<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended March 31, 1995
------------------
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from_______________ to ____________
Commission File Number 0-14129
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INDEPENDENCE BANCORP, INC.
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(Exact name of registrant as specified in its charter)
New Jersey 22-2483513
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1100 Lake Street Ramsey, NJ 07446
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(Address of principal executive offices)
(201) 825-1000
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(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that
the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes X No
----- -----
Number of shares outstanding of each of the issuers classes of common
stock on May 3, 1995 1,308,328
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<PAGE>
INDEPENDENCE BANCORP, INC. AND SUBSIDIARY
-----------------------------------------
INDEX
-----
PAGE
NUMBER
------
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Consolidated Balance Sheets (unaudited)
March 31, 1995 and December 31, 1994 3
Consolidated Statements of Income (unaudited)
Three Months Ended March 31, 1995 and 1994 4
Consolidated Statements of Cash Flows (unaudited)
Three Months Ended March 31, 1995 and 1994 5
Notes to Consolidated Financial Statements
(unaudited) 6-9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS 10-16
PART II - OTHER INFORMATION 17
SIGNATURES 18
<PAGE>
INDEPENDENCE BANCORP, INC. and SUBSIDIARY
- ---------------------------------------
Consolidated Balance Sheets (unaudited)
<TABLE>
<CAPTION>
March 31 December 31
(In thousands, except share data) 1995 1994
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Cash and due from banks $15,390 $17,326
Interest bearing deposits in other banks 6,632 4,860
Federal funds sold 19,300 8,550
- --------------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents 41,322 30,736
- --------------------------------------------------------------------------------------------------------------------------------
Securities
Available for sale, at market 6,386 3,451
Held to maturity, at cost (market value $108,080 and $94,228) 112,956 112,418
- --------------------------------------------------------------------------------------------------------------------------------
Total securities 119,342 115,869
Loans
Commercial 30,583 27,109
Real estate-construction 2,797 2,750
Real estate-commercial 28,685 39,803
Real estate-residential 40,190 28,084
Installment 32,487 32,712
- --------------------------------------------------------------------------------------------------------------------------------
Total loans 134,742 130,458
Less:
Allowance for possible loan losses 2,822 2,630
- --------------------------------------------------------------------------------------------------------------------------------
Loans,net 131,920 127,828
- --------------------------------------------------------------------------------------------------------------------------------
Premises and equipment,net 5,476 5,257
Accrued interest receivable 2,415 1,890
Other real estate, net 846 1,148
Other assets 452 479
- --------------------------------------------------------------------------------------------------------------------------------
Total assets $301,773 $283,207
================================================================================================================================
Liabilities and Stockholders' Equity
- ------------------------------------
Deposits
Demand (non-interest bearing) 67,914 63,662
Money market, NOW, and super NOW 92,400 81,928
Savings 66,050 66,397
Time certificates of $100,000 or more 7,899 6,047
Other time certificates 48,883 47,398
- --------------------------------------------------------------------------------------------------------------------------------
Total deposits 283,146 265,432
Other liabilities 1,454 1,098
Employee Stock Ownership Plan (ESOP)debt 1,280 1,307
- --------------------------------------------------------------------------------------------------------------------------------
Total liabilities 285,880 267,837
- --------------------------------------------------------------------------------------------------------------------------------
Commitments and Contingencies
Stockholders' equity
Preferred stock, no par value,1,000,000 shares authorized - -
Cumulative convertible preferred stock, 9% Series A, $1 par value, 776,875 777 777
issued and outstanding(liquidation value -$6,215)
Common stock, par value $1.667 per share, 5,000,000 authorized;
1,308,328 and 1,305,668, respectively, issued and outstanding 2,182 2,182
Capital in excess of par value 12,802 12,802
Retained earnings 1,451 1,042
Net unrealized holding loss on securities available for sale, net of income tax benefit (39) (126)
Preferred stock acquired by ESOP (1,280) (1,307)
- --------------------------------------------------------------------------------------------------------------------------------
Total stockholders' equity 15,893 15,370
- --------------------------------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $301,773 $283,207
================================================================================================================================
</TABLE>
3
<PAGE>
INDEPENDENCE BANCORP,INC.and SUBSIDIARY
- ---------------------------------------
Consolidated Statements of Income (unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31
---------------------
(In thousands, except per share data) 1995 1994
- --------------------------------------------------------------------------------------
<S> <C> <C>
Interest income:
Loans $2,968 $2,436
Securities 1,686 1,373
Federal funds sold 160 69
Deposits with banks 80 49
- --------------------------------------------------------------------------------------
Total interest income 4,894 3,927
- --------------------------------------------------------------------------------------
Interest expense:
Interest on deposits 1,372 1,026
- --------------------------------------------------------------------------------------
Total interest expense 1,372 1,026
- --------------------------------------------------------------------------------------
Net interest income 3,522 2,901
Provision for possible loan losses 180 250
- --------------------------------------------------------------------------------------
Net interest income after provision
for possible loan losses 3,342 2,651
- --------------------------------------------------------------------------------------
Non-interest income:
Service charges on deposit accounts 305 314
Other income 193 238
- --------------------------------------------------------------------------------------
498 552
- --------------------------------------------------------------------------------------
Non-interest expense:
Salaries and employee benefits 1,305 1,116
Occupancy and equipment 635 552
Insurance premiums on deposits 162 166
Other expenses 917 772
- --------------------------------------------------------------------------------------
3,019 2,606
- --------------------------------------------------------------------------------------
Income before income taxes 821 597
Income tax provision 272 196
- --------------------------------------------------------------------------------------
Net income 549 401
Dividends on preferred stock 140 140
- --------------------------------------------------------------------------------------
Net income applicable to common stock $409 $261
======================================================================================
Net income per common share
Primary $.31 $.20
Fully Diluted .26 .19
======================================================================================
Weighted average shares outstanding
Primary 1,308,328 1,305,668
Fully Diluted 2,112,224 2,100,851
======================================================================================
</TABLE>
4
<PAGE>
INDEPENDENCE BANCORP, INC. and SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
(In thousands) March 31,
-----------------------
Cash Flows From Operating Activities: 1995 1994
-----------------------
<S> <C> <C>
Net Income $549 $401
- ----------------------------------------------------------------------------------------------------------------------
Adjustments to Reconcile Net Income to Net Cash Provided by
Operating Activities:
Provision for possible loan losses 180 250
Depreciation of bank premises and equipment 187 138
Net amortization and accretion on securities 70 100
Provision for possible losses on other real estate 140 102
Loss (gain) on sale of other real estate 3 (56)
Gain on sale of residential mortgage loans and related servicing rights (4) (22)
Increase in accrued interest receivable (525) (443)
Decrease (increase) in other assets 27 (348)
Increase (decrease) in other liabilities 356 (211)
- ----------------------------------------------------------------------------------------------------------------------
Total Adjustments 434 (490)
- ----------------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) operating activities 983 (89)
- ----------------------------------------------------------------------------------------------------------------------
Cash Flows From Investing Activities:
Proceeds from maturities of securities:
Available for sale 54 1,077
Held for maturity 3,119 5,051
Purchase of securities:
Available for sale (2,872) --
Held for maturity (3,896) (17,281)
Net increase in loans (4,287) (600)
Decrease in other real estate 290 485
Capital expenditures (406) (92)
- ----------------------------------------------------------------------------------------------------------------------
Net cash used in investing activities (7,998) (11,360)
- ----------------------------------------------------------------------------------------------------------------------
Cash Flows From Financing Activities:
Net increase in deposit accounts 17,714 304
Principal payments on ESOP debt 27 25
Dividends paid on preferred stock (140) (140)
- ----------------------------------------------------------------------------------------------------------------------
Net cash provided by financing activities 17,601 189
- ----------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents 10,586 (11,260)
Cash and cash equivalents, beginning of year 30,736 39,431
- ----------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents, end of year $41,322 $28,171
- ----------------------------------------------------------------------------------------------------------------------
Supplemental Disclosures of Cash Flow Information:
Cash paid during the year for:
Interest $1,372 $1,026
Income taxes (refund) 175 --
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
5
<PAGE>
INDEPENDENCE BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Note 1. Basis of Presentation
The accompanying unaudited consolidated financial statements have been
prepared in accordance with the rules and regulations of the Securities and
Exchange Commission for interim financial information. Accordingly, they do not
include all the information and footnotes required by generally accepted
accounting principles for complete financial statements. Therefore, it is
suggested that the accompanying unaudited consolidated financial statements be
read in conjunction with the financial statements and notes thereto included in
Independence Bancorp, Inc.'s (the Company) December 31, 1994 Annual Report to
Shareholders. In the opinion of management, the accompanying unaudited
consolidated financial statements include all adjustments of a normal recurring
nature necessary to present fairly the Company's financial position as of
March 31, 1995, the results of its operations and cash flows for the three
months then ended, and cash flows for the first three months of 1995. The
results of operations for such interim periods are not necessarily indicative of
the results to be expected for the full year.
Note 2. Summary of Significant Accounting Policies:
Principles of consolidation
The consolidated financial statements of Independence Bancorp, Inc. include the
accounts of the Company and its wholly-owned subsidiary, Independence Bank of
New Jersey (the Bank). All significant intercompany accounts and transactions
have been eliminated.
Securities
The Company prospectively adopted Statement of Financial Accounting
Standards No. 115, "Accounting for Certain Investments in Debt and Equity
Securities" (SFAS 115), effective January 1, 1994. SFAS 115 requires the Company
to classify its investment securities as: (1) held to maturity, (2) available
for sale and (3) trading.
Securities which the Company has the ability and intent to hold until
maturity are classified as held to maturity. These securities are carried at
cost, adjusted for amortization of premiums and accretion of discounts.
Securities which are held for indefinite periods of time which management
intends to use as part of its asset/liability strategy, or that may be sold in
response to changes in interest rates, changes in prepayment risk, increased
capital requirements or other similar factors, are classified as available for
sale and are carried at market value. Differences between the security's
amortized cost and
6
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Continued
market value is charged/credited directly to stockholders' equity, net of income
taxes.
The Company has not classified any of its securities as trading.
Loans
Substantially all loans classified as commercial loans are at least
partially secured by real estate. Loans are stated at their principal amount
outstanding, net of any unearned income and net of loan origination fees and
costs. Nonrefundable loan origination fees and certain direct loan origination
costs are deferred and recognized over the life of the loan as an adjustment to
the loans' yield. The Bank does not accrue interest on any loan when factors
indicate collectability is doubtful. In general, the accrual of interest is
discontinued when a loan becomes 90 days past due as to principal or interest.
When interest accruals are discontinued, interest credited to income in the
current year is reversed, and interest accrued in the prior year is charged to
the allowance for possible loan losses. Management may elect to continue the
accrual of interest when the estimated net realizable value of collateral is
sufficient to cover the principal balance and accrued interest. Nonaccrual
loans are returned to accrual status when interest is received on a current
basis and other factors indicating doubtful collection cease.
Allowance for possible loan losses
The allowance for possible loan losses is maintained at a level considered
adequate by management to absorb potential loan losses. It is the result of an
in-depth and on-going analysis which relates outstanding balances to expected
allowance levels required to absorb future credit losses. Current economic
problems are addressed through management's assessment of anticipated changes in
the regional economic climate, changes in composition and volume of the loan
portfolio and variances in levels of classified, non-performing and past due
loans. Allowance adequacy calculations are completed by applying risk
assessments to determine specific and general allowance requirements for problem
and non-problem loans.
The allowance is increased as deemed necessary through provisions charged
against current earnings and additionally by crediting amounts of recoveries
received, if any, on previously charged-off loans. The allowance is reduced by
charge-offs of loans which are determined to be uncollectable, in accordance
with established policies.
7
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Continued
Impaired Loans
The Bank adopted SFAS 114 "Accounting by Creditors for Impairment of a
Loan", and SFAS No. 118 "Accounting by Creditors for Impairment of a Loan -
Income Recognition and Disclosures" as of January 1, 1995. SFAS No. 114 requires
that certain impaired loans be measured based on the present value of expected
future cash flows discounted at the loan's original effective interest rate. As
a practical expedient, impairment may be measured based on the loan's observable
market price or the fair value of the collateral if the loan is collateral
dependent. When the measure of the impaired loan is less than the recorded
investment in the loan, the impairment is recorded through a valuation
allowance.
The Bank had previously measured the allowance for credit losses using
methods similar to those prescribed in SFAS No. 114. As a result of adopting
these statements, no additional allowance for loan losses was required as of
January 1, 1995.
As of March 31, 1995, the Bank's recorded investment in impaired loans and
the related valuation allowance calculated under SFAS no. 114 is as follows:
<TABLE>
<CAPTION>
Recorded Valuation
Investment Allowance
---------- ---------
<S> <C> <C>
Impaired Loans-
Valuation allowance required $ 596 $136
No valuation allowance required 2,523 0
------ ----
Total Impaired Loans $3,119 $136
</TABLE>
This valuation allowance is included in the allowance for loan losses on the
balance sheet.
The average recorded investment in impaired loans for the quarter ended
March 31, 1995 was $3.3 million.
Interest payments received on impaired loans are recorded as interest
income unless collection of the remaining recorded investment is doubtful at
which time payments received are recorded as reductions of principal. The Bank
recognized no interest income on impaired loans for the quarter eneded March 31,
1995.
In accordance with SFAS No. 114, a loan is classified as foreclosed
property when the Bank has taken possession of the collateral, regardless of
whether the formal proceedings take place. This is a change from previous
accounting for in-substance foreclosed
8
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Continued
property under provisions of SFAS No. 15. SFAS No. 114 requires classification
as foreclosed property based on actual possession, whereas previous practice
classified certain loans as in-substance foreclosures prior to possession based
on characteristics of the borrower and underlying collateral. As a result of
adopting SFAS No. 114, loans of approximately $628 thousand no longer qualify as
in-substance foreclosures based on the possession criterion, and therefore have
been reclassified from other assets to loans as of January 1, 1995. Prior
periods have been restated to reflect the pronouncement.
Other Real Estate
Other real estate is comprised of foreclosed properties where the Company has
actually received title. Other real estate is carried at the lower of fair
value, as determined by current appraisals, less estimated costs to sell, or the
recorded investment in the loan on the property. Write-downs on these properties
which occur after the initial transfer from the loan portfolio are recorded as
operating expenses. Costs of holding such property are charged to expense as
incurred. Gains, to the extent allowable, and losses on the disposition of these
properties are reflected in current operations.
Note 3. Dividends
Based on the continuing improvement in the Bank's condition, with the Federal
Deposit Insurance Corporation (FDIC) and the New Jersey Department of Banking's
("Department") permission, the Board of Directors rescinded its December 23,
1993 Resolution.
The cash dividend for the common stock has been reinstated with the declaration
of a $0.025 cash payment per share to stockholders of record May 15, 1995.
Note 4. Commitments and Contingent Liabilities
In the normal course of business, there are outstanding various legal
proceedings, commitments and contingent liabilities, such as guarantees and
commitments to extend credit which are not reflected in the accompanying
financial statements. At March 31, 1995 standby letters of credit were
approximately $2,256,000. In addition, the Company has committed $24,921,000
for home equity loans; $16,585,000 for commercial and residential real estate
loans; $7,654,000 for commercial lines of credit and $5,974,000 for all other
commitments. In the judgement of management, the financial position or results
of operations of the Company will not be materially adversely affected by the
outcome of any present legal proceedings or other commitments and contingent
liabilities.
9
<PAGE>
Item 2- Management's Discussion and Analysis of Financial
- ----------------------------------------------------------
Condition and Results of Operations
-----------------------------------
Reference should be made to Management's Discussion and Analysis of
Financial Condition and Results of Operations in the Independence Bancorp, Inc.
Annual Report and Form 10K for the year ended December 31, 1994.
Overview
- --------
The Company recorded net income applicable to common stock for the three
months ended March 31, 1995 of $409 thousand, or $.31 and $.26 primary and fully
diluted per common share, respectively. This compares to net income applicable
to common stock for the three months ended March 31, 1994 of $261 thousand, or
$.20 and $.19 primary and fully diluted per common share, respectively. Improved
earnings for the first quarter 1995 were the result of a 21.4% increase in net
interest income compared to the first quarter of 1994. Non-interest income for
the three months ended March 31, 1995 decreased 9.8%, or $54 thousand as
compared to the same period in 1994, while non-interest expense totaled $3.0
million, increasing $413 thousand, or 15.8% over the comparable period in 1994.
As of March 31, 1995, the Company's Capital ratios were: 5.43% for Tier
I leverage capital; 10.16% for Tier I capital to risk-adjusted assets; and
11.56% for total Tier capital to risk-adjusted assets. The Bank's ratios as of
March 31, 1995 were 5.96% for Tier I leverage capital; 11.12% for Tier I capital
to risk-adjusted assets; and 12.38% for total Tier capital to risk-adjusted
assets. All ratios remain above regulatory mandated levels.
Delinquent loans (90 days or more, and still accruing) increased $95
thousand or 200%, while non-accrual loans and total non-performing assets
declined 24.7%, and 39.4%, respectively, from March 31, 1994 to March 31, 1995.
In the first quarter of 1995, total non-performing assets declined 13.0% as
compared to December 31, 1994.
Net Interest Income
- -------------------
Net interest income, stated on a fully tax equivalent (FTE) basis,
increased $621 thousand to $3.5 million in the first three months of 1995 when
compared to the same period of last year. This increase in net interest income
was primarily due to an increase in net interest earning assets coupled with the
23.6% increase in non-interest bearing liabilities. The Company's net interest
spread and net interest margin increased from 4.59% to 4.77% and from 5.03% to
5.38%, respectively, from the first quarter 1994 to the first quarter 1995.
10
<PAGE>
Interest income (FTE) for the first three months of 1995 increased 24.6%,
or $967 thousand compared to the respective period in 1994, while interest
expense increased 33.7% or $346 thousand over the same period in 1994.
The growth in average securities, loans and federal funds substantially
accounted for the increase in net interest income for the first quarter of 1995.
Similarly, the increase in average time deposits primarily accounted for the
increase in interest expense.
Average interest earning assets for the first quarter of 1995 increased
$29.5 million, or 12.5%, over the comparable period in 1994 and the overall rate
on earning assets increased by 65 basis points. Securities and real estate loans
are primarily responsible for this growth with increases in the first quarter of
1995 of $19.1 million and $10.1 million, respectively, as compared with the
first quarter of 1994.
The Company's average rate paid on interest-bearing liabilities increased
48 basis points for the three month period ended March 31, 1995 as compared to
the same period in 1994. This increase is attributable to the rising rate
environment during the first quarter of 1995. As a result, the cost of these
interest-bearing liabilities increased to 2.09% for the first three months of
1995, from 1.77% for the comparable period in 1994. The Company's net interest
spread for the three months ended March 31, 1995 increased 18 basis points over
that of the same period in 1994. Average demand deposits for the three months
ended March 31, 1995 increased $12.3 million, or 23.6% compared to the first
quarter of 1994. Average time deposits and other interest bearing liabilities
increased $11.7 million, or 26.3% and $6.8 million, or 4.7%, for the first
quarter of 1995 compared to the same period in 1994.
Included in interest-earning assets are loans on which the accrual of
interest has been discontinued. Such non-accrual loans amounted to $2.5 million
at March 31, 1995. Had these loans been current in accordance with their terms,
interest income on loans would have been $59 thousand higher. This reduction in
loan interest income because of these non-accruing loans accounted for a 15
basis point decline in the yield on total interest-earning assets.
Provision for Possible Loan Losses and Allowance for Possible Loan Losses
- -------------------------------------------------------------------------
The provision for possible loan losses, which is charged to operations, and
the allowance for possible loan losses are maintained at a level considered
adequate by management to absorb potential loan losses. It is the result of an
in-depth and ongoing analysis which relates outstanding balances to expected
allowance levels required to absorb future credit losses. Current economic
problems are addressed through management's assessment of anticipated changes in
the regional
11
<PAGE>
economic climate, changes in composition and volume of the loan portfolio and
variances in levels of classified, non-performing and past due loans. Allowance
adequacy calculations are completed by applying risk assessments to determine
specific and general allowance requirements for problem and non-problem loans.
The Company prospectively adopted Statement of Financial Accounting
Standards No. 114, "Accounting by Creditors for Impairment of a Loan" (SFAS
114), effective January 1, 1995. This statement requires that impaired loans,
within the scope of the statement, be measured on the present value of expected
future cash flows discounted at the loan's effective interest rate or market
price or the fair value of the collateral if the loan is collateral dependent.
The following table lists selected data relating to the loan portfolio and
certain factors which were considered by management in determining the amount of
the allowance for possible loan losses for the first quarter of 1995. The table
reflects the adoption of SFAS 114 and all prior year information has been
reclassified to conform with the current year presentation.
As of, or For the Period Ended
------------------------------
(dollar amounts in thousands)
<TABLE>
<CAPTION>
03/31/94 06/30/94 09/30/94 12/31/94 03/31/95
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Non-Accrual Loans $3,307 $3,084 $2,903 $2,622 $2,491
Impaired Loans 2,264 1,850 1,767 792 628
Other Real Estate 1,083 1,017 693 1,222 915
------ ------ ------ ------ ------
Non-Performing Assets $6,654 $5,951 $5,363 $4,636 $4,034
====== ====== ====== ====== ======
Past Due Loans * $ 47 $ 651 $ 44 $ 189 $ 143
====== ====== ====== ====== ======
Net Charge-offs $ 257 $ 500 $ 734 $ 876 $ (12)
====== ====== ====== ====== ======
Allowance for Possible
Loan Losses $2,485 $2,492 $2,508 $2,630 $2,822
====== ====== ====== ====== ======
Allowance as Percentage
of Loans Outstanding 2.03% 2.02% 1.99% 2.03% 2.09%
====== ====== ====== ====== ======
Allowance as Percentage
of Non-Performing
Loans 44.61% 50.51% 53.70% 77.04% 90.48%
====== ====== ====== ====== ======
Net Charge-offs (annualized)
to Average Loans
Outstanding 0.84% 0.84% 0.80% 0.70% (0.04%)
======= ====== ====== ====== =======
</TABLE>
* Loans over 90 days past due on which interest continues to be
accrued.
For the three months ended March 31, 1995, net loan recoveries were $12
thousand as compared with net loan charge-offs of $257 thousand for the
comparable period of 1994. During the first quarter of 1995, $24 thousand, or
54.5% of the loans charged-off were
12
<PAGE>
commercial loans, which includes lease financing. The remaining 45.5% of loans
charged-off related to installment loans. Recoveries during the first three
months of 1995 for installment loans previously charged off accounted for 96.9%,
or $31 thousand, of the total year-to-date recoveries. Included in past due
loans for March 31, 1995 is one commercial loan for $94 thousand.
At March 31, 1995, the Company's non-accrual loans, impaired loans, and
other real estate (in total, non-performing assets) totalled $4.0 million as
compared to $6.7 million at March 31, 1994. The ratio of non-performing assets
to total assets as of March 31, 1995 and 1994 was 1.3% and 2.6%, respectively.
At March 31, 1995, the Company's allowance for possible loan losses was
$2.8 million. This represented 2.1% of total loans and 90.5% of total non-
performing loans. This compares to the Company's allowance for possible loan
losses at March 31, 1994 of $2.5 million, or 2.0% of total loans and 44.6% of
total non-performing loans. The Company's allowance for possible loan losses at
December 31, 1994 was $2.6 million, or 2.0% of loans and 77.0% of total non-
accrual loans.
Non-Interest Income
- -------------------
Total non-interest income for the first quarter of 1995 totaled $498
thousand, a decrease of $54 thousand or 9.8% as compared to the same period of
1994. The decrease in non-interest income for the three months ended March 31,
1995 reflects the adoption of the Free Checking Program that was instituted
early in the second quarter of 1994. Other non-interest income for the first
three months of 1995 decreased $45 thousand compared to the comparable period in
1994 primarily due to the $57 thousand decrease in gains resulting from sales of
Other Real Estate Owned, offset by an increase in check printing income. There
were no sales of securities during the first quarter of 1995.
Non-Interest Expense
- --------------------
Non-interest expense totaled $3.0 million for the first quarter of 1995,
$413 thousand, or 15.8% above the comparable period in 1994. Annualized, total
non-interest expense as a percent of total average assets for the first three
months of 1995 and 1994 was 4.18% and 4.05%, respectively. Salaries and employee
benefits, which is the major component of this category, increased $189 thousand
during the first three months of 1995, resulting from additions made to staff,
higher medical costs, and merit increases.
Occupancy and equipment costs for the first three months of 1995 increased
$83 thousand, or 15.0% as compared to the same period in 1994 due to increased
data processing charges and depreciation expense relating to the Company's
computer conversion completed during the third quarter of 1994. Insurance
premiums on deposits remained at the 1994 level. Other non-interest expenses for
the first three months of
13
<PAGE>
1995 totaled $917 thousand, an increase of $145 thousand or 18.8% over the
comparable period in 1994. Approximately $52 thousand of the increase was
related to higher advertising and marketing expenses and the remaining increase
was attributable to an increase in the valuation reserve associated with Other
Real Estate Owned, and increased stationery and supplies costs.
Interest Rate Sensitivity and Liquidity
- ---------------------------------------
Management has identified numerous strategies, including a redeployment of
asset maturities and cash flows to insulate net interest income from the effects
of changes in interest rates. Sensitivity to interest rate fluctuations is
measured in a number of time frames. Gap positions are monitored as part of the
committee process. This activity includes periodic forecasts of future business
activity which are applied to various interest rate environments in a simulation
process. The use of these financial modeling techniques assists management in
its continuing efforts to achieve stable earnings growth in an everchanging
interest rate environment. While gap analysis is a general indicator of the
potential effect that changing interest rates may have on net interest income,
the gap itself does not present a complete picture of interest rate sensitivity.
For this reason, the Company primarily uses simulation techniques to project
future net interest income streams, incorporating the current "gap" position,
the forecasted balance sheet mix and the anticipated spread relationships
between market rates and bank products under a variety of interest rate
scenerios.
Liquidity measures the ability to satisfy current and future cash flow
needs as they become due. The Company's primary sources of liquidity are
deposits, loan repayments and investment securities. During the first three
months of 1995 and 1994, average balances in marketable securities and other
short-term investments comprised 46.5% and 44.6% of average total assets,
respectively. During the first three months of 1995, average deposit balances
(after interest credited) increased 7.9% to $270.8 million from December 31,
1994.
Securities, which consist of obligations of the U.S. Treasury and U.S.
Government Agencies and issues of state and political subdivisions totaled
$119.3 million at March 31, 1995, an increase of .4% or $588 thousand over
December 31, 1994. At March 31, 1995, the Company's securities classified as
held to maturity reflected gross unrealized gains of $703 thousand and gross
unrealized losses of $4.9 million. Securities available for sale at March 31,
1995 totaled $6.4 million, an increase of $2.9 million or 82.9% as compared to
December 31, 1994.
In accordance with SFAS 115, at March 31, 1995, the Company had an
unrealized loss balance of $39 thousand (net of tax effects) against retained
earnings for net declines in the fair market values of its investment securities
classified as available for sale. The
14
<PAGE>
Company had no investment securities classified as trading securities as of
March 31, 1995.
The Company remains a deposit-driven financial institution with emphasis
on core deposit accumulation and retention as a basis for sound growth and
profitability. The Company believes that its record of sustaining core deposit
growth is reflective of the Company's retail approach to banking which
emphasizes a combination of free checking accounts, convenient branch locations,
extended hours of service, quality service and active marketing. Historically,
the overall liquidity of the Company has been enhanced by the significant amount
of core deposits.
Capital Resources
- -----------------
At March 31, 1995, stockholders' equity totaled $15.9 million or 5.3% of
total assets, as compared with $14.4 million, or 5.5% , at March 31, 1994.
The Federal Reserve Board standards applicable to bank holding companies
and similar standards of the Federal Deposit Insurance Corporation applicable to
banks classify capital into two tiers, referred to as Tier I and Tier II. Tier
I capital consists of common stockholders' equity and qualifying perpetual
preferred stock, less goodwill. Tier II capital consists of the allowance for
possible loan and lease losses up to 1.25% of risk-weighted assets.
The Federal Reserve Board requires each bank holding company to maintain a
minimum leverage ratio of 3.0% (Tier I capital to quarterly average total
assets). The minimum 3.0% leverage requirement applies only to top-rated banking
organizations without any operating, financial or supervisory deficiencies.
Other organizations are expected to hold an additional capital cushion of at
least 100 to 200 basis points of Tier I capital, and, in all cases, banking
organizations should hold capital commensurate with the level and nature of all
the risks to which they are exposed. The Company's leverage capital ratio at
March 31, 1995 was 5.43%. On March 31, 1995, the Bank's leverage capital ratio
was 5.96%.
Based on the continuing improvement in the Bank's condition, with the FDIC
and Department's permission, the Board of Directors rescinded its December 23,
1993 resolution that required, among other things, the Bank to maintain its Tier
I leverage capital ratio at not less than 5.50%.
15
<PAGE>
The following table reflects the Company's and Bank's capital ratios as of
March 31, 1995:
<TABLE>
<CAPTION>
(in thousands) Company Bank
- --------------------------------------------------------------
<S> <C> <C>
Tier I Capital:
Actual.............................. 10.16% 11.12%
Regulatory Minimum Requirement...... 4.00% 4.00%
Combined Tier I and Tier II Capital:
Actual.............................. 11.56% 12.38%
Regulatory Minimum Requirement...... 8.00% 8.00%
Leverage Ratio:
Actual.............................. 5.43% 5.96%
Regulatory Minimum Requirement...... 4.00%
to
5.00% 5.50%
</TABLE>
16
<PAGE>
PART II - OTHER INFORMATION
---------------------------
ITEM 1 - LEGAL PROCEEDINGS
---------------------------
None
ITEM 2 - CHANGES IN SECURITIES
-------------------------------
None
ITEM 3 - DEFAULT UPON SENIOR SECURITIES
----------------------------------------
None
ITEM 4 - SUBMISSIONS OF MATTERS TO A VOTE OF SECURITY HOLDERS
--------------------------------------------------------------
None
ITEM 5 - OTHER INFORMATION
---------------------------
None
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
------------------------------------------
(a) The following exhibits are being filed with this report:
3.1 Certificate of Incorporation of the Company, as
amended.
27 Financial Data Schedule.
(b) No reports on Form 8-K have been filed during the quarter for
which this report is filed.
17
<PAGE>
SIGNATURES
-----------
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
INDEPENDENCE BANCORP, INC.
--------------------------
May 11, 1995 BY: /s/ KEVIN J. KILLIAN
-------------------------- ---------------------------
DATE KEVIN J. KILLIAN
SENIOR VICE PRESIDENT &
CHIEF FINANCIAL OFFICER
May 11, 1995 BY: /s/ KAREN J. HALL
-------------------------- ---------------------------
DATE KAREN J. HALL
CHIEF ACCOUNTING OFFICER
18
<PAGE>
CERTIFICATE OF INCORPORATION
----------------------------
OF
--
INDEPENDENCE BANCORP, INC.
--------------------------
TO: The Secretary of State
State of New Jersey
THE UNDERSIGNED, of the age of eighteen years or over, for the purpose
of forming a corporation pursuant to the provisions of Title 14A, Corporations,
General, of the New Jersey Statutes, does hereby execute the following
Certificate of Incorporation.
FIRST: The name of the corporation is Independence Bancorp, Inc.
SECOND: The address of the corporation's initial registered office is 63
West Allendale Avenue, Allendale New Jersey 07401, and the name of the
corporation's initial registered agent at such address is William L. Griffin,
Jr.
THIRD: The purpose or purposes for which the corporation is organized
are:
To engage in and do any lawful act
concerning any or all lawful business
for which corporations may be incor-
porated under the New Jersey Business
Corporation Act.
FOURTH: The term for which the corporation is to exist is perpetual.
FIFTH: The capital stock of the corporation shall consist of 500,000
shares of stock with a par value of $6.67 per share.
<PAGE>
SIXTH: The number of Directors constituting the initial Board of
Directors shall be twelve (12) and the names and addresses of the Directors are:
NAME BUSINESS ADDRESS
---- ----------------
William F. Dator Dator Agency, Inc.
6 East Ramapo Avenue
Mahwah, NJ 07430
Allen M. Demby, M.D. 245 East Main Street
Ramsey, NJ 07446
Julius J. Franchini Lynn Chevrolet
461 Kearny Avenue
Kearny, NJ 07032
Robert F. Frasco Frasco Enterprises
479 St. Highway 17
Mahway, NJ 07430
William L. Griffin, Jr. Independence Bank
of New Jersey
63 W. Allendale Avenue
Allendale, NJ 07401
Robert O. Hagman Theurer, Inc.
225 Parkhurst Street
Newark, NJ 07114
Joseph A. Haynes E.F. Hutton
East 140 Ridgewood Avenue
Mack Center 3
Paramus, NJ 07652
Vernon W. Hill, II Site Development
386 Route 70
Marlton, NJ 08053
Steinar Gundersen 520 Forest Court
River Vale, NJ 07675
Esko J. Koskinen Greenway Construction
111 Chestnut Ridge Rd.
Montvale, NJ 07645
James R. Napolitano Napolitano & Napolitano
180 East Main Street
Ramsey, NJ 07445
-2-
<PAGE>
NAME BUSINESS ADDRESS
---- ----------------
Joseph LoSoalzo Allendale Lumber & Millwork
55 Park Avenue
Allendale, NJ 07401
EIGHTH: Except as otherwise expressly provided in this
Article EIGHTH:
(i) any merger or consolidation of the corporation with or
into any other corporation; or
(ii) any sale, lease, exchange or other disposition of all or
substantially all of the assets of the corporation to or with any other
corporation, person or other entity, shall require the affirmative vote of the
holders of at least eighty percent (80%) of the outstanding shares of capital
stock of the corporation issued and outstanding and entitled to vote.
The provisions of this Article EIGHTH shall not apply to any transaction
described in clauses (i) or (ii) of this Article, which has been approved by
resolution adopted by the Board of Directors of the corporation at any time
prior to the consummation thereof.
This Article EIGHTH may not be amended or rescinded except by the
affirmative vote of the holders of at least eighty percent (80%) of the
outstanding shares of capital stock of the corporation issued and outstanding
and entitled to vote, at any regular or special meeting of the stockholders if
notice of the proposed alteration or amendment be contained in the notice of the
meeting.
NINTH: On all matters submitted to a vote at a meeting
-3-
<PAGE>
of shareholders, including the election of directors, each share of common stock
shall be entitled to one vote on each matter submitted.
TENTH: The shareholders shall have preemptive rights.
ELEVENTH: The name and address of the incorporator is:
Julie P. Geiser, Legal Assistant
Spector Cohen Gadon & Rosen, P.C.
1700 Market Street, 29th Floor
Philadelphia, PA 19103
IN WITNESS WHEREOF, the incorporator has signed the Certificate of
Incorporation on the 21st day of October.
/s/ Julie P. Geiser
-4-
<PAGE>
CERTIFICATE OF AMENDMENT
TO THE
CERTIFICATE OF INCORPORATION
OF
INDEPENDENCE BANCORP, INC.
____________________________
Pursuant to the provisions of Section 14A:7-15.1 of the New Jersey Business
Corporation Act, as amended, relating to the division or combination by a
corporation of its shares, Independence Bancorp, Inc. hereby certifies that:
1. The name of the corporation is Independence Bancorp, Inc.
2. On August 30, 1984, the Board of Directors of Independence Bancorp,
Inc. adopted, by a vote of a majority of the directors present at a meeting
thereof duly convened, at which meeting a quorum was at all times present and
voting, a resolution approving the division of the 191,007 shares of Common
Stock, par value $6.67 per share, of Independence Bancorp, Inc. outstanding on
August 30, 1984 into 382,014 shares of Common Stock, par value $3.335 per share,
of Independence Bancorp, Inc.
3. Said division will not adversely affect the rights or preferences of the
holders of outstanding shares of any class or series of Independence Bancorp,
Inc. and will not increase the number of authorized but unissued shares of
Independence Bancorp, Inc.
4. Prior to said division, there were outstanding 191,007 shares of
Independence Bancorp, Inc. Common Stock, par value $6.67 per share, and after
said division, there were outstanding 382,014 shares of Independence Bancorp,
Inc. Common Stock, par value $3.335 per share.
5. Article Fifth of the Certificate of Incorporation of Independence
Bancorp, Inc. is hereby amended to read as follows:
"FIFTH: The capital stock of the
corporation shall consist of 500,000
shares of stock with a par value of
$4.445 per share."
IN WITNESS WHEREOF, Independence Bancorp, Inc. has caused this Certificate
of Amendment to its Certificate of Incorporation to be signed by its President
this 24th day of March, 1986.
INDEPENDENCE BANCORP. INC.
By: /s/ Thomas M. Flynn
----------------------------
Thomas M. Flynn
President
<PAGE>
CERTIFICATE OF AMENDMENT
TO THE
CERTIFICATE OF INCORPORATION
OF
INDEPENDENCE BANCORP, INC.
----------------------------
Pursuant to the provisions of Sections 14A:9-2(4) and 14A:9-4(3) of the New
Jersey Business Corporation Act, as amended, the undersigned corporation
executes the following Certificate of Amendment to its Certificate of
Incorporation:
1. The name of the corporation is Independence Bancorp, Inc.
2. The amendments adopted to the Certificate of Incorporation of
Independence Bancorp, Inc. are as follows:
(a) Article Fifth of the Certificate of Incorporation of Independence
Bancorp, Inc. is amended to read as follows:
FIFTH: The aggregate number of shares which the corporation shall
have authority to issue shall be 3,000,000 shares of which
2,000,000 shares shall be common stock with a par value of $3.335
per share and of which 1,000,000 shares shall be preferred stock
without par value. The shares of preferred stock may be divided
into and issued from time to time in one or more classes and into
series within any class or classes as may be designated by the
Board of Directors of the corporation, each such class or series
to be distinctly titled and to consist of the number of shares
designated by the Board of Directors. All shares of any one class
or series of preferred stock so designated by the Board of
Directors shall be alike in every particular, except that shares
of any one class or series issued at different times may differ
as to the dates from which dividends thereon (if any) shall
accrue or be cumulative (or both). The designations, preferences,
qualifications, limitations, restrictions and special or relative
rights (if any) of any class or series of preferred stock may
differ from those of any and all other class or series at any
time outstanding. The Board of Directors of the corporation is
hereby expressly vested with authority, upon issuance of
preferred stock authorized hereby which is convertible into any
class or series of shares of the corporation to increase the
authorized shares of any class or series to such number as will
not be more than
<PAGE>
sufficient, when added to previously authorized but unissued
shares of such class or series, to satisfy the conversion
privileges of the convertible shares issued. The Board of
Directors of the corporation is hereby expressly vested with
authority to fix by resolution the designations, preferences,
qualifications, limitations, restrictions and special or relative
rights (if any) of the preferred stock and each class or series
thereof which may be designated by the Board of Directors,
including, but without limiting the generality of the foregoing,
the following:
(a) The voting rights and powers (if any) of the preferred stock
and each class or series thereof;
(b) The rates and times at which, and the terms and conditions
on which, dividends (if any) on preferred stock, and each class
or series thereof, will be paid, and any dividend preferences
or rights of cumulation;
(c) The rights (if any) of holders of preferred stock, and each
such series thereof, to convert the same into or exchange the
same for, shares of other classes (or series of classes) or
capital stock of the corporation and the terms and conditions for
such conversion or exchange, including, provisions for adjustment
of conversion or exchange prices or rates in such events as the
Board of Directors shall determine;
(d) The redemption rights (if any) of the corporation and of the
holders of preferred stock and each series thereof, and the times
at which, and the terms and conditions on which preferred stock
and each series thereof may be redeemed; and
(e) The rights and preferences (if any) of the holders of
preferred stock and each series thereof, upon the voluntary or
involuntary dissolution, liquidation or winding up of the
corporation.
(b) Article Tenth of the Certificate of Incorporation of Independence
Bancorp, Inc. is hereby deleted in its entirety and is of no
further force and effect.
(c) Article Eleventh of the Certificate of Incorporation of
Independence Bancorp, Inc. is hereby renumbered Article Tenth.
3. The amendments to the Certificate of Incorporation of Independence
Bancorp, Inc. were approved by the directors of Independence Bancorp, Inc. and
thereafter duly adopted by the shareholders of Independence Bancorp, Inc. on
April 23, 1986.
<PAGE>
4. The number of shares entitled to vote on the proposal to adopt the
amendments was 400,972.
5. The number of shares voting for the amendments was 263,269. The number
of shares voting against the amendments was 14,285.
IN WITNESS WHEREOF, Independence Bancorp, Inc. has caused this Certificate
of Amendment to its Certificate of Incorporation to be signed by its President
this 23rd day of April, 1986.
INDEPENDENCE BANCORP, INC.
/s/ Thomas M. Flynn
By: Thomas M. Flynn
<PAGE>
CERTIFICATE OF AMENDMENT
TO THE
CERTIFICATE OF INCORPORATION
OF
INDEPENDENCE BANCORP, INC.
--------------------------------
Pursuant to the provisions of Section 14A:715.1 of the New Jersey Business
Corporation Act, as amended, relating to the division or combination by a
corporation of its shares, Independence Bancorp, Inc. hereby certifies that:
1. The name of the corporation is Independence Bancorp, Inc.
2. On April 6, 1987, the Board of Directors of Independence Bancorp, Inc.
adopted, by a vote of a majority of the directors present at a meeting thereof
duly convened, at which meeting a quorum was at all times present and voting,
resolutions approving the division of the 526,043 shares of Common Stock, par
value $3.335 per share, of Independence Bancorp, Inc. issued and outstanding on
April 20, 1987 into 1,032,066 shares of Common Stock, par value $1.6675 per
share, of Independence Bancorp, Inc.
3. Said division will not adversely affect the rights or preferences of
the holders of issued and outstanding shares of any class or series of
Independence Bancorp, Inc. and will not increase the number of authorized but
unissued shares of Independence Bancorp, Inc.
4. Prior to said division, there were issued and outstanding 526,043
shares of Independence Bancorp, Inc. Common Stock, par value $3.335 per share,
and after said division, there were outstanding 1,052,086 shares of Independence
Bancorp, Inc. Common Stock, par value $1.6675 per share.
5. Article Fifth of the Certificate of Incorporation of Independence
Bancorp, Inc. is hereby amended to read as follows:
FIFTH: The aggregate number of shares which the corporation shall have
authority to issue shall be 3,000,000 shares of which 2,000,000 shares
shall be common stock with a par value of $1.6775 per share and of
which 1,000,000 shares shall be preferred stock without par value. The
shares of preferred stock may be divided into and issued from time to
time in one or more classes and into
<PAGE>
series within any class or classes as may be designated by the Board
of Directors of the corporation, each such class or series to be
distinctly titled and to consist of the number of shares designated by
the Board of Directors. All shares of any one class or series of
preferred stock so designated by the Board of Directors shall be alike
in every particular, except that shares of any one class or series
issued at different times may differ as to the dates from which
dividends thereon (if any) shall accrue or be cumulative (or both).
The designations, preferences, qualifications, limitations,
restrictions and special or relative rights (if any) of any class or
series of preferred stock may differ from those of any and all other
class or series at any time outstanding. The Board of Directors of the
corporation is hereby expressly vested with authority, upon issuance
of preferred stock authorized hereby which is convertible into any
class or series of shares of the corporation, to increase the
authorized shares of any class or series to such number as will not be
more than sufficient, when added to previously authorized but unissued
shares of such class or series, to satisfy the conversion privileges
of the convertible shares issued. The Board of Directors of the
corporation is hereby expressly vested with authority to fix by
resolution the designations, preferences, qualifications, limitations,
restrictions and special or relative rights (if any) of the preferred
stock and each class or series thereof which may be designated by the
Board of Directors, including, but without limiting the generality of
the foregoing, the following:
(a) The voting rights and powers (if any) of the preferred stock and
each class or series thereof;
(b) The rates and times at which, and the terms and conditions on
which, dividends (if any) on preferred stock, and each class or series
thereof, will be paid, and any dividend preferences or rights of
cumulation;
<PAGE>
(c) The rights (if any) of holders of preferred stock, and each such
series thereof, to convert the same into, or exchange the same for,
shares of other classes (or series of classes) of capital stock of the
corporation and the terms and conditions for such conversion or
exchange, including, provisions for adjustment of conversion or
exchange prices or rates in such events as the Board of Directors
shall determine;
(d) The redemption rights (if any) of the corporation and of the
holders of preferred stock and each series thereof, and the times at
which, and the terms and conditions on which preferred stock and each
series thereof may be redeemed; and
(e) The rights and preferences (if any) of the holders of preferred
stock and each series thereof, upon the voluntary or involuntary
dissolution, liquidation or winding up of the corporation.
IN WITNESS WHEREOF, Independence Bancorp, Inc. has caused this Certificate
of Amendment to its Certificate of Incorporation to be signed by its President
this 6th day of April, 1987.
INDEPENDENCE BANCORP, INC.
By: /s/ Thomas M. Flynn
-----------------------
Thomas M. Flynn
President
<PAGE>
CERTIFICATE OF AMENDMENT
TO THE
CERTIFICATE OF INCORPORATION
OF
INDEPENDENCE BANCORP, INC.
-----------------------------
Pursuant to the provisions of Sections 14A:9-2(4) and 14A:9-4(3) of the New
Jersey Business Corporation Act, as amended, the undersigned corporation
executes the following Certificate of Amendment to its Certificate of
Incorporation:
1. The name of the corporation is Independence Bancorp, Inc.
2. The Certificate of Incorporation of Independence Bancorp, Inc. is
amended by adding at the end thereof a new Article Eleventh to read as follows:
Eleventh: An officer or director of the corporation shall not be personally
liable to the corporation or to the shareholders of the corporation for
damages for breach of any duty owed to the corporation, except that this
Article Eleventh shall not relieve an officer or director of the
corporation from personal liability to the corporation and to the
shareholders of the corporation for damages for any breach of duty based
upon an act or omission:
(a) in breach of such officer's or director's duty of loyalty to the
corporation or to the shareholders of the corporation, or
(b) not in good faith or involving a knowing violation of law, or
(c) resulting in the receipt by such officer or director of an improper
personal benefit.
3. The amendment to the Certificate of Incorporation of Independence
Bancorp, Inc. was approved by the directors of Independence Bancorp, Inc. and
thereafter duly adopted by the shareholders of Independence Bancorp, Inc. on
April 9, 1987.
4. The number of shares entitled to vote on the proposal to adopt the
amendment was 526,043.
<PAGE>
5. The number of shares voting for the amendment was 392,216. The number
of shares voting against the amendment was 6,725.
IN WITNESS WHEREOF, Independence Bancorp, Inc. has caused this Certificate
of Amendment to its Certificate of Incorporation to be signed by its President
this 10th day of February 1988.
INDEPENDENCE BANCORP, INC.
By: /s/ Thomas M. Flynn
--------------------------------------
Thomas M. Flynn
<PAGE>
CERTIFICATE OF AMENDMENT
TO THE
CERTIFICATE OF INCORPORATION
OF
INDEPENDENCE BANCORP, INC.
-----------------------------
Pursuant to the provisions of Sections 14A:9-2(4) and 14A:9-4(3) of the New
Jersey Business Corporation Act, as amended, the undersigned corporation
executes the following Certificate of Amendment to its Certificate of
Incorporation:
1. The name of the corporation is Independence Bancorp, Inc.
2. The Certificate of Incorporation of Independence Bancorp, Inc. is
amended by adding at the end thereof a new Article Eleventh to read as follows:
Eleventh: An officer or director of the corporation shall not be personally
liable to the corporation or to the shareholders of the corporation for
damages for breach of any duty owed to the corporation, except that this
Article Eleventh shall not relieve an officer or director of the
corporation from personal liability to the corporation and to the
shareholders of the corporation for damages for any breach of duty based
upon an act or omission:
(a) in breach of such officer's or director's duty of loyalty to the
corporation or to the shareholders of the corporation, or
(b) not in good faith or involving a knowing violation of law, or
(c) resulting in the receipt by such officer or director of an improper
personal benefit.
3. The amendment to the Certificate of Incorporation of Independence
Bancorp, Inc. was approved by the directors of Independence Bancorp, Inc. and
thereafter duly adopted by the shareholders of Independence Bancorp, Inc. on
April 9, 1987.
4. The number of shares entitled to vote on the proposal to adopt the
amendment was 526,043.
<PAGE>
5. The number of shares voting for the amendment was 392,216. The number
of shares voting against the amendment was 6,725.
IN WITNESS WHEREOF, Independence Bancorp, Inc. has caused this Certificate
of Amendment to its Certificate of Incorporation to be signed by its President
this ___ day of February 1988.
INDEPENDENCE BANCORP, INC.
By: /s/ Thomas M. Flynn
------------------------
Thomas M. Flynn
<PAGE>
CERTIFICATE OF AMENDMENT
TO THE
CERTIFICATE OF INCORPORATION
OF
INDEPENDENCE BANCORP, INC.
----------------------------
Pursuant to the provisions of Sections 14A:9-2(4) and 14A:9-4(3) of the New
Jersey Business Corporation Act, as amended, the undersigned corporation
executes the following Certificate of Amendment to its Certificate of
Incorporation:
1. The name of the corporation is Independence Bancorp, Inc.
2. The amendment adopted to the Certificate of Incorporation of
Independence Bancorp, Inc. is as follows.
(a) Article Fifth of the Certificate of Incorporation of Independence
Bancorp, Inc. is amended to read as follows:
FIFTH: The aggregate number of shares which the corporation shall have
authority to issue shall be 6,000,000 shares of which 5,000,000 shares
shall be common stock with a par value of 1.6675 per share and of
which 1,000,000 shares shall be preferred stock without par value. The
shares of preferred stock may be divided into and issued from time to
time in one or more classes and into series within any class or
classes as may be designated by the Board of Directors of the
corporation, each such class or series to be distinctly titled and to
consist of the number of shares designated by the Board of Directors.
All shares of any one class or series of preferred stock so designated
by the Board of Directors shall be alike in every particular, except
that shares of any one class or series issued at different times may
differ as to the dates from which dividends thereon (if any) shall
accrue or be cumulative (or both). The designations, preferences,
qualifications, limitations, restrictions and special or relative
rights (if any) of any class or series of preferred stock may differ
from those of any and all other class or series at any time
outstanding. The Board of Directors of the corporation is hereby
expressly vested with authority, upon issuance of preferred stock
authorized hereby which is convertible into any class or series of
shares of the corporation, to increase the authorized shares of any
class or series to such number as will not be more than sufficient,
when added to previously authorized but unissued shares of such class
or series, to satisfy the conversion privileges of the convertible
shares issued. The Board of Directors of the corporation is hereby
expressly vested with authority to fix by resolution the designations,
preferences, qualifications,
<PAGE>
limitations, restrictions and special or relative rights (if any) of
the preferred stock and each class or series thereof which may be
designated by the Board of Directors, including, but without limiting
the generality of the foregoing, the following:
(a) The voting rights and powers (if any) of the preferred stock
and each class or series thereof;
(b) The rates and times at which, and the terms and conditions on
which, dividends (if any) on preferred stock, and each class or series
thereof, will be paid, and any dividend preferences or rights of
cumulation;
(c) The rights (if any) of holders of preferred stock, and each
such series thereof, to convert the same into, or exchange the same
for, shares of other classes (or series of classes) of capital stock
of the corporation and the terms and conditions for such conversion or
exchange, including, provisions for adjustment of conversion or
exchange prices or rates in such events as the Board of Directors
shall determine;
(d) The redemption rights (if any) of the corporation and of the
holders of preferred stock and each series thereof, and the times at
which, and terms and conditions on which preferred stock and each
series thereof may be redeemed; and
(e) The rights and preferences (if any) of the holders of
preferred stock and each series thereof upon the voluntary or
involuntary dissolution, liquidation or winding up of the corporation.
3. The amendment to the Certificate of Incorporation of Independence
Bancorp, Inc. was approved by the directors of Independence Bancorp, Inc. and
thereafter duly adopted by the shareholders of Independence Bancorp, Inc. on
April 27, 1989.
4. The number of shares entitled to vote on the proposal to adopt the
amendments was 1,104,458.
5. The number of shares voting for the amendment was 675,406. The number
of shares voting against the amendment was 25,906.
IN WITNESS WHEREOF, Independence Bancorp, Inc. has caused this Certificate
of Amendment to its Certificate of Incorporation to be signed by its President
this 25th day of May, 1989.
INDEPENDENCE BANCORP, INC.
By: /s/Thomas M. Flynn
------------------------
Thomas M. Flynn
<PAGE>
CERTIFICATE OF AMENDMENT
TO THE
CERTIFICATE OF INCORPORATION
OF
INDEPENDENCE BANCORP, INC.
-----------------------------
Pursuant to the provisions of Section 14A:7-2 of the New Jersey Statutes,
as amended, relating to the issuance of shares in classes and series, and the
authority conferred on the Board of Directors by the Certificate of
Incorporation to make divisions and determinations with respect to the issuance
of shares in classes or series, Independence Bancorp, Inc. executes the
following Certificate of Amendment to its Certificate or Incorporation:
1. The name of the corporation is Independence Bancorp, Inc.
2. A copy of the resolution of the Board of Directors required by Section
14A:7-2(3) of the New Jersey Statutes, as amended, setting forth the actions of
the Board of Directors and establishing and designating 776,875 shares of Series
A 9% Cumulative Convertible Preferred Stock and determining the relative rights,
preferences and limitations thereof is attached hereto as Exhibit A.
3. Said resolution was adopted by a vote of a majority of the directors
present at a meeting thereof duly convened and held on August 13, 1992, at which
meeting a quorum was at all times present and voting.
4. The Certificate of Incorporation of Independence Bancorp, Inc. is
hereby amended so that the designation and number of shares of Series A
Cumulative Convertible Preferred Stock, and the relative rights, preferences and
limitations thereof, are as stated in said resolution.
IN WITNESS WHEREOF, Independence Bancorp, Inc. has caused this Certificate
of Amendment to its Certificate of Incorporation to be signed by its President
this 13 day of August, 1992.
INDEPENDENCE BANCORP, INC.
By: /s/ A. ROGER BOSMA
---------------------------
A. ROGER BOSMA
President
<PAGE>
EXHIBIT "A"
Resolution of the Board of Directors determining the
designation and number of the Series A 9% Cumulative
Convertible Preferred Stock, without par value,
and the relative rights, preferences and
limitations thereof.
RESOLVED, that pursuant to the authority expressly granted to and vested in
the Board of Directors of the Corporation (the "Board") by the provisions of
Article Fifth of the Certificate of Incorporation of the Corporation and the
provisions of Section 14A:7-2 of the New Jersey Statutes, as amended, the Board
hereby creates a series of preferred stock, without par value, and determines
the designation and number of shares which constitute such series and the
relative rights, preferences and limitations of such series as follows:
1. Designation and Number of Shares. The series of Preferred Stock shall
--------------------------------
be designated as "Series A 9% Cumulative Convertible Preferred Stock"
(hereinafter called "Series A Preferred Stock") and shall consist of a total of
776,875 shares without par value. The stated value of the Series A Preferred
Stock shall be $1.00.
2. Dividends. The holders of the Series A Preferred Stock shall be
---------
entitled to receive preferential dividends in cash, when, as and if declared by
the Board of Directors out of the funds of the Corporation legally available at
the time for the payment of dividends, at a rate of $0.72 per share per annum,
and no more, payable quarterly on the thirtieth (30th) day of January, April,
July and October to holders of record of Series A Preferred Stock at the close
of business on the last day of the preceding month, before any dividend or other
distribution on any equity securities ranking junior to the Series A Preferred
Stock as to the payment of dividends or other distributions ("Junior Stock");
provided, however, that the Board of Directors may, at any time and from time to
time, change the payment dates of the Series A Preferred Stock dividend to dates
not more than fifteen (15) days before or after those set forth herein, in which
event the first dividend payable after each such change in the payment date
shall be adjusted accordingly on a daily basis from the dividend payment date
last preceding such change. The first dividend payment date of the Series A
Preferred Stock shall be January 30, 1993.
Dividends on each share of Series A Preferred Stock outstanding shall be
cumulative and shall accrue, without interest, from the date of issuance of the
Series A Preferred Stock, whether or not such dividends shall have been declared
and whether or not there shall be any funds of the Corporation legally available
for the payment of dividends. The date on which the Corporation shall initially
issue a share of Series A Preferred Stock shall be deemed to be the "date of
issuance" of
<PAGE>
such share regardless of the number of times the transfer of such share shall be
made on the Corporation's stock transfer records and regardless of the number of
certificates which may be issued to evidence such share.
If, in any dividend period or periods, full dividends (whether past or
current) upon the outstanding Series A Preferred Stock at the dividend rate set
forth herein shall not have been paid or set apart for payment, then, until such
payment is made or set apart, (i) no dividends or other distributions shall be
declared and paid or set apart for payment upon any equity securities of the
Corporation other than securities which have a dividend payment or other
distribution preference superior to the Series A Preferred Stock; (ii) the
Corporation and its subsidiaries shall be prohibited from repurchasing,
redeeming or otherwise acquiring any of the Corporation's preferred stock
ranking on a parity with the Series A Preferred Stock or any of the
Corporation's Common Stock ("Common Stock") or any Junior Stock; and (iii) the
Corporation shall be prohibited from issuing any preferred stock which ranks
superior to or on parity with the Series A Preferred Stock as to the payment of
dividends and other distributions. If, at any time, the Corporation shall pay
less than the total amount of dividends then payable on the then-outstanding
Series A Preferred Stock and on any then-outstanding class or series of stock of
the Corporation which ranks on a parity with the Series A Preferred Stock as to
the payment of dividends and other distributions ("Parity Stock"), the aggregate
payment to all holders of Series A Preferred Stock and to all holders of Parity
Stock shall be distributed among all such holders so that an amount ratably in
proportion to the respective annual dividend rates fixed thereon shall be paid
with respect each outstanding share of Series A Preferred Stock and Parity
Stock.
Holders of the Series A Preferred Stock shall not be entitled to
participate in any dividends or other distributions (cash, stock or otherwise)
declared or paid on or with respect to any Common Stock, Junior Stock or any
other class of stock or equity security of the Corporation or any series of any
such class.
3. Liquidation. In the event of the liquidation, dissolution or winding
up of the Corporation, whether voluntary or involuntary, after all creditors of
the Corporation shall have been paid in full, the holders of the outstanding
Series A Preferred Stock shall be entitled to receive an amount equal to $8.00
per share plus all accrued and unpaid dividends thereon (whether or not such
dividends shall have been declared and whether or not there shall be any funds
legally available for the payment of dividends), without interest, and no more,
to the date fixed for payment of such distributive amount before any
distribution of assets shall be made to the holders of any Common
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<PAGE>
Stock or Junior Stock. If, upon any dissolution, liquidation or winding up of
the Corporation, the net assets of the Corporation shall be insufficient to pay
the holders of all outstanding shares of Series A Preferred Stock and Parity
Stock the full amounts to which they respectively shall be entitled, the holders
of each such stock shall share ratably in any distribution of assets according
to the respective amounts which would be payable in respect of such stock upon
such distribution if all amounts payable on or with respect to all stock were
paid in full.
Neither consolidation or merger of the Corporation with any corporation,
nor the sale of all or part of the Corporation's assets for cash, securities or
other property, nor the purchase or redemption by the Corporation of any class
of stock permitted by the Certificate of Incorporation or any amendment thereof,
shall be deemed a liquidation, dissolution or winding up of the Corporation.
Holders of the Series A Preferred Stock shall not be entitled, upon the
liquidation, dissolution or winding up of the Corporation, to receive any
amounts with respect to such stock other than the amounts referred to in this
paragraph 3. Nothing contained herein shall be deemed to prevent the redemption
or purchase of the Series A Preferred Stock permitted by paragraph 4 herein, the
conversion of the Series A Preferred Stock pursuant to paragraph 5 herein or the
exercise of the Common Stock Purchase Rights pursuant to paragraph 6 herein
prior to liquidation, dissolution or winding up.
4. Redemption. The shares of Series A Preferred Stock shall be redeemable
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at the option of the Corporation, in whole or in part, at any time or from time
to time, upon payment of the respective redemption price set forth herein (the
"Redemption Price"); provided, however, that such shares shall not be redeemable
prior to October 31, 1995, unless the last sale price of the Common Stock as
reported on NASDAQ National Market System (or the average of closing bid and
asked quotations of the Common Stock if the principal market for the Common
Stock is at that time a market for which the last sale price is not reported)
shall have equaled or exceeded 140% of the conversion price then in effect for
at least 20 trading days during a 30 trading day period ending within 5 days
prior to the date notice of redemption is given. As used in this paragraph 4,
the term "conversion price" shall mean the quotient obtained by dividing $8.00
by the conversion rate then in effect as determined in accordance with paragraph
5 and the term "trading day" shall mean a calendar day on which both securities
markets in the United States are generally open and a last sale price of the
Common Stock is reported on the NASDAQ National Market System (or a closing bid
and asked quotation of the Common Stock is reported if the principal market
for the Common Stock is at that time a market for which the last sale price is
not reported.)
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<PAGE>
<TABLE>
<CAPTION>
If redeemed in the
12-month period Then the Redemption
beginning October 31, Price shall be
- --------------------- -------------------
<S> <C>
1992 $ 9.20
1993 8.90
1994 8.60
1995 8.30
1996 and thereafter 8.00
</TABLE>
plus in each case an amount equal to the accumulated and unpaid dividends
thereon (whether or not such dividends shall have been declared and whether or
not there shall be any funds legally available for the payment of dividends), to
and including the date fixed for redemption; provided, however, that less than
all of the Series A Preferred Stock then outstanding may be redeemed only after
full cumulative dividends to the end of the then current dividend period upon
all shares of Series A Preferred Stock and Parity Stock then outstanding (other
than the shares to be redeemed) shall have been paid or declared and set aside
for payment.
In the event that the Corporation shall determine to redeem less than all
of the outstanding shares of Series A Preferred Stock, the method by which the
shares of Series A Preferred Stock are to be redeemed may be by lot, pro rata or
any other means which the Board of Directors shall determine to be equitable,
and the Certificate of the Secretary of the Corporation filed with the
Corporation or with the transfer agent for the Series A Preferred Stock to be
redeemed setting forth the determination of the Board of Directors shall be
conclusive as to the shares redeemed and the method by which they were
determined.
Notice of any proposed redemption of Series A Preferred Stock shall be
given by the Corporation by first class mail, postage prepaid, at least thirty
(30) days and not more than sixty (60) days prior to the date fixed for such
redemption, to the holders of record of the shares of Series A Preferred Stock
to be redeemed at their respective addresses appearing on the books of the
Corporation. Any notice which is mailed as herein provided shall be conclusively
presumed to have been duly given, whether or not the holder receives such
notice, and failure to give such notice by mail, or any defect in such notice,
to the holders of any shares designated for redemption shall not affect the
validity of the proceedings for the redemption of any other shares of Series A
Preferred Stock. If less than all of the shares of Series A Preferred Stock
owned by a holder are to be redeemed, the notice shall also specify the number
of shares and the certificate numbers thereof which are to be redeemed.
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<PAGE>
On and after the date fixed in any notice of redemption as the date of
redemption (unless default shall be made by the Corporation in providing money
for the payment of the aggregate Redemption Price and any accrued and unpaid
dividends of the shares of Series A Preferred Stock to be redeemed), or if the
Corporation shall so elect, on and after the date (which date shall be the date
of redemption or prior thereto) on which the Corporation shall deposit, separate
and apart from its other funds in trust for the pro rata benefit of the holders
of the Series A Preferred Stock so called for redemption so as to be and
continue to be available therefor, with a bank or trust company (other than a
subsidiary of the Corporation) doing business in the State of New Jersey or the
Commonwealth of Pennsylvania, as "Paying Agent", money sufficient in amount to
pay, at the office of the Paying Agent on the redemption date, the aggregate
Redemption Price of the shares of Series A Preferred Stock to be redeemed and
any accrued and unpaid dividends thereon to date of redemption (provided the
notice of redemption shall state the name and address of the Paying Agent and
the intention of the Corporation to deposit said money on or before the date of
redemption with the Paying Agent), all dividends on the Series A Preferred Stock
called for redemption shall cease to accrue as of the date of redemption, and,
notwithstanding that any certificate for shares of Series A Preferred Stock so
called for redemption shall not have been surrendered for cancellation, the
shares represented thereby shall no longer be deemed outstanding and all rights
of the holders thereof as shareholders of the Corporation (including without
limitation the Common Stock Purchase Rights pursuant to paragraph 6 herein)
shall cease and terminate, except the right to receive from the Corporation or
Paying Agent, as the case may be, the Redemption Price and any accrued and
unpaid dividends as provided herein and the right to convert or exchange shares
thereof for shares of the Common Stock pursuant to paragraph 5 herein, which
right of conversion or exchange shall terminate on the date of redemption and
the right to exercise the Common Stock Purchase Rights pursuant to paragraph 6
herein, which right to purchase Common Stock shall terminate on the date of
redemption. At any time on or after the redemption date, or if the Corporation
shall deposit the money for such redemption prior to the redemption date, then
at any time on or after the date of deposit, the respective holders of record of
the Series A Preferred Stock to be redeemed shall be entitled to receive the
Redemption Price plus any accrued and unpaid dividends upon actual delivery to
the Corporation or the Paying Agent, as the case may be, of certificates for the
shares to be redeemed, such certificates, if required, to be duly endorsed in
blank. Any money deposited with the Paying Agent which remains unclaimed by the
holders of shares of Series A Preferred Stock called for redemption at the end
of five (5) full calendar years after the redemption date shall be paid by the
Paying Agent to the Corporation, and thereafter the holders of the shares of the
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<PAGE>
Series A Preferred Stock called for redemption shall look only to the
Corporation for payment.
5. Conversion.
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(a) The Series A Preferred Stock shall, at any time, be convertible
at the option of the respective holders thereof at the office of the Corporation
or, if the Corporation has a transfer agent for the Series A Preferred Stock, at
the office of such transfer agent, into fully paid and nonassessable shares of
Common Stock at the rate of one share of Common Stock for each share of Series A
Preferred Stock surrendered for conversion; provided, however, that in the case
of a call for redemption of any shares of the Series A Preferred Stock, the
rights of a holder to convert pursuant to this paragraph 5 shall cease, as to
the shares designated for redemption, at the close of business on the date fixed
for such redemption; provided further, that in the event of default in payment
of the aggregate Redemption Price and any accrued (including, without
limitation, dividends declared and set apart for payment but not paid) and
unpaid dividends of the shares of Series A Preferred Stock called for
redemption, the right of a holder to convert pursuant to this paragraph 5 shall
be reinstated. Upon conversion by a holder pursuant to this paragraph 5, the
Corporation shall make no payment or adjustment on account of dividends accrued
(including, without limitation, dividends declared and set apart for payment but
not paid) or in arrears on the shares of the Series A Preferred Stock
surrendered for such conversion.
(b) Each conversion of a share or shares of Series A Preferred Stock
shall be effected by surrender of the certificate or certificates representing
the shares to be converted, duly endorsed to the Corporation or in blank (and if
requested by the Corporation or transfer agent, with all signatures guaranteed),
at the principal office of the Corporation or transfer agent (or such other
office or agency of the Corporation as the Corporation may designate by notice
in writing to the holders of the Series A Preferred Stock) at any time during
its usual business hours, together with written notice to the Corporation or the
transfer agent that the holder elects to convert the shares or a stated number
of shares, represented by such certificate or certificates, which notice shall
state the name or names (with addresses) in which the holder wishes the
certificate or certificates for Common Stock to be issued. The Corporation
shall, as soon as practicable thereafter, issue and deliver by registered or
certified mail, addressed to the person for whose account surrender of the share
or shares of Series A Preferred Stock was made at such person's last known
address according to the records of the Corporation, or to his nominee or
nominees, certificates for the number of full shares of Common Stock to which he
shall be entitled, together with a cash adjustment in respect of any fraction of
a share as provided in clause (vii) of
<PAGE>
subparagraph (c) hereof if not convertible into a number of whole shares.
Conversion shall be deemed to have been made as of the date of surrender of the
share or shares of Series A Preferred Stock to be converted and of notice to the
Corporation or the transfer agent, and the person or persons entitled to receive
the Common Stock issuable upon conversion shall be treated for all purposes as
the record holder or holders of such Common Stock on such date. Unless otherwise
required by law, the stock transfer books of the Corporation for the Series A
Preferred Stock shall not be closed at any time so long as any of the shares of
Series A Preferred Stock are outstanding, but this shall not prevent the fixing
of a record date.
(c) The number of shares of Common Stock into which the shares of
Series A Preferred Stock shall be convertible shall be subject to adjustment as
follows:
(i) In case the Corporation shall (A) declare a dividend on its
Common Stock in shares of its capital stock, (B) subdivide its outstanding
shares of Common Stock, (C) combine its outstanding shares of Common Stock
into a smaller number of shares, or (D) issue, by reclassification of its
shares of Common Stock (including any such reclassification in connection
with a consolidation or merger in which the Corporation is the continuing
corporation), any shares of stock of the Corporation, the conversion rate
in effect at the time of the record date for such dividend or of the
effective date of such subdivision, combination or reclassification shall
be proportionately adjusted so that the holder of any Series A Preferred
Stock surrendered for conversion after such date shall be entitled to
receive upon the conversion of such shares, the number and kind of shares
which he would have owned or have been entitled to receive after the
happening of any of the events described herein had such Series A Preferred
Stock been converted immediately prior to such date. Such adjustment shall
be made successively whenever any event listed above shall occur.
(ii) In case the Corporation shall fix a record date for the
issuance of rights or warrants to all holders of its Common Stock entitling
them to subscribe for or purchase shares of Common Stock at a price per
share less than the current market price per share of Common Stock (as
defined in clause (iv) below) on such record date, the number of shares of
Common Stock into which each share of Series A Preferred Stock shall be
convertible after such record date shall be determined by multiplying the
number of shares of Common Stock into which each such share of Series A
Preferred Stock was convertible immediately prior to such record date by a
fraction, of which the numerator shall be the number of shares of Common
Stock outstanding on such record date plus the number of additional shares
of Common
<PAGE>
Stock offered for subscription or purchase, and of which the denominator shall
be the number of shares of Common Stock outstanding on such record date plus the
number of shares of Common Stock which the aggregate offering price of the total
number of shares so offered would purchase at such current market price. For the
purpose of this clause (ii), the issuance of rights or warrants to subscribe for
or to purchase stock or securities convertible into shares of Common Stock shall
be deemed to be the issuance of rights or warrants to purchase the shares of
Common Stock into which such stock or securities are convertible at an aggregate
offering price of such stock or securities plus the minimum aggregate amount (if
any) payable upon the conversion of such stock or securities into Common Stock.
Such adjustment shall be made successively whenever such a record date is fixed;
and in the event that such rights or warrants are not so issued, the conversion
rate shall again be adjusted to be the conversion rate which would then be in
effect if such record date had not been fixed. Notwithstanding the above, the
granting of options or rights pursuant to an employee benefit plan adopted by
the Board of Directors of the Corporation shall not constitute an event
requiring an adjustment under this subparagraph (c).
(iii) In case the Corporation shall fix a record date for the making of
a distribution to holders of its Common Stock (including any such distribution
made in connection with a consolidation or merger in which the Corporation is
the continuing corporation, but excluding any such distribution made in
connection with the liquidation, dissolution or winding up of the Corporation,
whether voluntary or involuntary), which distribution is not made ratably to the
holders of the Series A Preferred Stock, of evidences of its indebtedness or
assets (excluding cash dividends to the extent payable as such under applicable
law) or subscription rights or warrants (excluding those referred to in clause
(ii) above) and the aggregate fair market value of such evidences of
indebtedness or assets or subscription rights or warrants on such record date is
greater than the consideration received therefore, the number of shares of
Common Stock into which each share of Series A Preferred Stock shall be
convertible after such record date be determined by multiplying the number of
shares of Common Stock into which each such share of Series A Preferred Stock
was convertible immediately prior to such record date by a fraction, of which
the numerator shall be the current market value per share of Common Stock on
such record date, and of which the denominator shall be such current market
value per share of Common Stock plus the consideration (if any) paid by the
holder of the Common Stock for such portion of the assets or evidences of
indebtedness distributed or subscription rights or warrants
-8-
<PAGE>
applicable to one share of Common Stock less the fair market value of the
portion of the assets or evidences of indebtedness so distributed or of such
subscription rights or warrants applicable to one share of Common Stock. Such
adjustment shall be made successively whenever such a record date is fixed; and
in the event that such distribution is not so made, the conversion rate shall
again be adjusted to be the conversion rate which would then be in effect if
such record date had not been fixed.
(iv) For the purpose of any computation under clauses (ii) and (iii) above
and clause (vii) below, the current market price per share of Common Stock at
any date shall be the average of the daily closing prices for such stock for
fifteen consecutive trading days commencing twenty trading days before the date
of such computation. The closing price for the Common Stock for a day shall be
the closing price as reported in a national edition of the Wall Street Journal
-------------------
or, in case no reported sale takes place on such day, the average of the closing
bid and asked prices for such day quoted in a national edition of the Wall
----
Street Journal, in each case on the principal national securities exchange on
- -------------
which shares of Common Stock are listed or admitted to trading or, if not listed
or admitted to trading, the average of the closing bid and asked prices for the
Common Stock in the over-the-counter market as reported by NASDAQ or any
comparable system. In the absence of one or more such quotations for a day, the
Corporation shall determine the closing price for such day on the basis of such
quotations as it considers appropriate.
(v) No adjustment in the conversion rate shall be required unless such
adjustment would require an increase or decrease of at least 1% in such rate;
provided, however, that any adjustments which by reason of this clause (v) are
not required to be made shall be carried forward and taken into account in any
subsequent adjustment. All calculations under this subparagraph (c) shall be
made to the nearest one-hundredth of a share.
(vi) For the purposes of this subparagraph (c), the term "Common Stock"
shall mean (A) the class of stock designated as the Common Stock of the
Corporation at the date of initial issuance of Series A Preferred Stock or (B)
any other class of stock resulting from successive changes or reclassifications
of such Common Stock consisting solely of changes in par value, or from par
value to no par value, or from no par value to par value. If, at any time, as a
result of an adjustment made pursuant to clause (i) above, the holder of any
share of Series A Preferred Stock thereafter surrendered for conversion shall
become entitled to receive any shares of the Corporation other than shares
-9-
<PAGE>
of its Common Stock, the number of such other shares so receivable upon
conversion of any share of Series A Preferred Stock shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent
as practicable to the provisions with respect to the Common Stock contained
in clauses (i) through (v), inclusive, above, and the provisions of clauses
(vii) and (viii) inclusive, below, with respect to the Common Stock shall
apply on like terms to any such other shares.
(vii) No fractional shares of Common Stock shall be issued upon
conversion. In lieu of the issuance of fractional shares, a cash adjustment
will be paid to each holder of Series A Preferred Stock in respect of any
fraction of a share to which such holder becomes entitled pursuant to this
paragraph 5, which cash adjustment shall be equal to an amount determined
by multiplying such fraction by the current market price as of the date of
conversion (as defined in clause (iv) above) for a share of Common Stock).
(viii) In case of any consolidation of the Corporation with, or
merger of the Corporation into, any other corporation (other than a
consolidation or merger in which the Corporation is the continuing
corporation), or in case of any sale or transfer of all or substantially
all of the assets of the Corporation, the holder of each share of Series A
Preferred Stock then outstanding shall have the right thereafter to convert
such share into the kind and amount of shares of stock and other securities
and property and other consideration receivable upon such consolidation,
merger, sale or transfer by a holder of the number of shares of Common
Stock into which such shares of Series A Preferred Stock might have been
converted immediately prior to such consolidation, merger, sale or
transfer.
(ix) If any event occurs of the type contemplated by the provisions
of this subparagraph (c) which is not expressly provided for or adequately
covered by such provisions, then the Board of Directors will make an
appropriate adjustment in the conversion rate so as to protect the rights
of the holders of the Series A Preferred Stock. The Corporation may make
such adjustments in the conversion rate, in addition to those required
above, as it considers to be advisable in order that any event treated for
Federal income tax purposes as a dividend of stock or stock rights shall
not be taxable to the recipients.
(x) The Corporation shall at all times reserve and keep available out
of its authorized but unissued Common Stock, solely for the purpose of
effecting the conversion of the shares of Series A Preferred Stock, the
full number of shares of Common Stock deliverable upon conversion of all
<PAGE>
shares of the Series A Preferred Stock from time to time to time
outstanding. The Corporation shall from time to time, in accordance with
the laws of the State of New Jersey, increase the authorized number of
shares of its Common Stock if at any time the number of shares of Common
Stock remaining unissued shall not be sufficient to permit the conversion
of all the then outstanding Series A Preferred Stock.
(xi) Whenever the number of shares of Common Stock deliverable
upon the conversion of each share of Series A Preferred Stock shall be
adjusted pursuant to the provisions of this subparagraph (c), the
Corporation shall promptly, (A) make available at the principal office of
the Corporation or transfer agent a statement, signed by the Chairman of
the Board or the President or a Vice-President of the Corporation, setting
forth, in reasonable detail, the adjustment and the method of calculation
and the facts requiring such adjustment, and (B) mail to all holders of
shares of Series A Preferred Stock, at their last addresses as they shall
appear upon the books of the Corporation, a notice of such adjustment which
sets forth the adjusted number of shares of Common Stock deliverable upon
the conversion of each share of Series A Preferred Stock.
(d) The Corporation shall pay any and all issue and other taxes that
may be payable in respect of any issue or delivery of shares of Common Stock on
conversion of shares of the Series A Preferred Stock pursuant hereto. The
Corporation shall not, however, be required to pay any tax that may be payable
in respect of any transfer involved in the issue or delivery of shares of Common
Stock in a name other than that in which the shares of the Series A Preferred
Stock so converted were registered, and no such issue or delivery shall be made
unless and until the person requesting such issue has paid to the Corporation
the amount of any such tax or has established, to the satisfaction of the
Corporation, that such tax has been paid.
6. Common Stock Purchase Rights.
----------------------------
(a) Each full share of Series A Preferred Stock shall entitle the
holder thereof, subject to the provisions of this paragraph 6, to purchase one
fully paid and non-assessable share of Common Stock (the "Common Stock Purchase
Right") at the "Rights Purchase Price" specified in this paragraph 6 on or prior
to 5:00 p.m., New York time on October 31, 1997 (the "Expiration Date");
provided however that in the case of a call for redemption pursuant to paragraph
4 herein of any shares of the Series A Preferred Stock the rights of a holder
to purchase Common Stock pursuant to this paragraph 6 shall cease, as to the
shares designated for redemption, at the close of business on the date fixed for
such redemption; provided further, that in the
<PAGE>
event of a default in the payment of the aggregate Redemption Price of the
shares of Series A Preferred Stock called for redemption, the right of a holder
to purchase Common Stock pursuant to this paragraph 6 shall be reinstated;
provided further, that upon conversion by a holder of Series A Preferred Stock
pursuant to paragraph 5 herein the rights of the holder to purchase Common Stock
pursuant to this paragraph 6 shall cease as to the shares designed for
conversion at the close of business on the date a share or shares of Series A
Preferred Stock are surrendered for conversion as provided in paragraph 5
herein. Any Common Stock Purchase Right not exercised prior to the earlier of
the Expiration Date, the redemption date (as defined in paragraph 4 herein) or
the conversion date (as defined in paragraph 5 herein) shall be void and all
Common Stock Purchase Rights hereunder and all Common Stock Purchase Rights in
respect thereof under this paragraph 6 shall cease at the end of such period.
Subject to adjustment and change as provided in this paragraph 6, the "Rights
Purchase Price" shall be $9.60 per share of Common Stock. The Rights Purchase
Price shall be payable upon the exercise of a Common Stock Purchase Right
pursuant to this paragraph 6, in either cash, cashier's check, certified check,
bank draft, or postal or express money order, payable in United States dollars,
to the order of the Corporation.
(b) The Common Stock Purchase Rights shall be evidenced only by a
legended Series A Preferred Stock Certificate which may be combined, exchanged
or transferred upon the records of the Corporation (or if the Corporation has a
transfer agent, the records of the Corporation's transfer agent) only with the
Series A Preferred Stock and the Common Stock Purchase Rights may not be split
up, combined, exchange or transferred separately upon said records. Each Series
A Preferred Stock certificate shall bear a legend in the following form:
"This Certificate evidencing Series A Preferred Stock entitles the
holder thereof to the Common Stock Purchase Rights set forth in the
terms and conditions of the Series A Preferred Stock which Common
Stock Purchase Right may be combined, exchanged or transferred only
with the shares of Series A Preferred Stock evidenced hereby and such
Common Stock Purchase Rights may not be split up, combined, exchanged
or transferred separately from the shares of Series A Preferred Stock
evidenced hereby."
In the event any Common Stock Purchase Rights are exercised prior to their
expiration, the related Series A Preferred Stock Certificate shall bear an
appropriate legend evidencing the fact that such shares of Series A Preferred
Stock do not entitle the
<PAGE>
holder thereof to the Common Stock Purchase Rights granted pursuant to this
paragraph 6.
(c) An exercise of a Common Stock Purchase Right shall be effected by
the surrender of the Series A Preferred Stock Certificate or Certificates
representing the Common Stock Purchase Rights to be exercised, duly endorsed to
the Corporation or in blank (and if requested by the Corporation or transfer
agent, with all signatures guaranteed), together with the full Rights Purchase
Price at the principal office of the Corporation or transfer agent (or such
other office or agency of the Corporation as the Corporation may designate
by notice in writing to the holders of the Series A Preferred Stock) at any time
during its usual business hours, together with written notice to the Corporation
or the transfer agent that the holder elects to exercise the Common Stock
Purchase Rights and the number of shares of Common Stock desired to be
purchased, which notice shall state the name or names (with addresses) in which
the holder wishes the certificate or certificates for Common Stock to be issued.
The Corporation shall, as soon as practicable thereafter, issue and deliver by
registered or certified mail, addressed to the person for whose account
surrender of the share or shares of Series A Preferred Stock was made at such
person's last known address according to the records of the Corporation, or to
his nominee or nominees, certificates for the number of full shares of Series A
Preferred Stock appropriately legended and Common Stock to which he shall be
entitled herein, together with a cash adjustment in respect of any fraction of a
share of Common Stock as provided herein if any Common Stock Purchase Rights are
not exercisable into a number of whole shares of Common Stock. Exercise of
Common Stock Purchase Rights shall be deemed to have been made as of the date of
surrender of the share or shares of Series A Preferred Stock together with the
full Rights Purchase Price and of notice to the Corporation or the transfer
agent, and the person or persons entitled to receive the Common Stock issuable
upon exercise shall be treated for all purposes as the record holder or holders
of such Common Stock on such date. Unless otherwise required by law, the stock
transfer book of the Corporation for the Series A Preferred Stock and Common
Stock shall not be closed at any time so long as any of the shares of Series A
Preferred Stock are outstanding, but this shall not prevent the fixing of a
record date.
(d) The Rights Purchase Price and number of shares of Common Stock
issuable upon exercise of the Common Stock Purchase Rights shall be subject to
adjustment as follows:
(i) If the Corporation:
(1) pays a dividend or makes a distribution on its Common
Stock in shares of its Common Stock;
<PAGE>
(2) subdivides its outstanding shares of Common Stock into a
greater number of shares;
(3) combines its outstanding shares of Common Stock into a
smaller number of shares;
(4) makes a distribution on its Common Stock in shares of its
capital stock other than Common Stock; or
(5) issues by reclassification of its Common Stock any shares
of its capital stock;
then the Rights Purchase Price in effect immediately prior to such action shall
be proportionately adjusted (in conjunction with the adjustment provided for in
subparagraph (vii) hereof) so that the holder of any Common Stock Purchase Right
thereafter exercised may receive the aggregate number and kind of shares of
capital stock of the Corporation which he would have owned immediately following
such action if such Common Stock Purchase Right had been exercised immediately
prior to such action.
The adjustment shall become effective immediately after the record date in
the case of a dividend or distribution and immediately after the effective date
in the case of a subdivision, combination or reclassification.
If after an adjustment a holder of a Common Stock Purchase Right upon
exercise of it may receive shares of two or more classes of capital stock of the
Corporation, the Corporation's Independent Public Accountants shall determine
the allocation of the adjusted Rights Purchase Price between the classes of
capital stock. After such allocation, the exercise privilege and the Right
Purchase Price of each class of capital stock shall thereafter be subject to
adjustment on terms comparable to those applicable to Common Stock in this
subparagraph 6(d).
Such adjustment shall be made successively whenever any event listed above
shall occur.
(ii) If the Corporation distributes any rights, options or warrants
to all holders of its Common Stock entitling them to purchase shares of Common
Stock at a price per share less than the current market price per share on that
record date, the Rights Purchase Price shall be adjusted in accordance with the
formula:
O + N x P
-----
E'= E x M
---------
O + N
-14-
<PAGE>
where:
E' = the adjusted Rights Purchase Price.
E = the current Rights Purchase Price.
O = the number of shares of Common
Stock outstanding on the record
date.
N = the number of additional shares of
Common Stock offered.
P = the offering price per share of the
additional shares.
M = the current market price per share
of Common Stock on the record date.
The adjustment shall be made successively whenever any such rights, options
or warrants are issued and shall become effective immediately after the record
date for the determination of shareholders entitled to receive the rights,
options or warrants.
(iii) If the Corporation distributes to all holders of its Common
Stock any of its assets or debt securities or any rights or warrants to purchase
debt securities, assets or other securities of the Corporation, the Rights
Purchase Price shall be adjusted in accordance with the formula:
E' = E x M - F
-------
M
where:
E' = the adjusted Rights Purchase Price.
E = the current Rights Purchase Price.
M = the current market price per share
of Common Stock on the record date
mentioned below.
F = the fair market value on the record
date of the assets, securities,
rights or warrants applicable to
one share of Common Stock. The
Corporation's Independent Public
Accountants shall determine the
fair market value.
<PAGE>
The adjustment shall be made successively whenever any such distribution is
made and shall become effective immediately after the record date for the
determination of shareholders entitled to receive the distribution.
This subparagraph (iii) does not apply to cash dividends paid out of
consolidated current or retained earnings as shown on the books of the
Corporation prepared in accordance with generally accepted accounting principles
consistently applied. Also, this subparagraph does not apply to rights, options
or warrants referred to in subparagraph (ii) of this paragraph 6(d).
(iv) If the Corporation issues shares of Common Stock for a
consideration per share less than the current market price per share on the date
the Corporation fixes the offering price of such additional shares, the Rights
Purchase Price shall be adjusted in accordance with the formula:
P
-
E' = E x O + M
-----
A
where:
E' = the adjusted Rights Purchase Price.
E = the current Rights Purchase Price.
O = the number of shares outstanding immediately
prior to the issuance of such additional
shares.
P = the aggregate consideration received for
the issuance of such additional shares.
M = the current market price per share on the
date of issuance of such additional shares.
A = the number of shares outstanding immediately
after the issuance of such additional shares.
The adjustment shall be made successively whenever any such issuance is
made, and shall become effective immediately after such issuance.
-16-
<PAGE>
This subparagraph (iv) does not apply to:
(1) any of the transactions described in subparagraphs (ii) and (iii)
of this paragraph 6(d);
(2) the exercise of Common Stock Purchase Rights, or the conversion
or exchange of other securities convertible or exchangeable for Common
Stock;
(3) Common Stock issued to shareholders of any person which mergers
into the Corporation in proportion to their stock holdings of such person
immediately prior to such merger, upon such merger;
(4) Common Stock issued or sold upon the exercise of options granted
or to be granted to employees of the Corporation;
(5) Common Stock issued upon the conversion of the Series A Preferred
Stock; or
(6) Common Stock issued in a bona fide public offering pursuant to a
firm commitment underwriting.
(v) If the Corporation issues any securities convertible into or
exchangeable for Common Stock (other than securities issued in transactions
described in subparagraphs (ii) and (iii) of this paragraph 6(d)) for a
consideration per share of Common Stock initially deliverable upon conversion or
exchange of such securities less than the current market price per share on the
date of issuance of such securities, the Rights Purchase Price shall be adjusted
in accordance with this formula:
P
-
E' = E x O + M
-------
O + D
where:
E' = the adjusted Rights Purchase Price.
E = the then current Rights Purchase Price.
O = the number of shares outstanding
immediately prior to the issuance
of such securities.
P = the aggregate consideration
received for the issuance of such
securities.
<PAGE>
M = the current market price per share
on the date of issuance of such
securities.
D = the maximum number of shares
deliverable upon conversion or in
exchange for such securities at the
initial conversion or exchange
rate.
The adjustment shall be made successively whenever any such issuance is
made, and shall become effective immediately after such issuance.
This subparagraph (v) does not apply to:
(1) convertible securities issued to shareholders of any person which
mergers into the Corporation, or with a subsidiary of the Corporation, in
proportion to their stock holdings of such person immediately prior to such
merger, upon such merger; or
(2) convertible securities issued in a bona fide public offering pursuant
to a firm commitment underwriting.
(vi) For purposes of any computation respecting consideration
received pursuant to subparagraphs (iv) and (v) of this paragraph 6(d), the
following shall apply:
(1) in case of the issuance of shares of Common Stock for cash, the
consideration shall be the amount of such cash, provided that in no case shall
any deduction be made for any commissions, discounts or other expenses incurred
by the Corporation for any underwriting of the issue or otherwise in connection
therewith;
(2) in the case of the issuance of shares of Common Stock for a
consideration in whole or in part other than cash, the consideration other than
cash shall be deemed to be the fair market value thereof as determined in good
faith by the Corporation's Independent Public Accountants (irrespective of the
accounting treatment thereof), whose determination shall be conclusive, and
described in a report of the Corporation's Independent Public Accountant which
shall be filed with the Corporation; and
(3) in the case of the issuance of securities convertible into or
exchangeable for shares, the aggregate consideration received therefor shall be
deemed to be the consideration received by the Corporation for the issuance of
such securities plus the additional minimum consideration, if
-18-
<PAGE>
any, to be received by the Corporation upon the conversion or exchange thereof
(the consideration in each case to be determined in the same manner as provided
in clauses (1) and (2) of this subparagraph).
(vii) Upon each adjustment of the Rights Purchase Price pursuant to
this paragraph 6(d), each Common Stock Purchase Right outstanding prior to the
making of the adjustment in the Rights Purchase Price shall thereafter evidence
the right to receive upon payment of the adjusted Rights Purchase Price that
number of shares of Common Stock (calculated to the nearest hundredth) obtained
from the following formula:
N' = N x E
---
E'
where:
N' = the adjusted number of shares of Common
Stock issuable upon exercise of a Common
Stock Purchase Right by payment of the
adjusted Rights Purchase Price.
N = the number of shares of Common Stock
previously issuable upon exercise of
a Common Stock Purchase Right by
payment of the Rights Purchase Price
prior to adjustment.
E' = the adjusted Rights Purchase Price.
E = the Rights Purchase Price prior to adjustment.
(viii) For the purpose of any computation under subparagraphs (i)
through (v) above and subparagraph (xi) below, the current market price per
share of Common Stock at any date shall be the average of the daily closing
prices for such stock for fifteen consecutive trading days commencing twenty
trading days before the date of such computation. The closing price for the
Common Stock for a day shall be the closing price as reported in a national
edition of the Wall Street Journal or, in case no reported sale takes place on
-------------------
such day, the average of the closing bid and asked prices for such day quoted in
a national edition of the Wall Street Journal, in each case on the principal
-------------------
national securities exchange on which shares of Common Stock are listed or
admitted to trading or, if not listed or admitted to trading, the average of the
closing bid and asked prices for the Common stock in the over-the-counter market
as reported by NASDAQ or any comparable system. In the absence of one or more
such quotations for a day, the Corporation shall determine the closing price for
-19-
<PAGE>
such day on the basis of such quotations as it considers appropriate.
(ix) Anything in this subparagraph (d) to the contrary
notwithstanding, no adjustment of the Rights Purchase Price shall be
required unless such adjustment would require an increase or decrease of at
least $.10 per share; provided, however, that any adjustments which by
reason of this subparagraph are not required to be made shall be carried
forward and taken into account in any subsequent adjustment. All
calculations under this paragraph shall be made to the nearest cent or to
the nearest one-hundredth of a share, as the case may be, but in no event
shall the Corporation be obligated to issue fractional shares upon the
exercise of any Common Stock Purchase Rights.
(x) For the purpose of this subparagraph (d), the term "Common Stock"
shall mean (a) the class of stock designated as the Common stock of the
Corporation at the date of initial issuance of the Series A Preferred Stock
or (B) any other class of stock resulting from successive changes or
reclassifications of such Common Stock consisting solely of changes in par
value, or from par value to no par value, or from no par value to par
value. If, at any time, as a result of an adjustment made pursuant to
subparagraph (i) above, the holder of any share of Series A Preferred Stock
thereafter surrendered for exercise of a Common Stock Purchase Right shall
become entitled to receive any shares of the Corporation other than shares
of its Common Stock, the number of such other shares so receivable upon
exercise of a Common Stock Purchase Right with respect to any share of
Series A Preferred Stock shall be subject to adjustment from time to time
in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Common Stock contained in clauses (i)
through (v), inclusive, above, and the provisions of clauses (xi) and (xii)
inclusive, below.
(xi) No fractional shares of Common Stock shall be issued upon
exercise of the Common Stock Purchase Rights. In lieu of the issuance of
fractional shares, a cash adjustment will be paid to each holder of Series
A Preferred Stock in respect of any fraction of a share to which such
holder becomes entitled pursuant to this paragraph 6, which cash adjustment
shall be equal to an amount determined by multiplying such fraction by the
current market price (as defined in subparagraph (viii) above) for a share
of Common Stock.
(xii) If any capital reorganization or reclassification of the
capital stock of Corporation, or consolidation or merger of Corporation
with or into another corporation, or the sale of all or substantially all
of its assets to another corporation shall be effected, then, as a
condition of such reorganization, reclassification,
-20-
<PAGE>
consolidation, merger or sale, lawful and adequate provision shall be made
whereby the holder of each Common Stock Purchase Right then outstanding shall
thereafter have the right to purchase and receive on exercise of such Common
Stock Purchase Right upon the basis and upon the terms and conditions specified
in this paragraph 6 and in lieu of the shares of the Common Stock of the
Corporation immediately theretofore purchasable and receivable upon the exercise
of such Common Stock Purchase Right, such shares of stock, securities or assets
as may be issued or payable with respect to or in exchange for a number of
outstanding shares of such Common Stock equal to the number of shares of such
Common Stock immediately theretofore purchasable and receivable upon the
exercise of such Common Stock Purchase Right had such reorganization,
reclassification, consolidation, merger or sale not taken place, and in any such
case appropriate provision shall be made with respect to the rights and
interests of the holders of the Common Stock Purchase Rights to the end that the
provisions of this paragraph 6 (including, without limitation, provisions for
adjustment of the Rights Purchase Price and of the number of shares issuable
upon the exercise of Common Stock Purchase Rights) shall thereafter be
applicable as nearly as may be practicable in relation to any shares of stock,
securities, or assets thereafter deliverable upon exercise of Common Stock
Purchase Rights. The Corporation shall not effect any such consolidation, merger
or sale, unless, prior to or simultaneously with the consummation thereof, the
successor corporation (if other than the Corporation) resulting from such
consolidation or merger or the corporation purchasing such assets shall assume,
by written instrument, the obligation to deliver to the holder of each Common
Stock Purchase Right such shares of stock, securities or assets as, in
accordance with the foregoing provisions, such holders may be entitled to
purchase.
(xiii) If any event occurs of the type contemplated by the
provisions of this subparagraph (d) which is not expressly provided for or
adequately covered by such provisions, then the Board of Directors will make an
appropriate adjustment in the Rights Purchase Price and the number of shares
issuable upon the exercise of Common Stock Purchase Rights so as to protect the
rights of the holders of the Series A Preferred Stock. The Corporation may make
such adjustments in the Rights Purchase Price and the number of shares issuable
upon the exercise of Common Stock Purchase Rights, in addition to those required
above, as it considers to be advisable in order than any event treated for
Federal income tax purposes as a dividend of stock or stock rights shall not be
taxable to the recipients.
(xiv) The Corporation shall at all times reserve and keep available
out of its authorized but unissued Common Stock, solely for the purpose of
effecting the issuance of the shares of Common Stock upon the exercise of Common
Stock Purchase Rights, the full number of shares of Common Stock
-21-
<PAGE>
deliverable upon exercise of all Common Stock Purchase Rights from time to time
outstanding. The Corporation shall from time to time, in accordance with the
laws of the State of New Jersey, increase the authorized number of shares of its
Common Stock if at any time the number of shares of Common Stock remaining
unissued shall not be sufficient to permit the exercise of all the then
outstanding Common Stock Purchase Rights.
(e) The Corporation shall have the option to change the Rights
Purchase Price, at any time and from time to time by decreasing (any number of
times) the Rights Purchase Price then in effect, for such period or periods of
time as the Corporation may determine; provided, however, that the Rights
Purchase Price then in effect may not be decreased to a price more than $3.00
lower than the Rights Purchase Price which would have been in effect had there
been no prior decrease in the Rights Purchase Price pursuant to this
subparagraph (e). For the purposes of this subparagraph (e), the following
provisions (i) to (iv) shall be applicable:
(i) The election of the Corporation to decrease the Rights
Purchase Price shall be evidenced by a resolution of Corporation's Board of
Directors, certified by the Secretary or any Assistant Secretary of Corporation.
Such resolution shall specify the amount of such decrease, the effective date of
such decrease (herein called the ``Effective Date'') and the date such decrease
is to terminate.
(ii) The Corporation shall prepare and deliver to its Transfer
Agent, at least 50 days prior to the Effective Date of such decrease in the
Rights Purchase Price, a notice (herein called ``Notice of Change'') stating:
(1) The Rights Purchase Price then in effect,
(2) The amount of such decrease,
(3) The Effective Date, and
(4) The date such decrease in the Rights
Purchase Price is to terminate.
(iii) The Corporation or its transfer agent shall, not less than
40 days prior to the Effective Date, mail a copy of the Notice of Change by
first class mail, postage prepaid, to each registered holder of Series A
Preferred Stock.
(iv) No adjustment (or readjustment) in the Rights Purchase
Price pursuant to the provisions of subparagraph (d) of this paragraph 6 shall
cause any adjustment in the $3.00 maximum amount by which the Rights
<PAGE>
Purchase Price may be decreased pursuant to the provisions of this
subparagraph (e) of paragraph 6.
(f) The Corporation may retain the independent public accounting firm
regularly retained by the Corporation, or another firm of independent
public accountants selected by the Corporation's Board of Directors, to
make any computation required under this paragraph 6, and a Certificate
signed by such firm shall be conclusive evidence of the correctness of any
computation made under this paragraph 6.
(g) Whenever there is an adjustment in the Rights Purchase Price or
in the number or kind of securities issuable upon exercise of the Common
Stock Purchase Rights, or both, as provided in this paragraph 6, the
Corporation shall (a) promptly file with the transfer agent a certificate
signed by the Chairman of the Board, President or a Vice President of the
Corporation and by the Treasurer or an Assistant Treasurer or the
Secretary or an Assistant Secretary of the Corporation, showing in detail
the facts requiring such adjustment and the Rights Purchase Price, and
number and kind of securities issuable upon exercise of each Common Stock
Purchase Right after such adjustment; and (b) cause a notice stating that
such adjustment has been effected and stating the Rights Purchase Price
then in effect and the number and kind of securities issuable upon exercise
of each Common Stock Purchase Right to be sent by first class mail, postage
prepaid, to each registered holder of Series A Preferred Stock at his
address as it appears on the Series A Preferred Stock Register. The
transfer agent shall have no duty with respect to any such certificate
filed with it except to keep the same on file and available for inspection
by registered holders of Series A Preferred Stock during reasonable
business hours. The transfer agent shall not at any time be under any duty
or responsibility to any holder of Series A Preferred Stock to determine
whether any facts exist which may require any adjustment of the Rights
Purchase Price or the number or kind of securities issuable upon the
exercise of Common Stock Purchase Rights, or with respect to the nature or
extent of any such adjustment when made, or with respect to the method
employed in making any such adjustment, and shall not be deemed to have
knowledge of any adjustment unless and until it receives a certificate of
the Corporation.
(h) If more than one Series A Preferred Stock Certificate shall be
surrendered for exercise of the Common Stock Purchase Rights represented
thereby at any one time by the same registered holder, the number of shares
of Common Stock which shall be issuable upon exercise thereof shall be
computed on the basis of the aggregate number of shares of Common Stock
issuable on such exercise.
-23-
<PAGE>
(i) Nothing contained in this paragraph 6 shall be construed as
conferring upon the holders of the Common Stock Purchase Rights, in such
capacity, the right to vote or to consent or to receive notice as shareholders
of Common Stock in respect of the meetings of shareholders or the election of
Directors of the Corporation or any other matter or any rights whatsoever as
shareholders of Common Stock of the Corporation.
(j) The Corporation shall pay any and all issue and other taxes that
may be payable in respect of any issue or delivery of shares of Common Stock on
exercise of a Common Stock Purchase Right pursuant hereto. The Corporation shall
not, however, be required to pay any tax that may be payable in respect of any
transfer involved in the issue or delivery of shares of Common Stock in a name
other than that in which the shares of the Series A Preferred Stock were
registered, and no such issue or delivery shall be made unless and until the
person requesting such issue has paid to the Corporation the amount of any such
tax or has established, to the satisfaction of the Corporation, that such tax
has been paid.
7. Voting Rights.
-------------
(a) Except as otherwise set forth in this resolution and except in
statutory proceedings in which, and then only to the extent to which, their vote
is at the time required by law, the holders of shares of Series A Preferred
Stock shall have no right to vote at, to participate in, or to receive any
notice of any meeting of the shareholders of the Corporation. On any matter on
which the holders of Series A Preferred Stock shall be entitled to vote, they
shall be entitled to one vote for each share held.
(b) If and whenever full cumulative dividends on the Series A
Preferred Stock shall be in default for six non-consecutive quarterly dividend
periods or more, or four consecutive quarterly dividend periods or more, the
holders of Series A Preferred Stock shall be entitled to notice of all meetings
of the shareholders of the Corporation and to full voting rights (together with
holders of Common Stock but not as separate class unless otherwise required by
law) at all meetings and on all matters including, without limitation, the
election of directors of the Corporation, and each holder of shares of Series A
Preferred Stock shall be entitled to one vote for each full share of Common
Stock into which the aggregate number of shares of Series A Preferred Stock are
convertible as of the record date for such vote. At such time as all defaults in
such dividends shall have been cured and the dividend on the Series A Preferred
Stock for the then current quarterly dividend period shall have been declared
and paid or set apart for payment, all voting rights of the Series A Preferred
Stock granted by this subparagraph (b) shall terminate.
-24-
<PAGE>
(c) So long as any of the Series A Preferred Stock remains
outstanding, the Corporation will not, either directly or through merger or
consolidation with any other corporation, without the affirmative vote at a
meeting or the written consent with or without a meeting of the holders of at
least sixty-six and two thirds percent (662/3%) in number of the shares of the
Series A Preferred Stock then outstanding voting as a class:
(i) amend, alter or repeal any of the preferences, special
rights or powers of the shares of Series A Preferred Stock or any of the
provisions of the Certificate of Incorporation so as to affect them
adversely,
(ii) authorize any reclassification of the Series A Preferred
Stock, or
(iii) issue any class or classes of the equity securities of the
Corporation which have a dividend payment or liquidation payment preference
equal or superior to the Series A Preferred Stock (including by means of
the reissuance of shares reacquired by the Corporation by repurchase,
redemption or upon conversion).
8. Reissuance of Shares. Shares of Series A Preferred Stock which have
--------------------
been redeemed or purchased, or which have been converted into shares of Common
Stock or shares of stock of any other class or classes, shall have the status of
authorized and unissued shares of preferred stock and may be reissued as part of
the series of which they were originally a part or may be reissued as part of a
new series of the preferred stock to be created by resolution or resolutions of
the Board or as part of any other series of preferred stock, all subject to the
conditions or restrictions on issuance set forth in any resolution or
resolutions adopted by the Board providing for the issue of any series of
preferred stock.
-25-
<PAGE>
I, The Secretary of State of the State of New Jersey, DO HEREBY
CERTIFY that the foregoing is a true copy of CERTIFICATE OF Amendment and the
endorsements thereon, as the same is taken from and compared with the original
filed in my office on the 13th day of October, A.D. 1992 and now remaining on
file and of record therein.
IN TESTIMONY WHEREOF, I have hereunto set my hand and
affixed my Official Seal at Trenton, this day 16th of
October, A.D. 1992
SECRETARY OF STATE
<PAGE>
STATE OF NEW JERSEY
[SEAL]
Department of State.
I, the Secretary of State of the State of New Jersey, do hereby Certify
that the foregoing is a true copy of
---------------------------------------
Certificate of Incorporation and Amendments thereto of:
- ----------------------------------------------------------------------------
INDEPENDENCE BANCORP, INC.
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
<PAGE>
CERTIFICATE OF AMENDMENT
TO THE
CERTIFICATE OF INCORPORATION
OF
INDEPENDENCE BANCORP, INC.
-------------------------
Pursuant to the provisions of Section 14A:7-2 of the New Jersey Statutes,
as amended, relating to the issuance of shares in classes and series, and the
authority conferred on the Board of Directors by the Certificate of
Incorporation to make divisions and determinations with respect to the issuance
of shares in classes or series, Independence Bancorp, Inc. executes the
following certificate of Amendment to its Certificate of Incorporation:
1. The name of the corporation is Independence Bancorp, Inc.
2. A copy of the resolution of the Board of Directors required by Section
14A:7-2 (3) of the New Jersey Statutes, as amended, setting forth
the actions of the Board of Directors and establishing and designating
217,500 shares of Series B Non-Convertible Preferred Stock and
determining the relative rights, preferences and limitations thereof
is attached hereto as Exhibit A.
3. Said resolution was adopted by a vote of a majority of the directors
present at a meeting thereof duly convened and held on March 9, 1995,
at which meeting a quorum was at all times present and voting.
4. The Certificate of Incorporation of Independence Bancorp, Inc. is
hereby amended so that the designation and number of shares of Series
B Non-Convertible Preferred Stock, and the relative rights,
preferences and limitations thereof, are as stated in said resolution.
IN WITNESS WHEREOF, Independence Bancorp, Inc. has caused this Certificate
of Amendment to its Certificate of Incorporation to be signed by its President
this 24th day of March, 1995.
INDEPENDENCE BANCORP, INC.
By: /s/ A. Roger Bosma
------------------------
A. Roger Bosma
President
<PAGE>
EXHIBIT "A"
Resolution of the Board of Directors determining the
designation and number of the Series B
Non-Convertible Preferred Stock, without par value,
and the relative rights, preferences and
limitations thereof.
RESOLVED, that pursuant to the authority expressly granted to and vested in
the Board of Directors of the Corporation (the "Board") by the provisions of
Article Fifth of the Certificate of Incorporation of the Corporation and the
provisions of Section 14A:7-2 of the New Jersey Statutes, as amended, the Board
hereby creates a series of preferred stock, without par value, and determines
the designation and number of shares which constitute such series and the
relative rights, preferences and limitations of such series as follows:
1. Designation and Number of Shares. The series of Preferred Stock shall
--------------------------------
be designated as "Series B Non-Convertible Preferred Stock" (hereinafter called
"Series B Preferred Stock") and shall consist of a total of 217,500 shares
without par value. The stated value of the Series B Preferred Stock shall be
$1.00.
2. Dividends. The holders of the Series B Preferred Stock shall be
---------
entitled to receive nonpreferential dividends in cash, when, as and if declared
by the Board of Directors out of the funds of the Corporation legally available
at the time for the payment of dividends, at the same rate as are declared and
paid to holders of the Corporation's Common Stock. Dividends on each share of
Series B Preferred Stock outstanding shall not be cumulative. Dividends (whether
in cash, stock or otherwise) shall not be declared and paid on the Corporation's
Common Stock without the declaration and payment of equivalent dividends on the
Series B Preferred Stock. Holders of the Series B Preferred Stock shall be
entitled to participate in any dividends or other distributions (whether in
cash, stock or otherwise) declared and paid on or with respect to any Common
Stock ratably with any Common Stock.
3. Liquidation. In the event of the liquidation, dissolution or winding
-----------
up of the Corporation, whether voluntary or involuntary, after all creditors of
the Corporation shall have been paid in full and subject to the rights of the
holders of any stock of the Corporation ranking senior to the Series B Preferred
Stock in respect of distributions upon liquidation, dissolution or winding up of
the Corporation, the holders of the outstanding Series B Preferred Stock shall
be entitled to receive and share ratably with any distribution of assets to be
made to the holders of any Common Stock.
Neither consolidation or merger of the Corporation with any
corporation, nor the sale of all or part of the Corporation's assets for cash,
securities or other property, nor the purchase
<PAGE>
or redemption by the Corporation of any class of stock permitted by the
Certificate of Incorporation or any amendment thereof, shall be deemed a
liquidation, dissolution or winding up of the Corporation. Holders of the Series
B Preferred Stock shall not be entitled, upon the liquidation, dissolution or
winding up of the Corporation, to receive any amounts with respect to such stock
other than the amounts referred to in this paragraph 3.
4. Voting Rights.
-------------
(a) Except as otherwise set forth in this resolution and except in
statutory proceedings in which, and then only to the extent to which, their vote
is at the time required by law, the holders of shares of Series B Preferred
Stock shall have no right to vote at, to participate in, or to receive any
notice of, any meeting of the shareholders of the Corporation including, without
limitation, no right to vote in the election of directors of the Corporation. On
any matter on which the holders of Series B Preferred Stock shall be entitled to
vote, at all meetings and on all matters, they shall vote together with holders
of Common Stock but not as separate class unless otherwise required by law and
they shall be entitled to one vote for each share held.
(b) So long as any of the Series B Preferred Stock remains
outstanding, the Corporation will not, either directly or through merger or
consolidation with any other corporation, without the affirmative vote at a
meeting or the written consent with or without a meeting of the holders of at
least sixty-six and two thirds percent (66 2/3%) in number of the shares of the
Series B Preferred Stock then outstanding voting as a class;
(i) amend, alter or repeal any of the preferences, special rights
or powers of the shares of Series B Preferred Stock or any of the
provisions of the Certificate of Incorporation so as to affect them
adversely,
(iii) authorize any reclassification of the Series B Preferred
Stock.
5. Consolidation, Merger, etc.
---------------------------
(a) The Corporation shall not consummate any merger, consolidation or
similar transaction unless all then outstanding shares of the Series B Preferred
Stock shall be assumed and authorized by the successor or resulting company and,
insofar as possible, such company shall provide that such assumed stock shall
have the same powers, preferences, and relative, participating, optional or
other special rights and the qualifications, limitations or restrictions
thereon, that the Series B Preferred Stock had immediately prior to such
transaction or, in lieu thereof, the outstanding shares of Series B Preferred
Stock shall, without any action on the part of
-2-
<PAGE>
the Corporation or any holder thereof unless otherwise required by law, be
deemed exchanged for or converted into by virtue of such merger, consolidation
or similar transaction, the aggregate amount of stock, securities, cash or other
property (payable in like kind and on the same terms as apply to the holders of
Common Stock) as would be receivable by a holder of an equal number of shares of
Common Stock.
(b) In the event the Corporation shall enter into any agreement
providing for any consolidation or merger or similar transaction described in
paragraph (a) of this Section 5, then the Corporation shall as soon as
practicable thereafter (and in any event at least twenty business days before
consummation of such transaction) give notice of such agreement and the material
terms thereof to each holder of Series B Preferred Stock.
6. Ranking. The Series B Preferred Stock shall rank junior to the
--------
Corporation's Series A 9% Cumulative Convertible Preferred Stock and on parity
with the Corporation's Common Stock as to the payment of dividends and the
distribution of assets on liquidation, dissolution and winding up of the
Corporation, and, unless otherwise provided in the Certificate of Incorporation
of the Corporation, as amended, or a Certificate of Designations relating to a
subsequent series of preferred stock of the Corporation, the Series B Preferred
Stock shall rank junior to all other series of the Corporation's preferred
stock, as to the payment of dividends and the distribution of assets on
liquidation, dissolution or winding up.
7. Reissuance of Shares. Shares of Series B Preferred Stock which have
---------------------
been purchased shall have the status of authorized and unissued shares of
preferred stock and may be reissued as part of the series of which they were
originally a part or may be reissued as part of a new series of the preferred
stock to be created by resolution or resolutions of the Board or as part of any
other series of preferred stock, all subject to the conditions or restrictions
on issuance set forth in any resolution or resolutions adopted by the Board
providing for the issue of any series of preferred stock.
8. Miscellaneous. The shares of Series B Preferred Stock shall not be
--------------
redeemable or convertible.
-3-
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