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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
Pulse Bancorp, Inc.
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(Name of Issuer)
Common Stock, $1.00 par value per share
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(Title of Class of Securities)
745860 10 6
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(CUSIP Number)
Joseph G. Passaic, Jr.
Patton Boggs LLP
2550 M Street, NW
Washington, DC 20037
(202) 457-6000
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(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
July 9, 1998
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition that is the subject of this Schedule 13D, and is filing this
schedule because of (S)(S) 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the
following box. [_]
NOTE: Schedules filed in paper format shall include a signed original and five
copies of the Schedule, including all exhibits. See (S) 240.13d-7(b) for other
parties to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter the
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
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SCHEDULE 13D
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CUSIP NO. 745860 10 6 Page 2 OF 8 Pages
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NAME OF REPORTING PERSONS
1 I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS (entities only)
First Source Bancorp, Inc. 22-3566151
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CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
2 (See Instructions) (a) [_]
(b) [_]
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SEC USE ONLY
3
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SOURCE OF FUNDS (See Instructions)
4 WC AF BK
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CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [_]
5 Not Applicable
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CITIZENSHIP OR PLACE OF ORGANIZATION
6
State of Delaware
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SOLE VOTING POWER
7
NUMBER OF
620,940
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
OWNED BY 0
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EACH SOLE DISPOSITIVE POWER
9
REPORTING
620,940
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
0
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AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
620,940
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CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
12 (See Instructions)
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PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
19.9%
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TYPE OF REPORTING PERSON (See Instructions)
14
HC CO
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Item 1: Security and Issuer:
The securities as to which this Schedule 13D ("Schedule") relates are
shares of common stock, $1.00 par value per share ("Common Stock"), of
Pulse Bancorp, Inc. (the "Issuer" or "Pulse"). The address of the
Issuer's principal executive office is 6 Jackson Street, South River,
New Jersey 08882. Based upon the most recent information available to
the filing person, the Issuer has outstanding 3,120,300 shares of
Common Stock and no shares of Preferred Stock.
Item 2: Identity and Background:
(a) - (c) This Schedule is filed on behalf of First Source Bancorp,
Inc. (the "Company" or "First Source"). The Company's principal
business is to be the holding company for First Savings Bank, SLA
("First Source"), a New Jersey-chartered savings association offering a
variety of loan and deposit products to the communities it serves in
Middlesex, Monmouth and Union Counties in New Jersey. The address of
the Company's principal executive office is 1000 Woodbridge Center
Drive, Woodbridge, New Jersey 07095.
Pursuant to General Instruction C of Schedule 13D, the following
information is being provided with respect to each executive officer
and director of the Company ("Insiders"):
Name Principal Occupation or Employment and Address
---- ----------------------------------------------
John P. Mulkerin President, Chief Executive Officer and
Director
First Source Bancorp, Inc.
First Savings Bank, SLA
1000 Woodbridge Center Drive
Woodbridge, New Jersey 07095
Christopher Martin Executive Vice President, Chief
Operating and Financial Officer,
Corporate Secretary and Director
First Source Bancorp, Inc.
First Savings Bank, SLA
1000 Woodbridge Center Drive
Woodbridge, New Jersey 07095
Walter K. Timpson Chairman of the Board of Directors
First Source Bancorp, Inc.
First Savings Bank, SLA
1000 Woodbridge Center Drive
Woodbridge, New Jersey 07095
Donald T. Akey, M.D. Director
First Source Bancorp, Inc.
First Savings Bank, SLA
1000 Woodbridge Center Drive
Woodbridge, New Jersey 07095
Harry F. Burke Director
First Source Bancorp, Inc.
First Savings Bank, SLA
1000 Woodbridge Center Drive
Woodbridge, New Jersey 07095
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Keith H. McLaughlin Director
First Source Bancorp, Inc.
First Savings Bank, SLA
1000 Woodbridge Center Drive
Woodbridge, New Jersey 07095
Philip T. Ruegger, Jr. Director
First Source Bancorp, Inc.
First Savings Bank, SLA
1000 Woodbridge Center Drive
Woodbridge, New Jersey 07095
Jeffries Shein Director
First Source Bancorp, Inc.
First Savings Bank, SLA
1000 Woodbridge Center Drive
Woodbridge, New Jersey 07095
John F. Cerulo Senior Vice President
First Savings Bank, SLA
1000 Woodbridge Center Drive
Woodbridge, New Jersey 07095
Karen I. Martino Senior Vice President and Auditor
First Savings Bank, SLA
1000 Woodbridge Center Drive
Woodbridge, New Jersey 07095
Richard Spengler Senior Vice President - Chief Lending
Officer
First Savings Bank, SLA
1000 Woodbridge Center Drive
Woodbridge, New Jersey 07095
(d) During the past five years, neither the Company nor the Insiders
have been convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors).
(e) During the past five years, neither the Company nor the Insiders
have been a party to a civil proceeding of a judicial or administrative
body of competent jurisdiction and as a result of such proceeding was
or is subject to a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to,
federal or state securities laws or a finding of any violation with
respect to such laws.
(f) All of the Insiders are U.S. citizens.
Item 3: Source and Amount of Funds or Other Consideration:
The source of funds to be used by First Source, in making a purchase of
shares of common stock of Pulse, upon exercise of the Option (defined
in Item 4 hereof) to which this Schedule 13D relates, if and to the
extent the Option is exercised, will be either cash on hand at First
Source, a loan from an unaffiliated bank or other financial service
company, or other borrowings. First Source has not made, as of the date
hereof, any definitive plans or arrangements regarding the source of
such funds.
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Assuming the number of shares of Pulse common stock remains unchanged
from the number issued and outstanding on July 9, 1998 (i.e., 3,120,300
Shares), the exercise price of the Option in full at an Option Price
(defined in Item 4 hereof) of $30.30 per share, will result in the
purchase of 620,940 shares for an aggregate purchase price of
$18,814,482.
Item 4: Purpose of Transaction:
On July 9, 1998, First Source and Pulse entered into a Stock Option
Agreement (the "Stock Option Agreement") in which Pulse granted to
First Source the option (the "Option") (under certain circumstances,
described in this Item 4) to purchase 620,940 shares of Pulse common
stock at an exercise price of $30.30 per share. The Option was granted
in connection with the execution by First Source and Pulse of a
definitive Agreement and Plan of Merger dated as of July 9, 1998 (the
"Merger Agreement"), a copy of which is attached hereto as Exhibit 7.1
and incorporated by reference herein. The Merger Agreement provides for
the merger of Pulse with and into First Source (the "Merger"). Upon
consummation of the Merger, the registration of Pulse common stock
under Section 12(g) of the Securities Exchange Act of 1934 will be
terminated. At Closing, or as soon thereafter as practicable, Pulse
Savings Bank will merge with and into First Savings, with First Savings
surviving the merger (the "Bank Merger").
First Source required Pulse to grant the Option as a condition to First
Source entering into the Merger Agreement for the purpose of increasing
the likelihood that the Merger and the Bank Merger will be completed.
The Option is exercisable only upon the occurrence of certain events
that would jeopardize completion of the Merger, none of which has
occurred as of the date hereof. The Option is exercisable, in whole or
part, if, but only if, a Purchase Event (as hereinafter defined) shall
have occurred. A "Purchase Event" is defined as follows:
(i) Pulse shall have authorized, recommended,
publicly proposed or entered into an agreement with any person
(other than First Source or any affiliate of First Source or
any person acting in concert in any respect with First Source)
to effect an Acquisition Transaction, which shall mean (A) a
merger, consolidation or similar transaction involving Pulse
or any of its Subsidiaries (other than internal mergers,
reorganizations, consolidations or dissolutions involving only
existing Subsidiaries), (B) the disposition, by sale, lease,
exchange or otherwise, of assets of Pulse or any of its
Subsidiaries representing 25% or more of the consolidated
assets of Pulse and its Subsidiaries or (C) the issuance, sale
or other disposition of (including by way of merger,
consolidation, share exchange or any similar transaction)
securities representing 25% or more of the voting power of
Pulse or any of its Subsidiaries;
(ii) any person (other than First Source or any
affiliate of First Source or any person acting in concert in
any respect with First Source) shall have acquired Beneficial
Ownership (as such term is defined in Rule 13d-3 promulgated
under the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) of, or the right to acquire Beneficial
Ownership of, or any Group (as such term is defined under the
Exchange Act) shall have been formed which shall have acquired
Beneficial Ownership of, or the right to acquire Beneficial
Ownership of, 25% or more of the then outstanding shares of
Pulse Common Stock,
(iii) any person (other than First Source or any
affiliate of First Source or any person acting in concert in
any respect with First Source) shall have commenced (as such
term is defined in Rule l4d-2 under the Exchange Act) or shall
have filed a registration
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statement under the Securities Act of 1933, as amended (the
"Securities Act") with respect to, a tender offer or exchange
offer to purchase any shares of Pulse Common Stock and, upon
consummation of such offer, such person owns or controls 25%
or more of the then outstanding shares of Pulse Common Stock
(such an offer being referred to herein as a "Tender Offer" or
an "Exchange Offer," respectively);
iv) the holders of Pulse 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
First Source or any affiliate of First Source or any person
acting in concert in any respect with First Source) shall have
made, or disclosed an intention to make, a proposal to engage
in an Acquisition Transaction; or
(v) Pulse's Board of Directors shall not have
recommended to the stockholders of Pulse 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 First Source.
The Stock Option Agreement provides that it will terminate upon the
earlier of: (i) completion of the transactions contemplated by the
Merger Agreement; (ii) 12 months following the first occurrence of a
Purchase Event; (iii) termination of the Merger Agreement under certain
circumstances prior to the occurrence of a Purchase Event; or (iv) 12
months after termination of the Merger Agreement by First Source under
certain circumstances unless within 12 months of the termination a
Purchase Event occurs, in which event, the Option shall terminate 12
months after the occurrence of that Purchase Event.
The foregoing description of the Stock Option Agreement does not
purport to be complete and is qualified in its entirety by the text of
such Stock Option Agreement which is attached hereto as Exhibit 7.2 and
incorporated herein by reference.
Item 5: Interest in Securities of the Issuer:
(a) As of July 9, 1998, the Company directly and
beneficially owned 620,940 shares of the Issuer's Common Stock, which
represented 19.9% of the issued and outstanding shares of Common Stock
on such date.
(b) The Company has the sole power to vote and the sole
power to dispose of the 620,940 shares of Common Stock owned by it.
(c) There were no transactions in the common stock of
Pulse effected by First Source or any person identified in Item 2(a) -
(c) above during the sixty days preceding the date of this Schedule
13D.
(d) No person or entity other than the Company has the
right to receive, or the power to direct the receipt of, dividends
from, or the proceeds from the sale of, the shares of the Issuer's
Common Stock reported in this Schedule.
(e) Not applicable.
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Item 6: Contracts, Arrangements, Understandings or Relationships with Respect
to Securities of the Issuer:
Except for the Merger Agreement, the Stock Option Agreement, and
related agreements, neither First Source nor any person identified in
Item 2(a) - (c) above is a party to any contract, arrangement,
understanding or relationship (legal or otherwise) among themselves or
with any other person with respect to any securities of the Issuer,
including but not limited to transfer or voting of any of the Common
Stock, finder's fees, joint ventures, loan or option arrangements, puts
or calls, guarantees of profits, division of profits or loss, the
giving or withholding of proxies, or otherwise subject to a contingency
the occurrence of which would give another person voting or investment
power over the Common Stock.
Item 7: Material to Be Filed as Exhibits:
7.1 Agreement and Plan of Merger, dated as of July 9, 1998 between
First Source Bancorp, Inc. and Pulse Bancorp, Inc.
7.2 Stock Option Agreement, dated July 9, 1998, between First Source
Bancorp, Inc. and Pulse Bancorp, Inc. (attached as Annex B to the
Agreement and Plan of Merger, which is attached hereto as Exhibit
7.1).
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Signature
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After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete, and
correct.
/s/ John P. Mulkerin July 20, 1998
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John P. Mulkerin Date
President and Chief
Executive Officer
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of July 9, 1998, by and among First
Source Bancorp, Inc., a Delaware corporation ("Buyer") and Pulse Bancorp, Inc.,
a New Jersey corporation (the "Company"). (Buyer and the Company are herein
sometimes collectively referred to herein as the "Constituent Corporations".)
WHEREAS, the Boards of Directors of Buyer and the Company have determined
that it is in the best interests of their respective companies and their
shareholders to consummate the business combination transaction provided for
herein in which the Company will, subject to the terms and conditions set forth
herein, merge (the "Merger") with and into Buyer; and
WHEREAS, as soon as practicable after the execution and delivery of this
Agreement and Plan of Merger ("Agreement"), First Savings Bank, SLA, a New
Jersey chartered stock savings and loan association and a wholly owned
subsidiary of Buyer ("First Savings Bank", and sometimes referred to herein as
the "Surviving Bank"), and Pulse Savings Bank, a New Jersey chartered stock
savings bank and a wholly owned subsidiary of the Company (the "Company Bank"),
will enter into a Subsidiary Agreement and Plan of Merger (the "Bank Merger
Agreement") providing for the merger (the "Subsidiary Merger") of the Company
Bank with and into First Savings Bank, and it is intended that the Subsidiary
Merger be consummated immediately following the consummation of the Merger; and
WHEREAS, the parties desire to make certain representations, warranties and
agreements in connection with the Merger and also to prescribe certain
conditions to the Merger.
NOW, THEREFORE, in consideration of the mutual covenants, representations,
warranties and agreements contained herein, and intending to be legally bound
hereby, the parties agree as follows:
ARTICLE I
THE MERGER
1.1 The Merger. Subject to the terms and conditions of this Agreement,
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in accordance with the Delaware General Corporation Law (the "DGCL") and the New
Jersey Business Corporations Act ("NJBCA"), at the Effective Time (as defined in
Section 1.2 hereof), the Company shall merge with and into Buyer. Buyer shall be
the surviving corporation (hereinafter sometimes called the "Surviving
Corporation") in the Merger, and shall continue its corporate existence under
the laws of the State of Delaware. The name of the Surviving Corporation shall
be First Source Bancorp, Inc., or such other name as may be determined by the
Buyer. Upon consummation of the Merger, the separate corporate existence of the
Company shall terminate.
1.2. Effective Time. The Merger shall become effective as set forth in
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the certificate of merger (the "Certificate of Merger") which shall be filed
with appropriate authorities in the
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States of New Jersey and Delaware (the "Authorities") on the Closing Date (as
defined in Section 9.1 hereof). The term "Effective Time" shall be the date and
time when the Merger becomes effective, as set forth in the Certificate of
Merger.
1.3 Effects of the Merger. At and after the Effective Time, the Merger
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shall have the effects set forth in Sections 259 and 261 of the DGCL and
Section 14A:10-6 of NJBCA.
1.4 Conversion of Company Common Stock.
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(a) At the Effective Time, subject to Section 2.2 (e) hereof, each
share of the common stock, par value $1.00 per share, of the Company (the
"Company Common Stock") issued and outstanding immediately prior to the
Effective Time (other than shares of Company Common Stock held (x) in the
Company's treasury or (y) directly or indirectly by Buyer or the Company or any
of their respective Subsidiaries (as defined below) (except for Trust Account
Shares and DPC shares, as such terms are defined in Section 1.4 (b) hereof))
shall, by virtue of this Agreement and without any action on the part of the
holder thereof, be converted into and exchangeable for the number of shares (the
"Exchange Ratio") of the common stock, par value $0.01 per share, of Buyer
("Buyer Common Stock"), determined as follows (I) subject to the provisions of
Section 8.1(h), if the Average Closing Price (as defined below) is equal to or
greater than $11.50, the Exchange Ratio shall be equal to 3.2 (the "Minimum
Exchange Ratio"); (II) if the Average Closing Price is $10.00 or greater but
less than $11.50, the Exchange Ratio shall be 3.2; (III) if the Average Closing
Price is greater than $8.50 but less than $10.00 the Exchange Ratio shall equal
$32.00 divided by the Average Closing Price; or (IV) subject to the provisions
of Section 8.1(g) hereof , if the Average Closing Price is equal to or less than
$8.50, the Exchange Ratio shall be 3.764 (the "Maximum Exchange Ratio"). As used
herein, the term "Average Closing Price" means the average of the last reported
daily sales price (or if no sale on such date, then the mean of the closing
bid/ask price) per share of Buyer Common Stock on the Nasdaq Stock Market
("Nasdaq"), for the 10 consecutive trading days (the "Valuation Period") ending
on the fifth business day prior to the later of approval of the Buyer's
stockholders, approval of the Company's stockholders or the date on which the
last of all regulatory approvals required to consummate the transactions
contemplated hereby (including the Merger and the Subsidiary Merger) are
obtained, without regard to any requisite waiting periods in respect thereof.
All of the shares of Company Common Stock converted into Buyer Common Stock
pursuant to this Article I shall no longer be outstanding and shall
automatically be cancelled and shall cease to exist, and each certificate (each
a "Certificate") previously representing any such shares of Company Common Stock
shall thereafter only represent the right to receive (i) the number of whole
shares of Buyer Common Stock and (ii) the cash in lieu of fractional shares into
which the shares of Company Common Stock represented by such Certificate have
been converted pursuant to this Section 1.4(a) and Section 2.2(e) hereof.
Certificates previously representing shares of Company Common Stock shall be
exchanged for certificates representing whole shares of Buyer Common Stock and
cash in lieu of fractional shares issued in consideration therefor upon the
surrender of such Certificates in accordance with Section 2.2 hereof, without
any interest thereon. If prior to the Effective Time Buyer should split or
combine its common stock, or pay a dividend or other distribution in such common
stock, then the
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Exchange Ratio, Minimum Exchange Ratio and Maximum Exchange Ratio shall be
appropriately adjusted to reflect such split, combination, dividend or
distribution.
(b) At the Effective Time, all shares of Company Common Stock that
are owned by the Company as treasury stock and all shares of Company Common
Stock that are owned directly or indirectly by Buyer or the Company or any of
their respective Subsidiaries (other than shares of Company Common Stock
(x) held directly or indirectly in trust accounts, managed accounts and the like
or otherwise held in a fiduciary capacity that are beneficially owned by third
parties (any such shares, and shares of Buyer Common Stock which are similarly
held, whether held directly or indirectly by Buyer or the Company, as the case
may be, being referred to herein as "Trust Account Shares") and (y) shares of
Company Common Stock held by Buyer or the Company or any of their respective
Subsidiaries in respect of a debt previously contracted (any such shares of
Company Common Stock, and shares of Buyer Common Stock which are similarly held,
whether held directly or indirectly by Buyer or the Company being referred to
herein as "DPC Shares")) shall be cancelled and shall cease to exist and no
stock of Buyer or other consideration shall be delivered in exchange therefor.
All shares of Buyer Common Stock that are owned by the Company or any of its
Subsidiaries (other than Trust Account Shares and DPC Shares) shall become
treasury stock of Buyer.
1.5 Stock Options.
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(a) At the Effective Time, all options granted by the Company
("Company Options") to purchase shares of Company Common Stock which are
outstanding and unexercised immediately prior thereto shall, at the Company's
election to be made by written notice to the Buyer within 30 days of the date
hereof, be converted, in their entirety, automatically into either options to
purchase shares of Buyer Common Stock in an amount and at an exercise price
determined as provided below (and otherwise subject to the terms of the
Company's 1986 and 1993 Stock Option and Incentive Plans and the Company's 1997
Directors Stock Option Plan and 1997 Stock Compensation Plan (collectively, the
"Company's Stock Plans")) or shares of Buyer Common Stock in an amount and at an
exercise price determined as provided below, provided, however, that such
conversion does not impair the pooling of interests accounting treatment:
(1) The number of shares of Buyer Common Stock to be subject to the
new options or to the exchange for Company Options shall be equal to the
product of the number of shares of Company Common Stock subject to the
original options and the Exchange Ratio, provided that any fractional
shares of Buyer Common Stock resulting from such multiplication shall be
rounded down to the nearest share; and
(2) The exercise price per share of the Company Options if exchanged
for shares of Buyer Common Stock, or of Buyer Common Stock under the new
options if exchanged for options for Buyer Common Stock shall be equal to
the exercise price per share of Company Common Stock under the original
option divided by the Exchange Ratio, provided that such exercise price
shall be rounded up to the nearest cent.
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The adjustment provided herein with respect to any options which are "incentive
stock options" (as defined in Section 422 of the Internal Revenue Code of 1986,
as amended (the "Code")) shall be and is intended to be effected in a manner
which is consistent with Section 424(a) of the Code. The duration and other
terms of the new option shall be the same as the original option, except that
all references to the Company shall be deemed to be references to Buyer.
(b) Shares of Buyer Common Stock issuable upon exercise of Company
Stock Options shall be covered by an effective registration statement on
Form S-8, and Buyer shall file a registration statement on Form S-8 covering
such shares as soon as practicable after the Effective Time, but in no event
later than 30 days after the Effective Time.
(c) It is understood that the holders of a Company Option may
exercise such options, in accordance with the terms of the option, and
applicable regulations, prior to the Effective Time.
1.6 Buyer Common Stock. Except for shares of Buyer Common Stock owned by
------------------
the Company or any of its Subsidiaries (other than Trust Account Shares and DPC
Shares), which shall be converted into treasury stock of Buyer as contemplated
by Section 1.4 hereof, the shares of Buyer Common Stock issued and outstanding
immediately prior to the Effective Time shall be unaffected by the Merger and at
the Effective Time, such shares shall remain issued and outstanding.
1.7 Certificate of Incorporation. At the Effective Time, the Certificate
----------------------------
of Incorporation of Buyer, as in effect at the Effective Time, shall be the
Certificate of Incorporation of the Surviving Corporation.
1.8 By-Laws. At the Effective Time, the By-Laws of Buyer, as in effect
-------
immediately prior to the Effective Time, shall be the By-Laws of the Surviving
Corporation until thereafter amended in accordance with applicable law, subject
to amendment to increase the number of director seats by two.
1.9 Directors and Officers. Except as provided in Section 6.14 hereof,
----------------------
the directors and officers of Buyer immediately prior to the Effective Time
shall be the directors and officers of the Surviving Corporation, each to hold
office in accordance with the Certificate of Incorporation and By-Laws of the
Surviving Corporation until their respective successors are duly elected or
appointed and qualified.
1.10 Tax Consequences. It is intended that the Merger and the Subsidiary
----------------
Merger each constitute a reorganization within the meaning of Section 368(a) of
the Code, and that this Agreement shall constitute a "plan of reorganization"
for the purposes of Section 368 of the Code.
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ARTICLE II
EXCHANGE OF SHARES
2.1 Buyer to Make Shares Available. At or prior to the Effective Time,
------------------------------
Buyer shall deposit, or shall cause to be deposited, with a bank or trust
company (which may be a Subsidiary of Buyer) (the "Exchange Agent"), selected by
Buyer and reasonably satisfactory to the Company, for the benefit of the holders
of Certificates, for exchange in accordance with this Article II, certificates
representing the shares of Buyer Common Stock and the cash in lieu of fractional
shares (such cash and certificates for shares of Buyer Common Stock, together
with any dividends or distributions with respect thereto, being hereinafter
referred to as the "Exchange Fund") to be issued pursuant to Section 1.4 and
paid pursuant to Section 2.2(a) in exchange for outstanding shares of Company
Common Stock.
2.2 Exchange of Shares.
------------------
(a) As soon as practicable after the Effective Time, and in no event
more than three business days thereafter, the Exchange Agent shall mail to each
holder of record of a Certifica te or Certificates a form letter of transmittal
(which shall specify that delivery shall be effected, and risk of loss and title
to the Certificates shall pass, only upon delivery of the Certificates to the
Exchange Agent) and instructions for use in effecting the surrender of the
Certificates in exchange for certificates representing the shares of Buyer
Common Stock and the cash in lieu of fractional shares into which the shares of
Company Common Stock represented by such Certificate or Certificates shall have
been converted pursuant to this Agreement. The Company shall have the right to
review both the letter of transmittal and the instructions prior to the
Effective Time and provide reasonable comments thereon. Upon surrender of a
Certificate for exchange and cancellation to the Exchange Agent, together with
such letter of transmittal, duly executed, the holder of such Certificate shall
be entitled to receive in exchange therefor (x) a certificate representing that
number of whole shares of Buyer Common Stock to which such holder of Company
Common Stock shall have become entitled pursuant to the provisions of Article I
hereof and (y) a check representing the amount of cash in lieu of fractional
shares, if any, which such holder has the right to receive in respect of the
Certificate surrendered pursuant to the provisions of this Article II, and the
Certificate so surrendered shall forthwith be cancelled. No interest will be
paid or accrued on the cash in lieu of fractional shares and unpaid dividends
and distributions, if any, payable to holders of Certificates.
(b) No dividends or other distributions declared after the Effective
Time with respect to Buyer Common Stock and payable to the holders of record
thereof shall be paid to the holder of any unsurrendered Certificate until the
holder thereof shall surrender such Certificate in accordance with this Article
II. After the surrender of a Certificate in accordance with this Article II, the
record holder thereof shall be entitled to receive any such dividends or other
distributions, without any interest thereon, which theretofore had become
payable with respect to shares of Buyer Common Stock represented by such
Certificate. No holder of an unsurrendered Certificate shall be entitled, until
the surrender of such Certificate, to vote the shares of Buyer Common Stock into
which his Company Common Stock shall have been converted.
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(c) If any certificate representing shares of Buyer Common Stock is
to be issued in a name other than that in which the Certificate surrendered in
exchange therefor is registered, it shall be a condition of the issuance thereof
that the Certificate so surrendered shall be properly endorsed (or accompanied
by an appropriate instrument of transfer) and otherwise in proper form for
transfer, and that the person requesting such exchange shall pay to the Exchange
Agent in advance any transfer or other taxes required by reason of the issuance
of a certificate representing shares of Buyer Common Stock in any name other
than that of the registered holder of the Certificate surrendered, or required
for any other reason, or shall establish to the satisfaction of the Exchange
Agent that such tax has been paid or is not payable.
(d) After the Effective Time, there shall be no transfers on the
stock transfer books of the Company of the shares of Company Common Stock which
were issued and outstanding immediately prior to the Effective Time. If, after
the Effective Time, Certificates representing such shares are presented for
transfer to the Exchange Agent, they shall be cancelled and exchanged for
certificates representing shares of Buyer Common Stock as provided in this
Article II.
(e) Notwithstanding anything to the contrary contained herein, no
certificates or scrip representing fractional shares of Buyer Common Stock shall
be issued upon the surrender for exchange of Certificates, no dividend or
distribution with respect to Buyer Common Stock shall be payable on or with
respect to any fractional share, and such fractional share interests shall not
entitle the owner thereof to vote or to any other rights of a shareholder of
Buyer. In lieu of the issuance of any such fractional share, Buyer shall pay to
each former stockholder of the Company who otherwise would be entitled to
receive a fractional share of Buyer Common Stock an amount in cash determined by
multiplying (i) the product of the Average Closing Price and the Exchange Ratio
by (ii) the fraction of a share of Buyer Common Stock to which such holder would
otherwise be entitled to receive pursuan t to Section 1.4 hereof.
(f) Any portion of the Exchange Fund that remains unclaimed by the
stockholders of the Company for six months after the Effective Time shall be
paid to Buyer. Any stockholders of the Company who have not theretofore complied
with this Article II shall thereafter look only to Buyer for payment of their
shares of Buyer Common Stock, cash in lieu of fractional shares and unpaid
dividends and distributions on the Buyer Common Stock deliverable in respect of
each share of Company Common Stock such stockholder holds as determined pursuant
to this Agreement, in each case, without any interest thereon. Notwithstanding
the foregoing, none of Buyer, the Company, the Exchange Agent or any other
person shall be liable to any former holder of shares of Company Common Stock
for any amount properly delivered to a public official pursuant to applicable
abandoned property, escheat or similar laws.
(g) 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 the posting by such person
of a bond in such amount as Buyer may direct as indemnity against any claim that
may be made against it with respect to such Certificate, the Exchange Agent will
issue in exchange for such lost, stolen or destroyed Certificate the shares of
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Buyer Common Stock and cash in lieu of fractional shares deliverable in respect
thereof pursuant to this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Buyer as follows:
3.1 Corporate Organization.
----------------------
(a) The Company is a corporation duly organized, validly existing and
in good standing under the laws of the State of New Jersey. The Company has the
corporate power and authority to own or lease all of its properties and assets
and to carry on its business as it is now being conducted, and is duly licensed
or qualified to do business in each jurisdiction in which the nature of the
business conducted by it or the character or location of the properties and
assets owned or leased by it makes such licensing or qualification necessary,
except where the failure to be so licensed or qualified would not have a
Material Adverse Effect (as defined below) on the Company. The Company is duly
registered as a unitary savings and loan holding company under the Home Owners'
Loan Act of 1933, as amended. The Certificate of Incorporation and By-laws of
the Company, copies of which have previously been delivered to Buyer, are true,
complete and correct copies of such documents as in effect as of the date of
this Agreement. As used in this Agreement, the term "Material Adverse Effect"
means, with respect to Buyer, the Company or the Surviving Corporation, as the
case may be, a material adverse effect on the business, properties, assets,
liabilities, results of operations or financial condition of such party and its
Subsidiaries taken as a whole, other than any such effect attributable to or
resulting from general economic conditions. As used in this Agreement, the word
"Subsidiary" when used with respect to any party means any corporation,
partnership or other organization, whether incorporated or unincorporated, which
is consolidated with such party for financial reporting purposes.
(b) The Company Bank is a savings bank duly organized, validly
existing and in good standing under the laws of the State of New Jersey. The
deposit accounts of the Company Bank are insured by the Federal Deposit
Insurance Corporation (the "FDIC") through the Savings Association Insurance
Fund to the fullest extent permitted by law, and all premiums and assessments
required to be paid in connection therewith have been paid when due by the
Company Bank. Each of the Company's other Subsidiaries is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation or organization. Each of the Company's
Subsidiaries has the corporate power and authority to own or lease all of its
properties and assets and to carry on its business as it is now being conducted
and is duly licensed or qualified to do business in each jurisdiction in which
the nature of the business conducted by it or the character or the location of
the p roperties and assets owned or leased by it makes such licensing or
qualification necessary, except where the failure to be so licensed or qualified
would not have a Material Adverse Effect on the Company. The articles of
incorporation, by-laws and similar governing documents of each Subsidiary of the
Company,
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copies of which have previously been delivered to Buyer, are true, complete and
correct copies of such documents as in effect as of the date of this Agreement.
(c) The minute books of the Company and each of its Subsidiaries
contain true, complete and accurate records in all material respects of all
meetings and other corporate actions held or taken since December 31, 1993 of
their respective stockholders and Boards of Directors (including committees of
their respective Boards of Directors).
3.2 Capitalization.
--------------
(a) The authorized capital stock of the Company consists of
10,000,000 shares of Company Common Stock and 5,000,000 shares of preferred
stock (the "Company Preferred Stock"). As of the date of this Agreement, there
are (x) 3,120,300 shares of Company Common Stock issued and outstanding and
1,062,080 shares of Company Common Stock held in the Company's treasury, (y) no
shares of Company Common Stock reserved for issuance upon exercise of
outstanding stock options or otherwise except for (i) 297,988 shares of Company
Common Stock reserved for issuance pursuant to the Company Option Plans and
described in Section 3.2(a) of the Disclosure Schedule which is being delivered
to Buyer concurrently herewith (the "Company Disclosure Schedule") and (ii)
620,940 shares of Company Common Stock reserved for issuance upon exercise of
the option issued to Buyer pursuant to the Stock Option Agreement, dated July 9,
1998, between Buyer and the Company (the "Option Agreement") and (z) no shares
of Company Preferred Stock issued or outstanding, held in the Company's treasury
or reserved for issuance upon exercise of outstanding stock options or
otherwise. All of the issued and outstanding shares of Company Common Stock have
been duly authorized and validly issued and are fully paid, nonassessable and
free of preemptive rights. Except as referred to above or reflected in Section
3.2(a) of the Company Disclosure Schedule, and except for the Option Agreement,
the Company does not have and is not bound by any outstanding subscriptions,
options, warrants, calls, commitments or agreements of any character calling for
the purchase or issuance of any shares of Company Common Stock or Company
Preferred Stock or any other equity security of the Company or any securities
representing the right to purchase or otherwise receive any shares of Company
Common Stock or any other equity security of the Company. The names of the
optionees, the date of each option to purchase Company Common Stock granted, the
number of shares subject to each such option, the expiration date of each such
option, and the price at which each such option may be exercised under the
Option Plan, the Incentive Plan, as applicable, are set forth in Section 3.2(a)
of the Company Disclosure Schedule.
(b) Section 3.2(b) of the Company Disclosure Schedule sets forth a
true and correct list of all of the Subsidiaries of the Company as of the date
of this Agreement. Except as set forth in Section 3.2(b) of the Company
Disclosure Schedule, the Company owns, directly or indirectly, all of the issued
and outstanding shares of the capital stock of each of such Subsidiaries, free
and clear of all liens, charges, encumbrances and security interests whatsoever,
and all of such shares are duly authorized and validly issued and are fully
paid, nonassessable and free of preemptive rights. No Subsidiary of the Company
has or is bound by any outstanding subscriptions, options, warrants, calls,
commitments or agreements of any character calling for
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the purchase or issuance of any shares of capital stock or any other equity
security of such Subsidiary or any securities representing the right to purchase
or otherwise receive any shares of capital stock or any other equity security of
such Subsidiary. Assuming compliance by Buyer with Section 1.5 hereof, at the
Effective Time, there will not be any outstanding subscriptions, options,
warrants, calls, commitments or agreements of any character by which the Company
or any of its Subsidiaries will be bound calling for the purchase or issuance of
any shares of the capital stock of the Company or any of its Subsidiaries.
3.3 Authority; No Violation.
-----------------------
(a) The Company 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 approved by the
Board of Directors of the Company. The Board of Directors of the Company has
directed that this Agreement and the transactions contemplated hereby be
submitted to the Company's stockholders for approval at a meeting of such
stockholders and, except for the adoption of this Agreement by the requisite
vote of the Company's stockholders, no other corporate proceedings (except for
regulatory approvals) on the part of the Company are necessary to approve this
Agreement and to consummate the transactions contemplated hereby. This Agreement
has been duly and validly executed and delivered by the Company and (assuming
due authorization, execution and delivery by Buyer) constitutes a valid and
binding obligation of the Company, enforceable against the Company in accordance
with its terms, except as enforcement may be limited by general principles of
equity whether applied in a court of law or a court of equity and by bankruptcy,
insolvency and similar laws affecting creditors' rights and remedies generally.
(b) The Company Bank has full corporate power and authority to
execute and deliver the Bank Merger Agreement and to consummate the transactions
contemplated thereby. The execution and delivery of the Bank Merger Agreement
and the consummation of the transactions contemplated thereby will be duly and
validly approved by the Board of Directors of the Company Bank. Upon the due and
valid approval of the Bank Merger Agreement by the Company as the sole
stockholder of the Company Bank and by the Board of Directors of the Company
Bank, no other corporate proceedings on the part of the Company Bank will be
necessary to consummate the transactions contemplated thereby. The Bank Merger
Agreement, upon execution and delivery by the Company Bank, will be duly and
validly executed and delivered by the Company Bank and will (assuming due
authorization, execution and delivery by First Savings Bank) constitute a valid
and binding obligation of the Company Bank, enforceable against the Company Bank
in accordance with its terms, except as enforcement may be limited by general
principles of equity whether applied in a court of law or a court of equity and
by bankruptcy, insolvency and similar laws affecting creditors' rights and
remedies generally.
(c) Except as set forth in Section 3.3(c) of the Company Disclosure
Schedule, neither the execution and delivery of this Agreement by the Company or
the Bank Merger Agreement by the Company Bank, nor the consummation by the
Company or the Company Bank, as the case may be, of the transactions
contemplated hereby or thereby, nor compliance by
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<PAGE>
the Company or the Company Bank, as the case may be, with any of the terms or
provisions hereof or thereof, will (i) violate any provision of the Certificate
of Incorporation or By-Laws of the Company or the certificate of incorporation,
by-laws or similar governing documents of any of its Subsidiaries, or (ii)
assuming that the consents and approvals referred to in Section 3.4 hereof are
duly obtained, (x) violate any statute, code, ordinance, rule, regulation,
judgment, order, writ, decree or injunction applicable to the Company or any of
its Subsidiaries, or any of their respective properties or assets, or (y)
violate, conflict with, result in a breach of any provision of or the loss of
any benefit under, constitute a default (or an event which, with notice or lapse
of time, or both, would constitute a default) under, result in the termination
of or a right of termination or cancellation under, accelerate the performance
required by, or result in the creation of any lien, pledge, security interest,
charge or other encumbrance upon any of the respective properties or assets of
the Company or any of its Subsidiaries under, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, deed of trust, license,
lease, agreement or other instrument or obligation to which the Company or any
of its Subsidiaries is a party, or by which they or any of their respective
properties or assets may be bound or affected, except (in the case of clause (y)
above) for such violations, conflicts, breaches or defaults which, either
individually or in the aggregate, would not have or be reasonably likely to have
a Material Adverse Effect on the Company.
3.4 Consents and Approvals. Except for (a) the filing of applications
----------------------
with the Office of Thrift Supervision (the "OTS") and, if necessary, the Federal
Deposit Insurance Corporation ("FDIC") and approval of such applications, (b)
the filing of an application with the New Jersey Department of Banking and
Insurance (the "Banking Department") and approval of such application, (c) the
filing with the Securities and Exchange Commission (the "SEC") of a joint proxy
statement in definitive form relating to the meetings of the Company's
stockholders and Buyer's stockholders to be held in connection with this
Agreement and the transactions contemplated hereby (collectively, the "Proxy
Statement"), (d) the approval of this Agreement by the requisite vote of the
stockholders of the Company, (e) the filing of the Certificate of Merger with
the Secretary of New Jersey pursuant to the NJBCA, (f) the filings required by
the Bank Merger Agreement, (g) the approval of the Bank Merger Agreement by the
Company as the sole stockholder of the Company Bank and (h) such filings,
authorizations or approvals as may be set forth in Section 3.4 of the Company
Disclosure Schedule, no consents or approvals of or filings or registrations
with any court, administrative agency or commission or other governmental
authority or instrumentality (each a "Governmental Entity") or with any third
party are necessary in connection with (1) the execution and delivery by the
Company of this Agreement, (2) the consummation by the Company of the Merger and
the other transactions contemplated hereby, (3) the execution and delivery by
the Company Bank of the Bank Merger Agreement, and (4) the consummation by the
Company Bank of the Subsidiary Merger and the transactions contemplated thereby.
3.5 Reports. The Company and each of its Subsidiaries have timely filed
-------
all material reports, registrations and statements, together with any amendments
required to be made with respect thereto, that they were required to file since
December 31, 1994 with (i) the OTS, (ii) the FDIC, (iii) any state banking
commissions or any other state regulatory authority (each a "State Regulator")
and (iv) any other self-regulatory organization ("SRO") (collectively, the
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<PAGE>
"Regulatory Agencies"), and all other material reports and statements required
to be filed by them since December 31, 1994, including, without limitation, any
report or statement required to be filed pursuant to the laws, rules or
regulations of the United States, the OTS, the FDIC, any State Regulator or any
SRO, and have paid all fees and assessments due and payable in connection
therewith. Except for normal examinations conducted by a Regulatory Agency in
the regular course of the business of the Company and its Subsidiaries, except
as set forth in Section 3.5 of the Company Disclosure Schedule, no Regulatory
Agency has initiated any proceeding or, to the best knowledge of the Company,
investigation into the business or operations of the Company or any of its
Subsidiaries since December 31, 1994. There is no unresolved material violation,
criticism, or exception by any Regulatory Agency with respect to any report or
statement relating to any examinations of the Company or any of its
Subsidiaries.
3.6 Financial Statements. The Company has previously delivered to Buyer
--------------------
copies of (a) the consolidated balance sheets of the Company and its
Subsidiaries as of September 30 for the fiscal years 1995, 1996 and 1997, and
the related consolidated statements of income, changes in stockholders' equity
and cash flows for the fiscal years 1994 through 1997, inclusive, as reported in
the Company's Annual Report on Form 10-K for the fiscal year ended September 30,
1997 filed with the SEC under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), in each case accompanied by the audit report of KPMG Peat
Marwick, independent public accountants with respect to the Company, and (b) the
unaudited consolidated balance sheets of the Company and its Subsidiaries as of
March 31, 1998 and March 31, 1997 and the related unaudited consolidated
statements of income, cash flows and changes in stockholders' equity for the six
month periods then ended as reported in the Company's Quarterly Report on Form
10-Q for the period ended March 31, 1998 filed with the SEC under the Exchange
Act. The September 30, 1997 consolidated balance sheet of the Company (including
the related notes, where applicable) fairly presents the consolidated financial
position of the Company and its Subsidiaries as of the date thereof, and the
other financial statements referred to in this Section 3.6 (including the
related notes, where applicable) fairly present, and the financial statements
referred to in Section 6.9 hereof will fairly present (subject, in the case of
the unaudited statements, to recurring audit adjustments normal in nature and
amount), the results of the consolidated operations and consolidated financial
position of the Company and its Subsidiaries for the respective fiscal periods
or as of the respective dates therein set forth; ea ch of such statements
(including the related notes, where applicable) comply, and the financial
statements referred to in Section 6.9 hereof will comply, in all material
respects with applicable accounting requirements and with the published rules
and regulations of the SEC with respect thereto; and each of such statements
(including the related notes, where applicable) has been, and the financial
statements referred to in Section 6.9 hereof will be, prepared in accordance
with generally accepted accounting principles ("GAAP") consistently applied
during the periods involved, except as indicated in the notes thereto or, in the
case of unaudited statements, as permitted by Form 10-Q. The books and records
of the Company and its Subsidiaries have been, and are being, maintained in all
material respects in accordance with GAAP and any other applicable legal and
accounting requirements and reflect only actual transactions.
3.7 Broker's Fees. Neither the Company nor any Subsidiary of the Company
-------------
nor any of their respective officers or directors has employed any broker or
finder or incurred any
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liability for any broker's fees, commissions or finder's fees in connection with
any of the transactions contemplated by this Agreement, the Bank Merger
Agreement or the Option Agreement, except that the Company has engaged, and will
pay a fee or commission to, Sandler O'Neill & Partners, L.P. ("Sandler O'Neill")
in accordance with the terms of a letter agreement between Sandler O'Neill and
the Company concerning the issuance of an opinion regarding the fairness of the
Exchange Ratio, a true, complete and correct copy of which has been previously
delivered by the Company to Buyer.
3.8 Absence of Certain Changes or Events.
------------------------------------
(a) Except as may be set forth in Section 3.8(a) of the Company
Disclosure Schedule or as disclosed in the Company's Quarterly Report on
Form 10-Q for the quarter ended March 31, 1998 (a true, complete and correct
copy of which has previously been delivered to Buyer), since September 30, 1997,
(i) neither the Company nor any of its Subsidiaries has incurred any material
liability, except in the ordinary course of their business consistent with their
past practices, and (ii) no event has occurred which has caused, or is
reasonably likely to cause, individually or in the aggregate, a Material Adverse
Effect on the Company.
(b) Except as set forth in Section 3.8(b) of the Company Disclosure
Schedule, since March 31, 1998, the Company and its Subsidiaries have carried on
their respective businesses in the ordinary course consistent with their past
practices.
(c) Except as set forth in Section 3.8(c) of the Company Disclosure
Schedule, since March 31, 1998, neither the Company nor any of its Subsidiaries
has (i) increased the wages, salaries, compensation, pension, or other fringe
benefits or perquisites payable to any executive officer, employee, or director
from the amount thereof in effect as of March 31, 1998 (which amounts have been
previously disclosed to Buyer), granted any severance or termination pay,
entered into any contract to make or grant any severance or termination pay, or
paid any bonus other than year-end bonuses for fiscal 1998 as listed in Section
3.8 of the Company Disclosure Schedule or (ii) suffered any strike, work
stoppage, slow-down, or other labor disturbance.
3.9 Legal Proceedings.
-----------------
(a) Except as set forth in Section 3.9 of the Company Disclosure
Schedule, neither the Company nor any of its Subsidiaries is a party to any, and
there are no pending or, to the best of the Company's knowledge, threatened,
legal, administrative, arbitral or other proceedings, claims, actions or
governmental or regulatory investigations of any nature against the Company or
any of its Subsidiaries or challenging the validity or propriety of the
transactions contemplated by this Agreement, the Bank Merger Agreement or the
Option Agreement as to which there is a reasonable probability of an adverse
determination and which, if adversely determined, would, individually or in the
aggregate, have or be reasonably likely to have a Material Adverse Effect on the
Company.
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<PAGE>
(b) There is no injunction, order, judgment, decree, or regulatory
restriction imposed upon the Company, any of its Subsidiaries or the assets of
the Company or any of its Subsidiaries which has had, or could reasonably be
expected to have, a Material Adverse Effect on the Company.
3.10 Taxes.
-----
(a) Except as set forth in Section 3.10(a) of the Company Disclosure
Schedule, each of the Company and its Subsidiaries has (i) duly and timely filed
or will duly and timely file (including applicable extensions granted without
penalty) all Tax Returns (as hereinafter defined) required to be filed at or
prior to the Effective Time, and such Tax Returns which have heretofore been
filed are, and those to be hereinafter filed will be, true, correct and complete
and (ii) paid in full or have made adequate provision for on the financial
statements of the Company (in accordance with GAAP) all Taxes (as hereinafter
defined) and will pay in full or make adequate provision for all Taxes. There
are no material liens for Taxes upon the assets of either the Company or its
Subsidiaries except for statutory liens for current Taxes not yet due. Except as
set forth in Section 3.10(a) of the Company Disclosure Schedule, neither the
Company nor any of its Subsidiaries has requested any extension of time within
which to file any Tax Returns in respect of any fiscal year which have not since
been filed and no request for waivers of the time to assess any Taxes are
pending or outstanding. The federal and state income Tax Returns of the Company
and its Subsidiaries have been audited by the Internal Revenue Service or
appropriate state tax authorities with respect to those periods and
jurisdictions set forth on Section 3.10(a) of the Company Disclosure Schedule.
Except as set forth in Section 3.10(a) of the Company Disclosure Schedule,
neither the Company nor any of its Subsidiaries (i) is a party to any agreement
providing for the allocation or sharing of Taxes (other than the allocation of
federal income taxes as provided by Regulation 1.1552-l(a)(l) under the Code;
(ii) is required to include in income any adjustment pursuant to Section 481(a)
of the Code, by reason of the voluntary change in accounting method (nor has any
taxing authority proposed in writing any such adjustment or change of accounting
method); or (iii) has filed a consent pursuant to Section 341(f) of the Code.
For the purposes of this Agreement, "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.
For purposes of this Agreement, "Tax Return" shall mean any return, report,
information return or other document (including any related or supporting
information) with respect to Taxes.
3.11 Employees.
---------
(a) Section 3.11(a) of the Company Disclosure Schedule sets forth a
true and complete list of each employee benefit plan, arrangement or agreement
that is maintained or contributed to or required to be contributed to as of the
date of this Agreement (the "Plans") by
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the Company, any of its Subsidiaries or by any trade or business, whether or not
incorporated (an "ERISA Affiliate"), all of which together with the Company
would be deemed a "single employer" within the meaning of Section 4001 of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), for the
benefit of any employee or former employee of the Company, any Subsidiary or any
ERISA Affiliate.
(b) The Company has heretofore delivered to Buyer true and complete
copies of each of the Plans and all related documents, including but not limited
to (i) the actuarial report for any Plan (if applicable) for each of the last
two years, and (ii) the most recent determination letter from the Internal
Revenue Service (if applicable) for any Plan.
(c) Except as set forth in Section 3.11(c) of the Company Disclosure
Schedule, (i) each of the Plans has been operated and administered in all
material respects in accordance with its terms and applicable law, including but
not limited to ERISA and the Code, (ii) each of the Plans intended to be
"qualified" within the meaning of Section 401(a) of the Code either (1) has
received a favorable determination letter from the IRS, or (2) is or will be the
subject of an application for a favorable determination letter, and the Company
is not aware of any circumstances likely to result in the revocation or denial
of any such favorable determination letter, (iii) with respect to each Plan
which is subject to Title IV of ERISA, the present value of accrued benefits
under such Plan, based upon the actuarial assumptions used for funding purposes
in the most recent actuarial report prepared by such Plan's actuary with respect
to such Plan, did not, as of its latest valuation date, exceed the then current
value of the assets of such Plan allocable to such accrued benefits, (iv) no
Plan provides benefits, including without limitation death or medical benefits
(whether or not insured), with respect to current or former employees of the
Company, its Subsidiaries or any ERISA Affiliate beyond their retirement or
other termination of service, other than (w) coverage mandated by applicable
law, (x) death benefits or retirement benefits under any "employee pension
plan," as that term is defined in Section 3(2) of ERISA, (y) deferred
compensation benefits accrued as liabilities on the books of the Company, its
Subsidiaries or the ERISA Affiliates or (z) benefits the full cost of which is
borne by the current or former employee (or his beneficiary), (v) no liability
under Title IV of ERISA has been incurred by the Company, its Subsidiaries or
any ERISA Affiliate that has not been satisfied in full, and no condition exists
that presents a material risk to the Company, its Subsidiaries or an ERISA
Affiliate of incurring a material liability thereunder, (vi) no Plan is a
"multiemployer pension plan," as such term is defined in Section 3(37) of ERISA,
(vii) all contributions or other amounts payable by the Company, its
Subsidiaries or any ERISA Affiliates as of the Effective Time with respect to
each Plan in respect of current or prior plan years have been paid or accrued in
accordance with generally accepted accounting practices and Section 412 of the
Code, (viii) neither the Company, its Subsidiaries nor any ERISA Affiliate has
engaged in a transaction in connection with which the Company, its Subsidiaries
or any ERISA Affiliate could be subject to either a civil penalty assessed
pursuant to Section 409 or 502(i) of ERISA or a tax imposed pursuant to Section
4975 or 4976 of the Code, (ix) there are no pending, or, to the best knowledge
of the Company, threatened or anticipated claims (other than routine claims for
benefits) by, on behalf of or against any of the Plans or any trusts related
thereto and (x) the consummation of the transactions contemplated by this
Agreement will not (y) entitle any current or former employee or officer of the
Company or any ERISA Affiliate to severance pay,
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termination pay or any other payment, except as expressly provided in this
Agreement or (z) accelerate the time of payment or vesting or increase the
amount of compensation due any such employee or officer.
3.12 SEC Reports. The Company has previously made available to Buyer an
-----------
accurate and complete copy of each (a) final registration statement, prospectus,
report, schedule and definitive proxy statement filed since September 30, 1994
by the Company with the SEC pursuant to the Securities Act of 1933, as amended
(the "Securities Act") or the Exchange Act (the "Company Reports") and (b)
communication mailed by the Company to its stockholders since September 30,
1994, and no such registration statement, prospectus, report, schedule, proxy
statement or communication contained any untrue statement of a material fact or
omitted to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances in which
they were made, not misleading, except that information as of a later date shall
be deemed to modify information as of an earlier date. The Company has timely
filed all Company Reports and other documents required to be filed by it under
the Securities Act and the Exchange Act, and, as of their respective dates, all
Company Reports complied in all material respects with the published rules and
regulations of the SEC with respect thereto.
3.13 Company Information. The information relating to the Company and its
-------------------
Subsidiaries to be contained in the Proxy Statement and the Registration
Statement on Form S-4 (the "S-4") of which the Proxy Statement will be included
as a prospectus, or in any other document filed with any other regulatory agency
in connection herewith, will not contain any untrue statement of a material fact
or omit to state a material fact necessary to make the statements therein, in
light of the circumstances in which they are made, not misleading. The sections
of the Proxy Statement relating to the Company will comply in all material
respects with the provisions of the Exchange Act and the rules and regulations
thereunder.
3.13A Ownership of Buyer Common Stock: Affiliates and Associates. Except
-------------------------------- -------------------------
for the Stock Option Agreement, neither Company nor any of its Subsidiaries,
(i) beneficially own, directly or indirectly, or (ii) is a party to any
agreement, arrangement or understanding for the purpose of acquiring, holding,
voting or disposing of, in each case, any shares of capital stock of the Buyer
(other than Trust Account Shares and DPC Shares).
3.14 Compliance with Applicable Law. The Company and each of its
------------------------------
Subsidiaries hold, and have a t all times held, all material licenses,
franchises, permits and authorizations necessary for the lawful conduct of their
respective businesses under and pursuant to all, and have complied with and are
not, to its knowledge, in default in any respect under any applicable law,
statute, order, rule, regulation, policy and/or guideline of any Governmental
Entity relating to the Company or any of its Subsidiaries, except where the
failure to hold such license, franchise, permit or authorization or such
noncompliance or default would not, individually or in the aggregate, have or be
reasonably likely to have a Material Adverse Effect on the Company, and neither
the Company nor any of its Subsidiaries knows of, or has received notice of, any
material violations of any of the above.
- 15 -
<PAGE>
3.15 Certain Contracts.
-----------------
(a) Except as set forth in Section 3.15(a) of the Company Disclosure
Schedule, neither the Company nor any of its Subsidiaries; is a party to or
bound by any contract, arrangement, commitment or understanding (whether written
or oral) (i) with respect to the employment of any directors, officers,
employees or consultants, (ii) which, upon the consummation of the transactions
contemplated by this Agreement or the Bank Merger Agreement will (either alone
or upon the occurrence of any additional acts or events) result in any payment
(whether of severance pay or otherwise) becoming due from Buyer, the Company,
the Surviving Corporation, the Surviving Bank or any of their respective
Subsidiaries to any officer or employee thereof, (iii) which is a material
contract (as defined in Item 601(b)(10) of Regulation S-K of the SEC) to be
performed after the date of this Agreement that has not been filed or
incorporated by reference in the Company Reports, (iv) which is a consulting
agreement (including data processing, software programming and licensing
contracts) not terminable on 60 days or less notice involving the payment of
more than $50,000 per annum, in the case of any such agreement with an
individual, or $100,000 per annum, in the case of any other such agreement,
(v) which materially restricts the conduct of any line of business by the
Company or any of its Subsidiaries, (vi) with or to a labor union or guild
(including any collective bargaining agreement) or (vii) (including any stock
option plan, stock appreciation rights plan, restricted stock plan or stock
purchase plan) any of the benefits of which will be increased, or the vesting of
the benefits of which will be accelerated, by the occurrence of any of the
transactions contemplated by this Agreement or the Bank Merger 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 or the Bank Merger Agreement.
Each contract, arrangement, commitment or understanding of the type described in
this Section 3.15(a), whether or not set forth in Section 3.15(a) of the Company
Disclosure Schedule, is referred to herein as a "Company Contract". The Company
has previously delivered to Buyer true and correct copies of each Company
Contract.
(b) Except as set forth in Section 3.15(b) of the Company Disclosure
Schedule, (i) each Company Contract is valid and binding and in full force and
effect, (ii) the Company and each of its Subsidiaries have in all material
respects performed all obligations required to be performed by it to date under
each Company Contract, except where such noncompliance, individually or in the
aggregate, would not have or be reasonably likely to have a Material Adverse
Effect on the Company, (iii) no event or condition exists which constitutes or,
after notice or lapse of time or both, would constitute, a material default on
the part of the Company or any of its Subsidiaries under any such Company
Contract, except where such default, individually or in the aggregate, would not
have or be reasonably likely to have a Material Adverse Effect on the Company
and (iv) no other party to such Company Contract is, to the best knowledge of
the Company, in default in any respect thereunder.
3.16 Agreements with Regulatory Agencies. Except as set forth in Section
-----------------------------------
3.16 of the Company Disclosure Schedule, neither the Company nor any of its
Subsidiaries is subject to any cease-and-desist or other order issued by, or is
a party to any written agreement, consent agreement or memorandum of
understanding with, or is a party to any commitment letter or
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<PAGE>
similar undertaking to, or is subject to any order or directive by, or is a
recipient of any extraordinary supervisory letter from, or has adopted any board
resolutions at the request of (each, whether or not set forth on Section 3.16 of
the Company Disclosure Schedule, a "Regulatory Agreement"), any Regulatory
Agency o r other Governmental Entity that restricts the conduct of its business
or that in any manner relates to its capital adequacy, its credit policies, its
management or its business, nor has the Company or any of its Subsidiaries been
advised by any Regulatory Agency or other Governmental Entity that it is
considering issuing or requesting any Regulatory Agreement.
3.17 Investment Securities. Section 3.17 of the Company Disclosure
---------------------
Schedule sets forth the book and market value as of March 31, 1998 of the
investment securities, mortgage backed securities and securities held for sale
of the Company and its Subsidiaries. Section 3.17 of the Company Disclosure
Schedule sets forth an investment securities report which includes, security
descriptions, CUSIP numbers, pool face values, book values, coupon rates and
current market values.
3.18 Intellectual Property. Except where there would be no Material
---------------------
Adverse Effect on the Company, the Company and each of its Subsidiaries owns or
possesses valid and binding licenses and other rights to use without payment all
material patents, copyrights, trade secrets, trade names, servicemarks,
trademarks and computer software used in its businesses; and neither the Company
nor any of its Subsidiaries has received any notice of conflict with respect
thereto that asserts the right of others. The Company and each of its
Subsidiaries have in all material respects performed all the obligations
required to be performed by them and are not in default in any material respect
under any contract, agreement, arrangement or commitment relating to any of the
foregoing, except where such non-performance or default would not, individually
or in the aggregate, have or be reasonably likely to have a Material Adverse
Effect on the Company.
3.19 Undisclosed Liabilities. Except (a) as set forth in Section 3.19 of
-----------------------
the Company Disclosure Schedule, (b) for those liabilities that are fully
reflected or reserved against on the consolidated balance sheet of the Company
as of March 31, 1998 included in its Form 10-Q for the period ended March 31,
1998 and (c) for liabilities incurred in the ordinary course of business
consistent with past practice since March 31, 1998 that, either alone or when
combined with all similar liabilities, have not had, and could not reasonably be
expected to have, a Material Adverse Effect on the Company, neither the Company
nor any of its Subsidiaries has incurred any liability of any nature whatsoever
(whether absolute, accrued, contingent or otherwise and whether due or to become
due).
3.20 State Takeover Laws. The provisions of Article XV of the Company's
-------------------
Certificate of Incorporation will not, assuming the accuracy of the
representations contained in Section 4.12 hereof, apply to the Agreement, the
Bank Merger Agreement or the Stock Option Agreement or any of the transactions
contemplated hereby or thereby.
3.21 Administration of Fiduciary Accounts. The Company and each of its
------------------------------------
Subsidiaries has properly administered in all material respects all accounts for
which it acts as a fiduciary, including but not limited to accounts for which it
serves as a trustee, agent, custodian, personal
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<PAGE>
representative, guardian, conservator or investment advisor, in accordance with
the terms of the governing documents and applicable state and federal law and
regulation and common law. Neither the Company nor any of its Subsidiaries nor
any of their respective directors, officers or employees has committed any
breach of trust with respect to any such fiduciary account which has had or
could reasonably be expected to have a Material Adverse Effect on the Company,
and the accountings for each such fiduciary account are true and correct in all
material respects and accurately reflect the assets of such fiduciary account.
3.22 Environmental Matters. Except as set forth in Section 3.22 of the
---------------------
Company Disclosure Schedule:
(a) Each of the Company, its Subsidiaries, the Participation
Facilities and the Loan Properties (each as hereinafter defined) are, and have
been, in compliance with all applicable federal, state and local laws including
common law, regulations and ordinances and with all applicable decrees, orders
and contractual obligations relating to pollution, the discharge of, or exposure
to materials in the environment or workplace ("Environmental Laws"), except for
violations which, either individually or in the aggregate, have not had and
cannot reasonably be expected to have a Material Adverse Effect on the Company;
(b) There is no suit, claim, action or proceeding, pending or
threatened, before any Governmental Entity or other forum in which the Company,
any of its Subsidiaries, any Participation Facility or any Loan Property, has
been or, with respect to threatened proceedings, may be, named as a defendant
(x) for alleged noncompliance (including by any predeces sor), with any
Environmental Laws, or (y) relating to the release, threatened release or
exposure to any material whether or not occurring at or on a site owned, leased
or operated by the Company or any of its Subsidiaries, any Participation
Facility or any Loan Property, except where such noncompliance or release has
not resulted, and cannot be reasonably expected to result, either individually
or in the aggregate, a Material Adverse Effect on the Company;
(c) During the period of (x) the Company's or any of its
Subsidiaries' ownership or operation of any of their respective current
properties, (y) the Company's or any of its Subsidiaries' participation in the
management of any Participation Facility, or (z) the Company's or any of its
Subsidiaries' holding of a security interest in a Loan Property, there has been
no release of materials in, on, under or affecting any such property, except
where such release has not had and cannot reasonably be expected to result in,
either individually or in the aggregate, a Material Adverse Effect on the
Company. Prior to the period of (x) the Company's or any of its Subsidiaries'
ownership or operation of any of their respective current properties, (y) the
Company's or any of its Subsidiaries' participation in the management of any
Participation Facility, or (z) the Company's or any of its Subsidiaries' holding
of a security interest in a Loan Property, there was no release or threatened
release of materials in, on, under or affecting any such property, Participation
Facility or Loan Property, except where such release has not had and cannot be
reasonably expected to have, either individually or in the aggregate, a Material
Adverse Effect on the Company;
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<PAGE>
(d) All property formerly owned or leased by the Company and its
Subsidiaries which was subject to the provisions of the Industrial Site Recovery
Act, N.J.S.A. 13:1K-6, et seq. as amended ("ISRA"), compiled with all applicable
provisions of ISRA at the time such property was sold or transferred; and
(e) The following definitions apply for purposes of this
Section 3.22: (x) "Loan Property" means any property in which the Company or any
of its Subsidiaries holds a security interest, and, where required by the
context, said term means the owner or operator of such property; and (y)
"Participation Facility" means any facility in which the Company or any of its
Subsidiaries participates in the management and, where required by the context,
said term means the owner or operator of such property.
3.23 Derivative Transactions. Except as set forth in Section 3.23 of the
-----------------------
Company Disclosure Schedule, since September 30, 1997, neither Company nor any
of its Subsidiaries has engaged in transactions in or involving forwards,
futures, options on futures, swaps or other derivative instruments except (i) as
agent on the order and for the account of others, or (ii) as principal for
purposes of hedging interest rate risk on U.S. dollar denominated securities and
other financial instruments. None of the counterparts to any contract or
agreement with respect to any such instrument is in default with respect to such
contract or agreement and no such contract or agreement, were it to be a Loan
(as defined below) held by the Company or any of its Subsidiaries, would be
classified as "Other Loans Specially Mentioned", "Special Mention",
"Substandard", "Doubtful", "Loss", "Classified", "Criticized", "Credit Risk
Assets", "Concerned Loans" or words of similar import. The financial position of
the Company and its Subsidiaries on a consolidated basis under or with respect
to each such instrument has been reflected in the books and records of the
Company and such Subsidiaries in accordance with GAAP consistently applied, and
no open exposure of the Company or any of its Subsidiaries with respect to any
such instrument (or with respect to multiple instruments with respect to any
single counterparty) exceeds $500,000.
3.24 Opinion. The Company has received a written opinion, dated the date
-------
hereof, from Sandler O'Neill to the effect that, subject to the terms,
conditions and qualifications set forth therein, as of the date thereof the
Exchange Ratio is fair to such stockholders from a financial point of view. Such
opinion has not been amended or rescinded as of the date of this Agreement, and
will be updated at the time the Proxy Statement is mailed to stockholders of the
Company.
3.25 Assistance Agreements. Neither the Company nor any of its
---------------------
Subsidiaries is a party to any agreement or arrangement entered into in
connection with the consummation of a federally assisted acquisition of a
depository institution pursuant to which the Company or any of its Subsidiaries
is entitled to receive financial assistance or indemnification from any
governmental agency.
3.26 Approvals. As of the date of this Agreement, the Company knows of no
---------
reason why all regulatory approvals required for the consummation of the
transactions contemplated
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<PAGE>
hereby (including, without limitation, the Merger and the Subsidiary Merger)
should not be obtained without the imposition of a Burdensome Condition (as
defined below).
3.27 Loan Portfolio.
--------------
(a) In the Company's reasonable judgment, the allowance for loan
losses reflected in the Company's audited statement of condition at September
30, 1997 was, and the allowance for loan losses shown on the balance sheets in
its Reports for periods ending after September 30, 1997 have been and will be,
adequate in all material respects, as of the dates thereof, under generally
accepted accounting principles, and no Regulatory Agencies have required or
requested Company to increase the allowance for loan losses for such periods.
(b) Except as set forth in Section 3.27 of the Company Disclosure
Schedule, neither the Company nor any of its Subsidiaries is a party to any
written or oral (i) loan agreement, note or borrowing arrangement (including,
without limitation, leases, credit enhancements, commitments, guarantees and
interest-bearing assets) (collectively, "Loans"), other than Loans the unpaid
principal balance of which does not exceed $50,000, under the terms of which the
obligor is, as of the date of this Agreement, over 90 days delinquent in payment
of principal or interest or in default of any other provision, or (ii) Loan with
any director, executive officer or ten percent stockholder of the Company or any
of its Subsidiaries, or to the best knowledge of the Company, any person,
corporation or enterprise controlling, controlled by or under common control
with any of the foregoing. Section 3.27 of the Company Disclosure Schedule sets
forth (i) all of the Loans in original principal amount in excess of $50,000 of
the Company or any of its Subsidiaries that as of the date of this Agreement are
classified by any bank examiner (whether regulatory or internal) as "Other Loans
Specially Mentioned," "Special Mention," "Substandard," "Doubtful," "Loss,"
"Classified," "Criticized," "Credit Risk Assets," "Concerned Loans," "Watch
List" or words of similar import, together with the principal amount of and
accrued and unpaid interest on each such Loan and the identity of the borrower
thereunder, and (ii) by category of Loan (i.e., commercial, consumer, etc.), all
of the other Loans of the Company and its Subsidiaries that as of the date of
this Agreement are classified as such, together with the aggregate principal
amount of and accrued and unpaid interest on such Loans by category. The Company
shall promptly inform Buyer in writing of any Loan that becomes classified in
the manner described in the previous sentence, or any Loan the classification of
which is changed, at any time after the date of this Agreement.
(c) To the best of its knowledge, each loan reflected as an asset in
the Company Disclosure Schedule (i) is evidenced by notes, agreements or other
evidences of indebtedness which are true, genuine and correct in all material
respects, (ii) to the extent secured, has been secured by valid liens and
security interests which have been perfected, and (iii) is the legal, valid and
binding obligation of the obligor named therein, enforceable in accordance with
its terms, subject to bankruptcy, insolvency, fraudulent conveyance and other
laws of general applicability relating to or affecting creditors' rights and to
general equity principles, in each case other than loans as to which the failure
to satisfy the foregoing standards would not have a Material Adverse Effect on
the Company.
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<PAGE>
3.28 Year 2000 Compliance. The Company and the Company's Subsidiaries
--------------------
have taken all reasonable steps necessary to address the software, accounting
and record keeping issues raised in order for the data processing systems used
in the business conducted by the Company and its Subsidiaries to be
substantially Year 2000 compliant on or before the end of 1999 and, except as
set forth in the Company Disclosure Schedule, the Company does not expect the
future cost of addressing such issues to be material. Neither the Company nor
any of its Subsidiaries has received a rating of less than satisfactory from any
bank regulatory agency with respect to Year 2000 compliance.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to the Company as follows:
4.1 Corporate Organization.
----------------------
(a) Buyer is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware. Buyer has the corporate
power and authority to own or lease all of its properties and assets and to
carry on its business as it is now being conducted, and is duly licensed or
qualified to do business in each jurisdiction in which the nature of the
business conducted by it or the character or location of the properties and
assets owned or leased by it makes such licensing or qualification necessary,
except where the failure to be so licensed or qualified would not have a
Material Adverse Effect on Buyer. Buyer is duly registered as a bank holding
company under the BHC Act. The Certificate of Incorporation and By-laws of
Buyer, copies of which have previously been made available to the Company, are
true, complete and correct copies of such documents as in effect as of the date
of this Agreement.
(b) First Savings Bank is a savings and loan association duly
organized, validly existing and in good standing under the laws of the State of
New Jersey. The deposit accounts of First Savings Bank are insured by the FDIC
through the SAIF Insurance Fund to the fullest extent permitted by law, and all
premiums and assessments required in connection therewith have been paid by
First Savings Bank. Each of Buyer's other Subsidiaries is duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation. Each Subsidiary of Buyer has the corporate power and authority to
own or lease all of its properties and assets and to carry on its business as it
is now being conducted, and is duly licensed or qualified to do business in each
jurisdiction in which the nature of the business conducted by it or the
character or location of the properties and assets owned or leased by it makes
such licensing or qualification necessary, except where the failure to be so
licensed or qualified would not have a Material Adverse Effect on Buyer. The
Certificate of Incorporation and Bylaws of each subsidiary of the Buyer, copies
of which have previously been made available to the Company, are true, complete
and correct copies of such documents as in effect as of the date of this
Agreement.
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<PAGE>
(c) The minute books of Buyer and each of its Subsidiaries contain
true, complete and accurate records in all material respects of all meetings and
other corporate actions held or taken since December 31, 1993 of their
respective stockholders and Boards of Directors (including committees of their
respective Boards of Directors).
4.2 Capitalization.
--------------
(a) As of the date of this Agreement, the authorized capital stock
of Buyer consists of 85,000,000 shares of Buyer Common Stock and 10,000,000
shares of preferred stock, par value $.01 per share ("Buyer Preferred Stock").
As of June 30, 1998, there were 31,740,000 shares of Buyer Common Stock and no
shares of Buyer Preferred Stock issued and outstanding, and no shares of Buyer
Common Stock held in Buyer's treasury. As of the date of this Agreement, no
shares of Buyer Common Stock or Buyer Preferred Stock were reserved for
issuance, except that 11,775 shares of Buyer Common Stock were reserved for
issuance upon the exercise of stock options pursuant to the First Savings Bank,
SLA 1992 Incentive Stock Option Plan and the 1992 Stock Option Plan for Outside
Directors and 261,924 shares of Buyer Common Stock were reserved for issuance
upon the exercise of stock options pursuant to the Buyer 1996 Omnibus Incentive
Plan (collectively, the "Buyer Stock Plans"). All of the issued and outstanding
shares of Buyer Common Stock and Buyer Preferred Stock have been duly authorized
and validly issued and are fully paid, nonassessable and free of preemptive
rights, with no personal liability attaching to the ownership thereof. As of the
date of this Agreement, except as referred to above or reflected in Section
4.2(a) of the Buyer Disclosure Schedule and the Buyer Shareholder Rights
Agreement, Buyer does not have and is not bound by any outstanding
subscriptions, options, warrants, calls, commitments or agreements of any
character calling for the purchase or issuance of any shares of Buyer Common
Stock or Buyer Preferred Stock or any other equity securities of Buyer or any
securities representing the right to purchase or otherwise receive any shares of
Buyer Common Stock or Buyer Preferred Stock. The shares of Buyer Common Stock to
be issued pursuant to the Merger will be duly authorized and validly issued and,
at the Effective Time, all such shares will be fully paid, nonassessable an d
free of preemptive rights.
(b) Section 4.2(b) of the Buyer Disclosure Schedule sets forth a
true and correct list of all of the Buyer Subsidiaries as of the date of this
Agreement. Except as set forth in Section 4.2(b) of the Buyer Disclosure
Schedule, Buyer owns, directly or indirectly, all of the issued and outstanding
shares of capital stock of each of the Subsidiaries of the Buyer, free and clear
of all liens, charges, encumbrances and security interests whatsoever, and all
of such shares are duly authorized and validly issued and are fully paid,
nonassessable and free of preemptive rights. No Subsidiary of the Buyer has or
is bound by any outstanding subscriptions, options, warrants, calls, commitments
or agreements of any character with any party that is not a direct or indirect
Subsidiary of Buyer calling for the purchase or issuance of any shares of
capital stock or any other equity security of such Subsidiary or any securities
representing the right to purchase or otherwise receive any shares of capital
stock or any other equity security of such Subsidiary.
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<PAGE>
4.3 Authority. No Violation.
------------------------
(a) Buyer 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 approved by the
Board of Directors of Buyer. The Board of Directors of Buyer has directed that
this Agreement and the transactions contemplated hereby be submitted to Buyer's
stockholders for approval at a meeting of such stockholders and, except for the
adoption of this Agreement by the requisite vote of Buyer's stockholders, no
other corporate proceedings on the part of Buyer are necessary to consummate the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by Buyer and (assuming due authorization, execution and
delivery by the Company) constitutes a valid and binding obligation of Buyer,
enforceable against Buyer in accordance with its terms, except as enforcement
may be limited by general principles of equity whether applied in a court of law
or a court of equity and by bankruptcy, insolvency and similar laws affecting
creditors' rights and remedies generally.
(b) First Savings Bank has full corporate power and authority to
execute and deliver the Bank Merger Agreement and to consummate the transactions
contemplated thereby. The execution and delivery of the Bank Merger Agreement
and the consummation of the transactions contemplated thereby will be duly and
validly approved by the Board of Directors of First Savings Bank. Upon the due
and valid approval of the Bank Merger Agreement by Buyer as the sole stockholder
of First Savings Bank, and by the Board of Directors of First Savings Bank, no
other corporate proceedings on the part of First Savings Bank will be necessary
to consummate the transactions contemplated thereby. The Bank Merger Agreement,
upon execution and delivery by First Savings Bank, will be duly and validly
executed and delivered by First Savings Bank and will (assuming due
authorization, execution and delivery by the Company Bank) constitute a valid
and binding obligation of First Savings Bank, enforceable against First Savings
Bank in accordance with its terms, except as enforcement may be limited by
general principles of equity whether applied in a court of law or a court of
equity and by bankruptcy, insolvency and similar laws affecting creditors'
rights and remedies generally.
(c) Except as set forth in Section 4.3(c) of the Buyer Disclosure
Schedule, neither the execution and delivery of this Agreement by Buyer or the
Bank Merger Agreement by First Savings Bank, nor the consummation by Buyer or
First Savings Bank, as the case may be, of the transactions contemplated hereby
or thereby, nor compliance by Buyer or First Savings Bank, as the case may be,
with any of the terms or provisions hereof or thereof, will (i) violate any
provision of the Certificate of Incorporation or By-Laws of Buyer, or the
articles of incorporation or by-laws or similar governing documents of any of
its Subsidiaries or (ii) assuming that the consents and approvals referred to in
Section 4.4 are duly obtained, (x) violate any statute, code, ordinance, rule,
regulation, judgment, order, writ, decree or injunction applicable to Buyer or
any of its Subsidiaries or any of their respective properties or assets, or (y)
violate, conflict with, result in a breach of any provision of or the loss of
any benefit under, constitute a default (or an event which, with notice or lapse
of time, or both, would constitute a default) under, result in the termination
of or a right of termination or cancellation under, accelerate the performance
required by, or result in the creation of any lien, pledge, security
- 23 -
<PAGE>
interest, charge or other encumbrance upon any of the respective properties or
assets of Buyer or any of its Subsidiaries under, any of the terms, conditions
or provisions of any note, bond, mortgage, indenture, deed of trust, license,
lease, agreement or other instrument or obligation to which Buyer or any of its
Subsidiaries is a party, or by which they or any of their respective properties
or assets may be bound or affected, except (in the case of clause (y) above) for
such violations, conflicts, breaches or defaults which either individually or in
the aggregate will not have or be reasonably likely to have a Material Adverse
Effect on Buyer.
4.4 Consents and Approvals. Except for (a) the filing of applications
----------------------
with the OTS and approval of such applications, (b) the state banking approvals,
(c) the filing with the SEC of the Proxy Statement and the S-4, (d) the approval
of this Agreement by the requisite vote of the stockholders of Buyer, (e) the
filing of the Certificate of Merger with the Secretary, (f) such filings and
approvals as are required to be made or obtained under the securities or "Blue
Sky" laws of various states in connection with the issuance of the shares of
Buyer Common Stock pursuant to this Agreement, (g) filings required by the Bank
Merger Agreement, (h) the approval of the Bank Merger Agreement by the
stockholder of First Savings Bank, and (i) such filings, authorizations or
approvals as may be set forth in Section 4.4 of the Buyer Disclosure Schedule,
no consents or approvals of or filings or registrations with any Governmental
Entity or with any third party are necessary in connection with (1) the
execution and delivery by Buyer of this Agreement, (2) the consummation by Buyer
of the Merger and the other transactions contemplated hereby, (3) the execution
and delivery by First Savings Bank of the Bank Merger Agreement, and (4) the
consummation of First Savings Bank of the transactions contemplated by the Bank
Merger Agreement.
4.5 Financial Statements. Buyer has previously delivered to the Company
--------------------
copies of (a) the consolidated balance sheets of Buyer and its Subsidiaries as
of December 31 for the years 1997 and 1996 and the related consolidated
statements of income, changes in shareholders' equity and cash flows for the
fiscal years 1995 through 1997, inclusive, as reported in Buyer's Annual Report
on Form 10-K for the fiscal year ended December 31, 1997 filed with the SEC
under the Exchange Act, in each case accompanied by the audit report of KPMG
Peat Marwick LLP, independent public accountants with respect to Buyer, and (b)
the unaudited consolidated balance sheet of Buyer and its Subsidiaries as of
March 31, 1998 and March 31, 1997 and the related unaudited consolidated
statements of income, changes in shareholders' equity and cash flows for the
three-month periods then ended as reported in Buyer's Quarterly Report on Form
10-Q for the period ended March 31, 1998 filed with the SEC under the Exchange
Act. The December 31, 1997 consolidated balance sheet of Buyer (including the
related notes, where applicable) fairly presents the consolidated financial
position of Buyer and its Subsidiaries as of the date thereof, and the other
financial statements referred to in this Section 4.5 (including the related
notes, where applicable) fairly present and the financial statements referred to
in Section 6.9 hereof will fairly present (subject, in the case of the unaudited
statements, to recurring audit adjustments normal in nature and amount), the
results of the consolidated operations and changes in shareholders' equity and
consolidated financial position of Buyer and its Subsidiaries for the respective
fiscal periods or as of the respective dates therein set forth; each of such
statements (including the related notes, where applicable) comply, and the
financial statements referred to in Section 6.9 hereof will comply, in all
material respects with applicable accounting requirements
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<PAGE>
and with the published rules and regulations of the SEC with respect thereto;
and each of such statements (including the related notes, where applicable) has
been, and the financial statements referred to in Section 6.9 hereof will be,
prepared in accordance with GAAP consistently applied during the periods
involved, except as indicated in the notes thereto or, in the case of unaudited
statements, as permitted by Form 10-Q. The books and records of Buyer and its
Subsidiaries have been, and are being, maintained in all material respects in
accordance with GAAP and any other applicable legal and accounting requirements
and reflect only actual transactions.
4.6 Broker's Fees. Neither Buyer nor any Subsidiary of Buyer, nor any of
-------------
their respective officer s or directors, has employed any broker or finder or
incurred any liability for any broker's fees, commissions or finder's fees in
connection with any of the transactions contemplated by this Agreement, the Bank
Merger Agreement or the Option Agreement, except that Buyer has engaged, and
will pay a fee or commission to Ryan, Beck & Co. A copy of the Agreement with
Ryan, Beck & Co. has been provided to the Company.
4.7 Absence of Certain Changes or Events.
------------------------------------
(a) Except as may be set forth in Section 4.7 of the Buyer
Disclosure Schedule, or as disclosed in Buyer's Quarterly Report on Form 10-Q
for the quarter ended March 31, 1998 (a true, complete and correct copy of which
has previously been delivered to the Company), since December 31, 1997,
(i) neither Buyer nor any of its Subsidiaries has incurred any material
liability, except in the ordinary course of their business consistent with their
past practices, and (ii) no event has occurred which has caused, or is
reasonably likely to cause, individually or in the aggregate, a Material Adverse
Effect on Buyer.
(b) Except as set forth in Section 4.7(b) of the Buyer Disclosure
Schedule, since March 31, 1998, the Buyer and its Subsidiaries have carried on
their respective businesses in the ordinary course consistent with their past
practices.
4.8 Legal Proceedings.
-----------------
(a) Except as set forth in Section 4.8 of the Buyer Disclosure
Schedule or in Buyer's Quarterly Report on Form 10-Q for the quarter ended March
31, 1998, neither Buyer nor any of its Subsidiaries is a party to any and there
are no pending or to the best of Buyer's knowledge, threatened, material legal,
administrative, arbitral or other proceedings, claims, actions or governmental
or regulatory investigations of any nature against Buyer or any of its
Subsidiaries or challenging the validity or propriety of the transactions
contemplated by this Agreement, the Bank Merger Agreement or the Option
Agreement as to which there is a reasonable probability of an adverse
determination and which, if adversely determined, would have or be reasonably
likely to have a Material Adverse Effect on Buyer.
(b) There is no injunction, order, judgment, decree, or regulatory
restriction imposed upon Buyer, any of its Subsidiaries or the assets of Buyer
or any of its Subsidiaries which has had, or could reasonably be expected to
have, a Material Adverse Effect on Buyer.
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<PAGE>
4.9 Compliance with Applicable Law. Buyer and each of its Subsidiaries
------------------------------
holds, and has at all times held, all material licenses, franchises, permits and
authorizations necessary for the lawful conduct of their respective businesses
under and pursuant to all, and have complied with and are not in default in any
respect under any, applicable law, statute, order, rule, regulation, policy
and/or guideline of any Governmental Entity relating to Buyer or any of its
Subsidiaries, except where the failure to hold such license, franchise, permit
or authorization or such non-compliance or default would not, individually or in
the aggregate, have, or be reasonably likely to have, a Material Adverse Effect
on Buyer, and neither Buyer nor any of its Subsidiaries knows of, or has
received notice of violation of, any material violations of any of the above.
4.10 SEC Reports. Buyer has previously made available to the Company an
-----------
accurate and complete copy of each (a) final registration statement, prospectus,
report, schedule and definitive proxy statement filed since January 1, 1995 by
Buyer with the SEC pursuant to the Securities Act or the Exchange Act (the
"Buyer Reports") and (b) communication mailed by Buyer to its shareholders since
January 1, 1995, and no such registration statement, prospectus, report,
schedule, proxy statement or communication contained any untrue statement of a
material fact or omitted to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances in which they were made, not misleading, except that information
as of a later date shall be deemed to modify information as of an earlier date.
Buyer has timely filed all Buyer Reports and other documents required to be
filed by it under the Securities Act and the Exchange Act, and, as of their
respective dates, all Buyer Reports complied in all material respects with the
published rules and regulations of the SEC with respect thereto.
4.11 Buyer Information. The information relating to Buyer and its
-----------------
Subsidiaries to be contained in the Proxy Statement and the S-4, or in any other
document filed with any other regulatory agency in connection herewith, will not
contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in light of the circumstances in which
they a re made, not misleading. The S-4 (except for such portions thereof that
relate only to the Company or any of its Subsidiaries) will comply in all
material respects with the provisions of the Securities Act of 1933 and the
rules and regulations thereunder and the Exchange Act and the rules and
regulations thereunder.
4.12 Ownership of Company Common Stock: Affiliates and Associates.
---------------------------------- -------------------------
(a) Except for the Stock Option Agreement, neither Buyer nor any of
its affiliates or associates (as such terms are defined under the Exchange Act),
(i) beneficially own, directly or indirectly, or (ii) is a party to any
agreement, arrangement or understanding for the purpose of acquiring, holding,
voting or disposing of, in each case, any shares of capital stock of the Company
(other than Trust Account Shares and DPC Shares); and
(b) Neither Buyer nor any of its Subsidiaries is an "affiliate" (as
such term is defined in DGCL 203(c)(1)), an "associate" (as such term is defined
in DGCL 203(c)(2)) of the
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<PAGE>
Company or an "Interested Stockholder" (as such term is defined in Section 8 of
the Company's Certificate of Incorporation).
4.13 Taxes. Except as set forth in Section 4.13 of the Buyer Disclosure
-----
Schedule, each of Buyer and its Subsidiaries has (i) duly and timely filed or
will duly and timely file (including applicable extensions granted without
penalty) all Tax Returns required to be filed at or prior to the Effective Time,
and such Tax Returns which have heretofore been filed are, and those to be
hereinafter filed will be, true, correct and complete, and (ii) paid in full or
have made adequate provision for on the financial statements of Buyer (in
accordance with GAAP) all Taxes and will pay in full or make adequate provision
for all Taxes. There are no material liens for Taxes upon the assets of either
Buyer or its Subsidiaries except for statutory liens for current Taxes not yet
due. Except as set forth in Section 4.13 of the Buyer Disclosure Schedule,
neither Buyer nor any of its Subsidiaries has requested any extension of time
within which to file any Tax Returns in respect of any fiscal year which have
not since been filed and no request for waivers of the time to assess any Taxes
are pending or outstanding. The federal and state income Tax Returns of Buyer
and its Subsidiaries have been audited by the Internal Revenue Service or
appropriate state tax authorities with respect to those periods and
jurisdictions set forth on Section 4.13 of the Buyer Disclosure Schedule. Except
as set forth in Section 4.13 of the Buyer Disclosure Schedule, neither Buyer nor
any of its Subsidiaries (i) is a party to any agreement providing for the
allocation or sharing of Taxes (other than the allocation of federal income
taxes as provided by Regulation 1.1552 l(a)(1) under the Code); (ii) is required
to include in income any adjustment pursuant to Section 481(a) of the Code, by
reason of the voluntary change in accounting method (nor has any taxing
authority proposed in writing any such adjustment or change of accounting
method); or (iii) has filed a consent pursuant to Section 341(f) of the Code.
4.14 Employees.
---------
(a) Section 4.14(a) of the Buyer Disclosure Schedule sets forth a
true and complete list of each employee benefit plan, arrangement or agreement
that is maintained or contributed to or required to be contributed to as of the
date of this Agreement (the "Buyer Plans") by Buyer, any of its Subsidiaries or
by any trade or business, whether or not incorporated (a "Buyer ERISA
Affiliate"), all of which together with Buyer would be deemed a "single
employer" within the meaning of Section 4001 of ERISA, for the benefit of any
employee or former employee of Buyer, any Subsidiary or any ERISA Affiliate.
(b) Except as set forth in Section 4.14(b) of the Buyer Disclosure
Schedule, (i) each of the Buyer Plans has been operated and administered in all
material respects in accordance with its terms and applicable law, including but
not limited to ERISA and the Code, (ii) each of the Buyer Plans intended to be
"qualified" within the meaning of Section 401(a) of the Code has either (1)
received a favorable determination letter from the IRS, or (2) is or will be the
subject of an application for a favorable determination letter, and Buyer is not
aware of any circumstances likely to result in the revocation or denial of any
such favorable determination letter, (iii) with respect to each Buyer Plan which
is subject to Title IV of ERISA, the present value of accrued benefits under
such Buyer Plan, based upon the actuarial assumptions used for funding purposes
in the most recent actuarial report prepared by such Buyer Plan's actuary with
respect to such
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<PAGE>
Buyer Plan, did not, as of its latest va luation date, exceed the then current
value of the assets of such Buyer Plan allocable to such accrued benefits, (iv)
no Plan provides benefits, including without limitation death or medical
benefits (whether or not insured), with respect to current or former employees
of Buyer, its Subsidiaries or any ERISA Affiliate beyond their retirement or
other termination of service, other than (w) coverage mandated by applicable
law, (x) death benefits or retirement benefits under any "employee pension
plan," as that term is defined in Section 3(2) of ERISA, (y) deferred
compensation benefits accrued as liabilities on the books of Buyer, its
Subsidiaries or the ERISA Affiliates or (z) benefits the full cost of which is
borne by the current or former employee (or his beneficiary), (v) no liability
under Title IV of ERISA has been incurred by Buyer, its Subsidiaries or any
Buyer ERISA Affiliate that has not been satisfied in full, (vi) no Buyer Plan is
a "multiemployer pension plan," as such term is defined in Section 3(37) of
ERISA, (vii) all contributions or other amounts payable by Buyer, its
Subsidiaries or any ERISA Affiliate as of the Effective Time with respect to
each Plan in respect of current or prior plan years have been paid or accrued in
accordance with generally accepted accounting practices and Section 412 of the
Code, (viii) neither Buyer, its Subsidiaries nor any ERISA Affiliate has engaged
in a transaction in connection with which Buyer, its Subsidiaries or any ERISA
Affiliate could be subject to either a civil penalty assessed pursuant to
Section 409 or 502(i) of ERISA or a tax imposed pursuant to Section 4975 or 4976
of the Code, (ix) there are no pending, or, to the best knowledge of Buyer,
threatened or anticipated claims (other than routine claims for benefits) by, on
behalf of or against any of the Buyer Plans or any trusts related thereto and
(x) the consummation of the transactions contemplated by this Agreement will not
(y) entitle any current or former employee or officer of Buyer or any ERISA
Affiliate to severance pay, termination pay or any other payment, except as
expressly provided in this Agreement or (z) accelerate the time of payment or
vesting or increase in the amount of compensation due any such employee or
officer.
4.15 Agreements with Regulatory Agencies. Except as set forth in Section
-----------------------------------
4.15 of the Buyer Disclosure Schedule or as disclosed in Buyer's Annual Report
on Form 10-K for the year ended December 31, 1997, neither Buyer nor any of its
Subsidiaries is subject to any cease-and-desist or other order issued by, or is
a party to any written agreement, consent agreement or memorandum of
understanding with, or is a party to any commitment letter or similar
undertaking to, or is subject to any order or directive by, or is a recipient of
any extraordinary supervisory letter from, or has adopted any board resolutions
at the request of (each, whether or not set forth in Section 4.15 of the Buyer
Disclosure Schedule, a "Buyer Regulatory Agreement"), any Regulatory Agency or
other Governmental Entity that restricts the conduct of its business or that in
any manner relates to its capital adequacy, its credit policies, its management
or its business, nor has Buyer or any of its Subsidiaries been advised by any
Regulatory Agency or other Governmental Entity that it is considering issuing or
requesting any Regulatory Agreement.
4.15A Investments Securities. Section 4.15A of the Buyer Disclosure
----------------------
Schedule sets forth the book and market value as of March 31, 1998 of the
investment securities, mortgage backed securities and securities held for sale
of the Buyer and its Subsidiaries. Section 4.15A of the Buyer Disclosure
Schedule sets forth an investment securities report which includes, security
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<PAGE>
descriptions, CUSIP numbers, pool face values, book values, coupon rates and
current market values.
4.16 Undisclosed Liabilities. Except (a) as set forth in Section 4.16 of
-----------------------
the Buyer Disclosure Schedule, (b) for those liabilities that are fully
reflected or reserved against on the consolidated balance sheet of Buyer
included in its Form 10-Q for the period ended March 31, 1998 and (c) for
liabilities incurred in the ordinary course of business consistent with past
practice since March 31, 1998 that, either alone or when combined with all
similar liabilities, have not had, and could not reasonably be expected to have,
a Material Adverse Effect on Buyer, neither Buyer nor any of its Subsidiaries
has incurred any liability of any nature whatsoever (whether absolute, accrued,
contingent or otherwise and whether due or to become due).
4.17 Administration of Fiduciary Accounts. Buyer and each of its
------------------------------------
Subsidiaries has properly administered in all material respects all accounts for
which it acts as a fiduciary, including but not limited to accounts for which it
serves as a trustee, agent, custodian, personal representative, guardian,
conservator or investment advisor, in accordance with the terms of the governing
documents and applicable state and federal law and regulation and common law.
Neither Buyer nor any of its Subsidiaries nor any of their respective directors,
officers or employees has committed any breach of trust with respect to any such
fiduciary account which has or could reasonably be expected to have a Material
Adverse Effect on Buyer, and the accountings for each such fiduciary account are
true and correct in all material respects and accurately reflect the assets of
such fiduciary account.
4.18 Approvals. As of the date of this Agreement, Buyer knows of no
---------
reason why all regulatory approvals required for the consummation of the
transactions contemplated hereby (including, without limitation, the Merger and
the Subsidiary Merger) should not be obtained without the imposition of a
Burdensome Condition.
4.19 Reports. Buyer and each of its Subsidiaries have timely filed all
-------
material reports, registrations and statements, together with any amendments
required to be made with respect thereto, that they were required to file since
December 31, 1994 with any Regulatory Agency, and all other material reports and
statements required to be filed by them since December 31, 1994, including,
without limitation, any report or statement required to be filed pursuant to the
laws, rules or regulations of the United States, the Federal Reserve Board, the
FDIC, any State Regulator or any SRO, and have paid all fees and assessments due
and payable in connection therewith. Except for normal examinations conducted by
a Regulatory Agency in the regular course of the business of Buyer and its
Subsidiaries; except as set forth in Section 4.19 of Buyer Disclosure Schedule,
no Regulatory Agency has initiated any proceeding or, to the best knowledge of
Buyer, investigation into the business or operations of Buyer or any of its
Subsidiaries since December 31, 1994. There is no unresolved material violation,
criticism, or exception by any Regulatory Agency with respect to any report or
statement relating to any examinations of Buyer or any of its Subsidiaries.
4.19A State Takeover Laws. The provisions of Article VIII of Buyer's
----- -------------------
Certificate of Incorporation will not, assuming the accuracy of the
representations contained in Section 3.13A
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<PAGE>
hereof, apply to the Agreement, the Bank Merger Agreement or the Stock Option
Agreement or any of the transactions contemplated hereby or thereby.
4.20 Environmental Matters. Except as set forth in Section 4.20 of the
---------------------
Buyer Disclosure Schedule:
(a) Each of Buyer, its Subsidiaries, the Participation Facilities
and the Loan Properties (each as hereinafter defined) are, and have been, in
compliance with Environmental Laws, except for violations which, either
individually or in the aggregate, have not had and cannot reasonably be expected
to have a Material Adverse Effect on Buyer;
(b) There is no suit, claim, action or proceeding, pending or
threatened, before any Governmental Entity or other forum in which Buyer, any of
its Subsidiaries, any Participation Facility or any Loan Property, has been or,
with respect to threatened proceedings, may be, named as a defendant (x) for
alleged noncompliance (including by any predecessor), with any Environmental
Laws, or (y) relating to the release, threatened release or exposure to any
material whether or not occurring at or on a site owned, leased or operated by
Buyer or any of its Subsidiaries, any Participation Facility or any Loan
Property, except where such noncompliance or release has not resulted, and
cannot be reasonably expected to result, either individually or in the
aggregate, a Material Adverse Effect on Buyer;
(c) During the period of (x) Buyer's or any of its Subsidiaries'
ownership or operation of any of their respective current properties,
(y) Buyer's or any of its Subsidiaries' participation in the management of any
Participation Facility, or (z) Buyer's or any of its Subsidiaries' holding of a
security interest in a Loan Property, there has been no release of materials in,
on, under or affecting any such property, except where such release has not had
and cannot reasonably be expected to result in, either individually or in the
aggregate, a Material Adverse Effect on Buyer. Prior to the period of
(x) Buyer's or any of its Subsidiaries' ownership or operation of any of their
respective current properties, (y) Buyer's or any of its Subsidiaries'
participation in the management of any Participation Facility, or (z) Buyer's or
any of its Subsidiaries' holding of a security interest in a Loan Property,
there was no release or threatened release of materials in, on, under or
affecting any such property, Participation Facility or Loan Property, except
where such release has not had and cannot be reasonably expected to have, either
individually or in the aggregate, a Material Adverse Effect on Buyer; and
(d) The following definitions apply for purposes of this Section
4.20: (x) "Loan Property" means any property in which Buyer or any of its
Subsidiaries holds a security interest, and, where required by the context, said
term means the owner or operator of such property; and (y) "Participation
Facility" means any facility in which Buyer or any of its Subsidiaries
participates in the management and, where required by the context, said term
means the owner or operator of such property.
4.21 Derivative Transactions. Except as set forth in Section 4.21 of the
-----------------------
Buyer Disclosure Schedule, since December 31, 1997, neither Buyer nor any of its
Subsidiaries has engaged in transactions in or involving forwards, futures,
options on futures, swaps or other
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<PAGE>
derivative instruments except (i) as agent on the order and for the account of
others, or (ii) as principal for purposes of hedging interest rate risk on U.S.
dollar denominated securities and other financial instruments. None of the
counterparts to any contract or agreement with respect to any such instrument is
in default with respect to such contract or agreement and no such contract or
agreement, were it to be a Loan held by Buyer or any of its Subsidiaries, would
be classified as "Other Loans Specially Mentioned," "Special Mention,"
"Substandard," "Doubtful," "Loss," "Classified," "Criticized," "Credit Risk
Assets," "Concerned Loans" or words of similar import. The financial position of
Buyer and its Subsidiaries on a consolidated basis under or with respect to each
such instrument has been reflected in the books and records of Buyer and such
Subsidiaries in accordance with GAAP consistently applied, and no open exposure
of Buyer or any of its Subsidiaries with respect to any such instrument (or with
respect to multiple instruments with respect to any single counterparty) exceeds
$500,000.
4.22 Loan Portfolio.
--------------
(a) Except as set forth in Section 4.22 of the Buyer Disclosure
Schedule, neither Buyer nor any of its Subsidiaries is a party to any written or
oral (i) Loan, other than Loans the unpaid principal balance of which does not
exceed $50,000, under the terms of which the obligor is, as of the date of this
Agreement, over 90 days delinquent in payment of principal or interest or in
default of any other provision, or (ii) Loan as of the date of this Agreement
with any director, executive officer or ten percent stockholder of Buyer or any
of its Subsidiaries, or to the best knowledge of Buyer, any person, corporation
or enterprise controlling, controlled by or under common control with any of the
foregoing. Section 4.22 of the Buyer Disclosure Schedule sets forth (i) all of
the Loans in original principal amount in excess of $50,000 of Buyer or any of
its Subsidiaries that as of the date of this Agreement are classified by any
bank examiner (whether regulatory or internal) as "Other Loans Specially
Mentioned", "Special Mention", "Substandard", "Doubtful", "Loss", "Classified",
"Criticized", "Credit Risk Assets", "Concerned Loans", "Watch List" or words of
similar import, together with the principal amount of and accrued and unpaid
interest on each such Loan and the identity of the borrower thereunder, and
(ii) by category of Loan (i.e., commercial, consumer, etc.), all of the other
Loans of Buyer and its Subsidiaries that as of the date of this Agreement are
classified as such, together with the aggregate principal amount of and accrued
and unpaid interest on such Loans by category. Buyer shall promptly inform the
Company in writing of any loan that becomes classified in the manner described
in the previous sentence, or any Loan the classification of which is changed, at
any time after the date of this Agreement.
(b) To the best of its knowledge, each loan reflected as an asset in
the Buyer Disclosure Schedule (i) is evidenced by notes, agreements or other
evidences of indebtedness which are true, genuine and correct in all material
respects, (ii) to the extent secured, has been secured by valid liens and
security interests which have been perfected, and (iii) is the legal, valid and
binding obligation of the obligor named therein, enforceable in accordance with
its terms, subject to bankruptcy, insolvency, fraudulent conveyance and other
laws of general applicability relating to or affecting creditors' rights and to
general equity principles , in each case other than loans as to which the
failure to satisfy the foregoing standards would not have a Material Adverse
Effect on the Buyer.
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<PAGE>
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
5.1 Covenants of the Company. During the period from the date of this
------------------------
Agreement and continuing until the Effective Time, except as expressly
contemplated or permitted by this Agreement, the Bank Merger Agreement or the
Option Agreement or with the prior written consent of Buyer, the Company and its
Subsidiaries shall carry on their respective businesses in the ordinary course
consistent with past practice and consistent with prudent banking practice. The
Company will use its best efforts to (x) preserve its business organization and
that of its Subsidiaries intact, (y) keep available to itself and Buyer the
present services of the employees of the Company and its Subsidiaries and (z)
preserve for itself and Buyer the goodwill of the customers of the Company and
its Subsidiaries and others with whom business relationships exist. Without
limiting the generality of the foregoing, and except as set forth on Section 5.1
of the Company Disclosure Schedule or as otherwise contemplated by this
Agreement or consented to in writing by Buyer, the Company shall not, and shall
not permit any of its Subsidiaries to:
(a) solely in the case of the Company, declare or pay any dividends
on, or make other distributions in respect of, any of its capital stock, other
than normal quarterly dividends in an amount of no more than $0.20 per share of
Company Common Stock, provided, however, that on or after January 1, 1999, the
Company may increase its quarterly dividend to no more than $0.225 per share if
such increase will not prevent the Merger from being accounted for as a pooling
of interests;
(b) (i) split, combine or reclassify any shares of its capital stock
or issue or authorize or propose the issuance of any other securities in respect
of, in lieu of or in substitution for shares of its capital stock except upon
the exercise or fulfillment of rights or options issued or existing pursuant to
employee benefit plans, programs or arrangements, all to the extent outstanding
and in existence on the date of this Agreement and in accordance with their
present terms, and except pursuant to the Option Agreement, or (ii) repurchase,
redeem or otherwise acquire (except for the acquisition of Trust Account Shares
and DPC Shares, as such terms are defined in Section 1.4(b) hereof) any shares
of the capital stock of the Company or any Subsidiary of the Company, or any
securities convertible into or exercisable for any shares of the capital stock
of the Company or any Subsidiary of the Company;
(c) issue, deliver or sell, or authorize or propose the issuance,
delivery or sale of, any shares of its capital stock or any securities
convertible into or exercisable for, or any rights, warrants or options to
acquire, any such shares, or enter into any agreement with respect to any of the
foregoing, other than (i) the issuance of Company Common Stock pursuant to stock
options or similar rights to acquire Company Common Stock granted pursuant to
the Company Stock Plans and outstanding prior to the date of this Agreement, in
each case in accordance with their present terms and (ii) pursuant to the Option
Agreement;
(d) amend its Certificate of Incorporation, By-laws or other similar
governing documents;
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<PAGE>
(e) authorize or permit any of its officers, directors, employees or
agents to directly or indirectly solicit, initiate or encourage any inquiries
relating to, or the making of any proposal which constitutes, a "takeover
proposal" (as defined below), or, except to the extent legally required for the
discharge of the fiduciary duties of the Board of Directors of the Company,
recommend or endorse any takeover proposal, or participate in any discussions or
negotiations, or provide third parties with any nonpublic information, relating
to any such inquiry or proposal or otherwise facilitate any effort or attempt to
make or implement a take over proposal; provided, however, that the Company may
-------- -------
communicate information about any such takeover proposal to its stockholders if,
in the judgment of the Company's Board of Directors, based upon the written
opinion of outside counsel, such communication is required under applicable law.
The Company will immediately cease and cause to be terminated any existing
activities, discussions or negotiations previously conducted with an y parties
other than Buyer with respect to any of the foregoing. The Company will take all
actions necessary or advisable to inform the appropriate individuals or entities
referred to in the first sentence hereof of the obligations undertaken in this
Section 5.1(e). The Company will notify Buyer immediately if any such inquiries
or takeover proposals are received by, any such information is requested from,
or any such negotiations or discussions are sought to be initiated or continued
with, the Company, and the Company will promptly inform Buyer in writing of all
of the relevant details with respect to the foregoing. As used in this
Agreement, "takeover proposal" shall mean any tender or exchange offer, proposal
for a merger, consolidation or other business combination involving the Company
or any Subsidiary of the Company or any proposal or offer to acquire in any
manner a substantial equity interest in, or a substantial portion of the assets
of the Company or any Subsidiary of the Company other than the transactions
contemplated or permitted by this Agreement, the Bank Merger Agreement and the
Option Agreement;
(f) make any capital expenditures other than the expenses which are
set forth in Section 5.1(f) of the Company Disclosure Schedule and expenses
which (i) are made in the ordinary course of business or are necessary to
maintain existing assets in good repair, or (ii) in an amount of no more than
$50,000 individually and $75,000 in the aggregate;
(g) enter into any new line of business;
(h) acquire or agree to acquire, by merging or consolidating with,
or by purchasing a substantial equity interest in or a substantial portion of
the assets of, or by any other manner, any business or any corporation,
partnership, association or other business organization or division thereof or
otherwise acquire any assets, which would be material, individually or in the
aggregate, to the Company, other than in connection with foreclosures,
settlements in lieu of foreclosure or troubled loan or debt restructurings in
the ordinary course of business consistent with prudent banking practices;
(i) take any action that is intended or may reasonably be expected
to result in any of its representations and warranties set forth in this
Agreement being or becoming untrue in any material respect, or in any of the
conditions to the Merger set forth in Article VII not being satisfied, or in a
violation of any provision of this Agreement or the Bank Merger Agreement,
except, in every case, as may be required by applicable law;
- 33 -
<PAGE>
(j) change its methods of accounting in effect at September 30,
1997, except as required by changes in GAAP or regulatory accounting principles
as concurred to by the Company's independent auditors;
(k) (i) except as required by applicable law or to maintain
qualification pursuant to the Code, adopt, amend, renew or terminate any Plan or
any agreement, arrangement, plan or policy between the Company or any Subsidiary
of the Company and one or more of its current or former directors, officers or
employees or (ii) except for normal increases in the ordinary course of business
consistent with past practice or except as required by applicable law, increase
in any manner the compensation or fringe benefits of any director, officer or
employee or pay any benefit not required by any plan or agreement as in effect
as of the date hereof (including, without limitation, the granting of stock
options, stock appreciation rights, restricted stock, restricted stock units or
performance units or shares), except for continuation of contributions to the
Company's retirement plan in accordance with past practice, such contributions
not to exceed $45,000 per calendar quarter;
(l) take or cause to be taken any action which would disqualify the
Merger as a "pooling of interests" for accounting purposes or a tax free
reorganization under Section 368 of the Code, provided, however, that nothing
-------- -------
contained herein shall limit the ability of Buyer to exercise its rights under
the Stock Option Agreement;
(m) except as set forth in Section 5.1(m) of the Company Disclosure
Schedule, other than activities in the ordinary course of business consistent
with prior practice, sell, lease, encumber, assign or otherwise dispose of, or
agree to sell, lease, encumber, assign or otherwise dispose of, any of its
material assets, properties or other rights or agreements;
(n) other than in the ordinary course of business consistent with
past practice, incur any indebtedness for borrowed money, assume, guarantee,
endorse or otherwise as an accom modation become responsible for the obligations
of any other individual, corporation or other entity;
(o) file any application to relocate or terminate the operations of
any banking office of it or any of its Subsidiaries;
(p) commit any act or omission which constitutes a material breach
or default by the Company or any of its Subsidiaries under any Regulatory
Agreement or under any material contract or material license to which the
Company or any of its Subsidiaries is a party or by which any of them or their
respective properties is bound;
(q) except as set forth in Disclosure Schedule 3.27, 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;
(r) make or commit to any commercial business loan (including,
without limitation, lines of credit and letters of credit) or any commercial
real estate or construction loan
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(including, without limitation, lines of credit and letters of credit) secured
by any non-1-4 family residential properties, except in the ordinary course of
business consistent with past practices;
(s) purchase or commit to purchase any bulk loan portfolio;
(t) engage in or enter into any structured transactions, derivative
securities, arbitrage or hedging activity;
(u) make any equity investment or commitment to make such an
investment in real estate or in any real estate development project, other than
in connection with foreclosures, settlements in lieu of foreclosure or troubled
loan or debt restructurings in the ordinary course of business consistent with
prudent banking practices, or for goods, services or other items necessary in
the ordinary course of business relating to foreclosures, settlements in lieu of
foreclosure or troubled loan or debt restructurings;
(v) create, renew, amend or terminate or give notice of a proposed
renewal, amendment or termination of, any material contract, agreement or lease
for goods, services or office space to which the Company or any of its
Subsidiaries is a party or by which the Company or any of its Subsidiaries or
their respective properties is bound;
(w) take any action which would cause the termination or
cancellation by the FDIC of insurance in respect of the Company Bank's deposits;
or
(x) agree to do any of the foregoing.
5.2 Covenants of Buyer. During the period from the date of this
------------------
Agreement and continuing until the Effective Time, except as expressly
contemplated or permitted by this Agreement, the Bank Merger Agreement or the
Option Agreement or with the prior written consent of the Company, Buyer and its
Subsidiaries shall carry on their respective businesses in the ordinary course
consistent with past practice and consistent with prudent banking practice.
Buyer will use its best efforts to (x) preserve its business organization and
that of its Subsidiaries intact and (y) preserve for itself and the Company the
goodwill of the customers of Buyer and its Subsidiaries and others with whom
business relationships exist. Without limiting the generality of the foregoing
and except as set forth on Section 5.2 of the Buyer Disclosure Schedule or as
otherwise contemplated by this Agreement or consented to in writing by the
Company, Buyer shall not, and shall not permit any of its Subsidiaries to:
(a) declare or pay any extraordinary or special dividends on or make
any other extraordinary or special distributions in respect of any of its
capital stock; provided, however, that nothing contained herein shall prohibit
-------- -------
Buyer from increasing the quarterly cash dividend on the Buyer Common Stock;
(b) take any action that is intended or may reasonably be expected
to result in any of its representations and warranties set forth in this
Agreement being or becoming untrue in any material respect, or in any of the
conditions to the Merger set forth in Article VII not being
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satisfied or in a violation of any provision of this Agreement or the Bank
Merger Agreement, except, in every case, as may be required by applicable law;
(c) change its methods of accounting in effect at December 31, 1997,
except in accordance with changes in GAAP or regulatory accounting principles as
concurred to by Buyer' s independent auditors;
(d) take or cause to be taken any action which would disqualify the
Merger as a "pooling of interests" for accounting purposes or a tax free
reorganization under Section 368 of the Code, provided, however, that nothing
-------- -------
contained herein shall limit the ability of Buyer to exercise its rights under
the Option Agreement;
(e) take any action which would cause the termination or
cancellation by the FDIC of insurance in respect of First Savings Bank's
deposits; or
(f) agree to do any of the foregoing.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 Regulatory Matters.
------------------
(a) The Company and Buyer shall promptly prepare and file with the
SEC Proxy Statements (the "Joint Proxy Statement") and Buyer shall promptly
prepare and file with the SEC the S-4, in which the Joint Proxy Statement will
be included as a prospectus. Each of the Company and Buyer shall use all
reasonable efforts to have the S-4 declared effective under the Securities Act
as promptly as practicable after such filing, and each of the Company and Buyer
shall thereafter mail the Joint Proxy Statement to each of its respective
stockholders. Buyer shall also use all reasonable efforts to obtain all
necessary state securities law or "Blue Sky" permits and approvals required to
carry out the transactions contemplated by this Agreement and the Bank Merger
Agreement, and the Company shall furnish all information concerning the Company
and the holders of Company Common Stock as may be reasonably requested in
connection with any such action.
(b) The parties hereto shall cooperate with each other and use their
best efforts to promptly prepare and file all necessary documentation, to effect
all applications, notices, petitions and filings, and to obtain as promptly as
practicable all permits, consents, approvals and authorizations of all third
parties and Governmental Entities which are necessary or advisable to consummate
the transactions contemplated by this Agreement (including without limitation
the Merger and the Subsidiary Merger) (it being understood that any amendments
to the S-4 or a resolicitation of proxies as consequence of a subsequent
proposed merger, stock purchase or similar acquisition by Buyer or any of its
Subsidiaries shall not violate this covenant). The Company and Buyer shall have
the right to review in advance, and to the extent practicable each will consult
the other on, in each case subject to applicable laws relating to the exchange
of
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information, all the information relating to the Company or Buyer, as the case
may be, and any of their respective Subsidiaries, which appear in any filing
made with, or written materials submitted to, any third party or any
Governmental Entity in connection with the transactions contemplated by this
Agreement. In exercising the foregoing right, each of the parties hereto shall
act reasonably and as promptly as practicable. The parties hereto agree that
they will consult with each other with respect to the obtaining of all permits,
consents, approvals and authorizations of all third parties and Governmental
Entities necessary or advisable to consummate the transactions contemplated by
this Agreement and each party will keep the other apprised of the status of
matters relating to completion of the transactions contemplated herein.
(c) Buyer and the Company shall, upon request, furnish each other
with all information concerning themselves, their Subsidiaries, directors,
officers and stockholders and such other matters as may be reasonably necessary
or advisable in connection with the Proxy Statement, the S-4 or any other
statement, filing, notice or application made by or on behalf of Buyer, the
Company or any of their respective Subsidiaries to any Governmental Entity in
connection with the Merger and the other transactions contemplated by this
Agreement.
(d) Buyer and the Company shall promptly furnish each other with
copies of written communications received by Buyer or the Company, as the case
may be, or any of their respective Subsidiaries, Affiliates or Associates (as
such terms are defined in Rule 12b-2 under the Exchange Act as in effect on the
date of this Agreement) from, or delivered by any of the foregoing to, any
Governmental Entity in respect of the transactions contemplated hereby.
6.2 Access to Information.
---------------------
(a) Upon reasonable notice and subject to applicable laws relating
to the exchange of information, the Company shall, and shall cause each of its
Subsidiaries to, afford to the officers, employees, accountants, counsel and
other representatives of Buyer, access, during normal business hours during the
period prior to the Effective Time, to all its properties, books, contracts,
commitments, records, officers, employees, accountants, counsel and other
representatives and, during such period, the Company shall, and shall cause its
Subsidiaries to, make available to Buyer (i) a copy of each report, schedule,
registration statement and other document filed or received by it during such
period pursuant to the requirements of Federal securities laws or Federal or
state banking laws (other than reports or documents which the Company is not
permitted to disclose under applicable law) and (ii) all other information
concerning its business, properties and personnel as Buyer may reasonably
request. Neither the Company nor any of its Subsidiaries shall be required to
provide access to or to disclose information where such access or disclosure
would violate or prejudice the rights of the Company's customers, jeopardize any
attorney-client privilege or contravene any law, rule, regulation, order,
judgment, decree, fiduciary duty or binding agreement entered into prior to the
date of this Agreement. The parties hereto will make appropriate substitute
disclosure arrangements under circumstances in which the restrictions of the
preceding sentence apply. Buyer will hold all such information in confidence to
the extent required by, and in accordance with, the provisions of the
confidentiality agreement, dated July 9, 1998, between Buyer and the Company
(the "Confidentiality Agreement").
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(b) Upon reasonable notice and subject to applicable laws relating
to the exchange of information, Buyer shall, and shall cause its Subsidiaries
to, afford to the officers, employees, accountants, counsel and other
representatives of the Company, access, during normal business hours during the
period prior to the Effective Time, to such information regarding Buyer and its
Subsidiaries as shall be reasonably necessary for the Company to fulfill its
obligations pursuant to this Agreement to prepare the Proxy Statement or which
may be reasonably necessary for the Company to confirm that the representations
and warranties of Buyer contained herein are true and correct and that the
covenants of Buyer contained herein have been performed in all material
respects. Neither Buyer nor any of its Subsidiaries shall be required to provide
access to or to disclose information where such access or disclosure would
violate or prejudice the rights of Buyer's customers, jeopardize any attorney-
client privilege or contravene any law, rule, regulation, order, judgment,
decree, fiduciary duty or binding agreement entered into prior to the date of
this Agreement. The parties hereto will make appropriate substitute disclosure
arrangements under circumstances in which the restrictions of the preceding
sentence apply.
(c) All information furnished by Buyer to the Company or its
representatives pursuant hereto shall be treated as the sole property of Buyer
and, if the Merger shall not occur, the Company and its representatives shall
return to Buyer all of such written information and all documents, notes,
summaries or other materials containing, reflecting or referring to, or derived
from, such information. The Company shall, and shall use its best efforts to
cause its representatives to, keep confidential all such information, and shall
not directly or indirectly use such information for any competitive or other
commercial purpose. The obligation to keep such information confidential shall
continue for two years from the date the proposed Merger is abandoned and shall
not apply to (i) any information which (x) was already in the Company's
possession prior to the disclosure thereof by Buyer; (y) was then generally
known to the public; or (z) was disclosed to the Company by a third party not
bound by an obligation of confidentiality or (ii) disclosures made as required
by law. It is further agreed that, if in the absence of a protective order or
the receipt of a waiver hereunder the Company is nonetheless, in the opinion of
its counsel, compelled to disclose information concerning Buyer to any tribunal
or governmental body or agency or else stand liable for contempt or suffer other
censure or penalty, the Company may disclose such in formation to such tribunal
or governmental body or agency without liability hereunder.
(d) All information furnished by Company to the Buyer or its
representatives pursuant hereto shall be treated as the sole property of Company
and, if the Merger shall not occur, the Buyer and its representatives shall
return to Company all of such written information and all documents, notes,
summaries or other materials containing, reflecting or referring to, or derived
from, such information. The Buyer shall, and shall use its best efforts to cause
its representatives to, keep confidential all such information, and shall not
directly or indirectly use such information for any competitive or other
commercial purpose. The obligation to keep such information confidential shall
continue for two years from the date the proposed Merger is abandoned and shall
not apply to (i) any information which (x) was already in the Buyer's possession
prior to the disclosure thereof by Company; (y) was then generally known to the
public; or (z) was disclosed to the Buyer by a third party not bound by an
obligation of
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<PAGE>
confidentiality or (ii) disclosures made as required by law. It is further
agreed that, if in the absence of a protective order or the receipt of a waiver
hereunder the Buyer is nonetheless, in the opinion of its counsel, compelled to
disclose information concerning Company to any tribunal or governmental body or
agency or else stand liable for contempt or suffer other censure or penalty, the
Buyer may disclose such information to such tribunal or governmental body or
agency without liability hereunder.
(e) No investigation by either of the parties or their respective
representatives shall affect the representations, warranties, covenants or
agreements of the other set forth herein.
(f) Company shall respond reasonably and in good faith to any timely
request of Buyer to permit a representative of Buyer to attend any meeting of
Company's Board of Directors or the Executive Committee thereof, except to the
extent that such meeting, or portion thereof, relates to the Merger.
6.3 (a) Stockholder Meetings. The Company and Buyer each shall take
--------------------
all steps necessary to duly call, give notice of, convene and hold a special or
annual meeting of its respective stockholders to be held as soon as is
reasonably practicable after the date on which the S-4 becomes effective for the
purpose of voting upon the approval of this Agreement and the consummation of
the transactions contemplated hereby. The Company and Buyer each will, through
its respective Board of Directors, except to the extent legally required for the
discharge of the fiduciary duties of such board, recommend to its respective
stockholders approval of this Agreement and the transactions contemplated hereby
and such other matters as may be submitted to its stockholders in connection
with this Agreement. The Company and Buyer shall coordinate and cooperate with
respect to the foregoing matters, with a view towards, among other things,
holding the respective meetings of each party's stockholders on the same day.
(b) Voting Agreements. Each of the Company's directors have
-----------------
entered into a Voting Agreement, a form of which is attached as Exhibit 6.3(b),
hereto.
6.4 Legal Conditions to Merger. Each of Buyer and the Company shall, and
--------------------------
shall cause its Subsidiaries to, use their best efforts (a) to take, or cause to
be taken, all actions necessary, proper or advisable to comply promptly with all
legal requirements which may be imposed on such party or its Subsidiaries with
respect to the Merger or the Subsidiary Merger and, subject to the conditions
set forth in Article VII hereof, to consummate the transactions contemplated by
this Agreement and (b) to obtain (and to cooperate with the other party to
obtain) any consent, authorization, order or approval of, or any exemption by,
any Governmental Entity and any other third party which is required to be
obtained by the Company or Buyer or any of their respective Subsidiaries in
connection with the Merger and the Subsidiary Merger and the other transactions
contemplated by this Agreement, and to comply with the terms and conditions of
such consent, authorization, order or approval; provided, however, that neither
--------- -------
Buyer nor the Company shall be obligated to take any action pursuant to the
foregoing if the taking of such action or such compliance or the obtaining of
such consent, authorization, order or approval is likely, in the good faith
reasonable opinion of Buyer, to result in the imposition of a Burdensome
Condition.
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<PAGE>
6.5 Affiliates. Each of Buyer and the Company shall use its best efforts
----------
to cause each director, executive officer and other person who is an "affiliate"
(for purposes of Rule 145 under the Securities Act and for purposes of
qualifying the Merger for "pooling-of- interests" accounting treatment) of such
party to deliver to the other party hereto, as soon as practicable after the
date of this Agreement, and in any event prior to the earlier of the date of the
stockholders meeting called by the Company to approve this Agreement and the
date of the stockholders meeting called by Buyer to approve this Agreement, a
written agreement, in the form of Exhibit 6.5(a) hereto (in the case of
affiliates of Buyer) or 6.5(b) hereto (in the case of affiliates of the
Company), providing that such person will not sell, pledge, transfer or
otherwise dispose of any shares of Buyer Common Stock or Company Common Stock
held by such "affiliate" and, in the case of the "affiliates" of the Company,
the shares of Buyer Common Stock to be received by such "affiliate" in the
Merger: (1) in the case of shares of Buyer Common Stock to be received by
"affiliates" of the Company in the Merger, except in compliance with the
applicable provisions of the Securities Act and the rules and regulations
thereunder; and (2) during the period commencing 30 days prior to the Merger and
ending at the time of the publication of financial results covering at least 30
days of combined operations of Buyer and the Company.
6.6 Stock Exchange Listing. Buyer shall cause the shares of Buyer Common
----------------------
Stock to be issued in the Merger to be approved for listing on the Nasdaq,
subject to official notice of issuance, as of the Effective Time.
6.7 Employee Benefit Plans; Existing Agreements.
--------------------------------------------
(a) The employees of the Company (the "Company Employees") shall be
entitled to participate in Buyer's employee benefit plans in which similarly
situated employees of Buyer participate, to the same extent as comparable
employees of Buyer. As of the Effective Time, Buyer shall permit the Company
Employees to participate in Buyer's group hospitalization, medical, life and
disability insurance plans on the same terms and conditions as applicable to
comparable employees of Buyer and its Subsidiaries; provided, however, that all
Company employees and dependents will be eligible to participate in medical
insurance plans of First Savings Bank upon the merger without regard to any pre-
existing conditions or exclusions and with no uninsured waiting periods, and the
carry over of all current plan year deductibles and annual out-of-pocket
contribution, to the extent permitted by the Buyer's medical insurance plans. As
of the next entry date immediately following the Effective Time, Buyer shall
permit the Company Employees to participate in Buyer's defined benefit pension
plan, 401(k) savings plan, employee stock ownership plan ("ESOP") and similar
plans on the same terms and conditions as employees of Buyer and its
Subsidiaries, giving effect to years of service with the Company and its
Subsidiaries (to the extent the Company gave effect) as if such service were
with Buyer, for purposes of eligibility and vesting, but not for benefit accrual
purposes, provided, however, in no event shall said Company employees be
credited with more than three (3) years of service for vesting purposes under
the ESOP as of the Effective Time. Buyer shall as of the Effective Time enter
into a Consulting Agreement as contained at Disclosure Schedule 6.7(b)(2)
including the provisions detailed at 6.7(b)(2)(ii) of said Disclosure Schedule
with respect to Mr. George Hornyak. As of the merger date, Company Employees
retain accrual or payout for
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short-term disability, unused sick leave benefits and vacation pay, provided
such amounts have been fully accrued for by Company as of the Effective Time and
are in accordance with such amounts provided in past practice by the Company. As
of the Effective Time, all participants under the Company's defined contribution
plan shall become 100% vested in all participant accounts. With respect to
Buyer's welfare benefit plans, (including by example, vacation, sick leave,
severance), Company employees shall have prior service with the Company
recognized for purposes of eligibility to participate, vesting and benefits
accrual purposes.
(b) Following the Effective Time, Buyer shall honor and shall cause
the Surviving Bank to honor in accordance with their terms all employment,
severance and other compensation agreements and arrangements, including, but not
limited to, severance benefit plans listed in Section 6.7(b)(1) of the Company
Disclosure Schedule, existing prior to the execution of this Agreement and the
agreements and arrangement, as set forth in Section 6.7(b)(2) of the Company
Disclosure Schedule which are between the Company and any director, officer or
employee thereof and which have been disclosed in the Company Disclosure S
chedule and previously have been delivered to Buyer and agrees to make the
payments and provide the benefits pursuant thereto described in Section 6.7(b)
of the Company Disclosure Schedule.
(c) As of the Effective Time, Buyer will assume, or will cause First
Savings Bank to assume, the tax qualified plans of the Company Bank as listed in
Section 3.11(a) of the Company Disclosure Schedule. Neither Buyer nor First
Savings Bank shall be required to make further contributions to such plans. As
of the Effective Time, all accrued benefits under the plans shall be fully
vested and nonforfeitable. As soon as practicable after the Effective Time,
Buyer shall terminate or shall cause First Savings Bank to terminate the tax
qualified plans of the Company Bank assumed by Buyer, or First Savings Bank,
pursuant to this Section 6.7(c), and distribution of the accounts of active
participants immediately prior to the Effective Time under the plans shall be
made to the participants and beneficiaries in accordance with the terms of such
plans.
(d) Buyer and Surviving Bank shall implement the programs detailed
at items (i), (ii), (iii), (iv), (v) and (vii) of Disclosure Schedule 6.7(b)(2).
6.8 Indemnification.
---------------
(a) In the event of any threatened or actual claim, action, suit,
proceeding or investigation, whether civil or administrative, including, without
limitation, any such claim, action, suit, proceeding or investigation in which
any person who is now, or has been at any time prior to the date of this
Agreement, or who becomes prior to the Effective Time, a director or officer or
employee of the Company or any of its Subsidiaries (the "Indemnified Parties")
is, or is threatened to be, made a party based in whole or in part on, or
arising in whole or in part out of, or pertaining to (i) the fact that he is or
was a director, officer or employee of the Company, any of the Subsidiaries of
the Company or any of their respective predecessors or (ii) this Agreement or
any of the transactions contemplated hereby, whether in any case asserted or
arising before or after the Effective Time, the parties hereto agree to
cooperate and use their best efforts to defend against and respond thereto. It
is understood and agreed that after the Effective Time, Buyer
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shall indemnify and hold harmless, as and to the extent permitted by Delaware
law, each such Indemnified Party against any losses, claims, damages,
liabilities, costs, expenses (including reasonable attorney's fees and expenses
in advance of the final disposition of any claim, suit, proceeding or
investigation to each Indemnified Party to the fullest extent permitted by law
upon receipt of any undertaking required by applicable law), judgments, fines
and amounts paid in settlement in connection with any such threatened or actual
claim, action, suit, proceeding or investigation, and in the event of any such
threatened or actual claim, action, suit, proceeding or investigation (whether
asserted or arising before or after the Effective Time), the Indemnified Parties
may retain counsel reasonably satisfactory to them after consultation with
Buyer; provided, however, that (1) Buyer shall have the right to assume the
--------- -------
defense thereof and upon such assumption Buyer shall not be liable to any
Indemnified Party for any legal expenses of other counsel or any other expenses
subsequently incurred by any Indemnified Party in connection with the defense
thereof, except that if Buyer elects not to assume such defense or counsel for
the Indemnified Parties reasonably advises that there are issues which raise
conflicts of interest between Buyer and the Indemnified Parties, the Indemnified
Parties may retain counsel reasonably satisfactory to them after consultation
with Buyer, and Buyer shall pay the reasonable fees and expenses of such counsel
for the Indemnified Parties, (2) Buyer shall in all cases be obligated pursuant
to this paragraph to pay for only one firm of counsel for all Indemnified
Parties, (3) Buyer shall not be liable for any settlement effected without its
prior written consent (which consent shall not be unreasonably withheld) and (4)
Buyer shall have no obligation hereunder to any Indemnified Party when and if a
court of competent jurisdiction shall ultimately determine, and such
determination shall have become final and nonappealable, that indemnification of
such Indemnified Party in the manner contemplated hereby is prohibited by
applicable law. Any Indemnified Party wishing to claim Indemnification under
this Section 6.8, upon learning of any such claim, action, suit, proceeding or
investigation, shall notify promptly Buyer thereof, pr ovided that the failure
to so notify shall not affect the obligations of Buyer under this Section 6.8
except to the extent such failure to notify prejudices Buyer. Buyer's
obligations under this Section 6.8 continue in full force and effect for a
period of six (6) years from the Effective Time; provided, however, that all
-------- -------
rights to indemnification in respect of any claim (a "Claim") asserted or made
within such period shall continue until the final disposition of such Claim.
Notwithstanding anything to the contrary contained in this Section 6.8(a), in no
event shall Buyer's obligations under this Section 6.8(a) with respect to
indemnification or the advancement of expenses be greater than the obligations
of the Company and its Subsidiaries with respect thereto set forth as of the
date of this Agreement in the Certificate of Incorporation, By-laws or similar
governing documents of the Company and its Subsidiaries.
(b) Buyer shall cause the persons serving as officers and directors
of the Company immediately prior to the Effective Time to be covered for a
period of six years from the Effective Time by the directors' and officers'
liability insurance policy maintained by the Company (provided that Buyer may
substitute therefor policies of at least the same coverage and amounts
containing terms and conditions which are not less advantageous than such
policy) with respect to acts or omissions occurring prior to the Effective Time
which were committed by such officers and directors in their capacity as such.
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(c) In the event Buyer or the Surviving Corporation 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 Buyer or the Surviving Corporation, as the case may be, assume the
obligations set forth in this section.
(d) The provisions of this Section 6.8 are intended to be for the
benefit of, and shall be enforceable by, each Indemnified Party and his or her
heirs and representatives; and the provisions of this Section 6.8 will survive
the Effective Time.
6.9 Subsequent Interim and Annual Financial Statements. As soon as
--------------------------------------- ----------
reasonably available, but in no event later than April 1, 1999 or, in the case
of the Company, December 31, 1998, Buyer will deliver to the Company and the
Company will deliver to Buyer their respective Annual Reports on Form 10-K for,
year ending December 31, 1998 and, in the case of the Company, the fiscal year
ending September 30, 1998, as filed with the SEC under the Exchange Act. As soon
as reasonably available, but in no event more than 45 days after the end of each
fiscal quarter ending after the date of this Agreement, Buyer will deliver to
the Company and the Company will deliver to Buyer their respective Quarterly
Reports on Form 10-Q, as filed with the SEC under the Exchange Act.
6.10 Additional Agreements. In case at any time after the Effective Time
---------------------
any further action is necessary or desirable to carry out the purposes of this
Agreement, or the Bank Merger Agreement, or to vest the Surviving Corporation or
the Surviving Bank with full title to all properties, assets, rights, approvals,
immunities and franchises of any of the parties to the Merger or the Subsidiary
Merger, the proper officers and directors of each party to this Agreement and
their respective Subsidiaries shall take all such necessary action as may be
reasonably requested by Buyer.
6.11 Advice of Changes. Buyer and the Company shall promptly advise the
-----------------
other party of any change or event having a Material Adverse Effect on it or
which it believes would or would be reasonably likely to cause or constitute a
material breach of any of its representations, warranties or covenants contained
herein. From time to time prior to the Effective Time (and on the date prior to
the Closing Date), each party will promptly supplement or amend the Disclosure
Schedules delivered in connection with the execution of this Agreement to
reflect any matter which, if existing, occurring or known at the date of this
Agreement, would have been required to be set forth or described in such
Disclosure Schedules or which is necessary to correct any information in such
Disclosure Schedules which has been rendered inaccurate thereby. No supplement
or amendment to such Disclosure Schedules shall have any effect for the purpose
of determining satisfaction of the conditions set forth in Sections 7.2(a) or
7.3(a) hereof, as the case may be, or the compliance by the Company or Buyer, as
the case may be, with the respective covenants and agreements of such pa rties
contained herein.
6.12 Current Information. During the period from the date of this
-------------------
Agreement to the Effective Time, the Company will cause one or more of its
designated representatives to notify
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on a regular and frequent basis (not less than monthly) representatives of Buyer
and to report (i) the general status of the ongoing operations of the Company
and its Subsidiaries; (ii) the status of, and the action proposed to be taken
with respect to, those Loans held by the Company or any Subsidiary of the
Company which, individually or in combination with one or more other Loans to
the same borrower thereunder, have an original principal amount of $250,000 or
more and are non-performing assets; (iii) the origination of all loans other
than 1-4 family residential mortgage loans and consumer loans; and (iv) any
material changes in the Company's pricing of deposits. The Company will promptly
notify Buyer of any material change in the normal course of business or in the
operation of the properties of the Company or any of its Subsidiaries and of any
governmental complaints, investigations or hearings (or communications
indicating that the same may be contemplated), or the institution or the threat
of significant litigation involving the Company or any of its Subsidiaries, and
will keep Buyer fully informed of such events.
6.13 Execution and Authorization of Bank Merger Agreement. As soon as
----------------------------------- ----------------
reasonably practicable after the date of this Agreement, (a) Buyer shall
(i) cause the Board of Directors of First Savings Bank to approve the Bank
Merger Agreement, (ii) cause First Savings Bank to execute and deliver the Bank
Merger Agreement, and (iii) approve the Bank Merger Agreement as the sole
stockholder of First Savings Bank, and (b) the Company shall (i) cause the Board
of Directors of the Company Bank to approve the Bank Merger Agreement,
(ii) cause the Company Bank to execute and deliver the Bank Merger Agreement,
and (iii) approve the Bank Merger Agreement as the sole stockholder of the
Company Bank. The Bank Merger Agreement shall contain terms that are normal and
customary in light of the transactions contemplated hereby and such additional
terms as are necessary to carry out the purposes of this Agreement.
6.14 Directorships. Buyer and Surviving Bank shall cause its Board of
-------------
Directors to be expanded by two members and shall appoint two of the current
directors of the Company George T. Hornyak, Jr. and Joseph Chadwick as nominees
to fill the vacancies on Buyer's Board of Directors created by such increase as
of the Effective Time. The initial term for Mr. Hornyak on the Buyer's Board
shall expire in 2001 and for Mr. Chadwick in 1999. The initial term for both
Messrs. Hornyak and Chadwick on the Surviving Bank's Board shall expire in 1999.
Upon expiration of the initial terms, Messrs. Hornyak and Chadwick will be
considered by the respective Board Nominating Committees to stand for election
for a new three-year term.
ARTICLE VII
CONDITIONS PRECEDENT
7.1 Conditions to Each Party's Obligation To Effect the Merger. The
----------------------------------------------------------
respective obligation of each party to effect the Merger shall be subject to the
satisfaction at or prior to the Effective Time of the following conditions:
(a) Stockholder Approval. This Agreement shall have been approved
--------------------
and adopted by the affirmative vote of the holders of at least a majority of the
outstanding shares of Company Common Stock entitled to vote thereon and by the
affirmative vote of the holders of at least a majority of the outstanding shares
of Buyer Common Stock entitled to vote thereon.
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<PAGE>
(b) Nasdaq Stock Market Listing. The shares of Buyer Common Stock
---------------------------
which shall be issued to the stockholders of the Company upon consummation of
the Merger shall have been authorized for listing on the Nasdaq Stock Market,
subject to official notice of issuance.
(c) Other Approvals. All regulatory approvals required to
---------------
consummate the transactions contemplated hereby (including the Merger, the
Subsidiary Merger and, if necessary to consummate the Subsidiary Merger) shall
have been obtained and shall remain in full force and effect and all statutory
waiting periods in respect thereof shall have expired (all such approvals and
the expiration of all such waiting periods being referred to herein as the
"Requisite Regulatory Approvals").
(d) S-4. The S-4 shall have become effective under the Securities
---
Act and no stop order suspending the effectiveness of the S-4 shall have been
issued and no proceedings for that purpose shall have been initiated or
threatened by the SEC.
(e) No Injunctions or Restraints; Illegality. No order, injunction
----------------------------------------
or decree issued by any court or agency of competent jurisdiction or other legal
restraint or prohibition (an "Injunction") preventing the consummation of the
Merger, the Subsidiary Merger or any of the other transactions contemplated by
this Agreement or the Bank Merger Agreement shall be in effect. No statute,
rule, regulation, order, injunction or decree shall have been enacted, entered,
promulgated or enforced by any Governmental Entity which prohibits, restricts or
makes illegal consummation of the Merger or the Subsidiary Merger.
7.2 Conditions to Obligations of Buyer. The obligation of Buyer to
----------------------------------
effect the Merger is also subject to the satisfaction or waiver by Buyer at or
prior to the Effective Time of the following conditions:
(a) Representations and Warranties. (I) The representations and
------------------------------
warranties of the Company set forth in this Agreement shall be true and correct
in all material respects as of the date of this Agreement and (except to the
extent such representations and warranties speak as of an earlier date) as of
the Closing Date as though made on and as of the Closing Date; and (II) the
representations and warranties of the Company set forth in this Agreement shall
be true and correct in all material respects as of the date of this Agreement
and (except to the extent such representations and warranties speak as of an
earlier date) as of the Closing Date as though made on and as of the Closing
Date; provided, however, that, for purposes of this clause (II), such
-------- -------
representations and warranties shall be deemed to be true and correct in all
material respects unless the failure or failures of such representations and
warranties to be so true and correct, individually or in the aggregate,
represent a material adverse change from the business, assets, financial
condition or results of operations of the Company and its Subsidiaries taken as
a whole as represented herein. Buyer shall have received a certificate signed on
behalf of the Company by the Chief Executive Officer and the Chief Financial
Officer of the Company to the foregoing effect.
(b) Performance of Obligations of the Company. The Company shall
-----------------------------------------
have performed in all material respects all obligations required to be performed
by it under this
- 45 -
<PAGE>
Agreement at or prior to the Closing Date, and Buyer shall have received a
certificate signed on behalf of the Company by the Chief Executive Officer and
the Chief Financial Officer of the Company to such effect.
(c) No Burdensome Condition. None of the Requisite Regulatory
-----------------------
Approvals shall impose any term, condition or restriction upon Buyer, the
Company, the Company Bank, the Surviving Corporation, the Surviving Bank or any
of their respective Subsidiaries that Buyer, or the Company, in good faith,
reasonably determines would so materially adversely affect the economic or
business benefits of the transactions contemplated by this Agreement to Buyer or
the Company as to render inadvisable in the reasonable good faith judgment of
Buyer or the Company, the consummation of the Merger (a "Burdensome Condition").
(d) Consents Under Agreements. The consent, approval or waiver of
-------------------------
each person (other than the Governmental Entities) whose consent or approval
shall be required in order to permit the succession by the Surviving Corporation
or the Surviving Bank pursuant to the Merger or the Subsidiary Merger, as the
case may be, to any obligation, right or interest of the Company or any
Subsidiary of the Company under any loan or credit agreement, note, mortgage,
indenture, lease, license or other agreement or instrument shall have been
obtained, except where the failure to obtain such consent, approval or waiver
would not so materially adversely affect the economic or business benefits of
the transactions contemplated by this Agreement to Buyer as to render
inadvisable, in the reasonable good faith judgment of Buyer, the consummation of
the Merger.
(e) No Pending Governmental Actions. No proceeding initiated by any
-------------------------------
Governmental Entity seeking an Injunction shall be pending.
(f) Federal Tax Opinion. Buyer and Company shall have received an
-------------------
opinion of Patton Boggs, LLP, counsel to Buyer ("Buyer's Counsel"), in form and
substance reasonably satisfactory to Buyer, substantially to the effect that, on
the basis of facts, representations and assumptions set forth in such opinion
which are consistent with the state of facts existing at the Effective Time, the
Merger and Subsidiary Merger will be treated as reorganizations within the
meaning of Section 368(a) of the Code and that, accordingly, for federal income
tax purposes:
(i) No gain or loss will be recognized by the Buyer as a
result of the Merger;
(ii) No gain or loss will be recognized by First Savings Bank
as a result of the Subsidiary Merger;
(iii) No gain or loss will be recognized by the Company as a
result of the Merger;
(iv) No gain or loss will be recognized by the Company Bank as
a result of the Subsidiary Merger;
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<PAGE>
(v) No gain or loss will be recognized by the shareholders of
the Company who exchange all of their Company Common Stock solely for Buyer
Common Stock pursuant to the Merger (except with respect to cash received in
lieu of a fractional share interest in Buyer Common Stock;
(vi) The aggregate tax basis of the Buyer Common Stock
received by shareholders who exchange all of their Company Common Stock solely
for Common Stock pursuant to the Merger will be the same as the aggregate tax
basis of the Company Common Stock surrendered in exchange therefor (reduced by
any amount allocable to a fractional share interest for which cash is received).
In rendering such opinion, the Buyer's Counsel may require and
rely upon representations and covenants contained in certificates of officers of
Buyer, the Company, the Company Bank and others, including certain shareholders
of the Company.
(g) Legal Opinion. Buyer shall have received the opinion of
-------------
Malizia, Spidi, Sloane & Fisch, P.C., counsel to the Company (the "Company's
Counsel"), dated the Closing Date, substantially in the form attached hereto as
Exhibit 7.2(g). As to any matter in such opinion which involves matters of fact
or matters relating to laws other than Federal securities or New Jersey
corporate law, such counsel may rely upon the certificates of officers and
directors of the Company and of public officials and opinions of local counsel,
reasonably acceptable to Buyer, provided a copy of such reliance opinion shall
be attached as an exhibit to the opinion of such counsel.
(h) Pooling of Interests. Buyer shall have received a letter from
--------------------
its accountants (at the expense of the Buyer) addressed to Buyer, to the effect
that the Merger will qualify for "pooling of interests" accounting treatment,
unless such firm advises Buyer that it is unable to issue a letter to such
effect solely by reason of Buyer having exercised its right to purchase Company
Common Stock pursuant to the Option Agreement.
(i) Accountant's Letter. The Company shall have caused to be
-------------------
delivered to Buyer (at Buyer's expense) letters from KPMG Peat Marwick,
independent public accountants with respect to the Company, dated the date on
which the Registration Statement or last amendment thereto shall become
effective, and dated the date of the Closing, and addressed to Buyer, with
respect to the Company's consolidated financial position and results of
operations, which letters shall be based upon agreed upon procedures to be
specified by Buyer, which procedures shall be consistent with applicable
professional standards for letters delivered by independent accountants in
connection with comparable transactions; provided, however, that if the Merger
is terminated, all costs incurred in connection with the preparation of such
letters shall be borne equally by the Buyer and the Company.
(j) Subsidiary Merger. Nothing shall have come to the attention
-----------------
of Buyer which would preclude consummation of the Subsidiary Merger immediately
following consummation of the Merger.
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<PAGE>
7.3 Conditions to Obligations of the Company. The obligation of the
----------------------------------------
Company to effect the Merger is also subject to the satisfaction or waiver by
the Company at or prior to the Effective Time of the following conditions:
(a) Representations and Warranties. (I) The representations and
------------------------------
warranties of Buyer set forth in this Agreement shall be true and correct in all
material respects as of the date of this Agreement and (except to the extent
such representations and warranties speak as of an earlier date) as of the
Closing Date as though made on and as of the Closing Date; and (II) the
representations and warranties of Buyer set forth in this Agreement shall be
true and correct in all material respects as of the date of this Agreement and
(except to the extent such representations and warranties speak as of an earlier
date) as of the Closing Date as though made on and as of the Closing Date;
provided, however, that, for purposes of this clause (II), such representations
- -------- -------
and warranties shall be deemed to be true and correct in all material respects
unless the failure or failures of such representations and warranties to be so
true and correct, individually or in the aggregate, represent a material adverse
change from the business, assets, financial condition or results of operations
of Buyer and its Subsidiaries taken as a whole as represented herein. The
Company shall have received a certificate signed on behalf of Buyer by the Chief
Executive Officer and the Chief Financial Officer of Buyer to the foregoing
effect.
(b) Performance of Obligations of Buyer. Buyer shall have
-----------------------------------
performed in all material respects all obligations required to be performed by
it under this Agreement at or prior to the Closing Date, and the Company shall
have received a certificate signed on behalf of Buyer by the Chief Executive
Officer and the Chief Financial Officer of Buyer to such effect.
(c) Consents Under Agreements. The consent, approval or waiver of
-------------------------
each person (other than the Governmental Entities) whose consent or approval
shall be required in order to permit the succession by the Surviving Corporation
or the Surviving Bank pursuant to the Merger or the Subsidiary Merger, as the
case may be, to any obligation, right or interest of the Buyer or any Subsidiary
of the Buyer under any loan or credit agreement, note, mortgage, indenture,
lease, license or other agreement or instrument shall have been obtained, except
those for which failure to obtain such consent, approval or waiver would not so
materially adversely affect the economic or business benefits of the
transactions contemplated by this Agreement to Buyer as to render inadvisable,
in the reasonable good faith judgment of the Buyer, the consummation of the
Merger.
(d) No Pending Governmental Actions. No proceeding initiated by any
-------------------------------
Governmental Entity seeking an injunction shall be pending.
(e) Pooling of Interests. Buyer shall have received a letter from
--------------------
its accountants (at the expense of the Buyer) addressed to Buyer, to the effect
that the Merger will qualify for "pooling of interests" accounting treatment,
unless such firm advises Buyer that it is unable to issue a letter to such
effect solely by reason of Buyer having exercised its right to purchase Company
Common Stock pursuant to the Stock Option Agreement.
- 48 -
<PAGE>
(f) Federal Tax Opinion. The Company shall have received an
-------------------
opinion of the Buyer's Counsel, in form and substance satisfactory to the
Company, dated as of the Effective Time, substantially to the effect as set
forth in Section 7.2(f) hereof.
(g) Legal Opinion. The Company shall have received the opinion of
-------------
Buyer's Counsel, dated the Closing Date, substantially in the form attached
hereto as Exhibit 7.3(f). As to any matter in such opinion. which involves
matters of fact or matters relating to laws other than Federal securities law or
Delaware corporate law, such counsel may rely upon the certificates of officers
and directors of Buyer and of public officials and opinions of local counsel,
reasonably acceptable to the Company, provided a copy of such reliance opinions
shall be attached as an exhibit to the opinion of such counsel.
ARTICLE VIII
TERMINATION AND AMENDMENT
8.1 Termination. This Agreement may be terminated at any time prior to
-----------
the Effective Time, whether before or after approval of the matters presented in
connection with the Merger by the stockholders of both the Company and Buyer:
(a) by mutual consent of the Company and Buyer in a written
instrument, if the Board of Directors of each so determines by a vote of a
majority of the members of its entire Board;
(b) by either Buyer or the Company upon written notice to the other
party (i) 60 days after the date on which any request or application for a
Requisite Regulatory Approval shall have been denied or withdrawn at the request
or recommendation of the Governmental Entity which must grant such Requisite
Regulatory Approval, unless within the 60-day perio d following such denial or
withdrawal a petition for rehearing or an amended application has been filed
with the applicable Governmental Entity, provided, however, that no party shall
-------- -------
have the right to terminate this Agreement pursuant to this Section 8.1(b)(i) 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 or (ii) if any
Governmental Entity of competent jurisdiction shall have issued a final
nonappealable order enjoining or otherwise prohibiting the consummation of any
of the transactions contemplated by this Agreement;
(c) by either Buyer or the Company if the Merger shall not have been
consummated on or before March 31, 1999, unless the failure of the Closing to
occur by such date 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 either Buyer or the Company (provided that the terminating
party shall not be in material breach of any of its obligations under Section
6.3) if any approval of the stockholders of either of the Company or Buyer
required for the consummation of the Merger
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<PAGE>
shall not have been obtained by reason of the failure to obtain the required
vote at a duly held meeting of such stockholders or at any adjournment or
postponement thereof;
(e) by either Buyer or the Company (provided that the terminating
party is not then in material breach of any representation, warranty, covenant
or other agreement contained herein) if there shall have been a material breach
of any of the representations or warranties set forth in this Agreement on the
part of the other party, which breach is not cured within thirty days following
written notice to the party committing such breach, or which breach, by its
nature, cannot be cured prior to the Closing; provided, however, that neither
-------- -------
party shall have the right to terminate this Agreement pursuant to this Section
8.1(e) unless the breach of representation or warranty, together with all other
such breaches, would entitle the party receiving such representation not to
consummate the transactions contemplated hereby under Section 7.2(a) (in the
case of a breach of representation or warranty by the Company) or Section 7.3(a)
(in the case of a breach of representation or warranty by Buyer);
(f) by either Buyer or the Company (provided that the terminating
party is not then in material breach of any representation, warranty, covenant
or other agreement contained herein) if there shall have been a material breach
of any of the covenants or agreements set forth in this Agreement on the part of
the other party, which breach shall not have been cured within thirty days
following receipt by the breaching party of written notice of such breach from
the other party hereto;
(g) by the Company, by giving written notice of such election to
Buyer within two trading days after the Valuation Period in the event the
Average Closing Price is less than $8.50 per share; provided, however, that no
--------- -------
right of termination shall arise under this Section 8.1(g) if Buyer, within 5
business days of receipt of such written notice, notifies the Company in writing
that it has waived its right to utilize the Maximum Exchange Ratio and has
increased the Exchange Ratio such that the value of the consideration (valued at
the Average Closing Price) to be paid in respect of each share of Company Common
Stock to be converted into Buyer Common Stock and cash in lieu of fractional
shares upon consummation of the Merger is $32.00 per share;
(h) by Buyer, by given written notice of such election to Company
within two trading days after the Valuation Period in the event the Average
Closing Price is greater than $11.50 per share; provided, however, that no right
-------- -------
of termination shall arise under this Section 8.1(h) if the Company, within 5
business days of receipt of such written notice, notifies the Buyer in writing
that it has waived its right to utilize the Minimum Exchange Ratio and has
decreased the Exchange Ratio such that the value of the consideration (valued at
the Average Closing Price) to be paid in respect of each share of Company Common
Stock to be converted into Buyer Common Stock and cash in lieu of fractional
shares upon consummation of the Merger is $36.80 per share; or
(i) by Buyer, if the Board of Directors of the Company does not
publicly recommend in the Proxy Statement that the Company's stockholders
approve and adopt this Agreement or if, after recommending in the Proxy
Statement that stockholders approve and adopt
- 50 -
<PAGE>
this Agreement, the Board of Directors of the Company shall have withdrawn,
modified or amended such recommendation in any respect materially adverse to
Buyer.
8.2 Effect of Termination; Expenses. In the event of termination of this
-------------------------------
Agreement by either Buyer or the Company as provided in Section 8.1, this
Agreement shall forthwith become void and have no effect except (i) the last
sentence of Section 6.2(a), and Sections 6.2(c), 6.2(d), 8.2 and 9.4, 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 Purchase Event (as such term is
defined in the Option Agreement) or (y) is terminated by Buyer pursuant to
Section 8.1(e) and (f) hereof, and within 12 months after such termination by
Buyer pursuant to Section 8.1(e) and (f) hereof a Purchase Event shall occur,
then in addition to any other amounts payable or stock issuable by the Company
pursuant to this Agreement or the Option Agreement, as the case may be, the
Company shall pay to Buyer a termination fee of $3.2 million.
8.3 Amendment. Subject to compliance with applicable law, this Agreement
---------
may be amended by the parties hereto, by action taken or authorized by their
respective Boards of Directors, at any time before or after approval of the
matters presented in connection with the Merger by the stockholders of either
the Company or Buyer; provided, however, that after any approval of the
-------- -------
after any approval of the transactions contemplated by this Agreement by the
Company's stockholders, there may not be, without further approval of such
stockholders, any amendment of this Agreement which reduces the amount or
changes the form of the consideration to be delivered to the Company
stockholders hereunder other than as contemplated by this Agreement. This
Agreement may not be amended except by an instrument in writing signed on behalf
of each of the parties hereto.
8.4 Extension; Waiver. At any time prior to the Effective Time, the
-----------------
parties hereto, by action taken or authorized by their respective Board of
Directors, may, to the extent legally allowed, (a) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(b) waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto and (c) waive compliance
with any of the agreements or conditions contained herein. Any agreement on the
part of a party hereto to any such extension or waiver shall be valid only if
set forth in a written instrument signed on behalf of such party, but such
extension or waiver or failure to insist on strict compliance with an
obligation, covenant, agreement or condition shall not operate as a waiver of,
or estoppel with respect to, any subsequent or other failure.
ARTICLE IX
GENERAL PROVISIONS
9.1 Closing. Subject to the terms and conditions of this Agreement and
-------
the Bank Merger Agreement, the closing of the Merger (the "Closing") will take
place at 10:00 a.m. on a
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<PAGE>
date to be specified by the parties, which shall be the first day which is
(a) the last business day of a month and (b) at least two business days after
the satisfaction or waiver (subject to applicable law) of the latest to occur of
the conditions set forth in Article VII hereof (the "Closing Date"), at the
offices of Buyer's counsel unless another time, date or place is agreed to in
writing by the parties hereto.
9.2 Alternative Structure. Notwithstanding anything to the contrary
---------------------
contained in this Agreement, subject to the Company's consent, which consent
shall not be unreasonably withheld, prior to the Effective Time, Buyer shall be
entitled to revise the structure of the Merger and/or the Subsidiary Merger and
related transactions provided that each of the transactions comprising such
revised structure shall (i) fully qualify as, or fully be treated as part of,
one or more tax-free reorganizations within the meaning of Section 368(a) of the
Code, and not subject any of the stockholders of the Company to adverse tax
consequences or change the amount of consideration to be received by such
stockholders, (ii) be properly treated for financial reporting purposes as a
pooling of interests, (iii) be capable of consummation in as timely a manner as
the structure contemplated herein and (iv) not otherwise be prejudicial to the
interests of the stockholders of the Company. This Agreement and any related
documents shall be appropriately amended in order to reflect any such revised
structure.
9.3 Nonsurvival of Representations, Warranties and Agreements. None of
---------------------------------------------------------
the representations, warranties, covenants and agreements in this Agreement or
in any instrument delivered pursuant to this Agreement (other than pursuant to
the Option Agreement, which shall terminate in accordance with its terms) shall
survive the Effective Time, except for those covenants and agreements contained
herein and therein which by their terms apply in whole or in part after the
Effective Time.
9.4 Expenses. All costs and expenses incurred in connection with this
--------
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such expense, provided, however, that the costs and expenses of
-------- -------
printing and mailing the Proxy Statement to the stockholders of the Company and
Buyer shall be borne equally by Buyer and the Company, provided, however, that
--------- -------
all filing and other fees paid to the SEC or any other Governmental Entity in
connection with the Merger, the Subsidiary Merger and other transactions
contemplated thereby shall be borne by the Buyer; provided, further, however,
-------- ------- -------
that nothing contained herein shall limit either party's rights to recover any
liabilities or damages arising out of the other party's willful breach of any
provision of this Agreement.
9.5 Notices. All notices and other communications hereunder shall be in
-------
writing and shall be deemed given if delivered personally, telecopied (with
confirmation), mailed by registered or certified mail (return receipt requested)
or delivered by an express courier (with confirmation) to the parties at the
following addresses (or at such other address for a party as shall be specified
by like notice):
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<PAGE>
(a) if to Buyer, to:
Pulse Bancorp, Inc.
6 Jackson Street
P.O. Box 193
South River, New Jersey
Attention: George T. Hornyak, Jr.
President and Chief Executive Officer
with a copy to:
Malizia, Spidi, Sloane & Fisch, P.C.
One Franklin Square
1301 K Street, N.W.
Suite 700 East
Washington, D.C. 20005
Attention: Samuel J. Malizia
and
(b) First Source Bancorp, Inc.
1000 Woodbridge Center Drive
Woodbridge, New Jersey 07095
Attention: John P. Mulkerin
President and Chief Executive Officer
with a copy to:
Patton Boggs LLP
2550 M Street, N.W.
Washington, D.C. 20037
Attention: Joseph G. Passaic, Jr.
9.6 Interpretation. When a reference is made in this Agreement to
--------------
Sections, Exhibits or Schedules, such reference shall be to a Section of or
Exhibit or Schedule to this Agreement unless otherwise indicated. The headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement. Whenever the words
"include", "includes" or ''including'' are used in this Agreement, they shall be
deemed to be followed by the words "without limitation". The phrases "the date
of this Agreement", "the date hereof" and terms of similar import, unless the
context otherwise requires, shall be deemed to refer to July 9, 1998.
9.7 Counterparts. This Agreement may be executed in counterparts, all of
------------
which shall be considered one and the same agreement and shall become effective
when counterparts have
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<PAGE>
been signed by each of the parties and delivered to the other parties, it being
understood that all parties need not sign the same counterpart.
9.8 Entire Agreement. This Agreement (including the documents and the
----------------
instruments referred to herein) constitutes the entire agreement and supersedes
all prior agreements and understandings, both written and oral, among the
parties with respect to the subject matter hereof, other than the
Confidentiality Agreement, the Bank Merger Agreement and the Option Agreement.
9.9 Governing Law. This Agreement shall be governed and construed in
-------------
accordance with the laws of the States of Delaware and New Jersey, as
applicable, without regard to any applicable conflicts of law.
9.10 Enforcement of Agreement. The parties hereto agree that irreparable
------------------------
damage would occur in the event that the provisions contained in the last
sentence of Section 6.2(a) and in Section. 6.2(c) of this Agreement were not
performed in accordance with its specific terms or was otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of the last sentence of Section 6.2(a) and
Section 6.2(c) of this Agreement and to enforce specifically the terms and
provisions thereof in any court of the United States or any state having
jurisdiction, this being in addition to any other remedy to which they are
entitled at law or in equity.
9.11 Severability. Any term or provision of this Agreement which is
------------
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
9.12 Publicity. Except as otherwise required by law or the rules of the
---------
Nasdaq Stock Market, so long as this Agreement is in effect, neither Buyer nor
the Company shall, or shall permit any of its Subsidiaries to, issue or cause
the publication of any press release or other public announcement with respect
to, or otherwise make any public statement concerning, the transactions
contemplated by this Agreement without the consent of the other party, which
consent shall not be unreasonably withheld.
9.13 Assignment; No Third Party Beneficiaries. Neither this Agreement nor
----------------------------------------
any of the rights, interests or obligations hereunder shall be assigned by any
of the parties hereto (whether by operation of law or otherwise) without the
prior written consent of the other parties. Subject to the preceding sentence,
this Agreement will be binding upon, inure to the benefit of and be enforceable
by the parties and their respective successors and assigns. Except as otherwise
expressly provided herein, this Agreement (including the documents and
instruments referred to herein) is not intended to confer upon any person other
than the parties hereto any rights or remedies hereunder.
- 54 -
<PAGE>
IN WITNESS WHEREOF, Buyer and the Company have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the date
first above written.
FIRST SOURCE BANCORP, INC.
By: /s/ John P. Mulkerin
-----------------------------------
Name: John P. Mulkerin
Title: President and Chief Executive Officer
Attest:
/s/ Christopher Martin
- ----------------------------------
Name: Christopher Martin
PULSE BANCORP, INC.
By: /s/ George T. Hornyak, Jr.
-----------------------------------
Name: George T. Hornyak, Jr.
Title: President and Chief Executive Officer
Attest:
/s/ Nancy M. Janosko
- ----------------------------------
Name: Nancy M. Janosko
Secretary
- 55 -
<PAGE>
ANNEX B
THE TRANSFER OF THIS AGREEMENT IS
SUBJECT TO CERTAIN PROVISIONS CONTAINED
HEREIN AND TO RESALE RESTRICTIONS UNDER
THE SECURITIES ACT OF 1933, AS AMENDED
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of July 9, 1998 (the "Agreement"), by and
between Pulse Bancorp, Inc., a New Jersey corporation ("Issuer"), and First
Source Bancorp, Inc., a Delaware corporation ("Grantee").
WHEREAS, Grantee and Issuer have entered into an Agreement and Plan of
Merger (the "Merger Agreement"), dated July 9, 1998 herewith, providing for,
among other things, the merger of Issuer with and into Grantee; and
WHEREAS, as a condition and inducement to Grantee's execution of the Merger
Agreement, Grantee has requested that Issuer agree, and Issuer has agreed, to
grant Grantee the Option (as defined below);
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein and in
the Merger Agreement, and intending to be legally bound hereby, Issuer and
Grantee agree as follows:
1. Defined Terms. Capitalized terms which are used but not defined herein shall
have the meanings ascribed to such terms in the Merger Agreement.
2. Grant of option. Subject to the terms and conditions set forth herein,
Issuer hereby grants to Grantee an irrevocable option (the "Option") to
purchase 620,940 shares (subject to adjustment as set forth herein) (the
"Option Shares") of common stock, par value $1.00 per share, of Issuer
("Issuer Common Stock") at a purchase price (subject to adjustment as set
forth herein) of $30.30 per Option Share (the "Purchase Price").
3. Exercise of Option. (a) Grantee may exercise the Option, in whole or in part,
at any time and from time to time following the occurrence of a Purchase
Event (as defined below); provided, however, that the Option, to the extent
not previously exercised, shall terminate and be of no further force and
effect upon the earliest to occur of (i) the Effective Time, (ii) 12 months
after the first occurrence of a Purchase Event (as defined below), (iii)
termination of the Merger Agreement in accordance with the terms thereof
prior to the occurrence of a Purchase Event (other than a termination of the
Merger Agreement by Grantee pursuant to Section 8.1 (f) thereof) or (iv) 12
months after the termination of the Merger Agreement by Grantee pursuant to
Section 8.1 (f) thereof, provided, however, that if within 12 months after a
termination of the Merger Agreement by Grantee pursuant to Section 8.1 (f)
thereof a Purchase Event shall occur, then notwithstanding anything to the
contrary contained herein, this Option shall terminate 12
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months after the first occurrence of such Purchase Event; and provided
further, however, that any purchase of shares upon exercise of the Option
shall be subject to compliance with applicable law, including, without
limitation, the Bank Holding Company Act of 1956, as amended (the "Act"); and
provided further, however, that if the Option cannot be exercised on any day
because of any injunction, order or similar restraint issued by a court of
competent jurisdiction, the period during which the Option may be exercised
shall be extended so that the Option shall expire no earlier than on the 10th
business day after such injunction, order or restraint shall have been
dissolved or when such injunction, order or restraint shall have become
permanent and no longer subject to appeal, as the case may be.
Notwithstanding anything to the contrary contained herein, (i) the Option may
not be exercised at any time when Grantee shall be in material breach of any
of its covenants or agreements contained in the Merger Agreement such that
Issuer shall be entitled to terminate the Merger Agreement pursuant to
Section 8.1(f) thereof and (ii) this Agreement shall automatically terminate
upon the proper termination of the Merger Agreement by Issuer pursuant to
Section 8.1(f) thereof as a result of the material breach by Grantee of its
covenants or agreements contained in the Merger Agreement.
(b) As used herein, a "Purchase Event" means any of the following events:
(i) Issuer shall have authorized, recommended, publicly proposed or
entered into an agreement with any person (other than Grantee or any
affiliate of Grantee or any person acting in concert in any respect with
Grantee) to effect an Acquisition Transaction (as defined below). As used
herein, the term Acquisition Transaction shall mean (A) a merger,
consolidation or similar transaction involving Issuer or any of its
Subsidiaries (other than internal mergers, reorganizations, consolidati ons
or dissolutions involving only existing Subsidiaries), (B) the disposition,
by sale, lease, exchange or otherwise, of assets of Issuer or any of its
Subsidiaries representing 25% or more of the consolidated assets of Issuer
and its Subsidiaries or (C) the issuance, sale or other disposition of
(including by way of merger, consolidation, share exchange or any similar
transaction) securities representing 25% or more of the voting power of
Issuer or any of its Subsidiaries;
(ii) any person (other than Grantee or any affiliate of Grantee or any
person acting in concert in any respect with Grantee) shall have acquired
Beneficial Ownership (as such term is defined in Rule l3d-3 promulgated
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"))
of, or the right to acquire Beneficial Ownership of, or any Group (as such
term is defined under the Exchange Act) shall have been formed which shall
have acquired Beneficial Ownership of, or the right to acquire Beneficial
Ownership of, 25% or more of the then outstanding shares of Issuer Common
stock,
(iii) any person (other than Grantee or any affiliate of Grantee or
any person acting in concert in any respect with Grantee) shall have
commenced (as such term is defined in Rule l4d-2 under the Exchange Act) or
shall have filed a registration statement under the Securities Act of 1933,
as amended (the "Securities Act") with respect to, a tender offer or
exchange offer to purchase any shares of Issuer Common Stock and, upon
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consummation of such offer, such person owns or controls 25% or more of the
then outstanding shares of Issuer Common Stock (such an offer being
referred to herein as a "Tender Offer" or an "Exchange Offer,"
respectively);
(iv) 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
(v) 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.
As used in this Agreement, "person" shall have the meaning specified in
Sections 3 (a) (9) and 13 (d) (3) of the Exchange Act.
(c) In the event Grantee 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 Option Shares it intends to
purchase pursuant to such exercise and (ii) a place and date not earlier than
three business days nor later than 30 business days from the Notice Date for the
closing (the "Closing") of such purchase (the "Closing Date"). If prior
notification to or approval of the Office of Thrift Supervision (the "OTS") or
any other regulatory authority is required in connection with such purchase,
Issuer shall cooperate in good faith with Grantee in the filing of the required
notice or application for approval and the obtaining of any such approval and
the period of time that otherwise would run pursuant to the preceding sentence
shall run instead from the date on which, as the case may be (i) any required
notification period has expired or been terminated or (ii) such approval has
been obtained, and in either event, any requisite waiting period shall have
passed.
4. Payment and Delivery of Certificates. (a) On each Closing Date, Grantee
shall (i) pay to Issuer, in immediately available funds by wire transfer to a
bank account designated by Issuer, an amount equal to the Purchase Price
multiplied by the number of Option Shares to be purchased on such Closing Date
and (ii) present and surrender this Agreement to the Issuer at the address of
the Issuer specified in Section 12(f) hereof. In addition to any other amounts
payable pursuant to this Section 4(a), upon the first exercise of the Option,
Grantee shall pay an amount, if any, by which (i) $1,055,600 plus the product of
(A) the total number of Option Shares and (B) the difference between the
Market/Tender Offer Price (as defined below) and the Purchase Price exceeds (ii)
$32.00 provided, however, that in no event shall the amount payable pursuant to
this sentence exceed $3,780,000. As used herein, the "Market/Tender Offer
Price" shall mean the higher of the highest price per share at which a Tender
Offer or Exchange Offer has been made
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by any person other than Grantee or any affiliate of Grantee or person acting in
concert in any respect with Grantee for at least 25% of the shares of Issuer
Common Stock then outstanding or the highest closing sales price per share of
Issuer Common Stock quoted on the Nasdaq Stock Market ("Nasdaq") (or if Issuer
Common Stock is not quoted on the Nasdaq, the highest bid price per share as
quoted on the principal trading market or securities exchange on which such
shares are traded as reported by a recognized source) within the six-month
period immediately preceding this Agreement.
(b) At each Closing, simultaneously with the delivery of immediately
available funds and surrender of this Agreement as provided in Section 4(a)
hereof, Issuer shall deliver to Grantee (A) a certificate or certificates
representing the Option Shares to be purchased at such Closing, which Option
Shares shall be free and clear of all liens, claims, charges and encumbrances of
any kind whatsoever, other than any such lien or encumbrance created by Grantee
and (B) if the Option is exercised in part only, an executed new agreement with
the same terms as this Agreement evidencing the right to purchase the balance of
the shares of Issuer Common Stock purchasable hereunder. If Issuer shall have
issued rights or any similar securities ("Rights") pursuant to any shareholder
rights, poison pill or similar plan (a "Shareholder Rights Plan") prior or
subsequent to the date of this Agreement and such Rights remain outstanding and
attached to shares of Issuer Common Stock at the time of the issuance of any
Option Shares pursuant to an exercise of all or part of the Option hereunder,
then each Option Share issued pursuant to such exercise shall also represent the
number of Rights issued per share of Issuer Common Stock with terms
substantially the same as and at least as favorable to Grantee as are provided
under the Shareholder Rights Plan as then in effect.
(c) Certificates for the Option Shares delivered at each Closing shall be
endorsed with a restrictive legend which shall read substantially as follows:
THE TRANSFER OF THE STOCK REPRESENTED BY THIS CERTIFICATE MAY BE
SUBJECT TO RESTRICTIONS ARISING UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND PURSUANT TO THE TERMS OF A STOCK OPTION AGREEMENT DATED AS OF
JULY 9, 1998. A COPY OF SUCH AGREEMENT WILL BE PROVIDED TO THE HOLDER
HEREOF WITHOUT CHARGE UPON RECEIPT BY THE 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 legend if Grantee shall
have delivered to Issuer a copy of a letter from the staff of the
Securities and Exchange Commission (the "SEC"), or an opinion of outside
counsel reasonably satisfactory to Issuer in form and substance reasonably
satisfactory to Issuer and its counsel, to the effect that such legend is
not required for purposes of the Securities Act; (ii) the reference to the
provisions of this Agreement in the above legend shall be removed by
delivery of substitute certificate(s) without such reference if the shares
have been sold or transferred in compliance with the provisions of this
Agreement and under circumstances that do not require the retention of such
reference; and (iii) the legend shall
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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.
5. Representations and Warranties of Issuer. Issuer hereby represents and
warrants to Grantee as follows:
(a) Due Authorization. Issuer has full corporate power and authority to enter
into 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 authorized by all necessary
corporate action on the part of Issuer. This Agreement has been duly and validly
executed and delivered by Issuer.
(b) No Violation. Neither the execution and delivery of this Agreement, nor
the consummation of the transactions contemplated hereby, nor compliance by
Issuer with any of the terms or provisions hereof, will (i) violate any
provision of the Certificate of Incorporation (the "Certificate of
Incorporation") or By-Laws of Issuer or the certificates of incorporation, by-
laws or similar governing documents of any of its Subsidiaries or (ii) (x)
assuming that all of the consents and approvals required under applicable law
for the purchase of shares upon the exercise of the Option are duly obtained,
violate any statute, code, ordinance, rule, regulation, judgment, order, writ,
decree or injunction applicable to Issuer or any of its Subsidiaries, or any of
their respective properties or assets, or (y) violate, conflict with, result in
a breach of any provisions of or the loss of any benefit under, constitute a
default (or an event which, with notice or lapse of time, or both, would
constitute a default) under, result in the termination of or a right of
termination or cancellation under, accelerate the performance required by, or
result in the creation of any lien, pledge, security interest, charge or other
encumbrance upon any of the respective properties or assets of Issuer or any of
its Subsidiaries under, any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, deed of trust, license, lease, agreement or other
instrument or obligation to which Issuer or any of its Subsidiaries is a party,
or by which they or any of their respe ctive properties or assets may be bound
or affected.
(c) Authorized Stock. Issuer has taken all necessary corporate and other
action to authorize and reserve and to permit it to issue, and, at all times
from the date of this Agreement until the obligation to deliver Issuer Common
Stock upon the exercise of the Option, will have reserved for issuance, upon
exercise of the Option, shares of Issuer Common Stock necessary for Grantee to
exercise the Option, and Issuer will take all necessary corporate action to
authorize and reserve for issuance all additional shares of Issuer Common Stock
(together with any Rights which may have been issued with respect thereto) or
other securities which may be issued pursuant to Section 7 upon exercise of the
Option. The shares of Issuer Common Stock to be issued upon due exercise of the
Option, including all additional shares of Issuer Common Stock (together with
any Rights which may have been issued with respect thereto) or other securities
which may be issuable pursuant to Section 7, upon issuance pursuant hereto,
shall be duly and validly issued, fully paid and nonassessable, and shall be
delivered free and clear of all liens, claims, charges and encumbrances of any
kind or nature whatsoever (except any such lien or encumbrance created by
Grantee), including any preemptive rights of any stockholder of Issuer.
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(d) Board Action. By action of the Board of Directors of Issuer prior to the
execution of this Agreement, resolutions were duly adopted approving the
execution, delivery and performance of this Agreement, any purchase or other
transaction respecting Issuer Common Stock provided for herein, and the other
transactions contemplated hereby. Accordingly, the provisions of the New Jersey
Business Corporations Act as they relate to Issuer and Article XV of Issuer's
Certificate of Incorporation do not and will not apply to this Agreement or any
of the other transactions contemplated hereby.
6. Representations and Warranties of Grantee. Grantee hereby represents
and warrants to Issuer that:
(a) Due Authorization. Grantee has corporate power and authority to enter
into this Agreement and, subject to any approvals or consents referred to
herein, 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 Grantee. This Agreement has been duly executed and delivered by Grantee.
(b) Purchase Not for Distribution. This Option is not being acquired with a
view to the public distribution thereof and neither this Option nor any Option
Shares will be transferred or otherwise disposed of except in a transaction
registered or exempt from registration under the Securities Act.
7. Adjustment upon Changes in Capitalization, etc. (a) In the event (i)
of any change in Issuer Common Stock by reason of a stock dividend, stock split,
split-up, recapitalization, combination, exchange of shares or similar
transaction or (ii) that any Rights issued by Issuer shall become exercisable,
the type and number of shares or securities subject to the Option, and the
Purchase Price therefor, shall be adjusted appropriately, and, in the case of
any of the transactions described in clause (i) above, proper provision shall be
made in the agreements governing such transaction so that Grantee shall receive,
upon exercise of the Option, the number and class of shares or other securities
or property that Grantee would have received in respect of Issuer Common Stock
if the Option had been exercised immediately prior to such event, or the record
date therefor, as applicable. If any additional shares of Issuer Common Stock
are issued after the date of this Agreement (other than pursuant to an event
described in the first sentence of this Section 7 (a), the number of shares of
Issuer Common Stock subject to the option shall be adjusted so that, after such
issuance, the Option, together with any shares of Issuer Common Stock previously
issued pursuant hereto, equals 19.9% of the number of shares of Issuer Common
Stock then issued and outstanding, without giving effect to any shares subject
to or Previously issued pursuant to the option.
(b) In the event that Issuer shall enter into an agreement (i) to consolidate
with or merge into any person, other than Grantee or one of its Subsidiaries,
and shall not be the continuing or surviving corporation of such consolidation
or merger, (ii) to permit any person, other than Grantee or one of its
Subsidiaries, to merge into Issuer and Issuer shall be the continuing or
surviving corporation, but, in connection with such merger, the then outstanding
shares of Issuer
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Common Stock shall be changed into or exchanged for stock or other securities of
Issuer or any other person or cash or any other property or the outstanding
shares of Issuer Common Stock immediately prior to such merger shall after such
merger represent less than 50% of the outstanding shares and share equivalents
of the merged company, or (iii) to sell or otherwise transfer all or
substantially all of its assets to any person, other than Grantee or one of its
Subsidiaries, then, and in each such case, the agreement governing such
transaction shall make proper provisions so that the Option shall, upon the
consummation of any such tr ansaction and upon the terms and conditions set
forth herein, be converted into, or exchanged for, an option (the "Substitute
Option"), at the election of Grantee, of either (I) the Acquiring Corporation
(as defined below), (II) any person that controls the Acquiring Corporation, or
(III) in the case of a merger described in clause (ii), the Issuer (such person
being referred to as the "Substitute Option Issuer").
(c) The Substitute Option shall have the same terms as the Option, provided,
that if the terms of the Substitute Option cannot, for legal reasons, be the
same as the Option, such terms shall be as similar as possible and in no event
less advantageous to Grantee. The Substitute Option Issuer shall also enter into
an agreement with the then holder or holders of the Substitute Option in
substantially the same form as this Agreement, which shall be applicable to the
Substitute Option.
(d) The Substitute Option shall be exercisable for such number of shares of
the Substitute Common Stock (as hereinafter defined) as is equal to the Assigned
Value (as hereinafter defined) multiplied by the number of shares of Issuer
Common Stock for which the Option was theretofore exercisable, divided by the
Average Price (as hereinafter defined). The exercise price of the Substitute
Option per share of the Substitute Common Stock (the "Substitute Purchase
Price") shall then be equal to the Purchase Price multiplied by a fraction in
which the numerator is the number of shares of the Issuer Common Stock for which
the Option was theretofore exercisable and the denominator is the number of
shares of the Substitute Common Stock for which the Substitute Option is
exercisable.
(e) The following terms have the meanings indicated:
(I) "Acquiring Corporation" shall mean (i) the continuing or
surviving corporation of a consolidation or merger with Issuer (if other
than Issuer), (ii) Issuer in a merger in which Issuer is the continuing
or surviving person, and (iii) the transferee of all or substantially all
of the Issuer's assets (or the assets of its Subsidiaries).
(II) "Substitute Common Stock" shall mean the common stock issued by
the Substitute Option Issuer upon exercise of the Substitute Option.
(III) "Assigned Value" shall mean the highest of (i) the price per
share of Issuer Common Stock at which a tender offer or exchange offer
therefor has been made by any person (other than Grantee), (ii) the price
per share of Issuer Common Stock to be paid by any person (other than the
Grantee) pursuant to an agreement with Issuer, and (iii) the highest
closing sales price per share of Issuer Common Stock quoted on the Nasdaq
(or if
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Issuer Common Stock is not quoted on the Nasdaq, the highest bid price per
share as quoted on the principal trading market or securities exchange on
which such shares are traded as reported by a recognized source) within the
six-month period immediately preceding the agreement; provided, however,
that in the event of a sale of less than all of Issuer's assets, the
Assigned Value shall be the sum of the price paid in such sale for such
assets and the current market value of the remaining assets of Issuer as
determined by a nationally recognized investment banking firm selected by
Grantee or by a Grantee Majority, divided by the number of shares of Issuer
Common Stock outstanding at the time of such sale. In the event that an
exchange offer is made for the Issuer Common Stock or an agreement is
entered into for a merger or consolidation involving consideration other
than cash, the value of the securities or other property issuable or
deliverable in exchange for the Issuer Common Stock shall be determined by
a nationally recognized investment banking firm mutually selected by
Grantee and Issuer (or if applicable, Acquiring Corporation), provided that
if a mutual selection cannot be made as to such investment banking firm, it
shall be selected by Grantee (or a majority of interest of the Grantees if
there shall be more than one Grantee (a "Grantee Majority").
(IV) "Average Price" shall mean the average closing price of a share of
the Substitute Common Stock for the one year immediately preceding the
consolidation, merger or sale in question; but in no event higher than the
closing price of the shares of the Substitute Common Stock on the day
preceding such consolidation, merger or sale; provided that if Issuer is
the issuer of the Substitute Option, the Average Price shall be computed
with respect to a share of common stock issued by Issuer, the person
merging into Issuer or by any company which controls or is controlled by
such merging person, as Grantee may elect.
(f) In no event, pursuant to any of the foregoing paragraphs, shall the
Substitute Option be exercisable for more than 19.9% of the aggregate of the
shares of the Substitute Common Stock outstanding prior to exercise of the
Substitute Option. In the event that the Substitute Option would be exercisable
for more than 19.9% of the aggregate of the shares of Substitute Common Stock
but for this clause (f), the Substitute Option Issuer shall make a cash payment
to Grantee equal to the excess of (i) the value of the Substitute Option without
giving effect to the limitation in this clause (f) over (ii) the value of the
Substitute Option after giving effect to the limitation in this clause (f).
This difference in value shall be determined by a nationally recognized
investment banking firm selected by Grantee (or a Grantee Majority).
(g) Issuer shall not enter into any transaction described in subsection (b)
of this Section 7 unless the Acquiring Corporation and any person that controls
the Acquiring Corporation assume in writing all the obligations of Issuer
hereunder and take all other actions that may be necessary so that the
provisions of this Section 7 are given full force and effect (including, without
limitation, any action that may be necessary so that the shares of Substitute
Common Stock are in no way distinguishable from or have lesser economic value
than other shares of common stock issued by the Substitute Option Issuer).
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(h) The provisions of Sections 8 and 9 shall apply to any securities for
which the Option becomes exercisable pursuant to this Section 7 and as
applicable, references in such sections to "Issuer", "Option", "Purchase Price"
and "Issuer Common Stock" shall be deemed to be references to "Substitute Option
Issuer", "Substitute Option", "Substitute Purchase Price" and "Substitute Common
Stock", respectively.
8. Registration Rights. Issuer shall, if requested by Grantee (or if
applicable, a Grantee Majority) at any time and from time to time within three
years of the date on which the Option first becomes exercisable, as
expeditiously as possible prepare and file up to two registration statements
under the Securities Act if such registration is necessary in order to permit
the sale or other disposition of any or all shares of Issuer Common Stock or
other securities that have been acquired by or are issuable to Grantee upon
exercise of the Option in accordance with the intended method of sale or other
disposition stated by Grantee, including a "shelf" registration statement under
Rule 415 under the Securities Act or any successor provision, and Issuer shall
use its best efforts to qualify such shares or other securities under any
applicable state securities laws. Issuer shall use its best efforts to cause
each such registration statement to become effective, to obtain all consents or
waivers of other parties which are required therefor and to keep such
registration statement effective for such period not in excess of 180 days from
the day such registration statement first becomes effective as may be reasonably
necessary to effect such sale or other disposition. Any registration statement
prepared and filed under this Section 8, and any sale covered thereby, shall be
at Issuer's expense except for underwriting discounts or commissions, brokers'
fees and the fees and disbursements of Grantee's counsel related thereto.
Grantee shall provide all information reasonably requested by Issuer for
inclusion in any registration statement to be filed hereunder. If during the
time periods referred to in the first sentence of this Section 8 Issuer effects
a registration under the Securities Act of Issuer Common Stock for its own
account or for any other stockholders of Issuer (other than on Form S-4 or Form
S-8, or any successor forms or any form with respect to a dividend reinvestment
or similar plan), it shall allow Grantee the right to participate in such
registration, and such participation shall not affect the obligation of Issuer
to effect two registration statements for Grantee under this Section 8;
provided, however, that, if the managing underwriters of such offering advise
Issuer in writing that in their opinion the number of shares of Issuer Common
Stock requested by Grantee to be included in such registration, together with
the shares of Issuer Common Stock proposed to be included in such registration,
exceeds the number which can be sold in such offering, Issuer shall include the
shares requested to be included therein by Grantee pro rata with the shares
intended to be included therein by Issuer. In connection with any registration
pursuant to this Section 8, Issuer and Grantee shall provide each other and any
underwriter of the offering with customary representations, warranties,
covenants, indemnification and contribution in connection with such
registration. Notwithstanding anything to the contrary contained herein, in no
event shall Issuer be obligated to effect more than two registrations pursuant
to the first sentence of this Section 8 by reason of the fact that there shall
be more than one Grantee as a result of any assignment of this Agreement or
division of this Agreement pursuant to Section 10 hereof.
9. Listing. If Issuer Common Stock or any other securities to be acquired
upon exercise of the Option are then authorized for quotation on the Nasdaq or
any securities exchange, Issuer,
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upon the request of Grantee, will promptly file an application to authorize for
quotation the shares of Issuer Common Stock or other securities to be acquired
upon exercise of the Option on the Nasdaq or such other securities exchange and
will use its best efforts to obtain approval of such listing as soon as
practicable.
10. Division of Option. This Agreement (and the Option granted hereby) are
exchangeable, without expense, at the option of Grantee, 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 in the aggregate the same number of shares of Issuer Common
Stock purchasable hereunder. The terms "Agreement" and "Option" as used herein
include any other 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. Any such new Agreement executed and delivered shall constitute
an additional contractual obligation on the part of Issuer, whether or not the
Agreement so lost, stolen, destroyed or mutilated shall at any time be
enforceable by anyone.
11. Rights Agreement. Issuer shall not approve or adopt, or propose the
approval and adoption of, any Shareholder Rights Plan unless such Shareholder
Rights Plan contains terms which provide, to the reasonable satisfaction of
Grantee, that (a) the Rights issued pursuant thereto will not become exercisable
by virtue of the fact that (i) Grantee is the Beneficial Owner of shares of
Issuer Common Stock (x) acquired or acquirable pursuant to the grant or exercise
of this Option and (y) held by Grantee or any of its Subsidiaries as Trust
Account Shares or DPC Shares or (ii) while Grantee is the Beneficial Owner of
the shares of Issuer Common Stock described in clause (a) (i), an Acquisition
Transaction involving Issuer or any of its Subsidiaries, on the one hand, and
Grantee, any of its Subsidiaries, on the other hand, is proposed, agreed to or
consummated and (b) no restrictions or limitations with respect to the exercise
of any Rights acquired or acquirable by Grantee will result or be imposed by
virtue of the fact that Grantee is the Beneficial Owner of the shares of Issuer
Common Stock described in clause (a) (i) of this Section 11.
12. Miscellaneous. (a) Expenses. Except as otherwise provided in Section 8
hereof, each of the parties hereto shall bear and pay all costs and expenses
incurred by it or on its behalf in connection with the transactions contemplated
hereunder, including fees and expenses of its own financial consultants,
investment bankers, accountants and counsel.
(b) Waiver and Amendment. 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 modified, amended, altered or supplemented except upon
the execution and delivery of a written agreement executed by the parties
hereto.
(c) Entire Agreement; No Third-Party Beneficiary; Severability. This
Agreement, together with the Merger Agreement and the other agreements and
instruments referred to herein
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and therein, (a) constitutes the entire agreement and supersedes all prior
agreements and understandings, both written and oral, between the parties with
respect to the subject matter hereof and (b) is not intended to confer upon any
person other than the parties hereto any rights or remedies hereunder.
Notwithstanding anything to the contrary contained in this Agreement or the
Merger Agreement, this Agreement shall be deemed to amend the confidentiality
agreement between Issuer and Grantee so as to permit Grantee to enter into this
Agreement and exercise all of its rights hereunder, including its right to
acquire Issuer Common Stock upon exercise of the Option. If any term, provision,
covenant or restriction of this Agreement is held by a court of competent
jurisdiction or a federal or state regulatory agency to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of 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 Option does not permit Grantee to acquire
the full number of shares of Issuer Common Stock as provided in Section 3 hereof
(as adjusted pursuant to Section 7 hereof), it is the express intention of
Issuer to allow Grantee to acquire such lesser number of shares as may be
permissible without any amendment or modification hereof.
(d) Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of New Jersey without regard to any
applicable conflicts of law rules.
(e) Descriptive Headings. The descriptive headings contained herein are
for convenience of reference only and shall not affect in any way the meaning or
interpretation of this Agreement.
(f) Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally, telecopied (with
confirmation) or mailed by registered or certified mail (return receipt
requested) to the parties at the following addresses (or at such other address
for a party as shall be specified by like notice):
If to Issuer to:
Pulse Bancorp, Inc.
6 Jackson Street
P.O. Box 193
South River, New Jersey
Attention: George T. Hornyak, Jr.
President and Chief Executive Officer
with a copy to:
Malizia, Spidi, Sloane & Fisch, P.C.
One Franklin Square
1301 K Street, N.W.
Suite 700 East
Washington, D.C. 20005
Attention: Samuel J. Malizia, Esq.
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<PAGE>
If to Grantee to:
First Source Bancorp, Inc.
1000 Woodbridge Center Drive
Woodbridge, New Jersey 07095
Attention: John P. Mulkerin
President and Chief Executive Officer
with a copy to:
Patton Boggs LLP
2550 M Street, NW
Washington, D.C. 20037
Attention: Joseph G. Passaic, Jr., Esq.
(g) Counterparts. This Agreement and any amendments hereto may be executed in
two counterparts, each of which shall be considered one and the same agreement
and shall become effective when both counterparts have been signed, it being
understood that both parties need not sign the same counterpart.
(h) Assignment. Neither this Agreement nor any of the rights, interests or
obligations hereunder or under the Option shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other party, except that Grantee may assign this
Agreement to a wholly owned subsidiary of Grantee and after the occurrence of a
Purchase Event Grantee may assign its rights under this Agreement to one or more
third parties, provided, however, that Grantee may not assign this Agreement,
without the written consent of Issuer, to any third party who, to Grantee's
knowledge, would, upon exercise of the Option, own in excess of 6% of Issuer's
then issued and outstanding common stock. Subject to the preceding sentence,
this Agreement shall be binding upon, inure to the benefit of and be enforceable
by the parties and their respective successors and assigns. As used in this
Agreement, Grantee shall include any person to whom this Agreement or the Option
shall be assigned by a previous Grantee in accordance with the terms hereof
(i) Further Assurances. 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.
(j) Specific Performance. The parties hereto agree that this Agreement may be
enforced by either party through specific performance, injunctive relief and
other equitable relief. Both parties further agree to waive any requirement for
the securing or posting of any bond in connection with the obtaining of any such
equitable relief and that this provision is without prejudice to any other
rights that the parties hereto may have for any failure to perform this
Agreement.
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IN WITNESS WHEREOF, Issuer and Grantee have caused this Stock Option
Agreement to be signed by their respective officers thereunto duly authorized,
all as of the day and year first written above.
PULSE BANCORP, INC.
BY: /s/ George T. Hornyak, Jr.
---------------------------------------------
Name: George T. Hornyak, Jr.
Title: President and Chief Executive Officer
FIRST SOURCE BANCORP, INC.
BY: /s/ John P. Mulkerin
---------------------------------------------
Name: John P. Mulkerin
Title: President and Chief Executive Officer
B-13
