or engage in any negotiations or
discussions with any party other than Meridian with respect to any offer,
sale, transfer or other disposition of, any shares of common stock of UCB now
or hereafter owned by him or to support any such offer, sale, transfer, or
other disposition, unless advised in writing to the contrary by the Board of
Directors of UCB;
(f) Agrees not to offer, sell, transfer or otherwise dispose of any shares
of Meridian Common Stock received in the Merger, except in accordance with
Rule 145 under the Securities Act, which is applicable to all sales of
securities received by affiliates of the corporation required in a business
combination; and further understands and agrees that Meridian's stock
transfer agent will be given appropriate stop transfer instructions with
respect to the foregoing;
(g) Acknowledges and agrees that the provisions of subparagraphs (c) and
(f) hereof also apply to shares of Meridian Common Stock received in the
Merger (or any shares of UCB common stock or of Meridian Common Stock,
whether or not received in the Merger, for the period referred to in
subparagraph (c) above, owned by (i) his or her spouse, (ii) any of his or
her relatives or relatives of his or her spouse occupying his home, and (iii)
any other of his or her affiliates or associates;
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(h) Represents that he or she has the capacity to enter into this Letter
Agreement, and, if signing on behalf of a corporation or other organization,
has authority to bind such corporation or other organization, and that it is
a valid and binding obligation.
------
This Letter Agreement may be executed in two or more counterparts, each of
which shall be deemed to constitute an original, but all of which together
shall constitute one and the same Letter Agreement.
------
This Letter Agreement shall be effective upon execution by two or more
persons listed below.
------
This Letter Agreement shall terminate concurrently with any termination of
the Merger in accordance with its terms.
------
The undersigned intend to be legally bound hereby.
Very truly yours,
-------------------------------------
Eugene H. Bauer
-------------------------------------
Anton J. Campanella
-------------------------------------
John E. Holobinko
-------------------------------------
William C. Johnson, Jr.
-------------------------------------
Henry G. Largey
-------------------------------------
Donald S. Nowicki
-------------------------------------
Robert J. Bauer, individually and
on behalf of C. H. Winans Company
-------------------------------------
Robert W. Dowens, Sr.
-------------------------------------
Theodore E. Zuczek
-------------------------------------
J. Richard Pierce
-------------------------------------
Janice H. Levin, individually and
on behalf of Levin Properties
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<PAGE>
--------------------------------------
Raymond W. Bauer, individually and
on behalf of C.H. Winans Company
--------------------------------------
Nicholas A. Frungillo, Jr.
--------------------------------------
Albert W. Bossert
--------------------------------------
Walter W. Gauer
--------------------------------------
William G. Palmero
--------------------------------------
Maureen Staub
--------------------------------------
Robert G. Kenney
A-35
<PAGE>
EXHIBIT 2
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT ("Stock Option Agreement") dated May 23, 1995,
is by and between MERIDIAN BANCORP, INC., a Pennsylvania corporation
("Meridian"), and UNITED COUNTIES BANCORPORATION, a New Jersey corporation
("UCB").
BACKGROUND
1. Meridian and UCB desire to enter into an agreement, dated May 23, 1995
(the "Agreement"), providing, among other things, for the merger of UCB and
Meridian, with Meridian surviving the merger (the "Merger").
2. As a condition of Meridian entering into the Agreement on the terms and
conditions relating to price set forth in the Agreement, UCB is granting to
Meridian an option to purchase up to 375,000 shares of common stock of UCB,
subject to adjustment as provided in Section 5, on the terms and conditions
hereinafter set forth.
AGREEMENT
In consideration of the foregoing and the mutual covenants and agreements
set forth herein, Meridian and UCB, intending to be legally bound hereby,
agree:
1. Grant of Option. UCB hereby grants to Meridian, on the terms and
conditions set forth herein, the option to purchase (the "Option") up to
375,000 shares (the "Option Shares") of common stock, stated value $1.00 per
share (the "Common Stock"), of UCB, subject to adjustment as provided in
Section 5, at a price per share (the "Option Price") equal to $125.00;
provided, however, that in the event UCB issues or agrees to issue (including
through the issuance of any Rights (as defined in the Agreement) any shares
of Common Stock, except for shares issuable under outstanding stock options,
at a price less than $125.00 per share (as adjusted pursuant to Section 5 of
this Stock Option Agreement), such $125.00 per share price shall be reduced
to such lesser price.
2. Exercise of Option. Upon or after the occurrence of a Triggering Event
(as such term is hereinafter defined) and until termination of this Stock
Option Agreement in accordance with the provisions of Section 21, Meridian
may exercise the Option, in whole or in part, at any time or one or more
times, from time to time. As used herein, the term "Triggering Event" means
the occurrence of any of the following events:
(a) a person or group (as such terms are defined in the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and the rules and
regulations thereunder), other than Meridian, an affiliate of Meridian or
any present shareholder of UCB which or who presently owns more than 9.9%
of the presently outstanding shares of Common Stock, acquires beneficial
ownership (within the meaning of Rule 13d-3 under the Exchange Act) of
more than 9.9% of the then outstanding shares of Common Stock; provided,
however that a Triggering Event shall occur under this Section 2(a) in the
event any present shareholder of UCB which or who presently owns more than
9.9% of the presently outstanding shares of Common Stock increases such
shareholder's beneficial ownership to greater than 14.9% of the then
outstanding shares of Common Stock;
(b) a person or group, other than Meridian or an affiliate of Meridian,
enters into an agreement or letter of intent with UCB pursuant to which
such person or group or any affiliate of such person or group would (i)
merge or consolidate, or enter into any similar transaction, with UCB or
United Counties Trust Company ("UCTC"), (ii) acquire all or substantially
all of the assets of UCB or all or substantially all of the assets or
liabilities of UCTC, or (iii) acquire beneficial ownership of securities
representing, or the right to acquire beneficial ownership or to vote
securities representing, more than 9.9% of the then outstanding shares of
Common Stock or the then outstanding shares of common stock of UCTC; or
(c) a person or group, other than Meridian or an affiliate of Meridian,
publicly announces a bona fide proposal (including a written communication
that is or becomes the subject of public disclosure) for (i) any merger,
consolidation or acquisition of all or substantially all the assets of UCB
or all or substantially all of the assets or liabilities of UCTC, or any
other business combination involving UCB or UCTC, or (ii) a transaction
involving the transfer of beneficial ownership of securities representing,
or the right to acquire beneficial ownership or to vote securities
A-36
<PAGE>
representing, more than 9.9% of the then outstanding shares of Common Stock, or
any of the then outstanding shares of common stock of UCTC (collectively, a
"Proposal"), and thereafter, if such Proposal has not been Publicly Withdrawn
(as such term is hereinafter defined) at least 30 days prior to the meeting of
shareholders of UCB called to vote on the Merger, UCB's shareholders fail to
approve the Merger by the vote required by applicable law at the meeting of
shareholders called for such purpose or such meeting has been postponed or
cancelled; or
(d) a person or group, other than Meridian or an affiliate of Meridian,
makes a bona fide Proposal and thereafter, but before such Proposal has been
Publicly Withdrawn, UCB willfully takes any action in a manner which would
materially interfere with UCB's ability to consummate the Merger or
materially reduce the value of the transaction to Meridian;
(e) UCB breaches the covenant set forth at Section 4.06 of the Agreement;
or
(f) UCB breaches, in any material respect, any binding terms of the
Agreement or any provision of this Stock Option Agreement or the Agreement
after a Proposal is made and before it is Publicly Withdrawn or publicly
announces an intention to authorize, recommend or accept any such Proposal;
or
(g) any affiliate of UCB breaches any material provision of the UCB
Affiliate Agreement attached as Exhibit 1 to the Merger Agreement or breaches
in any material respect the covenant set forth in Section 4.06 of the
Agreement.
"Publicly Withdrawn" for purposes of this Section 2 shall mean an
unconditional bona fide withdrawal of the Proposal coupled with a public
announcement of no further interest in pursuing such Proposal or in acquiring
any controlling influence over UCB or in soliciting or inducing any other
person (other than Meridian or an affiliate of Meridian) to do so.
Notwithstanding the foregoing, the obligation of UCB to issue Option
Shares upon exercise of the Option shall be deferred (but shall not
terminate) (i) until the receipt of all required governmental or regulatory
approvals or consents necessary for UCB to issue the Option Shares, or
Meridian to exercise the Option, or until the expiration or termination of
any waiting period required by law, or (ii) so long as any injunction or
other order, decree or ruling issued by any federal or state court of
competent jurisdiction is in effect which prohibits the sale or delivery of
the Option Shares, and, in each case, notwithstanding any provision to the
contrary set forth herein, the Option shall not expire or otherwise
terminate.
UCB shall notify Meridian promptly in writing of the occurrence of any
Triggering Event known to it, it being understood that the giving of such
notice by UCB shall not be a condition to the right of Meridian to exercise
the Option. UCB will not take any action which would have the effect of
preventing or disabling UCB from delivering the Option Shares to Meridian
upon exercise of the Option or otherwise performing its obligations under
this Stock Option Agreement. In the event Meridian wishes to exercise the
Option, Meridian shall send a written notice to UCB (the date of which is
hereinafter referred to as the "Notice Date") specifying the total number of
Option Shares it desires to purchase and a place and date between two and ten
business days inclusive from the Notice Date for the closing of such a
purchase (a "Closing"); provided, however, that a Closing shall not occur
prior to two days after the later of receipt of any necessary regulatory
approvals or the expiration of any legally required notice or waiting period,
if any.
3. Payment and Delivery of Certificates. At any Closing hereunder, (a)
Meridian will make payment to UCB of the aggregate price for the Option
Shares so purchased by wire transfer of immediately available funds to an
account designated by UCB, (b) UCB will deliver to Meridian a stock
certificate or certificates representing the number of Option Shares so
purchased, registered in the name of Meridian or its designee, in such
denominations as were specified by Meridian in its notice of exercise and
bearing a legend as set forth below, and (c) Meridian will pay any transfer
or other taxes required by reason of the issuance of the Option Shares so
purchased.
A legend will be placed on each stock certificate evidencing Option Shares
issued pursuant to this Stock Option Agreement, which legend will read
substantially as follows:
"The shares of stock represented by this certificate have not been the
subject of a registration statement filed under the Securities Act of
1933, as amended (the "Act"), and declared effective by the Securities and
Exchange Commission. These shares may not be sold, transferred or
otherwise disposed of prior to such time unless United Counties
Bancorporation receives an opinion of counsel stating that an exemption
from the registration provisions of the Act is available for such
transfer."
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<PAGE>
4. Registration Rights. Upon or after the occurrence of a Triggering Event
and upon receipt of a written request from Meridian, UCB shall promptly
prepare and file a registration statement under the Securities Act of 1933,
as amended, with the Securities and Exchange Commission covering the Option
and such number of Option Shares as Meridian shall specify in its request,
and UCB shall use its best efforts to cause such registration statement to be
declared effective in order to permit the sale or other disposition of the
Option or the Option Shares, provided that Meridian shall in no event have
the right to have more than one such registration statement become effective,
and provided further that UCB shall not be required to prepare and file any
such registration statement in connection with any proposed sale with respect
to which UCB's counsel delivers to UCB and to Meridian its unqualified
opinion to the effect that no such filing is required under applicable laws
and regulations with respect to such sale or disposition. In connection with
such filing, UCB shall use its best efforts to cause to be delivered to
Meridian such certificates, opinions, accountant's letters and other
documents as Meridian shall reasonably request and as are customarily
provided in connection with registrations of securities under the Securities
Act of 1933, as amended. UCB shall provide to Meridian such number of copies
of the preliminary prospectus and final prospectus and any amendments and
supplements thereto as Meridian may reasonably request. All reasonable
expenses incurred by UCB in complying with the provisions of this Section 4,
including, without limitation, all registration and filing fees, reasonable
printing expenses, reasonable fees and disbursements of counsel for UCB and
blue sky fees and expenses, shall be paid by UCB. Underwriting discounts and
commissions to brokers and dealers relating to the Option or the Option
Shares, fees and disbursements of counsel to Meridian and any other expenses
incurred by Meridian in connection with such filing shall be borne by
Meridian. In connection with such filing, UCB shall indemnify and hold
harmless Meridian against any losses, claims, damages or liabilities, joint
or several, to which Meridian may become subject, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of
or are based upon any untrue statement or alleged untrue statement of any
material fact contained in any preliminary or final registration statement or
any amendment or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading;
and UCB will reimburse Meridian for any legal or other expense reasonably
incurred by Meridian in connection with investigating or defending any such
loss, claim, damage, liability or action; provided, however, that UCB will
not be liable in any case to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged
untrue statement or omission or alleged omission made in such preliminary or
final registration statement or such amendment or supplement thereto in
reliance upon and in conformity with written information furnished by or on
behalf of Meridian specifically for use in the preparation thereof. Meridian
will indemnify and hold harmless UCB to the same extent as set forth in the
immediately preceding sentence but only with reference to written information
furnished by or on behalf of Meridian for use in the preparation of such
preliminary or final registration statement or such amendment or supplement
thereto; and Meridian will reimburse UCB for any legal or other expense
reasonably incurred by UCB in connection with investigating or defending any
such loss, claim, damage, liability or action.
5. Adjustment Upon Changes in Capitalization. In the event of any change
in the Common Stock by reason of stock dividends, split-ups, mergers,
recapitalizations, combinations, conversions, divisions, exchanges of shares
or the like, then the number and kind of Option Shares and the Option Price
shall be appropriately adjusted.
6. Filings and Consents. Each of Meridian and UCB 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 Stock Option Agreement.
7. Representations and Warranties of UCB. UCB hereby represents and
warrants to Meridian as follows:
(a) Due Authorization. UCB has full corporate power and authority to
execute, deliver and perform this Stock Option Agreement and all corporate
action necessary for execution, delivery and performance of this Stock
Option Agreement has been duly taken by UCB. This Stock Option Agreement
constitutes a legal, valid and binding obligation of UCB, enforceable
against UCB in accordance with its terms.
(b) Authorized Shares. UCB has taken all necessary corporate action to
authorize and reserve for issuance all shares of Common Stock which may be
issued pursuant to any exercise of the Option.
8. Specific Performance. The parties hereto acknowledge that damages would
be an inadequate remedy for a breach of this Stock Option Agreement and that
the obligations of the parties hereto shall be specifically enforceable.
9. Entire Agreement. This Stock Option Agreement and the Agreement
constitute the entire agreement between the parties with respect to the
subject matter hereof and supersede all other prior agreements and
understandings, both written and oral, among the parties or any of them with
respect to the subject matter hereof.
A-38
<PAGE>
10. Assignment or Transfer. Meridian represents that it is acquiring the
Option for Meridian's own account and not with a view to, or for sale in
connection with, any distribution of the Option or the Option Shares.
Meridian is aware that neither the Option nor the Option Shares are the
subject of a registration statement filed with, and declared effective by,
the Securities and Exchange Commission pursuant to Section 5 of the
Securities Act of 1933, as amended, but instead are being offered in reliance
upon the exemption from the registration requirement provided by Section 4(2)
thereof.
11. Amendment of Stock Option Agreement. By mutual consent of the parties
hereto, this Stock Option Agreement may be amended in writing at any time,
for the purpose of facilitating performance hereunder or to comply with any
applicable regulation of any governmental authority or any applicable order
of any court or for any other purpose.
12. Validity. The invalidity or unenforceability of any provision of this
Stock Option Agreement shall not affect the validity or enforceability of any
other provisions of this Stock Option Agreement, which shall remain in full
force and effect.
13. Notices. All notices, requests, consents and other communications
required or permitted hereunder shall be in writing and shall be deemed to
have been duly given when delivered personally, by telegram or telecopy, or
by registered or certified mail (postage prepaid, return receipt requested)
to the respective parties as follows:
(i) If to Meridian, to:
Meridian Bancorp, Inc.
35 North Sixth Street
Reading, Pennsylvania 19603
Attention: David E. Sparks, Chief Financial Officer
and
Michael J. Hughes
Senior Vice President,
Corporate Development
Telecopy No.: (610) 665-2428
with a copy to:
Stevens & Lee
111 North Sixth Street
Reading, Pennsylvania 19601
Attention: Joseph M. Harenza, Esquire,
and David W. Swartz, Esquire
Telecopy No.: (610) 376-5610
(ii) If to UCB, to:
United Counties Bancorporation
Four Commerce Drive
Cranford, New Jersey 07016
Attention: Eugene H. Bauer
Chairman of the Board and
Chief Executive Officer
and
Alice Cadby,
Corporate Secretary
Telecopy No.: (908) 709-1583
(Marked "Confidential")
A-39
<PAGE>
with copies to:
Pitney, Hardin, Kipp & Szuch
Mail: P.O. Box 1945
Morristown, New Jersey 07962-1945
Street: 200 Campus Drive
Florham Park, New Jersey 07932-8950
Attention: Ronald Janis, Esquire
Telecopy No.: (201) 966-1550
or to such other address as the person to whom notice is to be given may have
previously furnished to the others in writing in the manner set forth above
(provided that notice of any change of address shall be effective only upon
receipt thereof).
14. Governing Law. This Stock Option Agreement shall be governed by and
construed in accordance with the domestic internal law (but not the law of
conflicts of law) of the Commonwealth of Pennsylvania.
15. Captions. The captions in this Stock Option Agreement are inserted for
convenience and reference purposes, and shall not limit or otherwise affect
any of the terms or provisions hereof.
16. Waivers and Extensions. The parties hereto may, by mutual consent,
extend the time for performance of any of the obligations or acts of either
party hereto. Each party may waive (i) compliance with any of the covenants
of the other party contained in this Stock Option Agreement and/or (ii) the
other party's performance of any of its obligations set forth in this Stock
Option Agreement.
17. Parties in Interest. This Stock Option Agreement shall be binding upon
and inure solely to the benefit of each party hereto, and nothing in this
Stock Option Agreement, express or implied, is intended to confer upon any
other person any rights or remedies of any nature whatsoever under or by
reason of this Stock Option Agreement.
18. Counterparts. This Stock Option Agreement may be executed in two or
more counterparts, each of which shall be deemed to be an original, but all
of which shall constitute one and the same agreement.
19. Expenses. Except as otherwise provided herein, all costs and expenses
incurred by the parties hereto in connection with the transactions
contemplated by this Stock Option Agreement or the Option shall be paid by
the party incurring such cost or expense.
20. Representations Relating to Authorizations. UCB and Meridian each
represent and warrant that executions, delivery and performance of this
agreement have been authorized by their respective boards of directors and
constitutes a legal and valid obligation enforceable in accordance with its
terms.
21. Termination. This Stock Option Agreement shall terminate and be of no
further force or effect upon termination of the Agreement in accordance with
the provisions thereof; provided, however, that, if the termination of the
Agreement occurs after a Triggering Event, this Stock Option Agreement shall
not terminate until expiration of twelve (12) months following the later of
the termination of the Agreement or the completion or abandonment of any
Proposal or any acquisition transaction relating to the Triggering Event.
22. Severability. If any term, provision, covenant or restriction
contained in this Stock Option 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 inn this Option Agreement shall remain in full force
and effect, and shall in no way be affected, impaired or invalidated. If for
any reason such court or regulatory agency determines that the Option will
not permit the holder to acquire the full number of shares of the Common
Stock provided in Section 2 hereof (as adjusted pursuant to Section 6
hereof), it is the express intention of UCB to allow the holder to acquire
such lesser number of shares as may be permissible at such lesser price or on
such other repurchase terms as such court or regulatory agency may indicate
to be reasonable, without any amendment or modification hereof.
IN WITNESS WHEREOF, each of the parties hereto, pursuant to resolutions
adopted by its Board of Directors, has caused this Stock Option Agreement to
be executed by its duly authorized officer and has caused its corporate seal
to be affixed hereunto and to be duly attested, all as of the day and year
first above written.
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<PAGE>
MERIDIAN BANCORP, INC.
By
-----------------------------------
Samuel A. McCullough,
Chairman and
Chief Executive Officer
(CORPORATE SEAL)
Attest:
-----------------------------------
William L. Gaunt,
Secretary
UNITED COUNTIES BANCORPORATION
By
-----------------------------------
Eugene H. Bauer,
Chairman of the Board and
Chief Executive Officer
(CORPORATE SEAL)
Attest:
-----------------------------------
Alice Cadby,
Secretary
A-41
<PAGE>
EXHIBIT 3
BANK
PLAN OF MERGER
THIS PLAN OF MERGER ("Plan of Merger") dated as of May 23, 1995, is by and
between MERIDIAN BANK, NEW JERSEY, a New Jersey banking corporation ("MBNJ"),
and UNITED COUNTIES TRUST COMPANY, a New Jersey banking corporation ("UCTC").
BACKGROUND
1. MBNJ is a wholly-owned subsidiary of Meridian Bancorp, Inc., a
Pennsylvania corporation ("Meridian"). The authorized capital stock of MBNJ
consists of 6,000,000 shares of common stock, par value $5.00 per share
("MBNJ Common Stock"), of which at the date hereof 1,000,000 shares are
issued and outstanding.
2. UCTC is a wholly-owned subsidiary of United Counties Bancorporation, a
New Jersey corporation ("UCB"). The authorized capital stock of UCTC consists
of shares of common stock, with a stated value $5.00 per share ("UCTC Common
Stock"), of which at the date hereof 2,425,900 shares are issued and
outstanding.
3. The respective Boards of Directors of MBNJ and UCTC deem the merger of
UCTC with and into MBNJ, pursuant to the terms and conditions set forth or
referred to herein, to be desirable and in the best interests of the
respective corporations and their respective shareholders.
4. The respective Boards of Directors of MBNJ and UCTC have adopted
resolutions approving this Plan of Merger. The respective Boards of Directors
of Meridian and UCB have adopted resolutions approving an Agreement and Plan
of Merger (dated as of May 23, 1995) (the "Agreement"), pursuant to which
this Plan of Merger is being executed by MBNJ and UCTC.
AGREEMENT
In consideration of the premises and of the mutual covenants and
agreements herein contained, and in accordance with the applicable laws and
regulations of the State of New Jersey, MBNJ and UCTC, intending to be
legally bound hereby, agree as follows:
ARTICLE I
MERGER
Subject to the terms and conditions of this Plan of Merger and in
accordance with the applicable laws of the Commonwealth of Pennsylvania and
the State of New Jersey, on the Effective Date (as that term is defined in
Article V hereof): UCTC shall merge with and into MBNJ; the separate
existence of UCTC shall cease; and MBNJ shall be the surviving corporation
(such transaction referred to herein as the "Merger" and MBNJ, as the
surviving corporation in the Merger, referred to herein as the "Surviving
Bank").
ARTICLE II
ARTICLES OF INCORPORATION AND BYLAWS
On and after the Effective Date, the articles of incorporation and bylaws
of MBNJ, as in effect immediately prior to the Effective Date, shall
automatically be and remain the articles of incorporation and bylaws of the
Surviving Bank, until altered, amended or repealed.
ARTICLE III
BOARD OF DIRECTORS AND OFFICERS
3.1. Board of Directors. On and after the Effective Date, the directors of
MBNJ shall consist of (a) those persons duly elected and holding office
immediately prior to the Effective Date, and (b) Albert W. Bossert, Anton J.
Camponella, Edward J. Hobbie, John E. Holobinko, William C. Johnson, Jr.,
Robert G. Kenney, Henry G. Largey, Donald S. Nowicki and Maureen E. Staub.
Each such director shall hold office until his or her successor is elected
and qualified or otherwise in accordance with the Bylaws of the Surviving
Bank.
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<PAGE>
3.2. Officers. On and after the Effective Date, the officers of MBNJ duly
elected and holding office immediately prior to the Effective Date shall be
the officers of the Surviving Bank, except for such former officers of UCTC
as shall be designated as officers of MBNJ, and at MBNJ's election, each to
hold office until his or her successor is elected and qualified or otherwise
in accordance with the bylaws of the Surviving Bank.
ARTICLE IV
CONVERSION OF SHARES
4.1. Stock of MBNJ. Each share of MBNJ Common Stock issued and outstanding
immediately prior to the Effective Date shall, on and after the Effective
Date, continue to be issued and outstanding as a share of common stock of the
Surviving Bank.
4.2. Stock of UCTC. Each share of UCTC Common Stock issued and outstanding
immediately prior to the Effective Date shall, on the Effective Date, be
cancelled, and no cash, stock or other property shall be delivered in
exchange therefor.
ARTICLE V
EFFECTIVE DATE OF THE MERGER
Subject to the terms and upon satisfaction of all requirements of law and
the conditions specified in this Plan of Merger, the Merger shall become
effective, and the effective date of the Merger (the "Effective Date") shall
occur, at the time specified in the certificate of merger to be issued by the
New Jersey Department of Banking, but shall not be effective prior to the
effective date of the merger of UCB with and into Meridian as provided in the
Agreement.
ARTICLE VI
EFFECT OF THE MERGER
On the Effective Date, the separate existence of UCTC shall cease; and all
of the property (real, personal and mixed), rights, powers, duties and
obligations of MBNJ and UCTC shall be taken and deemed to be transferred to
and vested in the Surviving Bank, without further act or deed, as provided by
applicable laws and regulations.
ARTICLE VII
CONDITIONS PRECEDENT
The obligations of MBNJ and UCTC to effect the Merger shall be subject to
the satisfaction, unless duly waived by the party permitted to do so, of the
conditions precedent set forth in the Agreement.
ARTICLE VIII
TERMINATION
This Plan of Merger shall terminate upon any termination of the Agreement
in accordance with its terms; provided, however, that any such termination of
this Plan of Merger shall not relieve any party hereto from liability on
account of a breach by such party of any of the terms hereof or thereof.
ARTICLE IX
AMENDMENT
Subject to applicable law, this Plan of Merger may be amended, by action
of the respective Boards of Directors of the parties hereto, at any time
prior to consummation of the Merger, but only by an instrument in writing
signed by duly authorized officers on behalf of the parties hereto.
ARTICLE X
MISCELLANEOUS
10.1. Extensions; Waivers. Each party, by a written instrument signed by a
duly authorized officer, may extend the time for the performance of any of
the obligations or other acts of the other party hereto and may waive
compliance with any of the obligations of the other party contained in this
Plan of Merger.
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<PAGE>
10.2. Notices. Any notice or other communication required or permitted
under this Plan of Merger shall be given, and shall be effective, in
accordance with the provisions of the New Jersey Banking Code, as amended.
10.3. Captions. The headings of the several Articles herein are inserted
for convenience of reference only and are not intended to be part of, or to
affect the meaning or interpretation of, this Plan of Merger.
10.4. Counterparts. For the convenience of the parties hereto, this Plan
of Merger may be executed in several counterparts, each of which shall be
deemed the original, but all of which together shall constitute one and the
same instrument.
10.5. Governing Law. This Plan of Merger shall be governed by and
construed in accordance with the laws of the State of New Jersey, without
reference to the choice of law principles of such laws.
IN WITNESS WHEREOF, MBNJ and UCTC have caused this Plan of Merger to be
executed by their duly authorized officers and their corporate seals to be
hereunto affixed on the date first written above.
MERIDIAN BANK, NEW JERSEY, a
New Jersey bank
By
--------------------------------
Samuel A. McCullough,
Chairman
(CORPORATE SEAL)
Attest:
--------------------------------
Michael J. Hughes,
Secretary
UNITED COUNTIES TRUST COMPANY, a
New Jersey bank
By
--------------------------------
Eugene H. Bauer,
Chairman
(CORPORATE SEAL)
Attest:
--------------------------------
Alice R. Cadby,
Secretary
A-44
<PAGE>
EXHIBIT 4
FORM OF OPINION OF COUNSEL TO MERIDIAN
UCB shall have received from counsel to Meridian, an opinion, dated as of
the Closing Date, substantially to the effect that, subject to normal
exceptions and qualifications:
(a) Meridian and Meridian Bank New Jersey have full corporate power to
carry out the transactions contemplated in the Agreement and the Bank Plan of
Merger (the "Plan"), respectively. The execution and delivery of the
Agreement and the Plan and the consummation of the transactions contemplated
thereunder have been duly and validly authorized by all necessary corporate
action on the part of Meridian and Meridian Bank New Jersey, and the
Agreement and the Plan constitute valid and legally binding obligations, in
accordance with their respective terms, of Meridian and Meridian Bank New
Jersey, respectively, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium, receivership, conservatorship, and other laws
affecting creditors' rights generally and as may be limited by the exercise
of judicial discretion in applying principles of equity. Subject to
satisfaction of the conditions set forth in the Agreement, neither the merger
of Meridian and UCB nor the merger of Meridian Bank New Jersey and UCTC, nor
compliance by Meridian and Meridian Bank New Jersey with any of the
respective provisions of the Agreement and the Plan, will (A) conflict with
or result in a breach or default under (i) the Articles of Incorporation or
Bylaws of Meridian or Meridian Bank New Jersey, or, (ii) to the knowledge of
such counsel, any note, bond, mortgage, indenture, license, agreement or
other instrument or obligation to which Meridian or Meridian Bank New Jersey
is a party, or (B) to the knowledge of such counsel, result in the creation
or imposition of any material lien or encumbrance upon the property of
Meridian or Meridian Bank New Jersey, except such material lien, instrument
or obligation as has been disclosed pursuant to the Agreement and the Plan,
or (C) violate in any material respect any order, writ, injunction, or decree
known to such counsel, or any statute, rule or regulation applicable to
Meridian or Meridian Bank New Jersey.
(b) Meridian Bank New Jersey is a validly existing state-chartered banking
institution organized and in good standing under the laws of the State of New
Jersey. The deposits of Meridian Bank New Jersey are insured to the maximum
extent provided by law by the Federal Deposit Insurance Corporation.
(c) There is to the knowledge of such counsel no legal, administrative,
arbitration or governmental proceeding or investigation pending or threatened
to which Meridian or Meridian Bank New Jersey is a party which would, if
determined adversely to Meridian or Meridian Bank New Jersey, have a material
adverse effect on the financial condition or results of operations of
Meridian and Meridian Bank New Jersey taken as a whole or which presents a
claim to restrain or prohibit the transactions contemplated by the Agreement
and the Plan, respectively.
(d) No consent, approval, authorization, or order of any federal or state
court or federal or state governmental agency or body is required for the
consummation by Meridian or Meridian Bank New Jersey of the transactions
contemplated by the Agreement and the Plan, except for such consents,
approvals, authorizations or orders as have been obtained.
(e) The mergers of Meridian and UCB and Meridian Bank New Jersey and UCTC
contemplated by the Agreement and the Plan, respectively, have been effected
in compliance with all applicable federal and state laws and regulations in
all material respects.
(f) The shares of Meridian Common Stock to be issued in connection with
the merger of UCB and Meridian contemplated by the Agreement have been duly
authorized and will, when issued in accordance with the terms of the
Agreement, be validly issued, fully paid and nonassessable.
(g) On the sole basis of such counsel's participation in conferences with
officers and employees of Meridian in connection with the Prospectus/Proxy
Statement, and without other independent investigation or inquiry, such
counsel has no reason to believe that the Prospectus/Proxy Statement,
including any amendments or supplements thereto (except for the financial
information, financial schedules and other financial or statistical data
contained therein and except for any information supplied by UCB or UCTC for
inclusion therein, as to which counsel need express no belief), as of the
date of mailing thereof and as of the date of the meeting of shareholders of
Meridian to approve the merger, contained any untrue statement of a material
fact with respect to Meridian or omitted to state any material fact
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with respect to Meridian or omitted to state any material fact with respect
to Meridian necessary to make any statement therein with respect to Meridian,
in light of the circumstances under which it was made, not misleading. Such
counsel may state that in rendering such opinion, they have no independently
verified and do not assume the responsibility for the accuracy, completeness
or fairness of any information or statements contained in the
Prospectus/Proxy Statement, except with respect to identified statements of
law or regulations or legal conclusions relating to Meridian or the
transactions contemplated in the Agreement and the Plan.
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EXHIBIT 5
FORM OF TAX OPINION OF STEVENS & LEE
Meridian and UCB shall have received an opinion of Stevens & Lee
substantially to the effect that, under the provisions of the IRC:
1. The Merger, pursuant to which UCB will transfer all of its assets
to Meridian in exchange for Meridian Common Stock (including fractional share
interests) and the assumption by Meridian of all of UCB's liabilities will
constitute a reorganization within the meaning of IRC Section 368(a)(1)(A).
2. UCB and Meridian will each be "a party to a reorganization" within the
meaning of IRC Section 368(b).
3. Neither UCB nor Meridian will recognize any gain or loss upon the
transfer of UCB's assets to Meridian in exchange solely for Meridian Common
Stock (including fractional share interests) and the assumption by Meridian
of the liabilities of UCB.
4. The basis of the UCB assets in the hands of Meridian will be the same
as the basis of such assets in the hands of UCB immediately prior to the
Merger.
5. The holding period of the assets of UCB to be received by Meridian will
include the period during which the assets were held by UCB.
6. No gain or loss will be recognized by the shareholders of UCB on the
receipt of Meridian Common Stock (including fractional share interests)
solely in exchange for their shares of UCB Common Stock.
7. The basis of the Meridian common Stock (including fractional share
interests) to be received by the UCB shareholders in the Merger will be the
same as the basis of the UCB Common Stock surrendered in exchange therefor.
8. The holding period of the Meridian Common Stock (including fractional
share interests) to be received by the UCB shareholders in the Merger will
include the period during which the UCB shareholders held their UCB Common
Stock, provided the shares of UCB Common Stock are held as a capital asset on
the Effective Date of the Merger.
9. The payment of cash in lieu of fractional share interests of Meridian
Common Stock will be treated as if the fractional share interests were
distributed as part of the Merger and then redeemed by Meridian. Such cash
payments will be treated as having been received as distributions in full
payment in exchange for the fractional share interests redeemed, as provided
in IRC Section 302(a). Any gain or loss recognized by a UCB shareholder will
be a capital gain or loss, provided the shares of UCB Common Stock are held
as a capital asset on the Effective Date of the Merger.
10. The Meridian Stock Purchase Rights transferred with the shares of
Meridian Common Stock will not constitute "other property" within the meaning
of IRC Section 356(a)(1)(B).
11. As provided in IRC Section 381(c)(2) and related Treasury regulations,
Meridian will succeed to and take into account the earnings and profits, or
deficit in earnings and profits, of UCB as of the Effective Date of the
Merger. Any deficit in the earnings and profits of Meridian or UCB will be
used only to offset the earnings and profits accumulated after the Merger.
12. Pursuant to IRC Section 381(a) and related Treasury regulations,
Meridian will succeed to and take into account the items of UCB described in
IRC Section 381(c). Such items will be taken into account by Meridian subject
to the conditions and limitations of IRC Sections 381, 382, 383, and 384 and
the Treasury regulations thereunder.
13. The Bank Merger will constitute a reorganization within the meaning of
IRC Section 368(a)(1)(A).
14. UCTC and MBNJ will each be "a party to a reorganization" within the
meaning of IRC Section 368(b).
15. Neither UCTC nor MBNJ will recognize any gain or loss upon the
transfer of UCTC's assets to MBNJ in constructive exchange solely for MBNJ
Common Stock and the assumption by MBNJ of the liabilities of UCTC.
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16. The basis of the UCTC assets in the hands of MBNJ will be the same as
the basis of such assets in the hands of UCTC immediately prior to the Bank
Merger.
17. The holding period of the UCTC assets in the hands of MBNJ will
include the period during which such assets were held by UCTC.
18. No gain or loss will be recognized by Meridian, as the shareholder of
UCTC, upon the constructive receipt of shares of MBNJ Common Stock in
exchange for the UCTC Common Stock surrendered in exchange therefor in the
Bank Merger.
19. The basis of the MBNJ Common Stock to be held by Meridian after the
Bank Merger will equal the basis of such stock immediately before the Bank
Merger, increased by the basis of the UCTC Common Stock surrendered in the
constructive exchange.
20. As provided in IRC Section 381(c)(2) and related Treasury regulations,
MBNJ will succeed to and take into account the earnings and profits, or
deficit in earnings and profits, of UCTC as of the Effective Date of the Bank
Merger. Any deficit in the earnings and profits of MBNJ or UCTC will be used
only to offset the earnings and profits accumulated after the Bank Merger.
21. Pursuant to IRC Section 381(a) and related Treasury regulations, MBNJ
will succeed to and take into account the items of UCTC described in IRC
Section 381(c). Such items will be taken into account by MBNJ subject to the
conditions and limitations of IRC Sections 381, 382, 383, and 384 and the
Treasury regulations thereunder.
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EXHIBIT 6
FORM OF OPINION
OF COUNSEL TO UCB
Meridian shall have received from counsel to UCB, an opinion, dated as of
the Closing Date, substantially to the effect that, subject to normal
exceptions and qualifications:
(a) UCB and UCTC have full corporate power to carry out the transactions
contemplated in the Agreement and the Bank Plan of Merger (the "Plan"),
respectively. The execution and delivery of the Agreement and the Plan and
the consummation of the transactions contemplated thereunder have been duly
and validly authorized by all necessary corporate action on the part of UCB
and UCTC, and the Agreement and the Plan constitute valid and legally binding
obligations, in accordance with their respective terms, of UCB and UCTC,
respectively, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium, receivership, conservatorship, and other laws
affecting creditors' rights generally and as may be limited by the exercise
of judicial discretion in applying principles of equity. Subject to
satisfaction of the conditions set forth in the Agreement, neither the
transactions contemplated in the Agreement and the Pan, nor compliance by UCB
and UCTC with any of the respective provisions thereof, will (A) conflict
with or result in a breach or default under (i) the Articles of Incorporation
or Bylaws of UCB, or UCTC, or (ii) to the knowledge of such counsel, any
note, bond, mortgage, indenture, license, agreement or other instrument or
obligation to which UCB or UCTC is a party, or (B) result in the creation or
imposition of any material lien or encumbrance upon the property of UCB or
UCTC, except such material lien, instrument or obligation as has been
disclosed pursuant to the Agreement and the Plan, or (C) violate in any
material respect any order, writ, injunction, or decree known to such
counsel, or any statute, rule or regulation applicable to UCB or UCTC.
(b) UCTC is a validly existing state-chartered banking institution
organized and in good standing under the laws of the State of New Jersey. The
deposits of UCTC are insured to the maximum extent provided by law by the
Federal Deposit Insurance Corporation.
(c) There is no legal, administrative, arbitration or governmental
proceeding or investigation pending or, to the knowledge of such counsel,
threatened to which UCB or UCTC is a party which would, if determined
adversely to UCB or UCTC, have a material adverse effect on the business,
properties, results of operations, or condition, financial or otherwise, of
UCB or UCTC or which questions the validity of the Agreement or the Plan, or
any other action to be taken by UCB or UCTC under the Agreement and the Plan,
respectively.
(d) No consent, approval, authorization, or order of any federal or state
court or federal or state governmental agency or body is required for the
consummation by UCB or UCTC of the transactions contemplated by the Agreement
and the Plan, except for such consents, approvals, authorizations or orders
as have been obtained and except for consents or approvals under state
securities laws as to which we express no opinion.
(e) The mergers of Meridian and UCB and Meridian Bank New Jersey and UCTC
contemplated by the Agreement and the Plan, respectively, have been effected
in compliance with all applicable federal and Pennsylvania and New Jersey
laws and regulations in all material respects.
(f) On the basis of such counsel's participation in conferences with
officers and employees of UCB in connection with the preparation of the
Prospectus/Proxy Statement and without other independent investigation or
inquiry, such counsel has no reason to believe that (i) the Prospectus/Proxy
Statement, including any amendments or supplements thereto (except for the
financial information, financial statements, financial schedules and other
financial or statistical data contained therein and except for any
information supplied by Meridian for inclusion therein, as to which counsel
need express no belief), as of the date of mailing thereof and as of the date
of the meeting of shareholders of UCB to approve the merger, contained any
untrue statement of a material fact or omitted to state a material fact
necessary to make any statement therein, in light of the circumstances under
which it was made, not misleading. Such counsel may state that they have no
independently verified and do not assume any responsibility for the accuracy,
completeness or fairness of any information or statements contained in the
Prospectus/Proxy Statement, except with respect to identified statements of
law or regulations or legal conclusions relating to UCB or UCTC or the
transactions contemplated in the Agreement and the Plan.
A-49
<PAGE>
ANNEX B
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT ("Stock Option Agreement") dated May 23, 1995,
is by and between MERIDIAN BANCORP, INC., a Pennsylvania corporation
("Meridian"), and UNITED COUNTIES BANCORPORATION, a New Jersey corporation
("UCB").
BACKGROUND
1. Meridian and UCB desire to enter into an agreement, dated May 23, 1995
(the "Agreement"), providing, among other things, for the merger of UCB and
Meridian, with Meridian surviving the merger (the "Merger").
2. As a condition of Meridian entering into the Agreement on the terms and
conditions relating to price set forth in the Agreement, UCB is granting to
Meridian an option to purchase up to 375,000 shares of common stock of UCB,
subject to adjustment as provided in Section 5, on the terms and conditions
hereinafter set forth.
AGREEMENT
In consideration of the foregoing and the mutual covenants and agreements
set forth herein, Meridian and UCB, intending to be legally bound hereby,
agree:
1. Grant of Option. UCB hereby grants to Meridian, on the terms and
conditions set forth herein, the option to purchase (the "Option") up to
375,000 shares (the "Option Shares") of common stock, stated value $1.00 per
share (the "Common Stock"), of UCB, subject to adjustment as provided in
Section 5, at a price per share (the "Option Price") equal to $125.00;
provided, however, that in the event UCB issues or agrees to issue (including
through the issuance of any Rights (as defined in the Agreement) any shares
of Common Stock, except for shares issuable under outstanding stock options,
at a price less than $125.00 per share (as adjusted pursuant to Section 5 of
this Stock Option Agreement), such $125.00 per share price shall be reduced
to such lesser price.
2. Exercise of Option. Upon or after the occurrence of a Triggering Event
(as such term is hereinafter defined) and until termination of this Stock
Option Agreement in accordance with the provisions of Section 21, Meridian
may exercise the Option, in whole or in part, at any time or one or more
times, from time to time. As used herein, the term "Triggering Event" means
the occurrence of any of the following events:
(a) a person or group (as such terms are defined in the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and the rules and
regulations thereunder), other than Meridian, an affiliate of Meridian or
any present shareholder of UCB which or who presently owns more than 9.9%
of the presently outstanding shares of Common Stock, acquires beneficial
ownership (within the meaning of Rule 13d-3 under the Exchange Act) of
more than 9.9% of the then outstanding shares of Common Stock; provided,
however that a Triggering Event shall occur under this Section 2(a) in the
event any present shareholder of UCB which or who presently owns more than
9.9% of the presently outstanding shares of Common Stock increases such
shareholder's beneficial ownership to greater than 14.9% of the then
outstanding shares of Common Stock;
(b) a person or group, other than Meridian or an affiliate of Meridian,
enters into an agreement or letter of intent with UCB pursuant to which
such person or group or any affiliate of such person or group would (i)
merge or consolidate, or enter into any similar transaction, with UCB or
United Counties Trust Company ("UCTC"), (ii) acquire all or substantially
all of the assets of UCB or all or substantially all of the assets or
liabilities of UCTC, or (iii) acquire beneficial ownership of securities
representing, or the right to acquire beneficial ownership or to vote
securities representing, more than 9.9% of the then outstanding shares of
Common Stock or the then outstanding shares of common stock of UCTC; or
(c) a person or group, other than Meridian or an affiliate of Meridian,
publicly announces a bona fide proposal (including a written communication
that is or becomes the subject of public disclosure) for (i) any merger,
consolidation or acquisition of all or substantially all the assets of UCB
or all or substantially all of the assets or liabilities of UCTC, or any
other business combination involving UCB or UCTC, or (ii) a transaction
involving the transfer of beneficial ownership of securities representing,
or the right to acquire beneficial ownership or to vote securities
representing, more than 9.9% of the then outstanding shares of Common
Stock, or any of the then outstanding shares of common stock of UCTC
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(collectively, a "Proposal"), and thereafter, if such Proposal has not been
Publicly Withdrawn (as such term is hereinafter defined) at least 30 days
prior to the meeting of shareholders of UCB called to vote on the Merger,
UCB's shareholders fail to approve the Merger by the vote required by
applicable law at the meeting of shareholders called for such purpose or such
meeting has been postponed or cancelled; or
(d) a person or group, other than Meridian or an affiliate of Meridian,
makes a bona fide Proposal and thereafter, but before such Proposal has
been Publicly Withdrawn, UCB willfully takes any action in a manner which
would materially interfere with UCB's ability to consummate the Merger or
materially reduce the value of the transaction to Meridian;
(e) UCB breaches the covenant set forth at Section 4.06 of the
Agreement; or
(f) UCB breaches, in any material respect, any binding terms of the
Agreement or any provision of this Stock Option Agreement or the Agreement
after a Proposal is made and before it is Publicly Withdrawn or publicly
announces an intention to authorize, recommend or accept any such
Proposal; or
(g) any affiliate of UCB breaches any material provision of the UCB
Affiliate Agreement attached as Exhibit 1 to the Merger Agreement or
breaches in any material respect the covenant set forth in Section 4.06 of
the Agreement.
"Publicly Withdrawn" for purposes of this Section 2 shall mean an
unconditional bona fide withdrawal of the Proposal coupled with a public
announcement of no further interest in pursuing such Proposal or in acquiring
any controlling influence over UCB or in soliciting or inducing any other
person (other than Meridian or an affiliate of Meridian) to do so.
Notwithstanding the foregoing, the obligation of UCB to issue Option
Shares upon exercise of the Option shall be deferred (but shall not
terminate) (i) until the receipt of all required governmental or regulatory
approvals or consents necessary for UCB to issue the Option Shares, or
Meridian to exercise the Option, or until the expiration or termination of
any waiting period required by law, or (ii) so long as any injunction or
other order, decree or ruling issued by any federal or state court of
competent jurisdiction is in effect which prohibits the sale or delivery of
the Option Shares, and, in each case, notwithstanding any provision to the
contrary set forth herein, the Option shall not expire or otherwise
terminate.
UCB shall notify Meridian promptly in writing of the occurrence of any
Triggering Event known to it, it being understood that the giving of such
notice by UCB shall not be a condition to the right of Meridian to exercise
the Option. UCB will not take any action which would have the effect of
preventing or disabling UCB from delivering the Option Shares to Meridian
upon exercise of the Option or otherwise performing its obligations under
this Stock Option Agreement. In the event Meridian wishes to exercise the
Option, Meridian shall send a written notice to UCB (the date of which is
hereinafter referred to as the "Notice Date") specifying the total number of
Option Shares it desires to purchase and a place and date between two and ten
business days inclusive from the Notice Date for the closing of such a
purchase (a "Closing"); provided, however, that a Closing shall not occur
prior to two days after the later of receipt of any necessary regulatory
approvals or the expiration of any legally required notice or waiting period,
if any.
3. Payment and Delivery of Certificates. At any Closing hereunder, (a)
Meridian will make payment to UCB of the aggregate price for the Option
Shares so purchased by wire transfer of immediately available funds to an
account designated by UCB, (b) UCB will deliver to Meridian a stock
certificate or certificates representing the number of Option Shares so
purchased, registered in the name of Meridian or its designee, in such
denominations as were specified by Meridian in its notice of exercise and
bearing a legend as set forth below, and (c) Meridian will pay any transfer
or other taxes required by reason of the issuance of the Option Shares so
purchased.
A legend will be placed on each stock certificate evidencing Option Shares
issued pursuant to this Stock Option Agreement, which legend will read
substantially as follows:
"The shares of stock represented by this certificate have not been the
subject of a registration statement filed under the Securities Act of
1933, as amended (the "Act"), and declared effective by the Securities and
Exchange Commission. These shares may not be sold, transferred or
otherwise disposed of prior to such time unless United Counties
Bancorporation receives an opinion of counsel stating that an exemption
from the registration provisions of the Act is available for such
transfer."
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<PAGE>
4. Registration Rights. Upon or after the occurrence of a Triggering Event
and upon receipt of a written request from Meridian, UCB shall promptly
prepare and file a registration statement under the Securities Act of 1933,
as amended, with the Securities and Exchange Commission covering the Option
and such number of Option Shares as Meridian shall specify in its request,
and UCB shall use its best efforts to cause such registration statement to be
declared effective in order to permit the sale or other disposition of the
Option or the Option Shares, provided that Meridian shall in no event have
the right to have more than one such registration statement become effective,
and provided further that UCB shall not be required to prepare and file any
such registration statement in connection with any proposed sale with respect
to which UCB's counsel delivers to UCB and to Meridian its unqualified
opinion to the effect that no such filing is required under applicable laws
and regulations with respect to such sale or disposition. In connection with
such filing, UCB shall use its best efforts to cause to be delivered to
Meridian such certificates, opinions, accountant's letters and other
documents as Meridian shall reasonably request and as are customarily
provided in connection with registrations of securities under the Securities
Act of 1933, as amended. UCB shall provide to Meridian such number of copies
of the preliminary prospectus and final prospectus and any amendments and
supplements thereto as Meridian may reasonably request. All reasonable
expenses incurred by UCB in complying with the provisions of this Section 4,
including, without limitation, all registration and filing fees, reasonable
printing expenses, reasonable fees and disbursements of counsel for UCB and
blue sky fees and expenses, shall be paid by UCB. Underwriting discounts and
commissions to brokers and dealers relating to the Option or the Option
Shares, fees and disbursements of counsel to Meridian and any other expenses
incurred by Meridian in connection with such filing shall be borne by
Meridian. In connection with such filing, UCB shall indemnify and hold
harmless Meridian against any losses, claims, damages or liabilities, joint
or several, to which Meridian may become subject, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of
or are based upon any untrue statement or alleged untrue statement of any
material fact contained in any preliminary or final registration statement or
any amendment or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading;
and UCB will reimburse Meridian for any legal or other expense reasonably
incurred by Meridian in connection with investigating or defending any such
loss, claim, damage, liability or action; provided, however, that UCB will
not be liable in any case to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged
untrue statement or omission or alleged omission made in such preliminary or
final registration statement or such amendment or supplement thereto in
reliance upon and in conformity with written information furnished by or on
behalf of Meridian specifically for use in the preparation thereof. Meridian
will indemnify and hold harmless UCB to the same extent as set forth in the
immediately preceding sentence but only with reference to written information
furnished by or on behalf of Meridian for use in the preparation of such
preliminary or final registration statement or such amendment or supplement
thereto; and Meridian will reimburse UCB for any legal or other expense
reasonably incurred by UCB in connection with investigating or defending any
such loss, claim, damage, liability or action.
5. Adjustment Upon Changes in Capitalization. In the event of any change
in the Common Stock by reason of stock dividends, split-ups, mergers,
recapitalizations, combinations, conversions, divisions, exchanges of shares
or the like, then the number and kind of Option Shares and the Option Price
shall be appropriately adjusted.
6. Filings and Consents. Each of Meridian and UCB 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 Stock Option Agreement.
7. Representations and Warranties of UCB. UCB hereby represents and
warrants to Meridian as follows:
(a) Due Authorization. UCB has full corporate power and authority to
execute, deliver and perform this Stock Option Agreement and all corporate
action necessary for execution, delivery and performance of this Stock
Option Agreement has been duly taken by UCB. This Stock Option Agreement
constitutes a legal, valid and binding obligation of UCB, enforceable
against UCB in accordance with its terms.
(b) Authorized Shares. UCB has taken all necessary corporate action to
authorize and reserve for issuance all shares of Common Stock which may be
issued pursuant to any exercise of the Option.
8. Specific Performance. The parties hereto acknowledge that damages would
be an inadequate remedy for a breach of this Stock Option Agreement and that
the obligations of the parties hereto shall be specifically enforceable.
9. Entire Agreement. This Stock Option Agreement and the Agreement
constitute the entire agreement between the parties with respect to the
subject matter hereof and supersede all other prior agreements and
understandings, both written and oral, among the parties or any of them with
respect to the subject matter hereof.
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<PAGE>
10. Assignment or Transfer. Meridian represents that it is acquiring the
Option for Meridian's own account and not with a view to, or for sale in
connection with, any distribution of the Option or the Option Shares.
Meridian is aware that neither the Option nor the Option Shares are the
subject of a registration statement filed with, and declared effective by,
the Securities and Exchange Commission pursuant to Section 5 of the
Securities Act of 1933, as amended, but instead are being offered in reliance
upon the exemption from the registration requirement provided by Section 4(2)
thereof.
11. Amendment of Stock Option Agreement. By mutual consent of the parties
hereto, this Stock Option Agreement may be amended in writing at any time,
for the purpose of facilitating performance hereunder or to comply with any
applicable regulation of any governmental authority or any applicable order
of any court or for any other purpose.
12. Validity. The invalidity or unenforceability of any provision of this
Stock Option Agreement shall not affect the validity or enforceability of any
other provisions of this Stock Option Agreement, which shall remain in full
force and effect.
13. Notices. All notices, requests, consents and other communications
required or permitted hereunder shall be in writing and shall be deemed to
have been duly given when delivered personally, by telegram or telecopy, or
by registered or certified mail (postage prepaid, return receipt requested)
to the respective parties as follows:
(i) If to Meridian, to:
Meridian Bancorp, Inc.
35 North Sixth Street
Reading, Pennsylvania 19603
Attention: David E. Sparks,
Chief Financial Officer
and
Michael J. Hughes
Senior Vice President,
Corporate Development
Telecopy No.: (610) 665-2428
with a copy to:
Stevens & Lee
111 North Sixth Street
Reading, Pennsylvania 19601
Attention: Joseph M. Harenza, Esquire,
and
David W. Swartz, Esquire
Telecopy No.: (610) 376-5610
B-4
<PAGE>
(ii) If to UCB, to:
United Counties Bancorporation
Four Commerce Drive
Cranford, New Jersey 07016
Attention: Eugene H. Bauer
Chairman of the Board and
Chief Executive Officer
and
Alice Cadby,
Corporate Secretary
Telecopy No.: (908) 709-1583
(Marked "Confidential")
with copies to:
Pitney, Hardin, Kipp & Szuch
Mail: P.O. Box 1945
Morristown, New Jersey 07962-1945
Street: 200 Campus Drive
Florham Park, New Jersey 07932-8950
Attention: Ronald Janis, Esquire
Telecopy No.: (201) 966-1550
or to such other address as the person to whom notice is to be given may have
previously furnished to the others in writing in the manner set forth above
(provided that notice of any change of address shall be effective only upon
receipt thereof).
14. Governing Law. This Stock Option Agreement shall be governed by and
construed in accordance with the domestic internal law (but not the law of
conflicts of law) of the Commonwealth of Pennsylvania.
15. Captions. The captions in this Stock Option Agreement are inserted for
convenience and reference purposes, and shall not limit or otherwise affect
any of the terms or provisions hereof.
16. Waivers and Extensions. The parties hereto may, by mutual consent,
extend the time for performance of any of the obligations or acts of either
party hereto. Each party may waive (i) compliance with any of the covenants
of the other party contained in this Stock Option Agreement and/or (ii) the
other party's performance of any of its obligations set forth in this Stock
Option Agreement.
17. Parties in Interest. This Stock Option Agreement shall be binding upon
and inure solely to the benefit of each party hereto, and nothing in this
Stock Option Agreement, express or implied, is intended to confer upon any
other person any rights or remedies of any nature whatsoever under or by
reason of this Stock Option Agreement.
18. Counterparts. This Stock Option Agreement may be executed in two or
more counterparts, each of which shall be deemed to be an original, but all
of which shall constitute one and the same agreement.
19. Expenses. Except as otherwise provided herein, all costs and expenses
incurred by the parties hereto in connection with the transactions
contemplated by this Stock Option Agreement or the Option shall be paid by
the party incurring such cost or expense.
20. Representations Relating to Authorizations. UCB and Meridian each
represent and warrant that executions, delivery and performance of this
agreement have been authorized by their respective boards of directors and
constitutes a legal and valid obligation enforceable in accordance with its
terms.
21. Termination. This Stock Option Agreement shall terminate and be of no
further force or effect upon termination of the Agreement in accordance with
the provisions thereof; provided, however, that, if the termination of the
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<PAGE>
Agreement occurs after a Triggering Event, this Stock Option Agreement shall
not terminate until expiration of twelve (12) months following the later of
the termination of the Agreement or the completion or abandonment of any
Proposal or any acquisition transaction relating to the Triggering Event.
22. Severability. If any term, provision, covenant or restriction
contained in this Stock Option 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 inn this Option Agreement shall remain in full force
and effect, and shall in no way be affected, impaired or invalidated. If for
any reason such court or regulatory agency determines that the Option will
not permit the holder to acquire the full number of shares of the Common
Stock provided in Section 2 hereof (as adjusted pursuant to Section 6
hereof), it is the express intention of UCB to allow the holder to acquire
such lesser number of shares as may be permissible at such lesser price or on
such other repurchase terms as such court or regulatory agency may indicate
to be reasonable, without any amendment or modification hereof.
IN WITNESS WHEREOF, each of the parties hereto, pursuant to resolutions
adopted by its Board of Directors, has caused this Stock Option Agreement to
be executed by its duly authorized officer and has caused its corporate seal
to be affixed hereunto and to be duly attested, all as of the day and year
first above written.
MERIDIAN BANCORP, INC.
By /s/ Samuel A. McCullough
-------------------------------------
Samuel A. McCullough,
Chairman and
Chief Executive Officer
(CORPORATE SEAL)
Attest: /s/ William L. Gaunt
---------------------------------
William L. Gaunt,
Secretary
UNITED COUNTIES BANCORPORATION
By /s/ Donald S. Nowicki
-------------------------------------
Donald S. Nowicki,
President
(CORPORATE SEAL)
Attest: /s/ Alice Cadby
--------------------------------
Alice Cadby,
Secretary
B-6
<PAGE>
ANNEX C
OPINION OF GOLDMAN, SACHS & CO.
September 21, 1995
Board of Directors
United Counties Bancorporation
Four Commerce Drive
Cranford, New Jersey 07016
Gentlemen:
You have requested our opinion as to the fairness to the holders of the
outstanding shares of Common Stock, no par value (the "Shares"), of United
Counties Bancorporation (the "Company") of the exchange ratio of 5.0 shares
of Common Stock, par value $5.00 per share ("Meridian Common Stock"), of
Meridian Bancorp, Inc. ("Meridian") to be received for each Share (the
"Exchange Ratio") pursuant to the Agreement and Plan of Merger dated as of May
23, 1995 between Meridian and the Company (the "Agreement").
Goldman, Sachs & Co. ("Goldman Sachs"), as part of its investment banking
business, is continually engaged in the valuation of businesses and their
securities in connection with mergers and acquisitions, negotiated
underwritings, competitive biddings, secondary distributions of listed and
unlisted securities, private placements and valuations for estate, corporate and
other purposes. We are familiar with the Company, having acted as its financial
advisor in connection with, and having participated in certain of the
negotiations leading to, the Agreement. We also regularly provide investment
banking and financial advisory services to Meridian, including having acted as
its financial advisor in connection with its acquisition of Commonwealth
Bancshares Corporation in 1993, its disposition of Meridian Title Insurance Co.
in 1992 and its disposition of selected credit card assets to Mellon Bank
Corporation in 1991, and having acted as co-manager in its common stock offering
in 1991, and we can be expected to continue to provide investment banking and
financial advisory services to Meridian. Goldman Sachs is a full service
securities firm and in the course of its trading activities it may from time to
time effect transactions and hold positions in the securities of the Company and
Meridian.
In connection with this opinion, we have reviewed, among other things, the
Agreement; Annual Reports to Stockholders and Annual Reports on Form 10-K of the
Company and Meridian for the five years ended December 31, 1994; certain interim
reports to stockholders and Quarterly Reports on Form 10-Q of the Company and
Meridian; certain other communications from the Company and Meridian to their
respective stockholders; and certain internal financial analyses and forecasts
for the Company and Meridian prepared by their respective managements. We also
have held discussions with members of the senior management of the Company and
Meridian regarding the past and current business operations, regulatory
relationships, financial condition and future prospects of their respective
companies. In addition, we have reviewed the reported price and trading activity
for the Shares and Meridian Common Stock, compared certain financial and stock
market information for the Company and Meridian with similar information for
certain other companies the securities of which are publicly traded, reviewed
the financial terms of certain recent business combinations in the banking
industry and performed such other studies and analyses as we considered
appropriate.
C-1
<PAGE>
Board of Directors
United Counties Bancorporation
September 21, 1995
Page Two
We have relied without independent verification upon the accuracy and
completeness of all of the financial and other information reviewed by us for
purposes of this opinion. In that regard, we have assumed, with your consent,
that the financial forecasts, including, without limitation, cost savings and
operating synergies projected by Meridian to result from the Merger, have been
reasonably prepared on a basis reflecting the best currently available judgments
and estimates of the Company and Meridian and that such forecasts will be
realized in the amounts and at the times contemplated thereby. We are not
experts in the evaluation of loan portfolios for purposes of assessing the
adequacy of the allowances for losses with respect thereto and have assumed,
with your consent, that such allowances for each of the Company and Meridian are
adequate to cover all such losses. In addition, we have not reviewed individual
credit files nor have we made an independent evaluation or appraisal of the
assets and liabilities of the Company or Meridian or any of their respective
subsidiaries and we have not been furnished with any such evaluation or
appraisal. We have assumed with your consent that the Merger will be accounted
for as a pooling of interests under generally accepted accounting principles.
Based upon and subject to the foregoing and based upon such other matters as
we consider relevant, it is our opinion that as of the date hereof the Exchange
Ratio pursuant to the Agreement is fair to the holders of Shares.
Very truly yours,
/s/ GOLDMAN, SACHS & CO.
------------------------
GOLDMAN, SACHS & CO.
C-2
<PAGE>
PART II - INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Pennsylvania law provides that a Pennsylvania corporation may indemnify
directors, officers, employees and agents of the corporation against
liabilities they may incur in such capacities for any action taken or any
failure to act, whether or not the corporation would have the power to
indemnify the person under any provision of law, unless such action or
failure to act is determined by a court to have constituted recklessness or
willful misconduct. Pennsylvania law also permits the adoption of a bylaw
amendment, approved by shareholders, providing for the elimination of a
director's liability for monetary damages for any action taken or any failure
to take any action unless (1) the director has breached or failed to perform
the duties of his office and (2) the breach or failure to perform constitutes
self-dealing, willful misconduct or recklessness.
The bylaws of Meridian provide for (1) indemnification of directors,
officers, employees and agents of the registrant and its subsidiaries and (2)
the elimination of a director's liability for monetary damages, to the
fullest extent permitted by Pennsylvania law.
Directors and officers are also insured against certain liabilities for
their actions, as such, by an insurance policy obtained by Meridian.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(A) EXHIBITS.
<TABLE>
<CAPTION>
Exhibit
Number Title or Description
----------- --------------------------------------------------------------------------------------------------
<S> <C>
2.1 Agreement and Plan of Merger dated as of May 23, 1995, between Meridian Bancorp, Inc. and United Counties
Bancorporation (included as Annex A to the Proxy Statement/Prospectus). Schedules are omitted; Meridian
Bancorp, Inc. agrees to furnish copies of such schedules to the Commission upon request.
2.2 Stock Option Agreement, dated May 23, 1995, between Meridian Bancorp, Inc. and United Counties Bancorporation
(included as Annex B to the Proxy Statement/Prospectus).
3.1 Articles of Incorporation of Meridian Bancorp, Inc., as amended (incorporated herein by reference to
Exhibit 3.1 to the Annual Report on Form 10-K of Meridian Bancorp, Inc. for the year ended December
31, 1994).
3.2 Bylaws of Meridian Bancorp, Inc., as amended (incorporated herein by reference to Exhibit 3.2 to the
Annual Report on Form 10-K of Meridian Bancorp, Inc. for the year ended December 31, 1991).
4.1 Rights Agreement dated July 25, 1989, between Meridian Bancorp, Inc. and Meridian Bank, as Rights Agent
(incorporated herein by reference to the Registration Statement on Form 8-A of Meridian Bancorp, Inc.
filed August 14, 1989).
4.2 Amendment to Rights Agreement, dated as of June 28, 1994, between Meridian Bancorp, Inc. and Meridian
Trust Company, as Rights Agent, incorporated herein by reference to Exhibit 2.2 of Amendment No. 1,
filed July 25, 1994, to the Registration Statement on Form 8-A of the Registrant, filed August 14, 1989.
4.3 Meridian Bancorp, Inc. has outstanding long-term debt which does not exceed 10% of the total assets
of Meridian Bancorp, Inc. and its consolidated subsidiaries; therefore, copies of the constituent instruments
defining the rights of the holders of such debt are not included as exhibits to this Registration Statement.
Meridian Bancorp, Inc. agrees to furnish copies of such instruments to the Commission upon request.
5.1 Opinion of Stevens & Lee re: Legality of Common Stock.*
8.1 Form of Opinion of Stevens & Lee re: Tax Matters.*
23.1 Consent of KPMG Peat Marwick LLP as to consolidated financial statements of Meridian Bancorp, Inc. as
of December 31, 1994 and 1993 and for each of the years in the three-year period ended December 31,
1994.*
</TABLE>
ii-1
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Title or Description
----------- --------------------------------------------------------------------------------------------------
<S> <C>
23.2 Consent of KPMG Peat Marwick LLP as to consolidated financial statements of United Counties Bancorporation
as of December 31, 1994 and 1993 and for each of the three years in the three year period ended December
31, 1994.*
23.3 Consent of Stevens & Lee (contained in Exhibit 5).*
23.4 Consent of Stevens & Lee (contained in Exhibit 8.1).*
23.5 Consent of Goldman, Sachs & Co.
24.1 Powers of Attorney of Directors and Officers.*
99.1 Opinion of Goldman, Sachs & Co., dated September 21, 1995 (included as Annex C to the Proxy Statement/Prospectus).
99.2 Form of Proxy for the Special Meeting of Stockholders of United Counties Bancorporation.*
99.3 Employment agreement, dated September 9, 1993, by and between United Counties Bancorporation, United
Counties Trust Company and Eugene H. Bauer (incorporated herein by reference to Exhibit I to the Current
Report on Form 8-K dated September 22, 1993 of United Counties Bancorporation).
99.4 Agreement dated May 23, 1995 between Eugene H. Bauer and United Counties Bancorporation.*
</TABLE>
------
* Previously filed.
(B) FINANCIAL STATEMENT SCHEDULES.
None required. Applicable schedules are included in documents incorporated
herein by reference.
ITEM 22. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any fact 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;
(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) The undersigned registrant hereby undertakes to deliver or cause to be
delivered with the prospectus, to each person to whom the prospectus is sent
or given, the latest annual report to security holders that is incorporated
by reference in the prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the Securities Exchange Act of
1934; and, where interim financial information required to be presented by
Article 3 of Regulation S-X are not set forth in the prospectus, to deliver,
or cause to be delivered to each person to whom the prospectus is sent or
given, the latest quarterly report that is specifically incorporated by
reference in the prospectus to provide such interim financial information.
(c) (1) The undersigned registrant hereby undertakes as follows: that
prior to any public reoffering of the securities registered hereunder
through use of a prospectus which is a part of this registration
statement, by any person or party who is deemed to be an underwriter
II-2
<PAGE>
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.
(2) The registrant undertakes that every prospectus (i) that is filed
pursuant to paragraph (1) immediately preceding, or (ii) that purports to
meet the requirements of section 10(a)(3) of the Act and is used in
connection with an offering of securities subject to Rule 415, will be
filed as a part of an amendment to the registration statement and will not
be used until such amendment is effective, and that, for purposes of
determining any liability under the Securities Act of 1933, each such
post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial bona fide
offering thereof.
(d) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the bylaws of the
registrant, or otherwise, the registrant has been advised that in the opinion
of the Securities and Exchange Commission such indemnification is against
public policy as expressed in the Act and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other
than the payment by the registrant of expenses incurred or paid by a
director, officer or controlling person of the registrant in the successful
defense of any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the
final adjudication of such issue.
(e) The undersigned registrant hereby undertakes to respond to requests
for information that is incorporated by reference into the prospectus
pursuant to Items 4, 10(b), 11, or 13 of this Form, within one business day
of receipt of such request, and to send the incorporated documents by first
class mail or other equally prompt means. This includes information contained
in documents filed subsequent to the effective date of the registration
statement through the date of responding to the request.
(f) The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Reading, Commonwealth
of Pennsylvania, on September 21, 1995.
MERIDIAN BANCORP, INC.
(Registrant)
By: /s/ Samuel A. McCullough
---------------------------
Samuel A. McCullough,
Chairman and Chief
Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
/s/ Samuel A. McCullough Chairman, Chief Executive Officer and Director
------------------------------------ (Principal Executive Officer) September 21, 1995
Samuel A. McCullough
/s/ David E. Sparks* Vice Chairman, Chief Financial Officer and
------------------------------------ Director (Principal Financial Officer) September 21, 1995
David E. Sparks
/s/ Michael J. Mizak, Jr.* Senior Vice President (Principal Accounting
------------------------------------ Officer) September 21, 1995
Michael J. Mizak, Jr.
/s/ Delight E. Breidegam, Jr.*
------------------------------------ Director September 21, 1995
Delight E. Breidegam, Jr.
/s/ Thomas F. Burke, Jr.*
------------------------------------ Director September 21, 1995
Thomas F. Burke, Jr.
/s/ Robert W. Cardy*
------------------------------------ Director September 21, 1995
Robert W. Cardy
/s/ Harry Corless*
------------------------------------ Director September 21, 1995
Harry Corless
/s/ William D. Davis*
------------------------------------ Director September 21, 1995
William D. Davis
/s/ Julius W. Erving*
------------------------------------ Director September 21, 1995
Julius W. Erving
/s/ Fred D. Hafer*
------------------------------------ Director September 21, 1995
Fred D. Hafer
II-4
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Lawrence C. Karlson*
------------------------------------ Director September 21, 1995
Lawrence C. Karlson
/s/ Ezekiel S. Ketchum*
------------------------------------ Director September 21, 1995
Ezekiel S. Ketchum
/s/ Sidney D. Kline, Jr.*
------------------------------------ Director September 21, 1995
Sidney D. Kline, Jr.
/s/ George W. Leighow*
------------------------------------ Director September 21, 1995
George W. Leighow
/s/ Joseph F. Paquette, Jr.*
------------------------------------ Director September 21, 1995
Joseph F. Paquette, Jr.
/s/ Daniel H. Polett*
------------------------------------ Director September 21, 1995
Daniel H. Polett
/s/ Lawrence R. Pugh*
------------------------------------ Director September 21, 1995
Lawrence R. Pugh
/s/ Paul R. Roedel*
------------------------------------ Director September 21, 1995
Paul R. Roedel
/s/ Wilmer R. Schultz*
------------------------------------ Director September 21, 1995
Wilmer R. Schultz
/s/ Robert B. Seidel*
------------------------------------ Director September 21, 1995
Robert B. Seidel
/s/ Judith M. von Seldeneck*
------------------------------------ Director September 21, 1995
Judith M. von Seldeneck
/s/ George Strawbridge, Jr.*
------------------------------------ Director September 21, 1995
George Strawbridge, Jr.
/s/ Anita A. Summers*
------------------------------------ Director September 21, 1995
Anita A. Summers
/s/ Earle A. Wootton*
------------------------------------ Director September 21, 1995
Earle A. Wootton
</TABLE>
*/s/ Samuel A. McCullough
-------------------------------------
Attorney-in-Fact
II-5
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
No. Description
<S> <C>
----------- --------------------------------------------------------------------------------------------------
2.1 ...... Agreement and Plan of Merger dated as of May 23, 1995, between Meridian Bancorp, Inc. and United Counties
Bancorporation (included as Annex A to the Proxy Statement/Prospectus). Schedules are omitted; Meridian
Bancorp, Inc. agrees to furnish copies of such schedules to the Commission upon request.
2.2 ...... Stock Option Agreement, dated May 23, 1995, between Meridian Bancorp, Inc. and United Counties Bancorporation
(included as Annex B to the Proxy Statement/Prospectus).
3.1 ...... Articles of Incorporation of Meridian Bancorp, Inc., as amended (incorporated herein by reference to
Exhibit 3.1 to the Annual Report on Form 10-K of Meridian Bancorp, Inc. for the year ended December
31, 1994).
3.2 ...... Bylaws of Meridian Bancorp, Inc., as amended (incorporated herein by reference to Exhibit 3.2 to the
Annual Report on Form 10-K of Meridian Bancorp, Inc. for the year ended December 31, 1991).
4.1 ...... Rights Agreement dated July 25, 1989, between Meridian Bancorp, Inc. and Meridian Bank, as Rights Agent
(incorporated herein by reference to the Registration Statement on Form 8-A of Meridian Bancorp, Inc.
filed August 14, 1989).
4.2 ...... Amendment to Rights Agreement, dated as of June 28, 1994, between Meridian Bancorp, Inc. and Meridian
Trust Company, as Rights Agent, incorporated herein by reference to Exhibit 2.2 of Amendment No. 1,
filed July 25, 1994, to the Registration Statement on Form 8-A of the Registrant, filed August 14, 1989.
4.3 ...... Meridian Bancorp, Inc. has outstanding long-term debt which does not exceed 10% of the total assets
of Meridian Bancorp, Inc. and its consolidated subsidiaries; therefore, copies of the constituent instruments
defining the rights of the holders of such debt are not included as exhibits to this Registration Statement.
Meridian Bancorp, Inc. agrees to furnish copies of such instruments to the Commission upon request.
5.1 ...... Opinion of Stevens & Lee re: Legality of Common Stock.*
8.1 ...... Form of Opinion of Stevens & Lee re: Tax Matters.*
23.1 ...... Consent of KPMG Peat Marwick LLP as to consolidated financial statements of Meridian Bancorp, Inc. as
of December 31, 1994 and 1993 and for each of the years in the three-year period ended December 31,
1994.*
23.2 ...... Consent of KPMG Peat Marwick LLP as to consolidated financial statements of United Counties Bancorporation
as of December 31, 1994 and 1993 and for each of the three years in the three year period ended December
31, 1994.*
23.3 ...... Consent of Stevens & Lee (contained in Exhibit 5).*
23.4 ...... Consent of Stevens & Lee (contained in Exhibit 8.1).*
23.5 ...... Consent of Goldman, Sachs & Co.
24.1 ...... Powers of Attorney of Directors and Officers.*
99.1 ...... Opinion of Goldman, Sachs & Co., dated September 21, 1995 (included as Annex C to the Proxy
Statement/Prospectus).*
99.2 ...... Form of Proxy for the Special Meeting of Stockholders of United Counties Bancorporation.*
99.3 ...... Employment Agreement, dated September 9, 1993, by and between United Counties Bancorporation, United
Counties Trust Company and Eugene H. Bauer (incorporated herein by reference to Exhibit I to the Current
Report on Form 8-K dated September 22, 1993 of United Counties Bancorporation).
99.4 ...... Agreement dated May 23, 1995 between Eugene H. Bauer and United Counties Bancorporation.*
</TABLE>
------
*Previously filed.
<PAGE>
Exhibit 23.5
September 21, 1995
Board of Directors
United Counties Bancorporation
Four Commerce Drive
Cranford, New Jersey 07016
Dear Sirs:
We hereby consent to the inclusion in the Registration Statement on Form S-4
(File No. 33-62305) of our opinion letter appearing as Annex C to the Proxy
Statement/Prospectus which is a part of the Registration Statement and to the
references thereto and to our firm under the captions "SUMMARY, The Merger --
Opinion of Financial Advisor" and "THE MERGER -- Opinion of Financial Advisor".
In giving such consent, we do not thereby admit that we come within the category
of persons whose consent is required under Section 7 of the Securities Act of
1933 or the rules and regulations of the Securities and Exchange Commission
thereunder.
Sincerely,
/s/ GOLDMAN, SACHS & CO.
------------------------
GOLDMAN, SACHS & CO.
