<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
[Amendment No. ]
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/X/ Preliminary Proxy Statement
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
CONTINENTAL BANCORPORATION
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/X/ Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
Common Stock, Par Value $2.00 per share
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2) Aggregate number of securities to which transaction applies:
4,807,561
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:*
$5.00 per share to be paid in cash
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4) Proposed maximum aggregate value of transaction:
$25,702,665: filing fee $5,141
- --------------------------------------------------------------------------------
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:_______________________________________________
2) Form Schedule or Registration Statement No.:__________________________
3) Filing Party:_________________________________________________________
4) Date Filed:___________________________________________________________
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*Set forth the amount on which the filing fee is calculated and state how it
was determined.
<PAGE>
"PRELININARY COPY"
Continental Bancorporation
1345 Chews Landing Road
Gloucester Township
Laurel Springs, New Jersey 08021
TO OUR SHAREHOLDERS:
The 1996 Annual Meeting of Shareholders of Continental Bancorporation
(the "Company") will be held on ________________, ___________________, 1996 at
9:00 A.M. local time at the principal offices of the Company, 1345 Chews Landing
Road, Gloucester Township, Laurel Springs, New Jersey. In addition to electing
eight directors, you will be asked to consider and approve an Agreement and Plan
of Merger and a related Plan of Merger under which the Company's wholly-owned
subsidiary bank, Continental Bank of New Jersey ("Continental"), would become a
subsidiary of Collective Bancorp, Inc., the savings and loan holding company for
Collective Bank headquartered in Cologne, New Jersey. If the proposed merger is
consummated, shareholders of the Company will receive $5.00 in cash for each of
their shares of the Common Stock of the Company.
Attached is a Notice of Annual Meeting and Proxy Statement of the
Company. The Proxy Statement describes the material features of the proposed
transaction and other important information. I urge all of our shareholders to
read it closely.
Your Board of Directors has carefully considered all of the terms and
conditions of the proposed merger and has received a favorable opinion from
Berwind Financial Group, L.P., an independent investment banking firm that, from
a financial point of view, the cash to be received by you in the merger is fair.
Your Board of Directors each believe that the proposed merger is in the best
interests of, and is fair to, the shareholders of the Company, and unanimously
recommend that you vote "FOR" the proposed merger. In addition to approval by
Company shareholders, the merger is subject to approval by certain governmental
agencies.
Whether or not you are planning to attend the 1996 Annual Meeting of
Shareholders of the Company, it is important that your shares be represented.
Approval of the proposed merger will require the affirmative vote of the holders
of at least a majority of the shares of the common stock of the Company voting.
Please complete, sign and date the enclosed proxy and mail it promptly in the
return envelope provided.
Sincerely,
WILLIAM STEINBERG
Chairman of the Board
____________________, 1996
<PAGE>
CONTINENTAL BANCORPORATION
1345 Chews Landing Road
Gloucester Township
Laurel Springs, New Jersey 08021
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
____________________, 1996
The 1996 Annual Meeting of Shareholders of Continental Bancorporation
(the "Company") will be held on ________________, ___________________, 1996 at
9:00 A.M. local time at the principal offices of the Company, 1345 Chews Landing
Road, Gloucester Township, Laurel Springs, New Jersey, to consider and vote on
the following matters as more fully described in the accompanying Proxy
Statement:
1. A proposal to approve and adopt an Agreement and Plan of Merger and a
related Plan of Merger, pursuant to which, among other things, (a)
CBAC Corp., a newly formed subsidiary of Collective Bancorp, Inc.,
will be merged with and into the Company and immediately thereafter
the Company will be merged with and into Collective Bancorp, Inc. and,
as a result thereof, the Company's bank subsidiary, Continental Bank
of New Jersey, will become a subsidiary of Collective Bancorp, Inc.,
and (b) each outstanding share of the Common Stock of the Company
(other than shares held by Collective Bancorp, Inc. and its
affiliates) will be converted into the right to receive $5.00 in cash,
all as more fully described in the accompanying Proxy Statement;
2. The election of eight directors, all as more fully described in the
accompanying Proxy Statement; and
3. Any other business that may properly come before the Annual Meeting or
any adjournments or postponements thereof.
The close of business on ______________, 1996 has been fixed as the
record date for the 1996 Annual Meeting of Shareholders of the Company (the
"Annual Meeting") and only holders of record of the common stock of the Company
on that date will be entitled to notice of, and to vote at, the Annual Meeting
or any adjournments or postponements thereof.
By Order of the Board of Directors
WILLIAM STEINBERG,
Chairman of the Board
__________________, 1996
YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING. AN AFFIRMATIVE
VOTE OF THE HOLDERS OF AT LEAST A MAJORITY OF THE OUTSTANDING SHARES OF THE
COMMON STOCK OF THE COMPANY VOTING IS REQUIRED FOR APPROVAL OF THE PROPOSED
MERGER. IN ORDER TO ASSURE THAT YOUR VOTE WILL BE COUNTED, YOU ARE URGED TO
SIGN, DATE AND MAIL THE ENCLOSED PROXY PROMPTLY IN THE ACCOMPANYING
POSTAGE-PREPAID ENVELOPE. IF YOU ATTEND THE ANNUAL MEETING, YOU MAY REVOKE YOUR
PROXY AND VOTE IN PERSON. THE PROXY MAY BE REVOKED AT ANY TIME PRIOR TO ITS
EXERCISE IN THE MANNER DESCRIBED IN THE ATTACHED PROXY STATEMENT.
<PAGE>
THE MERGER TO BE CONSIDERED AT THE ANNUAL MEETING IS OF GREAT
IMPORTANCE TO THE SHAREHOLDERS OF THE COMPANY. IF THE MERGER IS APPROVED AND
CONSUMMATED, A CASH PAYMENT OF $5.00 PER SHARE OF COMMON STOCK WILL BE MADE AND
THE SHAREHOLDERS' EQUITY INVESTMENT IN THE COMPANY WILL CEASE. ACCORDINGLY,
SHAREHOLDERS ARE URGED TO READ AND CAREFULLY CONSIDER THE INFORMATION PRESENTED
IN THE PROXY STATEMENT.
<PAGE>
TABLE OF CONTENTS
Page
SUMMARY.............................................................
SELECTED FINANCIAL DATA.............................................
INTRODUCTORY STATEMENT..............................................
Proposals Presented........................................
Voting Rights..............................................
Proxies....................................................
Solicitation of Proxies; Expenses..........................
THE MERGER..........................................................
Background of the Merger...................................
Recommendation of the Board of Directors;
Reasons for the Merger.....................................
Opinion of Independent Investment Banker...................
Interests of Certain Persons in the Merger.................
Stock Option Agreement.....................................
THE MERGER AGREEMENT................................................
Principal Terms............................................
Effective Date.............................................
Stock Options..............................................
Debentures.................................................
Payment for Shares.........................................
The Payment Fund...........................................
Conditions and Covenants...................................
Regulatory Approvals.......................................
Termination and Amendment..................................
FEDERAL INCOME TAX CONSEQUENCES TO SHAREHOLDERS.....................
MARKET INFORMATION..................................................
ELECTION OF DIRECTORS...............................................
SHAREHOLDER PROPOSALS...............................................
DESCRIPTION OF THE CAPITAL STOCK OF THE COMPANY.....................
RELATIONSHIP WITH INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS..........
AVAILABLE INFORMATION...............................................
INCORPORATION BY REFERENCE..........................................
<PAGE>
APPENDICES
Agreement and Plan of Merger.........................................Appendix A
Plan of Merger.......................................................Appendix B
Opinion of Berwind Financial Group, L.P..............................Appendix C
Stock Option Agreement...............................................Appendix D
<PAGE>
SUMMARY
The following is a brief summary of certain information contained
elsewhere in this Proxy Statement. This summary is included to assist the
shareholders of the Company in their review of this Proxy Statement and is
qualified in its entirety by reference to the more detailed information
appearing elsewhere in this Proxy Statement, including the Appendices hereto.
Shareholders are urged to read this Proxy Statement and the Appendices hereto in
their entirety.
THE ANNUAL MEETING
Date, Place and Time of Annual Meeting
The Annual Meeting will be held on ___________________, 1996 at 9:00
A.M. local time at the principal offices of the Company, 1345 Chews Landing
Road, Gloucester Township, Laurel Springs, New Jersey.
Purposes of Annual Meeting
At the Annual Meeting, the shareholders of the Company will be asked to
(i) consider and vote upon a proposal to approve and adopt an Agreement and Plan
of Merger, dated as of May 21, 1996 (the "Reorganization Agreement"), by and
among the Company, CBAC Corp. ("CBAC") and Collective Bancorp, Inc.
("Collective"), and a related Plan of Merger (the "Plan of Merger")
(hereinafter, the Reorganization Agreement and the Plan of Merger are sometimes
collectively referred to as the "Merger Agreement"), pursuant to which, among
other things, (a) CBAC will be merged with and into the Company (the "Merger")
and immediately thereafter the Company will be merged with and into Collective
and, as a result thereof, the Company's bank subsidiary, Continental Bank of New
Jersey, will become a subsidiary of Collective, and (b) each outstanding share
of the common stock, par value $2.00 per share, of the Company (the "Common
Stock") (other than shares held by Collective and its affiliates) will be
converted into the right to receive $5.00 in cash; and (ii) elect eight
directors of the Company. See "THE MERGER," "THE MERGER AGREEMENT" and "ELECTION
OF DIRECTORS."
Shares Entitled to Vote and Shares Outstanding
The Board of Directors of the Company has determined that holders of
record of the Common Stock at the close of business on [ ], [ ], 1996 (the
"Record Date") are entitled to notice of, and to vote at, the Annual Meeting or
any adjournments or postponements thereof. At the close of business on the
Record Date, there were [ ] shares of the Common Stock outstanding and
approximately [ ] holders of record of the shares of Common Stock. Shareholders
will have one vote for each share of the Common Stock held. See "INTRODUCTORY
STATEMENT - Voting Rights."
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<PAGE>
Vote Required
Approval of the Merger Agreement will require the affirmative vote of
the holders of at least a majority of the outstanding shares of Common Stock
voting at the Annual Meeting. The shares of Common Stock which the directors and
executive officers of the Company are entitled to vote will be counted as
outstanding for this purpose. The directors and executive officers of the
Company, as a group (nine persons), are entitled to vote an aggregate of
approximately 59.6% of the outstanding shares of Common Stock as of the Record
Date. Each of the members of the Board of Directors believes that the proposed
Merger is in the best interests of, and is fair to, the shareholders of the
Company and has recommended that the shareholders of the Company vote for the
Merger Agreement. See "THE MERGER -- Recommendation of the Board of Directors;
Reasons for the Merger." All of the directors and executive officers of the
Company have indicated that they intend to vote in favor of the Merger
Agreement. Consequently, the affirmative vote of none of the shares of Common
Stock outstanding as of the Record Date, other than those held by the directors
and executive officers of the Company, will be required for the approval of the
Merger.
Directors of the Company will be elected by a plurality of the votes
cast for such election by holders of Common Stock, and such holders have no
cumulative rights in voting for directors.
See "ELECTION OF DIRECTORS."
THE MERGER
Parties to the Merger
The Company. The Company is a New Jersey business corporation and a
registered bank holding company for Continental Bank of New Jersey, a state
chartered commercial bank. At March 31, 1996, the Company had total assets in
excess of $187 million. The mailing address of the Company's principal offices
is 1345 Chews Landing Road, Gloucester Township, Laurel Springs, New Jersey
08021 and its telephone number is (609) 227-8000.
Collective. Collective is a Delaware business corporation which is the
savings and loan holding company for Collective Bank. At March 31, 1996,
Collective had total assets in excess of $5.05 billion. The mailing address of
Collective's principal executive offices is P.O. Box 316, Egg Harbor, New Jersey
08215, and its telephone number is (609) 625-1110.
CBAC. CBAC is a Delaware business corporation that was organized by
Collective solely for the purpose of effecting the Merger. The mailing address
of CBAC's principal executive offices is P.O. Box 316, Egg Harbor, New Jersey
08215, and its telephone number is (609) 625-1110.
Principal Terms of the Merger
CBAC is to be merged with and into the Company and immediately
thereafter the Company will be merged with and into Collective, which will be
the surviving corporation. Upon completion of the Merger, the Company's bank
subsidiary, Continental Bank of New Jersey, will become a subsidiary of
Collective and each outstanding share of Common Stock (other than shares held by
Collective and its affiliates) will be converted into the right to receive $5.00
per share in cash.
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Copies of the Reorganization Agreement and the Plan of Merger are
attached to this Proxy Statement as Appendices "A" and "B", respectively.
See "THE MERGER AGREEMENT."
Effective Date
Subject to the terms and conditions specified in the Merger Agreement
and upon satisfaction of all requirements of law including the receipt of all
shareholder and other approvals required by federal and state governmental
agencies (including the expiration of any applicable waiting periods), the
Merger will become effective upon the filing of Articles of Merger with the
Departments of State of the States of New Jersey and Delaware (the "Effective
Date"). It is currently anticipated that the Merger will be consummated in the
latter part of the third quarter or in the fourth quarter of 1996. See "THE
MERGER AGREEMENT -- Effective Date."
Payment for Shares
All shareholders of the Company will be required to surrender their
Common Stock certificates in order to receive the cash payments to which they
will be entitled as a result of the Merger. Promptly after the Effective Date,
instructions with regard to the surrender of certificates, together with a
letter of transmittal to be used for that purpose, will be mailed to each
shareholder. Arrangements will also be made for Company shareholders to
surrender their Common Stock certificates in person immediately after the
Effective Date and receive immediate payment therefor.
See "THE MERGER AGREEMENT -- Payment for Shares."
HOLDERS OF SHARES OF COMMON STOCK SHOULD NOT SEND IN THEIR CERTIFICATES
UNTIL THEY RECEIVE FURTHER WRITTEN INSTRUCTIONS AND THE LETTER OF TRANSMITTAL.
HOLDERS OF SHARES OF COMMON STOCK ARE URGED TO PROMPTLY NOTIFY THE COMPANY OF
LOST, STOLEN OR DESTROYED CERTIFICATES OR CERTIFICATES NOT PROPERLY REGISTERED
IN ORDER TO BEGIN THE PROCESS OF ISSUANCE OF REPLACEMENT CERTIFICATES.
Recommendations of the Board of Directors;
Reasons for the Merger
The Board of Directors believes that the Merger is in the best
interests of, and is fair to, the shareholders of the Company and unanimously
recommends that shareholders vote "FOR" the approval and adoption of the Merger
Agreement.
The principal reason for the decision of the Board of Directors to
approve, and recommend shareholder approval of, the Merger Agreement is that the
Merger will enable all Company shareholders to realize in cash a significant
premium over the prices at which the Common Stock has historically traded. See
"MARKET INFORMATION."
In arriving at their recommendation, the members of the Board of
Directors considered, among other things, the recent and historical market
prices of the Common Stock, the net book value of the Common Stock (which, as of
March 31, 1996, was $2.42 per share), their knowledge of the business,
operations, properties, assets and earnings of the Company, as well as their
assessment of the earnings potential, prospects and future value of the Company
and the prices and
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<PAGE>
premiums paid in recent acquisitions of other companies in comparable
businesses. The Board of Directors also considered the taxable nature of the
Merger to the shareholders of the Company. Furthermore, the Board of Directors
placed special importance on the favorable opinion of Berwind Financial Group,
L.P., an independent investment banking firm retained by the Board of Directors
to evaluate the consideration to be paid to the shareholders of the Company in
the Merger. See "THE MERGER -- Background of the Merger."
The Board of Directors recognized that, while consummation of the
Merger will result in the Company's shareholders being entitled to receive $5.00
in cash for each of their shares, it will also eliminate the opportunity for the
Company's current shareholders to participate in the future growth, if any, of
the business of the Company. Accordingly, the Board of Directors gave
consideration to the Company's future prospects as well as its historical
results of operations. See "MARKET INFORMATION."
The Board of Directors did not attach relative weights to the factors
they considered in reaching their decision but did place particular emphasis
upon the receipt of the opinion of Berwind and, considering all factors
discussed above, determined that the Merger is in the best interests of, and is
fair to, all Company shareholders. See "THE MERGER -- Recommendation of the
Board of Directors, Reasons for the Merger; Opinion of Independent Investment
Banker" and "MARKET INFORMATION."
Opinion of Independent Investment Banker
Berwind Financial Group, L.P. ("Berwind") was retained by the Board of
Directors to evaluate the financial terms of the Merger. On May 21, 1996,
Berwind delivered to the Board of Directors its written fairness opinion stating
that based on its review, the terms of the Merger are fair to the shareholders
of the Company from a financial point of view. On [ ], Berwind delivered to the
Board of Directors another written fairness opinion stating that based on the
review described therein, the terms of the Merger are fair to the shareholders
of the Company from a financial point of view. A copy of Berwind's [ ], 1996
written fairness opinion is attached as Appendix C to this Proxy Statement and
should be read in its entirety. See "THE MERGER -- Opinion of Independent
Investment Banker" and "Appendix C."
Stock Options
All options owned by the officers and employees of the Company will be
canceled in connection with the Merger and each person will receive the
difference in cash between $5.00 and the option's exercise price. The aggregate
payments are anticipated to be approximately $868,810.
See "THE MERGER AGREEMENT - Stock Options."
Interest of Certain Persons in the Merger
Certain officers and a director of the Company will be entitled to
receive additional cash compensation on the Effective Date of the Merger as a
result of employment and/or severance agreements with the Company. The aggregate
payments are anticipated to be approximately $468,000. See "THE MERGER --
Interests of Certain Persons in the Merger."
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<PAGE>
Conditions to the Merger
The obligations of the parties to the Merger Agreement to consummate
the Merger are subject to the satisfaction of a number of conditions, including
the approval and adoption of the Merger Agreement by the shareholders of the
Company and compliance with certain other terms and conditions, including the
receipt of all necessary regulatory approvals. See "THE MERGER AGREEMENT --
Conditions and Covenants" and "Regulatory Approvals." Under applicable Delaware
law, the Merger is not required to be approved by the shareholders of
Collective.
Regulatory Approvals
The Merger is subject to prior approval by the Board of Governors of
the Federal Reserve System ("FRB") and the New Jersey Department of Banking.
Applications for such approvals have been filed, but no assurance can be given
that such regulatory approvals will be obtained. See "THE MERGER - Regulatory
Approvals."
Certain Federal Income Tax Consequences
The receipt of cash for shares of Common Stock pursuant to the Merger
will be a taxable transaction for Federal income tax purposes to shareholders
receiving such cash and may also be a taxable transaction for state, local and
foreign tax purposes. See "FEDERAL INCOME TAX CONSEQUENCES TO SHAREHOLDERS." IT
IS RECOMMENDED THAT EACH SHAREHOLDER CONSULT HIS OR HER OWN PERSONAL TAX ADVISOR
TO DETERMINE THE TAX CONSEQUENCES TO HIM OR HER RESULTING FROM THE MERGER.
Market Price of the Common Stock
On May 21, 1996 the last full trading day prior to the Company's public
announcement of the signing of the Merger Agreement, the closing sales price per
share of the Company Common Stock on Bloomberg Financial Services was $2.23. See
"MARKET INFORMATION."
Stock Option Agreement/Termination Fee
In connection with execution of the Plan of Merger, Collective and the
Company executed a Stock Option Agreement (the "Stock Option Agreement")
pursuant to which the Company gave Collective an option (the "Option") to
purchase up to 956,704 shares of Company Common Stock at an exercise price of
$4.00 per share, subject to adjustment in accordance with the terms of the Stock
Option Agreement. The Option is exercisable only upon the occurrence and
continuance of certain events that might jeopardize consummation of the Merger
pursuant to the terms of the Merger Agreement. See "THE MERGER-- Stock Option
Agreement" and the text of the Stock Option Agreement, attached hereto as
Appendix D and incorporated herein by reference.
The Merger Agreement provides that if Collective terminates the Merger
Agreement under certain circumstances the Company is required to pay Collective
a $500,000 termination fee. See "THE MERGER AGREEMENT - Termination and
Amendment."
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Debentures
Prior to the Effective Date of the Merger, the Company intends to
redeem all outstanding convertible debentures. Based on the fact that pursuant
to the Merger Agreement each share of Company Common Stock will be convertible
into $5.00 in cash, it will be in all convertible debenture holders' interest to
convert their convertible debentures into Company Common Stock prior to the
Effective Date of the Merger (i.e. 390 shares of Common Stock per $1,000
debenture based on the current conversion ratio of $2.56 per share) rather than
accept the redemption price of $1,030 per $1,000 debenture. See "THE MERGER
AGREEMENT - Debentures."
ELECTION OF DIRECTORS
Directors are elected at each Annual Meeting of shareholders. The
Bylaws of the Company provide that the Board of Directors is to consist of not
less than two and not more than 25 directors, each holding office for one year
and until their respective successor shall have been duly elected and qualified.
The Bylaws further provide that the exact number of directors to be elected will
be determined from time to time by the Board of Directors. The Board of
Directors has fixed the number of persons to serve on the Company's Board of
Directors at eight and has designated the nominees set forth herein for election
as directors. See "ELECTION OF DIRECTORS."
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<PAGE>
SELECTED FINANCIAL DATA
The following table sets forth, in summary form, certain consolidated
financial data for the Company as of and for the years ended December 31, 1995,
1994, 1993, 1992 and 1991, and as of and for the three months ended March 31,
1996 and 1995. This table is qualified in its entirety by the more detailed
information and financial statements which accompany this Proxy Statement, and
should be read in conjunction with such financial statements and related notes
thereto and the "Management's Discussion and Analysis of Financial Condition and
Results of Operations," of the Company which are contained in the documents
which accompany this Proxy Statement. For additional financial information
regarding the Company, please refer to the 1995 Annual Report to Shareholders
and the Company's Quarterly Report on Form 10-Q for the Quarter Ended March 31,
1996, copies of which accompany this Proxy Statement.
<TABLE>
<CAPTION>
Three Months Ended
March 31, Year Ended December 31,
------------------------ --------------------------------------------------------------------
1996 1995 1995 1994 1993 1992 1991
------------------------ --------------------------------------------------------------------
(in thousands, except per share data and ratios)
<S> <C> <C> <C> <C> <C> <C> <C>
Balance Sheet Data:
Total assets..................... $ 187,132 $ 189,913 $191,763 $181,131 $145,166 $111,953 $102,115
Total loans (net)................ 74,288 84,250 77,689 82,506 82,421 85,127 77,036
Federal funds sold............... 1,000 0 2,975 0 4,500 5,350 0
Investments(1)...................
Available for sale............. 73,482 57,272 65,765 50,438 16,312 0 0
Held to maturity............... 24,753 34,881 29,424 35,203 32,577 11,921 254
Total deposits................... 124,413 109,857 128,596 113,324 114,788 104,350 87,931
FHLB advances.................... 49,173 39,479 50,180 54,388 22,165 0 0
Stockholders' equity............. 11,419 11,249 11,146 11,447 6,538 5,725 5,248
Summary of Operations:
Interest income.................. $ 3,364 $ 3,303 $ 14,049 $ 10,579 $ 8,634 $ 8,323 $ 8,824
Net interest income before
credit loss provision.......... 1,615 1,558 6,396 6,066 5,819 5,244 4,782
Provision for credit losses...... 60 75 1,353 0 150 286 270
Non-interest income(2)........... 230 189 980 874 859 428 626
Non-interest expense............. 1,362 1,521 6,468 5,969 5,272 4,709 4,569
Income (loss) before income taxes 423 151 (445) 971 1,256 677 569
Provision for income taxes(3).... 161 54 (18) 384 509 262 233
Income (loss) before extraordinary
item and cumulative effect of
accounting change(3)........... 262 97 (427) 587 747 415 336
Cumulative effect of accounting
change......................... -- -- -- -- 244 -- --
Extraordinary item............... -- -- -- -- -- 62 130
Net income (loss)................ 262 97 (427) 587 991 477 466
Selected Operating Ratios:
Return on average assets......... .14% .05% ( .23)% .35% .82% .47% .51%
Return on average stockholders'
equity......................... 2.32 0.85 (3.73) 6.01 16.09 8.90 9.25
Net loans to deposits............ 59.71 76.69 60.41 72.81 71.80 81.58 87.61
Net interest margin(4)........... 3.64 3.57 3.51 3.95 5.14 5.56 5.64
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<PAGE>
Selected Capital and Asset Quality
Ratios:
Non-performing assets to
total assets(5)................ 1.67% 1.68% 1.78% 1.71% 1.16% 1.61% .98%
Non-performing loans to
gross loans.................... 3.10 3.53 3.27 3.65 1.80 1.70 1.05
Allowance for credit losses to
gross loans.................... 1.83 1.09 1.77 1.13 1.48 1.07 1.05
Allowance for credit losses to non-
performing loans(6)............ 59.15 30.66 54.14 30.86 81.83 63.03 100.37
Provision for credit losses to
gross loans.................... .08 .09 1.71 0.00 .18 .33 .35
Net (charge offs) recoveries to
average loans.................. (.09) (0.1) (1.1) (0.4) 0.2 (0.2) (0.2)
Stockholders' equity to assets... 6.10 5.92 5.81 6.32 4.50 5.11 5.14
Tier 1 capital to risk-weighted
assets 12.99 11.71 13.01 11.56 6.81 6.41 6.06
Total capital to risk-weighted
assets 15.49 13.73 15.52 13.53 9.25 8.73 8.33
Leverage capital ratio........... 5.86 6.16 6.04 6.59 4.78 5.20 5.16
Per Share Data:
Income (loss) before extraordinary
item and cumulative effect of
accounting change ............. $0.06 $0.02 $(0.09) $0.14 $0.27 $0.15 $.12
Cumulative effect of accounting
change(s)...................... -- -- -- -- .09 -- --
Extraordinary item(8)............ -- -- -- -- -- .02 .05
Net income....................... 0.06 0.02 (0.09) 0.14 0.36 0.17 0.17
Book value(7).................... 2.42 2.36 2.35 2.40 2.35 2.04 1.82
Cash dividend paid............... 0 0.06 0.06 0.05 0.05 0 0
Dividend payout ratio............ 0% 294.47% (66.74)% 23.00% 13.62% 0% 0%
</TABLE>
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(1) Effective December 31, 1993, the Company adopted SFAS No. 115 "Accounting
For Certain Investments in Debt and Equity Securities."
(2) Includes net gains on securities of $0 and $12,000 for the three months
ended March 31, 1996 and 1995, respectively, and $46,000 in 1995, $0 in
1994, $42,000 in 1993, and net losses of $153,000 in 1993 and $142,000 in
1991.
(3) Effective January 1, 1993, the Company adopted SFAS No. 109 "Accounting
for Income Taxes." The cumulative effect of the method of Accounting for
Income Taxes was $244,000. Under the deferred method used in 1992, the
Company recorded an extraordinary item for the utilization of tax loss
carryforwards of $62,000.
(4) Represents net interest income as a percentage of average interest-earning
assets.
(5) Non-performing assets is comprised of non-performing loans and of other
real estate owned.
(6) Non-performing loans consist of non-accrual loans, loans past due ninety
days or more, which are still accruing interest and troubled debt
restructured loans. Effective January, 1995, the Company adopted SFAS No.
114, "Accounting for Impairment of a Loan," as amended by SFAS No. 118,
"Accounting by Creditors for Impairment of a Loan - Income Recognition and
Disclosure." The effect of adoption was not significant to the Company's
financial position or results of operations.
(7) Represents Stockholders' Equity divided by the number of shares
outstanding at period end.
(8) Represents the utilization of net operating loss carryforward prior to the
adoption of SFAS No. 109.
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<PAGE>
CONTINENTAL BANCORPORATION
1345 Chews Landing Road
Gloucester Township
Laurel Springs, New Jersey 08021
PROXY STATEMENT
1996 Annual Meeting of Shareholders
to be held [___________________], 1996
INTRODUCTORY STATEMENT
This Proxy Statement is being furnished to the shareholders of the
Company in connection with the solicitation of proxies by the Board of Directors
of the Company for use at the 1996 Annual Meeting of Shareholders be held on
[ ], [ ], 1996, 9:00 A.M., local time, at the Company's principal offices, 1345
Chews Landing Road, Gloucester Township, Laurel Springs, New Jersey, and any
adjournments or postponements thereof.
Proposals Presented
At the Annual Meeting, shareholders of the Company will be asked to
consider and vote on the following matters:
1. A proposal to approve and adopt the Agreement and Plan of
Merger and the related Plan of Merger, pursuant to which, among other
things, (a) CBAC will be merged with and into the Company and,
immediately thereafter, the Company will be merged with and into
Collective and, as a result thereof, the Company's bank subsidiary,
Continental Bank of New Jersey, will become a subsidiary of Collective,
and (b) each outstanding share of Common Stock (other than shares held
by Collective and its affiliates) will be converted into the right to
receive $5.00 in cash;
2. The election of eight directors of the Company; and
3. Any other business that may properly come before the Annual
Meeting or any adjournments or postponements thereof.
With respect to the information set forth in this Proxy Statement, you
should also refer to the preceding summary beginning on page 1.
This Proxy Statement, the attached Notice and the enclosed Proxy are
first being mailed to shareholders of the Company on or about [ ], 1996.
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<PAGE>
Voting Rights
Only holders of record of shares of the Common Stock at the close of
business on [__________], [________________], 1996 will be entitled to notice
of, and to vote at, the Annual Meeting. At the close of business on such date,
there were [ ] shares of Common Stock outstanding and approximately [ ] holders
of record of the shares of Common Stock.
Shareholders of record on the Record Date are entitled to one vote per
share on any matter that may properly come before the Annual Meeting. The
presence, either in person or by proxy, of shareholders entitled to cast at
least a majority of the votes which all shareholders are entitled to cast is
necessary to constitute a quorum at the Annual Meeting.
Approval of the Merger will require the affirmative vote, either in
person or by proxy, of the holders of at least a majority of the outstanding
shares of Common Stock voting at the Annual Meeting. The shares of Common Stock
which the directors and executive officers of the Company are entitled to vote
will be counted as outstanding shares for this purpose. The directors and
executive officers of the Company, as a group (nine persons), are entitled to
vote an aggregate of approximately 59.6% of the shares of Common Stock
outstanding as of the Record Date. Each of the members of the Board of Directors
believes that the proposed Merger is in the best interests of, and is fair to,
the shareholders of the Company and has recommended that the shareholders of the
Company vote for the Merger Agreement. See "THE MERGER -- Recommendation of the
Board of Directors; Reasons for the Merger." All of the directors and executive
officers of the Company have indicated that they intend to vote in favor of the
Merger Agreement. Consequently, the affirmative vote of none of the shares of
Common Stock outstanding as of the Record Date, other than those held by the
directors and executive officers of the Company, will be required for approval
of the Merger.
Directors of the Company will be elected at the Annual Meeting by a
plurality of the votes cast for such election by the holders of Common Stock.
Holders of Common Stock have no cumulative rights in voting for directors.
Proxies
A Proxy is enclosed. Each properly executed, dated and returned Proxy
(which has not been revoked) will be voted at the Annual Meeting in accordance
with the instructions thereon. If no instructions to the contrary are given,
such Proxy will be voted in favor of the proposal for the (i) approval of the
Merger and Merger Agreement, and (ii) election of the eight nominees for
directors of the Company named herein.
At the date of the mailing of this Proxy Statement, the Company knows
of no other business that will be considered at the Annual Meeting. However, the
enclosed proxy confers discretionary authority to vote with respect to any and
all of the following matters that may come before the Annual Meeting: (i)
matters which the Company does not know a reasonable time before the Annual
Meeting are to be presented at the Annual Meeting; (ii) approval of the minutes
of the prior meeting if such approval does not amount to ratification of the
action taken at that meeting; (iii) the election of any person to any office for
which a bona fide nominee is named herein but is unable to serve or for good
cause will not serve; and (iv) matters incident to the conduct of the
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<PAGE>
Annual Meeting. In connection with such matters, the person designated as
proxy will vote in accordance with their best judgment.
Any shareholder of the Company giving a proxy may revoke it at any time
before it is exercised by, among other methods, giving written notice of such
revocation to the Secretary of the Company. The presence at the Annual Meeting
of any shareholder who has given a proxy will not revoke the proxy unless the
shareholder files written notice of revocation with the Secretary of the Company
prior to the voting of the proxy.
Solicitation of Proxies; Expenses
The expense of the proxy solicitation will be borne by the Company. In
addition to solicitation by mail, proxies may be solicited in person or by
telephone, telegraph or teletype by directors, officers or employees of the
Company and/or Continental Bank of New Jersey (the "Bank"), the Company's
predecessor, now a wholly-owned subsidiary of the Company, without additional
compensation. The Company is required to pay the reasonable expenses incurred by
record holders of the Company's Common Stock, who are brokers, dealers, banks or
voting trustees, or their nominees, for mailing proxy material and annual
shareholder reports to any beneficial owners of the Common Stock they hold of
record, upon request of such record holders.
THE MERGER
Background of the Merger
In the fall of 1995, the Board of Directors of the Company concluded,
among other things, that increasing competition and costs and minimal liquidity
of the corporation's Common Stock, as well as other factors, precluded the
Company from maximizing its shareholders' return through a strategy of internal
growth. The Board of Directors of the Company therefore considered the relative
merits of maintaining the independence of the Company and of merging the Company
with a larger financial institution. The Board also considered the desirability
of increasing the liquidity of the stock held by the Company's shareholders by
exchanging it for stock of a larger banking organization that would be listed on
the National Securities Exchange in a tax-free transaction and/or exchanging the
shares of the Company's Common Stock in an all-cash merger in a taxable
transaction. The Board's primary considerations in selecting an acquiror were to
provide a fair financial return to the Company's shareholders. As described
below, the Company eventually selected Collective as its merger partner because
of the superior cash consideration offered.
In December, 1995, the Company retained Berwind Financial Group, L.P.
("Berwind"), an investment banking firm located at 3000 Centre Square West, 1500
Market Street, Philadelphia, Pennsylvania, to find an acquiror which would
provide a fair financial return to the Company's shareholders. The Company
selected Berwind because of its familiarity with the Philadelphia/South Jersey
banking market and because of Berwind's experience in evaluating financial
strategies and fundamental transactions for banking institutions.
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<PAGE>
In December, 1995, the Board instructed Berwind to explore courses of
action (including the sale of the Company) which would be in the best interests
of the Company's shareholders in connection with, among other considerations,
maximizing the value of the investment of the Company's shareholders. Berwind
presented to the Company's Board of Directors certain information Berwind had
assembled regarding several potential merger partners, including Collective.
In early 1996, Berwind assembled packages for potential merger partners
containing extensive information about the Company. The Chairman of the Board of
the Company selected 14 potential merger partners and instructed Berwind to
contact those parties. Berwind then contacted all 14 parties on a confidential
and preliminary basis and, subject to each potential merger partner executing a
confidentiality agreement, provided them with information about the Company. Ten
potential merger partners executed confidentiality agreements with the Company,
and during March and April, 1996, Berwind met with and/or spoke to each of these
potential merger partners to discuss the potential acquisition of the Company.
Certain of the potential merger partners met with Company management and/or
requested additional information on the Company. One potential merger partner
conducted an on site due diligence review of the Company. After such meetings
and/or discussions, Berwind requested expressions of interest in a possible
transaction from each party.
On April 19, 1996, Berwind presented information regarding five
potential acquirors to the Chairman. This information included expressions of
interest from the five potential acquirors, summary financial information
concerning the potential acquirors, their stock trading prices and volumes over
the past five years, certain pro forma financial information, the recent
earnings releases of the potential acquirors, and certain additional
information. The information also contained a comparison of the terms of the
various expressions of interest. On April 25, 1996, the Chairman updated the
full Board of Directors as to the progress and status of the discussions. Based
upon the fact that the cash consideration offered by Collective was in excess of
that offered by any of the other potential acquirors, the Board of Directors
determined that Collective's offer was preferable, and after discussion and upon
motion duly made, the Board agreed, by the unanimous vote of the Directors
present, to enter into negotiations for a definitive Merger Agreement with
Collective. Such negotiations were conducted by the Company and Collective and
their representatives during the ensuing days.
Based on these preliminary indications of interest, Collective was
granted permission to do its due diligence review of the Company and confirm its
expression of interest. Additionally, Berwind held further discussions with each
of the remaining potential merger partners to further discuss issues (including
price) relating to their expressions of interest.
On May 6, 1996, Berwind obtained a revised expression of interest from
Collective, and based on the proposed price to be paid by Collective, the
Chairman decided to recommend to the full Board of Directors that the Company
attempt to consummate a transaction with Collective.
At a Special Meeting of the Board of Directors on May 20, 1996, the
Merger Agreement, along with the related Stock Option Agreement, were presented
to the Board of Directors of the Company. Berwind also presented a form of its
written fairness opinion stating that the merger was fair to the shareholders of
the Company from a financial point of view. Berwind's opinion is more fully
described in the section below entitled "THE MERGER - Opinion Of Financial
Advisor." Believing it desirable and in the best interests of the Company and
its shareholders to merge with
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<PAGE>
and into Collective in accordance with the terms of the Merger Agreement and the
Stock Option Agreement, the Board of Directors, adopted by unanimous vote of the
Directors present, the resolutions necessary to approve the merger with
Collective. The Merger Agreement and the Stock Option Agreement were signed on
May 21, 1996, and both the Company and Collective issued a joint press release
the following day.
For the reasons set forth below in the section immediately following
this section of the Proxy Statement, the Board of Directors of the Company has
concluded that the merger is in the best interests of the Company's
shareholders.
Recommendation of the Board of Directors;
Reasons for the Merger
The Board of Directors believes that the Merger is in the best
interests of, and is fair to, the shareholders of the Company and unanimously
recommends that the shareholders vote FOR the approval and adoption of the
Merger Agreement. For a description of the interests of a director and certain
officers of the Company in the Merger which may present them with certain
potential conflicts of interest, see "THE MERGER -- Interests of Certain Persons
in the Merger."
The principal reason for the decision of the Board of Directors to
approve, and recommend shareholder approval of, the Merger Agreement is that the
Merger will enable all shareholders of the Company to realize in cash a
significant premium over the prices at which the Common Stock has historically
traded. See "MARKET INFORMATION."
In arriving at its recommendation, the members of the Board of
Directors considered, among other things, the recent and historical market
prices of the Common Stock, the net book value of the Common Stock (which, as of
March 31, 1996, was $2.42 per share), the Board of Directors' knowledge of the
business, operations, properties, assets and earnings of the Company, as well as
their assessment of the earnings potential, and future value of the Company and
the prices and premiums paid in recent acquisitions of other companies in
comparable businesses. The Board of Directors also considered the taxable nature
of the Merger to the shareholders of the Company. Furthermore, the Board of
Directors placed special importance on the favorable opinion of Berwind as to
the fairness, from a financial point of view, of the cash consideration to be
paid to the shareholders of the Company in the Merger. The Board of Directors
felt that the proposed Merger, including the $5.00 per share cash price to be
received by the shareholders of the Company, was in the best interests of the
shareholders of the Company.
The Merger Agreement provides that subject to the Company's and its
Directors' fiduciary duties as determined by counsel for the Company, the
Company agreed that it will not, directly or indirectly through others, solicit
any other person with respect to the purchase of the Company's or any of its
subsidiaries' business, assets or capital stock, or engage in or continue
discussions with any other person or firm concerning the purchase of such
business, assets or stock, unless and until the Merger Agreement is terminated
in accordance with its terms.
The Board of Directors recognized that, while consummation of the
Merger will result in the Company's shareholders being entitled to receive $5.00
in cash for each of their shares, it will
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<PAGE>
also eliminate the opportunity for the Company's current shareholders to
participate in the future growth, if any, of the business of the Company.
Accordingly, the Board of Directors gave consideration to the Company's future
prospects, as well as its historical results of operations. See "MARKET
INFORMATION."
The Board of Directors did not attach relative weights to the factors
they considered in reaching their decision but did place particular emphasis
upon the receipt of the opinion of Berwind and, considering all factors
discussed above, determined that the Merger is in the best interests of, and is
fair to, all Company shareholders.
The Merger has not been structured so that approval of at least a
majority of unaffiliated shareholders is required because there is no legal
requirement for the Merger to be so structured. See "INTRODUCTORY STATEMENT --
Voting Rights." The Board of Directors believes that the Board's receipt of the
favorable opinion of Berwind as to the fairness, from a financial point of view,
of the cash consideration to be paid to the shareholders of the Company in the
Merger, provides reasonable safeguards with respect to the procedural fairness
of the proposed Merger and that the proposed Merger is procedurally fair to the
shareholders of the Company.
Opinion of Independent Investment Banker
The Company has retained Berwind to act as its financial advisor and to
render a fairness opinion in connection with the Merger. Berwind has rendered
its opinion to the Board of Directors of the Company that, based upon and
subject to the various considerations set forth therein, as of May 21, 1996 and
as of the date of the Proxy Statement, the consideration to be received in the
Merger is fair, from a financial point of view, to the holders of Company Common
Stock.
The full text of Berwind's Opinion as of the date thereof, which sets
forth the assumptions made, matters considered and limitations of the review
undertaken, is attached as Appendix C to this Proxy Statement, is incorporated
herein by reference, and should be read in its entirety in connection with this
Proxy Statement. The summary of the opinion of Berwind set forth herein is
qualified in its entirety by reference to the full text of such opinion attached
as Appendix C to this Proxy Statement.
Berwind was selected to act as the Company's financial advisor in
connection with the Merger based upon its qualifications, expertise and
experience. Berwind has knowledge of, and experience with, New Jersey banking
markets and banking organizations operating in those markets and was selected by
the Company because of its knowledge of, experience with, and reputation in the
financial services industry. Berwind, as part of its investment banking
business, is engaged regularly in the valuation of assets, securities and
companies in connection with various types of asset and security transactions,
including mergers, acquisitions, private placements, and valuation for various
other purposes and in the determination of adequate consideration in such
transactions.
On May 21, 1996, the Company's Board of Directors approved and executed
the Merger Agreement. Prior to such approval, Berwind delivered an opinion (the
"May Opinion") to the Company's Board stating that, as of such date, the
consideration to be received in the proposed Merger was fair to the shareholders
of the Company from a financial point of view. Berwind reached the same opinion
as of the date of this Proxy Statement (the "Proxy Opinion"). The full
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<PAGE>
text of the Proxy Opinion which sets forth assumptions made, matters considered
and limits on the review undertaken is attached as Appendix C to this Proxy
Statement. No limitations were imposed by the Company's Board of Directors upon
Berwind with respect to the investigations made or procedures followed by
Berwind in rendering the May Opinion or the Proxy Opinion.
In rendering its Proxy Opinion, Berwind: (i) reviewed the historical
financial performance, current financial position and general prospects of the
Company; (ii) reviewed the Merger Agreement, (iii) reviewed and analyzed stock
market performance of the Company; (iv) studied and analyzed the financial and
operating data of the Company; (v) considered the terms and conditions of the
Merger to the Company; (vi) met and/or communicated with certain members of the
Company's senior management to discuss its operations, historical financial
statements, and future prospects; (vii) reviewed this Proxy Statement, and
(viii) conducted such other financial analyses, studies and investigations as
Berwind deemed appropriate.
In delivering its May Opinion and Proxy Opinion, Berwind assumed that
in the course of obtaining the necessary regulatory and governmental approvals
for the Merger, no restriction will be imposed on Collective that would have a
material adverse effect on the contemplated benefits of the Merger.
Berwind relied without independent verification upon the accuracy and
completeness of all of the financial and other information reviewed by and
discussed with it for purposes of its opinion. With respect to the Company's
financial forecasts reviewed by Berwind in rendering its opinion, Berwind
assumed that such financial forecasts were reasonably prepared on bases
reflecting the best currently available estimates and judgments of the
management of the Company as to the future financial performance of the Company.
Berwind did not make an independent evaluation or appraisal of the assets
(including loans) or liabilities of the Company nor was it furnished with any
such appraisal. Berwind also did not independently verify and has relied on and
assumed that all allowances for loan and lease losses set forth in the balance
sheets of the Company were adequate and complied fully with applicable law,
regulatory policy and sound banking practice as of the date of such financial
statements.
The following is a summary of selected analyses prepared by Berwind and
presented to the Company's Board in connection with the May Opinion and analyzed
by Berwind in connection with the May and Proxy Opinions. In connection with
delivering its Proxy Opinion, Berwind updated certain analyses described above
to reflect current market conditions and events occurring since the date of the
May Opinion. Such reviews and updates led Berwind to conclude that it was not
necessary to change the conclusions it had reached in connection with rendering
the May Opinion.
Comparable Companies and Comparable Acquisition Transaction Analyses.
Berwind compared selected financial and operating data for the Company with
those of a peer group of selected banks and bank holding companies with (i)
assets between $100 and $350 million, as of the most recent financial period
publicly available, located in New Jersey and (ii) assets between $100 million
and $350 million, as of the most recent financial period publicly available,
located in the Southern New Jersey counties of Burlington, Ocean, Camden,
Gloucester, Atlantic, Salem, Cumberland and Cape May. Financial data and
operating ratios compared in the analysis of the Company peer group included but
was not limited to: return on average assets, return on average equity,
shareholders' equity to assets ratio and certain asset quality ratios.
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<PAGE>
Berwind also compared the multiples of book value, tangible book value
and latest twelve months' earnings inherent to the Merger with the multiples
paid in recent acquisitions of banks and bank holding companies that Berwind
deemed comparable. The transactions deemed comparable by Berwind included both
interstate and intrastate acquisitions announced between May 20, 1995 and May
20, 1996, in which the selling institution's assets were between $100 and $200
million. No company or transaction, however, used in this analysis is identical
to the Company, Collective or the Merger. Accordingly, an analysis of the result
of the foregoing is not mathematical; rather, it involves complex considerations
and judgments concerning differences in financial and operating characteristics
of the companies and other factors that would affect the public trading values
of the companies or company to which they are being compared.
Discounted Dividend Analyses. Using discounted dividend analyses,
Berwind estimated the present value of the future dividend streams that the
Company could produce over a five-year period under various earnings growth
assumptions. Berwind also estimated the terminal value for the Company's Common
Stock after the five year period by applying a range of earnings multiples to
the Company's terminal year earnings. The range of multiples used reflected a
variety of scenarios regarding the growth and profitability prospects of the
Company. The dividend streams and terminal values were then discounted to
present value using discount rates, reflecting different assumptions regarding
the rates of return required by holders or prospective buyers of the Company's
Common Stock.
In connection with rendering its May Opinion and Proxy Opinion, Berwind
performed a variety of financial analyses. Although the evaluation of the
fairness, from a financial point of view, of the consideration to be paid in the
Merger was to some extent a subjective one based on the experience and judgment
of Berwind and not merely the result of mathematical analysis of financial data,
Berwind principally relied on the previously discussed financial valuation
methodologies in its determinations. Berwind believes its analyses must be
considered as a whole and that selecting portions of such analyses and factors
considered by Berwind without considering all such analyses and factors could
create an incomplete view of the process underlying Berwind's opinion. In its
analysis, Berwind made numerous assumptions with respect to business, market,
monetary and economic conditions, industry performance and other matters, many
of which are beyond the Company's and Collective's control. Any estimates
contained in Berwind's analyses are not necessarily indicative of future results
or values, which may be significantly more or less favorable than such
estimates.
In reaching its opinion as to fairness, none of the analyses performed
by Berwind was assigned a greater or lesser weighting by Berwind than any other
analysis. As a result of its consideration of the aggregate of all factors
present and analyses performed, Berwind reached the conclusion, and opined, that
the consideration to be received in the Merger as set forth in the Merger
Agreement, is fair from a financial point of view, to the Company and its
shareholders.
Berwind's Proxy Opinion was based solely upon the information available
to it and the economic, market and other circumstances as they existed as of the
date its Proxy Opinion was delivered; events occurring after the date of its
Proxy Opinion could materially affect the assumptions used in preparing its
Proxy Opinion. Berwind has not undertaken to reaffirm and revise its Proxy
Opinion or otherwise comment upon any events occurring after the date thereof.
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<PAGE>
Pursuant to the terms of the engagement letter dated December 6, 1995
the Company has paid Berwind $35,000 for acting as financial advisor in
connection with the Merger including delivering its May and Proxy Opinions. In
addition, the Company has also agreed to pay Berwind $500,175 upon the
consummation of the Merger and to reimburse Berwind up to $10,000 for its
reasonable out-of-pocket expenses. Whether or not the Merger is consummated, the
Company has also agreed to indemnify Berwind and certain related persons against
certain liabilities relating to or arising out of its engagement.
The full text of the Proxy Opinion of Berwind dated as of the date of
this Proxy Statement, which sets forth assumptions made and matters considered,
is attached hereto as Appendix C. The Company's shareholders are urged to read
the Proxy Opinion in its entirety. Berwind's Proxy Opinion is directed only to
the consideration to be received by the Company's shareholders in the Merger and
does not constitute a recommendation to any holder of the Company Common Stock
as to how such holder should vote at the Company's Annual Meeting.
THE FOREGOING PROVIDES ONLY A SUMMARY OF THE PROXY OPINION OF BERWIND
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL TEXT OF THAT OPINION,
WHICH IS SET FORTH IN APPENDIX C TO THIS PROXY STATEMENT.
Interests of Certain Persons in the Merger
In considering the recommendation of the Board of Directors with
respect to the Merger, shareholders should be aware that certain persons have
interests which may present them with potential conflicts of interest in
connection with the Merger. The Board of Directors was aware of these potential
conflicts in considering the Merger.
The following officers and a director of the Company will be entitled
to receive the following additional cash compensation on the Effective Date of
the Merger as a result of employment and/or severance agreements with the
Company:
<TABLE>
<CAPTION>
Position Additional Cash
Name with the Bank Compensation
- -------------------------------- ---------------------------------------- -------------------------
<S> <C> <C>
David F. Dierker Director, President and Chief $360,000
Executive Officer
Jeffrey Steinberg Vice President and Branch $ 37,800
Administrator
Norman Mullock Vice President and Treasurer $ 37,800
Edward Petrosky Executive Vice President and $ 22,500
Chief Credit Officer
Other Officers -- $ 10,000
</TABLE>
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<PAGE>
Stock Option Agreement
Under the Stock Option Agreement, the Company has granted the Option to
Collective to purchase up to 956,704 authorized but unissued shares of the
Company Common Stock (or approximately 19.9% of the Company's issued and
outstanding Common Stock on May 21, 1996, prior to giving effect to the issuance
of Common Stock upon exercise of the Option) at a price of $4.00 per share. In
the event of any change in Company Common Stock by reason of stock dividends,
split-ups or the like, the type and number of shares subject to the Option and
the purchase price therefor shall be adjusted appropriately.
The purpose of the Option is to increase the likelihood that the Merger
will be consummated by making it more difficult and more expensive for a third
party to acquire control of the Company. Accordingly, certain aspects of the
Stock Option Agreement may have the effect of discouraging persons who might be
interested in acquiring the Company from considering or proposing such an
acquisition, even if such persons were prepared to offer higher consideration
per share for the Company Common Stock. The Option is exercisable only upon the
occurrence and continuance of the following events (a "Triggering Event"):
(i)(a) The Company or any of its subsidiaries (each a "Company
Subsidiary"), without having received Collective's prior written
consent, shall have entered into an agreement to engage in an
Acquisition Transaction (as hereinafter defined) with any person other
than Collective or any of its Subsidiaries (each a "Collective
Subsidiary") or (b) the Board of Directors of Company shall have
recommended that the stockholders of Company approve or accept any
Acquisition Transaction other than as contemplated by the Merger
Agreement. An "Acquisition Transaction" means (x) a merger or
consolidation, or any similar transaction, involving Company or any of
its subsidiaries, (y) a purchase, lease or other acquisition
representing 10% or more of the consolidated assets of Company 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 Company or any of its
subsidiaries;
(ii) The Company or any Company Subsidiary, without having
received Collective'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 Collective or a Collective
Subsidiary, or the Board of Directors of Company shall have withdrawn
or modified, or publicly announced its interest to withdraw or modify,
its recommendation that the stockholders of Company approve the
transactions contemplated by the Merger Agreement;
(iii) Any person, other than Collective, any Collective
Subsidiary or any Company 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; and the Company's shareholders shall not approve the Merger, or
the Company shall not have called a meeting of shareholders, or the
Company shall not have held a meeting of shareholders to vote
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<PAGE>
on the Merger no later than September 30, 1996, or the Company 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 the Company
or its stockholders to engage in an Acquisition Transaction, the
Company shall have breached any representation, warranty, covenant or
obligation contained in the Merger Agreement and such breach (x) would
entitle Collective to terminate the Merger Agreement and (y) shall not
have been cured prior to the Notice Date; or
(v) The holders of Company 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 Collective or any affiliate of Collective or any person acting in
concert in any respect with Collective) shall have made, or disclosed
an intention to make, a proposal to engage in an Acquisition
Transaction; or
(vi) The Company's Board of Directors shall not have
recommended to the stockholders of Collective 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 Collective.
The Option would terminate upon the earlier of (i) the Effective Date
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) of the Merger
Agreement and a Triggering Event shall not have occurred during such time.
Upon the occurrence of a Triggering Event, at the request of
Collective, the Company is required to repurchase the Option from Collective at
a price set forth in the Stock Option Agreement.
Collective has certain rights to require the preparation of a
registration statement to be used in connection with a sale of all or a portion
of the Option or shares acquired upon exercise thereof.
This summary of the Stock Option Agreement is qualified in its entirety
by a copy of the Stock Option Agreement, which is attached hereto as Appendix D
and is hereby incorporated by reference.
-19-
<PAGE>
THE MERGER AGREEMENT
Principal Terms
The descriptions of the terms and conditions of the Merger and of the
Merger Agreement included in this Proxy Statement are qualified in their
entirety by reference to the Reorganization Agreement and the Plan of Merger,
copies of which are attached hereto as Appendices A and B, respectively.
The Merger Agreement provides that, subject to the approval and
adoption of the Merger Agreement by the shareholders of the Company, and the
satisfaction of certain other conditions contained therein, CBAC will be merged
with and into the Company and, immediately thereafter, the Company shall be
merged with and into Collective, as the surviving corporation. In the Merger, on
the Effective Date, each outstanding share of Common Stock (other than shares
held by Collective and its affiliates) will, by virtue of the Merger and without
any action on the part of the holder thereof, no longer be outstanding and will
be canceled and converted into the right to receive $5.00 in cash. Each share of
the common stock of Collective will not be affected by the Merger.
Under applicable New Jersey law, Shareholders who object to the Merger
will not have the right to have the "fair value" of their shares judicially
determined and paid to them in cash.
After the Merger, current holders of Common Stock will possess no
interest in or rights as shareholders of the Company. On the Effective Date,
CBAC and the Company will cease to exist and Continental Bank of New Jersey will
become a subsidiary of Collective.
Collective has informed the Company that the proposed Merger will be
accounted for as a "purchase."
Effective Date
Subject to the terms and conditions specified in the Merger Agreement,
and upon satisfaction of all requirements of law, including, among other
conditions, receipt of the approval of the FRB and the New Jersey Department of
Banking, and the expiration of all waiting periods prescribed by law, the
"Effective Date" will occur within the tenth business day immediately following
the later of (i) the approval of the Merger by Company shareholders or (ii) the
approval of the Merger by all regulatory authorities and the expiration of all
applicable waiting periods, or such other date as is mutually agreed to by
Collective and the Company. On the Effective Date, the Company and Collective
will file appropriate Articles of Merger with the States of New Jersey and
Delaware to effect the Merger. The Merger shall become effective upon the last
of the filings of the Articles of Merger (the "Effective Date"). It is currently
anticipated that the Merger will be consummated in the later part of the third
quarter or in the fourth quarter of 1996.
The Merger Agreement provides for an outside Effective Date of December
31, 1996. See "THE MERGER AGREEMENT - Termination and Amendment."
-20-
<PAGE>
Stock Options
As of the Record Date, an aggregate of 486,600 shares of Common Stock
were subject to outstanding options. The options are held by five individuals,
including executive officers. The Merger Agreement provides that the Company
will take all steps necessary to cause all options outstanding thereunder to be
canceled, exercised or terminated prior to the Effective Date. The Company will
use its best efforts to obtain the consent of each holder of outstanding options
which are to be canceled to the cancellation of such options immediately prior
to the Effective Date in exchange for a cash payment from the Company equal to
the excess of $5.00 over the per share exercise price. The aggregate payments
are anticipated to be approximately $868,810.
Debentures
In February 1991, the Company authorized the issuance of up to
$1,100,000 of 11% convertible debentures due March 4, 2001. The debentures are
convertible to common stock of the Company at any time prior to maturity at
$2.56 per share, subject to adjustment in certain events. The debentures are
redeemable at the option of the Company at any time after March 4, 1994 at a
redemption price of 105% of the principal amount in 1994, reduced by 1% each
year to a minimum of 100% of the principal amount. In addition, the debentures
subject the Company to certain restrictive covenants, primarily regarding
limitations on dividends and stock purchases. As of March 31, 1996, the Company
had $1,096,000 of convertible debentures outstanding.
The Company intends to redeem prior to the Effective Date of the Merger
all outstanding convertible debentures. Based on the fact that pursuant to the
Merger Agreement each share of Company Common Stock will be convertible into
$5.00 in cash, it will be in all convertible debenture holders' interest to
convert their convertible debentures into Company Common Stock prior to the
Effective Date of the Merger (i.e. 390 shares of Common Stock per $1,000
debenture based on the current conversion ratio of $2.56 per share) rather than
accept the redemption price of $1,030 for each $1,000 debenture.
Payment for Shares
In order to receive the cash payments which shareholders will be
entitled to receive as a result of the Merger, each holder of Common Stock will
be required to surrender his stock certificates after the Effective Date,
together with a duly completed and executed letter of transmittal, to Midlantic
Bank, N.A. (the "Exchange Agent"). Upon receipt of such stock certificates and
letter of transmittal, the Exchange Agent will pay to the registered holder or
his transferee an amount equal to $5.00 for each share represented by such
certificates. No interest will be paid or accrued on the amounts payable upon
the surrender of stock certificates. Instructions with regard to the surrender
of certificates, together with a letter of transmittal to be used for this
purpose, will be forwarded to shareholders as promptly as practicable following
the Effective Date. SHAREHOLDERS SHOULD NOT SURRENDER THEIR STOCK CERTIFICATES
UNTIL SUCH LETTER OF TRANSMITTAL AND INSTRUCTIONS ARE RECEIVED. In addition, the
Exchange Agent will have available immediately after the Effective Date letters
of transmittal for use by the shareholders of the Company who wish to surrender
their stock certificates in person and receive immediate payment therefor.
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<PAGE>
The Payment Fund
At or after the Effective Date, Collective will deposit with the
Exchange Agent all of the funds necessary to make the cash payments of $5.00 per
share of Common Stock (the "Payment Fund").
Conditions and Covenants
In addition to the approval and adoption of the Merger Agreement by the
shareholders of the Company, the respective obligations of the Company, CBAC and
Collective to consummate the Merger are subject to the satisfaction or, where
permitted, waiver of certain conditions. including, among others: (a) the
correctness in all material respects, at and as of the Closing, of the
representations and warranties of the respective parties contained in the
Reorganization Agreement; (b) the performance by the respective parties of all
obligations contained in the Reorganization Agreement required to be performed
or complied with by them at or prior to the Closing; (c) the absence of any
injunction or other legal prohibition against the Merger; (d) the exchange of
certain legal opinions and closing certificates; and (e) the receipt on or
before the mailing of the Proxy Statement of an opinion of an independent
investment banker selected by the Company to the effect that based on the review
described therein, the price to be paid to the shareholders of the Company is
fair to the shareholders of the Company from a financial point of view and that
such opinion not be withdrawn or revoked on or prior to the Effective Date.
The obligations of Collective and CBAC to consummate the Merger are
also subject to certain additional conditions, including the termination,
exercise or cancellation of all options or rights to acquire shares of the
Common Stock of the Company. See "Stock Options."
The Company has agreed that, pending the Closing, it will carry on its
business in substantially the same manner as heretofore, keep in full force and
effect insurance comparable in scope and coverage to that now maintained by it
and use its best efforts to maintain and preserve its business organization
intact. The Company has agreed that during this period it will not, other than
in the ordinary course of business: (a) enter into any transaction or incur or
agree to incur any obligation or liability, except for the issuance by a
subsidiary of the Company of certain commercial paper; which will be guaranteed
by the Company; (b) incur or commit to any capital expenditures; (c) alter the
interest rate or fees charged in relation to loan service operations; (d) grant
any general or uniform increase in the rates of pay of employees, except as
consistent with past practice; (e) other than the merger of subsidiaries of the
Company, merge into or consolidate, or sell its assets to any other corporation
or person, or permit any other corporation to be merged or consolidated with it,
or acquire all of the assets of any other corporation or person; (f) issue,
sell, grant any option for, or acquire for value any shares of its capital stock
or otherwise effect any change in connection with its capitalization, other than
shares of its capital stock issued in connection with the exercise of employee
stock options: (g) or change any of its methods of reporting income and
deductions for Federal income tax purposes.
The Company has also agreed that neither the Company nor its
subsidiaries will declare or pay any dividends or make any distributions.
-22-
<PAGE>
The Company has also agreed that, pending the Closing or the earlier
termination of the Merger Agreement and subject to the Company's and its
directors' fiduciary duties as determined by counsel to the Company, it will not
directly or indirectly through others, nor will it permit any of its officers,
directors or other representatives to solicit any other person with respect to
the purchase of the Company's or any of its subsidiaries' business, assets or
capital stock, or, engage in or continue discussions with any other person or
firm concerning the purchase of such business, assets or stock.
Regulatory Approvals
The obligations of the Company to consummate the Merger are subject to
the additional condition that the Company, CBAC and Collective have obtained all
necessary consents, waivers and approvals required by agreements to which either
the Company, CBAC and Collective may be a party or required by any law or
regulation of any government or governmental authority, and any applicable
waiting period has expired, prior to the Effective Date.
The consummation of the Merger is conditioned, among other things, on
the approval by the FRB under the Bank Holding Company Act of 1956, as amended.
This approval is required by law and must be obtained before the Merger can be
consummated. An application for such approval has been filed with the FRB.
The Bank Holding Company Act provides that the FRB may not approve any
transaction: (1) if such transaction would result in a monopoly or would be in
furtherance of any combination or conspiracy to monopolize or to attempt to
monopolize the business of banking in any part of the United States; or (2) if
the effect of such transaction, in any section of the country, may be to
substantially lessen competition, or to tend to create a monopoly, or in any
other manner to restrain trade, in each case unless the FRB finds that the
anti-competitive effects of the proposed transaction are clearly outweighed in
the public interest by the probable effect of the transaction in meeting the
convenience and needs of the community to be served. In conducting its review of
any application for approval, the FRB is required to consider the financial and
managerial resources and future prospects of the company or companies and the
banks concerned and the convenience and needs of the communities to be served.
As interpreted by the FRB and the courts, the FRB may deny an application if it
determines that the financial or managerial resources of the acquiring bank
holding company are inadequate.
The Bank Holding Company Act provides that a transaction approved by
the FRB generally may not be consummated until thirty days (fifteen days if
requested and granted by the FRB) after FRB approval. During such period, the
U.S. Department of Justice may commence a legal action challenging the
transaction under the antitrust laws. A commencement of an action would stay the
effectiveness of the FRB's approval unless a court specifically orders
otherwise. If, however, the Justice Department does not commence a legal action
during such thirty day period, it may not thereafter challenge the transaction
except in an action commenced under Section 2 of the Sherman Antitrust Act.
The Bank Holding Company Act provides for the publication of notice and
the opportunity for administrative hearings relating to the application for
approval of the FRB noted above and authorizes the FRB to permit interested
parties to intervene in the proceedings. If an interested
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<PAGE>
party is permitted to intervene, such intervention could substantially delay the
FRB approval required for consummation of the Merger.
The approval of the New Jersey Department of Banking must also be
obtained before the Merger can be consummated. The New Jersey Department of
Banking is required to approve or disapprove a proposed acquisition within sixty
days after receipt of an application or within thirty days after receipt of
additional information submitted in response to a request by the Department. The
Department of Banking must evaluate factors similar to those considered by the
FRB in determining whether to approve the Merger. An application for approval
has been filed with the New Jersey Department of Banking.
The management of Collective and the Company have no reason to believe
that the required governmental approvals will not be obtained. There can be no
assurance, however, that any regulatory authority will approve the Merger and,
if approved, there can be no assurance as to the date of such approval or that
the Department of Justice will not object to the Merger. It is anticipated that
the decisions of the above governmental agencies will not be rendered until
after the shareholders of the Company have voted on the Merger.
Termination and Amendment
The Reorganization Agreement may be terminated and the Plan of Merger
abandoned at any time prior to the Closing (whether before or after its approval
by the shareholders of the Company): (a) by mutual consent of the parties
authorized by their respective Boards of Directors; (b) by written notice from
one party to the other party if the Closing does not occur by December 31, 1996;
(c) by written notice from one party to the other party stating that the party
giving such notice elects to terminate the Reorganization Agreement and abandon
the Plan of Merger, as of a stated date, which will not be less than ten
business days after the date on which such notice is given, because (i) the
party receiving such notice will be unable, by December 31, 1996, to meet or
satisfy one or more specified conditions precedent to the obligation of the
party sending such notice to close under the Reorganization Agreement, and (ii)
the party sending such notice does not intend to waive the satisfaction of such
conditions precedent; or (d) in the event of termination of the Plan of Merger
pursuant to the terms thereof.
The Merger Agreement provides that in the event the Merger Agreement is
terminated subsequent to the occurrence of a Triggering Event (as such term is
defined in the Stock Option Agreement) or by Collective under certain
circumstances as set forth in more detail in the Merger Agreement and within
twelve months after such termination by Collective a Triggering Event shall
occur, then in addition to any other amount payable or stock issuable by the
Company pursuant to the Merger Agreement and/or the Stock Option Agreement, as
the case may be, the Company shall pay to Collective a termination fee of
$500,000.
The Merger Agreement may be amended at any time, either before or after
its approval by the shareholders of the Company, by written agreement of the
Boards of Directors of the Company, CBAC and Collective, except that, after such
shareholder approval, no amendment may be made which reduces or changes in form
or time of payment the consideration to be received by the shareholders of the
Company in the Merger or result in a materially adverse tax or other effect to
the shareholders of the Company.
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<PAGE>
FEDERAL INCOME TAX CONSEQUENCES TO SHAREHOLDERS
The receipt of cash for shares of Common Stock in the Merger or
pursuant to the exercise of dissenters' rights will be a taxable transaction for
federal income tax purposes to the shareholders receiving such cash and may be a
taxable transaction for state and local tax purposes as well. A holder of Common
Stock will recognize gain or loss measured by the difference between such
shareholder's adjusted tax basis for the shares of Common Stock owned by him at
the time of the Merger and the amount of cash received therefor. In general, any
gain or loss will be capital gain or loss if the shares of Common Stock are
capital assets in the hands of the shareholder. Such gain or loss will be
long-term capital gain or loss if such shareholder's holding period is more than
six months, if the shares of Common Stock were acquired on or before January 1,
1988; or more than one year, if the shares of Common Stock were acquired after
January 1, 1988.
No ruling has been or will be requested from the Internal Revenue
Service, and no opinion of counsel has been or will be given to the Company as
to any of the tax consequences of the Merger.
THE FOREGOING IS ONLY A GENERAL DESCRIPTION OF CERTAIN OF THE FEDERAL
INCOME TAX CONSEQUENCES OF THE MERGER TO SHAREHOLDERS, WITHOUT REGARD TO THE
PARTICULAR FACTS AND CIRCUMSTANCES OF EACH SHAREHOLDER'S TAX SITUATION.
SHAREHOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THE
FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES OF THE MERGER TO THEM.
MARKET INFORMATION
The following table sets forth the high and low bid prices of the
Company's Common Stock for each quarter during 1995 and 1994, based upon
information obtained from either Janney Montgomery Scott, Inc., Haddonfield, New
Jersey and/or Bloomberg Financial Services. These quotations may represent
prices between dealers, may not include retail mark-ups, mark-downs, or
commissions, and do not necessarily represent actual transactions. There was no
substantial trading market of the Company's Common Stock in either 1995 or 1994.
<TABLE>
<CAPTION>
1995 High Bid Low Bid 1994 High Bid Low Bid
- -------------------- ------------- ------------ --------------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Fourth Quarter $ 2.125 $ 1.750 Fourth Quarter $ 1.875 $ 1.875
Third Quarter 2.125 1.750 Third Quarter 2.000 2.000
Second Quarter 2.250 2.000 Second Quarter 1.500 1.500
First Quarter 2.250 1.750 First Quarter 1.500 1.500
1996 High Bid Low Bid
- -------------------- ------------- ------------
Second Quarter
(thru June 18, 1996) $ 4.500 $ 2.125
First Quarter 2.125 2.000
</TABLE>
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<PAGE>
On May 21, 1996, the last full trading day prior to the Company's
public announcement of the signing of the Merger Agreement, the closing sales
price per share of the Common Stock on the Bloomberg Financial Services was
$2.23.
As of the Record Date there were approximately 600 holders of record of
the Company's Common Stock.
On July 1, 1989, all of the outstanding capital stock of Continental
Bank of New Jersey (the "Bank") was acquired by Continental Bancorporation (the
"Company"), a company formed to serve as a holding company for the Bank. Each
share of common stock of the Bank was exchanged for one share of common stock of
the Company, and each share of convertible preferred stock of the Bank was
exchanged for five shares of common stock of the holding company plus $0.75 paid
by the Bank in cash. The cash payments which amounted to $344,768 represented
three full quarterly cash dividends, which would have resulted in the conversion
of the preferred stock of the Bank to common stock, consistent with the
automatic conversion provision contained in the Bank's Restated Certificate of
Incorporation. The Company paid a $.06 per share cash dividend on March 17,
1995.
Cash available for dividend distribution to the holders of the
Company's Common Stock must initially come from dividends paid to the Company by
the Bank. Accordingly, restrictions on the Bank's cash dividend payments
directly affect the payment of cash dividends by the Company.
State banking statutes restrict the amount of dividends paid on capital
stock of the Bank to an amount which, following the payment of such dividend,
will not reduce surplus and undivided profits of the Bank to an amount less than
50 percent of capital stock. Dividends from the Bank and investment income
earned on short term investments held by the Company are the only source of
funds from which the Company currently can pay dividends to its stockholders.
The Merger Agreement provides certain restrictions on the ability of
the Company to declare and pay dividends prior to the time the Merger becomes
effective. See "MERGER AGREEMENT -- Conditions and Covenants." If the Merger is
not consummated for any reason, the payment of future cash dividends will be
determined by the Board of Directors of the Company and will be dependent upon
the earnings, financial condition and capital requirements of the Company and
other factors.
ELECTION OF DIRECTORS
The Bylaws of the Company provide that the Board of Directors is to
consist of not less than two and not more than 25 directors, each holding office
for one year and until their respective successor shall have been duly elected
and qualified. The Bylaws further provide that the exact number of directors to
be elected will be determined from time to time by the Board of Directors. The
Board of Directors has fixed the number of persons to serve on the Company's
Board of Directors at eight and recommends the election of the eight nominees
named in this Proxy Statement.
The following table sets forth information as of the Record Date
concerning the Company's nominees for election to the Board of Directors. All
nominees (other than David F. Dierker) for
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<PAGE>
election to the Board of Directors were elected to the Board at the last Annual
Meeting and all of the director nominees named below also serve on the Board of
Directors of the Bank. If any of the nominees become unable to or for good cause
will not serve, either (i) the current Board of the Company may nominate a
substitute nominee, in which event the persons named in the enclosed proxy card
will vote in accordance with their best judgment, or (ii) no new nominee may be
nominated to fill such a vacancy, in which event the number of directors to be
elected will be reduced accordingly. The Company expects all nominees to be
willing and able to serve. Unless otherwise specified, all persons listed below
have sole voting and investment power with respect to their shares of Common
Stock.
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<PAGE>
The following table and narrative set forth certain information with
respect to the Company's nominees:
<TABLE>
<CAPTION>
Number of
Shares of
Director of Common Stock Percent of
the Bank Beneficially Common
Name Since Age Owned(1) Stock(1)
- -------------------------------------------- ----------------- --------- -------------------- ----------------
<S> <C> <C> <C> <C>
Stanley W. Adleman, President 1982 69 143,033 3.0%
International Film, Services, Inc.
(Warehouse/Trucking)
Camden, NJ(2)
Ira Albom 1993 67 60,124 1.3%
Senior Vice President
Telefex, Inc.
New Wales, PA(3)
David F. Dierker 1995 38 200 *
President, Continental Bancorporation
and Continental Bank of New Jersey(4)
F. Budd Hineline Jr. 1985 72 465,925 9.9%
Self-Employed
Cherry Hill, NJ(5)
Richard H. Hineline 1978 71 326,192 6.9%
Retired
Haddonfield, NJ(5)(6)
Mark Rosen, President 1987 48 35,031 *
Garage Equipment Sales &
Service, Inc.
(Sales and Service of Automotive
Parts and Equipment)
Camden, NJ(7)
William Steinberg 1985 50 1,941,734 37.9%
Chairman of the Board
Continental Bancorporation and
Continental Bank of New Jersey(8)
Vito A. Valecce, M.D., Physician 1982 64 127,016 2.7%
Runnemede, NJ(9)
All Directors and Officers of the 3,099,555 59.6%
Company as a Group (9 persons)(10)
</TABLE>
- ----------
* Less than one percent
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<PAGE>
(1) The securities "beneficially owned" by an individual are determined in
accordance with the definition of "beneficial ownership" set forth in
the regulations of the SEC and, accordingly, may include securities
owned by or for, among others, the wife and/or minor children of the
individual and any other relative who has the same home as such
individual, as well as other securities as to which the individual has
or shares voting or investment power or has the right to acquire within
60 days after the Record Date. Beneficial ownership may be disclaimed
as to certain of the securities. Shares subject to outstanding stock
options which an individual has the right to acquire within 60 days
after the Record Date and shares which may be acquired upon conversion
of the Subordinated Debentures are deemed to be outstanding for the
purpose of computing the percentage of outstanding securities of the
class owned by such individual, or any group including such individual,
but are not deemed outstanding for the purpose of computing the
percentage of the class owned by any other individual. Individual
percentages have been rounded to the nearest tenth of a percentage
point.
(2) Includes 1,025 shares owned jointly by Mr. Adleman and his wife, 23,887
shares of Common Stock owned of record by Mr. Adleman's brother, sister
and children, 7,093 shares owned by Sea Associates, a partnership in
which Mr. Adleman serves as general partner, 9,792 shares owned by
International Film Service, a company of which Mr. Adleman is the
principal shareholder, 256 shares owned by Mr. Adleman's wife, and
9,766 shares of Common Stock which may be acquired by Mr. Adleman upon
conversion of the Subordinated Debentures.
(3) Includes 59,242 shares of Common Stock owned jointly with spouse.
(4) Does not include 350,000 shares of Common Stock subject to outstanding
stock options which were granted in 1995. Mr. Dierker became the
President and Chief Executive Officer of the Bank and the Company in
July 1995. From 1980 to June 1995, Mr. Dierker was employed at BancOne
Corporation, Columbus, Ohio. Just prior to joining the Company and the
Bank, he was Senior Vice President and Manager of Community Banking at
Bank One, Cincinnati, N.A.
(5) F. Budd Hineline, Jr. and Richard H. Hineline are brothers. Each of the
Hinelines disclaims beneficial ownership of the shares of Common Stock
held by the other.
(6) Includes 48,828 shares of Common Stock which may be acquired by Mr.
Hineline upon conversion of Subordinated Debentures. In June of 1990,
Mr. Hineline retired from the consulting position he held with Atlas
Corporation, a mineral mining company located in Denver, Colorado.
Prior to that date, he served as President of Atlas Building Systems,
Marlton, New Jersey.
(7) Includes 26,322 shares owned jointly by Mr. Rosen and his wife and
7,813 shares of Common Stock which Mr. Rosen and his children may
acquire upon conversion of Subordinated Debentures. Does not include
284,437 shares of Common Stock owned by the Nathan Rosen Trust for
which Mr. Rosen's mother and sister serve as co-trustees and as to
which Mr. Rosen disclaims beneficial ownership. From June 1986 to March
1991, Mr. Rosen was employed by Mechanics Auto Parts, Camden, New
Jersey. From January 1984
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<PAGE>
to May 1986, Mr. Rosen was employed by Philips Equipment and Supply,
Camden, New Jersey.
(8) Includes 106,600 shares of Common Stock subject to outstanding stock
options which Mr. Steinberg has the right to acquire within 60 days
after the Record Date and 301,171 shares of Common Stock which may be
acquired upon conversion of the Subordinated Debentures, all of which
are deemed to be outstanding for the purpose of computing the
percentage of outstanding securities of the class owned by Mr.
Steinberg but are not deemed outstanding for the purpose of computing
the percentage of the class owned by any other individual. Also
includes 1,087,478 shares of Common Stock held jointly by Mr. Steinberg
and his wife and 307,505 shares of Common Stock held in trust for the
benefit of Mr. Steinberg's minor child. Does not include the shares of
Common Stock owned by Jeffrey Steinberg (580,326 shares) his adult
child who is also an officer of the Bank and as to which Mr. Steinberg
disclaims beneficial ownership. Mr. Steinberg joined the Bank in
February 1985 and became Chairman of the Board in April 1986. Mr.
Steinberg has been Chairman of the Company since March 1989. For more
than five years prior to 1993, Mr. Steinberg was the President of
Coordinated Health Services, Inc.
(9) Includes 12,812 shares held by Dr. Valecce's wife in trust for their
children and 71,350 shares held by the Vito A. Valecce, M.D. Pension
Plan Trust. Also includes 9,766 shares which may be acquired by Dr.
Valecce upon conversion of the Subordinated Debentures.
(10) Included are 106,600 shares of Common stock subject to outstanding
stock options which the directors and officers, as a group, have the
right to acquire within 60 days after the Record Date and 377,344
shares of Common Stock which may be acquired upon conversion of
Subordinated Debentures owned by the officers and directors in the
group.
Except as otherwise indicated, each of the directors and nominees has
had the same principal occupation or employment for at least the past five
years.
Committees of the Board and Attendance
During 1995, the Company's Board of Directors held twelve meetings. The
Bank's Board of Directors (the "Bank's Board") held sixteen meetings. The
Company's Board of Directors does not have any standing committees. The Bank's
Board, however, does have a number of standing committees, including, among
others, an Audit Committee, Human Resources (Personnel) Committee and Nominating
Committee. To the extent necessary, the committees of the Bank's Board also
serve as committees of the Company's Board of Directors.
The Audit Committee is responsible for reviewing and considering
actions of the Bank's Board and the Company's Board of Directors in matters
relating to audit functions, selecting the Company's independent accountants,
reviewing with the Company's independent accountants the scope and results of
their audit, and reviewing the internal audits and the effectiveness of
procedures. The current members of the Audit Committee who are directors and/or
nominees for director are Ira Albom, Mark Rosen and William Steinberg. The
committee held two meetings during 1995.
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<PAGE>
The Human Resources (Personnel) Committee is responsible for the
Company's two stock option plans. The members of the Human Resources (Personnel)
Committee who are directors and nominees for director are Stanley W. Adleman,
Richard H. Hineline, Mark Rosen, William Steinberg and Vito A. Vallecce. This
committee did not meet during 1995.
The Nominating Committee is responsible for submitting to the Board of
Directors the names of potential nominees for director. The Nominating Committee
will consider nominees for directorships recommended by shareholders if such
recommendations are submitted in writing to the Nominating Committee a
reasonable time prior to the Annual Meeting. The members of the Nominating
Committee who are directors and nominees for director are F. Budd Hineline, Jr.,
William Steinberg, Vito A. Valecce and Mark Rosen. This committee did not meet
during 1995.
During 1995, all of the Company's directors who are currently standing
for reelection attended more than 75% of the aggregate of the total number of
meetings held by the Board of Directors and all committees thereof of which they
were members. Through March, 1995, Directors who were not also employees of the
Company received $150 for each Board meeting attended and members of the Loan
Committee and Executive Committee who were not also employees of the Company
received $150 for each such committee meeting attended. Since March, 1995, no
director fees have been paid.
Unless authority has been withheld, the proxy agents intend to vote FOR
the election of both of the Company's nominees. Under the law of the Company's
state of incorporation, the election of directors is by a plurality vote so that
the eight nominees who receive the most "FOR" votes shall be elected. An
abstention, broker non-vote or withholding authority to vote will not have the
same legal effect as a vote "against" a director and is not counted in
determining whether the nominee has received the required shareholder vote.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE ELECTION
OF THE ABOVE NAMED EIGHT NOMINEES TO HOLD OFFICE UNTIL THE NEXT ELECTION AND
UNTIL THEIR SUCCESSORS ARE DULY ELECTED AND QUALIFIED.
SHAREHOLDER PROPOSALS
Assuming the Merger is not consummated, Shareholder proposals regarding
the 1997 Annual Meeting must be submitted to the Company by [ ], 1997 to receive
consideration for inclusion in the Company's 1997 Proxy Statement.
DESCRIPTION OF THE CAPITAL STOCK OF THE COMPANY
The Company is authorized to issue 10,000,000 shares of Common Stock,
par value $2.00 per share and 1,000,000 shares of preferred stock. As of the
Record Date, [ ] shares of Common Stock were issued and outstanding and no
shares of preferred stock were issued or outstanding.
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The holders of Common Stock are entitled to dividends when and as
declared by the Board of Directors, subject to applicable legal restrictions,
and to participate equally in the net assets of the Company available for
distribution in the event of the liquidation of the Company, after payment of
any amounts due to creditors. The holders of the Common Stock have one vote per
share, have no preemptive, subscription or conversion rights, and are not
entitled to cumulative voting in the election of directors. The Common Stock is
not subject to any liability for further assessments. The Transfer Agent and
Registrar for the Common Stock is Continental Bank of New Jersey.
RELATIONSHIP WITH INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Company's independent certified public accountants during the most
recent year was Grant Thornton LLP. The Board of Directors has selected Grant
Thorton LLP to be the Company's independent certified public accountants for
1996. The selection of the Company's independent certified public accountants is
not being submitted to shareholders because there is no legal requirement to do
so. A representative of Grant Thorton LLP is expected to be present at the
Annual Meeting and to have the opportunity to make a statement, if he desires to
do so, and to be available to respond to appropriate questions.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). The reports, proxy
statements and other information filed by the Company pursuant to the
informational requirements of the Exchange Act, can be inspected and copied at
the public reference facilities maintained by the Commission at Judiciary Plaza,
450 Fifth Street N.W., Room 1024, Washington, D.C. 20549, and at the following
regional offices of the Commission: New York Regional Office, Seven World Trade
Center, 13th Floor, New York, New York 10048; Los Angeles Regional Office, 5757
Wilshire Blvd., Suite 500 East, Los Angeles, California 90036- 3648; and Chicago
Regional Office, Northwest Atrium Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60621. Copies of such material can also be obtained from the
public reference section of the Commission, Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549 at prescribed rates.
After the Effective Date of the Merger, registration of the Common
Stock under the Exchange Act will be terminated.
The Proxy Statement incorporates by reference information from
documents which are not presented herein or delivered herewith. These documents
(not including exhibits thereto, unless such exhibits are specifically
incorporated by reference into the information incorporated herein) are
available free of charge to any shareholder of the Company, including any
beneficial owner, upon written or oral request directed to David F. Dierker,
President (telephone number 609-227- 8000). Responses to any such request will
be made within one business day by sending the requested documents by first
class mail or other equally prompt means. In order to ensure timely
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delivery of the documents in advance of the Annual Meeting to which this Proxy
Statement relates, any request should be made by [ ], [ ], 1996.
The Company is furnishing to each person whose proxy is being solicited
a copy of the 1995 Annual Report to Shareholders and the Company's Quarterly
Report on Form 10-Q for the Quarter ended March 31, 1996.
INCORPORATION BY REFERENCE
Certain other documents previously filed by the Company with the
Commission pursuant to the Exchange Act are hereby incorporated by reference in
the Proxy Statement. The documents are (i) the Annual Report on Form 10-K for
the fiscal year ended December 31, 1995, as amended by Report on Form 10-K/A
dated April 25, 1996 (which includes portions of the 1995 Annual Report to
Shareholders); and (ii) the Quarterly Report on Form 10-Q for the quarter ended
March 31, 1996.
By Order of the Board of Directors,
WILLIAM STEINBERG
Chairman of the Board
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APPENDIX A
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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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<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
ARTICLE I
THE MERGER
<S> <C> <C>
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
</TABLE>
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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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<PAGE>
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.
3
<PAGE>
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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<PAGE>
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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<PAGE>
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
6
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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 (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.
40
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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
44
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APPENDIX B
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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<PAGE>
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
-------------------------------------
Chairman
4
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APPENDIX C
BERWIND
FINANCIAL GROUP, L.R
Investment Banking
Merchant Banking
May 21, 1996
Board of Directors
Continental Bancorporation
1345 Chews Landing Road
Laurel Springs, NJ 08021
Directors:
You have requested our opinion as to the fairness, from a financial
point of view, to the shareholders of Continental Bancorporation ("Continental")
of the financial terms of the proposed merger between Continental and Collective
Bancorp, Inc. ("Collective"). The terms of the proposed merger (the "Proposed
Merger") by and between Continental, Collective and a wholly owned subsidiary of
Collective, CBAC Corp., are set forth in the Agreement and Plan of Merger
(collectively, the "Agreement") dated May 21, 1996, and provide that each
outstanding share of Continental common stock will be converted into the right
to receive from Collective cash in an amount equal to $5.00.
Berwind Financial Group, L.P., as part of its investment banking
business, regularly is engaged in the valuation of assets, securities and
companies in connection with various types of asset and security transactions,
including mergers, acquisitions, private placements and valuations for various
other purposes, and in the determination of adequate consideration in such
transactions.
In arriving at our opinion, we have, among other things: (i) reviewed
the historical financial performance, current financial position and general
prospects of Continental, (ii) reviewed the Merger Agreement, (iii) reviewed and
analyzed the stock market performance of Continental, (iv) studied and analyzed
the consolidated financial and operating data of Continental, (v) considered the
terms and conditions of the Proposed Merger between Continental and Collective
as compared with the terms and conditions of comparable bank and bank holding
company mergers and acquisitions, (vi) met and/or communicated with certain
members of Continental's senior management to discuss its operations, historical
financial statements, and future prospects, and (vii) conducted such other
financial analyses, studies and investigations as we deemed appropriate.
<PAGE>
Board of Directors
May 21, 1996
Page 2
Our opinion is given in reliance on information and representations
made or given by Continental and its officers, directors, auditors, counsel and
other agents, and on filings, releases and other information issued by
Continental including financial statements, financial projections, and stock
price data as well as certain information from recognized independent sources.
We have not independently verified the information concerning Continental nor
other data which we have considered in our review and, for purposes of the
opinion set forth below, we have assumed and relied upon the accuracy and
completeness of all such information and data. Additionally, we assume that the
Proposed Merger is, in all respects, lawful under applicable law.
With regard to financial and other information relating to the general
prospects of Continental, we have assumed that such information has been
reasonably prepared and reflects the best currently available estimates and
judgments of the management of Continental as to Continental's most likely
future performance. In rendering our opinion, we have assumed that in the course
of obtaining the necessary regulatory approvals for the Proposed Merger, and in
preparation of the final proxy statement, no conditions will be imposed that
will have a material adverse effect on the contemplated benefits of the Proposed
Merger to Continental.
Our opinion is based upon information provided to us by the management
of Continental, as well as market, economic, financial, and other conditions as
they exist and can be evaluated only as of the date hereof and speaks to no
other period. Our opinion pertains only to the financial consideration of the
Proposed Merger and does not constitute a recommendation to the Board of
Continental and does not constitute a recommendation to Continental's
shareholders as to how such shareholders should vote on the Proposed Merger.
Based on the foregoing, it is our opinion that, as of the date hereof,
the Proposed Merger between Continental and Collective is fair, from a financial
point of view, to the shareholders of Continental.
Sincerely,
/s/ Berwind Financial Group, L.P.
-------------------------------------
BERWIND FINANCIAL GROUP, L.P.
<PAGE>
APPENDIX D
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
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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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<PAGE>
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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"PRELIMINARY COPY"
CONTINENTAL BANCORPORATION
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS [_________], 1996
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby constitutes and appoints William Steinberg and
Richard H. Hineline, and each of them, as attorneys and proxies of the
undersigned, each with full power of substitution, for and in the name, place
and stead of the undersigned, to appear at the Annual Meeting of Shareholders of
Continental Bancorporation ("the Company") to be held on the [ ] day of [ ],
1996, and at any postponement or adjournment thereof, and to vote all of the
shares of Common Stock of the Company which the undersigned is entitled to vote,
with all the powers and authority the undersigned would possess if personally
present. The undersigned hereby directs that this proxy be voted as follows:
1. To approve and adopt an Agreement and Plan of Merger and a related
Plan of Merger, pursuant to which, among other things, (a) CBAC
Corp., a newly formed subsidiary of Collective Bancorp, Inc., will
be merged with and into the Company and immediately thereafter the
Company will be merged with and into Collective Bancorp, Inc. and,
as a result thereof, the Company's bank subsidiary, Continental Bank
of New Jersey, will become a subsidiary of Collective Bancorp, Inc.,
and (b) each outstanding share of the Common Stock of the Company
(other than shares held by Collective Bancorp, Inc. and its
affiliates) will be converted into the right to receive $5.00 in
cash, all as more fully described in the accompanying Proxy
Statement:
|_| FOR |_| AGAINST |_| ABSTAIN
2. |_| To elect all eight nominees listed below for one year terms, as
described in the accompanying Proxy Statement. (To withhold
authority to vote for all eight nominees listed below check this
box |_|.)
Stanley W. Adleman Richard H. Hineline
Ira Albom Mark Rosen
David F. Dierker William Steinberg
F. Budd Hineline, Jr. Vito A. Valecce
INSTRUCTION: To withhold authority to vote for any individual nominee,
write that nominee's name on the space provided below.
(------------------------------------------------------)
THIS PROXY WILL, WHEN PROPERLY EXECUTED, BE VOTED AS DIRECTED BY THE
SHAREHOLDER. IF NO DIRECTIONS TO THE CONTRARY ARE INDICATED IN THE BOXES
PROVIDED, THE PERSONS NAMED HEREIN INTEND TO VOTE TO APPROVE THE MERGER WITH
COLLECTIVE BANCORP, INC. AND TO ELECT ALL EIGHT NOMINEES FOR DIRECTOR LISTED ON
THE REVERSE SIDE HEREOF.
THIS PROXY CONFERS CERTAIN DISCRETIONARY AUTHORITY DESCRIBED IN THE
PROXY STATEMENT. A MAJORITY OF SAID ATTORNEYS AND PROXIES PRESENT AT SAID
MEETING (OR IF ONLY ONE SHALL BE PRESENT, THEN THAT ONE) MAY EXERCISE ALL OF THE
POWERS HEREUNDER. THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE COMPANY'S
PROXY STATEMENT, DATED [ ], 1996, AND THE COMPANY'S 1995 ANNUAL REPORT TO
SHAREHOLDERS.
Dated:__________________________, 1996
(Please date this proxy)
________________________________(SEAL)
(Shareholder's Signature)
________________________________(SEAL)
(Shareholder's Signature)
It would be helpful if you signed your name
or names exactly as it appears hereon,
indicating any official position or
representative capacity.
