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OMB APPROVAL
UNITED STATES OMB Number: 3235-0145
SECURITIES AND EXCHANGE COMMISSION Expires: October 31, 1994
Washington, D.C. 20549 Estimated average burden
hours per form .... 14.90
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SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. ------------*
First Inter-Bancorp Inc.
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(Name of Issuer)
Common Stock, par value $1.00 per share,
and Associated Preferred Share Purchase Rights
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(Title of Class of Securities)
32054T
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(CUSIP Number)
James L. Mitchell, Esq.
Executive Vice President, General Counsel and Secretary
First Fidelity Bancorporation
550 Broad Street
Newark, New Jersey 07102
(201) 565-3200
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(Name, Address and Telephone Number of Person Authorized to Receive
Notices and Communications)
January 27, 1994
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ].
Check the following box if a fee is being paid with the statement [x]. (A fee
is not required only if the reporting person: (1) has a previous statement on
file reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
( See Rule 13d-7).
Note: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are to
be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities,
and for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
SCHEDULE 13D
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CUSIP NO. 32054T Page 2 of 16
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
First Fidelity Bancorporation
22-2826775
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a)[ ] (b)[ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS*
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR
2(e) [x]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
New Jersey
7 SOLE VOTING POWER
NUMBER OF 461,000*
SHARES
BENEFICIALLY 8 SHARED VOTING POWER
EACH 0
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON 461,000*
WITH
10 SHARED VOTING POWER
0
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
461,000*
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
16.6%**
14 TYPE OF REPORTING PERSON*
H; CO
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* Beneficial ownership of 461,000 share of Common Stock reported
hereunder is so being reported solely as a result of the Option
Agreement described in Item 4 hereof. The option granted pursuant to
such Option Agreement has not yet become exercisable. First Fidelity
expressly disclaims beneficial ownership of such shares. See Item 5
hereof.
** Based upon the 2,312,735 shares reported by First Inter-Bancorp Inc.
to be outstanding as of January 27, plus the 461,000 shares obtainable
by First Fidelity upon the exercise of the stock option described in
Item 4 were such stock option presently exercisable.
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ITEM 1. SECURITY AND ISSUER.
This statement relates to the Common Stock, par value $1.00
per share ("Common Stock" or "Company Common Stock") and associated preferred
share purchase rights of First Inter-Bancorp, Inc., a Delaware corporation (the
"Company"), the principal executive offices of which are located at Mid-Hudson
Summit Corporate Park, One Summit Court, P.O. Box M, Fishkill, New York 12524.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(c), (f) This statement is being filed by First Fidelity
Bancorporation, a New Jersey corporation registered as a bank holding company
under the Bank Holding Company Act of 1956, as amended ("First Fidelity"). The
principal business offices of First Fidelity are located at 2673 Main Street,
Lawrenceville, New Jersey 08648. First Fidelity provides a full range of
banking services in New Jersey, eastern Pennsylvania, Connecticut and
Westchester county and Riverdale, New York through its subsidiary banks First
Fidelity Bank, N.A., First Fidelity Bank, N.A., New York and Union Trust
Company, and provides services closely related to banking through its non-bank
subsidiaries. The names of the directors and executive officers of First
Fidelity and their respective business addresses, citizenship and present
principal occupations or employment, as well as the names, principal businesses
and addresses of any corporations or other organizations in which such
employment is conducted, are set forth on Schedule I hereto, which Schedule is
incorporated herein by reference.
(d) Neither First Fidelity nor, to the best of its knowledge,
any of the persons listed in Schedule I hereto has during the last five years
been convicted in a criminal proceeding (excluding traffic violations or
similar misdemeanors).
(e) As previously reported, in January 1992, First Fidelity
Bank, N.A., New Jersey, a bank subsidiary of First Fidelity ("FFBNJ"), which
was a party to the consolidation of which First Fidelity Bank, N.A. was the
resulting bank, resolved previously disclosed investigations and related
administrative proceedings regarding its participation as a selling group
member in primary distributions of certain government-sponsored corporation
securities. Without admitting liability and in order to settle the matter,
FFBNJ agreed to pay a civil penalty of $25,000 and to cease and desist from
alleged recordkeeping irregularities. As a result of the foregoing, all
investigations and administrative proceedings pertaining to FFBNJ's selling
group activities were concluded. In addition, FFBNJ decided not to continue as
a member of the
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selling group for securities issued by the Federal National Mortgage
Association. Except as described herein, neither First Fidelity nor, to the
best of its knowledge, any of the persons listed in Schedule I hereto has
during the last five years been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such
proceeding was or is subject to a judgment, decree or final order enjoining
future violations of, or prohibiting or mandating activities subject to,
federal or state securities laws or finding any violation of such laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
As more fully described in Item 4, the Company has granted to
First Fidelity an option pursuant to which First Fidelity has the right, upon
the occurrence of certain events (none of which has occurred), to purchase up
to 461,000 shares of Company Common Stock (subject to adjustment in certain
circumstances) at a price of $20.25 per share (the "Option"). Certain terms of
the Option are summarized in Item 4. If the Option were exercisable and First
Fidelity were to exercise the Option on the date hereof, the funds required to
purchase the shares of Company Common Stock issuable upon such exercise would
be $9,335,250. It is currently anticipated that such funds would be derived
from working capital.
ITEM 4. PURPOSE OF THE TRANSACTION.
(a)-(j) First Fidelity is seeking to acquire the entire
equity interest in the Company pursuant to the Merger (as defined below). The
transactions reported hereunder are intended to assist in the achievement of
that purpose.
The Merger Agreement. The Company, First Fidelity and FFB
Merger Sub II, Inc., a Delaware corporation and a wholly-owned direct
subsidiary of First Fidelity ("Merger Sub"), have entered into an Agreement and
Plan of Merger, dated as of January 27, 1994 (the "Merger Agreement"), pursuant
to which Merger Sub will be merged with and into the Company (the "Merger"),
with the Company being the surviving corporation (the "Surviving Company"). At
the effective time of the Merger (the "Effective Time"), each outstanding share
of Common Stock (other than shares the holder of which pursuant to any
applicable law providing for dissenters' or appraisal rights is entitled to
receive payment in accordance with the provisions of any such law and certain
other shares) will be converted into the right to receive $24.20 in cash
without interest (the "Merger Consideration"). As of the Effective Time, each
share of Common Stock held directly or indirectly by First Fidelity, other than
shares held in a fiduciary capacity or in satisfaction of a debt previously
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contracted and shares held as treasury stock by the Company, will be cancelled,
and no exchange or payment will be made with respect thereto.
The Merger is subject to regulatory approvals, the approval of
the stockholders of the Company and the satisfaction of various other terms and
conditions set forth in the Merger Agreement.
As a result of the Merger, the Company will become a
wholly-owned subsidiary of First Fidelity. The Merger Agreement also provides
that immediately after the Merger, Mid-Hudson Savings Bank FSB, a wholly-owned
subsidiary of the Company (the "Company Bank"), will merge with and into First
Fidelity Bank, N.A., New York or any successor thereto (the "Surviving Bank")
and cease to exist as a separate corporate entity (the "Bank Merger"). As a
result of the Merger, the Company Common Stock will be eligible for termination
of registration pursuant to Section 12(g)(4) of the Securities Exchange Act of
1934, as amended (the "Exchange Act"). In addition, the Company Common Stock
will cease to be authorized to be quoted on the National Association of
Securities Dealers Automated Quotation System. At the Effective Time, the
certificate of incorporation and by-laws and the directors and officers of
Merger Sub shall become the certificate of incorporation and by-laws and
directors and officers of the Surviving Company. At the Effective Time of the
Bank Merger, the articles of association and by-laws and directors and officers
of First Fidelity Bank, N.A., New York, shall be the articles of association
and by-laws and the directors and officers of the Surviving Bank.
The Option Agreement. Concurrently with the execution of the
Merger Agreement, First Fidelity and the Company entered into a Stock Option
Agreement, dated as of January 27, 1994 (the "Option Agreement"). The Option
Agreement is designed to enhance the likelihood that the Merger will be
successfully consummated in accordance with the terms contemplated by the
Merger Agreement and First Fidelity requested such agreement because it
believed that it would. Pursuant to the Option Agreement, the Company granted
First Fidelity an option (the "Option") to purchase, subject to adjustments in
certain circumstances, up to 461,000 authorized but unissued shares of Common
Stock (the "Option Shares") at a price of $20.25 per share, subject to
adjustment.
Subject to applicable law and regulatory restrictions, First
Fidelity may exercise the Option, in whole or in part, if, but only if, a
Purchase Event (as defined below) shall have occurred prior to the occurrence
of an Exercise Termination Event (as defined below).
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As defined in the Stock Option Agreement, "Purchase Event"
means either of the following:
(i) The acquisition by any person other than First Fidelity
or any First Fidelity subsidiary of beneficial ownership of 25% or
more of the then outstanding Common Stock; or
(ii) The occurrence of a Preliminary Purchase Event described
in (i) below except that the percentage referred to in clause (z)
shall be 25%.
"Exercise Termination Event" means the earliest to occur of
(i) the time immediately prior to the Effective Time, (ii) 12 months after the
first occurrence of a Purchase Event, (iii) 12 months after the termination of
the Merger Agreement following the occurrence of a Preliminary Purchase Event,
(iv) termination of the Merger Agreement in accordance with the terms thereof
prior to the occurrence of a Purchase Event or a Preliminary Purchase Event
(other than a termination of the Merger Agreement by First Fidelity pursuant to
Section 6.1(b)(ii) of the Merger Agreement providing for termination of the
Merger Agreement in the event of a material breach by either party thereto of
any representation, warranty, covenant or agreement contained in the Merger
Agreement (or, in the case of the Company, in the Option Agreement) which is
not cured or curable within 10 business days after written notice of such
breach or (v) 12 months after the termination of the Merger Agreement by First
Fidelity pursuant to Section 6.1(b)(ii) thereof.
The term "Preliminary Purchase Event" means any of the
following events or transactions occurring after the date of the Option
Agreement:
(i) The Company or any of its subsidiaries (each a "Company
Subsidiary") without having received First Fidelity's prior written
consent, shall have entered into an agreement to engage in an
Acquisition Transaction (as defined below) with any person (the term
"person" for purposes of this Agreement having the meaning assigned
thereto in Sections 3(a)(9) and 13(d)(3) of the Securities Exchange
Act of 1934 (the "Securities Exchange Act"), and the rules and
regulations thereunder) other than First Fidelity or any of its
subsidiaries (each a "First Fidelity Subsidiary") or the Board of
Directors of the Company shall have recommended that the shareholders
of First Inter-Bancorp approve or accept any Acquisition Transaction
with any person other than First Fidelity or any First Fidelity
Subsidiary. For purposes of the Option Agreement, "Acquisition
Transaction" shall mean
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(x) a merger or consolidation, or any similar transaction, involving
the Company or the Company Bank, (y) a purchase, lease or other
acquisition of all or substantially all of the assets of the Company
or the Company Bank or (z) a purchase or other acquisition (including
by way of merger, consolidation, share exchange or otherwise) of
securities representing 10% or more of the voting power of the Company
or the Company Bank;
(ii) Any person (other than First Fidelity or any First Fidelity
Subsidiary) shall have acquired beneficial ownership or the right to
acquire beneficial ownership of 10% or more of the outstanding shares
of Common Stock (the term "beneficial ownership" for purposes of this
Agreement having the meaning assigned thereto in Section 13(d) of the
Securities Exchange Act, and the rules and regulations thereunder);
(iii) Any person other than First Fidelity or any First Fidelity
Subsidiary shall have made a bona fide proposal to the Company or its
shareholders, by public announcement or written communication that is
or becomes the subject of public disclosure, to engage in an
Acquisition Transaction (including, without limitation, any situation
in which any person other than First Fidelity or any First Fidelity
Subsidiary shall have commenced (as such term is defined in Rule 14d-2
under the Securities Exchange Act) or shall have filed a registration
statement under the Securities Act of 1933, as amended (the
"Securities Act"), with respect to, a tender offer or exchange offer
to purchase any shares of Common Stock such that, upon consummation of
such offer, such person would own or control 10% or more of the then
outstanding shares of Common Stock of the Company (such an offer being
referred to herein as a "Tender Offer" or an "Exchange Offer",
respectively));
(iv) After a proposal is made by a third party to the Company or
its shareholders to engage in an Acquisition Transaction, the Company
shall have breached any covenant or obligation contained in the Merger
Agreement and such breach would entitle First Fidelity to terminate
the Merger Agreement or the holders of Company Common Stock shall not
have approved the Merger Agreement at the meeting of such stockholders
held for the purpose of voting on the Merger Agreement, such meeting
shall not have been held or shall have been canceled prior to
termination of the Merger Agreement or the Company's Board of
Directors shall have withdrawn or modified in a manner adverse to
First Fidelity, the recommendation of
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the Company's Board of Directors with respect to the Merger Agreement;
or
(v) Any person other than First Fidelity or any First Fidelity
Subsidiary, other than in connection with a transaction to which First
Fidelity has given its prior written consent, shall have filed an
application or notice with the Office of Thrift Supervision ("OTS"),
the Board of Governors of the Federal Reserve System (the "Federal
Reserve Board") or other governmental authority or regulatory or
administrative agency or commission (each, a "Governmental Authority")
for approval to engage in an Acquisition Transaction.
As provided in the Option Agreement, in the event that First
Fidelity is entitled to and wishes to exercise the Option, it shall send to the
Company a written notice (the "Option Notice" and the date of which being
hereinafter referred to as the "Notice Date") specifying (i) the total number
of shares of Common Stock it will purchase pursuant to such exercise and (ii) a
period of time (that shall not be less than three business days nor more than
thirty business days) running from the Notice Date (the "Closing Date") and a
place at which the closing of such purchase shall take place; provided, that,
if prior notification to or approval of the Federal Reserve Board or any other
Governmental Authority is required in connection with such purchase (each, a
"Notification" or an "Approval," as the case may be), First Fidelity shall
promptly file the required notice or application for approval and expeditiously
process the same and the period of time that otherwise would run pursuant to
this sentence shall run from the later of (x) the date on which any required
notification periods have expired or been terminated and (y) the date on which
such approval has been obtained and any requisite waiting period or periods
shall have expired. First Fidelity shall have the right to revoke its exercise
of the Option in the event that the transaction constituting a Purchase Event
that gives rise to such right to exercise shall not have been consummated.
Under applicable law and in connection with the Option
Agreement, First Fidelity may be required to obtain the prior approval of the
OTS and Federal Reserve Board prior to acquiring 5% or more of the issued and
outstanding shares of Common Stock. Certain other regulatory approvals may
also be required before such an acquisition could be completed.
The Option may not be assigned by First Fidelity to any other
person without the express written consent of the Company, except that First
Fidelity may assign its rights under the Option Agreement in whole or in part
after the
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occurrence of a Preliminary Purchase Event. However, until the date at which
the OTS and Federal Reserve Board have approved the application by First
Fidelity under the Home Owners' Loan Act, as amended, or the Bank Holding
Company Act of 1956, as amended (the "BHC"), as the case may be, to acquire the
shares of Common Stock subject to the Option, First Fidelity may not assign its
rights under the Option except in (i) a widely dispersed public distribution,
(ii) a private placement in which no one party acquires the right to purchase
in excess of 2% of the voting shares of the Company, (iii) an assignment to a
single party (e.g., a broker or investment banker) for the purpose of
conducting a widely dispersed public distribution on First Fidelity's behalf or
(iv) any other manner approved by the OTS and Federal Reserve Board.
In addition, any shares of Company Common Stock purchased upon
the exercise of the Option may be resold by First Fidelity pursuant to
registration rights under the Stock Option Agreement.
In the event of any change in the Common Stock by reason of
stock dividends, split-ups, mergers, recapitalizations, combinations,
subdivisions, conversions, exchanges of shares or the like, the type and number
of shares of Common Stock purchasable upon exercise hereof shall be
appropriately adjusted and proper provision shall be made so that, in the event
that any additional shares of Common Stock are to be issued or otherwise to
become outstanding as a result of any such change, the number of shares of
Common Stock subject to the Option will be adjusted so that, after such
issuance, it equals 19.9% of the number of shares of Common Stock then issued
and outstanding, without giving effect to any shares subject to or issued
pursuant to the Option.
Upon the occurrence of a Purchase Event that occurs prior to
an Exercise Termination Event, at the request of First Fidelity and upon
receipt of applicable regulatory approvals, the Company will be obligated to
repurchase the Option and any shares of Common Stock theretofore purchased
pursuant to the Option at a price determined as set forth in the Stock Option
Agreement.
In the event that First Fidelity exercises the repurchase
rights described above, the Company will thereafter pay the required amount or
the portion thereof that the Company is not then prohibited from so delivering
under applicable law and regulation or as a consequence of administrative
policy.
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In the event that prior to an Exercise Termination Event, the
Company shall enter into an agreement (i) to consolidate or merge with any
person, other than First Fidelity or a First Fidelity Subsidiary, and shall not
be the continuing or surviving corporation of such consolidation or merger,
(ii) to permit any person, other than First Fidelity or a First Fidelity
Subsidiary, to merge into the Company and the Company shall be the continuing
or surviving corporation, but, in connection with such merger, the then
outstanding shares of Common Stock shall be changed into or exchanged for stock
or other securities of any other person or cash or any other property or the
then outstanding shares of Common Stock shall after such merger represent less
than 50% of the outstanding shares and share equivalents of the merged company
or (iii) to sell or otherwise transfer all or substantially all of its or the
Company Bank's assets to any person, other than First Fidelity or a First
Fidelity Subsidiary, then, and in each such case, the agreement governing such
transaction shall make proper provision so that the Option shall, upon the
consummation of such transaction and upon the terms and conditions set forth
herein, be converted into, or exchanged for, an option (the "Substitute
Option"), at the election of First Fidelity, of either (x) the acquiring
corporation or (y) any person that controls the acquiring corporation. As more
fully described in the Option Agreement, the Substitute Option shall have
substantially the same terms as the Option, with adjustments in the exercise
price as set forth in the Option Agreement.
Copies of the Option Agreement and the Merger Agreement are
filed as exhibits to this Schedule 13D and are incorporated herein by
reference. The foregoing summary is not intended to be complete and is
qualified in its entirety by reference to such exhibits.
Purchases of Common Stock. Subject to market conditions and
developments with respect to the Merger, First Fidelity may purchase shares of
Common Stock in the open market or in privately negotiated transactions, to the
extent permitted by the BHC and federal securities laws.
Other than as described above or in Item 5 below, First
Fidelity does not have any plans or proposals which relate to or would result
in any of the matters listed in Items 4(a)-(j) of Schedule 13D.
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ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(a) The Option. First Fidelity may be deemed to be the
beneficial owner of the Option Shares. As provided in the Option Agreement,
First Fidelity may exercise the Option only upon the happening of one or more
events, none of which has occurred. See Item 4 hereof. Since the Option is
not presently exercisable, First Fidelity expressly disclaims beneficial
ownership of any of the Option Shares. If the Option were exercised in full,
the Option Shares would represent approximately 16.6% of the currently
outstanding Common Stock (after giving effect to the issuance of such Option
Shares). First Fidelity has no right to vote or dispose of the shares of
Common Stock subject to the Option unless and until such time as the Option is
exercised. To the best knowledge of First Fidelity, none of the persons listed
on Schedule I hereto beneficially owns any shares of Common Stock.
(b) The Option. If First Fidelity were to exercise the
Option, it would have sole power to vote and, subject to the terms of the
Option Agreement, sole power to direct the disposition of the shares of Common
Stock covered thereby.
(c) The Option. First Fidelity acquired the Option in
connection with the execution of the Merger Agreement. See Item 4 hereof.
To the best knowledge of First Fidelity, none of the persons
listed on Schedule I hereto has effected any transactions in Common Stock
during the past 60 days.
(d) Not applicable.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER.
Except as described in Item 4 and Item 5 hereof, neither First
Fidelity nor, to the best of its knowledge, any of the persons listed on
Schedule I hereto, has any contract, arrangement, understanding or relationship
with any other person with respect to any securities of the Company, including
the transfer or voting of any of the securities, finder's fees, joint ventures,
loan or option arrangements, puts or calls, guarantees of profits, division of
profits or losses, or the giving or withholding of proxies.
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ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
1. Agreement and Plan of Merger, dated as of January 27, 1994, by and
among First Inter-Bancorp Inc., First Fidelity Bancorporation and FFB
Merger Sub II, Inc., including the exhibits and annex thereto.
2. Stock Option Agreement, dated as of January 27, 1994, between First
Inter-Bancorp Inc. and First Fidelity Bancorporation.
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SIGNATURE
After due inquiry and to the best of my knowledge and belief,
I hereby certify that the information set forth in this statement is true,
complete and correct.
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Dated: February 7, 1994
FIRST FIDELITY BANCORPORATION
By: /s/ WOLFGANG SCHOELLKOPF
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Name: Wolfgang Schoellkopf
Title: Vice Chairman and
Chief Financial Officer
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SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF
FIRST FIDELITY BANCORPORATION
The names, business addresses and present principal
occupations of the directors and executive officers of First Fidelity are set
forth below. If no business address is given, the director's or officer's
business address is 2673 Main Street, Lawrenceville, NJ 08648. The business
address of each of the directors of First Fidelity is also the business address
of such director's employer, if any. Directors of First Fidelity are
identified by an asterisk. Unless otherwise indicated, all directors and
officers listed below are citizens of the United States.
Name Present Principal Occupation or
Employment and Address
Jay A. Anglada Executive Vice President and Head of
Trust Activities of First Fidelity.
* Louis E. Azzato Chairman, President and Chief
Executive Officer of Foster Wheeler
Corporation, an engineering and
construction company, Perryville
Corporate Park, Clinton, New Jersey
08809-4000.
* Edward E. Barr Chairman, President and Chief
Executive Officer and director of
Sun Chemical Corporation, a graphic
arts materials company, 222 Bridge
Plaza South, Fort Lee, New Jersey
07024.
* Roland K. Bullard, II Senior Executive Vice President of
First Fidelity.
Anthony R. Burriesci Executive Vice President and
Corporate Controller of First
Fidelity.
* Lee A. Butz President of Alvin H. Butz, Inc., a
construction management firm, Route
309, Box 509, Allentown,
Pennsylvania 18105.
* Luther R. Campbell, Jr. Managing Partner, Campbell, Rappold
& Yurasits, certified public
accountant, 1033 S. Cedar Crest
Blvd., Allentown, Pennsylvania
18103.
* John Gilray Christy Chairman of Chestnut Capital
Corporation, a private investment
firm, 125 Stafford Avenue, Suite
200, Building 3, Wayne, Pennsylvania
19087.
* James G. Cullen President and Chief Executive
Officer of New Jersey Bell Telephone
Company, a telephone utility, 540
Broad Street, Newark, New Jersey
07102.
* Gonzalo de Las Heras Executive Vice President of Banco
Santander, a Spanish banking
organization, 375 Park Avenue, New
York, New York 10152.
* E. James Ferland Chairman of the Board, President and
Chief Executive Officer of Public
Service Enterprise Group
Incorporated, a public utility
holding company, 80 Park Plaza,
Newark, New Jersey 07101.
Michael A. Gallagher Executive Vice President of First
Fidelity.
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* Arthur M. Goldberg President and Chief Executive
Officer of DiGiorgio Corporation, a
food wholesaler and building
products company, and Chairman and
Chief Executive Officer of Bally
Manufacturing Corporation, a
diversified holding company engaged
in manufacturing, casino and
entertainment businesses, 2
Executive Drive, Somerset, New
Jersey 08873.
* Leslie E. Goodman Senior Executive Vice President of
First Fidelity.
* Frank M. Henry President of Frank Martz Coach
Company, a transportation company,
Martz Towers, Box 1007,
Wilkes-Barre, Pennsylvania 18773.
* William F. Hyland Senior Partner of Riker, Danzig,
Scherer, Hyland & Perretti,
attorneys, Headquarters Plaza, One
Speedwell Avenue, Morristown, New
Jersey 07960.
* Juan Rodriguez Inciarte Executive Vice President of Banco
Santander, a Spanish banking
organization, Paseo de la
Castellana, 75 Madrid, Spain 28046.
Citizen of Spain.
William A. Karmen Executive Vice President, Human
Resources, of First Fidelity.
* John R. Kennedy President and Chief Executive
Officer of Federal Paper Board
Company, Inc., a manufacturing
company, 75 Chestnut Ridge Road,
P.O. Box 357, Montvale, New Jersey
07645.
Michael L. LaRusso Executive Vice President and
Director of Audit and Policy
Development of First Fidelity.
* Rocco J. Marano Chairman of Blue Cross and Blue
Shield of New Jersey, Inc., a health
insurance company, Three Penn Plaza
East, Newark, New Jersey 07105.
James L. Mitchell General Counsel, Executive Vice
President and Secretary of First
Fidelity.
* James D. Morrissey, Jr. President and Chief Operating
Officer of James D. Morrissey, Inc.,
a heavy an highway construction
company, 9119 Frankford Avenue,
Philadelphia, Pennsylvania 19114.
* Joseph Neubauer Chairman, President and Chief
Executive Officer of The ARA Group,
Inc., a services management company,
ARA Tower, 1101 Market Street,
Philadelphia, Pennsylvania 19107.
Thomas H. O'Brien, Jr. Executive Vice President of First
Fidelity.
* Peter C. Palmieri Vice Chairman and Chief Credit
Officer of First Fidelity.
Donald C. Parcells Executive Vice President of First
Fidelity.
Frederick H. Pennekamp Executive Vice President and
Treasurer of First Fidelity.
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* Wolfgang Schoellkopf Vice Chairman and Chief Financial
Officer of First Fidelity.
* Robert Montgomery Scott President and Chief Executive
Officer of the Philadelphia Museum
of Art, Box 7646, Philadelphia,
Pennsylvania 19101.
* Rebecca Stafford President of Monmouth College, New
Jersey.
* Sefton Stallard General Partner of North American
Venture Capital Fund, L.P., a
venture capita fund, Fawn Hill
Drive, P.O. Box 281, New Vernon, New
Jersey 07976.
* Anthony P. Terracciano Chairman of the Board, President and
Chief Executive Officer of First
Fidelity.
Kenneth H. Thorn Executive Vice President of First
Fidelity.
* Bernard C. Watson President and Chief Executive
Officer of The William Penn
Foundation, 1630 Locust Street,
Philadelphia, Pennsylvania 19102.
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<PAGE> 17
EXHIBIT - INDEX
1. Agreement and Plan of Merger, dated as of January 27, 1994, by and
among First Inter-Bancorp Inc., First Fidelity Bancorporation and FFB
Merger Sub II, Inc., including the exhibits and annex thereto.
2. Stock Option Agreement, dated as of January 27, 1994, between First
Inter-Bancorp Inc. and First Fidelity Bancorporation.
<PAGE> 1
[CONFORMED COPY]
AGREEMENT AND PLAN OF MERGER
DATED AS OF THE 27th DAY OF JANUARY, 1994
BY AND AMONG
FIRST FIDELITY BANCORPORATION,
FFB MERGER SUB II, INC.
AND
FIRST INTER-BANCORP INC.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
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<S> <C> <C>
Recitals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE I. THE MERGERS
Section 1.1. Structure of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.2. Effect on Outstanding Shares . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 1.3. Exchange Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 1.4. Dissenters' Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 1.5. Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 1.6. Bank Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 1.7 Alternative Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE II. CONDUCT PENDING THE MERGER
Section 2.1. Conduct of the Company's Business Prior to
the Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 2.2. Forbearance by the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 2.3 Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE III. REPRESENTATIONS AND WARRANTIES
Section 3.1. Representations and Warranties
of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 3.2. Representations and Warranties of
the Acquiror and the Merger Sub . . . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE IV. COVENANTS
Section 4.1. Acquisition Proposals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 4.2. Certain Policies of the Company . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 4.3. Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 4.4. Access and Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 4.5. Certain Filings, Consents and
Arrangements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 4.6. Antitakeover Statutes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 4.7. Indemnification; Directors'
and Officers' Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 4.8. Additional Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 4.9. Publicity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 4.10. Proxy Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 4.11. Shareholders' Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 4.12. Advisory Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 4.13. Notification of Certain Matters . . . . . . . . . . . . . . . . . . . . . . . . . 37
</TABLE>
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ARTICLE V. CONDITIONS TO CONSUMMATION
<S> <C> <C>
Section 5.1. Conditions to All Parties' Obligations . . . . . . . . . . . . . . . . . . . . . 38
Section 5.2. Conditions to the Obligations of the
Acquiror and Merger Sub . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 5.3. Conditions to the Obligation of the
Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
ARTICLE VI. TERMINATION
Section 6.1. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 6.2. Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
ARTICLE VII. EFFECTIVE DATE AND EFFECTIVE TIME
Section 7.1. Effective Date and Effective Time . . . . . . . . . . . . . . . . . . . . . . . . 42
ARTICLE VIII. OTHER MATTERS
Section 8.1. Certain Definitions; Interpretation . . . . . . . . . . . . . . . . . . . . . . . 42
Section 8.2. Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 8.3. Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 8.4. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 8.5. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 8.6. Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 8.7. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 8.8. Entire Agreement; Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 8.9. Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
</TABLE>
LIST OF ANNEXES
Annex 1 - Company Rights (Recital D)
Annex 2 - Form of Option Agreement (Recital E)
Annex 3 - Company Benefit Plans (Section 3.1(n))
Annex 4 - Form of Amendment to Rights Agreement
(Section 3.1(v))
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<PAGE> 4
AGREEMENT AND PLAN OF MERGER, dated as of the 27th day of
January, 1994 (this "Plan"), by and among First Fidelity Bancorporation (the
"Acquiror"), FFB Merger Sub II, Inc. ("Merger Sub") and First Inter-Bancorp
Inc. (the "Company").
RECITALS:
A. The Acquiror. The Acquiror has been duly incorporated and
is an existing corporation in good standing under the laws of the State of New
Jersey, with its principal executive offices located in Lawrenceville, New
Jersey. The Acquiror is a bank holding company duly registered with the
Federal Reserve Board (as defined below) under the Bank Holding Company Act of
1956, as amended (the "BHC Act").
B. Merger Sub. Merger Sub has been duly incorporated and is
an existing corporation in good standing under the laws of the State of
Delaware, with its principal executive offices located in Newark, New Jersey.
All the outstanding shares of the capital stock of Merger Sub are owned
directly by the Acquiror.
C. The Company. The Company has been duly incorporated and
is an existing corporation in good standing under the laws of the State of
Delaware, with its principal executive offices located in Fishkill, New York.
As of the date hereof, the Company has 6,000,000 authorized shares of common
stock, par value $1.00 per share ("Company Common Stock"), of which no more
than 2,312,735 shares were outstanding as of the date hereof, and 1,000,000
authorized shares of preferred stock, par value $1.00 per share ("Company
Preferred Stock"), none of which are outstanding (no other class of capital
stock being authorized) and options to acquire 225,148 shares of Company Common
Stock, 97,135 of which are exercisable as of the date hereof. The Company is a
savings and loan holding company duly registered with the Office of Thrift
Supervision ("OTS") under the Home Owners' Loan Act, as amended ("HOLA").
D. Rights, Etc. The Company does not have any shares of its
capital stock reserved for issuance, any outstanding option, call or commitment
relating to shares of its capital stock or any outstanding securities,
obligations or agreements convertible into or exchangeable for, or giving any
person any right (including, without limitation, preemptive rights) to
subscribe for or acquire from it, any shares of its capital stock
(collectively, "Rights"), except (i) pursuant to the Option Agreement (as
defined below), which will be entered into contemporaneously with the execution
and delivery of this Plan, (ii) pursuant to the Rights Agreement, dated as of
December 20, 1990 (the "Rights Agreement"),
<PAGE> 5
between the Company and American Stock Transfer and Trust Company, and (iii) as
set forth on Annex 1 and referred to in paragraph C above.
E. The Option Agreement. As an inducement to the willingness
of the Acquiror and Merger Sub to enter into this Plan, the Company will enter
into a Stock Option Agreement with the Acquiror in the form set forth in Annex
2 (the "Option Agreement"), pursuant to which the Company will grant to the
Acquiror an option to purchase authorized but unissued shares of Company Common
Stock equal to 19.9% of the outstanding shares of Company Common Stock upon the
terms and conditions therein contained.
F. Intention of the Parties. It is the intention of the
parties to this Plan that the Bank Merger (as defined below) be consummated
immediately after the Merger.
G. Board Approvals. The respective Boards of Directors of
the Acquiror, Merger Sub and the Company have duly approved the Plan and have
duly authorized its execution and delivery.
NOW, THEREFORE, in consideration of their mutual promises and
obligations hereunder, the parties hereto adopt and make this Plan and
prescribe the terms and conditions hereof and the manner and basis of carrying
it into effect, which shall be as follows:
ARTICLE I. THE MERGERS
SECTION 1.1. Structure of the Merger. On the Effective Date
(as defined in Section 7.1), Merger Sub will merge (the "Merger") with and into
the Company, with the Company being the surviving corporation (the "Surviving
Corporation"), pursuant to the provisions of, and with the effect provided in,
the Delaware General Corporation Law ("DGCL"). The separate corporate
existence of Merger Sub shall thereupon cease. The Surviving Corporation shall
continue to be governed by the laws of Delaware and its separate corporate
existence with all of its rights, privileges, immunities, powers and franchises
shall continue unaffected by the Merger. At the Effective Time (as defined in
Section 7.1), the certificate of incorporation and by-laws of the Company shall
be amended in their entirety to conform to the certificate of incorporation and
by-laws of Merger Sub in effect immediately prior to the Effective Time and
shall become the certificate of incorporation and by-laws of the Surviving
Corporation. At the Effective Time, the
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<PAGE> 6
directors and officers of Merger Sub shall become the directors and officers of
the Surviving Corporation.
SECTION 1.2. Effect on Outstanding Shares. (a) By virtue of
the Merger, automatically and without any action on the part of the holder
thereof, each share of Company Common Stock (along with its associated Rights
under the Rights Agreement) issued and outstanding at the Effective Time (other
than (i) shares the holder of which (the "Dissenting Stockholder") pursuant to
any applicable law providing for dissenters' or appraisal rights is entitled to
receive payment in accordance with the provisions of any such law, such holder
to have only the rights provided in any such law (the "Dissenters' Shares"),
and (ii) shares held directly or indirectly by the Acquiror (other than shares
held in a fiduciary capacity or in satisfaction of a debt previously
contracted) shall become and be converted into the right to receive $24.20 in
cash without interest (the "Merger Consideration"). As of the Effective Time,
each share of Company Common Stock held directly or indirectly by the Acquiror,
other than shares held in a fiduciary capacity or in satisfaction of a debt
previously contracted and shares held as treasury stock of the Company, shall
be cancelled and retired and cease to exist, and no exchange or payment shall
be made with respect thereto.
(b) The shares of common stock of Merger Sub issued and
outstanding immediately prior to the Effective Time shall become shares of the
Surviving Corporation after the Merger and shall thereafter constitute all of
the issued and outstanding shares of the capital stock of the Surviving
Corporation.
SECTION 1.3. Exchange Procedures. (a) At and after the
Effective Time, each certificate (each a "Certificate") previously representing
shares of Company Common Stock shall represent only the right to receive the
Merger Consideration in cash without interest.
(b) As of the Effective Time, the Acquiror shall deposit, or
shall cause to be deposited, with First Fidelity Bank, National Association, as
exchange agent (the "Exchange Agent"), for the benefit of the holders of shares
of Company Common Stock, for exchange in accordance with this Section 1.3, the
Merger Consideration to be paid pursuant to Section 1.2 and deposited pursuant
to this Section 1.3 in exchange for outstanding shares of Company Common Stock.
(c) As soon as practicable after the Effective Time, the
Acquiror shall cause the Exchange Agent to mail to each holder of record of a
Certificate or Certificates the
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<PAGE> 7
following: (i) a letter of transmittal specifying that delivery shall be
effected, and risk of loss and title to the Certificates shall pass, only upon
delivery of the Certificates to the Exchange Agent, which shall be in a form
and contain any other provisions as the Acquiror may reasonably determine; and
(ii) instructions for use in effecting the surrender of the Certificates in
exchange for the Merger Consideration. Upon the proper surrender of a
Certificate to the Exchange Agent, together with a properly completed and duly
executed letter of transmittal, the holder of such Certificate shall be
entitled to receive in exchange therefor a check representing the Merger
Consideration which such holder has the right to receive in respect of the
Certificate surrendered pursuant to the provisions hereof, and the Certificate
so surrendered shall forthwith be cancelled. If all required documentation is
received by the Exchange Agent within sixty (60) days after the Effective Time,
the Acquiror shall direct the Exchange Agent to make payment of the Merger
Consideration with respect to the Certificates so surrendered within five (5)
business days of the receipt of all required documentation. If all required
documentation is received by the Exchange Agent later than sixty (60) days
after the Effective Time, the Acquiror shall direct the Exchange Agent to make
payment of the Merger Consideration with respect to the Certificates so
surrendered with reasonable promptness after receipt of all required
documentation. No interest will be paid or accrued on the Merger
Consideration. In the event of a transfer of ownership of any shares of
Company Common Stock not registered in the transfer records of the Company, a
check for the Merger Consideration may be issued to the transferee if the
Certificate representing such Company Common Stock is presented to the Exchange
Agent, accompanied by documents sufficient, in the discretion of the Acquiror
and the Exchange Agent, (i) to evidence and effect such transfer and (ii) to
evidence that all applicable stock transfer taxes have been paid.
(d) From and after the Effective Time, there shall be no
transfers on the stock transfer records of the Company of any shares of Company
Common Stock that were outstanding immediately prior to the Effective Time. If
after the Effective Time Certificates are presented to the Acquiror or the
Surviving Corporation, they shall be cancelled and exchanged for the Merger
Consideration deliverable in respect thereof pursuant to this Plan in
accordance with the procedures set forth in this Section 1.3.
(e) Any portion of the aggregate Merger Consideration or the
proceeds of any investments thereof that remains unclaimed by the shareholders
of the Company for six
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<PAGE> 8
months after the Effective Time shall be repaid by the Exchange Agent to the
Acquiror. Any shareholders of the Company who have not theretofore complied
with this Section 1.3 shall thereafter look only to the Acquiror for payment of
their Merger Consideration deliverable in respect of each share of Company
Common Stock such stockholder holds as determined pursuant to this Plan without
any interest thereon. If outstanding certificates for shares of Company Common
Stock are not surrendered or the payment for them not claimed prior to the date
on which such payments would otherwise escheat to or become the property of any
governmental unit or agency, the unclaimed items shall, to the extent permitted
by abandoned property and any other applicable law, become the property of the
Acquiror (and to the extent not in its possession shall be paid over to it),
free and clear of all claims or interest of any person previously entitled to
such claims, provided, however, notwithstanding the foregoing, nothing in this
sentence shall prejudice the rights of holders of Company Common Stock at the
Effective Time who have not claimed the Merger Consideration to which they
would otherwise be entitled with respect to their shares of Company Common
Stock, to claim such Merger Consideration. Notwithstanding the foregoing, none
of the Acquiror, the Surviving Corporation, the Exchange Agent or any other
person shall be liable to any former holder of Company Common Stock for any
amount delivered to a public official pursuant to applicable abandoned
property, escheat or similar laws.
(f) In the event any Certificate shall have been lost, stolen
or destroyed, upon the making of an affidavit of that fact by the person
claiming such Certificate to be lost, stolen or destroyed and, if required by
the Exchange Agent, the posting by such person of a bond in such amount as the
Exchange Agent may direct as indemnity against any claim that may be made
against it with respect to such Certificate, the Exchange Agent will issue in
exchange for such lost, stolen or destroyed Certificate the Merger
Consideration deliverable in respect thereof pursuant to this Plan.
SECTION 1.4 Dissenters' Rights. Any Dissenting Stockholder
who shall be entitled to be paid the "fair value" of his or her Dissenters'
Shares, as provided in Section 262 of the DGCL, shall not be entitled to the
Merger Consideration, unless and until the holder thereof shall have failed to
perfect or shall have effectively withdrawn or lost such holder's right to
dissent from the Merger under the DGCL, and shall be entitled to receive only
the payment to the extent provided for by Section 262 of the DGCL with respect
to such Dissenters' Shares. If any Dissenting Stockholder shall fail to
perfect or shall have effectively withdrawn or lost the right to dissent, the
Dissenters' Shares held by such
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<PAGE> 9
Dissenting Stockholder shall thereupon be treated as though such Dissenters'
Shares had been converted into the right to receive the Merger Consideration
pursuant to Section 1.2.
SECTION 1.5. Options. At the Effective Time, each option
granted by the Company to purchase shares of Company Common Stock, which is
outstanding and unexercised immediately prior to the Effective Time (whether
such options are vested or not vested and whether or not such options are
otherwise exercisable), shall be adjusted so as to entitle the grantee thereof
to receive, in lieu of each share of Company Common Stock that would otherwise
have been issuable upon the exercise thereof, an amount in cash computed by
multiplying (i) the difference between (x) the per share amount of the Merger
Consideration and (y) the per share exercise price applicable to such option by
(ii) the number of such shares of Company Common Stock subject to such option.
The Company agrees to take or cause to be taken all action necessary under such
options to provide for such adjustment. At the Effective Time, the Acquiror
will make the payments required to be made or deliver such documents as may be
required to grantees of options under this Section 1.5.
SECTION 1.6 Bank Merger. The Company and the Acquiror will
take all action necessary and appropriate to cause, including causing the
entering into of a merger agreement, their respective subsidiaries First
Fidelity Bank, N.A., New York as it presently exists (the "Acquiror New York
Bank") or any successor by merger, consolidation or otherwise thereto and
Mid-Hudson Savings Bank FSB (the "Company Bank") to merge (the "Bank Merger")
immediately after the consummation of the Merger, with the Acquiror New York
Bank being the surviving bank ("Surviving Bank") thereof pursuant to the
provisions of applicable law. At the effective time of the Bank Merger, the
articles of association and by-laws of the Surviving Bank shall be the articles
of association and by-laws of the Acquiror New York Bank in effect immediately
prior to the effective time of the Bank Merger. At the effective time of the
Bank Merger, the directors and officers of the Surviving Bank shall be the
directors and officers of the Acquiror New York Bank immediately prior to the
effective time of the Bank Merger.
SECTION 1.7 Alternative Structure. In the event that within
30 days after the date hereof, the Acquiror should, after consultation with
counsel, determine that consummating or effecting the acquisition of the
Company by the Acquiror pursuant to the Alternative Structure is not likely to
delay in any material respect the consummation of such acquisition, the Company
will, at the request of the Acquiror and to the extent deemed necessary, enter
into an
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<PAGE> 10
amendment to this Plan, to cause the Company Bank to become a party to this
Plan and to provide for the Alternative Structure. As used herein,
"Alternative Structure" means the following transactions in the following
order:
(a) The establishment by the Acquiror New York Bank or any
successor by merger, consolidation or otherwise thereto of a
wholly-owned subsidiary (the "New Merger Sub");
(b) The merger of the "New Merger Sub" with and into the
Company with the same effect as the Merger;
(c) The liquidation or dissolution of the Surviving
Corporation; and
(d) The Merger of the Company Bank with and into the Acquiror
New York Bank or any successor by merger, consolidation or otherwise
thereto with the same effect as the Bank Merger.
ARTICLE II. CONDUCT PENDING THE MERGER
SECTION 2.1. Conduct of the Company's Business Prior to the
Effective Time. Except as expressly provided in this Plan, during the period
from the date of this Plan to the Effective Time, the Company shall, and shall
cause its subsidiaries to, (i) conduct its business in the usual, regular and
ordinary course consistent with past practice, (ii) use all reasonable efforts
to maintain and preserve intact its business organization, properties, leases,
employees and advantageous business relationships and retain the services of
its officers and key employees, (iii) take no action which would adversely
affect or delay the ability of the Company, the Acquiror or Merger Sub to
obtain any necessary approvals, consents or waivers of any governmental
authority required for the transactions contemplated hereby or to perform its
covenants and agreements on a timely basis under this Plan and (iv) take no
action that is reasonably likely to have a Material Adverse Effect (as defined
in Section 8.1 hereof) on the Company.
SECTION 2.2. Forbearance by the Company. During the period
from the date of this Plan to the Effective Time, the Company shall not, and
shall not permit any of its subsidiaries, without the prior written consent of
the Acquiror, to:
(a) other than in the ordinary course of business
consistent with past practice, make any advance or incur
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<PAGE> 11
any indebtedness for borrowed money, assume, guarantee, endorse or
otherwise as an accommodation become responsible for the obligations
of any other individual;
(b) adjust, split, combine or reclassify any capital
stock; make, declare or pay any dividend or make any other
distribution on, or directly or indirectly redeem, purchase or
otherwise acquire, any shares of its capital stock or any securities
or obligations convertible into or exchangeable for any shares of its
capital stock, or grant any stock appreciation rights or grant, sell
or issue to any individual, corporation or other person any right to
acquire, or securities evidencing a right to convert into or acquire,
any shares of its capital stock, except for regular quarterly cash
dividends at a rate per share of Company Common Stock not in excess of
$0.10 per share; provided, however, that the Company may not issue any
additional shares of capital stock except pursuant to (i) the exercise
of stock options or warrants outstanding as of the date hereof as set
forth on Annex 1 and on the terms in effect on the date hereof, (ii)
the Option Agreement or (iii) the Rights Agreement;
(c) other than in the ordinary course of business
consistent with past practice and pursuant to policies currently in
effect, sell, transfer, mortgage, encumber or otherwise dispose of any
of its material properties, leases or assets to any individual,
corporation or other entity other than a direct or indirect wholly
owned subsidiary of the Company, or cancel, release or assign any
indebtedness of any such person, except pursuant to contracts or
agreements in force at the date of this Plan;
(d) except to the extent required by law, increase in any
manner the compensation or fringe benefits of any of its employees or
directors, or pay any pension or retirement allowance not required by
any existing plan or agreement to any such employees or directors, or
become a party to, amend or commit itself to or fund or otherwise
establish any trust or account related to any Employee Plan (as
defined in Section 3.1(n)) with or for the benefit of any employee,
other than general increases in compensation in the ordinary course of
business consistent with past practice not in excess of 4% in any
12-month period, or voluntarily accelerate the vesting of any stock
options or other compensation or benefit;
(e) except as contemplated by Section 4.2 change its
method of accounting as in effect at December 31, 1992, except as
required by changes in generally accepted
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<PAGE> 12
accounting principles as concurred in by the Company's independent
auditors; or
(f) amend its articles of incorporation, its by-laws or,
except as contemplated by this Plan, the Rights Agreement.
SECTION 2.3. Cooperation. The Company shall, and shall cause
the Company Bank to, cooperate with Acquiror and Merger Sub in completing the
transactions contemplated hereby and shall not take, cause to be taken or agree
or make any commitment to take any action: (i) that is reasonably likely to
cause any of the representations or warranties of it that are set forth in
Article III hereof not to be true and correct, or (ii) that is inconsistent
with or prohibited by Section 2.1 or Section 2.2.
ARTICLE III. REPRESENTATIONS AND WARRANTIES
SECTION 3.1. Representations and Warranties of the Company.
The Company represents and warrants to the Acquiror and Merger Sub, that,
except as specifically disclosed in a letter of the Company delivered to the
Acquiror prior to the date hereof (and making specific reference to the Section
of this Plan for which an exception is taken):
(a) Recitals True. The facts set forth in the Recitals of
this Plan with respect to the Company are true and correct.
(b) Capital Stock. All outstanding shares of capital
stock of the Company and the Company Bank are duly authorized, validly
issued and outstanding, fully paid and non-assessable, and subject to
no preemptive rights.
(c) Authority. Each of the Company and its subsidiaries
has the requisite power and authority, and is duly qualified in all
jurisdictions (except for such qualifications the absence of which,
individually or in the aggregate, would not have a Material Adverse
Effect) where such qualification is required, to carry on its business
as it is now being conducted and to own all its material properties
and assets, and it has all federal, state, local, and foreign
governmental authorizations necessary for it to own or lease its
properties and assets and to carry on its business as it is now being
conducted, except for such powers and authorizations the absence of
which, either individually or in the aggregate, would not have a
Material Adverse Effect.
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<PAGE> 13
(d) Subsidiaries; Significant Investments. The only
direct subsidiary of the Company is the Company Bank; and the only
indirect subsidiaries of the Company are Mid-Hudson Diversified
Services, Inc., Northco Acquisition, Inc., Altamont Development Corp.
(which is 50% owned by the Company and 1.5% owned by the Company's
Employee Stock Ownership Plan), Empire State Thrift Services
Corporation (which is 42.7% owned by the Company), Mamton Realty
Corporation and East Fishkill Investors Corporation. The shares of
capital stock of all such subsidiaries that are owned by the Company
or the Company Bank are owned free and clear of all liens, claims,
encumbrances and restrictions on transfer and there are no rights to
subscribe for or acquire from the Company or the Company Bank such
capital stock. In addition, the Company has good and marketable
title, free and clear of liens and encumbrances, to $2,766,200 book
value of shares of Federal Home Loan Bank of New York stock, $183,930
book value of shares of Institutional Investors Capital Appreciation
Fund, and shares representing 9.99% of the stock of Center Banks, Inc.
Set forth on Schedule 3.1(d) hereof is a true and complete list of all
subsidiaries of the Company and the Company Bank and of all entities
(whether corporations, partnerships, or other similar organization) in
which either the Company or the Company Bank own, directly or
indirectly, 10% or more of the ownership interests (such list to
include the corresponding percentage ownership).
(e) Shareholder Approvals. (i) Subject to the receipt
of required shareholder approval of this Plan, each of this Plan and
the Option Agreement has been authorized by all necessary corporate
action of the Company. In addition, the Company has received the
written opinion of Lyons, Zomback & Ostrowski, a division of Advest,
Inc., to the effect that the Merger Consideration to be received by
the shareholders of the Company is fair to such shareholders from a
financial point of view. Subject to receipt of (A) such shareholder
approval and (B) the required approvals, consents or waivers of
governmental authorities referred to in Section 5.1(b), this Plan is,
and upon its execution and delivery the Option Agreement will be, a
valid and binding agreement of the Company enforceable against it in
accordance with its terms, subject as to enforcement to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles.
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<PAGE> 14
(ii) The affirmative vote of a majority of the outstanding
shares of Company Common Stock entitled to vote on this Plan is the
only shareholder vote required for approval of the Plan and
consummation of the Merger and the other transactions contemplated
hereby.
(f) No Violations. The execution, delivery and
performance of this Plan by the Company do not, the execution,
delivery and performance of the Option Agreement by the Company will
not, and the consummation of the transactions contemplated hereby or
thereby by the Company will not, constitute (i) a breach or violation
of, or a default under, any law, including any Environmental Law (as
defined below), rule or regulation or any judgment, decree, order,
governmental permit or license, or agreement, indenture or instrument
of the Company or any subsidiary of the Company or to which the
Company or any of its subsidiaries (or any of their respective
properties) is subject, which breach, violation or default would have
a Material Adverse Effect on it, or enable any person to enjoin the
Merger or the other transactions contemplated hereby, (ii) a breach or
violation of, or a default under, the certificate or articles of
incorporation or by-laws of the Company or any subsidiary of the
Company or (iii) a breach or violation of, or a default under (or an
event which with due notice or lapse of time or both would constitute
a default under), or result in the termination of, accelerate the
performance required by, or result in the creation of any lien,
pledge, security interest, charge or other encumbrance upon any of the
properties or assets of the Company or any subsidiary of the Company
under, any of the terms, conditions or provisions of any note, bond,
indenture, deed of trust, loan agreement or other agreement,
instrument or obligation to which the Company or any subsidiary of the
Company is a party, or to which any of their respective properties or
assets may be bound or affected, except for any of the foregoing that,
individually or in the aggregate, would not have a Material Adverse
Effect on the Company; and the consummation of the transactions
contemplated hereby or, upon its execution and delivery, by the Option
Agreement will not require any approval, consent or waiver under any
such law, rule, regulation, judgment, decree, order, governmental
permit or license or the approval, consent or waiver of any other
party to any such agreement, indenture or instrument, other than (i)
the required approvals, consents and waivers of governmental
authorities referred to in Section 5.1(b), (ii) the approval of the
shareholders of the Company referred to in Section 3.1(e), (iii) such
approvals, consents or
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<PAGE> 15
waivers as are required under the federal and state securities or
"Blue Sky" laws in connection with the transactions contemplated by
this Plan or the Option Agreement, and (iv) any other approvals,
consents or waivers the absence of which, individually or in the
aggregate, would not result in a Material Adverse Effect on the
Company or enable any person to enjoin or materially delay the Merger
or the Bank Merger.
(g) Reports. (i) As of their respective dates, neither
the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1992, nor any other document filed subsequent to December
31, 1992 under Section 13(a), 13(c), 14 or 15(d) of the Securities
Exchange Act of 1934, as amended (the "Securities Exchange Act"), each
in the form (including exhibits) filed with the Securities and
Exchange Commission (the "SEC") (collectively, the "Reports"),
contained or will contain any untrue statement of a material fact or
omitted or will omit to state a material fact required to be stated
therein or necessary to make the statements made therein, in light of
the circumstances under which they were made, not misleading. Each of
the balance sheets contained or incorporated by reference in the
Company's Reports (including in each case any related notes and
schedules) fairly presented the financial position of the entity or
entities to which it relates as of its date and each of the statements
of income and of changes in stockholders' equity and of cash flows,
contained or incorporated by reference in its Reports (including in
each case any related notes and schedules), fairly presented the
results of operations, stockholders' equity and cash flows, as the
case may be, of the entity or entities to which it relates for the
periods set forth therein (subject, in the case of unaudited interim
statements, to normal year-end audit adjustments that are not material
in amount or effect), in each case in accordance with generally
accepted accounting principles consistently applied during the periods
involved, except as may be noted therein.
(ii) The Company and each of its subsidiaries have each
timely filed all material reports, registrations and statements,
together with any amendments required to be made with respect thereto,
that they were required to file since December 31, 1990 with (i) the
SEC, (ii) the OTS, (iii) the Board of Governors of the Federal Reserve
System ("Federal Reserve Board"), (iv) the Federal Deposit Insurance
Corporation (the "FDIC"), (v) any state banking commission or other
regulatory authority ("State Regulator") (collectively, the
"Regulatory Agencies") and
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<PAGE> 16
(vi) the National Association of Securities Dealers, Inc. and any
other self-regulatory organization ("SRO"), and all other material
reports and statements required to be filed by them since December 31,
1990, including, without limitation, any report or statement required
to be filed pursuant to the laws, rules or regulations of the United
States, the Federal Reserve Board, the OTS, the FDIC, any State
Regulator or any SRO, and have paid all fees and assessments due and
payable in connection therewith.
(h) Absence of Certain Changes or Events. Except as
disclosed in the Company's Reports filed prior to the date of this
Plan, true and complete copies of which have been provided by the
Company to the Acquiror, since December 31, 1992, the Company and its
subsidiaries have not incurred any material liability, except in the
ordinary course of their business consistent with past practice, nor
has there been any change in the financial condition, properties,
business or results of operations of the Company or its subsidiaries
which, individually or in the aggregate, has had, or is reasonably
likely to have, a Material Adverse Effect on the Company.
(i) Taxes. All material federal, state, local, and
foreign tax returns required to be filed by or on behalf of the
Company or any of its subsidiaries have been timely filed or requests
for extensions have been timely filed and any such extension shall
have been granted and not have expired, and all such filed returns are
complete and accurate in all material respects. All taxes shown on
such returns, and all taxes required to be shown on returns for which
extensions have been granted, have been paid in full or adequate
provision has been made for any such taxes on the Company's balance
sheet (in accordance with generally accepted accounting principles).
As of the date of this Plan, there is no audit examination,
deficiency, or refund litigation with respect to any taxes of the
Company or any of its subsidiaries that could result in a
determination that would have a Material Adverse Effect on the
Company. All taxes, interest, additions, and penalties due with
respect to completed and settled examinations or concluded litigation
relating to the Company or any of its subsidiaries have been paid in
full or adequate provision has been made for any such taxes on the
Company's balance sheet (in accordance with generally accepted
accounting principles). The Company and its subsidiaries have not
executed an extension or waiver of any statute of limitations on the
assessment or collection of any material tax due that is currently in
effect.
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<PAGE> 17
(j) Absence of Claims. No litigation, proceeding or
controversy before any court or governmental agency is pending, and
there is no pending claim, action or proceeding against the Company or
any of its subsidiaries, which is reasonably likely, individually or
in the aggregate, to have a Material Adverse Effect on the Company or
to materially hinder or delay consummation of the transactions
contemplated hereby, and, to the best of the Company's knowledge, no
such litigation, proceeding, controversy, claim or action has been
threatened.
(k) Absence of Regulatory Actions. Neither the Company
nor any of its subsidiaries is a party to any cease and desist order,
written agreement or memorandum of understanding with, or a party to
any commitment letter or similar undertaking to, or is subject to any
order or directive by, or is a recipient of any extraordinary
supervisory letter from, federal or state governmental authorities
charged with the supervision or regulation of depository institutions
or depository institution holding companies or engaged in the
insurance of bank and/or savings and loan deposits ("Government
Regulators") nor has it been advised by any Government Regulator that
it is contemplating issuing or requesting (or is considering the
appropriateness of issuing or requesting) any such order, directive,
written agreement, memorandum of understanding, extraordinary
supervisory letter, commitment letter or similar undertaking.
(l) Agreements. (i) Except for the Option Agreement and
arrangements made in the ordinary course of business, the Company and
its subsidiaries are not bound by any material contract (as defined in
Item 601(b)(10) of Regulation S-K) to be performed after the date
hereof that has not been filed with or incorporated by reference in
the Company's Reports. Except as disclosed in the Company's Reports
filed prior to the date of this Plan, neither the Company nor any of
its subsidiaries is a party to an oral or written (A) consulting
agreement (other than data processing, software programming and
licensing contracts entered into in the ordinary course of business)
not terminable on 30 days' or less notice involving the payment of
more than $100,000 per annum, in the case of any such agreement with
an individual, or $100,000 per annum, in the case of any other such
agreement, (B) agreement with any executive officer, other than as
provided in clause (C) below, or other key employee of the Company or
any of its subsidiaries the benefits of which are contingent, or the
terms of which are materially altered, upon the occurrence of a
transaction involving the Company or any of its subsidiaries
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<PAGE> 18
of the nature contemplated by this Plan or the Option Agreement and
which provides for the payment of in excess of $100,000, (C) agreement
with respect to any executive officer of the Company or any of its
subsidiaries providing any term of employment or compensation
guarantee extending for a period longer than one year and for the
payment of in excess of $100,000 per annum, except for Employment
Agreements, dated as of July 21, 1993, between the Company and,
respectively, Robert N. Chambers, Anthony P. Costa, Stephen H. DuBois
and Jeffrey J. Squires, (D) agreement or plan, including any stock
option plan, stock appreciation rights plan, restricted stock plan or
stock purchase plan, any of the benefits of which will be increased,
or the vesting of the benefits of which will be accelerated, by the
occurrence of any of the transactions contemplated by this Plan or the
Option Agreement or the value of any of the benefits of which will be
calculated on the basis of any of the transactions contemplated by
this Plan or the Option Agreement or (E) agreement containing
covenants that limit the ability of the Company or any of its
subsidiaries to compete in any line of business or with any person, or
that involve any restriction on the geographic area in which, or
method by which, the Company (including any successor thereof) or any
of its subsidiaries may carry on its business (other than as may be
required by law or any regulatory agency).
(ii) Neither the Company nor any of its subsidiaries is in
default under or in violation of any provision of any note, bond,
indenture, mortgage, deed of trust, loan agreement or other agreement
to which it is a party or by which it is bound or to which any of its
respective properties or assets is subject, other than such defaults
or violations as could not reasonably be expected, individually or in
the aggregate, to have a Material Adverse Effect.
(m) Labor Matters. Neither the Company nor any of its
subsidiaries is a party to, or is bound by, any collective bargaining
agreement, contract, or other agreement or understanding with a labor
union or labor organization with respect to its employees, nor is the
Company or any of its subsidiaries the subject of any proceeding
asserting that it has committed an unfair labor practice or seeking to
compel it or any such subsidiary to bargain with any labor
organization as to wages and conditions of employment, nor is the
management of the Company aware of any strike, other labor dispute or
organizational effort involving the Company or any of its subsidiaries
pending or threatened.
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<PAGE> 19
(n) Employee Benefit Plans. Annex 3 contains a complete
list of all pension, retirement, stock option, stock purchase, stock
ownership, savings, stock appreciation right, profit sharing, deferred
compensation, consulting, bonus, group insurance, severance and other
benefit plans, contracts, agreements, arrangements, including, but not
limited to, "employee benefit plans", as defined in Section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), incentive and welfare policies, contracts, plans and
arrangements and all trust agreements related thereto with respect to
any present or former directors, officers, or other employees of the
Company or any of its subsidiaries (hereinafter referred to
collectively as the "Employee Plans"). (i) All of the Employee Plans
comply in all material respects with all applicable requirements of
ERISA, the Internal Revenue Code of 1986, as amended (the "Code") and
other applicable laws; neither the Company nor any of its subsidiaries
has engaged in a "prohibited transaction" (as defined in Section 406
of ERISA or Section 4975 of the Code) with respect to any Employee
Plan which is likely to result in any material penalties or taxes
under Section 502(i) of ERISA or Section 4975 of the Code; (ii) no
material liability to the Pension Benefit Guaranty Corporation has
been or is expected by the Company or any of its subsidiaries to be
incurred with respect to any Employee Plan which is subject to Title
IV of ERISA ("Pension Plan"), or with respect to any "single- employer
plan" (as defined in Section 4001(a)(15) of ERISA) currently or
formerly maintained by the Company or any entity which is considered
one employer with the Company under Section 4001 of ERISA or Section
414 of the Code (an "ERISA Affiliate"); (iii) no Pension Plan had an
"accumulated funding deficiency" (as defined in Section 302 of ERISA
(whether or not waived)) as of the last day of the end of the most
recent plan year ending prior to the date hereof; the fair market
value of the assets of each Pension Plan exceeds the present value of
the "benefit liabilities" (as defined in Section 4001(a)(16) of ERISA)
under such Pension Plan as of the end of the most recent plan year
with respect to the respective Pension Plan ending prior to the date
hereof, calculated on the basis of the actuarial assumptions used in
the most recent actuarial valuation for such Pension Plan as of the
date hereof; and no notice of a "reportable event" (as defined in
Section 4043 of ERISA) for which the 30-day reporting requirement has
not been waived has been required to be filed for any Pension Plan
within the 12-month period ending on the date hereof; (iv) neither the
Company nor any subsidiary of the Company has provided, or is
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<PAGE> 20
required to provide, security to any Pension Plan or to any
single-employer plan of an ERISA Affiliate pursuant to Section
401(a)(29) of the Code; (v) neither the Company, its subsidiaries, nor
any ERISA Affiliate has contributed to any "multiemployer plan", as
defined in Section 3(37) of ERISA, on or after September 26, 1980;
(vi) each Employee Plan of the Company or of any of its subsidiaries
which is an "employee pension benefit plan" (as defined in Section
3(2) of ERISA) and which is intended to be qualified under Section
401(a) of the Code (a "Qualified Plan") has received a favorable
determination letter from the Internal Revenue Service and the Company
and its subsidiaries are not aware of any circumstances likely to
result in revocation of any such favorable determination letter; (vii)
each Qualified Plan which is an "employee stock ownership plan" (as
defined in Section 4975(e)(7) of the Code) has satisfied all of the
applicable requirements of Sections 409 and 4975(e)(7) of the Code and
the regulations thereunder in all material respects; (viii) there is
no pending or threatened litigation, administrative action or
proceeding relating to any Employee Plan; (ix) there has been no
announcement or commitment by the Company or any subsidiary of the
Company to create an additional Employee Plan, or to amend an Employee
Plan except for amendments required by applicable law which do not
materially increase the cost of such Employee Plan; and the Company
and its subsidiaries do not have any obligations for retiree health
and life benefits under any Employee Plan, that cannot be amended or
terminated without incurring any liability thereunder; (x) with
respect to the Company or any of its subsidiaries, except as
specifically identified on Annex 3 and subject to the conditions,
limitations and assumptions specified therein, the execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby will not result in any payment or series of
payments by the Company or any subsidiary of the Company to any person
which is an "excess parachute payment" (as defined in Section 280G of
the Code) under any Employee Plan, increase or secure (by way of a
trust or other vehicle) any benefits payable under any Employee Plan,
or accelerate the time of payment or vesting of any such benefit, and
(xi) with respect to each Employee Plan, the Company has supplied to
the Acquiror a true and correct copy of (A) the most recent annual
report on the applicable form of the Form 5500 series filed with the
Internal Revenue Service (the "IRS"), (B) such Employee Plan,
including amendments thereto, (C) each trust agreement and insurance
contract relating to such Plan, including amendments thereto, (D) the
most recent summary
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<PAGE> 21
plan description for such Employee Plan, including amendments thereto,
if the Employee Plan is subject to Title I of ERISA, (E) the most
recent actuarial report or valuation if such Employee Plan is a
Pension Plan and (F) the most recent determination letter issued by
the IRS if such Company Benefit Plan is a Qualified Plan. Annex 3
contains a complete list of the Employee Plans.
(o) Title to Assets. The Company and each of its
subsidiaries has good and marketable title to its properties and
assets (other than (i) property as to which it is lessee and (ii) real
estate owned as a result of foreclosure, transfer in lieu of
foreclosure or other transfer in satisfaction of a debtor's obligation
previously contracted), except for such defects in title which would
not, individually or in the aggregate, have a Material Adverse Effect
on the Company.
(p) Knowledge as to Conditions. The Company knows of no
reason why the approvals, consents and waivers of governmental
authorities referred to in Section 5.1(b) should not be obtained
without the imposition of any condition of the type referred to in the
provisos thereto.
(q) Compliance with Laws. The Company and each of its
subsidiaries has all permits, licenses, certificates of authority,
orders and approvals of, and has made all filings, applications and
registrations with, federal, state, local and foreign governmental or
regulatory bodies that are required in order to permit it to carry on
its business as it is presently conducted and the absence of which
could, individually or in the aggregate, have a Material Adverse
Effect on the Company or materially delay the Merger; all such
permits, licenses, certificates of authority, orders and approvals are
in full force and effect, and, to the best knowledge of the Company,
no suspension or cancellation of any of them is threatened.
(r) Fees. Other than financial advisory services
performed for the Company by Lyons, Zomback & Ostrowski, a division of
Advest, Inc., in an amount and pursuant to an agreement both
previously disclosed to the Acquiror, neither the Company nor any of
its subsidiaries, nor any of their respective officers, directors,
employees or agents, has employed any broker or finder or incurred any
liability for any financial advisory fees, brokerage fees,
commissions, or finder's fees, and no broker or finder has acted
directly or indirectly for the Company or any subsidiary of the
Company, in connection with the
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<PAGE> 22
Plan or the transactions contemplated hereby. The Company shall not
be liable for any financial services advisory fees incurred by the
Acquiror.
(s) Environmental Matters. (i) With respect to the Company
and each of its subsidiaries:
(A) Each of the Company and its subsidiaries, the
Participation Facilities, and the Loan Properties (each as
defined below) are, and have been, in substantial compliance
with all Environmental Laws (as defined below);
(B) There is no suit, claim, action, demand,
executive or administrative order, directive, investigation or
proceeding pending or threatened, before any court,
governmental agency or board or other forum against it or any
of its subsidiaries or any Participation Facility (x) for
alleged noncompliance (including by any predecessor) with, or
liability under, any Environmental Law or (y) relating to the
release into the environment of any Hazardous Material (as
defined below), whether or not occurring at or on a site
owned, leased or operated by it or any of its subsidiaries or
any Participation Facility;
(C) There is no suit, claim, action, demand,
executive or administrative order, directive, investigation or
proceeding pending or threatened, before any court,
governmental agency or board or other forum relating to or
against any Loan Property (or the Company or any of its
subsidiaries in respect of such Loan Property) (x) relating to
alleged noncompliance (including by any predecessor) with, or
liability under, any Environmental Law or (y) relating to the
release into the environment of any Hazardous Material whether
or not occurring at or on a site owned, leased or operated by
a Loan Property;
(D) There is no reasonable basis for any suit,
claim, action, demand, executive or administrative order,
directive or proceeding of a type described in Section
3.1(s)(i)(B) or (C);
(E) The properties currently or formerly owned or
operated by the Company or any of its subsidiaries (including,
without limitation, soil, groundwater or surface water on,
under or adjacent to the properties, and buildings thereon) do
not
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<PAGE> 23
contain any Hazardous Material (as defined below) other than
as permitted under applicable Environmental Law (provided,
however, that with respect to properties formerly owned or
operated by the Company or any of its subsidiaries, such
representation is limited to the period the Company or any
such subsidiary owned or operated such properties);
(F) None of it or any of its subsidiaries has
received any notice, demand letter, executive or
administrative order, directive or request for information
from any federal, state, local or foreign governmental entity
or any third party indicating that it may be in violation of,
or liable under, any Environmental Law;
(G) There are no underground storage tanks on, in or
under any properties or Participation Facility and no
underground storage tanks have been closed or removed from any
properties or Participation Facility which are or have been in
the ownership of it or any of its subsidiaries;
(H) During the period of (l) its or any of its
subsidiaries' ownership or operation of any of their
respective current properties, (m) its or any of its
subsidiaries' participation in the management of any
Participation Facility, or (n) its or any of its subsidiaries'
holding of a security interest in a Loan Property, there has
been no release of Hazardous Material in, on, under or
affecting such properties. Prior to the period of (x) its or
any of its subsidiaries' ownership or operation of any of
their respective current properties, (y) its or any of its
subsidiaries' participation in the management of any
Participation Facility, or (z) its or any of its subsidiaries'
holding of a security interest in a Loan Property, there was
no release of Hazardous Material in, on, under or affecting
any such property, Participation Facility or Loan Property;
and
(I) None of it or its subsidiaries participates in
the management of a Loan Property or Participation Facility
within the meaning of 40 C.F.R. Section 300.1100(c).
(ii) The following definitions apply for purposes of this
Section 3.1(s): (w) "Loan Property" means any
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<PAGE> 24
property in which the applicable party (or a subsidiary of it) holds a
security interest, and, where required by the context, includes the
owner or operator of such property, but only with respect to such
property; (x) "Participation Facility" means any facility in which the
applicable party (or a subsidiary of it) participates in the
management (including all property held as trustee or in any other
fiduciary capacity) and, where required by the context, includes the
owner or operator of such property, but only with respect to such
property; (y) "Environmental Law" means (i) any federal, state or
local law, statute, ordinance, rule, regulation, code, license,
permit, authorization, approval, consent, legal doctrine, order,
directive, executive or administrative order, judgment, decree,
injunction, requirement or agreement with any governmental entity, (A)
relating to the protection, preservation or restoration of the
environment (which includes, without limitation, air, water vapor,
surface water, groundwater, drinking water supply, structures, soil,
surface land, subsurface land, plant and animal life or any other
natural resource), or to human health or safety, or (B) the exposure
to, or the use, storage, recycling, treatment, generation,
transportation, processing, handling, labeling, production, release or
disposal of, Hazardous Materials, in each case as amended and as now
or hereafter in effect, including all current Environmental Laws, all
future interpretations of current Environmental Laws and all future
Environmental Laws and subsequent interpretations thereof. The term
Environmental Law includes, without limitation, the federal
Comprehensive Environmental Response Compensation and Liability Act of
1980, the Superfund Amendments and Reauthorization Act, the federal
Water Pollution Control Act of 1972, the federal Clean Air Act, the
federal Clean Water Act, the federal Resource Conservation and
Recovery Act of 1976 (including the Hazardous and Solid Waste
Amendments thereto), the federal Solid Waste Disposal and the federal
Toxic Substances Control Act, the Federal Insecticide, Fungicide and
Rodenticide Act, the Federal Occupational Safety and Health Act of
1970, the Federal Hazardous Materials Transportation Act, or any
so-called "Superfund" or "Superlien" law, each as amended and as now
or hereafter in effect, and (ii) any common law or equitable doctrine
(including, without limitation, injunctive relief and tort doctrines
such as negligence, nuisance, trespass and strict liability) that may
impose liability or obligations for injuries or damages due to, or
threatened as a result of, the presence of or exposure to any
Hazardous Material; and (z) "Hazardous Material" means any substance
which is or could be detrimental to
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<PAGE> 25
human health or safety or to the environment, currently or hereafter
listed, defined, designated or classified as hazardous, toxic,
radioactive or dangerous, or otherwise regulated, under any
Environmental Law, whether by type or by quantity, including any
substance containing any such substance as a component. Hazardous
Material includes, without limitation, any toxic waste, pollutant,
contaminant, hazardous substance, toxic substance, hazardous waste,
special waste, industrial substance, oil or petroleum or any
derivative or by-product thereof, radon, radioactive material,
asbestos, asbestos-containing material, urea formaldehyde foam
insulation, lead and polychlorinated biphenyl.
(t) Allowance. The allowance for possible loan losses
reflected in the Company's press release announcing its fourth quarter
1993 results as well as its unaudited statement of condition at
December 31, 1993 was, and the allowance for possible loan losses
shown on the balance sheets in its Reports for periods ending after
the date of this Plan will be, adequate, as of the date thereof, under
generally accepted accounting principles applicable to federal savings
banks and federal savings association holding companies. The Company
has disclosed to the Acquiror in writing prior to the date hereof the
amounts of all loans, leases, advances, credit enhancements, other
extensions of credit, commitments and interest-bearing assets of the
Company and its subsidiaries that have been classified by any bank
examiner (whether regulatory or internal) as "Other Loans Specially
Mentioned", "Special Mention", "Substandard", "Doubtful", "Loss",
"Classified", "Criticized", "Credit Risk Assets", "Concerned Loans"
(in the latter 2 cases, to the extent available) or words of similar
import, and the Company and its subsidiaries shall promptly after the
end of any month inform the Acquiror of any such classification
arrived at any time after the date hereof. The Other Real Estate
Owned ("OREO") included in any non-performing assets of the Company or
any of its subsidiaries is carried net of reserves at the lower of
cost or fair value based on current independent appraisals or current
management appraisals provided, however, that "current" shall mean
within the past 12 months.
(u) Antitakeover Provisions Inapplicable. The provisions
of Section 203 of the DGCL and Articles Tenth and Sixteenth of the
Company's certificate of incorporation do not and will not apply to
this Plan, the Merger or the Option Agreement or the transactions
contemplated hereby or thereby and, in the case of Article Tenth, is
not applicable because the required
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<PAGE> 26
approval of the Company's board of directors has been obtained. The
Company has taken all actions required to exempt the Plan, the Merger
and the Option Agreement from any state antitakeover laws. In
addition, the board of directors of the Company has, in acting upon
the foregoing, satisfied the provisions of Article Seventeenth of the
Company's certificate of incorporation.
(v) Rights Agreement. The Company has duly adopted an
amendment to the Rights Agreement (in the form of Annex 4) as a result
of which neither the Acquiror nor Merger Sub will become an "Acquiring
Person" or an "Adverse Person" and no "Stock Acquisition Date" or
"Distribution Date" (as such terms are defined in the Rights
Agreement) or adjustment pursuant to Section 13 of the Rights
Agreement will occur, and the rights issued under the Rights Agreement
will not become distributable, unredeemable or exercisable, as a
result of the approval, execution or delivery of this Plan or the
Option Agreement or the consummation of the transactions contemplated
hereby or thereby or at any time thereafter, including, without
limitation, any acquisition of shares of Company Common Stock by the
Acquiror pursuant to the Option Agreement.
(w) Material Interests of Certain Persons. Except as
disclosed in the Company's Proxy Statement for its 1993 Annual Meeting
of Stockholders, no officer or director of the Company, or any
"associate" (as such term is defined in Rule 12b-2 under the
Securities Exchange Act) of any such officer or director, has any
material interest in any material contract or property (real or
personal), tangible or intangible, used in or pertaining to the
business of the Company or any of its subsidiaries required to be
disclosed under the Commission's Regulation S-K.
(x) Insurance. The Company and its subsidiaries are
presently insured, and since December 31, 1990, have been insured, for
reasonable amounts with financially sound and reputable insurance
companies, against such risks as companies engaged in a similar
business would, in accordance with good business practice, customarily
be insured. All of the insurance policies and bonds maintained by the
Company and its subsidiaries are in full force and effect, the Company
and its subsidiaries are not in default thereunder and all material
claims thereunder have been filed in due and timely fashion. In the
best judgment of the Company's management, such insurance coverage is
adequate.
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(y) Investment Securities. Except for pledges to secure
public and trust deposits, Federal Home Loan Bank of New York
borrowings, and reverse repurchase agreements entered into in
arm's-length transactions pursuant to normal commercial terms and
conditions and other pledges required by law, none of the investments
reflected in the consolidated balance sheet of the Company included in
the Company's Report on Form 10-Q for the quarter ended September 30,
1993, and none of the material investments made by it or any of its
subsidiaries since September 30, 1993, is subject to any restriction
(contractual, statutory or otherwise) that would materially impair the
ability of the entity holding such investment freely to dispose of
such investment at any time.
(z) Registration Obligations. Neither the Company nor any of
its subsidiaries is under any obligation, contingent or otherwise, to
register any of its securities under the Securities Act of 1933, as
amended, other than as set forth in the Option Agreement.
(aa) Books and Records. The books and records of the Company
and its subsidiaries have been, and are being, maintained in
accordance with applicable legal and accounting requirements and
reflect in all material respects the substance of events and
transactions that should be included therein.
(bb) Corporate Documents. The Company has delivered to the
Acquiror true and complete copies of (i) its certificate of
incorporation and by-laws and (ii) the charter and by-laws of the
Company Bank.
(cc) Liquidation Account. Neither the Merger nor the Bank
Merger will result in any payment or distribution payable out of the
Liquidation Account of the Company Bank.
SECTION 3.2. Representations and Warranties of the Acquiror
and the Merger Sub. The Acquiror represents and warrants to the Company that,
except as specifically disclosed in a letter of the Acquiror delivered to the
Company prior to the date hereof (and making specific reference to the Section
of this Plan for which an exception is taken):
(a) Corporate Organization and Qualification. Each of the
Acquiror and Merger Sub is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of New
Jersey or Delaware, respectively, and is in good standing as a foreign
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corporation in each jurisdiction where the properties owned, leased or
operated, or the business conducted, by it requires such
qualification, except for such failure to qualify or be in such good
standing which, when taken together with all other such failures,
would not have a Material Adverse Effect (as defined in Section 8.1).
The Acquiror and Merger Sub each has the requisite corporate and other
power and authority (including all federal, state, local and foreign
government authorizations) to carry on its respective businesses as
they are now being conducted and to own their respective properties
and assets. The Acquiror owns all of the shares of capital stock of
the Merger Sub.
(b) Authority. Each of the Acquiror and Merger Sub has the
requisite power and authority and has taken all corporate action
necessary in order to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. This Agreement is a
valid and binding agreement of the Acquiror and Merger Sub enforceable
against the Acquiror and Merger Sub in accordance with its terms.
(c) No Violations. The execution, delivery and performance
of this Agreement by the Acquiror and Merger Sub do not, and the
consummation of the transactions contemplated hereby will not,
constitute (i) a breach or violation of, or a default under, any law,
rule or regulation or any judgment, decree, order, governmental permit
or license, or agreement, indenture or instrument of the Acquiror or
Merger Sub or to which the Acquiror or Merger Sub (or any of their
respective properties) is subject, which breach, violation or default
would have a Material Adverse Effect on the Acquiror, or enable any
person to enjoin the Merger or the other transactions contemplated
hereby, (ii) a breach or violation of, or a default under, the
certificate or articles of incorporation or by-laws of the Acquiror or
Merger Sub or (iii) a breach or violation of, or a default under (or
an event which with due notice or lapse of time or both would
constitute a default under), or result in the termination of,
accelerate the performance required by, or result in the creation of
any lien, pledge, security interest, charge or other encumbrance upon
any of the properties or assets of the Acquiror or Merger Sub under,
any of the terms, conditions or provisions of any note, bond,
indenture, deed of trust, loan agreement or other agreement,
instrument or obligation to which the Acquiror or Merger Sub is a
party, or to which any of their respective properties or assets may be
bound or affected, except for any of the foregoing that, individually
or in
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the aggregate, would not have a Material Adverse Effect on the
Acquiror; and the consummation of the transactions contemplated hereby
will not require any approval, consent or waiver under any such law,
rule, regulation, judgment, decree, order, governmental permit or
license or the approval, consent or waiver of any other party to any
such agreement, indenture or instrument, other than (i) the required
approvals, consents and waivers of governmental authorities referred
to in Section 5.1(b) or (ii) any other approvals, consents or waivers
the absence of which, individually or in the aggregate, would not
result in a Material Adverse Effect on the Acquiror or enable any
person to enjoin or materially delay the Merger or the Bank Merger.
(d) Access to Funds. The Acquiror has, or on the Closing
Date will have, all funds necessary to consummate the Merger and pay
the aggregate Merger Consideration.
(e) Knowledge as to Conditions. The Acquiror knows of no
reason why the approvals, consents and waivers of governmental
authorities referred to in Section 5.1(b) should not be obtained
without the imposition of any condition of the type referred to in the
provisos thereto.
(f) Reports. (i) As of their respective dates, neither
the Acquiror's Annual Report on Form 10-K for the fiscal year ended
December 31, 1992, nor any other document filed subsequent to December
31, 1992 under Section 13(a), 13(c), 14 or 15(d) of the Securities
Exchange Act, each in the form (including exhibits) filed with the SEC
(collectively, the "Acquiror Reports"), contained or will contain any
untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements
made therein, in light of the circumstances under which they were
made, not misleading. Each of the balance sheets contained or
incorporated by reference in the Acquiror's Reports (including in each
case any related notes and schedules) fairly presented the financial
position of the entity or entities to which it relates as of its date
and each of the statements of income and of changes in stockholders'
equity and of cash flows, contained or incorporated by reference in
its Reports (including in each case any related notes and schedules),
fairly presented the results of operations, stockholders' equity and
cash flows, as the case may be, of the entity or entities to which it
relates for the periods set forth therein (subject, in the case of
unaudited interim statements, to normal year-end audit
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adjustments that are not material in amount or effect), in each case
in accordance with generally accepted accounting principles
consistently applied during the periods involved, except as may be
noted therein.
(ii) The Company and each of its subsidiaries have each
timely filed all material reports, registrations and statements,
together with any amendments required to be made with respect thereto,
that they were required to file since December 31, 1990 with (i) the
SEC, (ii) the OCC, (iii) the Federal Reserve Board, (iv) the Federal
Deposit Insurance Corporation (the "FDIC"), (v) any state banking
commission or other regulatory authority ("State Regulator")
(collectively, the "Regulatory Agencies") and (vi) the National
Association of Securities Dealers, Inc. and any other self-regulatory
organization ("SRO"), and all other material reports and statements
required to be filed by them since December 31, 1990, including,
without limitation, any report or statement required to be filed
pursuant to the laws, rules or regulations of the United States, the
Federal Reserve Board, the OCC, the FDIC, any State Regulator or any
SRO, and have paid all fees and assessments due and payable in
connection therewith, except where the failure to make any such filing
or pay any such fees or assessments would not have a Material Adverse
Effect.
(g) Absence of Claims. No litigation, proceeding or
controversy before any court or governmental agency is pending, and
there is no pending claim, action or proceeding against the Acquiror
or any of its subsidiaries, which is reasonably likely, individually
or in the aggregate, to have a Material Adverse Effect on the Acquiror
or to materially hinder or delay consummation of the transactions
contemplated hereby, and, to the best of the Acquiror's knowledge, no
such litigation, proceeding, controversy, claim or action has been
threatened.
(h) Absence of Regulatory Actions. Neither the Acquiror
nor any of its subsidiaries is a party to any cease and desist order,
written agreement or memorandum of understanding with, or a party to
any commitment letter or similar undertaking to, or is subject to any
order or directive by, or is a recipient of any extraordinary
supervisory letter from, any Regulatory Agencies nor has it been
advised by any Regulatory Agencies that it is contemplating issuing or
requesting (or is considering the appropriateness of issuing or
requesting) any such order, directive, written agreement, memorandum
of understanding, extraordinary supervisory letter, commitment letter
or similar undertaking which is
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reasonably likely, individually or in the aggregate, to have a
Material Adverse Effect on the Acquiror or to materially hinder or
delay consummation of the transactions contemplated hereby.
(i) Employee Benefit Plans. Except to the extent that it
would not result in or have a Material Adverse Effect, all of the
Acquiror Employee Plans comply in all material respects with all
applicable requirements of ERISA, the Code and other applicable laws;
neither the Acquiror nor any of its subsidiaries has engaged in a
"prohibited transaction" (as defined in Section 406 of ERISA or
Section 4975 of the Code) with respect to any Acquiror Employee Plan
which is likely to result in any material penalties or taxes under
Section 502(i) of ERISA or Section 4975 of the Code; (ii) no material
liability to the Pension Benefit Guaranty Corporation has been or is
expected by the Acquiror or any of its subsidiaries to be incurred
with respect to any Acquiror Employee Plan which is subject to Title
IV of ERISA ("Acquiror Pension Plan"), or with respect to any
"single-employer plan" (as defined in Section 4001(a)(15) of ERISA)
currently or formerly maintained by the Acquiror or any entity which
is considered one employer with the Acquiror under Section 4001 of
ERISA or Section 414 of the Code (an "ERISA Affiliate"); (iii) no
Acquiror Pension Plan had an "accumulated funding deficiency" (as
defined in Section 302 of ERISA (whether or not waived)) as of the
last day of the end of the most recent plan year ending prior to the
date hereof; the fair market value of the assets of each Acquiror
Pension Plan exceeds the present value of the "benefit liabilities"
(as defined in Section 4001(a)(16) of ERISA) under such Acquiror
Pension Plan as of the end of the most recent plan year with respect
to the respective Acquiror Pension Plan ending prior to the date
hereof, calculated on the basis of the actuarial assumptions used in
the most recent actuarial valuation for such Acquiror Pension Plan as
of the date hereof; and no notice of a "reportable event" (as defined
in Section 4043 of ERISA) for which the 30-day reporting requirement
has not been waived has been required to be filed for any Acquiror
Pension Plan within the 12-month period ending on the date hereof;
(iv) neither the Acquiror nor any subsidiary of the Acquiror has
provided, or is required to provide, security to any Acquiror Pension
Plan or to any single-employer plan of an ERISA Affiliate pursuant to
Section 401(a)(29) of the Code; (v) neither the Acquiror, its
subsidiaries, nor any ERISA Affiliate has contributed to any
"multiemployer plan", as defined in Section 3(37) of ERISA, on or
after September 26, 1980; and (vi) each Acquiror Employee Plan
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of the Acquiror or of any of its subsidiaries which is an "employee
pension benefit plan" (as defined in Section 3(2) of ERISA) and which
is intended to be qualified under Section 401(a) of the Code (a
"Qualified Plan") has received a favorable determination letter from
the Internal Revenue Service and the Acquiror and its subsidiaries are
not aware of any circumstances likely to result in revocation of any
such favorable determination letter. As used herein, "Acquiror
Employee Plan" means the Acquiror's defined benefits pension plan and
savings plan and any trust related thereto.
ARTICLE IV. COVENANTS
SECTION 4.1. Acquisition Proposals. The Company agrees that
neither it nor any of its subsidiaries nor any of the respective officers and
directors of the Company or its subsidiaries shall, and the Company shall
direct and use its best efforts to cause its employees, agents and
representatives (including, without limitation, any investment banker, attorney
or accountant retained by it or any of its subsidiaries) not to, initiate,
solicit or encourage, directly or indirectly, any inquiries or the making of
any proposal or offer (including, without limitation, any proposal or offer to
stockholders of the Company) with respect to a merger, consolidation or similar
transaction involving, or any purchase of all or any significant portion of the
assets or any equity securities of, the Company or any of its subsidiaries (any
such proposal or offer being hereinafter referred to as an "Acquisition
Proposal") or, except to the extent legally required for the discharge by the
board of directors of its fiduciary duties as advised in writing by such
board's counsel, engage in any negotiations concerning, or provide any
confidential information or data to, or have any discussions with, any person
relating to an Acquisition Proposal, or otherwise facilitate any effort or
attempt to make or implement an Acquisition Proposal. The Company will
immediately cease and cause to be terminated any existing activities,
discussions or negotiations with any parties conducted heretofore with respect
to any of the foregoing. The Company will take the necessary steps to inform
the appropriate individuals or entities referred to in the first sentence
hereof of the obligations undertaken in this Section 4.1. The Company will
notify the Acquiror immediately if any such inquiries or proposals are received
by, any such information is requested from, or any such negotiations or
discussions are sought to be initiated or continued with the Company after the
date hereof.
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SECTION 4.2. Certain Policies of the Company. At the request
of the Acquiror, the Company shall modify and change its loan, litigation and
real estate valuation policies and practices (including loan classifications
and levels of reserves) after the date on which all required federal depository
institution regulatory approvals are received and prior to the Effective Time
so as to be consistent on a mutually satisfactory basis with those of the
Acquiror and generally accepted accounting principles; provided that such
policies and procedures are consistent with all applicable laws and
regulations. The Company's representations, warranties and covenants contained
in this Plan shall not be deemed to be untrue or breached in any respect for
any purpose as a consequence of any modifications or changes undertaken solely
on account of this Section 4.2. The Acquiror hereby agrees to hold harmless,
indemnify and defend the Company, its subsidiaries, and their respective
directors, officers and employees for any loss, claim, liability or other
damage caused by or resulting from compliance with this Section 4.2.
SECTION 4.3. Employees. (a) Acquiror and any of its
subsidiaries shall have the right (but not the obligation) to employ, as
officers and employees of Acquiror, the Surviving Corporation or other
subsidiaries of Acquiror immediately following the Effective Time, any persons
who are officers and employees of the Company or any of its subsidiaries
immediately before the Effective Time. The Acquiror shall use all reasonable
efforts to identify, and offer employment opportunities to qualified,
satisfactorily performing employees of the Company and its subsidiaries in,
vacant positions within the business operations of the Acquiror and its
subsidiaries for which such employees are qualified. The Acquiror shall give,
and shall cause its subsidiaries to give, priority consideration to all such
employees vis-a-vis all individuals other than current employees of the
Acquiror; provided, however, that employees of the Company and its subsidiaries
shall rank on an equal footing with the employees of the Acquiror and any other
entity that has been acquired by the Acquiror or that may be acquired by the
Acquiror in the future. To the extent that any employee of the Company or the
Company Bank is not offered employment by the Acquiror or any of its
subsidiaries as of the Effective Time or the employment of any employee of the
Company or the Company Bank is involuntarily terminated within six months after
the Effective Time for any reason other than cause, such employee shall be
entitled to receive a severance payment equal to two weeks' pay for each full
year of service with the Company, the Company Bank and the Surviving
Corporation, provided, however, that under no circumstances shall any employee
be entitled to more than a total of 26 weeks' pay in respect of such severance
payment. For purposes
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of this Section 4.3, the term "involuntary termination" shall include the
offering of employment at, or relocation of an employee to, an office that is
not located within the New York Counties of Orange, Dutchess, Putnam, Ulster or
Westchester, and the term "cause" shall mean either (1) conviction of a felony
or (2) breach or failure to perform assigned duties under applicable law or the
bylaws of the Acquiror and such breach or failure constitutes self-dealing,
willful misconduct or recklessness. For purposes of this Section 4.3, the
determination of whether the employment of any employee is terminated for cause
shall be made in accordance with Acquiror or Acquiror's affiliates' normal
employment practices to the extent consistent with the definitions of
"involuntary termination" and for "cause" set forth herein. At and after the
Effective Time, the Acquiror shall honor the employment agreements between the
Company and the Company Bank and Robert N. Chambers, Anthony P. Costa, Stephen
H. DuBois and Jeffrey J. Squires in accordance with their terms in effect on
the date of this Agreement. In addition, it shall be a condition to employment
by Acquiror or any of its affiliates that any former officer or employee of the
Company agree to cancel any existing employment contract, agreement or
understanding between him or herself and the Company, including without
limitation all benefits related to severance arrangements upon a change of
control or otherwise, prior to accepting such new employment and without
accepting any of the severance benefits associated with such contract,
agreement or understanding. In consideration for the relinquishment of any
former employee of the Company of all benefits to which he or she might be
entitled under an employment agreement with the Company, the Acquiror agrees to
negotiate with any such person to whom it shall offer employment the terms of a
new, mutually agreeable employment agreement between such person and Acquiror
or, if applicable, an affiliate of Acquiror.
(b) Each person employed by the Company or any of its
subsidiaries prior to the Effective Time who remains an employee of the
Surviving Corporation or its subsidiaries following the Effective Time (each a
"Continued Employee") shall be entitled, as an employee of the Acquiror or any
of its subsidiaries, to participate in whatever employee benefit plans, as
defined in Section 3(3) of ERISA, or whatever nonqualified employee benefit
plans or deferred compensation, stock option, bonus or incentive plans or other
employee benefit or fringe benefit programs that may be in effect generally for
employees of Acquiror's subsidiaries from time to time ("Acquiror's Plans"), if
such Continued Employee shall be eligible or selected for participation therein
and otherwise shall not be participating in a similar plan which continues to
be maintained by the Surviving Corporation and its subsidiaries. Continued
Employees will be eligible to
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participate on the same basis as similarly situated employees of Acquiror or
Acquiror's subsidiaries. All such participation shall be subject to such terms
of such plans as may be in effect from time to time.
(c) The Acquiror or Acquiror's subsidiaries shall, for
purposes of vesting and for purposes of eligibility to begin participation with
respect to Acquiror's Plans, cause each of Acquiror's Plans to be amended to
recognize credit for each Continued Employee's term of service with the Company
and the Company's subsidiaries as if it were service with the Acquiror. The
parties hereto agree to use their best efforts to negotiate with the plan
sponsor of the Company's defined benefit retirement plan ("Company's Pension
Plan") in order to effect a transfer of all of the assets and benefit
liabilities from the Company's Pension Plan's trust to the Acquiror's Pension
Plan Trust. If the transfer of assets is made, Acquiror or Acquiror's
subsidiaries shall cause their respective qualified defined benefit plans to be
amended, to provide for payment of a transferred benefit for each Continued
Employee, former employee of the Company or beneficiary of a former employee of
the Company who was entitled to payment of an accrued benefit under the
Company's Pension Plan as of the Effective Time. Such transferred benefit
shall be equal to the benefit accrued under the Company's Pension Plan as of
the Effective Time, plus, in the case of a Continued Employee, any additional
benefit accruals under Acquiror or Acquiror's Subsidiary's defined benefit
plans. Upon the effective date of the transfer, no future benefit accruals
shall be provided under the Company's Pension Plan, and each Continued Employee
shall begin to accrue a benefit under Acquiror's Pension Plan according to its
terms. The Company agrees to assist with whatever action is required (including
issuance of a timely notice to employees under Section 204 of ERISA) to
effectuate the foregoing.
(d) Prior to the Effective Date, the Company may not make any
contributions to its Employee Stock Ownership Plan ("ESOP") or enter into any
loan agreements with respect to such ESOP. At the Closing, the Acquiror shall
assume sponsorship of the ESOP, and the Company agrees reasonably to assist
with whatever action is required to effectuate the foregoing. As soon as
practicable after the Effective Time, the Acquiror shall terminate the ESOP and
upon receipt of a determination by the IRS that the ESOP was qualified through
the date of the termination arrange for distribution of plan assets as provided
under the ESOP, as it may be amended in connection with such plan termination.
SECTION 4.4. Access and Information. Upon reasonable notice,
the Company shall (and shall cause its
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subsidiaries to) afford to the Acquiror and its representatives (including,
without limitation, directors, officers and employees of the Acquiror and its
affiliates, and counsel, accountants and other professionals retained) such
access during normal business hours throughout the period prior to the
Effective Time to the books, records (including, without limitation, tax
returns and work papers of independent auditors), properties, personnel and to
such other information as the Acquiror may reasonably request; provided,
however, that no investigation pursuant to this Section 4.4 shall affect or be
deemed to modify any representation or warranty made herein. The Acquiror will
not, and will cause its representatives not to, use any information obtained
pursuant to this Section 4.4 for any purpose unrelated to the consummation of
the transactions contemplated by this Plan. Subject to the requirements of
law, the Acquiror will keep confidential, and will cause its representatives to
keep confidential, all information and documents obtained pursuant to this
Section 4.4 unless such information (i) was already known to the Acquiror or an
affiliate of the Acquiror, other than pursuant to a confidentiality agreement
or other confidential relationship, (ii) becomes available to the Acquiror or
an affiliate of the Acquiror from other sources not known by such party to be
bound by a confidentiality obligation or agreement, (iii) is disclosed with the
prior written approval of the Company or (iv) is or becomes readily
ascertainable from published information or trade sources. In the event that
this Plan is terminated or the transactions contemplated by this Plan shall
otherwise fail to be consummated, each party shall promptly cause all copies of
documents or extracts thereof containing information and data as to another
party hereto (or an affiliate of any party hereto) to be returned to the party
which furnished the same.
SECTION 4.5. Certain Filings, Consents and Arrangements. The
Acquiror, Merger Sub and the Company shall (a) as soon as practicable make (or
cause to be made) any filings and applications required to be filed in order to
obtain all approvals, consents and waivers of governmental authorities
necessary or appropriate for the consummation of the transactions contemplated
hereby (including the Bank Merger) or by the Option Agreement, (b) cooperate
with one another (i) in promptly determining what filings are required to be
made or approvals, consents or waivers are required to be obtained under any
relevant federal, state or foreign law or regulation and (ii) in promptly
making any such filings, furnishing information required in connection
therewith and seeking timely to obtain any such approvals, consents or waivers
and (c) deliver to the other copies of the publicly available portions of all
such filings and applications promptly after they are filed.
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SECTION 4.6. Antitakeover Statutes. The Company shall take
all reasonable steps (i) to exempt the Company and the Plan from the
requirements of any state antitakeover law by action of its board of directors
or otherwise and (ii), upon the request of the Acquiror, to assist in any
challenge by the Acquiror to the applicability to the Merger of any state
antitakeover law.
SECTION 4.7. Indemnification; Directors' and Officers'
Insurance. (a) From and after the Effective Time through the sixth
anniversary of the Effective Date, the Acquiror agrees to indemnify and hold
harmless each present and former director and officer of the Company or its
subsidiaries and each officer of the Company or its subsidiaries that is
serving or has served as a director, trustee or officer of another entity
expressly at the Company's request or direction (the names and companies of
which have been set forth on Schedule 4.7(a) hereto) determined as of the
Effective Time (the "Indemnified Parties"), against any costs or expenses
(including reasonable attorneys' fees), judgments, fines, losses, claims,
damages or liabilities (collectively, "Costs") incurred in connection with any
claim, action, suit, proceeding or investigation, whether civil, criminal,
administrative or investigative, arising out of matters existing or occurring
at or prior to the Effective Time, whether asserted or claimed prior to, at or
after the Effective Time, to the fullest extent to which such Indemnified
Parties were entitled under the Company's certificate of incorporation or
by-laws in effect on the date hereof (and the Acquiror shall also advance
expenses as incurred to the fullest extent permitted under the Company's
certificate of incorporation and by-laws in accordance with the Acquiror's
indemnification policy). In addition to the foregoing, from and after the
Effective Time through the sixth anniversary of the Effective Date, the
Acquiror agrees to assume the obligations of the Company Bank to indemnify and
hold harmless Mr. Jeffrey J. Squires as set forth in the indemnification
agreement dated as of February 5, 1993 and executed by the Company Bank, a true
and correct copy of which has been delivered to the Acquiror on or prior to the
date hereof.
(b) Any Indemnified Party wishing to claim indemnification
under Section 4.7(a), upon learning of any such claim, action, suit, proceeding
or investigation, shall promptly notify the Acquiror thereof, but the failure
to so notify shall not relieve the Acquiror of any liability it may have to
such Indemnified Party to the extent that such failure does not materially
prejudice the indemnifying party. In the event of any such claim, action,
suit, proceeding or
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investigation (whether arising before or after the Effective Time), (i) the
Acquiror shall have the right to assume the defense thereof and the Acquiror
shall not be liable to such Indemnified Parties for any legal expenses of other
counsel or any other expenses subsequently incurred by such Indemnified Parties
in connection with the defense thereof, except that if the Acquiror elects not
to assume such defense or counsel for the Indemnified Parties advises that
there are issues which raise conflicts of interest between the Acquiror and the
Indemnified Parties, the Indemnified Parties may retain counsel satisfactory to
them, and the Acquiror shall pay the reasonable fees and expenses of such
counsel for the Indemnified Parties promptly as statements therefor are
received in any jurisdiction unless the use of one counsel for such Indemnified
Parties would present such counsel with a conflict of interest, (ii) the
Indemnified Parties will cooperate in the defense of any such matter and (iii)
the Acquiror shall not be liable for any settlement effected without its prior
written consent; and provided that the Acquiror shall not have any obligation
hereunder to any Indemnified Party when and if a court of competent
jurisdiction shall ultimately determine, and such determination shall have
become final and nonappealable, that the indemnification of such Indemnified
Party in the manner contemplated hereby is prohibited by applicable law.
(c) For a period of three years after the Effective Time, the
Acquiror shall use all reasonable efforts to cause to be maintained in effect
the current policies of directors' and officers' liability insurance maintained
by the Company (provided that the Acquiror may substitute therefor policies of
comparable coverage with respect to claims arising from facts or events which
occurred before the Effective Time); provided, however, that in no event shall
the Acquiror be obligated to expend, in order to maintain or provide insurance
coverage pursuant to this Subsection 4.7(c), any amount per annum in excess of
$200,000 (the "Maximum Amount"). If the amount of the annual premiums
necessary to maintain or procure such insurance coverage exceeds the Maximum
Amount, the Acquiror shall use all reasonable efforts to maintain the most
advantageous policies of directors' and officers' insurance obtainable for an
annual premium equal to the Maximum Amount.
SECTION 4.8. Additional Agreements. Subject to the terms and
conditions herein provided, each of the parties hereto agrees to use all
reasonable efforts to take promptly, or cause to be taken promptly, all actions
and to do promptly, or cause to be done promptly, all things necessary, proper
or advisable under applicable laws and regulations to consummate and make
effective the transactions contemplated by this Plan as promptly as
practicable, including using efforts to obtain
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all necessary actions or non-actions, extensions, waivers, consents and
approvals from all applicable governmental entities, effecting all necessary
registrations, applications and filings (including, without limitation, filings
under any applicable state securities laws) and obtaining any required
contractual consents and regulatory approvals.
SECTION 4.9. Publicity. The initial press release announcing
this Plan shall be a joint press release and thereafter the Company and the
Acquiror shall consult with each other in issuing any press releases or
otherwise making public statements with respect to the other or the
transactions contemplated hereby and in making any filings with any
governmental entity or with any national securities exchange with respect
thereto.
SECTION 4.10. Proxy Statement. As soon as practicable after
the date hereof, the Company shall prepare the proxy statement to take
shareholder action on the Merger and this Agreement (the "Proxy Statement"),
file the Proxy Statement with the SEC, respond to comments of the staff of the
SEC and promptly thereafter mail the Proxy Statement to all holders of record
(as of the applicable record date) of shares of Company Common Stock. The
Company represents and covenants that the Proxy Statement and any amendment or
supplement thereto, at the date of mailing to shareholders of the Company and
the date of the meeting of the Company's shareholders to be held in connection
with the Merger, will be in compliance with all relevant rules and regulations
of the SEC and will not contain any untrue statement of a material fact or omit
to state any material fact required to be stated or necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading. The Acquiror and the Company shall cooperate with each
other in the preparation of the Proxy Statement. If requested by the Acquiror,
the Company shall employ professional proxy solicitors to assist it in
contacting stockholders in connection with the vote on the Merger.
SECTION 4.11. Shareholders' Meeting. The Company shall take
all action necessary, in accordance with applicable law and its certificate of
incorporation and by-laws, to convene a meeting of the holders of Company
Common Stock (the "Company Meeting") as promptly as practicable for the purpose
of considering and taking action required by this Plan. Except to the extent
legally required for the discharge by the board of directors of its fiduciary
duties as advised in writing by such board's counsel, the board of directors of
the Company shall recommend at the Company Meeting that the holders of the
Company Common Stock vote in favor of and approve the Merger and adopt this
Plan. The board of
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directors of the Company, in discharging its fiduciary duties, may request and
take into consideration a letter from Lyons, Zomback & Ostrowski, a division of
Advest, Inc., to the effect that, in its opinion, the Merger Consideration to
be received by the Company's shareholders in connection with the Merger is fair
to such shareholders from a financial point of view.
SECTION 4.12. Advisory Board. The Acquiror and Merger Sub
agree, promptly following the Effective Time, to cause all the members of the
Company's board of directors immediately prior to the Effective Time who are
nominated by the Company, who are less than 73 years of age and who are willing
so to serve to be elected or appointed as members of a newly formed advisory
board, the function of which shall be to advise the Acquiror New York Bank on
deposit and lending activities in the Company's former market area; provided,
however, that the Acquiror may request the resignation of any member of the
advisory board, and such member promptly shall so resign, if the Acquiror
reasonably determines that such member has a conflict of interest that
compromises such member's ability to effectively serve as a member of the
advisory board or such member is 73 years of age or older. The advisory board
shall meet once every calendar quarter and terminate on the third anniversary
of the Effective Date. The members of the advisory board shall receive a
retainer fee of $10,000 for each year of service, up to a maximum of $30,000,
and a fee of $300 for each meeting attended; provided, however, that any member
of the advisory board that also is an employee or director of the Acquiror or
any of its affiliates shall not be entitled to any such fee for serving as a
member of the advisory board during such period in which he or she is serving
as an employee and/or director of the Acquiror or any affiliate thereof. At
the Effective Time, the Acquiror shall offer the opportunity for two members of
the Company Bank's board of directors to join the Acquiror New York Bank's
board of directors for terms of no less than three years. Such persons shall
receive a retainer fee equal to that paid to the other outside directors of the
entity on whose Board such person will be sitting; provided, however, that any
member of the Acquiror New York Bank's board of directors that is also an
employee of the Acquiror or any of its affiliates shall not be entitled to any
fee for serving as a member of the Acquiror New York Bank's board of directors
during such period in which he or she is serving as an employee. Any payment
of fees described in this Section 4.12 shall be made irrespective of, and shall
not prejudice or otherwise affect, any right to receive payments pursuant to
the Retirement Plan for Board Members of the Company.
SECTION 4.13. Notification of Certain Matters. Each party
shall give prompt notice to the others of: (a) any
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notice of, or other communication relating to, a default or event that, with
notice or lapse of time or both, would become a default, received by it or any
of its subsidiaries subsequent to the date of this Plan and prior to the
Effective Time, under any contract material to the financial condition,
properties, businesses or results of operations of the Company and its
subsidiaries taken as a whole to which the Company or any subsidiary is a party
or is subject; and (b) any material adverse change in the financial condition,
properties, business or results of operations of it and its subsidiaries taken
as a whole or the occurrence of any event which, so far as reasonably can be
foreseen at the time of its occurrence, is reasonably likely to result in any
such change. Each of the Company, the Acquiror and Merger Sub shall give
prompt notice to the other party of any notice or other communication from any
third party alleging that the consent of such third party is or may be required
in connection with the transactions contemplated by this Agreement.
ARTICLE V. CONDITIONS TO CONSUMMATION
SECTION 5.1. Conditions to All Parties' Obligations. The
respective obligations of the Acquiror, Merger Sub and the Company to effect
the Merger shall be subject to the satisfaction or waiver prior to the
Effective Time of the following conditions:
(a) The Plan and the transactions contemplated hereby
shall have been approved by the requisite vote of the shareholders of
the Company and by the Acquiror as the sole shareholder of Merger Sub
in accordance with applicable law.
(b) Banco Santander, S.A., the Acquiror, Merger Sub,
Acquiror New York Bank or any successor by merger, consolidation or
otherwise thereto, the Company and the Company Bank shall have
procured, if required, in the opinion of counsel for the Acquiror and
the Company, the approvals, consents or waivers with respect to the
Plan (including the Bank Merger) and the transactions contemplated
hereby (i) by the Office of the Comptroller of the Currency, (ii) by
the New York Superintendent of Banks pursuant to New York law (iii) by
the OTS and (iv) by the Federal Reserve Board, and all applicable
statutory waiting periods shall have expired; and the parties shall
have procured all other regulatory approvals, consents or waivers of
governmental authorities or other persons that, in the opinion of
counsel for the Acquiror and the Company, are necessary or appropriate
to the consummation of the transactions
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contemplated by the Plan; provided, however, that no approval, consent
or waiver referred to in this Section 5.1(b) shall be deemed to have
been received if it shall include any condition or requirement that,
individually or in the aggregate, would (i) result in a Material
Adverse Effect on the Acquiror (on a combined basis giving effect to
the Merger and the other transactions contemplated by this Plan) or
(ii) would reduce the benefits of the transactions contemplated by the
Plan to the Acquiror or Acquiror New York Bank in so significant and
material a manner that the Acquiror, in its good faith reasonable
judgment, would not have entered into this Plan had such condition or
requirement been known at the date hereof.
(c) All other requirements prescribed by law which are
necessary to the consummation of the transactions contemplated by this
Plan shall have been satisfied.
(d) No party hereto shall be subject to any order, decree
or injunction of a court or agency of competent jurisdiction which
enjoins or prohibits the consummation of the Merger or any other
transaction contemplated by this Plan, and no litigation or proceeding
shall be pending against the Acquiror or the Company or any of their
subsidiaries brought by any governmental agency seeking to prevent
consummation of the transactions contemplated hereby.
(e) No statute, rule, regulation, order, injunction or
decree shall have been enacted, entered, promulgated or enforced by
any governmental authority which prohibits, restricts or makes illegal
consummation of the Merger or any other transaction contemplated by
this Plan.
SECTION 5.2. Conditions to Obligations of the Acquiror and
Merger Sub. The obligations of the Acquiror and Merger Sub to effect the
Merger shall be subject to the satisfaction or waiver prior to the Effective
Time of the following additional conditions:
(a) The Acquiror shall have received from the Company's
independent certified public accountants "cold comfort" letters or
letters of procedures, dated (i) the date of the mailing of the Proxy
Statement to the Company's shareholders and (ii) shortly prior to the
Effective Date, with respect to certain financial information
regarding the Company in the form customarily
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<PAGE> 43
issued by such accountants at such time in transactions of this type.
(b) Each of the representations and warranties of the
Company contained in this Plan and the Option Agreement shall, in all
material respects, be true on the Effective Date as if made on such
date (or on the date when made in the case of any representation or
warranty which specifically relates to an earlier date); the Company
shall have performed, in all material respects, each of its covenants
and agreements contained in this Plan and the Option Agreement; and
the Acquiror shall have received a certificate signed by the Chief
Executive Officer and the Chief Financial Officer of the Company,
dated the Effective Date, to the foregoing effect.
(c) Neither the Acquiror nor Merger Sub shall have become
an "Acquiring Person" or an "Adverse Person" and no "Stock Acquisition
Date" or "Distribution Date" shall have occurred under the Rights
Agreement, and the rights issued thereunder shall not have become
distributable, unredeemable or exercisable.
SECTION 5.3. Conditions to the Obligation of the Company.
The obligation of the Company to effect the Merger shall be subject to the
satisfaction or waiver prior to the Effective Time of the following additional
conditions:
(a) Each of the representations, warranties and covenants
of the Acquiror and Merger Sub contained in this Plan shall, in all
material respects, be true on the Effective Date as if made on such
date (or on the date when made in the case of any representation or
warranty which specifically relates to an earlier date); the Acquiror
and Merger Sub shall have performed, in all material respects, each of
its covenants and agreements contained in this Plan; and the Company
shall have received certificates signed by the Vice Chairman and the
Chief Financial Officer of the Acquiror, dated the Effective Date, to
the foregoing effect.
ARTICLE VI. TERMINATION
SECTION 6.1. Termination. This Plan may be terminated, and
the Merger abandoned, prior to the Effective Date, either before or after its
approval by the shareholders of the Company and the Acquiror:
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(a) by the mutual consent of the Acquiror and the
Company, if the board of directors of each so determines by vote of a
majority of the members of its entire board;
(b) by the Acquiror or the Company, if its board of
directors so determines by vote of a majority of the members of its
entire board, in the event of (i) the failure of the shareholders of
the Company to approve the Plan at its meeting called to consider such
approval, or (ii) a material breach by the other party hereto of any
representation, warranty, covenant or agreement contained herein (or,
in the case of the Company, in the Option Agreement) or occurrence of
any event which causes a representation or warranty to become
materially untrue which is not cured or not curable within 10 business
days after written notice of such breach is given to the party
committing such breach by the other party;
(c) by the Acquiror or the Company by written notice to
the other party if either (i) any approval, consent or waiver of a
governmental authority required to permit consummation of the
transactions contemplated hereby shall have been denied or (ii) any
governmental authority of competent jurisdiction shall have issued a
final, unappealable order enjoining or otherwise prohibiting
consummation of the transactions contemplated by this Plan;
(d) by the Acquiror or the Company, if its board of
directors so determines by vote of a majority of the members of its
entire board, in the event that the Merger is not consummated by
November 30, 1994, unless the failure to so consummate by such time is
due to the breach of any representation, warranty or covenant
contained in this Plan by the party seeking to terminate; or
(e) by the Acquiror by written notice to the Company in
the event that the Acquiror reasonably determines that there has
occurred a change, in the financial condition, properties, assets
(including classifications thereof), business or results of operations
of the Company or the Company Bank which, individually or in the
aggregate, has had or might reasonably be expected to result in a
Material Adverse Effect on the Company or the Company Bank; provided,
however, that in the event that such change occurs as a result of (i)
changes in laws or regulations or governmental interpretations
thereof, (ii) changes in accounting rules of general applicability, or
(iii) a
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<PAGE> 45
change or a series of changes in market interest rates that is not
"material" (for purposes of this clause (iii) only a "material" change
in "market interest rates" shall mean an aggregate change either up or
down of more than 500 basis points in the fed funds rate), between
execution of this Agreement and the Effective Time, then the Acquiror
shall pay the Company its reasonable expenses incurred in connection
with this Agreement up to a maximum of $500,000.
SECTION 6.2. Effect of Termination. In the event of the
termination of this Plan by either the Acquiror or the Company, as provided
above, this Plan shall thereafter become void and, subject to the provisions of
Section 8.2, there shall be no liability on the part of any party hereto or
their respective officers or directors, except that any such termination shall
be without prejudice to the rights of any party hereto arising out of the
willful breach by any other party of any covenant or willful misrepresentation
contained in this Plan.
ARTICLE VII. EFFECTIVE DATE AND EFFECTIVE TIME
SECTION 7.1. Effective Date and Effective Time. On such date
as Acquiror selects and within 30 days after the expiration of all applicable
waiting periods in connection with approvals of governmental authorities occurs
and all conditions to the consummation of this Plan are satisfied or waived, or
on such earlier or later date as may be agreed by the parties, and in any
event upon five business days prior written notice to the Company, articles of
merger shall be executed in accordance with all appropriate legal requirements
and shall be filed as required by law, and the Merger provided for herein shall
become effective upon such filing or on such date as may be specified in such
articles of merger. The date of such filing or such later effective date is
herein called the "Effective Date". The "Effective Time" of the Merger shall
be as set forth in such articles of merger.
ARTICLE VIII. OTHER MATTERS
SECTION 8.1. Certain Definitions; Interpretation. As used in
this Plan, the following terms shall have the meanings indicated:
"material" means material to the Acquiror or the Company (as
the case may be) and its respective subsidiaries, taken as a whole.
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"Material Adverse Effect", with respect to a person, means any
condition, event, change or occurrence that is reasonably likely to
have a material adverse effect upon (A) the financial condition,
properties, assets, business or results of operations of such person
and its subsidiaries, taken as a whole, or (B) the ability of such
person to perform its obligations under, and to consummate the
transactions contemplated by, this Plan and, in the case of the
Company, the Option Agreement.
"person" includes an individual, corporation, partnership,
association, trust or unincorporated organization.
"subsidiary", with respect to a person, means any other person
controlled by such person, whether directly or indirectly.
When a reference is made in this Plan to Sections, Annexes or Schedules, such
reference shall be to a Section of, or Annex or Schedule to, this Plan unless
otherwise indicated. The table of contents and headings contained in this Plan
are for ease of reference only and shall not affect the meaning or
interpretation of this Plan. Whenever the words "include", "includes", or
"including" are used in this Plan, they shall be deemed followed by the words
"without limitation". Any singular term in this Plan shall be deemed to
include the plural, and any plural term the singular. Any reference to gender
in this Plan shall be deemed to any other gender.
SECTION 8.2. Survival. Only those agreements and covenants
of the parties that are by their terms applicable in whole or in part after the
Effective Time shall survive the Effective Time. All other representations,
warranties, agreements and covenants shall be deemed to be conditions of the
Plan and shall not survive the Effective Time. If the Plan shall be
terminated, the agreements of the parties in the last sentence of Section 4.2,
the last three sentences of Section 4.4 and Section 8.6 shall survive such
termination.
SECTION 8.3. Waiver. Prior to the Effective Time, any
provision of this Plan may be: (i) waived by the party benefitted by the
provision; or (ii) amended or modified at any time (including the structure of
the transaction) by an agreement in writing between the parties hereto approved
by their respective boards of directors, except that, after the vote by the
shareholders of the Company, no amendment may be made that would contravene
Sections 252(c) and 251(d) of the DGCL.
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<PAGE> 47
SECTION 8.4. Counterparts. This Plan may be executed in
counterparts each of which shall be deemed to constitute an original, but all
of which together shall constitute one and the same instrument.
SECTION 8.5. Governing Law. This Plan shall be governed by,
and interpreted in accordance with, the laws of the State of New York, without
regard to conflicts of laws principles.
SECTION 8.6. Expenses. Each party hereto will bear all
expenses incurred by it in connection with this Plan and the transactions
contemplated hereby.
SECTION 8.7. Notices. All notices, requests,
acknowledgements and other communications hereunder to a party shall be in
writing and shall be deemed to have been duly given when delivered by hand,
telecopy, telegram or telex (confirmed in writing) to such party at its address
set forth below or such other address as such party may specify by notice to
the other party hereto.
If to the Company, to:
Mid-Hudson Summit Corporate Park
One Summit Court
P.O. Box M
Fishkill, New York 12524
Telecopy: (914) 896-4228
Attention: Robert N. Chambers
Chairman of the Board and Chief
Executive Officer
With copies to:
Douglas J. McClintock, Esq.
Thacher Proffitt & Wood
Two World Trade Center
New York, New York 10048
Telecopy: (212) 912-7751/7752
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<PAGE> 48
If to the Acquiror or Merger Sub, to:
c/o First Fidelity Bancorporation
550 Broad Street
Newark, New Jersey 07102
Telecopy: (201) 565-2989
Attention: Wolfgang Schoellkopf
Vice Chairman and
Chief Financial Officer
With copies to:
James L. Mitchell
First Fidelity Bancorporation
550 Broad Street
Newark, New Jersey 07102
Telecopy: (201) 565-2989
and
H. Rodgin Cohen, Esq.
Mark J. Menting, Esq.
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Telecopy: (212) 558-3588
SECTION 8.8. Entire Agreement; Etc. This Plan, together with
the Option Agreement, represents the entire understanding of the parties hereto
with reference to the transactions contemplated hereby and supersedes any and
all other oral or written agreements heretofore made. All terms and provisions
of the Plan shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and assigns. Except as to Sections 4.7
and 4.13, nothing in this Plan is intended to confer upon any other person any
rights or remedies of any nature whatsoever under or by reason of this Plan.
SECTION 8.9. Assignment. This Plan may not be assigned by
any party hereto without the written consent of the other parties.
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<PAGE> 49
IN WITNESS WHEREOF, the parties hereto have caused this Plan
to be executed by their duly authorized officers as of the day and year first
above written.
FIRST FIDELITY BANCORPORATION
By: /s/ WOLFGANG SCHOELLKOPF
--------------------------------
Wolfgang Schoellkopf
Vice Chairman and Chief Financial
Officer
FFB MERGER SUB II, INC.
By: /s/ WOLFGANG SCHOELLKOPF
---------------------------------
Wolfgang Schoellkopf
President
FIRST INTER-BANCORP INC.
By: /s/ ROBERT N. CHAMBERS
--------------------------------
Robert N. Chambers
Chairman of the Board and
Chief Executive Officer
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<PAGE> 1
[CONFORMED COPY]
THE TRANSFER OF THE OPTION GRANTED BY THIS AGREEMENT IS
SUBJECT TO RESALE RESTRICTIONS ARISING UNDER THE
SECURITIES ACT OF 1933, AS AMENDED.
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of the 27th day of January,
1994 (this "Agreement"), between First Fidelity Bancorporation, a New Jersey
corporation ("Grantee"), and First Inter-Bancorp Inc., a Delaware corporation
("Issuer").
WITNESSETH:
WHEREAS, Grantee and Issuer have entered into an Agreement and
Plan of Merger, dated as of the 27th day of January, 1994 (the "Plan"), which
was executed by the parties hereto contemporaneously with prior to the
execution of this Agreement; and
WHEREAS, as a condition and inducement to Grantee's entering
into the Plan and in consideration therefor, Issuer has agreed to grant Grantee
the Option (as defined below);
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements set forth herein and in the Plan, the parties
hereto agree as follows:
SECTION 1. Issuer hereby grants to Grantee an unconditional,
irrevocable option (the "Option") to purchase, subject to the terms hereof, up
to 461,000 fully paid and nonassessable shares of Common Stock, par value $1.00
per share ("Common Stock"), of Issuer at a price per share equal to the last
reported sale price (or, if no such reported sale price, the last bid price)
reported on the National Association of Securities Dealers Automated Quotation
System on January 27, 1994 (the "Initial Price"); provided, however, that in
the event Issuer issues or agrees to issue (other than pursuant to options or
other agreements to issue Common Stock in effect as of the date hereof) any
shares of Common Stock at a price less than the Initial Price (as adjusted
pursuant to Section 5(b)), such price shall be equal to such lesser price (such
price, as adjusted as hereinafter provided, the "Option Price"). The number of
shares of Common Stock that may be received upon the exercise of the Option and
the Option Price are subject to adjustment as herein set forth.
SECTION 2. (a) Grantee may exercise the Option, in whole or
part, at any time and from time to time following the occurrence of a Purchase
Event (as defined
<PAGE> 2
below); provided that the Option shall terminate and be of no further force and
effect upon the earliest to occur of (i) the time immediately prior to the
Effective Time, (ii) 12 months after the first occurrence of a Purchase Event,
(iii) 12 months after the termination of the Plan following the occurrence of a
Preliminary Purchase Event (as defined below), (iv) termination of the Plan in
accordance with the terms thereof prior to the occurrence of a Purchase Event
or a Preliminary Purchase Event (other than a termination of the Plan by
Acquiror pursuant to Section 6.1(b)(ii) thereof) or (v) 12 months after the
termination of the Plan by Acquiror pursuant to Section 6.1(b)(ii) thereof. The
events described in clauses (i) - (v) in the preceding sentence are hereinafter
collectively referred to as an "Exercise Termination Event."
(b) The term "Preliminary Purchase Event" shall mean any of
the following events or transactions occurring after the date hereof:
(i) Issuer or any of its subsidiaries (each an "Issuer
Subsidiary") without having received Grantee's prior written consent,
shall have entered into an agreement to engage in an Acquisition
Transaction (as defined below) with any person (the term "person" for
purposes of this Agreement having the meaning assigned thereto in
Sections 3(a)(9) and 13(d)(3) of the Securities Exchange Act of 1934,
as amended (the "Securities Exchange Act"), and the rules and
regulations thereunder) other than Grantee or any of its subsidiaries
(each a "Grantee Subsidiary") or the Board of Directors of Issuer
shall have recommended that the shareholders of Issuer approve or
accept any Acquisition Transaction with any person other than Grantee
or any Grantee Subsidiary. For purposes of this Agreement,
"Acquisition Transaction" shall mean (x) a merger or consolidation, or
any similar transaction, involving Issuer or the Company's Bank, (y) a
purchase, lease or other acquisition of all or substantially all of
the assets of Issuer or the Company's Bank or (z) a purchase or other
acquisition (including by way of merger, consolidation, share exchange
or otherwise) of securities representing 10% or more of the voting
power of Issuer or the Company's Bank;
(ii) Any person (other than Grantee or any Grantee Subsidiary)
shall have acquired beneficial ownership or the right to acquire
beneficial ownership of 10% or more of the outstanding shares of
Common Stock (the term "beneficial ownership" for purposes of this
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<PAGE> 3
Agreement having the meaning assigned thereto in Section 13(d) of the
Securities Exchange Act, and the rules and regulations thereunder);
(iii) Any person other than Grantee or any Grantee Subsidiary
shall have made a bona fide proposal to Issuer or its shareholders, by
public announcement or written communication that is or becomes the
subject of public disclosure, to engage in an Acquisition Transaction
(including, without limitation, any situation in which any person
other than Grantee or any subsidiary of Grantee shall have commenced
(as such term is defined in Rule 14d-2 under the Securities Exchange
Act) or shall have filed a registration statement under the Securities
Act of 1933, as amended (the "Securities Act"), with respect to, a
tender offer or exchange offer to purchase any shares of Issuer Common
Stock such that, upon consummation of such offer, such person would
own or control 10% or more of the then outstanding shares of Issuer
Common Stock (such an offer being referred to herein as a "Tender
Offer" or an "Exchange Offer", respectively));
(iv) After a proposal is made by a third party to Issuer or its
shareholders to engage in an Acquisition Transaction, Issuer shall
have breached any covenant or obligation contained in the Plan and
such breach would entitle Grantee to terminate the Plan or the holders
of Issuer Common Stock shall not have approved the Plan at the meeting
of such stockholders held for the purpose of voting on the Plan, such
meeting shall not have been held or shall have been canceled prior to
termination of the Plan or Issuer's Board of Directors shall have
withdrawn or modified in a manner adverse to Grantee the
recommendation of Issuer's Board of Directors with respect to the
Plan; or
(v) Any person other than Grantee or any Grantee Subsidiary,
other than in connection with a transaction to which Grantee has given
its prior written consent, shall have filed an application or notice
with the Office of Thrift Supervision ("OTS"), Board of Governors of
the Federal Reserve System (the "Federal Reserve Board") or other
governmental authority or regulatory or administrative agency or
commission (each, a "Governmental Authority") for approval to engage
in an Acquisition Transaction.
(c) The term "Purchase Event" shall mean either of the
following events or transactions occurring after the date hereof:
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<PAGE> 4
(i) The acquisition by any person other than Grantee or any
Grantee Subsidiary of beneficial ownership of 25% or more of the then
outstanding Common Stock; or
(ii) The occurrence of a Preliminary Purchase Event described in
Section 2(b)(i) except that the percentage referred to in clause (z)
shall be 25%.
(d) Issuer shall notify Grantee promptly in writing of the
occurrence of any Preliminary Purchase Event or Purchase Event; provided,
however, that the giving of such notice by Issuer shall not be a condition to
the right of Grantee to exercise the Option.
(e) In the event that Grantee is entitled to and wishes to
exercise the Option, it shall send to Issuer a written notice (the "Option
Notice" and the date of which being hereinafter referred to as the "Notice
Date") specifying (i) the total number of shares of Common Stock it will
purchase pursuant to such exercise and (ii) a period of time (that shall not be
less than three business days nor more than thirty business days) running from
the Notice Date (the "Closing Date") and a place at which the closing of such
purchase shall take place; provided, that, if prior notification to or approval
of the Federal Reserve Board or any other Governmental Authority is required in
connection with such purchase (each, a "Notification" or an "Approval," as the
case may be), (a) Grantee shall promptly file the required notice or
application for approval ("Notice/Application"), (b) Grantee shall
expeditiously process the Notice/Application and (c) for the purpose of
determining the Closing Date pursuant to clause (ii) of this sentence, the
period of time that otherwise would run from the Notice Date shall instead run
from the later of (x) in connection with any Notification, the date on which
any required notification periods have expired or been terminated and (y) in
connection with any Approval, the date on which such approval has been obtained
and any requisite waiting period or periods shall have expired. For purposes
of Section 2(a), any exercise of the Option shall be deemed to occur on the
Notice Date relating thereto. On or prior to the Closing Date, Grantee shall
have the right to revoke its exercise of the Option in the event that the
transaction constituting a Purchase Event that gives rise to such right to
exercise shall not have been consummated.
(f) At the closing referred to in Section 2(e), Grantee shall
pay to Issuer the aggregate purchase price for the shares of Common Stock
specified in the Option Notice in immediately available funds by wire transfer
to a bank
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<PAGE> 5
account designated by Issuer; provided, however, that failure or refusal of
Issuer to designate such a bank account shall not preclude Grantee from
exercising the Option.
(g) At such closing, simultaneously with the delivery of
immediately available funds as provided in Section 2(f), Issuer shall deliver
to Grantee a certificate or certificates representing the number of shares of
Common Stock specified in the Option Notice and, if the Option should be
exercised in part only, a new Option evidencing the rights of Grantee thereof
to purchase the balance of the shares of Common Stock purchasable hereunder.
(h) Certificates for Common Stock delivered at a closing
hereunder shall be endorsed with a restrictive legend substantially as follows:
The transfer of the shares represented by this certificate is
subject to resale restrictions arising under the Securities
Act of 1933, as amended, and to certain provisions of an
agreement between First Fidelity Bancorporation and First
Inter-Bancorp Inc. ("Issuer") dated as of the 27th day of
January, 1994. A copy of such agreement is on file at the
principal office of Issuer and will be provided to the holder
hereof without charge upon receipt by Issuer of a written
request therefor.
It is understood and agreed that: (i) the reference to the resale restrictions
of the Securities Act in the above legend shall be removed by delivery of
substitute certificate(s) without such reference if Grantee shall have
delivered to Issuer a copy of a letter from the staff of the Securities and
Exchange Commission (the "SEC"), or an opinion of counsel, in form and
substance satisfactory to Issuer, to the effect that such legend is not
required for purposes of the Securities Act; (ii) the reference to the
provisions of this Agreement in the above legend shall be removed by delivery
of substitute certificate(s) without such reference if the shares have been
sold or transferred in compliance with the provisions of this Agreement and
under circumstances that do not require the retention of such reference; and
(iii) the legend shall be removed in its entirety if the conditions in the
preceding clauses (i) and (ii) are both satisfied. In addition, such
certificates shall bear any other legend as may be required by law.
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<PAGE> 6
(i) Upon the giving by Grantee to Issuer of an Option Notice
and the tender of the applicable purchase price in immediately available funds
on the Closing Date, Grantee shall be deemed to be the holder of record of the
number of shares of Common Stock specified in the Option Notice,
notwithstanding that the stock transfer books of Issuer shall then be closed or
that certificates representing such shares of Common Stock shall not then
actually be delivered to Grantee. Issuer shall pay all expenses and any and
all United States federal, state and local taxes and other charges that may be
payable in connection with the preparation, issue and delivery of stock
certificates under this Section 2 in the name of Grantee.
SECTION 3. Issuer agrees: (i) that it shall at all times
until the termination of this Agreement have reserved for issuance upon the
exercise of the Option that number of authorized and reserved shares of Common
Stock equal to the maximum number of shares of Common Stock at any time and
from time to time issuable hereunder, all of which shares will, upon issuance
pursuant hereto, be duly authorized, validly issued, fully paid, nonassessable,
and delivered free and clear of all claims, liens, encumbrances and security
interests and not subject to any preemptive rights; (ii) that it will not, by
amendment of its certificate of incorporation or through reorganization,
consolidation, merger, dissolution or sale of assets, or by any other voluntary
act, avoid or seek to avoid the observance or performance of any of the
covenants, stipulations or conditions to be observed or performed hereunder by
Issuer; (iii) promptly to take all action as may from time to time be required
(including (x) complying with all premerger notification, reporting and waiting
period requirements specified in 15 U.S.C. Section 18a and regulations
promulgated thereunder and (y) in the event, under the Home Owners' Loan Act,
as amended ("HOLA"), the Bank Holding Company Act of 1956, as amended ("BHC
Act"), or the Change in Bank Control Act of 1978, as amended, or any state
banking law, prior approval of or notice to the OTS, to the Federal Reserve
Board or to any other Governmental Authority is necessary before the Option may
be exercised, cooperating with Grantee in preparing such applications or
notices and providing such information to each such Governmental Authority as
it may require) in order to permit Grantee to exercise the Option and Issuer
duly and effectively to issue shares of Common Stock pursuant hereto; and (iv)
to take all action provided herein to protect the rights of Grantee against
dilution.
SECTION 4. This Agreement (and the Option granted hereby) are
exchangeable, without expense, at the option of Grantee, upon presentation and
surrender of this Agreement
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<PAGE> 7
at the principal office of Issuer, for other agreements providing for Options
of different denominations entitling the holder thereof to purchase, on the
same terms and subject to the same conditions as are set forth herein, in the
aggregate the same number of shares of Common Stock purchasable hereunder. The
terms "Agreement" and "Option" as used herein include any agreements and
related options for which this Agreement (and the Option granted hereby) may be
exchanged. Upon receipt by Issuer of evidence reasonably satisfactory to it of
the loss, theft, destruction or muti-lation of this Agreement, and (in the case
of loss, theft or destruction) of reasonably satisfactory indemnification, and
upon surrender and cancellation of this Agreement, if mutilated, Issuer will
execute and deliver a new Agreement of like tenor and date. Any such new
Agreement executed and delivered shall constitute an additional contractual
obligation on the part of Issuer, whether or not the Agreement so lost, stolen,
destroyed or mutilated shall at any time be enforceable by anyone.
SECTION 5. The number of shares of Common Stock purchasable
upon the exercise of the Option shall be subject to adjustment from time to
time as follows:
(a) In the event of any change in the Common Stock by reason
of stock dividends, split-ups, mergers, recapitalizations,
combinations, subdivisions, conversions, exchanges of shares or the
like, the type and number of shares of Common Stock purchasable upon
exercise hereof shall be appropriately adjusted and proper provision
shall be made so that, in the event that any additional shares of
Common Stock are to be issued or otherwise to become outstanding as a
result of any such change (other than pursuant to an exercise of the
Option), the number of shares of Common Stock that remain subject to
the Option shall be increased so that, after such issuance and
together with shares of Common Stock previously issued pursuant to the
exercise of the Option (as adjusted on account of any of the foregoing
changes in the Common Stock), it equals 19.9% of the number of shares
of Common Stock then issued and outstanding.
(b) Whenever the number of shares of Common Stock purchasable
upon exercise hereof is adjusted as provided in this Section 5, the
Option Price shall be adjusted by multiplying the Option Price by a
fraction, the numerator of which shall be equal to the number of
shares of Common Stock purchasable prior to the adjustment and the
denominator of which shall be equal to the
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<PAGE> 8
number of shares of Common Stock purchasable after the adjustment.
SECTION 6. (a) Upon the occurrence of a Purchase Event that
occurs prior to an Exercise Termination Event, Issuer shall, at the request of
Grantee (whether on its own behalf or on behalf of any subsequent holder of the
Option (or part thereof) or any of the shares of Common Stock issued pursuant
hereto), promptly prepare, file and keep current a shelf registration statement
under the Securities Act covering any shares issued and issuable pursuant to
the Option and shall use its best efforts to cause such registration statement
to become effective, and to remain current and effective for a period not in
excess of 180 days from the day such registration statement first becomes
effective, in order to permit the sale or other disposition of any shares of
Common Stock issued upon total or partial exercise of the Option ("Option
Shares") in accordance with any plan of disposition requested by Grantee;
provided, however, that Issuer may postpone filing a registration statement
relating to a registration request by Grantee under this Section 6 for a period
of time (not in excess of 30 days) if in its judgment such filing would require
the disclosure of material information that Issuer has a bona fide business
purpose for preserving as confidential. Grantee shall have the right to demand
two such registrations. The foregoing notwithstanding, if, at the time of any
request by Grantee for registration of Option Shares as provided above, Issuer
is in the process of registration with respect to an underwritten public
offering of shares of Common Stock, and if in the good faith judgment of the
managing underwriter or managing underwriters, or, if none, the sole
underwriter or underwriters, of such offering the offering or inclusion of the
Option Shares would interfere materially with the successful marketing of the
shares of Common Stock offered by Issuer, the number of Option Shares otherwise
to be covered in the registration statement contemplated hereby may be reduced;
provided, however, that after any such required reduction the number of Option
Shares to be included in such offering for the account of Grantee shall
constitute at least 33 1/3% of the total number of shares of Grantee and Issuer
covered in such registration statement; provided further, however, that if such
reduction occurs, then Issuer shall file a registration statement for the
balance as promptly as practicable thereafter as to which no reduction pursuant
to this Section 6(a) shall be permitted or occur and the Grantee shall
thereafter be entitled to one additional registration statement. Grantee shall
provide all information reasonably requested by Issuer for inclusion in any
registration statement to be filed hereunder. In connection with any such
registration, Issuer and Grantee
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<PAGE> 9
shall provide each other with representations, warranties, indemnities and
other agreements customarily given in connection with such registrations. If
requested by Grantee in connection with such registration, Issuer and Grantee
shall become a party to any underwriting agreement relating to the sale of such
shares, but only to the extent of obligating themselves in respect of
representations, warranties, indemnities and other agreements customarily
included in such underwriting agreements. Notwithstanding the foregoing, if
Grantee revokes any exercise notice or fails to exercise any Option with
respect to any exercise notice pursuant to Section 2(e), Issuer shall not be
obligated to continue any registration process with respect to the sale of
Option Shares issuable upon the exercise of such Option and Grantee shall not
be deemed to have demanded registration of Option Shares.
(b) In the event that Grantee requests Issuer to file a
registration statement following the failure to obtain any approval required to
exercise the Option as described in Section 9, the closing of the sale or other
disposition of the Common Stock or other securities pursuant to such
registration statement shall occur substantially simultaneously with the
exercise of the Option.
SECTION 7. (a) Upon the occurrence of a Purchase Event that
occurs prior to an Exercise Termination Event, (i) at the request (the date of
such request being the "Option Repurchase Request Date") of Grantee, Issuer
shall, subject to the limitations set forth below in Section 7(b), repurchase
the Option from Grantee at a price (the "Option Repurchase Price") equal to the
amount by which (A) the market/offer price (as defined below) exceeds (B) the
Option Price, multiplied by the number of shares for which the Option may then
be exercised and (ii) at the request (the date of such request being the
"Option Share Repurchase Request Date") of the owner of Option Shares from time
to time (the "Owner"), Issuer shall, subject to the limitations set forth below
in Section 7(b), repurchase such number of the Option Shares from the Owner as
the Owner shall designate at a price (the "Option Share Repurchase Price")
equal to the market/offer price multiplied by the number of Option Shares so
designated. The term "market/offer price" shall mean the highest of (i) the
price per share of Common Stock at which a tender offer or exchange offer
therefor has been made after the date hereof and on or prior to the Option
Repurchase Request Date or the Option Share Repurchase Request Date, as the
case may be, (ii) the price per share of Common Stock paid or to be paid by any
third party pursuant to an agreement with Issuer (whether by way of a merger,
consolidation or otherwise), (iii) the highest
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<PAGE> 10
last sale price for shares of Common Stock within the 360-day period ending on
the Option Repurchase Request Date or the Option Share Repurchase Request Date,
as the case may be, quoted on the NASDAQ National Market System (as reported by
The Wall Street Journal, or, if not reported thereby, another authoritative
source), (iv) in the event of a sale of all or substantially all of Issuer's
assets, the sum of the price paid in such sale for such assets and the current
market value of the remaining assets of Issuer as determined by a
nationally-recognized independent investment banking firm selected by Grantee
or the Owner, as the case may be, divided by the number of shares of Common
Stock of Issuer outstanding at the time of such sale. In determining the
market/offer price, the value of consideration other than cash shall be the
value determined by a nationally-recognized independent investment banking firm
selected by Grantee or the Owner, as the case may be, whose determination shall
be conclusive and binding on all parties.
(b) The Grantee's or Owner's right to exercise its right to
require Issuer to repurchase the Option and/or any Option Shares pursuant to
this Agreement shall be subject to obtaining all necessary approvals by any and
all regulatory agencies, including, without limitation, approval by the OTS,
and any legal approvals, as counsel for the Issuer shall determine necessary.
Grantee or the Owner, as the case may be, may exercise its right to require
Issuer to repurchase the Option and/or any Option Shares pursuant to this
Section 7 by surrendering for such purpose to Issuer, at its principal office,
a copy of this Agreement or certificates for Option Shares, as applicable,
accompanied by a written notice or notices stating that Grantee or the Owner,
as the case may be, elects to require Issuer to repurchase the Option and/or
the Option Shares in accordance with the provisions of this Section 7. As
promptly as practicable, and in any event within five business days after the
surrender of the Option and/or certificates representing Option Shares and the
receipt of such notice or notices relating thereto, Issuer shall deliver or
cause to be delivered to Grantee the Option Repurchase Price or to the Owner
the Option Share Repurchase Price or the portion thereof that Issuer is not
then prohibited from so delivering under applicable law and regulation or as a
consequence of administrative policy.
(c) Issuer hereby undertakes to use its reasonable efforts to
obtain all required regulatory and legal approvals and to file any required
notices as promptly as practicable in order to accomplish any repurchase
contemplated by this Section 7, and any expenses incurred (including reasonable
attorneys fees) in obtaining such
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<PAGE> 11
approvals shall be borne by the Grantee or the Owner, as the case may be.
Nonetheless, to the extent that Issuer is prohibited under applicable law or
regulation, or as a consequence of administrative policy, from repurchasing any
Option and/or any Option Shares in full, Issuer shall promptly so notify
Grantee and/or the Owner and thereafter deliver or cause to be delivered, from
time to time, to Grantee and/or the Owner, as appropriate, the portion of the
Option Repurchase Price and the Option Share Repurchase Price, respectively,
that it is no longer prohibited from delivering, within five business days
after the date on which Issuer is no longer so prohibited; provided, however,
that if Issuer at any time after delivery of a notice of repurchase pursuant to
Section 7(b) is prohibited under applicable law or regulation, or as a
consequence of administrative policy, from delivering to Grantee and/or the
Owner, as appropriate, the Option Repurchase Price or the Option Share
Repurchase Price, respectively, in full, Grantee or the Owner, as appropriate,
may revoke its notice of repurchase of the Option or the Option Shares either
in whole or in part whereupon, in the case of a revocation in part, Issuer
shall promptly (i) deliver to Grantee and/or the Owner, as appropriate, that
portion of the Option Purchase Price or the Option Share Repurchase Price that
Issuer is not prohibited from delivering after taking into account any such
revocation and (ii) deliver, as appropriate, either (A) to Grantee, a new
Agreement evidencing the right of Grantee to purchase that number of shares of
Common Stock equal to the number of shares of Common Stock purchasable
immediately prior to the delivery of the notice of repurchase less the number
of shares of Common Stock covered by the portion of the Option repurchased or
(B) to the Owner, a certificate for the number of Option Shares covered by the
revocation.
(d) Issuer shall not enter into any agreement with any
party (other than Grantee or a Grantee Subsidiary) for an Acquisition
Transaction unless the other party thereto assumes all the obligations of
Issuer pursuant to this Section 7 in the event that Grantee or the Owner
elects, in its sole discretion, to require such other party to perform such
obligations.
SECTION 8. (a) In the event that prior to an Exercise
Termination Event, Issuer shall enter into an agreement (i) to consolidate or
merge with any person, other than Grantee or a Grantee Subsidiary, and shall
not be the continuing or surviving corporation of such consolidation or merger,
(ii) to permit any person, other than Grantee or a Grantee Subsidiary, to merge
into Issuer and Issuer shall be the continuing or surviving corporation, but,
in connection
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with such merger, the then outstanding shares of Common Stock shall be changed
into or exchanged for stock or other securities of any other person or cash or
any other property or the then outstanding shares of Common Stock shall after
such merger represent less than 50% of the outstanding shares and share
equivalents of the merged company, or (iii) to sell or otherwise transfer all
or substantially all of its or the Company's Bank's assets to any person, other
than Grantee or a Grantee Subsidiary, then, and in each such case, the
agreement governing such transaction shall make proper provision so that the
Option shall, upon the consummation of such transaction and upon the terms and
conditions set forth herein, be converted into, or exchanged for, an option
(the "Substitute Option"), at the election of Grantee, of either (x) the
Acquiring Corporation (as defined below) or (y) any person that controls the
Acquiring Corporation (the Acquiring Corporation and any such controlling
person being hereinafter referred to as the Substitute Option Issuer).
(b) The Substitute Option shall be exercisable for such
number of shares of the Substitute Common Stock (as is hereinafter defined) as
is equal to the market/offer price (as defined in Section 7) multiplied by the
number of shares of the Issuer Common Stock for which the Option was
theretofore exercisable, divided by the Average Price (as is hereinafter
defined). The exercise price of the Substitute Option per share of the
Substitute Common Stock (the "Substitute Purchase Price") shall then be equal
to the Option Price multiplied by a fraction in which the numerator is the
number of shares of the Issuer Common Stock for which the Option was
theretofore exercisable and the denominator is the number of shares for which
the Substitute Option is exercisable.
(c) The Substitute Option shall otherwise have the same terms
as the Option, provided that if the terms of the Substitute Option cannot, for
legal reasons, be the same as the Option, such terms shall be as similar as
possible and in no event less advantageous to Grantee, provided further, that
the terms of the Substitute Option shall include (by way of example and not
limitation) provisions for the repurchase of the Substitute Option and
Substitute Common Stock by the Substitute Option Issuer on the same terms and
conditions as provided in Section 7.
(d) The following terms have the meanings indicated:
(i) "Acquiring Corporation" shall mean (i) the continuing or
surviving corporation of a consolidation
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or merger with Issuer (if other than Issuer), (ii) Issuer in a merger
in which Issuer is the continuing or surviving person, and (iii) the
transferee of all or any substantial part of the Issuer's assets (or
the assets of the Company's Bank).
(ii) "Substitute Common Stock" shall mean the common stock issued
by the Substitute Option Issuer upon exercise of the Substitute
Option.
(iii) "Average Price" shall mean the average closing price of a
share of the Substitute Common Stock for the one year immediately
preceding the consolidation, merger or sale in question, but in no
event higher than the closing price of the shares of the Substitute
Common Stock on the day preceding such consolidation, merger or sale;
provided that if Issuer is the issuer of the Substitute Option, the
Average Price shall be computed with respect to a share of common
stock issued by Issuer, the person merging into Issuer or by any
company which controls or is controlled by such merging person, as
Grantee may elect.
(e) In no event, pursuant to any of the foregoing paragraphs,
shall the Substitute Option be exercisable for more than 19.9% of the aggregate
of the shares of the Substitute Common Stock outstanding immediately prior to
the issuance of the Substitute Option. In the event that the Substitute Option
would be exercisable for more than 19.9% of the aggregate of the shares of
Substitute Common Stock but for this clause (e), the Substitute Option Issuer
shall make a cash payment to Grantee equal to the excess of (i) the value of
the Substitute Option without giving effect to the limitation in this clause
(e) over (ii) the value of the Substitute Option after giving effect to the
limitation in the clause (e). This difference in value shall be determined by
a nationally recognized investment banking firm selected by Grantee and the
Substitute Option Issuer.
SECTION 9. Notwithstanding Sections 2, 6 and 7, if Grantee
has given the notice referred to in one or more of such Sections, the exercise
of the rights specified in any such Section shall be extended (a) if the
exercise of such rights requires obtaining regulatory approvals (including any
required waiting periods) to the extent necessary to obtain all regulatory
approvals for the exercise of such rights, and (b) to the extent necessary to
avoid liability under Section 16(b) of the Securities Exchange Act by reason of
such exercise; provided that in no event shall any closing date occur more than
18 months after the related Notice Date, and, if the closing date shall not
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have occurred within such period due to the failure to obtain any required
approval by the OTS, the Federal Reserve Board or any other Governmental
Authority despite the best efforts of Issuer or the Substitute Option Issuer,
as the case may be, to obtain such approvals, the exercise of the Option shall
be deemed to have been rescinded as of the related Notice Date. In the event
(a) Grantee receives official notice that an approval of the OTS, the Federal
Reserve Board or any other Governmental Authority required for the purchase and
sale of the Option Shares will not be issued or granted or (b) a closing date
has not occurred within 18 months after the related Notice Date due to the
failure to obtain any such required approval, Grantee shall be entitled to
exercise the Option in connection with the resale of the Option Shares pursuant
to a registration statement as provided in Section 6. Nothing contained in
this Agreement shall restrict Grantee from specifying alternative means of
exercising rights pursuant to Sections 2, 6 or 7 hereof in the event that the
exercising of any such rights shall not have occurred due to the failure to
obtain any required approval referred to in this Section 9.
SECTION 10. Issuer hereby represents and warrants to Grantee
as follows:
(a) Issuer has the requisite corporate power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly approved by
the Board of Directors of Issuer and no other corporate proceedings on the part
of Issuer are necessary to authorize this Agreement or to consummate the
transactions so contemplated. This Agreement has been duly executed and
delivered by, and constitutes a valid and binding obligation of, Issuer,
enforceable against Issuer in accordance with its terms.
(b) Issuer has taken all necessary corporate action to
authorize and reserve and to permit it to issue, and at all times from the date
hereof through the termination of this Agreement in accordance with its terms
will have reserved for issuance upon the exercise of the Option, that number of
shares of Common Stock equal to the maximum number of shares of Common Stock at
any time and from time to time issuable hereunder, and all such shares, upon
issuance pursuant hereto, will be duly authorized, validly issued, fully paid,
non-assessable, and will be delivered free and clear of all claims, liens,
encumbrances and security interests and not subject to any preemptive rights.
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SECTION 11. (a) Neither of the parties hereto may assign any
of its rights or delegate any of its obligations under this Agreement or the
Option created hereunder to any other person without the express written
consent of the other party, except that Grantee may assign this Agreement to a
wholly owned subsidiary of Grantee and Grantee may assign its rights hereunder
in whole or in part after the occurrence of a Preliminary Purchase Event;
provided, however, that until the date at which the OTS and Federal Reserve
Board have approved an application by Grantee under HOLA or the BHC Act, as the
case may be, to acquire the shares of Common Stock subject to the Option,
Grantee may not assign its rights under the Option except in (i) a widely
dispersed public distribution, (ii) a private placement in which no one party
acquires the right to purchase in excess of 2% of the voting shares of Issuer,
(iii) an assignment to a single party (e.g., a broker or investment banker) for
the purpose of conducting a widely dispersed public distribution on Grantee's
behalf, or (iv) any other manner approved by the OTS and Federal Reserve Board.
The term "Grantee" as used in this Agreement shall also be deemed to refer to
Grantee's permitted assigns.
(b) Any assignment of rights of Grantee to any permitted
assignee of Grantee hereunder shall bear the restrictive legend at the
beginning thereof substantially as follows:
The transfer of the option represented by this assignment and
the related option agreement is subject to resale restrictions
arising under the Securities Act of 1933, as amended, and to
certain provisions of an agreement between First Fidelity
Bancorporation and First Inter-Bancorp Inc., ("Issuer") dated
as of the 27th day of January, 1994. A copy of such agreement
is on file at the principal office of Issuer and will be
provided to any permitted assignee of the Option without
charge upon receipt by Issuer of a written request therefor.
It is understood and agreed that (i) the reference to the resale restrictions
of the Securities Act in the above legend shall be removed by delivery of
substitute assignments without such reference if Grantee shall have delivered
to Issuer a copy of a letter from the staff of the SEC, or an opinion of
counsel, in form and substance satisfactory to Issuer, to the effect that such
legend is not required for purposes of the Securities Act; (ii) the reference
to the provisions of this Agreement in the above legend shall be removed by
delivery of substitute assignments without such
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reference if the Option has been sold or transferred in compliance with the
provisions of this Agreement and under circumstances that do not require the
retention of such reference; and (iii) the legend shall be removed in its
entirety if the conditions in the preceding clauses (i) and (ii) are both
satisfied. In addition, such assignments shall bear any other legend as may be
required by law.
SECTION 12. Each of Grantee and Issuer will use its
reasonable efforts to make all filings with, and to obtain consents of, all
third parties and Governmental Authorities necessary to the consummation of the
transactions contemplated by this Agreement, including, without limitation,
making application, if necessary, for quotation of the shares of Common Stock
issuable hereunder on the NASDAQ National Market System and applying to the OTS
under HOLA and the Federal Reserve Board under the BHC Act and to state banking
authorities for approval to acquire the shares issuable hereunder.
SECTION 13. The parties hereto acknowledge that damages would
be an inadequate remedy for a breach of this Agreement by either party hereto
and that the obligations of the parties shall hereto be enforceable by either
party hereto through injunctive or other equitable relief. Both parties
further agree to waive any requirement for the securing or posting of any bond
in connection with the obtaining of any such equitable relief and that this
provision is without prejudice to any other rights that the parties hereto may
have for any failure to perform this Agreement.
SECTION 14. If any term, provision, covenant or restriction
contained in this Agreement is held by a court or a federal or state regulatory
agency of competent jurisdiction to be invalid, void or unenforceable, the
remainder of the terms, provisions and covenants and restrictions contained in
this Agreement shall remain in full force and effect, and shall in no way be
affected, impaired or invalidated. If for any reason such court or regulatory
agency determines that Grantee is not permitted to acquire, or Issuer is not
permitted to repurchase pursuant to Section 7, the full number of shares of
Common Stock provided in Section 1(a) (as adjusted pursuant hereto), it is the
express intention of Issuer to allow Grantee to acquire or to require Issuer to
repurchase such lesser number of shares as may be permissible, without any
amendment or modification hereof.
SECTION 15. All notices, requests, claims, demands and other
communications hereunder shall be deemed
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to have been duly given when delivered in person, by cable, telegram, telecopy
or telex, or by registered or certified mail (postage prepaid, return receipt
requested) at the respective addresses of the parties set forth in the Plan.
SECTION 16. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York without regard to
conflicts of laws principles.
SECTION 17. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement and shall be effective at the time
of execution.
SECTION 18. Except as otherwise expressly provided herein,
each of the parties hereto shall bear and pay all costs and expenses incurred
by it or on its behalf in connection with the transactions contemplated
hereunder, including fees and expenses of its own financial consultants,
investment bankers, accountants and counsel.
SECTION 19. Except as otherwise expressly provided herein or
in the Plan, this Agreement contains the entire agreement between the parties
with respect to the transactions contemplated hereunder and supersedes all
prior arrangements or understandings with respect thereof, written or oral.
The terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective successors and permitted
assigns. Nothing in this Agreement, expressed or implied, is intended to
confer upon any party, other than the parties hereto, and their respective
successors except as assigns, any rights, remedies, obligations or liabilities
under or by reason of this Agreement, except as expressly provided herein.
SECTION 20. Capitalized terms used in this Agreement and not
defined herein but defined in the Plan shall have the meanings assigned thereto
in the Plan.
SECTION 21. Nothing contained in this Agreement shall be
deemed to authorize Issuer or Grantee to breach any provision of the Plan.
SECTION 22. In the event that any selection or determination
is to be made by Grantee or the Owner hereunder and at the time of such
selection or determination there is more than one Grantee or Owner, such
selection shall be made by a majority in interest of such Grantees or Owners.
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<PAGE> 18
SECTION 23. In the event of any exercise of the option by
Grantee, Issuer and such Grantee shall execute and deliver all other documents
and instruments and take all other action that may be reasonably necessary in
order to consummate the transactions provided for by such exercise.
SECTION 24. Except to the extent Grantee exercises the
Option, Grantee shall have no rights to vote or receive dividends or have any
other rights as a shareholder with respect to shares of Common Stock covered
hereby.
IN WITNESS WHEREOF, each of the parties has caused this Stock
Option Agreement to be executed on its behalf by their officers thereunto duly
authorized, all as of the date first above written.
FIRST FIDELITY BANCORPORATION
By: /s/ WOLFGANG SCHOELLKOPF
-----------------------------
Name: Wolfgang Schoellkopf
Title: Vice Chairman and
Chief Financial Officer
FIRST INTER-BANCORP INC.
By: /s/ ROBERT N. CHAMBERS
-----------------------------
Name: Robert N. Chambers
Title: Chairman of the Board and
Chief Executive Officer
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