UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
Continental Bancorporation
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(Name of Issuer)
Common Stock Par Value $.01 per share
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(Title of Class of Securities)
211033105
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(CUSIP Number)
Scott T. Page, Senior Executive Vice President, Collective Bancorp, Inc., 716
West White House Pike, Cologne, New Jersey 08213; Mailing Address: P.O. Box 316,
Egg Harbor, New Jersey 08915
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(Name, Address and Telephone Number of Person Authorized to Receive Notices and
Communications)
May 21, 1996
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box |_|.
Check the following box if a fee is being paid with the statement.|X|(A fee is
not required only if the reporting person: (1) has a previous statement on file
reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7.)
Note: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13d-1(a) for other parties to whom copies are to be
sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
SEC 1746 (12-91)
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Page 2 of 5 Pages
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CUSIP No. 211033105
SCHEDULE 13D
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Collective Bancorp, Inc.
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) |_|
(b) |_|
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
WC
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
State of Delaware
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7 SOLE VOTING POWER
NUMBER OF 956,704
SHARES
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8 SHARED VOTING POWER
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9 SOLE DISPOSITIVE POWER
956,704
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10 SHARED DISPOSITIVE POWER
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
956,704
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
|_|
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11);
19.9%
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14 TYPE OF REPORTING PERSON
CO
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
Item 1. Security and Issuer:
The class of equity security to which this statement relates is the Common
Stock, $2.00 par value (the "CB Common Stock"), of Continental Bancorporation, a
New Jersey corporation. ("Continental"). The principal executive offices of
Continental are located at 1345 Chews Landing Road, Laurel Springs, New Jersey
08021-2792.
Item 2. Identity and Background:
The person filing this statement is Collective Bancorp, Inc., a
corporation organized under the laws of the State of Delaware ("Collective").
The address of Collective's principal business and its principal office is 716
West White House Pike, Cologne, New Jersey 08213. Collective is a savings and
loan holding company registered under the Home Owners' Loan Act, as amended, and
through its various subsidiaries, provides a variety of financial services and
products to individuals, businesses and others. Schedule 1 to this statement
sets forth certain information with respect to the directors and executive
officers of Collective.
During the past five years, neither Collective nor, to the knowledge of
Collective, any director or executive officer of Collective, (i) has been
convicted in a criminal proceeding or (ii) has been a party to a civil
proceeding of a judicial or administrative body of competent jurisdiction where,
as a result of such proceeding, was or is subject to a judgment, decree or final
order enjoining future violations of, or prohibiting or mandating activities
subject to federal or state securities laws or finding a violation with respect
to such laws.
Item 3. Source and Amount of Funds and Other Consideration:
The source of funds for any exercise of the Option (as defined in Item 4)
would be provided from Collective's working capital. If Collective exercised the
Option in full, the exercise price would be approximately $3.8 million.
Item 4. Purpose of Transaction:
On May 21, 1996, Collective, Continental and CBAC Corp. ("CBAC"), a wholly
owned subsidiary of Collective formed for the purpose of facilitating the
transaction described below, entered into a definitive Agreement and Plan of
Merger (the "Merger Agreement"). Under the Merger Agreement, CBAC will merge
with and into Continental, shareholders of Continental will receive $5.00 per
share of CB Common Stock outstanding (including outstanding stock options) and
Continental will become a wholly owned subsidiary of Collective. Consummation of
the transactions contemplated by the Merger Agreement is subject to approval by
the shareholders of Continental and to receipt of all required regulatory
approvals. A copy of the Merger Agreement is filed as an exhibit to this
statement and is incorporated herein by reference.
In connection with the Merger Agreement, Continental and Collective
entered into a Stock Option Agreement, dated May 21, 1996, (the "Option
Agreement") pursuant to which Continental granted to Collective an option (the
"Option") to acquire up to 956,704 shares of CB Common Stock at an exercise
price of $4.00 per share. The option is exercisable only upon the occurrence of
certain events, as set forth in Section 2 of the Option Agreement.
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Page 4 of 5 Pages
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Collective may cause Continental to repurchase the Option (and any shares in
respect of which it has been exercised) under certain circumstances, as
described in Section 7 of the Option Agreement. Reference is hereby made to the
Option Agreement filed as an exhibit to this statement for a complete
description of the terms and conditions of the Option.
The purpose of the Option Agreement is to increase the likelihood that the
Merger will be completed as contemplated by the Merger Agreement.
Item 5. Interest in Securities of the Issuer.
As a result of the Option Agreement, Collective may, pursuant to Rule
13d-3(d)(i) under the Securities Exchange Act of 1934, be deemed to own
beneficially up to 956,704 shares of CB Common Stock, which is 19.9% of the
outstanding Common Stock as of May 21, 1996, or 16.6% of the outstanding CB
Common Stock as of May 21, 1996, after giving effect to the full exercise of the
Option. If the Option were to be exercised, Collective would have sole voting
power and, subject to the Option Agreement, sole dispositive power, with respect
to the shares of CB Common Stock acquired upon exercise.
Neither Collective nor, to the knowledge of Collective, any of its
directors or executive officer, have effected transactions in shares of CB
Common Stock during the past 60 days.
Item 6Contracts, Arrangements, Understandings or Relationships with respect to
Securities of the Issuer:
Except as set forth above, neither Collective nor to the knowledge of
Collective, any of its directors or executive officers, has any contracts,
arrangements, understandings or relationships (legal or otherwise) with any
person with respect to any securities of Continental including but not limited
to, transfer or voting of any securities of Continental, finder's fees, joint
ventures, loan or option arrangements, puts or calls, guarantees of profits,
division of profits or loss, or the giving or withholding of proxies.
Item 7. Material to be Filed as Exhibits:
7.1 Stock Option Agreement, dated May 21, 1996,between Continental
Bancorporation and Collective Bancorp, Inc.
7.2 Agreement and Plan of Merger, dated as of May 21, 1996, among
Collective Bancorp, Inc. Continental Bancorporation and CBAC Corp.
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Page 5 of 5 Pages
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Signature
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
COLLECTIVE BANCORP, INC.
Date: June 12, 1996 By: /s/EDWARD J. MCCOLGAN
Edward J. McColgan
Vice Chairman, Chief
Financial Officer
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SCHEDULE 1 TO SCHEDULE 13D
Directors and Executive Officers of Collective Bancorp, Inc.
The names, business addresses and present principal occupations or
employments of the directors and executive officers of Collective Bancorp, Inc.,
are set forth below. In each case, the directors's or executive officer's
mailing address is Collective Bancorp, Inc., P.O. Box 316, Egg Harbor, New
Jersey 08215. Unless otherwise indicated, (i) each occupation set forth opposite
an individual's name refers to Collective Bancorp, Inc., and (ii) each
individual is a citizen of the United States.
Name Present Principal Occupation or Employment
Wesley J. Bahr Retired, former Chairman, First Federal Savings
and Loan Association of New York. Chairman
and Chief Executive Officer.
George W. French Retired, former President, French Lumber Co.,
Inc.
Thomas H. Hamilton Chairman and Chief Executive Officer
Miles Lerman President, Miles Lerman Enterprises, a real estate
development firm.
David S. MacAllaster President, MacAllaster, Pitfield & Mackay, Inc.,
securities brokerage firm.
Edward J. McColgan Vice Chairman, Chief Financial Officer.
William R. Miller Retired former Senior Vice President
Manufacturing, Lennox China, Inc.
Robert F. Mutschler, Jr. Manufacturing Consultant, former Vice President,
Ocean Yacht II, a boat building company
Herman O. Wunsch President, Atlantic Maintenance, Inc.
Executive Officers Who Are Not Directors
Name Position with Collective Bancorp, Inc.
Scott T. Page Senior Executive Vice President, Secretary
Bernard H. Berkman Executive Vice President
<PAGE>
EXHIBIT (7)
AGREEMENT AND PLAN OF MERGER
BY AND BETWEEN
COLLECTIVE BANCORP, INC.,
CBAC CORP.
AND
CONTINENTAL BANCORPORATION
Dated as of the 21st day of May, 1996
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TABLE OF CONTENTS
Page
ARTICLE I
THE MERGER
Section 1.01 Structure of the Merger...................................... 1
Section 1.02 Effect on Outstanding Shares................................. 2
Section 1.03 Exchange Procedures.......................................... 2
Section 1.04 Options...................................................... 4
Section 1.05 Secondary Merger............................................. 4
Section 1.06 Modification of Structure................................... 4
ARTICLE II
REPRESENTATIONS AND WARRANTIES
Section 2.01 Representations and Warranties of the Seller................. 4
Section 2.02 Representations and Warranties of the Purchaser and
Acquisition Corp................... 18
ARTICLE III
CONDUCT PENDING THE MERGER
Section 3.01 Conduct of the Seller's Business Prior to the Effective Time. 22
Section 3.02 Forbearance by the Seller.................................... 23
Section 3.03 Conduct of the Purchaser's Business Prior to the Effective
Time............................... 27
ARTICLE IV
COVENANTS
Section 4.01 No Solicitation.............................................. 27
Section 4.02 Certain Policies of the Seller; Balance Sheet................ 28
Section 4.03 Access and Information....................................... 29
Section 4.04 Certain Filings, Consents and Arrangements................... 30
Section 4.05 Additional Agreements........................................ 31
Section 4.06 Publicity.................................................... 31
Section 4.07 Notification of Certain Matters.............................. 31
Section 4.08 Indemnification.............................................. 32
Section 4.09 Shareholders' Meeting........................................ 33
Section 4.10 Proxy Statement.............................................. 33
Section 4.11 Stock Option Agreement....................................... 34
Section 4.12 Dissenters' Rights........................................... 34
Section 4.13 Operating Transition..........................................34
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ARTICLE V
CONDITIONS TO CONSUMMATION
Section 5.01 Conditions to Each Party's Obligations........................ 34
Section 5.02 Conditions to the Obligations of the Purchaser under this
Agreement............................... 35
Section 5.03 Conditions to the Obligations of the Seller.................. 37
ARTICLE VI
TERMINATION
Section 6.01 Termination.................................................. 39
Section 6.02 Effect of Termination. .......................................40
ARTICLE VII
CLOSING, EFFECTIVE DATE AND EFFECTIVE TIME
Section 7.01 Effective Date and Effective Time............................ 40
Section 7.02 Deliveries at the Closing.................................... 41
ARTICLE VIII
OTHER MATTERS
Section 8.01 Certain Definitions; Interpretation.......................... 41
Section 8.02 Non-Survival of Representations, Warranties, Covenants and
Agreements.......................... 41
Section 8.03 Amendment.................................................... 41
Section 8.04 Waiver....................................................... 41
Section 8.05 Counterparts................................................. 42
Section 8.06 Governing Law................................................ 42
Section 8.07 Expenses..................................................... 42
Section 8.08 Notices...................................................... 42
Section 8.09 Entire Agreement; Etc........................................ 43
Section 8.10 Assignment................................................... 43
Section 8.11 Schedules Not Admissions..................................... 44
List of Exhibits
Exhibit A Plan of Merger
Exhibit B Stock Option Agreement
ii
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This is an AGREEMENT AND PLAN OF MERGER, dated as of the 21st day of May,
1996 (this "Agreement"), by and among COLLECTIVE BANCORP, INC., a Delaware
corporation (the "Purchaser"), CBAC CORP., a Delaware corporation and a wholly
owned subsidiary of the Purchaser (the "Acquisition Corp."), and CONTINENTAL
BANCORPORATION, a New Jersey chartered corporation (the "Seller").
INTRODUCTORY STATEMENT
The Boards of Directors of the Purchaser, the Acquisition Corp. and the
Seller have approved, and deem it advisable and in the best interests of their
respective companies and their shareholders to consummate the business
combination transaction provided for herein.
The Purchaser, the Acquisition Corp. and the Seller desire to make certain
representations, warranties and agreements in connection with the business
combination transaction provided for herein and to prescribe various conditions
to such transaction.
In consideration of their mutual promises and obligations hereunder, the
parties hereto adopt and make this Agreement and prescribe the terms and
conditions hereof and the manner and basis of carrying it into effect, which
shall be as follows:
ARTICLE I
THE MERGER
Section 1.01 Structure of the Merger. On the Effective Date (as defined in
Section 7.01), Acquisition Corp. shall merge (the "Merger") with and into the
Seller pursuant to a Plan of Merger substantially in the form attached as
Exhibit A and which qualifies as a reorganization under Section 368 of the
Internal Revenue Code of 1986, as amended; the separate existence of Acquisition
Corp. shall cease; Seller shall be the surviving corporation in the Merger (the
"Surviving Corporation") and a wholly owned subsidiary of Purchaser; and all of
the property (real, personal and mixed), rights, powers and duties and
obligations of Acquisition Corp. shall be taken and deemed to be transferred to
and vested in Seller, as the Surviving Corporation in the Merger, without
further act or deed; all in accordance with the applicable laws of the State of
Delaware and, to the extent applicable, the laws of the State of New Jersey. At
the Effective Time (as defined in Section 7.01), the Certificate of
Incorporation and Bylaws of the Seller shall be amended in their entirety to
conform to the Certificate of Incorporation and Bylaws of Acquisition Corp. in
effect immediately prior to the Effective Time and shall become the Certificate
of Incorporation and Bylaws of the Surviving Corporation. At the Effective Time,
the directors and officers of Acquisition Corp. shall become the directors and
officers of the Surviving Corporation.
<PAGE>
Section 1.02 Effect on Outstanding Shares.
(a) By virtue of the Merger, automatically and without any action on the
part of the holder thereof, each share of the Seller's common stock, par value
$2.00 per share (the "Seller Common Stock") issued and outstanding at the
Effective Time, other than (i) shares held directly or indirectly by the
Purchaser (other than shares held in a fiduciary capacity or in satisfaction of
a debt previously contracted) (ii) shares held as treasury stock of the Seller
(iii) shares underlying unexercised stock options and (iv) shares as to which
dissenters' rights have been asserted and duly perfected in accordance with the
provisions of the laws of the State of New Jersey, shall become and be converted
into the right to receive $5.00 in cash without interest (the "Merger
Consideration"). As of the Effective Time, each share of Seller Common Stock
held directly or indirectly by the Purchaser (other than shares held in a
fiduciary capacity or in satisfaction of a debt previously contracted), each
share of Seller Common Stock held as treasury stock of the Seller, other than
shares underlying unexercised stock options and shares as to which dissenters'
rights have been asserted and duly perfected in accordance with the provisions
of the laws of the State of New Jersey, shall be cancelled and retired and cease
to exist, and no exchange or payment shall be made with respect thereto. Each
option to purchase Seller Common Stock (other than options granted to Purchaser
pursuant to the attached Stock Option Agreement identified as Exhibit B)
outstanding immediately prior to the Effective Time, shall be cancelled in
exchange for the right to receive cash payments as set forth in Section 1.04.
(b) The shares of common stock of Acquisition Corp. issued and outstanding
immediately prior to the Effective Time shall become shares of the Surviving
Corporation after the Merger and shall thereafter constitute all of the issued
and outstanding shares of the capital stock of the Surviving Corporation.
Section 1.03 Exchange Procedures.
(a) At and after the Effective Time, each certificate previously
representing shares of Seller Common Stock (the "Certificate") (except as
specifically set forth in Section 1.02) shall represent only the right to
receive the Merger Consideration in cash without interest.
(b) At or before the Effective Time, the Purchaser shall deposit, or shall
cause to be deposited, with Midlantic Bank (or such other bank or trust company
as selected by the Purchaser and reasonably acceptable to the Seller) as
exchange agent (the "Exchange Agent"), for the benefit of the holders of shares
of Seller Common Stock, for exchange in accordance with this Section 1.03, an
amount of cash sufficient to pay the aggregate Merger Consideration to be paid
pursuant to Section 1.02.
(c) As soon as practicable after the Effective Time, but no later than 10
calendar days after the Effective Time, the Purchaser shall cause the Exchange
Agent to mail or deliver to each holder of record of a Certificate or
Certificates (other than holders of dissenting shares) the following: (i) a
letter of transmittal specifying that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the
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Exchange Agent, which shall be in a customary form; and (ii) instructions for
use in effecting the surrender of the Certificates in exchange for the Merger
Consideration. Upon the proper surrender of a Certificate or Certificates to the
Exchange Agent, together with a properly completed and duly executed letter of
transmittal, the holder of such Certificate or Certificates shall be entitled to
receive in exchange therefor a check in an amount equal to the product of the
Merger Consideration and the number of shares of Seller Common Stock represented
by the Certificate or Certificates surrendered pursuant to the provisions
hereof, and the Certificate or Certificates so surrendered shall forthwith be
cancelled. The Purchaser shall direct the Exchange Agent to make payment of the
Merger Consideration with respect to the Certificates so surrendered as soon as
practicable and, in any event, within five (5) business days of the receipt of
all required documentation. No interest will be paid or accrued on the Merger
Consideration. In the event of a transfer of ownership of any shares of Seller
Common Stock not registered in the transfer records of the Seller, a check for
the Merger Consideration may be issued to the transferee if the Certificate
representing such Seller Common Stock is presented to the Exchange Agent,
accompanied by documents sufficient, in the reasonable discretion of the
Purchaser and the Exchange Agent, (i) to evidence and effect such transfer and
(ii) to evidence that all applicable stock transfer taxes have been paid.
(d) From and after the Effective Time, there shall be no transfers on the
stock transfer records of the Seller of any shares of Seller Common Stock that
were outstanding immediately prior to the Effective Time. If after the Effective
Time Certificates are presented to the Purchaser, they shall be cancelled and
exchanged for the Merger Consideration deliverable in respect thereof pursuant
to this Agreement in accordance with the procedures set forth in this Section
1.03.
(e) Any portion of the aggregate Merger Consideration or the proceeds of
any investments thereof that remains unclaimed by the shareholders of the Seller
for 18 months after the Effective Time shall be repaid by the Exchange Agent to
the Purchaser. Any shareholders of the Seller who have not theretofore complied
with this Section 1.03 shall thereafter look only to the Purchaser for payment
of their Merger Consideration deliverable in respect of each share of Seller
Common Stock such shareholder holds as determined pursuant to this Agreement
without any interest thereon. Notwithstanding the foregoing, none of the
Purchaser, the Surviving Corporation, the Exchange Agent or any other person
shall be liable to any former holder of Seller Common Stock for any amount
delivered to a public official pursuant to applicable abandoned property,
escheat or similar laws.
(f) In the event any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
such Certificate to be lost, stolen or destroyed and, if required by the
Exchange Agent, the posting by such person of a bond in such amount as the
Exchange Agent may reasonably direct as indemnity against any claim that may be
made against it with respect to such Certificate, the Exchange Agent will issue
in exchange for such lost, stolen or destroyed Certificate the Merger
Consideration deliverable in respect thereof pursuant to this Agreement.
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Section 1.04 Options.
(a) At the Effective Time, Seller shall pay to each holder of an option
which has been granted by the Seller to purchase shares of Seller Common Stock
(other than options granted to Purchaser pursuant to the attached Stock Option
Agreement identified as Exhibit B) which is outstanding and exercisable but
unexercised immediately prior to the Effective Time ("Seller Options"), an
amount in cash computed by multiplying (i) any positive difference obtained by
subtracting from (x) the per share amount of the Merger Consideration and (y)
the per share exercise price applicable to such option by (ii) the number of
shares of Seller Common Stock subject to such option, subject, with respect to
each such holder, to the receipt by the Purchaser of an acknowledgment from such
holder that such payment shall constitute consideration for the termination and
cancellation of such option. The Seller agrees to take or cause to be taken all
action necessary so that each such option outstanding immediately after the
Effective Time as a result of the failure of the holder thereof to deliver the
acknowledgment described in the preceding sentence shall be converted into a
right to receive the amount described in the preceding sentence.
Section 1.05 Secondary Merger. The Surviving Corporation and the Purchaser
shall enter into a plan of merger (which shall be a plan of complete liquidation
and dissolution of the Surviving Corporation for purposes of Sections 332(a) and
337(a) of the Internal Revenue Code of 1986, as amended (the "Code")) pursuant
to which the Surviving Corporation will be merged with and into the Purchaser
immediately after the Effective Time (the "Secondary Merger"). The documentation
relating to the Secondary Merger shall provide that the directors of the
Purchaser as the surviving entity of the Secondary Merger shall be all of the
respective directors of the Purchaser immediately prior to such merger.
Section 1.06 Modification of Structure. Notwithstanding any provision of
this Agreement to the contrary, Purchaser may elect to modify the structure of
the transactions contemplated hereby so long as (i) there are no material
adverse federal or state income tax consequences to the Seller and its
stockholders or to holders of options to purchase Seller Common Stock as a
result of such modification; (ii) the consideration to be paid to holders of
Seller Common Stock or Seller Options under this Agreement is not thereby
changed in kind or reduced in amount because of such modification; and (iii)
such modification will not be likely to delay materially or jeopardize receipt
of any required regulatory approvals.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
Section 2.01 Representations and Warranties of the Seller. The Seller
represents and warrants to the Purchaser and Acquisition Corp. that, except as
specifically disclosed in a letter of the Seller delivered to the Purchaser
prior to the execution hereof (and making specific reference to the Section or
Sections of this Agreement for which an exception is
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taken) (such letter, as amended from time to time in the manner provided for in
Section 4.07 hereof, the "Disclosure Schedule"):
(a) Organization.
(i) The Seller is a corporation duly organized, validly existing and
in good standing under the laws of the State of New Jersey. Except for the
Seller Bank, Seller has no direct subsidiaries. The Seller and each of its
Subsidiaries is duly qualified to do business and is in good standing in New
Jersey and in each other jurisdiction in which the nature of the business
conducted or the properties or assets owned or leased by it makes such
qualification necessary and where the failure to be so qualified would have a
Material Adverse Effect. The minute books of the Seller and each Subsidiary
accurately record, in all material respects, all material corporate actions of
its stockholders and Board of Directors (including Committees thereof). Prior to
the execution of this Agreement, Seller has delivered to Purchaser true and
correct copies of the Charter and Bylaws of Seller and of each Subsidiary. The
Seller is a registered bank holding company under the Bank Holding Company Act.
The Seller and each of its Subsidiaries has the corporate power and authority to
carry on its business as it is now conducted and to own, lease and operate its
properties. The Seller has the corporate power and authority to execute and
deliver this Agreement and the power to consummate the transactions contemplated
hereby.
(ii) Seller Bank is a commercial bank, duly organized, validly
existing and in good standing under the laws of the State of New Jersey. Except
for Continental Investment Corporation, Seller Bank has no direct or indirect
subsidiaries. (Seller Bank and Continental Investment Corporation are sometimes
collectively referred to herein as the "Subsidiaries".) The Subsidiaries each
have the corporate power and authority to carry on its business as it is now
conducted and to own, lease and operate its properties, and is duly qualified to
do business and is in good standing in each jurisdiction in which the nature of
the business conducted or the properties or assets owned or leased by it makes
such qualification necessary and where the failure to be so qualified would have
a Material Adverse Effect.
(iii) The Seller and the Subsidiaries hold all material licenses,
certificates, permits, franchises and rights from all appropriate federal, state
or other public authorities necessary for the conduct of its and their business.
The Seller and the Subsidiaries have each conducted its business so as to comply
in all material respects with all applicable federal, state and local statutes,
ordinances, regulations or rules, and neither the Seller nor any of the
Subsidiaries is presently charged with, or, to the Seller's knowledge, under
governmental investigation with respect to, any actual or alleged material
violations of any statute, ordinance, regulation or rule; and neither the Seller
nor either of the Subsidiaries is the subject of any pending or, to the Seller's
knowledge, threatened material proceeding by any regulatory authority having
jurisdiction over its business, properties or operations.
(iv) The Disclosure Schedule 2.01(a)(iv) sets forth all of the
Subsidiaries of the Seller and all entities (whether corporations, partnerships,
or similar organizations), including the corresponding percentage ownership, in
which the Seller owns, directly or
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indirectly, 10% or more of the ownership interests ("Subsidiary") as of the date
of this Agreement and indicates for each Subsidiary, as of such date, its
jurisdiction of organization. Except as set forth in the Disclosure Schedule
2.01(a)(iv), the Seller owns, either directly or indirectly, all of the
outstanding capital stock of each of its Subsidiaries. Except for Seller Bank,
no Subsidiary of the Seller is an "insured depository institution" as defined in
the Federal Deposit Insurance Act, as amended, and applicable regulations
thereunder. All of the shares of capital stock of each of the Subsidiaries held
by the Seller or by another Subsidiary of the Seller are fully paid,
nonassessable and not subject to any preemptive rights and, except as set forth
in the Disclosure Schedule 2.01(a)(iv), are owned by the Seller or a Subsidiary
of the Seller free and clear of any claims, liens, encumbrances or restrictions
(other than those imposed by applicable federal and state securities laws) and
there are no agreements or understandings with respect to the voting or
disposition of any such shares so held.
(b) Capital Structure.
(i) The authorized capital stock of the Seller consists of Ten
Million (10,000,000) shares of Seller Common Stock, par value $2.00 per share
(the "Seller Common Stock") and Five Million (5,000,000) shares of preferred
stock (the "Seller Preferred Stock"). As of April 26, 1996: (A) 4,807,561 shares
of Seller Common Stock were issued and outstanding, and no shares of Seller
Preferred Stock were issued or outstanding, (B) 486,600 shares of Seller Common
Stock were reserved for issuance pursuant to stock options, (C) no shares of
Seller Preferred Stock were reserved for issuance and (D) 428,125 shares of
Seller Common Stock were reserved for issuance to retire the Seller's 11%
Convertible Subordinated Debentures (the "Debentures") and (E) 95,153 shares of
Seller's Common Stock were held by the Seller in its treasury. All outstanding
shares of Seller Common Stock are validly issued, fully paid and nonassessable
and not subject to any preemptive rights. The Disclosure Schedule 2.01(b)(i)
sets forth a complete and accurate list of all options to purchase Seller Common
Stock outstanding, including the dates of grant, exercise prices, dates of
vesting, dates of termination and shares subject to option for each grant and a
complete list of the outstanding Debentures.
(ii) As of the date of this Agreement, except for this Agreement and
as set forth in the Disclosure Schedule 2.01(b)(i), neither the Seller nor any
of its Subsidiaries is a party to or is bound by any outstanding subscriptions,
options, warrants, calls, rights, convertible securities, commitments or
agreements of any character obligating the Seller or any of its Subsidiaries to
issue, deliver or sell, or cause to be issued, delivered or sold, any additional
shares of capital stock of the Seller or any of its Subsidiaries or obligating
the Seller or any of its Subsidiaries to grant, extend or enter into any such
option, warrant, call, right, convertible security, commitment or agreement. As
of the date hereof, there are no outstanding contractual obligations of the
Seller or any of its Subsidiaries to repurchase, redeem or otherwise acquire any
shares of capital stock of the Seller or any of its Subsidiaries.
(iii) To the best of Seller's knowledge, except as declared in
Disclosure Schedule 2.01(b)(iii), no person or "group" (as that term is used in
Section 13(d)(3) of the
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Securities Exchange Act of 1934, as amended (the "Exchange Act")) is the
beneficial owner of 5% or more of the outstanding shares of Seller Common Stock.
(c) Authority. The Seller has all requisite corporate power and authority
to enter into this Agreement and, subject to approval of this Agreement by the
requisite vote of the shareholders of the Seller and approval of regulators, to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement, and the consummation of the transactions contemplated hereby
have been duly authorized by all necessary corporate action on the part of the
Seller. This Agreement has been duly executed and delivered by the Seller and,
assuming due execution and delivery by each of the Purchaser and the Acquisition
Corp., constitutes a valid and binding obligation of the Seller, enforceable in
accordance with its terms subject to applicable conservatorship, receivership,
bankruptcy, insolvency and similar laws affecting creditors' rights and remedies
generally, and subject, as to enforceability, to general principles of equity
(including without limitation specific performance), whether applied in a court
of law or a court of equity.
(d) Shareholder Approvals. The Board of Directors of the Seller has
directed that this Agreement and the transactions contemplated hereby be
submitted to the Seller's shareholders for approval at a meeting of such
shareholders and, except for adoption of this Agreement by the requisite vote of
the Seller's shareholders, no other corporate proceedings on the part of
theSeller are necessary to approve this Agreement and to consummate the
transactions contemplated hereby. The approval of the majority of the shares of
Seller Common Stock present and voting at a duly called meeting of the
shareholders is required for approval of this Agreement and to consummate the
transactions contemplated hereby. The Board of Directors of the Seller has
received the written opinion of Berwind Financial Group, LP, to the effect that
the Merger Consideration to be received by the shareholders of the Seller is
fair, from a financial point of view, to such shareholders.
(e) No Violations. Subject to approval of this Agreement by the regulatory
agencies referred to in Section 2.01(g)(ii), the execution, delivery and
performance of this Agreement by the Seller do not, and the consummation of the
transactions contemplated hereby by the Seller will not, constitute (i) a breach
or violation of, or a default under, any law, including any Environmental Law
(as defined in Section 2.01(s)), rule or regulation or any judgment, decree,
order, governmental permit or license, or agreement, indenture or instrument of
the Seller or any Subsidiary of the Seller or to which the Seller or any of its
Subsidiaries (or any of their respective properties) is subject, (ii) a breach
or violation of, or a default under, the certificate or articles of
incorporation or Bylaws of the Seller or any Subsidiary of the Seller or (iii) a
breach or violation of, or a default under (or an event which with due notice or
lapse of time or both would constitute a default under), or result in the
termination of, accelerate the performance required by, or result in the
creation of any lien, pledge, security interest, charge or other encumbrance (a
"Lien") upon any of the properties or assets of the Seller or any Subsidiary of
the Seller under, any of the terms, conditions or provisions of any note, bond,
indenture, deed of trust, loan agreement or other agreement, instrument or
obligation to which the Seller or any Subsidiary of the Seller is a party, or to
which any of their respective properties or assets may be bound or affected.
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(f) Consents. Except as set forth in Disclosure Schedule 2.01(f) or
referred to herein or in connection, or in compliance, with the provisions of
the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR Act"), the
Bank Holding Company Act, the Securities Act of 1933, as amended (the
"Securities Act"), the Exchange Act, the Home Owners' Loan Act of 1933, as
amended (the "HOLA"), the Bank Merger Act, as amended (the "BMA"), N.J.S.A.
17:9A-344, et seq., (the "NJSA"), the rules and regulations of the Office of
Thrift Supervision (the "OTS"), and the environmental, corporation, securities
or blue sky laws or regulations of the various states, no filing or registration
with, or authorization, consent or approval of, any public body or authority or
any other party is necessary for the consummation by the Seller of the Merger or
the other transactions contemplated by this Merger Agreement.
(g) Reports.
(i) As of their respective dates, neither the Seller's Annual Report
on Form 10-K for the fiscal year ended December 31, 1991, nor any other document
filed subsequent to December 31, 1991, under Section 13(a), 13(c), 14 or 15(d)
of the Exchange Act, each in the form (including any documents specifically
incorporated by reference therein) filed with the Securities and Exchange
Commission (collectively, the "Reports"), contained or will contain any untrue
statement of a material fact or omitted or will omit to state a material fact
required to be stated therein or necessary to make the statements made therein,
in light of the circumstances under which they were made, not misleading,
provided, however, that Seller's amendment of any Reports, in and of itself, in
response to SEC comments will not be violative of this section. Each of the
balance sheets of the Seller or its Subsidiaries contained or specifically
incorporated by reference in the Seller's Reports (including in each case any
related notes and schedules) fairly presented the financial position of the
entity or entities to which it relates as of its date and each of the statements
of income and of changes in shareholders' equity and of cash flows of the Seller
or its Subsidiaries, contained or specifically incorporated by reference in its
Reports (including in each case any related notes and schedules) (collectively
the "Financial Statements"), fairly presented the results of operations,
shareholders' equity and cash flows, as the case may be, of the entity or
entities to which it relates for the periods set forth therein (subject, in the
case of unaudited interim statements, to normal year-end audit adjustments), in
each case in accordance with generally accepted accounting principles ("GAAP")
consistently applied during the periods involved, except as may be noted
therein.
(ii) The Seller and each of its Subsidiaries have each filed all
material reports, registrations and statements, together with any amendments
required to be made with respect thereto, that they were required to file since
December 31, 1993 with (A) the SEC, (B) the Federal Deposit Insurance
Corporation (the "FDIC"), (C) the Department of Banking and Insurance of the
State of New Jersey (the "Department") or other banking regulatory authority
(collectively, the "Regulatory Agencies") and (E) the National Association of
Securities Dealers, Inc. and any other self-regulatory organization ("SRO"), and
have paid all fees and assessments due and payable in connection therewith,
except for those fees and assessments that would not be material.
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(h) Absence of Certain Changes or Events. From December 31, 1995, to the
date hereof: (i) the Seller and its Subsidiaries have not, except as set forth
in the Disclosure Schedule 2.01(h), incurred any material liability, other than
in the ordinary course of their business consistent with past practice, and (ii)
there has not been any condition, event, change or occurrence that, individually
or in the aggregate, has had, or is reasonably likely to have, a Material
Adverse Effect on the Seller. "Material Adverse Effect," with respect to a
person, means a material adverse effect upon the business, assets, financial
condition or results of operations, in each case, of the Seller or its
Subsidiaries, either individually or taken as a whole, except for any material
adverse effect caused by any change occurring after the date hereof in any
federal or state law rule or regulation or in GAAP, which change affects
state-chartered commercial banks generally and except that any changes in the
aggregate value of the securities or loan portfolios held by the Seller or
Seller Bank or by Purchaser as of the date hereof as a result of changes in
generally prevailing market interest rates shall not be deemed a Material
Adverse Effect.
(i) Business of Seller. Since December 31, 1995, Seller has conducted its
business only in the ordinary course. For purposes of the foregoing, Seller has
not, since December 31, 1995, controlled expenses through (i) elimination of
employee benefits, (ii) deferral of routine maintenance of real property or
leased premises, (iii) elimination of reserves where the liability related to
such reserve has remained, (iv) reduction of capital improvements from previous
levels, (v) failure to depreciate capital assets in accordance with past
practice or to eliminate capital assets which are no longer used in the business
of Seller, (vi) capitalized loan production expenses other than in accordance
with Statement of Financial Accounting Standard No. 91, or (vii) extraordinary
reduction or deferral of ordinary or necessary expenses.
(j) Taxes. All federal, state, local and foreign tax returns, as defined
below, required to be filed by or on behalf of the Seller or any of its
Subsidiaries have been duly and timely filed or requests for extensions have
been timely filed (and any such extension shall have been granted and not have
expired). All taxes, as defined below, shown on such returns, and all taxes
required to be shown on returns for which extensions have been granted, have
been paid in full or adequate provision has been made for any such taxes on the
Seller's balance sheet as of December 31, 1995 (in accordance with GAAP). Since
January 1, 1991, there has been no audit or examination of the Seller by the
Internal Revenue Service ort an audit or examination of the Seller by the
applicable taxing authority of the State of New Jersey. As of the date of this
Agreement, there is no audit examination, deficiency, claim or assessment, or
refund litigation with respect to any taxes of the Seller or any of its
Subsidiaries that could reasonably be expected to result in a Material Adverse
Effect on the Seller, and no claim or assessment has been made by any authority
in a jurisdiction where the Seller or any of its Subsidiaries do not file tax
returns and the Seller or any such Subsidiary is subject to taxation. All taxes,
interest, additions, and penalties due with respect to completed and settled
examinations or concluded litigation relating to the Seller or any of its
Subsidiaries have been paid in full or adequate provision has been made for any
such taxes on the Seller's balance sheet as of December 31, 1995 (in accordance
with GAAP). Except as set forth in Disclosure Schedule 2.01(j), the Seller and
its Subsidiaries have complied with the Tax
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Identification Number reporting requirements and have not executed an extension
or waiver of any statute of limitations on the assessment or collection of any
material tax due that is currently in effect. Except as set forth in Disclosure
Schedule 2.01(j), the Seller and each of its Subsidiaries have withheld and paid
all taxes required to have been withheld and paid in connection with amounts
paid or owing to any employee, independent contractor, creditor, shareholder or
other third party, and the Seller and each of its Subsidiaries have timely
complied with all applicable information reporting requirements under Part III,
Subchapter A of Chapter 61 of the Code and similar applicable state and local
information reporting requirements, except in each case for such failure to
withhold, pay or comply that would not, individually or in the aggregate, result
in a Material Adverse Effect on the Seller.
"Taxes" shall mean all taxes, charges, fees, levies, penalties or other
assessments imposed by any United States federal, state, local, or foreign
taxing authority, including, but not limited to, income, excise, property,
sales, transfer, franchise, payroll, withholding, social security or other
taxes, including any interest, penalties or additions attributable thereto. "Tax
Return" shall mean any return, report, information return or other documents
(including any related or supporting information) with respect to Taxes.
(k) Absence of Claims. Except as set forth in Disclosure Schedule 2.01(k),
Seller is not a party to any pending litigation, legal, administrative,
arbitration or other proceeding, claims, actions, investigations or inquiries or
controversy before any court or governmental agency ("Claim"), and Seller is not
aware of any pending Claim against Seller, any of its Subsidiaries, or to which
Seller or any of its Subsidiaries' assets are subject, in either case which is
reasonably likely, individually or in the aggregate, to have a Material Adverse
Effect on the Seller or to materially hinder or delay consummation of the
transactions contemplated hereby, and, to the Seller's knowledge, no such Claim
has been threatened.
(l) Absence of Regulatory Actions. Except as set forth in Disclosure
Schedule 2.01(l), neither the Seller nor any of its Subsidiaries is a party to
any cease and desist order, written agreement or memorandum of understanding
with, or a party to any commitment letter or similar written undertaking to, or
is subject to any order or directive by, or is a recipient of any extraordinary
supervisory letter from, federal or state governmental authorities charged with
the supervision or regulation of depository institutions or depository
institution holding companies or engaged in the insurance of bank and/or savings
and loan deposits ("Regulatory Agency") nor has it been advised by any
Regulatory Agency that it is contemplating issuing or requesting (or is
considering the appropriateness of issuing or requesting) any such order,
directive, written agreement, memorandum of understanding, extraordinary
supervisory letter, commitment letter or similar written undertaking. In
connection with the most recent examinations of the Seller and/or Seller Bank,
Seller and Seller Bank have not been informed or ordered by any Regulatory
Agency, whether by written communication or otherwise, to amend or change in any
material way Seller's or Seller Bank's Reports, accounting methods, methods of
operation, or business practices, or to classify any loans not previously
classified or to charge-off any loans, or increase Seller Bank's allowance for
loan losses, or to take or discontinue any activity or action.
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(m) Agreements.
(i) Except for this Agreement and except as disclosed in Disclosure
Schedule 2.01(m)(i), neither the Seller nor any of its Subsidiaries is a party
to a written or, to the Seller's knowledge, oral (A) consulting agreement (other
than data processing, software programming and licensing contracts entered into
in the ordinary course of business and customary real estate brokerage
commissions in connection with the sale of REO) not terminable on thirty (30)
days' or less notice, and providing for payments in excess of $5,000 per annum,
(B) agreement with any director, executive officer or other key employee of the
Seller or any of its Subsidiaries the benefits of which are contingent, or the
terms of which are materially altered, upon the occurrence of a transaction
involving the Seller or any of its Subsidiaries of the nature contemplated by
this Agreement, (C) agreement with respect to any director, executive officer or
key employee of the Seller or any of its Subsidiaries providing for other than
at-will employment, (D) agreement or plan, including any stock option plan,
stock appreciation rights plan, restricted stock plan, stock purchase plan, or
any other non-qualified compensation plan, any of the benefits of which will be
increased, or the vesting of the benefits of which will be accelerated, by the
occurrence of any of the transactions contemplated by this Agreement or the
value of any of the benefits of which will be calculated on the basis of any of
the transactions contemplated by this Agreement, (E) agreement containing
covenants that limit the ability of the Seller or any of its Subsidiaries to
compete in any line of business or with any person, or that involve any
restriction on the geographic area in which or method by which, the Seller
(including any successor thereof) or any of its Subsidiaries may carry on its
business (other than as may be required by law or any Regulatory Agency), (F)
agreement which by its terms limits the payment of dividends by Seller or any
Subsidiaries, (G) instrument evidencing or related to indebtedness for borrowed
money, whether directly or indirectly, by way of purchase money obligation,
conditional sale, lease purchase, guaranty or otherwise, in respect of which
Seller or any of its Subsidiaries is an obligor to any person, which instrument
evidences or relates to indebtedness (other than deposits, repurchase
agreements, bankers acceptances, and "treasury tax and loan" accounts
established in the ordinary course of business and transactions in "federal
funds") or which contains financial covenants or other restrictions (other than
those relating to the payment of principal and interest when due) which would be
applicable on or after the Effective Time to Purchaser, or any of Purchaser's
subsidiaries; (H) contract (other than this Agreement) limiting the freedom of
Seller or Seller Bank to engage in any type of banking or bank-related business
permissible under law; (I) contract, plan or arrangement which provides for
payments of benefits payable to any participant therein or party thereto, and
which might render any portion of any such payments or benefits subject to
disallowance of deduction therefor as a result of the application of Code
Section 280G; or (J) agreement for investment banking services or services
related to the sale, merger or acquisition of the Seller or its Subsidiaries.
(ii) All the contracts, plans, arrangements and instruments listed
in Disclosure Schedule 2.01(m)(i) are in full force and effect on the date
hereof and neither Seller nor, to the knowledge of Seller, any other party to
any such contract, plan, arrangement or instrument, has breached any provisions
of, or is in material default in any respect under any term of, any such
contract, plans, arrangement or instrument. Except as otherwise
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described in Disclosure Schedule 2.01(m)(ii), no plan, employment agreement,
termination agreement, or similar agreement or arrangement to which Seller or
any of its Subsidiaries may be liable (i) contains provisions which permit an
employee or independent contractor to terminate it without cause and continue to
accrue benefits thereunder; (ii) provides for acceleration in the vesting of
benefits thereunder upon the occurrence of a change in ownership or control of
Seller or its Subsidiaries; (iii) provides for benefits which may cause the
disallowance of a federal income tax deduction under the Code Section 280G; or
(iv) requires Seller or any of its Subsidiaries to provide a benefit in the form
of Seller Common Stock or determined by reference to the value of Seller Common
Stock.
(iii) Neither the Seller nor any of its Subsidiaries is in default
under or in violation of any provision, and is not aware of any fact or
circumstance that has been or could be alleged to constitute a material default
or violation, of any note, bond, indenture, mortgage, deed of trust, loan
agreement or other agreement to which it is a party or by which it is bound or
to which any of its respective properties or assets is subject.
(iv) Disclosure Schedule 2.01(m)(iv) contains all contracts relating
to data processing services. Under such disclosed contracts, Seller shall give
no notice of termination unless there has been prior written approval by the
Purchaser.
(n) Labor Matters. Neither the Seller nor any of its Subsidiaries is a
party to, or is bound by, any collective bargaining agreement, contract, or
other agreement or understanding with a labor union or labor organization with
respect to its employees. Neither the Seller nor any of its Subsidiaries is the
subject of any proceeding asserting that it has committed an unfair labor
practice or seeking to compel it or any such Subsidiary to bargain with any
labor organization as to wages and conditions of employment, nor is the
management of the Seller aware of any strike, other labor dispute or
organizational effort involving the Seller or any of its Subsidiaries that is
pending or threatened.
(o) Employee Benefit Plans. Disclosure Schedule 2.01(o) contains a
complete list of all employee, retiree or director pension, retirement, stock
option, stock purchase, restricted stock, stock ownership, savings, stock
appreciation right, profit sharing, deferred compensation, supplemental income,
supplemental retirement, consulting, bonus, group insurance, key executive
officer insurance, vacation, sick leave, severance and any other benefit plans,
employment contracts (providing termination, change in control, or severance
payments), agreements, arrangements, or policies including, but not limited to,
employee benefit plans, as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), incentive and welfare
policies, contracts, plans and arrangements and all trust agreements related
thereto, maintained with respect to any present or former directors, officers,
or other employees of the Seller or any of its Subsidiaries (hereinafter
referred to collectively as the "Employee Plans"). All of the Employee Plans
comply in all material respects with all applicable requirements of ERISA, the
Code and other applicable laws; neither the Seller nor any of its Subsidiaries
has engaged in a prohibited transaction (as defined in Section 406 of ERISA or
Section 4975 of the Code) with respect to any Employee Plan which is likely to
result in any material penalties or taxes to the Seller or
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its Subsidiaries under Section 502(i) of ERISA or Section 4975 of the Code. No
material liability to the Pension Benefit Guaranty Corporation has been incurred
and, except as described on Disclosure Schedule 2.01(o), there exists no fact or
circumstance which would cause the Seller to expect to incur any such liability
with respect to any Employee Plan which is subject to Title IV of ERISA
("Pension Plan"), or with respect to any "single-employer plan" (as defined in
Section 4001(a)(15) of ERISA) currently or formerly maintained by the Seller or
any entity which is considered one employer with the Seller under Section 4001
of ERISA or Section 414 of the Code (an "ERISA Affiliate"). Except as described
on Disclosure Schedule 2.01(o), no Pension Plan had an "accumulated funding
deficiency" (as defined in Section 302 of ERISA (whether or not waived)) as of
the date hereof; the present value of the "benefit liabilities" (as defined in
Section 4001(a)(16) of ERISA) under each Pension Plan as of the date hereof,
calculated on the basis of the actuarial assumptions used in the most recent
actuarial valuation for such Pension Plan as of the date hereof does not exceed
the fair market value of the assets of such Pension Plan, and no notice of a
"reportable event" (as defined in Section 4043 of ERISA) for which the 30-day
reporting requirement has not been waived has been required to be filed for any
Pension Plan within the 12-month period ending on the date hereof. Neither the
Seller nor any Subsidiary of the Seller has provided, or is required to provide,
security to any Pension Plan or to any single-employer plan of an ERISA
Affiliate pursuant to Section 401(a)(29) of the Code. Neither the Seller, its
Subsidiaries, nor any ERISA Affiliate currently contributes or, since December
31, 1988, has contributed to any multiemployer plan, as defined in Section 3(37)
of ERISA. Each Employee Plan of the Seller or of any of its Subsidiaries which
is an employee "pension benefit plan" (as defined in Section 3(2) of ERISA) and
which is intended to be qualified under Section 401(a) of the Code (a "Qualified
Plan") has received a favorable determination letter from the Internal Revenue
Service (the "IRS") that the pension benefit plan meets the Tax Reform Act of
1986 and all applicable legislative and regulatory requirements for tax
qualification that became effective at the time that the determination letter
was issued and the Seller and its Subsidiaries are not aware of any
circumstances likely to result in revocation of any such favorable determination
letter. Each Qualified Plan which is an "employee stock ownership plan" (as
defined in Section 4975(e)(7) of the Code) has satisfied all of the applicable
requirements of Sections 409 and 4975(e)(7) of the Code and the regulations
thereunder in all material respects and any assets of any such Qualified Plan
that are not allocated to participants' individual accounts are pledged as
security for, and subject to the provisions of Section 4.03(e) of this Agreement
may be applied to satisfy, any securities acquisition indebtedness. There is no
pending or, to the Seller's knowledge, threatened litigation, administrative
action or proceeding relating to any Employee Plan. There has been no
announcement or commitment by the Seller or any Subsidiary of the Seller to
create an additional Employee Plan, or to amend an Employee Plan except for
amendments required by applicable law which materially increase the cost of such
Employee Plan and except for any plans or amendments expressly described herein
or on Disclosure Schedule 2.01(o); and, except as set forth in Disclosure
Schedule 2.01(o), the Seller and its Subsidiaries do not have any obligations
for post-retirement or post-employment benefits under any Employee Plan
(exclusive of any coverage mandated by the Consolidated Omnibus Reconciliation
Act of 1986 ("COBRA") that cannot be amended or terminated upon no more than
sixty (60) days' notice without incurring any liability thereunder. With respect
to each Employee Plan to the
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extent applicable, the Seller has supplied or will promptly supply to the
Purchaser a true and complete copy of (A) the most recent annual report on the
applicable form of the Form 5500 series filed with the IRS with all the
attachments filed, (B) such Employee Plan, including amendments thereto, (C)
each trust agreement and insurance contract relating to such Employee Plan,
including amendments thereto, (D) the most recent summary plan description for
such Employee Plan, including amendments thereto, if the Employee Plan is
subject to Title I of ERISA, (E) the most recent actuarial report or valuation
if such Employee Plan is a Pension Plan and (F) the most recent determination
letter issued by the IRS if such Employee Plan is a Qualified Plan. To the
extent that any individual plan or arrangement described under this Section 2.01
does not completely meet representations made herein, such plan and its variance
from the representation is set out in Disclosure Schedule 2.01(o).
(p) Title to Assets. Except for the Real Estate Owned ("REO")and except as
set forth in Disclosure Schedule 2.01(p), the Seller and each of its
Subsidiaries has insurable title (subject only to standard title insurance
policy exceptions as determined by customary practices in the area in which such
properties are located) to its owned real properties, except for liens, as
defined below, or such other defects arising by operation of law or which would
not, individually or in the aggregate, have a Material Adverse Effect on the
Seller. Seller, as lessee, has the right under valid and existing leases of
properties used by Seller in the conduct of its business to occupy and use all
such properties that are leased by it as are now occupied and used by it. Liens
shall mean any claim, encumbrance, or charge on property for payment of a debt,
obligation or duty.
(q) Fees. Except as set forth in Disclosure Schedule 2.01(q) and other
than financial advisory services performed for the Seller by Berwind Financial
Group, LP, the terms of which are set forth in Disclosure Schedule 2.01(q),
neither the Seller nor any of its Subsidiaries, nor to Seller's knowledge any of
their respective officers, directors, employees or agents, has employed any
broker or finder or incurred any liability for any financial advisory fees,
brokerage fees, commissions, or finder's fees, and no broker or finder has acted
directly or indirectly for the Seller or any Subsidiary of the Seller, in
connection with this Agreement or the transactions contemplated hereby.
(r) Environmental Matters.
(i) Except as set forth in Disclosure Schedule 2.01(r) with respect
to the Seller and each of its Subsidiaries:
(A) Each of the Seller and its Subsidiaries, and to the
knowledge of the Seller, the Properties (as defined below) are, and have been,
in substantial compliance with all applicable Environmental Laws (as defined
below);
(B) There is no judicial or administrative proceeding pending
or, to the knowledge of the Seller, threatened against it or any of its
Subsidiaries (x) for alleged
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noncompliance (including by any predecessor) with, or liability under, any
applicable Environmental Law or (y) relating to the Release (defined below) into
the environment of any Hazardous Material (as defined below), whether or not
occurring at or on a site owned, leased or operated by it or any of its
Subsidiaries;
(C) There is no judicial or administrative proceeding pending
or to the knowledge of the Seller threatened against the Seller or any of its
Subsidiaries in respect of any Property (x) relating to alleged noncompliance
(including by any predecessor) with, or liability under, any Environmental Law
or (y) relating to the Release into the environment of any Hazardous Material
whether or not occurring at or on such Property;
(D) To the knowledge of Seller, the properties currently or ,
formerly owned or operated by the Seller or any of its Subsidiaries (including,
without limitation, soil, groundwater or surface water on or under such
properties, and buildings thereon or, to the knowledge of the Seller, (without
having done any independent investigation) adjacent to such properties) do not
contain any Hazardous Material other than as permitted under applicable
Environmental Law;
(E) None of the Seller or any of its Subsidiaries has received
any notice, demand letter, executive or administrative order, directive or
request for information from any federal, state or local governmental entity or
any third party relating to a Release or a threatened Release of Hazardous
Materials or Remediation (defined below) thereof or indicating that it may be in
violation of, or liable under, any applicable Environment Law;
(F) To the knowledge of the Seller, during the period of its
or any of its Subsidiaries' ownership or operation of any of their respective
current properties, or its or any of its Subsidiaries' holding of a security
interest in a Property, there has been no Release of Hazardous Material in, on,
under, or to the knowledge of the Seller, affecting or migrating to such
properties. To the knowledge of the Seller prior to the period of (A) the
Seller's or any of its Subsidiaries' ownership or operation of any of their
respective current properties, or (B) the Seller's or any of its Subsidiaries'
holding of a security interest in a Property, there was no Release of Hazardous
Material in, on, under, affecting or migrating to any such property; and
(G) None of the Seller or its Subsidiaries participates in the
management of a Loan Property within the meaning of 40 C.F.R. ss.300.1100(c)
(1993).
(ii) The following definitions apply for purposes of this Section
2.01(r): (a) "Property" means any property owned by the Seller (or any of its
Subsidiaries) or any property in which the Seller (or any of its Subsidiaries)
has an interest or with respect to which it holds a security interest, including
real estate owned ("REO") by the Seller, the branches or offices of the Seller
or its Subsidiaries, REO owned by any Subsidiary and, where required by the
context, includes the owner or operator of such property, but only with respect
to such property; (b) "Environmental Law" means (i) any federal, state or local
law, statute, ordinance, rule, regulation, code, license, permit, authorization,
approval, consent, order,
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directive, executive or administrative order, judgment, decree or injunction,
(A) relating to the protection, preservation or restoration of the environment
(which includes, without limitation, air, water vapor, surface water,
groundwater, drinking water supply, structures, soil, surface land, subsurface
land, plant and animal life or any other natural resource), or to employee
health or safety, or (B) the exposure to, or the use, storage, recycling,
treatment, generation, transportation, processing, handling, labeling,
production, release or disposal of, Hazardous Materials, in each case as amended
and as now in effect, including all judicial or legally binding administrative
interpretations of Environmental Laws or applicable regulations. The term
"Environmental Law" includes, without limitation, (i) the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, the Superfund
Amendments and Authorization Act, the Federal Water Pollution Control Act of
1972, the Clean Air Act, the Clean Water Act, the Resource Conservation and
Recovery Act of 1976 (including, but not limited to, the Hazardous and Solid
Waste Amendments thereto and Subtitle I relating to underground storage tanks),
the Solid Waste Disposal Act, the Toxic Substances Control Act, the Federal
Insecticide, Fungicide and Rodenticide Act, the Occupational Safety and Health
Act of 1970, the Hazardous Substances Transportation Act, the Emergency Planning
and Community Right-To-Know Act, the Safe Drinking Water Act, the National
Environmental Policy Act, or any so-called "Superfund" or "Superlien" law, each
as amended and as now in effect, and (ii) any present federal, state and local
laws, statutes, ordinances, rules or regulations conditioning transfer of
property upon a negative declaration or other approval of a governmental
authority of the environmental condition of the property or requiring
notification or disclosure of Releases of Hazardous Substances or other
environmental condition of the Loan Property to any governmental authority or
other person or entity, in connection with transfer of title to or interest in
property; (c) "Hazardous Material" means any substance (whether solid, liquid or
gas) which is listed, defined, designated or classified as hazardous, toxic or
radioactive or otherwise regulated, under any Environmental Law, whether by type
or by quantity, including any substance containing any such substance as a
component. Hazardous Material includes, without limitation, any toxic waste,
pollutant, contaminant, hazardous substance, toxic substance, hazardous waste,
special waste, industrial substance, extremely hazardous wastes, or words of
similar meanings or regulatory effect under any applicable Environmental Laws,
including, but not limited to, oil or petroleum or any fraction thereof, radon,
radioactive material, asbestos, asbestos-containing material, urea formaldehyde
foam insulation, lead and polychlorinated biphenyl; (d) "Release of any
Hazardous Material" means any release, deposit, discharge, emission, leaking,
spilling, seeping, migrating, injecting, pumping, pouring, emptying, dumping or
disposing of Hazardous Materials; and (e) "Remediation" means but is not limited
to, any response, remedial, removal, or corrective action, any activity to
cleanup, detoxify, decontaminate, contain or otherwise remediate any Hazardous
Material, any actions to prevent, cure or mitigate any Release of Hazardous
Materials, any inspection, investigation, study, monitoring, assessment, audit,
sampling and testing, laboratory or other analysis, or evaluation in each case
relating to a Release or threatened Release of any Hazardous Materials.
(s) Allowance for Loan Losses. In the Seller's reasonable judgment, the
allowance for loan losses reflected in the Seller's audited statement of
condition at December 31, 1995, was, and the allowance for loan losses shown on
the balance sheets in its Reports
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for periods ending after December 31, 1995, have been and will be, adequate in
all material respects, as of the dates thereof, under generally accepted
accounting principles applicable to commercial banks and no Regulatory Agency
has required or requested Seller to increase the allowance for loan losses for
such periods. The Seller has disclosed to the Purchaser in writing prior to the
date hereof the amounts of all loans, leases, advances, credit enhancements,
other extensions of credit, commitments and interest-bearing assets of the
Seller and its Subsidiaries that have been classified as of December 31, 1995,
as "Other Loans Specially Mentioned," "Special Mention," "Substandard,"
"Doubtful," "Loss," or words of similar import. From and after the date hereof,
the Seller promptly will provide the Purchaser with a copy of each quarterly
classified asset report it provides to its Board of Directors. The REO included
in any non-performing assets of the Seller or any of its Subsidiaries is carried
net of reserves at the lower of cost or fair value. Except as set forth in
Disclosure Schedule 2.01(t), the Seller has received and maintains in its
records with respect to classified assets and REO with book values (net of
reserves) in excess of $50,000 current independent appraisals or current
internal appraisals, in either case performed and prepared by a certified
appraiser; provided, however, that "current" shall mean within the past 12
months.
(t) Material Interests of Certain Persons. Except as set forth in
Disclosure Schedule 2.01(t), to Seller's knowledge, no officer or director of
the Seller, or any associate (as such term is defined in Rule 14a-1(a) under the
Exchange Act) of any such officer or director, has any interest in any material
contract or property (real or personal), tangible or intangible, used in or
pertaining to the business of the Seller or any of its Subsidiaries that would
be required to be disclosed under the Commission's Regulation S-K. No
transaction listed in Disclosure Schedule 2.01(t), is or has been in violation
of any applicable rules or regulations of the FDIC, the Department or of any
other bank regulatory authority. Each of the transactions set forth in
Disclosure Schedule 2.01(t) has been disclosed in Seller's annual proxy
statement in accordance with the regulations of the SEC.
(u) Insurance. The Seller and its Subsidiaries are presently insured, and
since December 31, 1993 have been insured, for reasonable amounts with
financially sound and reputable insurance companies, against such risks as
companies engaged in a similar business located in the State of New Jersey
would, in accordance with good business practice, customarily be insured. Each
policy of insurance maintained by Seller as of the date hereof is set forth in
Disclosure Schedule 2.01(u). Seller has not received notice from any insurance
carrier that (i) such insurance will be cancelled or that coverage thereunder
will be reduced or eliminated or (ii) premium costs with respect to such
insurance will be increased.
(v) Investment Securities. Except for ownership of subsidiary shares and
except as set forth in Disclosure Schedule 2.01(a)(iv), the Seller does not nor
do any of its Subsidiaries own or hold any equity securities or any security of
or interest in any mutual fund or other similar investment vehicle which invests
in equity securities. None of the investments reflected in the consolidated
balance sheet of the Seller as of December 31, 1995, and none of such
investments with face value of in excess of $100,000 made by it or any of its
Subsidiaries since December 31, 1995, is subject to any restriction (contractual
or statutory), other than applicable securities laws, that would materially
impair the ability of the
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entity holding such investment freely to dispose of such investment at any time,
except to the extent any such investments are pledged in the ordinary course of
business (including in connection with hedging arrangements or programs or
reverse repurchase arrangements) consistent with prudent banking practice to
secure obligations of the Seller or any of its Subsidiaries.
(w) Registration Obligations. Except with respect to the Debentures,
neither the Seller nor any of its Subsidiaries is under any obligation,
contingent or otherwise, to register any of its securities under the Securities
Act.
(x) Books and Records. The books and records of the Seller and its
Subsidiaries have been, and are being, maintained in accordance with applicable
legal and accounting requirements and reflect in all material respects the
substance of material events and transactions that should be included therein.
(y) Corporate Documents. The Seller has delivered to the Purchaser true
and complete copies of its Certificate of Incorporation and bylaws, as amended
to date, which are currently in full force and effect, and the certificate of
incorporation and bylaws of each of its Subsidiaries.
(z) Community Reinvestment Act Compliance. Seller and Seller Bank are in
substantial compliance with the applicable provisions of the Community
Reinvestment Act of 1977 and the regulations promulgated thereunder, and
received a CRA rating of at least satisfactory as of its last examination. As of
the date of this Agreement, Seller has not been advised of the existence of any
fact or circumstance or set of facts or circumstances which, if true, would
cause Seller to fail to be in substantial compliance with such provisions.
Section 2.02 Representations and Warranties of the Purchaser and
Acquisition Corp. The Purchaser and Acquisition Corp. represent and warrant to
the Seller that:
(a) Corporate Organization and Qualification.
(i) Purchaser. The Purchaser is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of Delaware
and is a savings and loan holding company duly registered under HOLA.
(ii) Acquisition Corp. Acquisition Corp. will at the Effective
Time be a corporation duly incorporated, validly existing and in good standing
under the laws of the State of Delaware. Acquisition Corp. will not, prior to
the Effective Time, engage in any business other than the transactions
contemplated by this Agreement or have any obligations or liabilities other than
its obligations hereunder.
(b) Capital Structure. The authorized capital stock of the Purchaser
consists of 37,000,000 shares of common stock, par value $.01 per share
("Purchaser Common Stock"),
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and 2,500,000 shares of preferred stock, par value $.01 per share (the
"Purchaser Preferred Stock"). As of June 30, 1995, 20,356,768 shares of
Purchaser Common Stock and no shares of Purchaser Preferred Stock were
outstanding. At the Effective Time, all the issued and outstanding capital stock
of Acquisition Corp. will be owned by the Purchaser. All outstanding shares of
capital stock of the Purchaser is, and at the Effective Time will be, and all
outstanding shares of capital stock of Acquisition Corp. at the Effective Time
will be, validly issued, fully paid and nonassessable and not subject to any
preemptive rights.
(c) Authority. Each of the Purchaser and the Acquisition Corp. has all
requisite corporate power and authority to enter into this Agreement, subject to
approval of regulators, and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement, and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of the Purchaser and the Acquisition Corp. This
Agreement has been duly executed and delivered by the Purchaser and the
Acquisition Corp., and assuming due execution and delivery by the Seller,
constitutes a valid and binding obligation of the Purchaser and the Acquisition
Corp., enforceable in accordance with its terms subject to applicable
conservatorship, receivership, bankruptcy, insolvency and similar laws affecting
creditors' rights and remedies generally, and subject, as to enforceability, to
general principles of equity (including without limitation specific
performance), whether applied in a court of law or a court of equity.
(d) No Violations. The execution, delivery and performance of this
Agreement by the Purchaser or the Acquisition Corp. do not, and the consummation
of the transactions contemplated hereby will not, constitute (i) a breach or
violation of, or a default under, any law, rule or regulation or any judgment,
decree, order, governmental permit or license, or agreement, indenture or
instrument of the Purchaser or the Acquisition Corp. or to which the Purchaser
(or any of their respective properties) is subject, (ii) a breach or violation
of, or a default under, the certificate of incorporation, charter or bylaws of
the Purchaser, the Acquisition Corp. or any Subsidiary of the foregoing or (iii)
a breach or violation of, or a default under (or an event which with due notice
or lapse of time or both would constitute a default under), or result in the
termination of, accelerate the performance required by, or result in the
creation of any lien, pledge, security interest, charge or other encumbrance
upon any of the properties or assets of the Purchaser or the Acquisition Corp.
under any of the terms, conditions or provisions of any note, bond, indenture,
deed of trust, loan agreement or other agreement, instrument or obligation to
which the Purchaser or the Acquisition Corp. is a party, or to which any of
their respective properties or assets may be bound or affected.
(e) Consents. Except as referred to herein or in connection, or in
compliance, with the provisions of the Exchange Act, the BHCA, the HOLA, the
BMA, the NJSA, the rules and regulations of the OTS, and the environmental,
corporation, securities or blue sky laws or regulations of the various states,
no filing or registration with, or authorization, consent or approval of, any
public body or authority is necessary for the consummation by the Purchaser, or
the Acquisition Corp. of the Merger or the other transactions contemplated by
this Agreement.
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(f) Access to Funds. The Purchaser and the Acquisition Corp. on the date
hereof have, and at the Effective Time will have, all funds necessary to
consummate the Merger and fulfill its obligations under the terms of this
Agreement, including without limitation, its obligation to pay the aggregate
Merger Consideration and to consummate in a timely manner the transactions
contemplated by this Agreement.
(g) Absence of Claims. No litigation, proceeding or controversy before any
court or governmental agency is pending, and there is no pending claim, action
or proceeding against the Purchaser, the Acquisition Corp. or any of their
subsidiaries, which is reasonably likely, individually or in the aggregate, to
materially hinder or delay consummation of the transactions contemplated hereby,
and, to the best of the Purchaser's knowledge, no such litigation, proceeding,
controversy, claim or action has been threatened.
(h) Absence of Regulatory Actions. Neither the Purchaser nor any of its
Subsidiaries is a party to any cease and desist order, written agreement or
memorandum of understanding with, or a party to any commitment letter or similar
written undertaking to, or is subject to any order or directive by, or is a
recipient of any extraordinary supervisory letter from any Regulatory Agency,
nor has it been advised by any Regulatory Agency that it is contemplating
issuing or requesting (or is considering the appropriateness of issuing or
requesting) any such order, directive, written agreement, memorandum of
understanding, extraordinary supervisory letter, commitment letter or similar
written undertaking which such directive, order, agreement or understanding
would materially hinder or delay consummation of the transactions contemplated
hereby. Purchaser shall make available to Seller, for review on the premises of
the Purchaser, all reports of any Regulatory Agency since June 30, 1993 and any
responses thereto.
(i) Corporate Documents. The Purchaser has delivered to the Seller true
and complete copies of the Purchaser's certificate of incorporation, charter and
bylaws as amended to date and currently in full force and effect and, prior to
the Effective Time, will have delivered to the Seller true and complete copies
of the certificate of incorporation, charter and bylaws of Acquisition Corp.
(j) Financial Statements. Purchaser has previously delivered, or will
deliver, to Seller the Purchaser's audited Financial Statements for the year
ended June 30, 1995, and the Purchaser's unaudited Financial Statements for the
quarter ended March 31, 1995. Once available, Purchaser shall deliver audited
financial statements for the year ended June 30, 1996. The Financial Statements
of Purchaser have been prepared in conformity in all material respects with GAAP
applied on a consistent basis (except for changes, if any, required by GAAP and
disclosed therein) throughout the periods covered by such statements, and fairly
present in all materials respects the consolidated financial condition, results
of operations, stockholders' equity, and cash flows of Purchaser as of and for
the periods ending on the dates thereof, except for Purchaser's interim
financial statements which are subject to normal year-end adjustments.
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(k) Absence of Knowledge. As of the date hereof, neither the Purchaser nor
the Acquisition Corp. knows of any reason why it would be unable to obtain all
of the necessary approvals required in order to consummate the transactions
contemplated by this Agreement. As of the date of this Agreement, the Purchaser
and Acquisition Corp. believe that, in light of its financial condition, it
shall be able to obtain all such approvals, without the imposition of any
burdensome term or condition.
(l) Community Reinvestment Act Compliance. The Purchaser's subsidiarybank
is in substantial compliance with the applicable provisions of the Community
Reinvestment Act of 1977 and the regulations promulgated thereunder, and
received a CRA rating of at least satisfactory as of its last examination. As of
the date of this Agreement, the Purchaser's subsidiarybank has not been advised
of the existence of any fact or circumstance or set of facts or circumstances
which, if true, would cause the Purchaser's subsidiary bank to fail to be in
substantial compliance with such provisions.
(m) OTS Presumptive Disqualifiers. Neither Purchaser, the Acquisition
Corp., nor any Affiliate of Purchaser or the Acquisition Corp., including any
management official thereof, has engaged in any activity that would give rise to
a presumptive disqualifier under 12 C.F.R. Section 574.7(g).
(n) Permits and Licenses. To the best of Purchaser's knowledge, the
Purchaser has all permits, licenses, certificates of authority, orders and
approvals and have made all filings, applications and registrations with
applicable governmental and regulatory bodies that are required to permit them
to carry on their respective businesses as they are presently being conducted
and the absence of which could have a material adverse effect on the ability of
the Purchaser to consummate the transactions contemplated hereby.
(o) Reports.
(i) As of their respective dates, neither the Purchaser's 10-K for
the fiscal year ended June 30, 1995, nor any other Report filed subsequent
thereto, each in the form (including any documents specifically incorporated by
reference therein) filed with the SEC or the OTS, contained or will contain any
untrue statement of a material fact or omitted or will omit to state a material
fact required to be stated therein or necessary to make the statements made
therein, in light of the circumstances under which they were made, not
misleading. Each of the balance sheets of the Purchaser or its Subsidiaries
contained or specifically incorporated by reference in the Purchaser's Reports
(including in each case any related notes and schedules) fairly presented the
financial position of the entity or entities to which its relates as of its date
and each of the Financial Statements fairly presented the results of operations,
shareholders' equity and cash flows, as the case may be, of the entity or
entities to which it relates for the periods set forth therein (subject, in the
case of unaudited interim statement, to normal year-end audit adjustments), in
each case in accordance with GAAP consistently applied during the periods
involved, except as may be noted therein.
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(ii) The Purchaser has filed all reports, registrations and
statements, together with any amendments required to be made with respect
thereto, that they were required to file since June 30, 1995, with the
Regulatory Agencies, the National Association of Securities Dealers, Inc. and
any other SRO, and have paid all fees and assessments due and payable in
connection therewith, except for those fees and assessments that would not be
material.
(p) Purchaser's Information. The information relating to Purchaser to be
furnished to Seller for inclusion in the proxy statement to be used to solicit
shareholder approval of this Agreement and related merger as of the date of such
proxy statement and up to the date of the shareholder meeting shall not contain
any untrue statement of material fact or omit to state a material fact necessary
to make the statement therein not misleading.
(q) Absence of Certain Changes or Events. From June 30, 1995, to the date
hereof: (i) Purchaser has not, except as set forth in Disclosure Schedule
2.02(q), incurred any material liability, other than in the ordinary course of
their business consistent with past practice, and (ii) there has not been any
condition, event change or occurrence that individually, or in the aggregate,
had, or is reasonably like to have, a Material Adverse Effect on the Purchaser.
ARTICLE III
CONDUCT PENDING THE MERGER
Section 3.01 Conduct of the Seller's Business Prior to the Effective Time.
Except with the written consent of Purchaser, which consent shall not be
unreasonably withheld and which will be provided within 3 calendar days from the
date of request, from and after the execution and delivery of this Agreement and
until the Effective Time, the Seller and its Subsidiaries will:
(a) conduct its and their business, maintain its and their properties and
operate only in the ordinary course of business consistent with past practices
and maintain Seller's Financial Statements and Reports in accordance with GAAP
and maintain Seller Bank's Regulatory Reports in accordance with Regulatory
Accounting Principles, if applicable;
(b) conduct its and their business and operate only in accordance with
sound banking practices, including charging off all loans required to be charged
off by bank regulators and regulations, statutes and sound banking practices as
determined by the Boards of Directors of the Seller and the Seller Bank;
(c) maintain an allowance for loan losses deemed by management of the
Seller to be adequate based on past loan loss experience and evaluation of
potential losses in current portfolios;
(d) remain in good standing with all applicable bank regulatory
authorities and preserve each of its and their existing banking locations;
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(e) use their commercially reasonable efforts to maintain and preserve
intact its business organization, properties, leases and advantageous business
relationships and maintain good relationships with employees, goodwill and
business relationships with customers and others;
(f) maintain in full force and effect all of the insurance policies and
bonds covering the directors, officers, employees, properties, businesses and
Employee Plans of the Seller and its Subsidiaries;
(g) consult with the Purchaser prior to acquiring any interest in real
property, except in the ordinary course of business
(h) not knowingly take any action which would materially adversely affect
or delay the ability of the Seller, Seller Bank, Purchaser or the Acquisition
Corp. to obtain any necessary approvals, consents or waivers of any governmental
authority or any other entity required for the transactions contemplated hereby;
and
(i) take such actions in the ordinary course of business consistent with
past practices to protect the Seller Bank's deposit base and prevent any
excessive withdrawals of deposits, provided, however, Seller Bank shall not pay
any interest on deposits which would exceed the maximum amount paid on like
accounts with comparable institutions in the Seller Bank's marketplace.
(j) provide to the Purchaser monthly trial balances on deposits and loans.
Section 3.02 Forbearance by the Seller. Without limiting the covenants set
forth in Section 3.01 hereof, except as otherwise specifically provided in this
Agreement and except to the extent required by law or regulation or by
regulatory authorities, and except in each case as specifically permitted by
other subsections of this Section 3.02 or any Schedules attached hereto, from
and after the execution and delivery of this Agreement and until the Effective
Time, the Seller and its Subsidiaries will not, without the prior written
consent of the Purchaser and Acquisition Corp. which written consent will not be
unreasonably withheld and which will be provided within 3 calendar days from the
date of request:
(a) amend its or their Certificate of Incorporation, Charter, or Bylaws or
other corporate governance documents;
(b) except for the issuance of up to a maximum of 486,600 shares of Seller
Common Stock upon exercise of Seller Options, and 428,125 shares of Seller's
Common Stock to retire Seller's Debentures, issue or sell any shares of its or
their capital stock, issue or grant any stock options, warrants, rights, calls
or commitments of any character calling for or permitting the issuance or sale
of its or their capital stock (or securities convertible into or exchangeable,
with or without additional consideration, for shares of such capital stock or
amend any of the terms of the outstanding stock options);
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c) increase or reduce the number of shares of its or their capital stock
by split-up, reverse split, reclassification, distribution of stock dividends,
change of par or stated value or otherwise modify, change or amend the voting
rights or preferences attributable to any such capital stock, except that the
reduction of outstanding shares of capital stock attributable to a stockholder
perfecting dissenters' rights shall not be violative of this section;
(Paragraph (d) intentionally omitted.)
(e) (i) except as set forth in Disclosure Schedule 3.02(e), adopt, amend
or otherwise modify any of Seller's Employee Plans, any bonus, pension, profit
sharing, retirement or other compensation plan qualified or non-qualified; (ii)
except as set forth in Disclosure Schedule 3.02(e), enter into or amend any
contract of employment with any officer which is not terminable at will without
cost or other liability; (iii) except as set forth in Disclosure Schedule
3.02(e), make or grant any general or individual wage or salary increase or
increase in any manner the compensation or fringe benefits of any of its
employees, officers or directors; (iv) become a party to or commit itself to
fund or otherwise establish any trust or account related to any Employee Plan
with or for the benefit of any employee, officer or director; (v) hire any new
employee, except that Seller may hire individuals of comparable skills and
qualifications and at comparable levels of compensation to fill existing
vacancies identified in Disclosure Schedule 3.02(e) and replace any employees
who terminate their employment with Seller after the date of this Agreement;
(vi) pay any bonus under any bonus or compensation plan (except as set forth in
Disclosure Schedule 3.02(e)); or (vii) except as set forth in Disclosure
Schedule 3.02(e), make any discretionary contribution to any Employee Plan;
(f) incur any obligations, liabilities or expenses or make any charitable
contributions, except in the ordinary course of business consistent with past
practice;
(g) merge or consolidate Seller with any other corporation; sell, transfer
or lease any of its or their assets or property except in the ordinary course of
business, or close any banking office; make any acquisition of all or any
substantial portion of the business or assets of any other person, firm,
association, corporation or business organization other than in connection with
the collection of any loan or credit arrangement between Seller and any other
person; enter into a purchase and assumption transaction with respect to
deposits and liabilities; permit the revocation or surrender by Seller of its
certificate of authority to do business or its certificate of authority to
maintain, or file an application for the relocation of any existing branch
officer, or file an application for a certificate of authority to establish a
new branch office;
(h) waive, release, transfer or grant any rights, or modify or change in
any material respect, any material leases, licenses or agreements, other than in
the ordinary course of business;
(i) subject any asset or property of Seller to a lien, mortgage, pledge,
security interest or other encumbrance (other than in connection with deposits,
repurchase agreements,
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bankers acceptances, and accounts established in the ordinary course of
business, transactions in "federal funds" and any lien, pledge, security
interest or other encumbrance incurred in the ordinary course of business
consistent with past practice which does not have or could not reasonably be
expected to have a Material Adverse Effect on Seller); modify in any material
respect the manner in which Seller has heretofore conducted its business or
enter into any new line of business;
(j) make any loan or commitment secured by 1-4-family residential
properties to any borrower or group of affiliated borrowers except in the
ordinary course of business consistent with past practices and policies;
(k) except as set forth in Disclosure Schedule 3.02(k), compromise, extend
or restructure any real estate loan, construction loan or commercial loan with
an unpaid principal balance except in the ordinary course of business consistent
with past practices and policies;
(l) offer, issue any commitment for, or approve any first lien variable
rate residential mortgage loans, or home equity line of credit loans other than
on terms and conditions, exclusive of interest rates substantially similar to
those for such loans then currently offered by Seller;
(m) make or commit to make any commercial business loan in excess of $
250,000 (including, without limitation, lines of credit and letters of credit)
or any commercial real estate or construction loan (including, without
limitation, lines of credit and letters of credit) secured by any non-1-4 family
residential properties and except in the ordinary course of business consistent
with past practices and policies;
(n) purchase or commit to purchase any bulk loan servicing portfolio;
(o) make any fixed rate loan with a term exceeding 20 years and which
cannot be sold in the secondary market;
(p) other than with respect to loan transactions entered into in the
ordinary course of business consistent with past practices and policies or other
than with respect to loans which are readily saleable in the secondary market
without recourse to the Federal Home Loan Mortgage Corporate or Federal National
Mortgage Association, make or enter into any material transaction, contract or
agreement or incur any other material commitment;
(q) incur any indebtedness for borrowed money (or guarantee any
indebtedness for borrowed money), except for deposit liabilities and except for
indebtedness incurred in the ordinary course of business the repayment term of
which does not exceed 90 days;
(r) cancel or compromise any debt or claim, which has not previously been
charged off, other than in the ordinary course of business and in an aggregate
amount which would not have a Materially Adverse Effect on Seller;
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(s) enter into any transaction other than in the ordinary course of
business;
(t) invite or initiate discussions or negotiations for the acquisition or
merger of the Seller or any Subsidiary by or with any corporation or other
entity other than the Purchaser or its affiliates;
(u) take any action which constitutes a breach or default of its
obligations under this Agreement, or would result in any of its representations
or warranties set forth in this Agreement becoming untrue, or which is
reasonably likely to delay or jeopardize the receipt of any of the regulatory
approvals required hereby;
(v) change its method of accounting as in effect as of December 31, 1995,
except as required by changes in GAAP or Regulatory Agencies;
(w) engage in or enter into any transactions with respect to Seller's
portfolio of securities or make any investment in any security other than U.S.
Treasury obligations and obligations of GNMA, FNMA and FHLMC with a maturity of
one year or less or investments in any security guaranteed by the Small Business
Administration with a face amount in excess of $250,000, except that Seller may
not under any circumstances engage in or enter into any structured transactions,
derivative securities, arbitrage or hedging activity;
(x) settle any claim, action or proceeding involving any liability of the
Seller or Seller Bank for money, damages or other payment in excess of $50,000
or material restrictions upon the operations of the Seller or the Seller Bank;
(aa) sell or otherwise dispose of or encumber any shares of capital stock
of any Seller Subsidiary;
(bb) fail to keep in full force and effect its insurance and bonds as now
carried;
(cc) change its methodology or monthly accrual for the allowance for loan
losses;
(dd) fail to notify Purchaser promptly of its receipt of any letter, notice
or other communication, whether written or oral, from any Regulatory Authority
advising that it is contemplating issuing, requiring, or requesting any
agreement, memoranda, understanding or similar undertaking, or order, directive,
or extraordinary supervisory letter;
(ee) fail to remain in compliance with any capital requirement of any
Regulatory Authority to which it is subject;
(ff) fail to promptly notify Purchaser of (A) the commencement or, to the
knowledge of Seller, threat of any audit, action, or proceeding involving any
material amount of Taxes of Seller; or (B) the receipt by Seller of any
deficiency or audit notices or reports in respect of any material deficiencies
asserted by any Federal, state, local, or other Tax authority;
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(gg) agree to the extension of any statute of limitations for making any
assessments with respect to Taxes;
(hh) fail to maintain and keep its properties in as good repair and
condition as at present, except for ordinary wear and tear;
(ii) except in the ordinary course of business and consistent with
applicable laws and regulations, make any loan or loan commitment to any of its
officers, directors or 5% or more stockholders (or any person or entity
controlled by or affiliated with such officer, director or 5% or more
stockholder);
or
(jj) agree or make any commitment to take any action to do any of the
foregoing.
Section 3.03 Conduct of the Purchaser's Business Prior to the Effective
Time. Except as expressly provided in this Agreement, during the period from the
date of this Agreement to the Effective Time, the Purchaser shall not (i) take
any action that would cause the representations in Section 2.02 to fail to be
true and accurate or that would materially affect the ability of the Purchaser
and the Bank to perform its covenants and agreements under this Agreement or to
consummate the transactions contemplated hereby or (ii) take any action, which
would materially adversely affect or delay the ability of the Seller or the
Purchaser to obtain any necessary approvals, consents or waivers of any
governmental authority required for the transactions contemplated hereby. Except
as expressly provided in this Agreement, Acquisition Corp. shall not conduct any
business prior to the Effective Time.
ARTICLE IV
COVENANTS
Section 4.01 No Solicitation. From and after the date hereof until the
termination of this Agreement, neither the Seller or Seller Bank, nor any of
their respective officers, directors, employees, representatives, agents or
affiliates (including, without limitation, any investment banker, attorney or
accountant retained by the Seller or any of its subsidiaries), will, directly or
indirectly, initiate, solicit or knowingly encourage (including by way of
furnishing non-public information or assistance), or facilitate knowingly, any
inquiries or the making of any proposal that constitutes, or may reasonably be
expected to lead to, any Acquisition Proposal (as defined below), or enter into
or maintain or continue discussions or negotiate with any person or entity in
furtherance of such inquiries or to obtain an Acquisition Proposal or agree to
or endorse any Acquisition Proposal, or authorize or permit any of its officers,
directors or employees or any of its subsidiaries or any investment banker,
financial advisor, attorney, accountant or other representative retained by any
of its subsidiaries to take any such action, and the Seller shall notify
Purchaser orally (within one business day) and in
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writing (as promptly as practicable) of all of the relevant details relating to
all inquiries and proposals which it or any of its subsidiaries or any such
officer, director, employee, investment banker, financial advisor, attorney,
accountant or other representative may receive relating to any of such matters
and if such inquiry or proposal is in writing, the Seller shall deliver to
Purchaser a copy of such inquiry or proposal promptly; provided, however, that
nothing contained in this Section 4.01 shall prohibit the Board of Directors of
the Seller from (i) furnishing information to, or entering into discussions or
negotiations with any person or entity that makes an unsolicited written, bona
fide proposal, to acquire the Seller pursuant to a merger, consolidation, share
exchange, business combination, tender or exchange offer or other similar
transaction, if, and only to the extent that, (A) the Board of Directors of the
Seller receives a written opinion from its independent financial advisor that
such proposal may be superior to the Merger from a financial point-of-view to
the Seller's stockholders, (B) the Board of Directors of the Seller, after
consultation with and based upon the written advice of independent legal counsel
(who may be the Seller's regularly engaged independent legal counsel),
determines in good faith that such action is necessary for the Board of
Directors of the Seller to comply with its fiduciary duties to stockholders
under applicable law (such proposal that satisfies (A) and (B) being referred to
herein as a "Superior Proposal") and (C) prior to furnishing such information
to, or entering into discussions or negotiations with, such person or entity,
the Seller (x) provides reasonable notice to Purchaser to the effect that it is
furnishing information to, or entering into discussions or negotiations with,
such person or entity and (y) receives from such person or entity an executed
confidentiality agreement in reasonably customary form, (ii) complying with Rule
14e-2 promulgated under the Exchange Act with regard to a tender or exchange
offer or (iii) failing to make or withdrawing or modifying its recommendation
and entering into a Superior Proposal if there exists a Superior Proposal and
the Board of Directors of the Seller, after consultation with and based upon the
written advice of independent legal counsel (who may be the Seller's regularly
engaged independent legal counsel), determines in good faith that such action is
necessary for the Board of Directors of the Seller to comply with its fiduciary
duties to stockholders under applicable law. For purposes of this Agreement,
"Acquisition Proposal" shall mean any of the following (other than the
transactions contemplated hereunder) involving the Seller or any of its
subsidiaries: (i) any merger, consolidation, share exchange, business
combination, or other similar transaction; (ii) any sale, lease, exchange,
mortgage, pledge, transfer or other disposition of 10% or more of the assets of
the Seller or Seller Bank, taken as a whole, in a single transaction or series
of transactions; (iii) any tender offer or exchange offer for 10% or more of the
outstanding shares of capital stock of the Seller or the filing of a
registration statement under the Securities Act in connection therewith; or (iv)
any public announcement of a proposal, plan or intention to do any of the
foregoing or any agreement to engage in any of the foregoing.
Section 4.02 Certain Policies of the Seller; Balance Sheet.
(a) At the request of the Purchaser accompanied or preceded by the
Purchaser's written confirmation that it is not aware of any fact or
circumstance that would result in the failure of any condition set forth in
Article V or an event of termination under Article VI, the Seller shall modify
and change its loan, litigation and real estate valuation policies and
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practices (including loan classifications and levels of reserves) after the date
on which all required shareholder, federal depository institution regulatory
(other than the applicable waiting period) and other approvals are received and
prior to the Effective Time so as to be consistent on a mutually satisfactory
basis with those of the Purchaser; provided, that such policies and practices
(x) are consistent with generally accepted accounting principles and all
applicable laws and regulations and (y) do not violate any law or regulation or
cause the Seller to be other than well-capitalized as defined by the FDIC.
(b) The Seller's representations, warranties and covenants contained in
this Agreement shall not be deemed to be untrue or breached in any respect for
any purpose as a consequence of any modifications or changes undertaken to
conform to Purchaser's policies solely on account of this Section 4.02.
Section 4.03 Access and Information.
(a) From the date of this Agreement through the Effective Time, Seller and
Seller Bank shall afford to each of Purchaser and its authorized agents and
representatives, reasonable access to their respective properties, assets, books
and records and personnel, at reasonable business hours and after reasonable
notice; and Purchaser shall be provided with such financial and operating data
and other information with respect to the businesses, properties, assets, books
and records and personnel of Seller and Seller Bank as they shall from time to
time reasonably request. Purchaser agrees to conduct any such requests and
discussions hereunder in a manner so as not to interfere unreasonably with
normal operations and consumer and employee relationships of Seller. In the
event the Purchaser learns of any information or matters during such
investigation that the Purchaser believes may constitute or reveal a material
breach of the Seller's representations, warranties, covenants or agreements
contained herein, the Purchaser shall provide the Seller with a written notice
within 15 business days or such longer period as extended by the parties in
writing contemplated by this Section 4.03, specifying the information or matters
learned and the basis upon which they may constitute or reveal a material breach
of the Seller's representations, warranties, covenants or agreements and the
Seller has the right to cure such material breach within 30 calendar days from
the date of such notice. No breach of a representation, warranty, covenant or
agreement that is learned pursuant to Purchaser's investigation contemplated by
this Section 4.03 shall constitute a material breach of a representation,
warranty, covenant or agreement by Seller under any provision of or for any
purpose under this Agreement and the information or matters underlying such
breach shall be deemed to have been fully disclosed in Seller's disclosure
pursuant to this Agreement, unless Purchaser provides Seller with a written
notice relating thereto delivered and the Seller has not cured such breach
within the time period provided in the immediately preceding sentence and
Purchaser exercises its right to terminate this Agreement on the basis thereof
in accordance with Section 6.01(f).
(b) The Purchaser agrees to treat as strictly confidential all information
received from the Seller or its Subsidiaries and agree not to divulge to any
other person, natural or corporate (other than essential employees and agents of
such party) any financial statements, schedules, contracts, agreements,
instruments, papers, documents and other information
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relating to the Seller and its Subsidiaries which it may come to know or which
may come into its possession and, if the transactions contemplated hereby are
not consummated for any reason, agrees promptly to return to the Seller all
written material furnished by Seller or its Subsidiaries.
(c) Each party hereto will not, and will cause its respective
representatives not to, use any information obtained from any other such party
as a result of this Agreement (including this Section 4.03) or in connection
with the transactions contemplated hereby (whether so obtained before or after
the execution hereof, including work papers and other materials derived
therefrom (collectively, the "Confidential Information") for any purpose
unrelated to the consummation of the transactions contemplated by this
Agreement. Subject to the requirements of law, regulation and applicable
Regulatory Agencies, each party hereto will keep confidential, and will cause
its respective representatives to keep confidential, all Confidential
Information relating to or furnished by any other such party unless such
information (i) was already or becomes known to the general public, other than
from a prohibited disclosure by a party to this Agreement or its
representatives, (ii) becomes available to such party or an affiliate of such
party from sources (other than another party to this Agreement or its
representatives) not bound by a confidentiality obligation or agreement, (iii)
is disclosed with the prior written approval of the party which furnished such
Confidential Information or (iv) is or becomes readily ascertainable from
published information. In the event that this Agreement is terminated or the
transactions contemplated by this Agreement shall otherwise fail to be
consummated, each party hereto and its respective representatives shall promptly
cause all Confidential Information in the possession of itself and its
representatives, including all copies or extracts thereof, to be returned to the
party which furnished the same.
Section 4.04 Certain Filings, Consents and Arrangements. The Purchaser and
the Seller shall cause Acquisition Corp. to, (a) make as soon as practicable (or
cause to be made) from the date of the Agreement, (or cause to be made) any
filings and applications required to be filed in order to obtain all approvals,
consents and waivers of governmental authorities necessary or appropriate for
the consummation of the transactions contemplated hereby (including the Bank
Merger), (b) cooperate with one another (i) in promptly determining what filings
are required to be made or approvals, consents or waivers are required to be
obtained under any relevant federal, state or foreign law or regulation and (ii)
in promptly making any such filings, furnishing information required in
connection therewith and seeking timely to obtain any such approvals, consents
or waivers, (c) use reasonable efforts to obtain all such approvals, consents or
waivers, to respond to all inquiries and requests for information from
regulatory authorities, (d) apprise each other of the content of all
communications with regulatory authorities with respect to all filings and
applications, and (e) deliver to the other copies of all such filings and
applications (except for materials that are legally privileged or which it is
prohibited by law from disclosing) promptly after they are filed.
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Section 4.05 Additional Agreements. Subject to the terms and conditions of
this Agreement, each of the parties hereto agrees to use all reasonable efforts
to take promptly, or cause to be taken promptly, all actions and to do promptly,
or cause to be done promptly, all things necessary, proper or advisable under
applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement as promptly as practicable,
including using reasonable efforts to obtain all necessary actions or
non-actions, extensions, waivers, consents and approvals from all applicable
governmental entities, effecting all necessary registrations, applications and
filings (including, without limitation, filings under any applicable state
securities laws) and obtaining any required contractual consents and regulatory
approvals.
Section 4.06 Publicity. The initial press release announcing this
Agreement shall be a joint press release and thereafter the Seller and the
Purchaser shall consult with each other in issuing any press releases or similar
public disclosure with respect to the other or the transactions contemplated
hereby and in making any filings with any governmental entity or with any
national securities exchange with respect thereto; provided, however, that
nothing contained in this Section 4.08 shall prohibit any party from responding
to questions from the business press or, following notification to the other
parties to this Agreement, from making any disclosure which, after consultation
with its counsel, it deems necessary to comply with the requirements of
applicable law or regulation.
Section 4.07 Notification of Certain Matters. The Purchaser and the
Acquisition Corp., on the one hand, and the Seller and the Seller Bank, on the
other hand, shall give prompt notice to the other of (a) the occurrence or its
knowledge of any event or condition that would cause any of its representations
or warranties set forth in this Agreement not to be true and correct in all
material respects as of the date of this Agreement or as of the Effective Time
(except as to any representation or warranty which specifically relates to an
earlier date), or any of its obligations set forth in this Agreement required to
be performed at or prior to the Effective Time not to be performed in all
material respects at or prior to the Effective Time (any such notice, a
"Supplemental Disclosure Schedule "), including without limitation, any event,
condition, change or occurrence which individually or in the aggregate has, or
which, so far as reasonably can be foreseen at the time of its occurrence, is
reasonably likely to result in a Material Adverse Effect on it; and (b) any
action of a third party of which it receives notice that might reasonably be
expected to prevent or materially delay the consummation of the transactions
contemplated hereby, including, without limitation, any notice or other
communication from any third party alleging that the consent of such third party
is or may be required in connection with the transactions contemplated by this
Agreement. Any Supplemental Disclosure Schedule given by the Seller to the
Purchaser shall be deemed to amend the Disclosure Schedule and, unless the
Purchaser, by written notice to the Seller given within fifteen (15) business
days of its receipt of such Supplemental Disclosure Schedule, exercises any
right of termination it may then have under Section 6.01(b), the Purchaser shall
thereafter be deemed to have permanently and irrevocably waived (on behalf of
itself and its Subsidiaries) (i) any right of termination (or any other rights
or remedies) arising out of or with respect to the events or conditions
described in such Supplemental Disclosure Schedule; and (ii) any contribution of
such events or conditions
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towards the occurrence of a Material Adverse Effect; provided, that no such
waiver shall exist with respect to the cumulation of such events or conditions
with any other events or conditions described in any subsequent Supplemental
Disclosure Schedule for purposes of determining the occurrence of a Material
Adverse Effect.
Section 4.08 Indemnification.
(a) From and after the Effective Time through the sixth anniversary of the
Effective Date, the Purchaser agrees to indemnify and hold harmless each present
and former director and officer of the Seller or its Subsidiaries and each
officer or employee of the Seller or its Subsidiaries that is serving or has
served as a director or trustee of another entity expressly at the Seller's
request or direction (each, an "Indemnified Party"), against any costs or
expenses (including reasonable attorneys' fees), judgments, fines, losses,
claims, damages or liabilities (collectively, the "Costs") incurred in
connection with any claim, action, suit, proceeding or investigation, whether
civil, criminal, administrative or investigative, and whether or not the
Indemnified Party is a party thereto, arising out of matters existing or
occurring at or prior to the Effective Time (including the transactions
contemplated by this Agreement), whether asserted or claimed prior to, at or
after the Effective Time, to the fullest extent then permitted under Delaware
law or, if greater, that the Seller would have been permitted under its
certificate of incorporation, charter or bylaws in effect on the date hereof.
(b) Any Indemnified Party wishing to claim indemnification under Section
4.08(a), upon learning of any such claim, action, suit, proceeding or
investigation, shall promptly notify the Purchaser thereof, but the failure to
so notify shall not relieve the Purchaser of any liability it may have hereunder
to such Indemnified Party if such failure does not materially and substantially
prejudice the indemnifying party. In the event of any such claim, action, suit,
proceeding or investigation, (i) the Purchaser shall have the right to assume
the defense thereof with counsel reasonably acceptable to the Indemnified Party
and the Purchaser shall not be liable to such Indemnified Party for any legal
expenses of other counsel subsequently incurred by such Indemnified Party in
connection with the defense thereof, except that if the Purchaser does not elect
to assume such defense within a reasonable time or counsel for the Indemnified
Party at any time advises that there are issues which raise conflicts of
interest between the Purchaser and the Indemnified Party, the Indemnified Party
may retain counsel satisfactory to such Indemnified Party, and the Purchaser
shall remain responsible for the reasonable fees and expenses of such counsel as
set forth above, promptly as statements therefor are received; provided,
however, that the Purchaser shall be obligated pursuant to this paragraph (b) to
pay for only one firm of counsel for all Indemnified Parties in any one
jurisdiction with respect to any given claim, action, suit, proceeding or
investigation unless the use of one counsel for such Indemnified Parties would
present such counsel with a conflict of interest; (ii) the Indemnified Party
will reasonably cooperate in the defense of any such matter and (iii) the
Purchaser shall not be liable for any settlement effected by an Indemnified
Party without its prior written consent, which consent may not be withheld
unless such settlement is unreasonable in light of such claims, actions, suits,
proceedings or investigations against, and defenses available to, such
Indemnified Party.
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(c) In the event Purchaser or any of its successors or assigns (i)
consolidates with or merges into any other Person and shall not be the
continuing or surviving corporation or entity of such consolidation or merger,
or (ii) transfers or conveys all or substantially all of its properties and
assets to any person, then, and in each such case, to the extent necessary,
proper provision shall be made so that the successors and assigns of Purchaser
assume the obligations set forth in this Section 4.08.
(d) The provisions of this Section 4.08 are intended to be for the benefit
of, and shall be enforceable by, each Indemnified Party and their respective
heirs and representatives.
Section 4.09 Shareholders' Meeting. The Seller shall take all action
necessary, in accordance with applicable law and its certificate of
incorporation and bylaws, to convene a meeting of the holders of Seller Common
Stock (the "Shareholder Meeting") as promptly as practicable for the purpose of
considering and voting on the approval and adoption of this Agreement. The
Seller's Board of Directors, subject to its fiduciary duties as advised by such
board's counsel and investment advisor, (i) shall recommend at the Shareholder
Meeting that the holders of the Seller Common Stock vote in favor of and approve
and adopt this Agreement and (ii) shall use its reasonable best efforts to
solicit such approvals.
Section 4.10 Proxy Statement. As soon as practicable after the date
hereof, the Seller shall prepare a proxy statement, which shall be reasonably
acceptable to counsel to the Purchaser, to take shareholder action on the Merger
and this Agreement (the "Proxy Statement"), file the Proxy Statement with the
SEC, respond to comments of the staff of the SEC and promptly thereafter mail
the Proxy Statement to all holders of record (as of the applicable record date)
of shares of Seller Common Stock. The Seller shall provide the Purchaser with
reasonable opportunity to review and comment upon the contents of the Proxy
Statement. The Seller represents and covenants that the Proxy Statement and any
amendment or supplement thereto, at the date of mailing to shareholders of the
Seller and the date of the Shareholder Meeting, will be in material compliance
with all relevant rules and regulations of the SEC and, with respect to the
Seller and the transactions contemplated herein, will not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The Purchaser shall
furnish the Seller with all information concerning the Purchaser as the Seller
may reasonably request in connection with the Proxy Statement such written
information included in the Proxy Statement shall be in material compliance with
all relevant rules and regulations of the SEC and will not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
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Section 4.11 Stock Option Agreement. Simultaneously with the execution of
this Agreement, the Seller and the Purchaser shall execute a Stock Option
Agreement (the "Option Agreement"), the form of which is attached hereto as
Exhibit B, pursuant to which the Seller shall grant an unconditional,
irrevocable option (the "Option") to the Purchaser.
Section 4.12 Dissenters' Rights. Any holder of Seller Common Stock
otherwise entitled to receive Merger Consideration for each of his or her shares
shall be entitled to demand payment of the fair cash value of such shares as
specified in N.J.S.A. 14:11-2 if the holder follows the procedures specified in
the statutes. Those shares shall hereafter be specified as "Dissenting Shares."
Any Dissenting Shares shall not, after the Effective Time, be entitled to vote
for any purpose or receive any dividends or other distributions and shall not be
converted into cash as provided in Section 1.03 hereof; provided, however, that
shares of Seller Common Stock held by a dissenting shareholder who subsequently
withdraws a demand for payment, fails to comply fully with the requirements of
the NJSA, or otherwise fails to establish the right of such shareholder to be
paid the fair cash value of such shareholder's shares under the NJSA shall be
deemed to be converted into cash pursuant to the terms and conditions specified
herein. Seller shall give Purchaser prompt notice of any written demands for
appraisal of any shares of Seller Common Stock, attempted withdrawals of any
such demands, and any other instruments served pursuant to the NJSA and received
by Seller relating to shareholders' rights of appraisal. Seller shall not,
except with the prior written consent of Purchaser, voluntarily make any payment
with respect to any demands for appraisals of any shares of Seller Common Stock,
offer to settle or settle any such demands or approve any withdrawal of any such
demands.
Section 4.13 Operating Transition. Notwithstanding any other provision of
this Agreement, in order to effect an orderly operating transition of the
business of the Seller Bank from the Seller to the Purchaser, Seller agrees to
cause the Seller Bank to provide Purchaser and Purchaser's agents and
representatives with the opportunity to participate in a joint calling program
on depositors and borrowers from Seller Bank, to participate in the training of
employees of Seller Bank and to maintain a liaison to observe the day-to-day
operations of Seller Bank. Purchaser agrees that its participation will not
interfere with the orderly conduct of the business of Seller Bank.
ARTICLE V
CONDITIONS TO CONSUMMATION
Section 5.01 Conditions to Each Party's Obligations. The respective
obligations of each party to effect the Merger shall be subject to the
fulfillment at or prior to the Effective Time of the following conditions, none
of which may be waived:
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(a) this Agreement shall have been approved by the requisite vote of the
holders of Seller Common Stock at the Shareholder Meeting in accordance with
applicable law;
(b) all necessary regulatory or governmental approvals, consents or
waivers required to consummate the transactions contemplated hereby shall have
been obtained and shall remain in full force and effect and all statutory
waiting periods in respect thereof shall have expired; and
(c) no party hereto shall be subject to any order, decree or injunction of
a court or agency of competent jurisdiction which enjoins or prohibits the
consummation of the Merger.
Section 5.02 Conditions to the Obligations of the Purchaser under this
Agreement. The obligations of the Purchaser to effect the Merger shall be
further subject to the satisfaction at or prior to the Effective Time of the
following conditions, any one or more of which may be waived by the Purchaser:
(a) each of the obligations, covenants and agreements of the Seller
required to be performed by it at or prior to the Effective Time pursuant to the
terms of this Agreement shall have been duly performed and complied with in all
material respects, except as to the failure to perform an obligation, covenant
or agreement that would not, individually or in the aggregate, result in a
Material Adverse Effect on Seller and its Subsidiaries taken as a whole, and the
Purchaser shall have received a certificate to the foregoing effect dated the
Effective Date and signed by the Chairman and President of the Seller;
(b) the representations and warranties of the Seller contained in this
Agreement (subject to Section 4.07) shall be true and correct in all material
respects as of the date of this Agreement and as of the Effective Time (as
though made at and as of the Effective Time except as to (i) any representation
or warranty which specifically relates to an earlier date and (ii) where the
facts which cause the failure of any representation or warranty to be so true
and correct would not, either individually or in the aggregate, constitute a
Material Adverse Effect on Purchaser and its Subsidiaries taken as a whole) and
the Purchaser shall have received a certificate to the foregoing effect dated
the Closing Date signed by the Chairman and President of the Seller.
(c) the Purchaser shall have received certified copies of the resolutions
(or documents of like import) evidencing the authorization of this Agreement and
the consummation of the transactions contemplated hereby by the Seller's Board
of Directors and the Seller's shareholders;
(d) the Purchaser shall have received a certificate of corporate existence
for the Seller from the Secretary of State of the State of New Jersey (such
certificate to be dated as of a day as close as practicable to the date of the
Closing) and a similar certificate for the Seller Bank from the Department;
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(e) Subject to the Purchaser's compliance with Sections 4.05 and 4.07,
none of the approvals or consents referred to in Section 5.01(b) hereof shall
contain any condition which would, or would be reasonably likely to, have a
Material Adverse Effect on the Purchaser and its Subsidiaries taken as a whole
giving effect to the completion of the transactions contemplated hereby;
(f) the Purchaser shall have received an opinion or opinions, dated the
date of the Closing, from Blank, Rome, Comisky & McCauley, counsel to the
Seller, to the effect that:
(i) Seller is a corporation duly authorized, validly existing and in
good standing corporation under the laws of the State of New Jersey and Seller
Bank is a state-chartered commercial bank duly organized and in existence under
the laws of the United States of America;
(ii) the Seller has the power and authority to carry on its business
currently conducted, to own, lease and operate its properties and to consummate
the transactions contemplated by this Agreement and Plan of Merger and the
Subsidiaries have the corporate power and authority to carry on their business
currently conducted and to own, lease and operate their properties;
(iii) this Agreement and Plan of Merger have been duly authorized
and approved by the Seller and this Agreement and Plan of Merger and the
transactions contemplated thereby have been approved by the requisite vote of
the Seller's shareholders and duly authorized, executed and delivered by the
Seller and this Agreement and Plan of Merger constitute the valid and binding
obligation of the Seller;
(iv) the authorized capitalization of the Seller is as set forth in
Section 2.01(b) hereof;
(v) to counsel's best knowledge, all acts, other proceedings
required to be taken by or on the part of the Seller, including the adoption of
this Agreement and Plan of Merger by the shareholders of the Seller, and the
necessary approvals, consents, authorizations or notifications required to be
taken to consummate the transactions contemplated by this Agreement and Plan of
Merger, have been properly taken or obtained; neither the execution and delivery
of this Agreement and Plan of Merger nor the consummation of the transactions
contemplated hereby and thereby, with or without the giving of notice or the
lapse of time, or both, will (i) violate any provision of the Certificate,
Charter or Bylaws of the Seller or the Subsidiaries; or (ii) to the knowledge of
such counsel, violate, conflict with, result in the material breach or
termination of, constitute a material default under, accelerate the performance
required by, or result in the creation of any material lien, charge or
encumbrance upon any of the properties or assets of the Seller or the
Subsidiaries pursuant to any indenture, mortgage, deed of trust, or other
agreement or instrument to which the Seller or the Subsidiaries are a party or
by which it or any of their properties or assets may be bound, or violate any
statute, rule or regulation applicable to the Seller or the Subsidiaries, which
would have a Material Adverse Effect on the financial condition, assets,
liabilities, or business of the
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Seller or the Subsidiaries; to the knowledge of such counsel, no consent,
approval, authorization, order, registration or qualification of or with any
court, regulatory authority or other governmental body, other than as
specifically contemplated by this Agreement is required for the consummation by
the Seller or the Subsidiaries of the transactions contemplated by this
Agreement and Plan of Merger;
(vi) to the knowledge of such counsel, since the date of this
Agreement, neither the Seller nor the Subsidiaries have granted any options,
warrants, calls, agreements or commitments of any character relating to any of
the shares of the Seller or the Subsidiaries, nor has the Seller or the
Subsidiaries granted any rights to purchase or otherwise acquire from the Seller
or the Subsidiaries any shares of the Seller's or the Subsidiaries' capital
stock, except as provided in this Agreement as set forth in Disclosure Schedule
2.01(b);
(vii) to the knowledge of such counsel and except as disclosed
pursuant to Disclosure Schedule 2.01(k), there are no actions, suits,
proceedings or investigations of any nature pending or threatened that challenge
the validity or legality of the transactions contemplated by this Agreement or
Plan of Merger which seek or threaten to restrain, enjoin or prohibit (or obtain
substantial damages in connection with) the consummation of such transactions;
(viii) to the knowledge of such counsel and except as is set forth
in Disclosure Schedule 2.01(k), there is no litigation, appraisal or other
proceeding or governmental investigation pending or threatened against or
relating to the business or property of the Seller or the Subsidiaries which
would have a Materially Adverse Effect on the consolidated financial condition
of the Seller, or of any legal impediment to the continued operation of the
properties and business of the Seller or the Subsidiaries in the ordinary course
after the consummation of the transactions contemplated by this Agreement and
Plan of Merger.
(g) the Seller shall have furnished the Purchaser with such certificates
of its officers or others and such other documents to evidence fulfillment of
the conditions set forth in this Section 5.02 as the Purchaser may reasonably
request.
(h) the Seller will be responsible for making all filings and/or
submitting all returns with respect to any state and/or local real estate
transfer or gains taxes that are required to be filed before the Effective Time.
Seller also agrees to pay any expenses relating to the preparation or filing of
returns with respect thereto.
Section 5.03 Conditions to the Obligations of the Seller. The obligations
of the Seller to effect the Merger shall be further subject to the satisfaction
at or prior to the Effective Time of the following conditions, any one or more
of which may be waived by the Seller:
(a) each of the obligations of the Purchaser required to be performed by
it at or prior to the Effective Date pursuant to the terms of this Agreement
shall have been duly
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performed and complied with in all material respects, and the Seller shall have
received a certificate to the foregoing effect dated the Closing Date and signed
by the President and Chief Financial Officer of the Purchaser;
(b) the representations and warranties of the Purchaser contained in this
Agreement shall be true and correct in all material respects as of the date of
this Agreement and as of the Effective Time (as though made at and as of the
Effective Time except as to any representation or warranty which specifically
relates to an earlier date) and the Seller shall have received a certificate to
the foregoing effect dated the Effective Date signed by the President and the
Chief Financial Officer of the Purchaser;
(c) the Seller shall have received an opinion, dated as of the Effective
Date, from Muldoon, Murphy & Faucette, counsel for the Purchaser to the effect
that:
(i) Purchaser is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware;
(ii) Purchaser has the corporate power and authority to carry on
its business as now conducted, to own, lease and operate its
properties and to consummate the transactions contemplated by
the Agreement;
(iii) the Agreement has been duly authorized, executed and delivered
by Purchaser and Acquisition Corp. and constitutes the valid
and binding obligation of Purchaser and Acquisition Corp;
(iv) all corporate acts and other proceedings required to be taken
by or on the part of Purchaser and Acquisition Corp. to
consummate the transactions contemplated by the Agreement have
been properly taken; neither the execution and delivery of the
Agreement, nor the consummation of the transactions
contemplated hereby and thereby, with and without the giving
of notice or the lapse of time, or both, will violate any
provision of the Articles of Incorporation or Bylaws of
Purchaser;
(v) except as disclosed in such opinion, to the knowledge of such
counsel there are no actions, suits, proceedings or
investigations (public or private) of any nature pending or
threatened that challenge the validity or propriety of the
transactions contemplated by the Agreement or which seek or
threaten to restrain, enjoin or prohibit or to obtain
substantial damages in connection with the consummation of
such transactions; and
(vi) all regulatory and governmental approvals and consents which
are necessary to be obtained by Purchaser and its
subsidiaries to permit the
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execution, delivery and performance of the Agreement have been
obtained.
ARTICLE VI
TERMINATION
Section 6.01 Termination. Notwithstanding any other provision of this
Agreement, this Agreement may be terminated, and the Merger abandoned, prior to
the Effective Time, either before or after its approval by the shareholders of
the Seller;
(a) by the mutual consent of the Purchaser and the Seller in a written
instrument if the board of directors of each so determines by vote of a majority
of the members of its entire board;
(b) by the Purchaser or the Seller (provided that the party seeking
termination is not then in material breach of any representation, warranty,
covenant or other agreement contained herein), in the event of (i) a failure to
perform or comply by the other party with any covenant or agreement of such
other party contained in this Agreement, which failure or non-compliance is
material in the context of the transactions contemplated by this Agreement, or
(ii) subject to Section 4.07, any inaccuracies, omissions or breach in the
representations, warranties, covenants or agreements of the other party
contained in this Agreement the circumstances as to which either individually or
in the aggregate have, or reasonably could be expected to have, a Material
Adverse Effect on such other party; in either case which has not been or cannot
be cured within 30 calendar days after written notice thereof is given by the
party seeking to terminate to such other party;
(c) by the Purchaser or the Seller by written notice to the other party if
either (i) any approval, consent or waiver of a governmental authority required
to permit consummation of the transactions contemplated hereby shall have been
denied or (ii) any governmental authority of competent jurisdiction shall have
issued a final, unappealable order enjoining or otherwise prohibiting
consummation of the transactions contemplated by this Agreement, or (iii) the
holders of Seller Common Stock shall fail to approve and adopt this Agreement,
provided, however, that no party shall have the right to terminate this
Agreement pursuant to this Section 6.01(c) if such denial or request or
recommendation for withdrawal shall be due to the failure of the party seeking
to terminate this Agreement to perform or observe the covenants and agreements
of such party set forth herein;
(d) by the Purchaser or the Seller, in the event that the Merger is not
consummated by December 31,1996, unless the failure of such occurrence is due to
the failure to perform or comply with any covenant or agreement contained in
this Agreement by the party seeking to terminate;
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(e) by the Purchaser, if the Board of Directors of the Seller does not
publicly recommend in the Proxy Statement that the Seller's stockholders approve
and adopt this Agreement or if, after recommending in the Proxy that
stockholders approve and adopt this Agreement, the Board of Directors of the
Seller shall have withdrawn, modified or amended such recommendation in any
respect materially adverse to the Purchaser; or
(f) subject to Section 4.07, by the Purchaser by written notice to the
Seller in the event that there has occurred since the date of this Agreement an
event, condition, change or occurrence which, individually or in the aggregate,
has had or could reasonably be expected to result in a Material Adverse Effect
on the Seller; provided that the Purchaser shall have given the Seller thirty
(30) calendar days prior written notice of such termination, and the Seller
shall not have remedied such event, condition, change or occurrence by the end
of such thirty-day period.
Section 6.02 Effect of Termination. In the event of termination of this
Agreement by either the Purchaser or the Seller as provided in Section 6.01,
this Agreement shall forthwith become void and have no effect except (i)
Sections 4.03(b), 4.03(c), 8.06 and 8.07, shall survive any termination of this
Agreement, (ii) that notwithstanding anything to the contrary contained in this
Agreement, no party shall be relieved or released from any liabilities or
damages arising out of its willful breach of any provision of this Agreement,
and (iii) in the event this Agreement (x) is terminated subsequent to the
occurrence of a Triggering Event (as such term is defined in the Option
Agreement, except for Section 2(b)(iv)) or (y) is terminated by Purchaser
pursuant to Section 6.01(b) or 6.01(e) hereof, and within 12 months after such
termination by Purchaser a Triggering Event shall occur, then in addition to any
other amounts payable or stock issuable by the Seller pursuant to this Agreement
or the Option Agreement, as the case may be, the Seller shall pay to Purchaser a
termination fee (the "Termination Fee") of $500,000.
ARTICLE VII
CLOSING, EFFECTIVE DATE AND EFFECTIVE TIME
Section 7.01 Effective Date and Effective Time. Subject to the provisions
of Article V and VI, the closing of the transactions contemplated hereby shall
take place at the offices of the Purchaser on such date (the "Closing Date") and
at such time as the Purchaser and the Seller mutually agree to within ten (10)
business days after the expiration of all applicable waiting periods in
connection with approvals of governmental authorities and all conditions to the
consummation of this Agreement are satisfied or waived, or on such other date as
may be agreed by the parties. Subject to the provisions of this Agreement, on
the Closing Date, the Certificate of Merger shall be signed, verified and
affirmed as required by Delaware Law and duly filed with the Secretary of State
of the State of Delaware. The date of such filing is herein called the
"Effective Date." The "Effective Time" of the Merger shall be the time on the
Effective Date as set forth in such articles of merger.
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Section 7.02 Deliveries at the Closing. Subject to the provisions of Articles V
and VI, on the Closing Date there shall be delivered to the Purchaser and the
Seller the documents and instruments required to be delivered under Article V.
ARTICLE VIII
OTHER MATTERS
Section 8.01 Certain Definitions; Interpretation. As used in this
Agreement, the following terms shall have the meanings indicated, unless the
context otherwise requires:
"material" means material to the Purchaser or the Seller (as the
case may be) and its respective subsidiaries, taken as a whole.
"person" includes an individual, corporation, partnership,
association, trust or unincorporated organization.
When a reference is made in this Agreement to Sections or Exhibits, such
reference shall be to a Section of, or Exhibit to, this Agreement unless
otherwise indicated. The headings contained in this Agreement are for ease of
reference only and shall not affect the meaning or interpretation of this
Agreement. Whenever the words "include, "includes, or "including" are used in
this Agreement, they shall be deemed followed by the words "without limitation."
Any singular term in this Agreement shall be deemed to include the plural, and
any plural term the singular. Any reference to gender in this Agreement shall be
deemed to include any other gender.
Section 8.02 Non-Survival of Representations, Warranties, Covenants and
Agreements. All representations, warranties, covenants and agreements contained
in this Agreement (or in any instrument delivered pursuant to this Agreement)
shall not survive beyond the Effective Time, except for the agreements contained
in Article I and Sections 4.08, and 8.06 hereof.
Section 8.03 Amendment. This Agreement may be amended by the parties
hereto, by or pursuant to action taken by their respective boards of directors,
at any time before or after approval hereof by the shareholders of the Seller
but, after such approval, no amendment shall be made which reduces the amount or
changes the form of the Merger Consideration as provided in Section 1.02 or
which in any way materially adversely affects the rights of such shareholders,
without the further approval of such shareholders. This Agreement may not be
amended except by an instrument in writing specifically referring to this
Section 8.03 and signed on behalf of each of the parties hereto.
Section 8.04 Waiver. At any time prior to the Effective Date, the
Purchaser, on the one hand, and the Seller, on the other hand, may (i) extend
the time for the performance of any of the obligations or other acts of the
other, (ii) waive any inaccuracies in
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the representations and warranties of the other contained herein or in any
documents delivered pursuant hereto and (iii) waive compliance by the other with
any of the agreements or conditions contained herein which may legally be
waived. Any agreement on the part of a party hereto to any such extension or
waiver shall be valid only if set forth in an instrument in writing specifically
referring to this Section 8.04 and signed on behalf of such party.
Section 8.05 Counterparts. This Agreement may be executed in counterparts
each of which shall be deemed to constitute an original, but all of which
together shall constitute one and the same instrument.
Section 8.06 Governing Law. This Agreement shall be governed by, and
interpreted in accordance with, the laws of the State of New Jersey, without
regard to conflicts of laws principles.
Section 8.07 Expenses. Each party hereto will bear all expenses incurred
by it in connection with this Agreement and the transactions contemplated
hereby, except that if the Termination Fee becomes payable, the Seller shall pay
the Termination Fee to the Purchaser upon demand.
Section 8.08 Notices. All notices, requests, acknowledgements and other
communications hereunder to a party shall be in writing and shall be delivered
by hand, overnight courier or by facsimile transmission (confirmed in writing)
to such party at its address or facsimile number set forth below or such other
address or facsimile number as such party may specify by notice hereunder, and
shall be deemed to have been delivered as of the date so delivered.
If to the Seller, to: Continental Bancorporation
1345 Chews Landing Road
Laurel Springs, NJ 08021-2792
609-227-8000
Facsimile: 609-231-9345
Attention: William Steinberg
and
Lawrence R. Wiseman, Esquire
Blank, Rome, Comisky & McCauley
Four Penn Center Plaza
Philadelphia, PA 19103
215-569-5549
Facsimile: 215-569-5555
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If to the Purchaser or Acquisition Corp., to:
Collective Bancorp, Inc.
P.O. 316
Egg Harbor, NJ 08215
1-800-327-4550
Facsimile: 1-609-965-4381
Attention: Scott T. Page
With copies to: Muldoon, Murphy & Faucette
5101 Wisconsin Avenue, N.W.
Washington, D.C. 20016
202-362-0840
Facsimile: (202) 966-9409
Attention: George W. Murphy, Jr., Esq.
Section 8.09 Entire Agreement; Etc. This Agreement, together with the
Disclosure Schedules (including any Supplemental Disclosure Schedules), the
Exhibits and the Plan of Merger, represent the entire understanding of the
parties hereto with reference to the transactions contemplated hereby and
supersedes any and all other oral or written agreements heretofore made. All
terms and provisions of the Agreement shall be binding upon and shall inure to
the benefit of the parties hereto and their respective successors and assigns.
Except as to Section 4.08, nothing in this Agreement is intended to confer upon
any other person any rights or remedies of any nature whatsoever under or by
reason of this Agreement.
Section 8.10 Assignment. This Agreement may not be assigned by any party
hereto without the written consent of the other parties.
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Section 8.11 Schedules Not Admissions. Inclusion in any Exhibit hereto or
in the Disclosure Schedules (including in any Supplemental Disclosure Schedule)
of any statement or information by the Seller shall not constitute an admission
that such information is required (by reason of materiality or otherwise) to be
furnished as part of such Disclosure Schedules, (including any Supplemental
Disclosure Schedule) or otherwise under this Agreement or an admission against
interest with respect to any person not a party hereto.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers as of the day and year first above
written.
COLLECTIVE BANCORP, INC.
By: /s/ Thomas H. Hamilton
Chairman and Chief Executive Officer
CBAC CORP.
By: /s/ Thomas H. Hamilton
Chairman and Chief Executive Officer
CONTINENTAL BANCORPORATION
By: /s/ William Steinberg
William Steinberg, Chairman
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Exhibit A
PLAN OF MERGER
BY AND AMONG
COLLECTIVE BANCORP, INC.,
CBAC CORP.
AND
CONTINENTAL BANCORPORATION
DATED AS OF MAY 21, 1996
<PAGE>
This PLAN OF MERGER dated as of May 21, 1996, (the "Plan of Merger") is
entered into by and among COLLECTIVE BANCORP, INC., a Delaware corporation (the
"Purchaser"), CBAC CORP., a Delaware corporation and a wholly owned subsidiary
of the Purchaser (the "Acquisition Corp."), and CONTINENTAL BANCORPORATION, a
New Jersey corporation (the "Seller"), pursuant to an Agreement and Plan of
Merger dated as of May 21, 1996, ("Merger Agreement") by and among the
Purchaser, the Acquisition Corp. and the Seller. Capitalized terms not otherwise
defined herein shall have the meanings set forth in the Merger Agreement.
In consideration of the mutual covenants and agreements set forth herein
and subject to the terms and conditions of the Merger Agreement, the parties
hereto agree as follows:
Section 1. The Merger. At the Effective Time, Acquisition Corp. will merge
with and into the Seller (the "Merger"), with the Seller being the surviving
entity (the "Surviving Corporation"). The separate corporate existence of
Acquisition Corp. shall thereupon cease. The Surviving Corporation shall
continue to be governed by the laws of the State of Delaware and its separate
corporate existence with all of its rights, privileges, immunities, powers and
franchises shall continue unaffected by the Merger.
Section 2. Name of Surviving Corporation. The name of the Surviving
Corporation shall be CBAC Corp.
Section 3. Exchange Procedures. Those shares of Seller Common Stock which
at the Effective Time will be converted into the right to receive the Merger
Consideration pursuant to Section 1.02 of the Merger Agreement will be Exchanged
in accordance with the provisions of Section 1.03 of the Merger Agreement.
Section 4. Assets and Liabilities. At the Effective Time, all assets and
property (real, personal, and mixed, tangible and intangible, choses in action,
rights, and credits) then owned by Acquisition Corp. shall immediately become
the property of the Surviving Corporation. The Surviving Corporation shall be
deemed to be a continuation of Acquisition Corp. and the Seller, the rights and
obligations of which shall succeed to such rights and obligations and the duties
and liabilities connected therewith.
Section 5. Directors of Surviving Corporation. At the Effective Time, the
directors of Acquisition Corp. shall become the directors of the Surviving
Corporation. The name and addresses, and terms of such directors are set forth
below.
George W. French 158 Philadelphia Avenue
Egg Harbor City, New Jersey 08215
Term Expires: 1998
Edward J. McColgan 158 Philadelphia Avenue
Egg Harbor City, New Jersey 08215
Term Expires: 1998
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Robert F. Mutschler 158 Philadelphia Avenue
Egg Harbor City, New Jersey 08215
Term Expires: 1998
Wesley J. Bahr 158 Philadelphia Avenue
Egg Harbor City, New Jersey 08215
Term Expires: 1997
Thomas H. Hamilton 158 Philadelphia Avenue
Egg Harbor City, New Jersey 08215
Term Expires: 1996
Miles Lerman 158 Philadelphia Avenue
Egg Harbor City, New Jersey 08215
Term Expires: 1996
David S. MacAllaster 158 Philadelphia Avenue
Egg Harbor City, New Jersey 08215
Term Expires: 1997
William R. Miller 158 Philadelphia Avenue
Egg Harbor City, New Jersey 08215
Term Expires: 1996
Herman O. Wunsch 158 Philadelphia Avenue
Egg Harbor City, New Jersey 08215
Term Expires: 1997
Section 6. Certificate of Incorporation and Bylaws. At the Effective Time,
the certificate of incorporation and bylaws of the Seller shall be amended in
their entirety to conform to the certificate of incorporation and bylaws of
Acquisition Corp. in effect immediately prior to the Effective Time and shall
become the federal charter and bylaws of the Surviving Corporation.
Section 7. Termination. This Plan of Merger shall terminate automatically
at such time as the Merger Agreement is terminated.
Section 8. Shareholder and Board Approval. The transactions contemplated by
the Merger Agreement and this Plan of Merger shall be ratified and approved by a
majority of the shares voting at a meeting of Seller's shareholders held to
approve and adopt
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the Merger Agreement. This Plan of Merger has been approved by the board of
directors of each of the Purchaser, Acquisition Corp. and the Seller.
Section 9. Counterparts. This Plan of Merger may be executed in one or more
counterparts, each of which shall be deemed to be an original and all of which
taken together shall constitute one instrument.
Section 10. Amendments. This Plan of Merger may be amended by the parties
hereto, by or pursuant to action taken by their respective boards of directors,
at any time before or after approval hereof by the shareholders of the Seller
but, after such approval, no amendment shall be made which reduces the amount or
changes the form of the Merger Consideration as provided in Section 1.02 of the
Merger Agreement or which in any way materially adversely affects the rights of
such shareholders, without the further approval of such shareholders. This Plan
of Merger may not be amended except by an instrument in writing specifically
referring to this Section 10 and signed on behalf of each of the parties hereto.
Section 11. Severability. Any provision of this Plan of Merger which is
prohibited or unenforceable shall be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining provisions
hereof.
Section 12. Governing Law. This Plan of Merger shall be governed by, and
interpreted in accordance with, the laws of the State of New Jersey, without
regard to conflicts of laws principles.
Section 13. Captions and References. The captions contained in this Plan of
Merger are for convenience of reference only and do not form a part of this Plan
of Merger.
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IN WITNESS WHEREOF, the parties hereto have caused this Plan of
Merger to be duly executed as of the date first above written.
COLLECTIVE BANCORP, INC.
By: /s/ Thomas H. Hamilton
Chairman and Chief Executive Officer
CBAC CORP.
By: /s/ Thomas H. Hamilton
Chairman and Chief Executive Officer
CONTINENTAL BANCORPORATION
By: /s/ William Steinberg
William Steinberg
Chairman
4
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EXHIBIT B
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of May 21, 1996, between COLLECTIVE
BANCORP, INC., a Delaware corporation ("Grantee"), and CONTINENTAL
BANCORPORATION, a New Jersey corporation ("Issuer").
W I T N E S S E T H:
WHEREAS, Grantee and Issuer have entered into an Agreement and Plan of
Merger of even date herewith (the "Merger Agreement"), which agreement has been
executed by the parties hereto immediately prior to this Agreement; and
WHEREAS, as a condition to Grantee's entering into the Merger Agreement
and in consideration therefor, Issuer has agreed to grant Grantee the Option (as
hereinafter defined):
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements set forth herein and in the Merger Agreement, the
parties hereto agree as follows:
1. (a) Issuer hereby grants to Grantee an unconditional, irrevocable
option (the "Option") to purchase, subject to the terms hereof, up to 956,704
fully paid and nonassessable shares of Issuer's Common Stock, par value $2.00
per share ("Common Stock"), at a price of $4.00, per share; provided, however,
that in the event Issuer issues or agrees to issue any shares of Common Stock
(other than as permitted under the Merger Agreement) at a price less than $4.00
per share (as adjusted pursuant to subsection (b) of Section 5), such price
shall be equal to such lesser price (such price, as adjusted if applicable, the
"Option Price"), provided further that in no event shall the number of shares
for which this Option is exercisable exceed 19.9% of the Issuer's issued and
outstanding common shares. The number of shares of Common Stock that may be
received upon the exercise of the Option and the Option Price are subject to
adjustment as herein set forth
(b) In the event that any additional shares of Common Stock are issued
or otherwise become outstanding after the date hereof (or any treasury shares
held by Issuer have been or are sold after May__, 1996) (other than pursuant to
this Agreement or as set forth in the Merger Agreement), the number of shares of
Common Stock subject to the Option shall be increased so that, after such
issuance, its equals 19.9% of the number of shares of Common Stock then issued
and outstanding without giving effect to any shares subject to or issued
pursuant to the Option. Nothing contained in this Section 1(b) or elsewhere in
this Agreement shall be deemed to authorize Issuer or Grantee to breach any
provision of the Merger Agreement.
2. (a) The Holder (as hereinafter defined) may exercise the Option, in
whole or part, and from time to time, if, but only if, a Triggering Event (as
hereinafter defined) has occurred prior to the occurrence of an Exercise
Termination Event (as hereinafter defined),
<PAGE>
provided that the Holder shall have sent the written notice of such exercise (as
provided in subsection (e) of this Section 2) within 30 days following such
Triggering Event. Each of the following shall be an Exercise Termination Event:
(i) the Effective Time of the Merger; (ii) termination of the Merger Agreement
in accordance with the provisions thereof if such termination occurs prior to
the occurrence of a Triggering Event; (iii) the passage of 18 months after
termination of the Merger Agreement if such termination follows the occurrence
of a Triggering Event; or (iv) the passage of 12 months after termination of the
Merger Agreement, if such termination is pursuant to Sections 6.01(b), 6.01(e)
or 6.01(f) and a Triggering Event shall not have occurred during such time. The
"Last Triggering Event" shall mean the last Triggering Event to occur. The term
"Holder" shall mean the holder or holders of the Option.
(b) The term "Triggering Event" shall mean any of the following events
or transactions occurring after the date hereof:
(i) (a) Issuer or any of its Subsidiaries (each an "Issuer
Subsidiary"), without having received Grantee's prior written consent,
shall have entered into an agreement to engage in an Acquisition
Transaction (as hereinafter defined) with any person (the term "person"
for purposes of this Agreement having the meaning assigned thereto in
Sections 3(a)(9) and 13(d)(3) of the Exchange Act, and the rules and
regulations thereunder) other than Grantee or any of its Subsidiaries
(each a "Grantee Subsidiary") or (b) the Board of Directors of Issuer
shall have recommended that the stockholders of Issuer approve or
accept any Acquisition Transaction other than as contemplated by the
Merger Agreement. For purposes of this Agreement, "Acquisition
Transaction" shall mean (x) a merger or consolidation, or any similar
transaction, involving Issuer or any of its subsidiaries ("Issuer
Subsidiary"), (y) a purchase, lease or other acquisition representing
10% or more of the consolidated assets of Issuer and its subsidiaries,
or (z) a purchase or other acquisition (including by way of merger,
consolidation, share exchange or otherwise) of securities representing
10% or more of the voting power of Issuer or any of Issuer Subsidiary;
(ii) Issuer or any Issuer Subsidiary, without having received
Grantee's prior written consent, shall have authorized, recommended,
proposed or publicly announced its intention to authorize, recommend or
propose, an agreement to engage in an Acquisition Transaction with any
person other than Grantee or a Grantee Subsidiary, or the Board of
Directors of Issuer shall have withdrawn or modified, or publicly
announced its interest to withdraw or modify, its recommendation that
the stockholders of Issuer approve the transactions contemplated by the
Merger Agreement;
(iii) Any person, other than Grantee, any Grantee Subsidiary
or any Issuer Subsidiary acting in a fiduciary capacity, shall have
acquired beneficial ownership or the right to acquire beneficial
ownership of 10% or more of the outstanding shares of Common Stock;
(the term "beneficial ownership" for purposes of this Agreement having
the meaning assigned thereto in Section 13(d) of the Exchange Act, and
the rules and regulations thereunder) and the Seller's shareholders
shall not approve the
2
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Merger, or the Seller shall not have called a meeting of shareholders,
or Seller shall not have held a meeting of shareholders to vote on the
Merger no later than September 30, 1996, or the Seller shall have
called a meeting of shareholders or shall have distributed a proxy
statement or other solicitation materials in connection with such
Acquisition Transaction;
(iv) After a proposal is made by a third party to Issuer or
its stockholders to engage in an Acquisition Transaction, Issuer shall
have breached any representation, warranty, covenant or obligation
contained in the Merger Agreement and such breach (x) would entitle
Grantee to terminate the Merger Agreement and (y) shall not have been
cured prior to the Notice Date (as defined below); or
(v) The holders of Issuer Common Stock shall not have approved
the Merger Agreement and the transactions contemplated thereby at the
meeting of such stockholders held for the purpose of voting on such
agreement, or such meeting shall not have been held or shall have been
cancelled prior to termination of the Merger Agreement, in each case
after it shall have been publicly announced that any person (other than
Grantee or any affiliate of Grantee or any person acting in concert in
any respect with Grantee) shall have made, or disclosed an intention to
make, a proposal to engage in an Acquisition Transaction; or
(vi) Issuer's Board of Directors shall not have recommended to
the stockholders of Issuer that such stockholders vote in favor of the
approval of the Merger Agreement and the transactions contemplated
thereby or shall have withdrawn or modified such recommendation in a
manner adverse to Grantee.
(c) Issuer shall notify Grantee promptly in writing of the occurrence
of a Triggering Event, it being understood that the giving of such notice by
Issuer shall not be a condition to the right of the Holder to exercise the
Option.
(d) In the event the Holder is entitled to and wishes to exercise the
Option, it shall send to Issuer a written notice (the date of which being herein
referred to as the "Notice Date") specifying (i) the total number of shares it
will purchase pursuant to such exercise and (ii) a place and date not earlier
than three business days nor later than 60 business days from the Notice Date
for the closing of such purchase (the "Closing Date"); provided, that if the
closing of the purchase and sale pursuant to the Option (the "Closing") cannot
be consummated by reason of any applicable judgment, decree, order, law or
regulation, the period of time that otherwise would run pursuant to this
sentence shall run instead from the date on which such restriction on
consummation has expired or been terminated; and provided further, without
limiting the foregoing, that if prior notification to or approval of the FDIC or
any other regulatory agency is required in connection with such purchase, the
Holder shall promptly file the required notice or application for approval and
shall expeditiously process the same and the period of time that otherwise would
run pursuant to this sentence shall run instead from the date on which any
required notification periods have expired or been terminated or such approvals
have been obtained and any requisite waiting period or periods
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shall have passed. Any exercise of the Option shall be deemed to occur on the
Notice Date relating thereto. Notwithstanding this subsection (e), in no event
shall any Closing Date be more than 18 months after the related Notice Date, and
if the Closing Date shall not have occurred within 18 months after the related
Notice Date due to the failure to obtain any such required approval, the
exercise of the Option effected on the Notice Date shall be deemed to have
expired. In the event (i) Grantee receives official notice that an approval of
the FDIC, Federal Reserve Board or any other regulatory authority required for
the purchase of Option Shares (as hereinafter defined) would not be issued or
granted, (ii) a Closing Date shall not have occurred within 18 months after the
related Notice Date due to the failure to obtain any such required approval or
(iii) Holder shall have the right pursuant to the last sentence of Section 7 to
exercise the Option, Grantee shall nevertheless be entitled to exercise its
right as set forth in Section 7 and, Grantee or Holder shall be entitled to
exercise the Option in connection with the resale of Issuer Common Stock or
other securities pursuant to a registration statement as provided in Section 6.
(e) At the Closing referred to in subsection (d) of this Section 2, the
Holder shall pay to Issuer the aggregate purchase price for the shares of Common
Stock purchased pursuant to the exercise of the Option in immediately available
funds by wire transfer to a bank account designated by Issuer, provided that
failure or refusal of Issuer to designate such a bank account shall not preclude
the Holder from exercising the Option.
(f) At such Closing, simultaneously with the delivery of immediately
available funds as provided in subsection (e) of this Section 2, Issuer shall
deliver to the Holder a certificate or certificates representing the number of
shares of Common Stock purchased by the Holder and if the Option should be
exercised in part only, a new Option evidencing the rights of the Holder thereof
to purchase the balance of the shares purchasable hereunder, and the Holder
shall deliver to Issuer a copy of this Agreement and a letter agreeing that the
Holder will not offer to sell or otherwise dispose of such shares in violation
of applicable law or the provisions of this Agreement.
(g) Certificates for Common Stock delivered at a closing hereunder may
be endorsed with a restrictive legend that shall read substantially as follows:
"The transfer of the shares represented by this certificate is subject
to certain provisions of an agreement between the registered holder
hereof and Issuer and to resale restrictions arising under the
Securities Act of 1933, as amended. A copy of such agreement is on file
at the principal office of Issuer and will be provided to the holder
hereof without charge upon receipt by Issuer of a written request
therefor."
It is understood and agreed that: (i) the reference to the resale restrictions
of the Securities Act in the above legend shall be removed by delivery of
substitute certificate(s) without such reference if the Holder shall have
delivered to Issuer a copy of a letter from the staff of the SEC, or an opinion
of counsel, in form and substance reasonably satisfactory to Issuer, to the
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effect that such legend is not required for purposes of the Securities Act; (ii)
the reference to the provisions of this Agreement in the above legend shall be
removed by delivery of substitute certificate(s) without such reference if the
shares have been sold or transferred in compliance with the provisions of this
Agreement and under circumstances that do not require the retention of such
reference; and (iii) the legend shall be removed in its entirety if the
conditions in the preceding clauses (i) and (ii) are both satisfied. In
addition, such certificates shall bear any other legend as may be required by
law.
(h) Upon the giving by the Holder to Issuer of the written notice of
exercise of the Option provided for under subsection (d) of this Section 2 and
the tender of the applicable purchase price in immediately available funds, the
Holder shall be deemed to be the holder of record of the shares of Common Stock
issuable upon such exercise, notwithstanding that the stock transfer books of
Issuer shall then be closed or that certificates representing such shares of
Common Stock shall not then be actually delivered to the Holder or the Issuer
shall have failed or refused to designate the bank account described in
subsection (e) of this Section 2. Issuer shall pay all expenses, and any and all
United States federal, state and local taxes and other charges that may be
payable in connection with the preparation, issuance and delivery of stock
certificates under this Section 2 in the name of the Holder or its assignee,
transferee or designee.
(i) Notwithstanding anything to the contrary contained in this
Agreement, the Issuer shall not be obligated to issue shares of common stock
upon the exercise of the Option (i) in the absence of any required governmental
or regulatory approval or consent necessary for the Issuer to issue shares or
for the Grantee to exercise the Option, (ii) in the event the Grantee is in
material breach of its representations, warranties, covenants or obligations
under the Merger Agreement or (iii) so long as any injunction or decree or
ruling issued by a court of competent jurisdiction is in effect which prohibits
the sale or delivery of the common stock.
3. Issuer agrees: (i) that it shall at all times maintain, free from
preemptive rights, sufficient authorized but unissued or treasury shares of
Common Stock (and other securities issuable pursuant to Section 5(a)) so that
the Option may be exercised without additional authorization of Common Stock (or
such other securities) after giving effect to all other options, warrants,
convertible securities and other rights to purchase Common Stock (or such other
securities); (ii) that it will not, by charter amendment or through
reorganization, consolidation, merger, dissolution or sale of assets, or by any
other voluntary act, avoid or seek to avoid the observance or performance of any
of the covenants, stipulations or conditions to be observed or performed
hereunder by Issuer; (iii) promptly to take all action as may from time to time
be required (including (x) complying with all premerger notification, reporting
and waiting period requirements specified in 15 U.S.C. 18a and regulations
promulgated thereunder and (y) in the event the Change in Bank Control Act of
1978, as amended, or any state banking law, prior approval of or notice to the
FDIC or to any state regulatory authority is necessary before the Option may be
exercised, cooperating fully with the Holder in preparing such applications or
notices and providing such information to the FDIC or such state regulatory
authority as they may require) in order to permit the Holder
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to exercise the Option and the Issuer duly and effectively to issue shares of
Common Stock pursuant hereto; and (iv) promptly to take all action provided
herein to protect the rights of the Holder against dilution.
4. This Agreement (and the Option granted hereby) are exchangeable,
without expense, at the option of the Holder, upon presentation and surrender of
this Agreement at the principal office of Issuer, for other Agreements providing
for Options of different denominations entitling the holder thereof to purchase,
on the same terms and subject to the same conditions as are set forth herein, in
the aggregate the same number of shares of Common Stock purchasable hereunder.
The terms "Agreement" and "Option" as used herein include any Stock Option
Agreements and related Options for which this Agreement (and the Option granted
hereby) may be exchanged. Upon receipt by Issuer of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this
Agreement, and (in the case of loss, theft or destruction) of reasonably
satisfactory indemnification, and upon surrender and cancellation of this
Agreement, if mutilated, Issuer will execute and deliver a new Agreement of like
tenor and date.
5. In addition to the adjustment in the number of shares of Common
Stock that are purchasable upon exercise of the Option pursuant to Section 1 of
this Agreement, the number of shares of Common Stock purchasable upon the
exercise of the Option shall be subject to adjustment from time to time as
provided in this Section 5.
(a) In the event of any change in Common Stock by reason of
stock dividends, split-ups, mergers, recapitalizations, combinations,
subdivisions, conversions, exchanges of shares or the like, the type
and number of shares of Common Stock purchasable upon exercise hereof
shall be appropriately adjusted so that Grantee shall receive upon
exercise of the Option and payment of the aggregate Option Price
hereunder the number and class of shares or other securities or
property that Grantee would have received in respect of Common Stock if
the Option had been exercised in full immediately prior to such event,
or the record date therefor, as applicable.
(b) Whenever the number of shares of Common Stock purchasable
upon exercise hereof is adjusted as provided in this Section 5, the
Option Price shall be adjusted by multiplying the Option Price by a
fraction, the numerator of which shall be equal to the number of shares
of Common Stock purchasable prior to the adjustment and the denominator
of which shall be equal to the number of shares of Common Stock
purchasable after the adjustment.
6. (a) Upon the occurrence of a Triggering Event that occurs prior to
an Exercise Termination Event (or as otherwise provided in the last sentence of
Section 2(e)), Issuer shall, at the request of Grantee delivered within 30 days
after such Triggering Event (or such trigger date as is provided in the last
sentence of Section 2(e)) (whether on its own behalf or on behalf of any
subsequent holder of this Option (or part thereof) or any of the shares of
Common Stock issued pursuant hereto), promptly prepare, file and keep current a
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shelf registration statement under the Securities Act covering any shares issued
and issuable pursuant to this Option and shall use its best efforts to cause
such registration statement to become effective and remain current in order to
permit the sale or other disposition of any shares of Common Stock issued upon
total or partial exercise of this Option ("Option Shares") in accordance with
any plan of disposition requested by Grantee. Issuer will use its best efforts
to cause such registration statement first to become effective and then to
remain effective for such period not in excess of 180 days from the day such
registration statement first becomes effective or such shorter time as may be
reasonably necessary to effect such sales or other dispositions. Grantee for a
period of 18 months following such first request shall have the right to demand
a second such registration if reasonably necessary to effect such sales or
dispositions. Holder shall not be obligated to pay, liable for or otherwise bear
any payments, fees or expenses associated with any registration contemplated by
this Section 6, all of which such payments, fees or expenses shall be borne by
the Issuer. The foregoing notwithstanding, if, at the time of any request by
Grantee for registration of Option Shares as provided above, Issuer is in
registration with respect to an underwritten public offering of shares of Common
Stock, and if in the good faith judgment of the managing underwriter or managing
underwriters, or, if none, the sole underwriter or underwriters, of such
offering the inclusion of the Holder's Option or Option Shares would interfere
with the successful marketing of the shares of Common Stock offered by Issuer,
the number of Option Shares otherwise to be covered in the registration
statement contemplated hereby may be reduced; and provided, however, that after
any such required reduction the number of Option Shares to be included in such
offering for the account of the Holder shall constitute at least 25% of the
total number of shares to be sold by the Holder and Issuer in the aggregate; and
provided further, however, that if such reduction occurs, then the Issuer shall
file a registration statement for the balance as promptly as practical and no
reduction shall thereafter occur (and such registration shall not be charged
against the Holder). Each such Holder shall provide all information reasonably
requested by Issuer for inclusion in any registration statement to be filed
hereunder. If requested by any such Holder in connection with such registration,
Issuer shall become a party to any underwriting agreement relating to the sale
of such shares, but only to the extent of obligating itself in respect of
representations, warranties, indemnities and other agreements customarily
included in such underwriting agreements for the Issuer. Upon receiving any
request under this Section 6 from any Holder, Issuer agrees to send a copy
thereof to any other person known to Issuer to be entitled to registration
rights under this Section 6, in each case by promptly mailing the same, postage
prepaid, to the address of record of the persons entitled to receive such
copies. Holder shall not obligated to pay, liable for or otherwise bear any
payments, fees or expenses associated with any registration contemplated by this
Section 6, all of which such payments, fees or expenses shall be borne by the
Issuer.
(b) The Issuer will indemnify and hold harmless Grantee, any
underwriter (as defined in the Securities Act) for Grantee, and each person, if
any, who controls Grantee or such underwriter (within the meaning of the
Securities Act) from and against any and all loss, damage, liability, cost and
expense to which Grantee or any such underwriter or controlling person may
become subject under the Securities Act or otherwise, insofar as such losses,
damages, liabilities, costs or expenses arise out of or are caused by any untrue
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statement or alleged untrue statement of any material fact contained in such
registration statement, any prospectus or preliminary prospectus contained
therein or any amendment or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances in which they were made, not misleading; provided, however,
that the Issuer will not be liable in any such case to the extent that any such
loss, damage, liability, cost or expense arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission so
made in conformity with information furnished by Grantee, such underwriter or
such controlling person in writing specifically for use in the preparation
thereof.
7. (a) Upon the occurrence of a Triggering Event that occurs prior to
an Exercise Termination Event, (i) at the request of the Holder, delivered
within 30 days after such occurrence (or such later period as provided in
Section 8 or the last sentence of Section 2(e)), Issuer (or any successor
thereto) shall repurchase the Option from the Holder at a price (the "Option
Repurchase Price") equal to the amount by which (A) the market/offer price (as
defined below) exceeds (B) the Option Price, multiplied by the number of shares
for which this Option may then be exercised and (ii) at the request of the owner
of Option Shares from time to time (the "Owner"), delivered within 30 days after
such occurrence (or such later period as provided in Section 8), Issuer shall
repurchase such number of the Option Shares from the Owner as the Owner shall
designate at a price (the "Option Share Repurchase Price") equal to the
market/offer price multiplied by the number of Option Shares so designated. The
term "market/offer price" shall mean the highest of (i) the highest price per
share of Common Stock at which a tender offer or exchange offer therefor has
been made, (ii) the highest price per share of Common Stock to be paid by any
third party pursuant to an agreement with Issuer, (iii) the average of the
Closing Price of the Common Stock of Issuer for the ten days preceding the
Triggering Event. In determining the market/offer price, the value of
consideration other than cash, to the extent consideration other than cash is
accepted by the Holder or the Owner, shall be determined by a nationally
recognized investment banking firm selected by the Holder or Owner, as the case
may be.
(b) The Holder and the Owner, as the case may be, may exercise
its right to require Issuer to repurchase the Option and any Option Shares
pursuant to this Section 7 by surrendering for such purpose to Issuer, at its
principal office, a copy of this Agreement or certificates for Option Shares, as
applicable, accompanied by a written notice or notices stating that the Holder
or the Owner, as the case may be, elects to require Issuer to repurchase this
Option and/or the Option Shares in accordance with the provisions of this
Section 7. As promptly as practicable, and in any event within five business
days after the surrender of the Option and/or certificates representing Option
Shares and the receipt of such notice or notices relating thereto, Issuer shall
deliver or cause to be delivered to the Holder the Option Repurchase Price
and/or to the Owner the Option Share Repurchase Price therefor or the portion
thereof that Issuer is not then prohibited under applicable law and regulation
from delivering.
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(c) To the extent that Issuer is prohibited under applicable
law or regulation, or as a consequence of administrative policy, from
repurchasing the Option and/or the Option Shares in full, Issuer shall
immediately so notify the Holder and/or the Owner and thereafter deliver or
cause to be delivered, from time to time, to the Holder and/or the Owner, as
appropriate, the portion of the Option Repurchase Price and the Option Share
Repurchase Price, respectively, that it is no longer prohibited from delivering,
within five business days after the date on which Issuer is no longer so
prohibited; provided, however, that if Issuer at any time after delivery of a
notice of repurchase pursuant to paragraph (b) of this Section 7 is prohibited
under applicable law or regulation, or as a consequence of administrative
policy, from delivering to the Holder and/or the Owner, as appropriate, the
Option Repurchase Price and the Option Share Repurchase Price, respectively, in
full (and Issuer hereby undertakes to use its best efforts to obtain all
required regulatory and legal approvals and to file any required notices as
promptly as practicable in order to accomplish such repurchase), the Holder or
Owner may revoke its notice of repurchase of the Option or the Option Shares
either in whole or to the extent of the prohibition, whereupon, in the latter
case, Issuer shall promptly (i) deliver to the Holder and/or the Owner, as
appropriate, that portion of the Option Repurchase Price or the Option Share
Repurchase Price that Issuer is not prohibited from delivering; and (ii)
deliver, as appropriate, either (A) to the Holder, a new Stock Option Agreement
evidencing the right of the Holder to purchase that number of shares of Common
Stock obtained by multiplying the number of shares of Common Stock for which the
surrendered Stock Option Agreement was exercisable at the time of delivery of
the notice of repurchase by a fraction, the numerator of which is the Option
Repurchase Price less the portion thereof theretofore delivered to the Holder
and the denominator of which is the Option Repurchase Price, or (B) to the
Owner, a certificate for the Option Shares it is then so prohibited from
repurchasing. If an Exercise Termination Event shall have occurred prior to the
date of the notice by Issuer described in the first sentence of this subsection
(c), or shall be scheduled to occur at any time before the expiration of a
period ending on the thirtieth day after such date, the Holder shall nonetheless
have the right to exercise the Option until the expiration of such 30 day
period.
8. The 30-day period for exercise of certain rights under Sections 2,
6, 7, and 11 shall be extended: (i) to the extent necessary to obtain all
regulatory approvals for the exercise of such rights, and for the expiration of
all statutory waiting periods provided such approvals are obtained within 9
months of the submission of an application by the Holder or Grantee; and (ii) to
the extent necessary to avoid liability under Section 16(b) of the Exchange Act
by reason of such exercise.
9. Issuer hereby represents and warrants to Grantee as follows:
(a) Issuer has full corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by the
Board of Directors of Issuer and no other corporate proceedings on the part of
Issuer are necessary to authorize this Agreement or to consummate the
transactions so contemplated. This Agreement has been duly and validly
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executed and delivered by Issuer. This Agreement is the valid and legally
binding obligation of Issuer, enforceable against Issuer in accordance with its
terms.
(b) Issuer has taken all necessary corporate action to authorize and
reserve and to permit it to issue, and at all times from the date hereof through
the termination of this Agreement in accordance with its terms will have
reserved for issuance upon the exercise of the Option, that number of shares of
Common Stock equal to the maximum number of shares of Common Stock at any time
and from time to time issuable hereunder, and all such shares, upon issuance
pursuant hereto, will be duly authorized, validly issued, fully paid,
nonassessable, and will be delivered free and clear of all claims, liens,
encumbrance and security interests and not subject to any preemptive rights.
(c) The execution and delivery of this Agreement does not, and the
consummation of the transactions contemplated hereby will not, conflict with, or
result in any violation pursuant to any provisions of the Certificate of
Incorporation or by-laws of Issuer or any Subsidiary of Issuer or, subject to
obtaining any approvals or consents contemplated hereby, result in any violation
of any loan or credit agreement, note, mortgage, indenture, lease, Plan or other
agreement, obligation, instrument, permit, concession, franchise, license,
judgment, order, decree, statute, law, ordinance, rule or regulation applicable
to Issuer or any Subsidiary of Issuer or their respective properties or assets
which Violation would have a Material Adverse Effect on Issuer.
(d) Issuer reaffirms with respect to this Agreement and the
transactions contemplated hereby the representations and warranties contained in
Section 2.01 of the Merger Agreement.
10. Grantee hereby represents and warrants to Issuer as follows:
(a) Grantee has all requisite corporate power and
authority to enter into this Option Agreement and
consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby
have been duly authorized by all necessary corporate
action on the part of the Grantee. This Agreement has
been duly executed and delivered by Grantee.
(b) This Option is not being and any shares or other
securities acquired by Grantee upon exercise of the
Option will not be acquired with a view to the public
distribution thereof and will not be transferred or
otherwise disposed of except in compliance with the
Securities Act.
11. Neither of the parties hereto may assign any of its rights or
obligations under this Option Agreement or the Option created hereunder to any
other person, without the express written consent of the other party, except
that in the event a subsequent Triggering Event shall have occurred prior to an
Exercise Termination Event, Grantee, subject to the
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express provisions hereof, may assign in whole or in part its rights and
obligations hereunder within 30 days following such subsequent Triggering Event
(or such later period as provided in Section 8).
12. Each of Grantee and Issuer 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, including without limitation applying to the Federal Deposit
Insurance Corporation for approval to acquire the shares issuable hereunder, but
Grantee shall not be obligated to apply to state banking authorities for
approval to acquire the shares of Common Stock issuable hereunder until such
time, if ever, as it deems appropriate to do so.
13. Notwithstanding anything to the contrary herein, in the event that
the Holder or Owner or any Related Person thereof is a person making without the
prior written consent of Issuer an offer or proposal to engage in an Acquisition
Transaction (other than the transaction contemplated by the Merger Agreement),
then (i) in the case of a Holder or any Related Person thereof, the Option held
by it shall immediately terminate and be of no further force or effect, and (ii)
in the case of an Owner or any Related Person thereof, the Option Shares held by
it shall be immediately repurchasable by Issuer at the Option Price. A Related
Person of a Holder or Owner means any Affiliate (as defined in Rule 12b-2 of the
rules and regulations under the Exchange Act) of the Holder or Owner and any
person that is the beneficial owner of 20% or more of the voting power of the
Holder or Owner, as the case may be.
14. The parties hereto acknowledge that damages would be an inadequate
remedy for a breach of this Agreement by either party hereto and that the
obligations of the parties hereto shall be enforceable by either party hereto
through injunctive or other equitable relief.
15. If any term, provision, covenant or restriction contained in this
Agreement is held by a court or a federal or state regulatory agency of
competent jurisdiction to be invalid, void or unenforceable, the remainder of
the terms, provisions and covenants and restrictions contained in this Agreement
shall remain in full force and effect, and shall in no way be affected, impaired
or invalidated. If for any reason such court or regulatory agency determines
that the Holder is not permitted to acquire the full number of shares of Common
Stock provided in Section 1(a) hereof (as adjusted pursuant to Section 1(b) or
Section 5 hereof), it is the express intention of Issuer to allow the Holder to
acquire or to require Issuer to repurchase such lesser number of shares as may
be permissible, without any amendment or modification hereof.
16. All notices, requests, claims, demands and other communications
hereunder shall be deemed to have been duly given when delivered in person, by
cable, telegram, telecopy or telex, or by registered or certified mail (postage
prepaid, return receipt requested) at the respective addresses of the parties
set forth in the Merger Agreement.
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17. This Agreement shall be governed by and construed in accordance
with the laws of the State of New Jersey, regardless of the laws that might
otherwise govern under applicable principles of conflicts of laws thereof.
18. 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. Except as otherwise expressly provided herein or in the Merger
Agreement, the Issuer shall bear and pay all costs and expenses incurred by it
or the Grantee, Holder or Owner or on their behalf in connection with the
transactions contemplated hereunder, including fees and expenses of their own
financial consultants, investment bankers, accountants and counsel.
20. Except as otherwise expressly provided herein or in the Merger
Agreement, this Agreement contains the entire agreement between the parties with
respect to the transactions contemplated hereunder and supersedes all prior
arrangements or understandings with respect thereof, written or oral. The terms
and conditions of this Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective successors and permitted assigns.
Nothing in this Agreement, expressed or implied, is intended to confer upon any
party, other than the parties hereto, and their respective successors except as
assigns, any rights, remedies obligations or liabilities under or by reason of
this Agreement, except as expressly provided herein. Any provision of this
Agreement may be waived at any time by the party that is entitled to the
benefits of such provision. This Agreement may not be modifiedd, amended,
altered or supplemented except upon the execution and delivery of a written
agreement executed by the parties hereto.
21. In the event of any exercise of the Option by Grantee, Issuer and
Grantee shall execute and deliver all other documents and instruments and take
all other action that may be reasonably necessary in order to consummate the
transactions provided for by such exercise.
22. Capitalized terms used in this Agreement and not defined herein
shall have the meanings assigned thereto in the Merger Agreement.
IN WITNESS WHEREOF, Collective Bancorp, Inc. and Continental
Bancorporation have caused this Agreement to be signed by their respective
officers thereunto duly authorized, all as of the date first written above.
[Signatures are on the following page.]
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COLLECTIVE BANCORP, INC.
By: /s/ Thomas H. Hamilton
Thomas H. Hamilton
Chairman and Chief Executive Officer
CONTINENTAL BANCORPORATION
By: /s/ William Steinberg
William Steinberg
Chairman
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