[RARITAN LOGO] [UNITED LOGO]
MERGER PROPOSED -- YOUR VOTE IS VERY IMPORTANT
The Boards of Directors of Raritan Bancorp Inc. and United National
Bancorp have approved the merger of Raritan into United.
In the merger, Raritan stockholders will receive 1.595 shares of United
common stock for each share of Raritan common stock. United common stock is
listed on NASDAQ's National Market System under the symbol "UNBJ". Based on
February 23, 1999 closing prices, 1.595 shares of United common stock had a
value of $36.59. Cash will be paid to Raritan shareholders instead of fractional
shares. If any stock dividend, stock split or similar event occurs prior to the
closing, the 1.595 exchange ratio will be adjusted appropriately.
Raritan shareholders will not be taxed on the exchange of Raritan stock
for United stock.
When the merger is completed, Raritan shareholders will own about 4
million shares, or 25% of United's common stock, assuming that none of Raritan
options are exercised prior to the merger.
The merger cannot be completed unless the shareholders of both
companies approve it. We have scheduled special meetings so our shareholders can
vote on the merger. Each Board of Directors unanimously recommends that its
shareholders vote FOR the merger.
The dates, times and places of the meetings are as follows:
The Raritan Meeting
Tuesday, March 30, 1999
10:00 a.m.
Raritan Valley Country Club
State Highway 28
Somerville, New Jersey 08876
The United Meeting
Tuesday, March 30, 1999
10:00 a.m.
United National Bancorp
1130 U.S. Route 22 East
Bridgewater, New Jersey 08807
Raritan shareholders of record as of February 12, 1999 are entitled to
attend and vote at the Raritan meeting. United shareholders of record as of
February 22, 1999 are entitled to attend and vote at the United meeting.
Your vote is very important. Whether or not you plan to attend a
meeting, please take the time to vote by completing and mailing the enclosed
proxy card to us. If you sign, date and mail your proxy card without indicating
how you want to vote your proxy will be counted as a vote in favor of the
merger. For Raritan stockholders, a failure to return the proxy card will in
most cases have the same effect as a vote against the merger.
Arlyn D. Rus
Chairman, President and CEO
Raritan Bancorp Inc.
Thomas C. Gregor
Chairman, President and CEO
United National Bancorp
Neither the Securities and Exchange Commission, nor any bank regulatory agency,
nor any state securities commission has approved or disapproved of these
securities or determined if this prospectus is truthful or complete. Any
representation to the contrary is a criminal offense.
This joint proxy statement-prospectus is dated
February 24, 1999, and is first being mailed to shareholders
of United and Raritan on February 26, 1999.
<PAGE>
TABLE OF CONTENTS
Page
SUMMARY 1
What this Document is About 1
United Shareholders Vote on the Merger 1
Raritan Shareholders Vote on the Merger 1
The Companies 1
The Merger 2
SUMMARY FINANCIAL DATA OF UNITED 6
SUMMARY FINANCIAL DATA OF RARITAN 9
COMPARATIVE PER SHARE DATA 10
SUMMARY PRO FORMA FINANCIAL
INFORMATION 13
INTRODUCTION 14
FORWARD LOOKING STATEMENTS 14
CERTAIN INFORMATION ABOUT UNITED 15
General 15
United National Bank 15
Recent Developments 16
CERTAIN INFORMATION ABOUT RARITAN 18
General 18
The Raritan Savings Bank 18
Recent Developments 19
THE RARITAN MEETING 21
Date, Time and Place 21
Purpose 21
Board Recommendation 21
Record Date; Required Vote 21
Voting Rights; Proxies 22
Solicitation of Proxies 23
Quorum 23
THE UNITED MEETING 23
Date, Time and Place 23
Purpose 23
Board Recommendation 23
Record Date; Required Vote 23
Voting Rights; Proxies 24
Solicitation of Proxies 25
Quorum 25
THE PROPOSED MERGER 25
General Description 25
Consideration; Exchange Ratio;
Cash instead of Fractional Shares 26
Conversion of Raritan Options 26
Background of and Reasons for the Merger 27
Interests of Certain Persons in the Merger 31
Opinion of United's Financial Advisor 33
Opinion of Raritan's Financial Advisor 39
Resale Considerations Regarding
United Common Stock 43
Conditions to the Merger 44
Conduct of Business Pending the Merger 45
Stock Option to United for Raritan Shares 45
Representations, Warranties and Covenants 46
Regulatory Approvals 46
Management and Operations
After the Merger 46
Exchange of Certificates 47
Amendments 47
Termination 48
Special Termination Provisions 48
Accounting Treatment of the Merger 50
Federal Income Tax Consequences 50
No Dissenters' Rights 51
PRO FORMA FINANCIAL INFORMATION 52
DESCRIPTION OF UNITED CAPITAL STOCK 58
Common Stock 58
Preferred Stock 59
COMPARISON OF THE RIGHTS OF
SHAREHOLDERS OF UNITED AND
RARITAN 60
Voting Requirements 60
Cumulative Voting 61
Classified Board of Directors 61
Rights of Dissenting Shareholders 62
Shareholder Consent to Corporate Action 63
Dividends 63
By-laws 63
Limitations of Liability of Directors
and Officers 64
Minimum Price Provision 64
Consideration of Acquisition Proposals 64
Preferred Stock 65
SHAREHOLDER PROPOSALS 65
United 65
Raritan 66
INFORMATION INCORPORATED BY
REFERENCE 66
OTHER MATTERS 67
LEGAL OPINION 67
EXPERTS 67
APPENDIX A Merger Agreement A-1
APPENDIX B Stock Option Agreement B-1
APPENDIX C Endicott Fairness Opinion C-1
APPENDIX D Keefe, Bruyette Fairness Opinion D-1
<PAGE>
Raritan's 1997 Annual Report to Stockholders and its Quarterly Report on Form
10-Q for the quarter ended September 30, 1998 are included with this document
and follow Appendix D.
HOW TO GET COPIES OF RELATED DOCUMENTS
This document incorporates important business and financial information
about United and Raritan that is not included in or delivered with this
document. United and Raritan Shareholders may receive the information free of
charge by writing or calling the persons listed below. For United documents,
make your request to Ralph L. Straw, Jr., Corporate Secretary, United National
Bancorp, 1130 Route 22 East, P.O. Box 6000, Bridgewater, New Jersey 08807;
telephone (908) 429-2200. For Raritan documents, make your request to Helen J.
Frangelli, Corporate Secretary, Raritan Bancorp Inc., 454 Route 28, Bridgewater,
New Jersey 08807; telephone (908) 231-8100 (ext. 127). We will respond to your
request within one business day by sending the requested documents by first
class mail or other equally prompt means. To ensure timely delivery of the
documents in advance of the meetings, you should request documents by March 23,
1999.
i
<PAGE>
SUMMARY
This is a summary of certain information regarding the proposed merger
and the shareholder meetings to vote on the merger. We urge you to carefully
read the entire document, including the Appendixes, before deciding how to vote.
What this Document is About
- ---------------------------
The Boards of Directors of Raritan Bancorp Inc. and United National Bancorp have
approved the merger of Raritan into United. The merger cannot be completed
unless both companies' shareholders approve it. The Raritan and United Boards
have each called a special meeting of their shareholders to vote on the merger.
This document is the proxy statement used by both boards to solicit proxies for
those meetings. It is also the prospectus of United regarding the United common
stock to be issued if the merger is completed.
United Shareholders Vote on the
Merger
Shares Entitled to Vote... 11,088,583 shares of United common stock
entitled to vote at the United Meeting. These are
the shares outstanding on February 22, 1999 other
than treasury stock.
Vote Required............... A majority of the votes cast at the United
meeting, whether in person or by proxy, must be
cast in favor of the merger for it to be approved.
Raritan Shareholders Vote on the Merger
Shares Entitled to Vote... 2,469,247 shares of Raritan common stock were
outstanding on February 12, 1999. Those shares are
entitled to vote at the Raritan meeting.
Vote Required............... The affirmative vote, in person or by proxy, of a
majority of the outstanding shares of Raritan
common stock is required to approve the merger.
The Companies
- -------------
United.................... United, a New Jersey corporation, is the bank
holding company for United National Bank. United
National Bank is a national bank that operates 28
branches located in Central and Northern New
Jersey. On September 30, 1998, United completed
its acquisition of State Bank of South Orange by
merging it into United National Bank. That merger
was accounted for as a pooling of interests.
United National Bank is a member of the Federal
Reserve System and the FDIC insures its deposits.
At September 30, 1998, United had $1.5 billion in
assets. United's principal executive offices are
located at 1130 Route 22 East, P.O. Box 6000,
Bridgewater, New Jersey 08807. United's telephone
number is (908) 429-2200.
Raritan..................... Raritan, a Delaware corporation, is the bank
holding company for The Raritan Savings Bank. The
Raritan Savings Bank is a New Jersey-chartered
stock savings bank that operates seven branches
located in Central New Jersey. At September 30,
1998, Raritan had $433.6 million in assets.
Raritan's principal executive offices are located
at 454 Route 28, Bridgewater, New Jersey 08807.
Raritan's telephone number is (908) 231-8100.
The Merger
- ----------
General Description....... Raritan will merge with United, with United as the
surviving entity. The merger will be completed on
the tenth business day after all material
conditions to closing have been met, unless United
and Raritan agree on a different closing date.
The terms of the proposed merger are set forth
in a merger agreement signed by United and Raritan
and their bank subsidiaries. A copy of the
Merger Agreement is attached as Appendix A to
this document and is incorporated herein
by reference.
<PAGE>
Consideration Payable to
Raritan Stockholders; 1.595
Exchange Ratio............ In the merger, Raritan stockholders will receive
1.595 shares of United common stock for each share
of Raritan common stock. If there is any stock
split, stock dividend or similar transaction
affecting United common stock prior to the
closing, the 1.595 exchange ratio will be adjusted
appropriately. The exchange ratio may be also be
adjusted as summarized under "Terminating the
Merger Agreement" on page 5 and as more fully
described under "Special Termination Provisions"
on pages 48 - 50.
Cash Instead of Fractional
Shares.................... Raritan stockholders will not receive fractional
shares of United common stock in the merger.
Instead they will receive, without interest, a
cash payment equal to the fractional share
interest they otherwise would have received,
multiplied by the value of United common stock.
For this purpose, United common stock will be
valued at the average of its closing prices during
the ten trading days ending on the day that all
material conditions to closing the merger have
been met.
2
<PAGE>
No Dissenters' Rights for
Raritan or United
Stockholders.............. Under applicable New Jersey and Delaware law,
neither United nor Raritan stockholders have
dissenters' rights of appraisal as to the merger.
Tax-Free Nature of the
Merger.................... United's counsel, Pitney, Hardin, Kipp & Szuch,
has delivered its opinion that the merger will
qualify as a tax-free reorganization. The
conversion of Raritan common stock into United
common stock will be tax-free for United, Raritan
and the Raritan stockholders. Raritan stockholders
will recognize no taxable gain or loss until they
sell the United common stock that they receive in
the merger. The basis of the United common stock
received by Raritan stockholders will be the basis
of the Raritan common stock converted in the
merger. The holding period of the United common
stock will include the holding period of the
Raritan common stock converted.
WE URGE RARITAN STOCKHOLDERS TO READ THE MORE
COMPLETE DESCRIPTION OF THE MERGER'S TAX
CONSEQUENCES ON PAGES 50 - 51 AND TO CONSULT THEIR
OWN TAX ADVISORS AS TO THE SPECIFIC TAX
CONSEQUENCES OF THE MERGER TO THEM UNDER
APPLICABLE LAWS.
Conversion of Raritan Stock
Options................... In the merger, holders of options to acquire
Raritan common stock will receive options to
purchase United common stock. The new options will
have the same terms and conditions as the old
options, except that the number of shares and the
exercise price will be adjusted to reflect the
1.595 exchange ratio.
Exchanging Your Stock
Certificates................ Promptly after the merger occurs, the exchange
agent will send Raritan stockholders letters of
transmittal and instructions for exchanging their
stock certificates for certificates representing
United common stock. RARITAN STOCKHOLDERS SHOULD
NOT SEND IN THEIR STOCK CERTIFICATES UNTIL THEY
RECEIVE INSTRUCTIONS FROM THE EXCHANGE AGENT.
Reselling the Stock You
Receive in the Merger....... The shares of United common stock to be issued in
the merger will be registered under the Securities
Act of 1933. Except as noted below, stockholders
may freely transfer those shares after they
receive them. Raritan has identified its
directors, executive officers and others who may
be deemed "affiliates" of Raritan, and those
persons have entered into agreements with United
restricting their ability to transfer the shares
they will receive in the merger.
Differences in Stock-
holders' Rights....... In the merger, each Raritan stockholder will
become a United shareholder. The rights of Raritan
stockholders are currently governed by Delaware
corporate law and Raritan's certificate of
incorporation and by-laws. The rights of United
shareholders are governed by New Jersey corporate
law and United's certificate of incorporation and
by-laws. The rights of Raritan and United
shareholders differ with respect to voting
requirements and various other matters. See pages
60 - 65.
3
<PAGE>
Reasons for the Merger...... United entered into the merger agreement as part
of United's ongoing strategy of growth through
acquisitions. Raritan entered into the merger
agreement at the conclusion of a process in which
Raritan solicited expressions of interest from
numerous potential acquirors. The Raritan Board
believes that the merger is fair to Raritan
stockholders and that the combined entity will be
better positioned for future success then Raritan
will be if it remains independent.
Opinion of United's
Financial Advisor........... Keefe, Bruyette & Woods, Inc. is United's
financial advisor on the merger. As of the date of
this proxy statement, Keefe, Bruyette considers
the exchange ratio fair to United and its
stockholders from a financial point of view. You
can read Keefe, Bruyette's fairness opinion, which
is Appendix D to this document. For information on
how Keefe, Bruyette arrived at its opinion, see
pages 33 - 39.
Opinion of Raritan's
Financial Advisor........... Endicott Financial Advisors, L.L.C. is Raritan's
financial advisor on the merger. As of the date of
this proxy statement, Endicott considers the
exchange ratio in the merger to be fair to
Raritan's shareholders from a financial point of
view. You can read Endicott's fairness opinion,
which is Appendix C to this document. For
information on how Endicott arrived at its
opinion, see pages 39 - 43.
Financial Interests of
Raritan's Directors and
Officers in the Merger...... Some of Raritan's directors and officers have
interests in the merger that are in addition to
their interests as stockholders. Arlyn Rus, Thomas
Tansey and John Lukens are each executive officers
of Raritan, and Mr. Rus is also the Chairman of
the Raritan Board. Under their employment and
supplemental retirement agreements with Raritan,
Mr. Rus will receive a cash payment of $2.0
million, Mr. Tansey will receive a cash payment of
$1.5 million, and Mr. Lukens will receive a cash
payment of $427,221. In addition, Raritan is
obligated to indemnify Mr. Rus and Mr. Tansey for
any federal excise taxes, which are estimated to
total $1.8 million. The directors and executive
officers of Raritan own options to purchase
144,634 shares of Raritan common stock granted
under the company's stock benefit plans. Of these
options, 132,300 were fully exercisable prior to
Raritan's entry into the merger agreement. The
remaining 12,334 options will become exercisable
as a result of the merger. The difference between
the aggregate exercise price and the market value
of all 144,634 option shares, which represents the
economic value of the options, was $3.5 million at
January 15, 1999.
United has agreed that Mr. Rus and William
Kelleher, Jr. will be appointed as directors of
United and United National Bank when the merger
occurs. Mr. Kelleher is currently a Raritan
director. All current Raritan directors, including
Mr. Rus and Mr. Kelleher, will be invited to serve
as advisory directors for United National Bank.
Each former Raritan director serving as either a
United director or an advisory director will
receive an annual fee of at least $16,000 per
year.
United has agreed to indemnify the directors and
officers of Raritan against certain liabilities
for a six-year period following the merger.
On February 12, 1999, directors and executive
officers of Raritan and their affiliates
owned 821,240 shares or 31.6% of the
Raritan common stock.
4
<PAGE>
For additional information on the benefits of the
merger to Raritan management, see pages 31-33.
Conditions to the Merger.... Completion of the merger is contingent on a number
of conditions, including approval of the merger by
Raritan and United shareholders at their meetings.
OCC Approval................ The merger has been approved by the Office of the
Comptroller of the Currency. OCC approval does not
constitute an endorsement of the merger or a
determination that the terms of the merger are
fair to Raritan stockholders or United
shareholders.
Terminating the Merger
Agreement................... Raritan has the right to terminate the merger
agreement if, between September 21, 1998 and the
date that all material conditions to the closing
have been met, the price of United common stock
falls:
* by more than 15% in absolute terms, and
* by at least 10% more than an index based on
the common stock of 20 other financial
institutions.
If Raritan exercises this termination right,
United can cancel the termination by increasing
the exchange ratio as provided in the merger
agreement. The merger agreement may be terminated
by either Raritan or United if the merger has not
occurred by June 30, 1999. For a more complete
description of these and other termination rights
available to Raritan and United, see pages 48 -
50.
Amending the Merger
Agreement................... The merger agreement may be amended by the written
consent of United and Raritan at any time prior to
the merger. However, under applicable Delaware
law, an amendment to decrease the exchange ratio
and certain other types of amendments cannot be
made following adoption of the merger agreement by
the Raritan stockholders without their approval.
Pooling Accounting
Treatment of the Merger..... United expects to account for the merger as a
pooling of interests for financial reporting
purposes. One of the conditions to United and
Raritan's obligation to close the merger is that
United receives a letter from its independent
public accountants regarding qualification of the
merger for pooling-of-interests accounting.
Raritan has Agreed Not to
Solicit Alternative
Transactions................ In the merger agreement, Raritan has agreed not to
encourage, negotiate with, or provide any
information to any person other than United
concerning an acquisition transaction involving
Raritan or The Raritan Savings Bank. However,
Raritan may take certain of these actions if its
Board of Directors determines that it should do
so. This determination by the Board must be made
after the Board consults with counsel, and must be
based on the Board's fiduciary duties. This
restriction, along with the option described in
the following paragraph, may deter other potential
acquirors of control of Raritan.
Raritan has Granted United
a Stock Option.............. As a condition to United entering into the merger
agreement, United required Raritan to grant United
a stock option designed to deter other companies
from attempting to acquire control of Raritan. The
option gives United the right to purchase for
$26.00 per share up to 470,000 shares of Raritan
5
<PAGE>
common stock, representing 19.9% of the
outstanding Raritan shares on the date the option
was granted. The option is exercisable only if
certain specific triggering events occur and the
merger does not occur. United has no right to vote
the shares covered by the option prior to its
exercise. United could recognize a gain if it
exercises the option and resells the shares it
acquires for more than the exercise price. The
option may deter other potential acquirors of
Raritan, since it would probably increase the cost
of acquiring all the shares of Raritan common
stock. United's exercise of the option could also
make pooling-of-interests accounting treatment
unavailable to another potential acquiror. The
agreement granting the option is set forth as
Appendix B to this document.
6
<PAGE>
SUMMARY FINANCIAL DATA OF UNITED
The following is a summary of certain historical consolidated financial
data for United. The data presented for the years 1993 through 1997, and as of
the end of those years, comes from United's audited consolidated financial
statements. The data presented for the nine months ended September 30, 1998 and
1997 and as of September 30, 1998, comes from United's unaudited consolidated
financial statements. United's consolidated financial statements as of December
31, 1997 and 1996, and for the years 1995, 1996 and 1997, are incorporated by
reference in this document. United's unaudited consolidated financial statements
for the nine months ended September 30, 1998 and 1997, and as of September 30,
1998, are incorporated by reference in this document. See page 66-67.
United acquired State Bank of South Orange through a merger effective
on September 30, 1998. United accounted for the merger as a pooling of
interests. Reflecting this pooling accounting treatment, the nine month data
below has been restated to include the accounts and the results of operations
for State Bank of South Orange. However, the data for the years 1993 through
1997, and as of the end of those years, has not been restated. United's
management does not think the changes which a restatement would show are
material. United expects that the financial statements shown in its upcoming
1998 annual report and in its financial statements published thereafter will be
restated to reflect the State Bank of South Orange merger, accounted for as a
pooling of interests.
In the opinion of United's management, the unaudited data shown on
pages 7-9 reflects all adjustments necessary for a fair presentation of that
data. All such adjustments were normal, recurring adjustments. Results for the
nine months ended September 30, 1998 do not necessarily indicate the results
that you should expect for any other interim period or for the year as a whole.
When reviewing this data, you should note that all per share data has
been adjusted to reflect stock dividends and splits. The adjusted financial
ratios, i.e. the return on average assets and the return on average
stockholders' equity, have been adjusted to exclude merger-related and
restructuring charges, the effects of accounting changes and SAIF (FDIC)
assessments. In the balance sheet data, "Short-term borrowing" includes Federal
funds purchased, securities sold under agreements to repurchase maturing in less
than one year, Federal Home Loan Bank advances, and demand notes of the U.S.
Treasury. "Other Borrowings" in the balance sheet data include obligations under
capital leases and Federal Home Loan Bank advances that will be held for one or
more years, and long-term debt. Under the heading "Other Ratios," the
non-performing loans consist of non-accrual loans, restructured loans and loans
past due 90 days or more and still accruing.
7
<PAGE>
<TABLE>
<CAPTION>
At or For the
Nine Months Ended
September 30, At or For Years Ended December 31,
---------------------------- --------------------------------------------
1998 1997 1997 1996 1995
---------- ---------- ----------- --------- ---------
(Dollars in thousands, except per share data)
<S> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Interest Income $ 76,856 $ 68,426 $ 88,577 $ 79,360 $ 77,552
Interest Expense 33,989 27,609 36,700 30,130 30,104
------------ ------------ ------------- ------------ -----------
Net Interest Income 42,867 40,817 51,877 49,230 47,448
Provision For Possible Loan Losses 2,169 2,844 3,600 3,049 871
------------ ------------ ------------- ------------ -----------
Net Interest Income After
Provision For Possible
Loan Losses 40,698 37,973 48,277 46,181 46,577
Non-Interest Income 15,500 14,023 19,388 15,546 14,653
Non-Interest Expense 41,414 37,423 47,420 43,102 47,429
------------ ------------ ------------- ------------ -----------
Income Before Income Taxes &
Effect of Accounting Change 14,784 14,573 20,245 18,625 13,801
Provision for Income Taxes 4,339 4,720 6,365 6,345 4,295
------------ ------------ ------------- ------------ -----------
Income Before Effect of
Accounting Change 10,445 9,853 13,880 12,280 9,506
Cumulative Effect of Change in
Accounting for Income Taxes -- -- -- -- --
============ ============ ============= ============ ===========
Net Income $ 10,445 $ 9,853 $ 13,880 $ 12,280 $ 9,506
============ ============ ============= ============ ===========
Income Before Merger Related
And Restructuring Charges,
Effect of Accounting Change,
And SAIF Assessment $ 12,139 $ 11,251 $ 15,278 $ 12,587 $ 11,595
============ ============ ============= ============ ===========
COMMON SHARE DATA:
Net Income Per Diluted Share $ 0.93 $ 0.88 $ 1.35 $ 1.21 $ 0.94
Net Income Per Diluted Share
Before Merger-Related and
Restructuring Charges,
And SAIF Assessment $ 1.08 $ 1.01 $ 1.48 $ 1.24 $ 1.15
Cash Dividends Declared Per Share $ 0.45 $ 0.38 $ 0.52 $ 0.45 $ 0.42
Book Value Per Share (period-end) $ 11.40 $ 10.18 $ 10.88 $ 9.62 $ 8.91
Average Diluted Shares
Outstanding (in thousands) 11,255 11,157 10,300 10,190 10,123
FINANCIAL RATIOS:
Return on Average Assets 0.98% 1.07% 1.16% 1.15% 0.92%
Return on Average
Stockholders' Equity 11.55% 12.43% 13.49% 13.21% 11.52%
Net Interest Margin 4.52% 4.93% 4.86% 5.17% 5.13%
Efficiency Ratio 63.52% 60.29% 59.93% 61.93% 65.52%
ADJUSTED FINANCIAL RATIOS:
Return on Average Assets 1.14% 1.22% 1.28% 1.17% 1.12%
Return on Average
Stockholders' Equity 13.42% 14.20% 14.84% 13.55% 14.05%
<PAGE>
<CAPTION>
At or For Years Ended December 31,
----------------------------------
1994 1993
---- ----
<S> <C> <C>
STATEMENT OF INCOME DATA:
Interest Income $ 65,384 $ 64,386
Interest Expense 18,913 20,062
------------ ------------
Net Interest Income 46,471 44,324
Provision For Possible Loan Losses 2,123 5,239
------------ ------------
Net Interest Income After
Provision For Possible
Loan Losses 44,348 39,085
Non-Interest Income 14,421 16,312
Non-Interest Expense 42,633 42,111
------------ ------------
Income Before Income Taxes &
Effect of Accounting Change 16,136 13,286
Provision for Income Taxes 5,264 4,653
------------ ------------
Income Before Effect of
Accounting Change 10,872 8,633
Cumulative Effect of Change in
Accounting for Income Taxes -- 1,059
========== ==========
Net Income $ 10,872 $ 9,692
============ ============
Income Before Merger Related
And Restructuring Charges,
Effect of Accounting Change,
And SAIF Assessment $ 10,872 $ 8,633
============ ============
COMMON SHARE DATA:
Net Income Per Diluted Share $ 1.09 $ 0.98
Net Income Per Diluted Share
Before Merger-Related and
Restructuring Charges,
And SAIF Assessment $ 1.09 $ 0.87
Cash Dividends Declared Per Share $ 0.38 $ 0.34
Book Value Per Share (period-end) $ 7.37 $ 7.39
Average Diluted Shares
Outstanding (in thousands) 9,952 9,865
FINANCIAL RATIOS:
Return on Average Assets 1.18% 1.09%
Return on Average
Stockholders' Equity 14.39% 13.87%
Net Interest Margin 5.62% 5.57%
Efficiency Ratio 65.93% 67.17%
ADJUSTED FINANCIAL RATIOS:
Return on Average Assets 1.18% 0.97%
Return on Average
Stockholders' Equity 14.39% 12.35%
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
At or For Nine Months
Ended
September 30, At or For Years Ended December 31
----------------------------------- -----------------------------------------------
1998 1997 1997 1996
---- ---- ---- ----
(Dollars in thousands, except per share data)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA (at period end):
Total Assets $ 1,516,710 $ 1,346,179 $ 1,309,836 $ 1,103,242 $
Securities 637,561 571,159 587,774 373,756
Federal Funds Sold 55,725 15,925 1,500 5,887
Loans (Net of Unearned Income) 709,067 663,525 613,712 621,035
Allowance for Possible Loan
Losses 7,359 8,515 7,633 8,158
Deposits 1,124,530 1,026,088 987,849 936,720
Short-Term Borrowing 104,329 78,718 79,546 46,328
Other Borrowings 119,682 92,703 92,706 9,693
Stockholders' Equity 126,398 112,675 110,950 96,952
CAPITAL RATIOS:
Leverage Ratio (period-end) 8.75% 9.07% 8.96% 7.96%
Tier I Capital to Risk-Weighted
Assets (period-end) 14.11% 15.02% 14.87% 11.66%
Combined Tier I and Tier II
Capital to Risk-Weighted
Assets (period-end) 14.93% 16.07% 15.86% 12.78%
OTHER RATIOS:
Loans to Deposits (period end) 63.05% 64.67% 62.13% 66.30%
Non-Performing Loans to Loans
(period end) 0.95% 1.53% 1.41% 1.81%
Allowance for Possible Loan
Losses to Non-Performing
Loans (period end) 109.44% 84.01% 88.45% 72.46%
Allowance for Possible
Loan Losses to Loans
(period end) 1.04% 1.28% 1.24% 1.31%
Non-Performing Assets As a
Percentage of Loans, Other
Real Estate Owned and Other
Assets Owned (period end) 1.02% 1.78% 1.67% 2.11%
Dividend Payout Ratio 48% 43% 39% 37%
<PAGE>
<CAPTION>
At or For Years Ended December 31
----------------------------------
1995 1994 1993
---- ---- -----
(Dollars in thousands, except per share data)
BALANCE SHEET DATA (at period end):
Total Assets $ 1,071,262 $ 950,158 $ 924,395
Securities 383,730 343,922 428,323
Federal Funds Sold 10,004 14,085 9,772
Loans (Net of Unearned Income) 582,554 519,651 415,052
Allowance for Possible Loan
Losses 8,297 10,768 11,950
Deposits 905,964 815,868 816,127
Short-Term Borrowing 53,347 52,301 26,681
Other Borrowings 9,680 1,269 1,266
Stockholders' Equity 89,537 72,694 72,633
CAPITAL RATIOS:
Leverage Ratio (period-end) 7.18% 8.68% 8.15%
Tier I Capital to Risk-Weighted
Assets (period-end) 10.99% 14.30% 16.13%
Combined Tier I and Tier II
Capital to Risk-Weighted
Assets (period-end) 12.20% 15.73% 18.06%
OTHER RATIOS:
Loans to Deposits (period end) 64.30% 63.69% 50.86%
Non-Performing Loans to Loans
(period end) 1.59% 2.34% 3.14%
Allowance for Possible Loan
Losses to Non-Performing
Loans (period end) 92.18% 88.74% 91.62%
Allowance for Possible
Loan Losses to Loans
(period end) 1.34% 1.83% 2.80%
Non-Performing Assets As a
Percentage of Loans, Other
Real Estate Owned and Other
Assets Owned (period end) 2.04% 2.63% 3.70%
Dividend Payout Ratio 44% 35% 34%
</TABLE>
9
<PAGE>
SUMMARY FINANCIAL DATA OF RARITAN
The following is a summary of certain selected historical consolidated
financial data for Raritan. The data presented for the years 1993 through 1997,
and as of the end of those years, comes from Raritan's audited consolidated
financial statements. The data presented for the nine months ended September 30,
1998 and 1997 and as of September 30, 1998 comes from Raritan's unaudited
consolidated financial statements. Raritan's consolidated financial statements
as of December 31, 1997 and 1996, and for the years 1995, 1996 and 1997, are
incorporated by reference in this document. Raritan's unaudited consolidated
financial statements for the nine months ended September 30, 1998 and 1997 and
as of September 30, 1998 are also incorporated by reference in this document.
See pages 66 - 67.
In the opinion of Raritan's management, the unaudited data shown below
reflects all adjustments necessary for a fair presentation of that data. All
such adjustments were normal, recurring adjustments. Results for the nine months
ended September 30, 1998 do not necessarily indicate the results that you should
expect for any other interim period or for the year as a whole.
<TABLE>
<CAPTION>
At or For Nine Months
Ended September 30, At or For Years Ended December 31,
-------------------------------- --------------------------------------------------
1998 1997 1997 1996 1995
------------ ---------------- --------------- -------------- ---------------
(Dollars in thousands, except per share data)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Interest income $ 22,323 $ 20,336 $ 27,647 $ 24,931 $ 23,456
Interest expense 12,366 10,508 14,525 12,857 13,007
---------- ---------------- --------------- -------------- ---------------
Net interest income 9,957 9,828 13,122 12,074 10,449
Provision for possible loan losses 225 450 600 450 300
---------- ---------------- --------------- -------------- ---------------
Net interest income after pro-
vision for possible loan losses 9,732 9,378 12,522 11,624 10,149
Other income 1,140 796 1,049 720 658
Operating expenses 6,304 5,549 7,464 7,423 6,593
---------- ---------------- --------------- -------------- ---------------
Income before income taxes 4,568 4,625 6,107 4,921 4,214
Income taxes 1,358 1,706 2,199 1,813 1,542
Cumulative effect of
Accounting changes -- -- -- -- --
=========== ================ =============== ============== ===============
Net income $ 3,210 $ 2,919 $ 3,908 $ 3,108 $ 2,672
=========== ================ =============== ============== ===============
PER COMMON SHARE DATA:
Net income per share
Basic $ 1.35 $ 1.24 $ 1.66 $ 1.39 $ 1.17
Diluted 1.27 1.15 1.54 1.27 1.09
Book Value 13.67 12.64 13.01 12.45 11.77
Dividends 0.45 0.354 0.47 0.40 0.35
RATIOS:
Return on average assets 1.01% 1.04% 1.02% 0.89% 0.80%
Return on average equity 13.37 13.20 13.13 11.71 10.53
FINANCIAL CONDITION DATA:
Total assets $ 433,555 $ 407,262 $ 408,308 $ 375,393 $ 354,810
Investment securities held-to-maturity 23,645 45,290 41,307 51,919 61,406
Securities available-for-sale 33,403 52,303 48,951 47,253 50,547
Loans, net 306,153 261,847 267,700 235,070 195,172
Allowance for loan losses 3,774 3,310 3,305 2,965 2,582
Deposits 359,491 335,910 337,084 331,178 315,038
Shareholders' equity 33,583 29,996 30,874 28,268 26,348
<PAGE>
<CAPTION>
At or For Years Ended December 31,
----------------------------------
1994 1993
---- ----
(Dollars in thousands, except per share data)
<S> <C> <C>
INCOME STATEMENT DATA:
Interest income $ 20,892 $ 20,049
Interest expense 9,992 9,230
----------- ---------------
Net interest income 10,900 10,819
Provision for possible loan losses 450 2,290
----------- ---------------
Net interest income after pro-
vision for possible loan losses 10,450 8,529
Other income 702 2,658
Operating expenses 6,721 7,432
----------- ---------------
Income before income taxes 4,431 3,755
Income taxes 1,577 1,352
Cumulative effect of
Accounting changes -- 13
-- --
=========== ===============
Net income $ 2,854 $ 2,416
=========== ===============
PER COMMON SHARE DATA:
Net income per share
Basic $ 1.26 $ 1.07
Diluted 1.19 1.02
Book Value 10.35 9.89
Dividends 0.31 0.25
RATIOS:
Return on average assets 0.88% 0.81%
Return on average equity 12.33 11.22
FINANCIAL CONDITION DATA:
Total assets $ 333,546 $ 307,332
Investment securities held-to-maturity 86,224 121,074
Securities available-for-sale 40,456 --
Loans, net 183,323 165,795
Allowance for loan losses 2,729 3,094
Deposits 296,166 281,333
Shareholders' equity 23,440 22,391
</TABLE>
10
<PAGE>
COMPARATIVE PER SHARE DATA
The earnings per share, period-end book value per share and cash
dividends per share for the common stock of United, State Bank of South Orange
and Raritan for the periods noted are indicated on page 11. The data are
presented on an historical and pro forma basis, as well as pro forma equivalent
per share data for Raritan. The historical per share data were derived from the
financial statements of United and Raritan that are incorporated by reference
herein and from State Bank of South Orange financial statements. See page 66-67.
The pro forma combined share data have been derived after giving effect to State
Bank of South Orange merger and the Raritan merger as if each occurred at the
beginning of the period presented using the pooling-of-interests method of
accounting. The historical per share data for both United and Raritan has been
restated to retroactively reflect the effect of stock dividends and stock
splits. See "Pro Forma Financial Information" on pages 52 - 57; " Summary
Financial Data of United" on pages 6 - 8; and " Summary Financial Data of
Raritan" on page 9.
The historical United data for the nine months ended September 30, 1998
reflects United's acquisition of State Bank of South Orange, which United
completed on September 30, 1998. In its third quarter 1998 Report on Form 10-Q,
United filed financial information on a combined basis to include the financial
results of State Bank of South Orange for the nine months ended September 30,
1998. However, the data for the years 1993 through 1997, and as of the end of
those years, has not been restated. United's management does not think the
changes which a restatement would show are material. We have computed the pro
forma equivalent per Raritan share by multiplying the pro forma combined per
share data (giving effect to the Raritan merger) by the 1.595 exchange ratio.
The 1.595 exchange ratio may be adjusted as described on pages 2, 26 and 48-50.
The dividend per share data shown below do not necessarily indicate the
dividends that you should expect for any future period. The amount of future
dividends payable by United, if any, is at the discretion of United's Board of
Directors. When declaring dividends, the directors normally consider United's
and United National Bank's cash needs, general business conditions, dividends
from subsidiaries and applicable governmental regulations and policies. Pro
forma amounts assume that United would have declared cash dividends per share on
United common stock, including the United common stock issued in the merger for
Raritan common stock, equal to its historical cash dividends per share declared
on United common stock.
11
<PAGE>
<TABLE>
<CAPTION>
Pro Forma
Historical Pro Forma Equivalent
Historical State Bank of Combined United Historical Pro Forma per
United South Orange and South Orange Raritan Combined Raritan Share
<S> <C> <C> <C> <C> <C> <C>
Nine Months Ended September 30, 1998
Net Income Per Share........................
Basic........................... $ 0.94 N/A N/A $ 1.35 $ 0.92 $ 1.47
Diluted......................... 0.93 N/A N/A 1.27 0.89 1.42
Book Value Per Share........................ 11.40 N/A N/A 13.67 10.07 16.06
Cash Dividends Per Share.................... 0.45 N/A N/A 0.45 0.45 0.72
Year Ended December 31, 1997
Net Income Per Share........................
Basic........................... $ 1.36 $ 1.03 $ 1.31 $ 1.66 $ 1.25 $ 1.99
Diluted......................... 1.35 1.03 1.30 1.54 1.21 1.93
Book Value Per Share........................ 10.88 8.88 10.53 13.01 9.88 15.76
Cash Dividends Per Share.................... 0.52 -- 0.52 0.47 0.52 0.83
Year Ended December 31, 1996
Net Income Per Share........................
Basic........................... $ 1.21 $ 1.23 $ 1.17 $ 1.39 $ 1.09 $ 1.74
Diluted......................... 1.21 1.23 1.16 1.27 1.07 1.71
Book Value Per Share........................ 9.62 7.71 9.30 12.45 8.91 14.21
Cash Dividends Per Share.................... 0.45 -- 0.45 0.40 0.45 0.72
Year Ended December 31, 1995
Net Income Per Share........................
Basic........................... $ 0.94 $ 1.17 $ 0.91 $ 1.17 $ 0.87 $ 1.39
Diluted......................... 0.94 1.17 0.91 1.09 0.85 1.36
Book Value Per Share........................ 8.91 6.58 8.58 11.77 8.29 13.22
Cash Dividends Per Share.................... 0.42 -- 0.42 0.35 0.42 0.67
</TABLE>
12
<PAGE>
The first table below presents, for the periods indicated, the high and
low closing prices per share of United common stock and Raritan common stock.
The prices of United common stock and Raritan common stock have been restated to
give retroactive effect to stock dividends and stock splits. The second table
presents information concerning the last sale price of United common stock and
of Raritan common stock on September 21, 1998 the last business day before the
merger agreement was announced, and on February 23, 1999, a date shortly before
the date of this proxy statement. The second table also presents the equivalent
value of United common stock per Raritan share which we computed by multiplying
the last sale price of United common stock on the dates indicated by the 1.595
exchange ratio. United common stock and Raritan common stock are each traded on
the Nasdaq National Market System. We urge you to obtain current market
quotations for United common stock and Raritan common stock. Because the
exchange ratio is fixed and trading prices fluctuate, Raritan stockholders are
not assured of receiving any specific market value of United common stock. The
price of United common stock when the merger becomes effective may be higher or
lower than its price when the merger agreement was signed, when this proxy
statement was mailed or when United or Raritan shareholders meet to vote on the
merger.
<TABLE>
<CAPTION>
Closing Sale Closing Sale
Price Per Share Price Per Share
of United of Raritan
Common Stock Common Stock
High Low High Low
<S> <C> <C> <C> <C>
1997:
First Quarter............................ $ 18.97 $ 15.55 $ 17.00 $ 15.50
Second Quarter........................... 17.26 15.86 20.50 16.33
Third Quarter............................ 21.34 17.26 25.75 19.50
Fourth Quarter........................... 26.25 21.45 29.50 25.50
1998:
First Quarter............................ 29.32 23.18 28.75 25.50
Second Quarter........................... 28.98 26.14 30.25 26.25
Third Quarter............................ 28.30 21.14 34.75 24.75
Fourth Quarter .......................... 24.50 21.50 37.00 30.50
1999:
First Quarter (through February 23, 1999) 23.56 22.50 37.00 33.00
</TABLE>
<TABLE>
<CAPTION>
Equivalent
Closing Sale Closing Sale Value of United
Price Per Share Price Per Share Common Stock Per
of United of Raritan Share of Raritan
Common Stock Common Stock Common Stock
<S> <C> <C> <C>
Date
September 21, 1998 $24.09 $33.00 $38.42
February 23, 1999 $22.94 $36.00 $36.59
</TABLE>
13
<PAGE>
SUMMARY PRO FORMA FINANCIAL INFORMATION
The following tables present certain unaudited combined condensed
financial information derived from the Unaudited Pro Forma Financial Information
for the periods and at the dates indicated. The pro forma combined financial
information takes into account United's recently completed acquisition of State
Bank of South Orange in addition to the pending acquisition of Raritan. The pro
forma combined information gives effect to the proposed Raritan merger accounted
for as a pooling of interests, as if the merger had been consummated for
statement of income purposes on the first day of the applicable periods and for
balance sheet purposes on September 30, 1998. See "Pro Forma Financial
Information" on pages 52 - 57. The summary pro forma financial information is
based on the historical financial statements of United and Raritan incorporated
by reference herein, and State Bank of South Orange historical financial
statements. See page 66-67. The pro forma financial information assumes a 1.595
exchange ratio.
The summary pro forma financial information should be read in
conjunction with the pro forma financial information and the related notes
thereto on pages 52 - 57 and the consolidated financial statements and related
notes incorporated by reference in this document. The pro forma financial
information does not necessarily indicate the results of operations which would
have been achieved had the merger been completed as of the beginning of the
periods for which that data are presented and should not be construed as being
representative of future periods.
<TABLE>
<CAPTION>
PRO FORMA UNAUDITED COMBINED FINANCIAL INFORMATION
(In thousands, except for per share data)
For the Nine Months
Ended
September 30, For the Years Ended December 31,
-------------------------------------------
1998 1997 1996 1995
------------------------ ------------- ------------ ------------
<S> <C> <C> <C> <C>
Results of Operations:
Net Interest Income Before Provision For
Possible Loan Losses $ 52,824 $ 67,940 $ 63,944 $ 60,312
Provision for Possible Loan Losses 2,394 4,432 3,691 1,398
Net Interest Income After Provision for
Possible Loan Losses 50,430 63,508 60,253 58,914
Income Before Income Taxes 19,352 27,482 24,585 18,766
Net Income 13,655 18,447 15,971 12,673
Net Income per Diluted Common Share 0.89 1.21 1.07 0.85
At September 30, 1998
---------------------------
Balance Sheet:
Total Assets $ 1,947,988
Total Deposits 1,484,021
Total Stockholders' Equity 149,738
Book Value Per Share 10.07
</TABLE>
14
<PAGE>
INTRODUCTION
The Boards of Directors of Raritan Bancorp Inc. and United National
Bancorp have approved an Amended and Restated Agreement and Plan of Merger,
dated as of September 22, 1998, by and among United, United's subsidiary, United
National Bank, Raritan and Raritan's subsidiary, The Raritan Savings Bank. The
merger agreement provides for Raritan to be merged with United with United as
the surviving corporation. The merger cannot be completed unless the
shareholders of both Raritan and United approve the merger agreement.
This document serves two purposes. It is the joint proxy statement
being used by the Raritan and United Boards of Directors to solicit proxies for
use at their special meetings called to seek shareholder approval of the merger
agreement. It is also the prospectus of United regarding the United common stock
to be issued if the merger is completed. Thus, we sometimes refer to this
document as the joint proxy statement-prospectus.
This document describes the merger agreement in detail. A copy of the
merger agreement is attached as Appendix A to this document and is incorporated
herein by reference. We urge you to read this entire document and the Appendixes
carefully.
All information and statements contained or incorporated by reference
in this document about Raritan were supplied by Raritan and all information and
statements about United were supplied by United.
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN OR INCORPORATED BY
REFERENCE IN THIS DOCUMENT. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH
INFORMATION THAT IS DIFFERENT.
FORWARD LOOKING STATEMENTS
This document contains and incorporates by reference certain
forward-looking statements regarding the financial condition, results of
operations and business of United and Raritan. Those statements are not
historical facts and include expressions about United's and/or Raritan's
* confidence,
* strategies and expressions about earnings,
* new and existing programs and products,
* relationships,
* opportunities,
* technology and
* market conditions.
You may identify these statements by looking for
* forward-looking terminology like "expect", "believe" or "anticipate",
* or expressions of confidence like "strong" or "on-going", or similar
* statements or variations of those terms.
These forward-looking statements involve certain risks and uncertainties. Actual
results may differ materially from the results the forward looking statements
contemplate because of, among others, the following possibilities:
* United does not realize expected cost savings or revenue enhancements
from the merger as anticipated;
* deposit attrition, customer loss or revenue loss following the merger
is greater than expected;
* competitive pressure in the banking and financial services industry
increases significantly;
* there are changes in the interest rate environment;
* United's Year 2000 compliance program does not address Year 2000
computer problems effectively; or
* general economic conditions, either nationally or in the state of New
Jersey, are less favorable than expected.
15
<PAGE>
CERTAIN INFORMATION ABOUT UNITED
General
- -------
United, a New Jersey corporation, was organized in 1987 and began
operations in 1988 as a holding company for United National Bank. United
indirectly owns additional subsidiaries through United National Bank, including
an investment subsidiary and a 50% interest in a financial services corporation.
United is registered as a bank holding company with the Board of Governors of
the Federal Reserve System under the Bank Holding Company Act. As of September
30, 1998, United had:
* consolidated assets $1.5 billion
* deposits $1.1 billion
* stockholders' equity $126 million
* loans $709 million
United's principal executive offices and telephone number are:
1130 Route 22 East
P.O. Box 6000
Bridgewater, New Jersey 08807
United National Bank
- --------------------
United National Bank, a wholly owned subsidiary of United, is a
commercial bank established in 1902 under the laws of the United States. United
National Bank is a member of the Federal Reserve System and the FDIC insures its
deposits. United National Bank maintains its principal office in Bridgewater,
New Jersey and operates 28 branches in the following New Jersey counties:
* Essex
* Hunterdon
* Middlesex
* Morris
* Somerset
* Union
* Warren
United National Bank also operates over 25 automatic teller machines
(ATMs) affiliated with the MAC(R) System, an eight-state network with membership
in the Plus(R) Nationwide network and the Honor network.
United National Bank provides a full range of commercial and retail
bank services, including:
* accepting demand, savings and time deposits
* commercial and retail lending, primarily
residential mortgages
automobile loans
small business loans
credit card loans
* full personal, corporate and pension trust services
* other fiduciary services
16
<PAGE>
Recent Developments
- -------------------
Fourth Quarter and Full Year 1998 Results
On January 20, 1999, United reported its fourth quarter and
full year 1998 earnings. Net income for the full year 1998 totaled $15.6
million, compared to $14.5 million for 1997. Excluding special one-time charges
for both years, United's net income was $17.3 million in 1998, compared to $15.9
million in 1997. Diluted earnings per share were $1.39 for full year 1998,
compared to $1.30 for 1997. Excluding special charges for both years, diluted
earnings per share were $1.54 for 1998, compared to $1.43 per share in 1997,
representing an 8.5% increase. United's basic earnings per share were $1.41 for
1998, compared to $1.31 for 1997. Excluding special charges for both years, the
basic earnings per share were $1.56 for 1998 and $1.44 for 1997.
Fourth quarter 1998 net income totaled $5.2 million, compared to $4.7
million for 1997. Both diluted and basic earnings per share were $0.46 for
fourth quarter 1998 compared to $0.42 for 1997.
United's Return on Average Assets was 1.36% for the fourth quarter and
1.08% for the full year 1998. United's Return on Average Equity was 15.75% for
the fourth quarter and 12.67% for the full year 1998. Net interest income was
$57.1 million for the full year 1998, compared to $54.8 million reported in
1997. United's net interest margin was 4.46% for 1998 compared to 4.86% for
1997.
United's total assets at December 31, 1998 were $1.5 billion. Loans
totaled $753 million and deposits were $1 billion.
17
<PAGE>
<TABLE>
<CAPTION>
UNITED NATIONAL BANCORP
Financial Highlights
(in thousands, except per share data)
Three Months Ended
December 31,
------------
1998(1) 1997 (1)
---- -----
<S> <C> <C> <C> <C>
Net Interest Income $ 14,197 $ 14,009
Provision for Possible Loan Losses 975 988
Net Income 5,155 4,686
Net Income Per Common Share
Basic 0.46 0.42
Diluted 0.46 0.42
Weighted Average Shares Outstanding
Basic 11,087 11,070
Diluted 11,245 11,186
Twelve Months Ended
December 31,
1998(1) 1997 1998(1) * 1997 *
---- ---- ---- ----
Net Interest Income $ 57,064 $ 54,826 $ 57,064 $ 54,826
Provision for Possible Loan Losses 3,144 3,832 3,144 3,832
Net Income 15,600 14,539 17,294 15,937
Net Income Per Common Share
Basic 1.41 1.31 1.56 1.44
Diluted 1.39 1.30 1.54 1.43
Weighted Average Shares Outstanding
Basic 11,084 11,068
Diluted 11,248 11,177
At December 31
--------------
1998(1) 1997
---- ----
Total Assets $ 1,488,593 $ 1,383,376
Total Loans 753,748 663,566
Total Deposits 1,046,715 1,055,619
Stockholders' Equity 126,245 116,627
</TABLE>
* Excluding merger related and restructuring charges.
(1) Numbers in this column are unaudited.
18
<PAGE>
CERTAIN INFORMATION ABOUT RARITAN
General
- -------
Raritan is a Delaware corporation and a bank holding company whose only
subsidiary is The Raritan Savings Bank. Raritan was formed at the direction of
The Raritan Savings Bank in connection with its conversion from a mutual to
stock form of organization in 1987. The sole activity of Raritan is its
ownership of all of the issued and outstanding common stock of The Raritan
Savings Bank.
At September 30, 1998 Raritan had:
* consolidated assets $433.6 million
* deposits $359.5 million
* shareholders' equity $ 33.6 million
* loans $306.2 million
Raritan's principal executive offices and telephone number are:
454 Route 28
Bridgewater, New Jersey 08807
(908) 231-8100
The Raritan Savings Bank
- ------------------------
The Raritan Savings Bank is an FDIC insured, New Jersey chartered stock
savings bank that was originally organized in 1869. Its main office is located
at 9 West Somerset Street, Raritan, New Jersey 08869, and its telephone number
is 908-725-0080. It also operates six additional branch offices in:
* Bridgewater
* Manville
* Martinsville
* Somerville
* Warren
* Whitehouse Station
The Raritan Savings Bank is engaged primarily in the business of
attracting deposits from the general public and originating residential
mortgage, construction and consumer loans, and small business loans. In
addition, a portion of its assets is invested in securities, including
mortgage-backed securities. The Raritan Savings Bank offers a wide range of
services to both consumer and commercial customers. These services include:
* consumer and commercial checking accounts
* NOW and money market accounts
* regular savings accounts
* prime performance accounts whose rates are tied to the prime
lending rate
* market-rate certificates
* IRA/Keogh accounts
* automated teller machine (ATM) accessibility using the MAC(R) and
Plus(R) systems
* real estate mortgage loans
* various consumer and commercial time and demand loans
* home equity lines of credit
19
<PAGE>
The Raritan Savings Bank considers its primary market area for deposits
to be the areas serviced by these seven offices, while its primary market area
for lending is more widespread and includes these New Jersey counties:
* Hunterdon
* Mercer
* Morris
* Middlesex
* Somerset
* Union
Recent Developments
- -------------------
Fourth Quarter and Full Year 1998 Results
On January 22, 1999, Raritan reported fourth quarter 1998 consolidated
net income of $1,048,000 or $.41 per diluted share and recorded full year
consolidated net income of $4,258,000 or $1.67 per diluted share, an increase of
9.0%. Comparable 1997 results were $989,000 or $.39 per diluted share for the
fourth quarter and $3,908,000 or $1.54 per diluted share for the year.
At December 31, 1998 Raritan's total assets were $431.5 million up from
$408.3 million a year earlier. Total net loans increased to $299.6 million from
$264.4 million at the same date last year while deposits increased to $356.7
million from $337.1 million a year earlier. Shareholders' equity was $34.3
million at December 31, 1998 versus $30.9 million at December 31, 1997. At
December 31, 1998 the book value per share of Raritan Bancorp was $13.91
compared to $13.01 at December 31, 1997. The leverage capital ratio was 7.65% at
December 31, 1998 compared to 7.33% at December 31, 1997.
20
<PAGE>
<TABLE>
<CAPTION>
Raritan Bancorp Inc. and Subsidiary
Financial Highlights
(In Thousands, Except Per Share Data)
<S> <C> <C>
Three Months Ended December 31 1998 (1) 1997 (1)
- ------------------------------ ---- ----
Net Interest Income $ 3,401 $ 3,294
Provision for Loan Losses 75 150
Net Income 1,048 989
Net Income Per Share (Diluted) .41 .39
Shares Outstanding December 31 2,466,331 2,372,226
Year Ended December 31: 1998 (1) 1997
- ----------------------- ---- ----
Net Interest Income $ 13,358 $ 13,122
Provision for Loan Losses 300 600
Net Income 4,258 3,908
Net Income Per Share (Diluted) 1.67 1.54
Shares Outstanding December 31 2,466,331 2,372,226
At December 31: 1998 (1) 1997
- --------------- ---- ----
Total Assets $ 431,525 $ 408,308
Securities Available for Sale, at fair value 29,381 48,951
Investment Securities, Held to Maturity, net 20,903 41,307
Total Net Loans 299,613 264,395
Total Deposits 356,698 337,084
Shareholders' Equity 34,316 30,874
</TABLE>
(1) Numbers in this column are unaudited.
21
<PAGE>
THE RARITAN MEETING
Date, Time and Place
- --------------------
This document solicits, on behalf of the Raritan Board, proxies to be
voted at a special meeting of Raritan Stockholders and at any adjournments or
postponements thereof. The Raritan meeting is scheduled to be held:
Tuesday, March 30, 1999
10:00 a.m.
Raritan Valley Country Club
State Highway 28
Somerville, New Jersey 08876
Purpose
- -------
At the meeting, Raritan stockholders will consider and vote on:
* approval and adoption of the merger agreement
* any other matters that may properly be brought before the
meeting.
Board Recommendation
- --------------------
THE RARITAN BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE MERGER
AGREEMENT AND UNANIMOUSLY RECOMMENDS A VOTE FOR APPROVAL AND ADOPTION OF THE
MERGER AGREEMENT.
Record Date; Required Vote
- --------------------------
The Raritan Board has fixed the close of business on February 12, 1999
as the record date for the Raritan meeting. Only holders of record of Raritan
common stock at that time are entitled to get notice of the meeting and to vote
at the meeting. On February 12, 1999, there were 2,469,247 shares of Raritan
common stock outstanding. Each of those shares will be entitled to one vote on
each matter properly submitted to the meeting.
THE MERGER CANNOT BE COMPLETED WITHOUT RARITAN STOCKHOLDER APPROVAL. A
majority of the outstanding shares of Raritan common stock must vote
affirmatively in person or by proxy in order to approve the merger agreement.
The required vote of the Raritan stockholders on the merger agreement
is based upon the total number of outstanding shares of Raritan common stock and
not upon the number of shares which are actually voted. Thus, if you abstain
from voting or if you don't submit a proxy card and don't vote in person at the
Raritan meeting, your action will have the same effect as a vote "NO" on the
merger agreement. Also, any broker non-vote will have the same effect as a vote
"NO" on the merger agreement.
On February 12, 1999, the directors and executive officers of Raritan
as a group beneficially owned 417,844 shares of Raritan common stock,
representing 16.9% of the issued and outstanding shares. These figures are
calculated without counting shares that could be acquired by exercising stock
options since the shares underlying those options cannot be voted at the
meeting. The Raritan directors have agreed to vote all the shares they
beneficially own FOR the merger agreement.
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<PAGE>
The Raritan non-director executive officers have indicated that they intend to
vote all the shares they beneficially own FOR the merger agreement.
THE MATTERS TO BE CONSIDERED AT THE RARITAN MEETING ARE OF GREAT
IMPORTANCE TO THE STOCKHOLDERS OF RARITAN. ACCORDINGLY, WE URGE YOU TO READ AND
CAREFULLY CONSIDER THE INFORMATION PRESENTED IN THIS DOCUMENT, AND TO COMPLETE,
DATE, SIGN AND PROMPTLY RETURN THE ENCLOSED PROXY IN THE ENCLOSED POSTAGE PAID
ENVELOPE.
Voting Rights; Proxies
- ----------------------
If you properly execute a proxy card and send it to Raritan in a timely
manner, your proxy will be voted in accordance with the instructions you
indicate on the proxy card, unless you revoke your proxy prior to the vote. IF
YOU SEND US A PROXY CARD THAT DOES NOT INSTRUCT US HOW TO VOTE, YOUR SHARES WILL
BE VOTED FOR APPROVAL AND ADOPTION OF THE MERGER AGREEMENT.
The Raritan Board is not aware of any matters that will come before the
meeting other than the vote on the merger. If any other matters come before the
Raritan meeting, the persons named on the enclosed proxy card will have the
discretion to vote on those matters using their best judgment, unless you
specifically withhold that authorization when you complete your proxy card.
You may revoke any proxy that you give at any time before it is used to
cast your vote. Simply showing up at the Raritan meeting will not automatically
revoke your proxy. To revoke a proxy, you must either file a written notice of
revocation with the Raritan Corporate Secretary, or deliver a properly executed
proxy with a later date to the Raritan Corporate Secretary. The Raritan
Corporate Secretary will be in attendance at the Raritan meeting and, prior
thereto, can be reached at the following address:
Helen J. Frangelli
Corporate Secretary
Raritan Bancorp Inc.
454 Route 28
Bridgewater, New Jersey 08807
Election inspectors appointed for the meeting will tabulate the votes
cast by proxy or in person at the Raritan meeting. The election inspectors will
determine whether a quorum is present. The election inspectors will treat
abstentions and "broker non-votes" as shares that are present and entitled to
vote for purposes of determining a quorum where
* proxies are marked as abstentions,
* stockholders appear in person but abstain from voting, or
* a broker indicates on a proxy that it does not have discretionary
authority regarding certain shares.
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<PAGE>
Solicitation of Proxies
- -----------------------
In addition to using the mails, the directors, officers and employees
of Raritan may solicit proxies for the Raritan meeting from stockholders in
person or by telephone. These directors, officers and employees will not be
specifically compensated for their services. Raritan has retained Kissel-Blake,
Inc., a proxy-soliciting firm, to assist it in soliciting proxies. Kissel-Blake,
Inc. will be paid a fee of $5,500 and will be reimbursed for certain
out-of-pocket expenses, estimated to be $2,500. Raritan will also make
arrangements with brokerage firms and other custodians, nominees and fiduciaries
to send proxy materials to their principals and will reimburse those parties for
their expenses in doing so. Raritan will bear all costs of soliciting proxies
for the Raritan meeting.
Quorum
- ------
At least a majority of the Raritan common stock issued and outstanding
and entitled to be voted at the Raritan meeting must be present in person or by
proxy to constitute a quorum.
THE UNITED MEETING
Date, Time and Place
- --------------------
This document solicits, on behalf of the United Board, proxies to be
voted at a special meeting of United Shareholders and at any adjournments or
postponements thereof. The United meeting is scheduled to be held:
Tuesday, March 30, 1999
10:00 a.m.
United National Bancorp
1130 U.S. Route 22 East
Bridgewater, New Jersey 08807
Purpose
- -------
At the meeting, United shareholders will consider and vote on:
* approval and adoption of the merger agreement
* any other matters that may properly be brought before the
meeting.
Board Recommendation
- --------------------
THE UNITED BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE MERGER
AGREEMENT AND UNANIMOUSLY RECOMMENDS A VOTE FOR APPROVAL AND ADOPTION OF THE
MERGER AGREEMENT.
Record Date; Required Vote
- --------------------------
The United Board has fixed the close of business on February 22, 1999
as the record date for the United meeting. Only holders of record of United
common stock at that time will be entitled to receive notice of, and to vote at,
the United meeting. On February 22, 1999, there were 11,088,583 shares of United
common
24
<PAGE>
stock outstanding and entitled to vote at the United meeting. Each of those
shares will be entitled to one vote on each matter properly submitted to the
meeting. This does not include 103,734 shares of treasury stock. This does not
include 103,734 shares of treasury stock.
THE MERGER CANNOT BE COMPLETED WITHOUT UNITED SHAREHOLDER APPROVAL. A
majority of the shares of United common stock represented and voting at the
United meeting, in person or by proxy, must vote affirmatively in order to
approve the merger agreement.
The required vote of the United shareholders on the merger agreement is
different from that for the Raritan stockholders. The required United
shareholder vote is based on the number of shares which are actually voted,
rather than the total number of outstanding shares of United common stock. Thus,
if you abstain from voting or if you don't submit a proxy card and don't vote in
person at the United meeting, your action will have no effect. Also, broker
non-votes will have no effect.
On February 22, 1999, the directors and executive officers of United as
a group beneficially owned 212,181 shares of United common stock, representing
1.9% of the issued and outstanding shares. These figures are calculated without
counting shares that could be acquired by exercising stock options since the
shares underlying those options can't be voted at the meeting. The United
directors and executive officers have indicated that they intend to vote all the
shares they beneficially own FOR the merger agreement.
WE URGE YOU TO READ AND CAREFULLY CONSIDER THE INFORMATION PRESENTED IN
THIS DOCUMENT, AND TO COMPLETE, DATE, SIGN AND PROMPTLY RETURN THE PROXY IN THE
POSTAGE PAID ENVELOPE PROVIDED.
Voting Rights; Proxies
- ----------------------
If you properly execute a proxy card and send it to United in a timely
manner, your proxy will be voted in accordance with the instructions you
indicate on the proxy card, unless you revoke your proxy prior to the vote. IF
YOU SEND US A PROXY CARD THAT DOES NOT INSTRUCT US HOW TO VOTE, YOUR SHARES WILL
BE VOTED FOR APPROVAL AND ADOPTION OF THE MERGER AGREEMENT.
The United Board is not aware of any matters that will come before the
meeting other than the vote on the merger. If any other matters come before the
United meeting, the persons named on the enclosed proxy card will have the
discretion to vote on those matters using their best judgment, unless you
specifically withhold that authorization when you complete your proxy card.
You may revoke any proxy that you give at any time before it is used to
cast your vote. Simply showing up at the United meeting will not automatically
revoke your proxy. To revoke a proxy, you must either file a written notice of
revocation with the United Corporate Secretary, or deliver a properly executed
proxy with a later date to the United Corporate Secretary. The United Corporate
Secretary will be in attendance at the United meeting and, prior thereto, can be
reached at the following address:
Ralph L. Straw, Jr.
Corporate Secretary
United National Bancorp
1130 U.S. Route 22 East
P.O. Box 6000
Bridgewater, New Jersey 08807-0010
Election inspectors appointed for the meeting will tabulate the votes
cast by proxy or in person at the United meeting. The election inspectors will
determine whether or not a quorum is present. The election inspectors will treat
25
<PAGE>
abstentions and "broker non-votes" as shares that are present and entitled to
vote for purposes of determining a quorum where
* proxies are marked as abstentions,
* stockholders appear in person but abstain from voting, or
* a broker indicates on a proxy that it does not have discretionary
authority regarding certain shares.
Solicitation of Proxies
- -----------------------
In addition to using the mails, the directors, officers and employees
of United may solicit proxies for the United meeting from shareholders in person
or by telephone. These directors, officers and employees will not be
specifically compensated for their services. United may retain a
proxy-soliciting firm to assist it in soliciting proxies. If so, United would
pay the proxy-soliciting firm a fee and reimburse it for certain out-of-pocket
expenses. United will also make arrangements with brokerage firms and other
custodians, nominees and fiduciaries to send proxy materials to their principals
and will reimburse those parties for their expenses in doing so. United will
bear all costs of soliciting proxies for the United meeting.
Quorum
- ------
At least a majority of the United common stock issued and outstanding
and entitled to be voted at the United meeting must be present in person or by
proxy to constitute a quorum.
THE PROPOSED MERGER
We have attached a copy of the merger agreement as Appendix A to this
joint proxy statement-prospectus and incorporated it by reference herein.
Descriptions of the merger and the merger agreement are qualified in their
entirety by reference to the merger agreement.
General Description
- -------------------
The merger agreement provides for the merger of Raritan with and into
United with United as the surviving entity. A closing under the merger agreement
is to occur on the tenth business day after the day when all material conditions
to closing have been met, including receipt of regulatory approvals and the
expiration of regulatory waiting periods. However, United and Raritan may agree
on a different closing date. The parties currently anticipate closing in March
1999. The merger will become effective at the time specified in certificates of
merger which United will file with the New Jersey and Delaware Secretaries of
State following the closing. United and Raritan anticipate that the merger will
become effective at the close of business on the closing date. Immediately after
the merger is effective, United will merge The Raritan Savings Bank with United
National Bank, with United National Bank as the surviving entity. The exact
closing date and the exact time the merger will become effective are dependent
upon satisfaction of numerous conditions, some of which are not under United or
Raritan's control.
26
<PAGE>
Consideration; Exchange Ratio; Cash instead of Fractional Shares
- ----------------------------------------------------------------
When the merger becomes effective, except as noted below, each
outstanding share of Raritan common stock will be converted into the right to
receive 1.595 shares of United common stock. The 1.595 exchange ratio takes into
account an adjustment made to reflect United's 10% stock dividend paid on
November 2, 1998. The exchange ratio is subject to further adjustment to take
into account any stock split, stock dividend or similar transaction with respect
to United common stock between the date of the merger agreement and the time the
merger becomes effective. The exchange ratio is also subject to adjustment as
described under "Special Termination Provisions" on pages 48-50. Certain shares
of Raritan common stock held by Raritan or by United or its subsidiaries will be
cancelled in the merger and will not be converted into United common stock.
Instead of fractional shares of United common stock, Raritan
stockholders will receive, without interest, a cash payment equal to the
fractional share interest to which they would otherwise be entitled multiplied
by the value of United common stock. For this purpose, United common stock will
be valued at the average of its closing prices for the ten consecutive trading
days ending with and including the date on which the material conditions to
closing the merger have been met. This valuation measure is subject to
anti-dilution adjustment in the event of any stock split, stock dividend or
similar transaction with respect to United common stock between the date of the
merger agreement and the time the merger becomes effective. All shares of United
common stock to be issued to a Raritan stockholder will be combined to make as
many whole shares as possible before calculating that stockholder's fractional
share interest.
The price of United common stock at the time the merger becomes
effective may be higher or lower than the market price
* when the merger agreement was signed,
* when this proxy statement was mailed,
* when the Raritan shareholders meet to vote on the merger, or
* when Raritan shareholders receive United stock certificates from the
exchange agent following the merger.
WE URGE YOU TO OBTAIN CURRENT MARKET QUOTATIONS FOR THE UNITED COMMON STOCK AND
THE RARITAN COMMON STOCK.
Conversion of Raritan Options
- -----------------------------
The merger agreement provides that each outstanding option to purchase
Raritan common stock granted under the Raritan stock option plan will be
converted at the time the merger becomes effective into an option to purchase
United common stock. The terms of the new option will be determined as follows:
* the right to purchase shares of Raritan common stock pursuant
to the old option will be converted in the new option into the
right to purchase that same number of shares of United common
stock multiplied by the exchange ratio,
* the option exercise price per share of United common stock
will be the previous option exercise price per share of
Raritan common stock divided by the exchange ratio, and
* in all other material respects the new option will be subject
to the same terms and conditions as governed the old option on
which it was based, including the length of time within which
the option may be exercised.
United has reserved for issuance the number of shares of United common
stock necessary to satisfy United's obligations under the converted options.
United has agreed to register those shares pursuant to the Securities Act as
soon as practicable after the merger becomes effective, but in no event later
than 45 days after the merger becomes effective. As of February 22, 1999, there
were options outstanding for 169,134 shares of Raritan common stock which would
be converted in the merger as described above.
27
<PAGE>
Background of and Reasons for the Merger
- ----------------------------------------
Background of the Merger (United). United's management and Board of
Directors regularly considers the possibility of acquiring other financial
institutions, as part of United's ongoing strategy of growth through
acquisitions in existing and contiguous market areas. Thomas C. Gregor is the
Chairman, President and Chief Executive Officer of United, and Arlyn D. Rus is
the Chairman, President and Chief Executive Officer of Raritan. Mr. Gregor has
known Mr. Rus for a number of years and has from time to time since 1993
discussed with Mr. Rus in general terms United's possible interest in a business
combination. In November 1995, Mr. Gregor met with Mr. Rus at the direction of
the United Board of Directors to discuss United's interest in taking an
investment position in Raritan. Facing no objection from Raritan, United
commenced purchasing stock in Raritan in 1996 and, at the time the merger
agreement was executed, United held 84,150 shares of Raritan common stock,
representing about 3.2% of the outstanding shares.
Further contacts between the two CEOs did not result in progress on a
potential merger until August 1998. On August 12, Mr. Gregor again contacted Mr.
Rus to see if there was any interest in moving the merger discussion forward.
Mr. Rus indicated that he would discuss the proposition with the Raritan Board.
In the meantime, Mr. Gregor consulted with Keefe, Bruyette & Woods, Inc.,
United's financial advisors, regarding the potential merger. On August 18, Mr.
Gregor reported the discussions that he had had with Mr. Rus regarding the
potential merger to the United Board. On August 19, Mr. Gregor received a letter
from Endicott, Raritan's financial advisor, requesting United's expression of
interest regarding a transaction with Raritan. Between August 19 and August 31,
Mr. Gregor, in consultation with Keefe, Bruyette, performed an initial analysis
of the potential transaction. Pursuant to the request from Endicott, United
prepared and then submitted to Endicott on August 31 a written expression of
interest in a transaction with Raritan. The expression of interest indicated
that United was prepared to consider a transaction with a fixed exchange ratio
of 1.45 shares of United common stock for each share of Raritan common stock
(1.595 after adjustment for United's subsequent stock dividend.
On September 15, Mr. Gregor reported to the United Board on the status
of United's discussions with Raritan, and indicated that United had been invited
by Raritan to make a presentation to Raritan's Board later the same day. That
afternoon, United's senior management and outside financial advisors met with
the Raritan Board to discuss United's strategic plan and its goals with respect
to a possible acquisition of Raritan. Mr. Gregor, Donald Malwitz, Vice President
and Treasurer of United, and Warren Gerleit, Executive Vice President and Chief
Lending Officer of United National Bank, together with United's financial
advisors, made a presentation to the Raritan Board and responded to questions.
Also on that date, United directed its outside counsel to begin preparing a
draft merger agreement and related documents. Representatives of United
performed due diligence at Raritan's offices on September 17 and 18.
Representatives of Raritan performed due diligence at United's offices on
September 18. Drafts of the merger agreement and related documents were
circulated and negotiated as due diligence proceeded.
On September 21 a meeting was held at Raritan's offices to finalize
negotiation of the merger agreement and related documents. The final version of
the documents were presented to the United Board of Directors at a meeting on
September 22, 1998, at which time Keefe, Bruyette made a presentation to the
United Board of Directors concerning the financial aspects of the transaction
and its fairness to United shareholders. At its September 22 meeting. the United
Board of Directors gave its final approval to the merger. Later that day, United
and Raritan jointly issued a public announcement regarding the transaction.
United's Reasons for the Merger. The United Board believes that the
merger and the merger agreement are in the best interests of United. The United
Board views the merger with Raritan as part of its ongoing strategy of growth
through acquisitions in existing and contiguous market areas. The United Board
28
<PAGE>
believes the merged institution will be a more efficient and capable competitor
in view of the evolution of the financial services industry. In reaching its
determination to approve the merger, factors considered by the United Board
included, but were not limited to, the following:
* Information concerning the business, earnings, operations,
financial condition, prospects, capital levels and asset
quality of Raritan and United, both individually and as
combined;
* The terms of the merger agreement and the option agreement;
* The anticipated cost savings and efficiencies available to
United as a result of the merger;
* The financial advice rendered by Keefe, Bruyette in connection
with the merger;
* The results of United's due diligence investigation, including
assessments of credit policies;
* Asset quality, interest rate risk, litigation and adequacy of
loan loss reserves; and
* The expectation that the merger would be tax-free to United
and could be treated as a pooling of interests for financial
accounting purposes.
In reaching their determination to approve and recommend the merger,
the Board did not assign any specific or relative weights to any of the
foregoing factors, and individual directors may have given differing weights to
different factors.
Recommendations of the United Board of Directors
The United Board believes that the merger is fair to, and in the best
interests of, United and its shareholders. The United Board of Directors also
believes the merged institution will be a more efficient and capable competitor
in view of the evolution of the financial services industry. Accordingly, the
Board unanimously approved the merger agreement and merger and recommends that
United shareholders vote FOR the approval and adoption of the merger agreement
and merger.
THE UNITED BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT ALL SHAREHOLDERS OF
UNITED APPROVE THE MERGER AGREEMENT AND THE MERGER.
Background of the Merger (Raritan). As part of its ongoing strategic
planning, the Raritan Board has regularly reviewed the merger and acquisition
market as a possible means of providing value to stockholders. Raritan has
engaged Endicott Financial Advisors, L.L.C. as its financial advisor since 1996.
In the spring and summer of 1998 the Board reviewed with Endicott the continuing
consolidation activity taking place in the banking industry nationwide and in
particular in the Mid-Atlantic market area. Among other things, the Board
discussed the increasing size of competitors and the benefits that increased
scales of operation contribute to supporting product innovations and
technological improvements. During this period, the Board discussed whether it
would be timely and appropriate for the company to contact a select group of
possible merger partners to determine whether there was interest at an
acceptable pricing level.
At a special meeting on August 13, Endicott discussed with the Board
the reasons why a merger transaction may be an advantageous alternative at the
present time and in the current market. Counsel addressed the fiduciary duties
of a board of directors in general and in particular in connection with mergers
and acquisitions. After extensive discussion, the Board authorized Endicott to
approach a selected group of five companies, including United, to inquire
29
<PAGE>
as to their interests in an acquisition of Raritan. After all five companies
entered into confidentiality agreements with Raritan, certain information was
provided to them, and they were asked to respond within a two-week time frame as
to their interest and with a preliminary pricing level. At a special Board
meeting on September 3, Endicott reported as to the responses received: two
companies were not interested; one was interested in Raritan but only if another
acquisition could be accomplished at the same time; and two companies, one of
which was United, were interested in a stock for stock transaction. Endicott
reviewed the profile, historically and on a pro forma basis, of each of the
companies that had expressed any interest. After questions and discussion, a
Special Board meeting was scheduled for September 8 to decide how and whether to
proceed with the expressions of interest.
On September 8, the Board again reviewed with Endicott and counsel the
expressions of interest and determined to pursue merger negotiations with
United, based in part on the proposed fixed exchange ratio of 1.45 shares of
United common stock for each share of Raritan common stock (1.595 after
adjustment for United's subsequent stock dividend), the trading price of the
companies that had expressed interest, and the historical and pro forma profile
of the companies. The Board directed Raritan management to invite the senior
management of United, as well as their financial advisors, to meet with the
Board on September 15 for the purpose of discussing United's strategic plan and
its goals with respect to a possible acquisition of Raritan. On September 15
Thomas Gregor, Chairman, President and Chief Executive Officer of United, Donald
Malwitz, Vice President and Treasurer of United, and Warren Gerleit, Executive
Vice President and Chief Lending Officer of United National Bank, together with
United's financial advisors, made a presentation to the Raritan Board and
responded to questions. Following this presentation, and after the United
representatives had departed, the Board further discussed the prospects of a
merger with United, and concluded by authorizing management, along with Endicott
and legal counsel, to negotiate a merger agreement based on terms discussed by
the Board and to conduct a due diligence investigation of United.
At a special Board meeting on September 20, Raritan's counsel and
financial advisor reviewed with the Board
* the terms of preliminary merger and stock option agreements
and the transactions contemplated thereby,
* the potential financial and strategic benefits of the
transaction,
* the results of due diligence reviews,
* financial and valuation analyses of the transactions, and
* the terms of the proposed transaction agreements, including
the exchange ratio.
Counsel again discussed the fiduciary duties of a board in connection
with merger transactions. At a September 21 special meeting, the Board reviewed
with counsel and Endicott the revised merger documents. The United proposal
contemplated a stock for stock exchange at a fixed exchange ratio of 1.45 shares
of United for each share of Raritan. This exchange ratio was subject to
adjustment for stock splits and dividends, and was subsequently adjusted to
1.595 to reflect United's 10% stock dividend). Based on a closing sales price
per share of United common stock, the exchange ratio equated to a value at that
time of approximately $35.
The Board was also advised that a written proposal had been received
from the other company that had earlier indicated an interest in acquiring
Raritan. This proposal contemplated a stock for stock exchange at a floating
exchange ratio that was designed to provide $35 of value to each Raritan
stockholder. The earlier indication of interest had involved a significantly
lower per share consideration. Endicott reviewed the proposal from a financial
point of view, and after discussion, the Board determined that the proposed
merger with United was a better transaction for stockholders. This conclusion
was based on the certainty of the United transaction and its perceived superior
value. United's transaction was fully negotiated and the structure, due
diligence and legal documentation complete. The financial value of the United
stock and the fixed exchange ratio was considered superior to the alternative
offer. Endicott rendered its opinion that the exchange ratio for the merger with
United was fair to Raritan stockholders from a financial point of view. Finally,
the Board was informed that only minor issues remained to be resolved in the
documents and that it was likely that definitive agreements would be presented
30
<PAGE>
for execution the next morning. The Board determined to meet again in the
morning, at which time counsel and Endicott informed them that a definitive
merger agreement and related documents had been satisfactorily negotiated. At
the September 21 meeting, the Raritan Board of Directors unanimously adopted and
approved the merger, the merger agreement, the option agreement and the
transactions contemplated thereby.
Raritan's Reasons for the Merger. The Raritan Board has determined that
the merger and the merger agreement are fair to, and in the best interests of,
Raritan and its stockholders. In reaching its determination, the Board consulted
with Endicott regarding the financial aspects and fairness of the transaction.
In arriving at its determination, the Board also considered a number of factors
which indicated that the merger should produce an institution that is well
capitalized, and one which will enjoy an enhanced operational and strategic
value and that should foster the potential for earnings growth. The factors
considered by the Board included, but were not limited to, the following:
* Information concerning the business, earnings, operations,
financial condition, prospects, capital levels and asset
quality of Raritan and United, both individually and as
combined. The businesses of Raritan and United were considered
complementary given the overlap in their geographic markets.
Also, United offers many commercial banking products and
services that are not offered by Raritan, but which Raritan
considers critical to its ability to remain competitive.
Raritan further believed that the combined market share and
larger capital base of the combined companies would enhance
their future business prospects.
* The financial advice rendered by Endicott that the exchange
ratio is fair, from a financial point of view, to Raritan
stockholders. In particular, the Board considered the per
share merger consideration based on United's market price, and
the fixed exchange ratio, which fixed Raritan's percentage
ownership of the combined companies and which could provide
even greater per share value to Raritan stockholders. The
Board also considered Raritan's right to terminate the merger
agreement, or have the exchange ratio increase in the event of
a decline in United's stock price that exceeded the decline in
the stock prices of similarly situated bank holding companies.
* The terms of the merger agreement, the option agreement and
the other documents executed in connection with the merger.
* The anticipated cost savings and efficiencies available to the
combined company as a result of the merger. Raritan
anticipated that annual cost savings of up to $4 million could
be realized through the merger.
* The current and prospective economic, competitive and
regulatory environment facing Raritan in particular and
financial institutions in general.
* The fact that the two members of the Board of Directors of
Raritan would become directors of United.
* The results of the due diligence investigations of United,
including assessments of credit policies, asset quality,
interest rate risk, litigation and adequacy of loan loss
reserves.
* The expectation that the merger would be tax free to Raritan
stockholders for federal income tax purposes.
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<PAGE>
* The nature and compatibility of the management and business
philosophies of Raritan and United.
* The prospects for growth and expanded products and services,
and other anticipated impacts on depositors, employees,
customers and communities served by Raritan.
* The pro forma ownership of the combined company by the
stockholders of Raritan.
In reaching their determinations to approve and recommend the merger,
the Board did not assign any specific or relative weights to any of the
foregoing factors, and individual directors may have given differing weights to
different factors.
Recommendations of the Raritan Board of Directors
The Raritan Board believes that the merger is fair to, and in the best
interests of, Raritan and its stockholders. Accordingly, the Board unanimously
approved the merger agreement and merger.
THE RARITAN BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT ALL
STOCKHOLDERS OF RARITAN APPROVE THE MERGER AGREEMENT AND THE MERGER.
Interests of Certain Persons in the Merger
- ------------------------------------------
In considering the recommendation of the Raritan Board regarding the
merger, Raritan stockholders should know that certain directors and officers of
Raritan have interests in the merger in addition to their interests as
stockholders of Raritan. All those additional interests are described below, to
the extent they are material and are known to Raritan. The Raritan Board was
aware of these interests and considered them, among other matters, in approving
the merger agreement:
Board Membership; Advisory Board. The merger agreement provides that
United and United National Bank will each appoint Arlyn D. Rus and another
Raritan designee to its Board of Directors as of the time the merger becomes
effective. Raritan has designated, and United has accepted, William T. Kelleher,
Jr., as the second designee. Mr. Rus is currently the Chairman, President and
Chief Executive Officer of Raritan. The merger agreement also provides that Mr.
Rus will serve as Vice Chairman of the Board of United. The merger agreement
provides that United National Bank will create an advisory Board of Directors
and invite all then directors of Raritan to serve on the advisory board as of
the time the merger becomes effective. Advisory board members will receive fees
which are expected to total no more than $16,000 per year, per director, less
(in the case of Mr. Rus and Mr. Kelleher) any fees they receive for service as
directors of United.
Stock Benefits. When the merger becomes effective each outstanding
option granted under Raritan's 1993 Stock Option Plan for Outside Directors, its
1993 Incentive Stock Option Plan or its 1997 Long-Term Incentive Stock Benefit
Plan will be converted into an option to purchase United common stock. All
outstanding, non-vested options will vest as a result of the merger. See
"Conversion of Raritan Options" on pages 26 - 27.
Employment Agreements with Executive Officers. Raritan and The Raritan
Savings Bank have employment agreements with Arlyn D. Rus, Chairman, President
and Chief Executive Officer, and Thomas F. Tansey, Executive Vice President,
Chief Operating Officer and Treasurer. The agreements both provide that in the
event of termination of employment upon a change of control of Raritan, the
executive is entitled to a severance payment equal to 36 times the highest
monthly compensation paid to him plus a "special retirement benefit". The
32
<PAGE>
special retirement benefit is an amount intended to compensate the executive for
any reduced retirement benefits under the Raritan pension plan. United National
Bank and Raritan have agreed that Raritan will pay to Mr. Rus and Mr. Tansey
their severance payments and special retirement benefits, estimated to be
$1,249,710 and $1,134,041, respectively, in a lump sum at or prior to the time
the merger becomes effective. In addition, United National Bank and Raritan have
agreed to indemnify the executives for the amount of any excise tax imposed on
those payments under Section 280G of the Internal Revenue Code of 1986, which
are estimated to total $1.8 million. United National Bank has also agreed to pay
for and provide to Mr. Rus and Mr. Tansey health, life, dental and disability
insurance coverage substantially identical to the coverage maintained by Raritan
until age 65, and thereafter, to provide those benefits with a 50% co-payment by
each of the executives.
Special Termination Agreement. Raritan and The Raritan Savings Bank
have a special termination agreement with John J. Lukens, Senior Vice President
and Senior Lending Officer, which requires Raritan to pay a cash severance
benefit to Mr. Lukens if, following a change in control, (1) the company
terminates his employment other than for cause, or (2) if he voluntarily
terminates his employment following a demotion, a loss of title, office or
significant authority, a reduction in base compensation or a relocation of his
principal place of employment by more than 25 miles. It is currently anticipated
that Raritan, with United's consent, will pay Mr. Lukens the cash severance
payment under the special termination agreement, estimated to be $185,707, at or
prior to the time the merger takes effect, and that after the merger takes
effect United National Bank will pay for and provide medical, life and
disability benefits in accordance with the terms of the agreement.
Supplemental Executive Retirement Plans. Raritan and The Raritan
Savings Bank have established supplemental retirement plans for the benefit of
Messrs. Rus, Tansey and Lukens. Under the supplemental retirement plans, Raritan
and The Raritan Savings Bank are required to make certain payments to each
executive over a period of 15 years. The amounts of these payments are
determined based on a percentage of the executive's final salary. Raritan and
The Raritan Savings Bank are also obligated under the supplemental retirement
plans to fund certain secular trusts established for each of these executives.
United National Bank and Raritan have agreed that Raritan will make payments
equal to the present value of the cash contributions necessary to fund the
secular trusts of Messrs. Rus and Tansey, which payments are estimated to be
$746,434 and $378,504, respectively. These payments will be made at or before
the time the merger becomes effective. United National Bank and Raritan have
agreed that Raritan will make similar payments with respect to Mr. Lukens unless
(1) United National Bank offers a position to him on or before December 15,
1998, and (2) United National Bank and Mr. Lukens mutually agree upon a new
agreement. The estimated payment with respect to Mr. Lukens is $241,514.
Director Deferred Compensation Plan. Raritan and The Raritan Savings
Bank have a Director Deferred Compensation Plan pursuant to which its directors
have elected to defer payment of certain of their board and committee fees.
United National Bank and Raritan have agreed that Raritan will transfer, at or
prior to the time the merger becomes effective, liquid assets into a trust to
ensure that the plan benefits will be paid without the need to obtain cash
withdrawals from the life insurance policies held by the trust.
Share Ownership. As of February 12, 1999, the directors of Raritan and
The Raritan Savings Bank beneficially owned in the aggregate approximately 15.2%
of the issued and outstanding shares of Raritan common stock. In connection with
the execution of the merger agreement, the directors of Raritan and The Raritan
Savings Bank agreed to vote in favor of the merger agreement. As of February 12,
1999, executive officers of Raritan who are not also directors beneficially
owned in the aggregate 1.7% of the issued and outstanding shares of Raritan
common stock.
33
<PAGE>
Indemnification; Directors and Officers. The merger agreement requires
United to indemnify, for a period of six years after the merger takes effect,
each director and officer of Raritan and The Raritan Savings Bank to the fullest
extent which Raritan and The Raritan Savings Bank would have been permitted
under applicable law and its Certificate of Incorporation and By-laws had the
merger not occurred. The indemnification is to cover any claims made against
that person because he or she served as a director or officer of Raritan or The
Raritan Savings Bank, or acted as a director or officer of a third party at the
written request of Raritan or The Raritan Savings Bank. The merger agreement
also requires United to provide Raritan and The Raritan Savings Bank's officers
and directors with directors' and officers' liability insurance for at least six
years after the merger takes effect upon terms and conditions substantially
similar to Raritan's existing directors' and officers' insurance policy.
Opinion of United's Financial Advisor
- -------------------------------------
United engaged Keefe, Bruyette & Woods, Inc. to act as its exclusive
financial advisor in connection with the merger. Keefe, Bruyette agreed to
assist United in analyzing, structuring, negotiating and effecting a transaction
with Raritan. United selected Keefe, Bruyette because Keefe, Bruyette is a
nationally recognized investment-banking firm with substantial experience in
transactions similar to the merger and is familiar with United and its business.
As part of its investment banking business, Keefe, Bruyette is continually
engaged in the valuation of businesses and their securities in connection with
mergers and acquisitions.
As part of its engagement, representatives of Keefe, Bruyette attended
the meeting of the United Board of Directors held on September 22, 1998 at which
the United Board considered and approved the merger agreement. At the September
22, meeting, Keefe, Bruyette rendered an oral opinion that was subsequently
confirmed in writing that, as of that date, the exchange ratio was fair to
United and its shareholders from a financial point of view. That opinion was
reconfirmed in writing as of the date of this proxy statement-prospectus.
The full text of Keefe, Bruyette's updated written opinion is attached
as Appendix D to this proxy statement-prospectus and is incorporated herein by
reference. United shareholders are urged to read the opinion in its entirety for
a description of the procedures followed, assumptions made, matters considered,
and qualifications and limitations on the review undertaken by Keefe, Bruyette.
KEEFE, BRUYETTE'S OPINION IS DIRECTED TO THE UNITED BOARD AND ADDRESSES
ONLY THE EXCHANGE RATIO. IT DOES NOT ADDRESS THE UNDERLYING BUSINESS DECISION TO
PROCEED WITH MERGER AND DOES NOT CONSTITUTE A RECOMMENDATION TO ANY UNITED
SHAREHOLDER AS TO HOW THE SHAREHOLDER SHOULD VOTE AT UNITED'S MEETING WITH
RESPECT TO THE MERGER OR ANY MATTER RELATED THERETO.
In rendering its opinion, Keefe, Bruyette:
* reviewed, among other things,
* the merger agreement,
* Annual Reports to stockholders and Annual Reports on Form 10-K
of Raritan,
* Annual Reports on Form 10-K of United,
* Certain interim reports to stockholders and Quarterly Reports
on Form 10-Q of Raritan,
* Quarterly Reports on Form 10-Q of United,
* Certain internal financial analyses and forecasts for United
prepared by Keefe, Bruyette and United management;
* Consensus "street" earnings per share estimates for United of
$1.69 in 1998 and $1.85 in 1999 that were published by the
Institutional Brokers Estimate System, known as IBES; and
* Certain internal financial anaylses and forecasts for Raritan
prepared by Raritan and its financial advisors, the underlying
assumptions of which were reviewed during due diligence with
the management of Raritan;
* held discussions with members of senior management of Raritan and
United regarding
* past and current business operations,
34
<PAGE>
* regulatory relationships,
* financial condition, and
* budgets, financial analyses, forecasts and future prospects of
the respective companies;
* compared certain financial and stock market information for Raritan
and United with similar information for certain other companies with
publicly traded securities;
* reviewed the financial terms of certain recent business combinations
in the banking industry; and
* performed other studies and analyses that it considered
appropriate.
In conducting its review and arriving at its opinion, Keefe, Bruyette
relied upon and assumed the accuracy and completeness of all of the financial
and other information provided to it or publicly available. Keefe, Bruyette did
not attempt to verify that information independently. Keefe, Bruyette relied
upon the management of United as to the reasonableness and achievability of the
financial and operating forecasts and projections, and the assumptions and bases
therefor, provided to Keefe, Bruyette. Keefe, Bruyette assumed that those
forecasts and projections reflected the best available estimates and judgments
of United management and that those forecasts and projections will be realized
in the amounts and in the time periods estimated by United management. Keefe,
Bruyette also assumed, without independent verification, that the aggregate
allowances for loan losses for Raritan and United are adequate to cover those
losses. Keefe, Bruyette did not make or obtain any evaluations or appraisals of
the property of Raritan or United, and did not examine any individual credit
files.
Raritan and Endicott, its outside financial advisors, provided Keefe,
Bruyette with certain projections. These included Raritan's internal 1998 budget
and income projections beyond 1998 prepared by Endicott. Raritan's budget showed
income per share of $1.65 in 1998 and Endicott's projections showed income per
share of $1.81 in 1999, $2.01 in 2000, $2.24 in 2001, $2.49 in 2002, $2.77 in
2003 and $3.05 in 2004. Keefe, Bruyette and certain representatives of United
reviewed with members of Raritan management the budgets, forecasts and related
underlying assumptions used by Raritan management. After those initial due
diligence discussions, Keefe, Bruyette prepared revised earnings estimates for
Raritan on a stand-alone basis of $1.58 in 1998, $1.65 in 1999, $1.78 in 2000,
$1.92 in 2001, $2.08 in 2002 and $2.24 in 2003. Prior to finalizing these
revised estimates, Keefe, Bruyette and members of the management of United
discussed the basis for those revisions with members of the management of
Raritan. Keefe, Bruyette used its revised estimates and underlying assumptions
in preparing its analyses and related opinion for the United Board.
The projections furnished to Keefe, Bruyette and used by it in certain
of its analyses were prepared by the senior management of United and Raritan.
United and Raritan do not publicly disclose internal management projections of
the type provided to Keefe, Bruyette in connection with its review of the
merger. As a result, those projections and the revisions to those projections
made by Keefe, Bruyette were not prepared with a view towards public disclosure.
The projections were based on numerous variables and assumptions which are
inherently uncertain, including factors related to general economic and
competitive conditions. Accordingly, actual results could vary significantly
from those set forth in the projections.
The following is a summary of the material analyses presented by Keefe,
Bruyette to the United Board on September 22, 1998 in connection with its
September 22 opinion:
Transaction Summary. Keefe, Bruyette calculated the merger
consideration to be paid pursuant to the exchange ratio as a multiple of
Raritan's book value, 1998 and 1999 earnings. This computation assumed the
Keefe, Bruyette estimates of Raritan's earnings per share of $1.58 in 1998 and
$1.65 in 1999, and an exchange ratio of 1.45 (prior to adjustment for United's
10% stock dividend). Based on those assumptions, this analysis indicated that
Raritan stockholders would receive shares of United common stock worth $38.40
for each share of Raritan common stock held, and that this amount would
represent a multiple of 3.06 times book value per share, and 23.3 times
estimated 1999 earnings per share.
Pro Forma Merger Analysis. Keefe, Bruyette performed pro forma merger
analyses that combined projected income statement and balance sheet information
for both United and Raritan. Keefe, Bruyette discussed these projections with
the management of United and Raritan. Keefe, Bruyette used certain assumptions
regarding the accounting treatment, acquisition adjustments, cost savings,
revenue enhancements, stock option treatment and other factors to calculate the
financial impact that the acquisition would have on certain projected financial
results of United. This analysis indicated that the merger is expected to
decrease United's book value per share and be accretive to United's projected
1999 earnings per share. This analysis was based on the Keefe, Bruyette Research
Department's estimates of United's 1999 earnings per share and on certain
management estimates of expected cost savings, revenue enhancements and
non-recurring charges to be incurred by United in connection with the merger.
The actual results achieved by the combined company will vary from the projected
results and the variations may be material.
Internal Rate of Return Analysis. Keefe, Bruyette performed an internal
rate of return analysis to determine a range of returns on United's initial
equity investment in Raritan. The cash flows from the equity investment were
determined by adding the value of the estimated future earnings that Raritan
could generate in the four year period from 1999 to 2002, and the effect of
estimated after-tax cost savings. The assumptions, which formed the basis of
this analysis, included earnings of $4.2 million in 1999 and $4.5 million in
2000, and an 8.00% earnings per share growth rate in 2001 and 2002 for Raritan
on a stand-alone basis. The terminal values applied to the cash flows at the end
of 2002 were determined by applying a range of projected price-to earnings
multiples (14x to 26x) to projected net income for Raritan for the year 2002.
Keefe, Bruyette presented a table showing the foregoing analysis with a range in
size of the initial equity investment and range of terminal cash flow multiples
from 14x to 26x; this resulted in annual returns from 13.5% to 29.8% for the
merger.
<TABLE>
<CAPTION>
Summary of Internal Rate of Return Analysis
------------------------------------- -----------------------------------
Terminal Multiple Internal Rate of Return
------------------------------------- -----------------------------------
<S> <C>
14.0x 13.5%
16.0x 16.8%
18.0x 19.8%
20.0x 22.5%
22.0x 25.1%
24.0x 27.6%
26.0x 29.8%
</TABLE>
Selected Transaction Analysis. Keefe, Bruyette reviewed certain
financial data related to a set of comparable New Jersey bank and thrift holding
company acquisitions since January 1, 1998.
<PAGE>
Keefe, Bruyette compared multiples of price to various factors for the
United-Raritan merger to the same multiples for the comparable group's mergers
at the time those mergers were announced. The results were as follows:
<TABLE>
<CAPTION>
Multiple of Price to Factor
---------------------------
Factor Considered Comparable Group Average United-Raritan Merger
----------------- ------------------------ ---------------------
<S> <C> <C>
Future 12 Months Earnings 26.3x 24.4x
Trailing 12 Months Earnings 31.8x 24.9x
Stated Book Value 2.57x 3.06x
Estimated Tangible Book Value 2.60x 3.10x
Tangible Book Premium To Core Deposits Value
19.4x 19.8x
</TABLE>
36
<PAGE>
Keefe, Bruyette repeated this analysis using current acquiror stock
prices. The results were as follows:
<TABLE>
<CAPTION>
Multiple of Price to Factor
---------------------------
Factor Considered Comparable Group Average United-Raritan Merger
----------------- ------------------------ ---------------------
<S> <C> <C>
Future 12 Months Earnings 22.8x 24.4x
Trailing 12 Months Earnings 26.8x 24.9x
Stated Book Value 2.23x 3.06x
Estimated Tangible Book Value 2.25x 3.10x
Tangible Book Premium To Core Deposits Value
17.0x 19.8x
</TABLE>
<PAGE>
No company or transaction used as a comparison in the above analysis is
identical to Raritan, United or the merger. Accordingly, an analysis of these
results is not mathematical. Rather, it involves complex considerations and
judgments concerning differences in financial and operating characteristics of
the companies and other factors that could affect the public trading value of
the companies to which they are being compared.
Selected Peer Group Analysis. Keefe, Bruyette compared the financial
performance and market performance of Raritan to those of a group of comparable
holding companies. The comparisons were based on:
* various financial measures:
* earnings performance
* operating efficiency
* capital adequacy
* asset quality
and
* various measures of market performance including:
* market/book values
* price to earnings
* dividend yields
To perform this analysis, Keefe, Bruyette used the financial information as of
and for the quarter ended June 30, 1998 and market price information as of
September 21, 1998. The companies in the peer group were New Jersey banks that
had total assets ranging from $650 million to $32 billion.
37
<PAGE>
Keefe, Bruyette's analysis showed the following concerning Raritan's
financial performance:
<TABLE>
<CAPTION>
Performance Measure Raritan Peer Group
------------------- ------- ----------
<S> <C> <C>
Return on Equity, annualized 12.86% 15.55%
Return on Assets, annualized 0.97% 1.17%
Net Interest Margin, annualized 3.29% 4.30%
Efficiency Ratio, annualized 57.48% 56.35%
Equity to Assets 7.33% 7.38%
Non-Performing Assets to Total Loans and Other Real
Estate Owned 0.61% 1.03%
Loan Loss Reserve to Nonperforming Loans
187% 309%
</TABLE>
Keefe, Bruyette's analysis showed the following concerning Raritan's
market performance:
<TABLE>
<CAPTION>
Performance Measure Raritan Peer Group
------------------- ------- ----------
<S> <C> <C>
Price to Earnings Multiple, based on 1998 estimated 20.89x 14.76x
earnings
Price to Book Multiples 2.46x 2.30x
Dividend Yield 1.82% 2.43%
</TABLE>
For purposes of the above calculations, all earnings estimates are based upon
the Keefe, Bruyette estimates for Raritan.
<PAGE>
Contribution Analysis. Keefe, Bruyette analyzed the relative
contribution of each of United and Raritan to certain pro forma balance sheet
and income statement items of the combined entity. The contribution analysis
showed:
Raritan Contribution To:
Combined Common Equity 20.7%
Combined Estimated Net Income
with Cost Savings 27.8%
Combined Total Assets 23.0%
Raritan Estimated Pro Forma Ownership 25.8%
Keefe, Bruyette compared the relative contribution of the balance sheet and
income statement items with the estimated pro forma ownership for Raritan
stockholders based on an exchange ratio of 1.45, prior to adjustment for
United's 10% stock dividend.
Other Analyses. Keefe, Bruyette reviewed the relative financial and
market performance of United and Raritan to a variety of relevant industry peer
groups and indices. Keefe, Bruyette also reviewed earnings estimates, balance
sheet composition, historical stock performance and other financial data for
Raritan.
In connection with its opinion dated as of the date of this proxy
statement-prospectus, Keefe, Bruyette performed procedures to update, as
necessary, certain of the analyses described above. Keefe, Bruyette reviewed the
assumptions on which the
38
<PAGE>
analyses described above were based and the factors considered in connection
therewith. Keefe, Bruyette did not perform any analyses in addition to those
described above in updating its September 22, 1998 opinion.
The United Board has retained Keefe, Bruyette as an independent
contractor to act as financial adviser to United regarding the merger. As part
of its investment banking business, Keefe, Bruyette is continually engaged in
the valuation of banking businesses and their securities in connection with
mergers and acquisitions, negotiated underwritings, competitive biddings,
secondary distributions of listed and unlisted securities, private placements
and valuations for estate, corporate and other purposes. As specialists in the
securities of banking companies, Keefe, Bruyette has experience in, and
knowledge of, the valuation of banking enterprises. In the ordinary course of
its business as a broker-dealer, Keefe, Bruyette may, from time to time,
purchase securities from, and sell securities to, United and Raritan. As a
market maker in securities Keefe, Bruyette may from time to time have a long or
short position in, and buy or sell, debt or equity securities of United and
Raritan for Keefe, Bruyette's own account and for the accounts of its customers.
United and Keefe, Bruyette have entered into an agreement relating to
the services to be provided by Keefe, Bruyette in connection with the merger.
United has agreed to pay Keefe, Bruyette a cash fee of $400,000 at the
consummation of the merger. Pursuant to the Keefe, Bruyette engagement
agreement, United also agreed to reimburse Keefe, Bruyette for reasonable
out-of-pocket expenses and disbursements incurred in connection with its
retention and to indemnify Keefe, Bruyette against certain liabilities,
including liabilities under the federal securities laws.
Opinion of Raritan's Financial Advisor
In deciding to approve the merger, Raritan's Board considered the oral
opinion rendered by its financial advisor Endicott, on September 20, 1998 that
the exchange ratio was fair, from a financial point of view, to the shareholders
of Raritan as of that date. Endicott's September 20, 1998 opinion was updated
and rendered in written form as of February 24, 1999, and is attached as
Appendix C to this joint proxy statement-prospectus. We encourage you to read
Appendix C.
Endicott will review and possibly revise its fairness opinion in the
event that Raritan's termination right based on a decline in United's stock
price is triggered. See the discussion under "Special Termination Provisions" on
pages 48 - 50.
Since April 1996, Endicott has formally acted as financial advisor to
Raritan on a contractual basis. Endicott was retained to provide general
financial advisory services and also to specifically advise Raritan in
connection with its strategic planning and merger and acquisition activities.
The investment banking business of Endicott includes valuation of
financial institutions and their securities in connection with mergers and
acquisitions and other corporate transactions. The Raritan Board chose Endicott
because of its expertise, experience and familiarity with the financial
institutions industry.
In connection with its acting as financial advisor to Raritan, at the
September 20, 1998 meeting at which the Raritan Board approved the merger
agreement, Endicott delivered its oral opinion to the Raritan Board, that, as of
that date, the exchange ratio was fair, from a financial point of view, to the
holders of shares of Raritan common stock. Endicott has delivered to Raritan a
written opinion dated the date of this joint proxy statement-prospectus that, as
of the date of the opinion, the exchange ratio is fair from a financial point of
view, to the holders of Raritan's common stock. We have attached the full text
of that opinion as Appendix C to this document and incorporated it herein by
reference. The description of the opinion set forth herein is qualified in its
entirety by reference to Appendix C. Holders of Raritan common stock are urged
to read the opinion in its entirety for a description of the procedures
followed, assumptions made, matters considered and qualifications on the review
undertaken by Endicott in connection herewith. The opinion is directed only to
the exchange ratio and does not constitute a recommendation to any stockholder
of Raritan as to how the stockholder should vote at the Raritan meeting.
39
<PAGE>
The Raritan Board did not impose any limitations on Endicott with
respect to the investigation made or procedures followed by Endicott in
rendering its fairness opinion. In connection with rendering its fairness
opinion to the Raritan Board, Endicott performed a variety of financial
analyses. The following is a summary of the material financial analyses
performed by Endicott. Endicott believes that its analyses must be considered as
a whole and that selecting portions of the analyses and the factors considered
therein, without considering all factors and analyses, could create an
incomplete view of the analyses and the processes underlying the fairness
opinion of Endicott. The preparation of a fairness opinion is a complex process
involving subjective judgments and is not necessarily susceptible to partial
analyses or summary description. In its analyses, Endicott made numerous
assumptions with respect to industry performance, business and economic
conditions and various other matters, many of which are beyond the control of
Raritan and United. Any estimates contained in Endicott's analyses are not
necessarily indicative of future results or values, which may be significantly
more or less favorable than those estimates. Estimates of values of companies do
not purport to be appraisals or necessarily reflect the prices at which the
companies or their securities may be sold.
The following is a summary of selected analyses prepared by Endicott
and presented to the Raritan Board in connection with Endicott's September 20,
1998 opinion and analyzed by Endicott in connection with that opinion and the
updated opinion delivered in connection with this proxy statement. In preparing
its updated opinion, Endicott updated certain analyses described below to
reflect certain market conditions and events occurring since the date of its
September 20 opinion. These reviews and updates led Endicott to conclude that it
was not necessary to change the conclusions it had reached in connection with
rendering its September 20 opinion.
Analysis of Publicly Traded Companies
In preparing its presentation, Endicott used publicly available
information to compare selected financial and market information, including book
value, tangible book value, earnings, asset quality ratios, loan loss reserve
levels, profitability and capital adequacy for United and other publicly traded
regional commercial banks located in the Mid-Atlantic United States. This peer
group consisted of institutions ranging in assets from $1 billion to $2 billion.
Endicott used similar data for nationwide high-performing commercial banks in
the same asset size range that had a return on equity for the last fiscal
quarter of greater than 15% and a price-to-tangible book value greater than
200%. Endicott reviewed the historical financial information for United and the
median value for each group since December 1993. Endicott calculated a range of
imputed stock market valuation of United common stock based on the valuation
multiples of the selected peer groups at December 31, 1997, June 30, 1998, and
September 15, 1998. The ranges obtained were as follows:
* December 31, 1997 $29.24 to $36.78
* June 30, 1998 $30.98 to $40.05
* September 15, 1998 $25.58 to $32.82
Separately, Endicott performed a similar analysis for Raritan and
comparable publicly traded companies. The peers consisted of a group of savings
institutions located in the Mid-Atlantic States with assets ranging between $200
million and $600 million and nationwide high performing savings institutions
40
<PAGE>
within the same asset size range with return on equity greater than 12.5% and
price-to-tangible book value greater than 150%. Endicott calculated a range of
imputed stock market valuation of Raritan common stock based on the valuation
multiples of the selected peer groups at December 31, 1997, June 30, 1998, and
September 15, 1998. The ranges obtained were as follows:
* December 31, 1997 $18.23 to $30.30
* June 30, 1998 $19.54 to $29.68
* September 15, 1998 $15.62 to $23.40
Analyses of Selected Merger Transactions
Endicott reviewed merger and acquisition transactions announced since
January 1, 1990 involving public savings institutions as acquirees and having a
transaction value over $15 million. Among those reviewed were:
* "1998 Nationwide Transactions," which are transactions announced
between January 1, 1998 and September 9, 1998, and
* "1998 Regional Transactions," which are transactions involving savings
institutions located in the Mid-Atlantic States announced between
January 1, 1998 and September 8, 1998.
Endicott reviewed the price to last twelve months earnings, price to
book value, price to tangible book value, price to deposits, price to assets,
and deposit premium paid in each transaction and computed high, low, mean,
and median ratios and premiums for the respective group of transactions.
Endicott's computations yielded the following median multiples for the 1998
Nationwide Transactions and the 1998 Regional Transactions, respectively, as
compared with the following indicated multiples for the merger:
<TABLE>
<CAPTION>
Median 1998 Nationwide Median 1998 Regional United Raritan Merger
---------------------- -------------------- ---------------------
<S> <C> <C> <C>
Price to Last Twelve Months Earnings
26.12x 26.72x 24.36x
Price to Book Value 220.18% 205.1% 285.0%
Price to Tangible Book Value 222.0% 205.1% 288.4%
Core Deposit Premiums 21.6% 21.3% 20.0%
</TABLE>
Based upon the median multiples for 1998 Nationwide Transactions, Endicott
derived an imputed range of values per share of Raritan common stock of $27.19
to $43.02. Based upon the median multiples for 1998 Nationwide Transactions,
Endicott derived an imputed range of values per share of Raritan common stock of
$27.52 to $43.02.
No company or transaction, used in this analysis is identical to
Raritan, United or the merger. Accordingly, an analysis of the result of the
foregoing is not mathematical; rather, it involves complex considerations and
judgments concerning differences in financial and operating characteristics of
the companies and other factors that would affect the public trading values of
the companies or company to which they are being compared.
In addition to the analysis of selected merger transactions, Endicott
reviewed the stock market performance of the most active acquirers of banks in
the country. Endicott considered the impact that the recent drop in the value of
the stocks of such acquiring companies would have on merger and acquisition
pricing in the near future.
41
<PAGE>
Discounted Earnings, Dividend Stream and Terminal Value Analysis
Using a discount earnings, dividend stream, and terminal value
analysis, Endicott estimated the future stream of earnings flows that Raritan
could be expected to produce through 2004 under various growth assumptions. To
approximate the terminal value of Raritan common stock at the end of the period,
Endicott applied price to earnings multiples of between 10.0x and 22.0x and
price to tangible book value multiples of between 100% and 300%. The net income
streams and terminal values were then discounted to present values using
different discount rates chosen to reflect different assumptions regarding the
required rates of return holders of prospective buyers of Raritan common stock
would expect. This analysis assumed that Raritan continued its current cash
dividend policy and indicated a reference range of between $15.27 and $43.41 per
share. When a 10.0% discount rate was applied to expected merger market
multiples, the analysis indicated a reference range of $29.09 to $37.84 per
share.
Pro Forma Merger Analysis
Endicott performed pro forma merger analyses that combined Raritan's
and United's current and projected incomes and balance sheets based on earnings
forecasts of Raritan and United that were prepared by Endicott and Raritan
management. The earnings forecasts for United were generally consistent with the
consensus "street" earnings per share estimated for United that were published
by the Institutional Brokers Estimate System, known as IBES, which estimated
earnings per share for United of $1.69 in 1998 and $1.85 in 1999. Assumptions
and analyses of the accounting treatment, acquisitions adjustments, operating
efficiencies and other adjustments were made to arrive at a base case pro forma
analysis to determine the effect of the transaction on both Raritan and United.
Endicott noted that, based on a $36.25 per share price for each share of Raritan
common stock, the impact of the merger on United's earnings per share did not
appear to be material while there was an initial 10% dilution to United's
tangible book value per share based on such forecasts.
In connection with rendering its September 20, 1998 opinion and its
updated opinion attached as Appendix C, Endicott reviewed and considered, among
other things:
* the merger agreement;
* audited consolidated financial statements and management's
discussion and analysis of financial condition and results of
operations for Raritan for the three fiscal years ending December
31, 1995, December 31, 1996, December 31, 1997 and the unaudited
consolidated financial statements of Raritan for the periods ending
March 31, 1998, June 30, 1998 and September 30, 1998;
* audited consolidated financial statements and management's
discussion and analysis of financial condition and results of
operations for United for the three fiscal years ended December 31,
1995, December 31, 1996, and December 31, 1997 and the unaudited
consolidated financial statements of United for the periods ending
March 31, 1998, June 30, 1998 and September 30, 1998;
* financial analyses and forecasts for United and Raritan prepared by
Endicott and Raritan management, the underlying assumptions of which
were reviewed during due diligence with the managements of Raritan
and United;
* the views of senior management of Raritan and United of their
respective past and current business operations, results thereof,
financial condition and future prospects;
* certain reported price and trading activity for Raritan common stock
and United common stock, including a comparison of certain financial
and stock market information for Raritan and United with similar
information for certain other companies the securities of which are
publicly traded;
42
<PAGE>
* the financial terms of recent business combinations in the banking
industry;
* the pro forma impact of the transaction on United;
* the current market environment generally and the banking environment
in particular; and
* such other information, financial studies, analyses and
investigations and financial, economic and market criteria which
Endicott considered relevant.
Raritan retained Endicott to act as independent financial advisor, to
render general advisory services and also to specifically advise Raritan in
connection with its strategic planning and merger and acquisition activities.
Pursuant to its agreement with Endicott, Raritan paid Endicott a fee for
rendering its fairness opinion relating to the merger at the September 20, 1998
meeting of the Raritan Board. In addition, Raritan will pay Endicott a
transaction fee equal to 1.0 % of the aggregate value of the consideration to be
paid by United in the merger. Approximately 25% of the transaction fee was paid
on the signing of the merger agreement and the remaining portion is payable at
the closing of the merger. Raritan expects to pay Endicott a total transaction
fee of approximately $1 million for its services in connection with the merger.
Raritan has also agreed to reimburse Endicott for its reasonable
out-of-pocket expense in connection with its engagement and to indemnify
Endicott and its affiliates and their respective partners, directors, officers,
employees, agents and controlling persons against certain expenses and
liabilities, including liabilities under securities laws. Raritan paid Endicott
a quarterly retainer of $7,500 during the two years before the merger agreement
was signed.
Resale Considerations Regarding United Common Stock
- ---------------------------------------------------
The shares of United common stock that will be issued if the merger is
consummated have been registered under the Securities Act of 1933. These
registered shares will be freely transferable, except for shares received by
persons, including directors and executive officers of Raritan, who may be
deemed to be "affiliates" of Raritan under Rule 145 promulgated under the
Securities Act. An "affiliate" of an issuer is defined generally as a person who
"controls" the issuer. Directors, executive officers and 10% shareholders may be
deemed to control the issuer. Affiliates may not sell their shares of United
common stock acquired pursuant to the merger, except pursuant to an effective
registration statement under the Securities Act covering the United common stock
or in compliance with Rule 145 or another applicable exemption from the
registration requirements of the Securities Act.
Persons who may be deemed "affiliates" of Raritan have delivered
letters to United in which they have agreed to certain restrictions on their
ability to transfer, whether by sale or otherwise, any Raritan common stock
owned by them and any United common stock acquired by them in the merger. United
required these restrictions in order to comply with the accounting rules
governing a pooling of interests, and to comply with Rule 145 under the
Securities Act. The persons who may be deemed affiliates have agreed not to
transfer the shares during a period which begins 30 days before the merger is
completed and ends when United publishes financial results covering at least 30
days of post-merger combined operations of United and Raritan. Those persons
have also agreed not to transfer their shares prior to that restricted period
without giving United advance notice and an opportunity to object if the
transfer would interfere with pooling of interests accounting for the merger.
43
<PAGE>
Those persons have also agreed to refrain from transferring United common stock
acquired by them in the merger, except in compliance with certain restrictions
imposed by Rule 145. Certificates representing the shares of United common stock
acquired by these persons in the merger will bear a legend reflecting that the
shares are restricted in accordance with the letter signed by them and may not
be transferred except in compliance with such restrictions.
Persons who may be deemed "affiliates" of United have also delivered
letters to United in which they have agreed not to transfer United common stock
beneficially owned by them in violation of the pooling of interests restrictions
set forth above with respect to Raritan.
Conditions to the Merger
- ------------------------
The obligation of each party to consummate the merger is subject to
satisfaction or waiver of certain conditions, including:
* approval of the merger agreement by the shareholders of Raritan and
United;
* receipt of all necessary consents, approvals and authorizations from
federal and state government authorities
* absence of any litigation that would restrain or prohibit the
consummation of the merger;
* receipt of a letter from United's independent accountants regarding
qualification of the merger for pooling of interests accounting
treatment; and
* receipt of an opinion of Pitney, Hardin, Kipp & Szuch regarding the
tax-free nature of the merger. If this condition is waived, i.e..
if the merger is not necessarily tax-free but United and Raritan
wish to consummate it anyway, Raritan will resolicit its
shareholders' vote on the merger.
The obligation of United to consummate the merger is also conditioned
on, among other things:
* continued accuracy of the representations and warranties of Raritan
contained in the merger agreement (subject to a materiality "out");
and
* performance by Raritan, in all material respects, of its obligations
under the merger agreement.
The obligation of Raritan to consummate the merger is also conditioned
on, among other things:
* continued accuracy of the representations and warranties of United
contained in the merger agreement (subject to a materiality "out");
* performance by United, in all material respects, of its obligations
under the merger agreement;
* receipt by Raritan of the fairness opinion letter of Endicott
attached as Appendix C to this proxy statement-prospectus; and
* the appointment of Messrs. Rus and Kelleher as directors of United
and United National Bank.
44
<PAGE>
Conduct of Business Pending the Merger
- --------------------------------------
The merger agreement requires Raritan to conduct its business until the
merger takes effect only in the ordinary course of business and consistent with
prudent banking practices, except as permitted under the merger agreement or
with the written consent of United. Under the merger agreement, Raritan has
agreed not to take certain actions without the prior written consent of United
or unless permitted by the merger agreement, including, among other things, the
following:
* change any provision of its charter, bylaws or similar governing
documents;
* issue new stock, grant an option, or declare, set aside or pay any
dividend other than Raritan's regular quarterly cash dividends up to
$0.15 per share;
* grant anyone severance or termination pay or enter into or
amend any employment agreement;
* adopt any new employee benefit plan, or award any increase in
compensation or benefits;
* file any applications or make any contracts regarding branching or
site location or relocation;
* agree to acquire any business or entity (other than to foreclose on
collateral for a defaulted loan);
* make any material change in its accounting methods or practices not
required by generally accepted accounting principles; and
* take any action that would cause any of its representations or
warranties in the merger agreement to be materially untrue or
incorrect at the time the merger becomes effective.
Under the merger agreement, Raritan cannot encourage or solicit or hold
discussions or negotiations with, or provide any information to, any person,
entity or group, other than United, concerning any (1) merger, (2) sale of
stock, (3) sale of substantial assets or liabilities outside the ordinary course
of business or (4) similar transactions. However, Raritan may enter into
discussions or negotiations or provide any information in connection with an
unsolicited possible transaction of this sort if the Raritan Board, after
consulting with counsel, determines in the exercise of its fiduciary
responsibilities that it should take such actions. Raritan has agreed to
promptly communicate to United the terms of any proposal it may receive with
respect to any such acquisition transaction. This restriction, along with the
option described in the following section, may deter other potential acquirors
of Raritan.
Stock Option to United for Raritan Shares
- -----------------------------------------
As a condition to United entering into the merger agreement, United
required that Raritan grant United a stock option that was designed to deter
other companies from attempting to acquire control of Raritan. The option gives
United the right to purchase for $26.00 per share up to 470,000 shares of
Raritan common stock, representing 19.9% of the outstanding Raritan shares on
the date the option was granted. The option is exercisable only if certain
specific triggering events occur and the merger does not occur. United has no
right to vote the shares covered by the option prior to its exercise.
45
<PAGE>
United could recognize a gain if it exercises the option and resells
the shares it acquires for more than the exercise price. The option may deter
other potential acquirors of Raritan, since it would probably increase the cost
of acquiring all the shares of Raritan common stock. United's exercise of the
option could also make pooling-of-interests accounting treatment unavailable to
another potential acquiror. The agreement granting the option is set forth as
Appendix B to this document.
Representations, Warranties and Covenants
- -----------------------------------------
The merger agreement contains customary mutual representations and
warranties, as well as covenants, relating to, among other things:
* corporate organization and similar corporate matters;
* authorization, execution and enforceability of the merger agreement;
* the accuracy of information contained in each party's filings with
the SEC;
* the accuracy of information supplied by each party in creating this
document;
* compliance with applicable laws;
* the absence of material litigation;
* certain bank regulatory matters;
* the absence of certain material changes or events since June 30,
1998;
* the adequacy of loan loss reserves; and
* each party's preparations to have its data processing systems be
Year 2000 compliant.
Regulatory Approvals
- --------------------
Consummation of the United-Raritan merger and the merger of The Raritan
Savings Bank into United National Bank requires the approval of the Office of
the Comptroller of the Currency. OCC approval was granted on January 8, 1999.
OCC approval does not constitute an endorsement of the merger or a determination
by the OCC that the terms of the merger are fair to the shareholders of Raritan
or United. United received a letter from the Federal Reserve Bank of New York
dated December 9, 1998 confirming that the merger does not require the filing of
a formal application with the Federal Reserve Board.
Management and Operations After the Merger
- ------------------------------------------
As a result of the merger, Raritan will be merged with and into United,
with United as the surviving entity. Immediately following the merger, The
Raritan Savings Bank will be merged with and into United National Bank, with
United National Bank as the surviving entity. United National Bank will continue
to operate as a wholly-owned subsidiary of United.
At the time the merger becomes effective, each of Arlyn D. Rus,
currently age 58, and William T. Kelleher, Jr., currently age 47, will become a
director of both United and United National Bank. Mr. Rus is currently Chairman,
President and Chief Executive Officer of both Raritan and The Raritan Savings
Bank. Mr. Rus
46
<PAGE>
also presently serves as a member of the Board of Directors of the New Jersey
League Savings and Community Bankers, and as a Director of Somerset Health Care
Corporation. Mr. Kelleher is currently a director of Raritan. Mr. Kelleher has
served as a Director of Raritan since 1987 and of The Raritan Savings Bank since
1983. Mr. Kelleher is a partner in the law firm of Kelleher and Moore, and has
served as a municipal court judge in the Borough of Somerville, New Jersey
since 1983 and in the Township of Branchburg since 1990.
Exchange of Certificates
- ------------------------
When the merger takes effect, no one will any longer have any rights as
a Raritan stockholder. Certificates that represented shares of Raritan common
stock automatically will represent the shares of United common stock into which
the merger converts those shares of Raritan common stock.
Promptly after the merger takes effect, United will have its exchange
agent send written instructions and a letter of transmittal to each holder of
Raritan common stock, indicating how to exchange Raritan stock certificates for
the United stock certificates. RARITAN STOCKHOLDERS SHOULD NOT SEND IN THEIR
STOCK CERTIFICATES UNTIL THEY RECEIVE INSTRUCTIONS FROM THE EXCHANGE AGENT.
Each share of United common stock issued in exchange for Raritan common
stock will be deemed to have been issued at the time the merger becomes
effective. Thus, Raritan stockholders who receive United common stock in the
merger will be entitled to receive any dividend or other distribution which may
be payable to holders of record of United common stock as of any date on or
after the time the merger becomes effective. However, no dividend or other
distribution will actually be paid with respect to any shares of United common
stock until the certificates formerly representing shares of Raritan common
stock have been surrendered, at which time any accrued dividends and other
distributions on such shares of United common stock will be paid without
interest. See "Consideration; Exchange Ratio; Cash instead of Fractional Shares"
on page 26.
Raritan stockholders, promptly after they surrender their Raritan stock
certificates to the exchange agent, will receive a certificate representing the
full number of shares of United common stock into which their shares of Raritan
common stock have been converted. At the time the new stock certificate is
issued, a check for the amount of the fractional share interest, if any, will
also be issued to each former Raritan stockholder.
Amendments
- ----------
United and Raritan may amend the merger agreement by mutual written
consent at any time prior to the time of the merger. However, Delaware law would
require Raritan to get approval from its stockholders of certain types of
amendments, such as an amendment that would decrease the exchange ratio.
47
<PAGE>
Termination
- -----------
Raritan and United may terminate the merger agreement at any time by
mutual consent.
Either Raritan or United may terminate the merger agreement for certain
reasons, including the following:
* the merger has not been completed by June 30, 1999;
* the Raritan or United shareholders fail to approve the merger
agreement at their meetings; or
* a regulatory approval needed to complete the merger has been denied
or withdrawn.
United may terminate the merger agreement if:
* there has been a material adverse change in Raritan's business,
operations, assets or financial condition since the date of the
merger agreement;
* Raritan materially breaches the merger agreement; or
* a regulatory approval needed to complete the merger is given with
conditions which materially impair the value of Raritan to United.
Raritan may terminate the merger agreement if:
* there has been a material adverse change in United's business,
operations, assets or financial condition since the date of the
merger agreement; or
* United materially breaches the merger agreement.
Upon a termination of the merger agreement, the merger and other
transactions contemplated by the merger agreement will be abandoned without
further action by any party and each party will bear its own expenses.
Special Termination Provisions
- ------------------------------
The merger agreement also contains provisions designed to let the
Raritan Board terminate the agreement upon a "Termination Event," which is when
both of the following occurs
* the price of United common stock falls by more than 15% from its level on
September 21, 1998, which was $23.807 after adjusting for United's 10% stock
dividend paid on November 2, 1998,
and
* the percentage drop in the price of United common stock is at least 10% more
than the percentage drop in an index of 20 comparable bank stocks. For
example, if the bank stock index falls by 8%, United common stock would have
to fall by more than 18% for the second test to be met.
48
<PAGE>
These particular termination provisions are also designed to let United
override the termination by increasing the exchange ratio to a level that would
give Raritan stockholders consideration with the minimum value they could have
received without triggering the termination provisions.
It is not possible to know whether a Termination Event will occur
before the Raritan stockholders vote at the Raritan meeting. WE CANNOT ASSURE
YOU EITHER THAT THE RARITAN BOARD WOULD EXERCISE ITS RIGHT TO TERMINATE THE
MERGER AGREEMENT IF A TERMINATION EVENT OCCURS, OR THAT UNITED WOULD INCREASE
THE EXCHANGE RATIO TO OVERRIDE ANY SUCH TERMINATION BY RARITAN.
The Raritan Board has not determined if it would exercise its right to
terminate the merger agreement upon a Termination Event. Similarly, the United
Board has not determined if it would increase the exchange ratio to override any
termination by Raritan upon a Termination Event. In making these determinations,
each board would, consistent with its fiduciary duties, take into account all
relevant facts and circumstances that exist at the time and would consult with
its financial advisors and legal counsel. By approving the merger agreement, the
stockholders of Raritan will give the Raritan Board the power, consistent with
its fiduciary duties, to complete the merger following a Termination Event
without any further action by, or resolicitation of, the Raritan stockholders.
By approving the merger agreement, the stockholders of United will give the
United Board the power, consistent with its fiduciary duties, to increase the
exchange ratio and complete the merger following a Termination Event and a
Raritan termination without any further action by, or resolicitation of, the
United stockholders.
The working of these special termination provisions can be explained
using the following definitions:
"Determination Date"-- the first day that all material conditions to
closing the merger have been met.
"Determination Price" -- the average of the closing prices for United
common stock for the ten trading days ending with the Determination Date.
"United Average Starting Date Price" -- the average of high and low
sale price of United common stock on September 21, 1998 (i.e., $26.188),
adjusted to reflect any stock split, stock dividend or similar event affecting
United common stock through the closing of the merger. Following United's 10%
stock dividend in November 1998, the United Average Starting Date Price was
adjusted to $23.807.
"United Floor Price" -- 85% of the United Average Starting Date Price.
"United Ratio" -- the number obtained by dividing the Determination
Price by the United Average Starting Date Price.
"Index Price" -- the number obtained using the index of 20 financial
institutions set forth on Exhibit B to the merger agreement.
"Index Ratio" -- the number obtained by dividing the Index Price on the
Determination Date by the Index Price on September 21, 1998, and then
subtracting 0.10.
49
<PAGE>
Using these definitions, there is a "Termination Event" only if both of
the following are true:
* The Determination Price is less than the United Floor Price
and
* The United Ratio is less than the Index Ratio.
Under the merger agreement, Raritan has three business days following
the Determination Date to exercise its termination rights based on a Termination
Event. United then has two business days to override the termination, if it so
chooses, by increasing the exchange ratio so that it equals the lesser of the
following two amounts:
(1) a number (rounded to four decimals) equal to a fraction in which
the numerator is the United Floor Price multiplied by the exchange ratio
then in effect and the denominator is the Determination Price, and
(2) a number (rounded to four decimals) equal to a fraction in which
the numerator is the Index Ratio multiplied by the exchange ratio then in
effect and the denominator is the United Ratio.
Accounting Treatment of the Merger
- ----------------------------------
United expects to account for the merger under the pooling of interests
method of accounting in accordance with generally accepted accounting
principles. Each party's obligation to consummate the merger is conditioned upon
United's receiving a letter from its independent public accountants that the
merger qualifies for such accounting treatment. Under pooling of interests
accounting treatment, as of the time the merger becomes effective the assets and
liabilities of Raritan would be added to those of United at their recorded book
values and the stockholders' equity accounts of United and Raritan would be
combined on United's consolidated balance sheet. On a pooling of interests
accounting basis, income and other financial statements of United issued after
the merger is completed would be restated retroactively to reflect the
consolidated combined financial position and results of operations of United and
Raritan as if the merger had taken place prior to the periods covered by such
financial statements. The pro forma financial information contained in this
joint proxy statement has been prepared using the pooling of interests
accounting method to account for the merger. See "Pro Forma Financial
Information" beginning on page 52.
Both the pooling-of-interests and purchase methods of accounting are
acceptable methods of recording business combinations. However, they are not
alternative choices in accounting for the same transaction. If all the criteria
for recording a transaction as a pooling are met, the transaction must be so
recorded. The method of accounting for a business combination can have a
significant effect on the reported earnings and financial condition of a
company. Typically, pooling accounting will result in higher reported earnings
for the acquiring company both in the year the merger closes and in future
years, when compared with purchase accounting. Typically, pooling accounting
will result in lower net worth being reported by the acquiring company following
the merger. United anticipates that the higher reported earnings likely to
result from the use of pooling-of-interest accounting in this acquisition may
have a positive effect on the market valuation for United common stock.
50
<PAGE>
Federal Income Tax Consequences
- -------------------------------
THE FOLLOWING IS A DISCUSSION OF THE MATERIAL FEDERAL INCOME TAX
CONSEQUENCES OF THE MERGER. THE DISCUSSION MAY NOT APPLY TO SPECIAL SITUATIONS,
SUCH AS THOSE OF ANY RARITAN STOCKHOLDERS
* WHO RECEIVED UNITED COMMON STOCK UPON THE EXERCISE OF EMPLOYEE STOCK
OPTIONS OR OTHERWISE AS COMPENSATION,
* THAT HOLD RARITAN COMMON STOCK AS PART OF A "STRADDLE" OR "CONVERSION
TRANSACTION", OR
* THAT ARE INSURANCE COMPANIES, SECURITIES DEALERS, FINANCIAL
INSTITUTIONS OR FOREIGN PERSONS.
THIS DISCUSSION DOES NOT ADDRESS ANY ASPECTS OF STATE, LOCAL OR FOREIGN
TAXATION. IT IS BASED UPON LAWS, REGULATIONS, RULINGS AND DECISIONS NOW IN
EFFECT AND ON PROPOSED REGULATIONS. ALL OF THESE ARE SUBJECT TO CHANGE BY
LEGISLATION, ADMINISTRATIVE ACTION OR JUDICIAL DECISION, AND THE CHANGES COULD
HAVE RETROACTIVE EFFECTS. NO RULING HAS BEEN OR WILL BE REQUESTED FROM THE
INTERNAL REVENUE SERVICE ON ANY TAX MATTER RELATING TO THE TAX CONSEQUENCES OF
THE MERGER.
As an exhibit to the Registration Statement of which this joint proxy
statement is a part, Pitney, Hardin, Kipp & Szuch, counsel to United, have
advised United and Raritan in an opinion dated the date of this joint proxy
statement that:
* the merger will be treated for federal income tax purposes as a
reorganization qualifying under the provisions of Section 368 of the
Internal Revenue Code of 1986, as amended.
* Raritan will not recognize any gain or loss.
* Raritan stockholders will not recognize any gain or loss for federal
income tax purposes upon the exchange in the merger of shares of
Raritan common stock solely for United common stock (except with
respect to cash received instead of a fractional share interest in
United common stock).
* The basis of United common stock received in the merger by Raritan
stockholders (including the basis of any fractional share interest
in United common stock) will be the same as the basis of the shares
of Raritan common stock that they surrendered in exchange therefor.
* The holding period of United common stock will include the holding
period during which the shares of Raritan common stock surrendered
in exchange therefor were held by the Raritan stockholder, provided
those shares of Raritan common stock were held as capital assets.
* Cash received by a holder of Raritan common stock instead of a
fractional share interest in United common stock will be treated as
received in exchange for such fractional share interest. If the
fractional share would have constituted a capital asset in hands of
that holder, the holder generally should recognize a capital gain or
loss equal to the amount of cash received, less the portion of the
adjusted tax basis in Raritan common stock allocable to the
fractional share interest.
Consummation of the merger is conditioned, among other things, on receipt
by each of United and Raritan of an opinion of Pitney, Hardin, Kipp & Szuch,
dated the closing date of the merger, to the same effect. If this condition is
waived, i.e. if the merger is not necessarily tax-free but United and Raritan
wish to consummate it anyway, Raritan will resolicit its stockholders' vote on
the merger.
51
<PAGE>
The opinions of Pitney, Hardin, Kipp & Szuch summarized above are or
will be based, among other things, on representations contained in certificates
of officers of Raritan and United.
BECAUSE CERTAIN TAX CONSEQUENCES OF THE MERGER MAY VARY DEPENDING UPON
THE PARTICULAR CIRCUMSTANCES OF EACH HOLDER OF RARITAN COMMON STOCK, AND OTHER
FACTORS, EACH RARITAN STOCKHOLDER IS URGED TO CONSULT HIS OR HER OWN TAX ADVISOR
TO DETERMINE THE PARTICULAR TAX CONSEQUENCES TO THE STOCKHOLDER OF THE MERGER
INCLUDING THE APPLICATION AND EFFECT OF STATE AND LOCAL INCOME AND OTHER TAX
LAWS.
No Dissenters' Rights
- ---------------------
Under applicable New Jersey and Delaware law, neither United nor
Raritan stockholders have dissenters' rights of appraisal in connection with the
merger.
PRO FORMA FINANCIAL INFORMATION
The following unaudited pro forma combined financial information takes
into account United's recently completed acquisition of State Bank of South
Orange in addition to the pending acquisition of Raritan. The State Bank of
South Orange merger was consummated on September 30, 1998 and was accounted for
as a pooling of interests. Accordingly, the following unaudited pro forma
combined financial information presents Pro Forma Combined Condensed Statements
of Condition of United and Raritan at September 30, 1998, giving effect to the
merger as if it had been consummated at such date. Also presented are the Pro
Forma Combined Condensed Statements of Income for the nine months ended
September 30, 1998 and the years ended December 31, 1997, 1996 and 1995 giving
effect to State Bank of South Orange merger and the merger as if each were
consummated on January 1 of each year. The unaudited pro forma financial
information is based on the historical financial statements of United, State
Bank of South Orange and Raritan after giving effect to State Bank of South
Orange merger and the merger under the pooling-of-interests method of accounting
and based upon the assumptions and adjustments contained in the accompanying
Notes to Pro Forma Combined Condensed Financial Statements.
United management has prepared the unaudited pro forma financial
information based upon
* the historical financial statements and related notes thereto of
United and Raritan incorporated herein by reference, and
* the historical financial statements and related notes thereto of
State Bank of South Orange.
The unaudited pro forma financial information should be read in conjunction with
those historical financial statements and notes. The Pro Forma Combined
Condensed Statements of Income are not necessarily indicative of operating
results that would have been achieved had either the State Bank of South Orange
merger or the Raritan merger been consummated as of the beginning of the periods
for which such data are presented and should not be construed as being
representative of future periods.
The pro forma financial information does not give effect to anticipated
cost savings of the merger. In addition one-time merger related charges which
either have been or will be incurred in connection with the merger have not been
reflected in the Pro Forma Statements of Income but have been reflected as of
September 30, 1998 in the Pro Forma Statements of Condition.
52
<PAGE>
<TABLE>
<CAPTION>
PRO FORMA COMBINED CONDENSED STATEMENTS OF CONDITION
September 30, 1998
(Unaudited)
United and
Pro Forma Raritan
United (4) Raritan Adjustments Combined
----------------- -------------- --------------------- ------------
(Dollar Amounts in Thousands, except per share data)
-----------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS
Cash and Due from Banks $ 44,697 $ 9,454 $ -- $ 54,151
Federal Funds Sold 55,725 44,500 -- 100,225
Securities Available for Sale, at Market Value 591,170 33,403 (2,777)(1) 621,796
Securities Held to Maturity 45,348 23,645 -- 68,993
Trading Account Securities, at Market Value 1,043 -- -- 1,043
Loans (Net of Unearned Income) 709,067 306,153 -- 1,015,220
Less: Allowance for Possible Loan Losses (7,359) (3,774) -- (11,133)
Other Assets 77,019 20,174 500 (3) 97,693
================ ============ =========== ================
Total Assets $ 1,516,710 $ 433,555 $ (2,277) $ 1,947,988
================ ============ =========== ================
LIABILITIES
Deposits $ 1,124,530 $ 359,491 $ -- $ 1,484,021
Other Borrowed Funds 224,011 35,000 -- 259,011
Other Liabilities 21,771 5,481 7,966 (1)(3) 35,218
----------------
------------ ----------- ----------------
Total Liabilities 1,370,312 399,972 7,966 1,778,250
---------------- ------------ ----------- ----------------
Company-Obligated Mandatorily Redeemable Preferred
Series B Capital Securities of a Subsidiary
Trust Holding Junior Subordinated Debentures
of the Company
20,000 -- -- 20,000
STOCKHOLDERS' EQUITY
Common Stock 13,989 26 4,703 (2) 18,718
Additional Paid-In Capital 104,263 11,280 (8,149)(1)(2) 107,394
Retained Earnings -- 23,762 (8,028)(3)(2) 15,734
Treasury Stock (1,352) (1,748) 1,748 (2) (1,352)
Restricted Stock (64) (195) 195 (3) (64)
Accumulated Other Comprehensive
Income (Loss) 9,562 458 (712)(1) 9,308
---------------- ------------ ----------- ----------------
Total Stockholders' Equity 126,398 33,583 (10,243) 149,738
---------------- ------------ ----------- ----------------
Total Liabilities and Stockholders' Equity $ 1,516,710 $ 433,555 $ (2,277) $ 1,947,988
================ =========== =========== ===============
</TABLE>
(1) Reflects the elimination of 84,150 shares of Raritan common stock owned by
United at September 30, 1998.
(2) The Pro Forma Combined Condensed Statements of Condition gives effect to
the merger by combining the respective balance sheets of United and
Raritan at September 30, 1998 on a pooling-of interests basis. The capital
accounts have been adjusted to reflect the issuance of 3,782,991 shares of
United in exchange for all the outstanding shares of Raritan and the
retirement of Raritan treasury stock.
(3) Reflects charges of approximately $10,005,000, $7,833,000 net of taxes,
which primarily includes estimated severance and outplacement costs of
$6,705,000, investment banker and other professional fees of $2,270,000,
expenses related to facilities closures and fixed asset disposals of
$670,000 and consolidation costs directly attributable to the merger of
$360,000.
(4) Includes the Statement of Condition of State Bank of South Orange, which
merger was consummated as of September 30, 1998.
53
<PAGE>
<TABLE>
<CAPTION>
PRO FORMA COMBINED CONDENSED STATEMENTS OF INCOME
For the Nine Months Ended September 30, 1998
(Unaudited)
United and
Pro Forma Raritan
United (2) Raritan Adjustments Combined
----------------------- ---------------- --------------- ----------------------
(Dollar amounts in thousands, except per share data)
<S> <C> <C> <C> <C>
Total Interest Income $ 76,856 $ 22,323 $ -- $ 99,179
Total Interest Expense 33,989 12,366 -- 46,355
------------------ ------------------ ----------- -------------------
Net Interest Income 42,867 9,957 -- 52,824
Provision for Possible Loan Losses 2,169 225 -- 2,394
------------------ ------------------ ----------- -------------------
Net Interest Income After Provision
For Possible Loan Losses 40,698 9,732 -- 50,430
Total Non-Interest Income 15,500 1,140 -- 16,640
Total Non-Interest Expense 41,414 6,304 -- 47,718
------------------ ------------------ ----------- -------------------
Income Before Income Taxes 14,784 4,568 -- 19,352
Provision for Income Taxes 4,339 1,358 -- 5,697
================== ================== =========== ===================
NET INCOME $ 10,445 $ 3,210 $ -- $ 13,655
================== ================== =========== ===================
EARNINGS PER COMMON
SHARE: (1)
Basic $ 0.94 $ 1.35 $ 0.92
================== ================== ===================
Diluted $ 0.93 $ 1.27 $ 0.89
================== ================== ===================
Weighted Average Number of
Shares Outstanding:
Basic 11,083,000 2,369,608 14,862,525
================== ================== ===================
Diluted 11,255,000 2,537,417 15,302,180
================== ================== ===================
</TABLE>
(1) The historical earnings per share of United and Raritan have been restated
to give retroactive effect to stock dividends and splits.
(2) Includes the financial results of State Bank of South Orange, which merger
was consummated as of September 30, 1998.
54
<PAGE>
<TABLE>
<CAPTION>
PRO FORMA COMBINED CONDENSED STATEMENTS OF INCOME
For the Year Ended December 31, 1997
(Unaudited)
United and
State State Bank
Bank of of South United and
South Pro Forma Orange Pro Forma Raritan
United Orange Adjustments Combined Raritan Adjustments Combined
------------ ---------- ----------- ------------ ----------- ----------- ----------
(Dollar amounts in thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C> <C>
Total Interest Income $ 88,577 $ 5,182 $ -- $ 93,759 $ 27,647 $ -- $ 121,406
Total Interest Expense 36,700 2,241 -- 38,941 14,525 -- 53,466
----------- --------- --------- ----------- ----------- -------- -----------
Net Interest Income 51,877 2,941 -- 54,818 13,122 -- 67,940
Provision for Possible Loan Losses 3,600 232 -- 3,832 600 4,432
----------- --------- --------- ----------- ----------- -------- -----------
Net Interest Income After Provision for
Possible Loan Losses 48,277 2,709 -- 50,986 12,522 -- 63,508
Total Non-Interest Income 19,388 589 -- 19,977 1,049 -- 21,026
Total Non-Interest Expense 47,420 2,168 -- 49,588 7,464 -- 57,052
----------- --------- --------- ----------- ----------- -------- -----------
Income Before Income Taxes 20,245 1,130 -- 21,375 6,107 -- 27,482
Provision for Income Taxes 6,365 471 -- 6,836 2,199 -- 9,035
--------- --------- -----------
=========== =========== ======== ===========
NET INCOME 13,880 $ 659 -- 14,539 3,908 $ -- $ 18,447
=========== ========= ========= =========== =========== ======== ===========
EARNINGS PER COMMON SHARE: (1)
Basic 1.36 $ 1.03 1.31 1.66 $ 1.25
=========== ========= =========== =========== ===========
Diluted 1.35 $ 1.03 1.30 1.54 $ 1.21
=========== ========= =========== =========== ===========
Weighted Average Number of Shares
Outstanding:
Basic 10,193,075 639,575 11,068,973 2,349,191 14,815,933
=========== ========= =========== =========== ===========
Diluted 10,301,158 639,575 11,177,056 2,531,981 15,215,566
=========== ========= =========== =========== ===========
</TABLE>
(1) The historical earnings per share of United and Raritan have been restated
to give retroactive effect to stock dividends and splits.
55
<PAGE>
<TABLE>
<CAPTION>
PRO FORMA COMBINED CONDENSED STATEMENTS OF INCOME
For the Year Ended December 31, 1996
(Unaudited)
United and
State State Bank United
Bank of of South Bank and
South Pro Forma Orange Pro Forma Raritan
United Orange Adjustments Combined Raritan Adjustments Combined
------------ ----------- ----------- ------------- ------------ ----------- --------
(Dollar amounts in thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C> <C>
Total Interest Income $ 79,360 $ 4,691 $ -- $ 84,051 $ 24,931 $ -- $ 108,982
Total Interest Expense 30,130 2,051 -- 32,181 12,857 -- 45,038
----------- ----------- -------- ------------ ------------ -------- ----------
Net Interest Income 49,230 2,640 -- 51,870 12,074 -- 63,944
Provision for Possible Loan Losses 3,049 192 -- 3,241 450 -- 3,691
----------- ----------- -------- ------------ ------------ -------- ----------
Net Interest Income After Provision
for 46,181 2,448 -- 48,629 11,624 -- 60,253
Possible Loan Losses
Total Non-Interest Income 15,546 540 -- 16,086 720 -- 16,806
Total Non-Interest Expense 43,102 1,949 -- 45,051 7,423 -- 52,474
----------- ----------- -------- ------------ ------------ -------- ----------
Income Before Income Taxes 18,625 1,039 -- 19,664 4,921 -- 24,585
Provision for Income Taxes 6,345 251 205 (2) 6,801 1,813 -- 8,614
=========== =========== ======== ============ ============ ======== ==========
NET INCOME $ 12,280 $ 788 $ (205) 12,863 $ 3,108 $ -- $ 15,971
=========== =========== ======== ============ ============ ======== ==========
EARNINGS PER COMMON SHARE: (1)
Basic $ 1.21 $ 1.23 1.17 $ 1.39 $ 1.09
=========== =========== ============ ============ ==========
Diluted $ 1.21 $ 1.23 1.16 $ 1.27 $ 1.07
=========== =========== ============ ============ ==========
Weighted Average Number of Shares
Outstanding:
Basic 10,140,781 639,575 11,016,679 2,242,258 14,593,081
=========== =========== ============ ============ ==========
Diluted 10,190,091 639,575 11,065,989 2,437,694 14,954,111
=========== =========== ============ ============ ==========
</TABLE>
(1) The historical earnings per share of United and Raritan have been restated
to give retroactive effect to stock dividends and splits.
(2) The pro forma adjustment to the provision for income taxes relates to the
reversal of tax benefits previously recognized by State Bank of South
Orange in 1996 and 1995 as a result of State Bank of South Orange's
reversal of its valuation allowance on deferred tax assets. State Bank of
South Orange established a valuation allowance on its deferred tax assets
upon adoption of Statement of Financial Accounting Standards ("SFAS") No.
109 in 1994 due to uncertainties regarding State Bank of South Orange's
ability to realize its deferred tax assets. Subsequently, as a result of
improved profitability in 1995 and 1996, the valuation allowance was
reversed, resulting in significant income tax benefits in both years.
The valuation allowance that existed as of December 31, 1994 is not needed
on a pro forma basis. The evaluation of the need for a valuation allowance
is based on the combined results of United and State Bank of South Orange.
United files consolidated tax returns with its subsidiaries, and therefore
any losses sustained by State Bank of South Orange would be offset by
profits of United and its other subsidiaries. No valuation allowance would
have been required as of December 31, 1994 had the companies always been
combined. Accordingly, the pro forma financial statements include a pro
forma adjustment to reflect what the changes to the valuation allowance
would have been had the companies always been combined.
56
<PAGE>
<TABLE>
<CAPTION>
PRO FORMA COMBINED CONDENSED STATEMENTS OF INCOME
For the Year Ended December 31, 1995
(Unaudited)
United
and
State State
State Bank of United
Bank of South and
South Pro Forma Orange Pro Forma Raritan
United Orange Adjustments Combined Raritan Adjustments Combined
----------- ---------- --------------- ---------- ------------- ----------- ---------
(Dollars in thousands, except per share data)
<S> <C> <C> <C> <C> <C>
Total Interest Income $ 77,552 $ 4,427 $ -- $ 81,979 $ 23,456 -- $ 105,435
Total Interest Expense 30,104 2,012 -- 32,116 13,007 -- 45,123
----------- ----------- --------- ----------- ----------- --------- ------------
Net Interest Income 47,448 2,415 -- 49,863 10,449 -- 60,312
Provision for Possible Loan Losses 871 227 -- 1,098 300 -- 1,398
----------- ----------- --------- ----------- ----------- --------- ------------
Net Interest Income After Provision
for 46,577 2,188 -- 48,765 10,149 -- 58,914
Possible Loan Losses
Total Non-Interest Income 14,653 505 -- 15,158 658 -- 15,816
Total Non-Interest Expense 47,429 1,942 -- 49,371 6,593 -- 55,964
----------- ----------- --------- ----------- ----------- --------- ------------
Income Before Income Taxes 13,801 751 -- 14,552 4,214 -- 18,766
Provision for Income Taxes 4,295 -- 256 (2) 4,551 1,542 -- 6,093
=========== =========== ========= =========== =========== ========= ============
NET INCOME $ 9,506 $ 751 $ (256) $ 10,001 $ 2,672 -- $ 12,673
=========== =========== ========= =========== =========== ========= ============
EARNINGS PER COMMON SHARE: (1)
Basic $ 0.94 $ 1.17 $ 0.91 $ 1.17 $ 0.87
=========== =========== =========== =========== ============
Diluted $ 0.94 $ 1.17 $ 0.91 $ 1.09 $ 0.85
=========== =========== =========== =========== ============
Weighted Average Number of Shares
Outstanding:
Basic 10,085,368 639,575 10,961,266 2,277,781 14,594,327
=========== =========== =========== =========== ============
Diluted 10,122,829 639,575 10,998,727 2,453,221 14,911,614
=========== =========== =========== =========== ============
</TABLE>
(1) The historical earnings per share of United and Raritan have been restated
to give retroactive effect to stock dividends and splits.
(2) The pro forma adjustment to the provision for income taxes relates to the
reversal of tax benefits previously recognized by State Bank of South
Orange in 1996 and 1995 as a result of State Bank of South Orange's
reversal of its valuation allowance on deferred tax assets. State Bank of
South Orange established a valuation allowance on its deferred tax assets
upon adoption of Statement of Financial Accounting Standards ("SFAS") No.
109 in 1994 due to uncertainties regarding State Bank of South Orange's
ability to realize its deferred tax assets. Subsequently, as a result of
improved profitability in 1995 and 1996, the valuation allowance was
reversed, resulting in significant income tax benefits in both years.
The valuation allowance that existed as of December 31, 1994 is not needed
on a pro forma basis. The evaluation of the need for a valuation allowance
is based on the combined results of United and State Bank of South Orange.
United files consolidated tax returns with its subsidiaries, and therefore
any losses sustained by State Bank of South Orange would be offset by
profits of United and its other subsidiaries. No valuation allowance would
have been required as of December 31, 1994 had the companies always been
combined. Accordingly, the pro forma financial statements include a pro
forma adjustment to reflect what the changes to the valuation allowance
would have been had the companies always been combined.
57
<PAGE>
DESCRIPTION OF UNITED CAPITAL STOCK
The authorized capital stock of United consists of 16,000,000 shares of
United common stock and 1,000,000 shares of preferred stock. As of September 30,
1998, there were 11,191,116 shares of United common stock issued and
outstanding, including 103,734 treasury shares, adjusted for the 10% stock
dividend declared on September 15, 1998. There were no shares of United
Preferred Stock outstanding.
Common Stock
- ------------
United is a New Jersey general business corporation governed by the New
Jersey Business Corporation Act and a registered bank holding company under the
Bank Holding Company Act. The following description of United common stock sets
forth certain general terms of United common stock. See "Comparison of the
Rights of Shareholders of United and Raritan" for additional information
relevant to an understanding of the capital stock of United, including a
description of the New Jersey Stockholders Protection Act, which restricts
certain transactions involving an "interested shareholder" and a "resident
domestic corporation".
Dividend Rights
Holders of United common stock are entitled to dividends when, as and
if declared by the Board of Directors of United out of funds legally available
for the payment of dividends. The only statutory limitation is that such
dividends may not be paid when United is insolvent. Funds for the payment of
dividends by United must come primarily from the earnings of United's bank
subsidiary. Thus, as a practical matter, any restrictions on the ability of
United National Bank to pay dividends will act as restrictions on the amount of
funds available for payment of dividends by United.
As a national banking association, United National Bank is subject to
limitations on the amount of dividends it may pay to United, United National
Bank's only shareholder. Prior OCC approval is required to the extent the total
of all dividends to be declared by United National Bank in any calendar year
exceeds net profits, as defined, for that year combined with United National
Bank's retained net profits from the preceding two calendar years, less any
transfers to capital surplus. Under this limitation, United National Bank could
declare dividends in 1998 without prior approval of the OCC of up to $15 million
plus an amount equal to United National Bank's net profits for 1998 to the date
of such dividend declaration.
United is also subject to certain Federal Reserve Board policies which
may, in certain circumstances, limit its ability to pay dividends. These
policies require, among other things, that a bank holding company maintain a
minimum capital base. The Federal Reserve Board would most likely seek to
prohibit any dividend payment which would reduce a holding company's capital
below these minimum amounts.
Voting Rights
At meetings of shareholders, holders of United common stock are
entitled to one vote per share. The quorum for a shareholders' meeting is a
majority of the outstanding shares. Except as indicated below, actions and
authorizations to be taken or given by shareholders generally require the
approval of a majority of the votes cast by holders of United common stock at a
meeting at which a quorum is present.
The Board of Directors is divided into three classes of directors, each
class being as nearly equal in number of directors as possible. Approximately
one-third of the entire Board of Directors is elected each year and the
directors serve for terms of up to three years and, in all cases, until their
respective successors are duly elected and qualified. The exact number of
directors and the number constituting each class are fixed from time to time by
resolution adopted by a majority of the entire Board of Directors.
58
<PAGE>
Minimum Price Provision
United's Certificate of Incorporation contains a "minimum price"
provision. It prohibits certain types of transactions between United and an
Interested Person. An "Interested Person" is defined to include persons who,
together with their affiliates, own 3% or more of the voting power of United's
capital stock. Transactions with an Interested Person are permitted if one of
the following is true:
* The transaction is approved by a majority of Disinterested
Directors. "Disinterested Directors" are defined in the Certificate
of Incorporation as persons, other than the Interested Person, who
became directors before the Interested Person became an Interested
Person, or who were subsequently nominated for director by a
majority of other Disinterested Directors.
* The proposed Transaction is approved by two-thirds of the votes cast
by "Disinterested Shareholders," a term defined in the Certificate
of Incorporation.
* The Disinterested Shareholders are offered consideration equal to or
greater than an amount determined by a formula contained in the
Certificate of Incorporation.
Liquidation Rights
In the event of liquidation, dissolution or winding up of United,
holders of United common stock are entitled to share equally and ratably in
assets available for distribution after payment of debts and liabilities.
However, if shares of United Preferred Stock are outstanding at the time of
liquidation, those shares may have prior rights upon liquidation.
Assessment and Redemption
All outstanding shares of United common stock are fully paid and
nonassessable. The United common stock is not redeemable at the option of the
issuer or the holders thereof.
Preferred Stock
- ---------------
The United Board of Directors may issue from time to time shares of one
or more classes or series of preferred stock. The preferred stock provisions in
United's Certificate of Incorporation authorize what is commonly referred to as
"blank check" preferred stock. That is, subject to certain provisions in the
Certificate of Incorporation and certain limitations prescribed by law, the
United Board has full authority to adopt resolutions to issue the shares, fix
the number of shares and change the number of shares constituting any series or
class. The United Board also has authority, without a further shareholder vote,
to provide for or change the voting powers, designations, preferences and
relative, rights, qualifications, limitations or restrictions of the preferred
stock, including dividend rights, redemption terms, conversion rights and
liquidation preferences.
One of the effects of these provisions may be to enable the United
Board to deter or discourage an attempt to obtain control of United by means of
a tender offer, proxy contest, merger or otherwise, and thereby to protect the
continuity of United's management. The issuance of shares of preferred stock may
adversely affect the rights of the holders of United common stock. For example,
preferred stock may rank prior to United common stock as to dividend rights,
liquidation preference or both, may have full or limited voting rights and may
be convertible into shares of United common stock.
59
<PAGE>
COMPARISON OF THE RIGHTS OF SHAREHOLDERS OF UNITED AND RARITAN
United is a business corporation incorporated in New Jersey under the
New Jersey Business Corporation Act and Raritan is a business corporation
incorporated in Delaware under the Delaware General Corporation Law. Delaware
corporate law currently governs the rights of Raritan stockholders. At the time
the merger becomes effective, each Raritan stockholder will become a shareholder
of United and New Jersey corporate law governs the rights of shareholders of
United. The following is a comparison of certain provisions of New Jersey
corporate law and Delaware corporate law and the respective certificates of
incorporation and by-laws of each of Raritan and United. This summary does not
purport to be complete and is qualified in its entirety by reference the
Delaware General Corporation Law and the New Jersey Business Corporation Act,
which statutes may change from time to time, and the respective certificates of
incorporation and by-laws of United and Raritan, which also may be changed.
Voting Requirements
- -------------------
Under New Jersey corporate law, unless a greater vote is specified in
the certificate of incorporation, the affirmative vote of a majority of the
votes cast by shareholders entitled to vote on the matter is required to
approve:
* any amendment to a New Jersey corporation's certificate of
incorporation,
* the voluntary dissolution of the corporation,
* the sale or other disposition of all or substantially all of a
corporation's assets otherwise than in the ordinary course of
business, or
* the merger or consolidation of the corporation with another
corporation.
United's Certificate of Incorporation does not presently contain provisions
specifying a greater vote in certain circumstances.
The New Jersey Shareholders Protection Act limits certain transactions
involving an "interested shareholder" and a "resident domestic corporation." An
"interested shareholder" is one that is directly or indirectly a beneficial
owner of 10% or more of the voting power of the outstanding voting stock of a
resident domestic corporation. The New Jersey Shareholders Protection Act
prohibits certain business combinations between an interested shareholder and a
resident domestic corporation for a period of five years after the date the
interested shareholder acquired its stock, unless the business combination was
approved by the resident domestic corporation's board of directors prior to the
interested shareholder's stock acquisition date. After the five-year period
expires, the prohibition on certain business combinations continues unless (1)
the combination is approved by the affirmative vote of two-thirds of the voting
stock not beneficially owned by the interested shareholder, (2) the combination
is approved by the board prior to the interested shareholder's stock acquisition
date, or (3) certain fair price provisions are satisfied.
Set forth below is a summary of provisions in Raritan's Certificate of
Incorporation and Delaware corporate law that, under certain circumstances
require greater than a majority of the votes eligible to be cast or limit
certain voting rights.
Under Delaware Law, unless otherwise specified in the Certificate of
Incorporation of a Delaware corporation, the affirmative vote of a majority of
the outstanding stock entitled to vote thereon is required to approve:
* an amendment to the certificate of incorporation,
* the sale or other disposition of all or substantially all of the
assets of a corporation, or
* the merger or consolidation of a stock corporation with another
stock corporation.
With respect to the amendment of the Certificate of Incorporation, the
affirmative vote of a majority of the outstanding shares of stock of each class
entitled to vote thereon is also required.
60
<PAGE>
In accordance with Raritan's certificate of incorporation, record
holders of common stock who beneficially own in excess of 10% of the outstanding
shares of common stock are not entitled to any vote with respect to the shares
held in excess of the 10%. The 10% cap is referred to as the "Limit" in this
document.
Under Raritan's certificate of incorporation, record holders of common
stock who beneficially own in excess of 10% of the outstanding shares of common
stock are not entitled to any vote with respect to the shares held in excess of
the 10% limit. No Raritan stockholder exceeded the 10% limit on the record date
for the Raritan meeting to vote on the merger. The certificate of incorporation
authorizes Raritan's Board of Directors:
* to make all determinations necessary to implement and apply the 10%
limit, including determining whether persons or entities are acting
in concert, and
* to demand that any person who is reasonably believed to beneficially
own stock in excess of the 10% limit supply information to the Board
to enable it to implement and apply the limit.
Under Raritan's Certificate of Incorporation the affirmative vote of
the holders of at least 80% of the outstanding voting stock entitled to vote in
the election of directors, after giving effect to the Limit, is required for
certain business combinations, certain liquidations or dissolutions, and certain
reclassifications of securities.
Cumulative Voting
- -----------------
Under New Jersey corporate law, shareholders of a New Jersey
corporation do not have cumulative voting rights in the election of directors
unless the certificate of incorporation so provides. United's Certificate of
Incorporation does not presently provide for cumulative voting.
Under Delaware corporate law, shareholders of a Delaware corporation do
not have cumulative voting rights in the election of directors unless the
certificate of incorporation so provides. Raritan's Certificate of Incorporation
does not presently provide for cumulative voting.
Classified Board of Directors
- -----------------------------
New Jersey corporate law permits a New Jersey corporation to provide
for a classified board in its certificate of incorporation and United currently
has a classified Board of Directors. The United Board is divided into three
classes, with one class of directors generally elected for three-year terms at
each annual meeting. A vacancy on the United Board of Directors may be filled by
the affirmative vote of two-thirds of the directors remaining in office. All
appointees will assume the class in which the vacancy occurs.
Delaware corporate law permits a Delaware corporation to provide for a
classified board in its certificate of incorporation or bylaws. Raritan's
Certificate of Incorporation provides that the board is divided into three
classes, each of which contains approximately one-third of the whole number of
members of the board. Each class serves a staggered term, with approximately
one-third of the total number of directors being elected each year.
Rights of Dissenting Shareholders
- ---------------------------------
Shareholders of a New Jersey corporation who dissent from a merger,
consolidation, sale of all or substantially all of the corporation's assets or
certain other corporate transactions are generally entitled to appraisal rights.
No statutory right of appraisal exists, however, if:
* the stock of the New Jersey corporation is listed on a national
securities exchange,
* the stock of the New Jersey corporation is held of record by not
less than 1,000 holders, or
* the consideration to be received pursuant to the merger,
consolidation or sale consists of cash or securities or other
obligations which, after the transaction, will be listed on a
national securities exchange or held of record by not less than
1,000 holders.
61
<PAGE>
Shareholders of a surviving corporation generally do not have the right
to dissent from a plan of merger unless the merger requires approval as set
forth in certain sections of New Jersey corporate law. Shareholders of United do
not have dissenters' rights because United will be the surviving corporation,
and the merger does not require approval as set forth in applicable sections of
New Jersey corporate law.
Stockholders of a Delaware corporation who dissent from a merger or
consolidation of the corporation may be entitled to appraisal rights. There are
no statutory rights of appraisal with respect to stockholders of a corporation
who meet the following conditions:
(1) The shares held by the stockholders must either be:
* listed on a national securities exchange or designated as a
national market system security on an interdealer quotation
system by the National Association of Securities Dealers,
Inc., or;
* held of record by more than 2,000 stockholders, and;
(2) Such stockholders must receive either:
* shares of stock or depository receipts of the corporation
surviving or resulting from the merger or consolidation, or
* shares of stock or depository receipts of any other
corporation, and;
(3) At the effective date of the merger or consolidation the stock or
depository receipts received by the stockholders must be either:
* listed on a national securities exchange or designated as a
national market system security on an interdealer quotation
system by the National Association of Securities Dealers,
Inc., or
* held of record by more than 2,000 stockholders (or cash in
lieu of fractional share interests therein).
The exceptions from the Delaware statutory right of appraisal apply to the
Raritan common stock because the Raritan common stock is presently listed on
Nasdaq and the United common stock to be received pursuant to the merger is
presently listed on Nasdaq.
62
<PAGE>
Shareholder Consent to Corporate Action
- ---------------------------------------
Unless the certificate of incorporation provides otherwise, New Jersey
corporate law permits any action that can be taken at a shareholders' meeting,
other than the annual election of directors, to be taken without a meeting upon
the written consent of shareholders who would have been entitled to cast the
minimum number of votes necessary to authorize the action at a shareholders'
meeting at which all shareholders entitled to vote were present and voting.
United's Certificate of Incorporation presently is silent on this issue. The
annual election of directors, if not conducted at a shareholders' meeting, may
only be effected by unanimous written consent. Under New Jersey corporate law, a
shareholder vote on a plan of merger or consolidation may be effected only:
* at a shareholders' meeting,
* by unanimous written consent of all shareholders entitled to vote on
the issue with advance notice to any other shareholders, or
* by written consent of shareholders who would have been entitled to
cast the minimum number of votes necessary to authorize such action
at a meeting, together with advance notice to all other
shareholders.
Raritan's Certificate of Incorporation of Raritan provides that
stockholders' action cannot be effected by written consent.
Dividends
- ---------
New Jersey corporate law generally permits a corporation to declare and
pay dividends on its outstanding stock if the corporation is not insolvent and
would not become insolvent because of the dividend payment, and if the dividend
is not prohibited by restrictions in the company's certificate of incorporation.
United's Certificate of Incorporation does not presently contain any such
restriction. Funds for the payment of dividends by United must come primarily
from the earnings of United's bank subsidiary. Thus, as a practical matter, any
restrictions on the ability of United National Bank to pay dividends act as
restrictions on the amount of funds available for the payment of dividends by
United.
Delaware corporate law generally limits dividends by Raritan to an
amount equal to the excess of the net assets of Raritan (the amount by which
total assets exceed total liabilities) over its statutory capital, or if there
is no such excess, to its net profits for the current and/or immediately
preceding fiscal year. Because Raritan does not conduct any material activities
at the holding company level, its ability to pay dividends depends on capital
distributions from its subsidiaries.
By-laws
- -------
Under New Jersey corporate law, the board of directors of a New Jersey
corporation has the power to adopt, amend, or repeal the corporation's by-laws,
unless such powers are reserved in the certificate of incorporation to the
shareholders. United's Certificate of Incorporation does not presently reserve
such powers to shareholders.
Under Delaware corporate law, the stockholders of a Delaware
corporation have the power to adopt, amend, or repeal the corporation's by-laws,
unless such powers also are reserved in the certificate of incorporation to the
board of directors. The Board of Directors may amend Raritan's Bylaws.
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Limitations of Liability of Directors and Officers
- --------------------------------------------------
Under New Jersey corporate law, a New Jersey corporation may include in
its certificate of incorporation a provision which would, subject to the
limitations described below, eliminate or limit directors' or officers'
liability to the corporation or bank, as the case may be, or to its
shareholders, for monetary damage for breaches of their fiduciary duty of care.
A director or officer cannot be relieved from liability or otherwise indemnified
for any breach of duty based upon an act or omission
* in breach of such person's duty of loyalty to the entity or its
shareholders,
* not in good faith or involving a knowing violation of law, or
* resulting in receipt by such person of an improper personal benefit.
United's Certificate of Incorporation contains provisions which limit a
director's or officer's liability to the full extent permitted by New Jersey
law.
Under Delaware corporate law, a Delaware corporation may include in its
certificate of incorporation a provision which would, subject to the limitations
described below, eliminate or limit directors' or officers' liability to the
corporation or its shareholders, for monetary damage for breaches of their
fiduciary duty of care. A director cannot be relieved from liability or
otherwise indemnified
* for breach of the director's duty of loyalty,
* for acts or omissions not in good faith or involving intentional
misconduct or knowing violation of law,
* for willful or negligent conduct in paying dividends or repurchasing
stock out of other than lawfully available funds, or
* for any transaction from which the director derives an improper
personal benefit.
Raritan's Certificate of Incorporation contains provisions that limit a director
or officer's liability to the full extent permitted by Delaware law.
Minimum Price Provision
- -----------------------
Raritan's certificate of incorporation contains a provision similar to
United's "Minimum Price Provision" discussed on page 59. under the caption "--
Minimum Price Provision," except that it applies to transactions with owners of
more than 10% of Raritan's common stock.
Consideration of Acquisition Proposals
- --------------------------------------
New Jersey corporate law provides that in determining whether a
proposal or offer to acquire a corporation is in the best interest of the
corporation, the board may, in addition to considering the effects of any action
on shareholders, consider any of the following:
* the effects of the proposed action on the corporation's employees,
suppliers, creditors and customers;
* the effects on the community in which the corporation operates; and
* the long-term as well as short-term interests of the corporation and
its shareholders, including the possibility that those interests may
be served best by the continued independence of the corporation.
The statute further provides that if, based on those factors, the board
determines that any such offer is not in the best interest of the corporation,
it may reject the offer. These provisions may make it more difficult for a
shareholder to challenge the United Board's rejection of, and may facilitate the
Board's rejection of, an offer to acquire United.
There are no comparable provisions in Delaware corporate law. However,
Raritan's certificate of incorporation provides that, when evaluating any offer
by another person to acquire Raritan, the board may consider all relevant
factors, including, without limitation, the social and economic effect of
acceptance of such offer:
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* on the present and future customers and employees of Raritan and The
Raritan Savings Bank;
* on the communities in which Raritan and The Raritan Savings Bank
operate or are located;
* on the ability of Raritan to fulfill its corporate objective as a
bank holding company under applicable laws and regulations; and
* on the ability of The Raritan Savings Bank to fulfill the objectives
of a stock form savings bank under applicable statutes and
regulations.
Preferred Stock
- ---------------
United can issue new shares of authorized but unissued common stock or
preferred stock without shareholder approval, except in connection with certain
transactions with "Interested Persons." See "Description of United Capital
Stock."
SHAREHOLDER PROPOSALS
United
- ------
New Jersey corporate law requires that the notice of a regular or
special shareholders' meeting specify the purpose or purposes of such meeting.
Thus, a shareholder proposal must be referred to in United's notice of
shareholders' meeting for the proposal to be validly considered at a United
annual meeting.
Any United shareholder that wishes to have a proposal included in
United's notice of shareholders' meeting, proxy statement and proxy card for its
1999 annual meeting must submit the proposal to United by the applicable
deadline. The deadline was November 23, 1998 subject to change as noted below.
If United changes its 1999 annual meeting date to a date more than 30
days from the date of its 1998 annual meeting, then the deadline referred to in
the preceding paragraph will be changed to a reasonable time before United
begins to print and mail its proxy materials. If United changes the date of its
1999 annual meeting in a manner which alters the deadline, United will so state
under Item 5 of the first quarterly report on Form 10-Q it files with the SEC
after the date change.
Raritan
- -------
Raritan will hold its 1999 annual meeting only if the merger is not
completed. Any Raritan stockholder who wishes to have a proposal included in
Raritan's proxy statement and proxy card for its 1999 annual meeting must submit
the proposal to Raritan by the applicable deadline. The deadline was November
25, 1998 subject to change as noted below.
Any Raritan stockholder who wishes to have a proposal considered at
Raritan's 1999 annual meeting (but not included in Raritan's proxy materials)
must submit the proposal to Raritan by the applicable deadline. The deadline was
January 28, 1999, subject to change as noted below.
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If Raritan changes its 1999 annual meeting date to a date more than 30
days from the date of its 1998 annual meeting, then each of the deadlines
referred to in the preceding two paragraphs will be changed to a reasonable time
before Raritan begins to print and mail its proxy materials. If Raritan changes
the date of the 1999 annual meeting in a manner which alters the deadlines,
Raritan will so state under Item 5 of the first quarterly report on Form 10-Q it
files with the SEC after the date change.
INFORMATION INCORPORATED BY REFERENCE
The following documents filed by United (Company File No. 000-16931)
with the SEC are hereby incorporated in this joint proxy statement-prospectus:
* Annual Report on Form 10-K for the year ended December 31, 1997
* Quarterly Reports on Form 10-Q for the quarters ended March 31, June
30, 1998, and September 30, 1998
* Current Report on Form 8-K filed with the SEC on July 1, August 28,
September 22, September 23, September 28, October 1, 1998, November
18, 1998, February 4, 1999 and Form 8-K/A on February 17, 1999.
* The description of United common stock set forth in United's
Registration Statement on Form 8-A filed by United pursuant to
Section 12 of the Exchange Act, and any amendment or report filed
for the purpose of updating such description
The following documents filed by Raritan (Company File No. 0-15830)
with the SEC are hereby incorporated in this joint proxy statement-prospectus:
* Annual Report on Form 10-K for the year ended December 31, 1997
* Quarterly Reports on Form 10-Q for the quarters ended March 31, June
30, 1998 and September 30, 1998
* Current Reports on Form 8-K filed with the SEC on October 6, 1998
* The description of Raritan common stock set forth in Raritan's
Registration Statement on Form 8-A filed by Raritan pursuant to
Section 12 of the Exchange Act, and any amendment or report filed
for the purpose of updating such description
Accompanying this Joint Proxy Statement are Raritan's 1997 Annual
Report to Stockholders and its Quarterly Report on Form 10-Q for the quarter
ended September 30, 1998.
All documents filed by United or Raritan pursuant to Sections 13(a),
13(c), 14, or 15(d) of the Exchange Act after the date of this document but
before the earlier of
* the date of the Raritan meeting,
* the date of the United meeting, or
* the termination of the merger agreement, are hereby incorporated by
reference into this document and shall be deemed a part this
document from the date they are filed.
Any statement contained in a document incorporated by reference herein
shall be deemed to be modified or superseded for purposes of this joint proxy
statement prospectus to the extent that a statement contained herein or in any
subsequently filed document which is deemed to be incorporated by reference
herein modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this joint proxy statement prospectus.
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The public may read and copy any documents United or Raritan files with
the SEC at the SEC's Public Reference Room at 450 Fifth Street, N.W.,
Washington, DC 20549. The public may obtain information on the operation of the
Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC also
maintains an Internet site that contains reports, proxy and information
statements, and other information about United and Raritan at
http://www.sec.gov.
OTHER MATTERS
As of the date of this joint proxy statement, the Raritan Board of
Directors knows of no other matters to be presented for action by the
stockholders at the Raritan meeting. If any other matters are properly
presented, however, it is the intention of the persons named in the enclosed
proxy to vote in accordance with their best judgment on such matters.
As of the date of this joint proxy statement, the United Board of
Directors knows of no other matters to be presented for action by the
stockholders at the United meeting. If any other matters are properly presented,
however, it is the intention of the persons named in the enclosed proxy to vote
in accordance with their best judgment on such matters.
LEGAL OPINION
Certain legal matters relating to the issuance of the shares of United
common stock offered hereby and certain tax consequences of the merger will be
passed upon by Pitney, Hardin, Kipp & Szuch, counsel to United.
EXPERTS
The consolidated financial statements of Raritan as of December 31,
1997 and 1996 and for each of the years in the three-year period ended December
31, 1997 have been incorporated by reference herein and in the Registration
Statement in reliance upon the report of KPMG LLP, independent certified public
accountants, incorporated by reference herein, and upon the authority of said
firm as experts in accounting and auditing.
The consolidated financial statements of United as of December 31, 1997
and 1996 and for the years then ended have been incorporated by reference herein
and in the Registration Statement in reliance upon the report of KPMG LLP,
independent certified public accountants, incorporated by reference herein, and
upon the authority of said firm as experts in accounting and auditing.
The consolidated financial statements of United for the year ended
December 31, 1995, incorporated by reference herein, have been audited by Arthur
Andersen LLP, independent public accountants, as indicated in their reports with
respect thereto, and are incorporated by reference herein, in reliance upon the
authority of said firm as experts in giving said reports.
Representatives of KPMG LLP will be present at the meetings. They will
be given an opportunity to make a statement if they desire to do so and will be
available to respond to appropriate questions from shareholders present at the
meetings.
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APPENDIX A
AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER
THIS AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER, dated
as of September 22, 1998 ("Agreement"), is among United National Bancorp, a New
Jersey corporation and registered bank holding company ("United"), United
National Bank, a national banking association ("UNB"), Raritan Bancorp Inc., a
Delaware corporation and registered bank holding company ("Raritan") and The
Raritan Savings Bank, a New Jersey-chartered stock savings bank (the "Bank").
RECITALS
United desires to acquire Raritan and Raritan's Board of
Directors has determined, based upon the terms and conditions hereinafter set
forth, that the acquisition is in the best interests of Raritan and its
stockholders. The acquisition will be accomplished by merging Raritan into
United with United as the surviving corporation and, at the same time, merging
the Bank into UNB with UNB as the surviving bank, and Raritan stockholders
receiving the consideration hereinafter set forth. The Boards of Directors of
Raritan, United, the Bank and UNB have duly adopted and approved this Agreement
and the Board of Directors of Raritan has directed that it be submitted to its
stockholders for approval.
As a condition precedent to entering into this Agreement,
United has required that Raritan grant it an option to purchase authorized but
unissued shares of Raritan common stock and, as a consequence, United and
Raritan have entered into a Stock Option Agreement, dated the date hereof (the
"United Stock Option").
NOW, THEREFORE, 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 hereafter defined), Raritan shall be merged
with and into United (the "Merger") in accordance with the New Jersey Business
Corporation Act ("NJBCA") and the Delaware General Corporation Law ("DGCL") and
United shall be the surviving corporation (the "Surviving Corporation").
Immediately following the Effective Time, the Bank shall be merged with and into
UNB as provided in Section 1.7 hereof.
1.2. Effect of the Merger. At the Effective Time (as hereafter
defined), the Surviving Corporation shall be considered the same business and
corporate entity as each of Raritan and United and thereafter all the property,
rights, powers and franchises of each of Raritan and United shall vest in the
Surviving Corporation and the Surviving Corporation shall be subject to and be
deemed to have assumed all of the debts, liabilities, obligations and duties of
each of Raritan and United 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 Corporation.
1.3. Certificate of Incorporation. The certificate of
incorporation of United as it exists immediately prior to the Effective Time
shall not be amended by the Merger, but shall continue as the certificate of
incorporation of the Surviving Corporation until otherwise amended as provided
by law.
1.4. Bylaws. The bylaws of United as they exist immediately
prior to the Effective Date shall continue as the by-laws of the Surviving
Corporation until otherwise amended as provided by law.
1.5. Directors and Officers. The directors and officers of
United as of the Effective Time shall continue as the directors and officers of
the Surviving Corporation, with the additions provided for in Section 5.15
hereof.
1.6 Closing Date, Closing and Effective Time; Determination
Date. Unless a different date, time and/or place are agreed to by the parties
hereto, the closing of the Merger (the "Closing") shall take place at 10:00
a.m., at the office of Pitney, Hardin, Kipp & Szuch, Florham Park, New Jersey,
on a date (the "Closing Date") which shall be the fifth business day following
the first date (the "Determination 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, or at such other place,
time or date as United and Raritan may mutually agree upon. The Merger shall
become effective (and be consummated) upon the effective time (the "Effective
Time") specified by United and Raritan in the certificates of merger (the
"Certificates of Merger"), which shall be prepared by United, shall be in form
and substance satisfactory to United and Raritan, and shall be filed with the
Secretary of State of the State of New Jersey and with the Secretary of State of
the State of Delaware. The parties currently anticipate that the Certificates of
Merger shall specify as the effective time the close of business on the Closing
Date. If no effective time is specified in the Certificates of Merger, the
Merger shall become effective (and be consummated) upon the later to be filed of
the two Certificates of Merger.
1.7. The Bank Merger. Immediately following the Effective
Time, the Bank shall be merged with and into UNB (the "Bank Merger") in
accordance with the provisions of the National Bank Act and the New Jersey
Banking Act of 1948, as amended, and UNB shall be the surviving bank (the
"Surviving Bank"). Upon the consummation of the Bank Merger, the separate
existence of the Bank shall cease and the Surviving Bank shall be considered the
same business and corporate entity as each of the Bank and UNB and all of the
property, rights, powers and franchises of each of the Bank and UNB shall vest
in the Surviving Bank and the Surviving Bank shall be deemed to have assumed all
of the debts, liabilities, obligations and duties of each of the Bank 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. Upon
the consummation of the Bank Merger, the articles of association and bylaws of
UNB shall become the articles of association and bylaws of the Surviving Bank,
the officers and employees of UNB and the officers and employees of the Bank
shall be the officers and employees of the Surviving Bank with such additions as
the Board of Directors of UNB shall determine, and the directors of UNB shall be
the directors of the Surviving Bank with the additions from the directors of
Raritan as specified herein. In connection with the execution of this Agreement,
the Bank and UNB shall execute and deliver a separate merger agreement (the
"Bank Merger Agreement") in substantially the form of Exhibit A, annexed hereto,
for delivery to the appropriate regulatory authorities for approval of the Bank
Merger.
ARTICLE II
CONVERSION OF RARITAN COMMON STOCK AND OPTIONS
Each share of common stock, $.01 par value, of Raritan
("Raritan Common Stock"), issued and outstanding immediately prior to the
Effective Time, and each option to purchase shares of Raritan Common Stock
validly issued pursuant to the 1993 Stock Option Plan for Outside Directors, the
1993 Incentive Stock Option Plan or the 1997 Long-Term Incentive Stock Benefit
Plan (together, the "Raritan Option Plans") and outstanding immediately prior to
the Effective Time and listed on Section 3.2 of the Raritan Disclosure Schedule
(each a "Raritan Option") shall, by virtue of the Merger and without any action
on the part of the holder thereof, be converted or canceled at the Effective
Time in accordance with this Article II.
2.1 Conversion of Raritan Common Stock; Exchange Ratio; Cash
in Lieu of Fractional Shares. Each share of Raritan Common Stock issued and
outstanding immediately prior to the Effective Time, other than shares to be
canceled pursuant to Section 2.4 hereof, shall be converted into the right to
receive 1.45 (the "Exchange Ratio") shares of Common Stock, $1.25 par value, of
United ("United Common Stock"), subject to adjustment as set forth in Section
2.6 below. No fractional shares of United Common Stock shall be issued pursuant
to the Merger, and, in lieu thereof, each holder of Raritan Common Stock who
would otherwise be entitled to a fractional interest will receive an amount in
cash determined by multiplying such fractional interest by the Average
Pre-Closing Price of United Common Stock. The "Average Pre-Closing Price of
United Common Stock" means the average of the "Closing Prices" (as hereinafter
defined) of United Common Stock for the ten consecutive full trading days ending
on (and including) the Determination Date. "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 reported in
The Wall Street Journal or, if not reported thereby, another authoritative
source as chosen by United). A "trading day" shall mean any business day on
which United Common Stock is actually traded on NASDAQ/NMS.
2.2. Exchange of Shares.
(a) Raritan and United hereby appoint The Bank of New York, or
such other bank as United (with the consent of Raritan, which consent shall not
be unreasonably withheld) shall designate, as the exchange agent (the "Exchange
Agent") for purposes of effecting the conversion of Raritan Common Stock and
Raritan Options. As soon as practicable after the Effective Time, but no later
than five business days after the Effective Time, the Exchange Agent shall mail
to each holder of record (a "Record Holder") of a Certificates or Certificates
which, immediately prior to the Effective Time represented outstanding shares of
Raritan Common Stock (the "Certificates"), a mutually agreed upon letter of
transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Exchange Agent), and instructions for use in effecting the
surrender of the Certificates in exchange for United Common Stock (and cash in
lieu of fractional shares) as provided in Section 2.1 hereof.
(b) Upon surrender of Certificates 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 Certificates the consideration as provided in Section 2.1
hereof and the Certificates so surrendered shall be canceled. 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 Certificates for exchange or, in default
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 shall be deemed stockholders 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.)
(c) After the Effective Time, there shall be no transfers on
the stock transfer books of Raritan of the shares of Raritan 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
canceled and exchanged for the consideration as provided in Section 2.1 hereof.
(d) If payment of the consideration pursuant to Section 2.1
hereof is to be made in a name other than that in which the Certificates
surrendered in exchange therefor is registered, it shall be a condition of such
payment that the Certificates 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 Certificates
surrendered, or required for any other reason, or shall establish to the
satisfaction of the Exchange Agent that such tax has been paid or is not
payable.
(e) With respect to each outstanding Raritan Option the
Exchange Agent shall, after the Effective Time, distribute to the Optionee an
amendment to the option grant evidencing the conversion of the grant to an
option to purchase United Common Stock in accordance with Section 2.7 hereof.
2.3. No Dissenters' Rights. Consistent with the provisions of
the DGCL, no stockholder of Raritan shall have appraisal rights with respect to
the Merger.
2.4. Canceled Shares. Each share of Raritan Common Stock (i)
which is held by Raritan as treasury stock or (ii) which is held by Bank or any
other direct or indirect subsidiary of Bank (except as trustee or in a fiduciary
capacity) or (iii) which is held by United, shall be canceled and retired at the
Effective Time.
2.5. United Shares. The shares of United Common Stock
outstanding at the Effective Time shall not be affected by the Merger, but along
with the additional shares of United Common Stock to be issued as provided in
Section 2.1 hereof, shall become the outstanding common stock of the Surviving
Corporation.
2.6 Anti-Dilution Adjustments. The Exchange Ratio and the
Average Pre-Closing Price of United Common Stock shall be appropriately adjusted
for any stock split, stock dividend, stock combination, reclassification or
similar transaction ("Capital Change") effected by United with respect to United
Common Stock between the date hereof and the Effective Time. By way of
illustration, the Exchange Ratio determined pursuant to Section 2.1 hereof shall
be adjusted upward by 10% (to 1.595) upon the payment of the 10% stock dividend
which United declared on September 15, 1998 and which is payable on November 2,
1998 to United shareholders of record as of October 15, 1998. In addition, if
United enters into an agreement pursuant to which shares of United Common Stock
would be converted, prior to the Effective Time, into shares or other securities
or obligations of another corporation, proper provision shall be made in such
agreement so that each Raritan stockholder shall be entitled to receive at the
Effective Time such number of shares or other securities or amount of
obligations of such other corporation as such stockholder would be entitled to
receive if the Effective Time had occurred immediately prior to the consummation
of such conversion.
2.7. Raritan Stock Options. At the Effective Time, each
outstanding Raritan Option held by any person (an "Optionee") under the Raritan
Option Plans shall be converted into a option to purchase United Common Stock (a
"Stock Option"), wherein (x) the right to purchase shares of Raritan Common
Stock pursuant to the Raritan Option shall be converted into the right to
purchase that same number of shares of United Common Stock multiplied by the
Exchange Ratio, (y) the option exercise price per share of United Common Stock
shall be the previous option exercise price per share of Raritan Common Stock
divided by the Exchange Ratio and (z) in all other material respects the option
shall be subject to the same terms and conditions as governed the Raritan Option
on which it was based, including the length of time within which the option may
be exercised and for any options which are "incentive stock options" (as defined
in Section 422 of the Internal Revenue Code of 1986, as amended (the "Code")),
the adjustments shall be and are intended to be effected in a manner which is
consistent with Section 424(a) of the Code. Shares of United Common Stock
issuable upon exercise of Stock Options shall be covered by an effective
registration statement on Form S-8, and United shall file a registration
statement on Form S-8 covering such shares as soon as practicable after the
Effective Time, but in no event later than 45 days after the Effective Time.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF RARITAN
References herein to "Raritan 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 Raritan
to United. Raritan hereby represents and warrants to United as follows:
3.1. Corporate Organization.
(a) Raritan is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware. Raritan has the
corporate power and authority to own or lease all of its properties and assets
and to carry on its business as it is now being conducted and is duly licensed
or qualified to do business in each jurisdiction in which the nature of the
business conducted by it or the character or location of the properties and
assets owned or leased by it makes such licensing or qualification necessary,
except where the failure to be so licensed or qualified would not have a
material adverse effect on the business, operations, assets or financial
condition of Raritan on a consolidated basis. Raritan is registered as a bank
holding company under the Bank Holding Company Act of 1956, as amended ("BHCA").
(b) Each of the Subsidiaries of Raritan are listed in the
Raritan Disclosure Schedule. The term "Subsidiary", when used in this Agreement
with respect to Raritan, means any corporation, joint venture, association,
partnership, trust or other entity in which Raritan has, directly or indirectly
at least a 50% interest or acts as a general partner. Each Subsidiary of Raritan
is duly organized, validly existing and in good standing under the laws of its
state of incorporation. The Bank is a New Jersey-chartered stock savings bank
whose deposits are insured to the fullest extent permitted by law by the Savings
Association Insurance Fund of the Federal Deposit Insurance Corporation ("SAIF")
for certain deposits, and by the Bank Insurance Fund of the FDIC (the "BIF") for
the remaining deposits, in each case to the fullest extent permitted by law.
Each Subsidiary of Raritan has the corporate power and authority to own or lease
all of its properties and assets and to carry on its business as it is now being
conducted and is duly licensed or qualified to do business in each jurisdiction
in which the nature of the business conducted by it or the character or location
of the properties and assets owned or leased by it makes such licensing or
qualification necessary, except where the failure to be so licensed or qualified
would not have a material adverse effect on the business, operations, assets or
financial condition of Raritan and its Subsidiaries on a consolidated basis. The
Raritan Disclosure Schedule sets forth true and complete copies of the
Certificates of Incorporation or Charter, as the case may be, and Bylaws of
Raritan and each Raritan Subsidiary as in effect on the date hereof. Except as
set forth in the Raritan Disclosure Schedule, Raritan 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 (i) residential real estate acquired through foreclosure or deed in lieu
of foreclosure in each individual instance with a fair market value less than
$500,000 and (ii) real estate used for its banking premises.
3.2. Capitalization.
The authorized capital stock of Raritan consists of 3,500,000
shares of Raritan Common Stock and 2,00,000 shares of preferred stock, $.01 par
value per share ("Raritan Preferred Stock"). As of the date hereof, there were
2,373,569 shares of Raritan Common Stock issued and outstanding, and 214,405
shares issued and held in the treasury, and no shares of Raritan Preferred Stock
outstanding. As of the date hereof, there were 264,812 shares of Raritan Common
Stock issuable upon exercise of outstanding Raritan Options (the "Option
Shares") granted to, directors and officers of Raritan or the Bank pursuant to
the Raritan Option Plans. The Raritan Disclosure Schedule sets forth (i) all
options which may be exercised for issuance of Raritan Common Stock and the
terms upon which the options may be exercised, and (ii) true and complete copies
of each of the Raritan Option Plans and a specimen of each form of agreement
pursuant to which any outstanding stock option was granted, including a list of
each outstanding stock option issued pursuant thereto. All issued and
outstanding shares of Raritan Common Stock, and all issued and outstanding
shares of capital stock of each Raritan Subsidiary, have been duly authorized
and validly issued, are fully paid, and nonassessable. The authorized capital
stock of the Bank consists of 10,000,000 shares of common stock, $2.00 par value
and no shares of preferred stock. All of the outstanding shares of capital stock
of each Raritan Subsidiary are owned by Raritan and are free and clear of any
liens, encumbrances, charges, restrictions or rights of third parties. Except
for the Raritan Options and the United Stock Option, neither Raritan nor any
Raritan Subsidiary 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 Raritan or any
Raritan Subsidiary 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 purchase or 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 Raritan, and subject to
the parties obtaining all necessary regulatory approvals, Raritan and the Bank
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 Board of Directors of each of Raritan and the Bank. The execution and
delivery of the Bank Merger Agreement has been duly and validly approved by the
Board of Directors of the Bank. Except for the approvals described in paragraph
(b) below, no other corporate proceedings on the part of Raritan or the Bank are
necessary to consummate the transactions contemplated hereby. This Agreement has
been duly and validly executed and delivered by Raritan and the Bank, and
constitutes valid and binding obligations of Raritan and the Bank, enforceable
against Raritan and the Bank 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-chartered savings 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
Raritan and the Bank, nor the consummation by Raritan and the Bank of the
transactions contemplated hereby in accordance with the terms hereof, or
compliance by Raritan and the Bank with any of the terms or provisions hereof,
will (i) violate any provision of Raritan's or the Bank's Certificates of
Incorporation or Charter, as the case may be, 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 Raritan or the Bank or any of their respective properties or
assets, or (iii) except as set forth in the Raritan 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 respective properties or
assets of Raritan or the Bank 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 Raritan or the Bank is a party, or by
which either or both of them or any of their respective 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 Raritan and its
Subsidiaries on a consolidated basis, and which will not prevent or delay the
consummation of the transactions contemplated hereby. Except for consents and
approvals of or filings or registrations with or notices to the OCC, the
Commissioner of Banking and Insurance of the State of New Jersey (together with
the Department of Banking and Insurance, the "Commissioner"), the Board of
Governors of the Federal Reserve System ("FRB"), the Securities and Exchange
Commission ("SEC"), applicable state securities bureaus or commissions, the New
Jersey Secretary of State, the Delaware Secretary of State, and the stockholders
of Raritan, 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 Raritan or the Bank in connection with (x) the execution and delivery
by Raritan and the Bank of this Agreement and (y) the consummation by Raritan
and the Bank of the transactions contemplated hereby and (z) the execution and
delivery by the Bank of the Bank Merger Agreement and the consummation by the
Bank of the transactions contemplated thereby.
3.4. Financial Statements.
(a) The Raritan Disclosure Schedule sets forth copies of the
consolidated statements of condition of Raritan as of December 31, 1995, 1996
and 1997, and the related consolidated statements of income, stockholders'
equity and cash flows for the periods ended December 31 in each of the three
years 1995 through 1997, in each case accompanied by the audit report of KPMG
Peat Marwick LLP, independent public accountants with respect to Raritan, and
the unaudited consolidated statements of condition of Raritan as of June 30,
1998 and related unaudited consolidated statements of income, changes in
stockholders' equity and cash flows for the six months then ended as reported in
Raritan'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
"Raritan Financial Statements"). The Raritan Financial Statements (including the
related notes) have been prepared in accordance with generally accepted
accounting principles ("GAAP") consistently applied during the periods involved,
and fairly present the consolidated financial condition of Raritan as of the
respective dates set forth therein, and the related consolidated statements of
income, stockholders' equity and cash flows fairly present the results of the
consolidated operations, stockholders' equity and cash flows of Raritan for the
respective periods set forth therein.
(b) The books and records of Raritan and its Subsidiaries 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 Raritan Financial Statements (including the notes
thereto), as of June 30, 1998 neither Raritan nor any of its Subsidiaries had
any material liabilities, whether absolute, accrued, contingent or otherwise
material to the business, operations, assets or financial condition of Raritan
or any of its Subsidiaries. Since June 30, 1998 and to the date hereof, neither
Raritan nor any of its Subsidiaries have incurred any material liabilities
except in the ordinary course of business and consistent with prudent banking
practice, except as specifically contemplated by this Agreement.
3.5. Brokerage Fees; Financial Advisor. Other than The
Endicott Financial Advisors, L.L.C. ("Endicott"), neither Raritan nor any of its
Subsidiaries 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. Copies of Raritan's agreements with Endicott are set forth in the
Raritan Disclosure Schedule. Endicott has delivered to Raritan its written
opinion with respect to the fairness, from a financial point of view, of the
Exchange Ratio to the shareholders of Raritan in the Merger. 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 Raritan or any of its
Subsidiaries other than fees which will be payable by Raritan to Endicott.
3.6. Absence of Certain Changes or Events.
(a) There has not been any material adverse change in the
business, operations, assets or financial condition of Raritan and its
Subsidiaries on a consolidated basis since June 30, 1998 and, to Raritan's
knowledge, no facts or conditions exist (other than regional or national
economic conditions which affect financial institutions generally) which Raritan
believes will cause or is likely to cause such a material adverse change in the
future.
(b) Except as set forth in the Raritan Disclosure Schedule,
neither Raritan nor any of its Subsidiaries has taken or permitted any of the
actions set forth in Section 5.2 hereof between June 30, 1998 and the date
hereof and Raritan and the Raritan Subsidiaries have conducted their business
only in the ordinary course, consistent with past practice.
3.7. Legal Proceedings. Except as disclosed in the Raritan
Disclosure Schedule, neither Raritan nor any of its Subsidiaries is a party to
any, and there are no pending or, to Raritan's knowledge, threatened, legal,
administrative, arbitral or other proceedings, claims, actions or governmental
investigations of any nature ("Legal Proceedings") against Raritan or any of its
Subsidiaries. Except as disclosed in the Raritan Disclosure Schedule, neither
Raritan nor any of its Subsidiaries is a party to any order, judgment or decree
entered against Raritan or any Raritan Subsidiary in any Legal Proceeding.
3.8. Taxes and Tax Returns.
(a) Raritan and each Raritan Subsidiary have duly filed (and
until the Effective Time will so file) all returns, declarations, reports,
information returns and statements ("Returns") required to be filed by them in
respect of any federal, state and local taxes (including withholding taxes,
penalties or other payments required) and each 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 (and disclosed to United
in writing). Raritan and each Raritan Subsidiary have established (and until the
Effective Time will establish) on their books and records reserves for the
payment of all federal, state and local taxes not yet due and payable, but
incurred in respect of Raritan or any Raritan Subsidiary through such date,
which reserves are, to the knowledge of Raritan, adequate for such purposes.
Except as set forth in the Raritan Disclosure Schedule, the federal income tax
returns of Raritan and its Subsidiaries 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 Raritan Disclosure Schedule, the applicable state
income tax returns of Raritan and its Subsidiaries 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 Raritan, there are no audits or other administrative or court
proceedings presently pending nor any other disputes pending, or claims asserted
for, taxes or assessments upon Raritan or any of its Subsidiaries, nor has
Raritan or any of its Subsidiaries given any currently outstanding waivers or
comparable consents regarding the application of the statute of limitations with
respect to any taxes or Returns.
(b) Except as set forth in the Raritan Disclosure Schedule,
neither Raritan nor any of its Subsidiaries (i) has requested any extension of
time within which to file any tax Return which Return has not since been filed,
(ii) is a party to any agreement providing for the allocation or sharing of
taxes, (iii) is required to include in income any adjustment pursuant to Section
481(a) of the Code, by reason of a voluntary change in accounting method
initiated by Raritan or any Raritan Subsidiary (nor does Raritan have any
knowledge that the IRS has proposed any such adjustment or change of accounting
method) or (iv) has 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 Raritan Disclosure Schedule,
neither Raritan nor any of its Subsidiaries maintains or contributes 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
"Raritan Pension Plans"), "employee welfare benefit plan", within the meaning of
Section 3(1) of ERISA (the "Raritan Welfare Plans"), stock option plan, stock
purchase plan, deferred compensation plan, severance plan, bonus plan,
employment agreement or other similar plan, program or arrangement. Neither
Raritan nor any of its Subsidiaries has, since September 2, 1974, contributed to
any "Multiemployer Plan", within the meaning of Sections 3(37) and 4001(a)(3) of
ERISA.
(b) Raritan has delivered to United in the Raritan Disclosure
Schedule a complete and accurate copy of each of the following with respect to
each of the Raritan Pension Plans and Raritan 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) The present value of all accrued benefits both vested and
non-vested under each of the Raritan Pension Plans subject to Title IV of ERISA,
based upon the actuarial assumptions used for purposes of the most recent
actuarial valuation prepared by such Raritan Pension Plan's actuary, did not
exceed the then current value of the assets of such plans allocable to such
accrued benefits. To the best of Raritan's knowledge, the actuarial assumptions
then utilized for such plans were reasonable and appropriate as of the last
valuation date and reflect then current market conditions.
(d) During the last six years, the Pension Benefit Guaranty
Corporation (the "PBGC") has not asserted any claim for liability against
Raritan or any of its Subsidiaries which has not been paid in full.
(e) All premiums (and interest charges and penalties for late
payment, if applicable) due to the PBGC with respect to each Raritan Pension
Plan have been paid. All contributions required to be made to each Raritan
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 Raritan
and its Subsidiaries which have not been paid have been properly recorded on the
books of Raritan and its Subsidiaries.
(f) Except as disclosed on the Raritan Disclosure Schedule,
each of the Raritan Pension Plans, the Raritan Welfare Plans and each other plan
and arrangement identified on the Raritan Disclosure Schedule 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. Furthermore, the IRS has
issued a favorable determination letter, which takes into account the Tax Reform
Act of 1986 and subsequent legislation through the date of such determination
letter, with respect to each of the Raritan Pension Plans and Raritan 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).
(g) To the knowledge of Raritan, 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
Raritan Welfare Plans or Raritan Pension Plans.
(h) No Raritan 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 Raritan Pension
Plans.
(i) To the knowledge of Raritan, no "accumulated funding
deficiency", within the meaning of Section 412 of the Code, has been incurred
with respect to any of the Raritan Pension Plans.
(j) There are no pending, or, to the knowledge of Raritan,
threatened or anticipated claims (other than routine claims for benefits) by, on
behalf of or against any of the Raritan Pension Plans or the Raritan Welfare
Plans, any trusts related thereto or any other plan or arrangement identified in
the Raritan Disclosure Schedule.
(k) Except as disclosed in the Raritan Disclosure Schedule, no
Raritan Pension or Welfare Plan provides medical or death benefits (whether or
not insured) beyond an employee's retirement or other termination of service,
other than (i) coverage mandated by law, or (ii) death benefits under any
Raritan Pension Plan.
(l) Except with respect to customary health, life and
disability benefits or as disclosed in the Raritan Disclosure Schedule, there
are no unfunded benefits obligations which are not accounted for by reserves
shown on the Raritan Financial Statements and established under GAAP, or
otherwise noted on such financial statements.
(m) Except as disclosed in the Raritan Disclosure Schedule,
with respect to each Raritan Pension and Welfare Plan that is funded wholly or
partially through an insurance policy, there will be no liability of Raritan or
any Raritan Subsidiary as of the Effective Time under any such insurance policy
or ancillary agreement with respect to such insurance policy in the nature of a
retroactive rate adjustment, loss sharing arrangement or other actual or
contingent liability arising wholly or partially out of events occurring prior
to the Effective Time.
(n) Except as hereafter agreed to by United in writing or as
disclosed on the Raritan Disclosure Schedule, the consummation of the
transactions contemplated by this Agreement will not (i) entitle any current or
former employee of Raritan or any Raritan Subsidiary 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 Raritan
Pension Plan or Raritan Welfare Plan.
3.10. Reports.
(a) The Raritan Disclosure Schedule lists, and as to item (i)
below Raritan has previously delivered or made available to United a complete
copy of, each (i) final registration statement, prospectus, annual, quarterly or
special report and definitive proxy statement filed by Raritan since January 1,
1995 pursuant to the Securities Act of 1933, as amended ("1933 Act"), or the
1934 Act and (ii) communication (other than general advertising materials, press
releases and dividend checks) mailed by Raritan to its shareholders as a class
since January 1, 1995.
(b) Since January 1, 1995, (i) Raritan has filed all reports
that it was required to file with the SEC under the 1934 Act, and (ii) Raritan
and the Bank each has duly filed all material forms, reports and documents which
they were required to file with each agency charged with regulating any aspect
of their business, in each case in form which was correct in all material
respects, and, subject to permission from such regulatory authorities, Raritan
promptly will deliver or make available to United accurate and complete copies
of such reports. As of their respective dates, each such form, report, or
document referred to in either of clauses (i) or (ii) above, and each final
registration statement, prospectus, annual, quarterly or special report,
definitive proxy statement or communication referred to in either of clauses (i)
or (ii) of paragraph (b) above, 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 information contained in any such document as of a later date shall be
deemed to modify information as of an earlier date. The Raritan Disclosure
Schedule lists the dates of all examinations of Raritan or the Bank conducted by
either the Commissioner or the FDIC since January 1, 1995 and the dates of any
responses thereto submitted by Raritan or the Bank.
3.11. Raritan and Bank Information. The information relating
to Raritan and the Bank to be contained in the Joint Proxy Statement/Prospectus
(as defined in Section 5.6(a) hereof) to be delivered to stockholders of Raritan
and United in connection with the solicitation of their approval of this
Agreement and the transactions contemplated hereby, as of the dates the Joint
Proxy Statement/Prospectus is mailed to stockholders of Raritan and United,
respectively, and up to and including the dates of each of the meetings to which
such Joint 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.
3.12. Compliance with Applicable Law.
(a) General. Except as set forth in the Raritan Disclosure
Schedule, each of Raritan and the Raritan Subsidiaries holds all licenses,
franchises, permits and authorizations necessary for the lawful conduct of its
business 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
relating to Raritan or any of its Subsidiaries (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
Raritan and its Subsidiaries on a consolidated basis) and Raritan has not
received notice of violation of, and does not know of any violations of, any of
the above.
(b) CRA. Without limiting the foregoing, to its knowledge the
Bank has complied in all material respects with the Community Reinvestment Act
("CRA") and Raritan has received no written notice that any person or group
would object to the consummation of a merger involving the Bank due to the CRA
performance of or rating of the Bank. Except as listed on the Raritan Disclosure
Schedule to the knowledge of the Bank, no person or group has adversely
commented upon the Bank's CRA performance. The most recent CRA rating received
by the Bank was "Satisfactory."
3.13. Certain Contracts.
(a) Except as disclosed in the Raritan Disclosure Schedule
under this Section or Section 3.5, (i) neither Raritan nor any Raritan
Subsidiary is a party to or bound by any contract or understanding (whether
written or oral) with respect to the employment or termination of any present or
former officers, employees, directors or consultants and (ii) the consummation
of the transactions contemplated by this Agreement will not (either alone or
upon the occurrence of any additional acts or events) result in any payment
(whether of severance pay or otherwise) becoming due from Raritan or any Raritan
Subsidiary to any officer, employee, director or consultant thereof. The Raritan
Disclosure Schedule sets forth true and correct copies of all employment
agreements or termination agreements with officers, employees, directors, or
consultants to which Raritan or any Raritan Subsidiary is a party.
(b) Except as disclosed in the Raritan Disclosure Schedule,
(i) as of the date of this Agreement, neither Raritan nor any Raritan Subsidiary
is a party to or bound by any commitment, agreement or other instrument which
contemplates the payment by Raritan or any Raritan Subsidiary of amounts in
excess of $100,000, or which has a term extending beyond November 1, 1998 and
cannot be terminated by Raritan or its subsidiary without consent of the other
party thereto, (ii) no commitment, agreement or other instrument to which
Raritan or any Raritan Subsidiary is a party or by which any of them is bound
limits the freedom of Raritan or any Raritan Subsidiary to compete in any line
of business or with any person, and (iii) neither Raritan nor any Raritan
Subsidiary is a party to any collective bargaining agreement.
(c) Except as disclosed in the Raritan Disclosure Schedule,
neither Raritan nor any Raritan Subsidiary nor, to the knowledge of Raritan, any
other party thereto, is in default in any material respect under any material
lease, contract, mortgage, promissory note, deed of trust, loan or other
commitment or arrangement.
3.14. Properties and Insurance.
(a) Raritan 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 Raritan's consolidated
balance sheet as of June 30, 1998, 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 June 30, 1998), 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 Raritan and its Subsidiaries taken as a whole and (iv) with respect
to owned real property, title imperfections noted in title reports delivered to
United prior to the date hereof. Raritan and its Subsidiaries as lessees have
the right under valid and subsisting leases to occupy, use, possess and control
all property leased by them in all material respects as presently occupied,
used, possessed and controlled by them.
(b) The Raritan Disclosure Schedule lists all policies of
insurance and bonds covering business operations and all insurable properties
and assets of Raritan and its Subsidiaries showing all risks insured against, in
each case under valid, binding and enforceable policies or bonds, with such
amounts and such deductibles as are specified. As of the date hereof, neither
Raritan nor any of its Subsidiaries has received any notice of cancellation or
notice of a material amendment of any such insurance policy or bond or is in
default under such policy or bond, 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 Raritan and its
Subsidiaries contain records that are accurate in all material respects of all
meetings and other corporate action held of their respective stockholders and
Boards of Directors (including committees of their respective Boards of
Directors).
3.16. Environmental Matters. Except as set forth in the
Raritan Disclosure Schedule:
(a) Neither Raritan nor any Raritan Subsidiary has received
any written notice, citation, claim, assessment, proposed assessment or demand
for abatement alleging that Raritan or such Raritan Subsidiary (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 Raritan and the Raritan Subsidiaries taken as a whole. Raritan 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 Raritan or any Raritan Subsidiary, as OREO or otherwise, or owned or
controlled by Raritan or any Raritan Subsidiary 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.
(b) Raritan 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 Raritan and the Raritan
Subsidiaries taken as a whole.
(c) To the knowledge of Raritan, 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 Raritan or any Raritan Subsidiary.
3.17. Reserves. The reserve for loan and lease losses in the
June 30, 1998 Raritan Financial Statements was, to Raritan's knowledge, adequate
based upon past loan loss experiences and potential losses in the current
portfolio to cover all then known or anticipated loan losses.
3.18. No Excess Parachute Payments. Except as disclosed in the
Raritan Disclosure Schedule, no officer, director, employee or agent (or former
officer, director, employee or agent) of Raritan or any Raritan Subsidiary is
entitled now, or will or may be entitled to as a consequence of this Agreement,
the Merger or the Bank Merger, to any payment or benefit from Raritan, a Raritan
Subsidiary, United or UNB which if paid or provided would constitute an "excess
parachute payment", as defined in Section 280G of the Code or regulations
promulgated thereunder.
3.19. Year 2000 Compliance. Raritan and the Raritan
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 Raritan and the Raritan Subsidiaries
to be substantially Year 2000 compliant on or before the end of 1999 and, except
as set forth in the Raritan Disclosure Schedule, Raritan does not expect the
future cost of addressing such issues to be material. Neither Raritan nor any
Raritan Subsidiary has received a rating of less than satisfactory from any bank
regulatory agency with respect to Year 2000 compliance.
3.20. Agreements with Bank Regulators. Except as disclosed in
the Raritan Disclosure Schedule, neither Raritan nor any Raritan 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 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 Raritan prior to the date of this
Agreement, nor has Raritan 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 Raritan prior to the
date of this Agreement. Neither Raritan nor any Raritan 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 United by Raritan prior to the date of this
Agreement.
3.21. 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 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 to Raritan. United hereby represents and warrants to Raritan 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 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 or qualified would not have a
material adverse effect on the business, operations, assets or financial
condition of United or its Subsidiaries (defined below). United is registered as
a bank holding company under the BHCA.
(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% 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 by the SAIF for certain deposits, and by the BIF for the remaining
deposits, in each case to the fullest extent permitted by law. 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 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 or qualified
would not have a material adverse effect on the business, operations, assets or
financial condition of United and its Subsidiaries.
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 ("United Preferred Stock"). As of June 30, 1998, there were
9,375,345 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 United Preferred Stock outstanding. Since
June 30, 1998, to and including the date of this Agreement, no additional shares
of United Common Stock have been issued except in connection with exercises of
options granted under the United Option Plan or grants of restricted stock under
the United Option Plan. As of June 30, 1998, except for 399,772 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 Raritan to keep the
representations in this section true or correct.
<PAGE>
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. United has a sufficient
number of authorized but unissued shares of United Common Stock to pay the
consideration for the Merger set forth in Article II of this Agreement. 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 each of United and UNB. The execution and delivery of the
Bank Merger Agreement has been duly and validly approved by the Board of
Directors of UNB. No other corporate proceedings on the part of United and UNB
are necessary to consummate the transactions contemplated hereby (except for the
approval by United of the Bank Merger Agreement and except for any shareholder
approval that may be required by the NASDAQ/NMS listing rules). 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 creditors of federally-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 or delivery of this Agreement nor
the consummation by United and UNB of the transactions contemplated hereby in
accordance with the terms hereof, will (i) violate any provision of the
Certificate of Incorporation or Bylaws of United or the Articles of Association
or Bylaws of 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 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 OTS, the FRB, the New
Jersey Secretary of State, the Delaware Secretary of State, the SEC, or
applicable state securities bureaus or commissions, 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, (b) the
consummation by United of the Merger and the other transactions contemplated
hereby and (c) the execution and delivery by UNB of the Bank Merger Agreement
and the consummation by UNB of the Bank Merger and other transactions
contemplated thereby. 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.
4.4. Financial Statements.
(a) United has previously delivered to Raritan 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 June 30, 1998 and the
related unaudited consolidated statements of income, changes in stockholders'
equity and cash flows for the six months then ended as reported in United's
Quarterly Report on Form 10-Q, filed with the SEC under 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 as of the respective dates set
forth therein, and the related consolidated statements of income, changes in
stockholders' equity and of cash flows (including the related notes, where
applicable) fairly present the results of the consolidated operations and
changes in stockholders' equity and of cash flows of United for the respective
fiscal periods set forth therein.
(b) The books and records of United and its subsidiaries 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 June 30, 1998 neither United nor any of its Subsidiaries had or
has, as the case may be, any material obligation or liability, whether absolute,
accrued, contingent or otherwise, 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 June
30, 1998, neither United nor any of its Subsidiaries have incurred any material
liabilities, except in the ordinary course of business and consistent with
prudent banking practice.
4.5. Brokerage 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 June
30, 1998 and to United's knowledge, no fact or condition exists (other than
regional or national economic conditions which affect financial institutions
generally) which United believes will cause or is likely to cause such a
material adverse change in the future.
4.7. United Information. The information relating to United
and its subsidiaries, this Agreement and the transactions contemplated hereby in
the Registration Statement and Joint Proxy Statement/Prospectus (as defined in
Section 5.6(a) hereof), as of the dates of the mailing of the Joint Proxy
Statement/Prospectus to shareholders of United and Raritan, respectively, and up
to and including the dates of each meeting to which such Joint 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.
4.8. Capital Adequacy. As of the date of this Agreement each
of United and UNB has, and at the Effective Time, after taking into effect the
Merger and the transactions contemplated hereunder, each of United and UNB 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 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 Legal Proceeding which would have a material adverse effect on the
business, operations, assets or financial condition of United and its
Subsidiaries on a consolidated basis.
4.11. Taxes and Tax Returns. United and its Subsidiaries have
duly filed (and until the Effective Time will so file) all Returns required to
be filed by them in respect of any federal, state and local taxes (including
withholding taxes, penalties or other payments required) and have 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 its
Subsidiaries have established (and until the Effective Time will establish) on
their books and records reserves for the payment of all federal, state and local
taxes not yet due and payable, but incurred in respect of United and its
Subsidiaries through such date, which reserves are, to the knowledge of United,
adequate for such purposes. No deficiencies exist or have been asserted based
upon the federal income tax returns of United and UNB.
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.
(c) The present value of all accrued benefits both vested and
non-vested under each of the United Pension Plans subject to Title IV of ERISA,
based upon the actuarial assumptions used for purposes of the most recent
actuarial valuation prepared by such United Pension Plan's actuary, did not
exceed the then current value of the assets of such plans allocable to such
accrued benefits. To the best of United's knowledge, the actuarial assumptions
then utilized for such plans were reasonable and appropriate as of the last
valuation date and reflect then current market conditions.
(d) During the last six years, the PBGC has not asserted any
claim for liability against United or any of its Subsidiaries which has not been
paid in full.
(e) All premiums (and interest charges and penalties for late
payment, if applicable) due to the PBGC with respect to each United Pension Plan
have been paid. All contributions required to be made to each United 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 United and its
Subsidiaries which have not been paid have been properly recorded on the books
of United and its Subsidiaries.
(f) Except as disclosed on the United Disclosure Schedule,
each of the United Pension Plans, the United Welfare Plans and each other plan
and arrangement identified on the United Disclosure Schedule 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. Furthermore, the IRS has
issued a favorable determination letter, which takes into account the Tax Reform
Act of 1986 and subsequent legislation through the date of such determination
letter, with respect to each of the United Pension Plans and United 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).
(g) To the knowledge of United, 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 United
Welfare Plans or United Pension Plans.
(h) No United 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 United Pension Plans.
(i) To the knowledge of United, no "accumulated funding
deficiency", within the meaning of Section 412 of the Code, has been incurred
with respect to any of the United Pension Plans.
4.13. Reports.
(a) Each communication mailed by United to its stockholders
since January 1, 1995, and each annual, quarterly or special report, proxy
statement or communication, as of its date, complied in all material respects
with all applicable statutes, rules and regulations enforced or promulgated by
the applicable regulatory agency 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) Since January 1, 1995, (i) United has filed all reports
that it was required to file with the SEC under the 1934 Act, and (ii) United
and UNB each has duly filed all material forms, reports and documents which they
were required to file with each agency charged with regulating any aspect of
their business, in each case in form which was correct in all material respects,
and, subject to permission from such regulatory authorities, United promptly
will deliver or make available to Raritan accurate and complete copies of such
reports. As of their respective dates, each such form, report, or document
referred to in either of clauses (i) or (ii) above, and each final registration
statement, prospectus, annual, quarterly or special report, definitive proxy
statement or communication referred to in either of clauses (i) or (ii) of
paragraph (b) above, 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
information contained in any such document as of a later date shall be deemed to
modify information as of an earlier date. The United Disclosure Schedule lists
the dates of all examinations of United or UNB conducted by either the OCC or
the FDIC since January 1, 1995 and the dates of any responses thereto submitted
by United or UNB.
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 United has not received notice of
violations of, and does not 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. Without limiting the
foregoing, to its knowledge UNB has complied in all material respects with the
CRA and United has received no written notice that any person or group would
object to the consummation of a merger involving UNB due to the CRA performance
or rating of UNB. To the knowledge of United, except as listed on the United
Disclosure Schedule, no person or group has adversely commented upon UNB's CRA
performance. The most recent CRA rating received by UNB was "Satisfactory."
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 June 30, 1998, 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 June 30, 1998). United and
its Subsidiaries as lessees have the right under valid and subsisting leases to
occupy, use, possess and control all real property leased by them in all
material respects 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, in each case under valid, binding and enforceable policies or
bonds, 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, neither United nor any of
its Subsidiaries has received any notice of cancellation or notice of a material
amendment of any such insurance policy or bond or is in default under such
policy or bond, 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 records that are accurate in all material respects 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, as OREO or otherwise, or owned or controlled
by United or any of its Subsidiaries as a trustee or fiduciary 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 June 30, 1998 United Financial Statements was, to United's
knowledge, adequate at the time based upon past loan loss experiences and
potential losses in the portfolio at the time to cover all then known or
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
substantially Year 2000 compliant on or before the end of 1999 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 Raritan
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 Raritan 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 Raritan by United
prior to the date of this Agreement.
4.21. Disclosures. 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 Raritan. During the period
from the date of this Agreement to the Effective Time, Raritan shall, and shall
cause each of its Subsidiaries to, conduct its respective 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. Raritan also shall use all reasonable
efforts to (i) preserve its business organization and that of each Raritan
Subsidiary intact, (ii) keep available to itself the present services of its
employees and those of its Subsidiaries, provided that neither Raritan nor any
of its Subsidiaries shall be required to take any unreasonable or extraordinary
act or any action which would conflict with any other term of this Agreement,
(iii) preserve for itself and United the goodwill of its customers and those of
its Subsidiaries and others with whom business relationships exist, and (iv)
take any action which United may reasonably request in order to cause the Merger
to qualify as a pooling of interests for accounting purposes including, without
limitation, reissuing "tainted" shares of Raritan Common Stock if United so
requests.
5.2. Negative Covenants and Dividend Covenants.
(a) Raritan agrees that from the date hereof to the Effective
Time, except as set forth in Section 5.2 of the Raritan Disclosure Schedule or
as otherwise approved by United in writing or as permitted or required by this
Agreement, it will not, nor will it permit any of its Subsidiaries to:
(i) change any provision of its Certificate of Incorporation
or Charter, as the case may be, or Bylaws or any similar governing documents;
(ii) except for the issuance of Raritan Common Stock pursuant
to the present terms of the outstanding Raritan Options and the United Stock
Option and as disclosed in the Raritan Disclosure Schedule, change the number of
shares of its authorized or issued common or preferred 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
Raritan or any Raritan Subsidiary or any securities convertible into shares of
such stock, or split, combine or reclassify any shares of its capital stock, or
redeem or otherwise acquire any shares of such 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, other than Raritan's
regular quarterly cash dividends in amounts not to exceed $0.15 per calendar
quarter, with the dividend payment dates to be coordinated with United, it being
the intention of the parties that the shareholders of Raritan receive dividends
for any particular calendar quarter on either the Raritan Common Stock or the
United Common Stock acquired in exchange therefor pursuant to the terms of this
Agreement but not both; provided further, that nothing contained herein shall be
deemed to affect the ability of the Bank to pay dividends on its capital stock
to Raritan;
(iii) grant any severance or termination pay (other than
pursuant to agreements or policies of Raritan in effect on the date hereof and
disclosed in the Raritan 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;
(iv) 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;
(v) make any capital expenditures other than pursuant to
binding commitments existing on the date hereof and expenditures necessary to
maintain existing assets in good repair and expenditures described in business
plans or budgets previously furnished to United;
(vi) file any applications or make any contract with respect
to branching or site location or relocation.
(vii) agree to acquire in any manner whatsoever (other than to
foreclose on collateral for a defaulted loan) any business or entity;
(viii) make any material change in its accounting methods or
practices, other than changes required in accordance with GAAP;
(ix) take any action that would result in any of the
representations and warranties contained in Article III of this Agreement not
being true and correct in any material respect at the Effective Time; or
(x) agree to do any of the foregoing.
(b) United agrees that from the date hereof to the Effective
Time, except as otherwise approved by Raritan in writing or as permitted or
required by this Agreement, it will not, nor will it permit any of its
Subsidiaries to:
(i) take any action that is intended or may reasonably be
expected to result in any of its representations and warranties set forth in
this Agreement being or becoming untrue in any material respect, or that may
result in any condition, agreement or covenant set forth in this Agreement not
being satisfied;
(ii) take or cause to be taken any action which would
disqualify the Merger as a tax free reorganization under Section 368 of the Code
or as a pooling of interests for accounting purposes;
(iii) consolidate with or merge with any other person or
entity in which United is not the surviving entity, or convey, transfer or lease
its properties and assets substantially as an entirety to any person or entity
unless such person or entity shall expressly assume the obligations of United
under this Agreement; or
(iv) authorize or enter into any agreement or commitment to do
any of the foregoing.
5.3. No Solicitation. So long as this Agreement remains in
effect, Raritan and the Bank 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 Raritan or the
Bank (an "Acquisition Transaction"). Notwithstanding the foregoing, Raritan may
enter into discussions or negotiations or provide information in connection with
an unsolicited possible Acquisition Transaction if the Board of Directors of
Raritan, after consulting with counsel, determines in the exercise of its
fiduciary responsibilities that such discussions or negotiations should be
commenced or such information should be furnished. Raritan shall promptly
communicate to United the terms of any proposal, whether written or oral, which
it may receive in respect of any such Acquisition Transaction and the fact that
it is having discussions or negotiations with a third party about an Acquisition
Transaction.
5.4. Current Information. During the period from the date of
this Agreement to the Effective Time, Raritan will cause one or more of its
designated representatives to confer on a monthly basis, or on such other
schedule as the parties may mutually agree upon, with representatives of United
regarding Raritan's business, operations, properties, assets and financial
condition and matters relating to the completion of the transactions
contemplated herein. Without limiting the foregoing, promptly, but in any event
within 30 days, after granting any new loan or extension of credit, or any
renewal of an existing loan or extension of credit, in excess of $250,000,
Raritan and the Bank will send United a description thereof, and thereafter
Raritan 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, Raritan will deliver to United the Bank's call reports filed with the
FDIC and Raritan's quarterly reports on Form 10-Q as filed with the SEC under
the 1934 Act, and United will deliver to Raritan United's quarterly reports on
Form 10-Q, as filed with the SEC under the 1934 Act, and UNB's call reports
filed with the OCC and the FDIC. As soon as reasonably available, but in no
event more than 90 days after the end of each fiscal year, Raritan will deliver
to United and United will deliver to Raritan their respective year end financial
statements and related reports to shareholders and regulatory agencies.
5.5. Access to Properties and Records; Confidentiality.
(a) Raritan and the Bank 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 Raritan and its
Representatives, reasonable access to their respective properties, and shall
disclose and make available to United and its Representatives or Raritan 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 Raritan 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. Raritan acknowledges that United may be involved in
discussions concerning other potential acquisitions and United shall not be
obligated to disclose such information to Raritan 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 other commercial purposes or any other purposes not expressly
permitted hereby. Each party 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 is abandoned, all documents, notes and
other writings prepared by a party hereto or its Representatives based on
information furnished by the other party shall be promptly destroyed. The
obligation to keep such information confidential shall continue for five years
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;
(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.
(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 meetings of Raritan
stockholders and United shareholders referred to in Section 5.7 hereof and
registering or otherwise qualifying under applicable federal and state
securities laws United Common Stock to be issued to Record Holders and Optionees
in connection with the Merger, the parties hereto shall cooperate in the
preparation and filing by United of a Registration Statement with the SEC which
shall include an appropriate joint proxy statement and prospectus satisfying all
applicable requirements of applicable state and federal laws, including the 1933
Act, the 1934 Act and applicable state securities laws and the rules and
regulations thereunder. (Such joint proxy statement and prospectus in the form
mailed by Raritan to the Raritan stockholders and Optionees together with any
and all amendments or supplements thereto, and in the form mailed by United to
the United shareholders together with any and all amendments or supplements
thereto, is collectively herein referred to as the "Joint 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 and Optionees, including the Proxy Statement/Prospectus, are
referred to herein as the "Registration Statement").
(b) United shall furnish information concerning United and the
Merger as is necessary in order to cause the Joint Proxy Statement/Prospectus,
insofar as it relates to United and the Merger, to comply with Section 5.6(a)
hereof. United agrees promptly to advise Raritan if at any time prior to the
Raritan stockholder meeting referred to in Section 5.7 hereof, any information
provided by United in the Joint Proxy Statement/Prospectus becomes incorrect or
incomplete in any material respect and to provide Raritan with the information
needed to correct such inaccuracy or omission. United shall furnish Raritan with
such supplemental information as may be necessary in order to cause the Joint
Proxy Statement/Prospectus, insofar as it relates to United and the Merger, to
comply with Section 5.6(a) after the mailing thereof to Raritan stockholders and
United shareholders.
(c) Raritan shall furnish United with such information
concerning Raritan and the Bank as is necessary in order to cause the Joint
Proxy Statement/Prospectus, insofar as it relates to such corporations, to
comply with Section 5.6(a) hereof. Raritan agrees promptly to advise United if,
at any time prior to either of the meetings referred to in Section 5.6(a)
hereof, information provided by Raritan in the Joint 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. Raritan
shall furnish United with such supplemental information as may be necessary in
order to cause the Joint Proxy Statement/Prospectus, insofar as it relates to
Raritan and the Bank, to comply with Section 5.6(a) after the mailing thereof to
Raritan stockholders and United 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. Raritan shall promptly
furnish United with such information regarding the Raritan stockholders as
United requires to enable it to determine what filings are required hereunder.
Raritan authorizes United to utilize in such filings the information concerning
Raritan and the Bank provided to United in connection with, or contained in, the
Joint Proxy Statement/Prospectus. United shall furnish Raritan with drafts of
all such filings, as well as filings with the SEC and all regulatory filings in
connection with the Merger, shall provide Raritan with the opportunity to
comment thereon, and shall keep Raritan advised of the status thereof. United
shall as promptly as practicable file the Registration Statement containing the
Joint Proxy Statement/Prospectus with the SEC, and each of United and Raritan
shall promptly notify the other of all communications, oral or written, with the
SEC concerning the Registration Statement and the Joint 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, waivers,
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, the
Commissioner, the State of New Jersey, the FDIC and the FRB. The parties shall
each have the right to review in advance (and shall do so promptly) all
information relating to the other, as the case may be, and any of their
respective subsidiaries, 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. The parties hereto shall use
reasonable business efforts to file for approval or waiver by the appropriate
bank regulatory agencies within 60 days of the date hereof.
(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) Raritan 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 Raritan 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.
Raritan agrees to provide United with any information, certificates, documents
or other materials about Raritan 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. Raritan
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 reimburse Raritan for reasonable expenses
thus incurred by Raritan 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 Raritan unless
Raritan 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,
Raritan shall cooperate with United to be in a position as of the Effective Time
to reasonably conform Raritan's policies and procedures regarding applicable
regulatory matters to those of United as United may reasonably identify to
Raritan from time to time.
5.7. Approval of Stockholders.
(a) Raritan will (i) take all steps reasonably necessary duly
to call, give notice of, convene and hold a meeting of the stockholders of
Raritan as soon as reasonably practicable for the purpose of securing the
approval by such stockholders of this Agreement, (ii subject to the fiduciary
responsibilities of the Board of Directors of Raritan to the stockholders of
Raritan, recommend to the stockholders of Raritan the approval of this Agreement
and the transactions contemplated hereby and use all reasonable efforts to
obtain, as promptly as practicable, such approvals, and (iii) cooperate and
consult with United with respect to each of the foregoing matters. In connection
therewith, Raritan will use reasonable efforts to cause each director of Raritan
to agree, (x) to vote in favor of the Merger, and (y) take such action as is
necessary or is reasonably required by United to consummate the Merger.
(b) United will (i) take all steps reasonably necessary duly
to call, give notice of, convene and hold a meeting of the stockholders of
United as soon as reasonably practicable for the purpose of securing the
approval by such stockholders of this Agreement, (ii subject to the fiduciary
responsibilities of the Board of Directors of United to the stockholders of
United, recommend to the stockholders of United the approval of this Agreement
and the transactions contemplated hereby and use all reasonable efforts to
obtain, as promptly as practicable, such approvals, and (iii) cooperate and
consult with Raritan with respect to each of the foregoing matters. In
connection therewith, United will use reasonable efforts to cause each director
of United to agree, (x) to vote in favor of the Merger, and (y) take such action
as is necessary or is reasonably required by Raritan to consummate 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, and obtain each other's prior approval, 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 Raritan determines that a material condition to its obligation to consummate
the transactions contemplated hereby cannot be fulfilled on or prior to June 30,
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, Raritan and United will
promptly inform the other of any facts applicable to Raritan or United,
respectively, or their respective directors or officers, 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. From time to time prior to the
Effective Time, 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 Transaction Expenses of Raritan.
(a) To the extent not already done, Raritan shall promptly,
but in any event within 30 days, after the execution of this Agreement ask all
of its attorneys and other professionals to render current and correct invoices
for all unbilled time and disbursements, and request that its professionals
render monthly invoices within 30 days after the end of each month. Raritan
shall accrue and/or pay all of such amounts as soon as possible.
(b) United and Raritan shall jointly make all arrangements
with respect to the printing and mailing of the Joint Proxy
Statement/Prospectus.
5.13. Closing. The parties hereto shall cooperate and use
reasonable efforts to try to cause the Effective Time to occur during January,
1999.
5.14. 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 Raritan or the Bank (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 Raritan or
the Bank or acted as a director or officer of a third party at the written
request of Raritan or the Bank, 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 Raritan or the Bank or any of
their respective affiliates, or by any former or present shareholder of Raritan
or the Bank (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 Joint 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 Raritan or the Bank or any committee of such
board, 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 Raritan or the Bank, as the case may be, 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 Raritan or the Bank 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 Raritan or the Bank or arising out of
any written indemnification agreements between Raritan or the Bank and such
persons disclosed in the Raritan Disclosure Schedule, as if such obligations
were pursuant to a contract or arrangement between United and such Indemnitees,
including the obligation to advance expenses pursuant to Raritan's Certificate
of Incorporation and Bylaws.
(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 5.14.
(d) United shall cause Raritan's and the Bank'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 Raritan's or the Bank'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
Raritan's or the Bank's existing officers' and directors' liability insurance,
as the case may be.
(e) Any Indemnitee wishing to claim indemnification under this
Section 5.14 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 5.14 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 5.14(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 5.14, 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.
5.15. New United and UNB Directors. As of the Effective Time,
United shall cause its Board of Directors and the UNB Board of Directors to take
action to appoint to the Boards of Directors of United and UNB, respectively, at
the Effective Time, Arlyn D. Rus and one other current Raritan director who
shall be proposed by Raritan and approved by United. Such persons will serve on
separate classes of the Board of Directors of United and Mr. Rus shall serve as
Vice Chairman of the Board of United. As of the Effective Time, United shall
cause the UNB Board of Directors to take action to create an advisory Board of
Directors and to invite all then directors of Raritan to serve on such advisory
board.
5.16. Employment Matters. In connection with the Merger,
United and Raritan will deal with employment and severance contracts and
arrangements with officers and employees of Raritan and the Bank in the manner
set forth in Section 5.16 of the
Raritan Disclosure Schedule.
5.17. Pooling and Tax-Free Reorganization Treatment. Neither
United nor Raritan 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.
5.18. Raritan Option Plans. From and after the Effective Time,
each Raritan Option which is converted to an option to purchase United Common
Stock under Section 2.1(b) shall be administered, operated and interpreted by a
committee comprised of members of the Board of Directors of United appointed by
the Board of Directors of United (including one or more former directors of
Raritan). United shall reserve for issuance the number of shares of United
Common Stock necessary to satisfy United's obligations.
United shall also register, if not previously registered pursuant to the 1933
Act, the shares authorized for issuance under the Raritan Options so converted.
5.19. Affiliates.
(a) Promptly, but in any event within 30 days, after the
execution and delivery of this Agreement, (i) Raritan shall deliver to United
(x) a letter identifying all persons who, to the knowledge of Raritan, may be
deemed to be affiliates of Raritan under Rule 145 of the 1933 Act, including
without limitation all directors and executive officers of Raritan and (y) a
letter identifying all persons who, to the knowledge of Raritan, may be deemed
to be affiliates of Raritan as that term (affiliate) is used for purposes of
qualifying for pooling-of-interests accounting treatment; and (ii) United shall
identify to Raritan all persons who, to the knowledge of United, may be deemed
affiliates of United as that term (affiliates) is used for purposes of
qualifying for pooling-of-interests accounting treatment.
(b) Raritan shall cause each director of Raritan to, and
Raritan shall use all reasonable efforts to cause each executive officer of
Raritan and each other person who may be deemed an affiliate of Raritan (under
either Rule 145 of the 1933 Act or the accounting treatment rules) to, execute
and deliver to United within 30 days after the execution and delivery of this
Agreement, a letter substantially in the form of Exhibit 5.19 hereto agreeing to
be bound by the restrictions of Rule 145 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 each director and executive officer of
United to, and United shall use all reasonable efforts to cause each other
person who may be deemed an affiliate of United (as that term is used for
purposes of qualifying for pooling of interests) to, execute and deliver to
United within 30 days after the execution and delivery of this Agreement, a
letter substantially in the form of Exhibit 5.19.1 hereto 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.
(c) United shall use reasonable business efforts to publish as
soon as possible, but no later than 20 days after the end of the first month
after the Effective Time in which there are at least 30 days of post-Merger
combined operations, combined revenues and net income figures as contemplated by
and in accordance with the terms of SEC Accounting Series Release No. 135.
5.20. Compliance with the Industrial Site Recovery Act.
Raritan, at its sole cost and expense, shall use all reasonable efforts to
obtain prior to the Effective Time, with respect to each facility located in New
Jersey owned or operated by Raritan or any Raritan Subsidiary (each, a
"Facility"), either: (a) a Letter of Non-Applicability ("LNA") from the New
Jersey Department of Environmental Protection ("NJDEP") stating that the
Facility is not 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; (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 the Facility; or (d) an opinion addressed to United
from New Jersey legal counsel reasonably acceptable to United to the effect that
ISRA has been complied with, or is inapplicable, with respect to the Facility.
In the event Raritan obtains a Remediation Agreement, Raritan 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.
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 Raritan Stockholders; SEC Registration. This
Agreement and the transactions contemplated hereby shall have been approved by
the requisite vote of the stockholders of Raritan and the shareholders of
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, 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, including
United Common Stock to be issued for the Raritan Options, 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, the OCC and any approval or waiver
required by the FRB) required to consummate the transactions contemplated hereby
shall have been obtained without any term or condition which would materially
impair the value of Raritan and the Bank, taken as a whole, 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 or the Bank Merger.
(d) Tax Free Exchange. United and Raritan shall have received
an opinion, satisfactory to United and Raritan, of Pitney, Hardin, Kipp & Szuch,
counsel for United, issued in reliance on tax representation letters from United
and Raritan 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, Raritan, UNB or the
Bank or to the stockholders of Raritan who exchange their shares of Raritan for
United Common Stock (except to the extent that cash is received in lieu of
fractional shares of United Common Stock).
<PAGE>
(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 Raritan and Bank. The representations and warranties of Raritan 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 on the Closing Date as though made on and as of the
Closing Date. Raritan 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 Raritan 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 Raritan Disclosure Schedule, materially adversely effect the
representation as to which the supplement or amendment relates. In interpreting
this Section 6.2(a) and Section 7.1(d) hereof, no representation or warranty of
Raritan shall be deemed untrue or incorrect, and Raritan shall not be deemed to
have breached a representation or warranty, as a consequence of any fact, event
or circumstance unless such fact, event or circumstance, individually or taken
together with all other facts, events or circumstances inconsistent with any
representation or warranty of Raritan contained in this Agreement has had or is
reasonably likely to have a material adverse effect on Raritan and the Bank,
taken as a whole, from that disclosed by Raritan on the date of this Agreement.
(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) Opinion of Counsel. United shall have received an opinion
of counsel to Raritan, dated the date of the Closing, in form and substance
reasonably satisfactory to United, covering the matters set forth on Schedule
6.2 hereto and any other matters reasonably requested by United.
(d) Bank Action. The Bank shall have taken all necessary
corporate action to effectuate the Bank Merger immediately following the
Effective Time.
(e) Certificates. Raritan shall have furnished United with
such certificates of its officers or other documents to evidence fulfillment of
the conditions set forth in this Section 6.2 as United may reasonably request.
(f) Environmental Law Compliance. Raritan shall have obtained,
with respect to each Facility, an LNA, a Remediation Agreement, a Negative
Declaration approval, a Remedial Action Workplan approval (in which event
Raritan 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), a 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 the Facility or an
opinion of the type referred to in Section 5.20(d) hereof.
6.3. Conditions to the Obligations of Raritan Under this
Agreement. The obligations of Raritan 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 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 shall have performed in all material
respects, the agreements, covenants and obligations 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 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. In interpreting
this Section 6.3(a) and Section 7.1(e) hereof, no representation or warranty of
United shall be deemed untrue or incorrect, and United shall not be deemed to
have breached a representation or warranty, as a consequence of any fact, event
or circumstance unless such fact, event or circumstance, individually or taken
together with all other facts, events or circumstances inconsistent with any
representation or warranty of United contained in this Agreement has had or is
reasonably likely to have a material adverse effect on United and UNB, taken as
a whole, from that disclosed by United on the date of this Agreement.
(b) Opinion of Counsel to United. Raritan shall have received
an opinion of counsel to United, dated the date of the Closing, in form and
substance reasonably satisfactory to Raritan, covering the matters set forth on
Schedule 6.3 hereto and any other matter reasonably requested by Raritan.
(c) Fairness Opinion. Raritan shall have received an opinion
from Endicott as of the date of this Agreement and the date the Joint Proxy
Statement/Prospectus is mailed to Raritan's stockholders, with respect to the
fairness, from a financial point of view, of the Exchange Ratio to the
shareholders of Raritan in the Merger.
(d) Raritan Directors. Each of United and UNB shall have taken
all action necessary to appoint two current Raritan directors to its Board of
Directors as specified in Section 5.15.
(e) Certificates. United shall have furnished Raritan with
such certificates of its officers or others and such other documents to evidence
fulfillment of the conditions set forth in this Section 6.3 as Raritan may
reasonably request.
(f) UNB Action. UNB shall have taken all necessary corporate
action to effectuate the Bank Merger immediately following the Effective Time.
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 Raritan:
(a) By mutual written consent of the parties hereto.
(b) By United or Raritan (i) if the Effective Time shall not
have occurred on or prior to the Cutoff Date or (ii) if a vote of the
stockholders of Raritan is taken and such stockholders fail to approve this
Agreement at the meeting (or any adjournment thereof) held for such purpose, or
(iii) if a vote of the shareholders of United is taken and such shareholders
fail to approve this Agreement at the meeting (or any adjournment thereof) held
for such purpose, unless in each case the failure of such occurrence shall be
due to the failure of the party seeking to terminate this Agreement to perform
or observe its agreements set forth herein to be performed or observed by such
party (or, in the case of Raritan, to be performed or observed by the directors
of Raritan) at or before the Effective Time.
(c) By United or Raritan 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 Raritan if
any such application is approved with conditions which materially impair the
value of Raritan and the Bank, 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
Raritan or the Bank, taken as a whole, from that disclosed by Raritan on the
date of this Agreement; or (ii) there was a material breach in any
representation, warranty, covenant, agreement or obligation of Raritan
hereunder.
(e) By Raritan, if (i) there shall have occurred a material
adverse change in the business, operations, assets or financial condition of
United or UNB from that disclosed by United on the date of this Agreement; or
(ii) there was a material breach in any representation, warranty, covenant,
agreement or obligation of United hereunder.
(f) By United or Raritan if any condition to Closing specified
under Article VI hereof applicable to such party cannot reasonably be met on or
before the Cutoff Date after giving the other party a reasonable opportunity to
cure any such condition.
(g) by Raritan, if (either before or after the approval of
this Agreement by the stockholders of Raritan) its Board of Directors so
determines by a vote of a majority of the members of its entire Board, at any
time during the three business day period commencing with (and including) the
Determination Date, if both of the following conditions are satisfied:
(x) the Average Pre-Closing Price of United Common
Stock on the Determination Date (the "Determination Price"), is less than the
United Floor Price. The "United Floor Price" is 85% of the United Average
Starting Date Price. The "United Average Starting Date Price" is the average of
the high and low sale price of United Common Stock (i.e., $26.188) on September
21, 1998 (the "Starting Date"), as the same shall be adjusted to reflect any
Capital Change; and
(y) (i) the quotient obtained by dividing the
Determination Price by the United Average Starting Date Price (the "United
Ratio") is less than (ii) the quotient obtained by dividing the number
calculated using the index of financial institutions set forth on Exhibit B
hereto (the "Index Price") as of the close of business on the Determination Date
by the Index Price as of the close of business on the Starting Date and
subtracting 0.10 from the quotient in this clause (y)(ii) (such number being
referred to herein as the "Index Ratio").
Notwithstanding the foregoing, if Raritan elects to exercise
its termination right pursuant to this subsection (g), it shall give prompt
written notice to United (provided that such notice of election to terminate may
be withdrawn at any time within the aforementioned three business day period)).
During the two business day period commencing with its receipt of such notice,
United shall have the option of increasing the consideration to be received by
the holders of Raritan Common Stock hereunder by increasing the Exchange Ratio
to equal the lesser of (i) a number (rounded to four decimals) equal to a
quotient, the numerator of which is the United Floor Price multiplied by the
Exchange Ratio (as then in effect) and the denominator of which is the
Determination Price, and (ii) a number (rounded to four decimals) equal to a
quotient, the numerator of which is the Index Ratio multiplied by the Exchange
Ratio (as then in effect) and the denominator of which is the United Ratio. If
United makes an election contemplated by the preceding sentence, within such two
business day period, it shall give prompt written notice to Raritan of such
election and the revised Exchange Ratio, whereupon no termination shall have
occurred pursuant to this subsection (g) 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 (g).
7.2. Effect of Termination. In the event of the termination
and abandonment of this Agreement by either United or Raritan pursuant to
Section 7.1, this Agreement shall forthwith become void and have no effect,
without any liability on the part of any party or its officers, directors or
stockholders, except that Sections 5.5(b) and 8.1 hereof shall have continuing
effect as set forth therein. Nothing contained herein, however, shall relieve
any party from any liability for any 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 Raritan and, if required, by the shareholders
of United, but, after any such adoption, no amendment shall be made which, under
applicable New Jersey or Delaware law, cannot be made without the approval of
the stockholders of Raritan or the shareholders of United, as the case may be,
without obtaining such approval. This Agreement may not be amended except by an
instrument in writing signed on behalf of United and Raritan.
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. 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, except that the cost of printing and mailing
the Joint Proxy Statement/Prospectus shall be borne equally by the parties
hereto if the transaction is terminated.
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 the same day by
registered or certified mail, postage prepaid, as follows:
<PAGE>
(a) If to United, to:
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
Attn.: Michael W. Zelenty, Esq.
By Hand: 200 Campus Drive
Florham Park, New Jersey 07932-0950
By Mail: P.O. Box 1945
Morristown, New Jersey 07962-1945
(b) If to Raritan, to:
Raritan Bancorp Inc.
454 Route 28
Bridgewater, New Jersey 08807
Attn.: Arlyn D. Rus, Chairman,
President and Chief Executive Officer
With a copy to:
Luse Lehman Gorman Pomerenk & Schick PC
5335 Wisconsin Avenue N.W.
Washington, D.C. 20015
Attn.: John J. Gorman
or such other addresses as shall be furnished in writing by
any party, and any such notice or communications shall be deemed to have been
given as of the date so delivered or telecopied and mailed.
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. Nothing in this Agreement is intended to
confer, expressly or by implication, upon any other person any rights or
remedies under or by reason of this Agreement, except for the indemnitees
covered by Section 5.14 hereof. No assignment of this Agreement may be made
except upon the written consent of the other parties hereto.
8.4. Entire Agreement. This Agreement, the Disclosure
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; provided,
however, that if this Agreement is terminated, the terms of Section 5.5(b) and
(c) and the terms of the Confidentiality Agreement between United and Raritan
dated August 19, 1998 shall remain in effect. If any provision of this Agreement
is found invalid, it shall be considered deleted and shall not invalidate the
remaining provisions.
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. Survival. All representations, warranties and, except to
the extent specifically provided otherwise herein, agreements and covenants,
other than those agreements and covenants set forth in Section 5.14 which shall
survive the Merger, shall terminate as of the Effective Time.
8.9. Knowledge. Representations made herein which are
qualified by the phrase to the best of Raritan's knowledge or similar phrases
refer as of the date hereof to the best knowledge of the Chief Executive Officer
and the Chief Lending Officer of Raritan and thereafter refer to the best
knowledge of any senior officer of Raritan or any Raritan subsidiary.
Representations made herein which are qualified by the phrase to the best of
United's knowledge or similar phrases refer as of the date hereof to the best
knowledge of the Chief Executive Officer, the Executive Vice President/Legal and
the Chief Financial Officer of United and thereafter refer to the best knowledge
of any senior officer of United or any United subsidiary.
<PAGE>
IN WITNESS WHEREOF, United, UNB, the Bank and Raritan 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. By: THOMAS C. GREGOR
- ------------------------------- -----------------------------------------
Ralph L. Straw, Jr., Secretary Thomas C. Gregor, Chairman, President
and Chief Executive Officer
ATTEST: RARITAN BANCORP INC.
HELEN J. FRANGELLI By: ARLYN D. RUS
- ------------------------------- -----------------------------------------
Helen J. Frangelli, Secretary Arlyn D. Rus, Chairman, President
and Chief Executive Officer
ATTEST: UNITED NATIONAL BANK
RALPH L. STRAW, JR By: THOMAS C. GREGOR
- ------------------------------- -----------------------------------------
Ralph L. Straw, Jr., Cashier Thomas C. Gregor, Chairman, President
and Chief Executive Officer
ATTEST: THE RARITAN SAVINGS BANK
HELEN J. FRANGELLI By: ARLYN D. RUS
- ------------------------------- -----------------------------------------
Helen J. Frangelli, Secretary Arlyn D. Rus, Chairman, President
and Chief Executive Officer
<PAGE>
CERTIFICATE OF THE DIRECTORS OF
RARITAN BANCORP INC. AND
THE RARITAN SAVINGS BANK
Reference is made to the Agreement and Plan of Merger, dated
as of September 22, 1998 (the "Agreement"), among United National Bancorp,
United National Bank, Raritan Bancorp Inc., and The Raritan Savings Bank.
Capitalized terms used herein have the meanings given to them in the Agreement.
Each of the following persons, being all of the directors of
Raritan and the Bank, agrees to vote or cause to be voted all shares of Raritan
Common Stock which are held by such person, or over which such person exercises
full voting control (other than shares with respect to which such person
exercises control in a fiduciary capacity, as to which no agreement is made
hereby), in favor of the Merger
ARLYN D. RUS
- ------------------------
THOMAS F. TANSEY
- ------------------------
PETER S. JOHNSON
- ------------------------
WILLIAM T. KELLENER, JR.
- ------------------------
WILLIAM T. ANDERSON
- ------------------------
WILLIAM W. CROUSE
- ------------------------
- ------------------------
- ------------------------
- ------------------------
- ------------------------
<PAGE>
Exhibit A to Merger Agreement
AGREEMENT TO MERGE BETWEEN
UNITED NATIONAL BANK
AND
THE RARITAN SAVINGS BANK
UNDER THE CHARTER OF UNITED NATIONAL BANK,
UNDER THE TITLE OF UNITED NATIONAL BANK
THIS AGREEMENT made between United National Bank (hereinafter
referred to as "UNB"), a national banking association organized under the laws
of the United States, being located at 1130 Route 22 East, Bridgewater, County
of Somerset in the State of New Jersey, with a capital of $__________ divided
into __________ shares of common stock, each of $_____ par value, $__________ of
surplus, and undivided profits of $__________ as of June 30, 1998, and The
Raritan Savings Bank (hereinafter referred to as "Bank"), a federally-chartered
savings bank organized under the laws of the United States, being located at
____________________, with a capital of $__________, divided into _____ shares
of common stock, each of $_____ par value, surplus of $__________, and undivided
profits of $__________ as of June 30, 1998, each acting pursuant to a resolution
of its board of directors, adopted by the vote of a majority of its directors,
pursuant to the authority given by and in accordance with the provisions of the
Act of November 7, 1918, as amended (12 U.S.C. Section 215(a)), and the New
Jersey Banking Act of 1948, as amended, witnesseth as follows:
Section 1. Bank shall be merged into UNB under the charter of
UNB.
Section 2. The name of the receiving association (hereinafter
referred to as the "Surviving Bank") shall be United National Bank.
Section 3. The business of the Surviving Bank shall be that of
a national banking association. This business shall be conducted by the
Surviving Bank at its main office which shall be located at 1130 Route 22 East,
Bridgewater, Somerset County, New Jersey, and at its legally established
branches.
Section 4. The amount of capital stock of the Surviving Bank
shall be $__________, divided into __________ shares of common stock, each of
$_____ par value, and at the time the merger shall become effective, the
Surviving Bank shall have a surplus of $__________, and undivided profits,
including capital reserves, which when combined with the capital and surplus
will be equal to the combined capital structures of the merging banks as stated
in the preamble of this Agreement, adjusted however, for normal earnings and
expenses between June 30, 1998, and the effective time of the merger.
Section 5. All assets of each of the merging banks, as they
exist at the effective time of the merger, shall pass to and vest in the
Surviving Bank without any conveyance or other transfer. The Surviving Bank
shall be responsible for all of the liabilities of every kind and description,
including liabilities arising from the operation of their respective trust
departments, of each of the merging banks existing as of the effective time of
the merger. After the effective time of the merger, UNB will continue to
maintain the Bank liquidation account established by Bank upon its conversion to
the stock form of organization for the benefit of eligible account holders. In
addition, UNB will also continue to maintain the Bank liquidation account
established in conjunction with the merger and acquisition of Manville Savings
with, and into the Bank. UNB will maintain both of the aforementioned
liquidation accounts on the same basis as immediately prior to the effective
time of the merger, and Bank's liquidation accounts for the benefit of eligible
account holders shall automatically be deemed assumed by UNB, as of the
effective time of the merger, on the same basis as they existed immediately
prior to the effective time of the merger.
Section 6. Bank shall contribute to the Surviving Bank its
capital set forth in the preamble, adjusted, however, for normal earnings,
expenses and dividends between June 30, 1998, and the effective time of the
merger.
UNB shall have on hand at the effective time of the merger its
capital as set forth in the preamble, adjusted, however, for normal earnings,
expenses and dividends between June 30, 1998 and the effective date of the
merger.
Section 7. The stockholders of UNB shall retain their rights
in the capital stock presently outstanding, which shall immediately and
automatically become __________ shares of common stock of the Surviving Bank,
each with $_____ par value, and the stockholders of Bank in exchange for the
excess acceptable assets contributed by their bank to the Surviving Bank shall
be entitled to receive _____ shares of common stock of the Surviving Bank, each
with $_____ par value.
Section 8. Neither of the banks shall declare nor pay any
dividend to its stockholders between the date of this Agreement and the time at
which the merger shall become effective, nor dispose of any of its assets in any
other manner except in the ordinary course of business consistent with prudent
banking practice; provided, however, that UNB shall be entitled to pay dividends
to its parent without restriction and Bank may pay dividends to it parent
consistent with past practice, so long as the payment of such dividends shall
thereby not cause a breach of any representation, covenant, agreement or
condition to which the Bank is subject under the Amended and Restated Agreement
and Plan of Merger, dated as of September 22, 1998 among United National
Bancorp, Raritan Bancorp Inc., UNB and Bank (the "Merger Agreement").
Section 9. The present board of directors of UNB shall serve
as the board of directors of the Surviving Bank until the next annual meeting or
until such time as their successors have been elected and have qualified. [add
two Raritan directors]
Section 10. Effective as of the time this merger shall become
effective as specified in the merger approval to be issued by the Office of the
Comptroller of the Currency (the "OCC"), the articles of association of the
resulting bank shall read in their entirety as set forth in Schedule 1 annexed
hereto.
Section 11. This Agreement shall be terminated automatically
if the Merger Agreement is terminated as provided in the Merger Agreement.
Section 12. This Agreement shall be ratified and confirmed by
the affirmative vote of the stockholders of each of the merging banks owning at
least two-thirds of its capital stock outstanding, at a meeting to be held on
the call of the directors; and the merger shall become effective at the time
specified in the merger approval to be issued by the OCC.
Section 13. Each of the representations, warranties and
covenants of the parties hereto shall terminate as of the effective time of the
merger, other than Section 5 hereof which shall survive the effective time of
the merger.
Section 14. This Agreement may be executed in any number of
counterparts, and each counterpart shall constitute an original instrument, but
all such separate counterparts shall constitute only one and the same
instrument.
Section 15. Except as governed by federal law, the validity,
construction and enforceability of this Agreement shall be governed in all
respects by the laws of the State of New Jersey without regard to its conflicts
of laws or rules.
WITNESS, the signatures and seals of the merging banks as of
this __________, each set by its president or a vice president and attested to
by its cashier or secretary, pursuant to a resolution of its board of directors,
acting by a majority.
ATTEST: UNITED NATIONAL BANK
_______________________ By:______________________________________
ATTEST: THE RARITAN SAVINGS BANK
________________________ By:______________________________________
<PAGE>
STATE OF NEW JERSEY )
: ss.
COUNTY OF __________ )
On this ____ day of __________, before me, a Notary Public for
this state and county, personally came ____________________, of UNITED NATIONAL
BANK, and each of his/her capacity acknowledged this instrument to the act and
deed of the association and the seal affixed to it to be its seal. WITNESS my
official seal and signature this day and year.
--------------------
(Seal of Notary)
STATE OF NEW JERSEY )
:ss.
COUNTY OF ___________)
On this _____ day of __________, before me, a Notary Public
for this state and county, personally came ____________________, of THE RARITAN
SAVINGS BANK, and each of his/her capacity acknowledged this instrument to the
act and deed of the association and the seal affixed to it to be its seal.
WITNESS my official seal and signature this day and year.
----------------------------
(Seal of Notary)
<PAGE>
Schedule 1 to Bank Merger Agreement
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 1130
Route 22 East, Bridgewater, Somerset 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 $__________ divided into __________ shares of common stock
of the par value per share of $_____ 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.
<PAGE>
EXHIBIT 5.19
RARITAN AFFILIATE LETTER
___________, 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 Raritan Bancorp Inc., a Delaware corporation
(the "Company") with and into United National Bancorp, a New Jersey corporation
("United"), pursuant to the Amended and Restated Agreement and Plan of Merger
dated as of September 22, 1998 (the "Agreement") among the Company, United, The
Raritan Savings Bank and United National Bank. I currently own shares of the
Company's common stock, par value $.01 per share ("Raritan 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 Raritan Common Stock. In
addition, to the extent I own options to acquire Raritan Common Stock, those
options will be converted in the Merger into United Common Stock or options to
acquire United 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 "Act")
by the Securities and Exchange Commission (the "Commission") and as the term
"affiliate" is used for purposes of the Commission'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 Commission's Accounting Series
Release 135, as amended by Staff Accounting Bulletins Nos. 65 and 76 ("ASR
135").
I represent to and covenant with United that:
A. Initial 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 Raritan 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 Raritan 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. Later Pre-Merger and Post-Consummation Transfer
Restrictions. 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 United by means
of the filing of a Form 10-Q or Form 8-K under the Securities Exchange Act of
1934, as amended, the issuance of a quarterly earnings report, or any other
public issuance which satisfies the requirements of ASR 135, I shall not
transfer any Raritan 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 Raritan Common Stock owned by such person or entity. For purposes
of this paragraph, "Raritan Common Stock" includes the United Common Stock into
which the Raritan Common Stock or Options is converted.
C. Need for Registration or Exemption in Connection with
Transfers. I have been advised that the issuance of United Common Stock to me
pursuant to the Merger will be registered with the Commission under the 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 received by me in the Merger is restricted under Rule 145
promulgated by the Commission under the Act. I may not transfer United Common
Stock received by me or by any relative who shares my home or by any person or
entity who or which I control, unless (i) such transfer is registered under the
Act, (ii) such transfer is made in conformity with the volume and other
limitations of Rule 145 promulgated by the Commission under the Act, or (iii) in
the opinion of counsel reasonably acceptable to United, such transfer is
otherwise exempt from registration under the 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 to any relative who
shares my home or to any person or entity who or which I control, 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 SEPTEMBER 22, 1998 BETWEEN THE
REGISTERED HOLDER HEREOF AND UNITED NATIONAL BANCORP, A COPY OF WHICH AGREEMENT
IS ON FILE AT THE PRINCIPAL OFFICE 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
_______________, 1998 by
UNITED NATIONAL BANCORP
By:
Name:
Title:
<PAGE>
EXHIBIT 5.19.1
UNITED AFFILIATE LETTER
____________, 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 Raritan Bancorp Inc., a Delaware corporation
("Raritan") with and into United National Bancorp, a New Jersey corporation
("United"), pursuant to the Amended and Restated Agreement and Plan of Merger
dated as of September 22, 1998 (the "Agreement") among United, Raritan, United
National Bank and The Raritan Savings Bank. I currently own shares of United's
common stock, $1.25 par value ("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 Raritan that:
A. Initial 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. Later Pre-Merger and Post-Consummation Transfer
Restrictions. 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 United by means
of filing of a Form 10-Q or Form 8-K under the Securities Exchange Act of 1934,
the issuance of a quarterly earnings report, or any other public issuance which
satisfies the requirements of ASR 135, 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.
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.
<PAGE>
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 6.2
FORM OF OPINION OF COUNSELS TO
RARITAN TO BE DELIVERED TO
UNITED AT THE EFFECTIVE TIME
(Capitalized terms used herein and not otherwise defined have the meanings
given them in the Agreement)
(a) Raritan is a corporation validly existing and in good
standing under the laws of the State of Delaware. Raritan has the corporate
power and authority to own or lease all of its properties and assets and to
carry on its business as described in the Joint Proxy Statement/Prospectus on
page __ under the caption _________________. Raritan is registered as a holding
company under the BHCA.
(b) Each Subsidiary of Raritan listed as such in the Raritan
Disclosure Schedule is validly existing and in good standing under the laws of
the jurisdiction of its incorporation. The Bank is a New Jersey-chartered stock
savings bank. The Bank has the corporate power and authority to own or lease all
of its properties and assets and to carry on its business as described in the
Joint Proxy Statement/Prospectus on page __ under the caption _________________.
(c) The authorized capital stock of Raritan consists of
__________ shares of Raritan Common Stock and _________ shares of Raritan
Preferred Stock. Except for any Raritan Common Stock issuable upon exercise of
outstanding Raritan Options granted pursuant to the Raritan Option Plans and the
United Stock Option, we have not become aware (through our representation of
Raritan in connection therewith or in the course of our representation of
Raritan in connection with the Agreement, or through Raritan's representations
to us in the attached certificate) of any outstanding subscription rights,
options, conversion rights, warrants or other agreements or commitments of any
nature whatsoever (either firm or conditional) obligating Raritan to issue,
deliver or sell, cause to be issued, delivered or sold, or restricting Raritan
from selling any Raritan Preferred Stock or any additional Raritan Common Stock
or obligating Raritan to grant, extend or enter into any such agreement or
commitment. Based solely upon our review of the minute books of Raritan and its
Subsidiaries, and without independent verification of the matters recited
therein, all of the outstanding shares of capital stock of each Subsidiary of
Raritan listed as such in the Raritan Disclosure Schedule have been validly
authorized and issued and we are not aware of any liens, claims, equities,
restrictions or encumbrances created by Raritan on Raritan's ownership thereof.
(d) The Agreement has been authorized, executed and delivered
by Raritan and the Bank and constitutes the valid and binding obligations of
Raritan and the Bank, respectively, enforceable in accordance with its terms,
except that the enforceability of the obligations of Raritan and the Bank may be
limited by bankruptcy, fraudulent conveyance, insolvency, reorganization,
moratorium, or laws affecting bank holding companies or New Jersey-chartered
stock savings banks or institutions the deposits of which are insured by the
FDIC or other laws heretofore or hereafter enacted relating to or affecting the
enforcement of creditors' rights generally and by principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law). In addition, certain remedial and other provisions of the
Agreement may be limited by implied covenants of good faith, fair dealing, and
commercially reasonable conduct, by judicial discretion, in the instance of
equitable remedies, and by applicable public policies and laws.
(e) The execution and delivery of the Agreement and the Bank
Merger Agreement and the consummation of the transactions contemplated thereby
will not (i) conflict with or violate any provision of or result in the breach
of any provision of the respective certificate of incorporation or charter, as
the case may be, or by-laws of Raritan or the Bank; (ii) conflict with or
violate in any material respect, or result in a material breach or violation of
the terms or provisions of, or constitute a default under, or result in (whether
upon or after the giving of notice or lapse of time or both) any material
obligation under, any indenture, mortgage, deed of trust or loan agreement or
any other agreement, instrument, judgment, order, arbitration award or decree of
which we are aware (through our representation of Raritan in connection
therewith or in the course of our representation of Raritan in connection with
the Agreement, or through Raritan's representations to us in the attached
certificate) and to which Raritan or the Bank is a party or by which Raritan or
the Bank is bound; or (iii) cause Raritan or the Bank to violate any law, rule
or regulation applicable to Raritan or the Bank: except with respect to (ii) and
(iii) above, such as in the aggregate will not have a material adverse effect on
the ability of Raritan and the Bank to consummate the transactions contemplated
by the Agreement.
(f) All actions of the directors and stockholders of Raritan
and of the Bank required by federal banking law or Delaware law, or by the
respective certificate of incorporation or charter, as the case may be, or
by-laws of Raritan or the Bank, to be taken by Raritan or the Bank to authorize
the execution, delivery and performance of the Agreement and consummation of the
Merger have been taken.
(g) No approvals, authorizations, consents or other actions or
filings under federal banking law or Delaware law ("Approvals") are required to
be obtained by Raritan or the Bank in order to permit the execution and delivery
of the Agreement by Raritan and the Bank and the performance by Raritan and the
Bank of the transactions contemplated thereby other than those Approvals which
have been obtained or those Approvals or consents required to be obtained by
United or UNB, or Approvals not required or necessary to be obtained on the date
hereof.
(h) Except as set forth in the Raritan Disclosure Schedule and
in Raritan's certificate addressed to us and attached hereto, and other than
ordinary routine litigation incidental to the business of Raritan or its
Subsidiaries, we are not aware of any material action, suit or proceeding or
investigation pending or threatened in writing against or affecting the
business, operations, property or financial condition of Raritan or any of its
Subsidiaries, at law or in equity, in any court or before any Federal, state,
municipal or other governmental department, commission, board, bureau, agency or
instrumentality, except those which, if decided adversely to Raritan or any of
its Subsidiaries, would not have a material adverse effect on Raritan and its
Subsidiaries, taken as a whole; provided, however, we are not counsel to Raritan
or its Subsidiaries in any litigation and with respect to litigation we are
relying upon the representation and warranty of Raritan made in Section 3.7 of
the Agreement with respect to material litigation and on Raritan's certificate
addressed to us and attached hereto.
*******
We are not passing upon and do not assume any responsibility
for the accuracy, completeness or fairness of the statements and information
contained in the Joint Proxy Statement/Prospectus and make no representation
that we have independently verified the accuracy, completeness or fairness of
such statements and information, but, without in any way limiting the generality
of the foregoing, based upon our review of the Joint Proxy Statement/Prospectus
(i) the Joint Proxy Statement/Prospectus (except for financial statements and
other tabular financial information, and other financial and statistical data
and information, as to which we express no opinion) complies as to form in all
material respects with the 1934 Act and the applicable laws and regulations
thereunder, (ii) no facts have come to our attention that caused us to believe
that (except for financial statements and other tabular financial information,
as to which we do not express any belief) the Joint Proxy Statement/Prospectus
on the date of the mailing thereof and on the date of the meeting of
stockholders of Raritan at which the Agreement was approved, contained any
untrue statement of a material fact with respect to Raritan or omitted to state
a material fact with respect to Raritan necessary in order to make the
statements therein with respect to Raritan, in light of the circumstances under
which they were made, not misleading.
*******
In rendering their opinion, counsel to Raritan (A) may, to the
extent they deem proper and so specify in their opinion, rely upon the opinion
of other counsel as to matters involving the application of laws of any
jurisdiction other than the United States, or may exclude from their opinion the
substance included in the opinions of other counsel given directly to Raritan
and (B) may rely, as to matters of fact, on certificates of responsible officers
of Raritan, the Bank, or other Subsidiaries of Raritan and public officials;
provided copies of any such opinions or certificates are delivered to Raritan
together with the opinion to be rendered hereunder by counsel to Raritan.
Counsel to Raritan may assume that any agreement is the valid and binding
obligation of any parties to such agreement other than Raritan and the Bank. As
to matters of fact, counsel to Raritan may also rely upon the representations
and warranties made by Raritan to Raritan in the Agreement as though such
representations and warranties were made directly to counsel. Counsel to Raritan
may also rely upon the genuineness of signatures and the authenticity of copies.
<PAGE>
SCHEDULE 6.3
FORM OF OPINION OF COUNSEL TO
UNITED TO BE DELIVERED TO
RARITAN AT THE EFFECTIVE TIME
(Capitalized terms used herein and not otherwise defined have the meanings
given them in the Agreement)
(a) United is a corporation 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 described in the Joint Proxy Statement/Prospectus on
page __ under the caption _________________. United is registered as a bank
holding company under the BHCA.
(b) Each Subsidiary of United listed as such in the United
Disclosure Schedule is validly existing and in good standing under the laws of
the jurisdiction of its incorporation. UNB is a national banking association
chartered under the laws of the United States. UNB has the corporate power and
authority to own or lease all of its properties and assets and to carry on its
business as described in the Joint Proxy Statement/Prospectus on page __ under
the caption _________________.
(c) The authorized capital stock of United consists of
___________ shares of common stock, ___ par value per share ("United Common
Stock"). Except for any United Common Stock issuable upon exercise of
outstanding stock options and stock appreciation rights granted pursuant to the
United Option Plan, we have not become aware (through our representation of
United in connection therewith or in the course of our representation of United
in connection with the Agreement, or through United's representations to us in
the attached certificate) of any outstanding subscription rights, options,
conversion rights, warrants or other agreements or commitments of any nature
whatsoever (either firm or conditional) obligating United to issue, deliver or
sell, cause to be issued, delivered or sold, or restricting United from selling
any additional United Common Stock or obligating United to grant, extend or
enter into any such agreement or commitment except as may be provided in any
acquisition agreement United may enter into after the date of execution of the
Agreement. Based solely upon our review of the minute books of United and its
Subsidiaries, and without independent verification of the matters recited
therein, all of the outstanding shares of capital stock of each Subsidiary of
United listed as such in the United Disclosure Schedule have been validly
authorized and issued and we are not aware of any liens, claims, equities,
restrictions or encumbrances created by United on United's ownership thereof.
The United Common Stock to be issued in connection with the Merger in accordance
with Article II of the Agreement, when so issued in accordance therewith, will
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 United.
(d) The Agreement has been authorized, executed and delivered
by United and UNB and constitutes the valid and binding obligations of United
and UNB, respectively, enforceable in accordance with its terms, except that the
enforceability of the obligations of United and UNB may be limited by
bankruptcy, fraudulent conveyance, insolvency, reorganization, moratorium, or
laws affecting institutions the deposits of which are insured by the FDIC or
other laws heretofore or hereafter enacted relating to or affecting the
enforcement of creditors' rights generally and by principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law). In addition, certain remedial and other provisions of the
Agreement may be limited by implied covenants of good faith, fair dealing, and
commercially reasonable conduct, by judicial discretion, in the instance of
equitable remedies, and by applicable public policies and laws.
(e) The execution and delivery of the Agreement and the Bank
Merger Agreement and the consummation of the transactions contemplated thereby
will not (i) conflict with or violate any provision of or result in the breach
of any provision of the respective certificates of incorporation or by-laws of
United or UNB; (ii) conflict with or violate in any material respect, or result
in a material breach or violation of the terms or provisions of, or constitute a
default under, or result in (whether upon or after the giving of notice or lapse
of time or both) any material obligation under, any indenture, mortgage, deed of
trust or loan agreement or any other agreement, instrument, judgment, order,
arbitration award or decree of which we are aware (through our representation of
United in connection therewith or in the course of our representation of United
in connection with the Agreement, or through United's representations to us in
the attached certificate) and to which United or UNB is a party or by which
United or UNB is bound; or (iii) cause United or UNB to violate any law, rule or
regulation applicable to United or UNB: except with respect to (ii) and (iii)
above, such as in the aggregate will not have a material adverse effect on the
ability of United and UNB to consummate the transactions contemplated by the
Agreement.
(f) All actions of the directors and stockholders of United
and of UNB required by federal banking law or New Jersey law, or by the
respective certificates of incorporation or by-laws of United or UNB, to be
taken by United or UNB to authorize the execution, delivery and performance of
the Agreement and consummation of the Merger have been taken.
(g) Assuming that there has been due authorization of the
Merger by all necessary corporate and governmental proceedings on the part of
Raritan and that Raritan has taken all action required to be taken by it prior
to the Effective Time, upon the appropriate filing of the Certificates of Merger
in respect of the Merger with the New Jersey Secretary of State and the Delaware
Secretary of State in accordance with Section 1.6 of the Agreement, the Merger
will become effective at the time of such filing, and upon effectiveness of the
Merger each share of Raritan Common Stock will be converted as provided in
Article II of the Agreement.
(h) No approvals, authorizations, consents or other actions or
filings under federal banking law or New Jersey law ("Approvals") are required
to be obtained by United or UNB in order to permit the execution and delivery of
the Agreement by United and UNB and the performance by United and UNB of the
transactions contemplated thereby other than those Approvals which have been
obtained or those Approvals or consents required to be obtained by Raritan or
the Bank, and Approvals not required or necessary to be obtained on the date
hereof.
(i) Except as set forth in the United Disclosure Schedule and
in United's certificate addressed to us and attached hereto, and other than
ordinary routine litigation incidental to the business of United or its
Subsidiaries, we are not aware of any material action, suit or proceeding or
investigation pending or threatened in writing against or affecting the
business, operations, property or financial condition of United or any of its
Subsidiaries, at law or in equity, in any court or before any Federal, state,
municipal or other governmental department, commission, board, bureau, agency or
instrumentality, except those which, if decided adversely to United or any of
its Subsidiaries, would not have a material adverse effect on United and its
Subsidiaries, taken as a whole; provided, however, we are not counsel to United
or its Subsidiaries in certain litigation and with respect to any such
litigation we are relying upon the representation and warranty of United made in
Section 4.10 of the Agreement with respect to material litigation and on
United's certificate addressed to us and attached hereto.
(j) The Registration Statement has been declared effective by
the SEC under the 1933 Act and we are not aware that any stop order suspending
the effectiveness has been issued under the 1933 Act or proceedings therefor
initiated or threatened by the SEC.
*******
We are not passing upon and do not assume any responsibility
for the accuracy, completeness or fairness of the statements and information
contained in the Joint Proxy Statement/Prospectus and make no representation
that we have independently verified the accuracy, completeness or fairness of
such statements and information, but, without in any way limiting the generality
of the foregoing, based upon our review of the Joint Proxy Statement/Prospectus
(i) the Joint Proxy Statement/Prospectus (except for financial statements and
other tabular financial information, and other financial and statistical data
and information, as to which we express no opinion) complies as to form in all
material respects with the 1933 Act and the applicable laws and regulations
thereunder, (ii) no facts have come to our attention that caused us to believe
that (except for financial statements and other tabular financial information,
as to which we do not express any belief) the Joint Proxy Statement/Prospectus
on the date of the mailing thereof and on the date of the meeting of
stockholders of Raritan at which the Agreement was approved, contained any
untrue statement of a material fact with respect to United or omitted to state a
material fact with respect to United necessary in order to make the statements
therein with respect to United, in light of the circumstances under which they
were made, not misleading.
*******
In rendering their opinion, counsel to United (A) may, to the
extent they deem proper and so specify in their opinion, rely upon the opinion
of other counsel as to matters involving the application of laws of any
jurisdiction other than the United States or the State of New Jersey, or may
exclude from their opinion the substance included in the opinions of other
counsel given directly to Raritan and (B) may rely, as to matters of fact, on
certificates of responsible officers of United, UNB, or other Subsidiaries of
United and public officials; provided copies of any such opinions or
certificates are delivered to Raritan together with the opinion to be rendered
hereunder by counsel to United. Counsel to United may assume that any agreement
is the valid and binding obligation of any parties to such agreement other than
United. As to matters of fact, counsel to United may also rely upon the
representations and warranties made by United to Raritan in the Agreement as
though such representations and warranties were made directly to counsel.
Counsel to United may also rely upon the genuineness of signatures and the
authenticity of copies.
<PAGE>
<TABLE>
Exhibit B to
Merger Agreement
Index
Index
Weighting
Company Name Ticker City State (%)
<S> <C> <C> <C> <C>
Commerce Bancorp, Inc. CBH Cherry Hill NJ 10.95
S&T Bancorp, Inc. STBA Indiana PA 8.50
TrustCo Bank Corp NY TRST Schenectady NY 8.28
Provident Bankshares Corporation PBKS Baltimore MD 7.80
UST Corporation USTB Boston MA 7.75
F&M National Corporation FMN Winchester VA 7.43
First Commonwealth Financial Corporation
FCF Indiana PA 6.97
Trust Company of New Jersey (The) TCNJ Jersey City NJ 5.67
National Penn Bancshares, Inc. NPBC Boyertown PA 4.10
BT Financial Corporation BTFC Johnstown PA 3.82
USBANCORP, Inc. UBAN Johnstown PA 3.55
Sandy Spring Bancorp SASR Olney MD 3.54
NBT Bancorp, Inc. NBTB Norwich NY 3.28
First Western Bancorp, Inc. FWBI New Castle PA 3.25
Harleysville National Corporation HNBC Harleysville PA 3.16
BSB Bancorp, Inc. BSBN Binghamton NY 3.07
F&M Bancorp FMBN Frederick MD 2.68
Community Bank System, Inc. CBU DeWitt NY 2.51
Arrow Financial Corporation AROW Glen Falls NY 2.04
Sun Bancorp, Inc. SNBC Vineland NJ 1.66
</TABLE>
If, at any time after September 21, 1998 and before the Determination Date, the
common stock of any company on this Exhibit B ceases to be publicly traded or
any public announcement of a proposal for such company to be acquired or for
such company to acquire another company or companies in transactions with a
value exceeding 25% of the acquiror's market capitalization, such company shall
be removed from the Index Group effective as of the Starting Date (i.e., such
Company shall not be considered part of the Index Group for any purposes in
connection with this Merger Agreement) and the Index Weighting of the remaining
companies in the Index Group shall be increased proportionately to their prior
Index Weighting, so that the total Index Weighting is 100%. If any company
belonging to the Index Group declares or effects a stock dividend,
reclassification, recapitalization, split-up, combination, exchange of shares,
or similar transaction between the Starting Date and the Determination Date, the
prices for the common stock of such company shall be appropriately adjusted for
the purposes of applying this Exhibit B.
<PAGE>
APPENDIX B
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (this "Agreement") dated
September 22, 1998, is by and between United National Bancorp, a New Jersey
corporation and registered bank holding company ("United"), and Raritan Bancorp
Inc., a Delaware corporation
("Raritan").
BACKGROUND
1. United, United National Bank ("UNB"), Raritan and The
Raritan Savings Bank (the "Bank"), as of the date hereof, have executed a
definitive agreement and plan of merger (the "Merger Agreement") pursuant to
which United will acquire Raritan through a merger of Raritan with and into
United (the "Merger").
2. During the negotiation of the Merger Agreement, United and
UNB advised Raritan that they would not execute the Merger Agreement unless
Raritan executed this Agreement.
3. As an inducement to United to enter into the Merger
Agreement and in consideration for such entry, Raritan has agreed to grant to
United an option to purchase authorized but unissued shares of common stock of
Raritan 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 Raritan,
intending to be legally bound hereby, agree:
1. Grant of Option. Raritan hereby grants to United the option
to purchase 470,000 shares of the common stock, $.01 par value (the "Common
Stock"), of Raritan at a price of $26.00 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 Raritan pursuant to which such person or any affiliate of
such person would (i) merge or consolidate, or enter into any similar
transaction, with Raritan or the Bank, (ii) acquire all or a significant portion
of the assets or liabilities of Raritan or the Bank, 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 Raritan or the Bank or any other business combination
involving Raritan or the Bank, 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 Raritan called to vote on the Merger and
Raritan' 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, Raritan 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 Raritan or any of its directors, officers
or agents, with the formal or informal approval or acquiescence of the Raritan
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 Raritan, 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 Raritan. The term "significant number" means 20% of the
outstanding shares of Raritan.
"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 Raritan or the Bank 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 Raritan 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.
Raritan 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 Raritan shall not be a condition to the right of United
to exercise the Option. Raritan will not take any action which would have the
effect of preventing or disabling Raritan 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 Raritan (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 Raritan) 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 Raritan of the aggregate price for the
Option Shares so purchased by wire transfer of immediately available funds to an
account designated by Raritan, (b) Raritan 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 Raritan, 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 Raritan Bancorp Inc., 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, Raritan
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 and any state securities bureau covering the Option and such number
of Option Shares as United shall specify in its request, and Raritan 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, Raritan 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 Raritan 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 Raritan and blue sky fees and expenses shall be paid by Raritan.
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, Raritan 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 Raritan
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 Raritan 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 Raritan 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 Raritan for any legal or other expense reasonably incurred by
Raritan 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 Raritan
with another entity, or in the event any sale of all or substantially all of the
assets of Raritan 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 Raritan 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
Raritan 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 Raritan. Raritan hereby
represents and warrants to United as follows:
a. Due Authorization. Raritan 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 Raritan.
<PAGE>
b. Authorized Shares. Raritan 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 Raritan or any agreement,
instrument, judgment, decree, statute, rule or order applicable to Raritan.
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 Raritan 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:
(a) If to United, to:
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
Attn.: Michael W. Zelenty, Esq.
By Hand: 200 Campus Drive
Florham Park, New Jersey 07932-0950
By Mail: P.O. Box 1945
Morristown, New Jersey 07962-1945
(b) If to Raritan, to:
Raritan Bancorp Inc.
454 Route 28
Bridgewater, New Jersey 08807
Attn.: Arlyn D. Rus, Chairman,
President and Chief Executive Officer
With a copy to:
Luse Lehman Gorman Pomerenk & Schick PC
5335 Wisconsin Avenue N.W.
Washington, D.C. 20015
Attn.: John J. Gorman
or such other addresses as shall be furnished in writing by
any party, and any such notice or communications shall be deemed to have been
given as of the date so delivered or telecopied and mailed.
<PAGE>
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.
RARITAN BANCORP INC.
By: ARLYN D. RUS
-----------------------------------
Arlyn D. Rus
UNITED NATIONAL BANCORP
By: THOMAS C. GREGOR
-----------------------------------
Thomas C. Gregor
<PAGE>
APPENDIX C
___________, 1998
Board of Directors
Raritan Bancorp Inc.
454 Route 28
Bridgewater, NJ 08807
Attention: Mr. Arlyn D. Rus
Chairman of the Board of Directors
Directors:
You have requested our opinion as to the fairness, from a financial
point of view, to the holders of the outstanding shares of common stock, par
value $0.01 per share (the "Raritan Shares"), of Raritan Bancorp Inc.
("Raritan") of the exchange ratio (as described below, the "Exchange Ratio")
pursuant to the Agreement and Plan of Merger, dated as of September 22, 1998
(the "Merger Agreement"), between Raritan and United National Bancorp ("United
National").
Pursuant to the Merger Agreement, Raritan will merge with and into
United National (the "Merger") and each Raritan Share issued and outstanding
immediately prior to the Effective Time (subject to certain exceptions) shall be
converted into 1.45 shares (the "Exchange Ratio") of common stock of United
National, par value $1.25 per share ("United National Common Stock"), subject to
adjustment as described in the Merger Agreement. As a result of the 10% stock
dividend declared September 16, 1998 and payable November 2, 1998 to
shareholders of record on October 15, 1998 by United National, the Exchange
ratio has been adjusted to 1.595 shares of common stock of United National, par
value $1.125 per share. It is our understanding that the merger will be
accounted for as a pooling-of-interests under generally accepted accounting
principles.
The investment banking business of Endicott Financial Advisors, L.L.C.
("Endicott") includes the valuation of financial institutions and their
securities in connection with mergers and acquisitions and other corporate
transactions.
In connection with this opinion, we have reviewed and considered, among
other things: (a) the Merger Agreement; (b) audited consolidated financial
statements and management's discussion and analysis of the financial condition
and results of operations for each of Raritan and United National for the three
fiscal years ended December 31, 1995, December 31, 1996 and December 31, 1997;
(c) unaudited consolidated financial statements and management's discussion and
analysis of the financial condition and results of operations for each of
Raritan and United National for the quarters ended March 31, 1998, June 30, 1998
and September 30, 1998; (d) financial analyses and forecasts for Raritan and
United National prepared by Endicott and Raritan management, the underlying
assumptions of which were reviewed during due diligence with the managements of
Raritan and United; (e) the views of senior management of Raritan and United
National of their respective past and current business operations, results
thereof, financial condition and future prospects; (f) certain reported price
and trading activity for the Raritan and United National common stock, including
a comparison of certain financial and stock market information with similar
information for certain other companies the securities of which are publicly
traded; (g) the financial terms of recent business combinations in the banking
industry; (h) the pro-forma impact of the transaction on United National; (i)
the current market environment generally and the banking environment in
particular; and (j) such other information, financial studies, analyses and
investigations and financial, economic and market criteria as we considered
relevant.
In performing our review, we have assumed and relied upon, without
independent verification, the accuracy and completeness of all of the financial
information, analyses and other information reviewed by and discussed with us,
and we did not make an independent evaluation or appraisal of the specific
assets, the collateral securing assets or the liabilities of Raritan or United
National or any of their subsidiaries, or the collectibility of any such assets
(relying, where relevant on the analyses and estimates of Raritan and United
National). With respect to the financial forecast and cost savings information
reviewed with Raritan management, we have assumed that they reflect the best
currently available estimates and judgments of the senior management of Raritan
as to the future financial performance of Raritan, United and the combined
entity. We have also assumed that there has been no material change in Raritan's
or United National's assets, financial condition, results of operations,
business or prospects since the date of the last financial statements made
available to us. We have also assumed without independent verification that the
aggregate consolidated allowance for loan losses for Raritan and United National
were adequate to cover such losses. We have further assumed that the conditions
precedent in the Agreement are not waived.
Our opinion is necessarily based on economic, market and other
conditions as in effect on, and the information made available to us as of, the
date hereof. Events occurring after the date hereof could materially affect the
assumptions used in preparing this opinion. We have not undertaken to reaffirm
or revise this opinion or otherwise comment upon any events occurring after the
date hereof.
We have acted as Raritan's financial advisor in connection with the
Merger and will receive a fee for our services, a significant portion of which
is contingent upon consummation of the Merger. We will also receive a fee for
rendering this opinion.
It is understood that this opinion is not to be quoted or referred to,
in whole or in part, in a registration statement, prospectus, or proxy
statement, or in any other document used in connection with the offering or sale
of securities, nor shall this letter be used for any other purposes, without
Endicott's prior written consent, provided, however, that we hereby consent to
the inclusion of this opinion in this Joint Proxy Statement-Prospectus and the
Registration Statement on Form S-4 of which it comprises a part.
Based upon and subject to the foregoing, it is our opinion that, as of
the date hereof, the Exchange Ratio is fair from a financial point of view to
the holders of Raritan Shares.
Very Truly Yours,
ENDICOTT FINANCIAL ADVISORS, L.L.C.
<PAGE>
APPENDIX D
September 22, 1998
The Board of Directors
United National Bancorp
1130 Route 22 East
PO Box 6000
Bridgewater, NJ 08807-0010
Members of the Board:
You have requested our opinion as investment bankers as to the
fairness, from a financial point of view, to the common stockholders of United
National Bancorp ("UNBJ") of the exchange ratio in the proposed merger ("the
Merger") of Raritan Bancorp, Inc. ("RARB") with and into UNBJ pursuant to the
Merger Agreement ("Agreement") dated as of September 22, 1998 between UNBJ and
RARB. It is our understanding that the Merger will be structured as a pooling of
interests under generally accepted accounting principles and will be a tax-free
reorganization under the Internal Revenue Code.
As is more specifically set forth in the Merger Agreement, upon
consummation of the Merger, each outstanding share of the common stock of RARB,
par value $.01 per share ("RARB Common Stock"), will be converted into and
exchanged for 1.595 (the "Exchange Ratio") shares of UNBJ ("UNBJ Common Stock"),
$.01 par value per share.
Keefe, Bruyette & Woods, Inc. ("Keefe Bruyette"), as part of its
investment banking business, is continually engaged in the valuation of bank
holding companies and banks, thrift holding companies and thrifts and their
securities in connection with mergers and acquisitions, underwriting, private
placements, competitive bidding processes, market making as a NASD market maker,
and valuations for various other purposes. As specialists in the securities of
banking companies we have experience in, and knowledge of, the valuation of
banking enterprises. In the ordinary course of our business as a broker-dealer,
we may, from time to time, trade the securities of RARB or UNBJ, for our own
account, and for the accounts of our customers and, accordingly, may at any time
hold a long or short position in such securities. To the extent we have any such
positions as of the date of this opinion it has been disclosed to UNBJ. KBW has
served as financial advisor to UNBJ in the negotiation of the Merger Agreement
and in rendering this fairness opinion and will receive a fee from UNBJ for
those services.
In arriving at our opinion, we have reviewed, analyzed and relied upon
material bearing upon the financial and operating condition of RARB and UNBJ and
the Merger, including among other things, the following:
i. Reviewed the Merger Agreement;
ii. Reviewed certain historical financial and other information concerning
UNBJ for the three years ending December 31, 1997, including UNBJ's
Annual Report to Stockholders and Annual Reports on Forms 10-K, and
interim quarterly reports on Form 10-Q;
iii. Reviewed certain historical financial and other information concerning
RARB for the three years ending December 31, 1997, including RARB's
Annual Report to Stockholders and Annual Reports on Forms 10-K, and
interim quarterly reports on Form 10-Q;
iv. Reviewed and studied the historical stock prices and trading volumes of
the common stock of both UNBJ and RARB;
v. Held discussions with senior management of UNBJ and RARB with respect
to their past and current financial performance, financial condition
and future prospects;
vi. Reviewed certain internal financial data, projections and other
information of UNBJ and RARB, including financial projections prepared
by management;
vii. Analyzed certain publicly available information of other financial
institutions that we deemed comparable or otherwise relevant to our
inquiry, and compared UNBJ and RARB from a financial point of view with
certain of these institutions;
viii. Reviewed the financial terms of certain recent business combinations in
the banking industry that we deemed comparable or otherwise relevant to
our inquiry; and
<PAGE>
ix. Conducted such other financial studies, analyses and investigations and
reviewed such other information as we deemed appropriate to enable us
to render our opinion.
In conducting our review and arriving at our opinion, we have relied
upon the accuracy and completeness of all of the financial and other information
provided to us or publicly available and we have not assumed any responsibility
for independently verifying the accuracy or completeness of any such
information. We have relied upon the management of UNBJ as to the reasonableness
and achievability of the financial and operating forecasts and projections (and
the assumptions and bases therefor) provided to us, and we have assumed that
such forecasts and projections reflect the best currently available estimates
and judgments of such management and that such forecasts and projections will be
realized in the amounts and in the time periods currently estimated by such
management. We and certain representatives of UNBJ management reviewed with
members of management of RARB the budgets, forecasts and related underlying
assumptions provided to us by RARB management. After those initial due diligence
discussions, we prepared revised earnings estimates for RARB. Prior to
finalizing these revised estimates, we and members of the management of UNBJ
discussed the basis for those revisions with members of the management of RARB.
We used our revised estimates and underlying assumptions in preparing our
analyses and related opinion for the Board of UNBJ. We are not experts in the
independent verification of the adequacy of allowances for loan and lease losses
and we have assumed that the current and projected aggregate reserves for loan
and lease losses for UNBJ and RARB are adequate to cover such losses. We did not
make or obtain any independent evaluations or appraisals of any assets or
liabilities of UNBJ, RARB, or any of their respective subsidiaries nor did we
verify any of UNBJ's or RARB's books or records or review any individual loan or
credit files.
We have considered such financial and other factors as we have deemed
appropriate under the circumstances, including, among others, the following: (i)
the historical and financial position and results of operations of UNBJ and
RARB; (ii) the assets and liabilities of UNBJ and RARB; and (iii) the nature and
terms of certain other merger transactions involving banks and bank holding
companies. We have also taken into account our assessment of general economic,
market and financial conditions and our experience in other transactions, as
well as our experience in securities valuation and knowledge of the banking
industry generally. Our opinion is necessarily based upon conditions as they
exist and can be evaluated on the date hereof and the information made available
to us through the date hereof.
Based upon and subject to the foregoing, it is our opinion that, as of
the date hereof, the Exchange Ratio is fair, from a financial point of view, to
UNBJ and its stockholders.
Very truly yours,
KEEFE, BRUYETTE & WOODS, INC.
