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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) June 25, 1998
UNITED NATIONAL BANCORP
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(Exact name of registrant as specified in its charter)
New Jersey
(State or other jurisdiction of incorporation)
000-16931 22-2894827
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(Commission File Number) (IRS Employer Identification No.)
1130 Route 22 East, Bridgewater, New Jersey 08807-0010
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(Address of principal executive offices)
(908) 429-2200
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(Registrant's telephone number, including area code)
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<PAGE>
Item 5. Other Events.
On June 25, 1998, United National Bancorp ("United") and State Bank of
South Orange ("State Bank") issued a press release jointly announcing that they
have entered into a definitive agreement in which United will acquire State Bank
in a tax-free exchange of stock. State Bank is a $75 million asset,
single-office bank headquartered in South Orange, New Jersey. The transaction
will be accounted for as a pooling of interests. The press release and the
Merger Agreement are annexed as Exhibits to this Form 8-K.
As of June 25, 1998, State Bank had 639,575 shares of common stock
outstanding. Pursuant to the Merger Agreement, each share of State Bank common
stock will be exchanged for 1.245 shares of United National.
In connection with the Merger Agreement, State Bank granted United an
option to purchase up to 127,275 shares of State Bank's common stock.
The announced merger is subject to necessary bank regulatory approvals,
the approval of State Bank shareholders and other customary conditions.
The description of the Merger Agreement and the terms of the
merger contained in this Form 8-K are qualified in their entirety by reference
to the Merger Agreement.
<PAGE>
Item 7. Exhibits.
99(a) Press Release dated June 25, 1998
99(b) Agreement and Plan of Merger dated June 25, 1998 by and between
United National Bancorp and State Bank of South Orange
99(c) Stock Option Agreement dated June 25, 1998 by and between
United National Bancorp and State Bank of South Orange
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
UNITED NATIONAL BANCORP
Dated: June 29, 1998 By: THOMAS C. GREGOR
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Thomas C. Gregor
Chairman, President and
Chief Executive Officer
<PAGE>
INDEX TO EXHIBITS
Exhibit No. Description
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99(a) Press Release dated June 25, 1998
99(b) Agreement and Plan of Merger dated June 25, 1998 by and between
United National Bancorp and State Bank of South Orange
99(c) Stock Option Agreement dated June 25, 1998 by and between
United National Bancorp and State Bank of South Orange
United National Bancorp to Acquire State Bank of South Orange
Bridgewater, NJ - June 25, 1998 - United National Bancorp (Nasdaq: UNBJ) and
State Bank of South Orange jointly announced that they have entered into a
definitive agreement in which United National will acquire State Bank in a
tax-free exchange of stock. State Bank is a $75 million asset, single-office
bank headquartered in South Orange, New Jersey. The transaction will be
accounted for as a pooling of interests.
"We believe that acquisitions of quality institutions like State Bank are
important to our strategy of expanding our presence into key markets," stated
Thomas C. Gregor, chairman and chief executive officer of United National. "We
look forward to introducing State Bank customers, as well as South Orange area
residents and businesses, to our personalized style of banking. United National
Bank will offer an expanded product line including trust and investment
services, and a full array of personal, mortgage, and commercial loans."
"We are delighted to join forces with United National," stated Milton J. Wigder,
chairman and founder of State Bank. "United National offers additional services
while maintaining he same high level of service and community focus that State
Bank has traditionally offered. We are convinced that our shareholders and
customers alike will benefit from this transaction.
The merger agreement provides that each share of State Bank common stock will be
exchanged for 1.245 shares of United National. State Bank currently has 639,575
shares of common stock outstanding. This acquisition is conditioned upon
receiving necessary bank regulatory approvals, the approval of the shareholders
of State Bank and other customary conditions. The merger agreement grants to
United National an option, exercisable in certain circumstances, to purchase up
to 172,275 shares of State Bank common stock. It is anticipated that the merger
will be consummated before year-end.
United National Bancorp, headquartered in Bridgewater, New Jersey, is a $1.3
billion asset commercial bank holding company whose principal subsidiary is
United National Bank. The Bank operates 26 offices throughout Hunterdon,
Middlesex, Morris, Somerset, Union and Warren counties in New Jersey. In
addition to providing a complete range of personal and business banking
products, United National also offers an array of financial services including
rust, asset management and investment services. United Commercial Capital Group,
a subsidiary of United National Bank, provides timely and innovative solutions
for real estate and commercial transactions that do not fall within the
boundaries of traditional bank financing. Visit United National on the World
Wide Web at www.united-national.com.
Contact: media, Donald Reinhard, 908-429-2370 or investors, Donald Malwitz,
908-429-2405, both of United National, or James J. Young, President of State
Bank at 973-762-2000.
# # #
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated June 25, 1998 (this
"Agreement"), is among United National Bancorp, a corporation chartered under
the laws of the State of New Jersey ("United"), United National Bank, a national
banking association and subsidiary of United ("UNB"), and State Bank of South
Orange, a commercial bank chartered under the laws of the State of New Jersey
("SBSO").
WHEREAS, United and UNB desire to acquire SBSO and SBSO's
Board of Directors has determined, based upon the terms and conditions
hereinafter set forth, that the acquisition described herein is in the best
interests of SBSO and its stockholders, the Boards of Directors of SBSO, United
and UNB have each duly adopted and approved this Agreement and the Board of
Directors of SBSO has directed that it be submitted to its shareholders for
approval; and
WHEREAS, the acquisition will be accomplished by merging SBSO
into UNB with UNB as the surviving bank, and SBSO shareholders receiving the
consideration hereinafter set forth; and
WHEREAS, simultaneously with the execution of this Agreement,
SBSO has executed and delivered to United a stock option agreement (the "Stock
Option Agreement") pursuant to which SBSO is issuing an option to United to
purchase certain shares of the authorized and unissued SBSO Common Stock (as
hereafter defined), subject to the terms and conditions set forth in the Stock
Option Agreement (the "United Stock Option").
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements herein contained, and intending to be legally
bound, the parties hereto agree as follows:
ARTICLE I
THE MERGER
1.1. The Merger. Subject to the terms and conditions of this
Agreement, at the Effective Time (as defined in Section 1.6), SBSO shall be
merged with and into UNB under the charter of UNB (the "Merger") in accordance
with the National Bank Act and the New Jersey Banking Act of 1948, as amended,
and UNB shall be the surviving bank (the "Surviving Bank").
1.2. Effect of the Merger. At the Effective Time, the
Surviving Bank shall be considered the same business and corporate entity as
each of SBSO and UNB and thereupon and thereafter, all the property, rights,
powers and franchises of each of SBSO and UNB shall vest in the Surviving Bank
and the Surviving Bank shall be subject to and be deemed to have assumed all of
the debts, liabilities, obligations and duties of each of SBSO and UNB and shall
have succeeded to all of each of their relationships, fiduciary or otherwise, as
fully and to the same extent as if such property rights, privileges, powers,
franchises, debts, obligations, duties and relationships had been originally
acquired, incurred or entered into by the Surviving Bank.
1.3. Articles of Association. The Articles of Association of
UNB as they exist immediately prior to the Effective Time shall continue as the
Articles of Association of the Surviving Bank, as set forth in Schedule 1.3
hereto, until otherwise amended as provided by law; provided however, that UNB
shall have the right, between the date hereof and the Closing, to amend its
Articles of Association in a manner that will not adversely affect the
shareholders of SBSO and upon the acceptance of such amendment by the Office of
the Comptroller of the Currency (the "OCC"), the Articles of Association of UNB
as so amended shall be substituted for Schedule 1.3.
1.4. Bylaws. The Bylaws of UNB as they exist immediately prior
to the Effective Time shall continue as the Bylaws of the Surviving Bank until
otherwise amended as provided by law.
1.5. Directors and Officers. The directors and officers of UNB
as of the Effective Time shall continue as the directors and officers of the
Surviving Bank.
1.6. Effective Time and Closing. The Merger shall become
effective (and be consummated) at the date and time (the "Effective Time")
specified in a notice to the OCC (the "OCC Notice") which will be filed by UNB
with the approval of SBSO, which approval shall not be unreasonably withheld or
delayed, such filing to occur immediately after the "Closing" (as hereinafter
defined) is consummated. A closing (the "Closing") shall take place at 10:00
a.m., on a day mutually agreed to by United and SBSO within ten (10) business
days following the "Determination Date" (as hereinafter defined), at the office
of Pitney, Hardin, Kipp & Szuch, Florham Park, New Jersey, or at such other
place, time or date as UNB and SBSO may mutually agree upon. The OCC Notice
shall specify as the Effective Time the close of business on the date of the
Closing unless a different Effective Time is agreed to by UNB and SBSO. The
"Determination Date" shall mean the first date on which all necessary regulatory
and governmental approvals and consents have been received, all statutory
waiting periods in respect thereof have expired, and all other conditions to the
consummation of the Merger specified in Article VI hereof (other than the
delivery of certificates, opinions and other instruments and documents to be
delivered at the Closing) have been satisfied or waived.
1.7. Capital Stock. As of March 31, 1998, UNB had capital of
$7,830,007.50, divided into 3,132,003 shares of common stock, each of $2.50 par
value, $64,299,000 of surplus, and undivided profits of $53,634,000. As of March
31, 1998, SBSO had capital of $3,197,875, divided into 639,575 shares of common
stock, each of $5.00 par value, $1,802,355 of surplus, and $968,975 of undivided
profits. At the Effective Time, the amount of capital stock of UNB shall be
$11,027,882.50, divided into 4,411,153 shares of common stock, each of $2.50 par
value, and UNB shall have a surplus of $66,101,355 and undivided profits,
including capital reserves, which when combined with the capital and surplus
will be equal to the combined capital structures of UNB and SBSO as stated in
the preceding two sentences, adjusted however, for earnings and expenses and
dividends declared and paid by UNB and SBSO between March 31, 1998 and the
Effective Time.
ARTICLE II
CONVERSION OF STATE BANK OF SOUTH ORANGE SHARES
2.1. Conversion of SBSO Common Stock. Each share of common
stock, par value $5.00 per share, of SBSO ("SBSO Common Stock"), issued and
outstanding immediately prior to the Effective Time (other than shares of SBSO
Common Stock retired pursuant to Section 2.5 and Dissenting Shares as defined in
Section 2.3) shall, by virtue of the Merger and without any action on the part
of the holder thereof, be converted at the Effective Time as follows:
(a) Exchange Ratio. Subject to the provisions of this Section
2.1, each share of SBSO Common Stock issued and outstanding immediately prior to
the Effective Time (excluding shares of SBSO Common Stock retired pursuant to
Section 2.5 and Dissenting Shares) shall be converted at the Effective Time into
the right to receive 1.245 shares (the "Exchange Ratio") of common stock, $1.25
par value, of United ("United Common Stock").
(b) Fractional Shares; Average Closing Price. No fractional
shares of United Common Stock shall be issued pursuant to the Merger, and, in
lieu thereof, a cash payment shall be made based on the average of the "Closing
Prices" (as hereinafter defined) of United Common Stock during the first 10 of
the 15 consecutive trading days immediately preceding the date of the Closing
(the "Average Closing Price of United Common Stock"). The "Closing Price" on any
trading day shall mean the closing price of United Common Stock on such day as
supplied by the Nasdaq Stock Market, National Market System ("NASDAQ/NMS") and
published in The Wall Street Journal. A "trading day" shall mean any business
day on which United Common Stock is actually traded on NASDAQ/NMS.
(c) Capital Changes. If between the date of this Agreement and
the Effective Time the outstanding shares of United Common Stock shall have been
changed into a different number of shares or a different class, by reason of any
stock dividend, stock split, reclassification, recapitalization, combination or
exchange of shares, the Exchange Ratio shall be correspondingly adjusted to
reflect such stock dividend, stock split, reclassification, recapitalization,
combination or exchange of shares.
(d) Cancellation of SBSO Certificates. After the Effective
Time, each such share of SBSO Common Stock shall no longer be outstanding and
shall automatically be cancelled, and each of the certificates (the
"Certificates") previously evidencing any such shares of SBSO Common Stock
outstanding immediately prior to the Effective Time (other than shares of SBSO
Common Stock retired pursuant to Section 2.5 and Dissenting Shares) shall
thereafter represent the right to receive the consideration described in
Sections 2.1(a) and 2.1(b) hereof. After the Effective Time, the holders of the
Certificates shall cease to have any rights with respect to such shares of SBSO
Common Stock except as otherwise provided herein or by law. The Certificates
shall be exchanged for certificates evidencing shares of United Common Stock
issued pursuant to this Article II, upon the surrender of such Certificates in
accordance with this Article II.
2.2. Exchange of Shares.
(a) SBSO and United agree to appoint The Bank of New York, or
such other bank as United (with the consent of SBSO, which consent shall not be
unreasonably withheld) shall designate, as the Exchange Agent (the "Exchange
Agent") for purposes of effecting the conversion of SBSO Common Stock described
herein. All fees and expenses of the Exchange Agent shall be paid by United. At
the Effective Time, United shall deposit with the Exchange Agent, for the
benefit of the holders of SBSO Common Stock, the consideration to be furnished
to such holders pursuant to Section 2.1 hereof. As soon as practicable after the
Effective Time, the Exchange Agent shall mail, to each holder of record (a
"Record Holder") of shares of SBSO Common Stock outstanding immediately prior to
the Effective Time, a letter of transmittal (which shall specify that delivery
of the Certificates shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates to the Exchange
Agent), and instructions for use in effecting the surrender of the Certificates
in exchange for United Common Stock (and cash in lieu of fractional shares).
Such letter of transmittal and instructions shall be in the form and substance
of a letter of transmittal and instructions which shall have been submitted to,
and approved by, SBSO prior to the Effective Time. Upon surrender of a
Certificate for exchange and cancellation to the Exchange Agent, together with
such letter of transmittal, duly executed, the Record Holder shall be entitled
to promptly receive in exchange for such Certificate the consideration as
provided in Section 2.1 hereof and the Certificates so surrendered shall be
cancelled. The Exchange Agent shall not be obligated to deliver or cause to be
delivered to any Record Holder the consideration to which such Record Holder
would otherwise be entitled until such Record Holder surrenders the Certificate
for exchange or, in lieu thereof, an appropriate Affidavit of Loss and Indemnity
Agreement and/or a bond as may be reasonably required in each case by United.
Notwithstanding the time of surrender of the Certificates, Record Holders (other
than holders of Dissenting Shares, as such term is defined in Section 2.3) shall
be deemed shareholders of United for all purposes from the Effective Time,
except that United shall withhold the payment of dividends from any Record
Holder until such Record Holder effects the exchange of Certificates for United
Common Stock. Such Record Holder shall receive such withheld dividends, without
interest, upon effecting the share exchange.
(b) After the Effective Time, there shall be no transfers on
the stock transfer books of SBSO of the shares of SBSO Common Stock which were
outstanding immediately prior to the Effective Time and, if any Certificates
representing such shares are presented for transfer, they shall be cancelled and
exchanged for the consideration as provided in Section 2.1 hereof.
(c) If payment of the consideration as provided in Section 2.1
hereof is to be made in a name other than that in which the Certificate
surrendered in exchange therefor is registered, it shall be a condition of such
payment that the Certificate so surrendered shall be properly endorsed (or
accompanied by an appropriate instrument of transfer) and otherwise in proper
form for transfer, and that the person requesting such payment shall pay to the
Exchange Agent in advance any transfer or other taxes required by reason of the
payment to a person other than that of the registered holder of the Certificate
surrendered, or required for any other reason, or shall establish to the
reasonable satisfaction of the Exchange Agent that such tax has been paid or is
not payable.
2.3. Dissenting Shares. Notwithstanding anything in this
Agreement to the contrary, any holder of SBSO Common Stock shall have the right
to dissent in the manner provided in the National Bank Act, 12 U.S.C. Section
215a, and if all necessary requirements of the National Bank Act are met, such
shares shall be entitled to payment in cash from UNB of the fair value of such
shares as determined in accordance with the National Bank Act. All shares of
SBSO Common Stock as to which the holder properly exercises dissenters' rights
in accordance with the National Bank Act shall constitute "Dissenting Shares"
unless and until such rights are waived by the party initially seeking to
exercise such rights.
2.4 UNB Common Stock. The shares of common stock of UNB
outstanding immediately prior to the Effective Time shall not be affected by the
Merger but shall be the same number of shares of the Surviving Bank.
2.5 Certain SBSO Shares Retired. Each share of SBSO Common
Stock that is either (a) owned by United or any direct or indirect wholly-owned
subsidiary of United (other than shares held in trust accounts, managed accounts
or in any similar manner as trustee or in a fiduciary capacity and shares held
as collateral or in lieu of a debt previously contracted) or (b) held in the
treasury of SBSO shall be cancelled and retired at the Effective Time and no
capital stock of United, cash or other consideration shall be paid or delivered
in exchange therefor.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF STATE BANK OF SOUTH ORANGE
References herein to the "SBSO Disclosure Schedule" shall mean
all of the disclosure schedules required by this Article III, dated as of the
date hereof and referenced to the specific sections and subsections of Article
III of this Agreement, which have been delivered on the date hereof, by SBSO to
United and UNB. SBSO hereby represents and warrants to United and UNB as
follows:
3.1. Organization.
(a) SBSO is a New Jersey banking corporation whose deposits
are insured by the Bank Insurance Fund of the Federal Deposit Insurance
Corporation (the "FDIC") to the fullest extent permitted by law. SBSO is duly
organized, validly existing and in good standing under the laws of the State of
New Jersey. SBSO has the corporate power and authority to own or lease all of
its properties and assets and to carry on its business as it is now being
conducted and is duly licensed or qualified to do business and is in good
standing in each jurisdiction in which the nature of the business conducted by
it or the character or location of the properties and assets owned or leased by
it makes such licensing or qualification necessary, except where the failure to
be so licensed, qualified or in good standing would not have a material adverse
effect on the business, operations, assets or financial condition of SBSO. The
SBSO Disclosure Schedule sets forth true and complete copies of the Certificate
of Incorporation and Bylaws of SBSO as in effect on the date hereof.
(b) SBSO has only one "Subsidiary" (as hereinafter defined),
which Subsidiary is identified in the SBSO Disclosure Schedule. The SBSO
Subsidiary is now, and at all times since its formation has been, inactive, and
SBSO has not previously had any active Subsidiaries. The term "Subsidiary", when
used in this Agreement with respect to SBSO, means any corporation, joint
venture, association, partnership, trust or other entity in which SBSO has,
directly or indirectly, at least a 50 percent interest or acts as a general
partner. Except as set forth in the SBSO Disclosure Schedule, SBSO does not own
or control, directly or indirectly, any equity interest in any corporation,
company, association, partnership, joint venture or other entity and owns no
real estate, except real estate used for its banking premises and real estate in
foreclosure.
3.2. Capitalization. The authorized capital stock of SBSO
consists of 800,000 shares of SBSO Common Stock. As of the date hereof, there
were 639,575 shares of SBSO Common Stock issued and outstanding and no shares of
SBSO Common Stock held in the treasury. As of the date hereof, there were no
shares of SBSO Common Stock issuable upon exercise of outstanding options
granted pursuant to any SBSO stock option plan. All issued and outstanding
shares of SBSO Common Stock have been duly authorized and validly issued, and
are fully paid and no assessment has been made on such shares. The authorized
but unissued shares of SBSO Common Stock are not subject to pre-emptive rights.
Except for the United Stock Option, SBSO does not have, nor is it bound by, any
outstanding subscriptions, options, warrants, calls, commitments or agreements
of any character calling for the transfer, purchase or issuance of any shares of
capital stock of SBSO or any securities representing the right to purchase or
otherwise receive any shares of such capital stock or any securities convertible
into or representing the right to subscribe for any such shares, and there are
no agreements or understandings with respect to voting of any such shares.
3.3. Authority; No Violation.
(a) Subject to the approval of this Agreement and the
transactions contemplated hereby by the stockholders of SBSO, and subject to the
parties obtaining all necessary regulatory approvals, SBSO has full corporate
power and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby in accordance with the terms hereof. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly approved by the
Board of Directors of SBSO. Except for the consents and approvals described in
paragraph (b) below, no other corporate proceedings on the part of SBSO are
necessary to consummate the transactions contemplated hereby. This Agreement has
been duly and validly executed and delivered by SBSO and constitutes the valid
and binding obligation of SBSO, enforceable against SBSO in accordance with its
terms, except to the extent that enforcement may be limited by (i) bankruptcy,
insolvency, reorganization, moratorium, conservatorship, receivership or other
similar laws now or hereafter in effect relating to or affecting the enforcement
of creditors' rights generally or the rights of creditors of New Jersey
state-chartered banks, (ii) general equitable principles, and (iii) laws
relating to the safety and soundness of insured depository institutions and
except that no representation is made as to the effect or availability of
equitable remedies or injunctive relief.
(b) Neither the execution and delivery of this Agreement by
SBSO, nor the consummation by SBSO of the transactions contemplated hereby in
accordance with the terms hereof, or compliance by SBSO with any of the terms or
provisions hereof, will (i) violate any provision of SBSO's Certificate of
Incorporation or other governing instrument or Bylaws, (ii) assuming that the
consents and approvals set forth below are duly obtained, violate any statute,
code, ordinance, rule, regulation, judgment, order, writ, decree or injunction
applicable to SBSO or any of its properties or assets, or (iii) except as set
forth in the SBSO Disclosure Schedule, violate, conflict with, result in a
breach of any provisions of, constitute a default (or an event which, with
notice or lapse of time, or both, would constitute a default) under, result in
the termination of, accelerate the performance required by, or result in the
creation of any lien, security interest, charge or other encumbrance upon any of
the properties or assets of SBSO under any of the terms, conditions or
provisions of, any note, bond, mortgage, indenture, deed of trust, license,
lease, agreement or other instrument or obligation to which SBSO is a party, or
by which it or any of its properties or assets may be bound or affected except,
with respect to (ii) and (iii) above, such as individually and in the aggregate
will not have a material adverse effect on the business, operations, assets or
financial condition of SBSO, or the ability of SBSO to consummate the
transactions contemplated hereby. Except for consents and approvals of or
filings or registrations with or notices to the FDIC, the Commissioner of
Banking of the State of New Jersey (the "Commissioner"), and the stockholders of
SBSO, no consents or approvals of or filings or registrations with or notices to
any public body or authority are necessary on behalf of SBSO in connection with
(x) the execution and delivery by SBSO of this Agreement and (y) the
consummation by SBSO of the transactions contemplated hereby.
3.4. Financial Statements.
(a) The SBSO Disclosure Schedule sets forth copies of the
statements of condition of SBSO as of December 31, 1996 and 1997, and the
related statements of income, stockholders' equity and cash flows for the
periods ended December 31 in each of the three years 1995 through 1997 (the
"SBSO Audited Statements"), in each case accompanied by the audit report of
Arthur Andersen, LLP, independent public accountants with respect to SBSO, and
the unaudited statement of condition as of March 31, 1998 and the related
unaudited statement of income of SBSO for the three months ended March 31, 1998,
as filed with the FDIC (the "SBSO Unaudited Statements" and, collectively with
the SBSO Audited Statements, the "SBSO Financial Statements"). The SBSO Audited
Statements (including the related notes) have been prepared in accordance with
generally accepted accounting principles ("GAAP") consistently applied during
the periods involved. The SBSO Unaudited Statements have been prepared in
accordance with FDIC accounting requirements ("RAP") applicable to such
statements consistently applied during the periods involved (except for the
notes associated with such unaudited statements, which notes are not required by
RAP). The SBSO Financial Statements fairly present the financial condition of
SBSO as of the respective dates set forth therein and fairly present the results
of the operations, and with respect to the SBSO Audited Statements the
stockholders' equity and cash flows, of SBSO for the respective periods set
forth therein.
(b) The books and records of SBSO have been and are being
maintained in material compliance with applicable legal and accounting
requirements, and reflect only actual transactions.
(c) Except as and to the extent reflected, disclosed or
reserved against in the SBSO Audited Statements (including the notes thereto),
as of December 31, 1997 SBSO did not have any liabilities, whether absolute,
accrued, contingent or otherwise, which are material to the business,
operations, assets or financial condition of SBSO and which are required by GAAP
to be disclosed in the SBSO Audited Statements. Except as and to the extent
reflected, disclosed or reserved against in the SBSO Unaudited Statements
(including the notes thereto), as of March 31, 1998 SBSO did not have any
liabilities, whether absolute, accrued, contingent or otherwise, which are
material to the business, operations, assets or financial condition of SBSO and
which are required by RAP to be disclosed in the SBSO Unaudited Statements.
Since March 31, 1998 and to the date hereof, SBSO has not incurred any
liabilities except in the ordinary course of business and consistent with
prudent banking practice or except as specifically contemplated by this
Agreement.
3.5. Financial Advisor; Broker's and Other Fees. SBSO has
retained Ryan, Beck & Co., Inc. ("Ryan Beck") to render a fairness opinion in
connection with the Merger. Ryan Beck has rendered its fairness opinion on the
date hereof. Except for Ryan Beck, neither SBSO nor any of its directors or
officers has employed any broker or finder or incurred any liability for any
broker's or finder's fees or commissions in connection with any of the
transactions contemplated by this Agreement. Except as set forth in the SBSO
Disclosure Schedule, there are no fees (other than time charges billed at usual
and customary rates) payable to any consultants, including lawyers and
accountants, in connection with this transaction or which would be triggered by
consummation of this transaction or the termination of the services of such
consultants by SBSO.
3.6. Absence of Certain Changes or Events.
(a) Except as set forth in the SBSO Disclosure Schedule, there
has not been any material adverse change in the business, operations, assets or
financial condition of SBSO since March 31, 1998 (including without limitation a
material adverse change arising from the institution of Legal Proceedings (as
defined in Section 3.7) or the occurrence of a default as described in Section
3.13(c)), and to SBSO's knowledge, no facts or conditions exist (other than
regional or national economic conditions which affect financial institutions
generally) which are reasonably likely to cause such a material adverse change
in the future.
(b) Except for the negotiation of the transactions
contemplated by this Agreement or as otherwise set forth in the SBSO Disclosure
Schedule, SBSO has not taken or permitted any of the actions set forth in
Section 5.2 hereof between March 31, 1998 and the date hereof and SBSO has
conducted its business only in the ordinary course, consistent with past
practice.
3.7. Legal Proceedings. Except as disclosed in the SBSO
Disclosure Schedule, as of the date of this Agreement SBSO is not a party to
any, and there are no pending or, to SBSO's knowledge, threatened, legal,
administrative, arbitral or other proceedings, claims, actions or governmental
investigations of any nature ("Legal Proceedings") against SBSO or against any
present or former SBSO officer or director in their capacity as a SBSO officer
or director which are material to SBSO. Except as disclosed in the SBSO
Disclosure Schedule, as of the date of this Agreement SBSO is not a party to any
material order, judgment or decree entered against SBSO in any lawsuit or
proceeding.
3.8. Taxes and Tax Returns.
(a) SBSO has duly filed (and until the Effective Time will so
file) all returns, declarations, reports, information returns and statements
("Returns") required to be filed by it in respect of any federal, state and
local taxes (including withholding taxes, penalties or other payments required)
and has duly paid (and until the Effective Time will so pay) all such taxes due
and payable, other than taxes or other charges which are being contested in good
faith. SBSO has established (and until the Effective Time will establish) on its
books and records reserves that it reasonably believes are adequate for the
payment of all federal, state and local taxes not yet due and payable, but are
anticipated to be incurred in respect of SBSO through the Effective Time. Except
as set forth in the SBSO Disclosure Schedule, the federal income tax returns of
SBSO have been examined by the Internal Revenue Service (the "IRS") (or are
closed to examination due to the expiration of the applicable statute of
limitations) and no deficiencies were asserted as a result of such examinations
which have not been resolved and paid in full. Except as set forth in the SBSO
Disclosure Schedule, the applicable state income tax returns of SBSO have been
examined by the applicable authorities (or are closed to examination due to the
expiration of the statute of limitations) and no deficiencies were asserted as a
result of such examinations which have not been resolved and paid in full. To
the knowledge of SBSO, there are no audits or other administrative or court
proceedings presently pending, or claims asserted, for taxes or assessments upon
SBSO nor has SBSO given any currently outstanding waivers or comparable consents
regarding the application of the statute of limitations with respect to any
taxes or tax Returns.
(b) Except as set forth in the SBSO Disclosure Schedule, SBSO
(i) has not requested any extension of time within which to file any tax Return
which Return has not since been filed, (ii) is not a party to any agreement
providing for the allocation or sharing of taxes, (iii) is not required to
include in income any adjustment pursuant to Section 481(a) of the Internal
Revenue Code of 1986, as amended (the "Code"), by reason of a voluntary change
in accounting method initiated by SBSO (nor does SBSO have any knowledge that
the IRS has proposed any such adjustment or change of accounting method) and
(iv) has not filed a consent pursuant to Section 341(f) of the Code or agreed to
have Section 341(f)(2) of the Code apply.
3.9. Employee Benefit Plans.
(a) Except as disclosed in the SBSO Disclosure Schedule, SBSO
does not maintain or contribute to any "employee pension benefit plan", within
the meaning of Section 3(2)(A) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA") (the "SBSO Pension Plans"), "employee welfare benefit
plan", within the meaning of Section 3(1) of ERISA (the "SBSO Welfare Plans"),
or any stock option plan, stock purchase plan, deferred compensation plan,
severance plan, bonus plan, employment agreement or other similar plan, program
or arrangement. SBSO has not, since September 2, 1974, contributed to any
"Multiemployer Plan", within the meaning of Sections 3(37) and 4001(a)(3) of
ERISA. None of the SBSO Pension Plans are subject to Title IV of ERISA, nor has
SBSO sponsored an SBSO Pension Plan that was subject to Title IV of ERISA within
six years from the date hereof.
(b) SBSO has delivered to United in the SBSO Disclosure
Schedule a complete and accurate copy of each of the following with respect to
each of the SBSO Pension Plans and SBSO Welfare Plans: (i) plan document,
summary plan description, and summary of material modifications (if not
available, a detailed description of the foregoing); (ii) trust agreement or
insurance contract, if any; (iii) most recent IRS determination letter, if any;
(iv) most recent actuarial report, if any; and (v) most recent annual report on
Form 5500.
(c) All contributions required to be made to each SBSO Pension
Plan under the terms thereof, ERISA or other applicable law have been timely
made, and all amounts properly accrued to date as liabilities of SBSO which have
not been paid have been properly recorded on the books of SBSO.
(d) Except as disclosed on the SBSO Disclosure Schedule, each
of the SBSO Pension Plans, the SBSO Welfare Plans and each other plan and
arrangement identified on the SBSO Disclosure Schedule has been operated in
compliance in all material respects with the provisions of ERISA, the Code,
regulations, rulings and announcements promulgated or issued thereunder, and
other applicable governmental laws and regulations. Furthermore, the IRS has
issued a favorable determination letter, which takes into account the Tax Reform
Act of 1986 and subsequent legislation, with respect to each of the SBSO Pension
Plans that are intended to satisfy the requirements of Section 401(a) and/or (k)
of the Code, and SBSO is not aware of any fact or circumstance which would
disqualify any such plan, that could not be retroactively corrected (in
accordance with the procedures of the IRS).
(e) To the knowledge of SBSO, within the past two plan years,
no non-exempt prohibited transaction, within the meaning of Section 4975 of the
Code or Section 406 of ERISA, has occurred with respect to any of the SBSO
Welfare Plans or SBSO Pension Plans.
(f) No SBSO Pension Plan or any trust created thereunder has
been terminated, nor have there been any "reportable events", within the meaning
of Section 4034(b) of ERISA, with respect to any of the SBSO Pension Plans.
(g) There are no pending, or, to the knowledge of SBSO,
threatened or anticipated claims (other than routine claims for benefits) by, on
behalf of or against any of the SBSO Pension Plans or the SBSO Welfare Plans,
any trusts related thereto or any other plan or arrangement identified in the
SBSO Disclosure Schedule.
(h) No SBSO Welfare Plan provides medical or death benefits
beyond an employee's retirement or other termination of service, other than
coverage mandated by law.
(i) Each SBSO Welfare Plan that provides health, life and/or
disability benefits is funded exclusively through insurance policies or
contracts.
(j) Except as hereafter agreed to by United in writing or as
disclosed on the SBSO Disclosure Schedule, the consummation of the transactions
contemplated by this Agreement will not (i) entitle any current or former
employee of SBSO to severance pay, unemployment compensation or any similar
payment, or (ii) accelerate the time of payment, accelerate the vesting, or
increase the amount, of any compensation or benefits due to any current employee
or former employee under any SBSO Pension Plan or SBSO Welfare Plan.
3.10. Reports.
(a) The SBSO Disclosure Schedule lists, and SBSO has
previously delivered to United a complete copy of, each communication (other
than general advertising materials and press releases) mailed by SBSO to its
stockholders as a class since January 1, 1996, and each such communication, as
of its date, complied in all material respects with all applicable statutes,
rules and regulations and did not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading; provided that
disclosures as of a later date shall be deemed to modify disclosures as of an
earlier date.
(b) SBSO has, since January 1, 1996, duly filed with the FDIC
in correct form the Call Reports required to be filed under applicable laws and
regulations, and SBSO promptly will deliver or make available to United accurate
and complete copies of such reports. The SBSO Disclosure Schedule lists all
examinations of SBSO conducted by either the FDIC or the New Jersey Department
of Banking since January 1, 1996 and the dates of any responses thereto
submitted by SBSO.
3.11. SBSO Information. The information relating to SBSO to be
contained in the Proxy Statement/Prospectus (as defined in Section 5.6(a)
hereof) to be delivered to stockholders of SBSO in connection with the
solicitation of their approval of this Agreement and the transactions
contemplated hereby, as of the date the Proxy Statement/Prospectus is mailed to
stockholders of SBSO, and up to and including the date of the meeting of
stockholders to which such Proxy Statement/Prospectus relates, will not contain
any untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. The information relating to SBSO in the
Registration Statement (as defined in Section 5.6(a) hereof), as of the date of
the filing thereof, will not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading.
3.12. Compliance with Applicable Law. Except as set forth in
the SBSO Disclosure Schedule, SBSO holds all material licenses, franchises,
permits and authorizations necessary for the lawful conduct of its business, and
has complied with and is not in default in any respect under any, applicable
law, statute, order, rule, regulation, policy and/or guideline of any federal,
state or local governmental authority relating to SBSO (other than where such
defaults or non-compliances will not, alone or in the aggregate, result in a
material adverse effect on the business, operations, assets or financial
condition of SBSO) and SBSO has not received notice of violation of, nor does it
know of any violations (other than violations which will not, alone or in the
aggregate, result in a material adverse effect on the business, operations,
assets or financial condition of SBSO) of, any of the above. As of the date of
this Agreement, SBSO has not received any written notice from any persons
asserting that such person would object to the consummation of a merger of SBSO
with United or with any other entity due to the CRA performance of or rating of
SBSO.
3.13. Certain Contracts.
(a) Except for plans referenced in Section 3.9 hereof or
disclosed in the SBSO Disclosure Schedule, (i) SBSO is not a party to or bound
by any contract or understanding (whether written or, to its knowledge, oral)
with respect to the employment or termination of any present or former officers,
employees, directors or consultants. The SBSO Disclosure Schedule sets forth
true and correct copies of all written employment agreements or termination
agreements with officers, employees, directors, or consultants to which SBSO is
a party.
(b) Except as disclosed in the SBSO Disclosure Schedule, (i)
as of the date of this Agreement, SBSO is not a party to or bound by any
commitment, agreement or other instrument (excluding commitments and agreements
in connection with extensions of credit by SBSO) which contemplates the payment
of amounts in excess of $100,000, or which otherwise is material to the
operations, assets or financial condition of SBSO, (ii) no commitment, agreement
or other instrument to which SBSO is a party or by which it is bound limits the
freedom of SBSO to compete in any line of business or with any person, and (iii)
SBSO is not a party to any collective bargaining agreement.
(c) As of the date of this Agreement, except as disclosed in
the SBSO Disclosure Schedule, neither SBSO nor, to the knowledge of SBSO, any
other party thereto, is in default in any material respect under any material
lease, contract, mortgage, promissory note, deed of trust, loan agreement or
other commitment or arrangement.
3.14. Properties and Insurance.
(a) SBSO has good and, as to owned real property, if any,
marketable title to all material assets and properties, whether real or
personal, tangible or intangible, reflected in SBSO's balance sheet as of
December 31, 1997, or owned and acquired subsequent thereto (except to the
extent that such assets and properties have been disposed of for fair value in
the ordinary course of business since December 31, 1997), subject to no
encumbrances, liens, mortgages, security interests or pledges, except (i) those
items that secure liabilities that are reflected in such balance sheet or the
notes thereto or incurred in the ordinary course of business after the date of
such balance sheet, (ii) statutory liens for amounts not yet delinquent or which
are being contested in good faith, (iii) such encumbrances, liens, mortgages,
security interests, pledges and title imperfections that are not in the
aggregate material to the business, operations, assets, and financial condition
of SBSO and (iv) with respect to owned real property, if any, title
imperfections noted in title reports delivered to United prior to the date
hereof. SBSO, as lessee, has the right under valid and subsisting leases to
occupy, use, possess and control, in all material respects, all real property
leased by it, as presently occupied, used, possessed and controlled by it.
(b) The SBSO Disclosure Schedule lists all policies of
insurance and bonds covering business operations and insurable properties and
assets of SBSO, all risks insured against, and the amount thereof and
deductibles relating thereto. Except as set forth in the SBSO Disclosure
Schedule, as of the date hereof, SBSO has not, since January 1, 1995, received
any notice of cancellation or notice of a material amendment of any such
insurance policy or bond and it is not in default in any material respect under
such policy or bond, and, to SBSO's knowledge, no coverage thereunder is being
disputed and all material claims thereunder have been filed in a timely fashion.
3.15. Minute Books. The minute books of SBSO contain records
which, in all material respects, accurately record all meetings and other
corporate action of its stockholders and Board of Directors (including
committees of its Board of Directors).
3.16. Environmental Matters. Except as disclosed in the SBSO
Disclosure Schedule:
(a) SBSO has not received any written notice, citation, claim,
assessment, proposed assessment or demand for abatement alleging that SBSO
(either directly or as a trustee or fiduciary, or as a successor-in-interest in
connection with the enforcement of remedies to realize the value of properties
serving as collateral for outstanding loans) is responsible for the correction
or cleanup of any condition resulting from the violation of any law, ordinance
or other governmental regulation regarding environmental matters, which
correction or cleanup would be material to the business, operations, assets or
financial condition of SBSO. SBSO has no knowledge that any toxic or hazardous
substances or materials have been emitted, generated, disposed of or stored on
any real property owned or leased by SBSO, as OREO or otherwise, or owned or
controlled by SBSO as a trustee or fiduciary (collectively, "Properties"), in
any manner that violates or, after the lapse of time may violate, any presently
existing federal, state or local law or regulation governing or pertaining to
such substances and materials, the violation of which would have a material
adverse effect on the business, operations, assets or financial condition of
SBSO.
(b) SBSO has no knowledge that any of the Properties has been
operated in any manner in the three years prior to the date of this Agreement
that violated any applicable federal, state or local law or regulation governing
or pertaining to toxic or hazardous substances and materials, the violation of
which would have a material adverse effect on the business, operations, assets
or financial condition of SBSO.
(c) To the knowledge of SBSO, there are no underground storage
tanks on, in or under any of the Properties and no underground storage tanks
have been closed or removed from any of the Properties while the property was
owned, operated or controlled by SBSO.
3.17. Reserves. The allowance for possible loan and lease
losses in the March 31, 1998 SBSO Financial Statements was adequate at the time
based upon past loan loss experiences and potential losses in the portfolio at
the time to cover all known or reasonably anticipated loan losses.
3.18. Year 2000 Compliance. SBSO has taken all reasonable
steps necessary to address the software, accounting and record keeping issues
raised in order for the data processing systems used in the business conducted
by SBSO to be Year 2000 compliant in accordance with applicable regulatory
guidelines, except as set forth in the SBSO Disclosure Schedule. SBSO does not
expect the future cost of addressing such issues to be material. SBSO has not
received a rating of less than satisfactory from any bank regulatory agency with
respect to Year 2000 compliance.
3.19. Agreements with Bank Regulators. Except as disclosed in
the SBSO Disclosure Schedule, SBSO is not a party to any agreement or memorandum
of understanding with, or a party to any commitment letter, board resolution
submitted to a regulatory authority or similar undertaking to, and is not
subject to any order or directive by, and is not a recipient of any
extraordinary supervisory letter from, any court, governmental authority or
other regulatory or administrative agency or commission, domestic or foreign
("Governmental Entity") which restricts materially the conduct of its business,
or in any manner relates to its capital adequacy, its credit or reserve policies
or its management, except for those the existence of which has been disclosed in
writing to United by SBSO prior to the date of this Agreement, nor has SBSO been
advised by any Governmental Entity that it is contemplating issuing or
requesting (or is considering the appropriateness of issuing or requesting) any
such order, decree, agreement, memorandum of understanding, extraordinary
supervisory letter, commitment letter or similar submission, except as disclosed
in writing to United by SBSO prior to the date of this Agreement. SBSO is not
required by Section 32 of the Federal Deposit Insurance Act to give prior notice
to a Federal banking agency of the proposed addition of an individual to its
board of directors or the employment of an individual as a senior executive
officer, except as disclosed in writing to United by SBSO prior to the date of
this Agreement.
3.20. Disclosure. No representation or warranty contained in
Article III of this Agreement contains any untrue statement of a material fact
or omits to state a material fact necessary to make the statements herein not
misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF UNB AND UNITED
References herein to the "United Disclosure Schedule" shall
mean all of the disclosure schedules required by this Article IV, dated as of
the date hereof and referenced to the specific sections and subsections of
Article IV of this Agreement, which have been delivered on the date hereof by
United and UNB to SBSO. United and UNB hereby represent and warrant to SBSO as
follows:
4.1. Corporate Organization.
(a) United is a corporation duly organized and validly
existing and in good standing under the laws of the State of New Jersey. United
has the corporate power and authority to own or lease all of its properties and
assets and to carry on its business as it is now being conducted, and is duly
licensed or qualified to do business and is in good standing in each
jurisdiction in which the nature of the business conducted by it or the
character or location of the properties and assets owned or leased by it makes
such licensing or qualification necessary, except where the failure to be so
licensed, qualified or in good standing would not have a material adverse effect
on the business, operations, assets or financial condition of United or any of
its Subsidiaries (defined below). United is registered as a bank holding company
under the Bank Holding Company Act of 1956, as amended (the "BHCA"). The United
Disclosure Schedule sets forth true and complete copies of the Certificate of
Incorporation of United.
(b) Each of the Subsidiaries of United are listed in the
United Disclosure Schedule. The term "Subsidiary" when used in this Agreement
with reference to United means any corporation, joint venture, association,
partnership, trust or other entity in which United has, directly or indirectly,
at least a 50 percent interest or acts as a general partner. Each Subsidiary of
United is duly organized and validly existing and in good standing under the
laws of the jurisdiction of its incorporation. UNB is a national bank whose
deposits are insured to the fullest extent permitted by law, by the Savings
Association Insurance Fund of the FDIC for certain deposits, and by the Bank
Insurance Fund of the FDIC for the remaining deposits. Each Subsidiary of United
has the corporate power and authority to own or lease all of its properties and
assets and to carry on its business as it is now being conducted and is duly
licensed or qualified to do business and is in good standing in each
jurisdiction in which the nature of the business conducted by it or the
character or location of the properties and assets owned or leased by it makes
such licensing or qualification necessary, except where the failure to be so
licensed, qualified or in good standing would not have a material adverse effect
on the business, operations, assets or financial condition of United or any of
its Subsidiaries. The United Disclosure Schedule sets forth true and complete
copies of the Articles of Association and Bylaws of UNB as in effect on the date
hereof.
4.2. Capitalization. The authorized capital stock of United
consists of 16,000,000 shares of United Common Stock and 1,000,000 shares of
preferred stock ("Preferred Stock"). As of March 31, 1998, there were 9,373,592
shares of United Common Stock issued and outstanding, including 94,303 treasury
shares and 2,700 shares of restricted stock granted under the United National
Bancorp Long-Term Stock Based Incentive Plan (the "United Option Plan") and
there were no shares of Preferred Stock outstanding. Since March 31, 1998, to
and including the date of this Agreement, no additional shares of United Common
Stock have been issued except in connection with the exercise of options granted
under the United Stock Option Plan or grants of restricted stock under the
United Option Plan. As of March 31, 1998, except for 383,428 shares of United
Common Stock issuable upon exercise of outstanding stock options granted
pursuant to the United Option Plan and the Non-Employee Director Stock Option
Plan (the "United Director Option Plan"), there were no shares of United Common
Stock issuable upon the exercise of outstanding stock options or otherwise. All
issued and outstanding shares of United Common Stock, and all issued and
outstanding shares of capital stock of United's Subsidiaries, have been duly
authorized and validly issued, are fully paid, nonassessable and free of
preemptive rights, and are free and clear of all liens, encumbrances, charges,
restrictions or rights of third parties. All of the outstanding shares of
capital stock of United's Subsidiaries are owned by United free and clear of any
liens, encumbrances, charges, restrictions or rights of third parties. Except
for the options referred to above under the United Option Plan and the United
Director Option Plan, neither United nor any of United's Subsidiaries has or is
bound by any outstanding subscriptions, options, warrants, calls, commitments or
agreements of any character calling for the transfer, purchase or issuance of
any shares of capital stock of United or United's Subsidiaries or any securities
representing the right to otherwise receive any shares of such capital stock or
any securities convertible into or representing the right to purchase or
subscribe for any such shares, and there are no agreements or understandings
with respect to voting of any such shares. No additional grants of awards, or
exercises of outstanding awards, under the United Option Plan or United Director
Option Plan, or repurchases of United Common Stock, prior to the Effective Time
shall be required to be disclosed or reported to SBSO to keep the
representations in this section true or correct.
4.3. Authority; No Violation.
(a) United and UNB have full corporate power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby in accordance with the terms hereof. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby have been duly and validly approved by the Boards of Directors of United
and UNB. Except for any shareholder approval that may be required by the
NASDAQ/NMS listing rules, no other corporate proceedings on the part of United
and UNB are necessary to consummate the transactions contemplated hereby. This
Agreement has been duly and validly executed and delivered by United and UNB and
constitutes a valid and binding obligation of United and UNB, enforceable
against United and UNB in accordance with its terms, except to the extent that
enforcement may be limited by (i) bankruptcy, insolvency, reorganization,
moratorium, conservatorship, receivership or other similar laws now or hereafter
in effect relating to or affecting the enforcement of creditors' rights
generally or the rights of national banks or their holding companies, (ii)
general equitable principles, and (iii) laws relating to the safety and
soundness of insured depository institutions and except that no representation
is made as to the effect or availability of equitable remedies or injunctive
relief.
(b) Neither the execution or delivery of this Agreement nor
the consummation by United and UNB of the transactions contemplated hereby in
accordance with the terms hereof or compliance by United or UNB with any of the
terms or provisions hereof, will (i) violate any provision of the Certificate of
Incorporation, Articles of Association or other governing instrument or Bylaws
of United or UNB, (ii) assuming that the consents and approvals set forth below
are duly obtained, violate any statute, code, ordinance, rule, regulation,
judgment, order, writ, decree or injunction applicable to United or UNB or any
of their respective properties or assets, or (iii) violate, conflict with,
result in a breach of any provision of, constitute a default (or an event which,
with notice or lapse of time, or both, would constitute a default) under, result
in the termination of, accelerate the performance required by, or result in the
creation of any lien, security interest, charge or other encumbrance upon any of
the properties or assets of United or UNB under, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, deed of trust, license,
lease, agreement or other instrument or obligation to which United or UNB is a
party, or by which United or UNB or any of their properties or assets may be
bound or affected, except, with respect to (ii) and (iii) above, such as
individually and in the aggregate will not have a material adverse effect on the
business, operations, assets or financial condition of United and United's
Subsidiaries on a consolidated basis, or the ability of United and UNB to
consummate the transactions contemplated hereby. Except for consents and
approvals of or filings or registrations with or notices to the OCC, the
Commissioner, the Securities and Exchange Commission (the "SEC"), applicable
state securities bureaus or commissions, and the National Association of
Securities Dealers, Inc., no consents or approvals of or filings or
registrations with or notices to any third party or any public body or authority
are necessary on behalf of United or UNB in connection with (a) the execution
and delivery by United or UNB of this Agreement and (b) the consummation by
United of the Merger and the other transactions contemplated hereby. To United's
knowledge, no fact or condition exists which United has reason to believe will
prevent it or UNB from obtaining the aforementioned consents and approvals
within the time frame contemplated hereby.
4.4. Financial Statements.
(a) United has previously delivered to SBSO copies of the
consolidated statements of financial condition of United as of December 31,
1995, 1996 and 1997, the related consolidated statements of income, changes in
stockholders' equity and of cash flows for the periods ended December 31 in each
of the three fiscal years 1995 through 1997, in each case accompanied by the
audit report of KPMG Peat Marwick, LLP, the current independent public
accountants with respect to United, or Arthur Andersen, LLP, previously the
independent public accountants with respect to United, and the unaudited
consolidated statements of condition of United as of March 31, 1998, and the
related unaudited consolidated statements of income, changes in stockholders'
equity and cash flows for the three months then ended as reported in United's
Quarterly Report on Form 10-Q, filed with the SEC under the Securities and
Exchange Act of 1934, as amended (the "1934 Act") (collectively, the "United
Financial Statements"). The United Financial Statements (including the related
notes), have been prepared in accordance with GAAP consistently applied during
the periods involved (except as approved by such independent public accountants
and disclosed therein), and fairly present the consolidated financial position
of United and its consolidated subsidiaries as of the respective dates set forth
therein, and the related consolidated statements of income, changes in
stockholders' equity and cash flows (including the related notes, where
applicable) fairly present the results of the consolidated operations, changes
in stockholders' equity and cash flows of United and its consolidated
subsidiaries for the respective fiscal periods set forth therein.
(b) The books and records of United have been and are being
maintained in material compliance with applicable legal and accounting
requirements, and reflect only actual transactions.
(c) Except as and to the extent reflected, disclosed or
reserved against in the United Financial Statements (including the notes
thereto), as of March 31, 1998 neither United nor any of its Subsidiaries had or
has, as the case may be, any obligation or liability, whether absolute, accrued,
contingent or otherwise, which is material to the business, operations, assets
or financial condition of United or any of its Subsidiaries and which are
required by GAAP to be disclosed in the United Financial Statements. Since March
31, 1998, neither United nor any of its Subsidiaries have incurred any
liabilities, except in the ordinary course of business and consistent with
prudent banking practice.
4.5. Brokerage and Other Fees. Except as set forth in the
United Disclosure Schedule, neither United nor UNB nor any of their respective
directors or officers has employed any broker or finder or incurred any
liability for any broker's or finder's fees or commissions in connection with
any of the transactions contemplated by this Agreement.
4.6. Absence of Certain Changes or Events. There has not been
any material adverse change in the business, operations, assets or financial
condition of United and United's Subsidiaries on a consolidated basis since
March 31, 1998 and to United's knowledge, no facts or conditions exist (other
than regional or national economic conditions which affect financial
institutions generally) which are reasonably likely to cause such a material
adverse change in the future.
4.7. United Information. The information relating to United,
this Agreement and the transactions contemplated hereby in the Proxy
Statement/Prospectus (as defined in Section 5.6(a) hereof), as of the date of
the mailing of the Proxy Statement/Prospectus, and up to and including the date
of the meeting of stockholders of SBSO to which such Proxy Statement/Prospectus
relates, will not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The information
relating to United, this Agreement and the transactions contemplated hereby in
the Registration Statement (as defined in Section 5.6(a) hereof), as of the date
of the filing thereof, will not contain any untrue statement of a material fact
or omit to state a material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading.
4.8. Capital Adequacy. At the Effective Time, after taking
into effect the Merger and the transactions contemplated hereunder, United will
have sufficient capital to satisfy all applicable regulatory capital
requirements.
4.9. United Common Stock. At the Effective Time, the United
Common Stock to be issued pursuant to the terms of Section 2.1, when so issued,
shall be duly authorized, validly issued, fully paid, and non-assessable, free
of preemptive rights and free and clear of all liens, encumbrances or
restrictions created by or through United, with no personal liability attaching
to the ownership thereof.
4.10. Legal Proceedings. Except as disclosed in the United
Disclosure Schedule, neither United nor any of its Subsidiaries is a party to
any, and there are no pending or, to United's knowledge, threatened, Legal
Proceedings against United or any of its Subsidiaries which, if decided
adversely to United, or any of its Subsidiaries, would have a material adverse
effect on the business, operations, assets or financial condition of United and
its Subsidiaries on a consolidated basis. Except as disclosed in the United
Disclosure Schedule, neither United nor any of United's Subsidiaries is a party
to any order, judgment or decree entered against United or any such Subsidiary
in any lawsuit or proceeding which would have a material adverse affect on the
business, operations, assets or financial condition of United and its
Subsidiaries on a consolidated basis.
4.11. Taxes and Tax Returns. United and each of its
Subsidiaries has duly filed (and until the Effective Time will so file) all
Returns required to be filed by it in respect of any federal, state and local
taxes (including withholding taxes, penalties or other payments required) and
has duly paid (and until the Effective Time will so pay) all such taxes due and
payable, other than taxes or other charges which are being contested in good
faith. United and each of its Subsidiaries have established (and until the
Effective Time will establish) on its books and records reserves that it
reasonably believes are adequate for the payment of all federal, state and local
taxes not yet due and payable, but anticipated to be incurred in respect of
United and its Subsidiaries through the Effective Time. No deficiencies exist or
have been asserted based upon the federal income tax returns of United and UNB.
To the knowledge of United, there are no audits or other administrative or court
proceedings pending, or claims asserted, for taxes or assessments upon United or
any of its Subsidiaries.
4.12. Employee Benefit Plans.
(a) United and its Subsidiaries maintain or contribute to
certain "employee pension benefit plans" (the "United Pension Plans"), as such
term is defined in Section 3 of ERISA, and "employee welfare benefit plans" (the
"United Welfare Plans"), as such term is defined in Section 3 of ERISA. Since
September 2, 1974, neither United nor its Subsidiaries have contributed to any
"Multiemployer Plan", as such term is defined in Section 3(37) of ERISA.
(b) Each of the United Pension Plans and each of the United
Welfare Plans has been operated in compliance in all material respects with the
provisions of ERISA, the Code, all regulations, rulings and announcements
promulgated or issued thereunder, and all other applicable governmental laws and
regulations.
4.13. Reports.
(a) Since January 1, 1996, United has filed all reports that
it was required to file with the SEC under the 1934 Act, all of which complied
in all material respects with all applicable requirements of the 1934 Act and
the rules and regulations adopted thereunder. As of their respective dates, each
such report, and each registration statement, proxy statement, form or other
document filed by United with the SEC since January 1, 1996, including without
limitation any financial statements or schedules included therein, did not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
made therein, in light of the circumstances under which they were made, not
misleading; provided that disclosures as of a later date shall be deemed to
modify disclosures as of an earlier date.
(b) United and UNB have, since January 1, 1996, duly filed
with the SEC, OCC and the FRB in correct form the monthly, quarterly and annual
reports required to be filed under applicable laws and regulations, and United,
upon request, promptly will deliver or make available to SBSO accurate and
complete copies of such reports.
4.14. Compliance with Applicable Law. United and its
Subsidiaries hold all material licenses, franchises, permits and authorizations
necessary for the lawful conduct of their respective businesses under and
pursuant to each, and has complied with and is not in default in any respect
under any, applicable law, statute, order, rule, regulation, policy and/or
guideline of any federal, state or local governmental authority or the
NASDAQ/NMS relating to United and its Subsidiaries (other than where such
default or non-compliance will not result in a material adverse effect on the
business, operations, assets or financial condition of United and its
Subsidiaries on a consolidated basis), and neither United nor any of its
Subsidiaries has received notice of violation of, nor does it know of any
violations (other than violations which will not, alone or in the aggregate,
result in a material adverse effect on the business operations, assets or
financial condition of United and its Subsidiaries on a consolidated basis) of,
any of the above.
4.15. Properties and Insurance.
(a) United and its Subsidiaries have good and, as to owned
real property, marketable title to all material assets and properties, whether
real or personal, tangible or intangible, reflected in United's consolidated
balance sheet as of December 31, 1997, or owned and acquired subsequent thereto
(except to the extent that such assets and properties have been disposed of for
fair value in the ordinary course of business since December 31, 1997). United
and its Subsidiaries as lessees have the right under valid and subsisting leases
to occupy, use, possess and control in all material respects, all real property
leased by them as presently occupied, used, possessed and controlled by them.
(b) The business operations and all insurable properties and
assets of United and its Subsidiaries are insured for their benefit against all
risks which, in the reasonable judgment of the management of United should be
insured against, with such deductibles and against such risks and losses as are
in the opinion of the management of United adequate for the business engaged in
by United and its Subsidiaries. As of the date hereof, United has not received
any notice of cancellation of or material amendment to any such insurance policy
or bond and is not in default in any material respect under any such policy or
bond, and, to its knowledge, no coverage thereunder is being disputed and all
material claims thereunder have been filed in a timely fashion.
4.16. Minute Books. The minute books of United and its
Subsidiaries contain accurate records of all meetings and other corporate action
held of their respective stockholders and Boards of Directors (including
committees of their respective Boards of Directors).
4.17. Environmental Matters. Except as disclosed in the United
Disclosure Schedule, neither United nor any of its Subsidiaries has received any
written notice, citation, claim, assessment, proposed assessment or demand for
abatement alleging that United or any of its Subsidiaries (either directly or as
a successor-in-interest in connection with the enforcement of remedies to
realize the value of properties serving as collateral for outstanding loans) is
responsible for the correction or clean-up of any condition material to the
business, operations, assets or financial condition of United or its
Subsidiaries. Except as disclosed in the United Disclosure Schedule, United has
no knowledge that any toxic or hazardous substances or materials have been
emitted, generated, disposed of or stored on any property owned or leased by
United or any of its Subsidiaries in any manner that violates or, after the
lapse of time may violate, any presently existing federal, state or local law or
regulation governing or pertaining to such substances and materials, the
violation of which would have a material adverse effect on the business,
operations, assets or financial condition of United and its Subsidiaries on a
consolidated basis.
4.18. Reserves. The allowance for possible loan and lease
losses in the March 31, 1998 United Financial Statements was adequate based at
the time upon past loan loss experiences and potential losses in the portfolio
at the time to cover all known or reasonably anticipated loan losses.
4.19. Year 2000 Compliance. United and the United Subsidiaries
have taken all reasonable steps necessary to address the software, accounting
and record keeping issues raised in order for the data processing systems used
in the business conducted by United and the United Subsidiaries to be Year 2000
compliant in accordance with applicable regulatory guidelines and United does
not expect the future cost of addressing such issues to be material. Neither
United nor any United Subsidiary has received a rating of less than satisfactory
from any bank regulatory agency with respect to Year 2000 compliance.
4.20 Agreements with Bank Regulators. Except as disclosed in
the United Disclosure Schedule, neither United nor any United Subsidiary is a
party to any agreement or memorandum of understanding with, or a party to any
commitment letter, board resolution submitted to a regulatory authority or
similar undertaking to, or is subject to any order or directive by, or is a
recipient of any extraordinary supervisory letter from, any Governmental Entity
which restricts materially the conduct of its business, or in any manner relates
to its capital adequacy, its credit or reserve policies or its management,
except for those the existence of which has been disclosed in writing to SBSO by
United prior to the date of this Agreement, nor has United been advised by any
Governmental Entity that it is contemplating issuing or requesting (or is
considering the appropriateness of issuing or requesting) any such order,
decree, agreement, memorandum of understanding, extraordinary supervisory
letter, commitment letter or similar submission, except as disclosed in writing
to SBSO by United prior to the date of this Agreement. Neither United nor any
United Subsidiary is required by Section 32 of the Federal Deposit Insurance Act
to give prior notice to a Federal banking agency of the proposed addition of an
individual to its board of directors or the employment of an individual as a
senior executive officer, except as disclosed in writing to SBSO by United prior
to the date of this Agreement.
4.21. Disclosures. There are no material facts concerning the
business, operations, assets or financial condition of United which would have a
material adverse effect on the business, operations or financial condition of
United which have not been disclosed to SBSO directly or indirectly by access to
any filing by United under the 1934 Act. No representation or warranty contained
in Article IV of this Agreement contains any untrue statement of a material fact
or omits to state a material fact necessary to make the statements herein not
misleading.
ARTICLE V
COVENANTS OF THE PARTIES
5.1. Conduct of the Business of SBSO. During the period from
the date of this Agreement to the Effective Time, SBSO shall conduct its
business and engage in transactions permitted hereunder only in the ordinary
course and consistent with prudent banking practice, except with the prior
written consent of United, which consent will not be unreasonably withheld. SBSO
also shall use all reasonable efforts to (i) preserve its business organization
intact, (ii) keep available to itself the present services of its employees and
(iii) preserve for itself and United the goodwill of its customers and others
with whom business relationships exist, in each case provided that SBSO shall
not be required to take any unreasonable or extraordinary act or any action
which would conflict with any other term of this Agreement.
5.2. Negative Covenants and Dividend Covenants. SBSO agrees
that from the date hereof to the Effective Time, except as otherwise approved by
United in writing, or as permitted or required by this Agreement or as contained
in the SBSO Disclosure Schedule, it will not:
(a) change any provision of its Certificate of Incorporation
or Bylaws or any similar governing documents;
(b) change the number of shares of its authorized capital
stock or issue any shares of SBSO Common Stock (other than under the United
Stock Option) or other capital stock or issue or grant any option, warrant,
call, commitment, subscription, right to purchase or agreement of any character
relating to the authorized or issued capital stock of SBSO or any securities
convertible into shares of such stock, or split, combine or reclassify any
shares of its capital stock, or declare, set aside or pay any dividend, or other
distribution (whether in cash, stock or property or any combination thereof) in
respect of its capital stock, or redeem or otherwise acquire any shares of such
capital stock;
(c) grant any severance or termination pay (other than
pursuant to policies of SBSO in effect on the date hereof and disclosed to
United in the SBSO Disclosure Schedule or as agreed to by United in writing) to,
or enter into or amend any employment agreement with, any of its directors,
officers or employees; adopt any new employee benefit plan or arrangement of any
type or amend any such existing benefit plan or arrangement; or award any
increase in compensation or benefits to its directors, officers or employees
except with respect to salary increases and bonuses for employees in the
ordinary course of business and consistent with past practices and policies;
(d) sell or dispose of any substantial amount of assets or
incur any significant liabilities other than in the ordinary course of business
consistent with past practices and policies;
(e) make any capital expenditures outside of the ordinary
course of business other than pursuant to binding commitments existing on the
date hereof and other than expenditures necessary to maintain existing assets in
good repair;
(f) file any applications or make any contract with respect to
branching or site location or relocation;
(g) agree to acquire in any manner whatsoever (other than to
realize upon collateral for a defaulted loan) any business or entity;
(h) make any material change in its accounting methods or
practices, other than changes required in accordance with generally accepted
accounting principles; or
(i) agree to do any of the foregoing.
5.3. No Solicitation. SBSO shall not, directly or indirectly,
encourage or solicit or hold discussions or negotiations with, or provide any
information to, any person, entity or group (other than United) concerning any
merger or sale of shares of capital stock or sale of substantial assets or
liabilities not in the ordinary course of business, or similar transactions
involving SBSO (an "Acquisition Transaction"). Notwithstanding the foregoing,
SBSO may (i) enter into discussions or negotiations or provide information in
connection with an unsolicited possible Acquisition Transaction if the Board of
Directors of SBSO, after consulting with counsel, determines that such
discussions or negotiations should be commenced in the exercise of its fiduciary
responsibilities or such information should be furnished in the exercise of its
fiduciary responsibilities; and (ii) respond to inquiries from its shareholders
in the ordinary course of business. SBSO will immediately communicate to United
the terms of any proposal, whether written or oral, which is communicated
directly or indirectly to any member of the Board of Directors or any executive
officer of SBSO in respect of any Acquisition Transaction, and the fact that it
is having discussions or negotiations with, or supplying information to, a third
party in connection with a possible Acquisition Transaction.
5.4. Current Information. During the period from the date of
this Agreement to the Effective Time, SBSO will, at the request of United, cause
one or more of its designated representatives to confer on a monthly or more
frequent basis with representatives of United regarding SBSO's business,
operations, properties, assets and financial condition and matters relating to
the completion of the transactions contemplated herein. Without limiting the
foregoing, promptly after granting any new loan or extension of credit, or any
renewal of an existing loan or extension of credit, in excess of $50,000, SBSO
will send to United a description thereof, and thereafter SBSO will promptly
send to United copies of such documents relating thereto as United shall
reasonably request. As soon as reasonably available, but in no event more than
45 days after the end of each fiscal quarter (other than the last fiscal quarter
of each fiscal year) ending after the date of this Agreement, SBSO will deliver
to United SBSO's Call Reports filed with the FDIC and United will deliver to
SBSO United's quarterly reports on Form 10-Q, as filed with the SEC under the
1934 Act. As soon as reasonably available, but in no event more than 90 days
after the end of each fiscal year, SBSO will deliver to United and United will
deliver to SBSO their respective year end financial statements and related
reports to shareholders and regulatory agencies.
5.5. Access to Properties and Records; Confidentiality.
(a) SBSO shall permit United and its agents and
representatives, including, without limitation, officers, directors, employees,
attorneys, accountants and financial advisors (collectively, "Representatives"),
and United and UNB shall permit SBSO and its Representatives, reasonable access
to their respective properties, and shall disclose and make available to United
and its Representatives or SBSO and its Representatives, as the case may be, all
books, papers and records relating to their respective assets, stock ownership,
properties, operations, obligations and liabilities, including, but not limited
to, all books of account (including the general ledger), tax records, minute
books of directors' and stockholders' meetings, organizational documents,
bylaws, material contracts and agreements, filings with any regulatory
authority, independent auditors' work papers (subject to the receipt by such
auditors of a standard access representation letter), litigation files, plans
affecting employees, and any other business activities or prospects in which
United and its representatives or SBSO and its representatives may have a
reasonable interest. Neither party shall be required to provide access to or to
disclose information where such access or disclosure would violate or prejudice
the rights of any customer or would contravene any law, rule, regulation, order
or judgment or, in the case of a document which is subject to an attorney-client
privilege, would compromise the right of the disclosing party to claim that
privilege. The parties will use all reasonable efforts to obtain waivers of any
such restriction (other than the attorney client privilege) and in any event
make appropriate substitute disclosure arrangements under circumstances in which
the restrictions of the preceding sentence apply. SBSO acknowledges that United
may be involved in discussions concerning other potential acquisitions and
United shall not be obligated to disclose such information to SBSO except as
such information is publicly disclosed by United.
(b) All information furnished by the parties hereto previously
in connection with transactions contemplated by this Agreement or pursuant
hereto shall be used solely for the purpose of evaluating the Merger
contemplated hereby, shall be kept confidential and shall be treated as the sole
property of the party delivering the information until consummation of the
Merger contemplated hereby and, if such Merger shall not occur, each party and
each party's Representatives shall return to the other party all documents or
other materials containing, reflecting or referring to such information, will
not retain any copies of such information, shall keep confidential all such
information, and shall not directly or indirectly use such information for any
competitive or commercial purposes or any other purpose not expressing permitted
hereby. Each party hereto shall inform its Representatives of the terms of this
Section 5.5. Any breach of this Section 5.5 by a Representative of a party
hereto shall conclusively be deemed to be a breach thereof by such party. In the
event that the Merger contemplated hereby does not occur or this Agreement is
terminated, all documents, notes and other writings prepared by a party hereto
or its Representatives based on information furnished by the other party, and
all other documents and records obtained from another party hereto in connection
herewith, shall be promptly destroyed. The obligation to keep such information
confidential shall continue for 30 months from the date the proposed Merger is
abandoned but shall not apply to (i) any information which (A) the party
receiving the information can establish by convincing evidence was already in
its possession prior to the disclosure thereof to it by the other party; (B) was
then generally known to the public other than as a result of a disclosure by any
party hereto or its Representative; (C) became known to the public through no
fault of the party receiving such information; or (D) was disclosed to the party
receiving such information by a third party not bound by an obligation of
confidentiality; or (ii) disclosures pursuant to a legal, regulatory or
examination requirement or in accordance with an order of a court of competent
jurisdiction, provided that in the event of any disclosure required by this
clause (ii), the disclosing party will give reasonable prior written notice of
such disclosure to the other parties and shall not disclose any such information
without an opinion of counsel supporting its position that such information must
be disclosed.
(c) In addition to all other remedies that may be available to
any party hereto in connection with a breach by any other party hereto of its or
its Representative's obligations under this Section 5.5, each party hereto shall
be entitled to specific performance and injunctive and other equitable relief
with respect to this Section 5.5. Each party hereto waives, and agrees to use
all reasonable efforts to cause its Representatives to waive, any requirement to
secure or post a bond in connection with any such relief.
5.6. Regulatory Matters.
(a) For the purposes of holding the meeting of SBSO
stockholders and registering or otherwise qualifying under applicable federal
and state securities laws United Common Stock to be issued to Record Holders in
connection with the Merger, the parties hereto shall cooperate in the
preparation and filing by (i) United of a registration statement with the SEC
which shall include an appropriate proxy statement and prospectus satisfying all
applicable requirements of applicable state and federal laws, including the
Securities Act of 1933, as amended (the "1933 Act"), the 1934 Act and applicable
state securities laws and the rules and regulations thereunder and (ii) SBSO of
a proxy statement with the FDIC satisfying all applicable requirements of
applicable state and federal laws, including the 1934 Act. (Such combined proxy
statement and prospectus in the form mailed by SBSO to the SBSO shareholders,
together with any and all amendments and supplements thereto, is herein referred
to as the "Proxy Statement/Prospectus" and the various documents to be filed by
United under the 1933 Act with the SEC to register for sale the United Common
Stock to be issued to Record Holders, including the Proxy Statement/Prospectus,
and the Proxy Statement for United stockholders, if necessary, together with any
and all amendments and supplements thereto, are referred to herein as the
"Registration Statement"). The Registration Statement shall not be filed by
United with the SEC without the approval of SBSO, acting through its attorneys,
which approval shall not be unreasonably withheld.
(b) United shall furnish information concerning United and the
Merger as is necessary in order to cause the Proxy Statement/Prospectus, insofar
as it relates to United and the Merger, to comply with Section 5.6(a) hereof.
United agrees to advise SBSO promptly if at any time prior to the SBSO
shareholder meeting referred to in Section 5.7 hereof, any information provided
by United in the Proxy Statement/Prospectus becomes incorrect or incomplete in
any material respect and to provide SBSO with the information needed to correct
such inaccuracy or omission. United shall not knowingly and intentionally take
any action which would cause the Proxy Statement/Prospectus to become incorrect
or incomplete in any material respect. United shall furnish SBSO with such
supplemental information as may be necessary in order to cause the Proxy
Statement/Prospectus, insofar as it relates to United and the Merger, to comply
with Section 5.6(a) after the mailing thereof to SBSO shareholders.
(c) SBSO shall furnish United with such information concerning
SBSO as is necessary in order to cause the Proxy Statement/Prospectus and
Registration Statement, insofar as it relates to SBSO, to comply with Section
5.6(a) hereof. SBSO agrees promptly to advise United if, at any time prior to
the SBSO shareholder's meeting referred to in Section 5.7 hereof, information
provided by SBSO in the Proxy Statement/Prospectus becomes incorrect or
incomplete in any material respect and to provide United with the information
needed to correct such inaccuracy or omission. SBSO shall not knowingly and
intentionally take any action which would cause the Proxy Statement/Prospectus
to become incorrect or incomplete in any material respect. SBSO shall furnish
United with such supplemental information as may be necessary in order to cause
the Proxy Statement/Prospectus and Registration Statement, insofar as it relates
to SBSO, to comply with Section 5.6(a) after the mailing thereof to SBSO
shareholders.
(d) United shall promptly make such filings as are necessary
in connection with the offering of the United Common Stock pursuant to the
Merger with applicable state securities agencies and shall use all reasonable
efforts to qualify the offering of the United Common Stock under applicable
state securities laws at the earliest practicable date. SBSO shall promptly
furnish United with such information regarding the SBSO shareholders as United
requires to enable it to determine what filings are required hereunder. SBSO
authorizes United to utilize in such filings the information concerning SBSO
provided to United in connection with, or contained in, the Proxy Statement/
Prospectus. United shall furnish SBSO with drafts of all such filings, shall
provide SBSO the opportunity to comment thereon, and shall keep SBSO advised of
the status thereof. United shall as promptly as practicable file the
Registration Statement containing the Proxy Statement/Prospectus with the SEC,
and SBSO shall as promptly as practicable file the Proxy Statement/Prospectus
with the FDIC, and each of United and SBSO shall promptly notify the other of
all communications, oral or written, with the SEC and FDIC concerning the
Registration Statement and the Proxy Statement/Prospectus.
(e) United shall cause the United Common Stock to be issued in
connection with the Merger to be listed on the NASDAQ/NMS.
(f) The parties hereto will cooperate with each other and use
all reasonable efforts to prepare all necessary documentation, to effect all
necessary filings and to obtain all necessary permits, consents, approvals and
authorizations of all third parties and governmental bodies necessary to
consummate the transactions contemplated by this Agreement as soon as possible,
including, without limitation, those required by the OCC and the State of New
Jersey. The parties shall each have the right to review in advance and comment
on all information relating to the other, as the case may be, which appears in
any filing made with, or written material submitted to, any third party or
governmental body in connection with the transactions contemplated by this
Agreement. United and UNB shall cause their application to the OCC to be filed
(i) within 45 days of the date hereof, so long as SBSO provides all information
necessary to complete the application within 30 days of the date hereof, or (ii)
within 15 days after all such information is provided, if SBSO does not provide
all such information within such 30 day period. United shall provide to SBSO
drafts of all filings and applications referred to in this Section 5.6(f) and
shall give SBSO the opportunity to comment thereon prior to their filing.
(g) Each of the parties will promptly furnish each other with
copies of written communications received by them or any of their respective
Subsidiaries from, or delivered by any of the foregoing to, any governmental
body in respect of the transactions contemplated hereby.
(h) SBSO acknowledges that United is in or may be in the
process of acquiring other banks and financial institutions and that in
connection with such acquisitions, information concerning SBSO may be required
to be included in the registration statements, if any, for the sale of
securities of United or in SEC reports in connection with such acquisitions.
SBSO agrees to provide United with any information, certificates, documents or
other materials about SBSO as are reasonably necessary to be included in such
other SEC reports or registration statements, including registration statements
which may be filed by United prior to the Effective Time. SBSO shall use its
reasonable efforts to cause its attorneys and accountants to provide United and
any underwriters for United with any consents, comfort letters, opinion letters,
reports or information which are necessary to complete the registration
statements and applications for any such acquisition or issuance of securities.
United shall promptly reimburse SBSO for reasonable expenses thus incurred by
SBSO should this Agreement be terminated for any reason. United shall not file
with the SEC any registration statement or amendment thereto or supplement
thereof containing information regarding SBSO unless SBSO shall have consented
in writing to such filing, which consent shall not be unreasonably delayed or
withheld.
(i) Between the date of this Agreement and the Effective Time,
SBSO shall cooperate with United to reasonably conform (as of the Effective
Time) SBSO's policies and procedures regarding applicable regulatory matters, to
those of United as United may reasonably identify to SBSO from time to time.
5.7. Approval of Stockholders. SBSO will (a) take all steps
reasonably necessary duly to call, give notice of, convene and hold a meeting of
the stockholders of SBSO as soon as reasonably practicable for the purpose of
securing the approval by such stockholders of this Agreement, (b) subject to the
fiduciary responsibilities of the Board of Directors of SBSO to the stockholders
of SBSO, recommend to the stockholders of SBSO the approval of this Agreement
and the transactions contemplated hereby and use all reasonable efforts to
obtain, as promptly as practicable, such approval, and (c) cooperate and consult
with United with respect to each of the foregoing matters. Except as set forth
in the SBSO Disclosure Schedule, in connection therewith, it is anticipated that
each director of SBSO shall vote his or her shares of SBSO in favor of the
Merger.
5.8. Further Assurances. Subject to the terms and conditions
herein provided, each of the parties hereto agrees to use all reasonable efforts
to take, or cause to be taken, all actions and to do, or cause to be done, all
things reasonably necessary, proper or advisable under applicable laws and
regulations to satisfy the conditions to Closing and to consummate and make
effective the transactions contemplated by this Agreement, including, without
limitation, using reasonable efforts to lift or rescind any injunction or
restraining order or other order adversely affecting the ability of the parties
to consummate the transactions contemplated by this Agreement and using all
reasonable efforts to prevent the breach of any representation, warranty,
covenant or agreement of such party contained or referred to in this Agreement
and to promptly remedy the same. Nothing in this section shall be construed to
require any party to participate in any threatened or actual Legal Proceedings
(other than Legal Proceedings to which it is otherwise a party or subject or
threatened to be made a party or subject) in connection with consummation of the
transactions contemplated by this Agreement unless such party shall consent in
advance and in writing to such participation and the other party agrees to
reimburse and indemnify such party for and against any and all costs and damages
related thereto.
5.9. Public Announcements. The parties hereto shall cooperate
with each other in the development and distribution of all news releases and
other public disclosures with respect to this Agreement or any of the
transactions contemplated hereby, except as may be otherwise required by law or
regulation or as to which the party releasing such information has used all
reasonable efforts to discuss with the other party in advance.
5.10. Failure to Fulfill Conditions. In the event that United
or SBSO reasonably determines that a material condition to its obligation to
consummate the transactions contemplated hereby cannot be fulfilled on or prior
to February 28, 1999 (the "Cutoff Date"), and that it will not waive that
condition, it will promptly notify the other party. Except for any acquisition
or merger discussions United may enter into with other parties, SBSO and United
will promptly inform the other of any facts applicable to SBSO or United,
respectively, or their respective directors, officers or Subsidiaries, that
would be likely to prevent or materially delay approval of the Merger by any
governmental authority or which would otherwise prevent or materially delay
completion of the Merger.
5.11. Disclosure Supplements. Each party hereto will promptly
supplement or amend (by written notice to the other) its respective Disclosure
Schedules delivered pursuant hereto with respect to any matter hereafter arising
which, if existing, occurring or known at the date of this Agreement, would have
been required to be set forth or described in such Schedules or which is
necessary to correct any information in such Schedules which has been rendered
materially inaccurate thereby. For the purpose of determining satisfaction of
the conditions set forth in Article VI, no supplement or amendment to such
Schedules shall correct or cure any warranty which was untrue when made, but
supplements or amendments may be used to disclose subsequent facts or events to
maintain the truthfulness of any warranty.
5.12. Indemnification.
(a) For a period of six years after the Effective Time, United
shall indemnify, defend and hold harmless each person who is now, or has been at
any time prior to the date hereof or who becomes prior to the Effective Time, a
director or officer of SBSO (collectively, the "Indemnitees") against any and
all claims, damages, liabilities, losses, costs, charges, expenses (including,
without limitation, reasonable costs of investigation, and the reasonable fees
and disbursements of legal counsel and other advisers and experts as incurred),
judgments, fines, penalties and amounts paid in settlement, asserted against,
incurred by or imposed upon any Indemnitee by reason of the fact that he or she
is or was a director or officer of SBSO or acted as a director or officer of a
third party at the request of SBSO, in connection with, arising out of or
relating to any threatened, pending or completed claim, action, suit or
proceeding (whether civil, criminal, administrative or investigative),
including, without limitation, any and all claims, actions, suits, proceedings
or investigations by or on behalf of or in the right of or against SBSO or any
of its affiliates, or by any former or present shareholder of SBSO (each a
"Claim" and collectively, "Claims"), including, without limitation, any Claim
which is based upon, arises out of or in any way relates to the Merger, the
Proxy Statement-Prospectus, this Agreement, any of the transactions contemplated
by this Agreement, the Indemnitee's service as a member of the Board of
Directors of SBSO or any committee thereof, the events leading up to the
execution of this Agreement, any statement, announcement, recommendation or
solicitation made in connection therewith or related thereto (or the absence of
any of the foregoing) and any breach of any duty in connection with any of the
foregoing, in each case to the fullest extent which SBSO would have been
permitted under any applicable law and its Certificate of Incorporation and
By-Laws had the Merger not occurred (and United shall also advance expenses as
incurred to the fullest extent so permitted).
(b) From and after the Effective Time, United shall assume and
honor any obligation of SBSO immediately prior to the Effective Time with
respect to the indemnification of the Indemnitees arising out of the Certificate
of Incorporation or By-Laws of SBSO or arising out of any written
indemnification agreements between SBSO and such persons disclosed in the SBSO
Disclosure Schedule, as if such obligations were pursuant to a contract or
arrangement between United and such Indemnitees.
(c) In the event United or any of its successors or assigns
(i) reorganizes or consolidates with or merges into or enters into another
business combination transaction with any other person or entity and is not the
resulting, continuing or surviving corporation or entity of such consolidation,
merger or transaction, or (ii) liquidates, dissolves or transfers all or
substantially all of its properties and assets to any person or entity, then,
and in each such case, proper provision shall be made so that the successors and
assigns of United assume the obligations set forth in this Section 5.12.
(d) United shall cause SBSO's officers and directors to be
covered, for a period of six years after the Effective Time, under (i) United's
then current officers' and directors' liability insurance policy or (ii) an
extension of SBSO's existing officers' and directors' liability insurance
policy. However, United shall only be required to insure such persons upon terms
and for coverages substantially similar to SBSO's existing officers' and
directors' liability insurance.
(e) Any Indemnitee wishing to claim indemnification under this
Section 5.12 shall promptly notify United upon learning of any Claim, but the
failure to so notify shall not relieve United of any liability it may have to
such Indemnitee if such failure does not materially prejudice United. In the
event of any Claim (whether arising before or after the Effective Time) as to
which indemnification under this Section 5.12 is applicable, (x) United shall
have the right to assume the defense thereof and United shall not be liable to
such Indemnitees for any legal expenses of other counsel or any other expenses
subsequently incurred by such Indemnitee in connection with the defense thereof,
except that if United elects not to assume such defense, or counsel for the
Indemnitees advises that there are issues which raise conflicts of interest
between United and the Indemnitees, the Indemnitees may retain counsel
satisfactory to them, and United shall pay the reasonable fees and expenses of
such counsel for the Indemnitees as statements therefor are received; provided,
however, that United shall be obligated pursuant to this Section 5.12(e) to pay
for only one firm of counsel for all Indemnitees in any jurisdiction with
respect to a matter unless the use of one counsel for multiple Indemnitees would
present such counsel with a conflict of interest that is not waivable by the
Indemnitees, and (y) the Indemnitees will cooperate in the defense of any such
matter. United shall not be liable for settlement of any claim, action or
proceeding hereunder unless such settlement is effected with its prior written
consent. Notwithstanding anything to the contrary in this Section 5.12, United
shall not have any obligation hereunder to any Indemnitee 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 Indemnitee
in the manner contemplated hereby is prohibited by applicable law or public
policy.
5.13. Pooling and Tax-Free Reorganization Treatment. Neither
United nor SBSO shall intentionally take, fail to take or cause to be taken or
not be taken, any action within its control, whether before or after the
Effective Time, which would disqualify the Merger as a "pooling of interests"
for accounting purposes or as a "reorganization" within the meaning of Section
368(a) of the Code. United and SBSO acknowledge that United expects the
transaction to be accounted for as a "pooling" transaction.
5.14. Affiliates.
(a) Promptly, but in any event within two weeks, after the
execution and delivery of this Agreement, (i) SBSO shall deliver to United (x) a
letter identifying all persons who, to the knowledge of SBSO, may be deemed to
be "affiliates" of SBSO under Rule 145 of the 1933 Act, including without
limitation all directors and executive officers of SBSO and (y) a letter
identifying all persons who, to the knowledge of SBSO, may be deemed to be
"affiliates" of SBSO as that term is used for purposes of qualifying for
"pooling of interests" accounting treatment; and (ii) United shall identify to
SBSO all persons who, to the knowledge of United, may be deemed "affiliates" of
United as that term is used for purposes of qualifying for "pooling of
interests" accounting treatment.
(b) Each person who may be deemed an affiliate of SBSO (under
either Rule 145 of the 1933 Act or the applicable accounting treatment rules)
shall execute a letter substantially in the form of Schedule 5.14 annexed hereto
agreeing to be bound by the restrictions of Rule 145, as set forth in Schedule
5.14 and agreeing to be bound by the rules which permit the Merger to be treated
as a pooling of interests for accounting purposes. In addition, United shall
cause its affiliates (as that term is used for purposes of qualifying for
pooling of interests) to execute a letter substantially in the form of Schedule
5.14-1 annexed hereto within two weeks of the date hereof, in which such persons
agree to be bound by the rules which permit the Merger to be treated as a
pooling of interests for accounting treatment. United agrees to publish, or file
a Form 8-K, Form 10-K or Form 10-Q containing financial results covering at
least 30 days of post-Merger combined operations of United and SBSO as soon as
practicable (but in no event later than 30 days) following the close of the
first calendar month ending 30 days after the Effective Time, in form and
substance sufficient to remove the restrictions set forth in paragraph "B" of
Schedule 5.14.
(c) With a view to making available to affiliates of SBSO who
receive shares of United Common Stock in the Merger the benefits of Rule 144
promulgated under the 1934 Act and any other rule or regulation of the SEC that
may at any time permit a holder of shares of United Common Stock to sell such
shares to the public without registration, United agrees, for a period of three
years following the Effective Time, to file with the SEC in a timely manner all
reports and other documents required of United under the 1933 Act and the 1934
Act and the rules and regulations thereunder.
5.15. Compliance with the Industrial Site Recovery Act. SBSO,
at its sole cost and expense, shall obtain prior to the Effective Time, either:
(a) a Letter of Non-Applicability from the New Jersey Department of
Environmental Protection ("NJDEP") stating that none of the facilities located
in New Jersey owned or operated by SBSO (each, a "Facility") is an "industrial
establishment," as such term is defined under the Industrial Site Recovery Act
("ISRA"); (b) a Remediation Agreement issued by the NJDEP pursuant to ISRA
authorizing the consummation of the transactions contemplated by this Agreement;
or (c) a Negative Declaration approval, Remedial Action Workplan approval, No
Further Action letter or other document or documents issued by the NJDEP
advising that the requirements of ISRA have been satisfied with respect to each
Facility subject to ISRA. In the event SBSO obtains a Remediation Agreement,
SBSO will post or have posted an appropriate Remediation Funding Source or will
have obtained the NJDEP's approval to self-guaranty any Remediation Funding
Source required under any such Remediation Agreement.
5.16. Transaction Expenses of SBSO.
(a) For planning purposes, SBSO shall, within 30 days from the
date hereof, provide United with its estimated budget of transaction-related
expenses reasonably anticipated to be payable by SBSO in connection with this
transaction based on facts and circumstances currently known, including the fees
and expenses of counsel, accountants, investment bankers and other
professionals. SBSO shall promptly notify United if or when it determines that
it will expect to exceed its budget; provided, however, that it is understood
that SBSO' exceeding such budget, in and of itself, shall not constitute a
breach of this Agreement. SBSO has previously disclosed to United the method by
which the fees of its investment bankers and counsel in connection with this
transaction are to be determined.
(b) Promptly, but in any event within 30 days, after the
execution of this Agreement, SBSO shall ask all of its attorneys and other
professionals to render current and correct invoices for all unbilled time and
disbursements. SBSO shall accrue and/or pay all of such amounts as soon as
possible.
(c) SBSO shall request that its professionals render monthly
invoices within 30 days after the end of each month. SBSO shall notify United
monthly of all out-of-pocket expenses which SBSO has incurred in connection with
this transaction.
(d) United, in reasonable consultation with SBSO, shall make
all arrangements with respect to the printing and mailing of the Proxy
Statement/Prospectus.
Section 5.17. Employees Following consummation of the Merger,
United shall make available to all employees and officers of SBSO who become
employed by UNB coverage under the benefit plans generally available to UNB's
employees and officers (including pension and health and hospitalization) on the
terms and conditions available to UNB's employees and officers. SBSO employees
will be given credit under United's or UNB's medical, life, vacation, sick
leave, disability and other welfare plans for prior service with SBSO, and
SBSO's employees will be granted credit for prior service with SBSO, for
purposes of eligibility and vesting under United's or UNB's pension and 401(k)
plans; provided, that SBSO employees will not be given credit under United's or
UNB's severance policy for prior service with SBSO.
Section 5.18. Change in Control Contracts. At the Closing
United and UNB will assume and, following the Closing, United and UNB will honor
the three existing written change in control contracts with officers of SBSO
that are included in the SBSO Disclosure Schedule.
ARTICLE VI
CLOSING CONDITIONS
6.1. Conditions of Each Party's Obligations Under this
Agreement. The respective obligations of each party under this Agreement to
consummate the Merger shall be subject to the satisfaction, or, where
permissible under applicable law, waiver at or prior to the Effective Time of
the following conditions:
(a) Approval of Stockholders; SEC Registration. This Agreement
and the transactions contemplated hereby shall have been approved by the
requisite vote of the stockholders of SBSO and, if necessary, United. The
Registration Statement shall have been declared effective by the SEC and shall
not be subject to a stop order or any threatened stop order; the Proxy
Statement-Prospectus shall have been approved for use in connection with the
Merger by the FDIC; and the issuance of the United Common Stock shall have been
qualified in every state where such qualification is required under the
applicable state securities laws. The United Common Stock to be issued in
connection with the Merger shall have been approved for listing on the
NASDAQ/NMS.
(b) Regulatory Filings. All necessary regulatory or
governmental approvals and consents (including without limitation any required
approval of the Commissioner, the FDIC or the OCC) required to consummate the
transactions contemplated hereby shall have been obtained without any term or
condition which would materially impair the value of SBSO to United. All
conditions required to be satisfied prior to the Effective Time by the terms of
such approvals and consents shall have been satisfied; and all statutory waiting
periods in respect thereof shall have expired.
(c) Suits and Proceedings. No order, judgment or decree shall
be outstanding against a party hereto or a third party that would have the
effect of preventing completion of the Merger; no Legal Proceeding shall be
pending or threatened by any governmental body in which it is sought to restrain
or prohibit the Merger and no Legal Proceeding shall be pending before any court
or governmental agency in which it is sought to restrain or prohibit the Merger
or obtain other substantial monetary or other relief against one or more parties
hereto in connection with this Agreement and which United or SBSO determines in
good faith, based upon the advice of their respective counsel, makes it
inadvisable to proceed with the Merger because any such Legal Proceeding has a
significant potential to be resolved in such a way as to deprive the party
electing not to proceed of any of the material benefits to it of the Merger.
(d) Tax Free Exchange. United and SBSO shall have received an
opinion, satisfactory to United and SBSO, of Pitney, Hardin, Kipp & Szuch,
counsel for United, issued in reliance on tax representation letters from United
and SBSO that are customary and reasonable under the circumstances, to the
effect that the transactions contemplated hereby will result in a reorganization
(as defined in Section 368(a) of the Code), and accordingly no gain or loss will
be recognized for federal income tax purposes to United, SBSO or UNB or to the
shareholders of SBSO who exchange their shares of SBSO for United Common Stock
(except to the extent that cash is received in lieu of fractional shares of
United Common Stock).
(e) Pooling of Interests. The Merger shall be qualified to be
treated by United as a pooling-of-interests for accounting purposes and United
shall have received a letter from KPMG Peat Marwick LLP to the effect that the
Merger will qualify for pooling-of-interests accounting treatment if closed and
consummated in accordance with this Agreement.
6.2. Conditions to the Obligations of United Under this
Agreement. The obligations of United under this Agreement shall be further
subject to the satisfaction or waiver, at or prior to the Effective Time, of the
following conditions:
(a) Representations and Warranties; Performance of Obligations
of SBSO. The representations and warranties of SBSO contained in this Agreement,
other than representations and warranties which are expressly stated to be made
as of the date hereof or as of any other particular date, shall be true and
correct in all material respects on the Closing Date as though made on and as of
the Closing Date. SBSO shall have performed in all material respects the
agreements, covenants and obligations necessary to be performed by it prior to
the Closing Date. With respect to any representation or warranty which as of the
Closing Date has required a supplement or amendment to the SBSO Disclosure
Schedule to render such representation or warranty true and correct as of the
Closing Date, the representation and warranty shall be deemed true and correct
as of the Closing Date only if (i) the information contained in the supplement
or amendment to the Disclosure Schedule related to events occurring following
the execution of this Agreement and (ii) the facts disclosed in such supplement
or amendment would not either alone, or together with any other supplements or
amendments to the SBSO Disclosure Schedule, materially adversely effect the
representation as to which the supplement or amendment relates.
(b) Consents. United shall have received the written consents
of any person whose consent to the transactions contemplated hereby is required
under the applicable instrument.
(c) Certificates. SBSO shall have furnished United with such
certificates of its officers or others (without personal liability) and such
other documents to evidence fulfillment of the conditions set forth in this
Section 6.2 as United may reasonably request.
6.3. Conditions to the Obligations of SBSO Under this
Agreement. The obligations of SBSO under this Agreement shall be further subject
to the satisfaction or waiver, at or prior to the Effective Time, of the
following conditions:
(a) Representations and Warranties; Performance of Obligations
of United. The representations and warranties of United and UNB contained in
this Agreement, other than representations and warranties which are expressly
stated to be made as of the date hereof or as of any other particular date,
shall be true and correct in all material respects on the Closing Date as though
made on and as of the Closing Date. United and UNB shall have performed in all
material respects, the agreements, covenants and obligations to be performed by
them prior to the Closing Date. With respect to any representation or warranty
which as of the Closing Date has required a supplement or amendment to the
United Disclosure Schedule to render such representation or warranty true and
correct as of the Closing Date, the representation and warranty shall be deemed
true and correct as of the Closing Date only if (i) the information contained in
the supplement or amendment to the Disclosure Schedule related to events
occurring following the execution of this Agreement and (ii) the facts disclosed
in such supplement or amendment would not either alone, or together with any
other supplements or amendments to the United Disclosure Schedule, materially
adversely effect the representation as to which the supplement or amendment
relates.
(b) Fairness Opinion. SBSO shall have received an updated
opinion from Ryan Beck as of the date the Proxy Statement/Prospectus is mailed
to SBSO's stockholders, to the effect that, in its opinion, the Exchange Ratio
is fair to the stockholders of SBSO.
(c) Certificates. United shall have furnished SBSO with such
certificates of its officers or others (without personal liability) and such
other documents to evidence fulfillment of the conditions set forth in this
Section 6.3 as SBSO may reasonably request.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
7.1. Termination. This Agreement may be terminated prior to
the Effective Time, whether before or after approval of this Agreement by the
stockholders of SBSO:
(a) By mutual written consent of the parties hereto;
(b) By United or SBSO (i) if the Effective Time shall not have
occurred on or prior to the Cutoff Date unless the failure of such occurrence
shall be due to the failure of the party seeking to terminate this Agreement to
perform or observe its agreements set forth herein to be performed or observed
by such party at or before the Effective Time, or (ii) if a vote of the
stockholders of SBSO or, if necessary, of United, is taken and such stockholders
fail to approve this Agreement at the meeting (or any adjournment thereof) held
for such purpose;
(c) By United or SBSO upon written notice to the other if any
application for regulatory or governmental approval necessary to consummate the
Merger and the other transactions contemplated hereby shall have been denied or
withdrawn at the request or recommendation of the applicable regulatory agency
or governmental authority or by United upon written notice to SBSO if any such
application is approved with conditions which materially impair the value of
SBSO, taken as a whole, to United;
(d) By United if (i) there shall have occurred a material
adverse change in the business, operations, assets, or financial condition of
SBSO from that disclosed by SBSO on the date of this Agreement, or (ii) there
was a material breach in any representation, warranty, covenant, agreement or
obligation of SBSO hereunder and such breach shall not have been remedied within
30 days after receipt by SBSO of notice in writing from United to SBSO
specifying the nature of such breach and requesting that it be remedied;
(e) By SBSO if (i) there shall have occurred a material
adverse change in the business, operations, assets or financial condition of
United, UNB or United and its Subsidiaries on a consolidated basis from that
disclosed by United on the date of this Agreement (which material adverse change
may result from, among other things, an acquisition or proposed acquisition of
another entity by United or UNB, or a change in the business, operations, assets
or financial condition of any such entity; provided, however, that in either
such case materiality is to be measured by the effect upon United and SBSO on a
combined basis); or (ii) there was a material breach in any representation,
warranty, covenant, agreement or obligation of United or UNB hereunder and such
breach shall not have been remedied within 30 days after receipt by United of
notice in writing from SBSO to United specifying the nature of such breach and
requesting that it be remedied;
(f) By United if any condition to Closing specified in Section
6.1 or Section 6.2 is not satisfied and is not capable of being satisfied by the
Cutoff Date; or
(g) By SBSO if any condition to Closing specified in Section
6.1 or Section 6.3 is not satisfied and is not capable of being satisfied by the
Cutoff Date; or
(h) By SBSO, if the Average Closing Price of United Common
Stock, calculated as though the Closing Date were to be the fifth business day
following the Determination Date (the "Determination Price"), is less than
$25.00 per share (as adjusted, in the manner provided in Section 2.1(c), for any
capital change after the date hereof). Notwithstanding the foregoing, SBSO must
give written notice to United of SBSO's election to exercise its termination
right pursuant to this subsection (h), if at all, on or before the close of
business on the fifth business day following the Determination Date.
Notwithstanding the foregoing, United may, at its option, eliminate SBSO's right
to terminate pursuant to this subsection (h), and nullify any then outstanding
termination notice which may have been given by SBSO pursuant to this subsection
(h), by United's giving irrevocable written notice to SBSO, on or before the
close of business on the third business day following the Determination Date,
that United is increasing the consideration to be received by the holders of
SBSO Common Stock hereunder by increasing the Exchange Ratio to a number
(rounded to three decimal places) such that each share of SBSO Common Stock is
exchanged in the Merger for shares of United Common Stock having a value, based
upon the Determination Price, equal to the value that would have been received
if the Determination Price had been $25.00. In order to calculate such increase
in the Exchange Ratio, the Exchange Ratio shall be multiplied by a fraction, the
numerator of which is $25.00 and the denominator of which is the Determination
Price. If United gives notice of an increased Exchange Ratio in accordance with
this subsection (h), then no termination or purported termination by SBSO
pursuant to this subsection (h) shall be effective, and this Agreement shall
remain in effect in accordance with its terms (except as the Exchange Ratio
shall have been so modified), and any references in this Agreement to "Exchange
Ratio" shall thereafter be deemed to refer to the Exchange Ratio as adjusted
pursuant to this subsection (h); or
(i) By SBSO, if SBSO's Board of Directors shall have approved
an Acquisition Transaction after determining, upon advice of counsel, that such
approval was necessary in the exercise of its fiduciary duties.
7.2. Effect of Termination. In the event of the termination
and abandonment of this Agreement by either United or SBSO pursuant to Section
7.1 hereof, this Agreement (except the provisions of Sections 5.5(b) and 8.1
hereof) shall forthwith become void and have no effect, without any liability on
the part of any party or its officers, directors or stockholders. Nothing
contained herein, however, shall relieve any party from any liability for any
material breach of this Agreement.
7.3. Amendment. This Agreement may be amended by mutual action
taken by the parties hereto at any time before or after adoption of this
Agreement by the stockholders of SBSO and, if required, the adoption of this
Agreement by the stockholders of United, but, after any such adoption, no
amendment shall be made which, under applicable New Jersey law, cannot be made
without the approval of the stockholders of SBSO or United, as the case may be.
This Agreement may not be amended except by an instrument in writing signed on
behalf of United, UNB and SBSO.
7.4. Extension; Waiver. The parties may, at any time prior to
the Effective Time of the Merger, (i) extend the time for the performance of any
of the obligations or other acts of the other parties hereto; (ii) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant thereto; or (iii) waive compliance with any of the
agreements or conditions contained herein. Any agreement on the part of any
party to any such extension or waiver shall be valid only if set forth in an
instrument in writing signed on behalf of such party against which the waiver is
sought to be enforced.
ARTICLE VIII
MISCELLANEOUS
8.1. Expenses. Subject to the provisions of Section 5.6(h)
hereof, all costs and expenses incurred in connection with this Agreement and
the transactions contemplated hereby (including legal, accounting and investment
banking fees and expenses) shall be borne by the party incurring such costs and
expenses; provided, however, that United and SBSO shall share equally the filing
fee in connection with the expenses relating to printing and mailing the Proxy
Statement-Prospectus.
8.2. Notices. All notices or other communications which are
required or permitted hereunder shall be in writing and sufficient if delivered
personally or sent by telecopier with confirming copy sent promptly thereafter
by overnight courier, messenger or by registered or certified mail, postage
prepaid, as follows:
If to United or UNB:
United National Bancorp
1130 Route 22 East, P.O. Box 6000
Bridgewater, New Jersey 08807-0010
Attn.: Thomas C. Gregor, Chairman,
President and Chief Executive Officer
With a copy to:
Pitney, Hardin, Kipp & Szuch
200 Campus Drive
Florham Park, New Jersey 07932-0950
P.O. Box 1945
Morristown, New Jersey 07962-1945
Attn.: Ronald H. Janis, Esq.
If to SBSO:
State Bank of South Orange
Valley and Third Streets, P.O. Box 384
South Orange, New Jersey 07049
Attn.: James J. Young, President and
Chief Executive Officer
With a copy to:
Lowenstein Sandler PC
65 Livingston Avenue
Roseland, New Jersey 07068
Attn.: Peter Ehrenberg, Esq.
or such other addresses as shall be furnished in writing by any party, and any
such notice or communication shall be deemed to have been given as of the date
so delivered or telecopied and mailed or otherwise transmitted.
8.3. Parties in Interest. This Agreement shall be binding upon
and shall inure to the benefit of the parties hereto and their respective
successors and permitted assigns. No assignment of this Agreement may be made
except upon the written consent of the other parties hereto. No person or entity
shall be deemed a third-party beneficiary under this Agreement, other than
current and former directors and officers of SBSO with respect to Section 5.12
hereof and other than the three officers with change in control contracts
covered by Section 5.18.
8.4. Entire Agreement. This Agreement, which includes the
Disclosure Schedules and other Schedules hereto and the other documents,
agreements and instruments executed and delivered pursuant to or in connection
with this Agreement, contains the entire Agreement between the parties hereto
with respect to the transactions contemplated by this Agreement and supersedes
all prior negotiations, arrangements or understandings, written or oral, with
respect thereto.
8.5. Counterparts. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement
and each of which shall be deemed an original.
8.6. Governing Law. This Agreement shall be governed by the
laws of the State of New Jersey, without giving effect to the principles of
conflicts of laws thereof.
8.7. Descriptive Headings. The descriptive headings of this
Agreement are for convenience only and shall not control or affect the meaning
or construction of any provision of this Agreement.
8.8. No Survival. The representations and warranties set forth
in Articles III and IV hereof shall not survive the consummation of the Closing,
but shall expire as of the Effective Time.
8.9. Knowledge. For purposes of this Agreement, information
shall be deemed known to a party hereto if it is actually know by one or more of
such party's executive officers.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
<PAGE>
IN WITNESS WHEREOF, United, UNB and SBSO have caused this
Agreement to be executed by their duly authorized officers as of the day and
year first above written.
ATTEST: UNITED NATIONAL BANCORP
RALPH L. STRAW, JR. THOMAS C. GREGOR
By: _______________________________ By: _____________________________
Ralph L. Straw, Jr., Secretary Thomas C. Gregor
Chairman, President and CEO
ATTEST: STATE BANK OF SOUTH ORANGE
ROBERT WIGDER JAMES J. YOUNG
By: ____________________________ By: ____________________________
Robert Wigder, Assistant Secretary James J. Young
President and CEO
ATTEST: UNITED NATIONAL BANK
RALPH L. STRAW, JR. THOMAS C. GREGOR
By: ____________________________ By: ____________________________
Ralph L. Straw, Jr., Cashier Thomas C. Gregor
Chairman, President and CEO
<PAGE>
CERTIFICATE OF STATE BANK OF SOUTH ORANGE ("SBSO") DIRECTORS
Reference is made to the Agreement and Plan of Merger, dated
June 25, 1998 (the "Agreement"), among United National Bancorp, United National
Bank and SBSO. Capitalized terms used herein have the meanings given to them in
the Agreement.
Each of the following persons, being all of the directors of
SBSO, agrees to vote or cause to be voted all shares of SBSO Common Stock which
are held by such person, or over which such person exercises full voting
control, in favor of the Merger.
MILTON WIGDER
- --------------------------
Milton Wigder
STEWART GLADSTONE
- --------------------------
Stewart Gladstone
ANTHONY BARTOLOTTA
- --------------------------
Anthony Bartolotta
ROBERT P. WIGDER
- --------------------------
Robert Wigder
SALVATORE C. NATOLI
- --------------------------
Salvatore C. Natoli
GEORGE MANNY
- --------------------------
George Manny
JAMES J. YOUNG
- --------------------------
James J. Young
<PAGE>
SCHEDULE 5.14
FORM OF STATE BANK OF SOUTH ORANGE AFFILIATE LETTER
June __, 1998
United National Bancorp
1130 Route 22 East, P.O. Box 6000
Bridgewater, New Jersey 08807-0010
Attn.: Thomas C. Gregor, Chairman,
President and Chief Executive Officer
Gentlemen:
I am delivering this letter to you in connection with the
proposed merger (the "Merger") of State Bank of South Orange, a New Jersey
chartered commercial banking corporation (the "Company"), with and into United
National Bank, a national banking association, pursuant to the Agreement and
Plan of Merger dated June 25, 1998 (the "Agreement") among the Company, United
National Bancorp ("United"), and United National Bank. I currently own shares of
the Company's common stock, par value $5.00 per share ("SBSO Common Stock"). As
a result of the Merger, I will receive shares of United's common stock, $1.25
par value ("United Common Stock"), in exchange for my SBSO Common Stock.
I have been advised that as of the date of this letter I may
be deemed to be an "affiliate" of the Company, as the term "affiliate" is
defined for purposes of paragraphs (c) and (d) of Rule 145 of the rules and
regulations promulgated under the Securities Act of 1933, as amended (the "1933
Act"), by the Securities and Exchange Commission ("SEC") and as the term
"affiliate" is used for purposes of the SEC's rules and regulations applicable
to the determination of whether a merger can be accounted for as a "pooling of
interests" as specified in the SEC's Accounting Series Release 135, as amended
by Staff Accounting Bulletins Nos. 65 and 76 ("ASR 135").
I represent to and agree with United that:
A. Transfer Review Restrictions. During the period beginning
on the date hereof and ending 30 days prior to the consummation of the Merger, I
shall not sell, transfer or otherwise dispose of ("transfer") any SBSO Common
Stock owned by me, and I shall not permit any relative who shares my home, or
any person or entity who or which I control, from transferring any SBSO Common
Stock owned by such person or entity, without notifying United in advance of the
proposed transfer and giving United a reasonable opportunity to review the
transfer before it is consummated. United, if advised to do so by its
independent public accountants, may instruct me not to make or permit the
transfer because it may interfere with the "pooling of interests" treatment of
the Merger. I shall abide by any such instructions.
B. Transfer Restrictions During Merger Consummation Period.
Other than with United's prior written consent, I shall not transfer any SBSO
Common Stock owned by me, and I shall not permit any relative who shares my
home, or any person or entity who or which I control, to transfer any SBSO
Common Stock owned by such person or entity during the period beginning 30 days
prior to the consummation of the Merger and ending immediately after financial
results covering at least 30 days of post-Merger combined operations have been
published by means of the filing of a Form 10-Q, Form 10-K or Form 8-K under the
Securities Exchange Act of 1934, as amended, the issuance of a quarterly or
year-end earnings report, or any other public issuance which satisfies the
requirements of ASR 135. For purposes of this paragraph only, "SBSO Common
Stock" includes United Common Stock into which my SBSO Common Stock is
converted.
C. Compliance with Rule 145. I have been advised that the
issuance of United Common Stock to me pursuant to the Merger will be registered
with the SEC under the 1933 Act on a Registration Statement on Form S-4.
However, I have also been advised that, since I may be deemed to be an affiliate
of the Company at the time the Merger is submitted for a vote of the Company's
stockholders, any transfer by me of United Common Stock is restricted under Rule
145 promulgated by the SEC under the 1933 Act. I may not transfer United Common
Stock unless (i) such transfer is made in conformity with the volume and other
limitations of Rule 145 promulgated by the SEC under the 1933 Act, to the extent
that such limitations are applicable to me, (ii) in the opinion of United's
counsel or counsel reasonably acceptable to United, such transfer is otherwise
exempt from registration under the 1933 Act or (iii) such transfer is registered
under the 1933 Act.
D. Stop Transfer Instructions; Legend on Certificates. I also
understand that stop transfer instructions will be given to United's transfer
agents with respect to the United Common Stock and that there will be placed on
the certificates of the United Common Stock issued to me, or any substitutions
therefor, a legend stating in substance:
"THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A
TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE SECURITIES ACT OF
1933 APPLIES. THE SHARES REPRESENTED BY THIS CERTIFICATE MAY ONLY BE
TRANSFERRED IN ACCORDANCE WITH THE TERMS OF AN AGREEMENT DATED JUNE 25,
1998 BETWEEN THE REGISTERED HOLDER HEREOF AND UNITED NATIONAL BANCORP,
A COPY OF WHICH AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICES OF UNITED
NATIONAL BANCORP."
E. Consultation with Counsel. I have carefully read this
letter and the Agreement and discussed the requirements of such documents and
other applicable limitations upon my ability to transfer United Common Stock to
the extent I felt necessary with my counsel or counsel for the Company.
Execution of this letter is not an admission on my part that I
am an "affiliate" of the Company as described in the second paragraph of this
letter, or a waiver of any rights I may have to object to any claim that I am
such an affiliate on or after the date of this letter. This letter shall
terminate concurrently with any termination of the Agreement in accordance with
its terms.
Very truly yours,
-----------------------------
Name:
Accepted this _____ day of
June, 1998 by
UNITED NATIONAL BANCORP
By: _________________________
<PAGE>
SCHEDULE 5.14-1
FORM OF UNITED NATIONAL BANCORP AFFILIATE LETTER
United National Bancorp
1130 Route 22 East, P.O. Box 6000
Bridgewater, New Jersey 08807-0010
Attn.: Thomas C. Gregor, Chairman,
President and Chief Executive Officer
Gentlemen:
I am delivering this letter to you in connection with the
proposed merger (the "Merger") of State Bank of South Orange, a commercial bank
chartered under the laws of the State of New Jersey ("SBSO"), with and into
United National Bank, a national banking association ("UNB"), pursuant to the
Agreement and Plan of Merger dated as of June 25, 1998 (the "Agreement") among
United National Bancorp, a corporation chartered under the laws of the State of
New Jersey ("United"), UNB and SBSO. I currently own shares of United's common
stock, $1.25 par value per share ("United Common Stock").
I have been advised that as of the date of this letter I may
be deemed to be an "affiliate" of United, as the term "affiliate" is used for
purposes of the rules and regulations of the Securities and Exchange Commission
(the "Commission") applicable to the determination of whether a merger can be
accounted for as a "pooling of interests" as specified in the Commission's
Accounting Series Release 135, as amended by Staff Accounting Bulletins Nos. 65
and 76 ("ASR 135").
I represent and covenant with United and SBSO that:
A. Transfer Restrictions Prior to Merger Consummation. During
the period beginning on the date hereof and ending 30 days prior to the
consummation of the Merger, I shall not sell, transfer or otherwise dispose of
("transfer") any United Common Stock owned by me, and I shall not permit any
relative who shares my home, or any person or entity who or which I control,
from transferring any United Common Stock owned by such person or entity,
without notifying United in advance of the proposed transfer and giving United a
reasonable opportunity to object to the transfer before it is consummated.
United, upon advice of its independent public accountants, may instruct me not
to make or permit the transfer because it may interfere with the "pooling of
interests" treatment of the Merger. I shall abide by any such instructions.
B. Transfer Restrictions During Merger Consummation Period.
Other than with United's prior written consent, I shall not transfer any United
Common Stock owned by me, and I shall not permit any relative who shares my
home, or any person or entity who or which I control, to transfer any United
Common Stock owned by such person or entity during the period beginning 30 days
prior to the consummation of the Merger and ending immediately after financial
results covering at least 30 days of post-Merger combined operations have been
published by means of the filing of a Form 10-Q, Form 10-K or Form 8-K under the
Securities Exchange Act of 1934, as amended, the issuance of a quarterly or
year-end earnings report, or any other public issuance which satisfies the
requirements of ASR 135.
C. Consultation with Counsel. I have carefully read this
letter and the Agreement and discussed the requirements of such documents and
other applicable limitations upon my ability to transfer United Common Stock to
the extent I felt necessary with my counsel or counsel for United.
Execution of this letter is not an admission on my part that I
am an "affiliate" of United as described in the second paragraph of this letter,
or a waiver of any rights I may have to object to any claim that I am such an
affiliate on or after the date of this letter. This letter shall terminate
concurrently with any termination of the Agreement in accordance with its terms.
Very truly yours,
-----------------------------
Name:
Accepted this ___ day of
____________, 1998 by
UNITED NATIONAL BANCORP
By: ___________________________
Name:
Title:
<PAGE>
SCHEDULE 1.3
ARTICLES OF ASSOCIATION
OF
UNITED NATIONAL BANK1
NAME
FIRST. The title of the Association shall be "United National
Bank".
MAIN OFFICE
SECOND. The main office of the Association shall be at
______________, _________________, __________ County, New Jersey. The general
business of the Association shall be conducted at its legally established
branches.
DIRECTORS
THIRD. The Board of Directors of this Association shall
consist of not less than five nor more than twenty-five shareholders. At any
meeting of the shareholders held for the purpose of electing Directors, or
changing the number thereof, the number of Directors may be determined by a
majority of the votes cast by the shareholders in person or by proxy. A majority
of the Board of Directors shall be necessary to constitute a quorum for the
transaction of business at any Directors' meeting.
The Board of Directors of the Association may be increased by
two between annual meetings of shareholders and vacancies on the Board may be
filled between annual meetings of the shareholders by a majority vote of the
full Board, but in no event shall the number of Directors exceed the total
number of twenty-five or such greater amount as may from time to time be
permitted by the laws of the United States. Any Director so elected by the Board
must comply with the provisions of law with respect to the ownership of shares
of the Association.
ANNUAL MEETING OF DIRECTORS
FOURTH. The regular annual meeting of the shareholders of this
Association shall be held at its main office or other convenient place duly
authorized by the Board of Directors on such day of the year as is specified
therefor in the By-Laws.
CAPITAL
FIFTH. The amount of authorized capital stock of this
Association shall be $20,000,000.00 divided into 8,000,000 shares of common
stock of the par value per share of $2.50 but said capital stock may be
increased or decreased from time to time in accordance with the provisions of
the laws of the United States.
If the capital stock is increased by the sale of additional
shares thereof, each shareholder shall be entitled to subscribe for such
additional shares in proportion to the number of shares of said capital stock
owned by him at the time the increase is authorized by the shareholders, unless
another time subsequent to the date of the shareholders' meeting is specified in
a resolution adopted by the shareholders at the time the increase is authorized.
The Board of Directors shall have the power to prescribe a reasonable period of
time within which the preemptive rights to subscribe to the new shares of
capital stock must be exercised.
If the capital stock is increased by a stock dividend, each
shareholder shall be entitled to his proportionate amount of such increase in
accordance with the number of shares of capital stock owned by him at the time
the increase is authorized by the shareholders, unless another time subsequent
to the date of the shareholders' meeting is specified in a resolution adopted by
the shareholders at the time the increase is authorized.
OFFICERS
SIXTH. The Board of Directors shall appoint one of its members
President of this Association, who shall be Chairman of the Board, unless the
Board appoints another director to be Chairman. The Board of Directors shall
have the power to appoint one or more Vice Presidents, at least one of whom
shall be authorized, in the absence of the President, to perform all acts and
duties pertaining to the office of the President; to appoint a Cashier and such
other officers and employees as may be required to transact the business of this
Association; to fix the salaries to be paid to such officers or employees and
appoint others to take their place.
The Board of Directors shall have the power to define the
duties of the officers and employees of this Association and to require adequate
bonds from them for the faithful performance of their duties; to make all
By-laws that may be lawful for the general regulation of the business of this
Association and the management of its affairs, and generally to do and perform
all acts that may be lawful for a Board of Directors to do and perform.
CHANGE OF MAIN OFFICE; BRANCHES
SEVENTH. The Board of Directors shall have the power to change
the location of the main office of this Association to any other place within
the limits of the State of New Jersey, without the approval of the shareholders
of this Association but subject to the approval of the Comptroller of the
Currency; and shall have the power to change the location of any branch or
branches of this Association to any other location, without the approval of the
shareholders of this Association but subject to the approval of the Comptroller
of the Currency.
EXISTENCE
EIGHTH. The corporate existence of this Association shall
continue until terminated in accordance with the laws of the United States.
SPECIAL MEETINGS OF SHAREHOLDERS; NOTICE OF MEETINGS
NINTH. The Board of Directors of this Association, or any
three or more shareholders owning, in the aggregate, not less than 10 per centum
(10%) of the stock of this Association, may call a special meeting of the
shareholders at any time.
Unless otherwise provided by the laws of the United States, a
notice of the time, place and purpose of every regular annual, and every special
meeting of the shareholders shall be given by first class mail, postage prepaid,
mailed at least ten days prior to the date of such meeting to each shareholder
of record at his address as shown upon the books of this Association.
INDEMNIFICATION
TENTH. Indemnification or reimbursement may be given to an
officer or director, as authorized by the Board of Directors, for expenses
incurred in any legal action where the officer or director is not adjudged to be
guilty of gross negligence, willful misconduct or criminal acts in the
performance of his duties to the Association.
AMENDMENT
ELEVENTH. Subject to the provisions of the laws of the United
States, these Articles of Association may be amended at any meeting of the
shareholders for which adequate notice has been given, by the affirmative vote
of the owners of a majority of the stock of this Association, voting in person
or by proxy.
1 Articles of Association of Harley National Bank as they will exist on the
Effective Date. The Articles may be amended prior to the Effective Date.
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT ("Agreement") dated June 25, 1998,
is by and between United National Bancorp, a New Jersey corporation and
registered bank holding company ("United"), and State Bank of South Orange, a
commercial bank organized under the laws of New Jersey ("SBSO").
BACKGROUND
1. United, United National Bank ("UNB"), and SBSO, as of the
date hereof, have executed a definitive agreement and plan of merger (the
"Merger Agreement") pursuant to which United will acquire SBSO through a merger
of SBSO with and into UNB (the "Merger").
2. During the negotiation of the Merger Agreement, United and
UNB advised SBSO that they would not execute the Merger Agreement unless SBSO
executed this Agreement.
3. As an inducement to United to enter into the Merger
Agreement and in consideration for such entry, SBSO has agreed to grant to
United an option to purchase authorized but unissued shares of common stock of
SBSO in an amount and on the terms and conditions hereinafter set forth.
AGREEMENT
In consideration of the foregoing and the mutual covenants and
agreements set forth herein and in the Merger Agreement, United and SBSO,
intending to be legally bound hereby, agree:
1. Grant of Option. SBSO hereby grants to United the option to
purchase 127,275 shares of the common stock, $5.00 par value (the "Common
Stock"), of SBSO at a price of $31.25 per share (the "Option Price"), on the
terms and conditions set forth herein (the "Option").
2. Exercise of Option. This Option shall not be exercisable
until the occurrence of a Triggering Event (as such term is hereinafter
defined). Upon or after the occurrence of a Triggering Event (as such term is
hereinafter defined), United may exercise the Option, in whole or in part, at
any time or from time to time, subject to the termination provisions of Section
19 of this Agreement.
The term "Triggering Event" means the occurrence of any of the
following events:
A person or group (as such terms are defined in the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and the rules and
regulations thereunder) other than United or an affiliate of United:
a. acquires beneficial ownership (as such term is defined in
Rule 13d-3 as promulgated under the Exchange Act) of at least 20% of the then
outstanding shares of Common Stock;
b. enters into a letter of intent or an agreement, whether
oral or written, with SBSO pursuant to which such person or any affiliate of
such person would (i) merge or consolidate, or enter into any similar
transaction, with SBSO, (ii) acquire all or a significant portion of the assets
or liabilities of SBSO, or (iii) acquire beneficial ownership of securities
representing, or the right to acquire beneficial ownership or to vote securities
representing 20% or more of the then outstanding shares of Common Stock;
c. makes a filing with any bank or thrift regulatory authority
or publicly announces a bona fide proposal (a "Proposal") for (i) any merger,
consolidation or acquisition of all or a significant portion of all the assets
or liabilities of SBSO or any other business combination involving SBSO, or (ii)
a transaction involving the transfer of beneficial ownership of securities
representing, or the right to acquire beneficial ownership or to vote securities
representing, 20% or more of the outstanding shares of Common Stock, and
thereafter, if such Proposal has not been Publicly Withdrawn (as such term is
hereinafter defined) at least 15 days prior to the meeting of stockholders of
SBSO called to vote on the Merger and SBSO' stockholders fail to approve the
Merger by the vote required by applicable law at the meeting of stockholders
called for such purpose; or
d. makes a bona fide Proposal and thereafter, but before such
Proposal has been Publicly Withdrawn, SBSO willfully takes any action in any
manner which would materially interfere with its ability to consummate the
Merger or materially reduce the value of the transaction to United.
The term "Triggering Event" also means the taking of any
material direct or indirect action by SBSO or any of its directors, officers or
agents, with the formal or informal approval or acquiescence of the SBSO Board
of Directors, with the intention of inviting, encouraging or soliciting any
proposal which has as its purpose a tender offer for the shares of Common Stock,
a merger, consolidation, plan of exchange, plan of acquisition or reorganization
of SBSO, or a sale of a significant number of shares of Common Stock or any
significant portion of its assets or liabilities.
The term "significant portion" means 25% of the assets or
liabilities of SBSO. The term "significant number" means 20% of the outstanding
shares of SBSO.
"Publicly Withdrawn", for purposes of clauses (c) and (d)
above, shall mean an unconditional bona fide withdrawal of the Proposal coupled
with a public announcement of no further interest in pursuing such Proposal or
in acquiring any controlling influence over SBSO or in soliciting or inducing
any other person (other than United or any affiliate) to do so.
Notwithstanding the foregoing, the Option may not be exercised
at any time (i) in the absence of any required governmental or regulatory
approval or consent necessary for SBSO to issue the shares of Common Stock
covered by the Option (the "Option Shares") or United to exercise the Option or
prior to the expiration or termination of any waiting period required by law, or
(ii) so long as any injunction or other order, decree or ruling issued by any
federal or state court of competent jurisdiction is in effect which prohibits
the sale or delivery of the Option Shares.
SBSO shall notify United promptly in writing of the occurrence
of any Triggering Event known to it, it being understood that the giving of such
notice by SBSO shall not be a condition to the right of United to exercise the
Option. SBSO will not take any action which would have the effect of preventing
or disabling SBSO from delivering the Option Shares to United upon exercise of
the Option or otherwise performing its obligations under this Agreement.
In the event United wishes to exercise the Option after a
Triggering Event has occurred and prior to the termination of this Agreement,
United shall send a written notice to SBSO (the date of which is hereinafter
referred to as the "Notice Date"), specifying the total number of Option Shares
it wishes to purchase and a place and date (not less than three days after such
notice is sent to SBSO) for the closing of such a purchase (a "Closing");
provided, however, that a Closing shall not occur prior to two days after the
later of receipt of any necessary regulatory approvals and the expiration of any
legally required notice or waiting period, if any.
3. Payment and Delivery of Certificates. At any Closing
hereunder (a) United will make payment to SBSO of the aggregate price for the
Option Shares so purchased by wire transfer of immediately available funds to an
account designated by SBSO, (b) SBSO will deliver to United a stock certificate
or certificates representing the number of Option Shares so purchased, free and
clear of all liens, claims, charges and encumbrances of any kind or nature
whatsoever created by or through SBSO, registered in the name of United or its
designee, in such denominations as were specified by United in its notice of
exercise and, if necessary, bearing a legend as set forth below and (c) United
shall pay any transfer or other taxes required by reason of the issuance of the
Option Shares so purchased.
If required under applicable federal securities laws, a legend
will be placed on each stock certificate evidencing Option Shares issued
pursuant to this Agreement, which legend will read substantially as follows:
The shares of stock evidenced by this certificate have
not been registered for sale under the Securities Act of 1933
(the "1933 Act"). These shares may not be sold, transferred or
otherwise disposed of unless a registration statement with
respect to the sale of such shares has been filed under the
1933 Act and declared effective or, in the opinion of counsel
reasonably acceptable to State Bank of South Orange, said
transfer would be exempt from registration under the
provisions of the 1933 Act and the regulations promulgated
thereunder.
No such legend shall be required if a registration statement is filed and
declared effective under Section 4 hereof.
4. Registration Rights. Upon or after the occurrence of a
Triggering Event and upon receipt of a written request from United, SBSO shall,
if necessary for the resale of the Option or the Option Shares by United,
prepare and file a registration statement with the Securities and Exchange
Commission, the Federal Deposit Insurance Corporation and any state securities
bureau, covering the Option and such number of Option Shares as United shall
specify in its request, and SBSO shall use its best efforts to cause such
registration statement to be declared effective in order to permit the sale or
other disposition of the Option and the Option Shares, provided that United
shall in no event have the right to have more than one such registration
statement become effective.
In connection with such filing, SBSO shall use its best
efforts to cause to be delivered to United such certificates, opinions,
accountant's letters and other documents as United shall reasonably request and
as are customarily provided in connection with registrations of securities under
the Securities Act of 1933, as amended. All expenses incurred by SBSO in
complying with the provisions of this Section 4, including without limitation,
all registration and filing fees, printing expenses, fees and disbursements of
counsel for SBSO and blue sky fees and expenses shall be paid by SBSO.
Underwriting discounts and commissions to brokers and dealers relating to the
Option Shares, fees and disbursements of counsel to United and any other
expenses incurred by United in connection with such registration shall be borne
by United. In connection with such filing, SBSO shall indemnify and hold
harmless United against any losses, claims, damages or liabilities, joint or
several, to which United may become subject, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of any material fact
contained in any preliminary or final registration statement or any amendment or
supplement thereto, or arise out of a material fact required to be stated
therein or necessary to make the statements therein not misleading; and SBSO
will reimburse United for any legal or other expense reasonably incurred by
United in connection with investigating or defending any such loss, claim,
damage, liability or action; provided, however, that SBSO will not be liable in
any case to the extent that any such loss, claim, damage or liability arises out
of or is based upon an untrue statement or alleged untrue statement of omission
or alleged omission made in such preliminary or final registration statement or
such amendment or supplement thereto in reliance upon and in conformity with
written information furnished by or on behalf of United specifically for use in
the preparation thereof. United will indemnify and hold harmless SBSO to the
same extent as set forth in the immediately preceding sentence but only with
reference to written information specifically furnished by or on behalf of
United for use in the preparation of such preliminary or final registration
statement or such amendment or supplement thereto; and United will reimburse
SBSO for any legal or other expense reasonably incurred by SBSO in connection
with investigating or defending any such loss, claim, damage, liability or
action.
5. Adjustment Upon Changes in Capitalization. In the event of
any change in the Common Stock by reason of stock dividends, split-ups, mergers,
recapitalizations, combinations, conversions, exchanges of shares or the like,
then the number and kind of Option Shares and the Option Price shall be
appropriately adjusted.
In the event any capital reorganization or reclassification of
the Common Stock, or any consolidation, merger or similar transaction of SBSO
with another entity, or in the event any sale of all or substantially all of the
assets of SBSO shall be effected in such a way that the holders of Common Stock
shall be entitled to receive stock, securities or assets with respect to or in
exchange for Common Stock, then, as a condition of such reorganization,
reclassification, consolidation, merger or sale, lawful and adequate provisions
(in form reasonably satisfactory to the holder hereof) shall be made whereby the
holder hereof shall thereafter have the right to purchase and receive upon the
basis and upon the terms and conditions specified herein and in lieu of the
Common Stock immediately theretofore purchasable and receivable upon exercise of
the rights represented by this Option, such shares of stock, securities or
assets as may be issued or payable with respect to or in exchange for the number
of shares of Common Stock immediately theretofore purchasable and receivable
upon exercise of the rights represented by this Option had such reorganization,
reclassification, consolidation, merger or sale not taken place; provided,
however, that if such transaction results in the holders of Common Stock
receiving only cash, the holder hereof shall be paid the difference between the
Option Price and such cash consideration without the need to exercise the
Option.
6. Filings and Consents. Each of United and SBSO will use its
best efforts to make all filings with, and to obtain consents of, all third
parties and governmental authorities necessary to the consummation of the
transactions contemplated by this Agreement.
Exercise of the Option herein provided shall be subject to
compliance with all applicable laws including, in the event United is the holder
hereof, approval of the Board of Governors of the Federal Reserve System and
SBSO agrees to cooperate with and furnish to the holder hereof such information
and documents as may be reasonably required to secure such approvals.
7. Representations and Warranties of SBSO. SBSO hereby
represents and warrants to United as follows:
a. Due Authorization. SBSO has full corporate power
and authority to execute, deliver and perform this Agreement and all corporate
action necessary for the execution, delivery and performance of this Agreement
has been duly taken by SBSO.
b. Authorized Shares. SBSO has taken and, as long as
the Option is outstanding, will take all necessary corporate action to authorize
and reserve for issuance all shares of Common Stock that may be issued pursuant
to any exercise of the Option.
c. No Conflicts. Neither the execution and delivery
of this Agreement nor consummation of the transactions contemplated hereby
(assuming all appropriate regulatory approvals) will violate or result in any
violation or default of or be in conflict with or constitute a default under any
term of the certificate of incorporation or by-laws of SBSO or any agreement,
instrument, judgment, decree, statute, rule or order applicable to SBSO.
8. Specific Performance. The parties hereto acknowledge that
damages would be an inadequate remedy for a breach of this Agreement and that
the obligations of the parties hereto shall be specifically enforceable.
Notwithstanding the foregoing, United shall have the right to seek money damages
against SBSO for a breach of this Agreement.
9. Entire Agreement. This Agreement constitutes the entire
agreement between the parties with respect to the subject matter hereof and
supersedes all other prior agreements and understandings, both written and oral,
among the parties or any of them with respect to the subject matter hereof.
10. Assignment or Transfer. United may not sell, assign or
otherwise transfer its rights and obligations hereunder, in whole or in part, to
any person or group of persons other than to an affiliate of United, except
after the occurrence of a Triggering Event. United represents that it is
acquiring the Option for United's own account and not with a view to or for sale
in connection with any distribution of the Option or the Option Shares. United
shall have the right to assign this Agreement to any party it selects after the
occurrence of a Triggering Event.
11. Amendment of Agreement. By mutual consent of the parties
hereto, this Agreement may be amended in writing at any time, for the purpose of
facilitating performance hereunder or to comply with any applicable regulation
of any governmental authority or any applicable order of any court or for any
other purpose.
12. Validity. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provisions of this Agreement, which shall remain in full force and
effect.
13. Notices. All notices, requests, consents and other
communications required or permitted hereunder shall be in writing and shall be
deemed to have been duly given when delivered personally, by express service,
cable, telegram or telex, or by registered or certified mail (postage prepaid,
return receipt requested) to the respective parties as follows:
If to United:
United National Bancorp
1130 Route 22 East, P.O. Box 6000
Bridgewater, New Jersey 08807-0010
Attn.: Thomas C. Gregor, Chairman,
President and Chief Executive Officer
With a copy to:
Pitney, Hardin, Kipp & Szuch
200 Campus Drive
Florham Park, New Jersey 07932-0950
P.O. Box 1945
Morristown, New Jersey 07962-1945
Attn.: Ronald H. Janis, Esq.
If to SBSO:
State Bank of South Orange
Valley and Third Streets, P.O. Box 384
South Orange, New Jersey 07049
Attn.: James J. Young, President and
Chief Executive Officer
With a copy to:
Lowenstein Sandler PC
65 Livingston Avenue
Roseland, NJ 07068
Attn.: Peter Ehrenberg, Esq.
or to such other address as the person to whom notice is to be given may have
previously furnished to the others in writing in the manner set forth above
(provided that notice of any change of address shall be effective only upon
receipt thereof).
14. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New Jersey.
15. Captions. The captions in the Agreement are inserted for
convenience and reference purposes, and shall not limit or otherwise affect any
of the terms or provisions hereof.
16. Waivers and Extensions. The parties hereto may, by mutual
consent, extend the time for performance of any of the obligations or acts of
either party hereto. Each party may waive (i) compliance with any of the
covenants of the other party contained in this Agreement and/or (ii) the other
party's performance of any of its obligations set forth in this Agreement.
17. Parties in Interest. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to confer upon any other person any
rights or remedies of any nature whatsoever under or by reason of this
Agreement, except as provided in Section 10 permitting United to assign its
rights and obligations hereunder.
18. Counterparts. 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.
19. Termination. This Agreement shall terminate upon either
the termination of the Merger Agreement as provided therein or the consummation
of the transactions contemplated by the Merger Agreement; provided, however,
that if termination of the Merger Agreement occurs after the occurrence of a
Triggering Event (as defined in Section 2 hereof), this Agreement shall not
terminate until the later of 18 months following the date of the termination of
the Merger Agreement or the consummation of any proposed transactions which
constitute the Triggering Event.
IN WITNESS WHEREOF, each of the parties hereto, pursuant to
resolutions adopted by its Board of Directors, has caused this Agreement to be
executed by its duly authorized officer, all as of the day and year first above
written.
STATE BANK OF SOUTH ORANGE
JAMES J. YOUNG
By:------------------------------------------
James J. Young, President and CEO
UNITED NATIONAL BANCORP
THOMAS C. GREGOR
By:------------------------------------------
Thomas C. Gregor
Chairman, President and
Chief Executive Officer
